What is a pay-if-paid clause and is it enforceable?
Last reviewed July 5, 2026
A pay-if-paid clause means a subcontractor only gets paid if the general contractor is paid by the owner. Its enforceability varies by state. Some states allow it, while others limit or prohibit it, especially if it affects a subcontractor's right to payment.
Key points
- Subcontractor payment depends on GC's payment from owner.
- Enforceability varies by state laws.
- Some states limit or prohibit these clauses.
Pay-if-paid clauses can shift financial risk to subs. If the GC doesn't get paid, the sub may not get paid either, which can create cash flow issues. Always check your state's lien statute and contract laws to understand the specific implications and enforceability in your area.
How Alloovium helps
Alloovium can help you review contracts and understand the implications of pay-if-paid clauses.
See how it worksRelated questions
- How do I prepare a certified payroll report for a federal project?
- How do I respond to a backcharge from a general contractor?
- How do I submit a change order request under an AIA contract?
- How long do I have to submit a delay claim under AIA A201?
- What are the general conditions in an AIA A201 contract?
- What documentation supports a construction delay claim in the US?
General information for US construction professionals — not legal advice. Lien deadlines, retainage caps and notice rules vary by state; verify with the state statute or a construction attorney.