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Confession of Judgment Provisions In Commercial Leases
Wouldn't it be nice to win your client's court case before even filing the complaint? In states where they are enforced, a properly drafted confession of judgment clause in a commercial lease can accomplish just that. The provision can be one of the most valuable tools in a landlord's toolkit for enforcing its leases and preserving its remedies.
A confession of judgment is a legal procedure where, after a commercial tenant defaults under a lease for nonpayment of rent or any other breach under the lease, the landlord can file an action in the local court of common pleas and simultaneously file a "confession of judgment" on behalf of the tenant to forfeit the case. The right to file the confession of judgment stems from language in the body of the lease agreement whereby the tenant, in the event of its default under the lease, voluntarily submits to the jurisdiction of the court and entry of a judgment against the tenant. Simply by filing the confession of judgment, the landlord essentially skips a large chunk of the usually quite lengthy litigation process.
In addition to use within commercial leases, these provisions are permitted in loan documents such as promissory notes and mortgages. These clauses are, however, prohibited in all residential leases and in many consumer transactions. There are two separate confessions of judgment clauses that may both appear in a commercial lease: a confession of judgment for rent and a confession of judgment for possession.
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