Can I Sublease Under a Commercial Lease?
Looking to make use of your extra space on the premises you lease? Learn how to make extra money for your business with a sublease here.
Have you found yourself in need of extra income for your business? And do you have extra space on the premises you lease that another party could occupy? If you are a tenant, you may be able to sublease part of your property to an interested party for money. Read on for everything you need to know about how to sublease.
What Is Subleasing?
Subleasing is when you, as a tenant, leases a portion of your leased premises with a third party. Under this arrangement you will become a sub-landlord to the other party who will be your sub-tenant. Furthermore, your landlord will be known as the head landlord to your subleasing arrangement. Moreover, any subleasing arrangements will need to be with the consent of your landlord. Keep in mind, that a sublease agreement will not affect your obligations under your lease agreement with your landlord. If you lease the entirety of your leased property to another party, this is known as assignment. Assignment involves separate legal obligations in comparison with subleasing, but will still require the consent of your landlord.
Why Would I Sublease?
Typically there are two reasons why tenants choose to sublease, when under a commercial lease. Firstly, you may be needing additional revenue to assist in the running of your business. Therefore, engaging in a commercial lease can be helpful as it effectively will your financial obligations under your own lease. Secondly, subleasing is preferable when you have additional space that you are not occupying on your leased premises. This can be particularly useful if you are downsizing or changing the scope of your business operations.
How Do I Sublease?
Firstly, you have to check your own lease to see if you can sublease under your agreement with your landlord. As mentioned earlier, you will need to gain written consent from your landlord if you want to sublease your property. Secondly, you should endeavour to conduct due diligence about your prospective sub-tenant. This includes making sure they will have the financial capacity to pay the rent but more importantly, whether you will be able to work in the same premises as them. Given that you will be sharing a premises, make sure you will be able to operate effectively in close proximity.
Thirdly, you should decide on the terms of the sublease, and ensure that they will be liable for events that will effect your own obligations under your lease with your landlord. Furthermore, generally you will not be able to make a residential sublease if you lease your premises under a commercial sublease.
Therefore, commercial subleases can be a great way to make additional revenue when you have spare space on your premises. If you have unique circumstances or unsure, it is best to get in contact with a commercial lease lawyer to provide you with relevant legal advice.
Need more information about subleasing? Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.
Lachlan is an intern at Lawpath as part of the content team. He is currently studying a Juris Doctor at the University of Sydney. Lachlan has a keen interest in corporate law and commercial litigation.