Subleasing occurs when a tenant permits another party to lease from him/her the premises the tenant has leased from the landlord. The tenant thus assumes the position of being landlord in relation to his/her subtenants. Subleasing usually occurs because the tenant has signed a fixed-term tenancy lease and wants, for a variety of reasons, to get out of it before it expires. To avoid the financial burden of the unexpired portion of the lease, the tenant tries to find a subtenant who will assume that burden.
A tenant considering subleasing should realize that his/her lease agreement will permit a sublease unless it specifically prohibits subleasing, that the subtenant assumes only the duties and rights enjoyed by the tenant, that the tenant is still responsible to the landlord for the performance of the lease agreement, and the tenant, in relation to the subtenant, assumes the responsibilities of a landlord and must, therefore, follow all the rules and laws applying to landlords including the security deposit law.
When a subtenant leases from a tenant the subtenant will receive only the rights and obligations of the tenant unless the subtenant and the tenant agree to the subtenant taking something less than all of the tenant's rights and responsibilities. Please note that the subtenant cannot receive more rights and responsibilities than the tenant enjoys in relation to the tenant's landlord because the tenant cannot sell to the subtenant rights and responsibilities that were never possessed in the first place.
Example: The tenant subleases the last three months of a fixed-term tenancy to a subtenant. At the end of the three months, the tenant's landlord refuses to renew the lease and insists that the subtenant move out. The subtenant is required to move because the tenant was only entitled to three more months' occupancy of the premises.
Things to Consider
The tenant may also want to consider the following before subleasing:
Example: If subtenants fail to pay the rent, the original landlord can hold you responsible for missed rent payments. This amount can be withheld from your security deposit, as can charges for physical damages done by the subtenants.
Two things may be done to protect against this:
- require the subtenants to sign a written agreement that includes everything in your contract with the landlord
- require a security deposit from the subtenants
Assuming the Role of Landlord
The tenant should also understand what assuming the role of the landlord means. For instance, if you require security deposits from the subtenants, the provisions of the security deposit law (including providing inventory checklists and placing the deposit in a financial institution) must be followed. (See Deposits And Checklists for more information). Also, if you want to evict the subtenants, you must use legal eviction procedures. (See Evictions). In addition, if landlords must register with a city housing department, sublessors may also have to do so. As an example, usually the person who sublets for more than a specified period of time qualifies as a landlord and must register with the city. To see if you qualify, check with your city housing department.
Subleasing can be a complicated procedure, particularly if you are planning on leaving the area for the period of the sublease. If so, you might try to get your landlord to sign a new contract with the persons who are interested in subletting. If your landlord agrees (this is often the case), and agrees to terminate your rental contract, your responsibilities end when your occupancy ends.
If you permit the subtenants to pay rent directly to the landlord, you run the risk of not knowing if the subtenants are continuing to meet their rental obligations. When the subtenants are required to pay rent directly to you, with you paying the usual rent to the landlord, there is much less risk.
Remember, if you should decide to just move out without subleasing, your landlord can hold you liable for rent due until the end of your agreed-upon occupancy. In a fixed-term lease, you can be held responsible for rent due until the specified ending date; in a periodic tenancy, you can be held responsible for rent due until the required notice period for termination has expired. The landlord, on the other hand, is supposed to make a "reasonable" effort to re-rent the place. If he is unable to do this, your responsibility, as mentioned, above, to pay rent ends when the new tenants begin paying rent. However, you can be held liable for reasonable re-renting costs such as advertising or transfer fees.