Sublease agreement template

What is a sublease agreement?

A sublease agreement is a legally binding document that permits a tenant (the sublessor) to rent out the premises they’re renting to another party (the sublessee) for a specified period of time.

The sublessee then pays rent for using the premises to the sublessor, who pays the rent forward to the landlord of the property who they were renting the space from to begin with. This is also known as subletting.

Although the sublessee is making use of the space and paying rent, the sublessor still maintains the core responsibilities set out in the original lease agreement or tenancy agreement. 

For example, the sublessor will still be liable for paying the rent to the landlord, and maintaining the space as previously agreed. 

This makes subleasing risky business, particularly if you haven’t got a robust sublease agreement to fall back on. That’s why we’ve created this article.

What is the purpose of a sublease agreement?

The main purpose of a sublease agreement is to protect the interests of all parties involved in the subletting process. To achieve this, it covers everything from the subtentant’s rights to enjoy the property to the sublessor’s right to prompt payment, and the landlord’s right to impose their original terms over the property’s use and maintainence. 

By clearly defining these contractual obligations, a sublease agreement can help to prevent misunderstandings and conflicts, ensuring a smooth and efficient leasing process.

Who manages sublease agreements?

Typically, the main tenant (the sublessor) will be responsible for creating and managing a sublease agreement. This is because the decision to sublet the property sits with them. 

But subletting can also happen in a commercial context, specifically within commercial lease agreements. 

In these instances, it’s common for the contract values (and subsequently risk) to be higher, and more parties to be involved in the drafting, negotiation, and management of a sublease agreement:

• Legal teams might be responsible for drafting and reviewing the sublease agreements to ensure compliance with legal requirements and the original lease terms.
• Real estate teams can be responsible for overseeing property management and ensuring the premises are utilized efficiently. 
• Finance teams are often responsible for handling rent payments and financial tracking related to subleases.

These teams work together to ensure that the sublease agreements are executed smoothly and align with the business's operational needs.

How to create a sublease agreement

Creating a sublease agreement involves a few critical steps to ensure that all parties—landlord, original tenant (sublessor), and new tenant (sublessee)—are legally protected. Here’s a concise guide on how to create a sublease agreement:

1. Review the original lease agreement

Before you jump into drafting a sublease agreement, review the original lease to determine if subleasing is permitted and under what conditions. 

Many leases require the landlord’s written consent before subletting. Some may prohibit subletting altogether. 

It’s important to know which category your original lease agreement places you in, and exactly which terms you need to comply with if you do decide to sublease a property.

2. Get the landlord’s consent for subletting

Even if the original lease allows subleasing, it’s still important get written permission from the landlord. This consent should outline the landlord’s agreement to the sublease terms and acknowledge the sublessee as a tenant. This will prevent contractual disputes and disagreements later down the line. 

3. Clearly identify all parties involved

The next essential step is to clearly identify all parties involved in the sublease within the subletting agreement. 

The sublease agreement should specify the sublessor (the original tenant), the sublessee (the new tenant), and reference the landlord, even though the landlord is not directly involved in the sublease. 

This clarity ensures that everyone knows their position and responsibilities within the agreement and helps to avoid nasty surprises. 

4. Provide a detailed description of the premises

Next, you’ll want to customize your sublease agreement template to include detailed description of the premises being subleased should be included. 

This section should cover the full address of the property and any specific areas included in the sublease. If only part of the property is being subleased, such as a single room in a larger apartment, this should be explicitly stated. 

5. Specify the term of the sublease

The sublease agreement should also specify the exact start and end dates of the sublet, ensuring it does not extend beyond the original lease term.

 This alignment is essential because a sublease that exceeds the original lease period can become invalid, potentially leaving the sublessor and sublessee in a difficult situation.

6. Set the rent amount and payment terms

Next, you’ll need to set out the contract’s payment terms. In particular, you need to clearly state the rent the sublessee will pay, including the payment schedule, due dates, and the preferred payment method.

 If the sublessee is responsible for other costs, such as utilities or maintenance fees, these should also be outlined to avoid confusion and disputes.

7. Include default and termination clauses

To protect the parties in the event of a contract breach, the sublet agreement should clearly define what constitutes a default, such as non-payment of rent, and outline the consequences of this. 

When drafting your sublease agreement, you should also make sure the termination clauses you include describe the process for ending the sublease early, including any required notice periods and fees. 

8. Address the use and release of security deposits

If a security deposit is involved, the agreement should clearly state the amount, how it will be used, and the conditions under which it will be returned at the end of the sublease. 

This ensures transparency and fairness in the handling of deposits, which can be a common source of disputes if the parties’ expectations aren’t properly managed. 

9. Consider legal advice and local regulations

Don’t forget that it’s always best to consult with a lawyer to ensure that the sublease agreement complies with local laws and provides adequate protection for all parties involved. 

After all, local regulations can put different constraints onto sublease agreements, and this will impact how your contract or agreement holds up in court if the worst does happen. 

Challenges of managing sublease agreement templates

Managing sublease agreement templates can present several challenges:

• Complexity: Ensuring compliance with the original lease terms and local laws can be complex, particularly since these regulations change and evolve over time, rending sublease agreement templates outdated.
• Coordination: Coordinating between different teams and stakeholders can be time-consuming, especially when the majority of the negotiations are scattered across different versions of the contract and different communication platforms.
• Customization: Customizing each agreement to reflect specific terms and conditions requires attention to detail, particularly if you’re a property management company with various sublease agreements on the go.
• Storage: Keeping track of executed agreements and related documents can be challenging without a centralized system in place to consolidate contract data.
• Compliance: Ensuring ongoing compliance with the terms of the sublease and original lease requires regular monitoring, and this isn’t scalable.

Fortunately, adopting a contract management system like Juro can solve most of these challenges, enabling you to reduce the time your team loses to repetitive contract admin and increase visibility into contracts. 

Manage sublease agreements in Juro

Juro's AI-native contract automation platform offers a comprehensive solution for managing sublease agreements, powering 2 million+ contracts globally for businesses like Placemakr, Trustpilot, Deliveroo, Remote, and TheRealReal.

Here's how Juro can benefit your team.

Self-serve contracts

Juro empowers teams to handle simple sublease agreements independently, reducing the legal team's workload and improving productivity.

This is achieved by enabling legal teams to create automated contract templates that commercial and real estate teams can self-serve confidently on with ease.

They simply answer a Q&A workflow to populate the contract, or integrate Juro with a CRM or their choice to pull the data into the contract automatically.

Accelerated contract workflows

Juro enables you to streamline the sublease agreement lifecycle with AI-driven contract drafting and negotiation tools to help you reach agreement with counterparties even faster.

Juro's legal AI assistant can propose new clauses during a negotiation, and your teams to redline contracts in real time, without ever leaving your browser.

Centralized contract repository 

Juro's data-rich contract repository empowers you to store all sublease agreements in one secure location for better risk management and compliance, avoiding missed renewal dates and regulatory issues.

With Juro, you can even set automated contract reminders to make sure you never miss a contractual obligation or renewal deadline again.

Integration with existing tools

Juro can be easily integrated with your existing current systems, including real estate CRMs like Wise Agent CRM, Zillow, Cloze, Real Geeks, and Chime through Zapier. This helps to ensure smooth contract management without disrupting workflows.

For more detailed insights on how Juro can help with real estate contract management, visit our real estate contract management software page.

Our platform is trusted by growing businesses in the real estate and proptech space, including clients like AppearHere, WeWork, Placemakr, and HappyCo.

Juro’s AI-native contract automation platform empowers all teams to create, agree, execute and manage contracts up to 10x faster than traditional tools. To find out more, hit the button below to book your personalized demo.