Rhode Island Stop-Notice (Payment Withholding Notice) Template
Prepared for customization by licensed Rhode Island counsel
© 2025 — Senior Legal Drafting Series

TABLE OF CONTENTS

1. Document Header
2. Definitions
3. Operative Provisions
   3.1 Statement of Claim and Amount
   3.2 Mandatory Payment Withholding
   3.3 Bonding to Discharge Stop-Notice
   3.4 Release Procedures
4. Representations & Warranties
5. Covenants & Ongoing Obligations
6. Default & Remedies
7. Risk Allocation
8. Dispute Resolution
9. General Provisions
10. Execution Block
11. Notary Acknowledgment (Optional/As Required)

1. DOCUMENT HEADER

Rhode Island Stop-Notice to Withhold Payments Pending Lien Resolution
Effective Date: [DATE]

Claimant: [LEGAL NAME], a [STATE] [ENTITY TYPE]
Owner: [LEGAL NAME]
Direct Contractor: [LEGAL NAME]
Construction Lender (if any): [LEGAL NAME]
Project: [PROJECT NAME / PROPERTY DESCRIPTION]
Property Address: [STREET, CITY, RI ZIP]
Legal Description: [INSERT OR “See Exhibit A”]
Contract/PO No.: [NUMBER]

Recitals
A. Claimant has furnished labor, services, equipment, and/or materials (“Work”) for the Project pursuant to the above-referenced contract(s).
B. Pursuant to the Rhode Island Mechanics’ Lien Law, R.I. Gen. Laws ch. 34-28 (2024), Claimant is entitled to serve this Stop-Notice to compel withholding of sufficient funds to satisfy its potential mechanic’s lien claim.
C. Claimant desires to preserve and enforce its statutory rights and mitigate the risk of non-payment.

NOW, THEREFORE, Claimant issues this Stop-Notice subject to the following terms and conditions.

2. DEFINITIONS

For purposes of this Stop-Notice:

“Bond” means a surety bond issued by a corporate surety licensed in Rhode Island in an amount not less than one hundred twenty-five percent (125%) of the Claimed Amount and conditioned upon payment of any judgment or settlement of Claimant’s mechanic’s lien claim.

“Claimed Amount” means the sum of US $[AMOUNT] currently due and owing to Claimant for Work furnished through [LAST DATE OF WORK], exclusive of interest, attorneys’ fees, and allowable costs.

“Owner” includes any fee owner, lessee, or other person with legal or equitable title to the Property.

“Stop-Notice” means this written notice directing the withholding of payments otherwise payable to the Direct Contractor in accordance with R.I. Gen. Laws ch. 34-28 and applicable common law.

[// GUIDANCE: Add or modify definitions to align with project contract terminology.]

3. OPERATIVE PROVISIONS

3.1 Statement of Claim and Amount

1. Claimant hereby asserts the Claimed Amount of US $[AMOUNT].
2. A detailed, itemized statement supporting the Claimed Amount is attached hereto as Exhibit B.

3.2 Mandatory Payment Withholding

1. Upon receipt of this Stop-Notice, Owner shall immediately withhold from any future or retained payments otherwise due or to become due to the Direct Contractor a sum equal to the Claimed Amount (“Withheld Funds”).
2. The Withheld Funds shall be retained in a segregated, interest-bearing account or trust until:
   a. Claimant’s mechanic’s lien is paid, compromised, or otherwise satisfied;
   b. A Bond compliant with Section 3.3 is posted; or
   c. Claimant executes and delivers a written Release in accordance with Section 3.4.

[// GUIDANCE: If a construction lender is funding draws, add parallel withholding language directed to the lender.]

3.3 Bonding to Discharge Stop-Notice

1. Owner or Direct Contractor may discharge this Stop-Notice by delivering to Claimant a Bond in the required amount.
2. Upon verified receipt of a Bond meeting statutory standards, Claimant shall, within three (3) business days, issue a written Release of this Stop-Notice in the form attached as Exhibit C.

3.4 Release Procedures

1. Claimant shall promptly release this Stop-Notice upon (i) receipt of full payment of the Claimed Amount (plus accrued interest and agreed fees, if any) in immediately available funds; or (ii) receipt of a Bond pursuant to Section 3.3.
2. Failure by Claimant to release the Stop-Notice after satisfaction as described above may subject Claimant to statutory penalties and/or damages.

4. REPRESENTATIONS & WARRANTIES

1. Claimant is duly organized, validly existing, and in good standing under the laws of its formation jurisdiction and authorized to transact business in Rhode Island.
2. The Work for which the Claimed Amount is sought was actually furnished to the Project and incorporated into or consumed in connection with the improvement of the Property.
3. The Claimed Amount is justly due and has not been paid, waived, or otherwise extinguished.
4. Claimant has complied, and will continue to comply, with all pre-lien notice, timing, and service requirements under R.I. Gen. Laws ch. 34-28.
5. No prior assignment of the Claimed Amount has been made.

5. COVENANTS & ONGOING OBLIGATIONS

1. Claimant will timely (i) record any required Notice of Intention to Claim Lien; and (ii) commence any lien enforcement action within statutory deadlines.
2. Owner will (i) maintain the Withheld Funds separate from general funds; and (ii) not disburse such funds except in strict compliance with this Stop-Notice and applicable law.
3. Each Party shall promptly furnish additional documentation reasonably requested to verify compliance.

6. DEFAULT & REMEDIES

6.1 Events of Default
a. Failure of Owner to withhold or promptly release funds as required.
b. Failure of Claimant to release the Stop-Notice after satisfaction.

6.2 Remedies
a. Injunctive Relief. The non-defaulting party may seek specific performance or injunctive relief, including court orders directing payment stoppage.
b. Monetary Damages. Recoverable damages include the unpaid Claimed Amount, consequential damages permitted by law, and prejudgment interest.
c. Attorneys’ Fees & Costs. The prevailing party in any proceeding arising out of this Stop-Notice shall be entitled to recover reasonable attorneys’ fees and costs.

[// GUIDANCE: Confirm fee-shifting authority with current RI statutes/case law.]

7. RISK ALLOCATION

1. Indemnification. Owner and Direct Contractor jointly and severally agree to indemnify, defend, and hold harmless Claimant from and against any third-party claims arising out of the wrongful disbursement of Withheld Funds contrary to this Stop-Notice.
2. Liability Cap. Claimant’s aggregate liability under this Stop-Notice shall not exceed the lesser of (i) the amount actually received by Claimant from the Owner or Bond surety, or (ii) the Claimed Amount, except to the extent damages result from Claimant’s gross negligence or willful misconduct.
3. Force Majeure. Neither party shall be liable for delays or failure to perform obligations hereunder due to causes beyond its reasonable control; provided that payment or bonding obligations under Sections 3.2 and 3.3 are expressly excluded from this Force Majeure clause.

8. DISPUTE RESOLUTION

1. Governing Law. This Stop-Notice shall be governed by and construed in accordance with the laws of the State of Rhode Island.
2. Forum Selection. Any action relating to this Stop-Notice shall be brought exclusively in the state courts sitting in [COUNTY], Rhode Island.
3. Arbitration. Not applicable (per metadata).
4. Jury Waiver. Not applicable (per metadata).
5. Injunctive Relief. Nothing herein shall limit a party’s right to seek emergency or provisional relief to enforce payment withholding.

9. GENERAL PROVISIONS

1. Amendments. Any amendment to this Stop-Notice must be in writing and signed by Claimant and Owner.
2. Waiver. No waiver of any provision shall be effective unless in writing and shall not constitute a waiver of any other provision.
3. Assignment. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, except that Claimant may assign its payment rights to a financing institution.
4. Severability. If any provision is held unenforceable, the remaining provisions shall remain in full force and effect.
5. Entire Agreement. This Stop-Notice, together with all attached exhibits, constitutes the entire agreement relating to the subject matter hereof.
6. Counterparts; Electronic Signatures. This Stop-Notice may be executed in multiple counterparts and by electronic signature, each of which shall be deemed an original and all of which together constitute one instrument.

10. EXECUTION BLOCK

CLAIMANT:
[LEGAL NAME]

By: _________________________________________
Name: [TYPED NAME]
Title: [CAPACITY]
Date: _________________

OWNER:
[LEGAL NAME]

By: _________________________________________
Name: [TYPED NAME]
Title: [CAPACITY]
Date: _________________

DIRECT CONTRACTOR (acknowledgment only):
[LEGAL NAME]

By: _________________________________________
Name: [TYPED NAME]
Title: [CAPACITY]
Date: _________________

CONSTRUCTION LENDER (acknowledgment only):
[LEGAL NAME]

By: _________________________________________
Name: [TYPED NAME]
Title: [CAPACITY]
Date: _________________

11. NOTARY ACKNOWLEDGMENT

[// GUIDANCE: Rhode Island does not strictly require notarization of a stop-notice, but notarizing strengthens evidentiary value and is recommended if the notice will be recorded or relied upon by third parties.]

State of Rhode Island
County of ☐

On this ___ day of __________, 20__, before me, the undersigned notary public, personally appeared _________________________, who proved to me through satisfactory evidence of identification to be the person whose name is signed above, and acknowledged that (he/she) executed the foregoing instrument in (his/her) authorized capacity.

________________________________________
Notary Public
My Commission Expires: ________________

Exhibit A

Legal Description of Property

Exhibit B

Itemized Statement of Claimed Amount

Exhibit C

Form of Release of Stop-Notice

[// GUIDANCE:
1. Serve this Stop-Notice by certified mail, return receipt requested, and/or personal delivery to the Owner, Direct Contractor, and Construction Lender (if any).
2. Confirm service and retention requirements under current Rhode Island Mechanics’ Lien Law before relying on this form.
3. Calendar all statutory deadlines (e.g., recording of Notice of Intention, commencement of suit) immediately upon service.]