STOP NOTICE

(NOTICE TO WITHHOLD PAYMENT PENDING LIEN RESOLUTION)

Nebraska Construction Lien Act – Neb. Rev. Stat. § 52-125 et seq.

[// GUIDANCE: This template is intentionally drafted with broad coverage to accommodate most private construction projects (commercial or residential) in Nebraska. Counsel should tailor section numbering, defined terms, and dollar thresholds to the particulars of the engagement, the project delivery system, and any upstream financing documents.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

1. Title: Stop Notice (Notice to Withhold Payment Pending Lien Resolution)
2. Claimant: [CLAIMANT LEGAL NAME], a [STATE] [ENTITY TYPE], having its principal office at [ADDRESS] (“Claimant”).
3. Owner: [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE], having its principal office at [ADDRESS] (“Owner”).
4. Direct Contractor: [PRIME/GENERAL CONTRACTOR NAME], a [STATE] [ENTITY TYPE], having its principal office at [ADDRESS] (“Direct Contractor”).
5. Construction Lender (if any): [LENDER NAME], a [STATE/NATIONAL BANK/ETC.], having its principal office at [ADDRESS] (“Lender”).
6. Project: Improvements located at or upon the real property commonly known as “[PROJECT NAME / STREET ADDRESS]” and legally described in Exhibit A hereto (“Project”).
7. Effective Date: [DATE STOP NOTICE SIGNED] (“Effective Date”).
8. Governing Law & Jurisdiction: The Nebraska Construction Lien Act, Neb. Rev. Stat. § 52-125 et seq., and other applicable law of the State of Nebraska (“Governing Law”).
9. Recitals
   9.1 Claimant has furnished labor, services, equipment, and/or materials to the Project pursuant to that certain contract, purchase order, or agreement dated [DATE OF YOUR CONTRACT] (the “Subcontract”).
   9.2 Claimant is owed the unpaid amount set forth below in connection with such improvements.
   9.3 Pursuant to Governing Law, Claimant is entitled to serve this Stop Notice upon Owner and Lender to require the withholding of undisbursed Project funds pending resolution of the lien claim.

II. DEFINITIONS

For purposes of this Stop Notice, the following capitalized terms shall have the meanings set forth below:

“Bond” means a payment bond or stop-notice release bond meeting the requirements of Section III.4.

“Claim Amount” means the sum of $[AMOUNT] representing the principal unpaid balance due to Claimant, together with any contractually-accrued finance charges through the Effective Date.

“Lien Release” means a statutory, unconditional release of lien and Stop Notice rights executed by Claimant substantially in the form mandated under Neb. Rev. Stat. § 52-142 (or successor provision).

“Obligor” means Owner, and if applicable, Lender as a disbursing construction lender within the meaning of the Governing Law.

“Stop Notice” has the meaning ascribed in Neb. Rev. Stat. § 52-125 et seq. and this instrument.

[// GUIDANCE: Add or delete definitions as necessary; ensure each capitalized term is used consistently throughout.]

III. OPERATIVE PROVISIONS

1. Notice to Withhold Funds
   1.1 Claimant hereby gives formal notice that the Claim Amount is due and unpaid.
   1.2 Pursuant to Governing Law, each Obligor shall immediately withhold from any unpaid contract funds, construction loan undisbursed funds, retainage, or other monies otherwise payable in connection with the Project, a sum equal to 125 % of the Claim Amount (the “Withheld Funds”).

2. Scope of Withholding
   2.1 The withholding obligation attaches to (i) funds payable to Direct Contractor; and (ii) funds payable to any subcontractor in the chain of contract through which Claimant has supplied its labor or materials.
   2.2 Withheld Funds shall remain segregated and undistributed until the earliest of:
   a. Written demand for release by Claimant in the form of a Lien Release;
   b. Submission of a duly-executed Bond in compliance with Section III.4;
   c. Final, unappealable judicial order directing disposition; or
   d. Expiration of Claimant’s statutory time to perfect a construction lien without filing.

3. Proof & Service
   3.1 A true and correct copy of this Stop Notice, together with a Verification (Exhibit B) executed under oath by Claimant’s authorized representative, shall be personally served or sent via certified U.S. Mail, return-receipt requested, upon each Obligor at the addresses set forth in Section I.
   3.2 Service is deemed complete upon the earlier of: (a) actual receipt; or (b) three (3) business days after mailing.

4. Bonding Requirements
   4.1 Any party may discharge the Withheld Funds by tendering to Claimant a stop-notice release bond executed by a surety licensed in Nebraska, in a penal sum of 150 % of the Claim Amount, naming Claimant as dual obligee.
   4.2 The Bond shall be conditioned upon payment of any judgment that may be recovered by Claimant in a lien foreclosure proceeding or related action.
   4.3 Upon receipt and verification of a Bond satisfying this Section III.4, Claimant shall promptly execute a partial Lien Release limited to the Stop Notice claims covered by the Bond.

5. Conditional & Unconditional Releases
   Any conditional release provided in exchange for progress payments shall become unconditional upon actual bank clearance of said payment.

6. Conditions Subsequent
   6.1 Claimant shall, within the statutory period prescribed by Neb. Rev. Stat. § 52-137, either (a) file its construction lien of record, or (b) deliver a Lien Release.
   6.2 Failure to do so shall automatically terminate the withholding obligation and authorize Obligor to release the Withheld Funds.

IV. REPRESENTATIONS & WARRANTIES

1. Good-Faith Claim. Claimant represents that the Claim Amount is just, due, and owing, has not been paid, waived, or satisfied, and reflects only bona fide charges for labor, services, equipment, and/or materials furnished.
2. License/Registration. Claimant is duly licensed, registered, or exempt per applicable Nebraska statutes and regulations to perform the work at issue.
3. Lien Rights Intact. Claimant has not executed any unconditional waiver or release of lien or Stop Notice rights covering the Claim Amount.
4. Survival. The representations and warranties herein survive full payment or bonding of the Claim Amount until Claimant executes a final Lien Release.

V. COVENANTS & RESTRICTIONS

1. Claimant Covenants
   a. To provide any supplemental documentation reasonably requested by Obligor to substantiate the Claim Amount within five (5) business days of written request.
   b. To execute appropriate partial releases contemporaneously with receipt of any partial payment.
   c. To discharge its lien and Stop Notice promptly upon full satisfaction of the Claim Amount (together with allowed interest and costs).

2. Obligor Covenants
   a. To retain the Withheld Funds in compliance with Section III.2 and refrain from disbursing same except as expressly permitted herein.
   b. To provide Claimant with written confirmation of the amount withheld and the account or escrow in which the Withheld Funds are maintained within ten (10) days of service of this Stop Notice.

VI. DEFAULT & REMEDIES

1. Events of Default
   a. Failure by an Obligor to withhold or maintain the Withheld Funds as required.
   b. Failure by Claimant to timely file a construction lien or otherwise preserve its statutory rights.

2. Notice & Cure
   Except where immediate injunctive relief is appropriate, the non-defaulting party shall provide written notice specifying the nature of default and a five (5) business-day opportunity to cure.

3. Remedies
   a. Equitable Relief. Specific performance and preliminary or permanent injunction to enforce withholding obligations.
   b. Monetary Relief. Recovery of Claim Amount, plus prejudgment interest at [___ %], court costs, and reasonable attorney’s fees.
   c. Escalating Remedies. Upon final judgment in Claimant’s favor, an Obligor who wrongfully failed to withhold becomes personally liable to Claimant to the extent of payments disbursed in violation of this Stop Notice.

VII. RISK ALLOCATION

1. Indemnification via Bond
   Surety under any Bond furnished pursuant to Section III.4 shall indemnify and hold Claimant harmless from and against all losses, damages, and expenses (including attorney’s fees) arising out of or relating to non-payment of the Claim Amount.

2. Limitation of Liability
   The aggregate liability of any Obligor complying in good faith with this Stop Notice is capped at the lesser of (i) the Withheld Funds, or (ii) the amounts required to be withheld under Governing Law.

3. Force Majeure
   No party shall be liable for delay or failure to perform any obligation to the extent caused by acts of God, governmental restrictions, or other events of force majeure; provided, however, that statutory deadlines for lien perfection are not extended by this provision.

VIII. DISPUTE RESOLUTION

1. Governing Law
   This Stop Notice and any dispute related hereto shall be governed by and construed in accordance with the laws of the State of Nebraska, without regard to conflict-of-laws principles.

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

3. Arbitration & Jury Trial
   Arbitration is not applicable. Nothing herein constitutes a waiver of any constitutional right to a jury trial.

4. Injunctive Relief
   The parties acknowledge that breach of the withholding obligations may cause irreparable harm for which monetary damages are an inadequate remedy. Accordingly, the non-breaching party shall be entitled to seek immediate injunctive relief to enforce this Stop Notice without the necessity of posting a bond.

IX. GENERAL PROVISIONS

1. Amendments & Waivers
   No amendment or waiver of any provision of this Stop Notice shall be effective unless in writing and signed by the party against whom enforcement is sought.

2. Assignment
   Claimant may assign its rights hereunder as collateral security; no other assignment or delegation is permitted without prior written consent of the non-assigning party.

3. Successors & Assigns
   This Stop Notice binds and benefits the parties and their respective successors and permitted assigns.

4. Severability
   If any provision is held invalid or unenforceable, such provision shall be reformed to the minimum extent necessary, and the remaining provisions shall remain in full force and effect.

5. Integration
   This Stop Notice constitutes the entire notice and understanding of the parties with respect to the subject matter and supersedes all prior or contemporaneous communications.

6. Counterparts; Electronic Signatures
   This Stop Notice may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Electronic or facsimile signatures are deemed original for all purposes.

X. EXECUTION BLOCK

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

[// GUIDANCE: Attach notarial acknowledgment below if notarization is desired or required by lender/owner.]

VERIFICATION (Exhibit B)

State of _ )
County of ______ ) ss.

I, [NAME], being first duly sworn, state: I am the [TITLE] of Claimant named in the foregoing Stop Notice; I have read said Stop Notice and know the contents thereof; the same is true of my own knowledge, except as to matters stated on information and belief, and as to those matters I believe them to be true.

[NAME]

Subscribed and sworn before me on ___, 20_.

Notary Public
My Commission Expires: _____

EXHIBIT A – LEGAL DESCRIPTION OF PROJECT PROPERTY

[INSERT FULL LEGAL DESCRIPTION OR ATTACH SEPARATE SHEET]

[// GUIDANCE:
1. Double-check statutory deadlines: as of this drafting, a construction lien in Nebraska must be recorded within 120 days after the claimant’s last furnishing of labor or materials.
2. Confirm that no prior unconditional lien waivers have been executed covering the Claim Amount.
3. Consider simultaneously filing a preliminary lien (“Notice of Intent to Lien”) to preserve priority.
4. For public projects, Nebraska Little Miller Act requirements may impose different bonding and notice procedures. Adapt template accordingly.
]