What a stop payment notice release bond is
In a few states, an unpaid subcontractor or supplier can serve a stop payment notice (also called a stop notice) on the owner or construction lender, which then holds back money owed on the job. A release bond lets that money be paid out; the claimant then claims against the bond instead.
In Arizona
Arizona has an express statutory stop-notice scheme. Under A.R.S. § 33-1062, an owner, construction lender, original contractor, or subcontractor that disputes a stop notice or bonded stop notice may obtain a release bond equal to 150% of the amount claimed; upon filing and service of that bond on the claimant, the withheld funds must be released promptly. The bond must be executed by a surety company licensed to transact surety business in Arizona.
- A bonded stop notice itself—served on a construction lender to compel withholding—also requires a bond at 150% of the claim amount, per A.R.S. § 33-1051 (definition of 'bonded stop notice').
- If the party alternatively records a surety bond to discharge a perfected mechanic's lien under A.R.S. § 33-1004 covering the same labor and material, that lien-discharge bond also operates as a release bond under § 33-1062.
You need this bond if you're
- A general contractor whose payments are being held
- A property owner or public agency holding funds
- A construction lender holding loan funds
What the surety looks at
The claim, the dispute behind it and your finances.