California payment rights
Pay-if-paid clauses are void in California: the Supreme Court held in Wm. R. Clarke Corp. v. Safeco (1997) that conditioning a subcontractor's payment on the owner paying first impermissibly waives lien rights. But the clause still shows up in subcontracts — and the real California traps lie elsewhere: payment windows the statute lets contracts move, waiver forms that only count in statutory form, and lien deadlines that run shorter for subs than for anyone else.
Clarke v. Safeco killed the clause in California, while most other US states still enforce clearly drafted versions — which is why national contract templates keep it in. Leaving it unchallenged invites payment games even though it's unenforceable, and ambiguous pay-when-paid wording is generally read as a timing clause, not a transfer of the owner-insolvency risk. Strike it anyway, and check what surrounds it.
California's private-work defaults: an owner pays a progress payment within 30 days after a notice demanding payment (Civil Code §8800), and a contractor passes each sub its share of a progress payment within 7 days of receipt (Bus. & Prof. Code §7108.5) — wrongful withholding costs 2% per month plus prevailing-party fees, and late payment to subs is grounds for CSLB discipline. The catch: both statutes yield to different terms agreed in writing. The dates are defaults, not guarantees — so the thing to check before signing is whether your subcontract quietly stretches them. A good-faith dispute only ever justifies withholding up to 150% of the disputed amount.
A contract term waiving your lien, stop-notice, or bond rights in advance is void (Civil Code §8122), and a waiver and release is null and void unless it substantially follows one of the four statutory forms — conditional and unconditional, progress and final (§§8132–8138). If a payment package asks you to sign anything else, that's a flag. And never hand over an unconditional release for money you haven't received: conditional forms exist for exactly that moment.
Private retention: the owner releases within 45 days of completion (§8812), your share flows down within 10 days of receipt (§8814), and wrongfully withheld retention accrues 2% per month (§8818) — see retention clauses for the games played around release. On public works signed since 2012, retention is capped at 5% per payment (PCC §7201). The deadlines: serve your preliminary notice within 20 days of first furnishing (§8204); record a lien within 90 days of completion — or just 30 days after a notice of completion is recorded, not the 60 days direct contractors get (§8414); then sue within 90 days or the lien expires (§8460). A $19 contract review flags the clauses; the calendar is yours to run.
Common questions
No. The California Supreme Court held in Wm. R. Clarke Corp. v. Safeco Insurance (1997) that pay-if-paid clauses are void because they impermissibly waive the subcontractor's lien rights. The clause still appears in subcontracts — especially national templates drafted for states that enforce it — so strike it rather than rely on unenforceability, and treat its presence as a signal to check the rest of the payment terms.
For progress payments on private work, the default is 7 days after the contractor receives payment (Business & Professions Code §7108.5), with a 2% per month penalty, prevailing-party attorney fees, and exposure to CSLB discipline for violations. But the statute applies 'unless otherwise agreed to in writing' — your subcontract can lawfully set longer terms, which is exactly why the payment clause deserves a careful read before you sign. Retention runs on its own clock: your share within 10 days of the contractor receiving it (Civil Code §8814).
Only the four statutory forms: conditional and unconditional waivers for progress payments (Civil Code §§8132, 8134) and conditional and unconditional final waivers (§§8136, 8138). A waiver that doesn't substantially follow the statutory text is null, void, and unenforceable — and any contract clause waiving lien rights in advance is void under §8122. Sign conditional forms until the money has actually cleared.
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