In this time of the pandemic many tenants are facing challenges, leading some to look at subleasing, also called subletting, their current rental property in order to move. Here are some tips for landlords and property managers on the issue.
By Evelyn Long
Finding a good tenant can be a challenge, so what happens if they ask to sublet? Subletting or subleasing can feel risky and unpredictable, so it’s important to weigh the advantages and disadvantages before making any major decisions. Only after evaluating the options should a choice be made. If subletting, the same as subleasing, is the best course of action, then there are steps you can take to minimize the risk.
Keep reading to learn more.
What Is Subletting?
Subletting is when a current tenant rents the property — or a portion of it — to someone else.
This process is also known as subleasing, and it is legal in most states as long as the landlord is made aware and the contract supports it. In this case, the tenant becomes the sublessor, and the person they sublease to becomes the sublessee. Typically, a tenant may approach a landlord about subletting if they are on a yearly contract and intend to be away for an extended period.
What Are the Advantages and Disadvantages?
As a landlord, there are pros and cons in allowing a tenant to sublet. It’s important to be aware of the risks before making a decision.
The major advantage of subletting is that money continues flowing even when the tenant is out of town. Also, since they’ve kept the lease agreement, there’s no hassle involved in negotiating new terms.
The landlord is not responsible for finding a new tenant because the current renter will be the one finding the sublessee. If the sublessor is reliable and has a strong relationship with the owner, it could be in everyone’s best interest to use subleasing as a short-term solution.
If you allow subletting and your current tenant decides to move out, the sublessee may sign up to renew the lease agreement, which would save the time and energy required to market the property.
Disadvantages of subletting
Adding a new person to the mix complicates matters. They will be unfamiliar, which could make repairs awkward or uncomfortable. Without requiring a background check, the landlord won’t know anything about the sublessee’s past. Are they a criminal? Do they pay their bills on time and have a high credit score? These are questions that might remain unanswered.
The sublessee could damage the space or commit a crime on the property, leaving the landlord with a mess to handle. Even though the tenant becomes the sublessor and is legally responsible for making payments, the proprietor could be left with the bills if the tenant is nowhere to be found.
How to Proceed With Ease
If you’ve decided to allow your tenant to sublet the property, taking steps before move-in day will simplify the process. Here are four steps to managing tenant sublets with minimal risk.
1. Set specific lease clauses
To ensure a subletting arrangement that satisfies each party’s needs, lay out specific clauses in the tenant contract. The contract will describe the rules and expectations of the rental agreement. This contract could be referenced in court, so make sure it is thorough enough to protect the property’s assets.
Once a tenant decides to sublet, draw up a sublease agreement that outlines the original renter’s rights and the responsibilities of the sublessee. Make sure you have a signed copy of this agreement on file.
2. Require a screening process
Some states demand a sublessee-screening process, but since this varies by state, be sure to require it as part of the contractual agreement.
This process provides the opportunity to turn away potential sublessees who could be problematic. It provides a layer of additional protection for the landlord and offers an initial impression of the new renter. Asking questions in advance reduces the risk of choosing a sublessee who would be a poor match for the property.
3. Learn state and local laws
Almost half of the states in the continental United States do not have laws governing subleasing. That means the contract between the landlord and tenant dictates the legality of subletting. This can be confusing in localities that have unclear or changing requirements. However, some research can help property managers cover their bases.
By learning state and local laws, a landlord can ensure they know their rights. This also guarantees the situation follows legal guidelines. If the tenant and property owner are both aware of legal repercussions, there will be less confusion or debate. Knowing which rights are protected will help guarantee that the landlord won’t be sued for violations.
4. Arrange online payments with your tenant
One of the greatest risks of subletting is the potential for missed rent payments. Ultimately, the sublessor is responsible for these payments under contract — regardless of whether their sublessee pays.
To eliminate the chances of confusion, late payments or a sob story, request automated online payments. That will guarantee the installments arrive on time each month.
Feel confident when subletting
After evaluating the advantages and disadvantages, it’s clear that subletting can be complex at times. However, it’s possible to manage tenant sublets with minimal risk by implementing these four steps. Subletting provides the opportunity for a positive experience when handled with experience and confidence.
About the Author:
Evelyn Long is the editor-in-chief of Renovated, where she shares real-estate market and maintenance advice for investors and their tenants. Based in Baltimore, Evelyn is enthusiastic about both brownstones and crab cakes.