{"id":163571,"date":"2023-12-20T14:50:52","date_gmt":"2023-12-20T21:50:52","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=163571"},"modified":"2023-12-20T14:50:54","modified_gmt":"2023-12-20T21:50:54","slug":"what-is-a-sublease","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease","title":{"rendered":"What is a Sublease?"},"content":{"rendered":"\n<p>A sublease is when a tenant rents the property they\u2019re renting to another tenant\u2014essentially reassigning the&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/rei\/glossary\/lease\" target=\"_blank\" rel=\"noreferrer noopener\">lease<\/a>. In most subleases, the tenant\u2019s renter covers all or a majority of the property\u2019s monthly rent payments. Subleasing can keep tenants from breaking their original lease while someone else pays their rent.&nbsp;<\/p>\n\n\n\n<p>For example, a tenant\u2019s job forces them to move before the end of their rental agreement. Subletting their rental can keep them from violating their rental agreement and\u00a0eviction. The new tenant assumes responsibility for the rent amount.\u00a0<\/p>\n\n\n\n<p>Subleases are also called sublets. A property\u2019s original tenant is called the sublessor or sublandlord and new tenants are sublessees or subtenants.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-does-a-sublease-work?\">How Does a Sublease Work?<\/h2>\n\n\n\n<p>In a typical sublease, a property\u2019s original tenant identifies a subtenant. The sublessor and sublessee sign a written agreement.&nbsp; The written agreement defines the obligations for which the sublessee is responsible. These details include a security deposit and rent payments. Often, the sublandlord gets their landlord\u2019s consent before subletting, either verbally or in writing. And sometimes, the landlord signs the written agreement between the sublessor and sublessee. The contract between the sublessor and sublessee does not replace the original tenant\u2019s rental agreement. Instead, it\u2019s a new document outlining the sublessee\u2019s obligations to the sublandlord.<\/p>\n\n\n\n<p>For example, the sublessee pays a security deposit and rent to the sublessor, not the landlord. But the original tenant\u2019s rental agreement remains in place. As such, they owe the property owner rent, even if the sublessee fails to pay them. They\u2019re accountable for nonpayment of rent and related late fees. The subtenant is also liable for any damage to the rental unit.<\/p>\n\n\n\n\n\n\n  <div class=\"lg:block\" x-data=\"{ ad_block_block_658360195669b: popAds(1) }\">\n      <template x-for=\"ad in ad_block_block_658360195669b\">\n        <a\n          :href=\"ad.linkURL\"\n          class=\"no-underline text-black\"\n          x-on:click=\"adClicked('https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease', ad.sponsor, ad.title, ad.id, 'blockAdClicked', 'blockAd', '')\"\n          target=\"_blank\">\n          <div\n            class=\"py-4 border-b flex flex-col flex-nowrap text-sm border-t px-0 rounded-none\"\n            x-init=\"\n              analytics.track('blockAdLoaded', {\n                referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease',\n                sponsor: ad.sponsor,\n                ad_title: ad.title,\n                ad_page_location: ''\n              })\n            \"\n            x-intersect:enter.once=\"adViewed('https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease', ad.sponsor, ad.title, ad.id, 'blockAdViewed', 'blockAd', '')\">\n            <div><span class=\"text-xs text-slate-light block bg-slate-50 p-1 inline-block rounded-md\">Sponsored<\/span><\/div>\n            <div class=\"flex items-center text-sm space-x-4\">\n                <img :src=\"ad.imageURL\" :alt=\"ad.imageAlt\" class=\"h-10 w-10 object-cover rounded-full\">\n\n                <div clas=\"text-sm\">\n                    <span class=\"font-bold block\" x-text=\"ad.sponsor\"><\/span>\n                    <span class=\"text-slate\/80\" x-text=\"ad.description\"><\/span>\n                <\/div>\n            <\/div>\n\n            <div>\n                <span class=\"font-bold\" x-text=\"ad.title\"><\/span>\n                <p class=\"mt-2 text-slate\/80\" x-text=\"ad.body\"><\/p>\n                <span class=\"mt-2 text-themeBlue block mt-2 underline\" x-text=\"ad.linkTitle\"><\/span>\n            <\/div>\n          <\/div>\n        <\/a>\n      <\/template>\n  <\/div>\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-is-the-difference-between-leasing-and-subleasing?\">What Is the Difference Between Leasing and Subleasing?<\/h2>\n\n\n\n<p>Leasing is a contract between a property owner or property manager and a tenant.\u00a0Subleasing, on the other hand, is an agreement between a tenant who rents a home to a new tenant. In a sublease, the original tenant keeps their lease with the landlord but creates a new agreement where the sublessee pays them to stay in the unit.<\/p>\n\n\n\n<p>So unlike a standard lease, where a tenant and landlord have a rental contract, a sublease allows the tenant to rent their home to someone else.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"state-and-city-laws-for-subletting\">State and City Laws for Subletting<\/h2>\n\n\n\n<p>There are many\u00a0legal implications\u00a0of subletting for real estate investors.<\/p>\n\n\n\n<p>First, it\u2019s essential to note that laws about sublease agreements vary by state and city. You need to know the local laws and regulations where your rental property is located. You may want to consult a lawyer or law firm to make sure you understand what\u2019s allowed and required of you as a landlord.<\/p>\n\n\n\n<p>In New York City, for example, tenants in buildings with four or more units can sublet their apartments no matter what their original lease says. This rule doesn\u2019t apply to co-ops and public housing, though.<\/p>\n\n\n\n<p>Landlords should account for subletting in their original lease agreements with new tenants. If you don\u2019t want to allow for subleasing and you\u2019re not required by law to do so, make sure your contract states this.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">How to protect yourself<\/h3>\n\n\n\n<p>If you\u2019re OK with subleasing, then you should define the process and terms for subletting in your rental agreement. Do you want to review potential subtenants? Or, you might require your signature on any contract between the sublessor and sublessee. You need to include details like these in your&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-master-lease-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">rental agreement<\/a>.<\/p>\n\n\n\n<p>Your legal rights and responsibilities as a landlord vary based on your rental property\u2019s location. The smartest approach is to seek legal advice if you\u2019re considering subletting your property.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"subleasing-example\">Subleasing Example<\/h2>\n\n\n\n<p>There are several reasons a&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/bartering-with-tenants\" target=\"_blank\" rel=\"noreferrer noopener\">tenant and landlord may come to an agreement to sublet<\/a>&nbsp;a property. Here\u2019s a brief example to consider:<\/p>\n\n\n\n<p>Let\u2019s say you lease to a tenant who recently moved in because they got a new job nearby. This tenant signed a 12-month lease and may stay longer if things work out. Unfortunately, after only a few months, the tenant informs you that they have to move because they need to care for an aging parent who fell ill. This tenant still has nine months left on their lease, and they\u2019ve asked you if they can sublet the apartment.<\/p>\n\n\n\n<p>If you don\u2019t want to allow the tenant to sublease, then you break your lease agreement with them and you\u2019ll need to find someone else to rent the place. To avoid having your rental unit empty, and hence,&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/renting-to-roommates-what-to-do-if-a-roommate-is-on-the-lease-but-wont-pay-rent\" target=\"_blank\" rel=\"noreferrer noopener\">unpaid rent<\/a>, you can decide to sublease the apartment through the tenant. This way, the apartment stays rented and someone keeps paying rent.<\/p>\n\n\n\n<p>The tenant will be responsible for finding someone to sublease the unit to, and they\u2019ll also be on the hook for ensuring you get your rent money each month.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"the-pros-and-cons-of-subletting\">The Pros and Cons of Subletting<\/h2>\n\n\n\n<p>In deciding whether to\u00a0allow subletting, real estate investors should consider the pros and cons.<\/p>\n\n\n\n<p>The pros of subletting include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Your property continues generating income<\/strong>. If your tenant moves, your rental property might stop earning money.<\/li>\n\n\n\n<li><strong>Someone is in your property<\/strong>. Having a vacant unit poses a risk. By subletting, you\u2019ll have someone in your rental property to alert you of anything needing repair. And their presence can cut down on vandalism or theft.<\/li>\n\n\n\n<li><strong>You don\u2019t have to find a new tenant<\/strong>. In many subletting situations, the original tenant finds a subtenant. That relieves you from having to spend time and money getting a new renter \u2013 and if you trust your tenant, there\u2019s a decent chance their subletter will be equally good.&nbsp;&nbsp;<\/li>\n\n\n\n<li><strong>You earn a good reputation<\/strong>. Allowing your tenants to sublet can&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/keep-high-quality-tenants\" target=\"_blank\" rel=\"noreferrer noopener\">make your renters happy with you as a landlord<\/a>. That positivity can lead to them referring others to you, making it easier for you to find future tenants.<\/li>\n<\/ul>\n\n\n\n<p>At the same time, there are some cons of subletting, such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Subtenants might be less qualified than the original tenants<\/strong>. Your tenant might not be as rigorous as you when finding a sublessee. They may select someone with a worse credit rating or less income than you\u2019d prefer.<\/li>\n\n\n\n<li><strong>You may not have a contract with the sublessee<\/strong>. The sublessor and sublessee may sign a written agreement without you. If so, you don\u2019t have a contract with the subtenant. That can cause you legal issues if the subtenant doesn\u2019t pay rent or damages your property.<\/li>\n\n\n\n<li><strong>You could lose out on money<\/strong>. Your tenant could ask their sublessee more for rent than you were charging. If you\u2019re not a party on the sublease agreement, the sublandlord isn\u2019t required to pass the full rent amount on to you. In this scenario, you\u2019re losing income you might otherwise get from your subleased property.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"what-real-estate-investors-should-know-about-sublease-agreements\">What Real Estate Investors Should Know About Sublease Agreements<\/h2>\n\n\n\n<p>Whether you allow for subleasing depends on your comfort with it and your rental property\u2019s location. Depending on state and city laws, there are some sublease guidelines to follow, including:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Seek legal advice<\/strong>. You must know the laws where your property\u2019s located. And you need to make sure your&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/lease-clauses\" target=\"_blank\" rel=\"noreferrer noopener\">lease agreement is within the law and enforceable<\/a>.<\/li>\n\n\n\n<li><strong>Determine how involved you want to be<\/strong>. Are you OK with your tenant finding a subtenant without your involvement? If not, do you require your written permission before they proceed with a sublessee?<\/li>\n\n\n\n<li><strong>Decide how you\u2019ll screen subtenants<\/strong>. Do you want to review a sublessee\u2019s credit rating before they sign an agreement with your tenant? Or, are you comfortable allowing your tenant to vet potential subtenants?&nbsp;<\/li>\n\n\n\n<li><strong>Define rent payments<\/strong>. You can stipulate in your lease agreement that your tenants owe you all rent collected through a sublease agreement. This rule keeps sublessors from charging sublessees more rent than you\u2019re charging them.<\/li>\n\n\n\n<li><strong>Choose if you want to allow\u00a0short-term rentals<\/strong>. Are you alright with your tenants listing your property on a service such as\u00a0Airbnb or VRBO? What about\u00a0subtenants?\u00a0<\/li>\n<\/ul>\n\n\n\n<p>In most places, the choice of whether to sublease is up to landlords. As a real estate investor, you have to decide to sublease based on your risk tolerance and business model. If you choose to allow sublets, it\u2019s crucial to define the details in your lease agreement.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"learn-more-about-subleasing\/subletting\">Learn More About Subleasing\/Subletting<\/h2>\n\n\n\n<p>Find out more about subleasing so you can be sure you truly understand these real estate concepts:<\/p>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/this-strategy-can-buy-you-a-house-several-years-faster\" target=\"_blank\" rel=\"noreferrer noopener\">Sublet or Save: This Strategy Can Help You Buy a House Several Years Faster<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/what-is-a-master-lease-real-estate\" target=\"_blank\" rel=\"noreferrer noopener\">What is a Master Lease and How Can Investors Use It to Scale?<\/a><\/p>\n\n\n\n<p><a href=\"https:\/\/www.biggerpockets.com\/blog\/airbnb-arbitrage\" target=\"_blank\" rel=\"noreferrer noopener\">Airbnb Rental Arbitrage: How to Make Money Without Owning Property<\/a><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_207c87b908df3a5866234e8d9a822c27\" class=\"visibility-group alignwide  hidden\">\n        \n\n<div id=\"hero-block_b30ab1e5f02a525f64dedab77807b331\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\"gap-10 lg:gap-20 flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 lg:w-1\/2 \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find the Right Agent, Close the Best Deal<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:18px\">Step #1: Use Agent Finder to match with top <em><strong>investor-friendly<\/strong><\/em> real estate agents to help you find, analyze, and close your next deal.<\/p>\n\n\n\n<div id=button-custom-event-block_5f9633aebe274774b1510fe8c1ba5920 class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/agent\/match\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Agent Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Find an Agent<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\"lg:w-1\/2 first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2021\/08\/Marketplace-Blog-Blocks-Agent-v3.png\" alt=\"investor friendly real estate agent\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/what-is-a-sublease',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>A sublease is when a tenant rents the property they\u2019re renting to another tenant\u2014essentially reassigning the lease. In most subleases, the tenant\u2019s renter covers all or a majority of the property\u2019s monthly rent payments. Subleasing can keep tenants from breaking their original lease while someone else pays their rent. <\/p>\n","protected":false},"author":613658,"featured_media":163572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183],"tags":[],"class_list":["post-163571","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613658"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=163571"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/163571\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/163572"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=163571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=163571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=163571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}