Stop Notices and Mechanics Liens are in the same “Lien Universe,” but they have significant differences. Understanding these differences can be key to making a good decision about whether to file one or both of the documents. A more in-depth analysis of the differences between the Stop Notice and the Mechanics Lien is found here: The Differences Between A Stop Notice And A Mechanics Lien.
1: Stop Notice Not Available Everywhere
When unpaid on a construction project anywhere in the United States, the unpaid party can file a mechanics lien. That remedy is available in every state. The Stop Notice remedy, however, is only available in a minority of states including Alaska, Arizona, California, and Washington. If the law isn’t available in your project’s state, there’s no such thing as a stop notice.
2: Stop Notices Impact Project Funds, Not Project Property
When you file a mechanics lien, your claim is actually made against the project jobsite. If worse comes to worse, you can put the project jobsite on the auction block to pay your claim, and the owner could wind up paying for the work twice. In the Stop Notice world, however, the claim is made only against “project funds,” which simply means the amount of money still in the owner’s control. If the owner hasn’t disbursed funds to the general contractor, those funds are “attached” by filing a Stop Notice.
3: Typically Sent And Not Formally Recorded
Another key difference between Stop Notices and Mechanics Liens is that Stop Notices are not usually recorded with the county recorder. Instead, they need only be delivered in some way to the applicable parties. While this makes the filing a bit less bureaucratic, it is actually more risky and difficult, because you may later be called upon to prove that the Stop Notice was sent and delivered on a certain date. Therefore, you want to be careful about who sends your Stop Notices, how they are tracked, and followup on all returned mail and deliveries.