Dictionary of Real Estate Terms: dragnet clause
dragnet clause
a provision in a mortgage that pledges several properties as collateral, potentially including newly acquired property owned by the borrower. A default on one mortgage constitutes a default on the one with the dragnet.
Example: A real estate investor was in financial straits. She failed to pay a certain mortgage. The holder of the mortgage on a different property, which was not in default, enforced the dragnet clause in its mortgage by foreclosing.
