Payments Made in Error: The Voluntary Payment Doctrine


Partner Todd E. Soloway, Chair of Pryor Cashman’s Real Estate Litigation Group, and Partner Eric Sherman, also of the Real Estate Litigation Group, have authored the New York Law Journal article, “Payments Made in Error: The Voluntary Payment Doctrine.”

In the world of complex commercial leases, with the multitude of "additional rent" charges and escalation packages, it is not uncommon for there to be errors in the billing and collection of these varied obligations. Those mistakes can result in significant overcharges to the unsuspecting or dilatory tenant, or significant underpayments to the unaware landlord.

Tenants and landlords alike must therefore be vigilant, lest they be deemed to have waived any right to recovery of wrongful payments. With respect to overpayments in particular, a lack of vigilance can prove fatal to any chance of recovery in light of the voluntary payment doctrine, a common law doctrine that bars recovery of such overpayments.

In their article, Soloway and Sherman, argue that while harsh in its consequences, the voluntary payment doctrine provides a measure of finality to payment, thereby motivating aggrieved parties to timely exercise their rights in seeking restitution.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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