Writing a demand letter is like walking on a tightrope; lean too far to either side and you fall over. Too lenient and your demand letter is ineffective. Too harsh and you could be committing extortion. There’s an art to it that contractors must be well versed in to receive payment.
Below, we will be discussing the do’s and don’ts of drafting a demand letter. While a demand letter can be an effective tool for avoiding litigation, it can easily be a detriment to your cause if drafted poorly. To ensure that your demand letters are concise, professional, and error-free, partner with the experienced team of attorneys at Cotney Construction Law, a Greensboro construction law firm.
Do: Detail the Dispute
Your demand letter should be short and to the point. Your goal is to present an argument that the other entity can’t argue against. The letter should not only state the exact amount that you are owed but also break down these expenses and provide the dates on which they were incurred. Include the contract and any pertinent invoices with your demand letter. Be sure to keep copies of your letter in case you have to present your case in court. Remember, this letter is representing you; a judge may one day read it even if an owner doesn’t.
Don’t: Take Things Personally
There are numerous reasons why an owner may be unable to pay you, and not all of them are malicious. An owner may have been unable to keep up with the cost of an expanding scope of work. They may have lost their primary source of funds. Even personal issues like a divorce can create complications that lead to nonpayment.
You must remain calm, even in instances where the owner is withholding payment for no reason aside from greed. As we will see below, heated emotions can lead to an ineffective demand letter and a criminal offense charge if you’re not careful. For legal counsel that can be objective and professional in any situation, consult with a Greensboro construction lawyer from Cotney Construction Law.
Do: Convey a Course of Action
Remember, your goal is to receive payment in a timely manner and avoid litigation. While their actions or lack thereof may speak to the contrary, no owner wants to have to defend themselves before a judge. They want an out, and may still be willing to work with you if you can present them with one. You should also consider a flexible payment plan if you believe the owner may be receptive to it.
However, a demand letter that’s wishy-washy may be ineffective. For example, setting a deadline before proceeding with legal action may be what finally convinces the owner of the reality of the situation, or it may make them more resolute in their stance. If you forgo a deadline, your letter should still clearly state that legal action will follow if this issue is not addressed in a timely manner.
Don’t: Use Threatening Language
You must under no circumstances employ threatening language in a demand letter. Aside from all but guaranteeing that an owner will continue to refuse payment, threatening language in a demand letter can be considered extortion. For this reason, you must avoid any language that can be interpreted as a threat towards the owner, their family, their property, or their reputation. Extortion also includes threats of humiliation, which is why an objective voice is so important.
Above all else, your demand letter should be reasonable. There’s no need to burn a bridge that may prove profitable in the future, especially if extenuating circumstances were involved in the withholding of payment. Additionally, if your letter is unreasonable or dishonest, it is sure to come under scrutiny in court and destroy your case.
Do: Work with an Attorney
A demand letter that is prepared by an attorney and includes a legal letterhead is going to be far more intimidating than a letter prepared by you alone. An attorney’s letterhead carries more weight and confirms the reality that litigation is on the table. The most effective demand letters are concise, pristine, and professional. The only way to ensure that your demand letter contains the do’s and avoids the don’ts is to have it drafted by an experienced and aggressive Greensboro construction attorney from Cotney Construction Law.
At Cotney Construction Law, we have experience in every stage of the claims process. From litigation to arbitration, our team of attorneys is prepared to do everything in their power to secure payment for you. Whether you are drafting a demand letter, reviewing contracts, or filing a lien, do so with the aid of a Greensboro contractor attorney from Cotney Construction Law.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.