Legal Question in Real Estate Law in Pennsylvania

Re: Judgement Note

You asked about accepting a judgment note in lieu of a debt.

Simple answer is no. Better answer is to seek representation.

What makes you think that if this builder's cash flow is this low now, when we are headed into the slow season in a very slow market that his cash flow will ever get any better?

The note is legal but is probably not worth the paper it is written on. Essentially he is asking you for a no interest loan with no security. You are not a bank. Why can't he go to a bank to get a loan until his cash flow improves? Guess?

What happens when his company goes bankrupt? Don't know? You get in line behind all those people with secured debts. If there's any money left over you may see pennies on the dollar, but I doubt you will see anything.

While the note is legal what he is asking you to do is illegal and should be reported to the bank. Depending on your mortgage, the money is actually not yours but is rather the banks pending completion of the work.

When this builder stiffs you and goes bankrupt do you want to be left paying on that loan. Your best bet is to let the bank intervene or hire an attorney to get the funds.

Regards,

Roger

(Ask the builder if he'll give you a security interest on his truck, equipment, home, etc.? Yeah, didn't think so.)

Re: Judgement Note

Some jurisdictions allow a confession of judgment. If so the statutory requirements must be strictly complied with. Better, perhaps, he should give you a note for the money he owes you at a reasonable rate of interest, with a payment schedule, an acelleration upon default clause, and an attorneys fees provision that allows you to collect attorneys fees if he defaults and you have to collect on the note.