Liens on Funds, Stop Notices, and Public Improvement Liens

What Are Liens on Funds, Stop Notices, and Public Improvement Liens?

A Lien on Funds (in some states referred to as a stop notice or public improvement lien) is a tool available in certain states to help stop the flow of funds on a project until it can be shown that you have been paid.

Serving a lien on funds may halt payment to your debtor or to the general contractor, and in some cases can even require the lender to withhold money.

Though the laws vary by state, one thing does tend to be consistent – the lien on funds will likely bring attention to your non-payment situation.

At first, this may seem counterproductive.  You want money to flow down to you, so why would you do something to stop that from happening?

Unfortunately, not all funds continue to flow as they should – especially to those further down the contractual chain.  A lien on funds can make an owner or general contractor aware that your customer hasn’t paid you.

Bringing the issue of non-payment to their attention may be what is needed to shake things up in the chain of supply.

Lien on Funds and Public Improvement Lien

These two are similar – lien on funds and public improvement lien. Typically, it’s a lien against the money owed by the Project Owner under contract with the Prime Contractor.

Stop Notice

A stop notice is a notice to party paying for work of improvement of money due, which can obligate that party to withhold sufficient funds to cover noticed amounts.

Here’s a quick look at which states offer this type of security!

Most Recent Resources

Blog

Help Your Customer Understand UCC Filings

Filing UCCs? Send your customer this letter to help them better understand the UCC filing and how it impacts them.
Read More
lien index
Lien Index

NCS Credit Lien Index 2023 Q2

The Lien Index decreased 16 points in Q2 2023 to 47. The significant decrease comes as the revised Q1 2023 Index skyrocketed to 63.

Read More
live webinars
Live Webinar

Common Mistakes In UCC Filings

A UCC filing is an incredible credit tool; however, taking and perfecting your security interest requires strict compliance with UCC Article 9. Make sure your UCCs are prepared and filed correctly, or you could jeopardize your security.
Read More