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 California
California lets a contractor release funds withheld under a stop payment notice by giving a release bond. The bond is 125 percent of the amount claimed (Civ. Code § 8510 for private works, § 9364 for public works).
- On public works the release bond surety is jointly liable with the payment bond sureties (Civ. Code 9364).
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.