Advantages and Disadvantages of Subleasing

Just like many small business owners, you may be exploring the idea of subleasing. Perhaps you've rented a commercial space and are now considering subleasing the extra space you don't need or can't afford. Or maybe you've found the perfect location for your business, but it requires signing a sublease to secure the space. But are subleases a good option?

Subleasing comes with its own set of advantages and disadvantages for landlords, tenants, and subtenants. Before making any decisions, it's important to understand what subleasing entails.

Understanding Subleases

A sublease is essentially a contract between a tenant with an existing lease and a new occupant. This contract can cover either all of the property leased by the tenant or just a portion of it. The original tenant becomes the sublandlord, while the new tenant becomes the sublessee. The original tenant may also be referred to as the master-tenant, and the original lease may be called the master lease.

A sublease allows the sublessee to use some of the tenant's rights for the property. While the landlord is not directly involved in the sublease, their consent is typically required for subletting. Subleasing can occur for various reasons, such as downsizing, relocation, or financial challenges.

How Subleases Operate

Before subletting a property, ensure that subleasing is allowed under your lease agreement, by your landlord, and within your state's laws. Some states have no specific regulations on subletting, while others require landlord approval before proceeding with a sublease. Generally, subletting is permissible if neither the lease nor the law explicitly prohibits it.

Subleases can be short-term or long-term, offering flexibility or stability, depending on your needs. Short-term subleases are typically for six months or less, providing the opportunity for trial periods and easy changes. Long-term subleases, on the other hand, offer stability and consistency in rent payments.

It's important to note that a sublease does not alter the original lease between the landlord and the tenant. The prime lease remains in effect and is referenced in the sublease agreement.