I have some general questions (with regard to my existing customer contracts) because of the legal change that an alarm contract cannot have an "automatic renewal under the same terms and conditions" provision.  (Yes, I am in a state that has made this change):  
    1.    I assume this means upon expiration of the initial term we are (essentially) on a month-to-month basis and the customer can (without any financial repercussions) cancel at any time.  However, what if they are billed annually for their system monitoring?  Does their payment of a full year of services constitute their agreement that the contract has been extended for a full year?  And if it does not, and they cancel mid-year, are they legally entitled to a refund of the pre-payments?  (My current contract states that if they default on the agreement then "company shall retain all prepayments...").     
    2.    With the automatic contract renewal no longer being valid, how does this effect the (future) sale of accounts and the multiples?  Example:  is a 5-year contract (signed 8 year ago) worth the same resale value as a 5-year contract that is only 2 years old? 
    Obviously it would be best if contracts were resigned after the initial term expires, but that's just unrealistic with people (in general) being less and less inclined to sign long term contracts, which makes me also ask:  Is there a (legally) accepted statement or document that can be incorporated into the renewal billing process that will also renew the existing contract terms without having to submit the full contract again?  I'm not looking to trick anyone, but customers get weird when they think you are changing something they have had in place for a long time. 
Please sign me 
ANON...and thanks again for all the great advice! 
    Making assumptions and then relying on them is something you need to learn not to do, especially if you're trying to make sense out of specific statutes, even those that affect the alarm industry.  Your first mistake [we'll get to the erroneous assumption in a moment] is not using the Standard Form Agreements, because I definitely do not and never have used automatic renewal "under the same terms and conditions".  If you had a Standard Form All in One [or an earlier standard form from us] you would have renewed "month to month", and though I am not sure which state you're in, I am confident that a month to month renewal is not prohibited.  
    Now for your erroneous assumption.  You claim that the statute does not permit automatic renewal for "like term" and therefore you assume that the contract goes on month to month.  Problem is that your contract does not state that it renews month to month.  It states that you renew for "like term" and since that is no longer enforceable in your jurisidiction the renewal simply does not go into effect; the contract is over.  The month to month relationship you mention is most likely one without a contract, and thus no protective provisions.
    There are states with statutes affecting the automatic renewal of agreements, both residential and commercial, and many more states that are likely to consider this kind of legislation.  All statutes, so far, exempt month to month renewal, and for that reason I have used month to month for many years now.  It's the safest way to renew.
    The Standard Forms have a term of 5 years for residential and 10 years for commercial.  During that, especially with all the new technology coming out on a regular basis, you should be updating systems and updating contracts.  But the month to month renewal should be your back up plan.
    As far as equity goes, a contract in month to month renewal is worth a lot more than an expired term contract that has an unenforceable automatic renewal clause.  A contract with month to month renewal should be worth almost as much as a contract within term, and sometimes an argument can be made that it's worth more.  Depends on the subscriber.  
    Let us know what state you're in and the new legislation.

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