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 New Jersey
New Jersey does not have a stop payment notice (stop notice) mechanism. Unpaid subcontractors and suppliers protect themselves through mechanics liens on private projects under the Construction Lien Law (N.J.S.A. 2A:44A-1 to -38) or bond claims on public projects under the Public Works Bond Act (N.J.S.A. 2A:44-143). There is no New Jersey statute authorizing a stop payment notice or a corresponding release bond.
- New Jersey's analogous remedy for freeing property from a filed mechanics lien is the lien discharge bond under N.J.S.A. 2A:44A-33, which requires a surety bond equal to 110% of the lien amount. This is a mechanics lien release bond, not a stop payment notice release bond.
- On public projects, unpaid parties may file a bond claim against the payment bond under N.J.S.A. 2A:44-143, or assert a trust-fund claim under N.J.S.A. 2A:44-148; neither involves a stop payment notice.
- States such as California have stop payment notice statutes; New Jersey does not, and no NJ court or legislature has adopted an equivalent mechanism.
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.