Stop-Notice

STATUTORY STOP-NOTICE

(Request to Withhold Contract Funds Pending Lien Resolution)

Texas Property Code, Chapter 53

[// GUIDANCE: This template is drafted as a comprehensive “Stop-Notice” (also known in Texas as a Statutory Funds-Trapping Notice) intended for use by a subcontractor, supplier, or other lien claimant. Although Texas does not formally use the term “Stop-Notice,” the mechanism described in Tex. Prop. Code §§ 53.052 & 53.082 functions identically by compelling the Owner to withhold funds otherwise payable to the Contractor. Customize all bracketed fields and attach the referenced Exhibits before delivery. Strict statutory deadlines apply. ]

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 Block
Exhibits

I. DOCUMENT HEADER

A. Parties

1. “Claimant”: [CLAIMANT LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS].
2. “Owner”: [OWNER LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS].
3. “Contractor”: [CONTRACTOR LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [ADDRESS].
4. “Surety” (if any): ☐.

B. Project Information
• Project Name: [PROJECT NAME]
• Property Description: [LOT/BLOCK, LEGAL DESCRIPTION, COUNTY], Texas (“Property”).
• Prime Contract Amount: $[___].
• Claimant’s Contract/PO No.: ☐.

C. Effective Date: [DATE] (“Effective Date”).

D. Governing Law & Jurisdiction: State of Texas lien laws; exclusive venue in the state courts of [COUNTY] County, Texas.

II. DEFINITIONS

“Bond” means a statutory bond satisfying Tex. Prop. Code Subch. H (§§ 53.171 et seq.) issued in favor of Claimant to secure payment of the Claim Amount.

“Claim Amount” means $[AMOUNT] representing the unpaid balance for labor, materials, and/or services furnished by Claimant to the Project.

“Release” means a duly executed release, partial release, or waiver of lien/claim in the form attached as Exhibit C.

“Stop-Notice” means this Statutory Notice of Claim and Request for Withholding of Funds delivered pursuant to Tex. Prop. Code §§ 53.052 & 53.082.

III. OPERATIVE PROVISIONS

1. Statutory Notice of Claim.
   Claimant hereby gives written notice under Tex. Prop. Code § 53.052 that it has provided labor, materials, and/or services for the Project and has not been paid the Claim Amount.

2. Demand to Withhold Funds.
   Pursuant to Tex. Prop. Code § 53.082, Claimant demands that Owner immediately withhold from payments otherwise due to Contractor an amount sufficient to cover the Claim Amount, plus statutory interest and allowable costs, until:
   a. Claimant is paid in full;
   b. a Bond is furnished and accepted by Claimant; or
   c. Claimant executes and delivers a Release.

3. Property Identification & Project Statement.
   Detailed statements required by Tex. Prop. Code § 53.054 are set out in Exhibit A (Statement of Account) and incorporated herein.

4. Preservation of Liens.
   Nothing herein waives Claimant’s right to file a lien affidavit under Tex. Prop. Code § 53.052 or pursue any other remedy.

IV. REPRESENTATIONS & WARRANTIES

1. Claimant represents that:
   a. It furnished the labor, materials, or services described in Exhibit B in good faith and in accordance with its contract;
   b. The Claim Amount is just, due, and unpaid;
   c. All applicable notices (if any) required under Tex. Prop. Code § 53.056 have been timely given; and
   d. No portion of the Claim Amount has been satisfied.

2. These representations survive until the earlier of (i) payment in full, or (ii) the execution of a Release by Claimant.

V. COVENANTS & RESTRICTIONS

1. Owner shall retain funds in strict compliance with Tex. Prop. Code § 53.082.
2. Contractor shall, within [5] business days of receipt of this Stop-Notice, either (a) pay Claimant the Claim Amount, or (b) furnish a Bond acceptable to Claimant.
3. Claimant agrees to execute an appropriate Release within [3] business days following receipt of collected funds or Bond.

VI. DEFAULT & REMEDIES

1. Events of Default.
   a. Owner’s failure to withhold funds as required.
   b. Contractor’s failure to pay or bond off the Claim Amount within the prescribed period.

2. Remedies.
   Upon default, Claimant may, without limitation:
   a. File a statutory lien affidavit against the Property;
   b. Commence suit under Tex. Prop. Code § 53.156 to foreclose its lien;
   c. Recover reasonable attorneys’ fees and costs; and
   d. Seek prejudgment interest at the highest rate allowed by law.

VII. RISK ALLOCATION

1. Indemnification & Bonding.
   Contractor agrees to indemnify, defend, and hold harmless Owner from any loss, liability, or expense arising out of Claimant’s lien or this Stop-Notice, provided Owner properly withholds funds.

2. Limitation of Liability.
   Owner’s liability to Claimant is capped at the lesser of (a) the Claim Amount, or (b) the unpaid contract balance Owner is otherwise obligated to withhold at the time of receipt of this Stop-Notice.

3. Force Majeure.
   Neither party shall be liable for delay in performance caused by events beyond its reasonable control; however, monetary obligations are never excused.

VIII. DISPUTE RESOLUTION

1. Governing Law: Texas.
2. Forum Selection: State courts located in [COUNTY] County, Texas.
3. Arbitration: Not applicable.
4. Injunctive Relief: The parties acknowledge that monetary damages may be inadequate; Claimant may seek injunctive relief to compel statutory withholding.

IX. GENERAL PROVISIONS

1. Amendments & Waivers. Must be in a writing signed by Claimant to be effective.
2. Assignment. Claimant may assign its rights hereunder; Contractor and Owner may not assign without prior written consent of Claimant.
3. Successors & Assigns. This Stop-Notice binds and benefits the parties and their respective successors and permitted assigns.
4. Severability. If any provision is unenforceable, the remainder remains in effect.
5. Entire Agreement. This document, including Exhibits, constitutes the entire understanding regarding the subject matter.
6. Counterparts; Electronic Signatures. This Stop-Notice may be executed in counterparts and by electronic signature with the same force as an original.

X. EXECUTION BLOCK

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

CLAIMANT:
[CLAIMANT LEGAL NAME]
By: _______________________________
Name: _____________________________
Title: _____________________________
Date: _____________________________

[Optional Notary Acknowledgment – recommended for record clarity though not statutorily required for the notice itself]

EXHIBITS

• Exhibit A – Statement of Account (Tex. Prop. Code § 53.054)
• Exhibit B – Itemized Description of Labor/Materials/Services
• Exhibit C – Form of Conditional/Unconditional Release

[// GUIDANCE: Attach contemporaneous lien-waiver forms compliant with Tex. Prop. Code § 53.281 if simultaneous payment is anticipated.]