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Demand Letter for Payment (Template & How-To for Subcontractors)
What is a demand letter for payment in construction?
A demand letter for payment is a written notice from a project stakeholder (e.g., subcontractor or supplier) to their hiring party (typically the general contractor (GC) or project owner) requesting overdue payment. It’s often the first official step before escalating to more formal remedies like a Notice of Intent (NOI) to Lien or legal action.
Unlike those tools, a demand letter is designed to be straightforward: a clear, professional reminder that money is past due and must be paid promptly. In construction, these letters are often tied to prompt payment laws, which require faster turnaround times for paying subcontractors and suppliers.
Using this sample demand letter shows you’re serious and gives the other side a chance to make things right before you take the next step.
If you choose to reference your state’s prompt payment law in your letter, confirm accuracy using this state-by-state prompt payment guide or by consulting your attorney.
How to Write a Demand Letter for Payment
When you write a demand letter for payment, your tone matters. You want to get the point across without burning bridges early, or having to resort to more serious methods, like invoking lien rights. Aim for professional and firm, but not hostile.
The letter should lay out the facts and set a clear deadline for payment. Make sure you include:
- Your company info and letterhead
- Recipient’s name, company, and address
- Project details (property address, work performed, pay app or invoice #)
- Amount due (and retainage, if that applies)
- Contract date and, if appropriate, a reference to applicable prompt payment laws (verify accuracy using this resource or by consulting your attorney)
- A clear deadline for payment
- A reservation of rights, maintaining your ability to escalate later
How to Send a Demand Letter for Payment
How you send the demand letter matters just as much as what’s in it. To cover your bases:
- Certified mail with a return receipt is your best option—it gives you proof it was received.
- You can also send a copy by email for speed, but we don’t recommend relying on email alone.
- Always keep copies of the letter and delivery receipts for your files.
That way, if you need to escalate later, you’ll have documentation that you tried to resolve things fairly.
How to Use This Demand Letter for Payment Template
This template is meant to be an all-purpose demand letter for payment in construction. It’s flexible enough to fit your situation, whether you’re chasing a late invoice or enforcing prompt payment rights.
Here are some tips for making the most of this demand letter template:
- Download your copy.
- Insert your company letterhead at the top, or copy and paste onto your letterhead.
- Add the date, names, and addresses.
- Fill in the project details, invoice or pay application number, amount due, and firm deadline.
- You may choose to include a reference to your state’s prompt payment law. If you do, confirm accuracy with this state-by-state prompt payment guide and/or with your attorney.
- Send it by certified mail (and email if you want extra speed) to create a record.
- Keep a copy for yourself.
- If the deadline passes without payment, follow through on the next steps with guidance from your attorney (NOI, mechanic’s lien, bond claim, etc.).
If payment isn’t made by the deadline included in your demand letter, you may need to try stronger remedies. These could include sending a Notice of Intent to Lien (if required by your state), filing a mechanic’s lien or bond claim, or even pursuing litigation. We recommend consulting a construction attorney at this stage to determine the most viable path forward.
A demand letter itself isn’t legally binding—it’s more of an official warning and request. Its real power comes from the documentation it provides and the fact that it signals you’re prepared to enforce your rights if payment isn’t made.
Yes. In fact, citing your state’s prompt payment laws can considerably strengthen your demand letter. Just make sure you confirm the details for your state since deadlines and interest rules vary.
In many states, you’re not legally required to send a demand letter before filing a mechanic’s lien or Notice of Intent. However, sending one first is often a smart step. It can resolve payment issues quickly, avoid legal action, and show good faith should you have to escalate later.
DISCLAIMER: This demand letter template and guide are provided for informational purposes only and do not constitute legal advice. If you have questions about your specific situation, consider consulting a licensed attorney.