What is a Stop Notice?
A stop notice is a statutory form of notice that is a very powerful remedy for contractors and suppliers to ensure payment. Think of a stop notice much like a mechanics lien, except that instead of placing an encumbrance on real property, a stop notice places an encumbrance on money. It freezes the flow of money, usually from the lender, or from an owner, if it’s owner financed, downstream to the general contractor and on. The stop notice is effective because it is freezing money and because it can be a faster remedy than a mechanics lien.
Who can issue a Stop Notice?
A stop notice can be issued by anyone that has mechanics lien rights. So if a subcontractor or material supplier has the legal right to issue a mechanics or material man’s lien, that entity or that person has a right to issue a stop notice.
When must a Stop Notice be served?
A stop notice must be served within the same time frame that a mechanics lien or a material man’s lien must be served. In the normal case, that means 120 days after completion has occurred. Completion is defined by our construction statutes to mean 30 days after certificate of occupancy. At least, that’s the normal definition. There are some other less common definitions. But the typically situation will be, as a rule of thumb, 150 days after the certificate of occupancy has issued. And again, that’s because when a certificate of occupancy issues, we add 30 days for determining completion. And then we add the statutory 120 days and that gives us the 150 days from when the C of O issued.