Cancellation notice

  February 18, 2011

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Question

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Dear Ken,

    Since purchasing your updated contracts, we have been trying to get the following signed on every service call:

Disclaimer Notice

Service contract (using per call basis provision)

Monitoring Contract

    My question is this. If we are resigning an existing customer, with the new monitoring contract do we have to also issue the 3 day notice of cancellation? Sometimes the existing customers monitoring contract was already expired and sometimes there is still time on it.

Thank You,

Jim Santaniello

Banner Alarm Company, Inc.

Massapequa, NY

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Answer:

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    The cancellation notice is required by statute, usually called the "door to door act".  For the 3 day cancellation notice statute in your jurisdiction go to http://www.kirschenbaumesq.com/noticeofcancel.htm

    "Door to door" literally means just that.  The 3 day cancellation notice kicks in if you, or anyone working for you, does any part of the sale in the home owner's house before the contract is signed.  So let's first point out when the 3 day notice does not apply.

    You have a store front where you display security systems.  Consumers come in, discuss their needs, negotiate a deal for an alarm system, and then sign a contract which contains all the terms [which means you don't get to go to the house before agreeing to scope of equipment or price].   Since you have not gone to the house before the contract is signed you do not have to provide a 3 day notice of cancellation.

    If you call the customer, visit the house, and then sign the contract either at the house, your office or somewhere else, you must use the 3 day notice of cancellation.  Once you've been to the house I think it wise to use the 3 day notice of cancellation.

    Now the question.  It's already your subscriber, under contract.  You mail a new contract to the subscriber for signature.  You don't follow up with a visit to the house to convince the subscriber to sign.  Under this circumstance you do not have to provide the 3 day notice of cancellation [in most jurisdictions].  But should you anyway?

    There is only one reason to use the 3 day notice of cancellation even though you don't have to.  When you go to sell your subscriber contracts [your business] your buyer may want assurance that you used the cancellation notice in all residential transactions.  Your practice of getting contracts signed through the mail may or may not be acceptable to the buyer. 

    So even if you do contracts through the mail you have the option to include the 3 day notice of cancellation, although the form is supposed to be filled out at the time of the contract execution and dated by you.  You may have to improvise.  A letter accompanying the proposed contract advising that the subscriber can cancel within 3 days of signing and returning the contract.  [I do not think this is necessary - but mentioning it in case you've decided you'd rather give the notice].

    When you use the mail exclusively and don't visit the residence before the contract is signed then it doesn't matter if the subscriber is a new customer or a renewing subscriber.