To Sublease or Not to Sublease?
Tales From Tenants Who Took the Leap
Last Updated: October 11, 2023
Written by
Jasmine Roy
Jasmine Roy, BCSC
Jasmine is a professional writer, editor, and SEO specialist with over five years of experience in content creation and digital marketing. In 2018, she completed her Bachelor of Communication Studies at MacEwan University in Edmonton, Alberta. She's been telling stories and passing on important information to the public ever since. Starting her career in journalism, Jasmine has always had a strong sense of civic engagement and the importance of law. Now, she uses her communication skills as Senior Marketing Writer and Editor at LawDepot.
Reviewed by
Connell Parish
Connell Parish, BA, JD
Connell Parish is a Legal Writer for LawDepot. Connell completed his undergraduate and law degrees at the University of Alberta and particularly enjoyed researching various legal topics from the rule of law and social media to energy law at the Alberta Utilities Commission. He brought his love for legal research to LawDepot, completing his articles at LawDepot and being called to the bar in Alberta in 2023.
|
Fact checked by
Kyle Adam
Kyle Adam, BComm
Kyle Adam is a seasoned content creator, editor, and SEO specialist with over four years of experience. Presently, he serves as Senior Marketing Writer and Editor at LawDepot. Holding a Bachelor of Communication Studies from MacEwan University, he further honed his skills with an Associate’s Certificate in Graphic Design from British Columbia Institute of Technology (BCIT). Kyle seamlessly blends his love for arts and writing to craft compelling content. He’s enthusiastic about explaining complex topics by using simple, accessible language and effective visuals.
Key Takeaways:
- Subleasing involves renting some or all of a rental property to a subtenant, often for a shorter term.
- Landlord consent is usually required for subleasing, and it's crucial to maintain a positive tenant-landlord relationship.
- Best practices for subleasing include obtaining landlord consent, finding suitable tenants, and having a written sublease agreement to avoid potential conflicts.
At this point, we’ve all stayed in an Airbnb at least once or twice (and if you haven’t, you probably know someone who has).
Whether you're the landlord or the tenant, subleasing is a great way to earn extra cash from a rental property!
If you’re thinking about becoming an Airbnb host, or if you’re just looking for a way to subsidize the cost of your own rent, you should know how subleasing works—not just theoretically, but how it actually plays out IRL.
Because, although subleasing sounds like a good idea initially, it doesn’t always work out as planned...
Ever wonder why?
To find out, we spoke to LawDepot customers from across America who had experience drafting a Sublease Agreement.
Many of these sublandlords found success, but not without their fair share of hardships. Learn from their subleasing stories and put together a winning strategy for yourself.
What is subleasing?
First off, let’s go over the basics of subleasing.
Subleasing, also known as subletting, is when an existing tenant rents some or all of their rental property to a subtenant.
Sublets are typically short-term rentals, though some tenants sublease their property for the entire length of their lease term. In any case, the subtenant enters an agreement with the existing tenant—not the landlord or owner of the rental property.
Typically, the landlord must approve of the sublease, but this depends on the master lease. Still, getting permission helps maintain a positive tenant and landlord relationship.
Generally, the original Lease Agreement will state whether or not the tenant has permission to sublease. This is a common provision in Commercial Lease Agreements, but residential tenants may need to ask for their Landlord’s Consent to Sublease.
In fact, obtaining written consent may be needed even in situations that allow subleasing. The lease might also specify that a landlord cannot unreasonably withhold approval.
What’s more, the new lease terms cannot violate or change terms in the existing Lease Agreement. As such, it’s critical for the tenant to review their lease before subleasing.
Other than these key differences, a Sublease Agreement is not so different from a general Lease Agreement. To recap, here are the main rules of subletting you need to know:
- The landlord should consent to a sublease arrangement
- The tenant (i.e., the master tenant or sublandlord ) takes responsibility for the sublease
- The Sublease Agreement cannot violate the original Lease Agreement
Sounds fairly straightforward, right?
Here’s the thing: if you’re trying to decide whether subleasing is something you’d like to do, it’s essential to weigh the pros and cons first.
So let’s dive into what some of LawDepot’s customers had to say.
To protect the privacy of our customers, we’ll refer to them by their first names only.
The benefits of subleasing according to tenants
1. Testing a location without a big commitment
In today’s remote and gig economy, it’s easy to find a demand for furnished properties with flexible contracts. Naturally, that’s where subletting comes in.
Take Abra, for example, who spent six months as a subtenant when she first moved to Boulder, Colorado. She said the flexibility was exactly what she needed as she found her way in a new city.
“Subleasing is a good option when you aren’t exactly sure what you are looking for, or you’re new to a place and want a chance to scope things out,” said Abra. “I wanted an option that was furnished, and I could get out of it if I decided I didn’t want to stay.”
In fact, Airbnb is a great way to capitalize on this market for temporary living. People are often willing to pay more for a place that’s stylishly furnished and in a great location.
Still, even without this online platform, subleasing is an excellent way to meet this demand and save some money. In Abra’s case, she subleased from someone privately (as opposed to an Airbnb host) for a budget-friendly living situation.
2. Accessing desirable locations
Christopher lives in a house in central San Francisco that he subleases to two other roommates. With the city’s high cost of living, Chris said that he couldn’t afford the place if it weren’t for the other two tenants.
“[Subleasing has] allowed us to live in the city in a much larger dwelling than we would be able to get normally,” said Chris.
“We have a garage, a backyard, and a driveway. We would never be able to have that on our own. It’s really helped us all live our best lives.”
Over in Hudson, New York, Patrice was able to access a better business location thanks to the help of a sublease. In her case, she needed to consolidate the operations of her book publishing business.
She was able to find space in a former Walmart store, but as a small not-for-profit, she needed a sublessee to help share the rent costs. With another renter, her business operations happily moved from three different locations to one.
3. Saving money
Of course, the overarching theme of all these benefits is saving money while subleasing. Any money that the subtenant puts towards property costs is money that stays in your pocket.
The situation is no different for Don, who rents a commercial building about an hour from New York City. He said he felt the office was rather empty after the pandemic hit, so he decided to sublease the space.
“I had some space that was idle and I wanted to turn it into an income. I figured there are lots of people looking to escape their pajamas in their living rooms,” said Don.
“With all the turmoil going on in the economy and with commercial space, [subleasing is] an income opportunity for people.”
The risks of subleasing according to tenants
1. Incompatible personalities between roommates
Whenever a tenant shares a rented space with a subtenant, it’s crucial to consider how their personalities will mesh as roommates. This is true even in friendly situations.
Take Michael, for example, an actor and a teacher in New York City. He’d had experience as a subtenant before. When he was able to get a place of his own, he wanted to rent a room to help subsidize his cost of living.
An old friend approached Michael, interested in subletting but looking for a flexible agreement as he navigated some personal and financial troubles. He asked for a handshake deal, which Michael says he now regrets accepting. With just a verbal agreement, they weren't able to set proper boundaries.
Michael said he felt the subtenant took advantage of his compassion and generosity. They were often unreasonable and eventually became violent. The tension between them mounted, and Michael had to end the relationship.
“You never know who someone really is until you live with them,” said Michael. “It’s really risky.”
East from New York, in Kentucky, Michelle also had a clash of personalities with one of her subtenants. She was renting a two-bedroom house with a fenced-in backyard, a driveway, and flowers. Subleasing helped her save a few hundred dollars every month, and she’d mostly had good subtenants, so she said it was very helpful.
However, one man was a revolving door of drama. He caused trouble by smoking inside, getting arrested by police at the house, and lying about his last name.
“He was always filling up the house with stuff he picked up on the side of the road. He complained a lot about everything and made [me] uncomfortable,” she said.
Michelle knew this subtenant wouldn’t work out and, ultimately, asked him to leave.
2. The eviction process and squatter’s rights
When subleasing, it's essential to be familiar with the eviction process and prepared for complications (especially when sharing the rental space).
Back in NYC, Michael was having trouble evicting his subtenant. Without a written contract or amicable communication, he wasn’t able to get them out easily when things went sour.
For him, it was essential to get the subtenant out within thirty days. They were threatening to use “ squatter’s rights,” which are rights that sometimes allow squatters to gain ownership of a property.
“Some people in New York are desperate,” said Michael. “They find a place, and they’ll do anything to keep it.”
In the end, Michael felt he had to leave his own apartment to feel safe and to give the subtenant the space and time they needed to get their things together and move out.
After he reclaimed his apartment, Michael said it was a tragic, awful experience and that he probably wouldn’t be subleasing again anytime soon.
He cautions other people interested in subleasing to “ Set your boundaries as soon as possible. Have a discussion about your pet peeves and have integrity. If you have an agreement, follow that agreement.”
For Michelle in Kentucky, the eviction process was a similar nightmare. The troublesome subtenant didn’t leave when he was expected to, and Michelle feared she’d have to go through a court eviction process.
Michelle tried to be transparent about why the situation wasn’t working out: they’d had multiple conversations about unpaid bills and behavior problems. He just wouldn’t leave.
“When I discovered he had moved most of his belongings, I seized the opportunity to change the locks,” said Michelle. “But when I drove down the street, he saw me and began to pursue me with his car.”
There was a car chase that involved loud honking and screaming, but eventually, she lost him at a red light.
“I was scared shaking. I went to my friends for protection,” she said. “Thankfully, after I lost him, I never heard from him again.”
3. Verbal agreements and communication
You must lay things out properly at the beginning to set a good tone for the entire rental agreement.
Remember the book publisher Patrice, back in Hudson, New York? Well, it actually took her some time to find a proper subtenant.
At first, her book business partnered with another organization that seemed highly compatible. They operated a library and shared a similar philosophy, so they agreed to split the commercial space.
“We agreed that we would rent this bigger space that neither of us needed and divide it in half, you know, according to with rent,” said Patrice. They made a verbal agreement and Patrice signed the Commercial Lease with the landlord.
The agreement went well for about four years... until the library changed management, and communication went cold.
“They weren't giving me any information,” said Patrice. “They just packed up and moved away and I lost my monthly income.”
Thankfully, Patrice was able to find another subtenant in the same building who was willing to sublease with her. This time, she knew to avoid handshake deals. She said her staff was grateful once the renter signed the Sublease Agreement.
“It’s a nice, clear business arrangement,” says Patrice. “And [the contract] felt like a nice little blanket of security.”
Best practices for subleasing
1. Get the landlord’s consent
Without the landlord’s consent, you could find yourself in legal trouble. What’s more, you won’t have the landlord to back you up when things with the subtenant don’t work out.
If your landlord needs some convincing, you should demonstrate:
- Why you want to sublease (e.g., for financial or personal reasons)
- How you’ll act as a responsible master tenant (e.g., by getting the proper documents)
- How you’ll screen and vet subtenants (e.g., credit checks, background checks, and income verification)
If you’re respectful, honest, and professional, it’s quite possible your landlord will support your decision to sublease on their property.
2. Find a suitable tenant
There are ample reliable websites for posting a sublet advertisement online. For example, Craigslist, Airbnb, and even Facebook Marketplace are great places to start. While some of these sites may help you draft your post, it’s crucial to include these details:
- A clear and detailed description of the property
- The rent amount and lease term
- Any other relevant details
- High-quality photos
With this information, any subtenant that applies should have a clear understanding of the rental situation.
You’ll also want to collect information from potential tenants. A Residential or Commercial Application Form will help you gather the details needed for income verification, credit history, and other reference checks.
But wait, what if you’re planning to rent to someone you know personally or through mutual connections? Should you still share these rent details and collect application forms?
Yes! It’s still essential to exchange this information!
What’s more, if you’re living on the property with the subtenant, you must remember to assess personalities.
Let’s go back to the west coast, where Chris was looking for a subtenant for his San Francisco house. In his case, Chris knew to discuss important expectations about living on the property together.
“My first roommate [and I] laid on the table what we were expecting out of a roommate. Like we laid our personality traits on the table,” said Chris.
During interviews, they spoke about being clean, respectful, and responsible for certain chores. After having this conversation with a candidate, they’d see how the other person would react.
“If they obviously are taken aback, then it's probably not a good fit. But if they are receptive and share those same sentiments, then usually it's a good indication that they're going to be a good fit for the house.”
When a roommate didn’t work out, Chris said it was easier to ask them to leave because they already knew they weren’t meeting expectations.
In his case, he gave the subtenant adequate notice to leave. She went without a fight, although she did cause some minor property damage and left behind many of her belongings.
“We did have to front that financial burden and then take it out of her security deposit,” said Chris.
“We were a little bit worried that if she didn't agree with what we had taken out, she might have tried to challenge it. But luckily, we didn't encounter that situation. She just was like yeah, I screwed up, I'll bite the bullet and accept this.”
3. Get the agreement in writing
Written Sublease Agreements are so important because they create a professional framework for both parties to follow. Plus, they act as evidence if you ever need to enforce a contract term.
“The business end of it should be clear, even if it’s a friendly situation. Human beings are human beings; relationships change over time,” said Patrice from New York.
“With a sublease, a contract is a good thing to have because it makes it clear where everybody stands,” she said.
“Good walls make good neighbors.”
Related Articles
