What is a Sublease Agreement?

A sublease agreement for the property is when a tenant (lessee) and other tenants (sublessee/subtenants) agree on particular terms and conditions. These rules are put in a formal document and signed by both parties.

In cases where the existing tenant wishes to leave the property with a good period on their lease agreement, they can sign the sublease agreement with the sublessee. However, the original lease agreements will continue to stay in effect with the landlord.

Also, the original tenants will be responsible for the rent payments. So, if the sublessee makes late rent payments, the existing tenants would be responsible.

So what is a sublease agreement? How does a sublease agreement work? And how can you write one? We will discuss all those things in this article to give you an extensive idea about them.

What is the difference between a subtenant and a roommate?

Before we move on to understand what a sublease agreement is, we need to understand when you need one. Some people might confuse the terms roommate and subtenant to be the same thing.

Therefore, they also believe they need to sign a sublease agreement for the rental property with their roommate. That is not the case since there is a clear difference between both. Let’s go over them in more detail.

  • Roommate
    A roommate is a person who lives in the same rental property. They would also be a signed party on the original lease agreement. Therefore, they would be counted as original tenants and have to pay monthly rent.
  • Subtenant
    On the other hand, the subtenant is an individual who doesn’t take the landlord’s permission for the rental unit. Instead, they would sign the sublease agreement with the original tenant. One of the things to note is that the original lease agreement for the rental property will stay effective.

Understanding the difference between a subtenant and a roommate is vital since it will help you know when you need a sublease agreement. Let’s move on to understanding the basics of the sublease agreement.

What is a Sublease Agreement?

A sublease agreement is a written document between the original tenant and the subtenant. It sets out the terms and conditions between both parties regarding the rental property.

The whole process is known as subleasing or subletting. Usually, there is a need for a sublease agreement when the existing tenant decides to re-rent some or the entire rental property to a subtenant for the remaining time frame for the original lease.

A vital element of the sublease agreement is that the subtenant will sign the contract with the existing tenant. They won’t be dealing or signing the deal with the landlord or the property owner.

Moreover, subleasing is not the same as assigning a lease since there is a significant difference between both. Assigning a lease is when an individual takes over the main lease agreement, and the original tenant is no longer responsible for paying rent.

The prospective tenants will be responsible for paying the utility costs and rent for the rental unit and will deal with the landlord directly.

Different terms used for the Sublease Agreement

The sublease agreement is also referred to as:

  • Sublet lease agreement
  • Sublet contract
  • Sublet agreement
  • Sublease rental agreement
  • Sublease contract

When creating a sublease agreement, the name of the original tenant would appear on the sublease agreement even if the sublessee is paying rent directly to the landlord.

What is a master lease?

The master lease is also known as the original lease. It refers to the existing lease between the landlord and the current tenants. If the current tenants enter into a sublease agreement with the sublessee, both parties still have to abide by the master lease since it is a legally valid document.

Furthermore, the sublease agreement should mention the terms and remaining provisions the sublessee must abide by. If the master lease expires, the sublease agreement will no longer be valid.

How does a lease agreement work?

A lease is a rental agreement between the property owner (landlord) and the tenant. It gives the tenants possession of the property for the time frame they and the landlord agree upon. The rental contract will also contain the contract’s length and the amount the tenant has to pay in rent.

In legal terminology, the tenant has the legal right to reside in the rental property. If the tenant decides to rent some portion or the entire premises to another individual, they must enter into a sublease agreement.

Simply put, they would be re-renting part of their legal tenancy to another individual as a new tenant. The existing tenant can establish the sublease unless the original lease signed doesn’t allow it.

Remember that the tenant who sublets the rental unit wouldn’t be released from their legal obligations on their original lease agreement. They would still be responsible for paying the landlord’s rent on time. Moreover, if the property incurs some damages due to the actions of the sublessee, then the tenant would be responsible for bearing the cost of those damages.

So, if the subtenant fails to pay the rent on time or doesn’t pay it for three consecutive months, the original tenant would have to pay the rental amount and any late charges to the landlord. They would have to collect the rent from the subtenant and then pay it to the landlord.

In which cases might a sublease be required?

There can be different reasons for the tenant to sublease their rental property. Most tenants are relocating to somewhere else on a temporary or permanent basis.

Therefore, subleasing the properties can give them back some or complete rent. Since the lease agreement is for a specific timeframe, there can be a few instances where the original tenant might find it difficult to complete the lease term.

They would have to go for the subleasing option to recover their rent and complete the lease term. Here is an example to help you get a better idea of when the subleasing might be required:

  • A tenant might rent an apartment in New York with a lease for 18 months.
  • After six months into the agreement, the tenant might receive a job offer from Los Angles and is considering to relocate a new place.
  • Therefore, the tenant can decide to sublease their apartment to another individual, who will become a subtenant for the remaining time frame of the lease.
  • They can find a subtenant for the sublease which means that the original tenant can relocate to the new place for their job. It will also save the original tenant from paying rent for two apartments or for paying the cancelation fees mentioned in the rental contract.

Moreover, the landlord will continue to get the benefits since they will receive monthly payments from the subtenants. It will also save them from the hassle of finding a replacement tenant quickly.

In such scenarios, subleasing can be a win-win situation for all parties involved. The tenant can leave the property without missing out on their rent, while the landlord will continue to receive rental payments.

Also, the sublease agreement signifies that the original tenant withholds interest in the apartment. They may renew their lease on their previous apartment if they move back to New York.

What parties a sublease agreement involves?

Two main parties are involved in the sublease agreement that is:

  • Original Tenant
    The original tenant, the sublessor, signed the initial lease contract with the landlord. They are now subleasing some part or the entire rental premises to the new tenant.
  • Subtenant
    This refers to the individual who enters into the sublease agreement with the tenants. The new tenants will now possess part or the entire rental house for the time frame mentioned in the original lease agreement.

While the landlord does own the property and is in a contract with the original tenant, the contractual commitments in the sublease agreement would be between a sublessor and a subtenant.

Nevertheless, the sublessor has to inform and notify the tenant about their subletting arrangements. In most cases, the sublessor would have to get the landlord’s approval. Once they get written approval from the landlord, they can sublet the property to another individual.

The tenant and the landlord can include control over the subletting process in the original lease. This way, the owner will retain control over who resides on their property.

Differences in sublease agreements according to the particular state and local laws

An important thing to consider when subleasing the property is the laws of the state and local municipalities. It can impact the tenant’s rights to sublease a particular property and allow a particular individual to sublease it even if the rental contract doesn’t allow them.

For instance, the tenant who lives in a building with four or more units in New York City can sublease the property with the landlord’s consent. However, suppose they deny subleasing the property due to no proper reasons. In that case, the provision to prevent the tenant from subleasing the property is void as a matter of public policy.

Another example is that in San Francisco, the tenant can find a different roommate even if the original lease prevents them from doing so. However, the replacement would have to meet the requirements set by the landlord for the rental space.

It is best to understand the governing law about the sublease agreement in the state or municipality you live in to avoid any issues. You can also take assistance from a law firm that can provide legal advice about the state laws.

How to write a Sublease Agreement

Now that you know what a sublease agreement is, let’s move on to making one.

It is vital to understand and get a sublease agreement template so you can include all the relevant information, such as:

  • Premises
  • Tenant
  • Sub-tenant
  • Original lease (terms and conditions)
  • Payment details
  • Consent from the landlord
  • Sublease term

Let’s move on to the steps to create a sublease agreement.

Step 1 – Give a clear idea about the premises

The first thing you need to do is mention the details about the property. It includes the overall structure of the premises and the complete property address. So, you need to include all the relevant details about the premises.

Also, it is important to mention what part of the property you will rent out to the sub-tenant. Mention the number of rooms you want the subtenant to possess on the property. For instance, you can mention that the sub-tenant will rent two rooms or the entire rental unit.

Step 2 – Include the details of the sublessor and the subtenants

Another important element to include in the sublease agreement is the details of the sublessor and the new sub-tenant. You can include your and the subtenant’s name, contact details (phone number and email address), and other personal information.

Step 3 – Clearly define the term of the sublease

Next, you need to mention the sublease term, which refers to the time frame you are subletting the property to the sub-tenant. The term of the sublease will vary from case to case, depending on the timeframe in the original lease.

Also, the tenant doesn’t need to rent the property to the subtenant for a specific time frame. For example, they can set the sublease agreement every month in which the sublease would be renewed each month. But, if you want, you can also set the lease term for a particular timeframe.

Step 4 – Include the details about the original lease

This step is the most important one when it comes to creating a sublease agreement. The new tenants need to know about any provisions or conditions set in the rental agreement with the landlord.

For instance, if the landlord has prohibited bringing pets to smoking on the premises, this needs to be included in the sublease agreement. The tenants can include a general statement in the sublease agreement regarding the obligation to comply with the rules and conditions set in the original rental contract.

Also, if the state or municipal laws require you to get written permission to show the landlord approval, you should include it in the sublease agreement. Also, other related documents should be included in the sublease agreement.

Step 5 – Mention the Rent Amount

Most importantly, it is vital to determine and mention the exact amount upon which the subtenant and the tenant agree. You can mention the exact figure the sub-tenant does monthly to the tenants.

If the sub-tenant doesn’t pay the rent on time or causes some damages to the rental unit, then the tenant would be responsible for paying for all the losses. While the subletting agreements are legally binding, the tenant would be responsible if the subtenant doesn’t comply with them.

Final thoughts

We hope you now have a clear idea of a sublease agreement and how you can create one for subletting a property. An important point to note for the tenant is that they have an immense responsibility in a sublet situation. Most tenants might think they can sublet the property and simply move out.

However, that is not the case since many technicalities go behind the subletting process. For instance, you would have to find a new tenant, which can be hectic. You can make online listings but would have to deal with phone calls throughout the day. Next, you would have to go through the rental application of each applicant and choose the right one.

If the master lease has a provision for obtaining written permission from the landlord, you must ask them first. Moreover, you would have to agree upon the rent amount for the sublease agreement. Additionally, the tenant is responsible for the month’s rent since the landlord would collect it from them, not the sublessee.

Once everything is complete, you will need to create a sublease agreement form. This entire process can be time-consuming and hectic. Also, you need to understand the state and municipality laws to ensure that you comply with them when subletting your property.

You might have to get the assistance of a law firm to understand and create a document that complies with the law. Understanding all of these things is important before you decide to sublet the rental premises to a sub-tenant.

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What is the difference between a sublease and a sublet?

Subletting refers to the contract between the new renter and the landlord if the original tenants decide to move out of the property. Conversely, subleasing is a process through which the original tenants rent the property to subtenants.

What type of property can I sublet?

Usually, tenants can sublet any residential property. The tenants can either rent the entire property or a part of it.

Two main factors would come into play for the sublease agreements. The first is the state laws, and the second is the lease signed with the landlord.

Few states prevent landlords from not allowing their tenants to sublease the property. On the other hand, few states would leave it to the landlord’s discretion whether or not they allow the tenant to sublease the property.

Even if the laws do allow the tenants to sublease the property, they would have to inform their landlord about their intent to sublease the property. This way, it reduces the chances of future conflicts.