Pay-if-Paid Clauses in New York Construction Contracts

Reviewed September 7, 2026.

A subcontract should state when payment is due and who bears the risk that the owner does not pay. In New York, making the owner's payment an absolute condition of a subcontractor's right to payment can violate the protection against advance waiver of lien rights in Lien Law § 34.

The First Department applied that rule in Interbar, Inc. v. Calcedo Construction Corp., 248 AD3d 503 (2026), rejecting an express upstream-payment condition. It also explained that treating the provision as a timing clause would not justify the significant delay at issue.

What to check before signing

• Identify an enforceable payment due date, invoice requirements and procedures for disputed amounts.
• Review owner-payment language alongside claim notices, suspension rights and contractual suit deadlines.
• Identify the project type. The Prompt Payment Act has coverage requirements and exclusions; public contracts and certain residential work follow different rules.
• Preserve lien and payment-bond rights independently. Challenging a payment clause does not extend filing, notice or lawsuit deadlines.

A payment defense can also involve disputed performance, credits or back charges. Invalidating a risk-shifting condition does not establish the amount owed by itself.

Kushnick Pallaci PLLC assists clients throughout New York with construction contract review. Contact 631-752-7100 or vtp@kushnicklaw.com.

Attorney Advertising. General information, not legal advice.