Construction Contract AttorneyLos Angeles & Glendale
We draft, negotiate, and enforce owner, prime, and subcontract agreements for Los Angeles and Glendale projects, before and after a dispute.
What should a California construction contract include?
A California construction contract should define the scope and drawings, the price and payment schedule, retention, the change order procedure, the schedule and any liquidated damages, insurance and indemnity, warranty terms, lien and stop notice waivers, and the dispute resolution forum. Home improvement contracts carry additional mandatory terms under Business and Professions Code section 7159, including specific notices and down payment limits.
At a glance
- Pay-if-paid
- Unenforceable in California (Wm. R. Clarke Corp. v. Safeco, 1997)
- Retention cap
- 5 percent on private contracts entered into on or after January 1, 2026
- Home improvement
- Down payment capped at $1,000 or 10 percent, whichever is less
- We represent
- Owners, developers, general contractors, subcontractors, and suppliers
A construction contract allocates the risk of delay, defects, changed conditions, and nonpayment, and California home improvement contracts must also include the terms and notices required by Business and Professions Code section 7159. DiJulio Law Group drafts and negotiates owner, prime, and subcontract agreements for projects in Glendale and Los Angeles.
Construction contract terms that decide California disputes
Los Angeles construction contracts are negotiated fast and litigated slowly. The clauses that decide outcomes are consistent: how change orders must be requested and approved, whether the contract contains a no-damages-for-delay provision, how retention is released, what the indemnity and additional insured obligations actually cover, whether pay-if-paid or pay-when-paid governs subcontractor payment, and what forum resolves disputes.
Residential work carries a further layer. California's home improvement contract statute imposes mandatory content and format requirements, restricts down payments, and requires specific notices. Non-compliance is not a technicality; it can affect a contractor's ability to enforce the contract and expose the license to disciplinary action, entirely apart from the merits of the underlying payment claim.
The firm drafts and negotiates these agreements for owners, developers, general contractors, and subcontractors, and litigates them when they fail. Contract work connects directly to payment disputes, mechanic's lien rights, and delay and change order claims; the remedies available later are largely fixed by the language agreed at the outset.
Payment terms written into the contract interact with California's prompt-payment and retention statutes, which are summarized on construction payment statutes.
Contract terms shape every later dispute. Owners buying or developing property should coordinate the construction agreement with the real estate transaction and with any zoning and land use approvals the project depends on. Contractors forming new entities for a project should address liability and ownership through business formation, and disputes that cannot be negotiated are often better handled through mediation before litigation. The complete practice is on the construction law page.
AIA vs. ConsensusDocs vs. custom construction contracts
Choosing a form
Standard forms from the AIA and ConsensusDocs give both sides a familiar starting point, while a custom contract fits an unusual project or risk profile. None of them is written for California law, so each needs revisions for lien waivers, retention, prompt payment, indemnity, and licensing rules before it is signed here.
| Feature | AIA documents | ConsensusDocs | Custom contract |
|---|---|---|---|
| Owner and contractor forms | A101–2017 agreement (stipulated sum) with A201–2017 general conditions | ConsensusDocs 200 agreement and general conditions (lump sum) | Drafted for the project |
| Subcontract forms | A401 owner-neutral subcontract family | ConsensusDocs subcontract series | Drafted to flow down the prime contract |
| Where you see it | Architect-designed commercial work | Contractor and owner groups that prefer its risk allocation | Developers and repeat owners with their own terms |
| California changes needed | Retention (Civ. Code § 8811), indemnity (§ 2782), lien waivers (§§ 8122, 8132–8138) | Same statutory checks | Same statutory checks, plus home improvement rules for residential work (Bus. & Prof. Code § 7159) |
| Main risk | Unmodified national terms that conflict with California statutes | Same | Gaps and ambiguities that a standard form would have covered |
The payment deadlines every California construction contract runs on
Statutory payment clock
California statutes set payment deadlines a contract can only partly change. Owners pay undisputed progress payments within 30 days of a proper demand, contractors pass subcontractor shares down within 7 days, and retention is due within 45 days after completion, with a 2 percent monthly penalty for wrongful withholding.
Late progress payments and late retention each carry a penalty of 2 percent per month in place of interest, plus attorney fees to the prevailing party (§§ 8800(c), 8818). The full table, including public works rules, is on our construction payment disputes page.
- Before work starts
License and down payment
Licensed at all times during the work (Bus. & Prof. Code § 7031). Home improvement down payments are capped at $1,000 or 10 percent, whichever is less (§ 7159.5 (opens in a new tab)).
- 30 days after demand
Owner pays progress payment
Unless otherwise agreed in writing, for any undisputed amount (Civil Code § 8800). Up to 150 percent of a disputed amount may be withheld.
- 7 days after receipt
Subcontractor share paid
Unless otherwise agreed in writing (Bus. & Prof. Code § 7108.5 (opens in a new tab)).
- 45 days after completion
Owner releases retention
Civil Code § 8812. Retention on contracts entered into on or after January 1, 2026 is capped at 5 percent (§ 8811).
- 10 days after receipt
Retention passed down
Each subcontractor's share of retention received by the direct contractor (§ 8814).
Construction contract clauses California law limits
Key clauses
Several common clauses are limited or void in California no matter how they are worded. True pay-if-paid clauses are unenforceable, retention is capped at 5 percent on newer private contracts, indemnity cannot cover a party's sole negligence, and an unlicensed contractor cannot sue to be paid. Contracts should be drafted around these rules.
Pay-if-paid
In Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882, the California Supreme Court held true pay-if-paid clauses unenforceable because they indirectly waive subcontractors' mechanic's lien rights. Civil Code § 8122 (opens in a new tab) voids any term that impairs another claimant's lien rights without a statutory release.
Retention
For private contracts entered into on or after January 1, 2026, retention may not exceed 5 percent of any payment or of the contract price, and subcontract retention cannot exceed the prime contract percentage (§ 8811 (opens in a new tab)). Exceptions cover certain unbonded subcontractors and residential projects of four stories or less that are not mixed use.
Indemnity limits
Indemnity for the promisee's sole negligence, willful misconduct, or design defects is void (§ 2782(a) (opens in a new tab)). For contracts entered into on or after January 1, 2013, a private owner cannot shift its own active negligence (§ 2782(c)), and subcontract indemnity cannot reach the general contractor's active negligence (§ 2782.05).
Unlicensed contractors
A contractor must be licensed at all times during the work to sue for payment, and the hiring party may sue to recover all compensation paid to an unlicensed contractor. Substantial compliance is available only to a contractor previously licensed in California who acted reasonably and promptly.
Home improvement contracts
Residential home improvement contracts must be in writing with the full contract amount, a schedule of payments tied to work, and a capped down payment, and the contractor may not take payment ahead of work performed or materials delivered unless bonded.
Liquidated damages
A per-day delay amount is valid unless the challenging party shows it was unreasonable when the contract was made. See delay claims and liquidated damages.
Managing PartnerR. David DiJulioRead profile- Office
- 330 North Brand Boulevard, Suite 1280, Glendale, California 91203
- Direct line
- (818) 502-1700 · rdd@dijuliolaw.com
- Courts
- Los Angeles County Superior Court, including the Glendale and Stanley Mosk courthouses.
- Focus
- Construction contracts, payment and lien claims, defects, delays, and project litigation for owners and contractors.
Construction contract matters we handle
For owners, developers, general contractors, subcontractors, and suppliers on Los Angeles and Glendale projects.
Owner & Prime Agreements
Negotiating and drafting owner-contractor agreements, including AIA and ConsensusDocs forms and heavily modified custom agreements for private commercial work.
Subcontracts & Flow-Down
Subcontract terms, flow-down provisions incorporating the prime contract, scope gaps between trades, and pay-if-paid and pay-when-paid clauses.
Change Order Procedures
Written change order requirements, notice deadlines, unit pricing, and the effect of proceeding with directed work before pricing is agreed.
Indemnity & Insurance
Indemnity scope, additional insured endorsements, waiver of subrogation, and the California limits on indemnity for an indemnitee's own negligence.
Home Improvement Compliance
Mandatory content, notices, and down payment limits for residential contracts, and the consequences of non-compliance in a payment dispute.
Termination & Suspension
Termination for cause and convenience, cure requirements, suspension of work for nonpayment, and the accounting that follows a termination.
Construction contract disputes that reach our office
Composite examples of the matters this practice handles. They illustrate common fact patterns and are not descriptions of specific client cases or predictions of any result.
The Verbal Change Order
An owner's representative directs additional work on site. The contractor performs, invoices, and is refused on the ground that the contract required written approval. Whether the work is compensable turns on waiver, course of conduct, and the exact notice language.
The Pay-If-Paid Clause
A subcontractor completes its scope on a Los Angeles commercial project and is told it will not be paid because the owner has not paid the general contractor. Whether that defense holds depends on the clause's precise wording and the remedies the subcontractor preserved.
The Non-Compliant Residential Contract
A contractor sues a homeowner for the balance on a remodel. The homeowner responds that the contract lacked required notices and exceeded the permitted down payment, converting a straightforward collection into a licensing and compliance fight.
First steps before you sign a construction contract
Check the license
Confirm the contractor's license and classification on the CSLB site for the whole planned period of work. Licensing affects every payment right that follows.
Read the notice clauses
Most contracts require written notice of claims and changes within a short window. Missing a notice provision is the most common way a good claim is lost.
Test the payment terms against statute
Retention, pay-if-paid, prompt payment, and lien waiver terms all have statutory limits in California. Mark any clause that conflicts before signing.
When a construction contract needs a lawyer's review
- You have been presented with a contract or subcontract you have not signed.
- Directed work is being performed without an executed change order.
- Payment has been withheld and you are considering suspending work.
- A termination notice has been served or is being contemplated.
- An indemnity or additional insured demand has been tendered to you.
- A residential contract may not satisfy California's mandatory content requirements.
California construction contract statutes and CSLB resources
- California Civil Code § 8811: Private Works Retention Cap (opens in a new tab)The 5 percent limit on retention for private contracts entered into on or after January 1, 2026, and its exceptions.
- California Civil Code § 2782: Construction Indemnity (opens in a new tab)The indemnity provisions that are void or unenforceable in construction contracts.
- California Business and Professions Code § 7031: Unlicensed Contractors (opens in a new tab)The bar on suits for compensation by unlicensed contractors and the right to recover amounts paid.
- Contractors State License Board: Check a License (opens in a new tab)The official lookup for a California contractor's license status, classifications, and bond history.
Construction contract questions California owners and contractors ask
What owners and contractors on Los Angeles projects ask about construction contract terms.
Are pay-if-paid clauses enforceable in California?
No, the California Supreme Court held in Clarke v. Safeco (1997) that true pay-if-paid clauses, which make the owner's payment a condition precedent to the general contractor's duty to pay a subcontractor, are unenforceable because they indirectly waive or forfeit the subcontractor's constitutionally protected mechanic's lien rights when the owner does not pay. A clause that only addresses the timing of payment is analyzed differently, so the exact wording matters.
How much retention can be withheld on a private California project?
For private contracts entered into on or after January 1, 2026, Civil Code section 8811 caps retention at 5 percent of each payment and 5 percent of the contract price, limits subcontract retention to the percentage in the prime contract, and awards attorney fees to the prevailing party in an enforcement action. The cap does not apply to certain subcontractors who fail to furnish a required bond after written notice, or to residential projects that are not mixed use and do not exceed four stories.
Can a subcontract make a subcontractor indemnify the general contractor for its own negligence?
Not for active negligence, because Civil Code section 2782.05 makes indemnity and defense clauses in construction contracts entered into on or after January 1, 2013 void to the extent the claim arises from the active negligence or willful misconduct of the general contractor, construction manager, or another subcontractor, or falls outside the subcontractor's scope of work. Residential SB 800 projects follow a parallel rule in section 2782(d). These protections cannot be waived by contract.
What happens if my contractor was not licensed?
Under Business and Professions Code section 7031, a contractor that was not duly licensed at all times during the work generally cannot sue to collect compensation for work that requires a license, and the person who hired the unlicensed contractor may bring an action to recover all compensation already paid. That makes licensing one of the first questions in any payment dispute. Courts allow substantial compliance only for a contractor previously licensed in California who acted reasonably and promptly.
What must a California home improvement contract include?
A California home improvement contract must be in writing and state the full contract amount, any down payment must not exceed $1,000 or 10 percent of the contract amount, whichever is less, and any payments before completion must follow a schedule tied to specific work, under Business and Professions Code section 7159.5 and the mandatory terms in section 7159. The contractor also may not accept payment that exceeds the value of work performed or materials delivered, unless bonded.
Should I use an AIA contract or a custom construction contract?
An AIA or ConsensusDocs form is a sensible starting point for many Los Angeles commercial projects because both sides recognize the structure, but neither is written for California law, so retention, indemnity, lien waiver, prompt payment, and licensing terms need revision before signing, and a custom contract makes sense when the project or risk allocation is unusual. The cost of revising a form is small compared with litigating a clause that conflicts with a statute.
Can a contract change California prompt payment deadlines?
Sometimes, because Civil Code section 8800 lets the owner and direct contractor agree otherwise in writing about the 30-day progress payment deadline and Business and Professions Code section 7108.5 allows a written agreement to change the 7-day subcontractor deadline, but public works retention rules in Public Contract Code section 7107 cannot be waived at all. Civil Code section 8122 separately voids terms that impair another claimant's lien rights. Read each clause against the specific statute.
When should a lawyer review a construction contract?
The most useful time for a lawyer to review a construction contract is before it is signed, when retention, indemnity, change order notice, and dispute resolution terms can still be negotiated, and the next most useful time is when the first notice deadline is approaching, because most claims are won or lost on whether notice was given on time. Send the draft, the plans, and the proposed schedule together.
Construction contract help in Los Angeles and Glendale
Construction claims on Los Angeles County projects are litigated in the county courts, and permit and inspection records are held by the local building department.
Talk to a Construction Attorney
The best moment to involve counsel is before signing, and the second best is at the first notice deadline. Send the contract and the correspondence.