The purpose of a sublet agreement is to make sure that the tenant and the subtenant are on the same page about who will be living in the space, when, how money will flow from one person to the other and what will happen in case anything changes or goes wrong.
The simplest elements of your contract are often the most important. Never assume that these things are clear because they've been agreed on verbally. Always get basic terms written down into a legal contract.
You will need to cover: start and end date, rent amount, utility payments and signatures. You should also review more complicated terms like non payment recourse, definitions of default, insurance and security deposit processes.
Security Deposit Clause
The handling of security deposits is extremely regulated on a state by state basis. You are sometimes required to be a registered escrow provider in order to hold a security deposit, and you are almost never allowed to mingle security deposits with your personal funds. Your subtenant also may have the right to ask for interest payments on the deposit. The deposit should nearly always be held in a bank account that is registered in the same state as the sublet.
For the purposes of your legal agreement, at a very minimum you should specify:
- Amount of deposit
- Process for claiming damages on the deposit
- Process for keeping the deposit if there are any damages
The Flip sublet agreement requires both sides of the contractual relationship to review and complete an inspection form at the beginning and end of the sublet, and requires the primary tenant to return the deposit within 30 days of the end of the lease. If they hold any amount of the deposit they must let the subtenant know in writing how much they held, and provide evidence that the damages actually occurred and that the amount of money required to fix them is commensurate with the amount of money withheld from the deposit.
Download a sample inspection form here.
Default & Nonpayment
Your sublease agreement should clearly define what it means for a subtenant to default on the agreement. For example:
If the subtenant doesn't pay rent when it's due or within a predefined grace period
If the subtenant abandons the premises or uses them for unpermitted or illegal purposes
The agreement also defaults if the primary tenant breaches it, for example by failing to pay rent directly to the landlord.
Remedies to Default
If default occurs then the next steps should be clear. Both sides should understand their recourse. Your agreement should state that the tenant can act as the landlord in order to recover the premises and start eviction proceedings. It should clarify how and when eviction proceedings will begin when they are triggered.
Eviction can take up to a month to complete, which is why it's so important to have mutual clarity around the behavior that can trigger eviction proceedings.
Consider requiring that your subtenant purchase their own renters' insurance policy for the duration of the sublet. This would protect belongings in the apartment from theft or damage and may also protect them from any damages incurred to their person or livelihood while they are in the sublet.
Read enough about sublet agreements? Start a sublet on Flip to get one customized for you, with very little effort. You can sign and store it from within your dashboard, and even send it to third parties for them to sign. Or check out a few more tips for subletting legally:
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