SECTIONS 3158-3159 - California Statutes

CIVIL CODE

SECTION 3158-3159

3158. Any of the persons named in Sections 3110, 3111, and 3112,
other than the original contractor, may give to the owner a stop
notice. Any person who shall fail to serve such a stop notice after a
written demand therefor from the owner shall forfeit his right to a
mechanic's lien.

3159. (a) Any of the persons named in Sections 3110, 3111, and 3112
may, prior to the expiration of the period within which his or her
claim of lien must be recorded under Chapter 2 (commencing with
Section 3109), give to a construction lender a stop notice or a
bonded stop notice. The construction lender shall be subject to the
following:
(1) The construction lender shall withhold funds pursuant to a
bonded stop notice filed by an original contractor, regardless of
whether a payment bond has previously been recorded in the office of
the county recorder where the site is located in accordance with
Section 3235.
(2) The construction lender shall withhold funds pursuant to a
bonded stop notice filed by any other person named in Sections 3110,
3111, and 3112, unless a payment bond has previously been recorded in
the office of the county recorder where the site is located in
accordance with Section 3235. If a payment bond has previously been
recorded, the construction lender may, at its option, withhold funds
pursuant to the bonded stop notice or stop notice, or may elect not
to withhold pursuant to the bonded stop notice or stop notice given
by anyone other than an original contractor.
(3) If, when giving the construction lender the stop notice or
bonded stop notice, the claimant makes a written request for notice
of the election, accompanied by a preaddressed, stamped envelope, the
construction lender shall furnish the claimant a copy of the bond
within 30 days after making the election. A lender shall not be
liable for a failure to furnish a copy of the bond if the failure was
not intentional and resulted from a bona fide error, if the lender
maintains reasonable procedures to avoid such an error, and if the
error was corrected not later than 20 days from the date on which the
violation was discovered. The payment bond may be recorded at any
time prior to the serving of the first stop notice. The notice may
only be given for materials, equipment, or services furnished, or
labor performed.
(b) In the case of a stop notice or bonded stop notice filed by
the original contractor or by a subcontractor, the original
contractor or subcontractor shall only be entitled to recover on his
or her stop notice or bonded stop notice the net amount due the
original contractor or subcontractor after deducting the stop notice
claims of all subcontractors or material suppliers who have filed
bonded stop notices on account of work done on behalf of the original
contractor or the subcontractor.
(c) In no event shall the construction lender be required to
withhold, pursuant to a bonded stop notice, more than the net amount
identified in subdivision (b). Notwithstanding any other provision,
no construction lender shall have any liability for the failure to
withhold more than this net amount upon receipt of a bonded stop
notice.