Sublease

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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.

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.



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