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How to Deal with Subletting

How to deal with Subletting

When you’ve chosen the right renter, you have certain expectations—you expect that person to respect your property, pay rent on time, and reside within your space for the amount of time specified on your lease. Above all, you expect them not to let anyone else stay in the space they’ve contracted with you.

Subletting can easily become a sticky situation, which is why it is NOT permitted in any of our leases at Bay Property Management Group. Just because it’s not allowed, however, doesn’t mean tenants don’t try to do it all the time.

What is Subletting?

Simply put, subletting happens when the person on a lease finds someone else to live in the space and pay the monthly rent. The person who’s actually on the agreement is no longer occupying the property, which immediately makes it harder for landlords to address maintenance issues, collect payment, and communicate with the resident in general.
In short, you may not even have any idea who’s living inside your walls if your tenant decides to sublet. This is why it’s essential to ensure your lease very clearly prohibits your renters from subletting their spaces.

Are you concerned that you might find yourself facing down subletting problems? Let’s look at some of the reasons tenants try to sublet and what you can do about the situation.

Why Tenants Try to Sublet Their Apartments

There are dozens of reasons tenants might want to sublet their apartments. For some people, twelve months is simply a lot longer in real life than it felt like it would be on paper. For others, bad roommates or relationship breakups can lead to uncomfortable living situations. If you’re wondering how to deal with subletting, here are some common reasons we’ve seen sublets occur and what you can do to remedy the situation.

Your Tenant Needs to Relocate

One of the most common reasons we see renters trying to sublet their places is due to relocation – it happens all the time. Often, major relocation occurs when a tenant accepts a job that’s hundreds or thousands of miles away from their current home. For the right career opportunity, many are willing to leave their current cities and start over somewhere new. In fact, the majority of millennials are intentionally renters rather than homeowners because they prefer the freedom and flexibility associated with being able to pick up and move without worrying about selling a home.

Although your contract may strictly forbid tenants from breaking their leases early for any reason, calls or emails concerning the need for relocation because of a new career opportunity are incredibly common. The best way to handle this situation is to work with your tenants rather than allowing them to sublet. This is why it’s essential to know exactly what’s in your lease, so you understand what your break-lease fee is. Typically, the cost to break a lease is an additional two months’ rent.

Since it’s very difficult to get tenants to agree to these terms—and you don’t want to be left without any fee to fill in the gaps—we suggest letting your tenants find their own replacements.

Allowing your tenants to find renters to replace them on the lease means you’re not stuck doing a bunch of leg work you weren’t planning to do. By putting the responsibility on your renter, you can continue with your normal day-to-day processes without being bogged down by advertising or showing your space.

These terms allow for a seamless transition without any vacancy or turnover of the property, as well as additional income from the transfer fee.

  • Application & Approval. The new tenant must apply to live there and pass the qualification process.
  • Lease Transfer. Rather than allowing a sublet, the existing tenant’s leases should be transferred to the new renter. The new tenant then pays the vacating tenant the escrow funds on file and assumes the property and apartment as-is, taking responsibility for any tenant damages.
  • Continuation of Payment. The former tenant must pay for each day until the new tenant moves in.
  • Transfer Fee. The exiting tenant must pay a transfer fee of $300 to $500.

Your Tenant Needs to Leave for a Couple Months and Come Back

If you have rental properties around a college or university, you may encounter this request quite often. The ebb and flow of the academic calendar means students may be looking to fill vacancies in their rentals during summer break or co-op programs when they won’t be around for three months or more. Again, instead of allowing a sublet, it’s always best to transfer the lease, whether there are multiple tenants or just a single tenant. When the original renter returns, you can simply transfer the lease back to that person.

The same process as noted above applies here, but this type of transfer is easier to handle because there isn’t as much to lose on the tenant’s end, since they’ll be coming back in a few months. In other words, they don’t have to pay break-lease fees.

Your Tenant Doesn’t Tell You About a Sublet

This situation happens from time to time, although it’s certainly not ideal. Rather than trying to turn back time, find ways to work with your renters so you can find a mutual solution that works best for all parties involved. The subletter must apply and pass the screening process. If there are questionable financial red flags on the application, the subletter and the original lessee must both be on the lease and held financially responsible.

On the other hand, if the subletter passes the application process, it’s best to generate a lease transfer amendment and try to get some form of compensation out of the original leaseholder by way of a break-lease fee.

In the end, it’s very important to try to make deals with tenants who need to get out of their leases, rather than being extremely strict with them. If you’re too inflexible, tenants won’t be transparent, and you could wind up having complete strangers living on your property. Court should always be the last-resort option if things can’t be worked out. You’ll be in a far better place if you can find common ground and negotiate with your tenants instead of spending money and time in front of a judge.

Bay Property Management Group is Philadelphia’s go-to property management firm. With an entire team of 24/7 on-call property managers and experts who know how to compose a lease that’ll keep you as protected as possible, why would you look anywhere else? Get started with our services by filling out a Bay Property Management Group Philadelphia online form today!