Legal Question in Construction Law in California
contractor rights
Is it legal for the contract between sub contractor and general contractor to have a stipulation that they will not pay the sub contractor if they (the general) has not been paid by the owner/developer?
2 Answers from Attorneys
Re: contractor rights
A few years ago, a Court of Appeal ruled that "pay if paid" clauses were illegal because the failure of the owner to pay was often the fault of the general and not the fault of the sub. Many contracts still include a variant called "pay when paid" and not much has changed over the years.
Legal? Probably not, but you a sub has to consider their relationship with the general and the cost of the fight.
Re: contractor rights
No, this is not legal. This is known as a 'paid if paid' clause and these are void as against public policy and unenforceable in CA.
Good Luck.
www.SoCalConstructionLaw.com
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