Length of Contract Term - Are There Limits if You're Not ADT
I received this inquiry from a California residential subscriber. Since I represent the alarm industry and not subscribers I didn't respond, but the inquiry raises an issue that confuses alarm companies, especially in California. The question was:
"I wanted to ask what that Legal contract length for a residential home alarm in California is. I currently have Vivint and they locked me into a 5 year contract when I was under the impression that it was 2yr maximum."
Too bad this subscriber feels "locked in" as opposed to having arranged for alarm protection for 5 years so she didn't need to be worried about it, etc. Well, I am sure there is another side to the story of being "locked in". Some inducement must have been offered to get this account. But I am off topic.
There is only one jurisdiction I know of that limits the term of a consumer contract, and I am not even sure the law would apply to alarm services. That's in Westchester County, NY. That law holds that no contract for future service can exceed two years. Notably that law does not apply if the future service is contracted at the same time as the sale of the equipment.
Why all the confusion. Recently I heard from an alarm company in Georgia who was told by a lawyer that there was a limit to the contract term. I couldn't find it. That brings us to California, where there is perhaps the most confusion.
I believe that ADT had an issue with an attorney general or other investigative agency in California and agreed to limit the term of its contract to 2 years as part of a resolution of the investigation. I don't recall seeing the agreement. That 2 year limit however affects only ADT, not you or anyone else. There is no legislation in California that I am aware of that restricts the term of the alarm agreement [and trust me, there are plenty of laws in California that affect the alarm agreement, so it's not as if the legislature forgot about this industry.
The Standard Form Agreement is for 5 years, so Vivint's 5 year agreement is in line with industry standard. That raises another interesting question. What makes industry standard? I can see two possible alternative criteria. Either it's based on the most customers who sign alarm contracts, or its based on what most alarm companies have in their contracts. So is it company or subscriber based, or both? My guess is that ADT, one company, has the majority of alarm subscribers. But thousands of alarm companies use the Standard Form Agreements. There is great similarity among most alarm agreements so often the unified approach is the same. In California ADT has a 2 year term, but most others have a 5 year term. I think 5 years would be the proper measure of what's customary.