DEFINITION of 'Sublease'

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.


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.

  1. Ground Rent Arrangement

    A situation in which someone owns a structure but not the land ...
  2. Gross Lease

    A type of commercial lease where the landlord pays for the building's ...
  3. Holdover Tenant

    A renter who remains in a property after the expiration of the ...
  4. True Lease

    A specific type of multi-year lease which does not pass on ownership ...
  5. Rent To Own

    An arrangement between a consumer and a seller that allows the ...
  6. Triple Net Lease

    A lease agreement that designates the lessee (the tenant) as ...
Related Articles
  1. Entrepreneurship

    Top 10 Features Of a Profitable Rental Property

    Find out which factors you should weigh when searching for income-producing real estate.
  2. Retirement

    Should You Buy Property On Leased Land?

    Find out what to consider before investing in a leased-land property.
  3. Personal Finance

    To Rent Or Buy? There's More To It Than Money

    Your lifestyle, level of commitment and the trade-offs need to be carefully weighed.
  4. Home & Auto

    To Rent Or Buy? The Financial Issues

    Thinking of buying a home? We look at the initial and ongoing costs, as well as the so-called benefits.
  5. Taxes

    Tax Deductions For Rental Property Owners

    Besides creating ongoing income and capital appreciation, real estate provides deductions that can reduce the income tax on your profits.
  6. Investing

    Undervalued Real Esate at Forestar Group

    Activists move to unlock the value of Forestar Group.
  7. Home & Auto

    4 Ways To Value A Real Estate Rental Property

    Real estate rentals can be a profitable alternative to the buy-and-sell approach if investors know how to make accurate valuations.
  8. Budgeting

    3 Things to Consider When Renting By the Room

    Although renting by the room can increase returns on rental property, it does come with a few caveats.
  9. Economics

    Who is a Lessor?

    A lessor is the owner of an asset that is leased.
  10. Investing

    Don't Ignore Maintenance Fees When Buying Real Estate

    Buying an apartment or condo costs more then the price of the unit. There are also unavoidable monthly maintenance fees that can vary greatly.
  1. Does renters insurance cover storage units?

    An all-perils renters insurance policy provides coverage for the contents of storage units. Most policies limit the amount ... Read Full Answer >>
  2. Does renters insurance cover mold?

    An all-perils renters insurance policy typically provides a low set amount of coverage for damage caused by mold as long ... Read Full Answer >>
  3. Does renters insurance cover dog bites?

    A renters insurance policy typically provides liability coverage, up to policy limits, for dog bites unless the coverage ... Read Full Answer >>
  4. Does renters insurance cover theft?

    An all-perils renters insurance policy provides worldwide theft coverage for personal property after a claim exceeds the ... Read Full Answer >>
  5. Does renters insurance cover moving?

    An all-perils renters insurance policy covers damage to items resulting from a covered peril during a move. Limitations and ... Read Full Answer >>
  6. How much renters insurance do you need?

    You should have enough renters insurance coverage to replace lost or damaged items with new ones. On average, renters have ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  4. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  5. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  6. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
Trading Center