Chances are you put a lot of effort into finding just the right tenant to entrust with your unit: you run a credit and criminal background check, you verify employment, you speak with applicants’ past landlords, and perhaps you even require an additional personal reference or two. In short, you do everything within your power to make sure that your unit is rented to the most reliable, responsible tenant possible. Performing this due diligence protects your property, your financial well-being, and also generally makes your life easier by bettering the chances that you’ve selected a tenant who will be a thoughtful neighbor to other tenants on your property.
Therein lies the biggest problem with subletting units: in such instances, you are typically entrusting this screening process to another party, essentially allowing a pre-existing tenant to select someone to occupy your unit on your behalf. Of course, it certainly works in the pre-existing tenant’s best interest to find a subletor who is responsible, who will take care of the unit, and who will make rent payments in a timely manner. After all, it’s the pre-existing tenant who will remain on the lease and ultimately be held responsible for any damage or financial obligations until the initial lease term has run its course. However, most tenants simply don’t have experience in property management or a complete handle on what it is that constitutes an ideal tenant. Because of this, problems can arise when subletting enters the equation.
On the other hand, there are benefits to subletting. No matter what a lease states, most property managers will at one point or another find themselves in a situation where a tenant simply must vacate a unit prior to the end of a lease term due to circumstances beyond their control. Unfortunately, this situation will not necessarily arise at a point where would-be renters are readily available. No matter what your lease states, if a pre-existing tenant finds himself in a position where he has to move with nine months still remaining on the lease, he simply may not have the financial resources to fulfill the terms of the lease on his own. Depending on your lease terms and state law, you may have the right to take this tenant to court to collect unpaid rent — in and of itself an expensive and arduous process.
For as much as subletting is not always an ideal scenario, if you find yourself in a position where the alternative is lost rent, a sublet may be the most viable option. If you do find yourself in this situation, it’s important to make sure that all of the following are in place:
- The pre-existing tenant (who is charged with finding a subletor) has proven himself to be responsible and generally exercises good judgment.
- A credit and criminal check are required of the subletor (whether this is covered by you or the pre-existing tenant).
- All necessary legal documents are in place to ensure that financial and other obligations are fulfilled, both in terms of monthly rent payments and any damage incurred on the unit.
- You maintain final approval over the potential subletor.
Remember, as a property manager, subletting is strictly under your control. If you opt not to allow subletting under any circumstances, be sure that you include a clause that states this in your lease contract. For an alternative view on subletting, be sure to check back next week when we’ll look at subletting from a tenant’s perspective.
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