Commercial Sublease Information
What is a Commercial Sublease?
A Commercial Sublease Agreement is used when a business tenant sublets the rental space to a subtenant without breaking his or her current lease with the landlord or property manager.
The subtenant pays rent to the tenant who signed the original lease and only rents the property (either a portion, or the entire rental space) until the end of the lease term.
A Commercial Sublease is the agreement made between the subtenant and sublandlord (the original tenant) and contains information about both parties, the original lease, landlord consent, financial responsibilities (such as damage deposit, utilities, and insurance), and any other additional terms of the lease deemed relevant by the parties.
Parties Involved in a Commercial Sublease
Landlord: The landlord is the person who owns or manages the property, offered the property for rent, and signed a lease with the tenant. The landlord must give permission to the tenant to sublease the space.
Tenant/Sublandlord: The tenant is the party who originally rented the commercial space from the landlord. Once the tenant sublets the space, he or she becomes the sublandlord. A tenant must still report to the landlord and he or she is still held to the terms of the original lease.
The sublandlord is responsible for the subtenant and any damages that are caused by the subtenant.
Subtenant: The subtenant is the person who rents the commercial space from the original tenant, also called the sublandlord. The subtenant will make rent payments and report any lease or property issues to the sublandlord. The subtenant's lease relationship is with the tenant/sublandlord and not the landlord or the landlord's property manager.
Before acquiring a subtenant, the tenant should refer to the master lease to see if subleasing arrangements are allowed. If so, the landlord will still need to be notified and written permission from the landlord may be required.
If subleasing was not allowed or not mentioned in the original lease, the tenant will need to obtain a Landlord's Consent to Sublease to make sure that no lease terms are breached and that the landlord is informed of the tenant's wish to sublet the space.
Common Reasons to Sublease
You may need a Commercial Sublease if:
- You have a seasonal business and want to cut costs during the off-season.
- You are an entrepreneur and wish to share your space with other business people to save capital.
- You had a change in circumstance and no longer wish to use your rental space but are still bound to a lease.
- You work with other consultants or contractors as part of your business and wish to share costs.