KEN KIRSCHENBAUM, ESQ ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE You can read all of our articles on our website. Having trouble getting our emails? Change your spam controls and whitelist ken@kirschenbaumesq.com ****************************** More on Special instructions for monitoring – should you allow it July 29, 2024 ************************** More on Special instructions for monitoring – should you allow it from article on July13, 2024 ************************** Ken, Your response to Damar Security Systems on July 13, 2024 regarding Special Instructions in a Monitoring Agreement reminds me of an issue that can come up in an acquisition. Some companies allow customers to have Special Instructions, some don’t, but some companies unknowingly buy accounts with Special Instructions in an acquisition. This is an especially good reason to have an experienced due diligence team review every contract in an acquisition, and to have an experienced industry attorney who can advise you as to whether or not to purchase the specific Agreement. It isn’t uncommon for our team to run into an agreement with Special Instructions. When we do, we make a note of the conditions and the Buyer can review it themselves. Sometimes it is a simple provision, such as “call the private response company instead of PD.” Sometimes it is complicated such as a butcher shop with a temperature sensor that requires an operator to call an on-call manager in case of a temperature alert or power failure. Many companies that wouldn’t agree to Special Instructions unwittingly purchase monitoring agreements that contain them. It’s best to be made aware of the situation during due diligence, so that the buyer can decide how to handle it, or, if they even want to purchase the account. Mitch Reitman 817 698 9999 XT 101 Reitman Consulting Group http://www.reitman.us ****************************** Another comment ***************************** Ken I just had an incident where the signal was placed on a 5 minute delay. The customer (attorney’s office) was not happy and asked why the police didn’t show up. Account history showed the delay and then the operator failed to dispatch after the 5 minutes. When i asked why and when did i approve a delay? The central station response was “this is how we handle burglar alarms”. Still trying to sort this out. Jason **************************** Response **************************** Alarm accounts are sold and transferred by agreement with a purchaser. The Asset Purchase Agreement is the most common and this is used when the purchaser is buying assets owned by the seller and not the seller itself. The other agreement is called a Stock Purchase Agreement; less common because the purchaser actually buys the entity itself, including all assets and liabilities. In either case the purchaser is acquiring the alarm accounts, which is the principal asset of an alarm company. One of the most common representation and warranties made by a seller is that the seller uses a FORM AGREEMENT and that the form agreement was not changed in any material way. In many transactions a seller will simply agree to make that representation; in some cases a seller will remember that it has made changes to the contract form in many situations. I usually put the onus on the purchaser to find the contracts that have changes, rather than permit a seller to make a representation that no changes have been made in contracts. It would be rare for an alarm company not to make some changes in contracts unless it’s a mass market operation where no changes are typically made. Though a seller might recall that it deleted the indemnity clause or increased or deleted the limitation of liability clause, a seller may not focus on or recall that response procedures were specified or changed in an agreement. After the sale a purchaser may find that contract and decide it’s a material change to the form, and that would be a good call if it’s made after a loss, after the fact, and the failure to follow the procedure is claimed to be the reason for the loss. That fact alone might change who has the burden of defending the case and paying any damages; it might create liability where none should have been found. Due diligence requires just that, careful review of the assets to be acquired. That means reviewing contracts. Mitch offers a valuable service performing due diligence. As for Jason’s comment regarding the central station’s policy I want to remind you, the dealer, that it is your responsibility to know your central station’s response policy and to convey that policy to your customers. Keep two things in mind: 1. The dealer is contracting for and agreeing to provide monitoring 2. The dealer is indemnifying the central station for claims made by dealer’s customers for losses Dealers should be satisfied with how their selected central station responds to signals, as a matter of policy rather than in a particular instance where policy was not followed. If not satisfied with the policy then exception needs to be made by the central station or dealer needs to find another central station who will be more compatible with the dealer’s expectations, which by the way, should coincide with the dealers customers’ expectations for alarm response. Dealer, get those policies in writing and give them to your customers. ********************** STANDARD FORMS Alarm / Security / Fire and related Agreements click here: www.alarmcontracts.com *************************** CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304. *********************** ALARM ARTICLES: You can always read our Articles on our website at ww.kirschenbaumesq.com/page/alarm-articles updated daily ******************** THE ALARM EXCHANGE - the alarm industries leading classified and business exchange - updated daily ************************* Wondering how much your alarm company is worth? Click here: https://www.kirschenbaumesq.com/page/what-is-my-alarm-company-worth ****************************** Getting on our Email List / Email Articles archived: Many of you are forwarding these emails to friends or asking that others be added to the list. Sign up for our daily newsletter here: Sign Up. You can read articles and order alarm contracts on our web site www.alarmcontracts.com ************************** 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 www.KirschenbaumEsq.com
