Pay-If-Paid vs Pay-When-Paid Clauses: Which States Enforce Them (2026)
✓ Verified against state statutes · Reviewed November 2026 · By Michael Evan — Founder · 50 states · 799 rules
Manage your lien deadlines and projects — your first project is on us →
Key Takeaways for Subs and Suppliers
A framing subcontractor finishes a $186,000 scope on a mid-rise in March. The GC’s answer to every call is the same: “Owner hasn’t funded the draw. Read your subcontract — we pay when we’re paid.” The sub reads it. Paragraph 9 says payment from the owner is “a condition precedent” to any payment to the subcontractor. The sub assumes it has no options and waits. That assumption is wrong in a large part of the country. Depending on the state, that paragraph may be void, may be valid but useless against a mechanics lien, or may be read as a timing term that runs out after a reasonable time. And in almost every state, the lien deadline never stopped running while the sub waited. This guide explains the two clauses, maps the 20 states with a statute on point, covers the federal rule, and lays out what to do when a GC tells you it hasn’t been paid. It applies The Mechanics Lien Management Method: protect the lien deadline first, then deal with the contract.
What Is a Pay-If-Paid Clause?
A pay-if-paid clause (also called a contingent payment clause) makes the owner’s payment to the general contractor a condition precedent to the GC’s duty to pay the subcontractor. If the condition never happens — the owner goes broke, walks away, or disputes the GC’s work — the GC never owes the sub. The sub carries the risk of the owner’s nonpayment, even though it never chose the owner and has no contract with it. Typical language: “Receipt of payment by Contractor from Owner is a condition precedent to Contractor’s obligation to pay Subcontractor. Subcontractor expressly assumes the risk of Owner’s nonpayment.” The words “condition precedent” and “assumes the risk” are what most courts look for.
What Is a Pay-When-Paid Clause?
A pay-when-paid clause sets the timing of payment, not whether payment happens. Typical language: “Contractor shall pay Subcontractor within 7 days after receipt of payment from Owner.” Many courts read a clause like that to mean the GC must still pay within a reasonable time if the owner never pays. The GC gets a delay, not a defense. Comparison: pay-if-paid controls whether the sub gets paid and shifts owner credit risk to the subcontractor; pay-when-paid controls when the sub gets paid, and the GC usually still owes within a reasonable time. Pay-if-paid is barred from defeating the lien in many states; pay-when-paid has no effect on lien rights in most states.
Pay-If-Paid Rules by State: The 20 States With a Statute
We checked each provision below against the statute text. They fall into four groups: statutes that void pay-if-paid, statutes that keep it from defeating lien or bond rights , rules that apply only on public projects , and timing-only prompt payment rules that do not ban the clause. Virginia and New York appear twice because their public and private rules differ. Nevada is in the protective group because of its stop-work right, not a lien rule: a sub can suspend work after the statutory notice even if its contract is pay-if-paid. For the 15 states with a statutory stop-work right, see The Right to Stop Work for Nonpayment by State . North Carolina (N.C.G.S. § 22C-2) — Void: Payment by the owner is not a condition precedent at any tier; a contrary agreement is unenforceable. No insolvency exception. South Carolina (S.C. Code § 29-6-230) — Void: Payment by the owner is not a condition precedent to payment of a subcontractor or supplier. Virginia (private) (Va. Code § 11-4.6) — Void: Void unless the party that failed to pay is insolvent or a debtor in bankruptcy. Public bodies are excluded from "owner". Delaware (6 Del. C. § 3507(e)) — Void: Void to make a contractor assume the risk of the owner's nonpayment, or to make bond payment depend on it. Excludes public works and certain small residential jobs. Massachusetts (M.G.L. c. 149 § 29E(e)) — Void: Void on private projects with a prime contract of $3 million or more (not 1–4 unit residential), with narrow default and insolvency exceptions. Wisconsin (Wis. Stat. § 779.135(3)) — Void: Payment from a party outside the contract cannot be a condition precedent. A pay-when-paid timing delay is still allowed. Nevada (NRS 624.626, 624.628(3)) — Protects lien/bond rights: A sub can stop work if unpaid 45 days after the 25th of the billing month, even under a pay-if-paid or pay-when-paid clause. Clauses waiving these rights are void. Texas (Tex. Bus. & Com. Code §§ 56.051–.056) — Protects lien/bond rights: Enforceable, except where the payor's own breach caused the nonpayment. It cannot be used to invalidate a lien. The payor must plead it as an affirmative defense. Illinois (770 ILCS 60/21(e)) — Protects lien/bond rights: Not a defense to a mechanics lien claim by a subcontractor or supplier. Missouri (Mo. Rev. Stat. § 431.183) — Protects lien/bond rights: Not a defense to enforcing a mechanics lien when payment depends on a private party. Utah (Utah Code § 13-8-4(3)) — Protects lien/bond rights: Not a defense to enforcing a lien (residential of 4 units or fewer excluded). The sub can request the project's financing information. Ohio (Ohio Rev. Code § 4113.62(E)) — Protects lien/bond rights: The clause is allowed, but it cannot stop a sub from filing a lien or bond claim while payment is pending. Kansas (K.S.A. § 16-1803(c)) — Protects lien/bond rights: A payment contingency clause does not defeat a mechanics lien claim. Maryland (Md. Real Prop. § 9-113(b)) — Protects lien/bond rights: Cannot abrogate or waive the right to claim a lien or sue on a bond. New Mexico (N.M. Stat. § 48-2-10) — Protects lien/bond rights: A contingent payment clause is not a waiver of the right to file and enforce a lien. Virginia (public) (Va. Code § 2.2-4354) — Public projects: On public contracts, the prime must pay the sub within 60 days of the sub's work, whether or not the prime has been paid. New York (public) (N.Y. State Fin. Law § 139-f) — Public projects: On public work, the clause is invalid if the prime fails to requisition the balance within 90 days of substantial completion. Colorado (C.R.S. § 38-46-103(2)(d)) — Timing only: The retainage statute expressly does not override pay-if-paid conditions. Not a ban. Minnesota (Minn. Stat. § 337.10) — Timing only: Pay subs within 10 days of receiving payment, 1.5% per month interest. Sets timing; does not void contingent payment. Vermont (9 V.S.A. § 4003) — Timing only: Pay within 7 days of receipt, plus interest. Timing rule, not a ban. Maine (10 M.R.S. § 1114) — Timing only: Pay within 7 days of receipt. Timing rule, not a ban.
States Where the Courts Decided It: New York and California
New York: West-Fair Electric Contractors v. Aetna Casualty & Surety Co., 87 N.Y.2d 148 (1995), held pay-if-paid void under Lien Law § 34. Pay-when-paid timing terms are treated differently, and a later appellate decision enforced a contingent clause where the sub had no lien rights to protect. On public work, State Finance Law § 139-f adds its own limit. See our New York construction attorney guide. California: Wm. R. Clarke Corp. v. Safeco Ins. Co., 15 Cal. 4th 882 (1997), held pay-if-paid unenforceable as an indirect waiver of lien and bond rights. California claimants should still serve the 20-day preliminary notice to keep those rights. Two of the largest construction markets have no general statute on private work, but their highest courts have rejected pay-if-paid anyway, on the same reasoning: a clause that lets the GC never pay works as an advance waiver of the sub’s lien rights, and lien waivers signed before payment are against public policy. In states with no statute and no clear high-court ruling, courts generally enforce a true pay-if-paid clause only when the language is unambiguous, and read anything less as pay-when-paid. Florida is the classic example: its courts have read unclear payment clauses as timing terms. Contract wording matters there, so have it reviewed before you sign.
Federal Projects: The Miller Act and the 7-Day Flow-Down
On federal construction, you cannot lien the property, but you can claim against the prime contractor’s payment bond. Under the Miller Act, a claimant unpaid 90 days after its last labor or materials can sue on the bond, a second-tier claimant must give the prime written notice within those 90 days, and suit is due within one year (40 U.S.C. § 3133(b)). A waiver of the right to sue on the bond is void unless it is written, signed, and made after the work was furnished (§ 3133(c)). Federal courts have generally held that the surety cannot use the prime’s pay-if-paid or pay-when-paid clause to defeat that bond claim. The clause may govern your contract claim against the prime, but the bond is a separate obligation. Separately, the federal Prompt Payment Act requires the prime to pay its subs within 7 days of receiving payment from the government, out of the amounts paid, with interest for late payment, and it flows down to every tier (31 U.S.C. § 3905(b); FAR 52.232-27). That is a timing rule. For state public projects, see Little Miller Act Deadlines by State and Prompt Payment Laws by State .
Your GC Says “We Haven’t Been Paid.” What Now?
Calculate your lien or bond deadline today. It almost always runs from your last furnishing date, and the subcontract’s payment clause does not pause it. The Mechanics Lien Management State System computes it for all 50 states. Read the exact clause. Look for “condition precedent” and “assumes the risk.” Without them, you probably have a pay-when-paid timing term. Check your state in the table above. If your state voids the clause or protects lien rights from it, say so in writing. Ask in writing when the GC billed the owner and when payment is expected. Some states require the GC to pursue payment from the owner before relying on the clause. Serve required notices. Missing a preliminary notice or statutory notice of intent can cost you the lien no matter how the clause reads. Send a dated demand. See our construction payment demand letter template. Record the lien or make the bond claim on time. The lien generator builds the filing from your project facts; use property search for the owner and legal description. For the full sequence, see Contractor Won’t Pay Me? 9 Steps to Get Paid . If the GC is sitting on money the owner already paid, see Private Prompt Payment Laws by State for the statutes that set deadlines and interest on private jobs.
Negotiating the Clause Before You Sign
Convert pay-if-paid to pay-when-paid with an outside date (for example, 45 or 60 days after the pay application, regardless of owner payment). Limit the contingency to owner nonpayment that is not caused by the GC’s own default. Require the GC to tell you within a set number of days when the owner has not paid, and why. Add a clause saying nothing in the subcontract waives or limits your lien, bond, or stop-work rights. Ask for the owner’s financing information or the payment bond up front. Utah lets subs ask for financing information by statute. The cheapest fix comes before signing. Ask for these changes: The same review applies to lien waiver and no-lien language buried in the subcontract. See No-Lien Clause Laws by State and lien waivers explained .
4 Mistakes Subs Make With Pay-If-Paid
The clause delays your contract claim; it does not extend your lien deadline. Miss the deadline and you lose your lien rights entirely. In six states it is void by statute, and in New York and California by court decision. Check before you concede. “Within 10 days after receipt” is usually pay-when-paid. After a reasonable time, the GC owes you anyway. On Miller Act and many state public jobs, the surety generally cannot rely on the clause. File the bond claim on time.
The Clause Can Wait. Your Lien Deadline Can’t.
The Mechanics Lien Management State System calculates your notice, lien, and enforcement dates in all 50 states. Build the filing in the lien generator, or connect with a licensed construction attorney through the Mechanics Lien Management attorney network to review a pay-if-paid clause.
Frequently Asked Questions
What is the difference between pay-if-paid and pay-when-paid?
A pay-if-paid clause makes the owner's payment to the general contractor a condition precedent to the GC paying the subcontractor, so if the owner never pays, the sub never has to be paid. A pay-when-paid clause only sets timing: the GC pays within a set period after it is paid, and courts in many states read it to require payment within a reasonable time even if the owner never pays. The difference is who carries the risk of owner nonpayment.
Are pay-if-paid clauses enforceable?
It depends on the state. North Carolina (G.S. 22C-2), South Carolina (29-6-230), Wisconsin (779.135(3)), Delaware (6 Del. C. 3507(e)), and Virginia on private projects unless the payor is insolvent (11-4.6) make them unenforceable by statute, and Massachusetts does on projects with a prime contract of $3 million or more. New York and California courts treat them as void because they indirectly waive lien rights. Many other states enforce them if the wording is clear.
Can a pay-if-paid clause stop me from filing a mechanics lien?
In many states, no. Statutes in Illinois (770 ILCS 60/21(e)), Missouri (431.183), Kansas (16-1803(c)), Texas (Bus. & Com. Code 56.054), Utah (13-8-4(3)), Maryland (Real Prop. 9-113(b)), New Mexico (48-2-10), and Ohio (4113.62(E)) say the clause cannot defeat or bar a lien claim, and Maryland and Ohio extend that protection to bond claims. Even where your contract claim against the GC is delayed, your lien against the property can still go forward, so keep your lien deadline on the calendar.
Does a pay-if-paid clause apply to a Miller Act bond claim?
Federal courts have generally held that a surety cannot use the prime contractor's pay-if-paid or pay-when-paid clause to defeat a subcontractor's Miller Act payment bond claim. The Miller Act lets a claimant sue on the bond if unpaid 90 days after its last labor or materials, and a waiver of that right is void unless it is in writing, signed, and made after the work was furnished (40 U.S.C. 3133). Suit is due within one year.
Is pay-if-paid enforceable in Texas?
Texas allows contingent payment clauses but limits them in Business and Commerce Code chapter 56. The clause cannot be enforced when the payor's own breach caused the nonpayment, and it may not be used as a basis to invalidate a mechanics lien. The payor has to raise it as an affirmative defense. Texas subcontractors should still serve the monthly fund-trapping notices and keep the lien deadline.
Is pay-if-paid enforceable in Florida?
Florida courts have long read ambiguous payment clauses as pay-when-paid timing terms rather than true conditions precedent, so a clause must say clearly that the subcontractor assumes the risk of owner nonpayment to shift that risk. We did not find a Florida statute that voids pay-if-paid. Florida claimants should rely on the Notice to Owner and lien process under chapter 713, which runs independently of the subcontract's payment clause.
What should I do if my GC says it hasn't been paid?
Treat it as a warning, not a reason to wait. Ask in writing when the GC billed the owner and when it expects payment, check whether your state limits pay-if-paid, serve any required notice, and calculate your lien or bond claim deadline from your last furnishing date. In most states the lien deadline keeps running regardless of the subcontract's payment clause. Connect with a licensed construction attorney through the Mechanics Lien Management attorney network if the amount is large.