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Who can put a system on test / Webinar registration
September 2, 2022
Registration for Sept 13, 2022 webinar on performing due diligence

          We’ve all heard the terminology, due diligence, in connection with a transaction to buy alarm accounts, but what due diligence actually consists of and how you get it done is not as familiar to everyone. In fact, due diligence can run the gamut from a cursory review of records to a comprehensive analysis that comes close to [and sometimes exceeds] a forensic financial audit.  Who you can and should engage for due diligence can also be an elusive choice. 
          Jim Wooster, Jr., of AFS [Alarm Financial Services], a lender to the alarm industry collateralized by alarm accounts, is opening a new service to perform Due Diligence.  I asked Jim to do a webinar to introduce his new Due Diligence service and it will be presented on September 13, 2022 at noon ET.  See you then.
Webinar:  Due Diligence in alarm industry on buy-sell or loan transaction
When:  September 13, 2022  12PM  ET
Topic:  Due diligence; what it means, what it involves, how it's performed and who  you can get to do it
Presented by:  Jim Wooster, Jr., President of Alarm Financial Services, Inc 
Hosted by:  Ken Kirschenbaum,Esq
Who should attend:  Alarm company owners, CFO, buyers and sellers
Who can put a system on test
          I have an interesting situation for you. We run our own UL listed CS. We have a couple of dealers who we do 3rd party monitoring for. They are in different geographical areas so we don’t compete. One dealer does mainly 2nd homes of people who are generally not at the residences and live out of state, these are vacation homes.
          These homes have sprinkler systems that need maintenance and inspections. These are done through various companies scheduled through a number of property management companies. When they call in to take a system off line we ask for a password. They don’t have a password and it gets awkward for everyone.
          The dealer is willing to sign a document saying that we can put his fire alarm systems on test without a password. We would clearly identify their exposure and liabilities in that document and recommend they provide all customers with passwords.        Other people in our company feel like we are creating too large a liability even if the Dealer signs the document, stating a reason that "this would be less that the industry norm."
          How do you see this?  Can you envision a document that would keep us out of the fray should something happen (recognizing that almost everyone gets invited to the party)
          You do approach the issue from the right perspective by wondering what document might keep you from being sued, and worse, losing.  You wouldn’t be the first central station to take a fire alarm off line only to find out later that there was a fire loss while the system was off-line.  Of course the questions start with who put the system on test or asked it to be taken off-line?  When was it taken off line?  How long was it off-line?  When did the fire start and how?
          If you take fire alarm monitoring seriously then you already know that you don’t put a system on test just because Tom, Dick or Harry called in the request.  The more interesting question is will the central station take the system off-line if the Dealer Calls?  One might ask, what authority does the Dealer have to request the system be taken off-line? 
          Don’t spend too much time pondering the question of the Dealer’s authority because you should know by now that the answer isn’t some mystical theoretic concept; the answer can be found in the contractual relationship of the three parties involved:  The central station, the Dealer and the subscriber.
          The Dealer should have a contract directly with the subscriber.  The central station may have a direct contract with the subscriber, but may just be relying on the Dealer’s contract with the subscriber [which is fine as long as it’s a Kirschenbaum Contract™]  The point is, what contract permits the Dealer to request the system to be taken off line?  The Standard Form Agreements provide that the Dealer is appointed the subscriber’s agent for purposes of managing the subcontractor relationships, which would include the central station providing the monitoring.  There is the authorization needed by the central station to accept requests by the Dealer.  Absent that authority the Dealer’s right to take the system off-line is questionable.  There are some who would take the position that the Dealer is the central station’s customer, not the subscriber.  That’s a risky position and one that’s easily dealt with by the agency appointment in the Standard Form Agreement, especially if the central station has a direct contract with the subscriber, unless that contract specifies who can request monitoring changes.
          A request that a Home Inspection company, or more precisely its employee, can call and take a sprinkler alarm, fire alarm or even a burglar alarm off-line needs to be approved by the subscriber unless the subscriber has authorized the Dealer to make that request. 
          Obviously these kinds of requests are made all the time and very likely central stations routinely comply by taking the systems off line.  If there is a loss either during the off-line time or someone forgets to put the system back on line, and there is a loss, be sure not to be standing in front of the fan.

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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