Last month, the New York State legislature introduced a bill that, if passed, would make it illegal for landlords and tenants to sublet their apartments for brief periods of time. The bill is intended to stop New Yorkers from using their homes as makeshift hotel rooms. Whether or not this bill passes, it highlights an important fact: Just because you live in your home doesn’t mean you can do whatever you want with it.
Subletting a space can be a great option both for renters and owners, but this arrangement also comes with serious risks if you don’t handle it properly. For those who are renting an apartment or house, you may want to sublet your space if you have to leave before the end of the lease, either because your financial situation has changed, making the rental too expensive, or perhaps because you’ve taken a new job in another city. In these cases, subletting allows you to find someone who can take over the responsibility for your lease so you are no longer responsible for paying out the rest of the term. Alternatively, the person subletting can serve as a placeholder for you if you plan on returning to the residence down the road.
In each of these cases, there is a proper protocol that you need to follow in order to please your landlord or property manager, and equally important, to make sure that the person subletting from you is reliable and doesn’t burn the place down. Much of the following information also holds true for those who actually own an apartment, home or even an office building and rent out extra rooms to help bring in some extra money.
Work with Your Landlord, Not Against Them
“People don’t communicate with their landlord, which is a bad starting place,” said Joseph Greenblatt, the president of Sunrise Management, a real estate management company in San Diego with more than 10,000 housing units. As Greenblatt and others point out, most leases explicitly prohibit tenants from subletting a space without getting permission from their landlord first. But some tenants mistakenly take this to mean that the landlord will be adamantly against them subletting the space and therefore they will try to broker a deal behind his or her back. According to Greenblatt, this is often not the case. “The landlord is obviously concerned about the risks of taking on a new tenant, but that just means you need to show your willingness to work with them to find a credit worthy sublease tenant.”
So what factors will a landlord weigh when considering your request to sublet? Greenblatt notes that landlords are mainly worried about “liability” issues, and are primarily influenced by a prospective tenant’s credit score and whether or not they have renters insurance. Still, there are little issues that come into play as well, especially if you’re looking to have people sublet your room while you continue living there.
Vicki Burns, the owner of Brash Key Realty in Colorado, told us that she focuses a lot on “wear and tear” issues. “We don’t want to overload our parking lots and plumbing,” she said, which means there are limits to how many tenants can live in a building. “There’s no hard and fast rule, but in my opinion, if there is only one bathroom in the property then we are not having more than three adults living there, though we could have three adults and two kids. It’s a quality of life issue.”
Beyond this, Greenblatt admits that it could also boil down to the landlord’s disposition. “I think landlords generally fall into one of a couple groups,” he said. “There are the sophisticated landlords who want to work together with you to find a primary tenant and then there is the other bucket, those who are less knowledgeable and less experienced and more inclined to take an adversarial position.”
What to Do If Your Landlord Says No
As we’ve reported before, your landlord is obligated to meet you halfway and help you to find someone else to take over your lease if circumstances require you to move elsewhere before the lease is up. But what happens if your landlord is just stubborn?
According to Greenblatt, your best bet is to reach out to a lawyer or contact the Legal Aid Society. “If you provide the landlord with a fair arrangement, they are obligated to grant you the right to do it. It cannot be unreasonably withheld.”
Check With Your Roommates
In addition to clearing your sublet arrangement with your landlord, you also need to get the approval of anyone else living in the apartment. “If one person’s name is on the lease you are OK. However, if there are two or more people on the lease, make sure everyone is apprised of the changes,” said Arlene Mayfield, the president of ApartmentGuide.com and NewHomeGuide.com. With both your landlord and your roommates, you may want to get a written consent saying it’s OK for you to sublet the space.
Get the New Tenant to Sign an Agreement
If you own your property or choose to sublet without notifying your landlord, the most important thing to do is make sure the person subletting from you signs an agreement stating that they will pay rent by a certain time each month, will be responsible for any damages and agree to rules for what they’re permitted to do in the space.
According to Jamie Clymer, the president of Rentals.com, you should “use an attorney to draft the lease agreement and review the terms of the lease with the tenant.”
Do a Credit Check
Whether it’s you or your landlord handling the sublet situation, the new tenant will have to go through a credit check. So, according to Clymer, you’ll have to ask the tenant for permission to do a background and credit check. Just like a normal landlord would, you'll want to look out for a low credit score (usually anything below 620) as well as for any loans that may still be outstanding.
Keep Tabs on Your New Tenant
If you have found a person to take over your lease with the landlord’s permission, then you are no longer responsible for what happens to the property. However, if you are bringing on extra residents, subletting out your place temporarily or subleasing without the landlord’s permission, you’ll definitely want to keep close tabs on the place to ensure that the new tenant does no damage. And if there is a problem, better to know about it sooner than later. Let’s say your tenant accidentally shoots a hole in the roof when he’s cleaning his shotgun. If that small hole goes unchecked, what might have been a minor patch job can turn into serious water damage after the first big rain storm. Or you know, other bad stuff could happen too.
“If you don’t know the tenant, I’d be wanting to make sure that all is well with the physical property on a very frequent basis, probably every few weeks,” Greenblatt said. Similarly, Clymer recommends that you “keep detailed records of when the rent is paid,” and make sure that it is never late.
What to Do When Things Go Wrong
So what is the worst that can happen if you end up temporarily subletting your apartment to someone who is reckless and destructive? According to Burns, the owner of Brash Key Realty, “You will get a notice to be evicted and we’ll pursue you in court to retrieve any damages.” If that’s not enough, you’ll also be forced to forfeit your original security deposit. But even in the worst case scenario, you’ll be given several days to “cure the situation,” meaning you’ll have to get rid of the person subletting and repair any damages that have caused you to be in default of your lease.
—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.