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What is a Stop Notice?
A Stop Notice is another mechanism for subcontractors in some states to seek payment for their work on construction projects. It can be used instead of, or in addition to, a Construction Lien. The main difference between a Construction Lien and a Stop Notice is that the lien is secured against the property, ‘trapping’ it from being sold or transferred until your bill is paid.
On the other hand, the notice has no effect on the property – instead, it ‘traps’ the funds on the project. As soon as a notice is received, the project owner or financier must withhold sufficient money to pay your claim. So until you are paid, payments to other parties are frozen.
Who needs to send one?
You can choose to send a Stop Notice if you are a contractor or supplier on a public or private construction project and have not been paid for your work. The notice can be used as an alternative to – or in support of – a Construction Lien.
What is a Miller Act Notice?
A Miller Act Notice (or Miller Act Claim) is used instead of a Construction Lien to seek payment for your work on a federal construction project. The federal government will not allow its property to be lien, so instead suppliers or subcontractors on federal construction projects can demand their payment rights under the Miller Act. (To claim payment on state or municipal projects, you must file a Construction Bond claim.)
Who needs to file one?
You should file a Miller Act claim if you have not been paid for your materials or services on a federal construction project. You can only file a Miller Act claim if you are a subcontractor or a sub-subcontractor.Prime contractors cannot make a claim under the Miller Act – instead, they must bring contract claim lawsuit against the government. Third tier subcontractors (e.g. if you are a supplier to a supplier) also have no rights under the Miller Act. Instead, you must pursue payment directly from the party you contracted with.
What is a Construction Bond Claim?
A Construction Bond claim (or a Bond Claim Notice) is generally used to claim payment on a state, county or municipal construction project. Private projects can also be bonded. Lien rights do not apply to state-owned property as the state government won’t allow anyone to foreclose on its land. They have what’s called sovereign immunity. Instead, you can claim your payment rights through a construction bond.
How to send a Construction Bond Notice?
The first thing to remember is that construction bonds need to be filed within certain deadlines, just like other liens or notices. Each state has different bond claim guidelines and deadlines, so you need to check your state requirements. Some states also require you to send preliminary notices – and these may be entirely different to the preliminary notices required in the same state for private projects.
What is a Construction Lien?
A Construction Lien is a lien that may be recorded against real property in the event of non-payment.
Who has a right to file a lien? Anyone who has worked on a construction project and has not been paid for their material, services, and/or labor should consider consulting with an attorney regarding filing a Construction Lien to secure their payment rights.
The following may have lien rights: