California · Civil Code
CIV §8536: (a) Except as provided in subdivision (b), on receipt of a stop payment notice a construction lender shall withhold from the borrower or other person to whom the lender or the owner is obligated to ma
What this law says, in plain English
A construction lender must withhold funds from a borrower upon receiving a stop payment notice, except as otherwise specified in the statute.
Read the full statutory text
(a) Except as provided in subdivision (b), on receipt of a stop payment notice a construction lender shall withhold from the borrower or other person to whom the lender or the owner is obligated to make payments or advancement out of the construction fund sufficient funds to pay the claim stated in the notice. (b) The construction lender may, at its option, elect not to withhold funds in any of the following circumstances: (1) The stop payment notice is unbonded. (2) The stop payment notice is given by a claimant other than a direct contractor, and a payment bond is recorded before the lender is given any stop payment notice.
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