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Stop Notices – Stopping the flow of construction funds

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In Arizona, if a progress payment to a Subcontractor is past due, the Subcontractor has the right to stop the flow of construction funds from the Owner or Construction Lender to the General Contractor by use of the statutorily-created “Stop Notice.” This is an important device that originated in California, but it is only truly effective during the midst of a project when there are still funds left to be paid to the General Contractor. It can be effective because it hits the General Contractor in the pocket book, and it causes issues to be resolved more immediately. There are mailing / service requirements that a Subcontractor must follow strictly to gain the benefit of the law. In addition, there are deadlines for filing a lawsuit upon a Stop Notice to which one must adhere or be forever barred from suing upon it. Please consult with your legal counsel.

 

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