KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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Q and A re buy-sell; civil v criminal; holding new owner to contract; leased residential system
July 21, 2025
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Question re Understanding the Hold Back in the alarm buy sell agr Part 8 from article on May 12, 2025
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Ken
Is it customary for the buyer and seller to agree on an assumed attrition rate that will not be deducted from the hold back money at the end of the hold back period?
I sold a bulk of accounts back in 2018 where the buying company did allow a 6% attrition that would not affect the hold back deduction. I've had a company approach me lately that is wanting to purchase accounts that doesn't offer that.
Barry
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Response
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No it's not customary. An attrition guarantee generally will not have a threshold before it kicks in. However, parties are free to agree on any terms they can image [within reason of conscionability] and most attorneys have no idea what's customary in the industry. I've seen agreements proposed where there is a "bucket" but that generally applies to warranty and representation claims, not attrition; however, no reason it can't.
What I am favoring lately is no attrition guarantee. Instead of the guarantee I suggest reducing the multiple by 2 X. That reduction should be more than the guarantee cap, but it will eliminate the uncertainty and potential of dispute, at least regarding attrition.
I can't suggest often enough that if you are selling or buying, engage K&K. We know how to do these deals with the least amount of nonsense and potential for dispute. And for those thinking about selling, think about it. You are reading this article today and so are at least 6000 other people in the alarm industry. And that's today and every day. There is no other forum that will get your availability out there faster and to the largest relevant audience than The Alarm Exchange. That K&K charges the lowest brokers fee in the industry, one month RMR, is a bonus. We are waiting for your call.
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Question re Cant make up case like this against alarm co and owner from article on May 13, 2025
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Ken
Interesting - Does winning a civil case, even by defaul, make it easier for prosecutors to bring criminal charges against him?
Brett
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Response
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I'm neither a prosecutor or criminal defense attorney, but the answer is likely that civil cases involved "preponderance" of the evidence and criminal conviction requires "beyond reasonable doubt", a far higher standard. The civil case is not going to be meaningful in the criminal case other than to assist the prosecutor to understand the underlying facts.
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Question re When can you hold new owner to alarm contract with previous owner from article on May 16, 2025
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Ken,
If the buyer of the company bought the corporation or LLC vs just an asset purchase, would the contract still be in effect?
Stan Corn
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Response
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Yes. Change in ownership of a legal entity will not vitiate a contract; the party signing it is still bound. Sale of assets is different; you need new contract. Another common issue is what happens when a property manager changes and demands you sign it's form agreement. Answer is that the Owner, the property manager's principal, is already bound by a contract and you don't have to sign anything. That position may not endear you to the manager, but that's another issue.
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leased system in a house
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Ken,
I have a customer that purchased a house that had a leased system. The customer does not want to use the current alarm company and would like to switch.
Do they have to rip everything out and start over?
I don’t want to have an issue and I don’t want my new customer to have to purchase everything. Meanwhile they cannot produce a signed copy of the contract. It’s just verbal at this point.
Jamie
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Response
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Leased systems in residence is not common though K&K does have a Standard Residential All in One Lease. The alarm company owns the equipment, always, and only the alarm company has the option to sell the system to the subscriber and the price is set and agreed to in the contract. But the alarm company doesn't have to sell it and can remove the system, wires too, as long as it does not do unreasonable damage to the premises.
I understand you would like to take-over this account and you're asking me how to do it with least expense to the customer. More than likely that also means least cost to you to take-over the account. It's easy for you to swap out the communicator, or just reprogram it if you can, and take over that system.
But the question you might want to ask yourself is whether you'd like it if I helped another company take-over one, or lots more, of your accounts?
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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
ken@kirschenbaumesq.com
www.KirschenbaumEsq.com
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