******************
Question
******************
Ken
Re: Alarm Company not paid from the August 23, 2013 email.
I have a question related to your response to the alarm company that didn’t get paid for their work. I was under the impression that a hardwired alarm system is an improvement to real property because the wiring, which accounts for most of the labor, can’t be removed without causing damage. When residential systems were a large portion of the work I performed, clients would routinely fill out a home improvement sales tax certificate, we would pay the tax on equipment, and no sales tax would be charged (collected). Have things changed?
I have another question related to filing a UCC. If the alarm firm that didn’t get paid were to file a UCC-1, even though permission wasn’t contractually granted, what type of problems is the alarm company facing, if any? It appears to be a legitimate claim, given that the alarm company performed the work and did not get paid. Would you explain the legalities involved with this?
Thanks,
Mitch Cohen
Bric Security
*******************
another comment
*******************
Ken,
According to the state of Florida, an alarm system is improvement to real property which relieves any sales tax to the customer. I was told this directly from the Florida Department of Revenue. Just an fyi. Love the forum.
Dealer in Florida
*******************
Answer
********************
These are interesting legal issues and I am sure others have different opinions and reach different conclusions.
There are laws that restrict the enforcement of several of the protective provisions in a properly worded alarm / security contract. These laws usually address work and material that affect real property or are part of the real property or the maintenance, construction or improvement of real property. To circumvent these laws the alarm contract provides that all equipment is deemed to remain personal property, whether it's to remain the alarm company's property or the subscriber's property. Courts have addressed alarm equipment from this context and accepted that the equipment is personalty. So from a liability perspective we want to continue having the equipment remain personalty.
Taxing authorities have their own take and address the issue without considering the liability law issues. Whether to tax or not may depend on the character of the equipment - either real property or personalty. It is not necessarily inconsistent for the alarm company to insist that the equipment be deemed personalty and yet permit the homeowner to sign a capital improvement certificate to avoid sales tax. Right now this is the best explanation I can give. We don't want to give up the personalty characterization because it may expose liability that is now avoided through contract.
It stand to reason that if you're insisting that your alarm equipment installation is not an improvement to real property and remains personalty that you can't file a mechanic lien, which is only for improvements to real property. Unless you have a very significant installation and are owed substantial money [I'd say $100,000 plus] it's not going to be cost effective to file a mechanic lien anyway. The cost of foreclosing your lien is significant and you may not have priority sufficient to get paid. I have rarely filed a mechanic lien for an alarm company and even then didn't go forward with the foreclosure action. A collection lawsuit is much faster and easier to prosecute.
You cannot file a UCC, which creates a lien against personalty, unless your contract permits it - which all of the Standard Form Contracts do. The UCC will perfect your security interest and you can then sieze and sell the collateral. Again, if your collateral is the equipment you installed then it may be more efficient and effective to commence a collection lawsuit, leaving your lien in place to prevent a sale, transfer or loss of interest in bankruptcy.
**************************
Comment on trip charges
*********************
Ken
Trip charges.
Real estate people say "location, location, location". In Manhattan it takes half hour do drive across the 2 miles wide island, another half hour to find parking and you still get $100 ticket for "no activity". That's on top of $15 round trip toll, $4 per gallon of gas and $15 three hours commercial metered parking if you find one. Parking tickets go up to $180 depends on the violation you're accused of. You can look it up on internet. New installations are usually done in very professional manner and done to code specifications, but service is questionable. Manhattan is so neglected, it may just fall apart. What looks good from far away is corroded and in really poor condition. I doubt there is a way to estimate your trip or overhead, but somehow the work gets done.
Dusan