STOP-NOTICE TEMPLATE
(Illinois – Private Construction Project)
[// GUIDANCE: This is a sophisticated template intended for use by licensed attorneys familiar with Illinois construction-lien practice. Customize bracketed sections, confirm factual accuracy, and verify current statutory limits before issuance.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Certificate of Service
1. DOCUMENT HEADER
STOP-NOTICE AND DEMAND TO WITHHOLD FUNDS
Effective Date: [DATE]
From:
[CLAIMANT NAME], an [ENTITY TYPE] (“Claimant”)
[CLAIMANT ADDRESS]
To:
[OWNER NAME], [ENTITY TYPE] (“Owner”)
[OWNER ADDRESS]
Cc (Mandatory):
(a) [PRIME CONTRACTOR NAME], the original contractor (“Contractor”)
(b) [LENDER/CONSTRUCTION LOAN TRUSTEE NAME] (“Lender”) – if applicable
Recitals
A. Claimant has furnished labor, materials, equipment, or services for improvement of the real property commonly known as “[PROJECT NAME / ADDRESS]” (the “Project”) pursuant to a subcontract dated [SUBCONTRACT DATE] with Contractor.
B. An unpaid balance in the principal amount of $ [AMOUNT] (the “Claim Amount”) remains due and owing to Claimant.
C. Under § 5 of the Illinois Mechanics Lien Act, 770 ILCS 60/5, a subcontractor may serve written notice upon the Owner, and upon the Lender if one exists, requiring the withholding of sufficient contract funds to satisfy Claimant’s lien rights.
D. Claimant now delivers this Stop-Notice to protect its lien rights and to demand that Owner and Lender withhold funds otherwise payable to Contractor in an amount sufficient to satisfy the Claim Amount plus statutory interest, costs, and attorneys’ fees.
NOW, THEREFORE, in consideration of the foregoing Recitals (which are incorporated herein) and to comply with Illinois law, Claimant issues this Stop-Notice on the terms that follow.
2. DEFINITIONS
For purposes of this Stop-Notice, capitalized terms shall have the meanings assigned below; terms defined in the singular include the plural and vice-versa.
“Bond” – A surety bond issued by a corporate surety licensed in Illinois and meeting the requirements of 770 ILCS 60/38, conditioned upon payment and holding the Owner harmless from the Claim Amount.
“Claim Amount” – The unpaid balance of $ [AMOUNT] for labor, materials, and/or services furnished by Claimant to the Project, exclusive of accrued interest, costs, and attorneys’ fees.
“Claim Documents” – Collectively, (i) this Stop-Notice; (ii) Claimant’s sworn contractor’s statement; (iii) itemized invoices and delivery tickets; and (iv) any additional documents substantiating the Claim Amount.
“Mechanics Lien Act” – The Illinois Mechanics Lien Act, 770 ILCS 60/1 et seq., as amended from time to time.
“Project” – The improvement of the real property legally described on Exhibit A attached hereto and incorporated by reference.
3. OPERATIVE PROVISIONS
3.1 Notice and Demand.
(a) Pursuant to 770 ILCS 60/5, Claimant hereby gives written notice to Owner and Lender of the Claim Amount and demands that Owner and Lender immediately withhold, from any monies now or hereafter due Contractor, a sum not less than the Claim Amount plus fifteen percent (15%) to cover potential interest, costs, and statutory attorneys’ fees (“Withheld Funds”).
(b) The Claim Amount was due on [ORIGINAL DUE DATE] and has remained unpaid for [NUMBER] days.
3.2 Itemization. Claimant provides as Exhibit B an itemized statement of the labor, materials, equipment, or services furnished, specifying the dates of performance and the corresponding charges as required by 770 ILCS 60/5.
3.3 Prohibition on Further Disbursements. Owner and Lender shall not disburse to Contractor any portion of the Withheld Funds until:
(i) Claimant files a waiver or release of lien for the Claim Amount;
(ii) Claimant executes a written acknowledgment of full payment; or
(iii) Owner or Lender posts a Bond in accordance with Section 3.4.
3.4 Substitution of Bond. Owner or Lender may discharge its withholding obligation by furnishing a Bond in an amount not less than 175% of the Claim Amount. Upon delivery of the Bond and written proof thereof to Claimant, Claimant shall promptly execute and record a release of its lien against the Project.
3.5 Preservation of Statutory Deadlines. Nothing in this Stop-Notice waives Claimant’s right to record a lien within the time prescribed by 770 ILCS 60/7 or to commence a foreclosure action within the limitations period set forth in 770 ILCS 60/9.
4. REPRESENTATIONS & WARRANTIES
4.1 Claim Validity. Claimant represents and warrants that:
(a) All labor, materials, and services described in Exhibit B were actually supplied to the Project;
(b) The Claim Amount is accurate, due, and unpaid; and
(c) Claimant has not previously been paid, nor has Claimant executed a waiver or release of lien for the Claim Amount.
4.2 Authority. The individual signing this Stop-Notice on behalf of Claimant is duly authorized to bind Claimant.
4.3 Survival. The representations and warranties herein survive service of this Stop-Notice and any subsequent settlement or litigation relating to the Claim Amount.
5. COVENANTS
5.1 Cooperation. Claimant shall promptly furnish supplementary documentation reasonably requested by Owner or Lender to evaluate the Claim Amount.
5.2 Owner’s Duty. Owner covenants to segregate and retain the Withheld Funds in a segregated, non-commingled account until disbursement is authorized under Section 3.3.
5.3 Contractor Notification. Owner shall deliver a copy of this Stop-Notice to Contractor within five (5) business days after receipt and shall provide Claimant with written confirmation of such delivery.
6. DEFAULT & REMEDIES
6.1 Events of Default. Each of the following constitutes a default:
(a) Owner’s or Lender’s failure to withhold the Withheld Funds;
(b) Unauthorized disbursement of any portion of the Withheld Funds in violation of Section 3.3; or
(c) Claimant’s material misrepresentation regarding the Claim Amount.
6.2 Cure Period. A defaulting party shall have ten (10) calendar days after written notice of default to cure.
6.3 Remedies.
(a) If Owner or Lender defaults, Claimant may (i) proceed to enforce its mechanic’s lien; (ii) seek prejudgment attachment of undisbursed construction funds; and/or (iii) recover attorneys’ fees and costs as provided under 770 ILCS 60/17.
(b) If Claimant defaults, Owner’s and Lender’s sole remedy is to release the Withheld Funds and make further payments in accordance with the prime contract.
7. RISK ALLOCATION
7.1 Indemnification/Bonding. Claimant shall indemnify, defend, and hold Owner and Lender harmless from any loss, damage, or expense (including reasonable attorneys’ fees) arising out of a wrongful or exaggerated Claim Amount; provided, however, that Claimant may satisfy its indemnification obligation by procuring the Bond described in Section 3.4.
7.2 Limitation of Liability. Owner’s and Lender’s aggregate liability to Claimant under this Stop-Notice shall not exceed the Withheld Funds.
7.3 Force Majeure. No party shall be liable for failure to perform any obligation hereunder (other than the withholding of funds) if such failure results from causes beyond its reasonable control, including acts of God, governmental orders, or labor disputes.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Stop-Notice and any dispute arising herefrom shall be governed by the Mechanics Lien Act and, to the extent not inconsistent, the laws of the State of Illinois.
8.2 Exclusive Forum. The parties submit to the exclusive jurisdiction of the state courts of competent jurisdiction located in [COUNTY], Illinois.
8.3 Injunctive & Equitable Relief. Nothing herein limits Claimant’s statutory right to injunctive relief to restrain improper disbursement of construction funds.
[// GUIDANCE: Arbitration and jury-trial waivers were expressly ruled out in the metadata; do not add.]
9. GENERAL PROVISIONS
9.1 Amendments. Any amendment to this Stop-Notice must be in writing and signed by Claimant.
9.2 Assignment. Claimant may assign its rights hereunder to a financing party upon written notice to Owner; Owner may not assign its obligations without Claimant’s written consent.
9.3 Severability. If any provision of this Stop-Notice is held invalid, the remaining provisions shall remain in full force and effect to the maximum extent permitted by law.
9.4 Entire Agreement. This Stop-Notice (including Exhibits) constitutes the entire agreement and notice with respect to the subject matter hereof and supersedes all prior oral and written communications.
9.5 Electronic Signatures & Counterparts. This document may be executed in counterparts and by electronic signature, each of which shall be deemed an original and all of which together shall constitute one instrument.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, Claimant has executed this Stop-Notice as of the Effective Date.
CLAIMANT:
[CLAIMANT NAME]
By: ____
Name: [TYPED NAME]
Title: [TITLE]
Date: _______
ACKNOWLEDGED:
OWNER:
[OWNER NAME]
By: ____
Name: [TYPED NAME]
Title: [TITLE]
Date: _______
LENDER (if any):
[LENDER NAME]
By: ____
Name: [TYPED NAME]
Title: [TITLE]
Date: _______
[// GUIDANCE: Notarization is generally not required for a § 5 notice but may be advisable for evidentiary purposes. Attach acknowledgment blocks if local recording or lender policy so requires.]
11. CERTIFICATE OF SERVICE
I, [NAME], certify under penalty of perjury that on [DATE OF MAILING], I served the foregoing Stop-Notice and all Exhibits by (check one):
☐ Certified mail, return receipt requested
☐ Personal hand delivery
☐ Overnight commercial courier
to the following parties at the addresses stated in the Document Header.
Signature: ___
Printed Name: ______
EXHIBIT A – LEGAL DESCRIPTION OF PROJECT
[INSERT COMPLETE LEGAL DESCRIPTION OR ATTACH SEPARATE SCHEDULE]
EXHIBIT B – ITEMIZED STATEMENT OF LABOR/MATERIALS
[INSERT DETAILED ITEMIZATION CONSISTENT WITH 770 ILCS 60/5]
[// GUIDANCE:
1. Verify the 90-day notice deadline (measured from the claimant’s last date of furnishing) before service.
2. Confirm the Owner’s legal name exactly as it appears on title.
3. If the Project involves public funds, additional statutory provisions under the Illinois Public Construction Bond Act may apply.
4. Preserve proof of mailing to satisfy evidentiary requirements under 770 ILCS 60/24.
5. Do not record this Stop-Notice with the recorder’s office; the statutory mechanism is service, not recording.]