With a Warrant of Attorney to Confess Judgment, Location May Still Be Everything

In our advisory dated October 15, 2013, we discussed Graystone Bank v. Grove Estates, L.P., in which the Superior Court of Pennsylvania rejected a borrower’s arguments that a judgment entered against the borrower by confession should be stricken both because its signature was not on the same page as the warrant of attorney and because the warrant of attorney was not repeated or specifically referred to in a subsequent Change in Terms Agreement which extended the maturity of the loan. As noted in our advisory, the Supreme Court of Pennsylvania had granted review of the case but had not yet decided it. On November 26, 2013, that court entered an order affirming the Superior Court’s decision per curiam. While this outcome is good news for creditors, a per curiam order does not serve as binding precedent. For that reason and the other reasons stated in our advisory, we continue to recommend that landlords and lenders consider doing the following in order to reduce the costs, risks and delay of litigation disputing the validity of confessed judgments:

• Including the warrant of attorney to confess judgment on the tenant's/borrower’s/guarantor’s signature page or the page immediately before the signature page together with a separate signature or initial block on the page where the warrant of attorney appears; and
• When modifying a loan or lease, restating the warrant of attorney to confess judgment in its entirety in the amendment of any loan document or lease that originally contained a warrant of attorney.