What is a pay-if-paid clause in construction contracts?

A pay-if-paid clause makes the general contractor's obligation to pay the subcontractor conditional on receiving payment from the owner. If the owner doesn't pay, the subcontractor may have no legal right to collect. Pay-if-paid is void in California, New York, North Carolina, and several other states. SubShield automatically detects these clauses and tells you if they're enforceable in your state.

What is broad indemnification in construction contracts?

Broad form (Type I) indemnification requires the subcontractor to indemnify the general contractor even for the GC's own negligence. This creates unlimited liability exposure. Over 40 states have anti-indemnity statutes that void these clauses. SubShield identifies them and cites the specific statute that voids them in your state.

How does SubShield analyze construction contracts?

Upload your subcontract (PDF, Word, or paste text) and SubShield's AI analyzes it in about 60 seconds. You get a risk score (1-10), identification of 50+ risky clause types, negotiation language to propose to your GC, and state-specific legal information.

Is SubShield a substitute for a construction attorney?

No. SubShield is an AI-powered educational tool that helps subcontractors understand their contracts better. For high-value contracts ($500K+) or complex disputes, consult a licensed construction attorney. SubShield costs $47 per analysis; attorney review costs $300-500+. Use SubShield for initial screening, attorney for final review.

What states does SubShield cover?

SubShield provides analysis for all 50 US states with specific knowledge of state lien laws, anti-indemnity statutes, prompt payment act requirements, retainage caps, and pay-if-paid enforceability which varies significantly by state.

How much does SubShield cost?

SubShield offers a free trial with one full analysis per month. Single reports cost $47. Pro Monthly is $97/month for unlimited analyses. Pro Annual is $797/year for unlimited analyses. All paid plans include a 60-day money-back guarantee.

What is a no-damage-for-delay clause?

A no-damage-for-delay clause prevents the subcontractor from recovering monetary damages when the project is delayed, even if the delay was caused by the GC. The only remedy is a time extension, not compensation for increased costs. These clauses can cost subcontractors $23,000+ on average. SubShield detects these clauses automatically.

How is SubShield different from using ChatGPT to review contracts?

SubShield is purpose-built for construction subcontracts with 50+ clause type detection specific to construction, state-specific legal information for all 50 states, industry benchmarks (AIA, ConsensusDocs standards), negotiation language templates, and a GC reputation database. General AI tools lack this specialized construction knowledge.

Retainage in Construction: What Subcontractors Need to Know

Retainage—also called retention—is money withheld from your progress payments until project completion. It's meant to ensure quality, but often becomes cash flow torture for subcontractors.

What is Retainage?

Retainage is a percentage (typically 5-10%) of each payment that the GC holds back. On a $500,000 subcontract with 10% retainage:

Each $100,000 invoice: You receive $90,000

Total held back: $50,000

Release date: Could be 6-18 months after YOUR work is complete

The Real Cost of Retainage

Cash Flow Impact

On a $500K job with 10% retainage:

$50,000 held for average 12 months

At 8% cost of capital: $4,000 in lost financing value

That's pure profit gone

The Multiplier Effect

If you have 5 jobs in progress with similar retainage:

$250,000 tied up in retainage

That's money you can't use for payroll, materials, or new jobs

Standard Retainage Rates

Scenario

Standard Rate

Commercial Private

Residential

Public Works

5% (capped by law in many states)

High Risk Work

Up to 10%

Red flag: Any retainage over 10% is excessive.

State Retainage Caps

Several states limit retainage by law:

Texas: 5% max on public projects

California: Must reduce to 5% after 50% completion

Florida: 5% max on private projects

Georgia: 10% max

Colorado: 5% max on public

When Should Retainage Be Released?

Industry Best Practice

Retainage should be released within 30 days of:

Substantial completion of YOUR work, OR

Owner's final payment to GC, whichever is earlier

Watch Out For

"Final completion of entire project" (you wait for everyone else)

"Final payment from Owner" (you bear owner payment risk)

No specific release date (could be indefinite)

How to Negotiate Better Retainage Terms

Option 1: Reduce the Percentage

"We request 5% retainage in line with industry standard and [state] law."

Option 2: Stepped Retainage

"10% until 50% complete, then reduce to 2.5% for remaining work."

Option 3: Early Release

"Release retainage within 30 days of substantial completion of Subcontractor's scope."

Option 4: Retainage Bond

On larger jobs, offer a retainage bond instead of cash holdback.

Retainage Release Language

Bad (For Subcontractor)

"Retainage shall be released upon final completion and acceptance of the entire Project."

Good (For Subcontractor)

"Retainage shall be released within 30 days of substantial completion of Subcontractor's Work, or upon release of retainage to Contractor by Owner, whichever occurs first."

What to Do If Retainage Is Held Too Long

Document completion of your scope with photos and sign-off

Send formal request for retainage release citing contract terms

File notice of intent to lien if not released

File mechanics lien before deadline expires

Pursue payment bond claim if available

Calculate Your Retainage Exposure

Use our free Retainage Calculator to see exactly how much retainage affects your cash flow and profit margin.

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Protect Yourself Before You Sign

SubShield identifies aggressive retainage terms in your contracts and gives you negotiation language to push back.

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*Questions about retainage? Email us at hello@trysubshield.com*

Retainage in Construction: What Subcontractors Need to Know

Retainage in Construction: What Subcontractors Need to Know

What is Retainage?

The Real Cost of Retainage

Cash Flow Impact

The Multiplier Effect

Standard Retainage Rates

State Retainage Caps

When Should Retainage Be Released?

Industry Best Practice

Watch Out For

How to Negotiate Better Retainage Terms

Option 1: Reduce the Percentage

Option 2: Stepped Retainage

Option 3: Early Release

Option 4: Retainage Bond

Retainage Release Language

Bad (For Subcontractor)

Good (For Subcontractor)

What to Do If Retainage Is Held Too Long

Calculate Your Retainage Exposure

Protect Yourself Before You Sign

Ready to Protect Your Next Contract?

More Resources

Turner Construction Subcontract Analysis: What to Watch For

Lien Waivers in Construction: The Complete Guide for Subcontractors