QUESTION:

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Ken,

    Just curious about this comment:

"Be sure you're using your Monitoring  Contract and not one provided by the central station."  [this comment was included in the 2009 year end New Year's resolutions - copied below for those of you who missed it]

 

    Why is that? We try to enforce use of our contracts, and when that’s not possible, we proofread theirs and send it to legal to verify that all parties are protected… We do have numerous dealers that have used contracts provided by you.

Acy Forsythe

Central Station Manager

Sentrynet

www.Sentrynet.com

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ANSWER:

    Here's the quick answer:  The central station's monitoring contract does not contain all of the terms necessary between the dealer/installer and the subscriber.  That central station monitoring contract usually does not include: (1) term of agreement, (2) amount to be paid by the subscriber, (3) periodic payment required, (4) obligations of the subscriber owed to the dealer, (5) obligations of the dealer owed to the subscriber - other than a monitoring obligation that has been undertaken by the central station and (6) may not - and probably doesn't - contain maximum protection for the dealer since the contract is designed to protect the central station.

    Because of all of the above, and I am sure other items, the central station's monitoring has little or no value to the dealer for equity purposes.  The dealer will not be able to sell - assign this contract because it's not the dealer's contract and lacks, important terms, some of which are mentioned above.

    In most monitoring scenarios dealers find that they need to get two monitoring contracts signed, theirs and the one provided by the central station.  If you read the two monitoring contracts you can easily understand why one does not substitute for the other, at least from the dealer's perspective.  You will find that a properly drafted dealer's monitoring contract - which of course you get from me at www.alarmcontracts.com - will adequately protect the central station, whereas the "three party monitoring contract" - which the central station should also get from me - will provide some protection to the dealer, but is designed to protect the central station primarily. 

    Many dealers prefer not to get the central station's monitoring contract signed.  Some recognize that they should be using their own contract and don't want to overwhelm the subscriber with more contracts than necessary; some don't want the subscriber to know that the dealer isn't actually providing the monitoring or that the monitoring company is separate from the dealer, and some just don't like some of the terms in the central station's monitoring contract. 

    Dealers who don't want to use the central station's monitoring contract can sometimes negotiate to use only the dealer's contract [mine will protect the central station and many central stations will accept this contract in lieu of getting the central station's contract signed ].  A large dealer will have more leverage with the central station, but no matter how many monitoring accounts a dealer has it should not expect the central station to take unnecessary risk by monitoring without a contract that provides proper protection.