Stop-Notice

STOP NOTICE AND VERIFIED DEMAND TO WITHHOLD PAYMENT

(Private Improvement – New York Lien Law Article 3-A, §§ 70-79-a (Trust Fund Provisions) and §§ 4-5 (Demand to Withhold))

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 & Verification Block

I. DOCUMENT HEADER

1. Title
   STOP NOTICE AND VERIFIED DEMAND TO WITHHOLD PAYMENT

2. Parties
   a. Claimant: [CLAIMANT LEGAL NAME], a [STATE] [entity type] having its principal place of business at [ADDRESS] (“Claimant”).
   b. Owner: [OWNER LEGAL NAME], a [STATE] [entity type] having its principal place of business at [ADDRESS] (“Owner”).
   c. Contractor: [CONTRACTOR LEGAL NAME], a [STATE] [entity type] having its principal place of business at [ADDRESS] (“Contractor”).
   d. Construction Lender (if any): [LENDER LEGAL NAME], a [STATE] [entity type] having its principal place of business at [ADDRESS] (“Lender”).

3. Project
   Project known as “[PROJECT NAME]” located at [PROJECT STREET ADDRESS, CITY, COUNTY, STATE] (the “Project”).

4. Effective Date
   This Stop Notice is effective as of [EFFECTIVE DATE] (the “Effective Date”).

5. Governing Statute
   This Stop Notice is issued pursuant to New York Lien Law Article 3-A (§§ 70-79-a, trust fund provisions) and the demand-to-withhold mechanism under Lien Law §§ 4-5 (collectively, the “Lien Law”).

II. DEFINITIONS

For clarity and consistent usage, the following capitalized terms have the meanings set forth below:

“Bond” – A surety bond issued in accordance with Section VII.3 of this Stop Notice to release Withheld Funds.
“Claim” – The unpaid amount of $[AMOUNT] (exclusive of interest, costs, and statutory fees) owed to Claimant for Labor and/or Materials.
“Labor and/or Materials” – The labor, services, equipment, or materials furnished by Claimant to the Project, as more particularly described in Exhibit A.
“Stop Notice” – This Stop Notice and Verified Demand to Withhold Payment, together with all exhibits and schedules hereto.
“Withheld Funds” – The portion of contract funds otherwise payable to Contractor that Owner/Lender must retain pursuant to this Stop Notice until the earlier of (i) resolution of Claimant’s lien rights, or (ii) release of such funds in accordance with the Release Procedures herein.

III. OPERATIVE PROVISIONS

1. Demand to Withhold Payment
   Claimant hereby demands that Owner and, if applicable, Lender immediately withhold from Contractor an amount equal to the Claim, plus an additional sum of [PERCENTAGE]% thereof as reasonably estimated interest, costs, and anticipated attorney fees (collectively, the “Withheld Funds”).

2. Statutory Compliance
   This Stop Notice complies in form and content with the requirements of N.Y. Lien Law §§ 4-5 (demand to withhold) and Article 3-A (§§ 70-79-a, trust fund provisions), including the verified statement of (i) the labor performed and/or materials furnished, (ii) the total value thereof, and (iii) the amount claimed to be due. Note: New York does not have a formal statutory stop notice; this document serves as a demand to withhold under the Lien Law.

3. Service of Stop Notice
   a. Method: Personal service, certified mail–return receipt requested, or overnight courier with signature confirmation.
   b. Recipients: Owner and Lender (if any), at the addresses listed in Section I.2.
   c. Timing: On or before [DATE], which is within the statutory period prescribed by the Lien Law.

4. Amount of Claim
   The Claim totals $[AMOUNT], comprised of:
   • Labor: $[AMOUNT]
   • Materials: $[AMOUNT]
   • Extras/Change Orders: $[AMOUNT]

5. Description of Labor and Materials
   A detailed itemization is attached hereto as Exhibit A and incorporated by reference.

6. Project Identification
   See Section I.3.

7. Conditions Precedent
   Claimant represents that all preliminary notices, if any, required by contract or statute have been duly given.

IV. REPRESENTATIONS & WARRANTIES

1. Authority
   Claimant is duly organized, validly existing, and in good standing in its jurisdiction of formation and is authorized to do business in New York.

2. Licensing & Qualification
   Claimant holds all licenses and governmental approvals necessary to furnish the Labor and/or Materials.

3. Accurate Information
   All statements made in or attached to this Stop Notice are true, correct, and complete in all material respects.

4. Survival
   The representations and warranties herein survive service of this Stop Notice and remain in effect until the earlier of (i) satisfaction of the Claim, or (ii) final adjudication.

V. COVENANTS & RESTRICTIONS

1. Prosecution of Claim
   Claimant shall commence an action to foreclose its lien (or otherwise enforce the Claim) within the time period required by the Lien Law.

2. Owner/Lender Covenant to Withhold
   Owner and Lender covenant to withhold the Withheld Funds until release pursuant to Section VII.4.

3. Notice of Bond
   If Owner, Contractor, or any surety furnishes a Bond to release the Withheld Funds, they shall provide Claimant with a copy within three (3) Business Days.

4. Record-Keeping
   Parties shall maintain complete records of all payments related to the Claim and produce such records upon reasonable written request.

VI. DEFAULT & REMEDIES

1. Events of Default
   a. Failure by Owner or Lender to withhold the Withheld Funds as demanded.
   b. Failure by Contractor to furnish a Bond or otherwise resolve the Claim within [___] days.

2. Notice & Cure
   Claimant shall provide written notice of default and a five-(5-) day cure period.

3. Remedies
   a. Equitable Relief: Temporary restraining order and/or preliminary injunction compelling withholding of funds.
   b. Monetary Relief: Judgment for the Claim, interest at the maximum rate permitted by law, and recovery of attorney fees and costs.
   c. Additional Statutory Remedies: Any remedies available under the Lien Law or other applicable law.

VII. RISK ALLOCATION

1. Indemnification (Bonding Requirements)
   If a Bond is furnished, the surety and principal shall jointly and severally indemnify and hold harmless Claimant against all loss, damage, cost, or expense (including reasonable attorney fees) arising from failure to pay the Claim.

2. Limitation of Liability
   The liability of Owner and Lender under this Stop Notice is limited to the amount of the Withheld Funds, absent willful misconduct or bad faith.

3. Bond to Release Withheld Funds
   a. Minimum Amount: 110% of the Claim (or such greater amount as required by the Lien Law).
   b. Form: Statutory form surety bond issued by a surety authorized to transact business in New York.
   c. Effect: Upon posting and service of the Bond, Owner and Lender may release the Withheld Funds to Contractor, and Claimant’s rights shall transfer to the Bond.

4. Release Procedures
   a. Automatic Release: Upon (i) full payment of the Claim plus accrued interest and costs, or (ii) receipt of a Bond complying with Section VII.3.
   b. Voluntary Release: Claimant may execute a written, notarized release in favor of Owner and Lender.
   c. Statutory Discharge: Any other circumstance specified in the Lien Law that mandates release.

5. Force Majeure
   No party shall be liable for delay or inability to perform obligations hereunder caused by events beyond its reasonable control; provided, however, that monetary obligations (including withholding of funds) are not excused.

VIII. DISPUTE RESOLUTION

1. Governing Law
   This Stop Notice shall be governed by and construed in accordance with the laws of the State of New York, including the Lien Law.

2. Forum Selection
   Any action or proceeding arising out of or relating to this Stop Notice shall be brought exclusively in the Supreme Court of the State of New York, [COUNTY] County.

3. Jury Waiver
   Not applicable.

4. Arbitration
   Not applicable.

5. Injunctive Relief
   The parties acknowledge that monetary damages may be inadequate; therefore, injunctive relief to enforce withholding of funds is expressly preserved.

IX. GENERAL PROVISIONS

1. Amendments & Waivers
   Any amendment or waiver must be in writing, signed by the party against whom enforcement is sought.

2. Assignment
   Claimant may assign its rights hereunder only in connection with an assignment of the underlying Claim; all other assignments are void without prior written consent of Owner.

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, the remaining provisions remain in full force and effect.

5. Integration
   This Stop Notice constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior discussions or writings.

6. Counterparts; Electronic Signatures
   This Stop Notice may be executed in counterparts, all of which constitute one instrument. Signatures transmitted electronically or by facsimile are deemed originals.

X. EXECUTION & VERIFICATION BLOCK

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

CLAIMANT:
[CLAIMANT LEGAL NAME]

By: _______________________________
Name: [AUTHORIZED SIGNATORY]
Title: [TITLE]
Date: ____________________, 20__

[ADD ADDITIONAL SIGNATURE BLOCKS IF OWNER/CONTRACTOR ARE ALSO SIGNING TO ACKNOWLEDGE RECEIPT.]

VERIFICATION

STATE OF __________ )
) ss.:
COUNTY OF __________ )

[NAME], being duly sworn, deposes and says:

1. I am the [TITLE] of [CLAIMANT LEGAL NAME], the Claimant in the foregoing Stop Notice;
2. I have read the foregoing Stop Notice and know the contents thereof;
3. The same is true to my knowledge, except as to matters stated to be alleged upon information and belief, and as to those matters I believe them to be true.

__________________________________
[NAME]

Sworn to before me this ___ day of __________, 20__.

__________________________________
Notary Public

EXHIBIT A

Itemized Statement of Labor and/or Materials Furnished

[Provide detailed breakdown including dates, descriptions, quantities, unit prices, and totals.]