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 Colorado
On Colorado public works, an unpaid subcontractor or supplier can file a verified statement of claim, and the public body withholds that amount (C.R.S. § 38-26-107). The contractor can substitute a bond of 1.5 times the claim plus costs, approved by the district court, to release the withheld money (C.R.S. § 38-26-108).
- If the claimant does not sue on the bond within the time limit in § 38-26-107(3), the bond is discharged.
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.