Commercial Lease Agreement: Should You Sign a Lease with a Confession of Judgment for Money?

You finally found that perfect retail office or industrial commercial space for your business...or so you thought, until you got the lease. Attempting to read the legal document, you soon feel overwhelmed by the complicated wording. You finally decide that you must seek assistance from an attorney. A recent small business in Philadelphia, which was a client of ours, contacted us at Lopes Law. They felt overwhelmed and frustrated.

The call with our client went something like this:

Client: "Hi, I heard about your firm from G****** and they suggested that I should reach out. I am renting some space for my business, and I cannot make sense of the lease."

Lopes Law: "No worries, we can certainly help and I appreciate you giving us a call. Can you tell us a little more about your business, and what your concerns are with the lease?"

Client: "I have signed leases before. This one, however, has a lot of legal terms. It includes "Confessions of Judgment" and a "Surety" Agreement (more on this in another blog post) with the lease agreement. I am just a little overwhelmed and concerned about what might be in this agreement."

Lopes Law: "No problem at all, as we said we are happy to help. We understand where you are coming from, and these lease agreements can cause a lot of apprehension. We have been negotiating leases for many years. We charge flat fees for either a detailed lease review and legal opinion, or for lease negotiations. If you require it, we can negotiate your lease for you."

That conversation (and the lease review) led to this post. As a business owner, you know that signing a commercial lease agreement is a big commitment. It's important to carefully review the terms of the lease before signing on the dotted line. One clause that often causes concern is the confession of judgment for money. We have created this blog post to shed some light on what a confession of judgment is, the potential risks involved, and whether you should sign a lease with this clause.

What is a Confession of Judgment for Money Damages?

A confession of judgment for money is a legal clause found in many different legal documents and agreements (for our purposes, we'll be focusing on commercial space lease agreements). It enables a landlord to get a judgment against a tenant without going to court. The tenant agrees to let the landlord get a judgment against them if they default. This judgment will be obtained without a trial or other legal proceedings. More technically, the confession of judgment typically states (something along the lines of) "any lawyer, including landlord's attorney, can enter judgment against the tenant." This judgment can be for all amounts owed by the tenant (including monthly rent, security deposits, attorneys fees, late fees and penalties, interest, and all sorts of other monetary damages that can significantly increase what you end up owing the landlord).

A confession of judgment for money is a powerful legal tool. It can have significant consequences for tenants who sign commercial lease agreements. This document is typically included in lease agreements, for office space or other commercial property, to provide landlords with a streamlined way to recover unpaid rent, damages, or other expenses (as we mentioned above) in the event of a default by the tenant.

The confession of judgment allows landlords to bypass the normal court process and obtain a judgment against the tenant quickly and easily. This can be advantageous for landlords, who may not want to spend time and resources pursuing a defaulting tenant through the courts. However, it can be detrimental to tenants, who may find themselves on the hook for substantial amounts of money without the opportunity to defend themselves in court.

It's important to note that confessions of judgment are not universally accepted in all states. Some jurisdictions have outlawed the use of confessions of judgment, while others have placed limitations on their use. For example, in Pennsylvania, confessions of judgment are legal, but they must be accompanied by an affidavit of non-military service to ensure that the tenant is not a member of the military, who are afforded certain legal protections.

If you are considering signing a commercial lease agreement that includes a confession of judgment for money, it's important to carefully review the terms and seek the advice of a legal professional (feel free to contact Lopes Law for help). An experienced commercial lease agreement lawyer can help you negotiate favorable terms and ensure that the confession of judgment is limited in scope and amount. They can also help you understand the potential risks involved and explore other options for protecting your interests in the lease agreement.

In addition to confessions of judgment, commercial lease agreements can include a wide range of other legal provisions that may be unfamiliar to business owners. At Lopes Law, we specialize in helping small business owners navigate the complexities of commercial leases and other legal agreements. Contact us today to learn more about how we can help protect your business interests.

Risks Involved with a Confession of Judgment for Money

If a lease includes a confession of judgment for money, it's important to understand the potential risks involved. By signing the lease with confession of judgment for money, the tenant is essentially giving up their right to contest any claims made by the landlord in court. The tenant is agreeing to allow the landlord to obtain a judgment against them without the need for any legal proceedings or the opportunity to defend themselves. If the tenant defaults on the lease, the landlord can use the confession of judgment to obtain a court order for the full amount of the rent owed, as well as any other damages or fees.

Another risk is that the judgment obtained through a confession of judgment can be enforced immediately, often without prior notice to the tenant. This means that the landlord can seize assets, garnish wages, or take other actions to collect the amount owed without giving the tenant a chance to negotiate or come up with an alternative payment plan.

Additionally, a confession of judgment can have long-lasting financial consequences for tenants. Once a judgment has been obtained, it can remain on the tenant's credit report for up to seven years, making it difficult to obtain credit or financing in the future. This can be particularly problematic for small business owners, who may need access to credit to grow their businesses or weather unforeseen financial challenges.

Overall, it's important for tenants to carefully consider the risks involved before signing a lease that includes a confession of judgment for money. It's also important to seek the advice of an experienced commercial lease agreement attorney professional who can review the lease agreement and help negotiate more favorable terms, such as limiting the scope and amount of the confession of judgment. At Lopes Law, we specialize in helping small business owners navigate the complexities of commercial leases and other legal agreements. Contact us today to learn more about how we can help protect your business interests and minimize the risks involved in signing a commercial lease.

Should You Sign a Lease with a Confession of Judgment?

Short answer: NO! (At least not without talking this through with an our commercial lease agreement attorneys or another attorney first)

Before signing a lease with a confession of judgment for money, it's important to carefully review the terms and seek the advice of a legal professional. In some jurisdictions, confessions of judgment may be illegal or subject to certain restrictions. It's also important to negotiate favorable terms and ensure that the confession of judgment is limited in scope and amount.

If you do decide to sign a lease with a confession of judgment, it's important to make every effort to fulfill your obligations under the lease and avoid defaulting. Defaulting on a lease can have serious consequences, including damage to your credit score and difficulty finding future rental properties. To avoid defaulting on your lease, it's important to have a solid understanding of your financial obligations and the terms of the lease. This includes understanding your rent payment schedule, additional fees, and any penalties or consequences for late or missed payments.

Small business owners should also consider factors such as market conditions, business growth projections, and potential changes in their industry when deciding whether to sign a lease with a confession of judgment. It's important to ensure that the terms of the lease align with the long-term goals of your business and that you're not taking on unnecessary risks.

At Lopes Law, we understand the unique challenges faced by small business owners when it comes to commercial leases. We can help you negotiate lease terms that are favorable to your business and provide guidance on managing your financial obligations throughout the lease term.

What should you do if you have a commercial lease agreement with a confession of judgment for money?

Signing a lease with a confession of judgment for money is a serious decision that requires careful consideration. At Lopes Law, we can help you review your lease and negotiate favorable terms to protect your business interests. Contact us today to schedule a consultation.