The 125% bond required to accompany a stop payment notice served on a construction LENDER exists to:
Explanation
Civil Code §8532 makes the bond the price of forcing a lender, a stranger to the dispute, to freeze loan funds: if the claim turns out to be bad, the bond answers the lender's resulting damages and costs. (a) confuses it with the §7071.6 license bond, which is a licensing condition unrelated to any project. (c) reverses the beneficiary — the bond protects the lender against the claimant, not the claimant against the borrower. (d) is the misconception that a bond can cure a missed notice; it cannot, and a claimant who never noticed the lender has nothing to serve.
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