dealing with tenants / more on capital improvement issue April 3, 2017

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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dealing with tenants  / more on capital improvement issue
April 3, 2017
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Register for next webinar on April 11, 2017: See below for details.
Title: All You Need To Know About Getting Top Dollar for your  Alarm Business -sale or financing
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dealing with tenants
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Ken.
    One of our subscribers has decided to begin renting out his home where we have been monitoring for the past year or so.  My question is, do we need to have the renter now sign the All-in-One and do we switch everything over to their name?  Or does it stay with the owner?  Couldn’t find a similar question already asked on the website. 
 Thank You,
 David Febbraio
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Response
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    This really is a close call.  Additional facts would tip the scale one way or the other.  
    You could take the position that the subscriber is your customer and the party with whom you have contracted.  You owe no duty to the tenant and you refuse to recognize the tenant.  Under this theory you would not want the tenant to sign anything.  You would need to be careful not the inadvertently establish a relationship with the tenant.  For example, you should not accept any requests by the tenant for service or changes in a call list or response policy.  However, if your subscriber gives the tenant the password and tells you to service the system when the tenant is available to let you in, you raise additional issues that may change the answer.
    I think the better approach is to tell the subscriber that since the tenant is in fact going to benefit from the alarm services you insist that the tenant sign off on the All in One agreement, even though the tenant isn't going to be making any payments.  It might matter what kind of alarm system is in place.  An intrusion or other security system that sends signals to the central station is likely going to involve the tenant in some way.  A fire alarm, on the other hand, is not turned on or off and isn't used in that sense.  Furthermore a fire alarm could be deemed for the protection of the subscriber-owner's property.  Problem is that you know the tenant is residing in the premises and relying on the smoke detectors and response to fire alarm signals; the tenant also has property to protect as well as life safety issues.  
    The best advice is never do any security or fire work or services without a proper contract to protect you.  That means you must contract with anyone who is using the system or services, relying on those services and has expectations as to how those services are likely to provide protection to person and property.  Why not insist on getting the tenant's signature on a Standard Form Agreement?  Better safe than sorry.  That tenant suffers a loss you can bet the tenant is going to sue you or the tenant's insurance company is going to sue you and you don't want to rely on the defense that you owed no duty to the tenant.
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more on capital improvement issue from March 25, 2017 article
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Ken,
    Take a look at this web page of an article in Security Sales magazine. http://www.securitysales.com/article/new-york-tax-board-says-installations-not-subject-to-sales-tax
Gene
Reliable Alarm
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Response
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    This is another sticky issue.  There are two competing issues and they may not be mutually exclusive.  The taxing authority may consider the alarm system a capital improvement, which by definition means it's an improvement to real property - a permanent improvement.  That would get you out of having to charge and collect sales tax.  It may also mean you don't have to pay a use tax in those states that have that kind of tax [this is really better left to Mitch Reitman].  
    But the other competing statute deals with prohibiting certain protective provisions when contracting for work improving real property.  New York has such a law.  So does Tennessee and West Virginia, and there may be others.  In these states you may not be able to get indemnification for your own negligence or exclude or limit your liability for your negligence.  This seems like a more important issue to me than the sales tax issue [though admittedly that can be a nightmare too].  
    Question is whether you can treat the installation as a capital improvement, not collect sales tax, and later claim that it's not an improvement to real property so you can rely on your protective provisions.  This question I can't answer.  To be safe I suggest you opt for collecting the sales tax.  The Standard Form Agreements make crystal clear that the alarm system remains personalty, is not a fixture and is not an improvement to real property.
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Title: All You Need To Know About Getting Top Dollar for your  Alarm Business -sale or financing
When: April 11, 2017 noon EST
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Where: Your computer for power point, live video and call in on computer or phone
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THE ALARM EXCHANGE

Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
ken@kirschenbaumesq.com
516 747 6700
www.KirschenbaumEsq.com
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