The rights of all persons furnishing work for any work of improvement, with respect to any fund for payment of construction costs, are governed exclusively by this chapter, and no person may assert any legal or equitable right with respect to the fund, other than a right created by a written contract between that person and the person holding the fund, except pursuant to the provisions of this chapter.
Article 1General Provisions
Section § 8500
This section says that if you’re supplying labor or materials for a construction project, any claims you have to the payment fund must follow the rules laid out in this chapter. You can't make claims based on anything outside these rules unless it’s from a written contract with the person who controls the payment fund.
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Section § 8502
If someone wants to stop a payment, they must file a special notice that follows certain rules, be signed, and be verified. This notice should have a basic description of the work done and an estimated total value of the work. You can only claim money for the work already completed by the time you submit the notice.
(a)CA Civil Law Code § 8502(a) A stop payment notice shall comply with the requirements of Chapter 2 (commencing with Section 8100) of Title 1, and shall be signed and verified by the claimant.
(b)CA Civil Law Code § 8502(b) The notice shall include a general description of work to be provided, and an estimate of the total amount in value of the work to be provided.
(c)CA Civil Law Code § 8502(c) The amount claimed in the notice may include only the amount due the claimant for work provided through the date of the notice.
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Section § 8504
If someone intentionally gives a false notice to stop payment or asks to withhold money for work that hasn't been done, they lose the right to get any of the money being withheld and can't claim a lien on the project.
A claimant that willfully gives a false stop payment notice or that willfully includes in the notice a demand to withhold for work that has not been provided forfeits all right to participate in the distribution of the funds withheld and all right to a lien under Chapter 4 (commencing with Section 8400).
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Section § 8506
A stop payment notice is a document used to hold back funds to ensure payment for construction work. If you want to issue a stop payment notice to an owner, you give it to them or their architect if they have one. If you’re giving the notice to a construction lender, it has to be sent to someone responsible at the branch that controls the construction money. Plus, the notice has to meet specific legal requirements outlined in another section of the law.
(a)CA Civil Law Code § 8506(a) A stop payment notice to an owner shall be given to the owner or to the owner’s architect, if any.
(b)CA Civil Law Code § 8506(b) A stop payment notice to a construction lender holding construction funds shall not be effective unless given to the manager or other responsible officer or person at the office or branch of the lender administering or holding the
construction funds.
(c)CA Civil Law Code § 8506(c) A stop payment notice shall comply with the requirements of Chapter 2 (commencing with Section 8100) of Title 1.
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Section § 8508
For a stop payment notice to be considered valid, the person making the claim must have first given a preliminary notice if it's required, and they must submit the stop payment notice before the deadline to record a claim of lien.
A stop payment notice is not valid unless both of the following conditions are satisfied:
(a)CA Civil Law Code § 8508(a) The claimant gave preliminary notice to the extent required by Chapter 2 (commencing with Section 8200).
(b)CA Civil Law Code § 8508(b) The claimant gave the stop payment notice before expiration of the time within which a claim
of lien must be recorded under Chapter 4 (commencing with Section 8400).
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Section § 8510
If someone has had funds withheld because of a stop payment notice, they can get those funds released by providing a release bond. This bond must be issued by a certified insurance company and guarantees payment of up to 125% of the claim amount stated in the stop payment notice, including any legal costs. Once the bond is given, the funds must be released.
(a)CA Civil Law Code § 8510(a) A person may obtain release of funds withheld pursuant to a stop payment notice by giving the person withholding the funds a release bond.
(b)CA Civil Law Code § 8510(b) A release bond shall be given by an admitted surety insurer and shall be conditioned for payment of any amount not exceeding the penal obligation of the bond that the claimant recovers on the
claim, together with costs of suit awarded in the action. The bond shall be in an amount equal to 125 percent of the amount claimed in the stop payment notice.
(c)CA Civil Law Code § 8510(c) On receipt of a release bond, the person withholding funds pursuant to the stop payment notice shall release them.
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