Episode #39
The Truth About Pay When Paid
A pay when paid clause can choke your cash flow. Karalynn explains how contingent payment clauses affect commercial subcontractors, why stopping work can make matters worse, and what to negotiate, document, and file so you can protect your payment rights when the owner or GC delays payment. Learn more about The Cromeens Law Firm here ! Grab Karalynn's new book Trust Your Gut here . Follow Karalynn Cromeens on Facebook here . Follow Karalynn Cromeens on Instagram here . Follow Karalynn Cromeens on LinkedIn here . Watch the show on YouTube here . Key Takeaways 1. A pay when paid clause can require a subcontractor to keep working without payment until the owner pays the general contractor, even when the subcontractor has performed perfectly. 2. Before taking on commercial work, subcontractors must confirm they have enough cash to cover labor, materials, and operating costs through a potentially long payment delay. 3. Stopping work because you have not been paid is risky and should not be done without legal guidance, because termination can leave you unpaid and responsible for replacement costs. 4. Contractors should investigate whether the owner has paid the GC and send timely notice to preserve lien rights, because a GC's resistance to notice may reveal that payment has already been received. 5. Negotiating payment protections before signing, including partial payment after a set period or reimbursement for lien costs, can reduce the financial damage of a contingent payment clause.
