Insurance & LiensQuestion 1555 of 1605
The construction lender must be served with a preliminary notice by a claimant lacking an owner contract primarily so the claimant can later:
a.Assert a bonded stop payment notice against undisbursed construction loan funds held by the lender
b.Foreclose on the lender's office
c.Become an additional insured
d.Collect workers' compensation from the lender
Explanation
Serving the construction lender preserves the claimant's ability to serve a bonded stop payment notice reaching undisbursed loan funds. Without notifying the lender, that fund-based remedy against loan proceeds is jeopardized.
Law Reference: Civ. Code §8410Practice all 1605 questions free — no signup required.
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Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)