5 ms·

This is kind of the equivalent of waiving your rights. For example, you've probably heard of contracts where you sign away your right to sue someone in civil c

This is kind of the equivalent of waiving your rights. For example, you've probably heard of contracts where you sign away your right to sue someone in civil court and agree to go to arbitration instead. That's signing away your rights. Similar story here. You are agreeing in advance, to waive your right to defend yourself in court. Since these are civil cases, the judgment is always in favor of the company filing the suit because you basically agreed to let them win if they ever decided to make such a filing. In civil cases, there isn't the same burden of proof as a criminal trial. It's more of a "which side does the scale tip to with the information at hand" thing. And since the defendant agreed to not defend themselves and conceded guilt in advance, the court always sides with the accuser. Didn't read this particular article but read a different one earlier this week on this topic so not sure if it's covered here but it's a really old law/tool and has been outlawed almost everywhere. I believe it's outlawed in the entire country for personal dealings because of laws regarding due process and consumer protection. However, it is still allowed in a few states for business dealings which is why these loan places use this legal process exclusively for business loans. They don't have the same level of protection that an individual has, even though a lot of these businesses are run by 2-3 people who put up their own assets against the loan.

jandrese 8y ago
That seems to be putting a lot of faith in the landlord not to screw you over. It's basically Russian Roulette. But if it's a seller's market what are you going to do? Live under a bridge? Live in the sewer? Live in New Jersey?
- turc1656 8y ago
  Totally agree. You have no control once you sign that paper if the other side will be honest or honorable in any way. And since there is no incentive for them to not screw you, and actual incentive to screw you (since they get a higher return over a shorter time) that should be the expectation. I think the real problem here is that people either don't read or don't understand what they sign. I mean you would think that a document labeled confession of judgment might alarm people, but apparently not. I recently moved and during the mortgage process for our new place I raised a number of issues regarding the accuracy of the information that was filled in. Nothing fraudulent or terrible on their part - just errors. When I raised these issues (including a math error on the loan disclosure and the omission of a loan credit I was promised) so they could correct and reissue before I signed them, the loan officer said, "You really read through these documents, huh?" and I was like "Well yeah. Who the hell wouldn't read through critical documents like this that put them on the hook for hundreds of thousands of dollars?" and she responded, "Basically everyone. They all pretty much just sign without reading. That's why we had to have that recorded phone call for documentation on our side to prove you actually understood at least the basics of what you signing." I mean I know almost no one reads EULAs, but mortgages?! That's just depressing.
  - marcosdumay 8y ago
    > I think the real problem here is that people either don't read or don't understand what they sign. If you are looking for real problems, that's way on the back of the line. The top one I can find is, how can somebody simply sign away their right to access the Judiciary system? How can those huge contracts with incomprehensible be binding for normal people? How come people have no alternative to signing them?
    - mjevans 8y ago
      I believe a solution is going to start by, principally, putting a lot of lawyers out of work (so don't expect it to happen without a law called for by the people). That solution is anything equivalent to a 'standard library' of contracts in which the consumer and the party they are interacting with agree to a single page configuration that defines the standard variable arguments. It would also be much nicer to make a 'payment schedule' table standard for nearly all non-lump-sum contracts.
    - turc1656 8y ago
      We're not talking about normal people - we're talking about businesses. It's been outlawed for regular people across the board. But because they can still apply to businesses in a few states, we end up with this. Businesses are supposed to be a bit more prepared and knowledgeable when it comes to legal matters so it's expected that the playing field is a bit more fair and they will understand what they are signing and be able to negotiable a contract better than a regular person who can't comprehend all the legalese. And technically, they do have an alternative - refuse to sign them and don't do business with them. No one is saying these businesses are required to take these loans on these terms. The owners simply don't understand what they are signing. Anyone who actually is a good risk for a loan and refuses to sign these documents shouldn't really have a problem getting someone to agree to omit that as part of the paperwork. I really think this is at least partially a matter of due diligence on the part of the business seeking the loan. If I ran a small company and found out that an officer/exec authorized to do business under the company name took out a loan and signed one of these confessions, there's a pretty decent chance they would be fired regardless of any pending legal action. If legal action was indeed filed, they would definitely be fired for a lack of due diligence on the documents that resulted in signing away company rights.

jandrese 8y ago

That seems to be putting a lot of faith in the landlord not to screw you over. It's basically Russian Roulette. But if it's a seller's market what are you going to do? Live under a bridge? Live in the sewer? Live in New Jersey?

turc1656 8y ago
Totally agree. You have no control once you sign that paper if the other side will be honest or honorable in any way. And since there is no incentive for them to not screw you, and actual incentive to screw you (since they get a higher return over a shorter time) that should be the expectation. I think the real problem here is that people either don't read or don't understand what they sign. I mean you would think that a document labeled confession of judgment might alarm people, but apparently not. I recently moved and during the mortgage process for our new place I raised a number of issues regarding the accuracy of the information that was filled in. Nothing fraudulent or terrible on their part - just errors. When I raised these issues (including a math error on the loan disclosure and the omission of a loan credit I was promised) so they could correct and reissue before I signed them, the loan officer said, "You really read through these documents, huh?" and I was like "Well yeah. Who the hell wouldn't read through critical documents like this that put them on the hook for hundreds of thousands of dollars?" and she responded, "Basically everyone. They all pretty much just sign without reading. That's why we had to have that recorded phone call for documentation on our side to prove you actually understood at least the basics of what you signing." I mean I know almost no one reads EULAs, but mortgages?! That's just depressing.
- marcosdumay 8y ago
  > I think the real problem here is that people either don't read or don't understand what they sign. If you are looking for real problems, that's way on the back of the line. The top one I can find is, how can somebody simply sign away their right to access the Judiciary system? How can those huge contracts with incomprehensible be binding for normal people? How come people have no alternative to signing them?
  - mjevans 8y ago
    I believe a solution is going to start by, principally, putting a lot of lawyers out of work (so don't expect it to happen without a law called for by the people). That solution is anything equivalent to a 'standard library' of contracts in which the consumer and the party they are interacting with agree to a single page configuration that defines the standard variable arguments. It would also be much nicer to make a 'payment schedule' table standard for nearly all non-lump-sum contracts.
  - turc1656 8y ago
    We're not talking about normal people - we're talking about businesses. It's been outlawed for regular people across the board. But because they can still apply to businesses in a few states, we end up with this. Businesses are supposed to be a bit more prepared and knowledgeable when it comes to legal matters so it's expected that the playing field is a bit more fair and they will understand what they are signing and be able to negotiable a contract better than a regular person who can't comprehend all the legalese. And technically, they do have an alternative - refuse to sign them and don't do business with them. No one is saying these businesses are required to take these loans on these terms. The owners simply don't understand what they are signing. Anyone who actually is a good risk for a loan and refuses to sign these documents shouldn't really have a problem getting someone to agree to omit that as part of the paperwork. I really think this is at least partially a matter of due diligence on the part of the business seeking the loan. If I ran a small company and found out that an officer/exec authorized to do business under the company name took out a loan and signed one of these confessions, there's a pretty decent chance they would be fired regardless of any pending legal action. If legal action was indeed filed, they would definitely be fired for a lack of due diligence on the documents that resulted in signing away company rights.