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Sample Settlement Demand Letter (Free Template)

Claudia Diaz - Demand Letter - February 26, 2024

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    Do you have a dispute with someone that you want to resolve before resorting to legal action? A settlement demand letter is an effective way of trying to a settle dispute before taking someone to small claims court. A settlement demand letter is a written offer addressed to someone who has wronged you. In the settlement demand letter, you can make an offer to try to induce settlement. To learn more about settlement demand letters read the article below. 

    Did you know we have a free tool powered by AI that helps you create a settlement demand letter? Check out our demand letter tool.

    Why is a Settlement Demand Letter Important?

    A strong settlement demand letter can be a useful tool if you are trying to settle a claim outside of court. Here are four good reasons to first send a settlement demand letter before suing the other party in small claims court: 

    1. Depending on the state you are filing a small claims court lawsuit in, you may be required to demand payment from the other party before filing. A settlement demand letter is one way of completing this requirement. 

    2. A settlement demand letter signals to the other party that you are serious about the dispute but willing to discuss a settlement without escalating the problem. 

    3. Sending a written settlement demand letter assures you there is a record of how much the other party owes you and why they owe you that amount. So while a settlement demand letter can be made orally, we recommend written demands. There is also no restriction on trying to settle via text message, but writing a letter is more formal and the other party will likely take you more seriously.

    4. The most important reason to send a settlement demand letter is that it may lead to a resolution without having to go to court. 

    Do I Need to Hire an Attorney to Write a Settlement Demand Letter?  

    We often see people ask whether they need an attorney to write a settlement demand letter. The choice is yours; you decide whether you want to hire an attorney to write a settlement letter. If you are thinking of hiring an attorney weigh the costs versus the benefits. Legal fees can add up quickly but depending on your case it may be worthwhile.  

    For example, if you were in a car accident that resulted in damage to your car and personal injuries you may want to consider speaking with a personal injury attorney before writing a settlement demand letter and making an offer to the other driver. 

    If you are looking for sample demand letters for minor car accidents that resulted in property damage but no personal injuries, take a look at the article we wrote here

    What to Include in Your Settlement Demand Letter?

    Even if the other party seems reluctant to settle, there may be a strong incentive to accept, since the alternative could be a lengthy and costly lawsuit.  

    Here are a few suggestions of what to include in your demand letter:

    • Include details about the dispute at hand. For example, is the dispute between you and the other party about property damage? Or does the other party owe you money? 

    • Make sure to include a settlement offer and the terms of the settlement. For example, if the other party agrees to pay for damages they caused to your property include a timeline for the payments and how the payments should be made. 

    • Include your contact information so that the other party can reach you in case they would like to accept your offer. The best way to communicate with the other party is in writing, include an email address along with any other form of communication you are comfortable with. 

    • Include where you would like to receive payment. Consider using Venmo or Paypal if you know the other party well. If not include your mailing address so they can mail a check to you. 

    • Include a deadline to respond to you. You may want to consider giving the other party 14 days to respond to you and state that if they do not respond within that time, you intend to sue them. 

    Sample Settlement Demand Letter 

    Did you know we have a free tool powered by AI that helps you create a settlement demand letter? Check out our demand letter tool.

    Here is a video on how our demand letter tool works:

    Below is a sample settlement demand letter. In this sample, the dispute is between two neighbors over damages to water pipes. This template can be easily modified for your particular dispute. The most important thing to consider when using this template is to add as many case-specific details as possible. 

    How to Send a Settlement Demand Letter 

    I recommend sending your demand letter in a way that ensures that it was delivered. This way, you know that the other party received your letter. If you later need to escalate to court, you can provide this evidence to the judge.

    • Sending the letter via email: if you send the letter via email, you will want to use a software that tells you whether the other party received your email and opened it. With our demand letter tool, you can track whether your email was delivered and opened. Check out our demand letter tool.

    • Sending the letter by mail: you will want to obtain tracking information for your demand letter to have proof of delivery. In my experience, it tends to be difficult to obtain signature confirmation at delivery as many individuals will avoid signing for mail or they will sign illegibly. However, many times a demand letter tends to be presumed delivered as long as the letter was mailed to a known address and tracking states that it was delivered. Pro Tip: I have also learned that USPS tends to not be the most reliable at providing tracking information as from time to time they fail to finish scanning the letters at delivery. Consider using FedEx or send multiple letters via USPS untile you have delivery confirmation with the tracking number. With our demand letter tool, you can mail your demand letter and obtain tracking. Check out our demand letter tool.

    If I were sending a demand letter, I would email and mail the letter. Mailing the letter is a more formal approach and you may be taken more seriously.

    Next Steps After Sending a Settlement Demand Letter

    Did you send a settlement demand letter to the other party but couldn't settle your dispute? At this point, you may want to consider taking the other party to small claims court

    Small claims courts handle a variety of cases at a low cost. This is because small claims courts were intended to be affordable and user-friendly. In some small claims courts, attorneys are not even allowed to represent you! If you are currently disputing with another party consider filing a small claims lawsuit, especially if the other party is reluctant or has outright refused to settle.

    Learn more on how to take someone to small claims court.


    Claudia Diaz

    Legal Educator @ People Clerk. Claudia holds a J.D. degree and is a certified mediator in New York and Florida. She has participated in dozens of small claims mediations in New York City courts.

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