South Carolina Mechanic’s Lien–Using a Notice of Project Commencement
In order to file a mechanic’s lien in South Carolina, lien claimants need certain information to fill out their forms. South Carolina has a solution to this dilemma by allowing a general contractor to file what is called a Notice of Project Commencement. Unlike other states in which the owner typically files such a notice, in South Carolina it is filed by the general contractor.
The purpose is to let other persons down the chain of title, including subcontractors and material suppliers, to receive needed information as to the general contractor, the owner, and description of the project. The purposes is to allow potential lien claimants to use this information for their pre-lien notices.
So why should a general contractor file such a form? There is actually a benefit. It is done by filing with the court and posting at the jobsite. If done, it may give the general contractor a payment defense against potential mechanic’s liens by a sub- subcontractor.
Four years, South Carolina general contractors had a problem in making payments to their subcontractors. One could make a full payment to a first-tier subcontractor, but if that money did not filter down to a sub-sub, that company could file it’s South Carolina mechanic’s lien. In essence, this may require the general contractor to pay twice.
The legislature of South Carolina changed this result by statute section 29-5-20. If the general pays it’s subcontractors in full, sub- subcontractors cannot file their mechanic’s lien. So if the sub does not in turn pay its lower tiered subcontractors, the general would not be liable.
For these reason, it is highly recommended that South Carolina general contractors receive lien waivers for all the payments to the subs. This will prevent the filing of a South Carolina mechanic’s lien.