About South Carolina Preliminary Notices
South Carolina is technically a non-notice state, that doesn’t specifically require preliminary notices to be provided by project participants on construction projects in the state. However, unlike some other non-notice states, South Carolina specifically contemplates preliminary notices that can have tangible, practical, and significant impacts to participants’ rights, if sent.
While South Carolina doesn’t mandate that preliminary notice be sent, it does provide for preliminary notices that have an effect if a participant chooses to send or file them. This means that despite not being required – sending preliminary notices in South Carolina is a good idea for more reasons than the fact that it’s always a good idea to send preliminary notice, even if not required.
Direct contractors may file a Notice of Commencement with the Clerk of Court or Register of Deeds for the county in which the property is located. While not mandatory, this notice provides some protection to the general contractor. If the notice of commencement is filed, the amount of liens filed by remote claimants (sub-subs, or suppliers to subs) may not exceed the amount the general contractor owes to the subcontractor with whom the remote claimant contracted. In essence the direct contractor can attempt to artificially turn South Carolina from a “full-price” lien state into an “unpaid balance” lien state.
The second voluntary preliminary notice that can have significant consequence is for sub-tier participants. Basically, this notice gives the sub-tier participants the ability to short circuit the direct contractor’s ability to limit their lien by filing a notice of commencement. If sub-subcontractors and suppliers to subcontractors do their research, finding out that a notice of commencement has been filed, they may in turn file a Notice of Furnishing Labor and Materials that can be served to the general contractor via certified mail with return receipt requested. If the sub-tier party delivers a notice of furnishing, payments by the owner to the contractor or by the contractor to the sub will not lessen the amount subject to lien of the sub-tier party.