Last Updated April 12, 2024

A Demand Letter is a document typically used as a final reminder to resolve an issue (such as requesting a payment for an unpaid debt) before legal action is taken.

A Demand Letter is a useful tool for settling a dispute without costing you the time and money associated with a legal battle. As a final warning letter, it communicates to the receiving party how serious you are about resolving the issue (if they fail to comply, they'll face legal repercussions).

Most importantly, if you do end up in court, a Demand Letter can be used as evidence to prove you did everything in your power to come to a reasonable solution to your dispute before resorting to legal action.

A Demand Letter is also known as a:

• Debt Collection Letter
• Letter of Demand (LOD)
• Request Letter

LawDepot's Demand Letter template can be customised for multiple scenarios:

• Use a Demand Letter for Payment, also known as a debt collection letter, when you need to collect a debt that is owed to you. For example, if you are a landlord and your tenant has failed to pay their rent, you can use the debt collection letter as a final warning to the tenant before taking legal action.
• Use a Demand Letter for an Action Required when someone has failed to uphold their end of an agreement. This is a broad Demand Letter and can be used in several different situations. For instance, you can use this letter if you paid for a service that was never completed (e.g. you hired someone to paint your fence) or if you entered a contract that the other party breached (e.g. someone failed to return rented equipment).
• Use a Demand Letter for an Insurance Claim when you are involved in an incident (especially if you suffered a personal injury) and need to be paid by an insurance company for costs and damages.
• Use a Demand Letter for a Bounced Cheque when you receive a cheque that doesn't clear from someone who owes you a debt due to insufficient funds or a closed account. You can use this letter to demand a payment in another form (such as cash or money order) before moving forward with legal action against the offending party.
• Use a Demand Letter for a Stopped Payment when you need to collect a debt that is owed to you but the offending party had their bank withhold funds from being processed. You can use this letter to inquire about a good faith dispute (i.e. whether or not the offending party has good reason to argue the amount owed) and request a payment before proceeding with legal action.

To write a Demand Letter, simply answer the questions in LawDepot's Demand Letter template to suit your needs. The information you'll need to have is:

• The name, address, and contact information of the aggravated party (i.e. the person who requires an action to be completed or a debt to be paid)
• The name, address, and contact information of the offending party (i.e. the person who has not fulfilled the agreed upon obligations)
• A description of the demand (i.e. details about the debt owed or the action required, including any relevant documents or evidence)

The time it takes to reach a settlement after sending a Demand Letter will vary based on your situation and the other party's response rate.

Typically, it's considered appropriate to give the other party three to five business days to comply with your demand. If you are filing a claim with an insurance company, extra time may be needed for adjusters to investigate, evaluate, and settle the insurance claim.

A settlement is a way of resolving a dispute without resorting to legal proceedings, while continuing to accommodate both parties. In some cases, a settlement may involve one party accepting less than what they are legally entitled to in order to end the dispute quickly and recover at least a portion of what was owed. You may choose to accept a lesser amount because you know the debtor is unable to repay the entire debt—regardless of whether or not you win a trial at court—and you wish to get as much of your money back as possible. If you choose to accept a smaller amount, you can use a Release of Liability to document the settlement.

Related Documents:

• Cease and Desist Letter: A document that threatens legal action if a party does not refrain from a certain action (e.g. copyright infringement)
• Promissory Note: An enforceable document in which a borrower agrees to pay back a loan within a certain time frame
• Release of Liability: A legally-binding document in which one party agrees not to pursue legal action against another party in an agreement

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