South Carolina Lawyer
SC Lawyer, January 2009, #4.
Should I Let Him Come Back? The Effect of Warranty and Repair Work on Mechanic's Lien Rights
South Carolina LawyerJanuary 2009Should I Let Him Come Back? The Effect of Warranty and Repair Work on Mechanic's Lien RightsBy Joshua D. SpencerJane Smith(fn1) purchases an abandoned single family home at a foreclosure sale and contracts with Ready Renovators(fn2) to restore the home. Being the savvy businesswoman that she is, Smith negotiates a one-year warranty on all workmanship in the contract. Ready Renovators completes all work in apparent accordance with the contract.
After the renovation is complete, Ready Renovators gives Smith a final bill, cleans up the worksite and vacates the premises. In order to preserve its mechanic's lien under S.C. Code Ann. § 29-5-90, Ready Renovators must serve and file its mechanic's lien within 90 days after the completion of the work. However, in this case, Ready Renovators fails to do so after Smith promises payment and urges Ready Renovators not to serve and file a mechanic's lien.
Smith is relieved because she is short on cash and her ability to make future payments to Ready Renovators is questionable. Smith now believes Ready Renovators is time-barred from filing its mechanic's lien. Fast-forward five months when Smith notices water stains on her ceiling. An inspection of the roof reveals Ready Renovators failed to properly install the flashing. Under the terms of the contract, Ready Renovators is required to return to Smith's home and provide the labor and materials necessary to repair the flashing. Despite not being paid, Ready Renovators returns to the house to make the repairs, hoping its return will encourage Smith to fully pay the balance she owes Ready Renovators.
Smith is pleased she will not be required to pay a hefty roof repair bill because the repair work is covered under the warranty provided for in the contract with Ready Renovators. What Smith does not know is that by allowing Ready Renovators to return to her home and perform the repairs, Ready Renovators' time period to serve and file the mechanic's lien has just been extended. A new time clock will start ticking which will give Ready Renovators 90 days from the last date of the roof repair work to serve and file its mechanic's lien. This extension of time will apply to all work performed by Ready Renovators at Smith's home, not just the repair work.
This time around, after one too many broken promises of payment from Smith, Ready Renovators serves and files its mechanic's lien within 90 days of the last date of the repair work-preserving its right to foreclose on the lien if it later becomes necessary. To the dismay of Smith, the South Carolina courts will likely consider this lien timely served and filed even though Ready Renovators initially failed to serve and file its first potential lien within ninety (90) days of the last date of work.
A creature of statute
Mechanic's liens are created automatically by statute in South Carolina. S.C. Code Ann. § 29-5-10 (2007). Any contractor, subcontractor or supplier automatically has a lien on any structure where work is performed or material is provided that is incorporated into the structure. S.C. Code Ann. § 29-5-20 (2007). Specifically, S.C. Code Ann. § 29-5-10 (2007) provides protection to anyone who performs labor or furnishes materials "in the erection, alteration, or repair of a building or structure upon real estate à [granting] a lien upon the building or structure and upon the interest of the owner of the building or structure in the lot of land on which the structure is located to secure payment due à for labor performed or materials furnished." S.C. Code Ann. § 29-5-10 (2007). However, it is imperative that the work performed be connected with the erection, alteration or repair of a building or structure in order to garner full protection from the law. If work is performed and a court determines that the work was not connected to the erection, alteration or repair of a building or structure, the...