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 Kentucky
On Kentucky public projects, an unpaid party can file a lien on the public funds owed to the contractor under KRS 376.210, and the public authority must withhold that amount under KRS 376.250. Under KRS 376.212, the contractor can discharge the lien by filing a bond for double the amount claimed with the county clerk.
- The bond must be filed before a judgment enforcing the lien. A similar bond for double the lien amount releases a mechanic's lien on private property under KRS 376.100.
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.