Legal Considerations You Should Make Before Subletting

by RyanD on November 3, 2012

(US law and generally) If you are renting a property, you may have the right to sublet the property if you can no longer fulfill your tenant obligations. You may also be able to sublet only one room of the apartment of the home if you cannot cover rents on your own. Subletting, also referred to as subleasing, is the process of leasing a property to another party when the property is being leased to you.

In a sublet contract, the landlord is still the lessor, you are still the lessee, and the subletter is the individual renting from you as the lessee. While subletting can benefit you when you do not want to break your lease, you should protect yourself legally before you consider this options. Failing to make the following legal considerations can land you in hot water financially regardless of who you sublet to.

Check Your Lease to See if Subletting is an Option

Before you start to construct a sublet lease contract, you need to review your current lease thoroughly to see if subletting is an option. Not all property managers and landlords will allow subletting and failing to recognize this can lead to an eviction and legal problems later down the line. Your lease document should have an entire paragraph dedicated to subletting. It will discuss whether you are permitted to sublet, what steps you need to follow if you find someone to sublet to, and whether or not the sublessors must be approved by the landlord. By knowing the procedures and rules, you can notify the landlord and make the subletting contract official.

Is Subletting or Novation the Best Option for You?

Subletting and novation may sound very similar to one another if you do not know the specifics. In actuality, subletting and novation are two very difficult things with very different legal considerations. If your landlord approves, you may have the option to novate the lease. Novation means that the landlord will void the existing lease contract and create a new contract with the new tenant. When a lease is novated, you are no longer financially responsible for the lease and you are not responsible for any damage reported after the date of the novation. You will receive your security deposit back when the new lease is signed as long as you did not cause chargeable damage.

You might wonder why you would not just choose novation in the first place. Novation is not practical for students who might be away for just a few months or for military personnel who will be returning back to their home when they are back in the states. If you plan on returning to your property at some point, subletting is the most practical option. This is when you need to find someone you can “assign” the lease to. Assigning the lease to another party might also be required when the landlord will not offer you novation as an option.

Require the Sublessor to Purchase Insurance

If you do sublet, you are responsible for minor and major damages caused by the tenant. It is a good idea to require the sublessee to carry renters insurance as part of the contract. The insurance should have your name and the other party’s name on it to protect yourself against liability exposures that might exist while you are not around to reduce risks.

Sublessors should sign contracts that are very similar to standard rental contracts. These contracts will list the rent charged, late fees, penalties, who the rent is to be paid to, and what utilities the tenant must pay. Make sure you write up a detailed contract, protect yourself, and do not sublet without doing your homework.

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