Arizona Laws 33-1058. Withholding monies by construction lenders; payment bond
A. On receipt of a stop notice pursuant to section 33-1055, the construction lender may and on receipt of a bonded stop notice shall withhold from the borrower or other person to whom it or the owner may be obligated to make payments or advances out of the construction fund sufficient monies to answer the claim and any claim of lien that may be recorded. If a payment bond has previously been recorded in accordance with section 33-1003, the construction lender shall withhold monies pursuant to a bonded stop notice filed by the original contractor and, at its option, may withhold monies pursuant to a stop notice or bonded stop notice given by anyone other than the original contractor.
Terms Used In Arizona Laws 33-1058
- Answer: The formal written statement by a defendant responding to a civil complaint and setting forth the grounds for defense.
- Bonded stop notice: means a stop notice that is given to any construction lender and that is accompanied by a bond executed solely by one or more surety companies authorized to transact surety business in this state pursuant to Title 20, Chapter 2, Article 1 in an amount equal to one hundred fifty per cent of the amount of the claim on the condition that if the owner, original contractor or construction lender recovers judgment in an action brought on a verified claim or on the lien filed by the claimant, the claimant would have sufficient monies to pay all costs and damages that the owner, original contractor or construction lender may sustain by reason of the stop notice claim or the lien, not exceeding the amount specified in the bond. See Arizona Laws 33-1051
- Construction lender: means any mortgagee or beneficiary under a deed of trust lending funds all or a portion of which defray the cost of the construction, alteration, repair or improvement or any assignee or successor in interest of either, or any escrow holder or other party holding any monies furnished or to be furnished by the owner or any other person as a source from which to pay construction costs. See Arizona Laws 33-1051
- Lien: A claim against real or personal property in satisfaction of a debt.
- Original contractor: means any contractor who has a direct contractual relationship with the owner. See Arizona Laws 33-1051
- Person: includes a corporation, company, partnership, firm, association or society, as well as a natural person. See Arizona Laws 1-215
- Stop notice: means a written notice that is signed and verified by the claimant or its agent and that states in general terms all of the following:
(a) A description of the labor, professional services, materials, machinery, fixtures or tools furnished or agreed to be furnished by the claimant. See Arizona Laws 33-1051
B. The construction lender may elect not to withhold pursuant to a bonded stop notice if a payment bond has been recorded in accordance with section 33-1003. When giving the construction lender the stop notice or bonded stop notice, if the claimant makes a written request for notice of the election, accompanied by a preaddressed, stamped envelope, the construction lender shall furnish to the claimant a copy of the bond within thirty days after making the election. A lender is not 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 no more than twenty days after the date on which the error was discovered.