Alert: Confession Of Judgment In Amendments To Loan Documents

Recently, the Pennsylvania Superior Court inHeritage Hills Associates, L.P. v. Heritage Hills Business I, LLC, reemphasized that for confession of judgment to be an enforceable remedy in connection with an amendment to a note, the confession of judgment provision must be restated or referenced in the amendment itself. The case involved a loan transaction that was amended three years after origination to, among other things, reduce the outstanding principal amount, change the interest rate and revise the payment schedule. The original note contained a warrant of attorney to confess judgment. While the amendment to the note included a statement that "Except as expressly provided in this Amendment, all provisions of the ... note remain in full force and effect and borrower and lender ... ratify and confirm each and ever provision thereof", the Superior Court found that "merely" referencing the terms of the original note was insufficient to evidence the borrower's