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If Regus Raised Your Rent, You Need To Read This ASAP

This technicality has given thousands of Regus customers a legal way to terminate the contract early

· Regus,Office Lease,Pricing,Complaints,Auto-Renewal

Regus is notorious for surprise rate increases.

Complaints about Regus unilaterally increasing rates are part of the top category of Regus complaints we receive each year.

regus billing problems

Sometimes Regus will tell you in advance that they intend to increase your monthly fees. But usually they just try to sneak it in without notice.

I've heard many different versions of this complaint, but the one that seems to shock people the most is when Regus increases your rent in the middle of a contract period.

rent an office for a day near me

That's what happened to Victor in Florida:

"Regus is suddenly increasing rent despite our 2-year agreement that specifies the rate for the duration of the term."

If you've given Regus your credit card or debit card to be charged automatically each month, then you're especially susceptible to this. Thankfully, Victor noticed and then found Veeto. But most Regus customers do not, until after they've been billed for several months--or even years--at the higher rate.

In this article, I'll answer the following ten questions.

  • May Regus increase the rent at anytime?
  • May Regus increase rent every year?
  • Does Regus have to give notice of rent increase?
  • Why does Regus increase rent every year?
  • How much should Regus rent increase every year?
  • Is there a limit on raising rent?
  • May Regus raise the required deposit?
  • How can I fight my Regus rent increase?
  • May a Regus tenant refuse a rent increase?
  • How can I get Regus to stop raising my rent?

Give me seven minutes, and I'll show you the Regus contract analysis we've used to help thousands of Regus customers beat unilateral rate increases.

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Let's start with the basics.

Are unilateral rate increases legal?

The format of this question is tricky, because what it means for something to be "legal" is probably not what someone who would ask this question is technically hoping to learn. A better way to ask the question would be to break it down into two different questions, each appended to a prompt:

Regus raised my rent.

  1. Do I have to pay the increase rate?
     
  2. Do I have to remain in the contract at all, given the sudden increase?

The surest way to answer these questions is to consult the Regus contract itself, and that's exactly what we'll do in this article.

It's important to realize, however, that we're not starting there because the Regus contract is the only "source of law" that could generally govern a unilateral rate increase. Rather, we're starting there because of the contract's strategic importance to Regus: it's probably the only source of law Regus could possibly cite as any sort of justification (apart from you just agreeing outright to the proposed rate increase) for increasing your rent.

One of Sun Tzu's six main principles in The Art of War is avoid your competitor's strengths and attack their weakness:

“An army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army avoids strength and strikes weakness.”

...and even better if you can find a way to turn your enemy's greatest strength into a weakness. That's exactly what we do when we're handling a Regus case for a client, and I'm going to show you how we do that when the case's underlying issues include a unilateral rate increase.

If you can eliminate the Regus contract as the a source of justification for Regus raising your rent, then you've probably taken away Regus's best argument for it being legal for Regus to raise your rates without your consent.

Let's look at the Regus contract itself.

The Regus contract has a history.

The Regus contract's language regarding rate increases has evolved over time. Being familiar with some of the previous versions can help you to better understand the current version. So I'm going to break down three different versions of the Regus contract over time, and this will give you a more informed frame of reference for understanding how people get out of Regus contracts early when Regus raises the rates.

The Regus Contract in 2005

The 2005 version of the Regus contract says, in section 36:

regus annual increase

Since section 36 references section 19, I'll also include section 19 from the 2005 version of the Regus contract:

regus renewal

If you were a Regus tenant who signed the 2005 version of the contract for a term greater or equal to 12 months, then I have bad news for you: section 36 gives Regus enormous latitude to increase your rates almost at whim. Let me demonstrate by listing some possible scenarios and highlighting problems for Regus tenants.

You have little recourse to cap those rate increases.

On one hand, section 36 says that Regus must wait for the anniversary trigger before instituting any rate increases. On the other hand, Regus preserves for itself the option of either increasing your rate by 4% or by the rate of change in the CPI ("consumer price index") over the previous 12 months, and specifies that it will select the option that results in the highest rate increase for you. That's a bad term for tenants--not just in practical terms but also in terms of fairness.

To explain what I mean, let's begin from the premise that Regus includes this term for the simple purpose of keeping its tenants' monthly rates apace with the rate at which the value of a given currency declines.

regus virtual office

This premise is gracious toward Regus, because it assumes that Regus is just trying to preserve the original value of the starting monthly contract price. This is arguably consistent with Regus's selection of an inflation-driven index, the CPI (in the US; but your contract might have the All Items Retail Prices Index if you're in the UK, or some other similar index if you're elsewhere in the world).

But this argument falls apart with the inclusion of this arbitrary 4% option. This is for two reasons.

First, by selecting the arbitrary rate increase of 4%, Regus is revealing that its intention is not truly to keep apace with inflation, but rather, to simply build in hard-to-notice contract terms that permit them to charge you more over time, once your switching costs of moving out of your Regus office have begun to accrue.

regus house rules

Second, just look at the spread between the arbitrary 4% option and the CPI at the time I'm writing this article. It's 1.8% (the red column in the chart above), which is 65% less than the 4% option. In other words, if Regus were to raise your rates today, based on these figures, you could translate section 36 to say:

"We're either going to increase your monthly rent by the actual rate at which the dollar has been devalued over the last 12 months, or we're going to increase your monthly rent by a rate that is 65% greater than that rate--and to be sure, we're always going to select the second option."

The two options are in no way comparable mathematically. So why does Regus bother to include the CPI option? It's a sleight of hand designed to give section 36 an aura of credibility, based on the idea that a rate increase that appears to be tied to some market-driven index would be much better received by a prospective tenant than the arbitrary, 4% alternative. A casual reader of section 36 could easily walk away with the impression that, because Regus has tied its rate increases to some market-tracking index, this a fair and reasonable inclusion in the contract--because the value of the person's dollar is likely to go down by some percentage over time.

In any case, the CPI option is a clever red herring included only to distract you from what the contract actually permits Regus to do. Yet, it actually gets even worse than that.

Section 36 actually gives Regus a third, unnamed and also undefined option--and, for Regus members, this is easily the scariest of the three options.

Notice the term "broadly equivalent." It's a strange term, which is not often used anywhere in the English language. Again, although rarely used at all, where you do see it used is largely in the UK--and specifically in state-issued laws or opinions.

One example comes from the Marine Accident Investigation Branch in the UK.

regus exit fees

In 2012, the MAIB modified its regulations by changing one of its core definitions: the meaning of the term "accident." One of the changes involved expanding the types of marine events that people covered by the regulations were required by law to report. I'm paraphrasing here...but, prior to 2012, those people were only required to report accidents that actually resulted in some damage or injury. After the change in 2012, though, those people were now required to also report events that could have potentially caused damage or injury.

To provide parameters for the expanded responsibilities, the MAIB created new terms, and arranged them by category, to give people guidance on what the term "accident" now meant. Those new terms were "marine casualty" and "marine incident." In explaining the change, the MAIB used the unusual term "broadly equivalent"...

"Under current Regulations, Accident means any Marine Casualty or Marine Incident. In historic data
Accident had a specific meaning, broadly equivalent to (but not identical to) Marine Casualty."

In the MAIB example, the usage of the term broadly equivalent performs the function of likening the pre-2012 meaning of the word "accident" to the post-2012 meaning of the word "marine casualty." Considering the context of the term "broadly equivalent" in the quote above, you should realize just how dangerous it is to include it in section 36 of the Regus contract. Pre-2012, the MAIB regulations did not require covered people to report potential harm, but post-2012, those regulations do require it. This is a major difference, which is why the MAIB not only uses the term broadly equivalent but also includes the parenthetical note that the terms are not identical.

broadly equivalent meaning

These two horses are broadly equivalent. But that does not mean that Regus would not prefer one over the other in a horse race, or that you would not be be at a major disadvantage if you permitted Regus to choose its preference. Broadly equivalent and equivalent are not equivalent.

You might wonder why Regus chose the term broadly equivalent rather than the less obscure word similar. Well, it's because when a tenant like you reads section 36, encounters the term broadly equivalent, and makes the mistake of guessing that you know what it means, it paves the way for Regus to "substitute" any index it wishes without you being actually aware in advance of this possibility. This is the dark art of legalese at work.

The Regus contract provides no parameters for which "broadly equivalent" index they are permitted to substitute. So, because, naturally, Regus has an incentive to charge you as much as possible for its services, and because, contractually, there is no limit to this, Regus need only find the highest possible index at any given time to milk your business for all it's worth.

Venezuela looks attractive, with a 12-month CPI change of 282,972.8%. Compare that to the US CPI of 1.8%.

To recap, we've seen how section 36 permits Regus to increase your rent using three different methods. One of those methods would justify an arbitrary 4% increase; one would have justified a 1.8% increase (were it to occur at the time of this writing) if the US CPI were the chosen index; and the third method could be used to justify astronomical rate increases to the extent that Regus could show any country's CPI to be "broadly equivalent" to one of the low, single-digit CPI index changes.

If you're thinking that anniversary-triggered increases are bad, just wait until you see the math on auto-renewal increases.

In my comparison of anniversary-triggered increases with renewal-triggered increases, I'm not even going to consider the third method just because of how crazy it is--even though it remains a legitimate possibility given how section 36 is written. So keep it mind, even though we're going to shelve it for now to keep the math somewhat sane.

Renewal-triggered increases occur according to section 19, which says that, instead of some index-method or arbitrary-percentage method, the amount of the renewal-triggered increase will be determined by the market price listed on the service agreement.

airbnb for office space

In the screenshot above, you can see the so-called "market price" listed in the second column from the left.

🚩 The first red flag you should see is that there is no indication how the market price itself was determined, and in the absence of any such explanation--along with supporting evidence--we can't be sure that the price of $720 is not just some made-up number. In other words, just because Regus says that the market price is $720 does not mean that it is. There has to be evidence to support that claim.

On the other hand, because of the way that section 19 is written, Regus doesn't really have to provide that evidence. Why not? Because section 19 does not say: "the fees on any renewal will be the market price," and with a full stop there. Rather, section 19 says: "the fees on any renewal will be the market price listed on the front of the service agreement." In other words, Regus is just using the label "market price" as a placeholder for section 19 to refer to, but it's also clever by Regus because most casual readers of section 19 would probably see the term "market price" and assume that this is something Regus has verified with objective data. In this way, section 19 is very likely to mislead people.

So, in this case (in the screenshot above), we find that once Regus renews your agreement, your rate would increase from $300/month to $720/month. That's a 140% rate increase! It's also 77x the CPI rate of 1.8% during this period.

I have no doubt that if prospective Regus tenants were to see and understand these terms before executing the agreement, they would not execute the agreement. They would instead laugh, and then runaway. But many people don't catch these major caveats, and that's probably a big part of how Regus has grown to become a $3.22 billion company.

So, in this case (in the screenshot above), we find that once Regus renews your agreement, your rate would increase from $300/month to $720/month. That's a 140% rate increase! It's also 77x the CPI rate of 1.8% during this period. Do you think anyone would willingly agree to a contract that provides for a 140% rent increase upon renewal? Of course not. That's why Regus has had to get really good over the years at writing tricky contracts.

regus revenue multiple

I have no doubt that if prospective Regus tenants were to see and understand these terms before executing the agreement, they would not execute the agreement. They would instead laugh, and then runaway. But many people don't catch these major caveats, and that's probably a big part of how Regus has grown to become a $3.22 billion company.

The Regus Contract in 2014

Between 2005 and 2014, there were a few key changes to the Regus contract regarding unilaterl rent increases, and I'll highlight those now.

The 2014 version of the Regus contract says, in section 8.8:

regus office locations

Since section 8.8 references section 1.3, I'll also include section 1.3:

regus virtual office cost

Since we already looked at the 2005 version in depth, I'll start by summarizing differences between the 2005 version we looked at and this 2014 version we will now look at.

Summary of differences between section 36 of the 2005 version and section 8.8 of the 2014 version:

  • The label Regus uses to refer to (what's essentially) rent has changed from "standard service fee" to "monthly office fee."
  • The CPI has been replaced with the All Items Retail Prices Index, which is weird, because this 2014 example contract was executed in the US, and the All Items Retail Prices Index is the UK's CPI.
  • The arbitrary, 4% option from section 36 of the 2005 version is not present in section 8.8 of the 2014 version.
  • There is a new methodology for determining the price increase, and its usage is contingent on the index methodology being found unlawful (go figure that Regus would anticipate courts having an issue with this part of their contract). That new methodology is said to be specified in the House Rules.

Section 8.8 does not say which section of the House Rules specifies the contingency methodology for determining a rent increase, but it's likely section 36 of the 2014 version of the Regus house rules:

regus house rules

So, by reference to section 36 of the house rules, the 2014 version of the Regus contract actually still includes the arbitrary, 4% methodology for raising your rent. Notice also that the language of section 36 of the house rules is misleading in the following way:

  • Section 8.8 says that the only circumstance in which the section 36 (of the house rules) methodology will used is if the section 8.8 methodologies are found to be unlawful.
  • The section 8.8 methodologies are of the index kind.
  • The section 36 methodologies appear to be either an arbitrary, 4% methodology or an index methodology.
  • But since section 36 is only invoked when index methodologies are found to be unlawful, the only methodology actually available in section 36 is the arbitrary, 4% methodology.
  • So, basically, although it Regus appears to have not wanted this to be so clear, your rates will either increase according to some index or according to the arbitrary 4%.
Thus, the 2005 and 2014 versions both lead to the same result in terms of how your rent increase will be calculated.

Why did Regus change the language, then?

We can find some clues as why Regus did this in the court documents of a 2016 class-action lawsuit against Regus. In that lawsuit, the court had to review facts presented about Regus's sales practices--by both the plaintiff and by Regus itself--and then provide several written analyses thereof. For the purpose of identifying some clues as to why Regus changed its contract from 2005 to 2014 by hiding some of its key language about price increases in the separate House Rules document, here is a screenshot from the court's analysis in that case:

regus bbb

One glaringly bothersome part about Regus not providing prospective customers with a copy of the house rules, as a practice, is this language found in the fine print of the order form:

"This Agreement incorporates our terms of business set out on attached Terms and Conditions, attached House Rules and Service Price Guide (where available) which you confirm you have read and understood."

It says that the house rules are attached to the order form. But they rarely are. This is in fact what the court found. So, at a minimum, the quoted part above, from the Regus order form fine print, is disingenuous. Is this, perhaps, an oversight by Regus, or instead a calculated and shady sales tactic? Well, let's ask the court...

regus top up retainer

Regus salespeople conceal material parts of the Regus contract largely because this is what Regus trains them to do. The contract changes Regus made from 2005 to 2014 simply made this concealment a little bit easier.

regus vs spaces

Indeed, if you are reading this article now, because Regus surprised you with a sudden rate increase you were not expecting, then your own experience gives evidence of Regus's success at hiding prices.

What about changes to the language regarding renewal-triggers?

Yep...this part is my favorite: the introduction of the the term "the then prevailing market rate." I'll explain why, of course.

regus login portal

Example of a Regus renewal agreement in Australia.

But let me start with a summary of the differences between section 19 of the 2005 version and section 1.3 of the 2014 version.

Summary of differences between section 19 of the 2005 version and section 1.3 of the 2014 version:

  • The 2014 version is silent on whether the terms of the prior agreement will carry forward into the renewed term, whereas the 2005 version specified that they would.
  • Whereas the 2005 version says that the fees for the renewed term will be at the market price specifically listed on the "service agreement," the 2014 version says the fees for the renewed term "will be at the then prevailing market rate."
  • No other part of the 2014 version gives any guidance on what exactly the "then prevailing market rate" is, or how it will be determined.

In practice, it appears that Regus introduced the phrase "then prevailing market rate" to make it harder for you to object to rent increases. How so? Well, if Regus raises your rent from $300/month to $1,300/month, and they tell you that $1,300/month is "the then prevailing market rate," most people don't seem to know how to counter that. But I'm going to tell you Veeto has countered it thousands of times.

 

It's simple really.

  1. Regus raises your rent.
  2. You object.
  3. They insist that the new rate is "the then prevailing market rate" and explain that section 1.3 gives them the contractual right to raise your rent to this new price.
  4. You respond by saying: "prove it."
You ask Regus to provide verifiable evidence that $1,300/month is in fact "the then prevailing market rate." Here's the funny thing, though. I've been doing this for a decade and have handled thousands of Regus cases: I've not once seen Regus actually provide this evidence. In the absence of Regus providing this evidence, they cannot enforce a rent increase under section 1.3. It really is that simple, despite how complicated the Regus salespeople you speak to might try to make it seem.

"The then prevailing market rate..."

To expound on this, let me provide you with an example of how market rates are determined in a non-Regus context under then prevailing market rate clauses. Here's a sample clause:

“Prevailing Market Rate” shall mean the then prevailing market rate for monthly rental for leases of space in the Market Area comparable to the renewal of the lease of the Premises (or the portion thereof, as applicable) and for a term equal to the term of the Extension Period, taking into account the length of the noncancellable lease term, rental concessions, the size of the space, the age and condition of the Building, the location of the Building, the amenities of the Building, the allowance for improvements, the pass through of operating expenses, taxes and insurance, the creditworthiness of Tenant, parking fees, and the residual value of existing improvements. The Prevailing Market Rate shall be determined between Landlord and Tenant by mutual agreement; however, if Landlord and Tenant cannot agree, the Prevailing Market Rate shall be established in the manner specified for determining Prevailing Market Rate contained in subparagraph below.

Notice in this sample clause that there are two methods for determining "the then prevailing market rate." The first is by mutual agreement between the tenant and landlord, and the second--which is a plan b if mutual agreement fails--is by a procedure specified in the next paragraph.

Within thirty (30) days after Tenant has exercised the Extension Option, Landlord shall advise Tenant, in writing, of its determination of the Prevailing Market Rate, on a per square foot basis, as of the beginning of the Extension Period. Within ten (10) business days after receipt of Landlord’s determination of the Prevailing Market Rate, Tenant shall advise Landlord, in writing, whether or not Tenant accepts or rejects the Prevailing Market Rate specified by Landlord. Failure to accept or reject in writing the Prevailing Market Rate specified by Landlord within such ten (10) business day period shall be deemed acceptance by Tenant. If Tenant rejects the Prevailing Market Rate determined by Landlord, Tenant shall specify in such notice Tenant’s determination of the Prevailing Market Rate, together with Tenant’s selection of an Appraiser (as defined below), who shall act on Tenant’s behalf in determining the Prevailing Market Rate. Within ten (10) business days after Landlord’s receipt of Tenant’s selection of an Appraiser, Landlord, by written notice to Tenant, shall designate an Appraiser, who shall act on Landlord’s behalf in the determination of the Prevailing Market Rate. Within thirty (30) days after the selection of Landlord’s Appraiser, the two Appraisers shall render a joint written determination of the Prevailing Market Rate. If the two Appraisers are unable to agree upon a joint written determination within said thirty (30) day period, each Appraiser shall render his or her own written determination and the two Appraisers shall select a third Appraiser within such thirty (30) day period. Within thirty (30) days after the appointment of the third Appraiser, the third Appraiser shall select one of the determinations of the two Appraisers originally selected, without modification or qualification. All Appraisers selected in accordance with this subsection shall have at least ten (10) years prior experience in the metropolitan Atlanta commercial office leasing market, shall be licensed and certified appraisers, and shall be members of one or more of the National Association of Industrial and Office Properties, American Institute of Real Estate Appraisers, the local Board of Realtors, the State Bar of Georgia or similar professional organization (herein defined as “Appraiser”). If either Landlord or Tenant fails or refuses to select an Appraiser, the other Appraiser shall alone determine the Prevailing Market Rate. Landlord and Tenant agree that they shall be bound by the determination of Prevailing Market Rate pursuant to this subparagraph for purposes of determining the Monthly Rental under the Lease for the Extension Period. Landlord shall bear the fees and expenses of its Appraiser; Tenant shall bear the fees and expenses of its Appraiser; and Landlord and Tenant shall share equally the fees and expenses of the third Appraiser, if any.

🚩 You see how determining "the then prevailing market rate" need not be so esoteric or unilateral? Most landlords don't do it the way Regus does it, and this should be a red flag for you. Now, how exactly should you broach the topic with Regus?

The first concept with which you may already be familiar is the predominant way in which real estate is appraised. If you've ever bought or sold a property, for example, then you've probably heard the phrase "pull comps." What this means is that the market price of one property is being determined by the verifiable market prices of comparable properties, usually ones that have recently closed a transaction. This is true for buying/selling real estate, and it's also true for renting real estate. To determine "the then prevailing market rate," therefore, Regus would probably need to hire an appraiser to find comparable properties that were recently rented, synthesize that transaction data, and then generate a report as evidence of their finding. Thus, if you ask Regus to prove to you that they have selected the actual "then prevailing market rate," it should be as easy as Regus providing you with that report, along with the report's meta data to show how the report was devised. The fact that Regus has never provided this in any of the thousands of cases I've handled implies either that Regus does not do this appraisal process at all or that Regus has some disincentive to provide you with the proof.

It should also be noted that venture-backed competitors such as WeWork present Regus with a potentially expensive problem. To the extent that companies such as WeWork and Industrious offer comparable offices, then the prices they charge would be something Regus would have to consider in a legitimate appraisal. Because those prices are probably "subsidized" in a significant way by billions of dollars of venture capital, were Regus to properly determine "the then prevailing market rate," the result could be something very unattractive to Regus: because these competitors are charging half of what you do, then you're probably overcharging, according to the data.

The second concept you should understand is why Regus might be reticent to provide you with proof even if they actually do have it. It has to do with what it means for a property to be a valid comp. Regus describes its contracts not as leases but as something akin to "hospitality agreements." You're not renting an office from Regus, in other words--so the narrative goes--your paying for a service that Regus calls a "serviced office." About 40% of Regus's revenue, for example, is estimated to come from "services" other than the use-of-space fee.

regus book a room

For this reason, only other serviced offices would even begin to qualify as comparable properties. This is important for two reasons.

myregus

First, not all markets a Regus office is in has nearby, comparable serviced office properties. Indeed, only 12.5% of all leasing activity in the US (as of Q3 2019, see chart above) was attributable to co-working or serviced office providers.

regus business centre

Regus has recently opened up a bunch of suburban locations in the US, for example. How many coworking competitors do you suppose are in these areas?

Second, unlike actual real estate transactions, serviced office transactions are not tracked by a central database such as the MLS or by county property records. This makes it nearly impossible for Regus to glean complete transaction data during a period from one of its competitors, and that reduces the pool of potential comps to only Regus transactions. This is where it gets really interesting, because, to provide you with actual proof of "the then prevailing market rate" for a Regus office, Regus would essentially have to provide you with confidential transaction data on other Regus offices that are similar to yours that were recently rented.

Like many badly-behaving businesses, Regus is not likely to let loose its financial secrets anytime soon (we recently saw what happened to WeWork when they reveled their secrets). This makes the counter to "the then prevailing market rate" argument almost like a checkmate.

The Regus Contract in 2017

Between 2014 and 2017, there were a few key changes to the Regus contract regarding unilateral rent increases, and I'll highlight those now.

The 2017 version of the Regus contract says, in section 8.7:

regus lawsuit

The 2017 version also says, in section 1.3:

regus head office

Summary of differences between section 8.8 of the 2014 version and section 8.7 of the 2017 version:

  • The All Items Retail Prices Index has been replaced with the Consumer Price Index, which, as in 2014, is weird, because this 2017 example contract was executed in the UK, and the Consumer Price Index is the US's version of the All Items Retail Prices Index.
  • The language has now limited Regus's discretion to substitute a "broadly equivalent" index of their choosing, only permitting substitute now "where a consumer price index is not available locally."
  • There is new language that says that a negative index rate will not result in a decreased Regus rate.
Of these three changes, by far the most important is the last one. Here's why. If the basis for including an index-based rate change clause is to ensure that Regus rates keep apace with currency value, then there is no explanation for why Regus would only allow for rate increases and not also rate decreases, when the local index decreases. Indeed, this reveals Regus's true motive, which is to simply appear legitimate while building in a sure-fire way to always charge Regus customer more money for the same services.

The desire to charge customers more is itself not inherently bad. But attempting to conceal that desire behind a disingenuous index clause is. In effect, Regus appears to have devised this clause to make its annual price increases as certain as gravity: to always move in only one direction.

pay my regus bill online

How much of an impact does the refusal to account for negative index changes have on Regus's bottom line (or yours, depending on how you look at it)? In the US, not much: over the last 20 years, for example, the CPI rate of change has only dipped below zero twice, in 2009 and again in 2015 (see chart above). But worldwide, it probably has a much larger impact. Keeping in mind that we're looking at 2017 version of the Regus contract, it's probably no coincidence that, according to the IMF, 23% of countries who report index data saw a negative index rate change in 2016, with an average rate change among those countries of -2.67%. This is exactly what Regus was trying to guard against with this language change to the contract.

Now that you have a thorough frame of reference for why and how Regus increases your rent, let's look at their actual arguments in response to complaints about rate increases.

Regus's argument to justify your rate increases...

If you ask Regus what gives them the right to unilaterally increase your rate, they'll probably point you to the tricky parts of the contract we just examined in detail. They're position is essentially, "well, you signed it; so you must be bound by it."

That's it. Unless you actually tailor your complaint to attack one of the details of the rate-change clause, then Regus's argument will simply be that you signed a contract containing these clauses.

...and although it's not a very compelling argument, it's the default winning argument unless you can craft a counterargument strong enough to unseat Regus's argument. So let's jump straight into that.

Your counterarguments...

Nondisclosure of Material Facts

The Regus "contract" has never been a single document. This appears to be by design, as court records and evidence presented in the 2016 class-action lawsuit show (which I've already sampled above). Regus salespeople apparently try hard to conceal key parts of the contract from you. One tactic might be to distract you from reading the terms and conditions actually attached to the order form. Another tactic might be to simply not present you with entire parts of the contract--the house rules, for example.

The key issue is whether the fine print on the Regus order form "incorporates by reference" all of the hidden pieces. On one hand, there is an argument that you cannot actually agree to something you never knew about, saw, and understood. This is relevant when the Regus salesperson conceals parts of the contract from you. If you can win this argument, then you can claim that the contract is either invalid entirely or, rather, that only the missing pieces are unenforceable. Alternatively, even if the contract is held to be valid, if you're making this argument after Regus already increased your rates and charged you, then you might be able to claim breach of contract and pursue damages.

Demand Proof

Given that the Regus contract has changed in important ways over time, the way you use this counterargument depends on which combination of terms govern your current contract with Regus. But in general, the point of this attack is to demand that Regus prove that they have the right to enforce the particular rate increase they have imposed. As I said earlier in the article, I have not once seen Regus comply with this request. This becomes a powerful attack, therefore, because Regus is likely to either be unwilling or unable to prove that they have the right to raise your rate to the specified level.

This one is interesting, because it's technically more of a defense than an offense. But in the context, it behaves as an offense. For example, let's say that you have decided that you've had enough of Regus after the latest rate increase and you want to leave the contract early. In that case, you simply leave. Shortly thereafter, Regus will say that you have breached the contract and that you owe the outstanding contract amount, which will probably be calculated according to the new rate. If you simply ignored these claims, then Regus would have to pursue you. When/if that happens, you simply respond to Regus stating that you believe their claim to be invalid, and invite them to provide you with proof that you owe the amount they specify. This will result in a flurry of platitudinous references to the "contract," but Regus will be reticent to get too far down into the weeds. At each interval, you simply reply to reiterate that they have not yet complied with your request, because proof of their claim requires more evidence and explanation.

Now, this might sound like a rudimentary strategy to you, but it's actually more sophisticated than it looks. What you're really forcing Regus to do is admit--either implicitly or explicitly--that their rate increase was really something between a material breach of contract and a proposed change. In the event it is the latter, then, like any proposal, you would have the right to accept or decline it. So you say that you have simply declined to continue the contract under the proposed changes.

One interesting consequence of Regus not being able or willing to prove their right to charge you more is that any charges they made to your credit card (or debit card) automatically after the rate increase would arguably be a violation of the Electronic Funds Transfer Act. The EFTA could provide $1,000 in statutory damages per violation in some cases, plus recovery of attorney's fees. The idea is that is Regus cannot prove that you authorized them to charge you that specific amount, then they would have charged you without authorization to do so, in violation of the EFTA. This thus becomes a powerful negotiation lever when all you really want to do is terminate the contract early without penalty.

It's just simple, contract 101, really. On renewals, for example, because there is no such index as "the then prevailing market rate," if Regus wishes to enforce an increased rate, then they'll have to do the work to prove that the rate they wish to charge is in fact the prevailing market rate. Absent that work, Regus tends to inadvertently grant disgruntled customers a golden ticket with which to get out of the contract entirely.

That's why I wrote this article...and now you know. 💡

Regus hopes you don't read this, if...

  • Regus has increased your monthly rates without your consent, and;
     
  • You're now trying to figure out how to legally get out of the contract and fire Regus for all of the nonsense you've endured;
     
  • You're not deterred by section 2.8 of the Regus contract (screenshot below), which tries to prevent people from discussing their Regus agreement:
regus reviews

Why do you suppose Regus would include a confidentiality clause in their contract? Because Regus hopes that disgruntled Regus customers don't talk to each other, and because Regus really hopes you don't talk to Veeto.

...which, you can do by clicking the button below.

Stop paying Regus rates you didn't agree to pay.

Tell us your Regus issue and we'll tell you your best strategy for getting out of your Regus contract. 🏆

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