Subcontract Review for California Contractors
California has some of the strongest subcontractor protections in the nation. Our AI identifies clauses that violate California law—including pay-if-paid clauses that are completely unenforceable.
Key California Construction Laws We Check
California Civil Code §2782
Anti-Indemnity Statute
Prohibits contractual provisions requiring indemnification for the indemnitee's sole negligence or willful misconduct.
âś… Broad form indemnity clauses are unenforceable in California
Wm. R. Clarke Corp. v. Safeco (1997)
Pay-If-Paid Void
California courts have consistently held pay-if-paid clauses unenforceable as against public policy.
âś… You must be paid for your work regardless of owner payment to GC
California Civil Code §8800-8848
Mechanic's Lien Rights
90 days from completion to file lien (60 days if Notice of Completion recorded). 20-day preliminary notice required.
✅ Strict notice requirements—failure means losing lien rights
California Business & Professions Code §7108.5
Prompt Payment
GC must pay subcontractors within 7 days of receiving payment from owner for that portion of work.
âś… 2% monthly penalty on late payments
California Civil Code §8152
Retainage Cap
Retention cannot exceed 5% on private works. Must be released within 45 days of completion.
âś… Contracts demanding >5% retainage violate California law
Common Contract Issues in California
- Pay-if-paid clauses (VOID in California—unenforceable)
- Retainage above 5% (violates Civil Code §8152)
- Waiver of lien rights (limited enforceability in CA)
- Broad indemnification (void per Civil Code §2782)
- No-damage-for-delay clauses (limited enforceability)
- Failure to provide 20-day preliminary notice forms
California Protects Subcontractors—But Only If You Know Your Rights
Get a complete risk analysis in 60 seconds. Know which clauses are unenforceable under California law.
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Frequently Asked Questions: California Subcontractor Contracts
Are pay-if-paid clauses legal in California?
No. Pay-if-paid clauses are unenforceable in California. California courts have consistently held these clauses void as against public policy, most notably in Wm. R. Clarke Corp. v. Safeco Insurance Co. (1997). If your contract contains a pay-if-paid clause, it will be treated as a pay-when-paid clause (affecting timing but not your right to payment).
What is the maximum retainage allowed in California?
California Civil Code §8152 limits retainage to 5% on private works of improvement. Additionally, the retained funds must be released within 45 days after completion. For public works, retainage is capped at 5% under Public Contract Code §7107. If your contract specifies higher retainage, that portion may be unenforceable.
How long do I have to file a mechanic's lien in California?
In California, subcontractors must file their mechanic's lien within 90 days after completion of the work. However, if a Notice of Completion is recorded, this deadline is reduced to 60 days for subcontractors. You must also serve a 20-day preliminary notice to preserve your lien rights. Missing these deadlines means losing your ability to lien the property.
What does California Civil Code §2782 prohibit?
California Civil Code §2782 is an anti-indemnity statute that prohibits contract provisions requiring a subcontractor to indemnify another party for that party's sole negligence or willful misconduct. "Type I" (broad form) indemnity clauses that attempt this are void and unenforceable. SubShield automatically detects these clauses and explains your protections.