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Sub Installs And Alarm Co Activates - Is This Allowed? AZ AHJ Responds, Party Invitation - December 14, 2016

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Date - January 21, 2016
Time: 7 PM to 10PM
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Sub installs and alarm co activates - is this allowed?  Az  ahj responds
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Ken,
    We have a project where the property manager wants to install the security system.  Our technician, who has an alarm license license would finalize the installation and activate the system.  Can we do this by AZ law?
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RESPONSE
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    Sounds like a pretty straight forward issue.  I know the question is intended as a license issue but I think other issues are also in play.  
    I think most jurisdictions that require an alarm license are going to be similar in the sense that they all permit a property owner to install a system.  Hence, DIY systems.  This of course does not apply to any alarm system that is required by law as opposed to one that is not.  So an intrusion system may not be required in a commercial premises but a fire alarm would be.  Your subscriber can install the intrusion system itself.  A property manager could probably install the system but can't charge for the installation if it's not licensed.  Not so with the fire alarm system.  That would probably have to be installed by a licensed company, and the property owner could somehow install the equipment itself it could not inspect, service or monitor the system without a required license.
    So this question involves a security system, not fire, and the answer is that the subscriber can install whatever part it is able to and the licensed alarm company can finish the installation and activate the system.  Just to be sure I asked an AZ AHJ, Detective Robinson, and his response is below.  Before I turn the "mike" over to him though, I want to comment on another issue, liability.  If you are going to finish up the installation and activate it I think you "own it".  You will be held responsible if the system fails as if you did the entire installation, so be careful.  If you agree to let the subscriber do some or all of the installation be sure that your contract clearly identifies the allocation of work and insist that you be compensated for inspecting the work done by the subscriber or others.

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    HERE'S DETECTIVE ROBINSON'S RESPONSE, AND THANKS FOR PARTICIPATING
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Ken
    Of course you know that my standard response when I am asked to give legal advice is that “I am not giving legal advice” and you should always ask a lawyer because they get paid more than I do, oh wait, but in this case, you are the lawyer asking my opinion as an investigator…
    I can tell you and your readers from an enforcement perspective that the answer to the question asked is yes, a property manager can install the alarm control panel for “their employer” without any alarm business or agent’s license and the alarm company asking the question can finalize and activate the system because they indicated that their alarm company and their agents are properly licensed in Arizona. 
    The only follow up issue I have to clear up for them is, I am assuming that their business has a proper Az license in order for their tech to be licensed in Az.  If they don’t have a proper Az business license and just plan to subcontract out the work to some other company’s licensed tech, that back door approach is illegal and does not work as others have tried to do that before you and we are on to that game.
    The Arizona Alarm Business License regulation makes provision for people who want to install, service, or otherwise maintain their own alarm equipment that can be found in ARS  32-101 under the definitions of alarm agent, alarm business and proprietor alarm.  The Phoenix Alarm Ordinance as well as other local jurisdiction alarm ordinances typically have similar exclusions for a proprietor. 
    Interestingly, the proprietor can also operate their own “in-house” central monitoring station as long as they do not provide monitoring services for any other entity outside their own organization.  An in-house or “mega” proprietor would be like some banks that have their own alarm service techs and their own central stations.  For example, I have had alarm inspections with banks who are mega proprietors who also outsource some of the alarm service work to a locally licensed alarm company / alarm agent and that is perfectly legal under current AZ laws.  This is a similar situation to the question that was asked. 
    Here are the AZ Alarm Business / Agent License laws pertaining to “proprietor”: 
ARS  32-101. Purpose; definitions
B. In this chapter, unless the context otherwise requires:
3. "Alarm agent":
(b) Does not include any action by a person that:
(i) Is performed in connection with an alarm system located on the person's own property or the property of the person's employer.
4. "Alarm business":
(b) Does not include any of the following:
(iii) A person who installs a nonmonitored proprietor alarm for a business that the person owns, is employed by or manages.
28. "Proprietor alarm": 
Means any alarm or alarm system that is owned by an alarm subscriber who has not contracted with an alarm business.
    I had a conversation this morning before I wrote this with the investigations supervisor over at the AZ Bureau of Technical Registration -BTR just to make sure that we are on the same page about the AZ license laws because the wording of the law can seem a little confusing. 
    Here is where people get a little a little confused between the letter of the law or the intent of the law: (this is why lawyers and politicians exist in a constant state of turmoil)
·         “(iii) A person who installs a nonmonitored proprietor alarm for a business that the person owns, is employed by or manages.” it is not a violation for the proprietor alarm to be monitored by their own in-house central monitoring station.  The subscriber is still required to have a “proprietor” alarm operators permit.
·         “Means any alarm or alarm system that is owned by an alarm subscriber who has not contracted with an alarm business.” it is not a violation for the proprietor alarm owner or DIY to install the alarm themselves and still have a monitoring contract. 
     In Phoenix, the DIY + PRO company that sells a DIY with a paid monitoring contract is still listed as the alarm business on the subscriber’s permit to operate the alarm and if they have a third party CMS behind the scenes then the third party CMS is listed on the permit as well. 
    The Alarm Business License law pertains to whatever entity (“the alarm company”) that is holding the “RMR” contract collecting revenue from the subscriber for the monitoring services.  This even includes finance companies that buy the “RMR” contract years after the original sale or installation who have nothing to do with alarm agents or running a central monitoring station and they subcontract out all services.  This is why the AZ Alarm Business License law and Phoenix Alarm Code was specifically written to address the “behind the scenes” companies like DIY and the third party central monitoring stations who tried to circumvent the law by claiming they are only selling DIY alarm equipment yet they still wanted to sell or collect for monitoring services even if it is month to month or long term RMR based contract. 
    So they wanted to have their cake and eat it too, right??  Sorry folks, if it quacks like a duck, walks like a duck, smells like a duck, swims like a duck, just because it is a DIY duck or a paper duck, it is nonetheless still a duck and you can not duck out on the license requirement.  So don’t be Daffy, listen to Ken’s advice and get a license for your duck ‘cause I’m hunting for unlicensed ducks and I’ve already bagged and cleaned a few nice prize ducks right in front of their major national account customers!  I love the look on the alarm agent’s face and the subscriber’s face during an inspection when I ask the subscriber for their personal ID and advise them it is now illegal for them to continue to operate their alarm system because their alarm company or agent does not have the required license, call me when you have a licensed alarm company and you are ready to complete this inspection so that you can turn your alarm back on.  In the meantime, you can probably hire a security service to babysit your property while you are waiting for your alarm company to get their license if you’re concerned about your property being without an alarm system.  Maybe your alarm company can work out a deal with you to pay for your security service expense since it is their fault that they don’t have the proper license.
    On an upbeat note, for most of your readers who have been ranting about the unlicensed DIY + PRO alarm companies, while I was speaking to the state investigator about this question I asked him for an update on the packet I gave him regarding unlicensed DIY + PRO monitoring companies and other unlicensed regular alarm companies operating in Az.  (FYI, the investigations supervisor and his investigators happens to be retired PD from back East working in a second career, AKA: retirement job and they hated responding to all of the false alarm calls during their PD career… now they investigate unlicensed alarm companies with a passion, go figure)  He was happy to inform me that they started working on the list of companies.  The first being everybody’s favorite DIY + PRO with a bull’s-eye on their back.  The list of subscriber accounts from our permit records was more than enough for them to establish that the unlicensed DIY + PRO was in fact doing business as an unlicensed alarm company and providing monitoring services for subscribers in AZ so they opened a case against them.  The DIY + PRO company acquiesced to getting their license in light of the fact that the AZ BTR can fine the unlicensed company up to $2000.00 per violation and the list of subscribers I gave them had several hundred chargeable violations that adds up to a sizable drain in resources on their RMR P&L statement.  It should be safe to say that they simply won’t be doing business in AZ without a license again. 
    Are you an MPERS provider or third party CMS that monitors MPERS that’s been reading Ken’s newsletter wondering if this applies to you?  Do you need to read the duck story again???  Panic alarm, cell phone panic app and help me I can’t get up MPERS alarm, all the same duck!  My next favorite duck hunt is going to be all of the unlicensed “medical monitoring” and MPERS companies who think they are exempt from the alarm business license laws. 
    I would encourage the alarm industry to work hard at maintaining their relationships with the local AHJ by doing your due diligence to get licensed.  For those of you that have a license, keep putting pressure on the local AHJ to enforce whatever alarm business license laws they have in that state.  Don’t give up, we are listening, but the wheels of justice grind slow…  I would say to ask around the industry about who got caught in Az without a license, but I doubt they would confess because I have also caught several well know & decorated alarm companies who have a reputation to maintain, ooopsie.
Thanks,
Detective H.W."Robbie" Robinson
Phoenix Police Code Enforcement Unit
        Alarm Inspections
Phoenix, Az