What is a “confession of judgment clause?”

Suppose that your customer owes you $50,000. Further suppose that your good friend the oil and gas well lien cannot help you since the debt is 12 months old.

In order to avoid a breach of contract lawsuit, the debtor agrees to sign a promissory note, which provides for regular monthly payments on the principal and interest. A shrewd business owner will require a “confession of judgment clause” in this promissory note as an enforcement tool.

The confession of judgment clause allows your attorney to appear before a judge and secure a judgment without process. The clause may read like this:

To further secure the payment of this note, Debtor irrevocably authorizes any attorney of any court of record to appear for Debtor in term time or vacation, at any time and from time to time after payment is due, whether by acceleration or otherwise, and confess a judgment without process against Debtor, in favor of Creditor for such sum as may appear to be unpaid and owing thereon together with interest, costs and five (5) percent attorney’s fees, with minimum attorney’s fees of Two hundred dollars and no cents ($200.00) and to waive and release all errors which may intervene in such proceeding and consent to immediate execution upon such judgment, hereby ratifying and confirming all that said attorney may do by virtue hereof. Debtor hereby waives the benefit of every statute conferring upon him any right or privilege of exemption, stay of execution, or other relief from the enforcement of a judgment.

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On August 27, 2013, Gary Quinnett presented a legal seminar on commercial real estate issues. The attendees rated him "Excellent"