Tenant wants to sublet, how do we do this?

Question

So my tenant wants to sublet the house she just rented three months ago. We are thinking of having the tenant find the sublessor and we will still use our criteria to vet the sublessor and approve them.

1. Should there be a separate sublease agreement for the new subletting tenant or should the subletter just sign onto the original lease as a sublessor?

2. Should we, the landlord, get the security deposit from the sublessor or should the sublessor give the security deposit to the current tenant?

3. Should the sublessor pay the tenant and tenant is still responsible for paying us, the landlord, or should the sublessor pay us, the landlord, directly?

We are thinking of having the tenant find the sublessor, we will still use our criteria to vet the sublessor and approve them.

Anything else we should think about?

Steve Osowicz · Answer

@Greg W. That looks like it could get out of hand, our lease stated no subletting. Does she just want to lease out a room or is it an expensive property? If not, and she basically just wants out, why not let her do the leg work to find a new tenant. Qualify the new tenant, once they pay their deposit and first months rent (or however you collect those funds), let her out of her lease and go forward with the new tenant.

Greg W. · Answer

Thanks, all, for your feedback and suggestions. When I hear from the tenant that they want to move out, I will advertise  and screen but possibly have the tenant show the place due to it being easier to schedule. I will make the tenant pay for any vacancy.

Neil Schoepp · Answer

Greg,

Don't let the whole I don't want the lease to end in November keep you from signing someone new. First you will be able to find someone next November, people are always looking. With that said you could sign a longer lease for 18 months or have the new tenant assume the payments on the present lease if the "new tenants" are hesitate at signing for a year and a half. This will keep you on the same timeline you already have.  Just make sure you tell the new tenants that after the 18 month lease is up you will be going to either an annual or monthly lease. Either of these scenarios work and can be a win-win for you and the tenant.

Some have cautioned on here about having tenants advertise your property. That they (the tenant) are not aware of all the discrimination rules. That they could say something that starts a time bomb ticking. I think if it was me I would re rent it for them but charge a fee for my time. Explain to your present tenant that it's not as easy as just throwing an ad up on craigslist. That there are federal and state laws that need to be followed. Nobody can pre-screen like we can. So why waste your time on folks that the tenant sends you only to take one quick look and be like nope they won't do.

Lastly, depending upon the reason the tenant in leaving I may even just cut them loose. Did the tenant change their mind? Or is there a family emergency, like parents having a stroke and now they must move across the state to take care of them.

When sitting down to discuss this with them remember to always act in a fair and consistent manner.

Raj Gandhi · Answer

Do what @Steve Osowicz said.  Schedule the new lease duration to end around peak demand for your region (June?).

Minimizing vacancy is critical to profitability.  On the front-end, make your outgoing tenant pay for any vacancy.  The back-side will be your risk; that's why you're scheduling for peak demand.

It is really important to have a respectful tenant that wants to live there to take care of the property.  Allow your tenant to search for new prospects but also post your property for rent online as you normally would.  It will be more work for you but this is the risk and cost of doing business as a landlord.

Leases are mandatory but all this extra work might mean the difference between 0% and 10% vacancy this year.

David Laplante · Answer

I would definitely do that, let her did someone and you approve them. Then let her out of her lease.

I usually also place an ad myself in a free place. I prefer prescreening myself over the phone first than letting someone who as no incentive to prescreen do it.

Greg W. · Answer

@Steve Osowicz

Steve, the tenant wants out of the lease. I like your idea of just signing a new lease with a new tenant but we don't want the new lease to end at the end of November, though suppose we could do an 18 month lease instead with a new tenant.

We do plan on letting the current tenant do all the legwork though.

Thanks for the idea about just signing a new tenant.

Tenant wants to sublet, how do we do this?

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