diff --git a/contractcourt/chain_arbitrator.go b/contractcourt/chain_arbitrator.go
index 1e2079b7..944b6cc8 100644
--- a/contractcourt/chain_arbitrator.go
+++ b/contractcourt/chain_arbitrator.go
@@ -341,9 +341,22 @@ func (c *ChainArbitrator) Start() error {
 				pCache:    c.cfg.PreimageDB,
 				signer:    c.cfg.Signer,
 				isOurAddr: c.cfg.IsOurAddress,
-				markChanClosed: func() error {
-					// TODO(roasbeef): also need to pass in log?
-					return c.resolveContract(chanPoint, nil)
+				notifyChanClosed: func() error {
+					c.Lock()
+					delete(c.activeChannels, chanPoint)
+
+					chainWatcher, ok := c.activeWatchers[chanPoint]
+					if ok {
+						// Since the chainWatcher is
+						// calling notifyChanClosed, we
+						// must stop it in a goroutine
+						// to not deadlock.
+						go chainWatcher.Stop()
+					}
+					delete(c.activeWatchers, chanPoint)
+					c.Unlock()
+
+					return nil
 				},
 				contractBreach: func(retInfo *lnwallet.BreachRetribution) error {
 					return c.cfg.ContractBreach(chanPoint, retInfo)
@@ -677,8 +690,21 @@ func (c *ChainArbitrator) WatchNewChannel(newChan *channeldb.OpenChannel) error
 			pCache:    c.cfg.PreimageDB,
 			signer:    c.cfg.Signer,
 			isOurAddr: c.cfg.IsOurAddress,
-			markChanClosed: func() error {
-				return c.resolveContract(chanPoint, nil)
+			notifyChanClosed: func() error {
+				c.Lock()
+				delete(c.activeChannels, chanPoint)
+
+				chainWatcher, ok := c.activeWatchers[chanPoint]
+				if ok {
+					// Since the chainWatcher is calling
+					// notifyChanClosed, we must stop it in
+					// a goroutine to not deadlock.
+					go chainWatcher.Stop()
+				}
+				delete(c.activeWatchers, chanPoint)
+				c.Unlock()
+
+				return nil
 			},
 			contractBreach: func(retInfo *lnwallet.BreachRetribution) error {
 				return c.cfg.ContractBreach(chanPoint, retInfo)