In the recent decision of Ferguson Fire and Fabrication, Inc. v. Preferred Fire Protection, L.L.C., the Supreme Court of South Carolina held that a Notice of Furnishing was valid as long as it provided the owner of the property with written notice of (1) the labor and/or materials the laborer furnished for the improvement of the property, and (2) the value or amount of such labor and/or material. Aside from these two requirements, nothing more is required for a valid Notice of Furnishing in order to comply with South Carolina’s mechanics lien.
If a laborer is employed by a person other than the owner, such as a general contractor or a subcontractor, then the laborer is required to serve the owner with a written Notice of Furnishing before a mechanic’s lien can attach to the owner’s property. S.C. Code Ann. § 29-5-40 governs the requirements and limitations of a Notice of Furnishing and states in relevant part:
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 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 § 29-5-20 shall attach upon the real estate improved as against the owner for the amount of the work done or material furnished. But in no event shall the [total] amount of liens set up [under this statute] exceed the amount due by the owner on the contract price of the improvement made.
In Ferguson Fire, the Supreme Court of South Carolina reversed and remanded the decision of the Court of Appeals because it had added requirements to § 29-5-40 that are not in the text of the statute itself. Specifically, the Court of Appeals incorrectly held that: (1) a Notice of Furnishing could not be delivered to an owner until after a materialman delivers all materials to the worksite, and (2) a Notice of Furnishing must include a demand for payment of a specific amount.
After analyzing the plain language of § 29-5-40 and considering its relationship to other South Carolina mechanic’s lien provisions, the Supreme Court of South Carolina determined that the Court of Appeals had confused the more simplistic requirements of a Notice of Furnishing under § 29-5-40 with the more stringent requirements of a Notice of Mechanic’s Lien under § 29-5-90. The Court explained how prior case law had held that a Notice of Furnishing could be submitted to the owner at any time because the text of § 29-5-40 does not specify a particular time within which the Notice must be submitted. However, the Court emphasized that a mechanic’s lien pursuant to S.C. Code Ann. § 29-5-20 would be limited to the amount of the unpaid balance (on the contract between the owner and contractor) at the time the owner received the Notice of Furnishing. The Court further held that the text of the statute required the laborer to state the “amount or value thereof” of its labor or material, but it did not require a specific demand for payment like the Court of Appeals had.
This case is a reminder that all jurisdictions have peculiarities in their lien statutes. It is essential, usually before a project begins, to check the fundamentals of the lien statute in the jurisdiction. Some states require, as a condition for a full lien, that the subcontractor or supplier provide notice BEFORE it begins work that it is about to begin work on the owner’s property. An ounce of prevention may be worth a pound of cure.