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Release of Stop Payment

CaliforniaStop Notice

I have a question. If a subcontractor has been paid and signed an unconditional lien waiver, but also filed their release of stop payment notice incorrectly what does California law say about subs being unwilling to file correctly? The subcontractor is telling me they have filed correctly and will not work with me to fix it; however, the public school entity is telling me it is not formatted correctly according to civil code and was not executed with the school.

1 reply

Apr 19, 2019
That's a really good question, and I'm glad you were able to get the payment dispute resolved. For one, if it hasn't been done already, sharing documentation received from the public entity with the stop notice claimant could help to show everything is on the up-and-up. For a party who's filed a stop notice, it's natural to be skeptical since they've already had to fight to be paid what they were owed - but, by showing them that there's just been some technical issue with a release, they might be more willing to work to fix the issue. Another option may be to draw up the correct paperwork (with the claimant's permission), and provide that paperwork for the claimant to sign themselves - then, upon receipt of the signature, to submit the paperwork on their behalf. This process, or one similar to it, is commonly used for mechanics lien releases, and it could make life easier on the claimant releasing their claim while also making sure it gets done. Yet another option could be to contest the filed stop payment notice by filing an affidavit for release of payment under § 9400-9406 of the California Civil Code. Under that section, a party can contest a stop payment notice and request the release of payment when there is no basis for the claim stated in the notice. If that affidavit is served on the public entity, the public entity will provide a copy to the stop notice claimant and, if the claimant does not refute the demand for the release of payment, payment will be released. Of course, while an effective option, this might not be the speediest way to have payment released. Finally, if other avenues aren't appealing or are unsuccessful, threatening to take legal action against a claimant unless they release their claim could always encourage them to do the right thing.
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