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 Tennessee
Tennessee does not have a stop payment notice mechanism. Unpaid subcontractors and suppliers on private projects protect themselves through Tennessee's mechanic's lien law (T.C.A. Title 66, Chapter 11) rather than by serving stop notices on construction lenders. Because there is no stop payment notice system in Tennessee, there is no corresponding stop-payment-notice release bond. The closest analog is the lien discharge bond under T.C.A. § 66-11-142, which allows any person to record a surety bond equal to the claimed lien amount to discharge a recorded mechanic's lien, after which the claimant pursues the surety rather than the property.
- Tennessee's 2020 Construction Industry Payment Protection Act (Public Chapter 749, effective July 1, 2020) added a 'stop work' right—a contractor may stop work after giving 10-day written notice of nonpayment—but this is entirely distinct from a California-style stop payment notice served on a lender to freeze construction funds.
- Under T.C.A. § 66-11-142(b), if a prime or remote contractor has already provided a valid payment bond, a copy of that bond may be recorded in lieu of a new bond to discharge a lien, and the lien on the property is then released.
- Only a handful of states (including California and Washington) have the stop-payment-notice / release-bond mechanism; Tennessee is not among them.
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.