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 Mexico
New Mexico's Stop Notice Act (NMSA §§ 48-2A-1 through 48-2A-12) applies only to residential construction with four or fewer dwelling units. An unpaid subcontractor or supplier may serve a stop notice on the owner or construction lender, but must accompany it with a surety bond (claimant as principal) at 125% of the claimed amount per § 48-2A-7. The original contractor may discharge the stop notice by posting a release bond at 125% of the claim amount with a corporate surety as co-signer under § 48-2A-10, redirecting the claimant's remedy to the bond.
- The Stop Notice Act applies only to residential projects with four or fewer dwelling units; it does not apply to public works or commercial projects.
- On public works projects, unpaid suppliers instead rely on payment bond claims under NMSA § 13-4-18 (the Little Miller Act).
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.