Surprise! Your Tenant Sublet Your Property

Landlord: 'What? You sublet my property to someone else without getting my permission?" Tenant: "I was hoping that my friend would be able to cover the rent for me after I lost my job. But he hasn't paid his share for over three months and refuses to move out!"

Ouch.

Many tenant lease agreements stipulate that subletting is not permissible. Yet, some tenants don't take this very seriously, thinking instead that they are being responsible in their attempts to cover the rent. They don't understand that landlords and property managers screen tenants thoroughly for a reason.

What does it mean to sublet?

Subletting is when a tenant rents out part or all of the property to another person not named in the original lease agreement.

It is legal to sublet?

It depends on your rental agreement, but in most cases subletting is not permitted without the consent of the landlord. For example, the Texas Property code states:  (Sec. 91.005) 'During the term of a lease, the tenant may not rent the leasehold to any other person without the prior consent of the landlord.'  If a tenant sublets without permission the landlord has a legal right to evict the tenant and all subtenants - as well as to sue for damages caused by the subletting agreement.

If the landlord grants the tenant permission to sublet, then the subtenant must make all repair requests through the tenant. The tenant acts as a landlord to the subtenant. The tenant is still responsible for paying the rent and making sure that every aspect of the rental agreement is respected. It becomes the tenants responsibility to collect rent from their subtenant and to cover all damages created by the subtenant.

Legal Complications

As noted above, subletting is specifically defined. When subletting has occurred without the landlords knowledge or permission the options are relatively straight forward. Yet, a landlord may face circumstances that complicate his/her legal options.

  • Responsible Subtenant - A tenant makes an oral or written agreement with a subtenant without the landlords permission. The landlord may evict both tenant and subtenant even though the subtenant entered into the agreement in good faith and responsibly pays the tenant his/her agreed upon share of the rent. Landlord may choose to add the subtenant to the lease or allow the subtenancy to continue.
  • Irresponsible Subtenant - Despite an agreement, subtenant does not pay his/her share of rent and/or does not conform to other aspects of the tenant's rental agreement and/or any applicable HOA rules. The tenant remains responsible for his/her subtenant. If and when the landlord learns that there is a subtenant an eviction process may begin.
  • Squatter - The tenant has left the property either legally at the end of the lease term or abandoned the property without notice prior to the end of the lease term. Meanwhile, another person has moved in while the property was vacant, put utilities in his/her name and even began to receive mail at that address. At times a 'squatter' may think s/he is the legal tenant, but was taken advantage of through a real estate scam. In some states the squatter may actually have some legal rights. An eviction process will need to conform to laws regarding squatters.
  • Subtenant to Squatter - In this case a person may have begun living at the property as a subtenant (unknown to the landlord), but the tenant abandoned the property leaving the subtenant in possession. There are variations on this theme as well. The 'subtenant' may not realize that s/he has just became legally designated as a squatter or may have intentionally refused to leave the property when the tenant left even if s/he knows that s/he will be classified as a squatter.
  • Trespasser - This is a person who has forcibly entered property and does not have access to utilities nor attempts to establish any type of 'legal' residence there.

What are the legal options for a landlord when an illegal subtenancy is discovered?

  • State Law - What are the laws re: subtenancy in your state? What legal rights do you have as a landlord when you learn that your tenant has sublet your rental property without notifying you?
  • Rental Agreement - Hopefully your rental agreement already contains the appropriate legal wording that informs tenants that they cannot sublet without your approval. If your rental agreement lacks legally specific language prohibiting subletting, obtain qualified counsel before taking any further action.
  • Clarify - Assuming that you can still locate the legal tenant, make sure that the person you believe to be the subtenant actually has been given subtenancy. In other words, is the person living in your rental property just house sitting, a relative who is being compassionately cared for under extenuating circumstances, or a family member who has returned home after finishing their schooling or after losing a job. Also, even if the additional person living in the property may not be a 'subtenant', the legal tenant may still be out of conformity to the lease agreement that specifies how many people may live at the property.
  • Damages - Is there any damage to your property that has been caused by a subtenant? If so, as far as possible, document everything.
  • Negotiate - Evicting a tenant and/or subtenant ought to be a last option after confirming that the person(s) in question is actually a subtenant. First, attempt to negotiate a win-win agreement with your tenant. Be firm, help the tenant understand that they have breached their contract. Help them to understand what the consequences can be. Yet, see if there is any way to remedy the situation without having to go to court. For instance, could the subtenant agreement be voided and the 'illegal' subtenant be added to the rental agreement as a co-tenant - after, of course, a thorough credit and criminal screening? Or, could the subtenant continue as a subtenant, again after a screening, but with a proper legal subleasing agreement? Or, would the subtenant be willing to leave and return the tenancy to its original agreement?
  • Notify - If you have determined that there has been a breach of contract, that a negotiated remedy was not possible, notify the tenant in writing. Follow the procedure that your state law outlines and inform your tenant of exactly what you plan to do. (see our separate article on evictions).

An ounce of prevention is worth a pound of cure

Here are a few recommendations:

  • As the above discussion suggests, make sure you have all your documents up to date, legally worded, and specific so that your tenants are clear on what they can and cannot do.
  • It is always wise to assume that your new tenants won't carefully read through their rental agreements, or if they do, that many of the specifics won't register as important to them as they are to you. Review the most important aspects with them.
  • Let them know exactly why you do a thorough screening of all prospective tenants. Underscore that the need for a careful screening of tenants is one of the reasons why you do not permit tenants to sublet.
  • Inform them that if the unpredictable and unfortunate happens and they lose their job and can't meet the monthly rent, to immediately inform you rather than to attempt to 'remedy' the issue by acting outside the specifics of their rental agreement. Clarify the consequences of a breach of contract long before there is a breach.
  • Drive by your property regularly. If you see, for example, the same 'additional' vehicles parked outside than were there originally, ask questions. Don't be taken by surprise - learning that your tenant has sublet your property out to a stranger months earlier.

 

Disclaimer:  I am not a real estate attorney. This is merely intended to be a discussion on the topic. Please check the laws within your state and consult the appropriate legal advisers for you particular situation.