A legal demand that forces the property owner or lender to hold back funds to ensure an unpaid party gets paid.
A stop notice is a statutory remedy available in some states (notably California) that requires a property owner or lender to withhold sufficient funds from the borrower or general contractor to cover the amount claimed by an unpaid subcontractor or supplier. Unlike a mechanic's lien, which attaches to the property itself, a stop notice attaches to the construction funds. A stop notice can be filed even on leasehold interests where a mechanic's lien may not be available.
For subcontractors and suppliers, a stop notice is a powerful payment-security tool because it reaches the construction funds directly rather than waiting on a property foreclosure. Estimators and project managers need to understand the strict statutory deadlines and preliminary-notice prerequisites in states that allow them, since missing a step can forfeit the remedy and turn a recoverable balance into a write-off.
An unpaid drywall sub who served a timely preliminary notice files a bonded stop notice with the construction lender, forcing the lender to withhold the disputed amount from the GC's next draw.
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