Real Estate Attorney Advice on Subleasing: The Pros & Cons of Allowing Your Tenants to Sublease Their Apartments
With tulips sprouting and 70-degree temperatures in the Twin Cities, summer will be here before we know it. For many landlords, that means facing a horde of college kids asking for permission to sublease their apartments.
Many landlords have knee-jerk reactions to subleasing, from “heck yes” to “absolutely not.” In my years as a real estate attorney, I’ve come to believe there’s no right or wrong answer to the question of allowing your tenants to sublease their rental units. Here are a few pros and cons to consider before making the decision for your own properties and some tips for working subleasing into your lease agreement, whatever your decision is.
3 Reasons to Allow Subleasing
First, the reasons why it may make sense for you to allow subleasing:
1. Keep your rental unit occupied
Subleasing keeps your rental unit occupied. Allowing tenants to sublease their apartments means the unit stays continually occupied until the end of the lease.
2. Save time and money
Subleasing can save you time and money. When you allow tenants to sublease, they’re responsible for finding subtenants and showing their apartments, which saves you time and money hunting for a new tenant yourself and flipping the apartment to get it ready for its new occupants.
3. Build goodwill with your tenants.
Subleasing can build goodwill with tenants. If you manage a building of responsible, long-term residents, allowing them to sublease their apartments in the event of a short-term move or long-term stay in the hospital can bolster your relationship with your tenants. You may find tenants are more willing to renew their leases and absorb rent increases.
3 Reasons to Prohibit Subleasing
So, why should you consider not allowing your tenants to sublease their rental units?
1. Your risk exposure
Subleasing can increase your exposure to risk. You run background checks, credit checks, and sign leases with your tenants—will they do the same with their subtenants? At the end of the day, a subtenant is a stranger you’re trusting with one of your rental units.
2. Your cost and time
Subleasing can be costly and time-consuming. Subtenants have few incentives to be good neighbors, and there are many horror stories about subleased apartments ruining landlords’ reputations, as well as subleased units being trashed.
3. No Guarantees
Subleasing doesn’t guarantee you’ll get paid. Allowing subleasing adds one more person in the chain between you and your rent payments.
The Subleasing Bottom Line
Subleasing is a choice you’ll have to make for yourself, your business, and your property. Whatever you decide, you should include your subleasing policy in your lease agreements. Here are a few tips for writing subtenant policies.
- Be clear and firm with your language, especially in stipulations and exceptions.
- Continue to require tenants to pay their rent themselves. This will keep them on the hook for payments they owe you and make them responsible for collecting rent from their subtenants.
- Stipulate who is responsible for repairs in the event a subtenant damages your rental unit.
- Forbid your tenants from adding surcharges to the rent to profit off their subtenants, as this incentivizes them to turn subleasing into a side business.
- Require your tenants to draw up a lease contract of their own with their subtenants that stipulates terms, the rent, deposits, and who pays for damage.
Ready for some expert help?
Need help deciding whether to allow your college student tenants to sublease their apartments? Morphew Law Office can help you weigh the pros and cons and draft a lease agreement that makes your decision clear and fair.