4 Things to Know About Subletting

Aug 12, 2015

Life, as it goes, can come at you fast. If you’re renting an apartment and you suddenly and unexpectedly need to move to a different city or country for a new job well before your lease expires, getting out of that lease can be complicated.

You can keep the apartment and move into a new one, thereby paying two rents in all. You can negotiate with your landlord to break your lease (sometimes at a price). Then there is subleasing, where you agree to rent out your apartment to a person for a period of time—be it for a few months or for the duration of the lease—in exchange for rent.

But subleasing your rental home can be a legally precarious situation. Your landlord may not allow it. If subletting is permitted in your lease, your subtenant could skimp out on paying rent, leaving you with the financial burden of having to pay it for him.

Here are a few things to keep in mind when you’re considering subleasing your apartment.

1. Read Your Lease

When you first sign your lease, be sure to read the language carefully to see if you’re allowed to sublet the apartment. Many states across the country have their own rules about subleasing apartments and homes. States such as Delaware allow tenants to sublet their apartments unless the lease agreement prohibits them from doing so.

If your landlord does not permit subletting your apartment and you still need to get out of your lease, there may be an early termination clause in that lease. That can cost money, however.

“An early termination provision often requires that you pay three months’ rent to get out of your lease,” says Matthew Chase, an attorney based in St. Louis.

Chase advises that people negotiate with their landlords for an early termination agreement at a lower rate. People can also ask to have a clear-cut sublease provision in the lease before you sign it.

“You can always tell the landlord that you’re willing to sign the lease, but you would prefer doing a one-month termination fee instead of a three-month fee,” he adds.

2. Research Your Subtenant

Having a subtenant can either be rewarding or risky. A subtenant could damage the apartment or fail to pay the rent.

The downside for tenants is that they maintain responsibility for the “misdeeds” of subtenants, says Chase.

To mitigate this risk, experts advise asking potential subtenants for a copy of their credit report along with references from mutual friends, old roommates, or even previous landlords.

3. Sign a Sublease Agreement

Once you’ve found a responsible subtenant, consider having them sign a clear-cut sublease agreement to spell out the terms of your arrangement.

For instance, the sublease can define:

  • The date of payment and the amount owed
  • Whether the subtenant will pay you the rent (and you then pay that rent to the landlord) or if he will pay the rent directly to the landlord
  • The value of the security deposit the subtenant must pay
  • Whether the cost of utilities should be shouldered by the subtenant or the sublessor
  • Damages
  • Any additional provisions

4. Require a Security Deposit

In the unfortunate event that a subtenant causes substantial damage to your apartment or fails to pay rent, a security deposit—worth roughly two months’ rent—can prove useful, says Chase.

If the stay in your apartment goes without a hitch, the subtenant gets the security deposit back and you either return to your old apartment good as new or finally get out of your lease after it ends—a happy ending for you, your landlord, and your subtenant.

This article does not reflect the views of Fannie Mae, and Fannie Mae does not endorse the positions or opinions noted herein.

The post 4 Things to Know About Subletting appeared first on Fannie Mae - The Home Story.

  • Beware of Scams

    Learn how to identify and avoid scam artists who promise immediate relief from foreclosure.

    Find out more »
  • FAQs

    Find the answers to common questions concerning your mortgage and the various options to avoid foreclosure.

    Find out more »
  • Glossary

    Visit our glossary of key terms to increase your understanding of the foreclosure options available.

    Find out more »