Demand Letter - Payment (New York)

DEMAND FOR PAYMENT — STATE OF NEW YORK

New York-specific payment demand letter. Incorporates CPLR statutory interest, New York usury limits, NY U.C.C. Article 2 acceptance rules, and NY Lien Law trust-fund principles where applicable.

NEW YORK PRACTICE NOTES BEFORE SENDING

☐ Statute of Limitations. Written contract and account stated claims accrue a six (6) year limitations period under CPLR § 213(2). Sale-of-goods claims under N.Y. U.C.C. § 2-725 carry a four (4) year limitations period, which the parties may by original agreement reduce to not less than one year (but may not extend).

☐ Tolling by Acknowledgment. Under N.Y. Gen. Oblig. Law § 17-101, a written signed acknowledgment of the debt restarts the limitations clock. Drafting tip: structure the demand so that any response constitutes such an acknowledgment.

☐ Usury Ceilings. Contractual interest above 16% per annum is civilly usurious and above 25% is criminally usurious under N.Y. Gen. Oblig. Law § 5-501 and N.Y. Penal Law § 190.40. Corporations generally cannot assert civil usury defense under Gen. Oblig. Law § 5-521, but the criminal ceiling still applies. Select a rate at or below 16% to avoid forfeiture of principal and interest under Seidel v. 18 E. 17th St. Owners, 79 N.Y.2d 735 (1992).

☐ Prejudgment Interest. Under CPLR §§ 5001 and 5004, New York awards prejudgment interest at the statutory rate of nine percent (9%) per annum on contract damages, computed from "the earliest ascertainable date the cause of action existed."

☐ Judiciary Law § 487. Be aware of triple damages for attorney deceit in connection with judicial proceedings.

☐ FDCPA Overlay. If the debt is a consumer obligation and Sender is acting as a "debt collector," comply with 15 U.S.C. § 1692 et seq. AND New York's 23 NYCRR Part 1 (DFS Debt Collection Rules).

1. HEADER

LAW OFFICES OF [________________________________]
[________________________________] (NY Address)
Tel: [________________________________] | Fax: [________________________________]
E-mail: [________________________________]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
AND VIA E-MAIL

Date: [__/__/____]

To:
[________________________________] (Debtor Legal Name)
Attn: [________________________________] (Authorized Representative)
[________________________________] (Street Address)
[________________________________] (City, State, ZIP)
E-mail: [________________________________]

Re: Formal Demand for Payment — [________________________________]
Outstanding Principal: $[____________]
Our File No.: [________________________________]

2. RECITALS

A. On [__/__/____], Creditor [________________________________] ("Creditor"), a New York [corporation/LLC/partnership/sole proprietor], and Debtor [________________________________] ("Debtor") entered into that certain [________________________________] (the "Agreement").

B. Under Section [____] of the Agreement, Debtor is obligated to pay Creditor the sum of $[____________] for [goods delivered / services rendered / loan advanced] on or before [__/__/____] (the "Original Due Date").

C. As of the date of this letter, the following amounts remain outstanding and past due:

D. Debtor has failed, neglected, and refused to pay said amounts notwithstanding due demand.

3. LEGAL BASIS UNDER NEW YORK LAW

3.1 Breach of Contract. Under Harris v. Seward Park Hous. Corp., 79 A.D.3d 425 (1st Dep't 2010), the elements of a New York breach-of-contract claim are: (i) formation of a valid contract, (ii) performance by Creditor, (iii) breach by Debtor, and (iv) resulting damages. All elements are satisfied here.

3.2 Account Stated. If applicable, Creditor rendered and Debtor received and retained (without timely objection within a reasonable time) statements of account. Under Jim-Mar Corp. v. Aquatic Constr., Ltd., 195 A.D.2d 868 (3d Dep't 1993), this creates an implied promise to pay the stated sum.

3.3 Goods Sold and Delivered (N.Y. U.C.C. Art. 2). If the transaction involves a sale of goods, Debtor accepted the goods under N.Y. U.C.C. § 2-606 and is obligated to pay the contract price pursuant to N.Y. U.C.C. § 2-607(1). Creditor's remedies include recovery of the price under § 2-709 and incidental damages under § 2-710.

3.4 N.Y. Lien Law Article 3-A (Trust Funds). If the underlying obligation arises from an improvement to real property in New York, funds received by Debtor in connection with such improvement constitute trust assets under Lien Law § 70, and diversion exposes corporate officers and directors to personal liability under Caristo Constr. Corp. v. Diners Fin. Corp., 21 N.Y.2d 507 (1968).

3.5 Quantum Meruit / Unjust Enrichment (Alternative). Pleaded in the alternative, Creditor is entitled to the reasonable value of goods and services conferred upon Debtor.

4. DEMAND FOR PAYMENT

4.1 Principal. Pursuant to the Agreement and New York law, Creditor hereby formally demands payment of the Outstanding Principal of $[____________].

4.2 Contractual Interest. Pursuant to Section [____] of the Agreement, contractual interest has accrued at [________]% per annum (which rate does NOT exceed the 16% civil usury ceiling under Gen. Oblig. Law § 5-501 or the 25% criminal usury ceiling under Penal Law § 190.40). Accrued contractual interest through [__/__/____] totals $[____________].

4.3 Statutory Prejudgment Interest. Upon commencement of litigation, Creditor will seek prejudgment interest at the statutory rate of nine percent (9%) per annum under CPLR § 5004, calculated from the earliest ascertainable date the cause of action existed pursuant to CPLR § 5001.

4.4 Late Fees and Costs. Pursuant to Section [____] of the Agreement, late fees of $[____] and collection costs (including reasonable attorneys' fees where authorized) shall also be recoverable.

4.5 Total Amount Demanded: $[____________] through [__/__/____], with interest continuing to accrue.

4.6 Payment Instructions. Payment shall be made by wire transfer of immediately available funds within ten (10) calendar days of Debtor's receipt of this letter to:

Bank: [________________________________]
ABA/Routing: [________________________________]
Account No.: [________________________________]
Account Name: [________________________________]
Reference: [________________________________]

4.7 No Accord and Satisfaction. Pursuant to N.Y. U.C.C. § 1-308 (formerly § 1-207), Creditor reserves all rights and does not accept any partial, conditional, or "payment in full" tender as satisfaction of the Outstanding Principal absent an express written release signed by an authorized officer of Creditor.

5. CONSEQUENCES OF NON-PAYMENT

5.1 Litigation. If full payment is not received by [__/__/____] (the "Cure Deadline"), Creditor is prepared to commence an action in the Supreme Court of the State of New York, County of [________________________________], or, where the amount in controversy meets the threshold, in the Commercial Division pursuant to 22 NYCRR § 202.70.

5.2 Remedies Sought. Creditor will seek:
- Judgment for the Outstanding Principal plus all contractual interest;
- Prejudgment interest under CPLR §§ 5001, 5004 (9%);
- Post-judgment interest under CPLR § 5003;
- Attachment under CPLR Art. 62 where Debtor is a non-domiciliary or has assigned/secreted assets;
- Reasonable attorneys' fees if contractually authorized; and
- Costs and disbursements under CPLR Art. 82.

5.3 Confession of Judgment. [Optional – strike if not applicable.] Pursuant to the attached Affidavit of Confession of Judgment executed under CPLR § 3218 (as amended by 2019 N.Y. Laws ch. 576), Creditor reserves the right to file the confession in New York only. [Note: Since 2019, CPLR § 3218 no longer authorizes filing of confessions against non-NY residents.]

5.4 Credit Reporting and Information Sharing. Where permitted by the Fair Credit Reporting Act and New York's SHIELD Act privacy framework, Creditor may report the delinquency to consumer reporting agencies.

6. TOLLING OF LIMITATIONS

6.1 Debtor is hereby advised that CPLR § 213(2) establishes a six-year statute of limitations for actions on a contractual obligation or liability, and N.Y. U.C.C. § 2-725 establishes a four-year limitations period for sale-of-goods claims. Nothing in this letter waives or extends any applicable limitations period.

6.2 Any written acknowledgment of the debt by Debtor in response to this letter may constitute a new promise to pay under N.Y. Gen. Oblig. Law § 17-101, thereby recommencing the running of the limitations period.

7. PRESERVATION OF EVIDENCE

Debtor is hereby placed on formal notice of a litigation hold and must preserve all documents, ESI, accounting records, bank statements, email communications, and text messages relating to the Agreement and this debt, consistent with VOOM HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A.D.3d 33 (1st Dep't 2012). Spoliation sanctions under CPLR § 3126 may be sought.

8. RESERVATION OF RIGHTS

8.1 This letter is sent without prejudice to any right, claim, or defense of Creditor, all of which are expressly reserved.

8.2 This letter is a confidential communication made in anticipation of litigation and is not admissible under CPLR § 4547 except as otherwise permitted.

8.3 Nothing herein constitutes a waiver of Creditor's right to declare the entire unpaid balance immediately due and payable pursuant to any acceleration clause in the Agreement.

9. GOVERNING LAW AND FORUM

9.1 The Agreement and any dispute arising under it are governed by the laws of the State of New York, pursuant to N.Y. Gen. Oblig. Law § 5-1401.

9.2 Exclusive jurisdiction and venue are reserved for the state and federal courts located in [________________________________] County, New York, pursuant to N.Y. Gen. Oblig. Law § 5-1402 where applicable.

10. ATTORNEY DESIGNATION

All further communications concerning this matter shall be directed exclusively to undersigned counsel:

___________________________________
[________________________________], Esq.
[________________________________] (Firm)
[________________________________] (NY Address)
NY Attorney Registration No.: [________________________________]
Tel: [________________________________]
E-mail: [________________________________]

Counsel for Creditor [________________________________]

Date: [__/__/____]

Enclosures:
- Exhibit 1: Copy of Agreement
- Exhibit 2: Invoices and Statements of Account
- Exhibit 3: Prior Correspondence and Demands
- Exhibit 4: Affidavit of Account (if applicable)

Sources and References

• N.Y. CPLR § 213 — https://www.nysenate.gov/legislation/laws/CVP/213
• N.Y. CPLR §§ 5001, 5004 (Prejudgment Interest)
• N.Y. U.C.C. § 2-725 (Four-Year SOL for Goods)
• N.Y. Gen. Oblig. Law § 5-501 (Usury)
• N.Y. Gen. Oblig. Law § 17-101 (Written Acknowledgment)
• N.Y. Lien Law Art. 3-A (Trust Funds)
• Harris v. Seward Park Hous. Corp., 79 A.D.3d 425 (1st Dep't 2010)
• 22 NYCRR § 202.70 (Commercial Division)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. It must be reviewed and customized by a New York-licensed attorney before use.