What is a Sublease Agreement?
A sublease agreement is a legal real estate document. The agreement is typically between the landlord, the tenant, and a third-party subleasing a room or unit. Essentially, subleasing refers to the tenant renting out the house or room to an individual while still being responsible for the original lease terms. Additionally, the tenant can either turn a profit or have the third party cover the monthly rent. Tenants sublease for many reasons, some personal and others financial. Some examples are employment relocation, reducing monthly expenses, or wanting to leave the apartment without breaking the lease.
Why do Landlords Hate Subleasing?
There are many reasons why landlords may hate subleasing. One significant reason is the potential for a squatter situation. Furthermore, landlords want to select their tenants by methods of background checks and rental history. When a tenant subleases their apartment, they tend to be more laid-back about who they choose.
Additionally, no landlord will accept a tenant turning a profit off their rental property. To avoid an individual from subleasing your place, make it clear in the lease that it will not be allowed. Also, let the tenant know that any guest staying in the unit or home for more than seven consecutive days should be added to the lease. If the tenant goes against the lease terms, they’re subject to eviction and potential lawsuit.
What are the Disadvantages of Subleasing?
Overall, subleasing can be tricky and typically not recommended. Potential disadvantages for both the sublessor and the landlord. Furthermore, it can cause legal issues or financial risks.
Sublease Agreement Risks for the Sublessor
- When a tenant subleases an apartment or house, they are still responsible for any damages that may occur. Subleasing is risky for a sublessor, they run the risk of the third-party tenant not paying rent or causing damage to the property.
- Be aware of the terms of your lease. Most of the time, landlords clearly state within the lease that there’s no subleasing or long-term house guests allowed. If the tenant breaks any terms within the lease, they can be evicted, and a judgment can be filed for the remaining rent balance.
- Locating an individual you can trust. Since the sublessor is still responsible for the lease terms, placing the ideal individual can be difficult.
Issues for a Landlord with a Sublease Agreement
If you own a rental property, try to avoid subleasing unless there’s no other option. A landlord can run into multiple problems, from financial to legal issues. Here are some of the issues for landlords when it comes to a sublease agreement:
- A landlord can face a non-paying subtenant, damages to the home, and little control over who resides in the house.
- The landlord can’t choose the individual compared to selecting a tenant.
- A complicated legal process is required to remove the individual from the property.
- Lack of communication. It’s like whisper down the lane, the landlord doesn’t have direct communication with the third party. Any issues or concerns relayed to the tenant as a middleman.
- It may only be a short-term option. When owning a rental property, it’s ideal to have a long-term tenant. It minimizes the chance of going months without a tenant in between renters. So, when an individual subleases, a lease renewal after the first year is rare. Considering subleasing is a short-term solution.
- The possibility of the tenant turning a profit. No landlord wants to leave money on the table when determining the rental rate. At times, the sublessor may request a higher number from the third party individual than the rent is.
How to Sublease an Apartment?
The first step in subleasing an apartment is to review your lease for subletting causes. Additionally, as a tenant, you want written approval from your landlord to sublease the unit. Another critical aspect is finding a suitable subtenant. Furthermore, an individual who will pay on time while respecting the property and neighbors. It’s tricky choosing the subtenant, since the tenant is still responsible for that individual.
Once a qualified subtenant is selected, you will draft a sublease agreement. Additionally, you can find generic sublease agreements online or hire a real estate attorney to draw one up. Clear communication is necessary, the subtenant must understand the terms of the lease and agreement. Lastly, complete the legal paperwork and transfer all utilities to the subtenant’s name.
Difference between Sublet and Sublease Agreement
Although subleasing and subletting have many similarities, the difference lies in the level of landlord involvement. Furthermore, in a sublet agreement, the subtenant has an agreement with the landlord. Additionally, making things easier for the landlord, especially with a possible eviction. A sublease agreement is between the original tenant and the subtenant. If you’re a landlord or tenant interested in subletting or subleasing, there’s more protection utilizing a sublet agreement.
Is it Worth it to partake in a Sublease Agreement?
If you’re a tenant who needs to move for employment or because you do not like the apartment/house. Then, subleasing can be worth it if you’re able to locate a qualified subtenant that you can trust. As a tenant, you wouldn’t want to be held responsible for a non-paying subtenant. Most rental leases are one-year contracts. So, if you’re able to wait out the remainder of the year, that’s recommended. If something comes up where you consider subleasing, review your contract and discuss things with your landlord.
As for a landlord, it’s simply not worth it to sublease your property. When subleasing, you run a greater risk of a non-paying tenant due to relying on two separate people to pay. It’s also more difficult to remove the subtenant from a sublease compared to a sublet situation. Additionally, as a landlord, you want complete control over your property and who resides within. Lastly, a sublease agreement gives most of the control to the tenant, with the chance of the tenant turning a profit. Landlords have expenses, so it’s never desired to leave money on the table.
If you’re considering subleasing an apartment, approach things correctly. Each circumstance is different, so weigh out the pros and cons of this real estate option. Lastly, follow the laws and hire a real estate attorney to draft a sublease agreement.