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contract with HOA - unit owner wants to cancel / comment on SARRG
March 9, 2018
contract with HOA - unit owner wants to cancel
    Please answer this ASAP.  You are welcome to post on the daily email, but I need some guidance on this ASAP.
    We installed systems and monitor those systems for a development of town homes where the HOA pays the monthly monitoring bill for each end user in a lump sum monthly payment.  The HOA signed a 5-year Kirschenbaum Commercial All in One Master Agreement in June of 2017 and then we had each end user sign a Kirschenbaum Residential All in One.  
    One of the end users wants to cancel and stated they already had another company install a system.  The system has not reported a LTT so we believe the system has not been replaced and still functioning normally, and monitored, as originally intended.  The end user pays for our monitoring as a part of their monthly/annual HOA dues, so we never send the end user an invoice for monitoring.  
    What do we do with the cancellation and what do we tell the end user?  Even if we reply to the end user that it is ok to cancel, do we continue billing the HOA for this one end user’s monitoring or do we stop charging the HOA for this end user’s portion of the lump sum monthly invoice?  Or how should we respond?  The end user is wanting us to confirm receipt of the cancellation.
    An important FYI to the above, the HOA recently tried to cancel the master agreement, and we told them the cancellation fee would be over $55,000 and when they heard that they rescinded the cancellation.  I’m worried the HOA is using this one end user to attempt an “end-around” the master agreement cancellation fee and see how we respond.
    You did use the proper contracts.  The HOA can sign the Commercial All in One [the Residential All in One would be OK also if you don't have the Commercial All in One].  The end users sign the Residential All in One.  
    You left out essential information for an analysis.  When you contracted with the HOA you calculated the rate based on the number of units.  What I don't know is whether you worded the contract to provide that the HOA is paying an RMR that includes all the unit owners or if the HOA is paying a per unit rate RMR without any provision that requires all or a minimum number of the unit owners to participate.  It sounds like the HOA intended to monitor all the units.  
    Because you are concerned that the HOA may use this one cancellation as a way to get out of the contract you should respond the unit owner that monitoring remains available for the system as long as it is connected, and be sure to notify the unit owner that you are ready, willing and able to continue to provide the monitoring service.  There is no reason to notify the HOA that a unit owner has canceled unless your deal does not include all unit owners.  If the deal is that you monitor only those unit owners who want monitoring, and only those will be paid for by the HOA, then you have to notify the HOA if there is a cancellation.  Whether that reduces your RMR depends on how you worded the contract with the HOA.
    BTW, next time you need legal advice ASAP you might want to consider engaging me, for a fee.  Since this issue is common in the industry it's being circulated.
more on SARRG
    I forgot to mention that Sarrg's new program is a significant step for the Industry and insurance availability.  SARRG now has the only "A" Rated policies from the only program that hasn't raised its rates since it's inception over 13 years ago.

Bart Didden


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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700