STOP NOTICE
(Lien‐Related Payment Withhold Directive – Oregon Private Improvement)
[// GUIDANCE: This template is drafted for Oregon private construction projects. Confirm project type (commercial vs. residential), parties, and amounts before use. Oregon does not have a statutory “stop‐payment notice” procedure comparable to California; this document therefore functions as a contractual directive grounded in the parties’ lien-related obligations under ORS chapter 87. Always coordinate service of this Notice with any statutory “Notice of Right to Lien” (ORS 87.021) and, if necessary, a perfected “Claim of Lien.”]
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// I. DOCUMENT HEADER
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Date of Notice: [NOTICE DATE]
Claimant/Notifying Party (“Claimant”):
Name: [CLAIMANT LEGAL NAME]
Entity Type: [LLC / Corporation / Sole Proprietor]
Address: [STREET, CITY, STATE ZIP]
CCB #: [OREGON CONSTRUCTION CONTRACTORS BOARD NUMBER, if applicable]
Primary Contracting Party (“Contractor”):
Name: [CONTRACTOR LEGAL NAME]
Prime Contract Date: [DATE]
Owner (“Owner”):
Name: [OWNER LEGAL NAME]
Project Address: [STREET, CITY, STATE ZIP]
Construction Lender (if any) (“Lender”):
Name: [LENDER LEGAL NAME]
Loan/Draw No.: [NUMBER]
Project (“Project”): [PROJECT NAME OR DESCRIPTION]
Effective Date: The earlier of (a) actual receipt of this Notice by Owner and Lender, or (b) three (3) business days following dispatch by certified mail, return receipt requested.
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// RECITALS
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A. Owner contracted with Contractor for construction of the Project at the above-described Property.
B. Claimant and Contractor entered into the Subcontract dated [SUBCONTRACT DATE] (the “Subcontract”) under which Claimant furnished labor, materials, equipment, or services (“Work”) for the Project.
C. Pursuant to ORS 87.001 et seq., including the preliminary “Notice of Right to Lien” under ORS 87.021, Claimant holds lien rights against the Property and related Construction Funds.
D. As of the Date of Notice, Claimant is owed $[NOTICE AMOUNT] (the “Claim Amount”), which remains unpaid more than [##] days after becoming due.
E. Claimant delivers this Stop Notice to direct the withholding of Construction Funds otherwise payable to Contractor until the Claim Amount is resolved in accordance with the terms set forth below and applicable Oregon law.
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// II. DEFINITIONS
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For ease of reference, capitalized terms used herein have the meanings set forth below:
“Bond” – A surety bond issued in compliance with ORS 87.076 and Section VII(A) of this Notice.
“Claim Amount” – The unpaid sum of $[NOTICE AMOUNT] claimed by Claimant for Work performed.
“Construction Funds” – Any loan proceeds, progress payments, retention, or other monies presently or subsequently due from Owner or Lender to Contractor on account of the Project.
“Law” – Oregon Construction Lien Law, Or. Rev. Stat. §§ 87.001– 87.093 (2023), and other applicable statutes.
“Notice Period” – The time during which Construction Funds must be withheld under Section III(D).
“Property” – The real property on which the Project is situated, legally described as: [INSERT FULL LEGAL DESCRIPTION].
“Release Instruments” – Collectively, (i) a Bond, (ii) a written unconditional release executed by Claimant, or (iii) a final, non-appealable court order discharging this Stop Notice.
“Stop Notice” or “Notice” – This document, inclusive of all attachments and exhibits.
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// III. OPERATIVE PROVISIONS
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A. Directive to Withhold.
Upon receipt of this Stop Notice and subject to Section III(D), Owner and/or Lender SHALL immediately withhold from Contractor, and from any party acting on Contractor’s behalf, Construction Funds in an amount not less than the Claim Amount plus an additional 25 % reserve for potential attorney fees, court costs, and interest (the “Withheld Funds”).
B. Application of Withheld Funds.
Withheld Funds shall be applied solely for:
1. Payment to Claimant upon receipt of mutually executed payment instructions;
2. Issuance of a Bond as provided in Section VII(A); or
3. Compliance with a final court order resolving the Claim Amount.
C. Restriction on Further Disbursements.
Owner and Lender shall not disburse Withheld Funds to Contractor, its surety, or any other person except as permitted under Section III(B). Any disbursement in violation of this Section constitutes a material breach of Owner’s and/or Lender’s fiduciary obligations under the Law and may subject the disbursing party to personal liability up to the amount wrongfully released.
D. Duration of Withholding (Notice Period).
The Withheld Funds must be retained until the earliest of:
1. Receipt of Release Instruments;
2. Sixty (60) days after the latest date on which a valid Claim of Lien could be timely recorded under ORS 87.035, provided Claimant has not recorded such lien;
3. Full payment to Claimant of the Claim Amount and any accrued interest; or
4. Written agreement among Claimant, Owner, and Contractor authorizing release.
E. Service of Notice.
Claimant shall serve this Stop Notice by any method authorized under ORCP 9 (service of pleadings and other papers) and shall provide proof of service upon request.
F. Contemporaneous Statutory Filings.
Owner and Lender acknowledge that nothing contained herein limits Claimant’s statutory right to (i) record a Claim of Lien, or (ii) commence suit to foreclose such lien. This Notice is in addition to, and not a substitute for, statutory remedies.
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// IV. REPRESENTATIONS & WARRANTIES
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Claimant represents that:
a. It has furnished Work of the nature, quality, and quantity stated in the accompanying Statement of Account (Exhibit A).
b. The Claim Amount is presently due and owing, has not been paid, waived, or otherwise satisfied.
c. Pre-lien notices required by ORS 87.021, if applicable, were timely and properly served. -
Survival. The representations and warranties in this Article IV survive the lifting or discharge of this Stop Notice until payment in full of the Claim Amount or entry of final judgment in any related proceeding.
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// V. COVENANTS & RESTRICTIONS
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A. Duty to Cooperate.
Owner, Lender, and Contractor agree to cooperate in good faith to verify the Claim Amount and to facilitate prompt and equitable release of Withheld Funds.
B. Notice of Bonding.
If Contractor or Owner elects to post a Bond, written notice of the Bond (with a copy thereof) shall be provided to Claimant within three (3) business days of issuance.
C. Non-Interference.
No Party shall impede Claimant’s exercise of lien rights or its pursuit of remedies permitted by Law.
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// VI. DEFAULT & REMEDIES
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A. Events of Default.
1. Failure of Owner or Lender to withhold or to continue withholding Construction Funds as required;
2. Release of Withheld Funds in violation of Section III(C);
3. Failure of Contractor to post a Bond within ten (10) business days after written demand.
B. Cure Period.
Before initiating litigation, Claimant shall provide written notice of default and allow a five (5) business-day cure period.
C. Remedies.
Upon uncured default, Claimant may seek:
1. Immediate injunctive relief compelling withholding of Construction Funds;
2. Money damages equal to the lesser of (i) the improperly released funds, or (ii) the Claim Amount, plus interest at the statutory rate, attorney fees, and costs; and
3. Any other relief available under ORS chapter 87 or at equity.
D. Attorney Fees.
In any action arising out of or relating to this Stop Notice, the prevailing party is entitled to recover its reasonable attorney fees and costs, including those incurred on appeal.
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// VII. RISK ALLOCATION
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A. Bond to Discharge Stop Notice.
Owner or Contractor may discharge this Stop Notice by procuring a Bond in an amount not less than 150 % of the Claim Amount, issued by a surety authorized to transact business in Oregon, conditioned for the payment of any sum that Claimant may recover in an action on the lien, in accordance with ORS 87.076.
B. Indemnification.
Contractor shall indemnify, defend, and hold harmless Owner and Lender against any loss, liability, or expense (including attorney fees) arising out of or related to the assertion of Claimant’s unpaid Work, except to the extent caused by the gross negligence or willful misconduct of Owner or Lender.
C. Limitation of Liability of Owner/Lender.
Provided Owner and Lender strictly comply with this Stop Notice, their liability to Claimant shall be limited to the amount of Construction Funds they are obligated to withhold under Section III(A).
D. Force Majeure.
No Party shall be liable for delays or failure in performance to the extent caused by events of force majeure, provided prompt written notice is given and diligent efforts to mitigate are undertaken.
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// VIII. DISPUTE RESOLUTION
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A. Governing Law.
This Stop Notice and any dispute arising hereunder shall be governed by the substantive law of the State of Oregon, without regard to conflict-of-laws principles.
B. Forum Selection.
Any action or proceeding shall be brought exclusively in the Circuit Court of the State of Oregon for the County of [COUNTY NAME].
C. Arbitration; Jury Waiver.
In accordance with the Metadata provided, the Parties expressly do not agree to arbitration or jury waiver. All disputes shall be resolved in state court.
D. Equitable Relief.
Nothing in this Article limits Claimant’s right to seek temporary, preliminary, or permanent injunctive relief to enforce the withholding obligations herein.
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// IX. GENERAL PROVISIONS
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A. Amendment & Waiver.
No amendment or waiver of any provision of this Stop Notice is effective unless in writing and signed by Claimant and Owner. No waiver shall constitute a continuing waiver.
B. Assignment.
Claimant may assign its rights hereunder in connection with an assignment of its Claim Amount. Owner may not assign obligations without Claimant’s prior written consent, except to a purchaser of the Property who assumes all obligations herein.
C. Successors & Assigns.
This Stop Notice binds and benefits the Parties and their respective successors and permitted assigns.
D. Severability.
If any provision of this Stop Notice is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the maximum extent permitted.
E. Integration.
This Stop Notice, together with all referenced exhibits, constitutes the entire agreement among the Parties concerning the withholding of Construction Funds and supersedes all prior communications on that subject.
F. Counterparts; Electronic Signatures.
This Stop Notice may be executed in counterparts, each of which is deemed an original, and all of which constitute one instrument. Signatures transmitted by electronic means (e.g., PDF, DocuSign) shall be deemed original.
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// X. EXECUTION BLOCK
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CLAIMANT
By: ____
Name: [AUTHORIZED SIGNATORY]
Title: [OFFICER/MANAGER]
Date: ____
OWNER (Acknowledgment Only)
By: ____
Name: [AUTHORIZED SIGNATORY]
Title: [OFFICER/MANAGER]
Date: ____
LENDER (Acknowledgment Only)
By: ____
Name: [AUTHORIZED SIGNATORY]
Title: [OFFICER/MANAGER]
Date: ____
[// GUIDANCE: Attach (i) Exhibit A – Statement of Account detailing unpaid invoices, dates, and amounts; (ii) Exhibit B – Proof of Service (certificate or mailing receipts). For residential projects, ensure compliance with additional disclosure obligations under ORS 87.093 and ORS 701.640.]
NOTICE TO OWNER AND LENDER
Failure to withhold Construction Funds pursuant to this Stop Notice may expose you to direct liability for the Claim Amount under Oregon Construction Lien Law. Consult legal counsel immediately upon receipt.