STOP NOTICE AND DEMAND TO WITHHOLD PAYMENT
(Vermont – Private Construction Project)
[// GUIDANCE: This form is intended for use by a potential lien claimant (e.g., subcontractor, material supplier, labor provider, or equipment lessor) on a private construction project located in the State of Vermont. Customize all bracketed text, confirm factual accuracy, and attach any required exhibits before service.]
TABLE OF CONTENTS
I. Document Header
II. Definitions
III. Operative Provisions (Stop-Notice Procedures)
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block
I. DOCUMENT HEADER
1.1 Title. STOP NOTICE AND DEMAND TO WITHHOLD PAYMENT (the “Stop Notice”).
1.2 Parties.
(a) Claimant: [LEGAL NAME], a [STATE] [ENTITY TYPE], having a principal place of business at [ADDRESS].
(b) Owner/Obligor: [LEGAL NAME], a [STATE] [ENTITY TYPE], having a principal place of business at [ADDRESS].
(c) Prime Contractor (if not the Owner): [LEGAL NAME], a [STATE] [ENTITY TYPE], having a principal place of business at [ADDRESS].
(d) Construction Lender (if any): [LEGAL NAME], a [STATE/FEDERAL] [BANK/FINANCIAL INSTITUTION], having a principal place of business at [ADDRESS].
1.3 Effective Date. This Stop Notice is effective upon the date of actual receipt by the Owner/Obligor (the “Effective Date”).
1.4 Project Identification.
(a) Project Name: [PROJECT TITLE].
(b) Property Description: [LEGAL DESCRIPTION OR VOLUME/PAGE REFERENCE].
(c) Vermont County: [COUNTY].
(d) Prime Contract Date: [DATE].
1.5 Consideration. Claimant has furnished labor, materials, equipment, or services for the improvement of the Property and asserts statutory lien rights under Vermont mechanic’s lien law. In furtherance of those rights and pursuant to Vermont stop-payment practices, Claimant issues this Stop Notice to require withholding of undisbursed contract funds.
II. DEFINITIONS
For purposes of this Stop Notice, the following capitalized terms have the meanings set forth below. Terms defined in the singular include the plural and vice-versa. Undefined capitalized terms shall have their plain meaning or the meaning ascribed by applicable law.
“Adequate Bond” – A surety bond issued by a surety acceptable under Vermont law in a penal sum of not less than one hundred fifty percent (150%) of the claimed amount that fully secures payment of the Lien Claim, including interest, costs, and reasonable attorneys’ fees.
“Claim Amount” – $[AMOUNT], representing the unpaid balance due to Claimant for labor, materials, equipment, or services furnished to the Project through [DATE].
“Claimant” – The party identified in Section 1.2(a) asserting lien rights and issuing this Stop Notice.
“Lien Claim” – Claimant’s mechanic’s lien or potential mechanic’s lien rights arising under Vermont law in connection with the Project.
“Owner/Obligor” – Collectively, the Owner and any Construction Lender receiving this Stop Notice and obligated to withhold funds.
“Property” – The real property and improvements described in Section 1.4.
“Release Event” – Any event described in Section 3.6 that obligates Claimant to execute a Release of this Stop Notice.
“Stop Notice” – This instrument, as the same may be supplemented or amended in accordance with Section 3.5.
III. OPERATIVE PROVISIONS (STOP-NOTICE PROCEDURES)
3.1 Service of Stop Notice.
(a) Method. Claimant shall serve this Stop Notice by any method authorized for service of process in Vermont or by certified mail, return receipt requested, addressed to the Owner/Obligor at the addresses set forth in Section 1.2.
(b) Proof. A signed receipt, affidavit of service, or electronic delivery confirmation constitutes prima facie evidence of receipt.
3.2 Scope of Withholding. Upon receipt, Owner/Obligor shall immediately withhold from payments otherwise due or to become due under the Prime Contract an amount equal to the lesser of (i) the Claim Amount, plus estimated interest and recoverable costs, or (ii) the unpaid balance of the contract price.
3.3 Duration of Withholding. The withholding obligation continues until the earliest to occur of (i) a Release Event, (ii) entry of a final court order resolving the Lien Claim, or (iii) other disposition permitted by Vermont law.
3.4 No Premature Disbursement. Any disbursement of withheld funds in violation of this Stop Notice shall be made at Owner/Obligor’s sole risk and may subject Owner/Obligor to personal liability to Claimant to the full extent permitted by law.
3.5 Amendments; Supplements. Claimant may amend or supplement this Stop Notice to correct, clarify, or increase the Claim Amount, provided such amendment is served in accordance with Section 3.1.
3.6 Release Procedures. Claimant shall execute and deliver a written Release of Stop Notice within five (5) business days following the earliest of:
(a) Payment in Full of the Claim Amount, together with any applicable interest and costs;
(b) Receipt of an Adequate Bond posted by Owner/Obligor;
(c) Dismissal or satisfaction of any perfected mechanic’s lien in favor of Claimant;
(d) A final, non-appealable order of a Vermont court that the Lien Claim is invalid or has been satisfied; or
(e) A mutually executed Settlement Agreement resolving the Lien Claim.
3.7 Effect of Release. Upon delivery of a Release of Stop Notice, Owner/Obligor may release withheld funds without liability to Claimant.
IV. REPRESENTATIONS & WARRANTIES
4.1 Claimant’s Authority. Claimant is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and is authorized to do business in Vermont.
4.2 Accuracy of Claim. The Claim Amount is true, correct, and just, no payments have been received except as noted, and all statutory pre-requisites to asserting the Lien Claim have been satisfied or timely will be.
4.3 No Waiver. Claimant has not executed any unconditional waiver or release of lien rights for the labor, materials, or services referenced herein.
4.4 Survival. The representations and warranties in this Section survive delivery of this Stop Notice and any Release until full satisfaction of the Lien Claim.
V. COVENANTS & RESTRICTIONS
5.1 Cooperation. Owner/Obligor shall promptly provide Claimant with written confirmation of the current undisbursed balance of the contract price and identify any prior stop notices or liens of record.
5.2 Notice of Bond. If Owner/Obligor elects to post an Adequate Bond, Owner/Obligor shall deliver written notice and a copy of the bond to Claimant within three (3) business days of issuance.
5.3 Preservation of Evidence. Each party shall preserve all records, invoices, and correspondence relevant to the Lien Claim until the later of (i) one year after final resolution or (ii) the longest period required by applicable law.
VI. DEFAULT & REMEDIES
6.1 Events of Default.
(a) Failure of Owner/Obligor to withhold funds as required by Section 3.2.
(b) Failure of Claimant to release this Stop Notice following a Release Event.
(c) Material misrepresentation by any party.
6.2 Notice & Cure. The non-defaulting party shall give written notice specifying the default. The defaulting party shall have five (5) business days to cure, unless the nature of the default renders cure impossible.
6.3 Remedies.
(a) Monetary Relief – Recovery of the Claim Amount, interest at the maximum lawful rate, and recoverable attorneys’ fees and costs.
(b) Equitable Relief – Injunction compelling withholding or release of funds, as applicable.
(c) Additional Relief – Any other remedy available under Vermont law, including foreclosure of the Lien Claim.
6.4 Cumulative Rights. Remedies are cumulative and may be exercised concurrently or successively.
VII. RISK ALLOCATION
7.1 Indemnification – Bonding Requirements.
(a) Upon posting of an Adequate Bond by Owner/Obligor, Claimant shall indemnify and hold harmless the surety and Owner/Obligor from any duplicate recovery, provided Claimant receives full payment of the Claim Amount.
(b) Conversely, if Owner/Obligor fails to maintain the Adequate Bond in full force, Owner/Obligor shall indemnify Claimant for any loss resulting from such failure.
7.2 Limitation of Liability – Payment Withheld. Owner/Obligor’s maximum aggregate liability to Claimant under this Stop Notice shall not exceed the lesser of (i) the Claim Amount plus recoverable costs, or (ii) the amount of funds actually withheld, except in cases of bad-faith disbursement or willful violation of Section 3.4.
7.3 Insurance. Each party shall maintain insurance policies customary for its operations and sufficient to cover its potential liabilities arising from the Project.
7.4 Force Majeure. No party shall be liable for failure to perform an obligation (other than payment of money) to the extent performance is rendered impossible by an event beyond that party’s reasonable control, provided written notice is given within a reasonable time.
VIII. DISPUTE RESOLUTION
8.1 Governing Law. This Stop Notice and any dispute arising hereunder shall be governed by the mechanic’s lien laws of the State of Vermont, without regard to conflict-of-law principles.
8.2 Forum Selection. Exclusive jurisdiction and venue shall lie in the state courts located in the county where the Property is situated.
8.3 Arbitration. Not applicable. Nothing herein shall be construed to require or permit compulsory arbitration.
8.4 Jury Waiver. Not applicable.
8.5 Injunctive Relief. Nothing in this Section limits a party’s right to seek temporary, preliminary, or permanent injunctive relief to enforce payment stoppage or release obligations.
IX. GENERAL PROVISIONS
9.1 Amendments & Waivers. No amendment or waiver of any provision shall be effective unless in a writing signed by the party against whom enforcement is sought.
9.2 Assignment. No party may assign or delegate its rights or obligations under this Stop Notice without the prior written consent of the other parties, except as required by law or pursuant to merger or consolidation.
9.3 Successors & Assigns. This Stop Notice binds and benefits the parties and their respective successors and permitted assigns.
9.4 Severability. Any provision held invalid or unenforceable shall be severed and the remainder construed to give effect to the parties’ intent, to the fullest extent permitted by law.
9.5 Integration. This Stop Notice constitutes the entire agreement of the parties with respect to the subject matter and supersedes all prior negotiations, representations, or agreements, oral or written.
9.6 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 electronically (e.g., PDF, facsimile, or via an approved e-signature platform) are deemed original for all purposes.
X. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned have executed this Stop Notice as of the Effective Date first written above.
| CLAIMANT | OWNER/OBLIGOR |
|---|---|
| By: _______ | By: _______ |
| Name: _____ | Name: _____ |
| Title: ____ | Title: ____ |
| Date: _____ | Date: _____ |
[If Prime Contractor is different from Owner, add signature lines below]
| PRIME CONTRACTOR (acknowledgment only) |
|---|
| By: _______ |
| Name: _____ |
| Title: ____ |
| Date: _____ |
[If Construction Lender is receiving the Stop Notice, add acknowledgment lines]
| CONSTRUCTION LENDER (acknowledgment only) |
|---|
| By: _______ |
| Name: _____ |
| Title: ____ |
| Date: _____ |
[// GUIDANCE:
1. Attach any required statutory notice forms or affidavits, if applicable.
2. Verify whether Vermont’s current mechanic’s lien statutes impose additional notice-of-intent or pre-claim filing requirements.
3. Confirm bonding limits and surety qualifications under prevailing Vermont law at the time of issuance.
4. Serve copies of the completed Stop Notice on all parties holding funds, including any escrow agents or title companies.
5. Calendar strict deadlines for (i) commencement of lien suit and (ii) recording or filing any subsequent lien or release documents to avoid forfeiture of rights.
]