STOP NOTICE AND DEMAND TO WITHHOLD PAYMENT

(Massachusetts – Private Construction Project)

TABLE OF CONTENTS

1. Document Header ............................................................................. 2
2. Definitions ....................................................................................... 3
3. Operative Provisions – Stop Notice & Withholding Directive ............... 4
4. Representations & Warranties ............................................................ 5
5. Covenants & Ongoing Obligations .................................................... 6
6. Bonding & Release Procedures ........................................................... 7
7. Default & Remedies ....................................................................... 8
8. Risk Allocation ............................................................................... 9
9. Dispute Resolution ......................................................................... 10
10. General Provisions ....................................................................... 11
11. Execution Block ............................................................................ 12

[// GUIDANCE: This template is intentionally drafted in contract-style form to (i) satisfy practitioners who prefer a bilateral, enforceable instrument in addition to the statutory notice, and (ii) provide clear procedures for bonding, release, and allocation of risk. Practitioners may shorten the template to a one-page statutory notice if desired, retaining Sections 1, 3, 6, 9, and 11.]

1. DOCUMENT HEADER

1.1 Title. Stop Notice and Demand to Withhold Payment Pending Lien Resolution (this “Stop Notice”).

1.2 Parties.
(a) Claimant: [CLAIMANT LEGAL NAME], a [STATE] [ENTITY TYPE], located at [ADDRESS], telephone [PHONE], email [EMAIL].
(b) Obligor (Contractor): [PRIME CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE], located at [ADDRESS].
(c) Disbursing Party (each, a “Withholding Party”):
  (i) Owner: [OWNER LEGAL NAME], located at [ADDRESS]; and/or
  (ii) Construction Lender (if applicable): [LENDER LEGAL NAME], located at [ADDRESS].

1.3 Project. Project Name/Description: [PROJECT], located at [SITE ADDRESS / LEGAL DESCRIPTION] (the “Project”).

1.4 Contract Reference. Claimant furnished labor, material, and/or equipment to the Project pursuant to that certain [SUBCONTRACT / PURCHASE ORDER] dated [DATE] between Claimant and Obligor (the “Underlying Contract”).

1.5 Effective Date & Governing Law. This Stop Notice is effective as of [EFFECTIVE DATE] and shall be governed by the lien laws of the Commonwealth of Massachusetts, including Mass. Gen. Laws ch. 254 and related common-law principles (collectively, “Applicable Law”).

2. DEFINITIONS

The following capitalized terms are used with the meanings set forth below. Undefined capitalized terms have the meanings assigned elsewhere in this Stop Notice.

“Bond” has the meaning provided in Section 6.2.
“Bonding Party” means Obligor or any other Person posting a Bond.
“Claim Amount” means $[AMOUNT] (exclusive of interest, costs, and attorney fees) currently overdue and owing to Claimant under the Underlying Contract.
“Final Resolution” has the meaning provided in Section 6.4.
“Withheld Funds” means funds otherwise payable to Obligor (or any lower-tier contractor) that a Withholding Party is directed to retain in accordance with Section 3.

[// GUIDANCE: Expand or narrow definitions to fit the transaction. Keep terms alphabetized.]

3. OPERATIVE PROVISIONS — STOP NOTICE & WITHHOLDING DIRECTIVE

3.1 Stop Notice. Pursuant to Applicable Law and the Underlying Contract, Claimant hereby gives formal Stop Notice and demands that each Withholding Party immediately withhold from any current or future payments otherwise due to Obligor an amount not less than the Claim Amount plus a 10 % contingency for accrued interest, statutory penalties, and fees (collectively, the “Withhold Requirement”).

3.2 Duration of Withholding. The Withhold Requirement shall remain in effect until the earliest to occur of:
 (a) Claimant delivers a written Release of Stop Notice in substantially the form of Exhibit A;
 (b) A Bond satisfying Section 6.2 is duly posted and accepted;
 (c) Final Resolution in accordance with Section 6.4; or
 (d) Entry of a final, non-appealable court order otherwise directing disposition of the Withheld Funds.

3.3 Non-Compliance. Failure of any Withholding Party to honor the Withhold Requirement may render such party jointly and severally liable to Claimant to the fullest extent permitted under Mass. Gen. Laws ch. 254 and applicable common law.

3.4 Escrow Option. Any Withholding Party may deposit the Withheld Funds into a segregated, interest-bearing escrow account with a federally insured depository institution, pending Final Resolution.

4. REPRESENTATIONS & WARRANTIES

4.1 By Claimant. Claimant represents and warrants as of the Effective Date:
 (a) All labor, materials, and/or equipment for which the Claim Amount is sought were actually furnished to the Project;
 (b) The Claim Amount is presently due and payable under the Underlying Contract and no part thereof has been paid;
 (c) Claimant has satisfied all statutory prerequisites to perfect any mechanic’s lien or related remedy under Applicable Law; and
 (d) The undersigned signatory has full authority to execute and deliver this Stop Notice.

4.2 Survival. The representations and warranties in this Section 4 shall survive until Final Resolution.

5. COVENANTS & ONGOING OBLIGATIONS

5.1 Cooperation. Claimant shall reasonably cooperate with Obligor and any Withholding Party in exchanging documentation necessary to verify the Claim Amount, including delivery of time sheets, invoices, or materials tickets.

5.2 Notice of Change. Claimant shall promptly notify all parties hereto of any material amendment to the Claim Amount or of any settlement discussions that could affect the Release Procedures in Section 6.

5.3 Preservation of Rights. Nothing herein shall be construed as a waiver of Claimant’s right to (i) record a mechanic’s lien, (ii) commence litigation, or (iii) pursue any other remedy available under Applicable Law.

6. BONDING & RELEASE PROCEDURES

6.1 Purpose. To facilitate continued Project funding, the parties agree to the following bonding and release framework.

6.2 Stop-Notice Release Bond.
 (a) Posting. Obligor (or any Bonding Party) may discharge the Withhold Requirement by procuring a surety bond (the “Bond”) executed by an admitted surety insurer authorized to transact business in Massachusetts.
 (b) Amount. The Bond shall be in a penal sum equal to 125 % of the Claim Amount (or such greater amount as any Withholding Party may reasonably require to cover potential statutory interest and fees).
 (c) Form. The Bond shall be in the form attached hereto as Exhibit B or such other form reasonably acceptable to Claimant and the Withholding Party.

6.3 Conditional Release. Upon receipt of a Bond satisfying Section 6.2, Claimant shall execute and deliver a Conditional Release of Stop Notice (Exhibit C), effective solely to the extent of the Bond.

6.4 Final Resolution. “Final Resolution” means the earliest to occur of:
 (a) Full payment of the Claim Amount to Claimant;
 (b) Written, unconditional waiver and release by Claimant; or
 (c) Entry of a final, non-appealable judgment or arbitration award determining the Claim Amount (or zero).

6.5 Return or Disbursement of Withheld Funds. Upon Final Resolution, the Withholding Party shall disburse the Withheld Funds (including accrued escrow interest, if any) in accordance with:
 (a) A joint written instruction executed by Claimant and Obligor; or
 (b) A final court order.

7. DEFAULT & REMEDIES

7.1 Events of Default. The following constitute an “Event of Default”:
 (a) A Withholding Party’s failure to honor the Withhold Requirement;
 (b) Any material misrepresentation by Claimant in Section 4;
 (c) Failure of a Bonding Party to maintain the Bond in full force and effect.

7.2 Cure Period. The non-defaulting party shall provide written notice of default; the defaulting party shall have 5 business days to cure.

7.3 Remedies. Without limiting any statutory rights, the non-defaulting party may seek:
 (a) Specific performance or injunctive relief compelling compliance;
 (b) Recovery of actual damages, including interest, costs, and reasonable attorney fees; and
 (c) Any other remedy available at law or in equity.

8. RISK ALLOCATION

8.1 Indemnification. Claimant shall indemnify, defend, and hold harmless each Withholding Party (and its respective officers, directors, employees, and agents) from and against any Losses arising out of any inaccuracy in Claimant’s representations or failure to comply with Applicable Law, except to the extent caused by such Withholding Party’s gross negligence or willful misconduct.

8.2 Limitation of Liability. Except for (i) a party’s indemnification obligations or (ii) liability arising from willful misconduct or fraud, each party’s aggregate liability under or in connection with this Stop Notice shall be capped at the lesser of (x) the Claim Amount, or (y) the total Withheld Funds.

8.3 No Consequential Damages. No party shall be liable for consequential, incidental, or punitive damages in connection with this Stop Notice.

9. DISPUTE RESOLUTION

9.1 Governing Law. This Stop Notice and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to conflict-of-law rules.

9.2 Forum Selection. Each party irrevocably submits to the exclusive jurisdiction of the state courts located in the county where the Project is situated.

9.3 Injunctive Relief. The parties acknowledge that monetary damages may be inadequate to remedy a breach of the Withhold Requirement, and each party is therefore entitled to seek temporary, preliminary, and permanent injunctive relief to enforce this Stop Notice.

[// GUIDANCE: Arbitration and jury waiver are intentionally omitted per user instructions.]

10. GENERAL PROVISIONS

10.1 Amendments. Any amendment or waiver must be in writing and signed by Claimant and the affected Withholding Party.

10.2 Successors & Assigns. This Stop Notice is binding upon and inures to the benefit of the parties and their respective successors and permitted assigns. No assignment by Obligor shall relieve it of its obligations herein.

10.3 Severability. If any provision is held invalid or unenforceable, the remaining provisions shall be liberally construed to carry out the parties’ intent.

10.4 Entire Agreement. This Stop Notice, together with any exhibits, constitutes the entire agreement with respect to the subject matter and supersedes any prior understandings.

10.5 Counterparts; Electronic Signatures. This Stop Notice may be executed in multiple counterparts, each of which is deemed an original, all of which constitute one instrument. Signatures transmitted by electronic means (e.g., PDF, DocuSign) are deemed original for all purposes.

11. EXECUTION BLOCK

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

[Notary Acknowledgment, if desired under M.G.L. ch. 183 §30 or local recording requirements.]

EXHIBIT A

FORM OF UNCONDITIONAL RELEASE OF STOP NOTICE
[Attach standard form – specify that the Release automatically terminates the Withhold Requirement upon payment in collected funds.]

EXHIBIT B

FORM OF STOP-NOTICE RELEASE BOND
[125 % of Claim Amount; Massachusetts rider language referencing Mass. Gen. Laws ch. 254.]

EXHIBIT C

FORM OF CONDITIONAL RELEASE OF STOP NOTICE
[Conditional upon Bond or partial payment; tailored to lender/owner acceptance.]

[// GUIDANCE: Review Mass. Gen. Laws ch. 254, §§ 2–4 for private-project lien timing, and ch. 254, § 14 for bond-to-release mechanics. Confirm compliance with any contractual notice provisions and lender disbursement controls. Replace bracketed text, verify dollar amounts, and append exhibits before service. Serve by certified mail, return receipt requested, or as otherwise required by contract or statute. Strict statutory deadlines apply to perfecting mechanic’s lien rights; this Stop Notice does not extend or toll those periods.]