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 Ohio
Ohio has a statutory equivalent for public improvement contracts: under Ohio Rev. Code § 1311.26, an unpaid subcontractor or material supplier may file a sworn affidavit with the public authority within 120 days of last furnishing labor or materials, which triggers a mandatory fund withholding by the authority under Ohio Rev. Code § 1311.28. The prime contractor or any interested party may then discharge that lien and free the withheld funds by posting a surety bond equal to 150% of the claimed amount with the public authority under Ohio Rev. Code § 1311.311. Ohio does not use the term 'stop payment notice'; this mechanism applies only to public improvement contracts, not to private construction or construction lenders.
- Ohio calls this a 'lien on contract funds' or 'affidavit,' not a 'stop payment notice'; the filing deadline is 120 days from the claimant's last furnishing of labor or materials.
- Under Ohio Rev. Code § 1311.311, once the bond is approved the affidavit is void and the withheld funds are released; if the claimant fails to file suit within 60 days of notice, the bond itself is voided.
- For private construction, Ohio uses property mechanics' liens (ORC Chapter 1311) with a lien-release bond under Ohio Rev. Code § 1311.11 (double the claim, or 1.5× if the claim exceeds $5,000), which is a property-lien discharge mechanism, not a stop-payment-notice equivalent.
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.