Private Speed Bumps

• South Carolina is an UNPAID BALANCE lien state.
• Remote contractors in South Carolina are defined as parties having a direct contractual relationship with a subcontractor of a bonded contractor, but no contractual relationship, expressed or implied, with the bonded contractor. The requirements for maintaining lien and bond rights differ according to the party with whom a subcontractor, sub-subcontractor or materialman contracts.
• Anyone with an interest in the property may file a bond that replaces the real property as security for the claim and discharges the real property from the lien.
• Leasehold Interests: General contractors, subcontractors and others providing labor or materials for tenant improvements should ensure that the landlord (owner of the property) has consented to the work. South Carolina courts have ruled that the owner/landlord of property will not be liable to the lien claimant unless there is an express or implied agreement that the owner/landlord may be held liable for the work performed.

Notice of Commencement Speed Bumps

• While there is no affirmative duty on general contractors to file a Notice of Project Commencement, the failure to file this notice strips general contractors of certain defenses to mechanic's liens filed by remote claimants. While an owner always has a paid-in-full defense and a right to pro rate just claims based upon the contract balance owed to the general contractor, general contractors do not have such defenses in the event remote claimants file liens and the general contractor has failed to file a Notice of Project Commencement.
• The owner or contractor in privity with the owner may file a notice of commencement within 15 days of beginning work on the project. If notice of commencement is filed, no subcontractor or supplier to a subcontractor not in privity with the contractor can file a lien unless it has first filed a notice of furnishing labor or materials;
• If a general contractor fails to file a Notice of Project Commencement properly, then Section 29-5-20(B) of South Carolina Title 29 no longer applies, which means that a sub-subcontractor or materialman can seek payment using a mechanic's lien for amounts greater than what the subcontractor is owed by the general contractor.
• The Notice of Project Commencement shall contain the following information
  
  (1) the name and address of the person filing the notice of commencement;
  (2) the name and address of the owner or developer;
  (3) a general description of the improvement; and
  (4) the location of the project.
• Other requirements for the Notice of Project Commencement to be valid:
  (1) the notice must be filed with the clerk of court or register of deeds in the county or counties where the real property is located;
  (2) the notice must be filed within fifteen days of the commencement of work and must be accompanied by a filing fee of fifteen dollars to be deposited in that county's general fund;
  (3) The name and address of the general contractor must be posted at the job site; and
  (4) A copy of the notice also must be posted at the job site, and the location notice must contain the following statement: "The contractor on the project has filed a notice of project commencement at the county courthouse. Sub-subcontractors and suppliers to subcontractors shall comply with Section 29-5-20 when filing liens in connection with this project."

Notice Speed Bumps

• Important Reminder: Claim amounts are required on all statutorily required NTOs.
• First and last furnishing dates are required on NTOs.

Mechanic's Lien Speed Bumps

• A lien claimant may gain priority over future advances made pursuant to a previously recorded mortgage by filing its Notice of Mechanic's Lien and serving notice on the prior recorded mortgage holder.

Foreclosure Lien Speed Bumps

• The mortgagee should be served in order to allow the lien to prevail over future advances on the construction loan. Attorney fees are awarded to the prevailing party in the foreclosure action. The amount of lien should not be overstated.
• The South Carolina mechanic's lien statutes allow for the "prevailing party" to recover its attorneys fees and expenses of litigation in enforcing or defending against the mechanic's lien. The right of the prevailing party to an award of attorneys fees in mechanic's lien cases is mandatory. However, the amount of the attorney's fee award falls within the discretion of the trial court.

Public Speed Bumps

• All claimants who do not have a contract with the general contractor, who wish to preserve their right to claim the full amount due to them must serve a preliminary notice. If the claimant does not serve this notice, then the claimant's claim cannot exceed the amount due to the claimant's customer. NOTE, however, that if the general contractor does not file the Notice of Project Commencement within 15 days of beginning the project, then preliens are not necessary, though they are still recommended.
• The South Carolina Supreme Court ruled that the Suppliers' Payment Protection Act creates a private cause of action and that an unpaid subcontractor or supplier may bring an action for payment directly against a governmental entity when the governmental entity has not fulfilled its duty to ensure that a proper payment bond is in place for the particular project. The contract must be in excess of fifty thousand dollars and the court limited the public owner's liability to the amount the public owner owed the prime contractor when it first received notice of non-payment.