File Stop Notice on Retention?
Yes, you CAN file stop notice on retention even though it isn't yet due!
QUESTION: My boss wants me to file Stop Notice on retention, after we receive the last progress payment, to ensure payment of the retention. We finish ahead of a lot of subs and he is afraid we will be forgotten by the time the money is released. Is this legal?
ANSWER: The rules regarding when a claimant is entitled to serve a stop notice depend upon who is holding the construction funds.
The stop notice should be served on the party holding the construction funds. This could be the property owner, a construction lender, or a public entity if the project is a public project.
On public jobs and on jobs on which the owner is holding the funds, a stop notice may be served at any time after the claimant has agreed to provide the labor and/or materials and/or equipment. This is not known by many claimants.
On public jobs and on jobs on which the owner is holding the funds, a stop notice may be served at any time after the claimant has agreed to provide the labor and/or materials and/or equipment. This is not known by many claimants.
The claimant may serve a stop notice after providing the labor and/or materials and/or equipment even if the amounts due are not yet owed under the contract, either because the progress payment invoice is not yet due to be paid or because the amount owed is being withheld as retention.
As always, there can be unique circumstances affecting an individual situation and if there is anything about a situation that does not seem straightforward, it is appropriate (necessary?) to consult with a California construction attorney.
Thank you to Dave Barnier for the above response. :) Dave Barnier is a California practicing litigation attorney in San Diego CA and can be reached by submitting this form with your questions.
The information in this article is based upon California law and is provided for general information, only. The information provided illustrates laws and legal principals in general. Any information or analysis presented in this article is intended solely to educate the reader on general issues. A comprehensive review of facts, documents, and applicable laws is always required before any attorney can competently provide any legal advice regarding any particular situation. In short: Please do not rely on any part of this article when analyzing any specific situation affecting you or your business.
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