Subleases and Assignments by Tenants & Related Legal Concerns
Some landlords allow a tenant to sublet their unit to a third party, while others do not. If you are considering this option, you should check your lease or rental agreement to make sure that it is permitted. Even if it is not explicitly prohibited, you should get your landlord’s permission in advance to minimize future disputes.
How a Sublease Works
A subtenant is not a co-tenant and does not have a direct relationship with your landlord. As their “landlord,” you can (and should) require them to pay rent directly to you and evict them if they fail to follow through. This differs from a co-tenant, who can be evicted only by your landlord. If you decide to evict your subtenant, you will need to follow the same procedures that would be required of a landlord. A month-to-month rental agreement may be better for a subtenant arrangement than a lease. Any agreement should clearly state the amount of the rent, the length of the tenancy, and any security deposit that may be required.
Check State and Local Laws
A tenant will usually need their landlord’s permission before subletting their unit, but some state or local laws may prevent landlords from unreasonably denying subleases.
You should be aware that any benefits that you give your subtenant must fit within the overall rules that the landlord imposes for the property and the people who live there. Even though the subtenant did not sign your lease with the landlord, its terms apply to them as well.
You should make sure that you are confident about the subtenant’s financial situation and ability to comply with the terms of the sublease and the landlord’s rules. If they fail to pay rent or damage the property, you will be on the hook to the landlord for all of your own rent and the cost of any repairs. In extreme situations, such as criminal activity by your subtenant, the landlord may evict you in order to remove the subtenant. You also may face an eviction if you get into a dispute with your subtenant. If they refuse to leave when you return, for example, it may be easier for the landlord to simply evict both of you.
Can a Subtenant Turn Into a Tenant?
A subtenant can turn into a tenant if the landlord and you start acting as though the subtenant is a co-tenant. The most common issue here is who receives rent from the subtenant. If they start paying the landlord rather than you, they will have a strong argument that they are the landlord’s tenant. To prevent your subtenant from gaining the rights of a co-tenant, you should make sure that they pay rent to you, and then you can send it to the landlord.
Assigning a Lease
While assignments are often discussed together with subleases, they should not be confused. An assignment transfers the rest of your lease to a new tenant, and it usually happens when you want to move out before the lease is over. While a sublease makes you the landlord of the subtenant, an assignment makes the assignee a tenant of your landlord. All of the terms of your existing agreement with the landlord most likely will apply to the assignee. (There is an exception if the agreement contains a personal term, such as handling errands for the landlord in exchange for reduced rent.) The original tenant, the assignee, and the landlord all will need to sign the assignment document for it to become valid.
The original tenant will remain liable for rent that the assignee does not pay unless the landlord agrees otherwise.
Assignments can be risky because the original tenant remains on the hook to the landlord for all of the remaining rent if the assignee fails to pay it. This essentially makes the original tenant a guarantor for the rent, so it may be more appealing to try to terminate the lease early and let the next tenant start a new lease. Sometimes, however, you can work around this default rule and get the landlord’s consent to take you off the hook for any rent that the assignee does not pay.
Vacation Rentals (Airbnb)
Many tenants try to earn extra money by listing a home as a short-term vacation rental on websites like Airbnb. You should make sure that your lease permits this type of rental, since you may face eviction if you use Airbnb without your landlord’s authorization. You should get any ensuing agreement with your landlord in writing. It should cover issues such as how much of your unit will be leased to the short-term renter, how often you can list on Airbnb, and financial considerations such as any amount of the Airbnb rent that the landlord receives.
In addition to getting your landlord’s permission, you will want to make sure that listing your home for a short-term vacation rental complies with any zoning or land use laws in your area. You must comply with any restrictions in these laws, even if your landlord does not require it.
Finally, you may want to purchase renters’ insurance, while being aware that it may not cover people in a vacation rental. Some insurance companies are extremely reluctant to provide policies to people who plan to list on Airbnb or similar services.