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New owner takes over building with fire sprinkler alarm – now what?
December 3, 2021
New owner takes over building with fire sprinkler alarm – now what?
          I have a commercial subscriber with a fire sprinkler alarm system.  Building has new owner, but previous owner hasn't alerted us to cancel.  When they do, we will have them submit a cancellation form. The owner has signed a Fire All in One and the initial term is not expired.
          The new building owners' property management company called today (sale final today) to change over ownership and make changes to account.  I need to get a new contract signed asap.  I was told the building owner is traveling and can't sign it until next week.  The property manager requests to sign the contract.  Says he has authority to sign contracts on behalf of building owner.
          I see 2 options:
1. Continue monitoring under old owner with old owner emergency contact list (since they haven't called to cancel monitoring), until new owner can sign.
2. Property manager to sign agreement temporarily until new agreement can be signed by building owner.
    Please advise
          This issue raises a number of issues beyond a simple answer that a new contract is needed, which is certainly one and maybe the best option.
          The old owner, who has apparently just sold the building, is still under contract and the term has not expired; he would owe 80% of the balance of the contract.  If the alarm system is leased, all or part of it, if you have an updated Fire All in One [the Lease format] you can also recovery 80% of the value of the installed equipment if you exercise your option to sell that equipment to the old owner.
          The old owner does not have the right to assign the Fire All in One to the new owner.  You can consent to an assignment.  Your consent to assignment should insist on an Assignment and Assumption of the Fire All in One by the old owner and new owner.  Be sure to remind the new owner that you are required to be named as an additional insured on the owner’s liability insurance policy.  Incidentally, on the assignment the new owner doesn’t get to negotiate the terms of the Fire All in One.  If you want to agree to changes you may, but you should be getting someone in return, such as an extended term on the contract expiration date.
          You really can’t ignore the notice you received that the building has sold and there is new owner.  Even if occupancy hasn’t changed because the same tenant remains in the building, the new owner does have an interest in the property that the fire alarm serves and would be able to pursue a claim against you.  Unless the new owner has signed a new contract or assumed the older contract you will likely not have any of the protection the Fire All in One affords you.
          I am fine with the managing agent signing a new contract or the Assignment and Assumption Agreement [that is not a standard form that is on our contract order form page].  An agent can sign for its principal.  But an agent acting without actual or apparent authority cannot bind its principal. Also, an agent cannot attest to its own authority.  In plain English, that means that the assurance from the agent that he has authority cannot be relied on.  You need confirmation from the owner that the agent has the authority.  You can get that confirmation in different ways; in writing is best and email is fine.  Seeing the agent’s contract with the owner is also fine but you need to read it to see if it lays out scope of authority.  A property manager generally has authority, which leads to the other way to rely on authority.
          Apparent authority is also acceptable, though it is subject to challenge and a bit harder to establish.  Even a property manager can be thrown under the bus by the owner if the owner wants to disown the contract.  It’s quite the problem for the agent since an agent acting outside the scope of his agency authority becomes personally liable.  That’s one reason K&K’s Collection Department routinely sues the agent and the owner; one or both of them should be liable.
          If the agent has authority you don’t need to get a contract or assignment signed by the new owner at a later date.  It would be prudent to send the fully executed contract [signed by you and the agent] to the new owner.  Too often owners claim that the agent didn’t have authority to sign a contract, that the owner never saw the contract and that the payments made over years were made because the alarm company sent invoices so they were paid. Be sure to make it clear that there is a contract and get a copy to the owner and try and get confirmation of receipt, not just of an envelope, but of the contract.  If for any reason you can’t get any confirmation from the principal that it has received the contract executed by the agent, when you send the invoices make sure it references the signed contract and date of contract. For example, the invoice should read “pursuant to contract dated December 3, 2020”.  If would be even better if you could add the payment number, such as “payment 36 out of 120”.
          One final note.  Do not continue monitoring or other services without a contract from the new owner; either new contract or assignment and assumption of the older contract.  Every day you continue to monitor without a proper contract means you are taking a risk you shouldn’t be taking.  If you can’t get the new owner to sign up then you need to declare the older owner in breach, which I would assume the old owner would be, especially if the premises are now occupied by the new owner. You can ask the older owner for the insurance certificate naming you as additional insured and if it doesn’t have it, that is an immediate breach. You would cancel monitoring and notify the AHJ.  You can let the new owner know you are not willing to accept the risk with no contract. 

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301