KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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What relationship can GC have with customer and alarm co
September 30, 2026
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What relationship can GC have with customer and alarm co
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Ken
We just joined the Concierge Program and we have a few questions regarding alarm subcontracting arrangements and would appreciate your guidance.
Our main questions are:
As a General Contractor, can we include a margin on alarm equipment and labor provided by a BSIS-licensed subcontractor?
If not, what compensation structures are permitted (commission, referral fee, project management fee, profit sharing, etc.)?
What are our requirements and limitations when using a BSIS-licensed alarm subcontractor?
Can we hold the customer contract and subcontract the alarm portion of the work?
Who should own the equipment, labor, service agreements, and customer contract to stay compliant?
What structure would you recommend for a GC that wants to manage the customer relationship, coordinate the project, and earn a reasonable profit while minimizing licensing risk?
name withheld
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Response
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The relationship between GC, end user and subcontractor is often confusing. How each state, especially those that license alarm companies, would consider the relationship is discussed here. The alarm company should be very carefull contracting with the GC and the contract presented by the GC always needs modification. Join the Concierge Program and use the free half hour each month for this kind of contract review and negotiation. If you don’t want to join the Concierge Program, but you want the legal services be prepared to pay $1000 for the review and negotiation with the GC [same goes for Management Agreements and Vendor Agreements]. Bottom line - join the Concierge Program, use it and save a load of money, and more importantly, be contractually safer. GC are not likely to sign the K&K Subcontractor Agreement, which is really designed for alarm co to alarm co contracting.
You raise a few specific questions which I will respond to, but the real issue is licensing, and that is addressed in more detail below.
Q: As a General Contractor, can we include a margin on alarm equipment and labor provided by a BSIS-licensed subcontractor?
A. Yes, you can quote a price for a project. You should not however hold yourself out as an alarm company offering alarm licensed services; hold yourself out as a GC who would engage licensed trades to do work. The general contracting job should not be limited to installation of an alarm system, but the alarm system can be one of several trades engaged for the project.
Q. If not, what compensation structures are permitted (commission, referral fee, project management fee, profit sharing, etc.)?
A. You get spread on installation charge less cost to pay the licensed alarm co; you do not share in the after-install services for which the alarm company will contract directly with the end user. If you want to be paid for the after-install services have the alarm company employ one of more of GC’s employees as commissioned sales people; then they can get commission on alarm deals based on the RMR for after-install services.
Q. What are our requirements and limitations when using a BSIS-licensed alarm subcontractor?
A. Answered above; you are not a licensed alarm company
Q. Can we hold the customer contract and subcontract the alarm portion of the work?
A. Just for installation.
Q. Who should own the equipment, labor, service agreements, and customer contract to stay compliant?
A. That will depend on whether the alarm co is installing leased equipment, but generally the end user owns the equipment once installed,other than perhaps communication devices which remain the alarm company’s property.
Q. What structure would you recommend for a GC that wants to manage the customer relationship, coordinate the project, and earn a reasonable profit while minimizing licensing risk?
A. GC should be treating all trades basically the same though GC would be wise to rely on the alarm co contract with the end user, encourage end user to sign that alarm contract because it will offer much more protection to the GC and alarm co for potential claims for equipment or alarm co service failure than the GC’s contract with its customer.
I would not overstate the restriction on the general contractor. A GC can contract with the owner or end user to perform the construction project, and that project may include installation of systems that require licensed trades, including electrical, plumbing, HVAC, roofing and, where applicable, an alarm system. The GC can subcontract the alarm installation to a properly licensed alarm company, just as it would subcontract other licensed trade work. The issue is not whether the GC can include the alarm installation in the construction contract; the issue is where the line is drawn between installation work that is part of the construction project and regulated, after-install alarm services.
In California, because the inquiry refers to a BSIS-licensed alarm subcontractor, the GC should be careful not to cross from construction contracting into alarm company operations. The GC may be able to include the alarm installation as part of the overall construction scope and subcontract that installation to the BSIS-licensed alarm company. However, monitoring, fire alarm inspection, repair service, user portal access for cameras, remote services, maintenance and other continuing alarm services should be contracted for directly between the end user subscriber and the licensed alarm company, and paid directly by the subscriber to the alarm company. The GC should not be the party selling or providing those after-install alarm services unless it has the required license and assumes the responsibilities that go with that status.
Florida should be treated the same way. The GC may contract for the construction job and subcontract the alarm installation to a licensed alarm contractor if the alarm installation is part of the building project. But the alarm company should contract directly with the end user subscriber for monitoring, service, inspection, maintenance, repairs and any ongoing alarm or fire alarm obligations. The GC should not collect the recurring service revenue, control the monitoring relationship, or appear to be the provider of regulated alarm services unless it is licensed and prepared to comply with the alarm licensing requirements.
Texas is particularly sensitive because alarm and private security activity is regulated. The GC can manage the construction project and can use a Texas-licensed alarm company to install the alarm system under the GC’s construction contract, but the continuing alarm relationship should be between the licensed alarm company and the subscriber. Monitoring, service, inspection, camera access, maintenance and repair should be covered by the alarm company’s subscriber agreement and paid directly by the subscriber. The GC’s role should remain project coordination and construction contracting, not operation as the alarm company after the installation is complete.
New York also recognizes the practical reality that a GC often contracts for an entire project and subcontracts portions of the work to licensed trades. If the alarm installation is part of the construction scope, the GC can subcontract that installation to a properly licensed alarm installer. The alarm company, however, should contract directly with the end user subscriber for monitoring, inspection, repair service, maintenance, remote access, portal access and other continuing services. That subscriber agreement should contain the alarm industry protective provisions, including limitation of liability, waiver of subrogation, indemnity, disclaimer of warranties, third-party indemnity and arbitration where appropriate.
The recommended structure is therefore more nuanced: [1] the GC/customer agreement may include the alarm installation as part of the construction project; [2] the GC may subcontract that installation work to a properly licensed alarm company; and [3] all after-install services, including monitoring, fire alarm inspection, repair service, maintenance, portal access to view cameras and other recurring alarm services, should be covered by a direct subscriber agreement between the end user and the licensed alarm company and paid directly by the end user to the alarm company. If the GC is designated as agent for the end user for some limited purpose, that should be documented separately and carefully, because acting as agent is a different issue than acting as the alarm company or collecting recurring alarm revenue.
The important distinction is installation versus the continuing alarm relationship. The GC can be paid for the construction project and can include a margin on subcontracted construction work if that is how the construction contract is structured. But after installation, the subscriber should look to the licensed alarm company, not the GC, for monitoring, inspection, service, repair, remote access and maintenance. Do not let the paperwork suggest that the GC is the alarm company unless the GC is licensed and intends to assume that regulatory and contractual responsibility. The arrangement should still be reviewed state by state and by the type of system involved, because burglar alarm, fire alarm, access control, CCTV, monitoring, inspection, maintenance and service work may be regulated differently.
Tomorrow’s article will address a related issue regarding the subcontractor relationship.
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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
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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