QUESTION:
What happens when a buyer purchases property with an existing security system. The equipment is attached to the structure and is assumed to be part of the purchase. Typically the previous owner does not let the new owner or know that the alarm is owned by the alarm company. Who's equipment is it and can it be taken-over by a new alarm company without ?
Mike
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ANSWER:
There are a few general principles of law that come to mind in response to this question. First and foremost, a party who does not have title to property cannot pass or give good title. Generally this principle is expressed as "a thief cannot pass good title to another." There is at least one exception under the Uniform Commercial Code, and that is that a merchant who deals in such property does pass good title to a bona fide purchaser for value, even if the merchant did not have good title.
This exception would not apply in the situation of a home owner selling his house together with an installed alarm system, nor would it apply to a commercial business selling its business, including its lease, leasehold improvements and fixtures. [the exception would apply if an alarm distributor acquired its inventory from mid night alarm supplies, i.e. off the back of a truck, and then sold it for fair market value to an unsuspecting alarm dealer. If the stolen merchandise was traced to the alarm dealer the bill of sale would legitimized the sale and the goods could not be recovered by the true owner].
My office, which probably starts more litigation for alarm companies than any other law firm in the country, has sued many home or business owners because they bought the house, or business premises, with an alarm system owned by the alarm company and then the new owner refused to recognize the alarm company as the owner of the equipment, refused to enter into a lease, monitoring and/or service contract, as the case may be, and otherwise refused to permit the removal of the equipment. The cause of action is for conversion, the legal definition of which is the wrongful, unjustified depriving the rightful owner of property from such property and using same for yourself.
Proving that you are the owner of equipment is not always that easy, or convincing. A contract with the prior homeowner or business owner (tenant) that clearly states that you are the owner of the equipment is a good start. Stickers on the control panel that state that the equipment is owned by you is also a good idea [but not necessary]. A UCC financing statement can also serve as notice of your ownership [though it is really to announce your security interest and not ownership interest], and also not necessary.