A coworking agreement is a service agreement that outlines the rights and duties of the coworking company and the individual or business using the coworking space. It also provides legal security to the coworking business.
You need to create a coworking agreement for potential members if you’re running a coworking business. In this article, we will cover the essential things to include in your coworking agreement so that operators can successfully manage their members. With that in mind, let’s dive right into this guide!
1. Service or lease agreement
First, clarify whether you will sub-lease the property or provide users a coworking space separately as a service. Here’s a quick recap of the key differences between providing a sub-lease and providing users with a coworking space as a service.
With a sub-lease, you re-rent the property to a third party. It is a legal transfer of tenancy during a set period. The tenant is generally responsible for paying for rent and repairs or damage to the property. The tenant has to abide by the rules in the original lease agreement the coworking space has with the property owner. The agreement can be for a fixed period or on a rolling basis.
You can only sub-lease if you have a legal agreement to do so in your initial tenancy agreement. Lease agreements typically give more rights to the lessee and are hard to end. Most coworking spaces do not sub-lease space.
A coworking service agreement is more common than a coworking lease agreement.
Through a service agreement, you agree to provide services (only) to members. A coworking service agreement is the commercial equivalent of an agreement for hotel accommodation. You allow people to utilize the coworking space and the resources in it.
Your agreement should have a beginning and end date. You should include a caveat that you, as the coworking business, have the right to make updates to the contract at your discretion.
2. Minimum service level
Your coworking agreement should also outline minimum service levels. The minimum service level outlines what a person joining your coworking space can expect.
For example, you could define the maximum number of people who will use the coworking space. This is especially important if you are renting out an office cubicle to a business. The minimum service level would also cover things like internet speed, how much access you get to meeting rooms and wellness spaces, etc.
Your users will want you to live up to those promises.
You might need to outline the penalties for failing to offer a specific quality of services. You can ask a lawyer to help draft the terms, especially if you’re not using a template agreement, to ensure you don’t face liability.
3. Monthly payments and fees
Your coworking agreement must reference monthly payments and fees. The contract should outline any additional fee charges as well. Break down the fees into categories within your agreement.
Here are some examples of fee categories for your coworking agreement:
- Overage fees: These are the fees a user incurs if they avail of more than the allocated service. For instance, they need to pay $50 per hour for a meeting room once they have gone over the maximum monthly allotment.
- Insufficient funds fees: An insufficient fund fee is a penalty payment. For example, if you don’t have enough money in your credit card account at the end of the month to pay the full bill, you need to pay a set fee.
- Late fees: Some businesses charge late fees for payments made after the deadline.
- Security deposit: The security deposit is a reimbursable fee that is returned at the end of the contract. The coworking company can deduct money from the security deposit to cover damages.
In the monthly payment and fees section, mention your preferred mode of payment.
Outlining payments and fees is vital. Make sure people signing the agreement know when they should pay, and what they are paying for. Specify, too, what happens if a person fails to make a payment.
4. Code of conduct
You will need a code of conduct for your coworking agreement. You will have people from diverse backgrounds sharing spaces together. These people will work for different kinds of businesses, may have different work timings, client visits, among other things.
To prevent misunderstandings, create a set of rules for everyone to follow.
While you may handle trivial matters on your own, you might need to recourse to legal action. Reasons you might need to involve a lawyer include, but are not limited to, racism, sexual harassment, among others.
Your coworking agreement must clearly outline the expectation you have of members or tenants of your coworking space. To ensure everyone is on the same page, use online community platforms to disseminate your code of conduct to all concerned parties.
5. Coverage
A coworking agreement should include details of any coverage you offer users. In times of unforeseen circumstances, your users must know if you will compensate them for any losses they suffer. Public liability insurance is an example of coverage you can offer.
As a legal contract, it’s important to limit liability.
Also, review whether your insurance policy covers assets owned by the user or whether you require them to get insurance.
You can choose to guide them on how to get personal insurance on their assets. You need to state your liabilities in the coworking agreement.
6. Termination
Your coworking agreement needs to state the terms of termination. The contract has to cover what both parties will do in the event of termination. The screenshot below provides a nice overview of termination clauses for a coworking space.
Regarding termination, you need a general paragraph outline the terms of the contract. Within the terms of the termination clause, consider factors like:
- Cancellation period before moving into the coworking space;
- Reasons why you, as the coworking operator, might independently terminate the contract;
- How the other party can terminate the contract;
- What happens to the deposit;
Termination of a contract is one of the essential parts of your coworking agreement. Make sure you go through the rules and regulations thoroughly. It will be the point of reference for any misunderstandings with users in the future.
Bottom line
Your coworking agreement is undeniably one of the most important aspects of your venture. You need to create one to prevent misunderstandings and protect yourself from any possible legal action.
This guide discussed six things to include in your coworking agreement. You learned about the service and lease agreement, minimum level of service, monthly payments and fees, code of conduct, coverage, and termination.
If you create a custom coworking agreement, make sure a lawyer still reviews the document. A poorly written contract can leave you open to liabilities and other sorts of problems you don’t want to deal with.
