Sublease

What is a 'Sublease'

A sublease is a real property rental agreement between an original tenant and a new tenant. The most common type of lease arrangement is between the landlord who owns the property and a tenant. If that tenant finds him or herself unable to continue meeting the terms of their lease, they may opt to create a sublease if the landlord allows it. The sublessee is subject to the same rental terms that the original lessee was subject to. Subleases can be executed for both residential and commercial properties.

BREAKING DOWN 'Sublease'

Because a lease is generally for a predefined term, situations can arise that make it difficult or impossible for the original tenant to complete the lease term. For example, if Sebastian is renting an apartment in Chicago with a 12-month lease and in month four he receives a job offer in Boston, he may decide to sublease his apartment to another tenant for the remaining eight months. The sublease means that Sebastian can accept the job and move - he doesn't have to pay expensive fees to get out of his lease or pay rent on two apartments. The landlord also benefits because he receives all 12 rent payments and doesn't have to find a replacement tenant. The sublease arrangement also means that Sebastian retains an interest in the apartment, so if he decides to move back to Chicago, he may be able to renew his lease and get his old apartment back.



RELATED TERMS
  1. Single Net Lease

    A commercial real estate lease agreement in which the tenant ...
  2. Gross Lease

    A type of commercial lease where the landlord pays for the building's ...
  3. Double Net Lease

    An agreement in which the tenant is responsible for both property ...
  4. Modified Gross Lease

    A type of real estate rental agreement where the tenant pays ...
  5. Ground Lease

    An agreement in which a tenant is permitted to develop a piece ...
  6. Holdover Tenant

    A renter who remains in a property after the expiration of the ...
Related Articles
  1. Personal Finance

    The Complete Guide To Becoming A Landlord: Landlord-Tenant Relationship

    A lease establishes the relationship of landlord and tenant and is both a conveyance of a possessory estate in real property and a contract between the parties. Through the lease, the tenant ...
  2. Personal Finance

    4 Things Landlords Aren't Allowed To Do

    Whether you're a landlord or a tenant, you need to know the rules.
  3. Personal Finance

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
  4. Personal Finance

    8 Lease Clauses You Need To Know

    If you're renting an apartment this year, beware of signing contracts with these tricky clauses.
  5. Retirement

    Could Being a Landlord Pay for Your Retirement?

    If you have the money to buy them and the energy to run them – or the funds to pay a good manager – rental properties can help pay for your retirement.
  6. Personal Finance

    Are You A Good Tenant?

    Landlords are looking for specific factors that are perceived to make up good tenants - do you fit the profile?
  7. Personal Finance

    Renters' Guide: Living With Roommates

    When two or more people sign a lease or rental agreement together, they become co-tenants and share the same legal rights and responsibilities. Many leases contain language stating something ...
  8. Personal Finance

    Leasing to Section 8 Tenants?

    Real estate investors and landlords: It's worthwhile to investigate the section 8 market. Learn about the pros and cons of leasing to section 8 tenants.
  9. Personal Finance

    Becoming A Landlord: More Trouble Than It's Worth?

    On the surface, being a landlord seems likes like a surefire bet, but it's usually more headache than it's worth.
  10. Investing

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
RELATED FAQS
  1. What are the differences between single, double and triple-net leases?

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  2. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
  3. Does homeowners insurance cover my tenants' belongings?

    I have two houses that I use as rental properties. I want to insure the houses, but I was wondering if... Read Answer >>
  4. Do landlords set up escrow accounts for their tenants' security deposits?

    Learn when and why landlords place rental property security deposits in separate escrow accounts to make sure the money is ... Read Answer >>
  5. If a telecommunication company wants to build a tower on my land how much should ...

    Get help in understanding how much income it is possible to receive for leasing land to a telecommunications company for ... Read Answer >>
  6. Why might a bond agreement limit the amount of assets that the firm can lease?

    Bond covenants can limit the amount of leases a company can have because leasing contracts are a form of debt. Taking on ... Read Answer >>
Trading Center