Confession of Judgment in Commercial Leases in Pennsylvania
Pennsylvania is one of the few states that permit a commercial landlord to obtain an almost immediate judgment against a defaulting tenant without requiring the landlord to go through the process of providing the tenant with notice, an opportunity to be heard or a trial. This legal remedy of confession of judgment is both a time and expense saver. However, because Pennsylvania courts scrupulously interpret the confession of judgment clause against the party seeking to benefit from it, the lease language must comply with strict drafting rules. For example, the confession of judgment provision must be written in large and bold type, the clause must be signed by the tenant, and it must be conspicuously worded so that it is clear that the tenant knows that it is waiving its rights.
A commercial lease may provide for confession of judgment for money damages, for possession of the leased premises or for both. This clause will most certainly come up during the negotiation of the lease agreement as it limits the tenant’s due process rights. A market compromise when push comes to shove is to delete confession for rent in arrears but to retain confession for possession in the lease. Confession for possession allows the landlord to swiftly get its property back and is arguably less likely to be contested after judgment is entered.
So, the tenant defaults. How does confession of judgment work? Along with a complaint, the landlord’s attorney will file with the court a confession of judgment (also known as a warrant of attorney) signed by the landlord’s attorney “as attorney for the tenant” reflecting that the tenant accepts liability (i.e., that the tenant agrees that the tenant defaulted and is no longer entitled to possession of the premises) and/or that the tenant agrees to the monetary damages (if any) set forth in the complaint (often to include attorney’s fees and interest). The court will thereafter enter judgment as of record against the tenant in conformity with the filing and the tenant will then be provided with notice.
The tenant has 30 days from the date upon which notice was served to file a petition to strike or open the judgment. A petition to strike the judgment will only be granted if there is a defect in the documents and exhibits filed to confess judgment. A petition to open challenges the facts alleged in the complaint. If the passage of 30 days has occurred without the filing of a petition to strike or open, the landlord or its attorney files a written order requesting that the court execute upon a judgment for money and/or files a writ for possession directing the sheriff to evict the tenant from the premises.
Confession of Judgment is a powerful tool for a commercial landlord. Avoiding the backlog of the court system and the expense of going to trial should a tenant default is well worth the energy of negotiating a properly worded and otherwise well-drafted confession of judgment clause into a commercial lease.
For more information regarding commercial leasing issues, contact Shari Hunn at firstname.lastname@example.org.