S*0565(Rat #0246, Act #0240 of 2000)  General Bill, By Setzler, Moore, 
Leatherman and Leventis
 A BILL TO AMEND CHAPTER 5, TITLE 29, CODE OF LAWS OF SOUTH CAROLINA, 1976,
 RELATING TO MECHANICS' LIENS, BY ADDING SECTION 29-5-440 SO AS TO PROVIDE,
 AMONG OTHER THINGS, THAT A PERSON WHO HAS FURNISHED LABOR, MATERIAL, OR RENTAL
 EQUIPMENT TO A BONDED CONTRACTOR OR THE LATTER'S SUBCONTRACTORS FOR WORK
 PROVIDED FOR IN A CONTRACT FOR CONSTRUCTION, AND WHO HAS NOT BEEN PAID IN FULL
 THEREFOR BEFORE THE EXPIRATION OF A PERIOD OF NINETY DAYS AFTER THE DAY ON
 WHICH THE LAST OF THE LABOR WAS DONE OR MATERIAL OR RENTAL EQUIPMENT WAS
 FURNISHED OR SUPPLIED, FOR WHICH THE CLAIM IS MADE, HAS THE RIGHT TO SUE ON
 THE PAYMENT BOND FOR THE AMOUNT OR BALANCE THEREOF UNPAID AT THE TIME OF THE
 INSTITUTION OF THE SUIT AND TO PROSECUTE THE ACTION TO FINAL EXECUTION AND
 JUDGMENT FOR THE SUM OR SUMS DUE HIM; TO AMEND SECTION 11-35-3030, AS AMENDED,
 RELATING TO THE SOUTH CAROLINA CONSOLIDATED PROCUREMENT CODE, CONSTRUCTION,
 ARCHITECT-ENGINEER CONSTRUCTION MANAGEMENT, LAND SURVEYING SERVICES, BOND AND
 SECURITY, SUITS ON PAYMENT BONDS, AND THE RIGHT TO INSTITUTE THE SAME, SO AS
 TO, AMONG OTHER THINGS, EXTEND THE RIGHT TO SUE TO PERSONS WHO HAVE FURNISHED
 RENTAL EQUIPMENT OR LABOR OR MATERIAL TO A BONDED CONTRACTOR OR THE LATTER'S
 SUBCONTRACTORS FOR THE WORK SPECIFIED IN THE CONTRACT, DELETE CERTAIN LANGUAGE
 AND PROVISIONS, AND PROVIDE FOR A REMOTE CLAIMANT TO HAVE A RIGHT OF ACTION ON
 THE PAYMENT BOND UPON CERTAIN CIRCUMSTANCES; TO AMEND SECTION 57-5-1660, AS
 AMENDED, RELATING TO THE STATE HIGHWAY SYSTEM, CONSTRUCTION CONTRACTS AND
 PURCHASES, CONTRACTORS' BONDS AND AMOUNTS AND ACTIONS ON SUCH BONDS, SO AS TO,
 AMONG OTHER THINGS, EXTEND THE RIGHT TO SUE, UNDER CERTAIN CIRCUMSTANCES TO
 ONE WHO FURNISHES RENTAL EQUIPMENT IN THE PROSECUTION OF THE WORK PROVIDED INT
 HE CONTRACT, DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE FOR A REMOTE
 CLAIMANT TO HAVE A RIGHT OF ACTION UPON A BOND; TO AMEND CHAPTER 1, TITLE 11,
 RELATING TO PUBLIC FINANCE, BY ADDING SECTION 11-1-120 SO AS TO PROVIDE THAT
 WHEN THE STATE OR A COUNTY, CITY, PUBLIC SERVICE DISTRICT OR A POLITICAL
 SUBDIVISION THEREOF, OR OTHER PUBLIC ENTITY CONTRACTS FOR CONSTRUCTION AND
 REQUIRES THE PERSON OR ENTITY PERFORMING THE WORK TO FURNISH A PAYMENT BOND,
 NOT GOVERNED BY CERTAIN OTHER PROVISIONS OF LAW, FOR THE PROTECTION OF PERSONS
 WHO FURNISH LABOR, MATERIAL, OR RENTAL EQUIPMENT TO THE CONTRACTOR OR HIS
 SUBCONTRACTORS FOR THE WORK SPECIFIED IN THE CONTRACT SHALL HAVE THE RIGHT TO
 SUE ON THE BOND UNDER CERTAIN CIRCUMSTANCES, AND PROVIDE FOR RELATED MATTERS;
 AND TO AMEND SECTION 29-5-23, AS AMENDED, RELATING TO MECHANICS' LIENS, NOTICE
 OF PROJECT COMMENCEMENT, AND LOCATION NOTICE, SO AS TO PROVIDE THAT THE
 FAILURE TO FILE A NOTICE OF PROJECT COMMENCEMENT RENDERS CERTAIN OTHER
 PROVISIONS OF LAW CONTAINED IN THIS ACT, RELATING TO THE REQUIREMENT OF A
 NOTICE OF PROVIDING LABOR, MATERIALS, OR RENTAL EQUIPMENT, INAPPLICABLE FOR A
 CLAIM AGAINST A PAYMENT BOND FURNISHED BY A CONTRACTOR HOLDING DIRECT
 CONTRACTUAL AGREEMENT WITH AN OWNER.-AMENDED TITLE

   03/04/99  Senate Introduced and read first time SJ-6
   03/04/99  Senate Referred to Committee on Banking and Insurance SJ-6
   05/20/99  Senate Recalled from Committee on Banking and Insurance SJ-7
   05/26/99  Senate Amended SJ-39
   05/26/99  Senate Read second time SJ-39
   05/26/99  Senate Ordered to third reading with notice of
                     amendments SJ-39
   05/27/99  Senate Read third time and sent to House SJ-83
   06/01/99  House  Introduced and read first time HJ-10
   06/01/99  House  Referred to Committee on Labor, Commerce and
                     Industry HJ-11
   02/16/00  House  Committee report: Favorable with amendment Labor,
                     Commerce and Industry HJ-5
   02/22/00  House  Requests for debate-Rep(s). Easterday, Loftis,
                     McGee, Leach, Knotts, Davenport and Hamilton HJ-16
   02/24/00  House  Requests for debate removed-Rep(s). Davenport and
                     Leach HJ-26
   02/29/00  House  Requests for debate removed-Rep(s). McGee, Knotts
                     and Loftis HJ-33
   02/29/00  House  Requests for debate-Rep(s). Rice HJ-39
   02/29/00  House  Debate adjourned until Wednesday, March 1, 2000 HJ-39
   03/01/00  House  Amended HJ-21
   03/01/00  House  Read second time HJ-27
   03/01/00  House  Requests for debate removed-Rep(s). Rice HJ-30
   03/02/00  House  Read third time and returned to Senate with
                     amendments HJ-14
   03/09/00  Senate Concurred in House amendment and enrolled SJ-18
   03/23/00         Ratified R 246
   03/29/00         Signed By Governor
   03/29/00         Effective date 03/29/00
   04/04/00         Copies available
   05/02/00         Act No. 240

AN ACT TO AMEND CHAPTER 5, TITLE 29, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO MECHANICS' LIENS, BY ADDING SECTION 29-5-440 SO AS TO PROVIDE, AMONG OTHER THINGS, THAT A PERSON WHO HAS FURNISHED LABOR, MATERIAL, OR RENTAL EQUIPMENT TO A BONDED CONTRACTOR OR THE LATTER'S SUBCONTRACTORS FOR WORK PROVIDED FOR IN A CONTRACT FOR CONSTRUCTION, AND WHO HAS NOT BEEN PAID IN FULL THEREFOR BEFORE THE EXPIRATION OF A PERIOD OF NINETY DAYS AFTER THE DAY ON WHICH THE LAST OF THE LABOR WAS DONE OR MATERIAL OR RENTAL EQUIPMENT WAS FURNISHED OR SUPPLIED, FOR WHICH THE CLAIM IS MADE, HAS THE RIGHT TO SUE ON THE PAYMENT BOND FOR THE AMOUNT OR BALANCE THEREOF UNPAID AT THE TIME OF THE INSTITUTION OF THE SUIT AND TO PROSECUTE THE ACTION TO FINAL EXECUTION AND JUDGMENT FOR THE SUM OR SUMS DUE HIM; TO AMEND SECTION 11-35-3030, AS AMENDED, RELATING TO THE SOUTH CAROLINA CONSOLIDATED PROCUREMENT CODE, CONSTRUCTION, ARCHITECT-ENGINEER CONSTRUCTION MANAGEMENT, LAND SURVEYING SERVICES, BOND AND SECURITY, SUITS ON PAYMENT BONDS, AND THE RIGHT TO INSTITUTE THE SAME, SO AS TO, AMONG OTHER THINGS, EXTEND THE RIGHT TO SUE TO PERSONS WHO HAVE FURNISHED RENTAL EQUIPMENT OR LABOR OR MATERIAL TO A BONDED CONTRACTOR OR THE LATTER'S SUBCONTRACTORS FOR THE WORK SPECIFIED IN THE CONTRACT, DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE FOR A REMOTE CLAIMANT TO HAVE A RIGHT OF ACTION ON THE PAYMENT BOND UPON CERTAIN CIRCUMSTANCES; TO AMEND SECTION 57-5-1660, AS AMENDED, RELATING TO THE STATE HIGHWAY SYSTEM, CONSTRUCTION CONTRACTS AND PURCHASES, CONTRACTORS' BONDS AND AMOUNTS AND ACTIONS ON SUCH BONDS, SO AS TO, AMONG OTHER THINGS, EXTEND THE RIGHT TO SUE, UNDER CERTAIN CIRCUMSTANCES TO ONE WHO FURNISHES RENTAL EQUIPMENT IN THE PROSECUTION OF THE WORK PROVIDED FOR IN THE CONTRACT, DELETE CERTAIN LANGUAGE AND PROVISIONS, AND PROVIDE FOR A REMOTE CLAIMANT TO HAVE A RIGHT OF ACTION UPON A BOND; TO AMEND CHAPTER 1, TITLE 11, RELATING TO PUBLIC FINANCE, BY ADDING SECTION 11-1-120 SO AS TO PROVIDE THAT WHEN THE STATE OR A COUNTY, CITY, PUBLIC SERVICE DISTRICT OR A POLITICAL SUBDIVISION THEREOF, OR OTHER PUBLIC ENTITY CONTRACTS FOR CONSTRUCTION AND REQUIRES THE PERSON OR ENTITY PERFORMING THE WORK TO FURNISH A PAYMENT BOND, NOT GOVERNED BY CERTAIN OTHER PROVISIONS OF LAW, FOR THE PROTECTION OF PERSONS WHO FURNISH LABOR, MATERIAL, OR RENTAL EQUIPMENT TO THE CONTRACTOR OR HIS SUBCONTRACTORS FOR THE WORK SPECIFIED IN THE CONTRACT SHALL HAVE THE RIGHT TO SUE ON THE BOND UNDER CERTAIN CIRCUMSTANCES, AND PROVIDE FOR RELATED MATTERS; AND TO AMEND SECTION 29-5-23, AS AMENDED, RELATING TO MECHANICS' LIENS, NOTICE OF PROJECT COMMENCEMENT, AND LOCATION NOTICE, SO AS TO PROVIDE THAT THE FAILURE TO FILE A NOTICE OF PROJECT COMMENCEMENT RENDERS CERTAIN OTHER PROVISIONS OF LAW CONTAINED IN THIS ACT, RELATING TO THE REQUIREMENT OF A NOTICE OF PROVIDING LABOR, MATERIALS, OR RENTAL EQUIPMENT, INAPPLICABLE FOR A CLAIM AGAINST A PAYMENT BOND FURNISHED BY A CONTRACTOR HOLDING DIRECT CONTRACTUAL AGREEMENT WITH AN OWNER.

Be it enacted by the General Assembly of the State of South Carolina:

Mechanics' liens; suit on payment bond

SECTION 1. Chapter 5 of Title 29 of the 1976 Code is amended by adding:

"Section 29-5-440. Every person who has furnished labor, material, or rental equipment to a bonded contractor or its subcontractors in the prosecution of work provided for in any contract for construction, and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material or rental equipment was furnished or supplied by him for which such claim is made, shall have the right to sue on the payment bond for the amount, or the balance thereof, unpaid at the time of the institution of such suit and to prosecute such action to final execution and judgment for the sum or sums justly due him.

A remote claimant shall have a right of action on the payment bond only upon giving written notice by certified or registered mail to the bonded contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material or rental equipment upon which such claim is made. However, in no event shall the aggregate amount of any claim against such payment bond by a remote claimant exceed the amount due by the bonded contractor to the person to whom the remote claimant has supplied labor, materials, rental equipment, or services, unless the remote claimant has provided notice of furnishing labor, materials, or rental equipment to the bonded contractor. Such written notice to the bonded contractor shall be personally served or sent by fax or sent by electronic mail or sent by registered or certified mail, postage prepaid, to the bonded contractor at any place the bonded contractor maintains a permanent office for the conduct of its business, or at the current address as shown on the records of the Department of Labor, Licensing and Regulation. After receiving the notice of furnishing labor, materials, or rental equipment, no payment by the bonded contractor shall lessen the amount recoverable by the remote claimant. However, in no event shall the aggregate amount of claims on the payment bond exceed the penal sum of the bond.

No suit under this section shall be commenced after the expiration of one year after the last date of furnishing or providing labor, services, materials, or rental equipment.

For purposes of this section, 'bonded contractor' means a contractor or subcontractor furnishing a payment bond, and 'remote claimant' means a person having a direct contractual relationship with a subcontractor of a bonded contractor, but no contractual relationship expressed or implied with the bonded contractor."

Procurement Code; suits, rental equipment; remote claimants; etc.>

SECTION 2. Section 11-35-3030(2)(c) of the 1976 Code is amended to read:

"(c) Suits on Payment Bonds--Right to Institute. Every person who has furnished labor, material, or rental equipment to a bonded contractor or his subcontractors for the work specified in the contract, and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by such person or material or rental equipment was furnished or supplied by such person for which such claim is made, shall have the right to sue on the payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute such action for the sum or sums justly due such person. A remote claimant shall have a right of action on the payment bond only upon giving written notice to the contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material or rental equipment upon which such claim is made, stating with substantial accuracy the amount claimed as unpaid and the name of the party to whom the material or rental equipment was furnished or supplied or for whom the labor was done or performed. Such written notice to the bonded contractor shall be personally served or served by mailing the same by registered or certified mail, postage prepaid, in an envelope addressed to the bonded contractor at any place the bonded contractor maintains a permanent office for the conduct of its business, or at the current address as shown on the records of the Department of Labor, Licensing and Regulation. However, in no event shall the aggregate amount of any claim against such payment bond by a remote claimant exceed the amount due by the bonded contractor to the person to whom the remote claimant has supplied labor, materials, rental equipment, or services, unless the remote claimant has provided notice of furnishing labor, materials, or rental equipment to the bonded contractor. Such written notice to the bonded contractor shall be personally served or sent by fax or sent by electronic mail or sent by registered or certified mail, postage prepaid, to the bonded contractor at any place the bonded contractor maintains a permanent office for the conduct of its business, or at the current address as shown on the records of the Department of Labor, Licensing and Regulation. After receiving the notice of furnishing labor, materials, or rental equipment, no payment by the bonded contractor shall lessen the amount recoverable by the remote claimant. However, in no event shall the aggregate amount of claims on the payment bond exceed the penal sum of the bond.

No suit under this section shall be commenced after the expiration of one year after the last date of furnishing or providing labor, services, materials, or rental equipment.

For purposes of this section, 'bonded contractor' means the contractor or subcontractor furnishing the payment bond, and 'remote claimant' means a person having a direct contractual relationship with a subcontractor of a bonded contractor, but no contractual relationship expressed or implied with the bonded contractor."

State highway system; contractors' bonds; suits

SECTION 3. Section 57-5-1660(b) of the 1976 Code is amended to read:

"(b) Every person who has furnished labor, material, or rental equipment in the prosecution of the work provided for in such contract, in respect of which such a bond has been furnished under this section and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material or rental equipment was furnished or supplied by him for which such claim is made, shall have the right to sue on such bond for the amount, or the balance thereof, unpaid at the time of the institution of such suit and to prosecute such action to final execution and judgment for the sum or sums justly due him. A remote claimant shall have a right of action upon the bond only upon giving written notice by certified or registered mail to the contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material or rental equipment for which claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom material or rental equipment was furnished or supplied or for whom labor was done or performed. However, in no event shall the aggregate amount of any claim against such payment bond by a remote claimant exceed the amount due by the bonded contractor to the person to whom the remote claimant has supplied labor, materials, rental equipment, or services, unless the remote claimant has provided notice of furnishing labor, materials, or rental equipment to the bonded contractor. Such written notice to the bonded contractor shall be personally served or sent by fax or sent by electronic mail or sent by registered or certified mail, postage prepaid, to the bonded contractor at any place the bonded contractor maintains a permanent office for the conduct of his business, or at the current address as shown on the records of the Department of Labor, Licensing and Regulation. After receiving the notice of furnishing labor, materials, or rental equipment, no payment by the bonded contractor shall lessen the amount recoverable by the remote claimant. However, in no event shall the aggregate amount of claims on the payment bond exceed the penal sum of the bond.

For purposes of this section, 'bonded contractor' means the contractor or subcontractor furnishing the payment bond, and 'remote claimant' means a person having a direct contractual relationship with a subcontractor, but no contractual relationship expressed or implied with the bonded contractor. No suit under this section shall be commenced after the expiration of one year after the date of the final settlement of the contract."

State of South Carolina, political subdivisions; payment bond; suits

SECTION 4. Chapter 1 of Title 11 of the 1976 Code is amended by adding:

"Section 11-1-120. When the State or a county, city, public service district, or other political subdivision thereof, or other public entity contracts for construction and requires the person or entity performing the work to furnish a payment bond not governed by Section 11-35-3030(2)(c) or Section 57-5-1660(b), for the protection of persons who furnish labor, material, or rental equipment to the contractor or its subcontractors for the work specified in the contract, the following provisions shall apply.

Every person who has furnished labor, material, or rental equipment to a bonded contractor or its subcontractors in the prosecution of the work provided for in the contract for construction, and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material or rental equipment was furnished or supplied by him for which such claim is made, shall have the right to sue on such bond for the amount, or the balance thereof, unpaid at the time of the institution of such suit and to prosecute such action to final execution and judgment for the sum or sums justly due him.

A remote claimant shall have a right of action on the payment bond only upon giving written notice by certified or registered mail to the bonded contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material or rental equipment upon which such claim is made. However, in no event shall the aggregate amount of any claim against such payment bond by a remote claimant exceed the amount due by the bonded contractor to the person to whom the remote claimant has supplied labor, materials, rental equipment, or services, unless the remote claimant has provided notice of furnishing labor, materials, or rental equipment to the bonded contractor. Such written notice to the bonded contractor shall be personally served or sent by fax or sent by electronic mail or sent by registered or certified mail, postage prepaid, to the bonded contractor at any place the bonded contractor maintains a permanent office for the conduct of its business, or at the current address as shown on the records of the Department of Labor, Licensing and Regulation. After receiving the notice of furnishing labor, materials, or rental equipment, no payment by the bonded contractor shall lessen the amount recoverable by the remote claimant. However, in no event shall the aggregate amount of claims on the payment bond exceed the penal sum of the bond.

No suit under this section shall be commenced after the expiration of one year after the last date of providing or furnishing labor, materials, rental equipment, or services.

For purposes of this section, 'bonded contractor' means a contractor or subcontractor furnishing a payment bond, and 'remote claimant' means a person having a direct contractual relationship with a subcontractor of a bonded contractor, but no contractual relationship expressed or implied with the bonded contractor."

Mechanics' liens; notice of project commencement; failure to file

SECTION 5. Section 29-5-23 of the 1976 Code, as amended by Act 34 of 1997, is further amended to read:

"Section 29-5-23. Any person entering into a direct agreement with, or with the consent of, an owner for the improvement of real property may file with the clerk of court or register of deeds in the county or counties where the real property is situate a notice of project commencement. The notice of project commencement shall contain the following information:

(1) the name and address of the person filing the notice of commencement;

(2) the name and address of the owner or developer;

(3) a general description of the improvement; and

(4) the location of the project.

The notice must be filed within fifteen days of the commencement of work and must be accompanied by a filing fee of fifteen dollars to be deposited in that county's general fund. The name and address of the contractor must be posted at the job site. A location notice also must be posted at the job site. The location notice must contain the following statement: 'The contractor on the project has filed a notice of project commencement at the county courthouse. Sub-subcontractors and suppliers to subcontractors shall comply with Section 29-5-20 when filing liens in connection with this project.' The failure to file a notice of project commencement shall render the provisions of Sections 29-5-20(B) and 29-5-60(B) inapplicable. The failure to file a notice of project commencement shall also render the provisions of Sections 29-5-440, 11-35-3030(2)(c), 57-5-1660(b), and 11-1-120, relating to the requirement of a notice of providing labor, materials, or rental equipment inapplicable for a claim against a payment bond furnished by a contractor holding a direct contractual agreement with an owner. The filing of a notice of project commencement shall not constitute a cloud, lien, or encumbrance upon, or defect to, the title of the real property described in the notice, nor shall it alter the aggregate amounts of liens allowable under Section 29-5-40, nor shall it affect the priority of any mortgage filed before or after the notice, nor shall it affect any future advances under any mortgage. The clerk of court or register of deeds in each county shall maintain a separate book and index of all notices of project commencements."

Time effective

SECTION 6. This act takes effect upon approval by the Governor.

Ratified the 23rd day of March, 2000.

Approved the 29th day of March, 2000.