This article was written by R. Bryan Barnes, a fellow shareholder in my firm.  

 Mechanic’s liens are creatures of statute. As a result, they are at various times tricky and misunderstood. The misunderstandings have given rise to many myths. Some of the most prevalent myths about mechanic’s liens are as follows:

1. Warranty work will not extend the time for filing a mechanic’s lien. No, the 90 days within which to file a mechanic’s lien will be considered to start after any warranty work is performed. Consequently, if the most of the job is finished but the supplier or subcontractor is called back out to do warranty work, then he has 90 days from the last day he performed warranty work to file his lien.

2. Attorneys fees are collectable without going to trial or a hearing in a mechanic’s lien action. No, the better view is that attorney’s fees are only collectable when the lien claimant is the "prevailing party". In order to be a "prevailing party" the claimant must be "the one who successfully prosecutes the action...prevailing on the main issues...and in his favor the decision or verdict is rendered and judgment entered."

3. The materials must be actually used in the structure or else there is no lien. No, where the supplier does not have a contract directly with the owner the materials must merely be furnished "for the improvement of real estate." Where the contract is directly with the owner the materials must be "actually used in the erection, alteration, or repair of the building or structure."

4. Overhead and profit are not collectable under a mechanic’s lien. No, the South Carolina Supreme Court has specifically held that overhead and profit are properly collectable under a mechanic’s lien theory.

5. Where one supplier perfects a mechanic’s lien and others who are owed money on the same job do not perfect a mechanic’s lien, then all will split the amount owed to the general contractor on a pro rata basis. No, where only one party has properly perfected a mechanic’s lien he is entitled to priority over all other suppliers of material and labor to that project. If they have not filed a mechanic’s lien claimant is entitled to be paid in full before they are entitled to be paid anything.

6. Where the claimant’s contract includes an arbitration clause, he is unable to perfect a lien because he cannot file suit. No, it is perfectly proper to engage in the arbitration proceeding and at the same time perfect a mechanic’s lien for the purpose of enforcing the arbitration judgment.

7. The reasonable rental value of tools, and equipment used on a project is not lienable. No, the General Assembly in 1990 amended the mechanic’s lien statute to give a person who supplies tools, appliances, equipment, etc., lien rights to the extent of the reasonable rental value of the equipment for the period of actual use.

8. A mechanic’ s lien is an effective tool against a publicly owned project. No, a school courthouse, city hall or other publicly owned property cannot be foreclosed by a mechanic’s lien. The doctrine of sovereign immunity prevents suits against the government except in the cases where the government has expressly allowed suits. Consequently, a mechanic’s lien cannot be foreclosed. However, the Miller Act and the South Carolina Consolidated Procurement Code both require bonds for construction under most circumstances on public projects. Consequently, the claimant has security for its claim in the form of a bond and not in the form of a land as with a mechanic’s lien.

9. A mechanic’s lien only covers the building and land where the materials we used. No, a mechanic’s lien may cover the entire development even if the materials were not used on every square foot. For example, a subcontractor used for the purpose of paving and grading a new subdivision is entitled to a lien over the entire subdivision, not just the streets which were paved and graded.