How to Negotiate a Commercial Subcontract
The Cromeens Law Firm
March 12, 2026
Commercial subcontracts are the lifeblood of the construction industry, yet most subcontractors sign them without a real understanding of what they are agreeing to. Many contractors assume the dense legal language is standard, unchangeable, or simply “part of doing business.” However, these documents are frequently drafted to protect the general contractor (GC) at your expense, shifting immense risk onto your shoulders.
Understanding what you are signing is not just about legal compliance; it is about survival. As Karalynn Cromeens highlights in her book, Quit Getting Screwed: Understanding and Negotiating the Subcontract, signing a subcontract without a thorough review can lead to financial ruin.
Here is why you must review and negotiate your commercial subcontracts, and how The Cromeens Law Firm can help protect your business.
There is no such thing as a truly “standard” subcontract. While many look similar, the specific clauses hidden within can vary wildly and often contain provisions that strip you of your rights. If you don’t know where to look, you might agree to terms that leave you unpaid, overworked, or legally liable for issues you didn’t cause.
Here are some of the most dangerous provisions often found in commercial subcontracts:
This is perhaps the most dangerous clause for a subcontractor. A “pay-if-paid” provision states that the general contractor has no obligation to pay you unless they receive payment from the owner. In essence, you become the financier of the project. If the owner goes bankrupt or refuses to pay the GC for reasons unrelated to your work, you don’t get paid—period.
While Texas courts look for reasons to invalidate these clauses, they are generally enforceable if written specifically. You should never accept the risk of the owner’s insolvency. Negotiating this to a “pay-when-paid” clause, or adding language that ensures payment after a reasonable time, is essential.
What you will typically see in a contract:
“Payment to Subcontractor is expressly conditioned upon General Contractor’s receipt of payment from Owner. If Owner fails to pay General Contractor for any reason, General Contractor shall have no obligation to pay Subcontractor.”
What to propose instead:
“General Contractor shall pay Subcontractor within 7 days of receipt of payment from Owner. If Owner fails to pay General Contractor within 45 days of Subcontractor’s invoice, General Contractor shall pay Subcontractor regardless of whether General Contractor has received payment from Owner.”
Why this matters:
The original language makes you responsible for the owner’s failure to pay, even when your work was done correctly. The replacement keeps a reasonable payment window but removes your exposure to problems between the GC and the owner that have nothing to do with you.
Indemnity clauses are designed to shift liability. A broad indemnity clause can make you responsible for the GC’s mistakes, the owner’s negligence, or design defects you had no control over.
For example, if an accident occurs on site due to the GC’s negligence, a poorly written indemnity clause could force you to pay for their legal defense and damages. You should only be responsible for your own negligence—not everyone else’s.
“I was doing them a favor.” This sentiment is the enemy of profitability. Without a written change order, you are essentially working for free. Subcontracts often state that no extra work will be paid for without a signed change order before the work begins. In Texas, verbal agreements for extra work are almost never enforceable in court, which means if it is not in writing, it did not happen.
Furthermore, vague scope descriptions like “and any other work reasonably inferred” can turn a profitable job into a loss. If the scope isn’t specific, the GC can demand extra work, claiming it was “implied” in the original contract, without paying you a dime extra.
What you will typically see in a contract:
“Subcontractor shall perform any additional work reasonably inferred from the contract documents or as directed by General Contractor. No additional compensation shall be paid unless a written change order has been executed prior to performance, and General Contractor reserves the right to direct changes without adjustment to the contract price.”
What to propose instead:
“Any work beyond the expressly defined scope of this Agreement must be authorized by a written change order signed by both parties before work begins. Subcontractor shall have no obligation to perform additional work without an executed change order that includes the agreed price and schedule adjustment.”
Why this matters:
The original language gives the GC room to expand your scope without paying for it by claiming the work was implied. The replacement makes written authorization a condition of performance, which protects you from doing thousands of dollars in extra work with no path to getting paid.
Imagine buying $10,000 worth of custom materials, only to receive an email that you’ve been terminated from the project because the GC found someone cheaper. A “termination for convenience” clause allows the GC to fire you without cause at any time. Unless you negotiate this out or ensure it includes payment for costs incurred, you could be left with custom materials and no way to recoup your investment.
What you will typically see in a contract:
“General Contractor may terminate this Agreement at any time for its convenience upon written notice to Subcontractor. In the event of such termination, Subcontractor shall be entitled to payment only for work completed and accepted prior to the date of termination.”
What to propose instead:
“General Contractor may terminate this Agreement for convenience upon 14 days written notice. In the event of such termination, Subcontractor shall be entitled to payment for all work completed, all materials ordered or purchased for the project, any restocking or cancellation fees incurred, and a reasonable amount for overhead and lost profit on the terminated portion of the work.”
Why this matters:
The original language cuts you off the moment the GC sends a termination notice, leaving you to absorb the cost of materials you already purchased and work you already planned for. The replacement ensures you are made whole for every dollar you committed to the project before termination.
Lien rights are your most powerful tool to ensure payment. However, many subcontracts bury language in payment applications that forces you to waive your lien rights before you actually receive the check. Never sign an unconditional lien waiver if the money isn’t in your bank account.
What you will typically see in a contract:
“As a condition of each progress payment, Subcontractor shall execute and deliver an unconditional waiver and release of all lien rights and claims through the date of the payment application.”
What to propose instead:
“As a condition of each progress payment, Subcontractor shall execute and deliver a conditional waiver and release of lien rights, which shall become effective only upon Subcontractor’s confirmed receipt of the payment amount stated in the waiver.”
Why this matters:
An unconditional waiver releases your lien rights the moment you sign it, even if the check never arrives or bounces. A conditional waiver only takes effect once the money is actually in your account, which means your rights stay intact until you are actually paid.
The risks listed above are not hypothetical. They destroy businesses every day.
As noted in Quit Getting Screwed, “The first rule about subcontracts is… there are no rules.” There are no laws guaranteeing that a commercial subcontract is fair. The only person who can protect your business is you.
Not every subcontract is worth fighting over, and not every GC is willing to negotiate. Knowing the difference before you invest time in redlines can save you a lot of frustration.
Start by assessing your leverage. If you are the only qualified subcontractor for the work, you have room to push back on almost anything. If you are one of five subs bidding the same scope, your leverage is limited and you need to pick your battles carefully.
Some clauses are dealbreakers no matter what. A pay-if-paid clause, a broad indemnity provision, and an unconditional lien waiver requirement in the same contract is a red flag. That combination puts almost every financial risk on you. Walk away.
Other clauses are worth negotiating even when you have limited leverage. Change order procedures, termination payment protections, and scope of work definitions are areas where most GCs will compromise because they also want the job to go smoothly.
The clearest sign that a GC is not negotiating in good faith is when they refuse to discuss any changes at all. That tells you something important about how they will treat you when a problem comes up on the job. Take that seriously before you sign.
You might be thinking, “I don’t have the time or money for a lawyer to review every contract.” The reality is, you cannot afford not to. The cost of a review is a fraction of what it costs to litigate a bad contract or lose payment on a job.
At The Cromeens Law Firm, we believe in being partners with our clients. We understand that construction moves fast, and you can’t wait weeks for a legal opinion. That is why we have streamlined the process to be accessible, predictable, and efficient.
We remove the uncertainty of hourly billing. Our contract review and creation services are offered at a flat rate, so you know exactly what the investment will be upfront.
We know that holding up a contract can mean losing the job. That is why we are committed to speed without sacrificing quality.
Your bid is not part of the contract unless you make it so. The verbal promises made by the project manager mean nothing once the ink is dry. The written contract is the final word.
Don’t bet your business on a document written to protect someone else. By understanding the risks and negotiating better terms, you protect the hard work you and your team put in every day.
The contract in front of you was written by the GC’s attorney to protect the GC. Not you. Before you sign your next commercial subcontract, let a construction attorney review it first. The Cromeens Law Firm offers flat-fee contract reviews with a 5 business day- turnaround because we know you cannot afford to wait. Call us today at 713-715-7334.
Don’t sign your rights away.
Is a pay-if-paid clause enforceable in Texas?
Yes, but with conditions. Texas courts will look for reasons to invalidate it, and the language has to be very specific for it to hold up. If the clause is vague or broadly written, you may have grounds to challenge it.
What Texas laws protect subcontractors in a commercial subcontract?
Texas has several statutes that work in your favor. The Prompt Payment Act requires GCs to pay you within 7 days of receiving payment from the owner. The Anti-Indemnity Act voids any clause that makes you responsible for the GC’s own negligence. And your lien rights under the Texas Property Code cannot be waived by contract.
What clauses should I never accept in a subcontract?
Unconditional lien waivers before payment clears, broad indemnity language that makes you responsible for the GC’s negligence, and termination for convenience clauses with no payment protection for work already done.
Should I walk away from a subcontract if the terms are too risky?
Sometimes yes. If a GC refuses to negotiate a pay-if-paid clause, a broad indemnity provision, and a termination for convenience clause all at once, the contract may put your business at more risk than the job is worth.
Karalynn Cromeens is the Owner and Managing Partner of The Cromeens Law Firm, PLLC, with over 17 years of experience in construction, real estate, and business law. A published author and passionate advocate for contractors, she has dedicated her career to protecting the businesses her clients have built. Karalynn is on a mission to educate subcontractors on their legal rights, which inspired her books Quit Getting Screwed and Quit Getting Stiffed, as well as her podcast and The Subcontractor Institute.
