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liability to tenants or other non-contracting parties
January 12, 2018
liability to tenants or other non-contracting parties
    I have been working with central stations setting up remote video services such as Doorman and Building monitoring.  The Alarm company enters into a contract with the building owners or management company.      There is no contract with any tenants in the building.  The contracts do contain an Indemnity /Waiver of Subrogation Rights /Assignments  clause that states there are no third party beneficiaries, which one of my customers believes is what limits their liability.
    What liability is there if the central station allowed someone entry that caused someone harm.  How can that liability be limited?
Mark Fischer
631 850 0084
    Good question.  Let me expand it.  The same principles apply to intercom systems and any other system or service that is in the tenant's apartment that the tenant interacts with.  That would include any type of security system that is arguably for the benefit of the tenant as opposed to the building owner or landlord.
    Clearly, non-contracting parties are not going to be held to and limited to the contract provisions.  A tenant that doesn't sign the alarm contract isn't going to be subject to the Exculpatory Clause and other protective provisions.  While the alarm company should have a contract with the owner, and that contract should have an indemnification provision, that provision may not be sufficient to insulate the alarm company from liability.  The better practice is to have the end user sign an alarm contract.
    Different scenarios illustrate the issues.
    Let's start with the video issue that you raised.  Virtual doorman or virtual tours within the building, are not necessarily for the benefit of the tenants; it could be a safety measure that the owner installs for its benefit only.  If the tenant has no control or access to the video system or service [contact with the central station] and only the owner has the contact, then a good argument is made that it's an owner only service.  However, if every tenant has access in their apartment to the system and service then it's harder to claim the tenants are not intended to be at least third party beneficiaries.  Of course we would argue that as third party beneficiaries the tenant would be bound by the contract signed by the owner, under which the tenant claims third party status, but that may not be enough when the tenant brings a tort claim, especially for non-economic damage [personal injury or death].  The most prudent practice would be to have each tenant sign an end user agreement with the protective provisions.  An owner could incorporate the alarm contract terms in the lease, and that would suffice, but most don't do it.
    Owner installs a PERS system in each apartment.  Here the tenant is the end user, even though the owner pays for the PERS service.  The tenant should sign a separate contract with the alarm or PERS company
    Owner installs fire detection devices in each apartment.  Tenant can't turn it on or off and has no contact with central station.  This system is for the owner and tenant need not sign an end user contract.
    I know your concern is liability.  But that's not the end of the issue.  What if the alarm company signs up a building and tenants have some direct use of the systems.  Maybe not the alarm, but the intercom which includes the video service, maybe a perimeter intrusion alarm or PERS unit.  It's a great contract, $1800 RMR.  Maybe this alarm company specializes in this market and has lots of buildings under contract; aggregate RMR of $40,000 or more.  Comes time to sell the accounts.  Buyer is not willing to buy these accounts because the tenants have not each signed an end user agreement.  Well the 38 times mulitple won't be including the $1800 contract and all the other aggregating $40,000.  There goes $68,400 to $1.520,000 down the drain; or at least will cause all kinds of aggita at the time of sale.  For what?  Because you were too lazy or cheap to get the contracts signed properly?  
    No sale on your horizon?  Well what happens when your central station or insurance company wakes up and figures out that you don't have proper protection because you took short cuts?  You think they are willing to accept the added risks for what you pay them?  To borrow and paraphrase from one of my favorite actors Eli Wallach from one of my favorite movies, The Good, The Bad and The Ugly, "there are two kinds of people in this world", smart and dumb.  Which are you?  
    Here is where you get the proper contracts.  Then all you need to do is use them, to be smart.

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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