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What to do after a stop payment notice?

CaliforniaStop Notice

Our roofing sub send us a stop payment notice. I'm not sure what my next step is. They were fired off our job for having employees who couldn't provide Socials or ID's.

2 replies

Feb 15, 2019
That's an interesting situation, and I'm sorry to hear you've had some issues on this job. For background, a stop payment notice will require the property owner to withhold payment (regardless of whether that project is public or private), and if there is a construction lender on the job, the stop payment notice gives them the authority to withhold payment - but doesn't necessarily require that payment be withheld. Stop payment notices may only be filed by claimants when the claimant is owed but unpaid for construction work they provide. With that in mind, let's look at how a contractor might respond to the stop payment notice. The options available to a contractor for responding will depend on whether the project is public or private in nature. For public projects, the contractor may challenge the stop notice, or they may file a payment bond which will, in turn, allow the owner and/or lender to release funds. For private projects, a contractor won't really be able to challenge a filed stop payment notice as easily - but they may still be able to file a bond for the release of funds. In either case, a contractor can always make payment to the party who sent the stop payment notice in exchange for their release of the stop payment notice. Even when a party has been fired off the job - they might still be owed for work performed that has not yet been paid for. If the payment claims on a stop payment notice are BS, it might be worthwhile for a contractor to reach out to the property owner and/or lender - if it can clearly and obviously be shown that payment is not actually owed, then they might be willing to release payment despite receiving the stop payment notice. Further, if a stop payment notice is sent but the owner or lender does not stop the flow of payments on the project - responding to the stop payment notice might not even be necessary at all. Ultimately, though, if a stop payment notice is causing a lot of problems on the job, it might be worthwhile to consult a local construction attorney - they'll be able to review the circumstances and advise on how to get the project back on track. For more information on California construction payment, this resource should be valuable: California Construction Payment Resources.
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Feb 11, 2020
We are a subcontractor on a public works contract and we issued a Stop Payment Notice because the GC was paid for our services and kept making excuses as to why they haven't issued payment. They received the Stop Notice and told us they were getting ready to put money in mail until they received the Notice so now they will not release the funds until we come to their office with a signed Stop Payment Release. (Funds which they had) From my understanding, we send a Release once we have received funds and clears our bank?  And will not release any other funds going forward until the Release is signed. We have completed all our contract work, even after we did the Stop Payment Notice and still have not received anything. What can we do? Can we send a letter stating that we are releasing that stop payment and in addition placing a new stop payment for the full amount of our contract? Any help will be appreciated. Thank you, Sammi
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