STOP NOTICE TO WITHHOLD PAYMENT PENDING LIEN RESOLUTION
District of Columbia
[// GUIDANCE: This template is intended for use by a subcontractor, material supplier, or other potential lien claimant (“Claimant”) on a private construction project located in the District of Columbia. Practitioners should confirm actual statutory requirements, filing deadlines, and service formalities prior to finalizing and serving this document.]
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. STOP NOTICE TO WITHHOLD PAYMENT PENDING LIEN RESOLUTION (the “Stop Notice”).
1.2 Parties.
• Claimant: [CLAIMANT LEGAL NAME], a [jurisdiction] [entity type], having its principal place of business at [ADDRESS].
• Direct Contractor: [DIRECT CONTRACTOR NAME], a [jurisdiction] [entity type], having its principal place of business at [ADDRESS].
• Owner/Obligor: [OWNER NAME], a [jurisdiction] [entity type], having its principal place of business at [ADDRESS].
• Construction Lender (if any): [LENDER NAME], a [jurisdiction] [entity type], having its principal place of business at [ADDRESS].
1.3 Project Information.
Project Name: [PROJECT NAME]
Project Address: [PROJECT ADDRESS]
Contract Date Between Owner and Direct Contractor: [DATE]
1.4 Effective Date & Jurisdiction.
This Stop Notice is effective as of [EFFECTIVE DATE] and is governed by the applicable mechanic’s lien statutes of the District of Columbia, D.C. Code § 40-301.01 et seq. (2023) (collectively, the “Lien Law”), and other applicable law.
1.5 Recitals.
A. Claimant has furnished labor, materials, equipment, or services (“Work”) for the Project pursuant to a contract with [CONTRACTING PARTY] dated [DATE] (the “Subcontract”).
B. As of the Effective Date, Claimant is owed $[CLAIM AMOUNT] (the “Claimed Sum”) and has not been timely paid.
C. Pursuant to the Lien Law and other applicable law, Claimant provides this Stop Notice to require the withholding of funds otherwise payable to the Direct Contractor pending resolution of Claimant’s lien rights.
2. DEFINITIONS
For ease of reference, capitalized terms used in this Stop Notice have the meanings given below. Terms defined in one Section apply throughout the entire document.
“Bond” means a surety bond in the statutorily required form and amount posted to discharge the Stop Notice pursuant to Section 7.
“Claim” means the Claimant’s demand for payment of the Claimed Sum arising out of the Work.
“Claimed Sum” has the meaning given in Recital B.
“Lien Action” means an action to foreclose or enforce a mechanic’s lien or bond claim under the Lien Law.
“Obligor” means, individually and collectively, the Owner and any Construction Lender to whom this Stop Notice is directed.
“Stop Notice” means this written notice directing the withholding of funds under the Lien Law.
3. OPERATIVE PROVISIONS
3.1 Stop Notice and Demand to Withhold.
(a) Claimant hereby demands that each Obligor immediately withhold from any payment otherwise due or to become due to the Direct Contractor an amount sufficient to satisfy the Claim, together with allowable interest, costs, and attorney fees.
(b) The withholding shall continue until (i) written release of this Stop Notice by Claimant, (ii) posting of a Bond consistent with Section 7, or (iii) final resolution of the Claim pursuant to a court order, settlement agreement, or other binding disposition.
3.2 Amount of Claim.
The Claimed Sum as of the Effective Date is $[CLAIM AMOUNT], exclusive of statutory interest, costs, and attorney fees.
3.3 Description of Work.
[DETAILED DESCRIPTION OF LABOR, MATERIALS, OR SERVICES PROVIDED, WITH DATES OF FIRST AND LAST FURNISHING].
3.4 Payment Application Detail.
Invoice/Pay App No.: [NUMBER]
Date Submitted: [DATE]
Amount Outstanding: $[AMOUNT]
3.5 Service of Stop Notice.
Claimant will serve this Stop Notice in compliance with the service methods authorized by the Lien Law, including certified mail, return receipt requested, personal delivery with signed acknowledgment, or statutory substitute service.
3.6 Preservation of Lien Rights.
Nothing in this Stop Notice constitutes a waiver of Claimant’s right to record or perfect a mechanic’s lien, commence a Lien Action, or pursue any other remedy available at law or in equity.
3.7 Conditions Precedent.
This Stop Notice is conditioned upon Claimant’s continued compliance with (i) all notice, timing, and recording requirements of the Lien Law; and (ii) any contractual prerequisites contained in the Subcontract.
4. REPRESENTATIONS & WARRANTIES
4.1 Authority.
Claimant represents that the individual executing this Stop Notice is duly authorized to bind Claimant.
4.2 Accuracy of Claim.
Claimant warrants that, to the best of its knowledge after reasonable inquiry, the Claimed Sum is true, correct, and not exaggerated.
4.3 Compliance with Lien Law.
Claimant represents that all preliminary notices (if any), sworn statements, and other statutory prerequisites to enforcement of its lien rights have been met or will be timely satisfied.
4.4 Survival.
The representations and warranties in this Section 4 survive any withdrawal, release, or discharge of this Stop Notice for a period equal to the applicable statute of limitations for a Lien Action.
5. COVENANTS & RESTRICTIONS
5.1 Cooperation.
Claimant will promptly furnish additional documentation reasonably requested by an Obligor to substantiate the Claim.
5.2 Notice of Changes.
Claimant shall notify each Obligor in writing within five (5) business days of (i) receipt of payment in full, (ii) withdrawal of the Claim, or (iii) any material change in the Claimed Sum.
5.3 Duty to Commence Lien Action.
If the Claim remains unresolved, Claimant shall commence a Lien Action within the statutory period required under the Lien Law, failing which the Obligors may treat this Stop Notice as withdrawn.
6. DEFAULT & REMEDIES
6.1 Events of Default.
(a) Failure of an Obligor to withhold the Claimed Sum after actual receipt of this Stop Notice constitutes a default.
(b) Failure of Claimant to commence a timely Lien Action as required by Section 5.3 constitutes a default by Claimant.
6.2 Cure Periods.
(a) Obligor Default: three (3) business days after written notice from Claimant.
(b) Claimant Default: ten (10) business days after written notice from an Obligor.
6.3 Remedies.
(a) Upon Obligor Default, Claimant may pursue injunctive relief compelling compliance, damages equal to the wrongfully released funds, and all statutorily recoverable costs and attorney fees.
(b) Upon Claimant Default, any Obligor may release the withheld funds without liability to Claimant.
6.4 Attorneys’ Fees.
The prevailing party in any dispute arising from this Stop Notice is entitled to recover its reasonable attorney fees and costs to the fullest extent permitted by law.
7. RISK ALLOCATION
7.1 Bonding Requirements.
(a) An Obligor or the Direct Contractor may discharge this Stop Notice by posting a Bond in at least 125% of the Claimed Sum, conditioned as required under the Lien Law.
(b) Upon receipt of a duly issued Bond, Claimant shall execute and deliver a written release of this Stop Notice within three (3) business days.
7.2 Indemnification.
The principal and surety under any Bond shall jointly and severally indemnify and hold harmless all Obligors from and against the Claim, together with any associated costs and attorney fees.
7.3 Liability Cap.
Absent bad-faith or willful misconduct, the liability of any Obligor for wrongfully withholding or releasing funds shall not exceed the lesser of (i) the amount improperly withheld or released, or (ii) the Claimed Sum.
7.4 Force Majeure.
No party shall be liable for failure to perform any obligation under this Stop Notice to the extent such failure is caused by events beyond the party’s reasonable control, including acts of God, governmental orders, or labor disputes.
8. DISPUTE RESOLUTION
8.1 Governing Law.
This Stop Notice and any related dispute are governed by the laws of the District of Columbia, without regard to conflict-of-laws principles.
8.2 Forum Selection.
Each party irrevocably submits to the exclusive jurisdiction of the courts of the District of Columbia (state courts) for any proceeding arising out of or relating to this Stop Notice.
8.3 Arbitration.
Not applicable.
8.4 Jury Waiver.
Not applicable.
8.5 Injunctive Relief.
Claimant expressly reserves all rights to seek preliminary or permanent injunctive relief to enforce the withholding of funds or preserve lien rights.
9. GENERAL PROVISIONS
9.1 Amendments; Waivers.
No amendment or waiver of any provision of this Stop Notice is effective unless in writing and signed by the party against whom enforcement is sought.
9.2 Assignment.
Claimant may not assign its rights under this Stop Notice without prior written consent of the Owner, which consent shall not be unreasonably withheld.
9.3 Successors & Assigns.
This Stop Notice binds and benefits the parties and their respective successors and permitted assigns.
9.4 Severability.
If any provision of this Stop Notice is held invalid or unenforceable, the remaining provisions shall remain in full force to the maximum extent permitted by law.
9.5 Entire Agreement.
This Stop Notice constitutes the entire agreement among the parties concerning the subject matter hereof and supersedes all prior oral or written statements.
9.6 Counterparts; Electronic Signatures.
This Stop Notice may be executed in counterparts, each of which is deemed an original, and all of which constitute one instrument. Signatures transmitted electronically or by facsimile are binding.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned Claimant has executed this Stop Notice effective as of the Effective Date first written above.
text
CLAIMANT:
[CLAIMANT LEGAL NAME]
By: ____
Name: [AUTHORIZED SIGNATORY]
Title: [TITLE]
Date: ________
NOTARY PUBLIC ACKNOWLEDGMENT
District of Columbia, ss:
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 individual whose name is subscribed to this instrument, and acknowledged executing the same in the capacity stated, for the purposes therein contained.
Witness my hand and official seal.
Notary Public
My commission expires: ____
[// GUIDANCE: Add additional signature lines for the Direct Contractor and Owner if a contemporaneous acknowledgement of receipt is desired. Notarial formalities in D.C. generally require a notary seal and commission expiration date.]
END OF DOCUMENT