Christensen Law Firm

Is There A Deadline To Serve A Stop Payment?


Any time you a contractor or supplier is owed money on a project that for which it hasn’t been paid, if there are still funds being held by the construction lender, then it is not too late to serve a stop notice. On self-funded projects (i.e., where there is no construction lender, but the owner is holding funds), the stop notice can still be used.

What Information Is Required To Be Included In The Stopped Payment?

A stop notice has to include a description of the work that was performed by the claimant, the labor that was provided, the equipment that was provided, and the materials that were provided. You also have to include the name of the person or entity the claimant contracted with and the dollar amount of the claim. The contractor or supplier asserting stop notice rights must describe any payments that have previously been made and, of course, the name and address of the person who is actually making the claim.

Are There Restrictions On The Amount That I Can Demand In A Stop Notice?

The only restrictions on the amount that may be claimed in a stop notice would be the amount that the claimant is actually owed. Certainly, a contractor or supplier is not allowed to inflate the claim, but if has legitimately provided labor services, material, or machinery to a project and hasn’t been paid for it, then those amounts may be included in the stop notice.

How And To Whom Do You Serve A Stop Notice?

How to serve a notice differs depending on what role the claimant had within the project. A general contractor, for example, can only issue a stop notice to the construction lender. Anyone lower than the general contractor can only issue a stop notice to the owner. The notice will be sent to all the appropriate people and, again, using a lien notice company who is familiar with these requirements would be a good idea.

What Happens After A Stop Notice Is Served? Do I Need To Do Anything?

Anyone who serves a stop notice hopes that it will catch the attention of the people who are actually holding the money so that whatever is happening that was preventing that person from getting paid will get resolved. That doesn’t always happen. The stop notice claimant is allowed to file a lawsuit to perfect the stop notice claim, which could be done as soon as ten days after serving the stop notice. The lawsuit has to be filed no later than three months after the lien deadlines. If the contractor or supplier with stop notice rights does not file a lawsuit by the deadline, then the stop notice expires and all legal rights arising from the stop notice cease to exist.

Additional Information On Getting Paid For Construction Projects In Arizona

The best advice is to consult with a construction attorney to ensure that all mechanic’s lien, payment bond, or a stop notice rights are protected. An experienced construction attorney will not only be able to guide a contractor or supplier through the complicated process of preserving those rights but may also be able to offer guidance on when it would make sense to take a more common-sense practical approach instead of a heavy-handed legal approach. For example, if a construction lender receives a stop notice claim, which requires them to holdout the construction funds until the stop notice claim is resolved, that freezing of the funds can sometimes cause the entire project to grind to a halt because the money simply stops flowing to the contractors doing the work. Instead of the stop notice freeing up the flow of funds, it can sometimes cause it to be constricted even more. Similar results sometimes happen with mechanic’s liens. Instead of having the effect of simply catching the attention of the people with the money and causing the issue to be resolved, sometimes it can have the effect of causing everyone to dig in their heels, meaning nobody gets paid, disputes escalate, and these payment mechanisms that can be so useful in certain circumstances might not solve any problems at all.

In the appropriate circumstances, these tools can be very useful in providing the contractor or supplier with additional legal avenues to ensure that they receive payment, but no contractor, supplier, subcontractor, or design professional should undertake them lightly. An experienced and expert construction attorney can help a contractor or supplier to determine whether it makes sense to use these legal rights in a given situation.

For more information on Deadline To Serve A Stop Notice In Arizona, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (480) 378-0466 today.

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