To sublet or not to sublet

For some landlords, summertime means subletting time. And as we all know, subletting can be a tricky nut to crack. Part of being a good landlord is knowing how to carefully weigh your options and choose the scenario that has the best chance of working to your benefit in the long run. Such decisions often have to be made on a case-by-case basis, accounting for the specific tenant and situation in question. Subletting is a perfect example of precisely this sort of scenario.

First and foremost, make sure that all of your rental leases contain a sublet clause requiring your tenants to obtain permission before subletting their apartments. It is imperative that you are always aware of any subletting scenarios that may arise.

Subletting most generally occurs in cases where a tenant needs to vacate his unit before the lease is up. As always, be sure to check your state laws, but most states require that both you and the tenant in question make an attempt to find a replacement tenant for the unit. This will require you to market the property as you normally would when seeking a new tenant. If you are unsuccessful and the unit goes to sublet for the remainder of the lease term, the original tenant is responsible for any differences in rent and “reasonable” costs incurred in your attempts to re-rent the apartment (this includes disparities in monthly rent between the original and subletting tenant, advertising costs, etc.).

In most cases (but not all—again, be sure to check your state laws), the tenant who signed the original lease is responsible for his rental unit whether he’s occupying the unit or someone else is. This means that the tenant is responsible not only for ensuring that the monthly rent is paid in full and on time, but also for any damages that are incurred in the unit whether they are caused by him or someone else. With this in mind, it’s wise to maintain the original tenant’s security deposit even when a sub-letter is occupying the unit.

If your state provides you with the option to determine whether or not to allow a tenant to sublet, carefully consider the experience you’ve had with your current tenant before making a decision about whether or not to allow a sublease. Since this person is technically still responsible for the unit, you’ll want to make sure he has a proven track record of paying rent on time, taking good care of the unit, and generally behaving appropriately for his living situation. If a tenant is already unreliable while on premises, the situation may well become even worse once he has vacated the unit.

In cases where you are allowing your tenant to sublet the unit to a new tenant of his choosing, it’s wise to recommend that he base his choice on a candidate’s demonstrated record of financial responsibility and stability or lack thereof. In most states, a credit check for this purpose is permissible and, more than that, advisable. A good friend of the original tenant is not necessarily the best choice for a sub-letter.

Although subletting may not be the most desirable option, in many cases it’s better than maintaining a vacant unit. For subletting to work, however, it’s critical that all parties involved—your original tenant, the subletting tenant, and you—have a firm understanding of each party’s responsibilities and financial obligations.