Back to News

Confession of Judgment Clauses in Commercial Leases

Published on

July 12, 2012

One of the most negotiated provisions in a commercial lease agreement is a confession of judgment clause. Two types of confessions of judgment exist in Pennsylvania: one for money damages and one for possession of the leased premises. A confession of judgment clause allows a landlord to file specific paperwork with the court to enter judgment against its tenant without the opportunity for a hearing or response from the tenant. The landlord is not required to notify the tenant, and the tenant does not have a right to dispute the entry of the judgment, except in limited circumstances. Usually, the landlord is permitted to confess judgment against the tenant only after the occurrence of a defined event, like failure to pay rent. As you can imagine, with such a powerful remedy at the fingertips of a landlord, Pennsylvania courts have limited its application, particularly with respect to lease amendments and assignments.

Generally, under Pennsylvania law, a confession of judgment clause contained in a commercial lease agreement will only be enforceable if it is restated in its entirety in a lease amendment or assignment. A confession of judgment clause that is not restated in a lease amendment or assignment may not be enforceable.

For instance, assume a landlord and tenant enter into a commercial lease agreement containing a confession of judgment clause. Two years later, the landlord and the tenant amend the lease to extend the term but fail to restate the confession of judgment clause in the amendment. Under Pennsylvania law, the tenant now has an argument that the confession of judgment clause in the original lease is ineffective against the tenant. Consequently, the landlord may be forced to pursue other remedies in the event of a default by the tenant, which other remedies often require additional time and expense.

The same principle applies in an assignment of a commercial lease agreement. In fact, Pennsylvania courts have expressly held that a confession of judgment clause is not binding on the assignee of a commercial lease without the assignee’s express written acknowledgement of the confession of judgment clause.

Accordingly, to retain the right to confess judgment against a tenant or a proposed assignee, a landlord should always ensure that the confession of judgment clause is restated, in its entirety, in any lease amendment or assignment.


Related News

View More News
News Alert
November 21, 2024

FinCEN Issues New Reporting Requirement for Certain Residential Real Estate Transfers

For many years, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) has enacted programs and r...

Learn More
News Alert
November 21, 2024

Federal Court Rejects Challenge to Corporate Transparency Act’s Applicability to Community Associations

The Corporate Transparency Act (“Act”) has recently survived a federal-court challenge to its applicability to Community ...

Learn More
Press Release
November 13, 2024

Barley Snyder Welcomes Attorney Thomas Platts to York Office

For Immediate Release York, Pa. – Barley Snyder is pleased to announce attorney Thomas T. Platts has recently joined the fi...

Learn More

Get in Touch

Our attorneys, paralegals and staff look forward to hearing from you. Please reach out to let us know how we can help.

Get In Touch
RECOGNIZED IN
Super Lawyers
Best Law Firms US News
Best Lawyers