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subscribers in breach and what to do / what's a personal guarantor
September 20, 2017
subs in breach and what to do
    I have several clients that don’t pay and won' cancel.   Any reason from wife says call husband or vice versa.  Being lax , being busy and also just trying to get free monitoring by not paying.   And of course the number one reason for not paying is "I don’t use it or I haven’t had a break in so don’t need it".    My reply is then send in a cancellation but they don’t.
    The question is how long can I keep billing knowing that I will be sending them to collection in order to get their attention. It doesn’t pay to send collections for under $100.00 for canceling 90 day past clients.  If I let the account run a 12 month invoice of past due and then cancel after 12 months and send them  to collection for homeowners that still live there and businesses that are still in business will that make my case stronger or would a court say I should have stopped invoicing at 90 days ?
    Wow, it's no wonder you are lost.  Before answering I checked to see if you had our Standard Form Agreements.  You do, from 2010, and all you have is the Monitoring agreement.  You need to update your contracts and get your subscribers to sign them.   Then you would know exactly how to handle these pain in the butt subscribers.  You made mistakes from the get go.
    First, why would you invite your subscriber to send you a cancellation notice?  They are going to interpret that one way, your consent to cancel.  Have you heard of recurring revenue?  It's what make the alarm business go round and round.  It also means pretty much what it sounds like, recurring revenue.  If you allow cancellation it will no longer be recurring, or revenue.
    There is no reason to continue monitoring if you're not getting paid.  And you don't have to let more months of not getting paid go by just so you can add it to a lawsuit, because all the Standard Form Agreements, including the monitoring contract you bought in 2010, provides for an acceleration of the balance of the contract; the RMR for the term of the agreement comes due and payable immediately.   The only reason to continue monitoring before you start a collection proceeding is if the subscriber claims it doesn't use the alarm system because it's inoperable, and you have central station activity reports showing the alarm system is in use.  Even then I would suggest terminating monitoring once the collection proceeding starts.
    In your case the collection proceeding will be a lawsuit; arbitration is not provided in your 2010 contract.  It will be in the new contracts, and it will make collections a lot easier.  Get the updated contracts here:
what's a personal guarantor
    The bottom of the 1st page of the Fire Alarm All in One seems to have 2 locations for the Sub to sign (“Subscriber” and then  “The undersigned personally guarantees Subscribers performance…”).
    Not sure who is to sign the ‘The undersigned… ‘ portion.  Please advise.
    Joke lawyers tell:  What's the definition of a "guarantor".  Answer, "a schmuck with a fountain pen".
The commercial Standard Form Agreements all have room for a "personal guarantee".  The personal guarantee is not on the Residential All in One because those contracts are almost always signed by an individual,  the occupant of the residence.  The Commercial All in One and the Fire All in One [also a commercial contract] are almost always signed by a legal entity, a corporation or LLC.  
    One of the most basic reasons to conduct business through a separate legal entity is to avoid personal liability.  If the entity can't pay its bills and folds, only the entity's assets are exposed, not the indviduals who formed the entity and business and then ran it to the ground, leaving you with a contract and no one to pay it.  Hence the personal guarantee.  
    If you can get the personal guarantee signed then you have two bites at the golden apple to get paid even if the business entity fails.  First bite, the entity will try and pay off debts that the individual owners have guaranteed or have personal legal exposure [withholding and sales taxes for example].  Second bite, if the entity folds you can still pursue the individual guarantors who sometimes have a lot more than their failed legal entity.  
    You are not required to ge the personal guarantee signed for the contract to be "legal".  Once an authorized person signs for the entity, the entity is bound by the contract.  Don't be surprised if you can't get a personal guarantee.  After all, that's the primary reason the entity was formed.  
    Some alarm company owners think they are slick and bury a statement within the fine print of their contract that says "whoever signs below for the entity is also agreeing to be personal liable for this contract", or something along those lines.  If that's in your contract I hope you wrote it yourself, because if your lawyer wrote it, you need a new lawyer, and for sure, you need a new contract.
    In order to have an enforceable personal guarantee it is almost universally required to have two signatures, one for the entity and one clearly for the personal guarantor.  That's why there are two places for signatures on the commercial All in One Agreements.


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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