California Stop Payment Notice
Secure undisbursed construction funds when you haven't been paid. A powerful alternative to the mechanics lien.
What Is a Stop Payment Notice?
A stop payment notice (commonly called a "stop notice") is a written demand served on a property owner or construction lender requiring them to withhold sufficient funds to cover the amount owed to an unpaid claimant. It is governed by California Civil Code sections 8044 and 8502–8520.
Unlike a mechanics lien, which creates a security interest in the property itself, a stop payment notice targets the money — specifically, undisbursed construction loan funds or payments the owner has not yet released to the general contractor. This makes it especially useful on projects where lien rights may be limited or where a construction lender is holding significant undisbursed funds.
A stop payment notice can be served alongside a mechanics lien. They are not mutually exclusive, and using both maximizes your leverage as an unpaid claimant.
Types of Stop Notices
California law recognizes two types of stop payment notices, each with different requirements and levels of protection:
Bonded Stop Notice
Accompanied by a surety bond equal to 125% of the claim amount (CA Civil Code §8532).
Legally obligates the construction lender to withhold funds. The lender has no discretion — they must hold the money.
Best used when a construction lender is involved and significant loan funds remain undisbursed.
Unbonded Stop Notice
Served without a surety bond. Simpler and less expensive to file.
The property owner must withhold funds, but a construction lender may choose to release funds without liability (CA Civil Code §8536).
Effective against property owners directly. Less leverage against construction lenders.
In practice, if you are dealing with a construction lender and substantial funds remain in the loan, a bonded stop notice is the stronger tool. If the dispute is directly with the property owner and no lender is involved, an unbonded stop notice may suffice.
Who Can File a Stop Payment Notice?
Under California Civil Code §8502, the following parties may serve a stop payment notice on a private construction project:
- Subcontractors who have a direct contract with the general contractor
- Material suppliers who have furnished materials to the project
- Equipment lessors who have provided equipment used on the project
- Laborers who have performed work on the project
These are generally the same parties who are eligible to file a mechanics lien in California. The general contractor may also serve a stop notice on the construction lender if the owner fails to pay under the direct contract.
Filing Requirements
To serve a valid stop payment notice in California, you must meet these requirements:
- Preliminary notice on file: Most claimants must have served a valid 20-day preliminary notice before the stop payment notice can be enforced (CA Civil Code §8200).
- Written notice: The stop payment notice must be in writing and include the amount claimed, a description of the work or materials provided, and the name of the person who contracted for the work (CA Civil Code §8502).
- Proper service: Must be served on the property owner and/or the construction lender. Service may be by personal delivery, certified mail, or other methods permitted by statute.
- Timing: Must be served before the deadline to record a mechanics lien expires — generally within 90 days after completion of the work, or 30 days after a notice of completion or cessation is recorded (CA Civil Code §8508).
- Bond (if bonded): A bonded stop notice must include a surety bond in the amount of 125% of the claim (CA Civil Code §8532).
The preliminary notice is the critical first step. Without it, most claimants cannot enforce their stop payment notice rights. Prelien helps you file your preliminary notice quickly and correctly, so your downstream rights — including stop notices — are protected from the start.
Frequently Asked Questions
What is the difference between a stop payment notice and a mechanics lien in California?
A mechanics lien attaches to the property itself, creating a security interest in the real estate. A stop payment notice targets undisbursed funds held by the property owner or construction lender. Under California Civil Code sections 8044 and 8502–8520, a stop notice demands that the holder of funds withhold enough money to cover the amount owed to the claimant. You can use both remedies simultaneously for maximum protection.
Do I need a preliminary notice before filing a stop payment notice in California?
Yes. Under California Civil Code section 8200, most claimants (subcontractors, material suppliers, and equipment lessors) must serve a valid 20-day preliminary notice before they can enforce a stop payment notice. Without a timely preliminary notice on file, your stop notice may be unenforceable. Learn more about California preliminary notices.
What is a bonded stop notice in California?
A bonded stop notice is a stop payment notice accompanied by a surety bond equal to 125% of the amount claimed, as required by California Civil Code section 8532. Filing a bonded stop notice obligates the construction lender to withhold the claimed funds. Without the bond, a lender may choose not to withhold funds and faces no liability for releasing them.
How long do I have to file a stop payment notice in California?
A stop payment notice must be served before the deadline to record a mechanics lien expires. Under California Civil Code section 8508, this generally means within 90 days after completion of the work of improvement, or 30 days after a notice of completion or cessation is recorded. Missing these deadlines forfeits your stop notice rights.
Protect Your Payment Rights
A valid preliminary notice is the foundation for enforcing stop payment notices, mechanics liens, and other construction remedies in California. File yours today.
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This page is provided for informational purposes only and does not constitute legal advice. Construction lien laws are complex and vary by jurisdiction. California Civil Code references cited on this page (including §8044, §8200, §8502–8520, §8532, §8536, and §8508) are current as of the date of publication but may be amended. For specific legal questions about your stop payment notice rights, consult a licensed California construction attorney. Prelien is not a law firm and does not provide legal advice.