Last updated June 13, 2022
Alternate Names:
A Demand Letter is also known as:
- Payment Demand Letter
- Letter of Demand
- LOD
What is a Demand Letter?
A Demand Letter is used by one party to request an action or payment from another party. It is a way for the parties to reach a peaceful resolution before taking the next step and settling the issue in court.
What is included in a Demand Letter?
A Letter of Demand outlines the reason or situation for sending the letter, including why the demander is making the claim, how the recipient can respond, and when they must respond. It also includes a warning of further legal action if the request is not carried out by the deadline.
While you don't have to provide documentation that supports your request, it helps to increase the likelihood of the recipient performing the action or repaying the debt outlined in the letter.
What can I use a Demand Letter for?
You can use LawDepot's Demand Letter for:
- Debts: A creditor can request outstanding payment from a debtor.
- Action: A demander can request that a recipient performs an action.
- Insurance Claim: An injured party can request that the insurance company provide a final settlement.
- NSF Cheque: If a debtor's cheque bounces (insufficient funds), a creditor can request payment.
- Stop Payment: When a debtor makes a payment to a creditor, but later cancels the cheque with the bank, a creditor can use this LOD to secure payment for the debt and encourage the debtor to resolve any dispute.
How do I write a Demand Letter?
You should stick to the facts when writing a Demand Letter. By nature, an LOD can be threatening, which is why it's important to remain clear and polite. If you're using an LOD for any of the above scenarios, include the following elements in your letter:
- What you are demanding and why you're sending the letter (e.g. The borrower defaulted on a payment of $1,000.00 due on the first of the month as per the contract, violating our written agreement)
- How to perform the action (e.g. Deliver the payment to the lender's address)
- Instructions for how and when to respond (e.g. In person or by registered mail before the first of August)
- The type of documentation attached to the LOD, such as an invoice or contract, to support the assertions (e.g. A copy of the original Loan Agreement dated June 1)
- Settlement terms or whether you will accept a lesser payment (e.g. The creditor will accept a lesser payment of $700.00 by August 1)
- Consequences for not following instructions laid out in the Demand Letter (e.g. If you fail to respond to this letter, I will commence legal action and use this letter as proof of your failure to resolve this matter)
How do I deliver a Demand Letter?
You can deliver a Demand Letter to the receiver yourself or enlist a lawyer, friend, or family member to deliver it on your behalf. You should always make a copy of the letter before delivering it. To ensure the letter is received if you cannot hand-deliver it, consider sending it by registered mail.
Why should I use a Demand Letter?
A Letter of Demand is used to request action, payment, or another legal obligation. It gives the recipient a chance to fulfill the request before being taken to court over the matter. Sending a Demand Letter is an attempt to express goodwill and reach a resolution as soon as possible to avoid expensive and time-consuming litigation.
What happens after I send a Demand Letter?
After you deliver the LOD to the recipient, you may or may not receive a response by the deadline. The recipient might carry out your demands and settle the claim, negotiate the demands, or ignore your letter entirely. Your next step will depend on the response you receive.
You might consider following up to ensure they have received your LOD, or pursue legal action and file a complaint. If you are unsure how to proceed, consult with an attorney about your next course of action.
Frequently Asked Questions:
Demand Letter FAQ 