A South Carolina Notice of Furnishing Labor or Materials is an important document for any lower tier project participants such as sub-subcontractors, or suppliers to subcontractors. This is an overlooked step that isn’t technically required but can have a serious impact on the ability to recover payment through a mechanics lien. The following is everything you need to know about a South Carolina Notice of Furnishing.
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Why send a South Carolina Notice of Furnishing
Generally speaking, the state of South Carolina doesn’t require preliminary notices to secure mechanics lien rights. However, there are not only practical benefits to sending one anyways, but there is also a situation where failure to send one could seriously impact the amount recoverable under a mechanics lien.
Securing full mechanics lien rights
If the general contractor to the project files a South Carolina Notice of Project Commencement, failure to send this notice can affect the amount that lower-tiered project participants can recover in through a mechanics lien. If a Notice of Commencement is filed, that then lower-tiered parties’ lien rights are limited to the amount owed by the GC to the subcontractor that hired them. Essentially, turning South Carolina into an “unpaid balance” state.
In order to counter this move, a contractor or supplier can send a Notice of Furnishing, also referred to as a Notice of Sub-Contract. This bypasses the protection afforded by the Notice of Commencement, ensuring mechanics lien rights for the full amount. Here is a hypothetical to show the importance of a Notice of Furnishing:
Let’s say that you are a tile supplier for a subcontractor on a home renovation project. At the beginning of the project, you had the wherewithal to send a Notice of Furnishing. You deliver the appropriate materials and submit your invoice for payment. The Owner releases funds to the GC, who in turn sends full payment to the subcontractor you were hired by. Then the sub skips town with your money.
The fact that you sent a Notice of Furnishing means that the GC can’t bring up the defense that your money was already paid to the subcontractor. Therefore, the GC is required to still pay you the full amount. If not, since the sub who hired you was paid in full, you’d have to go after the sub who hired you through litigation.
Requiring the general contractor to pay twice for the same work may seem like a steep penalty. But, most GC contracts impose a lot of project responsibilities; one of the main ones being, that they must ensure that all lower-tier participants are paid before releasing funds. The property owner is relying on the GC to make sure all payments are made to avoid the filing of a mechanics lien.
Sending notice even if not required
Even if there wasn’t a Notice of Commencement filed, it’s always a good idea to send a preliminary notice, even if it’s not required. The way payment is structured on a construction project can be a long, complicated chain; and the biggest contributing factors to payment issues are lack of communication and visibility. Sending a preliminary notice brings visibility to the project as a whole, and parties who aren’t normally in contact such as remote claimants and owners, are now aware of each other. This can go lengths to reduce the possibility of payment problems.
South Carolina Notice of Furnishing requirements
As you can see, a Notice of Furnishing is an incredibly important tool for ensuring that your mechanics lien rights can protect you to the fullest extent possible. Here are the practical requirements for a valid Notice of Furnishing.
There is no specific statutory form required for a Notice of Furnishing, but the law does provide certain information that should be included, such as:
- The name of the sub-sub or supplier claiming payment;
- Hiring party information;
- Description of labor or materials provided, along with the contract price or reasonable value;
- First and last dates of furnishing labor or materials (or the scheduled last day);
- The amount claimed to be due if any at the time.
The South Carolina court recently discussed these requirements in Furguson Fire v. Preferred Fire Protection. In that case, the court held that as long as actual notice is received, and the written notice contained the description of labor or materials along with their price or value, the Notice of Furnishing will still be considered valid.
As far as when to send a South Carolina Notice of Furnishing, there is no concrete deadline. Therefore, a notice can be filed at any time during the project. The courts even went so far as to state that this notice can be given before actually delivering labor or materials.
Anyone using a Notice of Furnishing should send it to the property owner by certified mail before filing a mechanics lien. If you are a “remote claimant” than a copy should also be sent to the general contractor as well. Such notices are deemed delivered when they are sent by certified mail.
Preliminary notices are always a good idea. The more communication on a project, the less likely payment problems will arise. Furthermore, if Notice of Commencement has been filed on the property, it would be foolish not to send one. No one walks on to a project anticipating payment problems, but unfortunately, they happen… all the time! South Carolina Notices of Furnishing are specifically designed to protect those parties that are far down the payment chain. The simple act of sending this notice can help ensure you get paid what you’ve earned.