Home Security Systems: It’s All about the Contract

Life time dancing lessons; Security monitoring contracts are annuities. Most renew without your knowledge. Read your contract.

Palm Coast, FL – October 23, 2009 – Wednesday, GoToby.com published a commentary entitled "Home Security Systems: Scam or Not?" It was intended to elicit responses that would help answer the question. To that end, it was very successful. GoToby.com’s conclusion: Several providers abuse their customers by using unethical tactics, then hide behind the enforcement provisions of their contract. But there are some very reputable companies who have to fight the negative image created by others.
Here are some things I learned. I’m sure some of them are new to you also. It is particularly important for Realtors® and sellers to understand home security contracts.
The Brinks/Broadview advertisement is misleading. The ad shows a phone call to you immediately after a simulated break-in. I observed a live demonstration of the process at (another alarm company). It took about 15 seconds for the call to be routed to someone who could make the call.
The heart of the security business is the monitoring contract. It represents a guaranteed revenue stream. It’s sometimes sold to a third party at a discounted rate. This is important to know because it may be the third party that calls you to collect past due amounts. Most contracts have a provision that you are responsible for the company’s legal and collection costs if your account becomes delinquent.
You do not own the monitoring equipment. In nearly every case, the company with the monitoring contract owns it.
Your monitoring contract has a term, typically one, two, three or five years. You are obligated for the full term of your contract, even if you sell your house. The contract does not automatically transfer to the new owner of the home. As a practical matter, most companies will "let you out" of your contract if the new owner signs a new contract. If the new owner does not sign a contract with your provider, you or they may have to replace the alarm panel since it is “locked out” by the contracted provider.
Most contracts are set up to renew automatically when the term expires. The renewal may be for only one year, but most likely, it’s for the same term as the original contract. If you don’t want to renew, you are obligated to notify the company at least a specified number of days before the end of the contract. If you fail to notify, your contract is renewed automatically. To the security company, the monitoring contract is like lifetime dancing lessons.
An unexpired contract is often used to leverage a monitoring contract at your new residence. The company may agree to drop the remaining two years of your existing contract for a new three-year contract at your new home.
Some companies use devious methods to renew their contract. For instance, in some cases a service call form may include language that renews your contract. How many people read the service call form before signing? Be careful, you may inadvertently extend your contract for several months or years.
Some companies who are not licensed to do business in the State of Florida sell installation and monitoring anyway. Be sure to verify their license. You can do that at
Some licensed companies contract with unlicensed agents to sell their services. The agents often do not have solicitation permits from the city. Since they often come in from out of town, you will have a difficult time trying to track them down later if you have problems.
Some companies subcontract their monitoring services. Because they pay per account, they may limit the number of signals or devices they monitor in your home.
When an alarm is received at the central station, the company must call your primary number first, then your secondary number before dispatching police, unless it’s for fire, holdup or panic. Make sure the company has your current numbers. When they reach you, they will ask for your password. Make sure you and all family members know what it is. Your alarm system is much more sophisticated than you think. Read the manual to understand its features. You should know how "Instant" is different from "stay." Your provider should take the time to train you and answer questions after installation.
Do you know if your smoke alarms are monitored? If you have to change the batteries in them, they’re not monitored.
Read the contract. Inquire if you do not understand it. Keep both the contract and the manual handy. You should understand both.
And remember – if you do not want to renew your contract, be sure to notify the company according to the terms of your contract.
GoToby.com thanks Norm Mugford for helping me understand a complex industry. Norm is President of Alarmpro Inc., a local company offering home security system sales, installation, and monitoring. He’s a member of the Palm Coast Code Enforcement Board and V.P./President Elect of the Alarm Association of Florida. He is also a former Board member and Chairman (appointed by Gov. Jeb Bush) of the Florida Electrical Contractors Licensing Board, Department of Business & Professional Regulations. 

Become a Member  —  118 readers became members of GoToby.com in September. You can join too and receive email notices of news, rumors, newsletters, and articles. [click here] It’s free.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply