Under Civil Code § 8812, the general contractor must pay subcontractors within 7 days after receiving payment from the owner for that sub’s work, plus 1% simple interest per month on late amounts. Your subcontract should mirror these statutory deadlines so that late payments automatically trigger the statutory interest and remedies without negotiation.

Under Civil Code § 8818, private construction retainage cannot exceed 5% of the contract price. Retention proceeds must be released within 45 days after the project is completed and a Notice of Completion is filed, minus a 125% withholding for uncompleted work. Your agreement should specify the exact retainage percentage, the release schedule (typically at substantial completion and final completion), and payment of statutory interest on withheld retainage.

While California has not enacted a blanket statutory ban on pay-if-paid clauses, courts and statutes in most states treat "pay-when-paid" as a reasonable timing provision rather than an absolute condition. Check California Civil Code §§ 8000-8822 (California Construction Law, including the Prompt Payment Act at §§ 8800-8815 and Mechanics Lien Law at §§ 8400-8500) for specific restrictions, and make sure your subcontract states that payment from the owner is not an absolute condition precedent to your right to be paid.

California requires use of the statutory lien waiver forms in Civil Code § 8132-8138 (conditional and unconditional waivers for both progress and final payments). Any non-statutory waiver that fails to meet these form requirements is invalid. A waiver is invalid unless payment was actually received or clearly conditional. Never sign an unconditional waiver until payment has actually cleared your bank account, and make sure your waiver identifies the specific billing period and amounts to avoid losing lien rights on future work.

Under Civil Code § 2782, construction contract provisions requiring a subcontractor to indemnify the contractor for the contractor’s sole negligence or willful misconduct are void. Type I and II indemnity clauses are permissible; Type III (sole negligence) indemnity is not. Always read the indemnification clause carefully — even in states with anti-indemnity statutes, "broad form" indemnity for joint negligence is typically still enforceable.

California requires recording a lien within 90 days after completion of the work of improvement (or recording of a Notice of Completion/Cessation, which shortens it to 30/60 days depending on whether the claimant filed a preliminary notice). California requires a preliminary 20-day Notice to the owner, direct contractor, and construction lender within 20 days of first furnishing labor or materials for most claimants other than the direct contractor. Send statutory notices by certified mail or another trackable method, keep copies of everything, and calendar the deadlines immediately upon each project’s completion.