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Stop payment on checks

CaliforniaLien Waivers

A general contractor is demanding that I issue an Unconditional Release for payment that has been mailed but not received or deposited by us. They sent copies of the check as proof that payment is coming. The checks are joint checks if that matters. The GC is now threatening to do a stop payment to our sub-contractor on a different job to force us to issue the UP prior to payment receipt. Is this legal? If I issue the UP and the check bounces can we still get payment from our subcontactor?

1 reply

Feb 26, 2020
For one, threatening to not pay on a totally unrelated job is certainly in poor form, and actually withholding payment for an issue on a separate job would be illegal under California's retainage laws since amounts being withheld must directly tie to the issue causing them to be withheld. And, if payment is improperly withheld on a separate job, then the contractor could be opening themselves up to legal liability and interest penalties. When a contractor is adamant about receiving a waiver before payment is actually made, pushing to use a conditional lien waiver is usually appropriate. As the contractor should know, a conditional lien waiver will be fully effective once payment is received. So, if a check is actually on the way, then they shouldn't have much to protest about - once the payment is received, that conditional waiver would effectively be unconditional. If a contractor is pushing specifically for an unconditional waiver with full knowledge that payment hasn't been received, it's natural to be a little skeptical. And, that's especially true where there's been some questionable behavior going on surrounding submitting checks and illegal threats. So, trying to discuss the matter in a bit more detail and get to the bottom of the contractor's uneasiness may help. Something as simple as obtaining tracking information on the check or discussing the matter with the other party on the joint check might help to move things along.
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