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What is a Sublease Contract?

By Ken Black
Updated May 17, 2024
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A sublease contract is an agreement by which the person leasing a piece of property leases it to a third party. Most commonly, a sublease may be written for a piece of real estate, such as a home where the renter only needs it for part of the year. Often, the owner of the property will put certain rules into place regarding a sublease contract, if it is allowed at all.

Typically, a sublease contract may be an option for those who are going to be away for an extended period of time, yet are under contract for a monthly payment for a property. In such cases, the original tenant may not be able to get released from the contractual obligations, and may seek another alternative. Subleasing is one option.

These sublease contracts are often somewhat more complex than a normal lease contract. For example, the contract may be subject to owner approval. In addition, there could be concerns about who will be liable for any damages done to the property. It could be that in the case of a sublease contract, the owner must go to the first tenant for collection of damages, and then that tenant would have to collect from the third party. Of course, this depends on the laws of the local jurisdiction, and what the contract stipulates.

Some natural limitations exist in a sublease contract that are not necessarily present in more traditional contracts. One of those is a limitation of the contract based on the original lease. Once the original lease holder's contract has terminated, he or she no longer has the right to rent that property to another party. In that case, the person with the sublease using or living at the property would need to move, or perhaps deal with the owner directly.

Due to the complexity involved in a sublease contract, as well as the liability issues, the question of whether one is even possible varies greatly. Property owners typically like to do their own screening and agreements, keeping track of who is living on their property. Therefore, many original lease contracts expressly prohibit a sublease contract. Those that do not may set some strict rules that are even more stringent than the original lease.

Sublease contracts are more popular for homes in vacation areas, where individuals may choose to live only part of the time. In such cases, allowing a sublease can be advantageous for the property owner because it may be easier to rent the property under those conditions. Still, even in popular vacation areas, the practice can vary widely, and it is up to the individuals entering into the sublease agreement to know what the original lease allows.

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