The confession of judgment procedure is not unique to Pennsylvania; however it is one of only a small number of jurisdictions in the United States to allow it. Confession of judgment permits a contracting party immediate access to a judgment and seizure and sale of assets of a defaulting party to satisfy the judgment. For that reason commercial lenders and landlords routinely require a confession of judgment clause in their contracts.
Because of the extraordinary power afforded to a creditor under a confession of judgment provision, the courts have over the years expanded the rights of debtors. A debtor may have a judgment opened if a petition to the court is timely filed. The debtor can raise issues 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 debtor’s petition, the judgment will be opened and the case will proceed to trial like a traditional lawsuit. A debtor may also petition to strike a judgment in the event there is a defect in either the agreement or in the complaint in confession of judgment.
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 default. Commercial lenders and landlords should insist on such provisions being included in their contracts and leases. This is just one reason commercial notes and leases should be reviewed by an attorney prior to being signed. Contact us if you feel we can assist you in this area.
— J. Ken Butera