Insurance & LiensQuestion 1508 of 1605
Compared to a mechanics lien, a key ADVANTAGE of a stop payment notice for a lower-tier claimant is that it:
a.Never requires a bond
b.Automatically doubles the recovery amount
c.Reaches undisbursed construction funds and can be pursued without foreclosing on the owner's real property
d.Requires no preliminary notice
Explanation
A stop payment notice reaches undisbursed construction funds held by the owner or lender, avoiding a foreclosure suit against the real property. It generally still requires a valid preliminary notice, and a stop notice to a lender requires a 125% bond, but it offers a distinct fund-based remedy.
Law Reference: Civ. Code §8500Practice all 1605 questions free — no signup required.
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