What is Subletting? A Guide for Landlords & Renters

When you’re leasing an apartment, it can be difficult to move out when you need to. Whether you’re taking a job in another city or moving across the country, life’s circumstances don’t always line up with the end of your lease period. No matter why you’re moving, subletting can let you honor your lease obligations while still saving money. So what is subletting, and how is it different from subleasing? Here’s what you need to know.

What Is Subletting?

A sublet or sublease is when a tenant rents out an apartment, rental house, or room to a third party. A sublet can be short term – renting out a room to a friend for a month. It can also be long term – renting your apartment to a stranger for the remainder of your lease because of an unexpected move.

Regardless of the exact scenario, some things remain the same. The original tenant’s name is still on the lease, and they are still responsible for paying the landlord. The subtenant, on the other hand, is responsible for paying rent to the original tenant, and caring for the property.

Why Sublet An Apartment?

So, why would you want to sublet your apartment? There are a few reasons you might want to do that. The first reason is economic. For example, maybe your area is suddenly in high demand, and you can charge more in rent than you’re paying. In that case, you could actually make money while moving. You can even sweeten the deal by leaving your furniture and renting the space as a furnished unit.

Another possible reason to sublet is if you have to move unexpectedly. What if you have a family member who gets sick and needs help at home? If you’re only two months into a twelve-month lease, you could be in a pickle. Either bite the bullet and pay for an apartment you’re not living in, or damage your credit by breaking your lease.

Or, you could just sublet your apartment! This might or might not require your landlord’s permission. But most landlords are reasonable people and would rather you sublet the space than break the lease.

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Advantages Of Subletting An Apartment

There are several reasons why you might want to sublet your apartment. Broadly speaking, these fall into three categories: freedom, money, and reputation. Let’s take a look at each of these:

• Freedom: No matter why you want out of your lease, subletting your apartment gives you a way to break free. Instead of being tied down with monthly payments, you’re free to explore new job opportunities, take care of family obligations, or even just travel the world.

• Money: For most renters, rent is their largest monthly expense. If you move and pay rent on two apartments, you’re potentially doubling that cost. Depending on where you live, this can be a major financial headache.

• Reputation: Breaking a lease is like defaulting on a credit card. It goes on your credit report and will remain there for years. It’s also a red flag to future landlords, who will see that you have a record of breaking leases.

Risks Of Subletting Apartments

So far, subletting your apartment sounds like a no-brainer. But there are some reasons you might want to think twice. Let’s talk about that.

• Reputation: Yes, you might sublet your apartment to protect your reputation. But if the subtenant ends up trashing the apartment or getting evicted, it’s going to reflect on you. After all, your name is on the lease.

• Money: You’re still responsible for your lease. So if a subtenant skips town or refuses to pay, you could end up back on the hook for your rent payments. And while you can technically sue the subtenant for non-payment, it’s usually not worthwhile.

• Effort: Because your money and reputation are on the line, you need to take the time to find a good subtenant. This means putting in your legwork, interviewing candidates, and narrowing down the list to a single reliable tenant.

Is Subletting Legal?

Different states and municipalities have different laws around subletting. In some areas, tenants have the right to sublet a property with or without the landlord’s permission. In others, the landlord has complete discretion over whether or not you can sublet.

If your state laws don’t guarantee you the right to sublet, look at your lease. Most leases will have language surrounding subletting. Often, subletting will be permitted, but you will have to pay an extra fee to the landlord to compensate for their risks.

If your lease bars you from subletting and state law doesn’t provide any exceptions, the next step is to try and reason with your landlord. Depending on your situation, they may make an exception. Even if you have the right to sublet without permission, you should still ask first; it’s the polite thing to do.

Do Rental Insurance Companies Cover Subletters?

When you’re subletting your apartment, your rental insurance may or may not cover your personal possessions. Check your insurance policy to see if it covers damage that occurs under the care of a subtenant. If it doesn’t, you’ll either need to find a new policy, or remove all your personal belongings from the premises.

Keep in mind that even if you’re not leaving any belongings, you’ll still want to carry renter’s insurance. It protects you from liability when someone is injured in your home, which can still be a concern when you’re subletting.

Subletting Vs. Subleasing: What’s The Difference?

The terms “subletting” and “subleasing” are often used interchangeably, but there’s actually a legal difference. Technically, subletting means transferring the remainder of the existing lease to a new tenant. The original tenant walks away free and clear, and the subtenant makes all of their payments directly to the landlord.

Most of the time, when people talk about subletting, they’re really talking about subleasing. In a subleasing arrangement, which we’re primarily writing about, the original tenant remains responsible for payments and the property’s condition. The subtenant is simply paying them for the privilege of occupying the space. In this case, tenants need to be very careful about choosing the right subtenant since they could be held responsible for that person’s actions.

Subleasing doesn’t have to mean renting out an entire unit. In a house or a multi-bedroom apartment, an original tenant could rent out one or more bedrooms to individual subtenants. In this case, the legal arrangement is similar, except for the fact that common areas will typically be shared.

Subleasing & State Laws

Different cities and states have different regulations relating to subleasing. To use an example of a particularly loose policy, San Francisco allows tenants of multi-bedroom apartments to replace their roommates as will, as long as the new roommate passes their landlord’s standard screening process. In New York, landlords can only deny a sublet on “reasonable grounds” – for example, the proposed subtenant is a sex offender.

On the other hand, some states are far more strict. In Arkansas, you can actually do time in prison for subletting your apartment without permission! In other words, it’s important to do your research and know your local laws.

Example Of A Sublease

Let’s say you’re living in Boston, and you’ve just signed a 12-month lease. During the third month, you get an offer for a new, better-paying job in Miami. You run an ad, and sublease the apartment for the remaining nine months.

This is good for both you and your landlord. You get to take that promotion, and you don’t have to pay rent on two apartments. Your landlord can rest assured that the rent will be paid, and that they won’t have to scramble to find a new tenant on short notice.

Should You Sublease Or Sublet An Apartment?

So, should you sublease or sublet your apartment? A lot depends on your situation. Here are a few things to think about.

If you’re moving permanently, it makes the most sense to sublet. You’ll walk away free of any financial or legal liability, and you’ll only have to worry about one lease.

If you’re leaving temporarily, subleasing makes more sense. You can sublease your unit for a month or more, then reoccupy the apartment when you get back in town.

If you’re adding a roommate, you need to sublease. Since you’ll be maintaining occupancy, you won’t be able to sublet and get rid of all responsibility. But you will be able to save money on your rent.

If your landlord doesn’t agree to sublet, a sublease might be your only option. You’ll still be on the hook for the full term of the original lease, but at least you can collect rent from the subtenant.

How To Sublet An Apartment In 5 Steps

Let’s say you’ve decided to sublet your apartment. How do you go about it? There may be different requirements depending on your state, but these five steps are essential no matter your location.

1. Consult Your Landlord Or Property Manager

In most cases, it’s traditional to give your landlord at least 30 days’ notice before subletting, just as you would if you were ending your lease. That said, it can be a good idea to give them notice beforehand. They might be able to help you out with sublease agreements, or help you find a suitable subtenant.

At this time, you should also send your landlord an official sublease proposition, including the dates of the sublease and the name of the subtenant. You should send this proposition even if it’s not required by state law, just to cover all of your bases. The last thing you want is for you or your subtenant to get evicted over a technicality.

2. Research Local Laws On Subletting

Regardless of your situation, make sure you know your rights. Look up your state and local laws regarding subletting, so you can know you’re following all the appropriate regulations. These might be different from the ones outlined in your lease agreement, in which case you might need to have a challenging conversation with your landlord.

3. Find A Trusted Subletter

Now that you know your rights and limitations, it’s time to find yourself a subtenant. Take some nice photos of the space, including the kitchen and bathroom. This is something your landlord might be able to help with, since they probably have pictures of the empty apartment from before you moved in.

Post listings on reliable websites like Facebook, Nextdoor, and Craigslist. If you don’t want to get inundated by spam, you might want to use a throwaway email address for this. Whatever you do, don’t post your phone number where it’s viewable to the general public. Do make sure to include relevant details, such as the apartment amenities and the rental price.

When you hear from a promising tenant, ask to meet with them in person, preferably in a public place like a restaurant. By meeting them face to face, you’ll have a better idea of who you’re dealing with.

4. Create A Sublet Agreement

When you’ve found a subtenant you like, it’s time to get an agreement in writing. The most important elements are the rent, as well as when the rent is due and how it is to be paid. If you’re trying to move in a hurry, you might have to give a little here. For example, you might have to rent your $1,500 apartment for $1,300 and eat the remaining $200. It depends how long you can wait and how hard you can afford to negotiate.

Your landlord may require subtenants to pay a separate security deposit in some cases. If they don’t, you might still want to collect one on your own, to cover you for potential damages. Either way, the security deposit needs to be part of the rental agreement.

If you’re renting the apartment as a furnished unit or leaving any personal belongings, make sure to list them in detail. Otherwise, they might not be covered by your renter’s insurance.

Another consideration is utilities. If you’re leaving the utilities in your name, make sure to spell out in writing who is responsible for the payments. This is usually only done when you’re coming back to the apartment. If you’re moving out permanently, it makes sense to transfer the utilities to the subtenant’s name.

Finally, make sure that move-in and move-out dates are listed in the written document. This ensures that everyone is on the same page with their moving plans. It also provides a paper trail if you’re charging prorated rent for a partial month.

5. Sign The Agreement & Stay In Touch

Once you’ve come to an agreement, make two copies, and sign and date both of them along with the subtenant. At this time, you should also schedule a walk-through, and fill out an inspection form to note any existing damages.

Afterwards, stay in touch, not just with the subtenant, but also with the landlord and any other roommates. If something goes wrong down the line, you’ll want to have open communication with all involved.

Sublet/Sublease Agreement Template

Many landlords will be willing to provide you with a boilerplate sublease agreement. If yours doesn’t, make sure you’re including the following elements:

• Your name and the name of the subtenant

• The address of the property, including the unit number if applicable

• If the unit is shared, what rooms will the subtenant occupy? Are any rooms off limits?

• The rent amount, as well as the recipient

• The exact start and end date of the sublease

• The amount of security deposit, as well as how it will be returned

• Who is responsible for utilities and how they are paying

• Parking spaces, as well as applicable fees, tags, etc.

• Rules for overnight guests and number of guests

• A statement that all terms from the master lease still apply

• Smoking rules

• A statement that the property is in good condition, and that the subtenant is responsible for any damages

• Dated signatures of both you and the subtenant

Summary

Subletting or subleasing your apartment isn’t for everybody. But if you’re in a pickle, it’s an effective way to save money and maintain good standing as a tenant. If you were asking, what is subletting,” be careful to mind the differences between subletting and subleasing and understand your local laws. All you need is time, and the care and due diligence to find a good tenant.

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