what is the difference between assignment and subletting

What is Assignment of Lease and How It Differs from Subletting

The assignment of lease (and rent) is a foggy topic that is often confused with subletting. Let's clear the air once and all right now. Learn the differences between a lease assignment and sublease so you can make the right choice.

What is Assignment of Lease? - The Important Basics

Let's begin by introducing the 3 players in a lease assignment - The landlord, the original tenant (assignor) and the new tenant (assignee). The original tenant has an unexpired lease agreement with the landlord and he wants out. Since the original tenant can't just break the agreement and walk off, what he does is to get a new tenant to swap places... and take over all his rights and obligations for the remainder of the lease period. So if the original tenant signs a 1 year commercial lease and the business goes bust after 8 months, the new tenant will be assigned a 4-month commercial lease (with the same terms and conditions as the original agreement). Now here's the big catch: Even though the original tenant has handed over all his duties and obligations to the new tenant, he is not off the hook... unless the landlord agrees to release him from all liabilities. If the new tenant stirs up trouble, our dear original tenant will find himself in hot soup as well. Of course, whether the original tenant is allowed to pull this assignment trick out of his hat is a whole new matter. Knowing for sure is actually simpler than most people think: First, examine your local landlord tenant laws for any lease assignment rules. Most of the time, landlords are given the right to allow or disallow assignments but once in a while, the local law let tenants have the final say instead. If there's no mention of lease assignments in your law text, then your rental lease agreement shall dictate the terms.

Difference Between Lease Assignment and Subletting

When it comes to subletting vs assignment of lease, there's often a massive mix-up. Sometimes even real estate professional get it wrong by assuming them to be one and same thing. However if you dig deeper, you will find that the differences are not just numerous, but important as well. Let's begin by dragging the landlord into the picture. An assignment of lease launches the new tenant into a direct relationship with the landlord - The landlord collects rent straight from the new tenant and deals with the new tenant directly on all lease issues. So in this case, the original tenant gets to take back seat and doesn't have to manage the new tenant actively. On the other hand, there's no direct relationship between the landlord and new tenant (subtenant) in a sublease. Instead the original tenant plays mother goose and is responsible for collecting rent from the subtenant and making sure that he's following the lease rules. When you compare the two, a sublease is a lot more hands-on for the original tenant. No matter which path you take, you will still want a good new tenant who pays the rent on time and follows the lease rules to the agreement. For the golden rules on screening tenants and running credit checks, Click here for our guide to running tenant credit checks. When you have a lease assignment, the terms and conditions of the lease remains largely unchanged - It's almost like taking the original lease agreement and swapping the tenant's name with another. With a sublease, there's more breathing space - The original tenant can decide how much rent to charge, how long the subtenant is going to stay or even collect security deposit... as long as it stays within the boundaries drawn by the original lease agreement between the landlord and original tenant.

Should You Choose Assignment of Lease or Sublease?

You are the Landlord - A lease assignment is recommended in most cases. You will have more control over your new tenant (instead of leaving matters in the original tenant's hands and hoping that he would do a good job)... plus you still have the original tenant to cover your back in case anything goes wrong. You are the Original Tenant - Now this is a tricky one. If you want to someone to take over the entire lease and property for its remaining duration (e.g. your business goes belly-up and you no longer need the office), then help yourself to a lease assignment. If the landlord's consent is required for assignment (and he doesn't give the nod), you can always try offering him a lease assignment fee as a deal sweetener. However, if you are looking for someone to share the place (and rent)... or perhaps you need someone to cover the rent while you are overseas for a few short months, then a sublease would be ideal. You are the New Tenant - An assignment of lease works better for you most of the time. You won't be at the mercy of the original tenant (for example if he screws up and the landlord terminates the original lease agreement, your sublease might also go up in flames). But if you only want to rent part of the property... or don't want to tie yourself down for the remaining lease duration, then you are better off sticking to a sublease. Now that we have covered the topic of assignment vs sublease, go ahead and take your pick - Click here for an assignment of lease form or Click here for a sublet agreement instead.

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Assignment vs Subletting - What is the difference?

Assignment vs subletting – what are the differences.

Assigning a residential lease agreement and subletting are two distinct ways of transferring tenancy rights in a rental property, each involving different legal and practical implications. Here’s a breakdown of their differences:

Assignment of a Residential Lease Agreement:

Definition:

Transfer of Responsibility: Assigning a lease involves transfer of the original tenant’s entire interest in the lease to a new tenant. The original tenant ceases to have any rights or obligations related to the property.

Consent from Landlord: Typically requires the landlord's explicit permission or consent. The landlord is often involved in vetting and approving the new tenant.

Replacement Tenant: The original tenant may find a replacement (assignee) who takes over the lease entirely. The landlord may also market for a new tenant and vet any potential replacement tenants.

Legal Responsibility:

Liability: The assignor (original tenant) is usually released from all liabilities and obligations once the lease is assigned to the new tenant.  This may key off of the new tenant taking possession of the rental unit.

Direct Relationship with Landlord: The new tenant (assignee) becomes directly responsible to the landlord for rent payments, property maintenance, and adherence to lease terms by effectively “stepping into the shoes” of the departing tenant.

Implications:

End of Original Tenancy: For the assignor, once the lease is assigned, their association with the property generally ends. They may not have recourse if the assignee defaults on payments or breaches the lease.

Subletting of a Residential Lease Agreement:

Partial Transfer: Subletting occurs when the original tenant rents out all or part of the property to a subtenant while retaining some rights and responsibilities under the original lease.

Consent from Landlord: Usually requires the landlord's permission, as outlined in the lease agreement. Some leases explicitly prohibit subletting.

Ongoing Relationship with Landlord: The original tenant (sublessor) maintains responsibility to the landlord for lease obligations.

Obligations: The sublessor remains responsible for rent payments and adherence to lease terms, acting as an intermediary between the landlord and subtenant.

Relationship with Subtenant: The sublessee has a legal relationship with the sublessor rather than the landlord. The sublessee must adhere to terms agreed upon in the sublease.

Ongoing Responsibility: The original tenant (sublessor) remains liable to the landlord for the property and its condition. They're responsible for any damages or lease violations caused by the sublessee.

Continued Tenancy: The original tenant maintains an ongoing relationship with the property and the landlord.

How Much Would Your Home Rent For?

Key Differences: 

• Transfer of Responsibility:  Assigning a lease completely transfers the tenant's interest to a new tenant, while subletting involves the original tenant retaining some rights and responsibilities.
• Direct Relationship : In assignment, the new tenant has a direct relationship with the landlord, whereas in subletting, the original tenant maintains this relationship. 
• Liability and Obligations:  Assigning a lease typically releases the original tenant from obligations, while subletting keeps them responsible for the property.

Both assignment and subletting can offer flexibility to tenants but come with distinct legal and practical implications that tenants and landlords should carefully consider before proceeding. Understanding these differences helps individuals choose the appropriate option based on their circumstances and lease agreement terms.

In most cases, assignment is the best course as it avoids the main pitfall of subletting, namely that the subletting tenant has no direct relationship or responsibility to the landlord/owner of the rental unit.  For that reason, professional property managers normally recommend termination of the original lease and negotiation of a new lease with the replacement tenant.  The outgoing tenant will normally absorb some of the costs associated with securing a replacement and the property manager makes sure the turnover is handled property.  Having experience when these issues arise is important to protect the landlord’s interests.  If you need management of an investment property, call one of our managers today to learn why so many landlords believe TREG is the RIGHT CHOICE for property management.

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Assignment vs. Subletting: What’s the Difference?

According to the Bureau of Labor Statistics, 20% of small businesses fail in their first year, 30% fail in their second year, 50% fail after five years, and 70% of small business owners fail in their 10th year in business. Yikes! Despite these grim statistics, commercial leases are generally a minimum of 5 years and contain severe, default penalties. In some cases, landlords will require the tenant to personally guarantee the lease, effectively using the tenant’s personal assets, i.e. home, as collateral to secure the lease.

Most tenants understand the implications of defaulting on their lease and enter into the agreement, eyes-open, and with every intention of abiding by the terms and conditions. The road to hell (and default) are paved with good intentions. Economic downturns, lost contracts/clients, sequestration, etc. can disrupt even the best laid plans; leaving tenants struggling or unable to meet their monetary obligations under their lease. In such cases, tenants’ most powerful tool/strategy to avoid default is to sublease or assign their lease.

Most, if not all, commercial leases contain Assignment and Sublease provisions and while the specific language and conditions can vary there are general, shared principles. Subletting and assigning are similar in that they both involve a transfer of the tenant’s right or interest in the lease that allow another (3 rd ) party to occupy the leased premises. Under the terms of most lease agreements the original tenant will remain responsible for the terms of the lease in the case of either a sublease or an assignment. This means that the landlord can proceed against the tenant in the case of a default by the subtenant or assignee; including but not limited to, rental payments, damage to the leased premises, etc. As a result, it is in both the tenant and landlord’s interest to carefully vet the proposed subtenant or assignee.

If subleases and assignments are similar in that they essentially allow the tenant to “rent out” their space to a 3 rd party, what’s the difference ?

Under a sublease, the tenant is either (sub)leasing a portion of the leased premises for the remainder of the lease term, all of the leased premises for a portion of the lease term, or a portion of the leased premises for a portion of the lease term. Subleases do not necessarily indicate financial hardship on behalf of the tenant or a likelihood of default. In fact, in some cases, companies may choose to lease more space than needed upon the lease commencement date in order to reserve the space for future growth. This is more common with large companies, i.e. Google, that can afford the lease payments but may seek to reduce expenses by subleasing the unused space. Another situation in which a tenant may request to sublease their space is in the case of a downsizing, consolidation, etc. where the they no longer need their entire space but do not want to move and can offset their rental obligations by renting the unused portion to another party.

Under a lease assignment, the tenant transfers all of its rights and responsibilities under the lease to the assignee along with its right to occupy the entire leased premises for the remainder of the lease term. A lease assignment is a much more serious request on behalf of the tenant than a request to sublease the space. While not always the case, a request to assign the lease may indicate that the tenant is unable or unwilling to continue to make lease payments and is likely to default on its lease then or at some point in the future. As stated earlier, most leases require the original tenant to remain liable for the lease (payments, responsibilities, etc.); however, with lease assignments the landlord may release the tenant and enter into a direct relationship with the assignee. The landlord’s decision will be based on a number of factors, most notably the financial strength of the assignee and the difference between the contract rent and market rents. Assignments are not necessarily indicative of financial trouble and can simply be the result of tenants relocating or consolidating; resulting in them no longer needing the leased premises.

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How Does Subleasing Work? How to Sublet and Not Get Burned

Also known as a subletting, this arrangement allows someone to rent a home from someone else who is already  renting the property. It can be a lifesaver for both tenants seeking short-term digs, as well as those who must vacate their apartment (temporarily or permanently) before their lease is up. Solution: subletting!

Let’s say, for instance, you have a one-year lease, but you get a job offer in another city six months into your lease. You could break your lease—that is, if your landlord allows it—or you could find someone to rent your apartment from you, and you become  this person’s  landlord (technically sublandlord).

Although arranging to sublet might seem like an easy way to get out of a lease on short notice, it could leave you on shaky legal ground if you don’t handle subletting appropriately. Read on to find out more about the pros and pitfalls of this practice and how to protect yourself.

Sublease vs. rental: What’s the difference?

Setting up a sublease is different from traditional renting because it adds another layer to the tenant-landlord relationship. If you rent a home, you rent from the property owner. You typically pay a security deposit, sign a lease, and pay your rent directly to the property owner or the property’s representatives.

A sublet situation is more like a sandwich. If you rent a home from the property owner and then sublet it to someone else, you’re in the middle between your subtenant and your landlord.

What are the benefits of subletting a house?

• Not having to break your lease.  Breaking an apartment lease can be an expensive proposition. You may have to pay a hefty fee or continue paying rent until your landlord finds another renter, which is expensive and frustrating.
• Not paying for an empty apartment.  It seems silly to pay rent on an apartment that’s not occupied. Finding a subtenant allows you to recoup at least some of your costs.
• Having a built-in house sitter.  If you find a trustworthy subtenant, you can leave your furnishings behind, knowing that someone’s there to keep an eye on things and deal with property-related emergencies.

What are the drawbacks to a sublease agreement?

It comes down to one word: liability.

“As a landlord, you’re not crazy about the idea of a subtenant, because you have someone in between you and the person who’s occupying your space,” says  William C. Vogel , president of Vogel Advisors, in Royal Oak, MI. “As a tenant, you’re still liable for the lease. If the subtenant doesn’t pay, you still have to make the payment.”

Liability issues go beyond monthly payments, though. Leases also typically address the overall condition of the apartment or property you’re leasing.

“The obligation is that you’re going to get the house, or the apartment, back in the same or better condition than you found it, and the risk is really significant with the wrong subtenant,” says Vogel.

If your subtenant trashes the kitchen or forgets to maintain the pool, it could cause thousands of dollars in property damage. Who’s on the hook for that? Often it’s the person in the middle.

Alternatives to sublets

Before you sublease your apartment, Vogel recommends you try a couple of alternatives. The first option is to find a new tenant to present to your landlord. This may work better if you’re renting from a property owner instead of an apartment management company, but it can’t hurt to try in either scenario.

Essentially, you find a new tenant who is willing to sign a brand-new lease. The tenant should meet your landlord’s requirements in terms of credit and rental history. Ideally the landlord says yes, and you’re released from your lease (and potential liability).

Another option is to find someone who is willing to finish your lease. You have six months left, and the new tenant is willing to sign the lease for six months. Note: Such an agreement doesn’t automatically relieve you of liability. Vogel recommends including language in the assignment that specifically relieves you of liability.

If those options don’t work, though, subletting may be your best alternative.

How to protect yourself when subletting

Brian Davis , director of education for Spark Rental in Baltimore, recommends starting by reviewing your lease.

“Some leases include a clause prohibiting a sublease, and others have a clause requiring the landlord’s written approval before the tenant can sublet,” Davis says. Even if your lease prohibits this practice, though, Davis still recommends asking your landlord.

“Most landlords are amenable, on the condition that the sublessee qualifies just like any other tenant,” he says.

If your landlord won’t budge, you can check out your local laws about subletting. Some states and cities have laws that state landlords can’t prevent subletting to qualified renters.

If your landlord is on board, there are some additional steps you should take to protect yourself:

• Screen your subtenant.  Don’t just take the word of a friend or relative on this person being wonderful. Check references. Run a background check. Do your due diligence to ensure you have someone who is responsible and financially stable.
• Sign a subletting agreement.  There are sample agreements online, or you could consult with a lawyer. Your subletting agreement should clearly spell out how long you’re subletting the space, how much rent is, when rent is due, and how the property should be maintained.
• Get a security deposit.  A security deposit can help cover any damage that occurs while someone else is occupying the space.

Subletting isn’t perfect, but if you get everything in writing and look for a responsible tenant, it could free you up to pursue other opportunities.

Melinda Sineriz is a writer living in Bakersfield, CA. She writes about personal finance and real estate for several websites and businesses.

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What is the Difference Between Sub-letting and Assigning a Lease?

If a tenant wants to leave their premises before the vacation date specified in their lease agreement, they can assign (i.e. transfer) or sub-let the shopfront.

By assigning or sub-letting the lease to a third party, tenants can leave the property without breaking the terms of their lease or paying two sets of rent. Assignment and subletting appear similar as they both rely on a third party taking over premises. But there are some key differences between the two.

We set these out below to help tenants decide which is better suited to their needs.

When is a Sub-let Used Instead of an Assignment?

A sub-let is when an existing tenant leases out all or part of their premises to a third party. However, the original tenant is still liable under the lease. You can read more about subleasing in our article, ‘ I’m Sub-letting a Property. What Do I Need to Know? ‘

An assignment, on the other hand, is when a tenant transfers their lease to someone else. The tenant is then no longer responsible under the original lease from the assignment date. Tenants more commonly assign the property when selling the business and sublease when the business has additional space they want to lease out. Importantly, a tenant requires the consent of the landlord to assign or sublet the property.

Should I Sub-let or Assign My Lease?

The answer depends on the circumstances of the parties’ transaction. For instance, a tenant may choose to sub-let if they are simply looking to rent out additional space to recoup costs or increase profit margins but want to remain as a tenant.

If, however, a tenant wants to end the lease early and vacate their business’ premises entirely, an assignment is likely a preferable option. An assignment transfers the obligations under the original lease to the new tenant (the assignee), placing them in the shoes of the old tenant. Both parties usually enter into a transfer of lease and deed of consent to assign the lease with the landlord and each other.

Sub-letting also creates a new series of obligations for head-tenants who act, essentially, as landlords. The head-tenant will require the sub-tenant to indemnify the tenant and landlord for their use of the property. Parties will effect this by entering into a formal sub-let with the landlord’s consent.

Key Takeaways

Assigning a lease and sub-letting are two options for tenants wanting to leave the premises before their lease ends.

Sub-letting involves a tenant leasing out all or part of their premises to a third party. Under a sub-letting agreement, the rights and obligations created under the initial lease remain in force.

An assignment involves transferring the lease from one party to another. After the assignment date, a tenant’s rights and obligations no longer exist. Tenants looking to vacate their premises entirely should, where possible, assign their lease as it gives rise to fewer liabilities and duties.

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What is the Difference Between an Assignment and a Sublease?

by Pam Pester | Sep 17, 2019

Commercial real estate clients frequently ask how an assignment of a lease differs from a sublease.  The difference is primarily a legal one, although each achieves a similar practical result.

Assignment .  An assignment of a real estate lease is a complete transfer of the right to be the tenant under the lease.  The third-party assignee becomes the “tenant” under the lease, taking over all of the leased premises, and is substituted for the old tenant. The new commerial real estate tenant pays the rent required under the lease directly to the landlord and is treated as the tenant under the lease for all purposes.  However, the catch is that the assignor tenant, unless released from liability by the landlord, remains liable for the obligations under the lease if the new tenant defaults. The old tenant can be sued by the landlord for back rent and other obligations imposed by the lease if the new tenant fails to pay or perform as required by the lease.  Given that a commercial real estate tenant who assigns a lease remains liable for the default of the new tenant, tenants should try to negotiate an automatic release provision.  Unfortunately, many landlords are unwilling to make this concession. An alternative strategy is to ask the landlord for a release if the proposed new tenant is of similar financial strength and creditworthiness.

Sublease. A sublease is a new lease agreement between the real estate tenant as sublessor and a third party as sublessee for all or a portion of the leased premises. The original commercial real estate lease between the tenant and the landlord remains in place, unaffected by the sublease. This means that the tenant remains liable for monthly rent under the original lease, while collecting rent from the subtenant under the sublease, which may be more, less or the same as the rent due under the main lease.

A sublease can be for less than all of the leased premises, while an assignment that transfers the entire lease must be for all of the premises. A sublease is a more involved transaction, as it requires a full sublease document between the commercial tenant as sublessor and the sublessee.

Reasonable Consent .  The landlord must be reasonable in consenting to the proposed assignment or sublease. Under Florida law a landlord cannot be unreasonable or arbitrary in withholding consent to an assignment or sublease. Nonetheless, it is still better to state in the text of the lease that the landlord will be reasonable.

In drafting an assignment or sublease clause, the tenant’s goal is flexibility. Being able to assign or sublet excess space with minimal interference from the landlord and minimal liability in the event the new tenant defaults can be a tremendous benefit to the tenant as the business climate changes from year to year.

When you need assistance with your commercial  lease in Tampa, FL and surrounding areas contact Pam Pester, Owner and President of Mobiliti CRE.  Mobiliti CRE is an independently owned commercial real estate company specializing in exclusive tenant and buyer representation.

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What’s the difference between a sublet and an assignment?

With both a sublet and a lease assignment, the departing tenant remains responsible for the rent unless a landlord explicitly releases you. 

When Ismail Mustafa, a tenant in Dumbo, wanted to break his lease recently, the landlord gave him three options: He could arrange a sublet, transfer the lease to someone else, or end the lease by paying two months of rent upfront.

There’s obviously a financial cost to paying two months rent as a penalty for breaking your lease but it is also the most clear-cut break with your landlord. If you're considering the same options as Mustafa, it's important to know the difference between transferring your lease to someone else (also known as an assignment) and subletting. Neither are without risk.

"The bottom line is—none of the options is perfect—each has advantages and disadvantages," says  attorney Steven Kirkpatrick, a partner at the law firm  Romer Debbas.

It's worth pointing out that a fourth option might be  offered to you: To move out and pay rent until the landlord finds a tenant. This is highly "problematic," says  Catherine Grad, a tenant attorney with her own practice.  "You no longer have control over the process and you are still on the hook for the rent and you’ve given the power to someone who’s incentive is less than yours." 

Subletting vs. assignment

When you sublet your place it's typically because you intend to return to the apartment. A sublet will usually end a week—but it could be just a day—before the actual end of your original lease.

Subletting for the entire length of the lease is an assignment. An assignment allows you to hand off the rental to a new tenant for the rest of the lease term. This is what Mustafa ended up doing.  What's important is that either way—with both a sublet and an assignment—you are giving up your rights to the rental  but in both scenarios you are often still liable if there is damage to the apartment or the next tenant fails to pay. The risks are "tremendous," Grad says. 

When you assign a lease, the person you are assigning to would pay the landlord directly and deal with the landlord for repairs. 

If you are subletting you stand in the shoes of the landlord. The subtenant pays you the rent and you then pay the landlord. "If there are problems in the apartment, it is your duty to get it fixed," Grad says. This is the case, even if you are not authorized to make the repairs.  So while a sublet and an assignment are technically different, in terms of the risk for the departing tenant, Grad  says,  "it is the same." 

"The fact that you assign your rights does not eliminate your obligation to pay," Kirkpatrick  says.

The only situation in which you wouldn't be responsible for the apartment in any way is if you were released by the landlord from your original lease in writing. In practical terms, Grad says, "y ou will never get that with a sublease but might get it for an assignment. The landlord has no incentive to give that to you. Why not have two people on the hook—both you and assignee?" she asks.

A payment or additional security might be the incentive a landlord needs to release you. Security deposits are capped at one months rent making this type of payment "problematic," says Kirkpatrick but he adds there might be ways to structure it as a quid pro quo to release you of liability.  

Negotiations around lease breaks

A landlord cannot unreasonably deny your request to sublet or assign a lease in a residential situation.  If your landlord isn’t responding to your request to assign the lease, that silence becomes default consent within 30 days of you alerting them or of them receiving any additional information about the arrangement. If a landlord's refusal to assign is unreasonable, that terminates your lease.

If the refusal is unreasonable for a sublet, you aren't released from the lease but you are able to sublet the apartment and can fight it out in court. 

Grad says seeking to sublet or to assign your lease often leads to discussions about lease termination. Landlords know they cannot unreasonably deny your request but they also entered an agreement with you and want you to pay up. Yes, the  landlord has a duty to mitigate—which means they must do all they can to find a replacement tenant if you want to break your lease—but as Grad points out, this benefit isn't a given. 

"You have to fight for it—that's the nature of legal rights. It  doesn’t mean you have a right to break your lease, it just gives you a defense when you get sued for all the rent," she says. 

Insurance considerations

Without release from your own lease you will want to set up a separate agreement with the incoming tenant. Kirkpatrick advises having an indemnification agreement although points out that for practical purposes if the person stops paying the rent, there are no guarantees they will still be able to pay you. "If it were me, I’d want a guarantor," Kirkpatrick says. 

To protect yourself, run a credit report on a prospective subtenant or assignee. Phil Horigan, founder of  Leasebreak,  a website where you can find renters to take over an unwanted lease tells Brick, "in most cases I have heard where a tenant has gotten burned by a sublet, the tenant did not run credit."

You also need to make sure the subtenant or assignee has apartment insurance and that you too have apartment insurance, Grad says. If your landlord has not released you from the lease you remain liable if the tenant, for example, floods the apartment below or there's a fire in the place. 

You also want your tenant to know you are not covering their contents or liability. Jeffrey Schneider, president of Gotham Brokerage (a Brick Underground sponsor) says, "there are various ways to cover this, depending on whether you are an owner or former tenant."

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Emily Myers

Emily Myers is a real estate writer and podcast host. As the former host of the Brick Underground podcast,  she earned four silver awards from the National Association of Real Estate Editors. Emily studied journalism at the University of the Arts, London, earned an MA Honors degree in English Literature from the University of Edinburgh and lived for a decade in California.

Real Estate Terms

Subletting vs Subleasing: What Is the Difference?

October 20, 2023

Even real estate professionals get these terms confused, so it’s essential to learn about this topic from trusted sources. Luckily, we have years of experience and are here to explain the difference between subletting vs subleasing.

What Is a Sublet?

In a sublet, the landlord enters into an entirely new contractual relationship with the new renter. The new renter pays rent money to the landlord and is legally responsible for fulfilling the lease terms.

Example of a Sublet

What is a sublease, example of a sublease.

Veronica feels she is wasting money by paying for the extra room, so she decides to sublease it. First, she checks the terms of her existing lease and gets the landlord’s consent.

Sublet vs. Sublease: What Are the Key Differences?

Landlord involvement, original lease.

In a sublet, the new renter makes rent payments to the property owner.

Tenant Responsibility

Pros and Cons of Subletting and Subleasing

Pros and cons of a sublet agreement.

For landlords, a sublet is appealing because the tenant does not leave them high and dry. The landlord continues to collect rent from the new tenant, and the property is not left vacant.

However, the downside to subletting for landlords is that the new renter may not be as reliable as the first. The landlord should always screen the subtenant to ensure they have a good reputation.

Pros of Subletting

Cons of subletting, cons of subletting , pros and cons of a sublease agreement.

A sublease appeals to tenants who have extra space in their apartment and want to make extra money. In a sublease, the original tenant can collect rent from the subtenant and continue living in their space. They also have the option to move away from the property while subleasing it to the new renter.

The downside of subleasing for tenants is that they are still accountable for their initial lease. Even if they vacate the property, they must continue paying rent to the landlord. Another issue is that the first tenant is responsible if the subtenant makes late rent payments or damages the property.

Pros of Subleasing 

Cons of subleasing, pros of subleasing, sublet vs. sublease: which should i use.

Because many people get the terms “sublet” and “sublease” confused, they often do not know which type of agreement will work best for them. Let’s discuss when to sublet vs. when to sublease.

When to Use a Sublet Agreement

A sublet agreement works best for tenants who want to relocate to a new property without breaking their lease. Sublets allow the tenant to be freed from their contract so they can start a new lease elsewhere.

Another scenario where a tenant may sublet their apartment is if they plan on traveling for an extended time. For example, say that a tenant is taking a trip to Greece for four months. Because they are not living in their apartment that whole time, they may consider it a waste of money to pay for rent.

In this scenario, the tenant can find a new renter to sublet their apartment to for those four months. Then, they can continue their lease when they return from their trip.

When to Use a Sublease Agreement

A sublease works best for tenants who want to continue living in their space while making extra money. If a tenant has a large apartment and is willing to give up a room, a sublease agreement allows them to do so. As long as they do not mind the added responsibility of collecting rent, this type of lease is the superior choice.

What Terms Are Included in a Lease Agreement?

While sublets and subleases are two different types of rental agreements, the terms that these leases cover are similar.

In the case of a sublet, the landlord will write up the lease agreement. In the case of a sublease, the primary tenant will write up the lease agreement.

According to Adobe , a sublet and sublease agreement should include the following details:

Frequently Asked Questions

Let’s address some frequently asked questions real estate students have about sublet and sublease agreements.

Are Sublets and Subleases Legal?

Are sublets and subleases legally binding, what to know before the real estate exam, leave a comment cancel reply, related posts, get exclusive real estate exam tips.

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Subletting and Assignment of Lease: What is the Difference?

Have you considered subletting your space? There are several ways to get rid of some or all of your space you lease that you don’t need. You can have language is your lease that simply ask to give up some space. You may elect to turn part of the space back to the landlord if your lease has a clause in enabling you to contract your space or you may have the option to terminate the lease. Today I want to talk about your option to sublet and/or assign your lease. I’ll explain the difference between Subletting and Assigning your lease you’ll what to know the difference and what rights under your lease you have to exercise either option. For lease negotiation purposes, there is usually little difference between subletting and assigning. For that reason, we often lump the two methods together and refer to them as “transfers”.

The difference between subletting and assigning

Subletting: If you transfer just part of your leased space to another tenant, on a temporary or permanent basis, its called a sublease, often times the sublease rate negotiated is below market rents with flexible terms in order to entice someone to sublet your space as apposed to going direct. The person who subleases is called a sub tenant. In a subleasing arrangement the sub tenant pays rent to you, the tenant and the tenant pays rent to the landlord under the same terms and conditions of your lease. If there is a sublease clause in your lease most often the Landlord will have to approve the sublessee and run a credit check just like they would with a normal tenant, the approval of which often is timely. You as the Tenant are ultimately responsible for the performance of your lease.

Assignment: By contrast, an assignment occurs when you transfer all your space to someone else (called an assignee) for the entire remaining term of your lease. (You can instead terminate the lease), which is often preferable if you want to move on and never come back, you’ll look for someone to completely take over the lease-assignment. In an assignment, the new tenant pays rent directly to the landlord Importantly, since you’ve given away all of your interest in the lease, you have no rights to retake the property or to evict the assignee for nonpayment of rent. You have to be careful not to assume that because you sublet your space or assigned the entire lease to another tenant, you’re relived of some or all of your obligations. Often, you’re still responsible for paying the rent if they subtenant or assignee fails to pay and making good on other lease obligations unless the Landlord releases you of financial obligations of the lease. Most landlords prefer that the Tenant buy-out their lease and go direct with a new Tenant rather than doing a sublease or assignment arrangement for a couple reasons

1) Extend the lease beyond the initial maturity date

2) Market conditions most likely changed since the initial lease was signed, the market rents most likely have increased since the original tenant took occupancy.

Here is an example of Subletting/Assignment clause, please note, this language is not a substitute for personalized advice from a knowledgeable real estate attorney, always consult an attorney who is licensed to practice in your state.

Tenant shall have the right to assign its lease or sublet the premises with the Landlord’s prior written consent providing that the Tenant or sub lessee will not violate any other restrictive covenant, then in effect in the center and of which Tenant has notice. It is expressly understood that Tenant shall have the unrestricted right to assign, sublet, license or transfer (hereinafter collectively “Transfer”) any or all of its rights and privileges under the lease.

You should consider both options and the consequences before deciding to subletting or assign your lease. You may find yourself wanting to move back into your space and if you assign your lease you give up that right. If you can’t terminate your lease which is the cleanest and lease complicated solution be sure that any assignee is a rock solid Tenant, or structure the transfer as a sublet, so that if the subtenant falls short, you can at least retake and use the space.

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Apr 07, 2021

The differences between assignment and sublease.

By Don Catalano

An assignment is the transfer of the commercial tenant’s entire responsibilities in a lease. When a corporate tenant assigns its lease, the assignee takes over the tenant’s responsibilities under the lease and communicates directly with the landlord.

When a tenant decides to assign a lease, all his rights and responsibilities in the original lease agreement are released to the third-party assignee. Hence, the original tenant (the "assignor") will have to leave the unit and allow the new tenant to take over all of the leased building.

It is important to check the clauses in the original lease agreement before committing an assignment arrangement. In some leases, the original tenant will remain responsible for the terms of the lease, especially if the new tenant defaults on the lease agreement or causes damage to the property. You may want to check your lease agreement for the option to pursue a permanent assignment so you won't be responsible for expenses or damages.

When a corporate tenant subleases an office , the tenant is transferring all or a portion of the premises for less than the entire term of the lease. Subletting is when a corporate tenant gives another tenant the right to occupy a portion of the entire rental unit for a specific period.

Corporate tenants often sublease when market rents have fallen and parties needing space typically sublease to get space already built-out at a much lower rate than they could as a direct tenant.

Do Both Options Need a Landlord’s Consent?

Both subletting and assigning a commercial lease require the permission of the landlord or a representing agent; this is often expressly indicated in the lease agreement itself. Although most state laws prohibit landlords from withholding consent unreasonably. If the landlord objects to the sublet or assignment, then they must do so on reasonable grounds.

In the case of assignment, a vetting procedure which usually includes credit checks may be completed before formalizing the arrangement with the associated documentation.

Is Subletting or Assignment Right For My Company?

Whether to sublet your commercial property or assign a commercial lease depends entirely on your business situation. By subletting unused space, tenants can recover vital running costs and even improve the viability of their own business. Also, the original tenant remains the tenant and is responsible for all clauses in the original lease.

Assigning your commercial lease to a third party is a good option if you want to terminate your tenancy before the end of your agreement and vacate the premises completely. This is often a good idea if you are planning to sell or relocate your business . With an assignment, you will be absolved of all responsibilities as the original tenant from the date of assignment.

Here are a few other articles to check out:

8 working from home tips you should know, 4 site selection tips when looking for office space, 5 tips when moving your office from big cities to the suburbs, subscribe for more great cre tips hbspt.cta._relativeurls=true;hbspt.cta.load(121314, 'cd3ad71f-75e1-4533-9c5a-8e82767e7aba', {"usenewloader":"true","region":"na1"});.

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Subletting vs Subleasing: Understand the Differences and Make the Right Choice

Figuring out the world of leasing can be more than a tad overwhelming. You might have encountered some confusing terminology, and you’re wondering, “What is subletting?,” “What is a sublease?,” or perhaps, “What does sublet mean?” And most importantly, when comparing sublet vs sublease choices, which is better for your particular scenario?

In this easy read, we’ll tackle what’s what in the question of subletting vs. subleasing, consider the pros and cons of each option, and provide helpful tips for a smooth leasing experience. So, let’s cut to the chase and get right to business!

Subletting vs Subleasing: The Tale of Two Tenants  

One is often mixed up with the other. And why not? Both subletting and subleasing do mean the same thing. A tenant rents out the property they are temporarily renting to another tenant. If you are the latter, you’ll eventually discover that distinction somewhere in the specifics of the lease, and this is what we’ll illustrate. 

Subletting, in the most simple terms, is when the original tenant (let’s call him Alex) rents out their property to you. At the same time, Alex still holds onto some rights and obligations under their original lease. This could include the entire property or just a part of it. He intends to return to the property once your tenure ends. It’s like living at a friend’s home until they get back from their sabbatical. 

Now, you might ask, “What is subleasing then?” If it sounds like a twin to subletting, you’re not entirely wrong. Subleasing, however, is when Alex decides to move on forever and transfers all his lease responsibilities to you. In this scenario, Alex is out of the picture, and you are in charge. So, in a way, a sublease is more permanent than a sublet. 

Benefits and Drawbacks 

Now, let’s consider the perks and downsides of each. First up: subletting. 

Pros of Subletting:

1. flexibility galore.

Subletting offers oodles of flexibility for both the original tenant and the sublessee, allowing for shorter stays. You can even extend your arrangement if you have to. 

Looking for the ultimate flex? Get the convenience of subletting and more with Anyplace , a housing rental platform specially designed for the work-from-anywhere generation or those who want to combine work and travel. We know you’re “going places,” and this is why you can book at Anyplace for as little as 30 days. Absolutely no tedious monthly leases are required. You can even extend your stay at any time. So, whether it’s 32, 45, or 90 days, you’re covered.

2. Location, Location, Location

Through subletting, you gain access to fab locations and properties that might not be typically available through traditional leasing channels.

With Anyplace, scoring an amazing rental is a no-brainer. Our luxe apartments are spread all over the key business hubs of Los Angeles , San Francisco , San Diego , and New York City . You’ll never have to worry about running out of temporary housing options in some of the best metropolises, be it for work or play. 

3. Furnishings Here, There, and Everywhere 

Although many sublets do come furnished, you’re almost always likely to find something that’s not quite to your liking nor matches your expectations. You may end up wasting precious hours shopping for items you aren’t likely to take along with you on your next move. 

At Anyplace , we know your every minute counts. That’s why all our apartments are move-in ready, complete with a fully-equipped home office and high-speed internet for your fast-paced lifestyle. You just have to show up, and voila, you can hit the ground running.

Yet, Anyplace rentals aren’t just your typical turnkey apartments. Beyond traditional furnishings, we offer top-notch amenities, such as a stocked kitchen, an in-unit washer and dryer, and much more. You won’t be lacking in anything, even with your discerning tastes.  

Cons of Subletting:

1. legal loop-de-loops.

The million-dollar question: “Is subletting illegal?” The answer: It’s complicated. That’s because a lot depends on what the lease agreement and local laws say. So, before diving into a sublet arrangement, take a closer look at any of its prohibitions. 

If you don’t want the hassle of second-guessing (because who does?!), then Anyplace is your place. We can help you overcome potential legal hurdles and survive the maze-like paperwork associated with subletting or subleasing. No worries—only absolute peace of mind. 

2. Limited Power

As someone renting a sublet, you may have fewer responsibilities but also limited rights when it comes to maintaining the property or handling issues during your stay. Kind of iffy, right?

But with Anyplace, we offer the kind of security that delivers peace of mind. We’ve partnered with Jacob Street, so you automatically get short-term insurance coverage every time you book any of our furnished apartments. 

Pros of Subleasing:

1. lease handoff.

As the new tenant when you sublease, you are able to enjoy the lease rights of the original tenant, which are transferred to you. These can include access to amenities, parking spaces, and other benefits outlined in the lease agreement. 

But the thing is, with greater power comes greater responsibility (kind of the flipside of subletting). Taking on a sublease comes with extra baggage: the original tenant’s financial and legal responsibilities for the remainder of the lease.  A “whew factor” for them—but not for you. 

2. Stability

Subleasing offers a more stable and long-term housing option for those looking to settle in for an extended period. Thus, by subleasing, you can eliminate the uncertainty of frequently searching for a new place.

Cons of Subleasing:

1. less flexibility.

Subleases are typically more rigid in duration and may not accommodate shorter stays or sudden changes in plans.

But with Anyplace, you’re never tied down with flexible-term leases . That’s real freedom for you.

2. Legal Hurdles

Like subletting, subleasing may be subject to restrictions outlined in the lease agreement or local policies. Once more, be sure to do your homework before jumping into a sublease. 

So which one is it in the showdown of sublet vs sublease? Regardless of your choice, one place trumps either, and that’s Anyplace. We can help make the apartment rental process as quick and easy as 1-2-3 . It’s just like booking a hotel room—or even better.

Finding your “suite” spot with Anyplace 

Whatever your needs and preferences, Anyplace can make your apartment search a walk in the park. With a user-friendly interface, a secure payment system, and a wide selection of properties, it’s a perfect option for your subletting or subleasing requirements. 

Ready to explore? Browse our selection of flexible-term, fully furnished apartments in major cities across the USA. At Anyplace, you’re sure to find exactly what you’re looking for .

Where to next? Find monthly rentals designed for remote workers on Anyplace .

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Assignments and Sub-Leases

Video-course: tenant’s duties - module 4 of 5, video-course: warranties and limits on sales contracts - module 3 of 5.

Assignments and subleases are terms for situations in which a tenant in possession of property transfers his or her right to possess that property to a third party. If the lessee transfers his or her entire remaining interest in the tenancy, then the transfer is known as an assignment. If the lessee transfers only part of his or her interest, then the transfer is known as a sublease. For example:

Barney leases Rubbleacre from Fred for two years, beginning January 1, 2013 and ending on December 31, 2014 at the rental price of $1,000 per month. On January 1, 2014, with one year remaining on the lease, Barney and Kazoo agree that Kazoo will occupy the land for the remainder of the lease, and that Kazoo will pay the $1,000 per month rent to Fred. In this case, Barney has “ assigned ” his lease to Kazoo. Barney leases Rubbleacre from Fred for two years, beginning January 1, 2013 and ending on December 31, 2014 at the rental price of $1,000 per month. On January 1, 2014, with one year remaining on the lease, Barney and Kazoo agree that Kazoo will occupy the land for the next six months and pay the rent for those months. At the end of six months, Barney will move back onto the land and finish out the remainder of the lease. In this case because Barney and Kazoo have agreed that Kazoo will assume less than the full remainder of the lease, Barney has “ sublet ” part of his interest in Rubbleacre to Kazoo.

See McClain Airlines, Inc. v. Republic Airlines, Inc. , 1991 U.S. App. LEXIS 18047 (1991) .

As a general principle, both assignments and subleases are allowed, and so any tenant can assign his or her lease to a third party or sublease his or her interest in the property to a third party at any time. However, as a practical matter, many lease agreements specifically prohibit assignments or subleases. Of course, any agreement between landlord and tenant that prohibits assignments or subleases is fully binding and enforceable.

The key issue to be discussed, then, is what affect the transfer of interest has on all the involved parties. Since there are several parties involved in these transactions, we will start by defining the parties. In an assignment, there is the landlord/ lessor (the property owner), the tenant/ assignor (the person who leased it from the landlord and then assigned his or her interest to a third party) and the assignee (the person who received the assignment). In a sublease, there is the landlord/ lessor, the tenant/ sublessor (the party who leased the property from the landlord but is now subleasing the property to a third party), and the sublessee.

As a further necessary introduction, there are two forms of relationship between every landlord and tenant. There is a contractual relationship that took effect and exists by virtue of the lease agreement itself. That relationship is known as “ privity of contract ”. In addition, there is a property ownership relationship, by virtue of their sharing of the ownership of the property. That relationship is known as “ privity of estate ”. “Privity of estate” exists between two parties when those two parties have successive ownerships in the same property (i.e., one holds a present interest while the other holds a future interest or they both hold future interests, one after another).

The Assignment

An assignment is a full transfer of the lease between the tenant and the assignee. Therefore, since the tenant no longer has any ownership interest in the property, there is no longer any relationship between the landlord and the tenant as far as the property ownership is concerned. Therefore, there is no longer “privity of estate” between the landlord and the tenant. On the other hand, there now is privity of estate between the landlord and the assignee. This is because the assignee now owns the present interest in the property. This present interest will end only at the end of the lease when it will go back to the landlord. Since the landlord’s right to possession is now successive to the possession of the assignee, the landlord and assignee are in privity of estate.

Privity of contract, on the other hand, still exists between the landlord and the tenant. This is because the original contract that existed between the landlord and the tenant is still fully valid even after the assignment. In other words, the landlord does not give up his or her right to enforce the lease agreement with the tenant just because the tenant transfers his or her interest to the third party. There is no privity of contract, of course, between the landlord and the assignee because those two parties never agreed to anything between themselves. For example:

Ethel owns Blackacre. She leases Blackacre to Lucy for 5 years. During year 2, Lucy assigns her interest in Blackacre to Ricky. Ethel is in privity of estate with Ricky and not Lucy and in privity of contract with Lucy and not Ricky. Also note that Lucy and Ricky are in privity of contract (because they made an agreement with each other), but not in privity of estate (Lucy has no possession interest in Blackacre, and so she does not have an interest that either follows or is followed by Ricky’s interest).

The sublease.

The sublease is only a partial transfer of interest from the tenant to the sublessee. The tenant is transferring part of his or her interest in time to the sublessee. Therefore, there is no privity of contract or privity of estate between the landlord and the sublessee in a sublease. The reason that there is no privity of estate between the landlord and the sublessee is that the landlord’s right to possession of the property does not follow the sublessee’s right to possession. Instead, it still follows the tenant’s right of possession. The landlord is, however, still in both privity of estate and privity of contract with the tenant. Privity of contract is still applicable for the same reason as with the assignment (the landlord and the tenant agreed on the terms of the original lease). In addition, there is privity of estate between the landlord and the tenant because the right to possession of the landlord still follows the right of possession of the tenant. For example:

Ethel owns Blackacre. She leases Blackacre to Lucy for 5 years. During year 2, Lucy subleases Blackacre to Ricky for one year. Ethel is not in privity of estate or privity of contract with Ricky because she did not make an agreement with Ricky and because her interest in possession of Blackacre does not follow Ricky’s (it follows the end of Lucy’s five year lease). On the other hand, Ethel and Lucy are in both privity of contract (because their agreement is still valid) and privity of estate (because Ethel’s interest follows the end of Lucy’s lease). Note that Lucy and Ricky are in both privity of estate and privity of contract. They are in privity of contract because they made an agreement with each other. They are in privity of estate because Lucy’s interest (in the remainder of her lease) follows Ricky’s interest (Lucy will get Blackacre at the end of Ricky’s one year sublease).

The ramifications of who is in privity of what with whom can be crystalized in a few rules:

• A party collecting rent (landlord from the tenant or tenant from assignee or sublessee) can collect rent from someone with whom he or she is in privity of contract or privity of estate.
• A party looking to enforce obligations of the landlord can only enforce those obligations against a party with whom he or she is in privity of estate.
• The contractual terms of the lease itself can only be enforced against a party with whom the party seeking to enforce the terms is in privity of contract.

For example:

1. Ethel owns Blackacre. She leases Blackacre to Lucy for 5 years. During year 2, Lucy assigns her interest in Blackacre to Ricky.

• Ethel may collect rent from Ricky or Lucy.
• Lucy may not collect rent from Ricky.
• Ricky may enforce landlords’ obligations against Ethel, but not against Lucy. Lucy may not enforce landlords’ obligations against Ethel.

2. Ethel owns Blackacre. She leases Blackacre to Lucy for 5 years. During year 2, Lucy subleases Blackacre to Ricky for one year.

• Ethel may collect rent from Lucy, only, not Ricky.
• Lucy may collect rent from Ricky.
• Ricky may enforce landlords’ obligations against Lucy, but not against Ethel.
• Lucy may enforce landlords’ obligations against Ethel.

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What is subletting and how does it differ from subleasing.

Subleasing and subletting are two terms that are often used interchangeably in the world of renting, but they actually have different meanings. In this article, we’ll explore the differences between subleasing and subletting and help you understand which option may be right for you.

What is subleasing?

Subleasing occurs when a tenant who is currently renting a property from a landlord decides to rent out the property to another person, known as the subtenant. The subtenant pays rent to the original tenant, who in turn pays rent to the landlord. The original tenant is still responsible for the terms of their lease with the landlord, including paying rent and maintaining the property.

What is subletting?

Subletting is similar to subleasing in that it involves a tenant renting out a property to another person. However, there is one key difference: the tenant who is subletting the property is not responsible for the terms of their lease with the landlord. Instead, the subtenant enters into a new lease agreement directly with the landlord. Let’s get the basics out of the way. Put simply, to sublet means to rent out the room or apartment that you’re currently renting to another person. That person (the sublessee) essentially takes over the remainder of your lease and agrees to pay you (the sublettor)  for all bills and payments moving forward. To sublet can also mean that you personally rent out someone else’s room, but we’re going to walk you through what it means to sublet your own room or apartment.

Let’s say you’ve signed a 1-year lease and, with 6 months left, suddenly find that you need to move out of the state or to a new city for a job or personal reasons. Breaking your lease is one option, but it can be costly for myriad reasons. That’s where subletting comes in. Renting your apartment to someone else for those 6 months is a great alternative and one that can save you a bundle of money. 

Which option is right for you?

eciding whether to sublease or sublet a property depends on your specific circumstances. If you’re a tenant who needs to leave your rental property temporarily but plans to return, subleasing may be the best option for you. This allows you to keep your lease with the landlord while still offsetting the cost of rent. However, it’s important to note that subleasing may not be allowed under your lease agreement, so it’s essential to review your contract carefully.

If you’re a landlord and your tenant wants to sublease, it’s important to review your lease agreement to determine whether subleasing is permitted. You may also want to consider requiring the subtenant to submit a rental application and undergo a background check to ensure they’re a reliable tenant.

On the other hand, if you’re a tenant who needs to leave your rental property permanently, subletting may be a better option. This allows you to transfer your lease to the subtenant and remove yourself from any obligations to the landlord.

5 steps to sublet or sublease your apartment

If you’re considering subletting or subleasing your apartment, here are five steps you should take:

The first step is to review your lease agreement to determine whether subletting or subleasing is allowed. Some landlords do not allow either option, while others may require written permission before you can proceed.

Once you have permission to sublet or sublease, the next step is to find a subtenant. You can advertise your apartment on various platforms, such as social media, online classifieds, and word-of-mouth.

Before choosing a subtenant, it’s essential to screen potential candidates. Interview all candidates and get a feel for who they are. You may even want to ask for references or proof of employment if entering into a subleasing agreement where you are still responsible for the rent payments to the landlord.

Once you’ve found a suitable subtenant, it’s time to sign a sublet/sublease agreement. This document should outline the terms of the agreement , including the rent amount, the duration of the sublet/sublease, and any other conditions.

Finally, it’s important to notify your landlord about the sublet/sublease agreement. You should provide them with a copy of the signed agreement and ensure that the subtenant is aware of their responsibilities under the lease agreement.

By following these five steps, you can sublet or sublease your apartment in a legal and responsible manner. Remember to always review your lease agreement carefully and seek permission from your landlord before proceeding with either option.

Before you go

Once you and the sublessee have agreed to the conditions of your sublet, here are a few things to remember to do before your move.

• Choose a move-in/move-out date that works for both of you
• Make a copy of your key or give your own to your sublessee
• Determine how you will receive payment for rent and utilities (Venmo, Apple Pay, etc.)

Frequently asked questions

Subletting involves renting out your apartment to someone else for a period of time while you are still responsible for the lease. Subleasing is similar, but you transfer the lease to the subtenant for the duration of their stay.

No, you should always seek permission from your landlord before subletting or subleasing your apartment. Failure to do so can result in legal action and even eviction.

It’s important to screen potential subtenants by checking their credit history, rental history, employment status, and conducting a background check to ensure they have no criminal history.

The agreement should include the rent amount, the duration of the sublet/sublease, and any other conditions. It should also outline the responsibilities of the subtenant, including their obligation to adhere to the terms of the original lease agreement.

It depends on the terms of your lease agreement and local rental laws. In some cases, you may be able to charge more than you pay for rent, but in other cases, you may not be allowed to charge more than the original rent amount.

If the subtenant damages the apartment, you may be held responsible and could face legal action. It’s important to include provisions in the sublet/sublease agreement that outline the responsibilities of the subtenant in maintaining and repairing the apartment.

It depends on the terms of the sublet/sublease agreement. In most cases, you will need to provide written notice to the subtenant and seek their agreement to end the agreement early. You may also be required to pay any fees or penalties outlined in the original lease agreement.

If your landlord denies your request to sublet or sublease, you may need to seek legal advice or negotiate with your landlord to reach a compromise. It’s important to remember that you are legally bound by the terms of your lease agreement and may face consequences for violating these terms.

Final thoughts

Subleasing and subletting are two options for tenants who need to rent out their rental property to another person. Understanding the differences between these two options can help you make an informed decision about which option is right for you. Remember to review your lease agreement carefully before deciding to sublease or sublet and consider working with a professional property management company to ensure a smooth rental process.

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Subletting vs Subleasing: Key Differences Explained

Estimated reading time: 3 minutes

When it comes to renting, it’s essential to understand the differences between subletting and subleasing. These terms are often used interchangeably, but they have distinct meanings and implications. 

In simple terms, sublet is for an entire rental property (e.g., a studio) and sublease is for a portion of a rental property (e.g., a bedroom).

Subletting Simplified

Subletting is when you hand over your entire rental property to a new tenant. This process is akin to passing the baton in a relay race – you’re temporarily transferring your rental space to someone else. In this arrangement:

• The new tenant deals directly with the landlord, paying rent to them.
• As the original leaseholder, you no longer bear responsibility for rent payments or damages during the sublet period. These responsibilities shift to the new tenant.
• Subletting can be ideal for situations like a six-month sabbatical, where you don’t want to give up your lease but can’t occupy the space.

Understanding Subleasing

Subleasing, on the other hand, involves renting out a portion of your leased property while you continue to occupy the rest. Key points include:

• You rent out part of your property, such as a room, to a subtenant .
• The subtenant pays their share of the rent to you, and you continue paying the full rent to the landlord.
• In this setup, you, as the original leaseholder, remain responsible for the full rent and any damages or issues that arise.
• An example of subleasing is renting out an extra room in your apartment, creating a roommate-like scenario but with a formal agreement.

Real-world Examples

Subletting Scenario: Imagine going on a six-month sabbatical. You sublet your apartment to someone else, who pays you rent. You’re no longer involved in paying rent to your landlord during this period.

Subleasing Scenario: You have an extra room in your apartment and decide to sublease it to a friend. Your friend pays you for their share, and you continue to handle the full rent payment to your landlord.

June Homes and Short-term Rentals

Platforms like June Homes streamline the process of finding short-term rentals , offering an alternative to traditional subletting and subleasing. June Homes provides flexibility and convenience for those seeking housing arrangements. For more insights, consider resources like “ What is Subletting ?”, “ Where to Find a Sublet in NYC “, and “ First Time Renter Guide. “

Understanding the nuances between subletting and subleasing is crucial for making informed decisions in real estate. Each option has unique advantages and responsibilities, so it’s important to choose the one that best suits your needs and circumstances. Happy renting!

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What is the Difference Between Sub-letting and Assigning a Commercial Lease?

As a commercial property tenant, you have a number of options during your tenancy. Sub-letting and assigning a commercial lease are just two of them. Whilst often mentioned in the same breath, the two processes are very different, and tenants should be aware of these variations before taking the step that suits their specific requirements.

As a leading commercial property estate agent serving landlords and tenants in Staffordshire, Cheshire and Shropshire, we help our clients cut through the legal jargon to understand and utilise the solutions that suit them. Here, we shine the spotlight on sub-letting and assignment so you can have a clearer understanding and subsequently rent with confidence.

Related Article: The Benefits of Investing in Commercial Property

Related Article: A How-To on Industrial Leasing

What is sub-letting?

A sub-let is arranged by the existing and original tenant, who (with the landlord’s approval) arranges for all or part of the commercial premises to be let to a third party. Sub-letting unlocks numerous benefits for the tenant, especially if they want to share the cost of renting a property. Even if the tenant chooses to sub-let however, they are still liable under the lease.

Another important difference between a sublease and an assignment relates to the fact that normally the sublease will be contracted outside of the ‘Landlord and Tenant Act 1954’, which removes the ‘security of tenure’ provisions from the sublease. This means that in the event that the head tenant vacates the building or ceases to trade the sub-tenant will lose their right of occupation and will be required to vacate as well. This is understandably slightly precarious from the subtenant’s point of view as the sub-tenant does not have the certainty of being able to remain in occupation indefinitely and, depending on the head tenant’s circumstances, may be required to vacate at short notice.

How is assignment different?

Assigning a commercial lease is the legal transfer of the lease to a third party. With assignment, the original tenant is not liable under the original lease, and responsibility is legally transferred as of the assignment date.

Unlike with sub-letting, when assigning a commercial lease, the original tenant does not share the property with the third party. This option is therefore more commonly used when a tenant has to sell their business and no longer has use for the commercial space they are legally bound to lease for the remaining period of their tenancy.

Do both options need a landlord’s consent?

Both sub-letting and assigning a commercial lease can only be done with the permission of the landlord or representing agent, a fact that will be stipulated in the lease itself. If the landlord objects to the sub-let or assignment, then they must do so on reasonable grounds. They are prohibited by law to withhold consent unreasonably.

When assigning the commercial lease, a vetting procedure (complete with credit checks) will usually be completed prior to formalising the arrangement with the associated documentation.

Is sub-letting or assignment right for me?

Whether to sub-let your commercial property or assign a commercial lease depends entirely on your circumstances. As previously mentioned, sub-letting is beneficial for tenants who have additional space within the commercial premises that they do not use. By sub-letting this unused space, tenants can recoup vital running costs and even improve the viability of their own business. With sub-letting, the original tenant remains the tenant and as ‘head tenant’ you will have various responsibilities.

A head tenant is essentially the landlord of the sub-tenant. The terms and conditions of the sub-let should, therefore, be formalised in writing with the landlord’s permission.

Assigning your commercial lease to a third party is a better option if you wish to terminate your tenancy before your agreement comes to an end and vacate the premises completely. This may be necessary if you have had to sell or relocate your business. With an assignment, you will have no responsibilities as the original tenant from the date of assignment. All obligations as set out in your original tenancy agreement will be transferred to the new tenant or ‘assignee’. To formalise the transfer, all parties must agree and sign a transfer of lease and deed of consent.

Final Words

As you navigate the options of sub-letting or assigning your commercial lease, understanding the distinct differences can empower you to make the right decision for your business. Our team at Rory Mack Associates specialises in guiding landlords and tenants through these complexities, ensuring clarity and confidence in every lease transaction.

For further information about sub-letting and assignment, please contact our dedicated team directly at 01782 715725 . Alternatively, you can email [email protected] to get in touch.

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Assignments vs. Subleases: What are the Differences?

by Chamber | Apr 3, 2023 | Blog | 0 comments

Submitted By:

• Peter Pokorny, Commercial Agent | Long & Foster Commercial | ww w .longandfoster.com/AgentSearch/PeterPokorny-13338785
• Peter Pokorny & Bruce Rosen, Attorneys | Real Estate Counselors | www.recdc.com

A tenant who no longer needs its space may want to assign or sublet their premises.  Or a business who needs space, may consider subleasing a space, or having that tenant assign its lease to them.

Although assignments and subleases are similar, they have distinct legal consequences. Some of the key issues are set out below.  

ASSIGNMENT :

What is it?  An assignment is the transfer of the party’s entire interest in a lease. When a tenant assigns its lease, the assignee takes over the tenant’s obligations under the lease and deals directly with the landlord.

When is it typically used?  Assignments are typically used when a party is taking over the entire leased space, for the entire remaining term, and will take on the existing lease economics. One common example is when a business is sold, existing leases are assigned to the new buyer.

Advantages:

• Since the assignee pays rent directly to the landlord, the assignor is not involved in receiving and relaying money each month.
• Although it’s not common, depending upon the circumstances, an assignor may get released from all future lease obligations.

Disadvantages:

• The assignee takes over the entire leased space.  It can’t negotiate to occupy (and pay rent on) a smaller space.
• The assignee takes over any existing liability under the lease that the assigning tenant may have.  An indemnity can help with this.
• The assignee cannot negotiate the rental rate – it must pay whatever the lease charges.
• The assignor forfeits all rights to use the premises and cannot choose to return later.

What is it?  A sublease is the transfer of all or a portion of the premises for less than the entire term of the lease.  A transfer of all of a tenant’s space for a term that is 1-day less than the lease term qualifies as a sublease.

When is it typically used?  Assigning tenants often sublease when market rents have fallen (as they can’t find an assignee to pay the rate under the lease).  Parties needing space typically sublease to get space already built-out at a lower rate than they could as a direct tenant.

• The subtenant can negotiate the rental rate and other business terms with its Sublandlord.
• The subtenant may negotiate for a shorter term than a landlord would agree to for a direct tenant.
• A subtenant may enjoy the benefits of amenities like kitchens and conference rooms it shares with its Sublandlord.
• The subtenant does not have a direct relationship with the landlord. This means it cannot sue the landlord for landlord defaults under the lease (like landlord’s failure to maintain the building).
• The subtenant must get consent of both the landlord and its Sub-landlord for issues like alterations and signage.
• During the term of the sublease, if the tenant defaults under the lease, the subtenant could be evicted by the landlord (even if the subtenant is not in default under the sublease).