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Simple English definitions for legal terms
cognovit note
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A quick definition of cognovit note:
A cognovit note is a type of promissory note that includes a clause called a cognovit clause. This clause allows the lender to obtain a judgment against the borrower without going through a lengthy legal process if the borrower defaults on the loan. In simpler terms, it means that the borrower agrees in advance to allow the lender to obtain a court judgment against them if they don't pay back the loan as agreed.
A more thorough explanation:
A cognovit note is a type of promissory note that includes a clause called a cognovit clause. This clause allows the lender to obtain a judgment against the borrower without going through the usual legal process.
For example, let's say John borrows $10,000 from Jane and signs a cognovit note. The note includes a clause that says John agrees to allow Jane to obtain a judgment against him if he fails to repay the loan. If John defaults on the loan, Jane can take the note to court and obtain a judgment against him without having to go through a lengthy legal process.
Cognovit notes are controversial because they give lenders a lot of power over borrowers. Some states have even banned the use of cognovit notes because they are seen as unfair to borrowers.