Subletting Laws

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 What Is a Sublet?

Individuals who rent apartments or houses will typically be required to sign a lease for a fixed period of time. If, during that time period, an individual is not planning on living at the apartment or house for a while, they may be able to rent that space out to someone else.

Subleasing and assignments may be available options for individuals who will not be using their residences for a time period. The process of renting out an apartment or house that an individual is renting is called subletting.

A sublease, or a sublet, occurs when a tenant who has a lease agreement with a landlord allows another individual, called a subtenant, to use the rented space for a certain period of time. The original renter will still be liable to the landlord.

They will be responsible for the lease agreement. The subtenant is then liable to the original tenant.

An assignment, in contrast, an assignment occurs when the tenant transfers their lease agreement to another individual, called the assignee. In these instances, the assignee will assume the lease agreement and become the new tenant, with all of the former tenant’s duties and rights.

Sublease and assignments are commonly used in commercial lease agreements when a tenant no longer needs or can afford the rented space or when the tenant wishes to leave before their lease term expires. The tenant can reclaim part of their lease expenses and can avoid paying for idle space by subletting or assigning the property.

Subletting and assignment terms may be included in business lease agreements. These clauses may require a tenant to get permission from the landlord before subletting or assigning the space or the lease may ban subletting or assignment.

Am I Always Allowed to Sublet My Space?

As noted above, whether an individual is allowed to sublet their space will depend on their individual lease. Many leases have clauses that outline the tenant’s rights related to subletting.

There are some landlords that allow tenants to sublet freely and others who do not permit the practice at all. It is important for an individual to review their lease before subletting their property.

In addition, city ordinances may affect an individual’s ability to sublet.

What if I Want to Sublet My Space?

There are two ways an individual can have someone else legally move into a space that they are renting, as noted above, subleasing and assignments. More details on these two types of arrangements are as follows:

  • Sublease arrangements:
    • The original renderer is still responsible for the rent being paid by the new tenant in addition to any damage to the premises before the end of the lease;
    • The new tenant will pay the original tenant’s rent, not the landlord;
    • The original tenant should have a written agreement with the new subtenant, spelling out their obligations; and
    • Most leases require the original tenant to get the landlord’s approval of any subtenant prior to the time the subtenant moves in; and
  • Assignment:
    • Allows the original tenant to transfer their the lease to someone else;
      • The new tenant will be responsible for everything the original tenant promised in the original lease; and
    • Assignment almost always requires approval from the landlord.

What Is a Sublease of a Commercial Lease?

A commercial sublease occurs when a commercial tenant transfers all or a portion of their interest in a leased property to a third party for a specific and temporary period of time. It is important to be aware that the original tenant will remain liable for any damages that occur in the event of a breach of the lease.

A company may either sublet a portion of their office space to a third party while still working in the same space or sublet the entire location until the end of their lease period. For example, if a business is seasonal, for example, a holiday store, they may sublease their space to another store until the holiday period arrives.

For example, a Halloween store may have a 1 year commercial lease that they sublease for 9 months of the year when their store is not operating. It is important to note that, when a business sublets a property, the original tenant, or sublessor, is still obligated to the landlord for all of the terms of the original lease.

This means that a sublessor maintains privity of estate and privity of contract with their landlord. The sublessee, or the individual who is using the lease for a temporary period of time, is only liable to the original tenant but not to the landlord.

Can a Commercial Lease Be Assigned or Subleased?

The rights of tenants to sublease or assign commercial leases will be determined by the terms of the leases. The terms of a lease may prohibit the tenant from subletting or assigning or they may allow the tenant to sublet or assign if they obtain consent from the landlord to meet certain conditions.

There are some jurisdictions that prohibit landlords from withholding their consent to sublet or assign unreasonably. If the lease does not state otherwise, a commercial lease can generally be assigned or subleased.

The ability of a tenant to sublease or assign a commercial lease may be negotiated when signing or renewing the lease.

What Legal Issues Can Arise in Connection with Subletting?

There may be some potential legal issues that arise in connection with subletting. If a landlord does not approve a commercial sublease, the tenant has many choices, including:

  • Examine the lease agreement: A tenant should examine their lease agreement to determine if there are any provisions for subleasing. If the lease agreement expressly bans subleasing, the tenant may be without legal grounds to seek a sublease;
  • Talk with the landlord: The tenant may attempt to negotiate with the landlord to see if there is a way for both sides to agree. This may include suggesting modifications to the lease agreement, for example, raising the rent or adding extra security measures;
  • Seek legal counsel: If a tenant believes their landlord’s reluctance to grant a sublease is unfair or breaches the lease agreement, they should consult with legal counsel;
    • A lawyer may assist in reviewing the lease agreement and advising the tenant on their rights and alternatives;
  • Find a new tenant: If a landlord is not willing to consider a sublease, the renter can explore finding a new tenant to take over their lease. However, most commercial lease agreements will include a no assignment or subletting provision, which indicates that the tenant cannot transfer or sublease the lease without the landlord’s permission; and
  • Early termination: If a tenant is not able to find a subtenant or if their landlord refuses to allow a sublease, the tenant may consider terminating their lease early;
    • In this scenario, however, the renter may be required to pay a penalty fee or additional costs as specified in the lease agreement.

If the landlord refuses to allow the commercial sublease, the tenant should review their lease, try to negotiate with their landlord, and consult with legal counsel if needed. The tenant may be able to sue a landlord if they refuse to allow a sublet.

Do I Need a Lawyer to Help Sublet My Space?

Because landlord-tenant laws are constantly changing, it may cause cases to be complicated. In addition, the laws governing subleases and assignments may vary by state.

If you have any issues, questions, or concerns related to subletting your space, it may be helpful to consult with a landlord-tenant lawyer. Your lawyer can advise you of the landlord-tenant laws in your state as well as your options if your landlord is not allowing you to sublet.

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