Landlords: Should You Allow Subletting?

Residential landlords are increasingly faced with the prospect that their tenants are subletting their rental units. Subletting can take many forms – roommates, girlfriends/boyfriends,unauthorized family members, short-term vacation rental services, etc. In many cases this happens without the landlord’s knowledge. When it is happening with your knowledge, should you allow it?

My typical advice to clients is “no,” do not allow any type of subletting arrangement. There are a number of reasons not to allow subletting. First and foremost, you do not have a direct legal relationship with the subletting tenants. This can have important consequences when it comes to serving an eviction notice or filing an eviction lawsuit (i.e., do you serve the subtenants and/or do you even know their names to use on the paperwork?). And, if your actual tenant has vacated the rental unit, you might have an even more difficult time pursuing eviction remedies against subtenants.

Landlords also face potential liability exposure if they allow subletting. Unless you are running background checks on subtenants (and do you really want that extra burden?), you might have no idea who is living in your rental unit. If a subtenant ends up manufacturing drugs in the unit or assaults another resident, you could very well be sued for not taking reasonable care in conducting a background screening.

There are also more practical reasons for not allowing subletting. If a subtenant damages your rental unit, you are likely stuck with whatever security deposit you have from your primary tenant to cover repair costs. And, if there are several subtenants or a stream of overnight vacation renters, there is more likelihood that your rental property will suffer more damage. In addition,do you really want your tenants to potentially profit on your rental unit by allowing them to rent it out to others?

If you have weighed these risks and decide to allow subletting, that is obviously your prerogative as a landlord. If these risks are unacceptable, then make sure your rental agreement has a “no subletting or assignment” clause. The clause should also state that overnight vacation rental services are strictly prohibited. Finally, if you discover that a tenant is unlawfully subletting,contact an attorney to take immediate steps to stop it so that you do not waive your right to do so.