STOP NOTICE AND REQUEST FOR WITHHOLDING OF FUNDS

(Louisiana Private Works Act – La. Rev. Stat. § 9:4801 et seq.)

[// GUIDANCE: This template is intentionally broad so that it can be adapted to either private or public Louisiana construction projects. Practitioners should confirm whether the project is governed by the Louisiana Private Works Act (La. Rev. Stat. § 9:4801 et seq.) or the Louisiana Public Works Act (La. Rev. Stat. § 38:2241 et seq.) and revise accordingly.]

TABLE OF CONTENTS

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

1. DOCUMENT HEADER

STOP NOTICE AND REQUEST FOR WITHHOLDING OF FUNDS (this “Stop Notice”) is issued and delivered as of [EFFECTIVE DATE] (the “Effective Date”) by [CLAIMANT LEGAL NAME], a [state & entity type] whose mailing address is [address] (“Claimant”), to:

• [OWNER LEGAL NAME], a [state & entity type] whose mailing address is [address] (“Owner”);
• [PRIME CONTRACTOR LEGAL NAME] (“Prime Contractor”);
• [SURETY/LENDER LEGAL NAME] (“Surety” and/or “Construction Lender,” as applicable).

Recitals

A. Claimant has furnished labor, services, equipment, and/or materials for the improvement known as [PROJECT NAME / DESCRIPTION] located at [PROPERTY LEGAL DESCRIPTION / MUNICIPAL ADDRESS] (the “Project”) pursuant to a contract (the “Subcontract”) with the Prime Contractor dated [date].

B. As of the Effective Date, Claimant is owed the unpaid sum of $[AMOUNT] for work performed on the Project (the “Unpaid Amount”).

C. Pursuant to the Louisiana Private Works Act (La. Rev. Stat. § 9:4801 et seq.), Claimant delivers this Stop Notice to compel Owner to withhold sufficient Project funds, or to require a statutory bond, pending resolution of Claimant’s privilege and claim.

NOW, THEREFORE, Claimant hereby issues this Stop Notice and respectfully demands compliance with the provisions set forth below.

2. DEFINITIONS

For purposes of this Stop Notice, the following terms have the meanings set forth below. Any capitalized term not defined in this Section and otherwise defined herein shall have the meaning given to it where defined.

“Bond” means any payment bond, security, or other surety instrument posted in favor of Claimant under the Private Works Act to secure payment of the Claim.

“Claim” means the privilege and claim for the Unpaid Amount asserted by Claimant in accordance with La. Rev. Stat. § 9:4801 et seq.

“Claim Deadline” means the statutory deadline by which Claimant must file suit or otherwise perfect its Claim, calculated from the date of substantial completion or abandonment of the Project, or as otherwise provided by law.

“Release of Stop Notice” means a written release, substantially in the form of Exhibit A, executed by Claimant upon receipt of full payment or satisfactory Bond.

“Retained Funds” means Project funds otherwise payable to the Prime Contractor or any lower-tier claimant that, pursuant to this Stop Notice, must be withheld until the earlier of (i) full payment to Claimant, (ii) posting of a Bond, or (iii) entry of a final, non-appealable order resolving the Claim.

“Stop Notice” has the meaning set forth in the preamble.

3. OPERATIVE PROVISIONS

3.1 Stop Notice and Demand for Withholding
(a) Claimant hereby demands that Owner immediately withhold from current and future payments to the Prime Contractor an amount equal to the Unpaid Amount plus reasonable estimated costs of collection, but in no event less than [125 %] of the Unpaid Amount or such other percentage as Louisiana law may require (collectively, the “Withheld Sum”).
(b) Owner shall not disburse the Withheld Sum until the earlier of: (i) receipt of a Release of Stop Notice; (ii) posting of a Bond meeting the requirements of Section 3.3; or (iii) final adjudication of the Claim.

3.2 Scope of Claim and Allocation of Withheld Sum
The Withheld Sum shall secure payment of:
(i) the Unpaid Amount;
(ii) all permissible interest, attorney fees, court costs, and collection expenses; and
(iii) any additional sums recoverable under the Private Works Act.

3.3 Bonding Option and Substitution
Owner, the Prime Contractor, or Surety may discharge the Withheld Sum by providing Claimant a Bond in a penal sum of at least [1.25 × Unpaid Amount] issued by a surety licensed to transact business in Louisiana and otherwise meeting the statutory requirements for discharge of privileges and claims under La. Rev. Stat. § 9:4831.

3.4 Service and Proof of Delivery
This Stop Notice is deemed served on the earlier of (i) personal delivery to Owner (or its duly authorized agent) and Surety, or (ii) certified mail, return-receipt requested, postage prepaid, addressed to the Owner and Surety at their last known addresses. Claimant’s Certificate of Service (Exhibit B) shall constitute prima facie evidence of proper service.

3.5 Supporting Documentation
Contemporaneously with, or within five (5) business days after, service of this Stop Notice, Claimant shall furnish Owner reasonably detailed invoices, delivery tickets, time sheets, and other documentation substantiating the Unpaid Amount. Owner may inspect such records during normal business hours upon forty-eight (48) hours’ advance written notice.

3.6 Release Procedures
Upon receipt of (i) the Withheld Sum in collected funds, (ii) a Bond satisfying Section 3.3, or (iii) other mutually agreed resolution, Claimant shall execute and deliver a Release of Stop Notice within three (3) business days.

3.7 Conditions Subsequent
(a) If Claimant fails to timely commence an action to enforce its Claim within the Claim Deadline, this Stop Notice shall be void and of no further force or effect, and Owner may disburse the Withheld Sum.
(b) Nothing herein limits Claimant’s right to file a “Statement of Claim and Privilege” or other lien-perfecting instrument.

4. REPRESENTATIONS & WARRANTIES

4.1 Claimant represents and warrants that:
(a) it is lawfully licensed (if applicable) and qualified to perform work on the Project;
(b) the Unpaid Amount is just, due, and owing, has not been paid, waived, or otherwise satisfied, and is not the subject of any pending good-faith dispute;
(c) Claimant has complied with all statutory notice, recordation, and filing requirements necessary to preserve its Claim; and
(d) the person executing this Stop Notice on Claimant’s behalf is duly authorized to do so.

4.2 Survival
The representations and warranties in this Section shall survive any payment, bonding, or other resolution of the Claim until such time as a Release of Stop Notice becomes effective.

5. COVENANTS & OBLIGATIONS

5.1 Claimant Covenants
(a) Claimant shall prosecute its Claim diligently and in good faith.
(b) Claimant shall promptly notify Owner in writing of any material change affecting the Claim or the Unpaid Amount.

5.2 Owner Covenants
Owner shall:
(i) segregate and retain the Withheld Sum in a trust or escrow account;
(ii) refrain from disbursing the Withheld Sum except as expressly permitted herein; and
(iii) promptly notify Claimant of any Bond posted in substitution for the Withheld Sum.

6. DEFAULT & REMEDIES

6.1 Events of Default
(a) Owner’s disbursement of the Withheld Sum in violation of Section 3.1.
(b) Claimant’s material misrepresentation in this Stop Notice.
(c) Failure by either party to comply with any covenant, representation, or obligation herein, after ten (10) days’ written notice and opportunity to cure.

6.2 Remedies
(a) Specific Performance and Injunction: The non-defaulting party may seek injunctive relief compelling compliance with this Stop Notice, including but not limited to restraining unlawful disbursement of the Withheld Sum.
(b) Damages: The non-defaulting party may recover all actual damages, reasonable attorney fees, and court costs resulting from a breach.
(c) Cumulative Remedies: Remedies are cumulative and may be exercised concurrently or successively.

7. RISK ALLOCATION

7.1 Indemnification (Bonding Requirements)
To the fullest extent permitted by law, the Prime Contractor and any Surety shall indemnify, defend, and hold harmless Owner from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorney fees) arising out of or relating to the Claim, except to the extent caused by Owner’s willful misconduct or bad faith failure to withhold the Withheld Sum.

7.2 Limitation of Liability (Payment Withheld)
Owner’s liability to Claimant with respect to this Stop Notice shall not exceed the lesser of (i) the Withheld Sum actually retained by Owner, or (ii) the penal sum of any Bond provided in substitution thereof, absent a judicial finding of Owner’s willful misapplication of funds.

7.3 Force Majeure
Neither party shall be liable for any delay or failure to perform caused by acts of God, war, terrorism, civil unrest, governmental order, pandemic, or other events beyond its reasonable control; provided, however, that this provision shall not relieve Owner of the obligation to retain the Withheld Sum once it has been segregated.

8. DISPUTE RESOLUTION

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

8.2 Forum Selection
Exclusive jurisdiction and venue for any action arising out of or related to this Stop Notice shall lie in the competent state court located in [PARISH NAME] Parish, Louisiana.

8.3 Arbitration & Jury Waiver
Arbitration and jury trial waivers are not applicable to this Stop Notice, and the parties expressly preserve their right to seek injunctive relief and other judicial remedies.

8.4 Injunctive Relief
The parties acknowledge that a breach of this Stop Notice may cause irreparable harm for which monetary damages are an inadequate remedy. Accordingly, the non-breaching party shall be entitled to seek temporary, preliminary, and permanent injunctive relief without posting any bond, in addition to all other remedies.

9. GENERAL PROVISIONS

9.1 Amendments and Waivers
No amendment or waiver of any provision of this Stop Notice shall be effective unless in writing and signed by Claimant and Owner. No failure or delay in exercising any right shall operate as a waiver thereof.

9.2 Assignment
Neither this Stop Notice nor any interest herein may be assigned by Claimant without the prior written consent of Owner, which shall not be unreasonably withheld. Any attempted assignment in violation of this Section shall be void.

9.3 Successors and Assigns
Subject to Section 9.2, this Stop Notice shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns.

9.4 Severability
If any provision of this Stop Notice is held by a court of competent jurisdiction to be invalid or unenforceable, such provision shall be reformed to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect.

9.5 Integration
This Stop Notice constitutes the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings, and agreements, whether written or oral.

9.6 Counterparts and Electronic Signatures
This Stop Notice may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument. Delivery of an executed counterpart by electronic transmission (e.g., PDF or DocuSign) shall be as effective as delivery of a manually executed counterpart.

10. EXECUTION BLOCK

IN WITNESS WHEREOF, Claimant has executed this Stop Notice as of the Effective Date.

Claimant: [CLAIMANT LEGAL NAME]

By: ____
Name: [PRINTED NAME]
Title: [TITLE]
Date: ________

[NOTARY ACKNOWLEDGMENT, if required]

OWNER RECEIPT & ACKNOWLEDGMENT

[// GUIDANCE: Although not required for validity, obtaining the Owner’s acknowledgment of receipt is a best practice to eliminate service disputes.]

The undersigned hereby acknowledges receipt of this Stop Notice on behalf of Owner on the date indicated below and agrees to comply with its terms.

Owner: [OWNER LEGAL NAME]

By: ____
Name: [PRINTED NAME]
Title: [TITLE]
Date: ________

EXHIBIT A

FORM OF RELEASE OF STOP NOTICE

[Date]

To: [OWNER]
Re: [PROJECT]

Claimant hereby acknowledges receipt of full payment (or acceptable Bond) in satisfaction of its Claim in the amount of $[AMOUNT] and releases the Stop Notice dated [EFFECTIVE DATE] in its entirety. This Release shall not affect any unpaid amounts arising under a different contract or change order unless expressly stated.

Claimant: [CLAIMANT LEGAL NAME]

By: ____
Name: [PRINTED NAME]
Title: [TITLE]
Date: ________

EXHIBIT B

CERTIFICATE OF SERVICE

I, the undersigned, certify under penalty of perjury that I served the foregoing Stop Notice on the parties below by the method indicated:

1. Owner: [OWNER LEGAL NAME & ADDRESS]
   ☐ Personal Delivery ☐ Certified Mail No. ____

2. Prime Contractor: [PRIME CONTRACTOR LEGAL NAME & ADDRESS]
   ☐ Personal Delivery ☐ Certified Mail No. ____

3. Surety/Lender (if any): [SURETY/LENDER LEGAL NAME & ADDRESS]
   ☐ Personal Delivery ☐ Certified Mail No. ____

Executed on ___, 20 at ____, Louisiana.

Signature: __________
Print Name: [NAME]
Title: [TITLE]

[// GUIDANCE: Recordation of a “Statement of Claim and Privilege” in the parish mortgage records is generally still required to perfect lien rights. This Stop Notice is a supplemental remedy to freeze contract funds. Calendar all statutory deadlines (often 30–60 days post-substantial completion) to avoid forfeiting privileges.]