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Legally Binding Sublet Agreement

Sign a legally binding agreement with your subtenant to protect yourself against miscommunication, lost rent or squatting.

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.

Read below for a detailed walkthrough of each term that goes into a sublet agreement.

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Basic terms

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.

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.

Your agreement should also specify if there are any fees associated with late payments.

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.

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

You can setup a security deposit on Flip, and let us handle the correct placement of the deposit as well as claims and disputes. To setup a deposit, start a listing on Flip and invite your tenant.

Insurance requirements

You may want to include a term in your sublease agreement that mandates an extra renters' insurance policy. 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.

Next steps

You might want to read about how security deposits work in your state, if you're required to get landlord approval in your state or if it's possible that your lease has illegal terms governing your ability to sublet.

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