Q: What
are stop notices and bonded stop notices?
A: A
stop notice is given by a claimant on a construction project stating
what was furnished or agreed to be furnished, to whom, in what amount
and, of that amount, what has been paid.
A bonded
stop notice is the same except it is given with a bond in the amount
of 125% of claim or lien. The bond is for the benefit of the owner,
original contractor or construction lender if they suffer damages as a
result of the stop notice claim or lien.
Q: Who can
give a stop notice?
A: Any
person entitled to record a lien, other than the original contractor.
Q: Who can
give a bonded stop notice?
A: Any
person entitled to record a lien.
Q: Do stop
notices and bonded stop notices apply to all jobs?
A:
No. The notices do not apply to government work or dwellings of
owner-occupants.
Q: What
happens if I don’t give a stop notice?
A: If
the owner or construction lender makes written demand for a stop
notice, you must give a stop notice within 30 days or lose your lien
rights.
Q: How do
I give a stop notice or bonded stop notice?
A: It
must be delivered in person or by certified mail to the owner or left
at the owner’s residence or place of business. For construction
lenders, it must be given or served on the manager or other
responsible person at the office that administers or holds the
construction monies.
Q: What
happens when a stop notice is given?
A: The
owner must withhold from the original contractor and the construction
lender may withhold from the borrower enough money to answer the stop
notice claim and any claim of lien that may be recorded.
Q: What
happens when a bonded stop notice is given?
A: The
construction lender must withhold from the borrower enough money to
answer the claim and any claim of lien that may be recorded.
Q: What
effect does a payment bond have on a stop notice or bonded stop notice?
A: If a
payment bond has been recorded the owner may elect not to withhold
monies.
A construction lender must withhold monies
if the original contractor filed a bonded stop notice, and may withhold
monies if a stop notice or bonded stop notice is given by anyone other
than the original contractor.
Q: How can a
stop notice or bonded stop notice be released?
A: An
owner, construction lender, original contractor or subcontractor can
file a release bond for the benefit of the claimant. The bond must be
in the amount of 125% of the amount claimed in the notice. Once the
release bond is filed and served on the claimant, the monies withheld
under the stop notice or bonded stop notice must be released promptly.
Q: How long
do I have to enforce a stop notice or bonded stop notice once it is
filed?
A:
Legal action may be brought to enforce payment of the claim at any time
after ten days from the date of service of the notice but no later than
three months after the time for recording a lien under section 33-993
(120 days after completion or 60 days after recording of a notice of
completion). The parties may agree in writing to extend the time for
legal action for an additional three months.
|
