You have a subcontract to sign, and its payment clause says the GC pays after the owner pays. Read the whole clause before pricing or accepting the work. AIA’s payment-process guide distinguishes pay-when-paid timing language from pay-if-paid language that can shift owner nonpayment risk. The effect of your clause depends on its wording and applicable law.
For a North Carolina house, do not assume every contingent-payment clause is invalid under Chapter 22C. That chapter has express residential exclusions. Give a construction attorney the complete subcontract and project description, then settle payment terms before your crew starts.
What a pay-when-paid clause says
In AIA’s terminology explanation, pay-when-paid connects the timing of payment to the GC’s receipt of owner payment. The GC still owes payment. Pay-if-paid goes further by potentially making owner payment a condition of the GC’s obligation. AIA advises legal review because state treatment differs.
Check which rule the clause describes. Do not classify it from a heading alone. Find the sentence describing when payment becomes due. Then find any wording addressing what happens if the owner never pays.
Keep the question open until the contracting parties and attorney resolve it. If one sentence says payment is due after receipt and another says the GC has no obligation without receipt, flag both. Do not quote only the more favorable sentence in your estimate file.
Check when payment is due and who bears nonpayment risk
Use this table to check the clause against AIA’s distinction. A court’s interpretation depends on the clause.
Scroll to read all columns.
| Clause question | Timing issue | Nonpayment-risk issue |
|---|---|---|
| What starts the payment period? | Identify receipt, approval, or another stated event | Ask whether that event is also a condition of any duty to pay |
| What if the owner delays? | Look for a stated waiting period or fallback | Ask who carries the financing gap |
| What if the owner never pays? | Find any obligation to pay even without owner payment | Flag language transferring that loss to the sub |
| What is incorporated? | Read the referenced payment process | Check whether other documents alter the condition |
Ask for the relevant incorporated documents before signing. If the agreement refers to the prime contract, obtain the applicable sections. Identify amendments and special payment exhibits. Keep the versions you reviewed with the signed subcontract.
Check the clause rather than relying on the builder’s explanation. If the builder says “we always pay,” ask how the agreement reflects that commitment. Have the people authorized to agree on terms put them in writing.
What North Carolina G.S. 22C-2 says
For work within Chapter 22C, G.S. 22C-2 says performance under the contract entitles the sub to payment from its contracting party. It states that owner payment to the contractor is not a condition precedent to payment to a sub. The same rule addresses payment between tiers, and contrary agreements are unenforceable.
The chapter also has a pass-through timing provision. G.S. 22C-3 requires payment for a performing sub’s work and materials within seven days after the upstream party receives each periodic or final payment for that work. Read the entitlement and timing provisions together.
First check whether Chapter 22C covers the job. For residential work, read the prohibition with the chapter’s applicability rule.
Check the residential exclusions before citing payment rules
G.S. 22C-6 excludes residential contractors as defined by its licensing reference. It also excludes residential improvements covered by its architectural-law exemption reference and improvements consisting of twelve or fewer residential units. These are exclusions of the chapter, not just exceptions to one timing sentence.
For a single-family build, do not assert that G.S. 22C-2 automatically cancels the payment clause. Have an attorney check the project and applicable law. The statute’s exclusion does not, by itself, prove that every clause on excluded work is enforceable either.
Give the attorney the property location, project description, contracting parties, and full documents. Ask whether the clause controls timing, transfers risk, or conflicts with another applicable rule. Ask what the GC still owes if the owner does not pay for your work.
Questions to ask before signing
Who submits your work in the owner’s payment request? Who confirms that it was included? Who tells you whether the request is approved or disputed? Ask how you will get a dated answer.
Ask what happens if the payment trigger never occurs and whether there is a final date by which payment is due. Ask how accepted base work, retainage, and disputed changes are treated. Confirm what notice you must deliver to preserve a contract claim.
Ask whether the builder has confirmed owner financing through its process. Identify who explains funding problems. Do not ask a site foreman to amend company payment obligations without confirmed authority.
Write the resolved answers into the appropriate agreement or amendment. A separate email can help document the discussion, but have the attorney check whether it changes the contract. Keep a list of unanswered terms rather than assuming silence means agreement.
Build your cash forecast from confirmed payment terms
Use the confirmed terms in your cash forecast. List material commitments, crew costs, invoice dates, expected receipts, and money retained. Do not insert a guessed owner-payment date to make the plan balance.
Use the draw-schedule guide to separate funding from trade obligations. Review the payment process before committing another crew start.
If the forecast depends on an uncertain draw, mark that uncertainty in the forecast. Ask the builder to resolve it before you commit to procurement or crew dates. Consider the size and duration of the commitment with your bookkeeper or accountant.
For recurring work, review whether the same contract applies to every lot. Obtain job-specific payment exhibits and amendments. Do not assume a settled term on one property carries into the next agreement unchanged.
When the GC says it has not been paid
Ask which invoice and owner request contain your scope. Ask separately whether the request was submitted, approved, and paid. Identify any dispute about your own work. Keep the answer with your payment record.
Have an attorney review the payment clause before threatening to stop work or signing a settlement. Check lien deadlines separately. North Carolina’s property-lien filing limit is 120 days after last furnishing under G.S. 44A-12; the enforcement-action limit is 180 days after last furnishing under G.S. 44A-13. Waiting for owner payment does not restart those statutory clocks from your invoice date.
Use the unpaid-invoice guide to organize the file. Track collection efforts, contract notices, and statutory notices separately.
For year-end reporting after the payment records are reconciled, follow the subcontractor 1099 workflow.
Where Cercha fits
Cercha profiles and portfolios let you present the work you do to prospective builder contacts. Builder and sub endorsements provide context about work completed together. Use Messages to begin a business conversation, then verify payment terms directly with the contracting party.