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Commercial subleasing: What you need to know

On Behalf of | Dec 21, 2021 | Commercial Leases

As a commercial landlord here in Los Angeles, you will likely have to deal with the issue of subleasing at some point. Unless you unilaterally forbid subleasing specifically in your leasing contract for your commercial tenants, it’s quite possible that the current economic instability could give rise to requests for subleasing.

How you respond to such requests matters a great deal. Since you don’t want to wind up as a defendant in a civil lawsuit, the following guidelines can be helpful in those circumstances.

What are the tenant’s rights in the matter?

As stated, unless specifically prohibited by the leasing contract, your tenant does have a right to sublease the property. As the property owner, you retain the right to restrict the type of business that the potential subtenant proposes to open. 

However, there is a caveat. A landlord’s consent may not be “unreasonably withheld.” While that clause is open to liberal interpretation, it is always best to err on the side of caution and seek a legal opinion whenever you are in doubt about your position.

The tenant remains liable

When a tenant takes on a subtenant, the original tenant remains liable for all of the financial burden to the property owner. They remain responsible for collecting the subtenant’s share of the rent because they have the role of surety for the original financial obligations. If the subtenant moves out in the middle of the night and skips out on their portion of the rent, that is not the property owner’s responsibility to pursue payment. The tenant absorbs the entire responsibility for paying the full rent according to the terms of their lease.

Is it advantageous to allow subleasing?

While circumstances do indeed matter, e.g., the type of business the sublessee plans to operate, from an owner’s perspective, a sublease tenant can indeed be a positive thing. In an uncertain economy where your original tenant may be struggling to make rent each month, a subtenant’s contributions can make the difference between shutting down and abdicating the tenant’s responsibility to pay rent and continuing to operate their business.