Texas subcontractor agreement checklist: payment terms and records to review

Read the whole agreement package

A subcontract is often more than the document carrying the signature block. It may incorporate the prime contract, drawings, specifications, schedule, safety rules, insurance requirements, bid proposal and later addenda. Ask for the referenced documents and identify which version controls when they conflict.

Prepare a simple document register: title, revision date, received date and person responsible for review. If a provision refers to an online manual or a document you have not received, record that as an open item. Signing a short cover page without the incorporated terms can leave the office unaware of the billing or dispute process.

This guide is an office review framework, not a ready-to-sign legal contract. If you searched for a subcontractor agreement template, use the sections below to assess one with a qualified adviser. Do not assume a template from another state handles the Texas project, trade or allocation of risk correctly.

Confirm the parties, project and exact scope

Use the correct legal names, not just logos or trade names. Identify who can sign for each entity, where notices go and who may authorize changes. The customer's accounts-payable contact and the field supervisor may have different authority. Compare those details with vendor onboarding and the project records.

Define included work, exclusions, drawing revisions, quantities, assumptions and interfaces with other trades. For example, install twenty light fixtures from Drawing E-04 Revision C is clearer than electrical work complete. If programming, trenching, permits or testing are excluded, make the allocation visible before the crew starts.

Map the contract tier too. A contract with a subcontractor rather than the original contractor places your firm at a different point in the chain. Use the lower-tier subcontractor guide when that relationship applies.

Payment terms: identify the trigger, not just net 30

Texas Property Code Chapter 28 addresses prompt payment and disputed withholding in covered private-project relationships. Business & Commerce Code Chapter 56 separately addresses contingent-payment clauses and contains exclusions and limits. Do not reduce either framework to a promise that every invoice must be paid a fixed number of days after its printed date.

If payment is conditioned on another party's receipt, request legal review of the actual wording. Our pay-if-paid guide separates a payment condition from timing language, and the prompt-payment guide explains the statutory starting points.

Agree how changes become billable

Identify who can direct an extra, what written authorization is expected, how price and time are established and when a notice or quote must be submitted. A signed daily ticket may confirm hours without approving a lump-sum change price. Decide how those records work together rather than assuming one signature serves every purpose.

Use a change log with the request date, scope, responsible person, proposed amount, approval status and billing reference. Separate approved changes from pending requests. If urgent work is directed before a formal change order, preserve the instruction and escalate the authorization question promptly.

Keep contract notice requirements and statutory claim notices in separate calendars. The customer may require a quick commercial notice of an extra even though a lien-related date follows a different rule. The unpaid change-order guide explains the record trail to preserve.

Worked example: a $50,000 subcontract with a pending extra

Fictional example: a subcontract has a $50,000 base price and a $4,000 approved change. A later $2,000 request is still pending. The approved contract total is $54,000, not $56,000. If completed approved work is $30,000 and the agreed payment application holds 10% retainage, that application's gross work is $30,000, retained amount $3,000 and current requested amount $27,000 before other supported adjustments.

If $20,000 is received against that request, the remaining current-request balance is $7,000; the $3,000 retained sum remains separately tracked. The pending $2,000 extra should not disappear, but it should not be labeled approved or collected either. The invoice, change log, retainage ledger and bank allocation need to tell the same story.

These are bookkeeping assumptions for the example, not a statement that 10% is required or lawful in every situation. The real contract and applicable law control. A clear review before signing helps the office know which documents establish each number.

Review waivers, insurance and dispute terms before the first problem

Identify the required waiver documents and whether they match the payment event. A request for an unconditional waiver while funds are still pending deserves review. See the Texas waiver forms guide; do not rewrite a statutory form casually to match a generic template.

Have indemnity, insurance, bond, damages, termination and suspension terms reviewed for the actual trade and project. A certificate of insurance is not a complete policy review. A payment bond and performance bond also serve different tasks. List the required documents, who supplies them and when they expire.

For disputes, locate the notice address, response deadlines, negotiation or mediation steps, arbitration or court provisions and record-retention requirements. An office should know where to send a contract notice before an emergency. Do not stop work or sign a release solely because a template includes a clause that appears favorable.

Before-signature subcontract checklist

• Legal entities, signing authority, project and contract tier confirmed.
• All incorporated documents received and versioned.
• Scope, exclusions, quantities and trade interfaces reconciled with the estimate.
• Price basis, approved changes, billing cutoff and required packet defined.
• Payment triggers, contingent language, retainage and disputed withholding reviewed.
• Change authorization and commercial notice procedures assigned to a responsible person.
• Waiver, insurance, bond and closeout requirements understood.
• Termination, suspension, dispute and formal-notice terms reviewed.
• Signed final copies and the approved document register stored together.

Subcontractor agreement FAQs

Can I use a free subcontractor agreement template? It can help identify topics, but it needs project-specific review. A free form is not proof that the risk allocation or Texas legal requirements are appropriate.

Is a purchase order enough? Its terms, incorporated documents and the parties' conduct matter. Read the complete package rather than judging only by the document's title.

What if work already started without a signed agreement? Preserve the actual communications and performance records. Do not backdate a signature. The unsigned-contract payment guide explains how to organize the situation.

Should every term be handled by the bookkeeper? No. The office can flag missing information and reconcile amounts; authorized management and qualified advisers should resolve legal and commercial risk before signature.