We’ve all been there. You landed a summer internship or a new job in a different city, or you have to move into a new house before your lease is up.
Rather than doubling up on rent or losing your deposit, consider a sublease. Leasing your apartment to another tenant allows you to get out of Dodge and keep some cash, but you could find yourself in unwanted — and expensive — legal battles if done improperly.
Here’s how you can manage a sublet legally to avoid unnecessary stress and hassle.
Create a sublease agreement
Even if you find a reliable subtenant, it’s a good idea to get your agreement in writing. You can find sublease samples online. The samples are basic boilerplates where you can put in the amount of rent, due dates and what the security deposit is.
Some people are able to make a profit off a sublease. Some have to take a loss, such as renting for a price lower than the rent they pay, if they are in a rush to find a subtenant. And others take the same amount of rent to break even. It all depends on the specific sublease situation, said John Bartlett, executive director of the Metropolitan Tenants Organization in Chicago, a tenant advocacy group.
“It is best to rent the unit to a trustworthy person,” Bartlett said. “And if that means suffering a small loss, then that is better rather than holding out to get the full rent or renting to someone with a less than stellar rental record.”
To avoid unexpected costs while you’re away, you can add additional clauses to the agreement to make sure your subletter complies with the terms of the lease. A few common examples:
- Require the subtenant to take responsibility for any damage to the apartment during the stay.
- The subtenant should keep furniture in good condition, assuming you plan to leave personal items.
- If you live in a city that has specific recycling requirements, you can ask your subletter to follow those rules to avoid fines.
Ask for a security deposit
If you are subletting your apartment, experts suggested you take at least one month’s rent as a security deposit. You can request more if you think it’s appropriate, but for tenants of rent-stabilized apartments in New York, you can only take one month’s rent as a security deposit by law.
Remove yourself from the lease, if you can
Bartlett said in many leases, the tenant and subletter appear on the same lease contract. As a result, they will be jointly liable for damages or missed payments. That means that the landlord can go after one tenant or both if things go wrong.
If you don’t plan to return to the apartment, Bartlett recommended you try to convince the landlord to take you off the lease and sign a new lease with your subtenant. That would be the ideal situation for you, but the landlord has little incentive to sign a new lease if they can get you, the tenant on record, to pay rent should things go awry with the subtenant, Rozen said. Your landlord may refuse, but it’s worth a try. Sweetening the deal by paying a negotiated fee to your landlord may be worth it, Bartlett said.
Things you should do before subletting your apartment
Subletting means you become the landlord to the subletter, and there’s no contractual relationship between the subletter and your actual landlord, Jennifer Rozen, a New York City tenant lawyer, told MagnifyMoney.
If a subletter fails to pay rent, or damages the apartment, as long as the lease is still in effect, you could still be on the hook for the full rent amount or the damages, tenants’ rights experts said.
Given the potential risks involved in subletting, here’s some homework you need to do before giving your apartment key to your subtenant:
Before you do anything, review your state’s landlord-tenant laws and regulations. Every state has its own sublet laws, so it’s a good idea to understand your rights and obligations as a tenant.
In some places, like Illinois and New York, you have the legal right to sublet as long as the landlord doesn’t reasonably deny it. In New York, requests must be in writing and sent by certified mail with an attached proposed sublease that includes the subletter’s information. The landlord has 10 days to look over your request and ask additional questions, but Rozen says the entire approval process could take as long as two months. In other states, including Iowa and Kansas, you cannot sublet unless your lease permits it.
No laws prohibit subletting, but the subletting procedure may vary greatly based on specific leases. You should see if your lease has restrictions on subletting. If the lease or the state law requires you to contact the landlord and go through a formal process, then you need to abide.
In many states, landlords cannot unreasonably deny a subtenant, but they do want to be involved in a sublease, according to Bartlett.
“They’re not going to want some person that they don’t even know who it is to live in their unit,” Bartlett said.
Once you are clear on your obligations and responsibilities, you can start looking for a subtenant. Experts interviewed by MagnifyMoney strongly advised that you interview your candidate(s) and do your due diligence.
One way to protect yourself as a tenant is to call your potential subletter’s previous landlords to inquire about his/her rent payment history, Bartlett said. Rozen said it’s legal for you to request W-2s, recent pay stubs and credit reports from the prospective subtenant, or recent bank statements if this person is a freelancer or unemployed.
“You definitely shouldn’t get yourself in a situation where you no longer have the right to be in the apartment because you find the sublease, [but] you don’t know whether the person is financially viable,” said Rozen, who has represented hundreds of residential and commercial tenants.
If you want to go forward with a subtenant whose financials are questionable, you could ask him or her to pay upfront the partial or full rent amount for the sublease. “That’s the safest thing to do because the only thing you can do as the tenant of record is pay the rent to avoid getting sued by the landlord, then you have to go after the subtenant,” Rozen said.
What’s the risk of subletting without asking your landlord?
Although it’s best to inform your landlord of the sublease and follow the rules, in reality, many people don’t do that. It’s fine if you don’t get caught, but the consequences could be severe if you do.
In many leases, Bartlett said, there’s a clause stating that the unit is only for the person named on the lease. If the landlord finds out that a tenant has sublet their property while keeping it in the dark, the landlord could terminate the lease and demand that you leave the property. You could be liable for any damages or unpaid rent, experts said.
In New York, if your landlord finds out about a subtenant he or she didn’t approve, or simply doesn’t want the subtenant, the landlord may send you a legal notice requiring you to remove your subletter in 10 days. The landlord cannot directly evict the subtenant without getting you involved. Miss the deadline and your landlord could terminate your lease and try to evict you in housing court, which in turn, removes the subtenant. Or worse: “If you have a legal fee provision in your lease, then the landlord would be entitled to collect their legal fees from you if you go to court … and lose,” Rozen said.
What to do when things go wrong?
When she was in law school, Rozen sublet her apartment, but her subtenant wouldn’t leave the apartment when the lease was up and stopped paying rent.
In that situation, Rozen said the tenant would have to file a claim in court against the subtenant. Such cases often takes months, unless your subtenant voluntarily moves out after the case is filed. In Rozen’s case, her subletter finally left the apartment willingly, but he skipped on two months’ rent and left town. It was too late for Rozen to sue at that point.
“I will never make that mistake again,” Rozen said. “I was a poor law student.”
If your subletter doesn’t pay rent or damages your apartment, Rozen said the first step is to write a demand letter explaining the situation and threatening to sue if they don’t repay the rent or the costs.
If a demand letter doesn’t work, an easy and inexpensive way to handle the situation is to file a small claims lawsuit, which typically doesn’t require hiring an attorney, Rozen said. You could collect up to a few thousand dollars, depending on your state. In New York, for instance, the maximum is $5,000.
Resources for tenants
There are many housing advocacy groups across the country dedicated to helping tenants. When involved in disputes with your landlord or your subletter, you can turn to local organizations for legal advice and assistance. To find your local tenant advocacy groups, check out this Tenant Rights page on the U.S. Department of Housing and Urban Development website.