Sublease agreements are popular contracts in both commercial and residential markets, but the rules for subleasing in these settings are very different. Use our guide to learn answers to common questions about how residential and commercial subleases work.
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A sublease agreement is a written or verbal agreement between an original renter (tenant) and a third-party (subtenant). In a sublease, the subtenant agrees to pay the tenant rent money for use of the rented space. In turn, the original tenant continues to pay the landlord rent as described in the original lease.
In a sublease, the original tenant remains legally responsible for the original commercial lease or residential lease. Therefore the original tenant is liable for rents paid and any damages done as prescribed by the original lease.
Subleasing allows the original tenant to honor their legal obligation to the lease without the burden of paying for a physical space they aren’t using.
Done correctly, subleasing is legal and can be beneficial to all parties. Done incorrectly, a sublease can lead to legal issues for the tenant and subtenant.
Whether you are seeking to sublease your apartment or looking for a short-term stay, there are several terms and important synonyms worth knowing:
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Though subleasing a residential space is relatively common, residential leases often forbid subleasing. For this reason, subleasing in residential real estate is frequently done without a landlord’s consent and without a formal sublease. But such arrangements can lead to ugly legal problems when things go wrong.
Below are some steps you can follow to help arrive at a legal sublease arrangement, regardless of whether your lease prohibits subleasing.
Before you do anything else, check your lease to see what your landlord has to say about subleasing. Keep in mind that state regulations supersede a lease agreement in cases where the two conflict. If your lease prohibits subleasing, use the information below to see if your state regulations permit this restriction.
As a tenant, the burden of finding a subtenant will likely be on you. You may want to start by asking people you know if they’re looking to sublease or know someone who is. If you are required to obtain your landlord’s consent, having a trustworthy person lined up will likely help persuade.
With that in mind, consider doing the following once you have a subtenant lined up:
Residential subleases should generally contain some common elements. It is extremely important to have a legally sound residential sublease that speaks to all necessary and relevant terms. The following list is not comprehensive, but provides a basis for the type of information a residential sublease may need to include:
A sublease is a legally binding contract—as such, it has maximum enforceability if signed. As the original tenant, remember that you will ultimately be liable for fulfilling the original lease. This means you will be liable for any damages done by the subtenant. Having a solid, signed sublease agreement in place can offer legal remedy if you end up on the hook for damage you didn’t inflict.
It is ill-advised to sublease your apartment or room without clear legal authority to do so. But even if your sublease agreement has not been authorized by your landlord, it may still be enforceable, especially if it’s signed.
Commercial subleases can be more complicated than their residential counterparts. Though they are common in the business world, commercial subleases have few protective laws and regulations in their corner. As such, they tend to be highly specific so that all potential situations and problems are spoken to in the terms of the agreement.
When it comes to subleasing commercial space, you’ll likely want to contact your landlord regardless of what your lease says about subleasing. Subleasing is standard practice in commercial environments, and commercial landlords are typically quite involved in the process. You may even be able to work with the landlord to negotiate sublease terms in your favor.
Though every commercial rental situation is unique, there are some common elements that most commercial subleases should contain. It is important to make sure that the agreement works for you and your business, and that all terms are sound. Having an agreement with missing or problematic elements (such as if the duration is wrong or the premise is inadequately described) could potentially cause more harm than good.
The following information is far from exhaustive, but many commercial subleases include the following terms:
For maximum enforcement capability, commercial sublease agreements should be signed and dated by the original tenant (sublessor) and subtenant.
Remember that commercial subleases are legally binding. Before signing, make sure the agreement has all necessary elements and that you’re on board with its terms.
In both commercial and residential arrangements, sublease agreements can be useful for tenants when they wish to move out of a rental space before their term is up. Subleases can also be useful if tenants wish to leave the space for a specific amount of time before returning. For potential subtenants, subleases can be especially beneficial for those who don’t want to enter a full-term lease.
No. If subleasing is done legally, it will not hurt your credit score. But if done outside the specific legislation of your state and the specific lease you are under, a sublease can hurt your credit score if it results in unpaid rent.
Though the laws vary state to state, in most cases subleasing is not illegal. However, subleasing may be a violation of your lease if you do not obtain written permission from your landlord.
Yes. If executed properly, a sublease agreement is a legally enforceable contract between parties. If you break a sublease, you will be bound by the terms of the contract.
It may still be enforceable. As a tenant, if you take a subtenant to small claims court, the fact that the landlord did not condone the sublease might not matter. However, the sublease’s enforceability (or lack thereof) will depend on your exact situation. If you have questions, it may be helpful to speak with a lawyer.