As a landlord, It’s crucial to have a strong lease that leaves no room for ambiguity. A clear lease sets you and your lessees up for a friction-free tenancy and spells out exactly what your tenant can and cannot do, including subleasing the unit. As with most things landlord related, there isn’t a one-size-fits-all answer. Instead, it’s important to weigh the pros and cons of allowing your tenant to sublease, and decide if it’s right for you.
How does a Sublease Work?
Subleasing is when a tenant rents out their current rental, or your property, to another tenant. Depending on the sublease, the subtenant could pay all of the rent, or merely a portion of it. Similarly, the subtenant may assume all of the liability, or it may remain with the original tenants. If the tenants retain liability, they are responsible if the subtenants stop paying rent, damages the unit, or otherwise breaches the agreement.
The Pros of Subletting for Landlords
As a landlord, you know that living situations change, which can impact your income as a landlord. Perhaps your tenants have to relocate due to family issues or a new job. Whatever the specifics, life changes can mean your tenant is no longer able to maintain their lease agreement. In these scenarios, it can be advantageous as a landlord to allow for a sublet Continuous Occupancy.
Without a sublet, a tenant’s move mid-rental period would mean you’d be left with a broken lease. While your lease should have protections built-in for you, including fines in the event of a broken lease, you’re still likely to find yourself at a disadvantage financially as your unit won’t be occupied. Allowing a sublease means avoiding a rental vacancy and lost rental income.
In the event of a sublease, the responsibility falls squarely on your original tenant to find someone to take over the lease. As a landlord, you don’t have to spend the time or money to attract a new, suitable tenant for your property Additionally, depending on how the sublease is structured, the original tenant may assume all responsibility for the sublease. Meaning they are responsible if the subtenant stops paying rent, damages the property, or otherwise causes issues at your property. All in all, this means less work for you as the landlord.
The Cons of Subletting for Landlords
Unreliable Screening Procedures
By allowing your original tenant to choose and screen the sublessee, you also give up the ability to control and carefully select the tenant subleasing your property. The original tenant may be more focused on finding someone to cover their financial obligation than with their qualifications.
Complications and Damages
If the original tenant is responsible for managing the subtenant, what happens if you cannot locate your original tenant? Perhaps the subtenant pays their portion of the rent to your original tenant, and you cannot get in touch with them to collect a late rent this can become a complicated situation that impacts you financially and emotionally.
In the event of damages or lease violations think violations of noise or pet policies or issues of nonpayment, you now potentially have two lessees to deal with, evict, or otherwise manage. Also, in some states or cities, your original tenant can evict the subtenant. It can undoubtedly grow complicated.
Sublease Terms in Lease Agreements
Your original lease agreement should explicitly state whether or not you allow subleasing, and if you do, what the terms are. Here are a few possible terms to consider including:
- No sublets without the landlord’s consent or written permission The landlord must screen and approve all subtenants.
- Require renter’s insurance.
- Rent must be paid directly to the landlord even if the original renter is covering a portion of it.
Whether or not you choose to allow subleasing of your property, it’s essential to outline this in your lease carefully. With a clear lease agreement, you may be able to have your tenant sublease your property in a way that you’re comfortable with and benefits you as well.