STOP-NOTICE AND DEMAND FOR WITHHOLDING OF FUNDS
(“Stop-Notice”)
[// GUIDANCE: This template is drafted for use on private construction projects located in the State of Maine and is intended to compel the Owner (and, if applicable, the Construction Lender) to withhold further payments to the Direct Contractor until the Claimant’s lien claim has been resolved, bonded off, or otherwise released. It is not a substitute for timely recording a “Statement of Account” or commencing a lien enforcement action under 10 M.R.S. §§ 3251–3269. Practitioners should verify all dates, amounts, and statutory deadlines before 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 and Demand for Withholding of Funds Pursuant to 10 M.R.S. §§ 3251 et seq.
1.2 Parties
a. “Claimant”: [CLAIMANT LEGAL NAME], a [STATE] [entity type], having its principal place of business at [ADDRESS].
b. “Owner”: [OWNER LEGAL NAME], a [STATE] [entity type], having its principal place of business at [ADDRESS].
c. “Direct Contractor”: [CONTRACTOR LEGAL NAME], the party with whom Owner directly contracted for the Work.
d. “Construction Lender” (if any): [LENDER LEGAL NAME], its successors and assigns.
e. “Surety” (if any bond is posted): [SURETY LEGAL NAME].
1.3 Project
Project Name: [PROJECT NAME]
Project Address / Legal Description: [PROPERTY ADDRESS OR ATTACH LEGAL DESCRIPTION AS EXHIBIT A].
1.4 Effective Date
This Stop-Notice becomes effective on the date of the latest signature below (“Effective Date”).
1.5 Governing Law and Jurisdiction
This Stop-Notice is governed by the Maine mechanic’s lien statutes, 10 M.R.S. §§ 3251 et seq., and any related common-law principles. The forum for any litigation arising out of or relating to this Stop-Notice shall be the state courts located in [COUNTY], Maine.
2. DEFINITIONS
For purposes of this Stop-Notice, capitalized terms have the meanings set forth below:
“Amount of Claim” means the unpaid contract price of $[AMOUNT] for labor, materials, services, or equipment furnished by Claimant for the Project.
“Bond” means a lien discharge bond, cash deposit, or other security posted pursuant to applicable Maine law in an amount not less than the Amount of Claim plus statutory interest and costs.
“Lien” means Claimant’s mechanic’s lien rights under 10 M.R.S. §§ 3251 et seq.
“Release” means a written, unconditional waiver and release of this Stop-Notice executed by Claimant in substantially the form attached as Exhibit B.
“Work” means the labor, materials, services, and equipment furnished by Claimant, as further described in Section 3.2.
3. OPERATIVE PROVISIONS
3.1 Notice and Demand
a. Claimant hereby gives written notice that it has furnished Work to the Project and has not been paid the Amount of Claim.
b. Pursuant to its Lien rights, Claimant demands that Owner and Construction Lender immediately withhold from any unpaid contract funds otherwise due or to become due to Direct Contractor an amount equal to the Amount of Claim (including any retainage) until this Stop-Notice is released, satisfied, or discharged by bond.
3.2 Description of Work
[Provide concise but complete description of labor, materials, services, or equipment, including first and last date of furnishing and any relevant purchase order, subcontract, or delivery ticket numbers.]
3.3 Statutory Deadlines
a. First furnishing: [DATE]
b. Last furnishing: [DATE]
c. Deadline to record Statement of Account (within 90 days after last furnishing): [DATE]
d. Deadline to commence enforcement action (within 120 days after last furnishing): [DATE]
3.4 Conditions Precedent
This Stop-Notice is conditioned upon (i) Claimant’s continued compliance with statutory notice and filing requirements, and (ii) Claimant’s timely prosecution of any enforcement action if payment is not received.
4. REPRESENTATIONS & WARRANTIES
4.1 Authority
Claimant represents that the undersigned is duly authorized to execute and deliver this Stop-Notice on its behalf.
4.2 Good-Faith Statement
Claimant warrants that the Amount of Claim is just, due, and owing and that all credits and offsets known to Claimant have been duly allowed.
4.3 Compliance
Claimant represents that it has satisfied all applicable licensing requirements and has furnished the Work in accordance with its subcontract and applicable law.
4.4 Survival
The representations and warranties herein survive any Release until Owner or Surety has fully satisfied the Amount of Claim.
5. COVENANTS & RESTRICTIONS
5.1 Claimant’s Covenants
a. To promptly furnish any additional documentation reasonably requested by Owner or Construction Lender to substantiate the Amount of Claim.
b. To execute a Release within three (3) business days after receipt of good-funds payment or after a Bond satisfying Section 7.2 is recorded and delivered to Claimant.
5.2 Owner’s Covenants
a. To segregate and withhold from progress payments or retainage an amount at least equal to the Amount of Claim.
b. Not to release such withheld funds except (i) upon Claimant’s written Release, (ii) upon posting of a compliant Bond, or (iii) pursuant to final non-appealable court order.
5.3 Construction Lender’s Covenants
If Construction Lender has notice of this Stop-Notice, it shall similarly withhold disbursements from the Owner or Direct Contractor in an amount equal to the Amount of Claim.
6. DEFAULT & REMEDIES
6.1 Events of Default
a. Owner or Construction Lender releases withheld funds in violation of Section 5.
b. Claimant materially misrepresents the Amount of Claim.
c. Any party fails to comply with a final court order relating to this Stop-Notice.
6.2 Cure Period
Except as to a willful release of withheld funds, the defaulting party shall have five (5) business days after written notice to cure the default.
6.3 Remedies
a. Specific Performance: Claimant may seek a court order compelling compliance with the withholding obligations.
b. Damages: The defaulting party is liable for the Amount of Claim, reasonable attorneys’ fees, court costs, and statutory interest.
c. Lien Enforcement: Claimant retains all rights to enforce its Lien.
d. Injunctive Relief: Claimant may seek temporary, preliminary, and permanent injunctive relief to preserve funds.
6.4 Attorneys’ Fees
The prevailing party in any action arising out of or relating to this Stop-Notice is entitled to reasonable attorneys’ fees and costs.
7. RISK ALLOCATION
7.1 Indemnification (Claimant to Owner)
Claimant shall indemnify, defend, and hold harmless Owner and Construction Lender from any loss, liability, or expense (including reasonable attorneys’ fees) arising out of a judicial finding that Claimant willfully exaggerated the Amount of Claim by more than fifteen percent (15%).
7.2 Bonding Requirements
Owner or Construction Lender may discharge this Stop-Notice by recording and delivering to Claimant a Bond executed by a surety licensed to transact business in Maine in an amount not less than the Amount of Claim plus twenty-five percent (25%) to cover interest and costs.
7.3 Limitation of Liability
Owner’s liability under this Stop-Notice is capped at the lesser of (i) the Amount of Claim or (ii) the unpaid balance of the contract price in Owner’s possession at the time of receipt of this Stop-Notice.
7.4 Force Majeure
No party is liable for failing to perform any obligation (other than payment of money) caused by events beyond its reasonable control, provided that such party gives prompt notice and resumes performance when feasible.
8. DISPUTE RESOLUTION
8.1 Governing Law
Maine law governs all matters arising out of or relating to this Stop-Notice, without regard to conflict-of-law principles.
8.2 Forum Selection
Any action shall be brought exclusively in the state courts located in [COUNTY], Maine.
8.3 Arbitration / Jury Waiver
Not applicable.
8.4 Injunctive Relief
Nothing herein limits Claimant’s right to seek equitable or injunctive relief to preserve the withheld funds.
9. GENERAL PROVISIONS
9.1 Amendment and Waiver
No amendment or waiver is effective unless in writing and signed by the party against whom it is enforced.
9.2 Assignment
Neither this Stop-Notice nor any rights hereunder may be assigned without the prior written consent of the non-assigning parties, except that Claimant may assign its Lien rights and this Stop-Notice to a bonding company or secured lender.
9.3 Successors and Assigns
This Stop-Notice binds and benefits the parties and their respective successors and permitted assigns.
9.4 Severability
If any provision is held invalid or unenforceable, the remaining provisions remain in full force to the maximum extent permitted by law.
9.5 Integration
This Stop-Notice constitutes the entire agreement of the parties concerning the subject matter and supersedes all prior communications relating thereto.
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. Electronic signatures and PDF copies are deemed originals.
10. 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: _____
Date: _______
OWNER:
[OWNER LEGAL NAME]
By: _____
Name: _____
Title: _____
Date: _______
CONSTRUCTION LENDER (if applicable):
[LENDER LEGAL NAME]
By: _____
Name: _____
Title: _____
Date: _______
[// GUIDANCE: If notarization is customary in your county or required by lender policy, add jurat/acknowledgment blocks here.]
EXHIBIT A
(LEGAL DESCRIPTION OF PROPERTY)
[Attach or insert]
EXHIBIT B – FORM OF RELEASE
Release of Stop-Notice
Claimant hereby acknowledges receipt of $[AMOUNT] in full satisfaction of the Stop-Notice dated [DATE] and releases Owner, Construction Lender, and their sureties from all obligations thereunder, reserving no claims whatsoever.
[Signature / Date / Notary as required]
[// GUIDANCE: Serve this Stop-Notice by a method that provides verifiable proof of delivery (e.g., certified mail, return receipt requested; hand delivery with signed receipt; or statutory process server). Retain copies of all transmittals. Confirm that the Stop-Notice is served within the statutory period and that the Statement of Account and foreclosure action deadlines are calendared and monitored.]