If you’re a college student, recent grad, or anyone living in a big city, you’re no stranger to sublets: Apartments that one tenant subleases to somebody else, often for a short period of time (such as a summer break).
Although the concept of a sublet is simple: somebody renting a sublet pays the rent instead of the original tenant for a defined time period, subleasing is filled with potential pitfalls for everybody involved: the landlord, the sublessor, and the sublessee.
If you’re considering a sublet or hope to sublease your apartment to someone else, this post will serve as a primer on how to take on a sublet or how to sublet your apartment to somebody else.
First, some definitions:
- The landlord is the property owner or third party hired by the property owner to rent out the property.
- The sublessor is the tenant who is renting from the landlord and who rents to the sublessee.
- The sublessee is the person who is renting from the sublessor.
The most important thing to understand about a sublet is that even though the sublessor may move out for a period of time, the sublessor is still liable to the landlord for rent, the condition of the property, and any other terms of the lease. Subleasing does not change the original contract!
For Sublessors: How to Sublet Your Apartment (Safely!)
When you sign a lease on a new apartment, you may not be thinking that you someday might need to sublet your place. Still, a lease that allows subletting is better than one that does not; at least you’ll have the option. You may never plan to use the subleasing clause but if you have to move out unexpectedly such as because of a job transfer and can’t get out of the whole rental agreement without losing a ton of money, it may be your saving grace.
Where to Find a Sublessee
So you want to move out of your pad and need to get someone else in the apartment to cover your lease. Where do you find that person?
Even though it’s full of spam, I still find Craigslist to be a good resource for anything related to rentals. In addition, you can also place an ad on LoopNet.com, Zillow, or even in the local newspaper. With the price of newspaper ads though, I recommend trying online listings first.
Once you have applicants, you need to start screening them. Remember that as a sublessor, you are responsible for any potential damage to the property and even if the sublessee stops paying rent, you are still liable to pay the landlord rent. Therefore, you need to screen potential sublessees just as you would if you were the property owner: call references, check credit, and verify employment. When you’ve selected a sublessee that you feel will be a good fit, draft up an agreement and have the sublessee sign it. The best place to get a sublease agreement would be from a local attorney who knows state laws related to real estate. We have provided a sample sublease agreement in a Word doc as an example only. You may also find samples at your local library or pay for one to be drafted on a Website like LegalZoom.
A sublet is a great option if you need a place to crash for the summer, in a new city while you look for a permanent pad, or if you can’t qualify for a new apartment because of credit.
If you have bad credit due to a recent foreclosure, short sale or bankruptcy, you probably already know that you won’t qualify to buy a house for a while. In addition, landlords who check credit may be turned off by low scores, so much so that you could be rejected for tenancy. If poor credit is keeping you from finding the right place to rent, then you may want to consider looking for someone who is subleasing their tenancy out. While a sublease certainly doesn’t mean that the sublessor won’t check credit (because they should) in my experience, many don’t bother.
Keep in mind that as a prospective sublessee, you should get permission to live in the property from the landlord (not just the sublessor) in writing. This helps to reduce the risk that your time in the property will be disturbed. If the lease between the sublessor and the landlord specifically disallows for subleasing and you assume it’s okay, the landlord may have the right to evict you!
You should also have a written agreement between you and the sublessor specifically outlining who will pay for what. Disagreements arise easily unless terms such as who will pay for maintenance and utilities are clearly outlined in writing. You cannot expect the landlord or property owner to help you out if you have a disagreement with the sublessor. According to Robert Griswold of real estate industry Website Inman News, “If the owner of the building is aware that you are living in the apartment, he does not have any responsibility for any terms of your sublease agreement between you and the renter.”
If You’re a Landlord
As a landlord, I always make sure that my leases specifically state in writing that subleasing and assignments are not allowed. So why did I spend so much time telling you that as a tenant you want to ask for one? It’s just like when you’re buying your home you want to pay the least amount of money for it but when you go to sell the same house without any improvements you expect top dollar for it— it’s natural to want what benefits you, and that’s okay. Most real estate contracts are negotiable, so it’s okay to go back and forth a little bit about different terms until both parties are completely satisfied.
Be sure to check your state laws before drafting a lease. In some states—California is one—if the landlord does not address subleasing in a lease, the tenant may legally do so.
Most landlords know that screening tenants is extremely important and that the more screening you do, the better your chances are of having a good tenant that abides by the terms of the lease and pays on time. If you allow either subleasing, you may be wasting your money screening the original tenant because the tenant can turn right over and put someone in your property with no rental history, no job, and a 440 FICO score.
Final Note: Sublets Vs. Assignments
As if adding “or” and “ee” to the end of everything weren’t confusing, another term to quickly distinguish is an assignment.
An assignment takes place when a tenant wants to completely get rid of his tenancy. For example, instead of wanting to move out of his apartment for the summer, the tenant needs to move from California to Florida permanently but his lease is still valid for another year. Assigning the lease actually replaces one party on the contract for another. So the difference between an assignment and a sublease is that in an assignment the original tenant is no longer liable to the landlord, only the new tenant is. In a sublease, the sublessor is liable to the landlord and the sublesee is liable to the sublessor.
Whether you are a landlord or a tenant, read as much as possible about your state tenancy laws regarding. The more educated you become, the less likely you will be to make a costly mistake.
Do you have a sublet story (good or bad)—either as a landlord, tentant, or sublessee? Share it in a comment!
Photo Credit: Ani-Bee