A mechanic's lien is a statutory mortgage to secure payment of work performed or materials furnished in the erection, alteration, or repair of a building or structure upon privately-held real estate. The lien arises automatically when the labor is performed or the material is incorporated into the structure, but when the person claiming the lien was employed by someone other than the owner, he must notify the owner of the furnishing of labor or material in order for the lien to attach to the property. This is typically called a "notice of furnishing." S.C. Code Section 29-5-40 provides the requirements a subcontractor or materialman must meet in order to put the owner on notice:
Whenever work is done or material is furnished for the improvement of real estate upon the employment of a contractor or some other person than the owner and such laborer, mechanic, contractor or materialman shall in writing notify the owner of the furnishing of such labor or material and the amount or value thereof, the lien given by Section 29-5-20 shall attach upon the real estate improved as against the true owner for the amount of the work done or material furnished. But in no event shall the aggregate amount of liens set up hereby exceed the amount due by the owner on the contract price of the improvement made.
The South Carolina Court of Appeals recently provided guidance regarding this statute in Ferguson Fire and Fabrication, Inc. v. Preferred Fire Protection, LLC, 397 S.C. 379 (Ct. App. February 29, 2012). The Court of Appeals held that in order for the lien to attach to the real estate, the written notice to the property owner must:
- be delivered after the services are performed or the materials are furnished;
- identify the amount of services performed or materials furnished; and
- include a demand for payment.
The procedures proscribed by the Court of Appeals are contrary to the typical industry practice of sending notices of furnishing prior to furnishing all labor or material. Subcontractors and suppliers are cautioned to review, and possibly, revise their notice of furnishing procedures to ensure that they meet with the guidelines handed down by the Court of Appeals.
Note: A mechanic's lien is purely statutory. Therefore, the requirements of the statute must be strictly followed. Please consult an attorney to protect or enforce any potential lien rights.