Does a subcontractor need to be licensed?

In most states, yes. Specialty trades such as plumbing, electrical, HVAC, and roofing typically require state or local licensing. Operating without a required license can make the contract unenforceable and expose the contractor and subcontractor to penalties. Always verify license requirements in the project's state.

Can a subcontractor file a lien if not paid?

Yes. Every US state grants subcontractors statutory lien rights (mechanic's or materialman's lien) against the property where work was performed. A lien can cloud the property title and prevent a sale or refinancing. General contractors should require lien waivers tied to each payment milestone.

What insurance does a subcontractor need?

At minimum: Commercial General Liability (CGL) insurance with limits appropriate to the project value (typically $1M–$2M per occurrence), Workers' Compensation as required by state law, and commercial auto coverage for project vehicles. The GC should be named as an additional insured on the CGL policy.

What is a pay-when-paid clause and is it enforceable?

A pay-when-paid clause conditions the contractor's payment to the subcontractor on the contractor first receiving payment from the project owner. Enforceability varies by state — California, Wisconsin, and several others restrict or void these clauses. Even in states that allow them, courts often interpret them narrowly.

Free Subcontractor Agreement Template — Fill Out & Download Instantly

Free — No Sign-Up RequiredPDF & WordUpdated April 9, 2026

A subcontractor agreement is a binding contract between a general contractor and a subcontractor (or specialty trade contractor) that defines the terms under which the subcontractor will perform a specific portion of work on a construction or services project. This template covers all critical provisions including detailed scope of work, project name and address, start and completion dates, contract amount, payment schedule, license and insurance requirements, and independent contractor status.

⚠️ Legal Disclaimer: This template is attorney-reviewed and built to US legal standards. It does not substitute for professional legal advice. For complex situations, we recommend consulting a licensed attorney.

Document Completeness8%

Governing State*

General Contractor Name*

Full legal name of the general or prime contractor

Contractor Address*

Subcontractor Name*

Subcontractor Address*

Subcontractor License Number

State contractor license number, if required for this trade

Project Name*

Project Address*

Scope of Work*

Be as specific as possible — include materials, standards, and deliverables

Work Start Date*

MM/DD/YYYY

Completion Date*

MM/DD/YYYY

Total Contract Amount*

Payment Terms*

Required Liability Insurance Amount*

Minimum general liability coverage the subcontractor must maintain

Include Independent Contractor clause

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SUBCONTRACTOR AGREEMENT

This Subcontractor Agreement ("Agreement") is entered into as of [Work Start Date], by and between:

[General Contractor Name] ("Contractor")

Address: [Contractor Address]

and

[Subcontractor Name] ("Subcontractor")

Address: [Subcontractor Address]

1. PROJECT

Project Name: [Project Name]

Project Address: [Project Address]

2. SCOPE OF WORK

Subcontractor agrees to perform the following work ("Work") in a professional and workmanlike manner, in accordance with all applicable building codes, regulations, and the project's construction documents:

[Scope of Work]

Subcontractor shall furnish all labor, tools, equipment, and materials necessary to complete the Work unless otherwise specified above. Any work not expressly included in this scope requires a written change order signed by both parties.

3. SCHEDULE

Work Start Date: [Work Start Date]

Substantial Completion Date: [Completion Date]

Subcontractor shall begin Work on the Start Date and prosecute the Work diligently to achieve Substantial Completion by the Completion Date. Subcontractor shall coordinate with Contractor and other trades to avoid delays. Time is of the essence in this Agreement.

4. CONTRACT AMOUNT AND PAYMENT

Total Contract Amount: $[Total Contract Amount]

Payment Terms: milestone

Contractor shall pay Subcontractor in accordance with the payment terms stated above. Subcontractor shall submit invoices or applications for payment in the format required by Contractor. Payment is contingent upon Contractor receiving payment from the project owner for the corresponding work (pay-when-paid), unless prohibited by applicable state law.

Contractor may withhold payment for: (a) defective or incomplete Work; (b) claims or liens filed against the project; (c) reasonable evidence that the cost to complete the Work will exceed the unpaid Contract Amount; or (d) Subcontractor's failure to comply with this Agreement.

5. CHANGE ORDERS

No changes to the scope, schedule, or Contract Amount shall be made without a written change order signed by both Contractor and Subcontractor. Subcontractor shall not perform additional work without written authorization. Unauthorized extra work will not be compensated.

6. INSURANCE

Subcontractor shall procure and maintain throughout the term of this Agreement:

a) Commercial General Liability insurance with limits of not less than $[Required Liability Insurance Amount] per occurrence;

b) Workers' Compensation insurance as required by the laws of [Governing State];

c) Automobile liability insurance covering all vehicles used in connection with the Work.

Subcontractor shall name Contractor as an additional insured on its CGL policy and provide a certificate of insurance before commencing Work.

7. INDEMNIFICATION

Subcontractor shall defend, indemnify, and hold harmless Contractor and the project owner from and against any claims, damages, losses, and expenses, including attorney's fees, arising out of or resulting from the performance of Subcontractor's Work, provided that such claims are caused by the negligent acts or omissions of Subcontractor, its employees, or its sub-subcontractors.

8. INDEPENDENT CONTRACTOR STATUS

Subcontractor is an independent contractor and not an employee, agent, joint venturer, or partner of Contractor. Subcontractor is responsible for all federal, state, and local taxes on compensation received under this Agreement, including self-employment taxes. Contractor will not withhold income taxes or pay employment taxes on Subcontractor's behalf. Subcontractor has no authority to bind Contractor to any obligation.

9. WARRANTY

Subcontractor warrants that all Work will be free from defects in workmanship and materials for a period of one (1) year from the date of Substantial Completion. Subcontractor shall promptly correct any defective Work at no additional cost to Contractor or the project owner.

10. TERMINATION

Contractor may terminate this Agreement for cause upon written notice if Subcontractor: (a) fails to prosecute the Work with diligence; (b) fails to correct defective Work within 48 hours of notice; (c) becomes insolvent; or (d) otherwise materially breaches this Agreement. Upon termination for cause, Contractor may complete the Work using other means and deduct the cost from any amounts owed to Subcontractor.

Either party may terminate this Agreement for convenience upon seven (7) days' written notice. In such event, Subcontractor shall be compensated for all Work satisfactorily completed through the termination date.

11. GOVERNING LAW

This Agreement shall be governed by the laws of the State of [Governing State]. Any disputes arising hereunder shall be resolved in the appropriate courts of [Governing State].

12. ENTIRE AGREEMENT

This Agreement constitutes the entire agreement between the parties concerning the Work and supersedes all prior negotiations, representations, or agreements. Modifications must be in writing and signed by both parties.

IN WITNESS WHEREOF, the parties have executed this Subcontractor Agreement as of the date first written above.

_________________________________

[General Contractor Name]

General Contractor

Date: _______________

_________________________________

[Subcontractor Name]

Subcontractor

Date: _______________

Document Completeness8%

Governing State*

General Contractor Name*

Full legal name of the general or prime contractor

Contractor Address*

Subcontractor Name*

Subcontractor Address*

Subcontractor License Number

State contractor license number, if required for this trade

Project Name*

Project Address*

Scope of Work*

Be as specific as possible — include materials, standards, and deliverables

Work Start Date*

MM/DD/YYYY

Completion Date*

MM/DD/YYYY

Total Contract Amount*

Payment Terms*

Required Liability Insurance Amount*

Minimum general liability coverage the subcontractor must maintain

Include Independent Contractor clause

What Is a Subcontractor Agreement Template?

When Do You Need It?

You need a subcontractor agreement whenever a general contractor engages a specialty trade or services provider to complete a defined scope of work as part of a larger project. This agreement is essential for construction projects of any size, home renovation and remodeling work, specialty installations, and any situation where an independent subcontractor is being paid to deliver defined results. Without a written agreement, disputes about scope, payment, delays, and liability become extremely difficult to resolve..

What's Included in This Template

Contractor and subcontractor identification
Project name, address, and description
Detailed scope of work
Start date and completion date
Contract amount and payment terms
License number verification
Insurance and indemnification requirements
Independent contractor acknowledgment
Change order process
Warranty obligations
Termination provisions
Governing state and dispute resolution

How to Fill It Out

Identify the Contractor and Subcontractor — Enter the full legal name and address of both the general contractor and the subcontractor. For business entities, use the registered company name. Include the subcontractor's contractor license number, as this is required for enforcement in most states.

Define the Project and Scope of Work — Provide the project name and address, then write a detailed scope of work describing exactly what the subcontractor will deliver. Be specific about materials, specifications, and standards. A vague scope of work is the most common cause of subcontractor disputes.

Set Payment Terms and Schedule — Enter the total contract amount and select payment terms — whether milestone-based, monthly progress payments, or a lump sum upon completion. Clear payment terms protect the subcontractor's cash flow and set expectations for the contractor.

Confirm Insurance and Independent Contractor Status — Enter the required insurance amount and confirm whether an independent contractor clause applies. The independent contractor clause is critical for tax purposes and limits the contractor's liability for the subcontractor's employees.

Legal Requirements & Notes

Subcontractor agreements in the US are governed by state contract law, construction statutes, and in some cases federal regulations. Key considerations:

Contractor Licensing: Most states require specialty trade contractors (plumbers, electricians, HVAC, roofers) to hold a valid state license. Contracts with unlicensed contractors may be unenforceable in states like California, Florida, and Arizona.

Mechanic's Liens: Subcontractors have statutory lien rights in all 50 states. A subcontractor who is not paid can file a mechanic's lien against the property. Include a lien waiver exchange process tied to payment milestones.

Pay-When-Paid Clauses: Many states restrict or prohibit pay-when-paid clauses that condition subcontractor payment on the contractor receiving funds from the owner. California, Wisconsin, and several other states impose limits on these provisions.

Workers' Compensation: Misclassifying employees as subcontractors is a serious legal risk. Ensure the subcontractor carries workers' compensation insurance, or the general contractor may be liable for injuries to the sub's workers.

Prompt Payment Acts: Most states have prompt payment statutes that require contractors to pay subcontractors within a set number of days of receiving payment. Violations may trigger interest penalties.

Prevailing Wage: On public projects, federal Davis-Bacon Act or state prevailing wage laws may require subcontractors to pay workers at mandated rates.

Frequently Asked Questions

A general contractor (GC) is hired directly by the project owner and manages the overall project. A subcontractor is hired by the GC to perform a specific portion of the work — for example, plumbing, electrical, or drywall. Subcontractors typically have no direct contractual relationship with the project owner.

Free Subcontractor Agreement Template — Fill Out & Download Instantly

SUBCONTRACTOR AGREEMENT

1. PROJECT

2. SCOPE OF WORK

3. SCHEDULE

4. CONTRACT AMOUNT AND PAYMENT

5. CHANGE ORDERS

6. INSURANCE

7. INDEMNIFICATION

8. INDEPENDENT CONTRACTOR STATUS

9. WARRANTY

10. TERMINATION

11. GOVERNING LAW

12. ENTIRE AGREEMENT

What Is a Subcontractor Agreement Template?

When Do You Need It?

What's Included in This Template

How to Fill It Out

Legal Requirements & Notes

Frequently Asked Questions

Related Templates

Construction Contract

Service Agreement

Roofing Contract Template