STOP PAYMENT NOTICE
(Demand to Withhold Construction Funds Pending Lien Resolution)
Nevada – Governed by Chapter 108, Nevada Revised Statutes (“NRS”)
[// GUIDANCE: This template is drafted for private‐works projects in Nevada. Nevada does not provide a statutory “stop‐notice” remedy comparable to certain other states; accordingly, this form is structured as (i) a formal notice to the Owner/Construction Lender (“Disbursing Party”) demanding the contractual withholding of funds, and (ii) an agreement setting the rules for bonding, release, and dispute resolution. Counsel should confirm project‐specific contract language, loan documents, and any trust-fund provisions before use.]
// All bracketed items are user-editable placeholders.
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Bonding Requirements
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Exhibits
1. DOCUMENT HEADER
STOP PAYMENT NOTICE AND AGREEMENT TO WITHHOLD FUNDS
Effective Date: [DATE]
Claimant: [NAME OF CLAIMANT] (“Claimant”)
Address: [ADDRESS]
NV License No.: [NV CSLB #]
Obligated Party(ies):
a. Owner: [NAME & ADDRESS] (“Owner”)
b. Construction Lender/Disbursing Party (if applicable): [NAME & ADDRESS] (“Lender”)
Project: [PROJECT NAME OR DESCRIPTION] located at [STREET ADDRESS, CITY, COUNTY, NV ZIP].
Prime Contract No.: [CONTRACT #] between Owner and [PRIME CONTRACTOR NAME].
Recitals
A. Claimant has furnished labor, services, equipment, and/or materials (“Work”) to the Project pursuant to its subcontract dated [DATE] with [CONTRACTING PARTY].
B. As of the Effective Date, Claimant is owed the sum of $[AMOUNT] (the “Claim Amount”), exclusive of interest, costs, and attorney fees.
C. Claimant has timely complied with all notice prerequisites under NRS ch. 108, including any Notice of Right to Lien and Notice of Intent to Lien, and now seeks temporary protection of undisbursed construction funds.
D. Owner and/or Lender are willing to withhold funds in accordance with the terms set forth below to avoid encumbrance of the Project and to facilitate prompt resolution of the Claim.
NOW, THEREFORE, Claimant delivers this Stop Payment Notice and the parties agree as follows:
2. DEFINITIONS
For ease of reference, the following capitalized terms have the meanings set out below. Any term not defined herein shall have the meaning ascribed to it in NRS ch. 108 or, if none, its ordinary legal meaning.
- “Agreement” means this Stop Payment Notice and Agreement to Withhold Funds.
- “Bond” means a surety bond issued by a corporate surety authorized in Nevada, in the form attached hereto as Exhibit C, guaranteeing payment or release of the Claim Amount.
- “Claim Amount” has the meaning set forth in Recital B.
- “Disbursing Party” means, as the context requires, Owner and/or Lender holding undisbursed construction funds.
- “Notice Bond” means the bond optionally posted by Claimant pursuant to §5.2.
- “Release Bond” means the bond optionally posted by the Obligated Party pursuant to §5.3.
- “Withheld Funds” means the portion of the Contract Balance held back under §3.2, plus accrued interest thereon.
[// GUIDANCE: Add or delete definitions to track project‐specific terminology.]
3. OPERATIVE PROVISIONS
3.1 Stop Payment Notice. Claimant hereby formally demands that the Disbursing Party immediately withhold from further disbursement an amount equal to 125 % of the Claim Amount or the remaining unpaid Contract Balance, whichever is less (the “Withheld Funds”).
3.2 Scope & Duration of Withholding.
a. The Withheld Funds shall be segregated from other funds and held in trust until the earliest of:
i. Written Release issued by Claimant under §5.4;
ii. Posting of a Release Bond under §5.3;
iii. Final, non-appealable court order; or
iv. Expiration of Claimant’s lien-recording deadline without recordation.
b. Interest. Withheld Funds shall accrue interest at the rate provided for under the Prime Contract or, if silent, at the statutory rate.
3.3 Accounting. The Disbursing Party shall, within five (5) business days of written request, provide Claimant with a written accounting of the Contract Balance and any disbursements made after the Effective Date.
3.4 Non-Disbursement Covenant. The Disbursing Party shall not directly or indirectly disburse the Withheld Funds except in strict accordance with this Agreement.
3.5 Conditions Precedent/Concurrent. Claimant shall, contemporaneously with delivery of this Stop Payment Notice, serve all other parties entitled to statutory notice under NRS ch. 108 and shall attach hereto a sworn Proof of Service (Exhibit B).
4. REPRESENTATIONS & WARRANTIES
Claimant represents and warrants to the Obligated Party that:
4.1 Compliance with Statutory Notices. Claimant has fully complied with NRS ch. 108 notice requirements, including timely service of any Notice of Right to Lien and Notice of Intent to Lien.
4.2 Accuracy of Claim. The Claim Amount is justly due and owing, no portion has been paid, and the computation is true and correct to the best of Claimant’s knowledge.
4.3 Good-Faith Dispute Resolution. Claimant is acting in good faith and will release the Stop Payment Notice promptly upon satisfaction of the Claim Amount or other agreed settlement.
4.4 Authority. The individual executing this Agreement on behalf of Claimant has full power and authority to do so.
[// GUIDANCE: Survival. These warranties survive until final release of the Stop Payment Notice.]
5. COVENANTS & BONDING REQUIREMENTS
5.1 Cooperation. The parties shall reasonably cooperate to expedite resolution of the Claim and minimize disruption to the Project.
5.2 Optional Notice Bond by Claimant.
a. Claimant may, but is not required to, post a Notice Bond in the penal sum of 125 % of the Claim Amount.
b. Upon acceptance of a Notice Bond, the Disbursing Party may elect to disburse Contract funds notwithstanding §3.2; provided, however, that the surety remains liable for the Claim Amount plus costs, interest, and attorney fees.
5.3 Release Bond by Obligated Party. The Disbursing Party may discharge its withholding obligation at any time by posting a Release Bond in the penal sum of 150 % of the Claim Amount, conditioned on payment of any judgment entered in favor of Claimant.
5.4 Release Procedures.
a. Within three (3) business days after receipt of: (i) full payment of the Claim Amount in immediately available funds, or (ii) a Release Bond acceptable to Claimant, Claimant shall execute and deliver a written Conditional Release of Stop Payment Notice in the form attached hereto as Exhibit D.
b. Upon clearance of funds or surety acceptance, Claimant shall furnish a Unconditional Waiver and Release upon Final Payment per NRS ch. 108.
5.5 Recordkeeping. Each party shall maintain complete records of Bonds, payments, and releases for a minimum of six (6) years.
6. DEFAULT & REMEDIES
6.1 Events of Default. The following constitute defaults under this Agreement:
a. Disbursement of any portion of the Withheld Funds in violation of §3.4;
b. Failure of Claimant to release the Stop Payment Notice pursuant to §5.4 after satisfaction of conditions precedent;
c. Material breach of any representation, warranty, or covenant herein.
6.2 Cure Period. Except for non-disbursement obligations under §3.4 (which are absolute), the defaulting party shall have five (5) business days after written notice to cure any default.
6.3 Remedies. Upon uncured default, the non-defaulting party may pursue:
a. Temporary, preliminary, and/or permanent injunctive relief compelling compliance;
b. Recovery of the Claim Amount (or withheld funds wrongfully released) plus interest;
c. Court costs and reasonable attorney fees;
d. Any additional remedies available at law or in equity.
6.4 Cumulative Remedies. All rights and remedies are cumulative and may be exercised concurrently or successively.
7. RISK ALLOCATION
7.1 Indemnification. Each party (the “Indemnifying Party”) shall indemnify, defend, and hold harmless the other party, its officers, directors, lenders, and agents from and against all claims, damages, losses, liabilities, and expenses (including attorney fees) arising out of or relating to (i) the Indemnifying Party’s breach of this Agreement, or (ii) any willful misconduct or gross negligence in connection herewith.
7.2 Limitation of Liability. Except for (i) unpaid principal obligations, (ii) fraud, or (iii) willful misconduct, each party’s liability under this Agreement shall not exceed the lesser of (a) the Withheld Funds, or (b) the Claim Amount.
7.3 Force Majeure. Neither party shall be liable for delay or failure in performance resulting from acts beyond its reasonable control, provided that such party gives prompt written notice and diligently attempts to resume performance.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Agreement and any dispute hereunder shall be governed by, and construed in accordance with, the laws of the State of Nevada, without regard to conflict-of-law principles.
8.2 Forum Selection. The parties irrevocably submit to the exclusive jurisdiction of the state courts located in [COUNTY], Nevada, for any action arising out of or related to this Agreement.
8.3 Jury Waiver. Not applicable.
8.4 Arbitration. Not applicable unless the parties execute a separate written arbitration agreement.
8.5 Injunctive Relief. The parties acknowledge that a breach of §3.4 or §5.4 would cause irreparable harm for which monetary damages are inadequate; accordingly, injunctive relief is an appropriate and necessary remedy.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers. No amendment or waiver is effective unless in writing and executed by the party against whom enforcement is sought. A waiver on one occasion is not a waiver on any subsequent occasion.
9.2 Assignment. Neither party may assign or delegate its rights or obligations hereunder without the prior written consent of the other party, except assignments by operation of law.
9.3 Successors & Assigns. This Agreement is binding upon and inures to the benefit of the parties and their respective successors and permitted assigns.
9.4 Severability. If any provision is held invalid, the remainder shall be enforced to the fullest extent permitted by law.
9.5 Integration. This Agreement constitutes the entire agreement of the parties with respect to the subject matter and supersedes all prior negotiations and writings.
9.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Electronic signatures and scanned copies are deemed originals.
9.7 Notices. All notices must be in writing and delivered (i) personally, (ii) by certified U.S. mail, return-receipt requested, or (iii) by nationally recognized overnight courier, to the addresses listed in the Document Header (or as later changed by notice). Notice is effective upon receipt or first refusal.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Stop Payment Notice and Agreement to Withhold Funds as of the Effective Date.
| CLAIMANT | OBLIGATED PARTY (OWNER) | CONSTRUCTION LENDER (if any) |
|---|---|---|
| By: _________ | By: _________ | By: _________ |
| Name: [PRINT] | Name: [PRINT] | Name: [PRINT] |
| Title: | Title: | Title: |
| Date: | Date: | Date: |
[// GUIDANCE: Nevada does not require notarization for service of a stop payment notice, but notarization may enhance evidentiary value. Add acknowledgments if desired.]
11. EXHIBITS
• Exhibit A – Description of Labor, Services, Equipment, and/or Materials Furnished
• Exhibit B – Proof of Service Affidavit
• Exhibit C – Form of Notice Bond (Claimant)
• Exhibit D – Form of Conditional/Unconditional Release of Stop Payment Notice
[// GUIDANCE: Practitioners should (1) verify all statutory deadlines under NRS ch. 108, including the 90-day recording window for mechanics’ liens; (2) confirm any contractual pay-when-paid clauses; and (3) tailor bond penal sums if the parties deviate from industry norms of 125 %/150 %.]