On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in blog on Thursday, January 18, 2018.
A sublease is a rental agreement between a tenant and a subtenant who will be renting out a portion, or all, of an already rented space from the current tenant. The subtenant pays rent to the tenant, now the sublessor, who is responsible for the rent payments to the original landlord. For small business owners looking to rent a small space, subleasing can be a more affordable option. However, as with any lease, there are pros and cons which the renter should consider carefully before signing a lease.
Pros of subleasing
Subleasing a space can be cheaper than renting an exclusive space and the affordability makes it appealing for new business owners. A sublease can be easier to obtain, without all the credit requirements of a standard commercial lease. Generally, sublease rates are a flat rate fee and more straightforward.
Renters only looking to rent a small space may be drawn to a sublease, allowing them to only rent the amount of space they need. If the sublessor wishes to move before the original lease is up, the tenant has the option to rent the entire space. Also, most sublease spaces are turnkey ready.
Depending on the building location and set up, subleases can provide access to common areas, storage rooms and other shared spaces at a reduced cost. Tenants may also be able to use existing office technology, such as a fax machine or copier. Additionally, a sublease may also give you access to internet service and security systems.
Some of the issues with subleasing arise simply because you must go through the sublessor, who then must reach out to the landlord. This can cause delays for any maintenance needs. Going through an unresponsive middleman can be frustrating when you need something fixed.
Also, when subleasing a space you sacrifice privacy. You are limited by however the space is decorated and laid out. Subleasing from similar professionals can help with this problem, since they likely have similar needs.
When reviewing a sublease, make sure to ask to review the original lease as well. The sublessor may attempt to pass along unfavorable lease terms, such as fees, to you. You will also want to make sure the original lease permits subleasing. If the sublessor defaults on their loan, you could lose the leased space even if you were paying the sublessor.
A lease, even a sublease, is a binding legal document. Before signing, review all the terms and get clarification on anything you do not understand. Don’t get stuck in a subpar sublease simply because you didn’t understand what you were signing.
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