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 York
New York does not have a statutory stop payment notice system. Only Alaska, Arizona, California, and Washington give unpaid parties a right to serve a stop payment notice on an owner or construction lender. New York protects unpaid subcontractors and suppliers through mechanics liens under Lien Law Article 2 (for private projects) and statutory trust fund obligations under Lien Law Article 3-A; there is no stop payment notice release bond in New York law.
- Under N.Y. Lien Law § 19, an owner or contractor may discharge a mechanics lien from private property by posting a surety bond equal to 110% of the lien amount—this is a lien discharge bond, not a stop payment notice release bond.
- Under N.Y. Lien Law § 37, a court may order a bond of not less than the amount unpaid under the contract to discharge all liens on a project.
- Lien Law Article 3-A (§§ 70–79-a) imposes a statutory trust on construction funds, making diversion of those funds a potential larceny under N.Y. Penal Law § 79-a, but it creates no stop payment notice 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.