STOP NOTICE AND DEMAND FOR WITHHOLDING OF PAYMENT

(Pennsylvania – Private Construction Project)

I. DOCUMENT HEADER

A. Parties
1. Claimant: [CLAIMANT LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE], having its principal place of business at [ADDRESS] (“Claimant”).
2. Owner: [OWNER LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE], having its principal place of business at [ADDRESS] (“Owner”).
3. Prime Contractor: [PRIME CONTRACTOR LEGAL NAME], a [STATE OF ORGANIZATION] [ENTITY TYPE], having its principal place of business at [ADDRESS] (“Prime Contractor”).
4. Construction Lender (if any): [LENDER NAME] (“Lender”).

B. Project Information
• Property: [FULL LEGAL DESCRIPTION OR STREET ADDRESS] (the “Property”).
• Contract: [IDENTIFY CONTRACT/PURCHASE ORDER] dated [DATE] between Claimant and Prime Contractor (the “Contract”).
• Effective Date of Stop Notice: [DATE] (the “Effective Date”).

C. Jurisdiction
This Stop Notice is issued pursuant to the Pennsylvania Mechanics’ Lien Law of 1963, 49 P.S. § 1101 et seq., and all other applicable Pennsylvania statutes and common law (collectively, the “PA Lien Law”).

II. DEFINITIONS

For purposes of this Stop Notice, capitalized terms have the meanings set forth below and shall apply equally to singular and plural forms.

1. “Amount Withheld” means the lesser of:
   a. the Claim Amount; or
   b. any unpaid contract balance otherwise due or to become due from Owner (or Lender) to Prime Contractor for work performed on the Property.

2. “Bond” means a payment bond or other statutory bond acceptable under PA Lien Law § 1501, issued by a surety authorized to transact business in Pennsylvania, in an amount not less than 150% of the Claim Amount.

3. “Claim Amount” means $[AMOUNT], representing the unpaid labor, services, equipment, or materials furnished by Claimant to the Property.

4. “Lien Claim” means any mechanics’ lien claim that Claimant has filed or may hereafter file with respect to the Property pursuant to PA Lien Law.

5. “Release Event” means the earliest to occur of:
   a. full payment to Claimant of the Claim Amount (plus any agreed interest and costs);
   b. posting of a Bond in compliance with Section IV.C below; or
   c. entry of a final, non-appealable court order resolving the Lien Claim.

6. “Stop Notice” means this written notice and demand, together with all attachments, schedules, and proof of service.

[// GUIDANCE: Add additional defined terms here if tailoring for lender-delivered funds, multiple lien claimants, or joint check arrangements.]

III. OPERATIVE PROVISIONS

3.1 Notice and Demand

A. Pursuant to PA Lien Law and equity, Claimant hereby demands that Owner and Lender immediately withhold the Amount Withheld from any current or future payments otherwise payable to or for the benefit of Prime Contractor in connection with the Property.
B. The withheld funds shall be retained in trust pending the earlier of (i) a Release Event, or (ii) further written agreement among Claimant, Owner, and Prime Contractor.

3.2 Amount Claimed

Claimant provided labor and/or materials under the Contract from [START DATE] through [LAST DATE], for which $[AMOUNT] remains due and unpaid despite timely demand. An itemized statement is attached hereto as Exhibit A and incorporated by reference.

3.3 Service of Stop Notice

Simultaneously with execution, Claimant shall serve this Stop Notice on each recipient below by (i) certified mail, return receipt requested; (ii) overnight courier with proof of delivery; and/or (iii) personal delivery with signed acknowledgment:
1. Owner (at the address set forth above);
2. Prime Contractor (same); and
3. Lender (if any).

Proofs of service shall be collectively attached as Exhibit B.

3.4 Duration

The Stop Notice shall remain in force until the earliest Release Event or written rescission executed by Claimant.

IV. REPRESENTATIONS & WARRANTIES

Claimant represents and warrants to Owner and Lender that, as of the Effective Date:

1. Claimant supplied labor, materials, equipment, or services for the improvement of the Property in good faith under the Contract.
2. The Claim Amount is justly due and owing and reflects all allowable credits, offsets, and set-offs known to Claimant.
3. All condition precedents to filing a Lien Claim under PA Lien Law (including, where applicable, any Notice of Intent to Lien) have been satisfied or will be timely satisfied.
4. Claimant has not waived its lien or payment rights, except as expressly set forth in any written, signed partial or final lien waiver delivered to Owner prior to the Effective Date.
5. The information contained in this Stop Notice, including Exhibits, is true and correct to the best of Claimant’s knowledge and belief.

These representations and warranties survive delivery of this Stop Notice.

V. COVENANTS & RESTRICTIONS

1. Cooperation: Claimant shall reasonably cooperate with Owner’s or Lender’s requests for documentation to verify the Claim Amount.
2. No Interference: Owner and Claimant shall not unreasonably withhold consent to any good-faith efforts by Prime Contractor to bond off the Lien Claim under Section IV.C below.
3. Notice of Payment: Owner or Lender shall provide written notice to Claimant within three (3) Business Days after making any payment to Claimant or posting a Bond that triggers a Release Event.
4. Preservation of Rights: Nothing herein shall be construed as a waiver of Claimant’s right to file, prosecute, or foreclose a mechanics’ lien, nor as a limitation on Owner’s or Lender’s statutory defenses.

VI. DEFAULT & REMEDIES

1. Owner/Prime Contractor Default: Failure to withhold the Amount Withheld after actual receipt of this Stop Notice constitutes a material default.
2. Remedies: Upon default, Claimant may, without prejudice to any other rights:
   a. commence an action at law or in equity to enforce the Stop Notice;
   b. seek injunctive relief to restrain disbursement of project funds; and/or
   c. accelerate filing or foreclosure of its Lien Claim.
3. Attorney Fees: In any action to enforce this Stop Notice, the prevailing party shall be entitled to recover its reasonable attorney fees, court costs, and expenses to the fullest extent permitted by law.

VII. RISK ALLOCATION

7.1 Indemnification / Bonding Requirements

Prime Contractor (and any surety issuing a Bond) shall indemnify, defend, and hold harmless Owner, Lender, and their respective successors and assigns from and against any claims, losses, or costs (including attorney fees) arising out of or relating to the Lien Claim, except to the extent such losses are caused by the gross negligence or willful misconduct of the indemnified party.

7.2 Limitation of Liability

Owner’s aggregate liability to Claimant under this Stop Notice shall not exceed the Amount Withheld actually in Owner’s possession at the time a Release Event occurs.

7.3 Force Majeure

No party shall be liable for delay in performance caused by events beyond its reasonable control (including acts of God, governmental action, or court orders), provided such party promptly notifies the other parties in writing.

VIII. DISPUTE RESOLUTION

1. Governing Law: This Stop Notice and any dispute arising hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania without regard to conflict-of-law principles.
2. Forum Selection: The parties irrevocably submit to the exclusive jurisdiction of the state courts located in the county where the Property is situated.
3. Arbitration: Not applicable.
4. Injunctive Relief: Claimant’s entitlement to seek equitable or injunctive relief (including payment stoppage) is expressly preserved.

IX. GENERAL PROVISIONS

1. Notices: All notices under this Stop Notice shall be in writing and delivered in accordance with Section 3.3.
2. Amendment; Waiver: No amendment or waiver shall be effective unless in a writing signed by the party against whom enforcement is sought.
3. Assignment: Claimant may assign its rights hereunder only with the prior written consent of Owner, except an assignment to a financing institution of Claimant’s choosing.
4. Severability: If any provision of this Stop Notice is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.
5. Integration: This Stop Notice, together with its Exhibits, constitutes the entire notice and understanding among the parties regarding the subject matter hereof.
6. Counterparts; Electronic Signatures: This Stop Notice may be executed in counterparts, each of which shall be deemed an original. Electronic signatures (including PDF and DocuSign®) shall be deemed originals for all purposes.

X. EXECUTION BLOCK

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

*Prime Contractor executes solely to acknowledge receipt and notice; execution does not constitute acceptance of liability beyond that imposed by law or contract.

[NOTARY ACKNOWLEDGMENT BLOCKS – add if required for recording or lender requirements]

EXHIBIT A – ITEMIZED STATEMENT OF CLAIM

EXHIBIT B – PROOFS OF SERVICE

[Attach certified mail receipts, courier tracking, or affidavits of personal service.]

[// GUIDANCE:
1. Verify all statutory deadlines under PA Lien Law—for subcontractors, a Notice of Intent to Lien must be served at least 30 days before filing the lien claim itself.
2. Confirm that the project is not bonded under the PA Public Works Contractors’ Bond Law; this template is for private construction projects only.
3. If the Owner has already posted a payment bond, adapt Section 7.1 to reference the existing bond instead of requiring a new one.
4. Consider recording the Stop Notice (or a memorandum of it) in the county recorder’s office to place third parties on constructive notice—although not expressly required by PA statute, it may provide additional leverage.
5. Always review the underlying construction contract for any contractual notice prerequisites or alternative dispute resolution clauses that could alter or supplement these provisions.
]

This template is provided for use by licensed attorneys. Customize and verify all bracketed terms, statutory citations, and procedural steps before use.