Current Status Introducing Body:
HouseBill Number: 4644Primary Sponsor: CorningCommittee Number: 25Type of Legislation: GBSubject: Public buildings, payment bond for constructionResiding Body: HouseCurrent Committee: JudiciaryComputer Document Number: BBM/10861JM.94Introduced Date: 19940201Last History Body: HouseLast History Date: 19940201Last History Type: Introduced, read first time, referred to CommitteeScope of Legislation: StatewideAll Sponsors: CorningType of Legislation: General Bill
Bill Body Date Action Description CMN Leg Involved ____ ______ ____________ ______________________________ ___ ____________ 4644 House 19940201 Introduced, read first time, 25 referred to CommitteeView additional legislative information at the LPITS web site.
TO AMEND CHAPTER 5, TITLE 10, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO CONSTRUCTION AND RENOVATION OF PUBLIC BUILDINGS AND OTHER PROJECTS, BY ADDING ARTICLE 5 SO AS TO PROVIDE A PROCEDURE REQUIRING ANY PERSON ENTERING INTO A FORMAL CONTRACT WITH THE STATE OR ANY COUNTY, CITY, OR OTHER POLITICAL SUBDIVISION OR OTHER PUBLIC AUTHORITY FOR THE CONSTRUCTION OF A PUBLIC BUILDING, FOR THE PROSECUTION AND COMPLETION OF A PUBLIC WORK, OR FOR REPAIRS UPON A PUBLIC BUILDING OR PUBLIC WORK TO, PRIOR TO COMMENCING THE WORK, EXECUTE, DELIVER TO THE PUBLIC OWNER, AND RECORD IN THE PUBLIC RECORDS OF THE COUNTY WHERE THE IMPROVEMENT IS LOCATED A PAYMENT AND PERFORMANCE BOND WITH A SURETY INSURER AUTHORIZED TO DO BUSINESS IN THIS STATE AS SURETY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Chapter 5, Title 10 of the 1976 Code is amended by adding:
Section 10-5-510. (1)(a) Any person entering into a formal contract with the State or any county, city, or political subdivision thereof, or other public authority, for the construction of a public building, for the prosecution and completion of a public work, or for repairs upon a public building or public work is required, before commencing the work, to execute, deliver to the public owner, and record in the public records of the county where the improvement is located, a payment and performance bond with a surety insurer authorized to do business in this State as surety. The bond must state the name and principal business address of both the principal and the surety and must contain a description of the project sufficient to identify it. The bond must be conditioned that the contractor perform the contract in the time and manner prescribed in the contract and promptly make payments to all persons defined in Section 10-5-520 whose claims derive directly or indirectly from the prosecution of the work provided for in the contract. Any claimant may apply to the governmental entity having charge of the work for copies of the contract and bond and must thereupon be furnished with a certified copy of the contract and bond. The claimant shall have a right of action against the contractor and surety for the amount due him. Such action shall not involve the public authority in any expense. When such work is done for the State and the contract is for $100,000 or less, no payment and performance bond shall be required. At the discretion of the official or board awarding such contract when such work is done for any county, city political subdivision, or public authority, any person entering into such a contract which is for $200,000 or less may be exempted from executing the payment and performance bond. When such work is done for the State, the director of the Division of General Services may delegate to state agencies the authority to exempt any person entering into such a contract amounting to more than $100,000 but less than $200,000 from executing the payment and performance bond. In the event such exemption is granted, the officer or officials are not personally liable to persons suffering loss because of granting such exemption. The Division of General Services shall compile an annual report that lists the number of requests by state agencies for delegation of authority to waive the bond requirements by agency and project number and states whether any request for delegation was denied and the justification for the denial. The report must be submitted no later than February first to the Governor, the President of the Senate, and the Speaker of the House of Representatives.
(b) The Division of General Services shall promulgate regulations with respect to all contracts for $200,000 or less, to provide:
(1) procedures for retaining up to ten percent of each request for payment submitted by a contractor and procedures for determining disbursements from the amount retained on a pro rata basis to laborers, materialmen, and subcontractors, as defined in Section 10-5-520;
(2) procedures for requiring certification from laborers, materialmen, and subcontractors, as defined in Section 10-5-520, prior to final payment to the contractor that such laborers, materialmen, and subcontractors have no claims against the contractor resulting from the completion of the work provided for in the contract.
The State shall not be held liable to any laborer, materialman, or subcontractor for any amounts greater than the pro rata share as determined under this section.
(2) A claimant, except a laborer, who is not in privity with the contractor and who has not received payment for his labor, materials, or supplies shall, within forty-five days after beginning to furnish labor, materials, or supplies for the prosecution of the work, furnish the contractor with a notice that he intends to look to the bond for protection. A claimant who is not in privity with the contractor and who has not received payment for his labor, materials, or supplies shall, within ninety days after performance of the labor or after complete delivery of the materials or supplies or, with respect to rental equipment, within ninety days after the date that the rental equipment was last on the job site available for use, deliver to the contractor and to the surety written notice of the performance of the labor or delivery of the materials or supplies and of the nonpayment. No action for the labor, materials, or supplies may be instituted against the contractor or the surety unless both notices have been given. No action shall be instituted against the contractor or the surety on the bond after one year from the performance of the labor or completion of delivery of the materials or supplies. A claimant may not waive in advance his right to bring an action under the bond against the surety. In any action brought to enforce a claim against a payment bond under this section, the prevailing party is entitled to recover a reasonable fee for the services of his attorney for trial and appeal or for arbitration, in an amount to be determined by the court, which fee must be taxed as part of his costs, as allowed in equitable actions.
(3) The bond required in subsection (1) may be in substantially the following form:
BY THIS BOND, We , as Principal and , a corporation, as Surety, are bound to , herein called Owner, in the sum of $ , for payment of which we bind ourselves, our heirs, personal representatives, successors, and assigns, jointly, and severally.
THE CONDITION OF THIS BOND is that if Principal:
1. Performs the contract dated , 19 , between Principal and Owner for construction of , the contract being made a part of this bond by reference, at the times and in the manner prescribed in the contract; and
2. Promptly makes payments to all claimants, as defined in subsection (1) Section 10-5-510 supplying Principal with labor, materials, or supplies, used directly or indirectly by Principal in the prosecution of the work provided for in the contract; and
3. Pays Owner all losses, damages, expenses, costs, and attorney's fees, including appellate proceedings, that Owner sustains because of a default by Principal under the contract; and
4. Performs the guarantee of all work and materials furnished under the contract for the time specified in the contract, then this bond is void; otherwise it remains in full force.
Any changes in or under the contract documents and compliance or noncompliance with any formalities connected with the contract or the changes do not affect Surety's obligation under this bond.
DATED ON , 19 .
(Name of Principal)
By (As Attorney in Fact)
(Name of Surety)
(4) The payment provisions of all bonds furnished for public work contracts described in subsection (1) must, regardless of form, be construed and deemed statutory bond provisions, subject to all requirements of subsection (2).
(5) Any action authorized under this section may be brought in the county in which the public building or public work is being constructed or repaired.
(6) All bonds executed pursuant to this section shall make reference to this section by number and shall contain reference to the notice and time limitation provisions of this section.
(7) In lieu of the bond required by this section, a contractor may file with the State, county, city, or other political authority an alternative form of security in the form of cash, a money order, a certified check, a cashier's check, an irrevocable letter of credit, or other security of a type approved by the Secretary of State. Any such alternative form of security must be for the same purpose and is subject to the same conditions as those applicable to the bond required by this section. The determination of the value of an alternative form of security must be made by the State, county, city, or other political subdivision as is appropriate under the circumstances.
Section 10-5-520. As used in this article, the term:
(1) `Architect' means a person or firm that is authorized to practice architecture pursuant to the laws of this State or a general contractor who provides architectural services under a design-build contract.
(2) `Claim of lien' means the claim recorded as provided under the laws of this State.
(3) `Clerk's office' means the office of the clerk of the circuit court of the county in which the real property is located.
(4) `Commencement of the improvement' means the time of filing for record of the notice of commencement.
(5) `Contract' means an agreement for improving real property, written or unwritten, express or implied, and includes extras or change orders.
(6) `Contract price' means the amount agreed upon by the contracting parties for performing all labor and services and furnishing all materials covered by their contract and must be increased or diminished by the price of extras or change orders, or by any amounts attributable to changes in the scope of the work or defects in workmanship or materials or any other breaches of the contract; but no penalty or liquidated damages between the owner and a contractor diminishes the contract price as to any other lienor. If no price is agreed upon by the contracting parties, this term means the value of all labor, services, or materials covered by their contract, with any increases and diminutions, as provided in this item. Allowance items are a part of the contract when accepted by the owner.
(7) `Contractor' means a person other than a materialman or laborer who enters into a contract with the owner of real property for improving it, or who takes over from a contractor as so defined in the entire remaining work under such contract. The term `contractor' includes an architect, landscape architect, or engineer who improves real property pursuant to a design-build contract.
(8) `Direct contract' means a contract between the owner and any other person.
(9) `Engineer' means a person or firm that is authorized to practice engineering pursuant to the laws of this State or a general contractor who provides engineering services under a design-build contract.
(10) `Extras or change orders' means labor, services, or materials for improving real property authorized by the owner and added to or deleted from labor, services, or materials covered by a previous contract between the same parties.
(11) `Furnish materials' means supply materials which are incorporated in the improvement including normal wastage in construction operations; or specially fabricated materials for incorporation in the improvement, not including any design work, submittals, or the like preliminary to actual fabrication of the materials; or supply materials used for the construction and not remaining in the improvement, subject to diminution by the salvage value of such materials; and includes supplying tools, appliances, or machinery used on the particular improvement to the extent of the reasonable rental value for the period of actual use (not determinable by the contract for rental unless the owner is a party thereto), but does not include supplying handtools. The delivery of materials to the site of the improvement is prima facie evidence of incorporation of such materials in the improvement.
(12) `Improve' means build, erect, place, make, alter, remove, repair, or demolish any improvement over, upon, connected with, or beneath the surface of real property, or excavate any land, or furnish materials for any of these purposes, or perform any labor or services upon the improvements, including the furnishing of carpet or rugs or appliances that are permanently affixed to the real property; or perform any labor or services or furnish any materials in grading, seeding, sodding, or planting for landscaping purposes, including the furnishing of trees, shrubs, bushes, or plants that are planted on the real property, or in equipping any improvement with fixtures or permanent apparatus.
(13) `Improvement' means any building, structure, construction, demolition, excavation, landscaping, or any part thereof existing, built, erected, placed, made, or done on land or other real property for its permanent benefit.
(14) `Laborer' means any person other than an architect, landscape architect, engineer, land surveyor, and the like who, under properly authorized contract, personally performs on the site of the improvement labor or services for improving real property and does not furnish materials or labor service of others.
(15) `Lender' means any person who loans money to an owner for construction of an improvement to real property, who secures that loan by recording a mortgage on the real property, and who periodically disburses portions of the proceeds of that loan for the payment of the improvement.
(16) `Lienor' means a person who is a:
(e) materialman who contracts with the owner, a contractor, a subcontractor, or a sub-subcontractor; or
(f) professional lienor;
and who has a lien or prospective lien upon real property under this article, and includes his successor in interest. No other person may have a lien under this article.
(17) `Lienor giving notice' means any lienor, except a contractor, who has duly and timely served a notice to the owner and, if required, to the contractor and subcontractor.
(18) `Materialman' means any person who furnishes materials under contract to the owner, contractor, subcontractor, or sub-subcontractor on the site of the improvement or for direct delivery to the site of the improvement or, for specially fabricated materials, off the site of the improvement for the particular improvement, and who performs no labor in the installation thereof.
(19) `Notice by lienor' means the notice to owner served as provided under the laws of this State.
(20) `Notice of commencement' means the notice recorded as provided under the laws of this State.
(21) `Owner' means a person who is the owner of any legal or equitable interest in real property, which interest can be sold by legal process, and who enters into a contract for the improvement of the real property. The term includes a condominium association as to improvements made to association property or common elements. The term does not include any political subdivision, agency, or department of the State, a municipality, or other governmental entity.
(22) `Perform' or `furnish' when used in connection with the words `labor' or `services' or `materials' means performance or furnishing by the lienor or by another for him.
(23) `Post' or `posting' means placing the document referred to on the site of the improvement in a conspicuous place at the front of the site and in a manner that protects the document from the weather.
(24) `Real property' means the land that is improved and the improvements thereon, including fixtures, except any such property owned by the State or any county, municipality, school board, or governmental agency, commission, or political subdivision.
(25) `Site of the improvement' means the real property which is being improved and on which labor or services are performed or materials furnished in furtherance of the operations of improving such real property. In cases of removal, without demolition and under contract, of an improvement from one lot, parcel, or tract of land to another, this term means the real property to which the improvement is removed.
(26) `Subcontractor' means a person other than a materialman or laborer who enters into a contract with a contractor for the performance of any part of such contractor's contract.
(27) `Sub-subcontractor' means a person other than a materialman or laborer who enters into a contract with a subcontractor for the performance of any part of such subcontractor's contract."
SECTION 2. This act takes effect upon approval by the Governor.