KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Attend our free round tables at ISC / How does the alarm lease work
July 17, 2021
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ISC round tables - call to attend and participate
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Meet with experts. Check for openings at the Round Tables. Don't miss out on these free educational participation meetings. Contact Stacy Spector,Esq at 516 987 8428 or SSpector@Kirschenbaumesq.com for availability to participate
Confirmed round tables:
Monday July 19 from 2-3pm Ron Davis - discussion on selling and listing with broker
Tuesday July 20 from 11 am to 12pm Troy Iverson, Avantguard. Central station issues and what's new at Avantguard
Tuesday July 20 from 2-3pm Mitch Reitman. Selling, taxes and structuring issues
Tuesday July 20 from 4-5PM Morgan Hertel, Rapid Response. What's new at Rapid and exciting in central station operations
Wednesday July 21 from 10 -11am. Shawn Iverson, The Insurance Center. E&O coverage and insurance issues for alarm industry
Wednesday July 21 from 2-3pm Ken Kirschenbaum. Contracts and how to respond to contract challenges
Wednesday July 21 from 4-5 pm Ken Kirschenbaum. Buy - sell considerations from legal perspective. How to plan for it and what to expect
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How does the alarm lease work – follow up to article on July 16, 2021
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Ken
Your recommendation that we lease the system to the subscriber so we can exercise shut-off rights [July 16, 2021 article] brings a whole other round of questions: how do I lease systems for a set price for a undefined period of time? For example, the Lease is five-year residential and ten year commercial. Can I lease it for the price of the equipment? Say $200 for a camera for the term of the contract and any subsequent renewals?
Presently they pay extra for a maintenance agreement. If they don’t own the equipment are we obligated to provide maintenance and for free?
We want them to pay for the equipment upfront and then in their mind they are receiving value for what they’re paying for. When they own the equipment would I be able to command such a high dollar amount if I leased the equipment on install. To be determined but you catch my line of thinking there if we go down that rabbit hole we might be back to providing free equipment upfront with the hope and prayer that they pay on the backend.
I don’t have the ability to be able to pull credit so I have to use personal intuition to decide who gets free equipment and who doesn’t, which opens up a whole other can of worms; were they denied free equipment because they’re a protected minority, because they’re smokers or because their house is in the substandard area of town? Sounds like a big ass can of worms.
Anon
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Response
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You didn’t fall out of bed one day and know how to sell and install alarm systems [including all security, camera and fire systems]. You had to learn how to do it. When you went from signing your customers up on Kirschenbaum Contracts™ instead of napkins [or home-made contracts or written by who knows who – same as napkins] you had to learn how to sell those contracts. If you are smart you signed up for the Concierge Program so you can get assistance with the contracts – help negotiating the terms of the agreement. Well, there are Standard Form Leases that you can learn how to “sell” to your customers.
How can you structure your lease so it doesn’t put added risk on you waiting for payment over the life of the lease? The answer is easy, charge for installation. The installation charge may be about the same as if you were selling and installing the system the system outright. Keep in mind that there are many variables in the typical alarm deal. Think about it; you need to consider the cost of equipment, labor for installation; then monitoring charges and corresponding expenses; potential repair cost when you provide repair service; labor and system expense for access control administration. There are many components to calculating your charges. You can start by figuring out, by doing the math, what will you collect over a 5 year residential deal or a 10 year commercial deal. Say it’s $1500 for sale and install and $40 a month including monitoring and service. That’s $3900 for the residential and $6300 for the commercial. Now let’s lease the system. Why should a customer agree to a lease instead of a sale? A commercial customer will be able to expense the lease rather than depreciate the alarm purchase. Both residential and commercial customers may be persuaded that leasing is the way to go because they don’t want to be worrying about the system and your lease calls for full monitoring and service of the system for ordinary wear and tear. There are several “selling” features to the Lease and since this is a public forum I am not going to discuss them. Might be appropriate for a webinar or even better – if you’re at ISC next week attend one of the Round Tables on Wednesday July 21 and we can discuss it. Or, call me after ISC for private consult; figure 15 minutes to half hour, $125 to $250; free to Concierge Clients.
The bottom line is that you should end up with the same money with a lease and you still own the system, which in many cases means you “own” the site; that’s especially the case with commercial fire system which are expensive to replace.
Leasing generally brings the same installation charge and more RMR. Learn how to sell the leases if your market is right for leasing.
PS - you don't have a "maintenance" agreement; you have a repair service agreement within your All in One agreement
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To order up to date Standard Form Alarm / Security / Fire and related Agreements, click here: www.alarmcontracts.com
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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.
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THE ALARM EXCHANGE
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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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