Understanding Sublease vs. Sublet

While you may typically think of renting out your property as a straightforward tenant-landlord relationship, it can sometimes become more complicated. For example, economic and personal changes may make it impossible for a current tenant to fulfill their obligations under the lease. That's when subletting or subleasing may become a viable alternative to ending a lease, imposing financial penalties on the tenant, and losing money due to a vacant rental property.

Imagine you get a phone call from a reliable and trusted tenant. They consistently pay on time, they take good care of the lawn, and you've enjoyed greater peace of mind since they first moved into your rental property. This ideal tenant tells you they're getting married and moving to their new spouse's home. 

You want to be as kind to them as possible, but you can't afford months of carrying costs while waiting to find another tenant. Good news! Your tenant says that they've found the perfect person to rent the property in their place.

While you may have heard the terms sublease and sublet used interchangeably, they are, in fact, quite different. Find out how to handle the processes of subleasing or subletting and protect yourself, whether you're the landlord or tenant in the scenario.

What is a sublease?

A sublease is an agreement between a current tenant who is occupying a rental property under the terms of a lease and another tenant who wishes to occupy the property in whole or in part. Unless it is specifically banned in the rental agreement, the primary tenant may be able to sublease their rental property. In this case, the legal relationship would be between the tenant and the sub-tenant.

There are several scenarios in which a sublease may make sense, including the following:

• A tenant wishes to take on a roommate and rent out part of the home to them.
• A tenant will be out of town for an extended period and wants to make the rental property available to someone in their absence.
• A tenant has experienced a life change that requires them to vacate the property before the end of the lease term's expiration. They're subleasing for the balance of the lease term to avoid financial penalties.

It is important to remember that the primary agreement is between the tenant and the property owner, and the sublease, as its name suggests, is a secondary relationship. If the sub-tenant doesn't pay rent, the primary tenant is still responsible for paying rent to the landlord. Similarly, if the sub-tenant damages the property, the primary tenant will be responsible for that damage.

Thus, for tenants who wish to sublease, it's essential to find a reliable and responsible sub-tenant. In addition, it's a good idea to have a sublease agreement in place so that the sub-tenant can take legal responsibility in writing for the terms of the sublease and the primary tenant can enjoy additional peace of mind.

In order to avoid the potential for drama altogether, a sublet might be a better option, both for the landlord and for each of the tenants.

What is a sublet?

A sublet allows direct landlord communication with the sub-tenant, unlike a sublease, where the legal relationship is between the primary and sub-tenant. The sub-tenant pays the landlord directly and is directly responsible for their treatment of the property.

A sublet can be a great option in any previously described circumstances that might otherwise lead to a sublease. Because both tenants are in direct communication with the landlord, everyone is more likely to fulfill their obligations under their rental agreements.

For the landlord, a sublet is far preferable to a sublease. It provides greater transparency and ensures a better, more direct line of communication with those occupying the property. This is yet another reason that maintaining a friendly relationship and open communication with your tenants is important. It encourages them to come to you when there are problems or changes in their lives that might lead to the need for a sublease.

Another advantage of subletting over subleasing is that the terms of occupancy are limited by the terms of the primary lease with a sublease. By contrast, when subletting, the landlord can continue to lease to the sub-tenant even after the terms of the original tenancy have expired.

For example, say the primary tenant signs a two-year lease, then subsequently has a job change that causes them to move to a new city. By working with the landlord to find a suitable sub-tenant, the landlord can implement a sublet of the property for the balance of the lease term. At the end of the term, the sub-tenant, who has paid on time and taken good care of the property, may then be able to sign a new lease with the landlord and take possession of the property as the primary tenant.

Renters insurance when subleasing or subletting

Whether you choose to sublease or sublet, be sure to discuss the arrangement with your renters insurance or landlord's insurance carrier. Either of these arrangements may violate the terms of your policy, raise your premiums, or make it difficult to obtain coverage.

From initial tenant screening to renters insurance to rental payment options, RentSpree offers a range of services to help landlords and tenants streamline the application process, tenant onboarding, and ongoing property management. It offers powerful tools and a suite of services that make every aspect of renting easier and more secure.