Opinion ID: 1363940
Heading Depth: 2
Heading Rank: 3

Heading: profit as a component of mechanic's lien

Text: In the arbitration procedure Sentry claimed the balance due for profit under the Side Agreement. The Circuit Court adopted the AAA award as a mechanic's lien judgment. MCDC asserts that profit and overhead are not proper components of a mechanic's lien. We disagree. The parties by express contractual provisions fixed the compensation for full performance. Overhead and profit under the Side Agreement were components of the contract price. S.C. Code Ann. Section 29-5-10 (Supp. 1984) provides, Any person to whom a debt is due for labor performed or furnished or for materials furnished and actually used ... by virtue of an agreement ... shall have a lien... [Emphasis supplied]. In Williamson v. Hotel Melrose , 110 S.C. 1, 96 S.E. 407 (1918), this Court upheld a contractor's mechanic's lien for oversight and supervisory services. The general rule on whether overhead and profit are lienable is stated in 53 Am. Jur. 2d Mechanic's Liens , Section 107 (1970): Since the statutes provide a lien for labor performed and materials furnished, the question arises, particularly where a contractor works under a cost-plus contract, whether items which are not direct labor or material costs, such as overhead and profit, are lienable. Such items, as such and standing by themselves, are nonlienable, but they become lienable when they are included in a contract price or are reflected in the reasonable value of labor or materials furnished. Thus, the cost or value of labor for which a lien may be claimed is not necessarily confined to the actual wages paid by the employer to the employee actually performing the labor. It may also include costs and expenses of operation in addition to direct wages paid. We hold that overhead and profit, when stated as part of the contract price, are proper components of a mechanic's lien.