Sublease vs. sublet: legalities, examples, and FAQs

Sublet or sublease – as a real estate professional, understanding the difference between the two is paramount. These terms are often confusing for even the most seasoned agents. They describe two different rental agreements that may affect tenants, landlords, and subtenants differently.

This guide breaks down the definitions, differences, pros and cons, and key considerations for sublet and sublease agreements. By the end, you’ll have the knowledge to guide your clients effectively.

What is a sublet?

A sublet occurs when a tenant finds a new renter to take over their lease with the landlord. In this setup, the original tenant leaves completely.

The landlord then makes a new contract with the new tenant, who will occupy the property and be responsible for paying rent directly to the landlord or property owner. This new arrangement could be permanent or temporary.

How a subletting works

The process of subletting typically includes:

1. The original tenant informing the landlord of their intent to leave.
2. The existing tenant is finding a suitable new tenant.
3. The landlord screens and approves the new tenant.
4. The landlord and the new tenant sign a new lease agreement.

In most cases, sublets are used in rental properties to avoid breaking a lease, incurring penalties, or leaving a property vacant for the landlord.

Example of a sublet

Marcus rents an apartment but gets a job offer in another state. To avoid breaking his lease, Marcus finds Warren, a reliable tenant. The landlord approves Warren, and they sign a new lease. Marcus moves out and avoids an early termination penalty, Warren gets a new home, and the landlord avoids a vacant unit.

What is a sublease?

A sublease occurs when the original tenant rents out their leased property—or part of it—to another person (the subtenant). Unlike a sublet, the original tenant remains legally responsible for the terms of the original lease with the landlord.

How a sublease works

In a sublease:

1. The original tenant drafts a sublease agreement with the subtenant.
2. The subtenant pays rent to the original tenant, who continues to pay the landlord.
3. The original tenant retains responsibility for the property and lease terms.

Subleases are commonly used when tenants want to rent out extra space.

Example of a sublease

Veronica has a two-bedroom apartment but only uses one room. She subleases the extra room to her friend Anise, who pays rent to Veronica. The landlord receives rent from Veronica as usual, and both tenants enjoy a mutually beneficial arrangement.

Sublease vs Rent

Understanding sublease vs rent is important not only for your real estate exam but also for real-life situations you’ll face as an agent. These are terms that often confuse clients, so knowing how to explain them clearly will set you apart.

When sublease and rent are compared, consider what type of agreement each involves. A sublease usually involves a tenant renting out their property to another person—perhaps for a shorter term and perhaps with different terms. It can be a good option for someone who is temporarily in need of a place or prefers more flexible terms.

On the other hand, a rental agreement is directly entered into with the landlord. Clients looking for long-term security, clearer terms, and more control over their lease will choose a standard rental agreement.

As a future real estate agent, explaining sublease vs. rent can help you guide clients to the best choice for their needs. Whether they need short-term flexibility or a long-term home, knowing these differences will make you a better resource for them.

So when you think about sublease vs rent, remember:

• Sublease = short-term, flexible, often temporary.
• Rent = long-term, stable, direct agreement with landlord.

This is not just about passing the exam — it’s about practical knowledge that will help you advise clients confidently.

What is the difference between sublet and sublease?

Sublet or sublease? Although it may seem similar, their differences have significant legal and practical implications.

1. Landlord involvement
   • Sublet: The landlord interacts directly with the new tenant and signs a new lease.
   • Sublease: The landlord has no direct relationship with the subtenant. The original tenant acts as the subtenant’s landlord.

2. Lease agreement
   • Sublet: The original lease is terminated, and a new lease is created between the landlord and the new tenant.
   • Sublease: The original lease remains active. The subtenant’s agreement with the original tenant does not involve the landlord.

3. Payment responsibility
   • Sublet: The new tenant pays rent directly to the landlord.
   • Sublease: The subtenant pays rent to the original tenant, who remains responsible for paying the landlord.

4. Tenant responsibility
   • Sublet: The new tenant assumes full responsibility for the property, including damages.
   • Sublease: The original tenant remains responsible for damages caused by the subtenant.

Pros and cons of subletting and subleasing

Understanding the benefits and drawbacks of subletting and subleasing is crucial for guiding clients effectively.

Subletting

Pros for tenants:

• Avoids lease-breaking penalties.
• Allows relocation without financial strain.

Cons for tenants:

• Must find a reliable new tenant.
• Relinquishes rights to the property.

Pros for landlords:

• Maintains consistent rent payments.
• Reduces vacancy risks.

Cons for landlords:

• Risk of screening unreliable tenants.

Subleasing

Pros for tenants:

• Generates income by renting extra space.
• Allows temporary relocation while retaining the lease.

Cons for tenants:

• Responsible for the subtenant’s rent and damages.
• Increased risk if the subtenant breaches the agreement.

Pros for landlords:

• Continues to receive rent from the original tenant.
• The property remains occupied.

Cons for landlords:

• Limited oversight of subtenants.
• Dependence on the original tenant for lease compliance.

Sublet and sublease agreements

Clear agreements are essential to ensure all parties understand their rights and responsibilities.

Sublet agreements

Sublet agreements are typically drafted by landlords and should include:

• Names of the landlord and the new tenant.
• Rent amount and payment schedule.
• Lease duration and terms.
• Security deposits and fees.

Sublease agreements

Sublease agreements are created by the original tenant and should cover the following:

• Names of the tenant and subtenant.
• Payment terms (rent and utilities).
• Duration of the sublease.
• Rules and obligations, such as property care and restricted activities.

When to recommend subletting or subleasing

When to sublet

• The tenant wants to permanently leave the property.
• The landlord is willing to approve a new tenant.
• The tenant seeks to avoid lease penalties.

When to sublease

• The tenant plans to return after a temporary absence.
• The tenant has unused space to rent out.
• The tenant prefers to maintain their lease.

Why subleasing or subletting matters for real estate agents

As a real estate professional, understanding subleasing and subletting can help you:

• Advise clients: Provide informed guidance to tenants and landlords considering these arrangements.
• Resolve conflicts: Help tenants and landlords navigate disagreements over subleasing or subletting.
• Strengthen relationships: Build trust with clients by offering expert advice on these complex issues.

Frequently Asked Questions

1. Are sublets and subleases legal?
   Yes, but they have to be in accordance with local laws and lease agreements. For example, in New York, tenants in buildings of four or more units can sublease if the landlord agrees or if the refusal is unreasonable. Any lease clause that restricts a tenant’s right to sublease is invalid due to public policy.
   In San Francisco, a tenant can replace their roommate, even if the lease prohibits it, as long as the new roommate meets the landlord’s screening standards.
2. Who is responsible for damages in a sublease?
   The original tenant is responsible for damages caused by the subtenant, as they remain the primary leaseholder.
3. Can a tenant sublease without permission?
   No. Most leases require landlord approval for subleasing. Doing it without having permission could lead to eviction.

Conclusion

Understanding the differences between sublets and subleases is essential for real estate professionals to advise clients. Whether navigating temporary relocations or helping tenants avoid lease penalties, your expertise ensures smooth transactions and satisfied clients.

By knowing the legalities, drafting solid agreements, and understanding each arrangement’s pros and cons, you can provide valuable guidance and build trust in your professional relationships.

But these aren’t the only concepts you’ll need to be familiar with before your test. Study more critical terms with our handy digital Real Estate Flashcards! With the right preparation, you’ll not only ace your exam but also feel ready to tackle real-world scenarios as a knowledgeable professional.