The notice attaches to undisbursed construction funds rather than to the real property. It is available in several states and may be bonded or unbonded, with bonded notices binding lenders.
It supplements rather than replaces lien rights.
Alternative Names:
Stop Payment Notice|Notice to Withhold
Why it Matters?
The notice reaches construction loan funds that a mechanics lien cannot, which makes it valuable where the lender's deed of trust has priority over the lien and the property equity is insufficient. Bonded stop notices bind construction lenders while unbonded ones typically reach only the owner. Deadlines run in parallel with lien deadlines, so pursuing both requires tracking two sets of dates.
Frequently Confused with
Related terms
Frequently asked questions
What does a stop notice reach that a lien does not?
What is the difference between bonded and unbonded?
