How can you avoid subleasing pitfalls?

1 Know your rights and obligations

Before you decide to sublease your space, you need to review your lease carefully and check if you have the right to sublease, and under what terms. Some leases may prohibit subleasing altogether, or require the landlord's consent, or impose certain restrictions or fees. You also need to know your obligations as the original tenant, such as paying rent, maintaining the premises, and complying with the lease covenants. Even if you sublease your space, you remain liable to the landlord for any breach or default by the subtenant, unless the landlord agrees to release you from your obligations.

2 Negotiate with your landlord

Once you have confirmed that you can sublease your space, you need to negotiate with your landlord and obtain their consent in writing. You should communicate your reasons for subleasing, such as financial hardship, business expansion, or relocation, and present a credible and qualified subtenant. You should also try to negotiate favorable terms for yourself, such as a rent reduction, a lease termination option, or a release from liability. However, you should also be prepared to compromise and respect your landlord's interests, such as maintaining the building's value, security, and reputation.

3 Draft a clear sublease agreement

After you have secured your landlord's consent, you need to draft a clear and comprehensive sublease agreement that outlines the rights and responsibilities of both parties. The sublease agreement should include essential details, such as the sublease term, rent amount, security deposit, maintenance obligations, insurance requirements, and dispute resolution mechanisms. The sublease agreement should also be consistent with the original lease and specify how the subtenant will comply with the lease provisions. You should also attach a copy of the original lease to the sublease agreement and have both parties sign and date it.

4 Market your space effectively

To find a suitable subtenant for your space, you need to market your space effectively and competitively. You should highlight the benefits and features of your space, such as the location, size, layout, amenities, and accessibility. You should also provide accurate and updated information, such as the availability, condition, and price of your space. You can use various channels to advertise your space, such as online platforms, brokers, networks, or referrals. You should also screen and verify the potential subtenants and check their credit history, financial statements, and business references.

5 Monitor the subtenant's performance

After you have signed the sublease agreement and handed over the keys, you need to monitor the subtenant's performance and ensure that they fulfill their obligations. You should maintain regular communication with the subtenant and the landlord and address any issues or concerns promptly. You should also inspect the premises periodically and check for any damages or violations. You should also keep track of the rent payments and the utility bills and report any arrears or discrepancies. If the subtenant fails to comply with the sublease agreement or the original lease, you should take appropriate action, such as issuing a notice, imposing a penalty, or terminating the sublease.

6 Plan for the end of the sublease

Finally, you need to plan for the end of the sublease and prepare for the return of the premises to the landlord or the original tenant. You should review the sublease agreement and the original lease and check for any obligations or conditions that apply to the end of the sublease, such as restoring the premises, removing any improvements, or paying any outstanding balances. You should also conduct a final inspection and inventory and document any damages or deficiencies. You should also collect the keys and the security deposit and issue a receipt and a release letter to the subtenant.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?