Having commercial sublease insurance is crucial for anyone considering subleasing a piece of property, whether it's an apartment or a home. If the subletting tenant causes damage to the property, insurance should cover the damage so that the original lessee can avoid liability.

Facts About Subleases

If you are the tenant of a property and want to lease the property to a new tenant, you would use a sublease. In a sublease, the new tenant is either referred to as the sublessee or the subtenant. After the sublease is in place, the subtenant will have the right to occupy the property or share the property with the original tenant.

The subtenant will pay rent to the original tenant, who will then make payments to the landlord. Although a sublease allows the subtenant to take over the property, the original tenant will still be responsible for the property. This means that if the subtenant damages the property or fails to pay rent, the landlord can hold the original tenant liable. In general, the original tenant must obtain approval from the landlord before subleasing the property.

The Process of Subleasing

Most subleases contain an automatic renewal provision. Basically, this means that the sublease will continue in perpetuity until the subtenant or the original tenant decides to terminate the agreement. Automatic renewals can occur:

  • Weekly.
  • Monthly.
  • Yearly.

After the subtenant moves into a property, they should complete a check-in inspection form within a month of the move-in date. This form should describe the state of the property when the subtenant first arrived. When the subtenant decides to leave the property, the state of the property will be compared to this form to determine if any damage has occurred.

Before moving in, the subtenant will need to provide the original tenant with a damage deposit. At the end of the sublease, this deposit will cover any damages caused by the subtenant. If the damage deposit covers all of the repairs with money left over, the remainder of the deposit will be given back to the subtenant. The subtenant will be returned the entire deposit if there is no damage to the property.

A master lease is the original lease that the original tenant signed. The sublease will be based on the terms of the master lease. In a sublease, the original tenant, also referred to as the sublandlord, is the person that signed the master lease and is now subleasing the property to a new tenant.

Although the sublease is usually written based on the master lease, the sublease is actually governed by the laws where the property is located. Subtenants are legally entitled to a copy of the master lease. Typically, the subtenant will receive a master lease copy at the same time they receive the sublease. The sublandlord can also deliver a master lease copy at a later time.

It's possible to sublease either a portion of a piece of property or the entire property. For instance, if you are the lessee of an apartment, you could sublease one of the bedrooms if you need help paying the rent. Before subleasing a piece of property, it's important to obtain commercial sublease insurance. Generally, the sublandlord should purchase this insurance. Subtenants do not need to purchase their own insurance policy if the property is fully covered by the sublandlord's policy.

After agreeing to a sublease, the subtenant should have a reasonable amount of time to complete the check-in inspection form. At the very least, the subtenant should have a week to complete the form, but the sublandlord can grant up to a month. In general, the damage deposit provided by the subtenant should equal a month of rent, although the sublandlord may request any amount that they decide is reasonable.

When writing the sublease agreement, the sublandlord can outline what changes, if any, the subtenant can make to the property. The sublandlord may give the subtenant fewer rights to change the property than the master lease affords but cannot provide the subtenant with more rights. Additionally, the sublandlord cannot allow the subtenant to use the property for a purpose not listed in the master lease.

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