Article 2Stop Payment Notice to Owner

Section § 8520

Explanation

This law explains that if someone (not a direct contractor) has a right to claim a lien on a property, they can give a notice to the owner called a 'stop payment notice.' The property owner can also demand this notice be given by anyone with lien rights. If the person with the lien rights doesn't provide a stop payment notice after being asked, they lose their right to claim the lien.

(a)CA Civil Law Code § 8520(a) A person that has a lien right under Chapter 4 (commencing with Section 8400), other than a direct contractor, may give the owner a stop payment notice.
(b)CA Civil Law Code § 8520(b) The owner may give notice, in compliance with the requirements of Chapter 2 (commencing with Section 8100) of Title 1, demanding that a person that has a lien right under Chapter 4 (commencing with Section 8400) give the owner a stop payment notice. If the person fails to give the owner a bonded or unbonded stop payment notice, the person forfeits the right to a lien under Chapter 4 (commencing with Section 8400).
stop payment notice property owner lien rights direct contractor exclusion demand notice bonded stop payment unbonded stop payment forfeit lien rights Chapter 4 lien construction lien notice requirements Chapter 2 compliance Section 8400 lien lien forfeiture
(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)

Section § 8522

Explanation

When a property owner receives a stop payment notice, they must hold back enough money from what they owe the main contractor or someone working under the main contractor to cover the claim detailed in the notice. However, if the owner has already recorded a payment bond, they don't have to withhold the funds. Instead, the owner must inform the claimant within 30 days and provide a copy of the bond, following specific notification rules.

(a)CA Civil Law Code § 8522(a) Except as provided in subdivision (b), on receipt of a stop payment notice an owner shall withhold from the direct contractor or from any person acting under authority of a direct contractor a sufficient amount due or to become due to the direct contractor to pay the claim stated in the notice.
(b)CA Civil Law Code § 8522(b) The owner may, but is not required to, withhold funds if the owner has previously recorded a payment bond under Section 8600. If the owner does not withhold funds, the owner shall, within 30 days after receipt of the stop payment notice, give notice to the claimant that a payment bond has been recorded and provide the claimant a copy of the bond. The notice shall comply with the requirements of Chapter 2 (commencing with Section 8100) of Title 1.
stop payment notice withhold funds direct contractor payment bond claimant notification recorded bond Section 8600 Chapter 2 compliance property owner obligations fund withholding owner's notice requirement construction payments contractor claims payment bond record claim coverage
(Added by Stats. 2010, Ch. 697, Sec. 20. (SB 189) Effective January 1, 2011. Operative July 1, 2012, by Sec. 105 of Ch. 697 and by Section 8052.)