SUB LEASING COMMERCIAL SPACE (PROS & CONS)

SUB LEASING COMMERCIAL SPACE (PROS & CONS)

A sublease agreement is a rental agreement between two landlords where one party (the sub lessor) leases property from the other party (the subtenant). An individual may want to occupy property for a shorter amount of time than the existing leasehold.

The Primary Lease is the agreement between the property owners to the Primary Tenant. If you’re new Landlord or Sub-Landlord’s rights to lease or sub-let the property are legally enforceable. Also find out subletting property (pros & cons)

Things to consider before subleasing commercial space.

  • Is a Sub-Lease Permitted? The Primary Lease will contain a section regarding assignments or Sub-Leases. The primary lease may indicate whether having a sub-lease may need verification from the landlord or not. But in most cases you require a signature from him.
  • Is the business model permitted on the commercial property? Sub leasing may be hindered by what kind of business the sub tenant runs. Some commercial property managers or landlords carefully select what business they allow on the premise.
  • Limiting Liability. The standard language in a commercial lease makes the defaulting Tenant/Sub-Tenant liable for all current and remaining base and additional rent, brokers fees, re-construction of the space, advertising.
  • Profit shares with landlord. Landlord but in some cases it is limited to a percentage of the profits. It’s usually under the primary agreement of the landlord how much could be his shares when you sub-lease.

The pros and cons of subleasing.

  • Peace of mind for the sub lessor because he has exclusive access than subtenant.
  • Additional income by leasing out the property to multiple subtenants
  • Authority to change terms for the subtenants by giving full or partial notice to the subtenants

Cons of subleasing commercial space:

  • Some subtenants are hard to manage
  • Damage costs are paid by the sub lessor alone excluding the subtenant

Why you want a sublease of your commercial space.

When you are renting out part of the office space that you consider excess or unused. This can be a great way to make extra money. Subleasing office space may either take rent away all space or excess space. It is done in conditions like:

  • You found another better location space suitable for your business.
  • Better or fair rates in new commercial space.
  • Good conditions provided by the new landlord or property manager.
  • No access to common areas like storage facilities. This will lead you to find a better place and sublease your rental for a fixed time.
  • No parking space. It’s vital in business because clients need parking lots.
  • Zoning laws. Some business find out a law against their operation in some areas after signing a contract with the landlord. They are prohibited in certain locations such as setting up clubs in homesteads.
  • Having plenty of space and finding a business that is compatible with you is important.

Sublease terms and conditions

Occupancy limits. The sub lease should clearly specify the number of individuals who will be staying in the property. This may result in the property being Let occupied by a group of individuals who never figured in the lease agreement.

Maintenance and repair. As a lessee, you might want to ensure the terms are clear regarding the maintenance issues and the lessor will take care of it. Putting these up in the lease agreement might help both parties achieve a better understanding.

Rental deposits. This can cover starting from how much to deposit, how, when the right time is. Putting these up in the lease agreement might help both parties achieve a better understanding.

Penalties for disruptive behavior. There must be set penalties for the sub tenants who violate the agreement. If these penalty laws are put together, the sub tenants will follow the right rules.

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ABOUT ME

Hi,am Karueddie working with Edremedy solutions Ltd as a property manager and palm oil broker. i am also a golf addict and love the game as my main hobby. Feel free to contact me
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