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Does a construction lender have to withhold funds on an bonded stop notice that is not bonded?

CaliforniaStop Notice

Stop notice was not bonded.

1 reply

Aug 16, 2018
That's a good question. In California, a stop payment notice may be either bonded or unbonded. Under § 8536(b)(1) of the California Civil Code, a construction lender may elect not to withhold funds when the stop payment notice is unbonded. However, this does not mean the stop payment notice is ineffective. Unbonded stop payment notices may still be enforced under § 8550-8560 as long as all requirements are followed. Of course, when a stop payment notice is unbonded, a claimant will not benefit from the extra protection a bonded stop payment notice will provide.
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