STOP NOTICE AND DEMAND TO WITHHOLD FUNDS

(Idaho – Construction Project)

[// GUIDANCE: This template is designed for use by a potential lien claimant (typically a subcontractor or supplier) seeking to freeze undisbursed construction funds in Idaho pending resolution of a mechanics’-lien claim. Idaho has no stand-alone “stop-payment-notice” statute comparable to California’s; however, parties may contractually—and, in equity, may—demand that an Owner or Construction Lender withhold sums otherwise payable to a Direct Contractor. This document therefore couples a contractual demand with the statutory mechanics-lien framework under Idaho Code Title 45, Chapter 5. Counsel should confirm project-specific facts, contractual provisions, and statutory deadlines before service.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

1. Title: “Stop Notice and Demand to Withhold Funds (Idaho).”
2. Parties:
   a. Claimant: [CLAIMANT LEGAL NAME], a [state] [entity type] (the “Claimant”).
   b. Owner: [OWNER LEGAL NAME], a [state] [entity type] (the “Owner”).
   c. Direct Contractor: [CONTRACTOR LEGAL NAME], a [state] [entity type] (the “Contractor”).
   d. Construction Lender (if any): [LENDER LEGAL NAME], a [state/national bank/FI] (the “Lender”).
3. Project: [PROJECT NAME / LEGAL DESCRIPTION / ADDRESS] (the “Project”).
4. Effective Date: [EFFECTIVE DATE] (the “Effective Date”).
5. Governing Law: Idaho mechanics-lien law (Idaho Code tit. 45, ch. 5) and applicable Idaho common law (“Idaho Lien Law”).
6. Consideration: Mutual promises and the preservation of statutory and equitable lien rights.

II. DEFINITIONS

For ease of reference, capitalized terms have the meanings set forth below. Terms defined in one Section are cross-referenced parenthetically where first used.

1. “Claim Amount” – The unpaid sum of $[AMOUNT] for labor, services, equipment, and/or materials furnished to the Project.
2. “Demand” – The contractual and equitable demand set forth in Section 3.1 requiring the temporary withholding of funds.
3. “Release Bond” – A surety bond in the amount and form permitted under Idaho Lien Law sufficient to discharge this Stop Notice (see § 3.4).
4. “Stop Notice” – This instrument, including all exhibits, schedules, and attachments.
5. “Withheld Funds” – Retained sums otherwise payable to the Contractor, not exceeding the Claim Amount plus permitted statutory additions (e.g., interest, fees, and costs).

III. OPERATIVE PROVISIONS

3.1 Stop Notice and Demand to Withhold Funds.
a. Pursuant to Idaho Lien Law and the parties’ contractual rights, Claimant hereby demands that Owner and, if applicable, Lender immediately withhold from any payments otherwise due or to become due to Contractor the Withheld Funds.
b. The Demand shall continue in effect until (i) written Release (Section 3.3), (ii) posting of a Release Bond (Section 3.4), or (iii) final non-appealable adjudication of the underlying lien claim.

3.2 Scope of Withholding.
a. The Withheld Funds shall not exceed the Claim Amount plus up to 15 % to cover potential interest, statutory penalties, and attorney fees as may be awarded under Idaho Lien Law.
b. Owner/Lender may also withhold reasonable administrative costs actually incurred in compliance with this Stop Notice.

3.3 Release of Stop Notice.
Claimant shall deliver a written, recordable Release:
i. Within three (3) Business Days after full payment of the Claim Amount (certified funds or unconditional joint check); or
ii. Immediately upon receipt of a Release Bond that satisfies Section 3.4; or
iii. Upon written agreement of the parties resolving the Claim.

3.4 Bonding-Around Procedure.
a. Owner, Contractor, or Lender may discharge this Stop Notice by tendering a Release Bond meeting all of the following:
1. Surety licensed in Idaho and listed on the U.S. Treasury’s Circular 570;
2. Penal sum not less than 150 % of the Claim Amount (current Idaho standard for lien release bonds);
3. Beneficiary: Claimant;
4. Conditioned upon payment of any judgment or settlement of Claimant’s lien action, plus costs and fees.
b. Upon receipt of a conforming Release Bond, Claimant shall execute and record a statutory release in substantially the form attached as Exhibit A.

3.5 Preservation of Lien Rights.
Nothing herein waives or impairs Claimant’s right to record a mechanics’ lien or to commence a foreclosure action within the statutory period.

IV. REPRESENTATIONS & WARRANTIES

4.1 Claimant’s Representations.
a. Claimant has furnished labor, materials, and/or equipment of the value stated in the Claim Amount;
b. All sums claimed are justly due and unpaid;
c. Claimant holds all required licenses under Idaho Code § 54-1902 et seq. (public works) or Idaho Code § 54-5201 et seq. (private works), as applicable;
d. Claimant has complied with all contractual notice prerequisites, including any preliminary notice or pay-if-paid provisions, if enforceable.

4.2 Survival.
The representations and warranties in this Stop Notice survive payment, bonding, or release until final resolution of the Claim Amount.

V. COVENANTS

5.1 Claimant shall:
a. Commence any lien-foreclosure action within the period required by Idaho Lien Law (presently six [6] months from lien recording);
b. Provide Owner and Lender with written notice of any such action within five (5) Business Days of filing;
c. Promptly release this Stop Notice upon satisfaction of Section 3.3.

5.2 Owner shall:
a. Segregate the Withheld Funds;
b. Provide Claimant written confirmation of the amount withheld within ten (10) Business Days of service.

VI. DEFAULT & REMEDIES

6.1 Events of Default.
a. Owner or Lender’s failure to withhold or maintain the Withheld Funds;
b. Claimant’s material misrepresentation of the Claim Amount or failure to prosecute its lien claim in good faith.

6.2 Cure; Notice.
The non-defaulting party shall give written notice specifying the default and allow five (5) Business Days to cure, except that improper release of funds is an immediate default.

6.3 Remedies.
a. Injunctive Relief. Claimant may seek a temporary restraining order and preliminary injunction compelling withholding of funds.
b. Monetary Relief. The non-breaching party may recover actual damages, statutory interest, and reasonable attorney fees.
c. Specific Performance. Enforce withholding, bonding, or release obligations.

VII. RISK ALLOCATION

7.1 Indemnification – Wrongful Stop Notice.
Claimant shall indemnify, defend, and hold harmless Owner and Lender from and against any loss, cost, or expense (including attorney fees) arising from a Stop Notice subsequently adjudicated to be groundless, excessive, or fraudulent.

7.2 Limitation of Liability.
Owner and Lender’s aggregate liability to Claimant under this Stop Notice shall not exceed the amount of Withheld Funds actually retained.

7.3 Insurance.
Each party shall maintain insurance customary for its role on the Project and consistent with Idaho statutory minimums.

7.4 Force Majeure.
Delays in processing or withholding caused by acts of God, governmental orders, or events beyond reasonable control shall not constitute default, provided the claiming party gives prompt notice.

VIII. DISPUTE RESOLUTION

8.1 Governing Law.
Idaho Lien Law and other applicable laws of the State of Idaho, without regard to conflicts-of-law principles.

8.2 Forum Selection.
The state courts sitting in the county where the Project is located shall have exclusive jurisdiction.

8.3 Arbitration.
Not applicable unless the parties execute a separate written arbitration agreement.

8.4 Jury Waiver.
Not applicable (no waiver stated).

8.5 Interim Injunctive Relief.
A party may petition any court of competent jurisdiction for temporary or preliminary injunctive relief to enforce withholding, bonding, or release obligations, without posting bond to the extent permitted by law.

IX. GENERAL PROVISIONS

9.1 Amendments; Waivers.
Must be in a written instrument signed by Claimant and Owner (and Lender, if applicable). No waiver is binding unless expressly set forth in writing.

9.2 Assignment.
Claimant may not assign rights hereunder without Owner’s prior written consent, except to a surety enforcing subrogation rights.

9.3 Successors & Assigns.
This Stop Notice binds and benefits the parties and their respective successors and permitted assigns.

9.4 Severability.
Any provision held unenforceable shall be reformed to reflect the parties’ original intent to the maximum extent permitted by law; remaining provisions remain in full force.

9.5 Integration.
This instrument constitutes the entire agreement concerning the withholding of funds, superseding all prior or contemporaneous communications on that subject.

9.6 Counterparts; Electronic Signatures.
This Stop Notice may be executed in counterparts, each of which is deemed an original, and may be signed electronically pursuant to Idaho’s Uniform Electronic Transactions Act, Idaho Code §§ 28-50-101 et seq.

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the parties hereto have executed this Stop Notice as of the Effective Date.

CLAIMANT:
[CLAIMANT LEGAL NAME]
By: _____
Name: _____
Title: _______

OWNER:
[OWNER LEGAL NAME]
By: _____
Name: _____
Title: _______

CONTRACTOR (acknowledgment only):
[CONTRACTOR LEGAL NAME]
By: _____
Name: _____
Title: _______

LENDER (if any, acknowledgment only):
[LENDER LEGAL NAME]
By: _____
Name: _____
Title: _______

STATE OF __ )
: ss.
COUNTY OF __ )

On this _ day of _, 20__, before me, the undersigned, a Notary Public in and for said State, personally appeared ______, known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the foregoing instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.

Witness my hand and official seal.

Notary Public
My Commission Expires: ____

EXHIBIT A

Form of Release of Stop Notice (Idaho)
[Include statutory form of release suitable for recording, referencing Release Bond details or proof of payment.]

[// GUIDANCE: Idaho does not prescribe a mandatory form; adapt the exhibit to match current Title 45 requirements and local recorder formatting rules.]