So what's the deal with Cognovit notes in Ohio?

Recently we filed a Cognovit note on behalf of our client in Cuyahoga County for $30,000. We were able to get an immediate judgement for our client without having to go through the standard litigation process. Our client was happy, and although we do enjoy our time in court, so were we.


The Supreme Court of Ohio recently reaffirmed the enforceability of cognovit notes in Ohio. It's a hot topic, as many have their due process qualms with it. Let's delve in.


For client's like our lender above and commercial creditors it's great news! They typically use cognovits promissory notes to secure repayment obligations. In Sutton Bank v. Progressive Polymers, LLC et al., 2020 Ohio 5101, the court reversed a decision from the Eleventh District Court of Appeals and held that a cognovit note provision was allowed when the creditor included the clear intent of the parties and used the required statutory warning language.


So why the controversy?


To clarify, a promissory note is a legal instrument that proves a debt owed by a borrower to a lender, whereby the parties are identified and the repayment terms for the debt is set out. A cognovit promissory note (or a cognovit note) takes things to the next level by bringing in a confession of judgment. Specifically, the “warrant of attorney” clause, which allows one party to enter judgment against the other. Meaning this allows a cognovit note to be used as a confession of judgment. While there are strict statutory safeguards in place, cognovit notes have been abused in other states, which limits their widespread use.


By filing a traditional promissory note, one must sue and allow the debtor to contest the debt. But, by filing a cognovit note you can get around this lengthy process. Yes, including the expenses of a litigation and a trial. In addition, the cognovit note can obtain an immediate judgment from a court against a defaulted borrower and not provide an opportunity to contest the judgment. Hence, our client above being happy.


But with great power, comes great responsibility. Due to the hefty punch of the cognovit note, Ohio law only allows them to be used in the commercial context. Cognovit notes are indeed a valuable legal tool of enforcement for lenders in commercial matters.


Have you provided a product or service to someone that remains unpaid? Do you have accounts receivable that you are not collecting? Reach out to us and see if we can help you. *Spoiler alert*, we can!


Want to read the laws we're talking about? Ohio Code provided below.

Ohio Revised Code § 2323.12 regarding judgments by confession:


A person indebted, or against whom a cause of action exists, may personally appear in a court of competent jurisdiction, and, with the assent of the creditor, or person having such cause of action, confess judgment; whereupon judgment shall be entered accordingly. The debt or cause of action shall be briefly stated in the judgment, or in a writing to be filed as pleadings in other actions.

Such judgment shall authorize the same proceedings for its enforcement as judgments rendered in actions regularly brought and prosecuted. The confession shall operate as a release of errors.

Ohio Revised Code § 2323.13 warrant of attorney must appear in the contract:

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, failure on his part to comply with the agreement, or any other cause.

Ohio Revised Code § 2323.12(D).



This blog is not a solicitation for business and it is not intended to constitute legal advice on specific matters, create an attorney-client relationship or be legally binding in any way.