KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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When can you call a default / ISC meetings
April 9, 2024
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When can you call a default
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Ken
Does the Residential All in One contract specify how long until unpaid invoices are considered in default?
I am ready to terminate a customer for non-payment and want to bill them for the 80% remaining on the contract but I want to make sure I am doing things correctly.
Scott Lipner
Emergency Response Associates
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Response
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The Residential All in One, like all the K&K Standard Agreements, require payments on the first of the month [provided you didn’t modify the printed form].
Importantly there is no grace period, no late payment option, no date specified for when the subscriber will be in default, other than the payment due date; first of the month.
Sometimes subscribers request a grace or notice provision whereby you would be required to provide notice of default and opportunity to cure before declaring a default. While, generally, there is no object to including such provision, it does add to your burden and complicate the breach of contract event. For that reason, you can agree to such a provision, but you don’t want to offer it in the printed form because most subscribers will not request that change.
What is the practical effect of the default date or event? Well, most of you are in the business of building your business and you do that by retaining your customers. You don’t wait for the second of the month to send out breach of contract notices. In fact most if not all of you bend over backwards trying to get late payers and no payers to pay up. Most of the time your perseverance pays off, the customer pays, and you retain the customer. But not always, which is why K&K offers to support you in your collection efforts. No other law firm [or, if you’re dumb enough to use one, collection agency, has the experience and trained legal and paralegal staff as K&K. You already have a K&K contract; it makes sense to have K&K enforce it for you. I’m proud of K&K’s success rate and I am sure you will be just as pleased. Collections are initiated by contacting Kathleen Lampert at KLampert@Kirschenbaumesq.com or 516 747 6700 x 319.
So how long do you wait for a customer to pay? The best practice answer is act fast if the customer falls out of its usual payment pattern. If you’ve been tolerating a customer paying 6 months in arrears for years you need to act fast if the 6 months starts getting extended; the customer has set its own “line in the sand” which you have accepted by your historical conduct. You can change your tolerance level only after letting the customer know that you now expect prompt payment, and you define that for the customer as “first of the month, in advance” as the contract requires.
Even though no notice of default is required most of you are going to give it because you want to encourage payment. A notice of default, worded as harshly or gently as you wish, will typically give a deadline for payment; it will usually have a warning what will happen if payment is not received. This warning should not however be mistaken for the termination notice, which should not be included in your default warning notice or letter. That’s because a termination letter is much different.
The termination letter is just that; it is notice that the contractual relationship has been breached; your services will end on a time and date certain [and you better end it at that time], and that you intend to hold the customer to the provisions of the contract. The termination letter differs entirely from the default notice. There is no opportunity to cure in the termination letter; you are not asking for a payment; it’s too late for the customer to continue with the contract which you have declared in breach and over, expect for your enforcement rights.
If you think there are too many nuances, too complicated process, you’re right. Mess up your letters to the customer and you will create defenses the customer doesn’t actually have. Interestingly enough, another option is sending no notices at all. Customer fails to make payment on time and you send the contract to K&K for collection. We will probably tell you to send a final invoice for the full contract damages, but that can be send on the second day of the month as far as I am concerned, if that’s how you want to play it.
I will end by letting you know that sending a case to K&K for collection sooner rather than later will generally end well for you. The K&K staff is trained to save the account when possible, with your acquiescence of course, because sometimes you don’t want the customer back.
By the way, if you don’t have a K&K Standard Form Agreement then don’t ask me when or how you declare a default because I have no idea what you have in your contract. Also, don’t send it to K&K’s collection department because we will only support K&K contracts.
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Private and Group meeting schedule
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Group Meetings: See schedule below. Last minute changes: call: Stacy Spector at 516 987 8428.
Private Meetings:
Schedule a Private Meeting with Ken Kirschenbaum by calling Stacy Spector at 516 987 8428.
Register for a Group Meeting by calling Stacy Spector at 516 987 8428
Schedule Private meeting with broker Rory Russell by calling Stacy Spector at 516 987 8428.
Group Meetings: Topics and Schedule
Tuesday April 9. Group Meeting: 3:00 pm to 4:00 pm – Monetize on your monitoring accounts; new incentive program; learn how to get unheard of incentives from your central station or move to another one. Group meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 11:00 am to 12:00 pm - Selling and buying alarm accounts; Things to know. Group Meeting conducted by Ken Kirschenbaum.
Wednesday April 10. Group Meeting: 2:00 pm to 3:00 pm – State sales tax and complex company valuation. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Wednesday April 10. Group Meeting: 3:00 pm to 4:00 pm – Central station – dealer relationship; contract issues; understanding the dealer agreement terms and why you need the K&K Rider. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: 10:00 am to 11:00 am - Insurance for your alarm business – best options; availability, pricing and claims. Group meeting conducted by Shawn Iverson of The Insurance Center.
Thursday April 11. Group Meeting: 11:00 am to 12:00 pm – Contracts – which ones you need and why you need them. Group meeting conducted by Ken Kirschenbaum.
Thursday April 11. Group Meeting: from 3:00 pm to 4:00 pm -
The Corporate Transparency Act. Group meeting conducted by Mitch Reitman of Reitman Consulting Group.
Private Meetings with Rory Russell of AFS:
Schedule a private meeting with Rory Russell of Acquisition and Funding Services (AFS) to discuss buying or selling security, fire and integration business. Available times to meet with Rory Russell are as follows: Wednesday April 10 and Thursday April 11 between 7:30 am and 11:00 am and 12:30 pm and 4:00 pm. Contact Stacy Spector to schedule a private meeting with Rory. Call 516 987 8428
ALL TIMES ARE PACIFIC STANDARD TIME.
Contact Stacy Spector, Esq. for all scheduling at Sspector@kirschenbaumesq.com or 516-987-8428.
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STANDARD FORMS Alarm / Security / Fire and related Agreements
click here: www.alarmcontracts.com
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CONCIERGE LAWYER SERVICE PROGRAM FOR THE ALARM INDUSTRY - You can check out the program and sign up here: https://www.kirschenbaumesq.com/page/concierge or contact our Program Coordinator Stacy Spector, Esq at 516 747 6700 x 304.
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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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