STOP NOTICE
(Arizona Private and Public Construction Projects – A.R.S. § 33-1051 et seq.)
[// GUIDANCE: This template is drafted for use on Arizona construction projects where a subcontractor, supplier, or laborer (“Claimant”) seeks to compel an Owner and/or Construction Lender (“Obligor”) to withhold contract funds otherwise payable to the Prime Contractor until the Claimant’s lien claim is resolved. Insert all bracketed information, delete inapplicable options, and attach exhibits as needed.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Title & Parties.
STOP NOTICE (“Notice”) issued by [CLAIMANT LEGAL NAME], an [entity type, state] (“Claimant”), to (i) [OWNER/ REPUTED OWNER LEGAL NAME] (“Owner”) and, if applicable, (ii) [CONSTRUCTION LENDER LEGAL NAME] (“Lender,” and together with Owner, each an “Obligor”).
1.2 Project.
Name: [PROJECT NAME] (“Project”)
Location: [STREET ADDRESS, CITY, COUNTY, AZ] (“Project Site”)
Prime Contract No.: [CONTRACT NO./DATE]
1.3 Effective Date.
This Notice is effective on [EFFECTIVE DATE] (“Effective Date”).
1.4 Governing Statute & Jurisdiction.
This Notice is made pursuant to A.R.S. § 33-1051 et seq. and shall be governed by the laws of the State of Arizona without regard to conflict-of-laws principles.
2. DEFINITIONS
For purposes of this Notice, capitalized terms have the meanings set forth below. Undefined capitalized terms shall have the meanings ascribed in A.R.S. § 33-1051 et seq.
“Bond” – A surety bond meeting the requirements of Section 7.2 intended to release funds withheld pursuant to this Notice.
“Claim Amount” – The sum of $[AMOUNT], representing the unpaid balance for labor, services, equipment, or materials furnished by Claimant to the Project, together with statutory allowances for costs, interest, and attorneys’ fees.
“Prime Contractor” – [PRIME/GENERAL CONTRACTOR LEGAL NAME], the party directly contracted with Owner for the construction of the Project.
“Release Notice” – A written notice issued by Claimant releasing all or part of the amounts previously demanded under this Stop Notice in conformity with Section 7.3.
“Stop Notice” or “Notice” – This instrument, including all exhibits and attachments, properly served and verified as required by Arizona law.
3. OPERATIVE PROVISIONS
3.1 Demand for Withholding.
Pursuant to A.R.S. § 33-1051(A), Claimant hereby demands that each Obligor immediately withhold, from any money due or to become due to the Prime Contractor under the Prime Contract, an amount equal to the Claim Amount plus twenty percent (20%) thereof as security for potential court costs, interest, and attorneys’ fees (collectively, the “Withheld Funds”).
3.2 Scope of Withholding.
The Withheld Funds shall not be disbursed, released, or otherwise transferred until the earliest to occur of:
a. Written Release Notice from Claimant;
b. Filing with the Obligor of a Bond satisfying Section 7.2;
c. Final, non-appealable court order directing release; or
d. Expiration of statutory enforcement periods without commencement of suit by Claimant.
3.3 Service of Notice.
Claimant has served this Stop Notice by [certified mail / personal delivery] in accordance with A.R.S. § 33-1051(C). [// GUIDANCE: Retain certified mail receipts or affidavits of service.]
4. REPRESENTATIONS & WARRANTIES
Claimant represents and warrants to each Obligor that, as of the Effective Date:
4.1 Performance. Claimant has furnished labor, materials, equipment, and/or services to the Project at the request of the Prime Contractor or its agents.
4.2 Preliminary Notice. Claimant served a valid Preliminary Twenty-Day Notice under A.R.S. § 33-992.01 covering the labor or materials forming the basis of this Stop Notice.
4.3 Unpaid Balance. The Claim Amount remains due and owing; no portion has been paid, released, or otherwise satisfied.
4.4 Accuracy. All statements in this Stop Notice are true and correct to the best of Claimant’s knowledge after reasonable investigation and are made under penalty of perjury.
4.5 Compliance. Claimant has complied with all conditions precedent to the validity of this Stop Notice under Arizona law.
5. COVENANTS & RESTRICTIONS
5.1 Obligor’s Covenant to Withhold. Each Obligor shall segregate and hold the Withheld Funds in trust and not disburse such funds except as permitted by Section 3.2.
5.2 Claimant’s Covenant to Enforce. Claimant shall commence any required enforcement action within the statutory period prescribed by A.R.S. Title 33, Chapter 7. Failure to timely prosecute such action shall constitute automatic release of the Stop Notice.
5.3 Notice of Payment or Bond. If an Obligor releases funds or accepts a Bond pursuant to Section 7.2, such Obligor shall provide written notice to Claimant within five (5) business days of such release or acceptance.
6. DEFAULT & REMEDIES
6.1 Events of Default. An Obligor’s failure to withhold or its improper release of Withheld Funds in violation of this Notice and A.R.S. § 33-1051 constitutes a default.
6.2 Cure Period. Upon written notice of default, an Obligor shall have five (5) business days to cure by re-withholding funds or securing a Bond. No cure period applies if funds have been irrevocably disbursed.
6.3 Remedies. In addition to statutory remedies, Claimant may seek:
a. Temporary, preliminary, and permanent injunctive relief compelling compliance;
b. Judgment for the Claim Amount, plus court costs, interest, and reasonable attorneys’ fees; and
c. Any other relief available at law or in equity.
7. RISK ALLOCATION
7.1 Indemnification (Bonding Requirements).
If Claimant elects to post a Bond under A.R.S. § 33-1053 for the benefit of an Obligor, Claimant shall indemnify and hold harmless the surety against losses arising from Claimant’s breach of bonded obligations. Conversely, if an Obligor posts a Bond under Section 7.2, the Obligor and its surety shall indemnify Claimant against wrongful release of funds.
7.2 Bond to Release Funds.
An Obligor or the Prime Contractor may discharge the Stop Notice by furnishing a surety bond in an amount equal to one hundred twenty-five percent (125%) of the Claim Amount, issued by an admitted surety, naming Claimant as obligee, and conditioned on payment of any judgment rendered on the claim (“Bond”).
7.3 Release Procedures.
Upon full payment or satisfaction of the Claim Amount, Claimant shall, within five (5) business days, execute and deliver a Release Notice in recordable form. Failure to deliver a Release Notice after payment entitles the paying party to recover consequential damages, including reasonable attorneys’ fees.
7.4 Limitation of Liability.
No Obligor shall be liable to the Prime Contractor or any other person for lawfully withholding funds pursuant to this Notice up to the Claim Amount plus the twenty-percent statutory allowance (“Liability Cap”).
8. DISPUTE RESOLUTION
8.1 Governing Law. This Notice and any related enforcement action shall be governed by the laws of the State of Arizona.
8.2 Forum Selection. The Superior Court of the State of Arizona in and for the County where the Project is located shall have exclusive jurisdiction.
8.3 Arbitration. Not applicable.
8.4 Jury Waiver. Not applicable.
8.5 Injunctive Relief. Nothing herein limits Claimant’s right to seek injunctive or equitable relief to enforce withholding obligations.
9. GENERAL PROVISIONS
9.1 Amendments and Waivers. No amendment to this Stop Notice is effective unless in writing and signed by Claimant. Waiver of any provision requires written consent of Claimant and applies only to the specific instance waived.
9.2 Assignment. Claimant may assign its rights under this Stop Notice in connection with an assignment of the underlying Claim Amount; any other assignment is void without written consent of Claimant.
9.3 Successors and Assigns. This Stop Notice binds and benefits the parties and their respective successors and permitted assigns.
9.4 Severability. If any provision of this Notice is held unenforceable, the remaining provisions shall remain in full force and effect and be construed to fulfill the parties’ intent to the maximum extent permitted by law.
9.5 Integration. This Stop Notice constitutes the entire notice and supersedes all prior communications relating to the same claim and Project.
9.6 Counterparts; Electronic Signatures. This Notice may be executed in counterparts, each of which is deemed an original, and all of which constitute one instrument. Signatures delivered by facsimile, PDF, or secure electronic signature platform shall be deemed originals.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, Claimant executes this Stop Notice as of the Effective Date set forth above.
[CLAIMANT LEGAL NAME]
By: ______
Name: ____
Title: _____
State of __ )
County of __ )
Subscribed and sworn (or affirmed) before me on this _ day of _, 20_, by _____, as _____ of [CLAIMANT LEGAL NAME], personally known to me or proven on the basis of satisfactory evidence to be the person who appeared before me.
Notary Public
My Commission Expires: _____
[// GUIDANCE: If a Lender is named as an Obligor, consider obtaining an acknowledgment of receipt below to avoid service disputes.]
ACKNOWLEDGMENT OF RECEIPT (Optional)
The undersigned hereby acknowledges receipt of the foregoing Stop Notice on __, 20__.
Owner: ____ Title: __
Lender: ____ Title: __
© [YEAR] [LAW FIRM/ PREPARER]. All rights reserved. This template is provided solely for use by qualified legal professionals and must be reviewed for project-specific compliance prior to use.