California Stop Notice Release Bond

The California Stop Notice Release Bond states that the Claimant in the matter should receive judgement in any action brought on said Claim

The bond holder should pay said judgement and costs to Claimant in an amount not exceeding the sum specified in this undertaking.

A public entity may permit the direct contractor to give the public entity a release bond. The California Stop Notice Release Bond must be written by a surety company, like Surety1, in an amount equal to 125 percent of the claim stated in the stop payment notice.  It also must be conditioned for the payment of any amount the claimant recovers in an action on the claim, together with court costs if the claimant prevails.  On receipt of a release bond, the public entity will not withhold funds from the direct contractor pursuant to the stop payment notice.

Construction lenders are only required to withhold an amount sufficient to satisfy the amount claimed in a stop payment notice if it receives a bonded stop payment notice.  Even if a construction lender receives a bonded stop payment notice, it may  object to the sufficiency of the surety, but only if the surety is not an admitted surety insurer in California.  This can be done by giving notice to the stop payment notice claimant within 20 days after receiving the bonded stop payment notice.

If the stop payment notice claimant receives such a notice from a construction lender, the stop payment notice claimant must provide a substitute bond from an admitted surety insurer in California within 10 days after receiving the notice. To ensure that if you serve a bonded stop payment notice, it is recommended to be bonded by a surety insurer in California, like Surety1.