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The difference on Private and Public projects; Liens VS Work Stoppage

4 months ago

Hello,

I am trying to understand how state agencies will put a “work stoppage” on a project rather than a lien. How is this process different than those in the private sector?

Chief Legal Officer Levelset

Generally, the labor or materials furnished to improve private property are protected by mechanics lien rights, and the labor or materials furnished for a public project are protected by a claim against a payment bond. In California, however, there is an additional potential remedy, a stop notice.

A stop notice is a document given for the purpose of stopping, intercepting, or freezing funds that have not yet been paid on a construction project in an attempt to ensure payment. The documents can be very effective in helping participants get paid on projects that cannot be liened or don’t have bonds. Once a stop notice is sent, the public entity must withhold an amount sufficient to satisfy the claim for nonpayment.

The process to use a stop notice is very similar to making a bond claim , and is similar in some respects to claiming a lien against a private work. A preliminary notice is required in order to qualify to send a valid stop notice, but the stop notice is not recorded with the county recorder. Instead it must be delivered public entity commissioning the work and the prime contractor by the earlier of:

(a) 30 days from the recording of a Notice of Completion for the project; or
(b) within 90 days from the actual completion (if no Notice of Completion was recorded).

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