Stop notices are a California-specific construction debt collection method. Much like the mechanics lien, it is an option contractors can use to expedite collection of payments. Property owners and general contractors have a vested interest in understanding this area of the law.
What Does a Stop Notice Do?
A stop payment notice, or stop notice, is a legal order to the property owner or the construction lender that forces them to withhold further payments. This tool does not force the property into foreclosure, as a mechanics lien can, but instead interrupts the project's funding source.
How Do You Address a Stop Notice?
There are several options for a property owner or general contractor to address a stop payment. However, the law is incredibly complicated, and your objections must be thorough and well-supported to ensure success.
Why Would a Contractor Take this Route?
Contractors often elect to use stop payment notices because a property where they are working may have liens that supersede any additional liens they could pursue. Additionally, the stop payment is seen as a more direct way to recover funds from a general contractor who is refusing to pay, rather than pursuing the property owner who may have already issued payment. Under some circumstances it is also possible for a general contractor to use a stop payment.
What Will Happen to My Project?
Mechanics liens or stop payments can cause significant project delays. While these are difficult to resolve, they will not necessarily bring the project to a complete standstill. Work with your experienced construction law attorney to explore the many options you have for resolving these issues and keeping your construction project on track.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.