SUBLEASE: CHARACTERISTICS, ADVANTAGES AND DISADVANTAGES - ARTE - 2025

The sublease happens when a formal tenant, whose name is translated into a lease, rent part of the property, or all of the property of which is tenant to a third person. Subleases can be executed for both residential and commercial properties.

It is important to know that with a sublease you are creating a new and different legal relationship between the tenant and the person who is being sublet. At the same time, the relationship between the tenant and his landlord remains intact.

Source: pxhere.com

Subletting is a common method of occupying commercial property rather than executing a conventional lease directly with an owner. The most common reason a tenant subleases space is to save money and time.

Subleases are almost always priced below market prices for similar properties, which often include accessories and furnishings at no additional cost.

characteristics

Subletting occurs if a person, who is a tenant of a property, finds another person to pay part or all of the monthly rent. That person is the subtenant.

Subleases are often a situation where "rain for one company is blue sky for another."

If a company no longer has a need for a particular space, but still has a remaining term to meet in its lease, instead of paying a purchase commission or leaving the space empty, it markets that space by subletting it to a third party, thus offsetting some of costs.

Generally, the subtenant must follow the same rules as the original tenant.

A subtenant should know that approval for the sublease comes from the owner and from what is detailed in the main lease.

Both the tenant and the subtenant should be informed of local laws regarding subletting, ensure that the landlord has given their approval, and ensure that the rights in the original lease apply to the subtenant during the sublease.

Legality

A lease is the agreement between a real estate owner and a tenant, which transfers the landlord's rights to exclusive possession and use of his property to the tenant. There the duration of the lease and the amount to be paid for rent are established.

The tenant's legal right to own the property is considered a lease. Subletting occurs when the tenant transfers a portion of her legal tenure to a third party as a new tenant.

The right to sublet all or part of the rented property will depend on what the lease contract allows. There should be clauses that include sublease approval or disapproval.

Many landlords prohibit subletting, unless they have given prior written consent, which means that subletting without permission can be considered a breach of contract.

Laws governing subleasing vary by state. Before considering subletting it is advisable to consult the laws of the relevant state.

Notification to owner

Most leases require that the owner's consent be obtained to sublet. They also require the owner's approval of any subtenant.

Even if the lease does not say anything about the sublease, the tenant should consider contacting the owner before subletting, to help maintain a good relationship between the two.

Responsibility of the lessee

The sublease does not relieve the tenant of his obligation to pay the rent of the original lease contracted. It also does not exempt your responsibility for the cost of repairs caused by any property damage.

If the subtenant is unable to pay, the tenant will be required to pay the rent in full. This is because your name is the one on the lease.

The subtenant must pay the rent and comply with the terms of the sublease. However, the main tenant is still ultimately responsible for the lease.

Therefore, if the subtenant is behind in rent, the landlord has the option to sue the original tenant.

The subtenant

If there are problems with the subtenant, the tenant can serve an eviction notice. The initial tenant is responsible for evicting the subtenant and could face his or her own eviction for not doing so.

The original tenant cannot grant property rights to the subtenant that the original lease did not grant.

Advantages and disadvantages

Advantage

Subletting a rented property is a great way to minimize costs if you have to move out of town or travel for an extended period of time.

Since a lease is for a predefined term, situations may arise that make it impossible for the original tenant to complete the term of the lease.

For example, if you rent an apartment in Chicago on a 12-month lease and in the fourth month you receive a job offer in Boston, you may decide to sublet the apartment to another tenant for the remaining eight months.

Subleasing means you can take on the new job and move out, without having to pay expensive fees to get out of the lease, or pay the rent for two apartments.

The landlord also benefits, because he receives all twelve rent payments and does not have to look for a replacement tenant.

Subletting also means that interest in the apartment is maintained. If you decide to return to Chicago, you can renew your lease and get your old apartment back.

Disadvantages

Subletting has its risks. If the tenant has to move out of town with no plans to return, he should seek to end the lease with the landlord. This avoids any possible inconvenience that may arise from having sublet the rented property.

Subleases require more documentation than conventional leases. It's not just the sublease itself, but the owner's consent agreement and the underlying rental agreement, including any addendums.

This will require additional time in the negotiation, involving several parties. Only the consent of the owner can add up to one month of additional time, waiting for the owner to respond officially.

Evaluate the subtenant

The main tenant is often faced with being liable for the subtenant's actions. Therefore, if a subtenant causes damage to the property, the main tenant is liable.

If the subtenant does not pay the rent for two months, the tenant will be liable to the owner for the amount of said rent.

Make sure to properly assess the potential subtenant, checking their income, credit, and contacting their previous landlords.

References

1. Investopedia (2018). Sublease. Taken from: investopedia.com.
2. Frederic Goodwill (2018). The Do's and Don'ts of Subleasing. Rocket Lawyer. Taken from: rocketlawyer.com.
3. Teresa Traverse (2016). 5 Things to Know About Subletting & Subleasing. For Rent. Taken from: forrent.com.
4. Find Law (2018). What is the Difference Between Subleasing and Reletting? Taken from: realestate.findlaw.com.
5. Smart Business (2012). What tenants should consider before subleasing space. Taken from: sbnonline.com.