STOP PAYMENT NOTICE
(Minnesota Mechanic’s Lien – Minn. Stat. § 514.01 et seq.)
[// GUIDANCE: This template is intended for use by licensed Minnesota construction‐law practitioners. Verify all statutory deadlines and service requirements before use.]
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 Parties.
(a) “Claimant”: [LEGAL NAME], a [ENTITY TYPE] with its principal place of business at [ADDRESS].
(b) “Obligated Party”: [LEGAL NAME OF OWNER / CONSTRUCTION LENDER], a [ENTITY TYPE] with its principal place of business at [ADDRESS].
1.2 Project.
Project name: [PROJECT TITLE]
Project location: [STREET ADDRESS, CITY, MN ZIP]
Prime contract date: [DATE]
Prime contractor: [LEGAL NAME]
1.3 Effective Date.
This Stop Payment Notice (“Notice”) is effective on the date of service set forth in Section 3.9 (the “Effective Date”).
1.4 Jurisdiction.
This Notice is issued pursuant to the Minnesota Mechanics Lien Act, Minn. Stat. § 514.01 et seq., and all other applicable Minnesota law (collectively, “State Lien Law”).
2. DEFINITIONS
For purposes of this Notice, capitalized terms have the meanings set forth below.
“Bond” means a statutory lien‐release bond furnished under Minn. Stat. § 514.[____] [// GUIDANCE: Insert the correct subsection after verification].
“Claim Amount” means US $[AMOUNT], representing the unpaid balance for labor, services, equipment, or materials furnished by Claimant to the Project.
“Claim Documents” means all invoices, sworn statements, and other evidence supporting the Claim Amount.
“Funds Subject to Withholding” means any unpaid contract funds, retention, progress payments, or loan proceeds otherwise due or to become due to the Prime Contractor or any subcontractor against whom Claimant’s lien is asserted, in an amount not less than the Claim Amount plus [25 %] for anticipated interest, costs, and fees.
“Release Event” has the meaning given in Section 3.7.
“Service” and “Serve” mean personal delivery or certified mail, return receipt requested, in strict conformity with State Lien Law.
3. OPERATIVE PROVISIONS
3.1 Stop Payment Directive.
Pursuant to State Lien Law, Claimant hereby directs Obligated Party to withhold and secure the Funds Subject to Withholding until the earlier of (i) occurrence of a Release Event, or (ii) further order of a court of competent jurisdiction.
3.2 Claim Amount.
Claimant asserts a mechanics lien claim in the Claim Amount for labor, services, equipment, or materials furnished to the Project during the period [DATE] through [DATE]. Detailed Claim Documents are attached as Exhibit A.
3.3 Continuation of Work.
Nothing in this Notice shall obligate Claimant to perform additional work; however, if Claimant continues to perform, all additional amounts shall be deemed part of the Claim Amount unless separately waived in writing.
3.4 Interest.
The Claim Amount shall accrue interest at the lesser of (i) [___ %] per annum or (ii) the maximum rate permitted by applicable law, from the date payment was first due until paid in full.
3.5 Reservation of Lien Rights.
Claimant expressly reserves all rights to perfect, enforce, foreclose, or otherwise prosecute its mechanics lien under State Lien Law.
3.6 Bonding Requirements.
(a) Substitution. Obligated Party may release the Funds Subject to Withholding by procuring and delivering to Claimant a Bond in a penal sum equal to at least [150 %] of the Claim Amount, issued by a surety licensed in Minnesota and otherwise complying with State Lien Law.
(b) Form of Bond. Any Bond shall name Claimant as the sole obligee and shall recite that it is issued pursuant to Minn. Stat. § 514.[____].
3.7 Release Procedures.
Upon the earliest of the following (each, a “Release Event”), Claimant shall promptly execute and deliver a written release of this Notice:
(i) full payment of the Claim Amount, plus accrued interest and recoverable costs;
(ii) receipt of an acceptable Bond as described in Section 3.6; or
(iii) written agreement executed by Claimant and Obligated Party resolving the claim.
3.8 Conditions Precedent.
Claimant’s obligations under this Notice are conditioned upon accurate, complete, and timely payment of all sums due.
3.9 Service of Notice.
Concurrently with execution, Claimant shall Serve an endorsed copy of this Notice and all required attachments on each Obligated Party and on the Prime Contractor, in the manner prescribed by State Lien Law. Proof of Service shall be filed or recorded as required.
4. REPRESENTATIONS & WARRANTIES
Claimant represents and warrants to Obligated Party that, as of the Effective Date:
4.1 Performance. Claimant has fully performed or is diligently performing the labor, services, equipment, or materials described in the Claim Documents.
4.2 Accuracy. The Claim Amount is true, correct, and made in good faith.
4.3 Compliance. Claimant has complied with all preliminary notice, licensing, and registration requirements under State Lien Law, including any statutory pre-lien notices.
4.4 Authority. The individual executing this Notice on behalf of Claimant is duly authorized to bind Claimant.
4.5 No Waiver. Claimant has not executed any unconditional lien waiver or release covering the Claim Amount.
All representations and warranties survive until the earlier of payment in full or a Release Event.
5. COVENANTS & RESTRICTIONS
5.1 Prosecution of Lien. Claimant shall timely file, record, and/or foreclose its lien as required by State Lien Law.
5.2 Cooperation. Obligated Party shall furnish, within [5] business days of written request, a verified accounting of all remaining contract funds.
5.3 Notice of Disbursement. Obligated Party shall provide Claimant at least [10] business days’ prior written notice before disbursing any funds in contravention of this Notice.
5.4 Non-Interference. Neither party shall take any action intended to hinder or delay the other party’s statutory rights or remedies.
6. DEFAULT & REMEDIES
6.1 Events of Default.
(a) Failure by Obligated Party to withhold funds as required herein;
(b) Failure by Claimant to prosecute its lien within statutory deadlines;
(c) Material misrepresentation by either party in this Notice or Claim Documents.
6.2 Cure Period.
The defaulting party shall have [5] business days after written notice to cure any Event of Default, except that withholding obligations under Section 3.1 are immediate and non-curable.
6.3 Remedies.
Upon any uncured Event of Default, the non-defaulting party may exercise any combination of the following remedies:
(i) injunctive relief compelling compliance;
(ii) recovery of actual damages, including attorney fees and costs as allowed by Minn. Stat. § 514.[____];
(iii) specific performance; and
(iv) any other remedy available at law or in equity.
7. RISK ALLOCATION
7.1 Indemnification.
(a) By Claimant. Claimant shall indemnify and hold harmless Obligated Party against third-party claims arising solely from Claimant’s willful misconduct.
(b) By Obligated Party. Obligated Party shall indemnify and hold Claimant harmless from any loss, including attorney fees, arising out of Obligated Party’s improper disbursement of funds in violation of this Notice.
7.2 Limitation of Liability.
Obligated Party’s total liability to Claimant under this Notice shall not exceed the Funds Subject to Withholding, except in cases of gross negligence or willful misconduct.
7.3 Insurance.
Each party shall maintain commercially reasonable insurance for liabilities arising under this Notice.
7.4 Force Majeure.
Neither party is liable for delays caused by events beyond its reasonable control; payment obligations, however, are not excused.
8. DISPUTE RESOLUTION
8.1 Governing Law.
This Notice and any dispute arising hereunder shall be governed by Minnesota law, without regard to conflict-of-laws principles.
8.2 Forum Selection.
The parties consent to exclusive jurisdiction in the state courts located in [COUNTY], Minnesota.
8.3 Arbitration.
Not applicable. Nothing herein shall be construed as a consent to arbitration.
8.4 Jury Waiver.
Not applicable.
8.5 Injunctive Relief.
Each party acknowledges that breach of this Notice may cause irreparable harm for which money damages are inadequate. The non-breaching party is entitled to seek injunctive relief without the necessity of posting bond, to the extent permitted by law.
9. GENERAL PROVISIONS
9.1 Amendments and Waivers.
No amendment or waiver of any provision of this Notice is effective unless in writing and signed by both Claimant and Obligated Party. A waiver is effective only in the specific instance and for the specific purpose given.
9.2 Assignment.
Neither party may assign this Notice without the prior written consent of the other, except that Claimant may collaterally assign its rights to a surety or lender.
9.3 Successors and Assigns.
This Notice binds and benefits the parties and their respective successors and permitted assigns.
9.4 Severability.
If any provision is held unenforceable, the remaining provisions shall be severed and enforced to the maximum extent permitted by law.
9.5 Integration.
This Notice, together with the Claim Documents, constitutes the entire agreement between the parties respecting the subject matter and supersedes all prior discussions or agreements.
9.6 Counterparts; Electronic Signatures.
This Notice may be executed in counterparts, each of which is deemed an original, and all of which constitute one instrument. Electronic signatures are valid and binding to the fullest extent permitted by law.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned has executed and Delivered this Stop Payment Notice as of the Effective Date.
CLAIMANT:
[LEGAL NAME]
By: ____
Name: ____
Title: ____
Date: ______
OBLIGATED PARTY (Acknowledgment of Receipt Only):
[LEGAL NAME]
By: ____
Name: ____
Title: ____
Date of Receipt: ___
[// GUIDANCE: Add notarization or witness blocks if required for filing in the county of the Project.]
EXHIBIT A – CLAIM DOCUMENTS
- Sworn Statement of Account
- Itemized Invoices
- Delivery Tickets / Time Sheets
- Preliminary Notice(s) (if applicable)
[// GUIDANCE: Before serving, confirm (1) that you are within Minnesota’s statutory deadline for service of a stop payment notice or, if no formal stop‐notice statute applies, that you retain all lien‐filing deadlines under Minn. Stat. § 514.08; (2) that service complies with Minn. Stat. § 514.06; and (3) that the amount claimed is accurate and properly supported. Failure to satisfy statutory prerequisites may render the Notice void or expose the claimant to damages, costs, and attorney fees.]