On August 30, 2019, Governor Cuomo signed legislation that amended CPLR § 3218 to prevent creditors from filing confessions of judgment in New York against out-of-state debtors.  Under the prior version of the statute, a creditor could enter a confession of judgment against a debtor based upon an affidavit signed by the debtor “stating the sum for which judgment may be entered, authorizing the entry of judgment, and stating the county where the defendant resides or if he is a non-resident, the county in which entry is authorized.”  In other words, a creditor could file a confession in New York against a non-resident debtor and begin seizing on the debtor’s assets, regardless of the debtor’s actual connection to the state.

Under the amended version, a confession of judgment must be supported by an affidavit “stating the sum for which judgment may be entered, authorizing the entry of judgment, and stating the county where the defendant resides. . . . For purposes of this section, a non-natural person resides in any county where it has a place of business.”  In short, confessions of judgment against non-resident individuals or entities with no place of business within the state are now prohibited.  The amended statute includes a carve-out for government agencies:  “Notwithstanding any other provision of law to the contrary, a government agency engaged in the enforcement of civil or criminal law against a person or a non-natural person may file an affidavit in any county within the state.”  Finally, this new law takes effect immediately and “appl[ies] to judgments by confession entered upon affidavits filed on or after such effective date,” so unfiled confessions based on affidavits signed before August 30 are now prohibited.

For a copy of the updated statute, please contact Michael O’Donnell at modonnell@riker.com or Dylan Goetsch at dgoetsch@riker.com.