Breach of a Demand Promissory Note Claim Accrues When Demand for Payment Is Made

By: Jeffrey M. Haber

In Minihane v. Brown, 2026 N.Y. Slip Op. 01505 (2d Dept. Mar. 18, 2026), the Appellate Division, Second Department, addressed when the statute of limitations begins to run on a demand promissory note. The defendant borrowed $19,000 pursuant to a note that provided repayment was due only upon written demand, which could be made no earlier than January 1, 2015. Although the lender did not make a demand until September 2023, the borrower argued that the six‑year statute of limitations for breach of contract began running on the earliest permissible demand date, which had long since expired. The motion court rejected that argument, and the Second Department affirmed. The Court held that, under the plain terms of the note, repayment was conditioned on a demand, and the lender had no enforceable right to payment until such demand was made. Accordingly, the breach of contract cause of action accrued, and the statute of limitations began to run, only upon the actual demand for payment.

Defendant borrowed $19,000 from his wife’s mother (plaintiff) on August 21, 2014, and executed a promissory note agreeing to pay back the money upon written request “no sooner than January 1, 20215” (“Promissory Note”). The Promissory Note did not include the payment of interest. On September 11, 2023, Plaintiff requested that the money be paid back. Defendant did not respond to plaintiff’s demand. On November 1, 2023, plaintiff filed a motion for summary judgment in lieu of complaint for repayment of the loan.

On December 22, 2023, defendant opposed plaintiff’s motion and cross-moved, pursuant to CPLR 3211(a)(5), to dismiss the action in its entirety because the action was commenced after the expiration of the applicable statute of limitations. Defendant argued: (1) the face of the Promissory Note set January 1, 2015, as the date plaintiff could first demand payment; (2) as a demand note, the time to commence an action to enforce the Promissory Note began to run on January 1, 2015; (3) accounting for the “COVID toll,” resulting from the pandemic,[1] the six-year statute of limitations expired on August 17, 2021; and (4) plaintiff’s action was filed two years after the expiration of the statute of limitations.

On March 4, 2024, the motion court granted plaintiff’s motion and denied defendant’s cross-motion. The motion court held that the statute of limitations began to run upon demand. The judgment was signed on March 14, 2024, and entered on March 26, 2024. 

A party may move for judgment dismissing one or more causes of action asserted against it on the ground that the cause of action may not be maintained because of the applicable statute of limitations.[2] “To dismiss a cause of action pursuant to CPLR 3211(a)(5) on the ground that it is barred by the Statute of Limitations, a defendant bears the initial burden of establishing prima facie that the time in which to sue has expired.”[3] If a defendant satisfies its initial burden of establishing that the time in which to commence the action has expired, the burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or whether the plaintiff commenced the action before the expiration of the statute of limitations.[4] 

A cause of action to recover on a promissory note has a six-year statute of limitations.[5] “As a general principle, the statute of limitations begins to run when a cause of action accrues, that is, ‘when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court.’”[6] Generally, “where ‘the claim is for payment of a sum of money allegedly owed pursuant to a contract, the cause of action accrues when the [party making the claim] possesses a legal right to demand payment.’”[7] However, “‘when the right to final payment is subject to a condition, the obligation to pay arises and the cause of action accrues, only when the condition has been fulfilled.’”[8] “A cause of action to recover on a note which is payable in full at one time accrues at the time it becomes due.”[9]

The Second Department affirmed.

The Court held that “under the specific terms of the promissory note at issue, repayment was not due until the plaintiff requested repayment, and the plaintiff was not entitled to obtain relief in court until she made such a request.”[10] Thus, concluded the Court, “the statute of limitations did not begin to run until September 11, 2023, and this action was timely.”[11] 

Takeaway

A demand promissory note is a written agreement in which a borrower acknowledges a debt and promises to repay a specified sum of money, but only upon the lender’s affirmative demand for payment. Unlike a traditional promissory note that contains a fixed maturity date or a schedule of installment payments, a demand promissory note leaves the timing of repayment entirely within the lender’s control. The borrower’s obligation to pay does not arise automatically with the passage of time; rather, it is triggered only when the lender makes a clear demand, often in writing, in accordance with the terms of the note. Until that demand is made, the lender generally has no right to sue for nonpayment. This structure is commonly used in informal lending arrangements, such as loans between family members or closely held businesses, where flexibility is desired. From a legal standpoint, demand promissory notes carry important statute of limitations implications because, in many jurisdictions, such as New York, the limitations period begins to run only when a demand for payment is

actually made.

In Minihane, the Court rejected the defendant’s argument that the statute of limitations began to run on the earliest date the plaintiff could have demanded repayment under the Promissory Note. Instead, the Court focused on the plain language of the Promissory Note, which made repayment due only upon written request. Because no demand was made until September 11, 2023, the plaintiff had no enforceable right to payment, and therefore no accrued cause of action, before that date. As a result, the six‑year statute of limitations applicable to promissory notes did not begin to run until the demand was made, rendering the action timely.

The decision also underscores the burden-shifting framework applicable to statute of limitations defenses under CPLR 3211(a)(5). While a defendant bears the initial burden of establishing that the time to sue has expired, that burden cannot be met where no earlier demand was made. In such circumstances, the defendant cannot rely on hypothetical or permissible demand dates to establish accrual.

From a practical standpoint, Minihane highlights the importance of the drafting and analysis of promissory notes. For lenders, demand notes can preserve enforceability for extended periods, as delay in making a demand postpones accrual of the claim. For borrowers, the absence of a demand may mean that a statute of limitations defense is unavailable, even many years after execution of the note. For litigators, Minihane serves as a reminder that an accrual analysis must be grounded in the language of the contract at issue.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm.

[1] The “COVID toll” refers to a series of executive orders issued by then‑Governor Andrew Cuomo in response to the COVID‑19 pandemic that temporarily stopped the running of statutes of limitations and other litigation deadlines statewide. This tolling was extended multiple times through successive executive orders and ultimately remained in effect from March 20, 2020 through November 3, 2020, a total of 228 days. New York courts have uniformly held that these orders created a toll, not a suspension. A toll stops the clock entirely, excluding the toll period from the statute of limitations calculation, rather than merely granting a grace period for claims that would have expired during the emergency. As a result, all civil causes of action governed by a limitation period, regardless of when they accrued, were extended by 228 days, unless the statute of limitations expired before March 20, 2020.

[2] CPLR 3211(a)(5).

[3] Savarese v. Shatz, 273 A.D.2d 219, 220 (2d Dept. 2000).

[4] Elia v. Perla, 150 A.D.3d 962 (2d Dept. 2017).

[5] See CPLR 213(2); Carpenito v. Linksman, 197 A.D.3d 553, 554 (2d Dept. 2021).

[6] Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765, 770 (2012) (citation omitted), quoting Aetna Life & Cas. Co. v. Nelson, 67 N.Y.2d 169, 175 (1986).

[7] Id., quoting Minskoff Grant Realty & Mgt. Corp. v. 211 Mgr. Corp., 71 A.D.3d 843, 845 (2d Dept. 2010). It should be noted that under General Obligations Law § 17-101, a party can revive a claim for non-payment notwithstanding the statute of limitations. Under this section, “[a]n acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law and rules other than an action for the recovery of real property. This section does not alter the effect of a payment of principal or interest.” A “writing, in order to constitute an acknowledgment, must recognize [the] existing debt and must contain nothing inconsistent with an intention on the part of the debtor to pay it.” Lew Morris Demolition Co. v. Board of Educ. of City of N.Y., 40 N.Y.2d 516, 521 (1976); see also Pugni v. Giannini, 163 A.D.3d 1018, 1019-1020 (2d Dept. 2018). 

[8] Id., quoting John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544, 550 (1979).

[9] Morrison v. Zaglool, 88 A.D.3d 856, 858 (2d Dept. 2011). “However, with respect to a note payable in installments, … , there are separate causes of action for each installment accrued, and the statute of limitations begins to run on the date each installment becomes due and is defaulted upon, unless the debt is accelerated.” Sce v. Ach, 56 AD3d 457, 458 (2d Dept. 2008) (citations omitted).

[10] Slip Op. at *1.

[11] Id., citing Hahn Automotive, 18 N.Y.3d at 770-772; Morrison, 88 A.D.3d at 858.