Insurance & LiensQuestion 1520 of 1605
A subcontractor serves a stop payment notice on the private owner (not bonded). The owner is then obligated to:
a.Record the notice with the recorder
b.Immediately pay the subcontractor in full
c.Withhold sufficient undisbursed funds from the direct contractor to cover the claim plus a reasonable allowance for litigation costs
d.Ignore the notice unless it is bonded
Explanation
Civil Code §8534 provides that a stop payment notice to the owner obligates the owner to withhold from the direct contractor money sufficient to answer the claim plus a reasonable allowance for costs. A bond is required to bind a lender, but not to bind the owner.
Law Reference: Civ. Code §8534Practice all 1605 questions free — no signup required.
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