In it’s simplest terms, a sublease is a legal agreement between a landlord, the original tenant, and a third party who agrees to assume the leasing obligations and responsibilities agreed to by the first leaser. Dependent upon certain conditions, a sublease can prove advantageous to both the original tenant and the sub leaser.
There can be many reasons as to why a tenant wishes to sublease, (provided, of course, that a sublease allowance was included in the original leasing agreement.) Perhaps the tenant has outgrown the space, is relocating or downsizing, or is paying for unoccupied space due to a miscalculation of space needed.
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Whatever the reason, under the right circumstances a sublease can prove beneficial to all parties. The Original tenant is relieved of the burden of paying for space no longer needed, and the subtenant is often able to negotiate a sub lease at far lower rates than would normally be the case under first tenant leasing conditions.
A downside to subleasing is that the sub leaser has limited negotiating power, and in most cases must accept the terms and conditions of the original lease. Additionally, the sublease may not entitle the sub leaser to any of the options granted to the original tenant.
The original tenant should verify the financial stability of a proposed sub leaser before any final agreement between the parties are reached, since the original tenant is still responsible to the landlord, and must adhere to the original leasing payment schedule, even in the event of a default in sublease payments.