What Can an Unpaid Contractor Do to Your Building?

An unpaid contractor or supplier can put a lien on the building itself, which clouds its title until the debt is paid, the lien is bonded off or it lapses; in South Carolina the claimant has 90 days to file and six months to sue, and the lien ranks behind any mortgage recorded before the lien was filed.

The right belongs to anyone owed for labor or materials that went into the building with the owner's consent, from the general contractor down to the concrete subcontractor and the lumber yard, under Title 29 of the state code. The lien attaches to the building and to the owner's interest in the land, so it travels with the property, and a buyer or lender who finds one in the records will want it settled before closing. The code caps what a sub-subcontractor or supplier can collect at what was owed down the chain, unless that claimant gave the owner the notice the statute provides for.

The deadlines are short and strict. A claimant must serve and file a statement of the debt within 90 days after last working on or supplying the job, and must sue to enforce it, with notice of the suit filed, within six months. Miss either deadline and the lien is dissolved.

The date that decides who stands first is the day the lien statement is filed. Apart from one exception the code sets out, a mechanic's lien is not enforceable against a mortgage recorded before that statement was filed, so a bank whose construction loan was recorded at the start of the job generally stands ahead of any contractor who files later. The trades cannot jump ahead of that bank, but they can hold up a sale or a refinancing, because the title has to be cleared before either one closes.

An owner who disputes the bill doesn't have to pay it to free the building. The code lets the owner, or anyone with an interest in the property, post security worth one and a third times the amount claimed, in cash, securities or a surety bond, and the lien is discharged; the fight then moves to the money posted. That is how a building can be sold or financed while the dispute goes on, at the cost of tying up a third more than the claim. Whoever wins a lien suit can also recover a reasonable attorney's fee, though fee and costs together can't exceed the lien.

The owner who gets hurt is the one who paid the general contractor and later learns the subcontractors were never paid, because the code gives those subcontractors and suppliers a lien of their own on the building. Unfinished projects are where the claims pile up, as contractors' liens on the stalled townhomes on East McBee Avenue in Greenville show. For a buyer or a lender, the 90-day window carries a quieter risk: on a building where work ended recently, a contractor still inside that window may not have filed yet, so a clean records search cannot rule the claim out.