Are you curious about the differences between a sublease and a sublet? Although often used interchangeably, these terms actually refer to two different arrangements for tenants.
In a sublease, the original tenant and the subtenant make the deal, while a sublet involves the landlord and the subtenant directly. In both cases, however, the landlord’s approval is required.
In this article, we’ll break down the distinctions between subleasing and subletting, including variations like short-term subleasing, such as vacation rentals.
We’ll also weigh the pros and cons of letting tenants sublease and offer tips for managing both subleasing and subletting in your lease agreements.
Plus, we’ll give you some helpful advice you can pass on to your tenants if you allow subleasing.
What are the specific differences between a sublease and a sublet that landlords need to know about?
While the terms are often used interchangeably in casual conversation, subleasing and subletting refer to different legal arrangements regarding property occupancy. Let’s examine each.
A sublease occurs when the original tenant, also known as the primary tenant, who has signed a lease with the landlord, creates a lease agreement with a subtenant, allowing the latter to use all or part of a property during their own lease period.
The original “master lease” between the landlord and the original tenant remains in effect. The original tenant continues to be responsible for fulfilling the obligations of the lease, including paying rent and maintaining the property, even if the subtenant breaks their sublease conditions.
While there is typically no direct relationship between the landlord and the subtenant in a sublease situation, the landlord must give permission to open a sublease on the property in the original lease. Otherwise, the primary tenant, who is still responsible for the original lease, could be in breach of their rental agreement. Finding that a tenant is subleasing without permission can be grounds for a landlord to terminate a lease agreement and seek eviction.
Tenants often sublease their spaces when they need to move before the end of their lease, or they may sublease part of the rental property to help cover expenses.
A tenant may also decide to travel for a number of months but plan to return and, therefore, sublease for a while until they’re ready to reoccupy the property.
If a tenant chooses to make money from their rental home using short-term vacation rental services, this is also considered subleasing.
While some landlords are happy to allow this kind of activity, others are not. Landlords will often deal with short-term subleasing separately and specifically in the lease since it tends to cause more disruption to neighboring tenants and can increase the risk of damage to the property.
A sublet will often happen under similar circumstances, for example, when a tenant needs to move for work and can no longer complete the full term of their lease. However, in this case, rather than the tenant finding a subtenant for their place, the landlord finds a new tenant and offers them the remainder of the lease.
Typically, the original tenant must continue paying the rent until the sublet can be finalized. However, the landlord is obligated to find a subtenant as quickly as possible.
For example, as of July 2019, landlords in New York are responsible for mitigating damages by trying to re-rent their property reasonably quickly. Once the new tenant begins paying rent, the original tenant’s responsibility for rent for the balance of the original term ends.
There are many reasons why you might consider giving your tenant a relative amount of freedom when it comes to subleasing.
However, there are risks involved with subleasing, which is why many landlords choose not to allow the practice.
As a landlord, it’s up to you to balance the pros and cons of your particular circumstances and decide whether you want to allow your tenants to sublease.
Landlords should include clauses to manage both subleasing and subletting in their original lease agreements to maintain control of their properties. Unfortunately, many standard rental contracts still do not contain clauses about subleasing.
As a landlord, you decide whether or not to allow your tenant to sublease your property. This can be beneficial, as you won’t have to spend time and money finding a subtenant if the original tenant needs to leave.
However, it also represents a risk, as the landlord does not have the opportunity to screen the subtenant and ensure they do not have a history of eviction, for example.
Allowing subleasing or not can be on a spectrum. The lease agreement can deny subleasing in all circumstances. On the other end of the spectrum, it can give the original tenant full rights to sublease part or all of the property as long as they continue to meet the conditions of the lease agreement, which means paying rent and maintaining the property. The lease could also allow the tenant to apply to the landlord for separate written permission to sublease without providing a reason. The landlord could also charge a reasonable fee.
The question of subleasing for short-term stays can be dealt with separately in the contract. Short-term vacation rentals may still be prohibited in your area if you do not include a subleasing clause in your lease.
The lease may also contain restrictions on the number of people who can occupy the property and provisions restricting the tenant from using the property for a home business.
The section of the lease dealing with early contract termination should cover subletting also. This clause typically reinforces that the tenant is responsible for paying rent until the end of their original contract but that the landlord will attempt to find a sublet tenant as quickly as reasonably possible to take up the obligation.
This is not the only way to terminate a lease early. Some landlords prefer tenants to pay a one-time fee to streamline the process. Find out more about lease termination clauses here.
If you decide to allow your tenants to sublease their space, it can be a good idea to advise them to put in place a subleasing agreement similar to the agreement between you and the tenant.
Just like a lease, a subleasing agreement should contain:
From the landlord’s perspective, it’s important that the sublease agreement acknowledges that the terms of the sublease are subject to the terms and conditions of the lease agreement between the original tenant and the landlord. A copy of that lease should be made available to the subtenant. The subtenant should be asked to agree to comply with the details of the master lease agreement where applicable.
Below are answers to some of the most frequently asked questions from landlords about subletting and subleasing.
Yes, in most cases, a tenant needs their landlord’s permission to sublet their rental unit. Many lease agreements explicitly require the tenant to obtain the landlord’s consent before subletting. Failing to get permission could lead to violations of the lease terms, based on which the landlord might take legal action or evict.
A sublease should clearly outline the terms of the sublet, including the duration, the amount of rent and how the subtenant should pay, security deposit arrangements, and any specific rules or conditions of the sublet. It’s also wise to include the original lease terms to ensure the subtenant knows of any obligations or restrictions.
Whether a tenant can charge more rent to their subtenant than they’re paying depends on local laws and the original lease agreement. While some landlords and jurisdictions may allow this practice, others might restrict it.
If the subtenant fails to pay rent, the original tenant remains responsible for paying rent in full to the landlord, as the original tenant’s name is on the original lease. The original tenant may need to cover any missing payments to avoid violating their lease terms. They can seek to recover the rent from the subtenant through small claims court or other legal means.
Typically, the original tenant is responsible for any damages to the rental unit caused by the subtenant. The original tenant would need to pay to repair the damages or compensate the landlord accordingly. However, the original tenant can seek reimbursement from the subtenant, especially if such terms were included in the sublease agreement.
The landlord’s primary legal relationship is with the original tenant, not the subtenant. While the landlord may have indirect responsibilities, such as ensuring the property meets habitability standards, the original tenant acts as the subtenant’s landlord under the sublease arrangement.
Life is unpredictable, so subletting and subleasing are standard parts of the rental business when tenants cannot complete their lease terms. As a landlord, the best thing you can do is ensure you are in total control of the subleasing situation by including detailed clauses in your rental agreement that let the tenant know what they can and cannot do.
It is possible to give tenants the freedom to sublease while protecting your overall interest. The key is not to leave things to chance but instead cover your bases in your lease agreement.
Note: RentPrep does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, or accounting advisors.
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