A pay-if-paid clause is a strict conditional payment provision in a subcontract. It states that the GC has no obligation to pay the sub unless and until the owner pays the GC for that work. If the owner never pays (bankruptcy, dispute, default), the sub never gets paid. This is materially different from a pay-when-paid clause, which simply gives the GC a reasonable time to pay after receiving owner funds but does not condition payment entirely on owner payment.
Pay-if-paid clauses are unenforceable in some states (California, New York, North Carolina, others) because courts view them as shifting unrelated risk onto subs. In states where they are enforceable, the language must be explicit; courts construe ambiguous clauses as pay-when-paid rather than pay-if-paid. Subs faced with a pay-if-paid clause should: try to negotiate it out, file mechanics liens promptly when payment lags, monitor owner solvency, and require shorter notice and cure deadlines on payment delay.