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 North Carolina
North Carolina does not have a stop payment notice (stop notice) statute. Unpaid subcontractors and suppliers instead perfect a 'Notice of Claim of Lien upon Funds' under N.C. Gen. Stat. § 44A-18, which requires the obligor to retain withheld funds; no NC statute allows the owner or contractor to post a release bond to free those funds in lieu of the claim. The bond-off mechanism that NC does recognize—depositing a corporate surety bond equal to 125% of the claimed amount under G.S. 44A-16—applies only to discharge a recorded claim of lien on real property (mechanics lien), not a lien on funds.
- G.S. 44A-18 through § 44A-24 governs the Notice of Claim of Lien upon Funds; upon service, the obligor must retain funds up to the claimed amount, but no statutory bond mechanism exists to release those funds in lieu of the claim.
- G.S. 44A-16 permits an owner to discharge a recorded claim of lien on real property by depositing a corporate surety bond equal to 125% of the claimed amount with the clerk of superior court—this is a lien-discharge bond for mechanics liens, not a stop notice release bond.
- Multiple legal authorities confirm NC does not recognize the traditional stop payment notice mechanism used in California and a handful of other states.
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.