Associations Cannot Enter A Confessed Judgment Against Unit Owners…
… no matter how much they want to. Many planned community and condominium declarations have a confession of judgment paragraph. These are usually towards the back and written in all caps (just like my father-in-law sending an email). They seem to permit associations to bypass all of the demand letters and District Justice courtrooms, and just enter a judgment against the Unit Owner. But what looks good on paper doesn’t always work in practice. Pennsylvania Courts just re-affirmed the long-time rule that Associations cannot confess judgment against Unit Owners.
Residential condominium or homeowner association assessments are a “consumer credit transaction.” This means that the assessments are used to pay for goods or services that are primarily for personal family or household use. Pennsylvania law says that a person cannot enter a confessed judgment against another for a debt that comes from a consumer credit transaction. In the case that I read, the Association and the Unit Owner entered into a payment plan. When the Unit Owner stopped making payments, the Association entered a confessed judgment against him. The Court struck the confessed judgment on its own – it did not even wait for the Unit Owner to make a request.
There are three lessons to be learned from this case. First, condominium and homeowners’ association assessments are consumer transactions. Second, as consumers, Unit Owners are protected by lots of consumer protection laws. These include a prohibition against confessed judgments. It also includes laws like the Fair Debt Collection Act and the Unfair Trade Practices and Consumer Protection Law. Third, there is no use for an Association to go through the time and expense of entering a confessed judgment when a judge can strike it of their own accord. Collections can be a frustrating process, but there is no shortcut to following all of the consumer protection requirements.