Stop-Notice

STOP NOTICE

(“Payment Withholding Notice” – Alaska)

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
4. Representations & Warranties
5. Covenants
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block
11. Certificate of Service

1. DOCUMENT HEADER

Stop Notice Date: [DATE]
Effective Upon Receipt By: (a) [OWNER LEGAL NAME] (“Owner”); (b) [CONSTRUCTION LENDER LEGAL NAME] (“Lender”) (if applicable)

Claimant: [CLAIMANT LEGAL NAME], an [ENTITY TYPE & STATE] having its principal place of business at [ADDRESS] (“Claimant”)

Prime Contractor: [PRIME CONTRACTOR LEGAL NAME] (“Prime Contractor”)

Project: [PROJECT NAME / DESCRIPTION], located at [PROJECT ADDRESS] (“Project”)

Governing Law: State of Alaska Mechanics Lien Act, Alaska Stat. § 34.35 et seq., and other applicable Alaska law (“Lien Law”)

2. DEFINITIONS

“Claim Amount” means US $[AMOUNT], representing the unpaid balance for labor, services, equipment, or materials furnished by Claimant to the Project through [LAST DATE OF WORK].

“Contract Funds” means any undisbursed monies currently or subsequently due and owing from Owner and/or Lender to Prime Contractor in connection with the Project Contract.

“Stop-Notice Bond” means a bond in an amount not less than [125%] of the Claim Amount, issued by a surety authorized to transact business in Alaska, conditioned to satisfy the Claim Amount together with interest, costs, and attorneys’ fees, and to indemnify Owner and Lender from any loss attributable to withholding or release of Contract Funds.

“Release Event” means (i) written acknowledgment by Claimant of full payment; (ii) posting of a Stop-Notice Bond meeting the requirements of Section 3.4; or (iii) final adjudication that no sum is due to Claimant.

Capitalized terms used but not defined have the meanings assigned in the Lien Law.

3. OPERATIVE PROVISIONS

3.1 Notice and Demand to Withhold.
Pursuant to the Lien Law, Claimant hereby (a) notifies Owner and Lender that Claimant has furnished labor, services, equipment, and/or materials for the Project and is owed the Claim Amount, and (b) demands that Owner and Lender immediately withhold from payments otherwise due to Prime Contractor a sum sufficient to cover the Claim Amount plus statutory interest, costs, and potential attorneys’ fees (“Withheld Funds”).

3.2 Scope of Withholding.
The Withheld Funds shall be retained until the earliest to occur of a Release Event. Owner and Lender shall not disburse any portion of the Withheld Funds without Claimant’s written consent or a final court order.

3.3 Supporting Statement & Verification.
Attached hereto as Exhibit A is Claimant’s itemized statement of account, including (i) a description of the labor, services, equipment, or materials furnished; (ii) the dates thereof; (iii) the contract or purchase order number(s); and (iv) the computation of the Claim Amount. Exhibit B contains Claimant’s sworn verification, executed under penalty of perjury, that the information herein is true and correct to the best of Claimant’s knowledge and belief.

3.4 Bonding-Off Procedure.
Owner, Lender, or Prime Contractor may secure the release of Withheld Funds by delivering to Claimant (with copy to the other parties) a duly executed Stop-Notice Bond. Upon receipt and confirmation of the Stop-Notice Bond’s validity, Claimant shall promptly issue a written Release of Stop Notice in the form attached as Exhibit C.

3.5 Preservation of Lien Rights.
This Stop Notice is in addition to and does not waive Claimant’s right to record a mechanics lien or pursue any other remedy available under the Lien Law or contract.

4. REPRESENTATIONS & WARRANTIES

4.1 Performance.
Claimant represents that it has fully performed, or has substantially performed, all obligations required of it under its agreement with Prime Contractor through the date stated in Exhibit A.

4.2 Authenticity of Claim.
Claimant warrants that the Claim Amount is justly due and owing, has not been paid, waived, satisfied, or secured, and that no set-offs, counterclaims, or defenses exist to Claimant’s knowledge.

4.3 Authority.
The person executing this Stop Notice on behalf of Claimant is duly authorized and empowered to do so.

5. COVENANTS

5.1 Cooperation.
Upon reasonable request, Claimant will provide supplemental documentation to Owner or Lender necessary to evaluate the Claim Amount.

5.2 Conditional Release.
If Claimant receives (i) valid payment instruments covering the Claim Amount and any agreed interest and costs, or (ii) a Stop-Notice Bond as provided in Section 3.4, Claimant shall execute and deliver the Release of Stop Notice within three (3) business days.

5.3 No Impairment.
Claimant covenants not to impair or cloud the title to the Project except as permitted by the Lien Law pending receipt of the Withheld Funds or adequate security.

6. DEFAULT & REMEDIES

6.1 Events of Default.
(a) Failure by Owner or Lender to withhold Contract Funds in accordance with Section 3.1;
(b) Payment of Withheld Funds in violation of this Stop Notice; or
(c) Failure by Prime Contractor, Owner, or Lender to timely bond-off as provided in Section 3.4.

6.2 Remedies.
Upon an Event of Default, Claimant may pursue any and all remedies available at law or in equity, including but not limited to:
(i) enforcement of mechanics lien rights;
(ii) injunction compelling withholding of Contract Funds;
(iii) recovery of damages, interest, costs, and reasonable attorneys’ fees; and
(iv) foreclosure of any recorded lien or suit on the Stop-Notice Bond.

6.3 Attorneys’ Fees.
The prevailing party in any action to enforce or defend this Stop Notice shall be entitled to recover its reasonable attorneys’ fees and costs.

7. RISK ALLOCATION

7.1 Indemnification (Bonding Requirements).
If Owner or Lender elects to release Contract Funds in reliance on any Stop-Notice Bond, the issuer of such bond shall indemnify and hold Owner and Lender harmless from any liability, loss, or expense arising out of such release.

7.2 Limitation of Liability.
Owner and Lender shall not be liable to Prime Contractor for any delay damages, interest, or penalties resulting from compliance with this Stop Notice, except to the extent caused by Owner’s or Lender’s gross negligence or willful misconduct.

7.3 Force Majeure.
If performance of any obligation hereunder is prevented or delayed by an event of Force Majeure (including but not limited to acts of God, war, terrorism, government action, or natural disaster), the affected party’s obligations shall be tolled for the duration of such event.

8. DISPUTE RESOLUTION

8.1 Governing Law.
This Stop Notice, and any dispute arising herefrom, shall be governed by and construed in accordance with the laws of the State of Alaska, without giving effect to its conflict-of-laws principles.

8.2 Forum Selection.
The Superior Court for the State of Alaska in the judicial district where the Project is located shall have exclusive jurisdiction over any action arising out of or relating to this Stop Notice.

8.3 Injunctive Relief.
Nothing herein shall limit Claimant’s right to seek provisional or injunctive relief, including an order compelling Owner or Lender to withhold Contract Funds.

9. GENERAL PROVISIONS

9.1 Amendment; Waiver.
No amendment or waiver of any provision of this Stop Notice shall be effective unless in writing and signed by Claimant.

9.2 Assignment.
Claimant may assign its rights hereunder, including its right to receive Withheld Funds, only with the prior written consent of Owner and Lender, which consent shall not be unreasonably withheld.

9.3 Severability.
If any provision of this Stop Notice is held invalid or unenforceable, the remaining provisions shall remain in full force and effect and shall be construed to best effectuate the parties’ intent.

9.4 Entire Notice.
This document, together with its exhibits, constitutes the entire Stop Notice and supersedes all prior or contemporaneous communications relating to the subject matter herein.

9.5 Counterparts; Electronic Signatures.
This Stop Notice may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. Electronic or facsimile signatures shall be deemed originals for all purposes.

10. EXECUTION BLOCK

CLAIMANT:

_____________________________________
[NAME], [TITLE]
[CLAIMANT LEGAL NAME]
Date: _______________________________

[Optional Notary Acknowledgment – Alaska]

STATE OF ALASKA )
) ss.
JUDICIAL DISTRICT )

On this ____ day of __________, 20__, before me, the undersigned notary public, personally appeared ______________________________, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to this instrument and acknowledged that he/she executed the same on behalf of [CLAIMANT LEGAL NAME] for the purposes therein contained.

_______________________________
Notary Public in and for Alaska
My Commission Expires: __________

11. CERTIFICATE OF SERVICE

I certify under penalty of perjury that on the ____ day of __________, 20__, I caused a true and correct copy of this Stop Notice (with all exhibits) to be served by [PERSONAL DELIVERY / CERTIFIED MAIL, RETURN RECEIPT REQUESTED / OTHER STATUTORY METHOD] upon:

1. Owner: [OWNER NAME & ADDRESS]
2. Lender (if any): [LENDER NAME & ADDRESS]
3. Prime Contractor: [PRIME CONTRACTOR NAME & ADDRESS]

_____________________________________
[NAME], [TITLE]
[CLAIMANT LEGAL NAME]

EXHIBIT A

Itemized Statement of Account

(Attach spreadsheet or schedule detailing dates, description of work/materials, quantities, unit prices, extensions, credits, and net Claim Amount.)

EXHIBIT B

Verification

I, ________________________, declare under penalty of perjury under the laws of the State of Alaska that I am [TITLE] of Claimant; that I have read the foregoing Stop Notice and the matters stated therein are true and correct to the best of my knowledge and belief.

Executed on ____________, 20__, at ______________________, Alaska.

_____________________________________
[NAME]

EXHIBIT C

Conditional Release of Stop Notice (Form)

Upon receipt and clearance of payment in the sum of US $___________ (the “Payment”), Claimant hereby releases and discharges the Stop Notice dated ____________, 20__, served upon [OWNER] and [LENDER] in connection with the Project known as “[PROJECT NAME].” This release is conditioned upon actual receipt of the Payment; if any instrument of payment is dishonored, this release shall be null and void.

_____________________________________
[NAME], [TITLE]
[CLAIMANT LEGAL NAME]
Date: _______________________________