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 Screen. If the underlying obligation is a loan or forbearance, the general civil maximum is 16% under N.Y. Gen. Oblig. Law § 5-501 and Banking Law § 14-a, and knowingly charging more than 25% is criminal usury under Penal Law § 190.40. Corporate and LLC borrowers generally cannot assert civil usury under GOL § 5-521(1) and Limited Liability Company Law § 1104(a), but may assert criminal usury. GOL § 5-501(6)(a) generally removes civil limits at $250,000, subject to its one- or two-family residential exception, and § 5-501(6)(b) removes all usury limits at $2.5 million. Review the borrower, principal, collateral, and all interest-equivalent charges before stating a lawful rate; Seidel v. 18 E. 17th St. Owners, 79 N.Y.2d 735 (1992), addresses the consequences of civil usury.

☐ Prejudgment Interest. CPLR § 5001 provides interest on qualifying contract damages from the earliest ascertainable date the cause of action existed. CPLR § 5004 generally sets 9% per year, but sets 2% for an action arising from consumer debt with a natural-person defendant on qualifying judgments or accrued claims. Classify the debt and defendant before selecting a rate.

☐ 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. Counsel has determined that this rate and all interest-equivalent charges comply with the usury rules that apply after considering GOL §§ 5-501 and 5-521, Limited Liability Company Law § 1104, Banking Law § 14-a, Penal Law § 190.40, the principal amount, the borrower's legal form, and the nature of the obligation. Accrued contractual interest through [__/__/____] totals $[____________].

4.3 Statutory Prejudgment Interest. Upon commencement of litigation, Creditor will seek interest on qualifying contract damages under CPLR §§ 5001 and 5004 from the earliest ascertainable date the cause of action existed. Applicable rate: ☐ 9% general rate ☐ 2% for a qualifying consumer-debt action against a natural person ☐ other statutory rate: [____]%.

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 Conditional Payment. Creditor requests advance written discussion of any proposed partial payment or settlement. The legal effect of a conditional tender depends on the actual facts and governing law; this letter does not determine whether the claim has been satisfied.

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 and 5004 at the applicable rate selected above;
• 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 This letter does not independently select governing law. Apply New York law if the Agreement contains an enforceable choice of New York law; N.Y. Gen. Oblig. Law § 5-1401(1) supplies a no-reasonable-relation rule only for qualifying transactions of at least $250,000, subject to its stated exclusions.

9.2 Any action may be filed in [court and county or district selected by the Agreement], if jurisdiction and venue are proper. N.Y. Gen. Oblig. Law § 5-1402(1) permits a New York court action against a foreign corporation, nonresident, or foreign state only when the contract chooses New York law under § 5-1401, covers a transaction of at least $1 million, and includes the foreign corporation’s or nonresident’s agreement to submit to New York court jurisdiction. The statute alone does not make New York the exclusive forum or select a federal court.

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 and principal-amount exceptions) — https://legislation.nysenate.gov/pdf/laws/GOB5-501
• N.Y. Gen. Oblig. Law § 5-521 (Corporate-borrower defenses) — https://legislation.nysenate.gov/pdf/laws/GOB5-521
• N.Y. Limited Liability Company Law § 1104 (LLC-borrower defenses) — https://legislation.nysenate.gov/pdf/laws/LLC1104
• N.Y. Banking Law § 14-a — https://legislation.nysenate.gov/pdf/laws/BNK14-A
• N.Y. Penal Law § 190.40 — https://legislation.nysenate.gov/pdf/laws/PEN190.40
• 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.