Life can change quickly, and when it does, you must pivot to adjust to your new circumstances. Whether you've decided to move into a new home or relocate for a job position, unforeseen circumstances always arise. When they do, they often call us to adjust quickly to the changes.
Your tenant is no exception to this rule. Circumstances can change for anyone, and if they change for your tenant, you must be prepared for your tenant to sublease your apartment unit. What exactly is subleasing? Read on to discover everything you need to know about subleases, subletting, and how the two affect your business.
What is a Sublease?
A sublease is a short-term lease contracted between an original tenant whose name is on the original lease and a new tenant whose name is not. In a sublease, the original tenant rents a room, a portion of the property, or the entire property to a subtenant for a term shorter than the original lease period. Subleasing allows the original tenant to either move or gain a roommate without the consequences of breaking their lease.
In a sublease, the subtenant reports directly to the original tenant. The original tenant is responsible for the subtenant's payment and any damages that the subtenant incurs.
What is Subletting?
Subletting occurs after two tenants sign a sublease; subletting is the action of a subtenant leasing a rental property from the original tenant.
Breaking Leases vs. Subletting: What’s the Difference?
When a tenant wishes to leave a property, they have two options: breaking their lease or subletting the property. So, what’s the difference between the two? When a tenant breaks their lease, they are no longer affiliated with the property. Once a tenant breaks their lease, they no longer need to live on the property or pay monthly rent. Also, a landlord may return their security deposit to them. When a tenant decides to sublease a property, they maintain responsibility for it—even if they no longer reside there. They are liable for any damage incurred by the new tenant and any missed payments. Lastly, when a tenant subleases a property, their security deposit may be returned either:
- Before the subtenant moves in - As a landlord, you will need to “check out” the previous tenant before the subtenant “checks in. By turning over the apartment to the subtenant after checking out the original tenant, you may access any damage incurred to the property and refund the original tenant’s security deposit accordingly. Then, if any damage occurs afterward, it will be the responsibility of the subtenant. You may then deduct the fee for damages out of the subtenant’s separate security deposit.
- After the original lease contract ends - You may choose to assess for damages after both the original tenant and the subtenant move out. If you assess damages during this time, it will be challenging to determine which tenant is responsible for the damages. Then, returning the security deposits to each tenant may become more of a hassle.
Generally, there are consequences associated with breaking a lease. However, many tenants may pay extra fees to break their lease and avoid heavier consequences. When a tenant chooses to sublease, they avoid breaking their lease—but they may forfeit their security deposit.
What Scenarios Would a Tenant Need to Sublet?
There are several scenarios in which a tenant may need to sublease your rental property. There are three ways in which a tenant may sublease your rental property:
- Roommate subleases – occur when the original tenant sublets a room to the subtenant while still living on the property
- Short-term subleases – occur when the subtenant leases the entire property from the tenant for a short time within the original lease period. After a short-term sublease, the original tenant resumes their tenancy of the property.
- Long-term – occur when the original tenant permanently moves out of the rental property. The subtenant then assumes full responsibility as a tenant, as their sublease lasts for the remainder of the original lease.
Within the three types of subleases, there are three scenarios in which a tenant may need to sublease your property:
- Room-by-room subleases – may occur when the original tenant brings in a subtenant to help pay the monthly rent. In this situation, both the tenant and subtenant may live on the property full-time like roommates.
- Short-term subleases – most often occur in the summer. For example, when an original tenant returns home from college for the summer, they may sublet the summer months. Once the summer ends, they return to the apartment to resume tenancy.
- Long-term subleases – may occur when the original tenant needs to relocate altogether. With a long-term lease, the subtenant becomes the primary tenant for the remainder of the original lease.
How Does Subletting Work?
In layman’s terms, subletting is when a tenant borrows property from the original tenant. The two tenants must draft and sign a sublease agreement for this to happen. The sublease agreement should outline which tenant is responsible for the rental payment, which tenant is liable for damages, and which tenant will report to the landlord.
Once the tenants complete a sublease agreement, the subtenant can move into the property. While subletting the property, the original tenant assumes responsibility for the subtenant. If the subtenant fails to make a payment, the original tenant must pay in their place. When the subtenant’s sublease agreement ends, the original tenant either assumes their tenancy of the unit, or the landlord leases the space to another tenant.
Before subleasing can begin, landlords must include a subleasing clause in the original lease contract; Including this clause is essential. A subleasing clause is a part of the contract that stipulates your tenant's permission if they wish to sublease your property. Including a subleasing clause in the lease confirms your tenant’s right to sublease.
Landlord tip: The rights of a tenant to sublease varies by state. In some states, like New York, it is illegal for a landlord to restrict their tenant from subleasing a property. In other states, landlords can refuse a tenant’s request to sublease. Before outlining the details of your subleasing clause, make sure to research your local laws.
Once you have included a subleasing clause in the original lease, your tenant will be free to create a sublease agreement with the subtenant.
What are Sublease Agreements?
Sublease agreements are contracts that outline the responsibilities of a subtenant during their sublease. Subleasing agreements are signed documents between the original tenant and the subtenant, and they should include:
- The names of the involved tenants
- The dates of the original lease
- The dates the new tenant will live at the property
- A description of the rental property
- The security deposit required from the new tenant
- The terms of the sublease agreement – the amount of rent due, when the rent is due, and if the rent should be sent to the original tenant or directly to the landlord
- Rules of the unit – any pet policies, smoking policies, or insurance policies
- Signatures of the tenant
In some states, tenants may sublease a property without the express permission of a landlord. However, if you live in a state that does not restrict landlord interference, you must include a subleasing clause in your original lease. With the clause, tenants are legally obligated to inform you or seek your permission before subletting another tenant. When outlined in an original lease, subleasing clauses should stipulate:
- If your tenant may sublet the apartment
- At what rent rate the tenant may sublease the apartment
- How many days' notice your tenant must give you before subleasing the property
- If the tenant must get your approval when screening for subtenants
- If the original tenant or the subtenant is responsible for a late or missed payment
By taking steps to inform your tenants of the DOs and DON’Ts of subleasing your property, you may ensure the subleasing process is seamless.
What Steps do Tenants Need to Take to Sublet?
To begin subletting a property, a tenant may notify a landlord beforehand. While some states do not legally require this step, it is a courteous measure. If your tenant is considering subletting your property, communicate your wish for notification beforehand. Depending on your state, this is also your opportunity to accept or deny their request to sublease your rental.
After a tenant notifies you of their wish to sublease, it is your decision as a landlord to either contribute to the tenant screening process or leave the decision to your tenant. Following your decision, the tenant is free to contract a sublease agreement with the subtenant.
Should I Screen Sublease Applicants?
As a landlord, it is in your best interest to screen any sublease applicants. Screening applicants will allow you to determine:
- Who may pay their rent on time
- Who is least likely to cause damage
- Who would be a great subletter in general to your property
If the law permits, it is highly suggested that you, as a landlord, aid in the subletter screening process.
Actions to Consider When You Don’t Wish to Sublet Your Property
If you do not wish to sublease your property, first research local laws on landlord rights with subleases. If you live in a state that permits a landlord’s refusal to sublease, include this restriction in your original lease agreement.
If a tenant wishes to leave the property, but you do not want them to sublease it, consider offering the tenant a buy-out option. By paying a buy-out fee, a tenant may terminate their lease early. Offering this alternative may be the best option for a tenant who wishes to move and a landlord who restricts subleases.
What Are Some Best Practices for Landlords Subleasing Their Property?
Things can get tricky when a tenant decides to sublease your rental unit. To avoid any confusion with payments or security deposits, it is best for landlords to:
- Collect rent payments directly from the subtenant – Even though a sublease agreement falls between the original tenant and the subtenant, it is best to personally collect the rent payment directly from the subtenant. This eliminates any confusion about payments and eliminates the “middleman” of the original tenant.
- Perform check-in/check-out procedures – You can ensure no confusion at the end of the original lease date by checking the original tenant out of the apartment and returning their security deposit before the subtenant moves in. Keeping the tenants’ check-in and check-out procedures separate guarantees that each tenant only takes responsibility for the damages they incur.
- Preview the sublease agreement – Previewing the sublease agreement before your tenants sign allows you to add rules or make suggestions about your property in relation to their tenancy.
Manage Your Rental with Apartments.com
Whether you’re screening for tenants or creating lease agreements, Apartments.com has the rental manager tools to guide you through the subleasing process.
Apartments.com makes it easy to screen tenants, get the information you need, and find a qualified renter fast. Unlike our competitors, who use various third-party resources to collect information, we partner with TransUnion to provide you with screening reports for evictions, credit, and criminal history. Another feature you’ll find only on Apartments.com is support for co-signers, guarantors, and co-applicants. If you need more information to make a decision, you can request supporting documents from potential tenants directly on our platform. Get all the information you need to find the right tenant quickly and easily.
Subleasing your property can seem overwhelming, but Apartments.com has the rental manager tools to make the process seamless. The next time your tenant considers subleasing your property, let Apartments.com help you every step of the way.
Frequently Asked Questions
How do I prepare a subletter?
To prepare a subletter for your rental unit, share any rules or regulations they must comply with during their tenancy. This includes any late fees, pets, smoking, or noise policies
Do tenants’ rights change with a sublease?
The rights of the original tenant do not change with a sublease. The subtenant’s rights may change if you or the original tenant stipulate those changes in the signed sublease agreement.
