How Does Subleasing Work? How to Sublet and Not Get Burned
Also known as subletting, this arrangement allows someone to rent an apartment from someone else who is already renting it. This can be a lifesaver for tenants seeking short-term housing, as well as for those who must move out of their apartment before their lease expires (temporarily or permanently). The solution: subletting
Let’s say, for instance, you have a one-year lease, but you get a job offer in another city six months into your lease. You could break your lease—that is, if your landlord allows it—or you could find someone to rent your apartment from you, and you become this person’s landlord (technically sublandlord).
Although arranging to sublet might seem like an easy way to get out of a lease on short notice, it could leave you on shaky legal ground if you don’t handle subletting appropriately. Read on to find out more about the pros and pitfalls of this practice and how to protect yourself.
Sublease vs. rental: What’s the difference?
Setting up a sublease is different from a traditional rental because it adds another layer to the tenant-landlord relationship. If you rent a property, you are renting from the property owner. You usually pay a deposit, sign a lease, and pay rent directly to the property owner or a representative of the property.
A sublet situation is more like a sandwich. If you rent a home from the property owner and then sublet it to someone else, you’re in the middle between your subtenant and your landlord.
What are the benefits of subletting a house?
- Not having to break your lease. Breaking an apartment lease can be an expensive proposition. You may have to pay a hefty fee or continue paying rent until your landlord finds another renter, which is expensive and frustrating.
- Not paying for an empty apartment. It seems silly to pay rent on an apartment that’s not occupied. Finding a subtenant allows you to recoup at least some of your costs.
- Having a built-in house sitter. If you find a trustworthy subtenant, you can leave your furnishings behind, knowing that someone’s there to keep an eye on things and deal with property-related emergencies.
What are the drawbacks to a sublease agreement?
It comes down to one word: responsibility.
“As a landlord,” says William C. Vogel, president of Vogel Advisors in Royal Oak, Michigan, “you’re not crazy about the idea of a subtenant because you have a person between you and the person occupying your space.” As a tenant, you are still responsible for the lease. If the subtenant doesn’t pay, you still have to pay.”
The issue of responsibility goes beyond monthly payments, though. The lease usually also deals with the overall condition of the apartment or property you’re renting.
“Your obligation is that you restore the house or apartment to the same or better condition than you found it,” Vogel says, “and the risks associated with the wrong subtenant are really high.
If your subtenant trashes the kitchen or forgets to maintain the pool, it could result in thousands of dollars in property damage. Who is responsible for this? Usually it’s the person in the middle.
Alternatives to sublets
Before you sublet your apartment, Vogel suggests that you try a few alternatives. The first option is to find a new tenant to introduce to your landlord. This may be better if you are renting from a landlord rather than an apartment management company, but in either case, it doesn’t hurt to try.
Basically, you find a new tenant who is willing to sign a brand new lease. That tenant should meet your landlord’s requirements in terms of credit and rental history. Ideally, the landlord agrees, and you can break the lease (and potential liability).
Another option is to find someone who is willing to complete your lease. You have six months left, and the new tenant is willing to sign a six-month lease. Note: Such an agreement does not automatically release you from liability, and Vogel recommends including language in the assignment that specifically releases you from liability.
If none of these options are feasible, subletting may be your best option.
How to protect yourself when subletting
Brian Davis, director of education for Spark Rental in Baltimore, recommends starting by reviewing your lease.
“Some leases include clauses prohibiting subletting, while others have clauses requiring the landlord to give written approval before the tenant can sublet,” Davis says. However, even if your lease prohibits this practice, Davis still recommends asking your landlord.
“Most landlords do agree, provided the subtenant qualifies like any other tenant,” he says.
If your landlord won’t budge, you can look at local laws on subletting. Some states and cities have laws that say a landlord cannot prevent subletting to a qualified tenant.
If your landlord is on board, there are some additional steps you should take to protect yourself:
- Screen your subtenant. Don’t just take the word of a friend or relative on this person being wonderful. Check references. Run a background check. Do your due diligence to ensure you have someone who is responsible and financially stable.
- Sign a subletting agreement. There are sample agreements online, or you could consult with a lawyer. Your subletting agreement should clearly spell out how long you’re subletting the space, how much rent is, when rent is due, and how the property should be maintained.
- Get a security deposit. A security deposit can help cover any damage that occurs while someone else is occupying the space.
Subletting isn’t perfect, but if you put everything in writing and look for a responsible tenant, it can free you up to pursue other opportunities.