Legal Definitions - anaconda clause

An anaconda clause (also sometimes called a Mother Hubbard clause) is a broad, general provision in a legal document, such as a deed, mortgage, or security agreement. Its purpose is to include all related property, assets, or obligations that might not have been specifically listed or described in detail within the document. It acts as a "catch-all" to ensure that nothing is accidentally omitted, effectively "sweeping in" any unmentioned items under its scope.

• Example 1: Real Estate Mortgage

  Imagine a homeowner takes out a mortgage on their house. The mortgage document specifically describes the house and the land it sits on. However, it also includes an anaconda clause stating, "This mortgage also covers all other real property now owned or hereafter acquired by the borrower within the same county, including any fixtures, improvements, or appurtenances related thereto."

  Explanation: This clause ensures that if the homeowner owns a small, unlisted parcel of land adjacent to their main property, or if they acquire another small piece of land in the same county later, that property would automatically be included under the mortgage as collateral, even though it wasn't individually itemized in the initial description.

• Example 2: Business Asset Sale

  A small business is being sold, and the sale agreement meticulously lists all the major assets: specific machinery, inventory, and customer lists. To prevent any oversight, the agreement includes an anaconda clause: "The seller hereby conveys to the buyer all other assets, tangible and intangible, owned by the seller and used in the operation of the business as of the closing date, whether or not specifically enumerated herein."

  Explanation: This clause ensures that minor assets like office supplies, small tools, or even unlisted intellectual property (like a specific recipe or a unique process) that are part of the business operation are also transferred to the buyer, even if they weren't individually itemized in the main list of assets. It prevents disputes over items that might have been inadvertently left out.

• Example 3: Loan Security Agreement

  A company obtains a loan and grants the lender a security interest in its assets. The security agreement specifically lists the company's manufacturing equipment and accounts receivable. To provide comprehensive collateral, it also contains an anaconda clause: "The debtor grants the secured party a security interest in all other present and future assets of the debtor, of every kind and nature, wherever located, including but not limited to general intangibles, chattel paper, and deposit accounts."

  Explanation: This clause ensures that the lender's security interest extends beyond the specifically listed items to cover virtually all other assets the company owns now or might acquire in the future. This provides the lender with broad protection, as it can claim a security interest in any unlisted asset if the company defaults on the loan.