QUESTION:
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hi ken
We have been using your lease agreements for burglar and fire alarm systems for decades in New York and in one of your email letters about renewals recently you said that the renewal clause is not effectual unless the alarm company mails a letter to the lessee, absent of letter, the renewal is a month to month after the term of the contract expires.
First let me ask you, is this correct? Next, if it is correct, is the letter a regular letter or a certified letter with a signed receipt or no receipt signed ? If a letter is adequate, should the lease agreements mention about this method of renewing the full term of the agreement? I have not seen anything in my current lease agreements about this?
What kind of language should the letter say for the full term renewal of the original contract?
If a letter is sent to lessee about renewing the full term of the contract for another five years after it has expired and the lessee fails to pay monthly recurring, can the full term of contract for 5 years be accelerated and moneys collected by initiating a lawsuit?
Please respond.
thanks
warren davis
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ANSWER:
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Here is the New York law http://www.kirschenbaumesq.com/autonewyork1.htm
Check out other state's renewal laws at http://www.kirschenbaumesq.com/autorenewal.htm
You have to send the letter as required by the statute. If you send the letter you can enforce the renewal term. The lease or other alarm contract does not have to mention the notice provision required by statute unless the statute requires that notice; New York does not. So in New York you send a letter stating "your contract will automatically be renewed or extended pursuant to paragraph xx unless you timely cancel the contract." Check the statute for the specifics.
One thing not in the statute is a requirement that the notice be send separately. You can't send it with the monthly invoice even if you send it certified. The court wants to be sure that the notice is not missed by being included with other papers.
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QUESTION:
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Hi Ken.
Given the fact that you are now recommending using a five year term agreement with only month-to-month automatic renewals and sending out a new contract every five years, I have a few questions and comments.
I recently printed up your agreements and sent them out to all my customers to replace their existing agreements, some of which are over 15 years old. The reaction of many has been, "Why do I need to sign a new agreement?" "Are you getting ready to go out of business?" "I've been a customer for 17 years. Why do you want me to now sign up for a 5 year commitment as if I were a new customer?"
I've actually had a few customers cancel as a consequence. I've now decided to reprint the agreement with a 3 year term, which is more in keeping with cellphone contracts, cable and satellite, etc. as well as ADT. We don't subsidize the original install by offering free or cheap systems. Our typical residential installation is $2500-3500, and so we make a profit whether or not we have a monitoring contract (which we always do).
Any suggestions as to how to handle these phone calls and letters from longtime customers who are upset by the new contract?
Also, per code, your contract contains a 3-day right of cancellation, but in a conversation with you, you mentioned that if I'm mailing the contracts out, there is no 3-day right. However, the contract still says there is. Do you recommend having a separate contract for renewals when mailing it out, without the 3-day right so as to avoid confusion?
Kind regards,
Lenny Bianchi
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ANSWER:
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You are correct that I recommend that you get new contracts signed rather than rely on renewal terms. It's good idea to update contracts and subscriber systems periodically. By the way, the Standard Commercial Lease is a 10 year initial term and the Fire Alarm Inspection / Service contract is for 7 year initial term.
There is no magic to the length of the term. Pick terms that you are comfortable with. As far as how to deal with subscribers, that's your job as a salesman for your company. Your number one job is to sell your services, and that means getting your contracts signed. There are loads of email articles on my website dealing with the contracts and your ability to sell these contracts starts with you not only understanding them but believing in them. They need to make sense to you so that you can confidently offer them to your subscribers.