Last Updated February 16, 2024
What is a Commercial Sublease Agreement?
A Commercial Sublease is a contract used to rent commercial property from a tenant rather than from a landlord or owner. In this case, the original tenant (i.e. the outgoing tenant) is known as the sublandlord and the new tenant (i.e. the incoming tenant) is known as the subtenant.
Although a new lease agreement is created between the sublandlord and the subtenant, the original lease (sometimes called the master lease) remains intact and the sublandlord is still responsible for reporting to the original landlord. Consequently, the terms outlined in a sublease cannot breach the terms outlined in the master lease.
LawDepot's Commercial Sublease can be customised to abide by the landlord and tenant laws in England, Northern Ireland, Scotland, and Wales.
What is included in a Commercial Sublease Agreement?
Generally, a Commercial Sublease contains information about:
- The parties in the agreement
- The original lease
- The landlord's consent to sublease
- Financial details (e.g. cost of rent, how rent is collected, if a damage deposit is required, and who is responsible for additional expenses like utilities and insurance)
- Permitted uses of the commercial property (if the tenant is allowed to use the property for a different purpose than what is outlined in the master lease, or if alterations or improvements are allowed)
Keep in mind, the sublandlord cannot give the subtenant more rights than what the landlord gave them under the master lease. For example, a master lease could allow a tenant to use a property as a dental office. If a sublease is created from this master lease, the subtenant would be allowed to use the space as a dental office only. In this case, the tenant (now the sublandlord) is not breaching any terms in the master lease because they are not giving the new tenant more rights than what was originally provided. However, if the subtenant wanted to open another type of business, like a retail store, the sublandlord would not be able to authorise it without the landlord's written consent.
Can I sublet without my landlord's consent?
Typically, you must obtain written consent from your landlord before you can sublet a property. In most cases, a landlord will state in the master lease that subletting is either not permitted or is allowed with consent of the landlord. If nothing about subletting is specified in the master lease, you should ask for written permission. If a tenant sublets without the landlord's permission, the landlord can take legal action to evict the tenant from the property.
How do I sublet a lease?
When you sublet your Commercial Lease, your role changes from tenant to sublandlord and you take on new responsibilities, which means that you must ensure your subtenant's actions do not violate your original lease agreement. This means you'll need to address certain landlord obligations, such as:
- Screening new tenants
- Ensuring rent is paid
- Maintaining the condition of the property
- Protecting yourself from liabilities
LawDepot's Commercial Sublease Agreement helps you address some of these obligations by allowing you to include certain terms within the agreement, such as:
- Requiring a check-in inspection and/or damage deposit
- Establishing the area that is available to the tenant (some sublandlords choose to rent out only a portion of the commercial property, like an office space within a building)
- Establishing the permitted uses of the premises (e.g. to be used only for retail)
- Reducing the amount of changes the subtenant can make to the property (e.g. repainting the walls, expanding a store front, etc.)
- Requiring the subtenant to obtain insurance
It's important to remember that a sublease is always subordinate to the original lease and can be terminated if the terms of the original lease are not met. Therefore, it's strongly recommended that a sublandlord and subtenant do their due diligence to ensure their Commercial Sublease Agreement preserves the integrity of the master lease.