A commercial tenant is behind in rent but is willing to pay back the past due monies over time. If the landlord believes there are no better options than keeping the existing tenant, then they should sign a rent reduction agreement with the tenant outlining the terms and conditions. A well thought out agreement created by the landlords attorney usually also includes a Confession of Judgment with the specific relief period defined. There has also historically been abuse of confession of judgment promissory notes, resulting in excessive judgments and abusive enforcement through garnishments and other attachments. Both Maryland and Virginia allow confession of judgment provisions, but require service of notice on the debtor of the confessed judgment and allow a debtor to reopen the judgment. The result is the same as if the Landlord had simply filed a normal lawsuit, instead of confessing judgment.
An example is below.
Relief Period. Landlord agrees to defer from the exercise of its remedies in respect of the “Relief Arrears” (as defined in Paragraph X) during the period (the “Relief Period”) beginning on March 1, 2016 (the “Effective Date”) and ending on the date which is the earlier of (a) the date of termination described in Paragraph Y of this Amendment, or (b) November 30, 2018. Tenant acknowledges that despite Landlord’s forbearance, the full amount of Minimum Rent continues to accrue and be due in accordance with the Lease and this Amendment.
Confession of Judgment. Tenant hereby authorizes, irrevocably, any attorney of any court of record to appear for the Tenant in such court, in term time or vacation, at any time after default in the payment of any payment required by Tenant, or Tenant’s failure to vacate after expiration of the Term, pursuant to the Lease, and confess judgment without process in favor of the Landlord (including any successor thereto) for such amount as may appear to be unpaid thereon, together with reasonable costs of collection, including reasonable attorneys’ fees, and/or for the recovery by Landlord of possession of the Premises, and to waive and release all errors which may intervene in any such proceedings, and consent to immediate execution upon such judgment, hereby ratifying and confirming all that said attorney may do by virtue hereof.