5.2 Notice of Project Commencement & Notice of Furnishing

Why the Notice System Exists

A general contractor can pay a first-tier subcontractor in full and later learn that the subcontractor never paid its own suppliers or sub-subcontractors. Those remote claimants have lien rights under § 29-5-20, so the owner and contractor face the risk of paying twice. South Carolina manages that risk with two linked notices:

• the Notice of Project Commencement (NPC), filed by the contractor under § 29-5-23
• the Notice of Furnishing, sent by a sub-subcontractor or supplier under § 29-5-20(B)

The NPC is optional. The statute says a person "may file" one. Filing it is what turns on the lien caps that protect contractors and owners.

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The Notice of Project Commencement (§ 29-5-23)

Job-site posting

The name and address of the contractor must be posted at the job site, along with a location notice containing this 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."

What filing does and does not do

• Filing makes § 29-5-20(B), the Notice of Furnishing cap, and § 29-5-60(B), proration among sub-tier lienors, apply to the project.
• It also makes the notice-of-furnishing rules for payment-bond claims apply. Those rules are in §§ 29-5-440 and 11-35-3030(2)(c), and in §§ 57-5-1660(b) and 11-1-120.
• The NPC is not a lien, cloud, or encumbrance on title. It does not change the total liens allowed under § 29-5-40 or the priority of any mortgage.
• Each clerk or register of deeds keeps a separate index of these notices, so claimants can check whether one was filed.

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The Notice of Furnishing (§ 29-5-20(B))

When an NPC has been filed, a sub-subcontractor or supplier is limited in how much it can lien. The aggregate of its liens may not exceed the amount the contractor owes the subcontractor it worked for, unless it sent the contractor a notice of furnishing labor or materials by certified or registered mail.

The notice must include six items:

1. the name of the sub-subcontractor or supplier claiming payment
2. the name of the person it contracted with or was employed by
3. a description of the labor, services, or materials and their contract price or value, with specially fabricated materials stated separately
4. a description of the project sufficient to identify it
5. the date the first and last labor, services, or materials were furnished or scheduled to be furnished
6. the amount claimed to be due, if any

Effect of the notice. After the contractor receives it, no payment by the contractor to the subcontractor lessens the amount the notifying claimant can recover. The contractor must protect that claimant, typically with joint checks or by withholding from the subcontractor.

Deadline. Section 29-5-20(B) sets no fixed number of days for the Notice of Furnishing. What matters is timing relative to payments. Every dollar the contractor pays the subcontractor before receiving the notice reduces the capped amount, so suppliers send the notice at the start of a job.

Outer limits.

• The total of all liens on the improvement can never exceed the amount due by the owner.
• When the money owed a subcontractor is not enough to pay all its sub-tier lienors, the contractor prorates it among their just claims (§ 29-5-60(B)).
• Individual laborers with liens under $2,000 are exempt from the § 29-5-20(B) notice rule (§ 29-5-20(D)).

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Who Must Watch These Rules?

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Contractor Workflow

1. File the NPC within 15 days of starting work, and post the contractor's name and address and the statutory location notice at the site.
2. Log every Notice of Furnishing received and tie it to the subcontractor's pay applications.
3. After a notice arrives, pay the notifying supplier directly or by joint check, or withhold enough from the subcontractor, because later payments to the subcontractor no longer reduce that claim.
4. Collect lien waivers from subcontractors and from each notifying sub-tier claimant with every progress payment.

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Practical Exam Scenarios

Scenario 1 — Supplier that never sent notice. Trident Builders files an NPC on day 3 of an office park project. The framing subcontractor buys $40,000 of lumber from Carolina Lumber, which sends no Notice of Furnishing. Trident pays the framer in full ($95,000) on August 15. The framer then fails, and Carolina Lumber files a $40,000 lien. Because an NPC was filed and Carolina Lumber never gave notice, § 29-5-20(B) caps its lien at what Trident still owes the framer, which is $0.

Scenario 2 — No NPC filed. Apex Construction never files an NPC on a warehouse project. A rebar supplier to the concrete subcontractor is not paid $30,000 and records a timely lien without having sent a Notice of Furnishing. Because no NPC was filed, § 29-5-23 makes the § 29-5-20(B) cap inapplicable. The supplier's lien is not limited to the balance owed its subcontractor, though all liens together still cannot exceed the amount due by the owner.

Scenario 3 — First-tier subcontractor. Palmetto Electric contracts directly with the prime contractor, which filed an NPC. Palmetto never sends a Notice of Furnishing. The § 29-5-20(B) cap applies to sub-subcontractors and suppliers to subcontractors, not to a first-tier subcontractor, so Palmetto keeps its § 29-5-20(A) lien rights, subject to the ordinary filing and suit deadlines.