Question:

Ken,

I have been in the security industry in sales, management and ownership forover 35 years and have not only enjoyed your legal input into our industry,but also when your e. mails "spark" some additional questions in variousimportant areas from time to time.

My concern today deals with alarm companies which issue Alarm InstallationCertificates (not UL) to  their residential/commercial customers ordirectly to their insurance carriers, either upon completion ofinstallation or send these certificates out on an annual or periodic basisupon request.

Since "Certificate" means a document that certifies and "Certify" means todeclare formally to be competent, valid and true, my concerns are two foldwhen we place the following verbiage on these signed documents: "Thissystem is complete as ordered and has been fully operational since the dateindicated below" or "We certify that this system is complete and has beenfully operational since the date indicated below."

Concern #1: On new installations wouldn't it be better to leave thisverbiage out all together or not even use a Certificate Form, but just usea standard notification of installation letter with the customer'sinformation and system specifications?

Concern #2: We issue the Certificate with the above verbiage on theinitial installation and issue another Certificate on the same locationthree years later (or when a new owner moves in), without inspecting thesystem most of the time, and again "certify that this system is completeand HAS BEEN FULLY OPERATIONAL since the date indicated below," which isusually the original installation date.

Do you think my fears of additional liability and exposure are valid?
Signed,

Concerned

___________________________

Answer: 

Your relationship with your subscriber is defined by your writtencontract.  Many alarm companies use my standard forms [www.alarmcontracts.com], so I will use those as a frame of reference toanswer the question.    None of my contracts provide for the issuance of a "certificate".  If Iunderstand the question, you refer to a certificate that a home owner orcommercial subscriber gives to his/its insurance company so that insuranceunderwriting requirements are met and insurance coverage issued.Homeowners can receive a discount in home owners insurance; commercialsubscribers may not be able to  obtain fire or liability insurance withoutthe certificates.    My standard form contracts do not mention "certificates".  The"certification" is nothing more than a confirmation that the alarm systemis installed and functioning.  It is likely to impose liability only whenyou know that the system is not functioning, or you provide a certificationwithout making some inquiry or inspection.  In other words, you may haveexposure if you negligently represent, or willfully represent that thealarm is in working order when that is not the case.    The certification would constitute a separate undertaking on your partand you could be held liable for your misrepresentation or willful ornegligent misrepresentation.  In other words, for knowing you are nottelling the truth or knowing that you didn't make sufficient inquiry beforeexpressing a statement of fact.    A provision in the contract exonerating you for the certification willnot protect you since the party relying on the certification is not a partyto the contract.    If you issue a certificate you should be able to document that youinspected the system and it is working, or at least get a representationfrom the subscriber regarding the system's operation.