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COMMITTEE REPORT
February 16, 2000
S. 565
S. Printed 2/16/00--H.
Read the first time June 1, 1999.
To whom was referred a Bill (S. 565), 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 for the right to sue on a payment bond, etc., respectfully
That they have duly and carefully considered the same, and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking after the enacting words and inserting:
/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 equipement 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 pre-paid, 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."
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 or, material, or rental equipment to the a bonded contractor or its his subcontractors for the work specified in the contract, in respect of which a payment bond is 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 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. Any person having a direct contractual relationship with a subcontractor of the contractor, but no contractual relationship expressed or implied with the contractor furnishing such payment bond, 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 an a permanent office or conducts 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."
SECTION 3. Section 57-5-1660(b) of the 1976 Code is amended to read:
"(b) Every person who has furnished labor or, 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;. provided, however, that any person having direct contractual relationship with a sub-contractor but no contractual relationship expressed or implied with the contractor furnishing the bond 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."
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 or, 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 or, 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 or, 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 or, 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."
SECTION 5. Section 29-5-23 of the 1976 Code, as added by Act 368 of 1992 and 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."
SECTION 6. This act takes effect upon approval by the Governor.
Renumber sections to conform.
Amend totals and title to conform.
HARRY F. CATO, for Committee.
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 FOR THE RIGHT TO SUE ON A PAYMENT BOND, UNDER CERTAIN CONDITIONS AND CIRCUMSTANCES, FOR THE AMOUNT, OR BALANCE, UNPAID AT THE TIME OF INSTITUTING THE SUIT AND TO PROSECUTE THE ACTION TO FINAL EXECUTION AND JUDGMENT FOR THE SUM OR SUMS JUSTLY DUE; TO AMEND SECTION 11-35-3030, AS AMENDED, RELATING TO THE PROVISIONS FOR BOND AND SECURITY AND CONSTRUCTION SERVICES UNDER THE SOUTH CAROLINA CONSOLIDATED PROCUREMENT CODE, SO AS TO DELETE CERTAIN PROVISIONS RELATIVE TO THE RIGHT TO INSTITUTE SUITS ON PAYMENT BONDS, AND TO ADD PROVISIONS FOR, AMONG OTHER THINGS, THE REQUIRED GIVING OF TWO WRITTEN NOTICES; TO AMEND SECTION 57-5-1660, AS AMENDED, RELATING TO THE STATE HIGHWAY SYSTEM, CONSTRUCTION CONTRACTS AND PURCHASES, AND AMOUNTS OF AND ACTIONS ON CONTRACTORS' BONDS, SO AS TO DELETE CERTAIN PROVISIONS, AND TO ADD PROVISIONS FOR, AMONG OTHER THINGS, THE REQUIRED GIVING OF TWO WRITTEN NOTICES; AND TO AMEND THE 1976 CODE BY ADDING SECTION 11-1-120 SO AS TO PROVIDE FOR THE PROVISIONS APPLICABLE TO THE INSTITUTION OF A SUIT WHEN THE STATE OR A COUNTY, A MUNICIPALITY, OR A POLITICAL SUBDIVISION OF THE STATE, A COUNTY, OR A MUNICIPALITY 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, IN THE FULL AMOUNT OF THE CONTRACT FOR THE PROTECTION OF PERSONS WHO FURNISH LABOR OR MATERIAL TO THE CONTRACTOR OR HIS SUBCONTRACTORS FOR THE WORK SPECIFIED IN THE CONTRACT.
Be it enacted by the General Assembly of the State of South Carolina:
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 or material 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 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 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, or services, unless the remote claimant has provided notice of furnishing labor or materials 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 pre-paid, 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 or materials, 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, or materials.
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."
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 or material to the a bonded contractor or its his subcontractors for the work specified in the contract, in respect of which a payment bond is 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 such person or material 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. Any person having a direct contractual relationship with a subcontractor of the contractor, but no contractual relationship expressed or implied with the contractor furnishing such payment bond, 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 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 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 an a permanent office or conducts 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, or services, unless the remote claimant has provided notice of furnishing labor or materials 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 or materials, 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, or materials.
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."
SECTION 3. Section 57-5-1660(b) of the 1976 Code is amended to read:
"(b) Every person who has furnished labor or material 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 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;. provided, however, that any person having direct contractual relationship with a sub-contractor but no contractual relationship expressed or implied with the contractor furnishing the bond 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 for which claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom material 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, or services, unless the remote claimant has provided notice of furnishing labor or materials 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 or materials, 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."
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 or material to the contractor or its subcontractors for the work specified in the contract, the following provisions shall apply.
Every person who has furnished labor or material 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 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 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, or services, unless the remote claimant has provided notice of furnishing labor or materials 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 or materials, 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, 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."
SECTION 5. Section 29-5-23 of the 1976 Code, as added by Act 368 of 1992 and 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 or materials, 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."
SECTION 6. This act takes effect upon approval by the Governor.
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