*************************
QUESTION: CANCELLATION NOTICE WHEN MAILING CONTRACT
*************************
Ken,
    We are using your alarm contracts for our customers.  When we send the contract by mail, what date do we use on the Notice of Cancellation?  Do we use the date that we are sending the contract, or the date we expect that they will receive the contract.  This will make a difference for the date they have to cancel by.
Thank You,
Lisa Brown
F&S Logo
Napreville, IL
************************
RESPONSE
************************
    Good question.  A 3 day notice of cancellation is required in all states.  It provides a "cooling off" time to give a customer some time to recover from a high pressure sales pitch.  The statute is generally referred to as the Door to Door Sales Act, and that's because it's intended for pressure sales pitches at a residence.  Typically the statutes require the notice of cancellation unless the sale, which means the execution of the agreement, takes place at your regular place of business.  So the notice is required not only when the pitch is made at the residence, but if it's made at a convention, seminar, promotional event or perhaps a satellite office like a kiosk at a mall.  
    What purpose is served requiring the cancellation notice when the sale takes place on line or through the mail?  I suppose an on line sign up could be facilitated and coordinated with a telephone sales pitch.  The customer is persuaded to sign up while the highly trained telephone salesman is pushing the sale.  A mailed contract however does not have that same level of pressure.  No matter how skilled a sales pitch may be, by the time the contract arrives in the mail [assuming it ever gets there with the increasingly deteriorating US mail service] the customer has had plenty of time to "cool off".  No cancellation notice should be required.  Keep in mind that others may want proof that you complied with the cancellation notice requirement or justify non compliance.  So you may want to retain proof of execution through the mail, such as your cover letter, instructions on execution and return and the mailing, including envelop, from the subscriber.  
    If you want to play it safe and provide a 3 day notice of cancellation then send the cancellation form with the contract.  Date the form sufficiently in advance so that the subscriber will have at least 3 days after the contract is received by the subscriber.  You should also keep in mind that the subscriber is entitled to a fully executed copy of the contract, so you may want to sign it before sending it to the subscriber.  You would then instruct the buyer to return a copy of the fully executed contract to you.  
    By the way, be aware that the 3 day notice of cancellation appears directly above the subscriber's signature and it refers to a cancellation form that you are required to provide.  The 3 day cancellation notice is therefore separate from the actual cancellation form.  You are required to fill in the date of the cancellation form giving the subscriber the outside date for canceling.  The Standard Form Residential All in One has the cancellation notice where it belongs, in the format required, and we provide you with the actually cancellation form.  The cancellation form is presented to the subscriber in original and two copies.  You leave the original and one copy; have one copy initialed and retain that copy.  This third copy that I am suggest you get initialed and retain is not required by statute.  You are only required to leave the original and one copy of the cancellation form.  I want you to have proof of deliver, so I want you to get and retain a receipt.  You can do it same time you get the Disclaimer Notice signed.  Since the Disclaimer Notice isn't a contract you don't have to leave a copy with the subscriber, though you may want to so that the subscriber is reminded of all the items on the Disclaimer Notice.
*************************
CONTRACTING WITH BUILDING THEN HOME OWNER
************************
Ken:
    How would you recommend we handle a situation where a builder paid us to install a security system in a newly built home but the person purchasing the home is responsible for the monitoring contract?
    We recently had a home owner ask us to begin monitoring the alarm system a few weeks before they had gone to settlement with the builder on the new home. My concern is that our monitoring contract is with the home owner but they have not officially purchased the home yet. Would we need to get the builder to sign a contract for monitoring to protect us while we are monitoring the home until it goes to settlement? Would it be two separate contracts? One with the builder “until settlement” and another with the home owner “after settlement”?
    Would any of your answers change if it was a situation where a land owner contracted with a builder to build a home on property they already own?
    If you use this question in your newsletter can you please post it as
anonymous
*********************** 
RESPONSE
***********************
    The builder should sign a Residential All in One.  You will be using the Sales portion and you can also use the Monitoring part.  You could change the term by indicating that builder can cancel monitoring when house is sold, or that it automatically cancels upon sale.  Require the builder to notify you of a sale.  You can also ask the builder to require the buyer to sign up for monitoring and service with you, and you can even provide the contract the home owner will need to sign.  If the builder doesn't want to assist you in that way then make it your business to meet the home owner at or prior to the closing.  Unless the home owner signs your Residential All in One for monitoring and service you should not provide monitoring or service.  The system should be left so that it could be turned on or off, but the keypad should read "no monitoring".  Remember:  no contract, no monitoring.
    Even if the builder wants you to continue monitoring post closing and agrees to pay you, you should decline unless the occupant of the premises, be it new owner or tenant, signs the Residential All in One.  It's the end user who is using the alarm system and that end user needs to be under contract, even if the charges are being paid by someone else.  If there is a loss, fire, intrusion, etc, it's the end user who is going to sue you; the builder too if it's a fire and the builder still owns the property.
*************************