SOUTH CAROLINA
STOP PAYMENT NOTICE
(Template – For Attorney Review & Customization)
[// GUIDANCE: This template is intended solely as a starting point for licensed South Carolina counsel. It does not constitute legal advice. Review all bracketed items, statutory references, and procedural requirements against current South Carolina law before use.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Notary Acknowledgment (Optional)
1. DOCUMENT HEADER
Title: Stop Payment Notice Pursuant to S.C. Code Ann. §§ 29-5-10 et seq.
Claimant: [CLAIMANT LEGAL NAME], a [STATE] [ENTITY TYPE] having a principal place of business at [ADDRESS] (“Claimant”).
Owner/Obligee: [OWNER/OBLIGEE LEGAL NAME], a [STATE] [ENTITY TYPE] having a principal place of business at [ADDRESS] (“Owner”).
Construction Lender (if applicable): [LENDER NAME] (“Lender”).
Project: [PROJECT NAME AND ADDRESS] (“Project”).
Prime Contract: Executed on [DATE] between Owner and [GENERAL CONTRACTOR NAME] (“Prime Contract”).
Effective Date of Notice: [DATE] (“Effective Date”).
Governing Law: South Carolina lien law, S.C. Code Ann. §§ 29-5-10 et seq.
2. DEFINITIONS
For purposes of this Stop Payment Notice (the “Notice”), the following terms shall have the meanings set forth below:
“Bond” – A surety bond obtained in accordance with Section 3.4, conditioned to release funds withheld under this Notice.
“Claim Amount” – The aggregate sum of $[AMOUNT], representing unpaid labor, services, equipment, or materials furnished by Claimant for the Project as of the Effective Date.
“Funds Subject to Withholding” – Any undisbursed contract funds, progress payments, or retention proceeds otherwise due under the Prime Contract in an amount not less than the Claim Amount, together with any statutorily-permitted allowances for interest, costs, and attorneys’ fees.
“Lien Release” – A written, statutory-compliant unconditional release of Claimant’s lien and stop-payment rights, in the form attached as Exhibit B or otherwise acceptable to Claimant.
“Notice Date” – The date of confirmed delivery of this Notice to Owner and, where applicable, Lender.
[// GUIDANCE: Add, remove, or modify defined terms to mirror project-specific documents and terminology.]
3. OPERATIVE PROVISIONS
3.1 Stop Payment Directive. Pursuant to S.C. Code Ann. §§ 29-5-10 et seq., Claimant hereby directs Owner and Lender to withhold and retain, from any sums otherwise payable in connection with the Project, the Funds Subject to Withholding until the earliest of:
(a) Claimant’s filing of a voluntary Lien Release;
(b) Posting of a Bond in accordance with Section 3.4; or
(c) Final, non-appealable adjudication or settlement of Claimant’s underlying lien claim.
3.2 Scope of Withholding. The withholding obligation shall apply to all progress, retention, and final payments under the Prime Contract and any related loan or disbursement agreements, regardless of whether such funds are held by Owner, Lender, escrow agent, or title insurer.
3.3 Notice Obligations. Owner shall, within five (5) business days after the Notice Date, provide written confirmation to Claimant specifying (i) the undisputed amount currently withheld, (ii) the balance of undisbursed contract funds, and (iii) the anticipated date of next scheduled disbursement.
3.4 Bonding-Off Procedure. Owner or Lender may discharge the withholding obligation by procuring and delivering to Claimant a surety Bond, issued by a corporate surety authorized to transact business in South Carolina and meeting the requirements of S.C. Code Ann. § 29-5-110, in a penal sum not less than one and one-half (1.5) times the Claim Amount.
3.5 Duration. This Notice shall remain in full force and effect until fully released in accordance with Section 3.1 or otherwise terminated pursuant to written agreement of the parties.
3.6 Effect on Contractual Deadlines. All contractual payment milestones or draw schedules under the Prime Contract or any loan agreement are hereby modified to the extent necessary to give effect to this Notice.
4. REPRESENTATIONS & WARRANTIES
4.1 Claimant represents and warrants that:
(a) Claimant is duly licensed, qualified, and authorized to perform the labor or furnish the materials underlying the Claim Amount;
(b) The Claim Amount is presently due and owing, has not been paid, waived, or released, and is not subject to offset except as expressly disclosed in Exhibit A;
(c) Claimant has complied in all material respects with the notice and filing prerequisites of S.C. Code Ann. §§ 29-5-20, -40, and -90; and
(d) This Notice is executed by a duly authorized representative of Claimant.
4.2 Survival. The representations and warranties set forth in Section 4.1 shall survive execution and delivery of this Notice and any subsequent Bonding-Off or Lien Release.
5. COVENANTS & RESTRICTIONS
5.1 Further Assurances. Each party shall execute such additional documents and take such further actions as may be reasonably necessary to carry out the intent of this Notice.
5.2 Non-Interference. Owner shall not disburse, transfer, assign, pledge, or otherwise encumber the Funds Subject to Withholding except in strict compliance with this Notice.
5.3 Notice of Bond. Within three (3) business days after issuance of any Bond in accordance with Section 3.4, Owner shall furnish Claimant with a fully executed original bond instrument and all accompanying riders and endorsements.
5.4 Record Maintenance. Owner shall preserve all documents relating to Project payments for at least six (6) years following final completion of the Project or such longer period as may be required by law.
6. DEFAULT & REMEDIES
6.1 Events of Default. An “Event of Default” occurs if Owner or Lender:
(a) Fails to withhold the Funds Subject to Withholding in accordance with Section 3.1;
(b) Fails to provide confirmation or documentation required under Section 3.3 or Section 5.3;
(c) Disburses any portion of the Funds Subject to Withholding in violation of this Notice; or
(d) Fails to procure a Bond within ten (10) business days after entry of a final court order requiring such Bond.
6.2 Cure Period. Upon written notice of an Event of Default, Owner shall have three (3) business days to cure the default, failing which Claimant may pursue any and all remedies available at law or equity.
6.3 Remedies. Without limiting other rights, Claimant may seek:
(a) Temporary, preliminary, and permanent injunctive relief compelling compliance with this Notice;
(b) An order directing Lender or any escrow agent to segregate and hold the Funds Subject to Withholding;
(c) Recovery of costs of suit, including reasonable attorneys’ fees, pursuant to S.C. Code Ann. § 29-5-10; and
(d) Such other relief as the court deems just and proper.
6.4 Cumulative Rights. Remedies are cumulative and not exclusive. Failure to assert a remedy shall not constitute a waiver.
7. RISK ALLOCATION
7.1 Indemnification for Wrongful Disbursement. Owner shall indemnify, defend, and hold Claimant harmless from and against all losses, damages, costs, and expenses (including reasonable attorneys’ fees) arising out of or relating to any disbursement of Funds Subject to Withholding made in violation of this Notice.
7.2 Limitation of Liability. Owner’s aggregate liability under this Notice shall not exceed the lesser of: (i) the Funds Subject to Withholding actually disbursed in violation of this Notice, or (ii) the Claim Amount, except in cases of willful misconduct or gross negligence.
7.3 Force Majeure. Neither party shall be liable for failure or delay in performance caused by events beyond its reasonable control; provided, however, that this Section does not excuse Owner’s obligation to withhold funds once they are received or otherwise within Owner’s control.
8. DISPUTE RESOLUTION
8.1 Governing Law. This Notice and any dispute arising hereunder shall be governed by and construed in accordance with the lien laws of the State of South Carolina without regard to conflict-of-law principles.
8.2 Forum Selection. The parties submit to the exclusive jurisdiction of the Court of Common Pleas of the county in which the Project is located (the “Designated Court”).
8.3 Jury Trial & Arbitration. No jury-trial waiver or arbitration provisions are included. All matters shall be tried in the Designated Court unless otherwise agreed in writing after the Effective Date.
8.4 Injunctive Relief. Nothing herein shall restrict Claimant’s right to seek provisional or injunctive relief in any court of competent jurisdiction to enforce the withholding obligations set forth herein.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers. No amendment or waiver of any provision of this Notice is effective unless it is in writing and signed by Claimant. A waiver on one occasion is not a waiver of any subsequent breach.
9.2 Assignment. Owner may not assign, delegate, or transfer any rights or obligations under this Notice without Claimant’s prior written consent.
9.3 Severability. If any provision of this Notice is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid provision shall be interpreted to effectuate its original intent to the maximum extent permitted by law.
9.4 Entire Agreement. This Notice constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous oral or written communications.
9.5 Counterparts; Electronic Signatures. This Notice may be executed in counterparts, each of which shall be deemed an original. Signatures transmitted by electronic means (e.g., PDF, DocuSign) shall be deemed original signatures for all purposes.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned executes this Stop Payment Notice as of the Effective Date.
CLAIMANT:
[CLAIMANT LEGAL NAME]
By: _____
Name: [PRINTED NAME]
Title: [TITLE]
Date: _________
OWNER/OBLIGEE: (acknowledgment of receipt only)
By: _____
Name: [PRINTED NAME]
Title: [TITLE]
Date: _________
LENDER (if applicable): (acknowledgment of receipt only)
By: _____
Name: [PRINTED NAME]
Title: [TITLE]
Date: _________
[// GUIDANCE: Receipt acknowledgment blocks are optional but recommended to establish evidentiary record of service.]
11. NOTARY ACKNOWLEDGMENT (Optional)
State of _ )
County of ______ )
On this ___ day of _, 20_, before me, the undersigned Notary Public, personally appeared ___, whose identity was proved to me on the basis of satisfactory evidence, to be the individual who executed the foregoing Stop Payment Notice and acknowledged to me that he/she executed the same for the purposes therein stated.
Notary Public
My Commission Expires: _______
EXHIBIT A
Itemized Statement of Claim Amount
- Invoice No. _ dated _ – $__
- Invoice No. _ dated _ – $__
…
Total: $[AMOUNT]
EXHIBIT B
Form of Unconditional Lien Release
[Insert statutory form compliant with S.C. Code Ann. § 29-5-380 or successor provisions.]
[// GUIDANCE:
1. Service Requirements – South Carolina does not provide explicit “stop-notice” statutes analogous to California; however, parties frequently incorporate similar withholding notices contractually or seek equitable relief under S.C. Code Ann. §§ 29-5-10 et seq. Confirm viability with counsel.
2. Filing Deadlines – Verify that the underlying mechanics’ lien (if any) is timely perfected (generally within 90 days of last furnishing) and that suit is commenced within the statutory six-month period.
3. Bonding – Ensure surety complies with S.C. Code Ann. § 38-1-20 and is duly authorized by the S.C. Department of Insurance.
4. Customization – Replace all bracketed placeholders, attach supporting invoices, and update cross-references before service.
]