California Supplemental (CSE) Practice Exam

What is the main difference between a Stop Notice and a Bonded Stop Notice?

1. A Stop Notice is always more enforceable

2. A Bonded Stop Notice requires accompanying bond documentation

3. A Stop Notice can only be used on private projects

4. Both are the same in function

The correct answer is: A Bonded Stop Notice requires accompanying bond documentation

The main difference between a Stop Notice and a Bonded Stop Notice lies in the requirement of accompanying bond documentation. A Bonded Stop Notice is utilized specifically when the claimant wants to secure payment by filing a notice that includes a bond. This bond acts as a guarantee that the claimant will be protected in the event that the notice leads to legal action or a claim against the construction funds. In contrast, a regular Stop Notice does not require a bond and serves as a method for a contractor, subcontractor, or supplier to demand payment directly from construction funds being held by the property owner or general contractor. While both serve the purpose of halting payments to contractors to ensure subcontractors or suppliers are paid, the Bonded Stop Notice adds the layer of security through the bond. The other options do not accurately reflect the fundamental distinction between the two. The enforceability is not inherently better in one over the other; rather, it depends on specific circumstances and local laws. The claim that a Stop Notice can only be used on private projects is also incorrect, as both types of notices can be applicable in various scenarios, including public works. Finally, stating that both are the same in function overlooks the nuanced difference in terms of the bond requirement, which is a