WeWork’s 110 Wall Street: You can co-live here, but you can’t co-sue us

Membership agreement for startup's new co-living space includes strict legal clauses

Apr.April 05, 2016 11:07 AM

WeWork on Monday opened the doors of its WeLive co-living venture at 110 Wall Street. The cost of membership: Upwards of $1,375 per month – and giving up your right to sue WeWork over its own negligence.

Buried in a residential membership agreement reviewed by The Real Deal are a number of clauses that in theory severely limit WeWork’s legal liability towards its tenants. Residential tenants, whom the company refers to as “members,” are required to sign off their right to pursue class action lawsuits against the company.

Under the agreement, WeWork is not liable for any damage to its tenants’ personal property “whether or not caused by WeWork’s negligence.” And just to be safe, the firm specifies that its financial liability towards tenants’ guests “for all causes of action” can never exceed the equivalent of 12 monthly membership payments (or $16,500 for those renting a bed in a shared unit).

The clauses go beyond what is typically included in residential lease agreements. A prominent real estate attorney, speaking on condition of anonymity, told TRD that the clause freeing WeWork from responsibility for its own negligence would be “stricken and unenforceable in any court of law.”

The attorney added that the ban on class-action lawsuits could potentially hold up in court. Adding such a clause to contracts is increasingly common in industries ranging from credit cards to cable television. But it appears at odds with WeWork’s much-professed goal of molding members into a community – or “Capitalist Kibbutz” in the words of co-founder Adam Neumann.

A WeWork spokesperson told The Real Deal that the contract is a membership agreement, not a lease agreement, and that waivers on class action lawsuits are common practice. The spokesperson added that limits on WeWork’s liability only apply to tenants’ personal property.

The clauses are likely to be cheered by WeWork’s investors, who have pumped more than $1 billion into the startup. Imagine this investors’ nightmare: an unruly WeWork employee accidentally burns down the building, or forgets to put up that flood fence when the next hurricane hits, and hundreds of angry tenants band up to sue the company out of its venture-capital stash.

WeWork, a rapidly growing co-working company founded by Adam Neumann and Miguel McKelvey in 2010 and valued at $16 billion, recently branched out into the residential sphere. 110 Wall Street, which it leases from Rudin Management, is its first co-living building in New York. Beds in one-to-four bedroom apartments rent at $1,375 per month and private rooms start at $2,000 per month. According to a fact sheet, four-bedroom apartments can sleep up to eight people. The average unit size is 450 square feet. Amenities (for a $125 monthly fee) include cable, laundry, internet and yoga classes.


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