MISSOURI STOP-PAYMENT NOTICE & PAYMENT WITHHOLDING AGREEMENT
(Prepared for use under Missouri mechanic’s lien statutes and related state lien law)
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
Page numbers to be added in final formatting.
1. DOCUMENT HEADER
1.1 Title & Parties.
Stop-Payment Notice & Payment Withholding Agreement (the “Notice” or this “Agreement”) issued by [CLAIMANT LEGAL NAME], a ---------- [entity type & state of organization] (“Claimant”), to and for the benefit of:
a) [PRIME CONTRACTOR LEGAL NAME], a ---------- [entity type & state] (“Prime Contractor”);
b) [OWNER LEGAL NAME], a ---------- [entity type & state] (“Owner”); and, if applicable,
c) [CONSTRUCTION LENDER LEGAL NAME], a ---------- [entity type & state] (“Lender”).
1.2 Project.
Project known as “[PROJECT NAME]”, located at [PROJECT ADDRESS], more particularly described in Exhibit A (the “Property”).
1.3 Effective Date.
This Notice is effective on the date of [DATE OF SERVICE] (the “Effective Date”).
1.4 Governing Law & Venue.
This Notice is governed by and shall be construed in accordance with the mechanic’s lien statutes of the State of Missouri (“Lien Law”). Exclusive venue lies in the state courts of [COUNTY, MISSOURI].
Recitals
WHEREAS, Claimant has furnished labor, materials, equipment, or services (collectively, “Work”) for the improvement of the Property pursuant to that certain agreement dated [DATE] between Claimant and [CONTRACTING PARTY] (the “Subcontract”); and
WHEREAS, Claimant has not been timely paid the sum of $[CLAIM AMOUNT] for the Work (the “Unpaid Amount”); and
WHEREAS, under the Lien Law, Claimant is entitled to serve a stop-payment notice to require the withholding of undisbursed contract funds pending resolution of its claim;
NOW, THEREFORE, Claimant issues this Notice and the parties agree as follows:
2. DEFINITIONS
For ease of reference, capitalized terms used but not defined elsewhere in this Notice have the meanings set forth below.
“Bond” – a surety bond issued by a corporate surety authorized to do business in Missouri, in a penal sum not less than [150% OF CLAIM], conditioned to discharge the Unpaid Amount and protect the Owner, Prime Contractor, and Lender from any loss arising out of this Notice.
“Release Event” – (i) full payment to Claimant of the Unpaid Amount (plus any accrued interest and recoverable costs), or (ii) posting of a Bond that satisfies Section 7 below.
“Stop-Period” – the period commencing on the Effective Date and terminating upon the earlier to occur of (a) a Release Event or (b) entry of a final, non-appealable court order directing otherwise.
“Undisbursed Funds” – all contract funds, draw proceeds, and retainage not yet paid to the Prime Contractor as of the Effective Date that are attributable to Work furnished by Claimant.
Additional defined terms appear where first used and are indicated by quotation marks.
3. OPERATIVE PROVISIONS
3.1 Notice to Withhold.
Pursuant to the Lien Law, Claimant hereby demands that Owner, Prime Contractor, and Lender immediately withhold the Undisbursed Funds in an amount not less than the Unpaid Amount during the Stop-Period.
3.2 Scope of Withholding.
The withholding obligation applies to (a) progress and retainage payments otherwise payable to the Prime Contractor, and (b) any other contract funds under Owner’s or Lender’s control that are allocable to the Work.
3.3 Service of Notice.
This Notice shall be deemed served on each addressee upon the earliest of:
a) personal delivery;
b) deposit with a nationally recognized overnight courier; or
c) certified mail, return-receipt requested, postage prepaid.
[// GUIDANCE: Missouri permits multiple service methods; select one and attach proof of service in Exhibit B.]
3.4 Conditions Precedent.
Claimant affirms that all statutory pre-lien notices, if any, have been timely and properly served, thereby satisfying all conditions precedent to enforcement of this Notice.
3.5 Release Procedure.
Upon the occurrence of a Release Event, Claimant shall, within ten (10) calendar days, execute and deliver to Owner and Lender a written Release of Stop-Payment Notice in the form of Exhibit C.
3.6 Interest on Withheld Funds.
Undisbursed Funds shall accrue interest for the benefit of their rightful recipient as provided in the prime construction contract or, if silent, at the statutory rate applicable to judgments in Missouri.
4. REPRESENTATIONS & WARRANTIES
4.1 Authority.
Claimant represents it is duly organized, validly existing, and in good standing, and this Notice has been duly authorized and executed.
4.2 Accuracy of Claim.
Claimant warrants that (a) the Unpaid Amount is presently due and owing; (b) the Work has been fully performed in accordance with the Subcontract; and (c) no portion of the Unpaid Amount has been paid or satisfied.
4.3 Survival.
The representations and warranties set forth in this Section 4 survive any Release Event and remain in effect until all claims relating to the Work are finally resolved.
5. COVENANTS & RESTRICTIONS
5.1 Cooperation.
During the Stop-Period, each Party shall reasonably cooperate to expedite resolution of the underlying payment dispute, including exchange of relevant documentation.
5.2 Non-Interference.
Owner, Prime Contractor, and Lender shall not disburse or otherwise encumber the Undisbursed Funds in violation of this Notice.
5.3 Claimant’s Further Assurances.
Claimant shall (a) prosecute any mechanic’s lien or payment bond claim with due diligence, and (b) promptly furnish status updates upon reasonable request.
6. DEFAULT & REMEDIES
6.1 Events of Default.
a) Failure by Owner, Prime Contractor, or Lender to withhold Undisbursed Funds in accordance with Section 3.1.
b) Failure by Claimant to timely file suit or mechanic’s lien within the statutory period after serving this Notice.
6.2 Cure Period.
Except for intentional disbursement of funds in violation of this Notice (which constitutes immediate Default), the defaulting Party has five (5) business days after receipt of written notice to cure.
6.3 Remedies.
a) Injunctive Relief. Claimant may seek ex parte or preliminary injunctive relief to enforce withholding.
b) Monetary Recovery. The defaulting Party shall be liable for all damages, including consequential damages proximately caused by the breach, subject to the limitation in Section 7.3.
c) Attorneys’ Fees & Costs. The prevailing Party in any enforcement action is entitled to recover reasonable attorneys’ fees and court costs.
7. RISK ALLOCATION
7.1 Indemnification & Bonding.
a) If Claimant’s claim is judicially determined to be frivolous or willfully exaggerated, Claimant shall indemnify, defend, and hold harmless Owner, Prime Contractor, and Lender from any loss, including attorneys’ fees, arising out of the improper withholding.
b) Owner, Prime Contractor, or Lender may obtain a Bond to secure Claimant’s claim, in which case the Undisbursed Funds may be released to the extent permitted by the Lien Law.
7.2 Insurance.
Each Party shall maintain insurance customary for its role on the Project. Proof of coverage shall be provided upon written request.
7.3 Limitation of Liability.
Except for (i) a Party’s obligation to indemnify under Section 7.1 or (ii) a willful breach of Section 3.1, the aggregate liability of Owner, Prime Contractor, and Lender under this Notice shall not exceed the lesser of (a) the Undisbursed Funds, or (b) the Unpaid Amount.
7.4 Force Majeure.
No Party is liable for failure to perform an obligation (other than payment of money) if performance is prevented by events beyond its reasonable control, provided it gives prompt notice and resumes performance promptly after the event.
8. DISPUTE RESOLUTION
8.1 Governing Law.
This Notice shall be governed by the laws of the State of Missouri, without regard to its conflicts-of-law principles.
8.2 Forum Selection.
Any action arising out of or relating to this Notice shall be instituted exclusively in the [CIRCUIT COURT OF ___ COUNTY, MISSOURI].
8.3 Arbitration.
Arbitration is not applicable unless the Parties separately agree in writing after the Effective Date.
8.4 Jury Trial Waiver.
Not applicable.
8.5 Injunctive Relief.
Nothing in this Section limits Claimant’s right to seek provisional or injunctive relief to maintain the status quo regarding the Undisbursed Funds.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers.
No amendment or waiver of any provision is effective unless in writing and signed by the Party against whom enforcement is sought.
9.2 Assignment.
Neither this Notice nor any right or obligation hereunder may be assigned without the prior written consent of the non-assigning Parties, except that Claimant may assign its rights to a surety under the Bond.
9.3 Successors & Assigns.
This 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 shall remain in full force and effect, and the invalid provision shall be reformed to the minimum extent necessary to achieve its original intent.
9.5 Integration.
This Notice constitutes the entire agreement of the Parties with respect to the subject matter and supersedes all prior communications relating thereto.
9.6 Counterparts; Electronic Signatures.
This Notice may be executed in multiple counterparts, each of which is deemed an original, and all of which together constitute one instrument. Signatures transmitted electronically (e.g., PDF, DocuSign) are binding.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Missouri Stop-Payment Notice & Payment Withholding Agreement as of the Effective Date.
CLAIMANT
[CLAIMANT LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
OWNER (acknowledgment of receipt and agreement to withhold funds)
[OWNER LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
PRIME CONTRACTOR (acknowledgment of receipt)
[PRIME CONTRACTOR LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
LENDER (if applicable)
[CONSTRUCTION LENDER LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
[// GUIDANCE: Attach notarization blocks if local recording officials require acknowledgment for filing or if Parties consider doing so for evidentiary purposes.]
EXHIBIT A
Legal Description of Property
EXHIBIT B
Proof of Service
EXHIBIT C
Form of Release of Stop-Payment Notice
[// GUIDANCE:
1. Verify all Missouri statutory notice periods and service requirements (e.g., certified mail, personal delivery) before deployment.
2. Confirm the penal sum required for a discharge bond under current Missouri law (commonly 150% of the claim).
3. Replace bracketed placeholders with project-specific data and attach any required supporting affidavits.
4. This template is intended for use by licensed counsel; additional project-specific revisions may be necessary.]