Title 29 Chapter 5 of the South Carolina Code sets forth the basis by which
subcontractor, material supplier or other persons improving real estate
may file a lien on property for which they performed labor or provided
materials. It is important for a contractor and the owner to understand
that the lien (and any subsequent action to foreclose on the lien) are
separate and apart from the breach of contract case that usually accompanies
it. A mechanic's lien is a security interest in property for the benefit
of those who have supplied labor or materials that improve the property.
Its purpose in part is protect the value of the labor and materials used
to improve the property not just against the owner, but as to all other
persons claiming a later security interest in the property, like a subsequent
purchaser or bank issuing a mortgage.
When a contractor files a mechanic's lien on property where he has
performed labor or provided materials he is required to file a sworn statement
of account which details the basis for the lien. The accounting does not
have to be perfect. In fact §29-5-100 states that "No inaccuracy
in such statement relating to the property to be covered by the lien,
if the property can be reasonably recognized, or in stating the amount
due for labor or materials shall invalidate the proceedings, unless it
appear that the person filing the certificate has wilfully and knowingly
claimed more than is his due."
However, contractors should also keep in mind that mechanic's liens
are meant to protect material and labor
actually used in the construction and that generally, overhead costs and lost profits
are not within the purview of the mechanic's lien statute unless the
terms of the overhead and profit are embodied within a contract.
Zepsa Const., Inc v. Randazzo, 357 S.C. 32 591 S.E.2d29 (2003)
So this means that while a contractor may have a contract that says he
is entitled to the payment of a certain sum of money, the amount he is
actually able to lien may be substantially less. While the "retail
value" of the services or material you provided may be more than
what it actually cost you to perform the work, a lien is meant to protect
the actual investment you have in the property; that is your actual costs.
So when completing your statement of account, it is best to do a true
accounting of the material and labor used on the job, not just the difference
between what the contract says and what you have been paid. And for goodness
sake, do not estimate or guess. There is still legal recourse to collect
your other damages such as overhead and profit through a breach of contract
action. But that may be separate from your lien.
For over 40 years, Finkel Law Firm LLC has represented individuals and
businesses in construction and mechanic's lien cases. If you require
legal assistance involving construction or mechanic's liens, please
do not hesitate to contact the Finkel Law Firm.
*Any results the law firm may have achieved in past cases do not imply
or indicate that similar results may be had in your case. Outcome of litigation
is dependent on many factual and legal circumstances that may differ in
your particular case.