• An owner or contractor cannot waive or impair the lien rights of others. It is unclear whether a party can waive its own lien rights by contract before performing any work.
• Arizona’s mechanic lien laws provide statutory Lien Waiver forms which should be used each time a progress payment is made and at the completion of a project.
• “Paid if Paid” is eforced if explicit.
• “Pay when Paid” suggests time for payment.
• Pay-when-paid clause in the subcontract generally do not create a condition precedent to payment unless the contractual language demonstrates the parties' “unequivocal intent" that the subcontractor will only be paid if the contractor is paid.

Retainage Provisions

Public

• 34-221. Contract with successful bidder; payments to contractor; security; recovery of damages by contractor for delay; progress payments.  The rate of retainage is 10 percent of the amount of each pay estimate to be paid to the contractor within sixty days after completion or filing notice of completion of the contract. When the contract is fifty per cent completed, one-half of the retainage is released. Thereafter,if work is deemed satisfactory, no more than 5 percent may be withheld. In lieu of retainage, a contractor may deposit securities. Upon final payment, the contractor is entitled to all interest earned on the deposited securities. When a contractor substitutes securities, a subcontractor is also entitled to substitute securities. Upon completion and acceptance of each separate building, public work, or division of the contract, payment may be made in full.

Private

• 32-1129.01. Progress payments by owner; conditions; interest.  Owners may withhold a "reasonable amount of retention." They are permitted to withhold only an amount sufficient to pay the direct expenses the owner reasonably expects to incur to correct any items set forth in the statute such as defective work, damage, or reasonable evidence that the contract cannot be completed. For a full list of statutory items see ARIZ. REV. STAT. § 32-1129.01(d). On the written request of a subcontractor, the owner shall notify the subcontractor within five days after the issuance of a progress payment to the contractor. On the written request of a subcontractor, the owner shall notify the subcontractor within five days after the owner releases retention or makes the final payment to the contractor on the construction contract.