Question:
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Ken,
Thanks again for all your great advice and support of the alarm industry. I deal with Home Owners Associations (HOA's) a great deal, and they typically have a third-party management company. Many times, the management company is the one that I work with when installing alarms, setting up monitoring etc.
In this situation, who should sign the contracts, especially the monitoring agreement? Is the management companies signature sufficient even if the HOA later fires that company and has a new management company? Same thing with the board - the board is typically 5 members of the community, if I were to get one or more of them to sign, will it still be valid when they are no longer serving on the board of trustees?
To ask another way, who should I have sign these contracts to provide me with the longest and best coverage in the even of a lawsuit?
Thanks again,
T.J
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Answer:
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A management company is an agent for its principal, in your case, the Home Owners Association. The HOA may be incorporated or an unincorporated entity. If unincorporated, by the way, every home owner is personally liable for the obligations of the HOA [state law may change that, but I think it's the general rule].
Your subscriber should never be the managing agent, or agent. The subscriber is the principal. The reason for this is that should you decide to sue the agent, the defense will certainly be that an agent for a disclosed principal is not liable for the principal's obligations. The agent binds the principal. You do however have to know who the principal is, and you need to be reasonably certain that the agent has the authority to act for the principal.
A management company would normally appear to have authority to act for the HOA. Board members and officers of the HOA would also appear to have authority. It would be prudent, though often not practical, for you to insist in proper corporate resolutions or other evidence of authority from the principal confirming that the agent has authority. Keep in mind that an agent cannot establish its own authority; that confirmation must come from the principal.
We run into agency / principal issues frequently in collection cases. The agent claims it has no liability and the principal claims the agent acted without authority. We are usually successful against one of them. Either the agent did bind the principal or the agent, acting without authority or for an undisclosed [or non existent] principal becomes personally liable for the obligation.
An agent who acts with authority, or a board member or officer who acts with authority, will bind the entity [subscriber] and that contract will remain enforceable even when the agent or officer no longer has its position or authority.
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Comment on invoicing
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Hi Ken,
Some who responded seem to have a preference for annual invoicing. Nothing wrong with getting paid a year in advance. That being said, we strongly encourage monthly payments but will only do so on pre-authorized payment through a bank account or credit card. There is very little cost for this (probably less than sending an invoice by mail every year).
The advantage is that you don’t catch a client at a bad time with a $300 invoice that they don’t really have the funds to cover. Our logic is that quarterly and annual invoices will generate more cancellations from clients who don’t use their system very frequently and from those that are having tough financial times than will low monthly costs that are processed automatically. Many clients likely forget altogether about their payments to us. With pre-authorized payment, we also don’t have to wait for the client to get their mail or e-mail and take the time to pay us. We get paid in the first few days of the month automatically and don’t lose clients because they can’t pay us $300.
Regards,
Kevin Buckland