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 Louisiana
On Louisiana public works, an unpaid claimant can file a sworn statement of the amount due with the public entity and record it (La. R.S. 38:2242). Under La. R.S. 38:2242.2, any interested party can cancel that claim by depositing a surety bond, or cash or certified funds, with the recorder of mortgages for 125 percent of the claim.
- The party posting the bond must notify the public entity, the claimant and the contractor by certified mail.
- On DOTD highway contracts, the department withholds 125 percent of a sworn claim from payments to the contractor (La. R.S. 48:256.5).
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.