diff --git a/nursery_store.go b/nursery_store.go
index 5167a7ab6..6b76d4925 100644
--- a/nursery_store.go
+++ b/nursery_store.go
@@ -400,6 +400,10 @@ func (ns *nurseryStore) CribToKinder(bby *babyOutput) error {
 			return err
 		}
 
+		utxnLog.Tracef("Placing (crib -> baby) output for "+
+			"chan_point=%v at height_index=%v", chanPoint,
+			maturityHeight)
+
 		// Register the kindergarten output's prefixed output key in the
 		// height-channel bucket corresponding to its maturity height.
 		// This informs the utxo nursery that it should attempt to spend
@@ -413,7 +417,6 @@ func (ns *nurseryStore) CribToKinder(bby *babyOutput) error {
 // confirmation of the preschool output's commitment transaction.
 func (ns *nurseryStore) PreschoolToKinder(kid *kidOutput) error {
 	return ns.db.Update(func(tx *bolt.Tx) error {
-
 		// Create or retrieve the channel bucket corresponding to the
 		// kid output's origin channel point.
 		chanPoint := kid.OriginChanPoint()
@@ -459,13 +462,41 @@ func (ns *nurseryStore) PreschoolToKinder(kid *kidOutput) error {
 			return err
 		}
 
-		// Since the CSV delay on the kid output has now begun ticking,
-		// we must insert a record of in the height index to remind us
-		// to revisit this output once it has fully matured.
+		// If this output has an absolute time lock, then we'll set the
+		// maturity height directly.
+		var maturityHeight uint32
+		if kid.BlocksToMaturity() == 0 {
+			maturityHeight = kid.absoluteMaturity
+		} else {
+			// Otherwise, since the CSV delay on the kid output has
+			// now begun ticking, we must insert a record of in the
+			// height index to remind us to revisit this output
+			// once it has fully matured.
+			//
+			// Compute the maturity height, by adding the output's
+			// CSV delay to its confirmation height.
+			maturityHeight = kid.ConfHeight() + kid.BlocksToMaturity()
+		}
 
-		// Compute the maturity height, by adding the output's CSV delay
-		// to its confirmation height.
-		maturityHeight := kid.ConfHeight() + kid.BlocksToMaturity()
+		// In the case of a Late Registration, we've already graduated
+		// the class that this kid is destined for. So we'll bump it's
+		// height by one to ensure we don't forget to graduate it.
+		lastGradHeight, err := ns.getLastGraduatedHeight(tx)
+		if err != nil {
+			return err
+		}
+		if maturityHeight <= lastGradHeight {
+			utxnLog.Debugf("Late Registration for kid output=%v "+
+				"detected: class_height=%v, "+
+				"last_graduated_height=%v", kid.OutPoint(),
+				maturityHeight, lastGradHeight)
+
+			maturityHeight = lastGradHeight + 1
+		}
+
+		utxnLog.Tracef("Placing (crib -> kid) output for "+
+			"chan_point=%v at height_index=%v", chanPoint,
+			maturityHeight)
 
 		// Create or retrieve the height-channel bucket for this
 		// channel. This method will first create a height bucket for
diff --git a/nursery_store_test.go b/nursery_store_test.go
index 1fce278b5..ca0b1540d 100644
--- a/nursery_store_test.go
+++ b/nursery_store_test.go
@@ -127,7 +127,11 @@ func TestNurseryStoreIncubate(t *testing.T) {
 
 		// Begin incubating all of the outputs provided in this test
 		// vector.
-		err = ns.Incubate(test.commOutput, test.htlcOutputs)
+		var kids []kidOutput
+		if test.commOutput != nil {
+			kids = append(kids, *test.commOutput)
+		}
+		err = ns.Incubate(kids, test.htlcOutputs)
 		if err != nil {
 			t.Fatalf("unable to incubate outputs"+
 				"on test #%d: %v", i, err)
@@ -362,7 +366,7 @@ func TestNurseryStoreFinalize(t *testing.T) {
 
 	// Begin incubating the commitment output, which will be placed in the
 	// preschool bucket.
-	err = ns.Incubate(kid, nil)
+	err = ns.Incubate([]kidOutput{*kid}, nil)
 	if err != nil {
 		t.Fatalf("unable to incubate commitment output: %v", err)
 	}
@@ -449,7 +453,7 @@ func TestNurseryStoreGraduate(t *testing.T) {
 
 	// First, add a commitment output to the nursery store, which is
 	// initially inserted in the preschool bucket.
-	err = ns.Incubate(kid, nil)
+	err = ns.Incubate([]kidOutput{*kid}, nil)
 	if err != nil {
 		t.Fatalf("unable to incubate commitment output: %v", err)
 	}