QUESTION:
Hi Ken,
I thoroughly enjoy your emails. For a newer company like us they
have been tremendously valuable. You do a great service to the industry
and our customers.Got a question for you.
We occasionally do "takeovers". A customer is unhappy with their
current service and ask us to provide service for them. I certainly
understand if their previous alarm company wants their equipment back. How
about the wiring in the house or business?
We all know of "vindictive" alarm companies making it virtually
impossible for another company to come in behind them because the cut or
trimmed the wires. Also, what rights do they have. Does my customer have
to let them in and give them the opportunity to do this? Can we remove the
former companies’ equipment and put it into a box for them to pick up?
Thanks again for the help
Ken Hagerty
Arksas Security
****************************
ANSWER:
Your contract with the subscriber will determine who owns the
wiring and other equipment. You can’t remove it unless you own it or you
have a security interest in it. One of the advantages of leasing your
equipment is that you retain ownership, forever.
There is no "dollar" buy out at the end of a properly drafted
alarm lease. [I am not talking about a finance deal through a third party
lender who buys your paper, but when you lease the system] At the end of
your relationship with the subscriber, whether it comes about because of
another alarm company stealing your account, a tenant moving or the end of
the term of the lease, you have the right to remove your equipment,
assuming your lease provides for that. Your contract [lease] should spell
out your rights, including equipment removal.
When your subscriber or a subsequent occupant in the premises,
refuses to permit you to remove your equipment, and that includes the
wire, you can sue for "conversion". A conversion action arises when
another without your permission retains or takes control of your property,
to your exclusion, and uses it as its own. But what can you sue for when
this happens?
There are two measures of damage. One is the value of the
equipment at the time of the conversion. If you have a provision in your
contract that specifies that you have the right to sell the equipment to
the subscriber upon default for a specific value that is in the contract,
then that may serve as your measure of damage. Absent an agreed value, or
if the party converting the equipment has not signed the contract [such as
a subsequent occupant] you will have to prove the value. If the equipment
is old you may have trouble convincing the judge that it is worth current
equipment value.
But you can try and prove a second measure of value, and that
is the value to the one converting the equipment. Here you would argue
that although you have only a few hundred dollars of wire the cost of
reinstalling it would be several thousand dollars in labor and new wiring.
Of course it’s much cheaper to the subscriber and the new
alarm company if they use your equipment. Suing can be an effective
deterrent.
When dealing with residential subscribers or small commercial subscribers
you typically do not own the equipment or the wiring. Therefore, the
subscriber retains it, even after a default. If you have filed a UCC-1
security statement you could seek to recover the collateral. My contracts
do provide for securing the debt owed by your subscriber to you, though
this relief is not commonly used.
In your question you are the "new" alarm company. If your
subscriber doesn’t own the equipment and doesn’t permit the alarm company
to remove it [assuming it wants to] your subscriber risks getting sued and
so do you if you know you are using the other alarm company’s equipment.
Having said that, conversion actions are rare because they are costly to
prosecute and damages often difficult to establish.