Should Landlords Allow Subleasing?

Published by ezLandlordForms on

As a landlord, you’re sometimes asked to make tough decisions.  

Your tenant may approach you one day, and ask if they can sublet the rental property.  Maybe they want to move out early, or maybe they want to offer short-term use of the property as a vacation rental on VRBO or Airbnb.  It may sound reasonable when they explain it and ask your permission, but should you allow them to sublease the property to strangers?  

First, make sure you fully understand what it means.  What exactly is a sublease agreement?  The tenant leases the property to a third party, effectively becoming a middle-man, who is simultaneously your tenant and the subtenant’s landlord.  They are responsible to you for the rent and property care, and they are responsible to the subtenant for the landlord’s responsibilities.

It’s important to note that allowing subleases is up to the landlord in most – but not all – states.  As a landlord, you are not usually obligated to allow tenants the option of subletting their apartment without your written approval.  Nonetheless, be sure to check with your state landlord-tenant laws, as some states do restrict landlords on sublease provisions.  If you choose to allow it, take steps to protect your rights and your investment.  Have the terms clearly indicated in writing, as part of your signed lease agreement.

Here are some pros and cons to consider.

Pros
More attractive to tenants.  Allowing subleasing may make your apartment more appealing than one that doesn’t.  If a tenant isn’t sure how long they need to rent for, they may look for apartments that specifically allow subleases.

 

Easier to rent.  If your unit is near a college or university, it may be much easier to rent if you allow tenants to sublet during the summer months.  It may also be easier to rent to those who hope to study abroad, or even to snowbirds who head south for the winter.  Being flexible with your tenants may result in lower vacancy numbers for you.

May offer some protection.  Empty apartments are more susceptible to break-ins.  Having an occupied apartment also means problems such as water leaks or frozen pipes won’t go unnoticed.

Cons
No proper screening.  When tenants are allowed to sublease their apartments, it can be difficult to control who the sublessee will be.  You can’t usually screen applicants, as the new lease arrangement is between your current tenant and the new tenant.  If the new tenant doesn’t meet your (hopefully strict) requirements, there isn’t much you can do about it.
 

You don’t deal directly with the new tenant.  In a sublease situation, you don’t go to the new tenant for rent payments, property damage or other important matters.  The sub-tenant has no legal obligation to you, even though you are the landlord.  Your legal lease agreement is only with your original tenant.  If you run into issues, your only recourse is with the tenant who signed the lease, not the current person on the premises.
 

Can complicate an eviction.  If an eviction is necessary, regardless of the reason, you must now evict both the tenant and sub-tenant.  Even though your lease agreement is only with your original tenant, you have someone else on the premises.  If they choose not to leave, you could be in a messy situation.

Theft or property damage.  Allowing subleases can make you more vulnerable to damage or theft.  Sub-tenants may not treat your unit with care, as they know they aren’t the ones on the lease agreement.  As the landlord, you’ll have trouble taking direct legal action against the current occupants as you have no written agreement with them.
Late, or non-payment of rent.   If your tenant has trouble collecting rent from their sublessees, they may be late with their rent.  They may also stop paying altogether, as they can’t afford to cover for their sub-tenant who isn’t paying.  If the current occupant is responsible for paying utilities and doesn’t do so, it creates an even bigger legal mess that is best avoided.

Should landlords allow subleasing?
Many landlords refuse to allow their tenants to sublet their units.  When it comes to subleasing, there are few benefits to the landlord.  It mostly helps the tenants, not you.   It also complicates the landlord-tenant situation.  As the landlord, you would have little power over the current occupant of your property which isn’t ideal.

A better option to subleasing is to allow an assignment.  This essentially allows a new tenant to substitute for the original one.  The original tenant can show the property and collect rental applications, then pass them along to you to run screening reports and background checks, and select among the applications.  An assignment lets you therefore terminate the existing lease and start a lease agreement with this new tenant.  Choosing an assignment instead of a sublease allows you to retain all of your legal rights as the landlord.

Related Reading

The Sublet Process for Dummies – Roommates, Landlords, Screening & Sublease Agreements

Landlords and Regulators Crack Down on Subleasing Through Airbnb & Others

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Categories: Leasing Issues

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