Understanding demand notes and borrower's obligations

Under a demand note, the borrower must make payment when the lender requests it. If the borrower fails to make the payment after the demand is made, the lender can take legal action after reviewing the terms of the promissory note. The note should include details about the steps a lender may take to demand payment and the consequences for the borrower if they fail to pay. If there are specific procedures the lender must follow before requesting the total amount, the lender should follow them.

Maintaining records of additional expenses and recoverable costs

It is vital to keep a detailed record of all expenses and any additional expenses incurred while demanding repayment, including attorneys' fees or registered mail costs, as they may be recoverable from the borrower in case of delayed or defaulted payments.

Specifying a deadline for payment

When creating a demand, it's important to specify a deadline by which the borrower must make full payment with the accrued interest to date. Choose a date that works for both parties. Generally, a week or two should provide enough time for the borrower to pay the amount due. It will help ensure the loan is paid back on time and without issues.

Sending demands via registered mail

It is recommended that you send the demand via registered mail, as it provides a record of your actions in case a court action is required.

Seeking legal advice in case of non-payment

If a borrower refuses to make a payment, it is recommended that you seek the advice of a legal expert, like an attorney or lawyer, to assist you in recovering the amount payable by the borrower. By seeking their assistance, you can receive the necessary guidance to navigate the legal process and protect your rights.

Frequently asked questions

What's a “demand for payment” note?

If you lent money under a demand promissory note, the borrower only needs to pay it back once you ask for it in a written notice. That notice is a demand promissory note for payment. As a lender, you want to ensure the payment demand is drafted correctly and helps you collect the full amount of money you lent.

What information is needed to complete a demand for payment on demand promissory note?

Here's the information you'll need to complete it:

• Who it's going to (borrower): Ensure you have the name and contact information of the recipient (borrower) ready
• Date: Get the date on which the original promissory note was issued
• Payment due: Keep the figure of the due loan amount ready