Generally speaking, alarm systems are good things. Not only do they provide you with an additional level of security, but some alarms can be programmed to alert you when dangerous situations arise, such as when there’s carbon monoxide in your home or when your basement starts to flood. You may also save on your home insurance premium if you have an alarm system. So what’s the problem with alarms?

Well, alarm systems are one of those little things to which experienced Realtors pay a lot of attention because they can cause problems depending on how they’re treated in the agreement of purchase and sale, similar to front yard parking.

How so? To begin with, there’s a difference between an alarm system and a monitoring contract. The alarm system consists of the actual hardware – the keypad, the door and window contacts, the motion detectors, etc. The monitoring contract is the contract you sign with a monitoring company so that when your alarm goes off, the monitoring company will call the police.

Most people assume they own their hardware, but that’s not always the case. There are 3 basic situations when it comes to the hardware: 1. You own it; 2. You don’t own it now, but it’s subject to a lease to own agreement and you’ll own it some day; and 3. The monitoring company owns it and leaves it in your home as long as your monitoring contract remains in effect.

Here’s a general rule of thumb with which I’m sure you’ll agree: Don’t sell something unless you own it. Pretty basic common sense, isn’t it? So why do so many sellers include their alarm systems in the purchase price, along with their fridges and light fixtures, when they don’t own them? The simple answer is that they don’t know that they don’t own them.

A couple years ago, clients of mine bought a home and the alarm system was included in the purchase price. I always ask my clients to look into the status of their alarm systems before selling their homes (see below for the questions I suggest they ask their alarm companies) so I asked the sellers’ Realtor if the sellers owned the alarm system. She said that they did.

After the deal was done and before it closed, the sellers’ Realtor called me and said that the sellers did not in fact own the system and would have to pay a few thousand dollars to get out of their contract with their monitoring company unless my clients agreed to assume the monitoring contract. My clients wanted an alarm system so they said they’d assume it, but first wanted to speak to the monitoring company to get details about the system.

When my clients called the monitoring company and asked about the system they were given information about where all the contacts and motion detectors were located. This was the information for which they were looking, but they were concerned because the monitoring company divulged all this information without even asking my clients even one question about who they were. My clients could have wanted the information because they were planning on robbing the home, but the monitoring company didn’t seem to care. Based on this, my clients decided that this was not the company for them and chose not to assume the existing system. To make a long story short, after many phone calls and emails, the sellers were faced with an unplanned expense and weren’t happy about it. This expense could have been avoided had the details of the alarm system’s ownership and the monitoring contract been investigated prior to them putting their home on the market.

So without further ado, if you want to avoid problems with your alarm when you sell your home, here are some questions I’d suggest you ask BEFORE you put your home on the market:

Regarding the alarm system hardware:

1. Do we own our system outright?
2. If we don’t own our system, can we buy it, and if so, how much will that cost?
3. If we don’t own it and we can’t buy it, can the buyers assume our contract with you and are there any transfer costs associated with doing that?

Apart from the alarm system itself, you don’t want to continue to be on the hook for a monitoring contract for the home you just sold, so it’s a good idea to also ask these questions regarding the monitoring contract:

1. How much is our monthly monitoring fee?
2. Until when does our contract run?
3. How much will it cost if we want to terminate our contract early?
4. Can the buyers assume our contract and are there any transfer costs associated with doing that?

So there you have it. Another example of something you can do in advance to avoid problems down the road. There’s nothing like thorough planning to make things go more smoothly.

As always, if you know of anyone who’s looking for an honest Realtor who really knows his stuff and doesn’t pressure his clients, Please Don’t Keep Me a Secret. I really appreciate your referrals. Thanks for reading and don’t be shy if you have any questions or comments!