The Enforceability of Pay-If/When-Paid Clauses in North Carolina
Construction contracts often include provisions governing payment terms between general contractors and subcontractors. One such provision is the “pay-if/when-paid” clause, which dictates that a subcontractor will receive payment only after the general contractor has been paid by the project owner. While “pay-if/when-paid” clauses may be enforceable in Arizona, Colorado, Georgia, Florida, Illinois, Michigan and Maryland, such clauses are unenforceable in the state of North Carolina.