New Developments for S Corporations
Anatomy of a Simple Contract
Real Estate Sellers Beware!
What is the Health Insurance Portability and Accountability Act of 1996?
What is Jurisdiction?
Wage Payment and Collection Law
Watch Those Limitation Periods!
Spouse's Guaranty May Be Unenforceable
Federal Estate Taxes and Life Insurance: Choose the Owner and Beneficiary Carefully
Signing Papers for a Corporation
The "Good" Divorce
The Truth About Notarization
What is Confession of Judgment?
Consideration of the Living Will?
What to Do When the IRS Calls
Some Overlooked Deductions
Pennsylvania's Implied Consent Law
Why Was O.J. Acquitted?
Co-Ownership of Real Estate: Title Matters
Dram Shop Litigation
"Full Tort" or "Limited Tort" The Auto Insurance Dilemma
Shifting the Burden of Legal Fees to Your Opponent
Seven Reasons to Incorporate
What Happens to Your Property If You Die Without a Will?
Don't Speak Too Soon!
Why We Take Personal Injury Cases on a Contingent Fee Basis
THE FAMILY AND MEDICAL LEAVE ACT
The "Durable" Power of Attorney
Federal Minimum Wage Raised
How Long Must You Keep Financial Records?
Easements and Licenses
Trust Fund Taxes and the 100% Penalty
Confession of judgment" is an agreement by a party to a lease or promissory note that in the event of a default, the other party, usually a landlord or lender, may proceed to the county courthouse, declare a default and enter judgment immediately in an agreed amount. The defaulting party does not receive the benefit of a trial.
The confession of judgment procedure, although not unique to Pennsylvania, is unusual in the United States. It allows a contracting party immediate access to a judgment and seizure and sale of assets of a defaulting party to satisfy the judgment.
Recent court decisions have limited the ability of a judgment creditor to seize immediately bank accounts or other property of the debtor in the hands of third parties; however, a judgment creditor still may exercise any other remedies directly against the debtor, including seizure of the debtor's property.
Because of the extraordinary power afforded to a creditor under a confession of judgment provision, the courts have expanded the rights of debtors in recent years. A debtor may have a judgment opened if, in a petition to the court, he can raise an issue of material fact as to the propriety of the entry of the judgment in the first place. If an issue of fact is raised in a petition, the judgment will be opened and the case will proceed to trial like any lawsuit. A debtor may also petition to strike a judgment in the event there is a defect in the form of a judgment on its face.
Lenders and landlords routinely insist upon a confession of judgment clause because it is a powerful remedy in the event of default. If you are a lender or landlord, you will want such a clause.
Borrowers and tenants should be careful about executing documents containing a confession of judgment provision as their rights might be significantly impaired in the event of a dispute.
- Bill Brennan