What is a Sublease Agreement?

Sublease means renting out a property to a third party by a tenant for a specific period of time. A sublease agreement or sublease contract is a legally binding agreement between the current tenant of an existing lease and a new tenant. The current tenant can also be referred as ‘sublessor’ and the new tenant can be referred to as ‘a subtenant or sublessee’. In a sublease agreement, the subtenant is subject to the term and conditions of the original lease. Subleasing of a property happens when the tenant holding tenancy over the property will go onto transfer a part of their tenancy to a third party after getting the consent of landlord.

As per the sublease contract, the exclusive possession and usage of the property will be to benefit the tenant for a period agreed and mentioned in the sublease agreement. The property can only be sublet to the new tenant with the permission of the landlord. Usually, the sublease contract only includes the terms of original contract, however it does involve an additional fee for the transfer.

According to the contract, the original tenant will remain solely responsible for damages, payment of rent, and any breach of the initial sublease agreement A typical sublease contract will include the time length of the agreement between the owner and the tenant and the amount of money or rent that the tenant has to pay the owner over the time period of the sublease agreement.

Subleasing a property is only required if the initial lease contract permits it. The original owner of the property must be made aware when the property is getting sublet to someone else, if the owner is not aware of this or they did not give permission, the owner can file a lawsuit against the sublessor and the subtenant. Before subletting the property, tenants must know that subletting will not release them from the initial responsibilities on the original contract of the lease. Any damages that will occur to the property, the original tenant will be accountable for that as well as for paying the rent of the property.

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Master Lease:

Master lease is the original lease of the property. It is the contract that was signed between the tenant and landlord. The subtenant’s interest in the property cannot exceed the interest created by the original lease. The sublease contract will require the subtenant to comply with all the provisions of the original lease agreement or the master lease contract as well as the things included in the sublease agreement.

Steps involved in Subleasing a property:

By subletting a property, the tenant is provided the security of not breaking the lease. Every tenant has to follow the following steps in order to subleasing a property:

• Be sure that the property can be subleased:

  This is the most important thing to know. Before you look for subtenants and write down a sublease agreement, you must be sure if the property can be subleased or not. The section to sublease the property must be included in the original lease document in order for you to sublease the property. In some cases, the laws of the country or state forbids tenants from subleasing a property and in other cases the landlord might not allow the tenants to sublet their property. Either way you must have the permission from the landlord and that you are not disobeying any laws.

• Insurance company of the subtenant:

  If the subtenant has an insurance company, it will back them up in of theft or any liability limits with injuries. An insurance company of the subtenant can sometimes even cover the living expenses during the time period of sublease. So, it is important and in favor of the tenant to check if the subtenant has an insurance company or not. This measure will protect you from covering any type of expenses of any damages that may occur during the time period of sublease.

• Sublease Advertisement:

  Advertisement is a major part of subleasing a property. You must think of a creative way to advertise your property. Taking pictures, listing rent cost and details of the property should be included in the property. If you are subleasing the property to more than one person than that should be included in the advertisement as well.

• Interview the Subtenants:

  Before subleasing the property to anyone or signing a sublease agreement with anyone, you must interview the people who have contacted you in order to sublease. Interviewing possible candidates is useful as it will give you a little insight on who you are giving your property to. It will protect you from getting involved with a scam or any kind of fraud that may require you to take any type of legal action in the future. You can also do a check on the people you are subleasing and see if they have any history of crime, breach of contract or not paying rent.

After you have followed all the steps mentioned above and taken all the measures necessary in order to avoid any problems in the future, you should compromise an agreement and discuss the terms and conditions with your subtenant and all the parties involved should sign the agreement after coming toa mutual understanding about everything related to the property.

What should be included in a Sublease Agreement?

In order to sublease a property successfully, the most important thing to note is that the contract for subletting is written carefully and all the major and minor details regarding the property are included in it. Including all information that a subletter must know about the property can save the sublessor from legal battles in the future. Here are some things that should be written down in a Sublease Agreement:

• Cost of Monthly Rent

• Who will be responsible for repair and maintenance?

• Length of the Sublease Agreement

• Required utilities and how they will be paid

• Guest Policy

• Liability Information

• Smoking Policy

• Security Policy

• Disclosure of lead-based paint

• Terms of the original lease agreement

• Landlord’s consent or permission

• Signatures of all parties involved

  A simple sublease agreement on the other hand will only include a few things:

• Premises

• Tenant

• Subtenant

• Term

• Original lease

• Rent

Above mentioned sections are the only things that will be written down in a simple and precise sublease agreement.

Another important thing that you must note that before you decide to sublet a property and make the sublessee sign the agreement, you must have a discussion about the rent of the property and make sure that you and the subtenant are on the same page about the rent of the property in order to avoid any complications in the future.

As a subtenant it should be important to note that you conduct a review of the lease and completely understand the terms and conditions written and are comfortable with it before you sign it. In most cases the sublessee negotiates only about rent and damage repair costs. The subtenant can also discuss about the length and time period of the sublease, if they think that the time period mentioned on the lease is not enough they can negotiate it with the tenant and increase the time of the sublease expiration date.

Type of property that can be subleased:

Before thinking about subletting any property, you must think if the property can be sublet or not. If the landlord has allowed, then any property can be sublet to a subtenant after signing an agreement. House, apartment, room, condo, basement, mobile home, garage, duplex, townhouse, are all included in the types of property that can be sublet by the tenant to a sublessee.

How sublease agreement works?

Sublease is basically a contract between a property owner and a tenant that transfer the owner’s property rights and use of the property to a tenant for a specific period of time. The sublease agreement includes the time period of contract and the amount of rent. Any property can be sublet to a subtenant unless the original lease contract forbids it. When a tenant has decided to sublease a property, they must know that they are still responsible for the rent and other obligations, however, the owner must be notified, and the property must be sublet with the permission of the landlord. Control over the process of subletting should be written into the original lease so that owner have control over who uses and occupies their property.

Another thing to note before subleasing is that the laws of the country or state you are living in. in some countries or states there are laws that do not allow tenants to sign a sublease agreement and sublet the property to another subtenant. And there are certain laws that allow tenants to sublet the property to another tenant even if the owner has forbidden it.

Things to consider before signing a sublease agreement:

A lot of tenants are resistant to sublease their property because there are a lot of things to consider including the terms and conditions of the original lease and whether the landlord will allow the tenant to sublease the property to a subtenant. Following are some things that should be considered before signing a sublease agreement:

• Whether the tenant and landlord are on the same page about subleasing the property or not
• If the original rights of the tenant that were included in the original lease will change after signing the sublease contract.
• Who will handle the subleasing rental amounts?
• If the subtenant requires some improvement in the property who will be responsible for that?

Discussing these things with the original landlord before signing the sublease contract is important as it will save all the parties involved with any complications regarding the property in future. When both the tenant and landlord are on the same page about this stuff, they can inform the subtenant about it and subtenant will be aware of who to contact when they require any help regarding the property.

Why you need a written sublease contract?

Oral sublease agreements do exist but the problem with them is that they are difficult to enforce. Oral sublease agreement is not legally binding like written sublease agreement and that means if there is a problem in the future regarding the property or sublease agreement, there will be no written agreement to be provided in court and the court would have to hear the evidence from all the parties involved and based on that they will decide who is right and who is wrong.

But if there is a written sublease agreement, incase of a fraud or breach of contract when one of the parties takes legal action, they will provide the written contract in court and based on that court will decide who is write and who is wrong. Another reason why you should have a written sublease contract is because some jurisdictions require that any contracts that involve any type of property must be in writing as they are more enforceable.

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