STOP NOTICE
(Notice to Withhold Payment Pending Lien Resolution)
[PROJECT NAME / DESCRIPTION]
[COUNTY], New Mexico
[// GUIDANCE: This template is designed for use by subcontractors, material suppliers, artisans, laborers, or other potential lien claimants on private construction projects in the State of New Mexico. Before serving the notice, confirm all statutory pre-requisites (e.g., preliminary notice, timeliness, service method) under the New Mexico mechanic’s lien framework and any applicable contractual provisions.]
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 and Parties
This Stop Notice (the “Notice”) is executed and delivered as of [EFFECTIVE DATE] (the “Effective Date”) by [CLAIMANT LEGAL NAME], a [STATE] [ENTITY TYPE] having its principal place of business at [ADDRESS] (“Claimant”), and is directed to:
a. [OWNER/OBLIGOR LEGAL NAME], a [STATE] [ENTITY TYPE] (“Obligor/Owner”); and
b. [PRIME CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] (“Prime Contractor”).
1.2 Recitals
A. Claimant has furnished labor, services, equipment, and/or materials (collectively, the “Work”) to the real property commonly known as [PROJECT ADDRESS / LEGAL DESCRIPTION] (the “Project”) under its agreement with Prime Contractor dated [DATE] (the “Subcontract”).
B. Claimant is entitled to payment of [CLAIM AMOUNT IN WORDS] Dollars (US $[AMOUNT]) for Work furnished through [LAST DATE OF WORK] (the “Unpaid Amount”).
C. New Mexico law authorizes a potential lien claimant to require the withholding of available contract funds otherwise payable to the Prime Contractor until the earlier of (i) satisfaction, compromise, or adjudication of the underlying lien claim, or (ii) the posting of an appropriate release bond.
D. Claimant now delivers this Notice to protect its statutory lien rights and to request withholding of funds pursuant to such law.
NOW, THEREFORE, Claimant submits the following:
2. DEFINITIONS
For purposes of this Notice:
“Bond” means any surety bond or other acceptable security posted in compliance with applicable New Mexico mechanic’s lien statutes to discharge the withholding obligation created by this Notice.
“Lien Claim” means Claimant’s prospective or recorded mechanic’s lien securing payment of the Unpaid Amount, together with allowable interest, costs, and attorneys’ fees.
“Release Event” means (i) full payment of the Unpaid Amount to Claimant; (ii) written waiver and release executed by Claimant; (iii) posting of a Bond that satisfies statutory requirements and covers at least 125 % of the Unpaid Amount; or (iv) final, non-appealable court order determining that Claimant is not entitled to the Lien Claim or any portion thereof.
“Stop Notice” or “Notice” means this instrument, inclusive of all exhibits and attachments, duly served in accordance with Section 3.5 below.
“Withheld Funds” means any funds otherwise payable or to become payable by Obligor to Prime Contractor under the Prime Contract, up to the Statutory Withholding Amount.
“Statutory Withholding Amount” means the Unpaid Amount plus the statutory buffer (currently [PERCENTAGE OR STATUTORY FORMULA]) required to protect Claimant’s interests and potential cost awards.
3. OPERATIVE PROVISIONS
3.1 Demand to Withhold Payment
Claimant hereby demands that Obligor immediately withhold the Statutory Withholding Amount from funds otherwise due or to become due to Prime Contractor.
3.2 Duration of Withholding
The withholding shall remain in effect until a Release Event occurs. Obligor shall retain the Withheld Funds in a segregated, interest-bearing account, or otherwise safeguard the funds as permitted by law.
3.3 Application of Withheld Funds
Upon occurrence of a Release Event, Obligor shall disburse the Withheld Funds as follows:
a. If the Release Event is full payment to Claimant, to Claimant to the extent of the Unpaid Amount;
b. If a Bond is posted, to Prime Contractor or as otherwise directed by the surety;
c. If a court order is entered, in accordance with such order.
3.4 Additional Amounts Accruing
This Notice covers the Unpaid Amount and any additional unpaid sums that accrue for Work furnished prior to the date of service, provided Claimant amends or supplements this Notice within statutory time frames.
3.5 Service of Notice
Claimant shall serve this Notice by [CERTIFIED MAIL, HAND DELIVERY, OR OTHER STATUTORILY PERMITTED METHOD] to Obligor at [ADDRESS] and to Prime Contractor at [ADDRESS], and shall retain proof of service.
[// GUIDANCE: Confirm NM requirements for service—e.g., certified mail, return receipt requested, to the owner’s address listed on the building permit or as otherwise required.]
3.6 Conditions Precedent and Subsequent
This Notice is conditioned upon Claimant’s timely recording or perfection of its Lien Claim in accordance with New Mexico law. Failure to record a lien within statutory deadlines may terminate the effectiveness of this Notice.
4. REPRESENTATIONS & WARRANTIES
4.1 Authority
Claimant represents that it is duly licensed and authorized to perform the Work and to file this Notice.
4.2 Accuracy
Claimant warrants, to the best of its knowledge after reasonable inquiry, that the Unpaid Amount is justly due and owing and that no payments have been received for such Work.
4.3 Survival
The representations and warranties herein survive service of this Notice and any Release Event until the later of (i) final resolution of the Lien Claim, or (ii) expiration of the applicable statute of limitations.
5. COVENANTS & RESTRICTIONS
5.1 Claimant’s Covenant to Pursue Lien
Claimant shall pursue its Lien Claim diligently and in good faith, including initiation of any foreclosure action within statutory deadlines.
5.2 Owner/Obligor Cooperation
Obligor shall provide Claimant reasonable access to payment applications, disbursement logs, and related documentation evidencing compliance with this Notice.
5.3 Notice of Bond
Prime Contractor shall provide Claimant written notice within three (3) business days of posting any Bond to release the withholding.
6. DEFAULT & REMEDIES
6.1 Events of Default
a. Obligor’s failure to withhold or safeguard the Statutory Withholding Amount;
b. Prime Contractor’s interference with or misapplication of Withheld Funds;
c. Claimant’s failure to perfect or timely prosecute the Lien Claim.
6.2 Notice and Cure
Non-defaulting party must deliver written notice identifying the default. Defaulting party has seven (7) days to cure, unless a shorter period is mandated by law.
6.3 Remedies
a. Injunctive Relief: Immediate court order compelling compliance with withholding obligations.
b. Monetary Damages: Unpaid Amount, consequential damages, reasonable attorneys’ fees, and costs.
c. Specific Performance: Enforcement of any statutory obligations relating to bonding or release.
6.4 Attorneys’ Fees
The prevailing party in any enforcement action arising from or related to this Notice is entitled to recover its reasonable attorneys’ fees and costs.
7. RISK ALLOCATION
7.1 Indemnification & Bonding
If Prime Contractor posts a Bond, Prime Contractor shall indemnify and hold harmless Obligor from any claims, damages, or expenses (including attorneys’ fees) arising from Claimant’s Lien Claim or this Notice, to the extent covered by the Bond.
7.2 Limitation of Liability
Obligor’s liability to Claimant is capped at the Statutory Withholding Amount, exclusive of attorneys’ fees and statutorily mandated penalties.
7.3 Force Majeure
No party shall be liable for delays or failures in performance caused by events beyond reasonable control, provided that such party promptly notifies the other parties and resumes performance as soon as practicable.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Notice and any related dispute shall be governed by the laws of the State of New Mexico, without regard to conflict-of-law rules.
8.2 Forum Selection
Exclusive jurisdiction and venue lie in the state courts of [COUNTY], New Mexico.
8.3 Arbitration
Not applicable.
8.4 Injunctive Relief
Nothing herein limits any party’s right to seek provisional or injunctive relief, including a temporary restraining order or preliminary injunction, to enforce or preserve rights under this Notice.
9. GENERAL PROVISIONS
9.1 Amendments and Waivers
Any amendment or waiver must be in writing and signed by the party against whom enforcement is sought.
9.2 Assignment
Neither Claimant nor Prime Contractor may assign rights or obligations arising under this Notice without prior written consent of the other parties, except as required for collateral assignment to a surety issuing a Bond.
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 remain in full force, and the unenforceable provision shall be reformed to the minimum extent necessary to render it enforceable.
9.5 Integration
This Notice constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior understandings regarding the same.
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. Signatures transmitted electronically shall be deemed original signatures.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, Claimant has executed this Stop Notice effective as of the Effective Date.
CLAIMANT:
[AUTHORIZED SIGNATORY NAME]
[Title]
[CLAIMANT LEGAL NAME]
STATE OF _ )
COUNTY OF ______ ) ss.
On this ___ day of _, 20_, before me, the undersigned Notary Public, personally appeared _____, who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the foregoing instrument and acknowledged that (s)he executed the same in his/her authorized capacity on behalf of Claimant.
Notary Public
My Commission Expires: ______
[// GUIDANCE: Include additional signature blocks for Owner/Obligor and Prime Contractor if local practice or negotiated agreements require countersignature. NM law does not mandate owner acknowledgment for service of a stop notice, but countersignature can provide evidentiary confirmation of receipt.]
END OF DOCUMENT