STOP NOTICE AND DEMAND TO WITHHOLD FUNDS
(West Virginia – Mechanics’ Lien Payment Withholding Notice)
[// GUIDANCE: This template is intentionally drafted in a “belt-and-suspenders” style. Sections exceed statutory minimums to give practitioners additional defensive leverage. Delete any provisions that are unnecessary for your matter.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Operative Provisions
- Representations & Warranties
- Covenants & Restrictions
- Default & Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
1.1 Title
STOP NOTICE AND DEMAND TO WITHHOLD FUNDS (“Stop Notice”)
1.2 Parties
a. Claimant: [CLAIMANT LEGAL NAME], a [state] [entity type], contractor license no. [LICENSE NO.], with its principal place of business at [ADDRESS].
b. Obligated Party: [PERSON OR ENTITY WITH DISBURSING AUTHORITY] (“Obligated Party”)—e.g., the owner, construction lender, or other party in control of undisbursed contract funds.
c. Prime Contractor (if different from Claimant): [NAME], contract date [DATE].
1.3 Project & Property
• Project Name / Number: [PROJECT NAME]
• Property Description: [LEGAL DESCRIPTION OR ADDRESS]
1.4 Recitals
A. Claimant furnished labor, services, materials, or equipment (“Work”) for the Project pursuant to a written agreement dated [DATE] (the “Contract”).
B. Claimant has not been paid $[AMOUNT] (“Claim Amount”) despite due demand.
C. Under W. Va. Code ch. 38, art. 2 (Mechanics’ Liens) and applicable common law, a stop-notice procedure is permitted whereby a claimant may require the withholding of undisbursed funds pending resolution of a lien claim.
D. Claimant seeks to protect its lien rights and prevent further disbursement of project funds until the Claim Amount is resolved.
1.5 Effective Date
This Stop Notice is effective upon the earliest of (i) personal delivery, (ii) courier delivery, or (iii) deposit in U.S. Certified Mail, return-receipt requested, to the Obligated Party (“Effective Date”).
1.6 Governing Jurisdiction
State of West Virginia.
2. DEFINITIONS
The following terms have the meanings set forth below and apply throughout this Stop Notice:
“Bond” – A surety bond in a penal sum of not less than one hundred twenty-five percent (125 %) of the Claim Amount, issued by a surety authorized to transact business in West Virginia, conditioning payment of the Claim Amount and costs.
“Claim Amount” – The unpaid contract balance of $[AMOUNT] claimed by the Claimant for Work performed on the Project.
“Lien Claim” – Claimant’s statutory mechanic’s lien rights arising under W. Va. Code ch. 38, art. 2, including any amendments or supplements thereto.
“Obligated Party” – The person or entity holding, controlling, or otherwise responsible for disbursing contract funds relating to the Project.
“Stop Notice” – This instrument, together with all exhibits, schedules, verifications, and notarizations.
[// GUIDANCE: Add, delete, or edit defined terms as necessary for your project.]
3. OPERATIVE PROVISIONS
3.1 Formal Notice and Demand
Pursuant to W. Va. Code ch. 38, art. 2 and any other applicable law, Claimant hereby gives formal notice to the Obligated Party and demands that the Obligated Party immediately:
a. Withhold from further disbursement a sum equal to the Claim Amount, plus an additional 10 % to cover potential interest and costs, until the earlier of (i) written release of this Stop Notice by Claimant, (ii) posting of a Bond, or (iii) final adjudication or settlement of the Lien Claim.
b. Provide Claimant, within five (5) business days, a written statement of the remaining contract balance and the funds currently retained.
3.2 Supporting Documentation
Simultaneously with this Stop Notice, Claimant is delivering:
i. An itemized statement of Work.
ii. Copies of unpaid invoices, applications for payment, and delivery tickets.
3.3 Conditions Precedent to Release
The Obligated Party shall not release any portion of the withheld funds unless:
1. Claimant executes and delivers a Conditional Waiver and Release on Payment as to the portion of the Claim Amount actually paid; or
2. A court of competent jurisdiction issues a final, non-appealable order directing such release; or
3. A Bond has been posted and approved pursuant to Section 7.1.
3.4 Deadlines
a. Claimant shall record and perfect its Lien Claim within the statutory period.
b. If Claimant fails to commence an action to enforce its Lien Claim within the statutory limitation period, this Stop Notice shall be deemed automatically released without further action.
4. REPRESENTATIONS & WARRANTIES
4.1 Claimant represents and warrants that:
a. The Work described herein was actually performed or furnished and is lienable under West Virginia law.
b. All requisite preliminary notices, if any, have been properly served or are not required.
c. The Claim Amount is just, due, and unpaid and no known offsets or credits exist.
d. Claimant has not assigned, pledged, or otherwise transferred the Claim Amount.
e. Claimant is duly licensed and in good standing to perform the Work.
4.2 Survival. The representations and warranties in this Section 4 survive satisfaction, bonding-off, or expiration of this Stop Notice.
5. COVENANTS & RESTRICTIONS
5.1 Claimant Covenants
a. To cooperate reasonably with any bonding-off procedure.
b. To deliver unconditional releases promptly upon receipt of collected funds.
5.2 Obligated Party Covenants
a. To withhold funds strictly in accordance with this Stop Notice.
b. Not to collaterally secure, transfer, or otherwise encumber withheld funds.
c. To notify Claimant within three (3) business days of any Bond posted.
6. DEFAULT & REMEDIES
6.1 Events of Default
a. Failure of the Obligated Party to withhold funds as demanded.
b. Unauthorized disbursement or diversion of withheld funds.
6.2 Notice & Cure
Claimant shall provide written notice of default; the Obligated Party shall have two (2) business days to cure.
6.3 Remedies
Upon default, Claimant may:
i. Seek injunctive relief compelling compliance;
ii. Recover the Claim Amount directly from the Obligated Party to the extent of funds improperly disbursed;
iii. Recover reasonable attorneys’ fees, court costs, and interest at the statutory rate.
7. RISK ALLOCATION
7.1 Bonding Requirements
The Obligated Party or any interested party may discharge this Stop Notice by posting a Bond meeting the definition in Section 2. Upon receipt of an approved Bond, Claimant shall promptly deliver a written Stop Notice Release.
7.2 Limitation of Liability
The Obligated Party’s aggregate liability under this Stop Notice shall not exceed the lesser of (i) the Claim Amount, or (ii) the undisbursed funds remaining under the prime contract at the time of service.
7.3 Force Majeure
Neither party is liable for non-performance caused by events beyond its reasonable control; however, the withholding obligation survives force majeure events, subject to Bonding Requirements.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Stop Notice and all related disputes are governed by the laws of the State of West Virginia, without regard to conflict-of-law rules.
8.2 Forum Selection
Any action arising out of or relating to this Stop Notice shall be brought exclusively in the state courts located in [COUNTY], West Virginia.
8.3 Arbitration & Jury Waiver
Arbitration is not applicable. No jury-trial waiver is sought.
8.4 Injunctive Relief
Nothing herein restricts Claimant’s right to seek provisional or injunctive relief to enforce payment stoppage.
9. GENERAL PROVISIONS
9.1 Amendments & Waivers
Must be in writing, signed by Claimant. No course of dealing or delay waives rights.
9.2 Assignment
Claimant may assign its rights under this Stop Notice upon written notice to the Obligated Party. Obligated Party may not assign its obligations without Claimant’s consent.
9.3 Successors & Assigns
Bind and inure to the benefit of the parties and their respective successors and permitted assigns.
9.4 Severability
If any provision is held invalid, the remainder shall be enforced to the fullest extent permitted by law.
9.5 Integration
This Stop Notice constitutes the entire notice and demand between the parties concerning the subject matter hereof.
9.6 Counterparts & Electronic Signatures
May be executed in counterparts, including by DocuSign or similar e-signature platform, each of which is deemed an original.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the undersigned executes this Stop Notice as of the Effective Date.
| Claimant | |
|---|---|
| By: ________ | Date: ____ |
| Name: [PRINTED NAME] | |
| Title: [AUTHORIZED TITLE] |
[// GUIDANCE: Attach any corporate resolutions or certificates of authority for entity Claimants.]
VERIFICATION
STATE OF ____ )
: SS
COUNTY OF ________ )
The undersigned, [NAME], being first duly sworn, states:
1. I am the [TITLE] of Claimant named in the foregoing Stop Notice;
2. I have read the foregoing document and know its contents;
3. The matters stated therein are true of my own knowledge and belief.
[NAME]
Subscribed and sworn before me this _ day of _, 20.
Notary Public
My Commission Expires: _______
[// GUIDANCE: File and serve this Stop Notice exactly as required under local practice. Calendar all statutory deadlines for perfecting and enforcing the underlying mechanic’s lien.]