Subletting and subleasing are similar rental agreements where a third party joins an existing arrangement between a landlord and a tenant.
A sublet and sublease contract has some similarities and key differences.
What is Sublet?
A subletting contract allows a landlord or owner of a property to include a subletter in an existing leased contract directly.
A sublet does not involve the original lessee in the new contract. It means it is a new lease agreement arranged between the landlord and the new tenant.
In this case, the original lessee of the property does not continue the lease agreement payments. The new tenant is directly responsible for making payments to the landlord.
What is Sublease?
A sublease contract is between a lessee of a property and a new tenant. It does not involve the original lessor or owner of the property.
A sublease is arranged when a lessee cannot continue with the original lease agreement due to any reason. A new tenant enters the property with a sublease arrangement and starts paying the sublessor.
In this arrangement, the lessor or owner of the property deals only with the lessee who now becomes a sublessor. Legally, the sublessor is responsible for fulfilling the terms and conditions of the original lease agreement.
How Does Subletting Work?
Renters and lessees can only sublet if the original rental agreement allows them to do so. Often, landlords do not break lease agreements and wouldn’t allow subletting.
In practice, when a lessee cannot continue with a lease contract, he or she will try to find another tenant for the landlord. The terms and conditions including the rental amount are the same for the new tenant.
Then, the lessee offers an arrangement between both parties. The landlord arranges a new subletting contract for the remaining period of the original lease contract initially.
Once both parties agree to the terms and conditions, they sign the subletting contract. Although the original lease agreement is not canceled but the responsibility of making rental payments shift to the new tenant.
This way, all three parties involved in a sublet arrangement take benefit of some sort. The landlord keeps receiving rentals without a delay, the original lessee does not need to make further payments, and the new tenant gets a place to live at the same cost usually.
How Does Subleasing Work?
A sublease arrangement can also be made only when allowed by the landlord. In this arrangement, the lessee can create a new rental agreement by subleasing a portion or full property to a new tenant.
A sublease is typically arranged when the landlord does not allow the cancelation of a lease agreement before maturity. It is often the case with lease agreements.
The lessee of the property finds a new tenant. The terms and conditions of the new subleasing arrangement are agreed upon by these two parties only.
The sublessee pays rentals to the sublessor (the original lessee) and then the rentals are paid to the original landlord. It means all three parties are actively involved in a subleasing arrangement.
The original lease contract remains valid and the lessee remains legally responsible for all terms and conditions including property rentals and safety measures until the maturity of the agreement.
Subleasing in Other Industries
Subleasing is also a popular option in other industries like shipping and transportation. For instance, when a business books a shipping container but cannot fully utilize the space available.
In other cases, it is commonly observed in shared office spaces. A sublease is also an option when leasing vehicles for the long term and cannot be used for several months by the lessee.
How to Arrange a Sublet or Sublease Contract?
Sublet and sublease arrangements follow a similar pattern. The difference is in the way a contract is signed between two new parties.
First of all, you should check with your landlord if subletting or subleasing is allowed. You shouldn’t enter a new agreement if it’s not allowed to avoid legal troubles.
Then, verify if your contract includes a renter’s insurance plan or not. A renter’s insurance plan will protect you from the personal theft or injury costs of a visitor to your place.
In the next step, you should arrange a formal subletting or subleasing contract with the new tenant. Even if it is for a shorter period, a formal agreement will protect you from several challenges like an early termination without notice.
Then, you should ask for a security deposit from the new tenant. It can cover maintenance costs and any missing rentals if things don’t go as planned.
Finally, make sure to interview different candidates before signing the sublease or sublet contract. Either way, you’ll still be responsible legally as your original lease contract will still be valid.
Pros and Cons of Subletting
Subletting comes with some important aspects for the landlord, lessee, and the new tenant.
Advantages of Subletting
Subletting allows tenants to share or outsource rentals to another tenant. It does not come at the cost of terminating the original lease agreement.
The original lessee does not owe the landlord anymore as the arrangement is settled directly by the owner.
The landlord or owner does not need to worry about rentals and can hand-pick a new tenant for the remaining of the lease period.
As for the new tenant, a partial subletting arrangement is a quick way to find a renting space without entering into a long-term commitment.
Disadvantages of Subletting
Subletting can be difficult to arrange as the landlord would often refuse to arrange a new agreement before a lease contract expires.
Also, a tenant may not be fully acquitted from legal responsibilities unless both new parties in the contract agree to do so.
Finding a tenant for a shorter period is difficult as tenants and landlords both usually look for long-term arrangements.
Pros and Cons of Subleasing
Subleasing also comes with similar pros and cons as subletting.
Advantages of Subleasing
The landlord and lessee continue with the original lease agreement. So, the lessee does not need to break the original lease agreement with subleasing.
A lessee can save money with a sublease when going out of a lease contract temporarily before the contract expires. A sublease is often arranged for a shorter period and it can be terminated at any time when required.
The landlord does not need to worry about the rentals and maintenance of the property as the original contract remains intact.
As a tenant, you can access a furnished property for a shorter period. You do not need to make long-term commitments and abide by other lease terms and conditions.
Disadvantages of Subleasing
Subleasing arrangements come with some limitations as well.
A sublessee can break the sublease agreement at any time. Often, these arrangements do not hold for the long term.
A sublessor may not find a sublessee easily for a shorter period. Finding a tenant for a temporary arrangement is often difficult.
A tenant arranging a sublease may lose money if a new sublessee isn’t found quickly or the new tenant leaves without notice.
The landlord may also face problems as the new tenant may not protect the property due to a lack of responsibility obligation in a sublease contract.
Sublet Vs Sublease – Key Differences and Similarities
Many experts consider a sublet and sublease the same arrangement. These terms are often used interchangeably as well. It is because both these arrangements have subtle similarities.
A new tenant enters an already leased property in a sublet or sublease contract. The original tenant (lessee) of the property often arranges the new tenant.
Both these agreements are often arranged for shorter periods and often for a few months before a lease agreement expires.
In both arrangements, rental payments are made by the new tenant and are passed on to the landlord directly or through the original lessee.
A sublet agreement is directly made between the landlord and the new tenant. It is also called reletting as it’s a new contract. Contrarily, a sublease contract is made between the original lessee and a new tenant.
The original tenant is not responsible for property maintenance and rental payments in a sublet contract. However, the original tenant remains liable for all terms and conditions in a sublease.