The South Carolina Mechanic’s Lien Statute contains a provision that, if followed, protects owners and general contractors from liability on a mechanic’s liens of material suppliers and/or sub-subcontractors to a subcontractor in excess of the amount owed to the subcontractor.  This provision is found in S.C. Code Ann. § 29-5-23.

Failure to file a Notice of Project Commencement allows sub-subcontractors and material suppliers to a subcontractor to seek payment through a mechanic’s liens for amounts that exceed the amount owed to the subcontractor by the owner of 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."

What does this statute mean for owners and general contractors? 

Owners and general contractors need to make sure that a Notice of Project Commencement is filed on all projects to limit exposure to sub-subcontractors and material suppliers caused by a subcontractor that fails to pay sub-subcontractors and material suppliers.  By filing the Notice of Project Commencement, an owner and general contractor can limit the amounts owed under a mechanic’s lien to the amount owed to the subcontractor.  If a Notice of Project Commencement is not filed, sub-subcontractors and material suppliers to a subcontractor can file a mechanic’s lien on the aggregate of funds unpaid on the project.

What does this statute mean for sub-subcontractors and material suppliers to subcontractors?

Sub-subcontractors and material suppliers on projects in which a valid Notice of Project Commencement has been filed will need to be extremely diligent in making sure that payments are timely made and that Notice of Furnishings are timely served since collection on a mechanic’s lien will be limited to the amount owed to the subcontractor.