Subletting Your Home: Everything You Need to Know

Subletting is a fairly common practice in the real estate rental market, but there is often a lot of confusion over whether it’s legal and whether it’s a good idea. If you’re considering subletting your home, you need to understand the concept of sublease agreements, be aware of the risks, and know how to go about subletting the right way.

What does ‘subletting’ mean?

Subletting (also commonly called subleasing) is when a tenant rents out the home or apartment they are renting from the landlord. In this case, the original tenant becomes the subletter (or sublessor) and the person moving into the unit becomes the subtenant (or sublettee or sublessee). Subletting is different from a traditional rental, in which the person living in the space rents directly from the landlord. With a sublease, the original tenant remains on the original lease and is therefore responsible for all terms in the original lease. The new tenant is never added to the original lease. This means if the subtenant damages the home or fails to pay rent, the original tenant is still liable as far as the landlord is concerned.

Should I sublet my home?

As you can be held responsible for your subtenant’s behavior, subletting can be a risky proposition. Generally speaking, it’s best to avoid subletting when possible. However, there are times when subletting makes sense. For example, if you need to move out temporarily and plan to return to your home within a few months, subletting allows you to remain on your lease while having someone else cover the rent while you’re away. Let's take a look at a few more examples.

Situations where subletting is the best option

• If you need to move out temporarily and plan to return.
• If you must move during your lease term and can’t afford to pay the early termination fee for breaking your lease.
• If you’re a tenant who wants to earn some extra money by renting out a spare room.

Definitely don’t sublet if…

• Your state or municipality prohibits subletting.
• Your lease or landlord prohibits subletting.
• You don’t have the time or resources to find qualified subtenants.
• You don’t want to be held responsible for your subtenant’s behavior.
• You don’t have a good reason to remain on the original lease.

How to properly (and legally) sublet your home

Step 1: Check your lease to make sure you’re allowed to sublet

Look for a clause in your lease that references common terms like subletting, subleasing, or subtenants. Many landlords reasonably prefer to limit occupants to tenants whom they have directly screened. When in doubt, talk to your landlord to make sure you’re operating within the terms of your lease.

Step 2: Find and screen potential subtenants

Many subletters prefer to sublet to someone they know, so asking your friends and family if they know anyone who needs a place may be a good starting point. Social media is another common way for today’s subletters to find subtenants. Take your time interviewing candidates to find someone you’re comfortable with. Consider running a credit and/or background check on your candidates if it’s legally allowed in your area.

Step 3: Draft and sign a sublease agreement

Sublease agreements outline the terms of the sublet to confirm that both parties understand and agree to the terms.

What you need for a sublease agreement

The sublease agreement outlines important terms including dates, the rent amount, and the amount of any deposit. It’s important to have this agreement in place to make sure all parties to the sublet understand the terms and agree to them. To draft the sublease agreement, you’ll just need a sublease agreement template and all the applicable information to populate the template. Applicable information includes the address of the property, full names of all parties, and terms of the original lease. A strong sublease agreement also covers specifics like late fees, policies, utilities, and any furnishings. Once the sublease agreement is drafted, both the subletter and all subtenants need to sign and date the agreement. Depending on the terms of the original lease, the landlord may also need to sign the sublease agreement to authorize the sublet.

The pros and cons of subletting your home

| Pros | Cons | | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | - Subletting offers an alternative to breaking your lease. - Your subtenants can cover the cost of your rent so you don’t have to pay rent on two different homes if you move away temporarily. - You can earn extra income from subletting a room in your home. | - You are still responsible for the terms of your original lease. - There is a risk that your subtenants will damage the property or fail to pay rent. - In many cases, landlords will not allow subletting, so this may not even be an option for you. |

The bottom line

As long as your local laws and your lease agreement allow subleases, subletting your home may be useful in certain circumstances, like when you need to move out temporarily or when you need to move out before your lease expires. But subletting isn’t risk-free. You’ll still be responsible for the terms of your original lease, so you could end up paying the price if your subtenants damage the property or fail to pay rent. To mitigate the risk, take your time screening subtenants, and make sure your subtenants sign a sublease agreement before moving in.

Frequently asked questions

Is it against the law to sublease?  Sometimes. Certain states and municipalities have laws prohibiting subletting. Even if your local jurisdiction allows subletting, individual landlords can legally prohibit subletting if they have a compelling reason for doing so. Can you sublet a rent-to-own?  It depends on your local laws and your rent-to-own contract. Either one may prohibit subletting your rent-to-own home. Should I rent a sublet?  Only under the right circumstances. A sublet apartment might make sense if you only need a place temporarily. But if you’re looking for stability and the convenience of dealing directly with a landlord (instead of using the primary tenant as a middleman), a traditional rental will be a better fit.