Ohio Cognovit Enforceability

[Mehgan Moore]

Trying to purchase a small out of state MHP and getting financing from a small local bank, in Ohio.    The bank is has come back with this info; I am wondering if there is any legal stance I could have with pushing back on the bank and not agreeing to this.  I may just need to find a new lender.

"The need for the borrower to sign in Ohio solely concerns cognovit enforceability. An Ohio court has the power to enforce the cognovit terms of a note only where one of the note’s makers lives or signed it.

The State of Ohio allows a cognovit language on a commercial promissory note: I have copied the language from the note as well for your review.

CONFESSION OF JUDGMENT: If I default, I authorize an attorney to appear in a court of record and confess judgment against me in favor of you. The confession of judgment may be without process and for any amount due on the Loan including collection costs and reasonable attorneys’ fees. This is in addition to other remedies.

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FOR THIS NOTICE “YOU” MEANS THE EACH BORROWER.

WARNING: BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAULURE ON HIS PART TO COMPLY WITH THE AGREEMENT OR ANY OTHER CAUSE.

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The banks in Ohio use this provision in the note to begin legal action. Sutton Bank’s policy is to require all loans be executed in the State of Ohio to protect the cognovit feature on the note. "