Tenant can’t pay rent so he plans to sublet

Investor · Philadelphia, PA · Member since 2015 · 97 posts · 23 votes

Hello BP,

I have a rental property with student renters. The lease is signed by all 3 of them and they split the monthly lease. The lease is a collective lease and not individual lease. One student informed me yesterday that he is studying abroad and his parent refused to pay the rent. He said he won’t be able to pay it by himself so he will sublet. He is asking me what is the process for subletting? I am dumbfounded...the lease states no subletting but I can’t take the chance to not have the full rent or to take another person without screening. If I say yes, then the responsibility falls on me as far as safety of the others. Any advice is appreciated. Thank you.

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Marcia Maynard

Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes

The lease says no sublet, so let the tenants know subleting is not an option.

The three tenants need to sort this out. If they can present you with a suitable replacement tenant that passes your tenant screening, then you can easily remove the departing tenant and add the incoming tenant to the lease. If all parties to a lease agree, it can be modified at anytime. One lease, three names, jointly and severally liable.

They will undoubtedly ask about the security deposit. Let them know the security deposit will not be refunded until possession of the unit is returned to you. So if all three of them pitched in, they need to sort it out. Usually an incoming tenant will pay off the amount the outgoing tenant put in.

Also, it's a good idea to do an inspection of the place whenever there is a change of tenants. Charge for damages as they occur or as you discover them. If you wait until the end of tenancy, the security deposit is rarely enough. Inspections and "pay as you go" also helps guide tenants to follow the terms of the rental agreement.

Good luck!

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Marcia Maynard
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
7y
The lease says no sublet, so let the tenants know subleting is not an option.
The three tenants need to sort this out. If they can present you with a suitable replacement tenant that passes your tenant screening, then you can easily remove the departing tenant and add the incoming tenant to the lease. If all parties to a lease agree, it can be modified at anytime. One lease, three names, jointly and severally liable.
They will undoubtedly ask about the security deposit. Let them know the security deposit will not be refunded until possession of the unit is returned to you. So if all three of them pitched in, they need to sort it out. Usually an incoming tenant will pay off the amount the outgoing tenant put in.
Also, it's a good idea to do an inspection of the place whenever there is a change of tenants. Charge for damages as they occur or as you discover them. If you wait until the end of tenancy, the security deposit is rarely enough. Inspections and "pay as you go" also helps guide tenants to follow the terms of the rental agreement.
Good luck!
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Bob B.
Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes
7y
Did you get the parents on the lease?
1 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
7y
..do not do this ! This month he wants to sublet because he’s broke next month it’ll be sell drugs to make money then the month after that he’ll turn the place into a brothel . Hopefully you got the parents as co signers on the lease
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Katie Stewart
Specialist · Fort Collins, CO · Member since 2018 · 557 posts · 191 votes
7y
I would take Marcia's advice and replace the tenant on the lease rather than subletting. Make sure you go through your normal screening processes and stick to your rental criteria. Best of luck!
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
7y
@Jem J. You shouldn't own an investment property if you are that leveraged. You should have a reserve fund available to cover vacancies, late rent, no rent, repairs, etc. If one tenant fails to pay and it puts you in a financial bind, this is a bad investment.
Your lease says no subletting. If that's your rule and what they agreed to, enforce it.
In the future, your lease agreement should include "joint and severally liable" which means every tenant is 100% responsible for the rent. If a tenant fails to pay his share of rent, that's the responsibility of the other two tenants. Either they pay it or they all three get evicted.
My advice for now is to stand your ground and tell Tenant A that he cannot sublet. Tell all three tenants that they are all responsible and can't pay 1/3 and expect to stay. Either the rent is paid in full or it's not.
If I understand your situation correctly, this is probably not a good investment and you should consider selling it and buying something safer.
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