Whether you allow your tenant to sublease or not should be decided on a case by case basis.
Generally speaking, unless special circumstances apply or your lease prohibits subletting, it is often the most commonsense approach to allow your tenants to sublease.
Why? Because a seasoned landlord will understand that “life happens” and circumstances change. Although your tenant may have signed a one year lease, professional or personal reasons may require them to move.
From a landlord's perspective, subleasing is not ideal as it creates unnecessary admin and added risk. However, subletting doesn’t have to be an overly complicated process if you get the basics right.
By making sure the tenants involved in the subletting arrangement know their obligations, subletting doesn’t have to be bad for business.
Subletting or subleasing is when a tenant assigns the original lease to a third person who was not a party to the initial agreement.
These circumstances usually arise when, for personal or professional reasons, a tenant has to leave a rental property. Although it may seem like your tenant is throwing you a curve-ball (what's next?), this often happens when renting to tenants. After all, the only thing constant is change!
Through the new subletting agreement, the subletter or subtenant becomes responsible for the original lease obligations, including payment of rent. The subletter can pay the rent to you, or to the original tenant, who can then make the payment.
Subletting can be either temporary or permanent. If the tenant is going on a month-long holiday, they may only want to sublet temporarily, while if they have to relocate for work, they may want to take out a permanent lease assignment.
Subletting can be risky, as it is often an arrangement made between the original tenant and incoming subtenant. This can make landlords nervous because the incoming subtenant hasn’t been thoroughly screened by you like the original tenant was.
Even though your original tenant may be a trustworthy and reliable type, how can you be sure that the person they choose to sublet to is of the same moral character? They may be in a rush to move out, so their standards may not be as high as yours.
If you allow subletting under your lease agreement, reserve the right to thoroughly screen subtenants before they move in. If your tenant questions why this is necessary, just explain that this step is standard practice to make sure the incoming subtenant will not cause any issues, such as noise or damage to the property.
If they are as brilliant as your original tenant is holding them out to be, they shouldn’t have a problem with this process.
If you have a clause in the lease agreement that prohibits subletting, you can say no. However, do be aware that this can also cause issues.
Some states have banned clauses that prohibit subletting. Check your relevant laws before putting this clause into a lease or trying to enforce it.
If you ban your tenant from subleasing, they may leave the rental property anyway and stop paying rent. This will leave you out of pocket and responsible for finding the replacement tenant - a task your tenant was previously asked to do for you.
Instead, it may be better to allow your tenants to sublease but ask them to pay a one-off convenience fee, to compensate you for the time and effort of screening a new tenant. Subletting is a common issue, especially in group housing, so you might as well meet your tenant halfway.
Make sure you "dot your I’s and cross your T’s" by asking your tenant to sign a sublease agreement with the new subtenant. It always pays to have everything in writing - subletting arrangements are no exception.
This will help minimize your risk and give you some legal options if things go in an unexpected direction.
If you are going to allow subletting, you should make it a clause of the original agreement that subletting is only allowed with prior written approval from the landlord.
We hope you found this blog interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional.
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