Should the sub be licensed?

Required for trade work in most states. Electrical, plumbing, HVAC require state trade licenses. Using unlicensed sub voids GC consumer protections, creates significant liability, and exposes GC to state contractor-board sanctions. Verify license at state board (California CSLB, Oregon CCB, etc.) before subcontracting.

What insurance is enough?

Industry standard: $1M general liability per occurrence / $2M aggregate; workers' comp per state law (mandatory for any sub with employees); auto $1M combined. Higher for high-risk trades or large projects. GC named as additional insured (not just certificate holder). Sub provides certificate of insurance before mobilization.

Can the sub file a mechanics lien?

Yes if not paid - subs and material suppliers have direct lien rights against the project property. Subcontractor agreements typically include lien-release procedures: Sub provides conditional lien releases at each payment milestone (releases lien when payment clears) and unconditional final release at final payment. Sub also indemnifies GC against any sub-tier claims (Sub's subs and suppliers).

What if the sub doesn't finish?

GC has rights under contract: notice and cure period (typically 14-30 days), then GC can complete with another sub at original sub's expense (cost-to-complete). State contractor boards investigate sub abandonment; license sanctions common. Insurance bond claims (license bond, performance bond if applicable) for amounts beyond what original sub completed. Document everything for insurance and legal purposes.

Can the sub modify scope without GC approval?

No - changes must be in writing per the agreement. Verbal changes are not enforceable for additional payment. Sub doing extra work without authorisation is at sub's own cost. GC has fiduciary obligation to protect owner against unauthorised changes; sub acting outside contract risks payment dispute.

Should the sub be licensed?

Required for trade work in most states. Electrical, plumbing, HVAC require state trade licenses. Using unlicensed sub voids GC consumer protections, creates significant liability, and exposes GC to state contractor-board sanctions. Verify license at state board (California CSLB, Oregon CCB, etc.) before subcontracting.

What insurance is enough?

Industry standard: $1M general liability per occurrence / $2M aggregate; workers' comp per state law (mandatory for any sub with employees); auto $1M combined. Higher for high-risk trades or large projects. GC named as additional insured (not just certificate holder). Sub provides certificate of insurance before mobilization.

Can the sub file a mechanics lien?

Yes if not paid - subs and material suppliers have direct lien rights against the project property. Subcontractor agreements typically include lien-release procedures: Sub provides conditional lien releases at each payment milestone (releases lien when payment clears) and unconditional final release at final payment. Sub also indemnifies GC against any sub-tier claims (Sub's subs and suppliers).

What if the sub doesn't finish?

GC has rights under contract: notice and cure period (typically 14-30 days), then GC can complete with another sub at original sub's expense (cost-to-complete). State contractor boards investigate sub abandonment; license sanctions common. Insurance bond claims (license bond, performance bond if applicable) for amounts beyond what original sub completed. Document everything for insurance and legal purposes.

Can the sub modify scope without GC approval?

No - changes must be in writing per the agreement. Verbal changes are not enforceable for additional payment. Sub doing extra work without authorisation is at sub's own cost. GC has fiduciary obligation to protect owner against unauthorised changes; sub acting outside contract risks payment dispute.

Subcontractor Agreement

Agreement between general contractor and subcontractor - scope, payment, lien releases, indemnification.

Customise

State / jurisdiction variant

General contractor — name

GC address

GC license

Subcontractor — name

Sub address

Sub license

Project address

Master GC contract reference

Subcontractor scope

Sub contract amount (USD)

Sub payment terms

Start / completion dates

Insurance requirements

Lien release requirement

Indemnification

Intellectual property / work product

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SUBCONTRACTOR AGREEMENT

═══════════════════════════════════════════════════════════════════════

GENERAL CONTRACTOR

Name: Pacific Home Renovations LLC
Address: 880 SE Hawthorne Blvd, Portland, OR 97214
License: OR CCB# 188432

SUBCONTRACTOR

Name: Cascade Electrical Contractors LLC
Address: 500 SW 4th Ave, Portland, OR 97204
License: OR CCB# 200543, Oregon Electrical License #C9-185

PROJECT

Address: 482 Elm Street, Apt 3B, Portland, OR 97214
Master contract: Master Contract: Taylor Kitchen Remodel - PHR-2026-04481, dated 2026-01-15

ARTICLE I - SCOPE OF SUBCONTRACTOR WORK

Electrical work for kitchen remodel:
- Install (8) new recessed lights with rough-in.
- Install (1) pendant fixture with switching.
- Install (3) new GFCI outlets at island.
- Install (4) new circuits as required.
- Install dishwasher rough-in (existing 20A circuit).
- All work to applicable code (Oregon Specialty Electrical Code 2024 + amendments).
- Coordinate with GC on sequencing.
- Pull all required permits; arrange inspections.
Exclusions: appliance hookup beyond rough-in (handled by GC); work outside kitchen.

ARTICLE II - PAYMENT

Subcontract amount: $6,800.00

Payment terms:

Net 14 days from approved invoice and rough-in inspection passed.
Mobilization: $1,000 at signing.
Progress: $4,000 upon rough-in inspection passed.
Final: $1,800 upon final inspection passed.
All payments contingent on GC receiving payment from owner for the same milestone.
Lien-release for each milestone (conditional on payment).

ARTICLE III - SCHEDULE

Start: 2026-03-12 (after demo complete). Substantial completion: 2026-04-30.

ARTICLE IV - INSURANCE

Sub maintains during the project:
- General liability $1,000,000 per occurrence / $2,000,000 aggregate.
- Workers' compensation per state law.
- Auto liability $1,000,000 combined single limit.
GC named as additional insured on liability policies.
Sub provides certificate of insurance before mobilization.

ARTICLE V - LIEN RELEASES

Sub provides:
- Conditional lien release at each progress milestone (releases lien rights upon payment clearing).
- Final unconditional lien release at final payment.
Sub indemnifies GC and Owner against any unpaid sub-tier claims (Sub's subs / suppliers).
Lien-release forms must comply with Oregon ORS 87 (or state-specific equivalent).

ARTICLE VI - INDEMNIFICATION

Sub indemnifies, defends, and holds harmless GC and Owner against:
- Claims arising from Sub's work (negligence, breach of contract).
- Claims by Sub's employees, sub-subs, or suppliers.
- Code violations resulting from Sub's work.
- Property damage caused by Sub.
This indemnification survives completion of the project.

ARTICLE VII - INTELLECTUAL PROPERTY & WORK PRODUCT

All drawings, specifications, shop drawings, as-builts, calculations, designs, software, and other work product Sub prepares specifically for this project (the "Deliverables") are assigned to GC upon payment, and to the extent eligible are "works made for hire."
Sub retains ownership of its pre-existing tools, methods, templates, and know-how ("Sub Background IP") and grants GC a perpetual, royalty-free license to use any Sub Background IP embedded in the Deliverables solely for the project.
Sub warrants the Deliverables do not infringe any third-party intellectual property right.

ARTICLE VIII - GENERAL PROVISIONS

1. Sub is bound by master contract terms applicable to subcontract scope.
2. Sub follows GC instructions on coordination, schedule, and quality.
3. Sub provides as-built drawings of installed electrical (where applicable).
4. Disputes resolved per master contract's dispute-resolution section.
5. State law governs (per master contract).

EXECUTION

_______________________________ Date: ____________________
Pacific Home Renovations LLC (General Contractor)

_______________________________ Date: ____________________
Cascade Electrical Contractors LLC (Subcontractor)

About this template

A subcontractor agreement governs the relationship between general contractor (GC) and a sub for specific scope of work. The most-critical elements: (1) Specific scope (avoid scope creep and unauthorised additional work); (2) Payment terms (typically pay-when-paid contingency on owner payment to GC, but state law often limits this); (3) Insurance requirements (general liability, workers' comp, auto - GC named as additional insured); (4) Lien release procedures (Sub indemnifies GC against sub-tier claims); (5) Indemnification (Sub holds harmless GC and Owner for Sub's work). Pay-when-paid clauses (Sub paid only after GC receives payment from Owner) are common but limited by state law: California Public Contract Code §10262.5 (public works) and Civil Code §8800 (private) impose timing constraints; many states prohibit pay-when-paid for unreasonable delays. Pay-if-paid clauses (Sub paid ONLY IF GC receives payment, with no obligation to pay if owner defaults) are even more restrictive and are unenforceable in many states. State-licensed subs (electrical, plumbing, HVAC) must hold appropriate trade licenses; using unlicensed subs can void GC consumer protections and create significant liability. Insurance is non-negotiable: Sub without proper coverage exposes GC and Owner to workplace-injury claims (workers' comp), liability claims, and property damage claims. Lien releases at each payment milestone protect GC against sub-tier liens against the property; missing this protection can result in GC paying multiple times for the same work. Indemnification clauses must comply with state anti-indemnity statutes - many states prohibit indemnification for the indemnitee's own negligence (California Civil Code §2782; similar elsewhere).

When to use it

GC retaining subcontractor for specific trade work.
Multi-tier construction with general + subs.
Subcontract under master contract framework.
Public-works projects (specific public-works sub agreements).
Specialty-trade work (electrical, plumbing, HVAC).

What to include

GC and sub identification with licenses.
Project and master contract reference.
Specific sub scope.
Payment terms with pay-when-paid framework.
Schedule.
Insurance requirements with GC additional insured.
Lien release procedures.
Indemnification.
Intellectual property / work-product assignment (drawings, designs, deliverables).

Frequently asked

Generally yes, but with state-law limitations. California Public Contract Code §10262.5 limits pay-when-paid on public works. State prompt-payment laws (California Civil Code §8800; Oregon ORS 701.620) limit how long GC can hold sub payments after receiving owner payment. Pay-if-paid clauses (Sub paid ONLY IF owner pays) are unenforceable in many states (West Virginia, Wisconsin, others) - they shift owner payment risk entirely to Sub. State-by-state variation; consult counsel.

⚠ Legal disclaimer. State law governs subcontractor relationships heavily. Pay-when-paid and pay-if-paid clauses face state-law limitations (California, Wisconsin, West Virginia, others have specific rules). State licensing for trade subs (electrical, plumbing, HVAC) is mandatory; using unlicensed subs voids consumer protections. Anti-indemnity statutes (California Civil Code §2782; similar elsewhere) limit indemnification scope. For commercial or large residential projects, consult construction attorney for state-specific compliance.

Jurisdiction: United States — state mechanic’s lien + prompt-payment statutes for subcontractors (Cal. Civ. Code §§8400-8494 + Cal. Bus. & Prof. Code §7108.5; Tex. Prop. Code §§53.051-53.106 + Ch. 28; Fla. Stat. §§713.06-713.08 + §218.735; NY Lien Law §3 + Gen. Bus. Law §756); AIA Contract Documents A401 (Owner-Subcontractor) + A201 §5; federal Miller Act 40 USC §§3131-3134 + state Little Miller Acts for public projects.

Last reviewed: 2026-05

Reviewed by ScoutMyTool — consult a licensed attorney for binding use.