Florida Sublease Agreement Overview
A Florida sublease agreement is a rental contract between a tenant and a new tenant after the first tenant leases from the landlord. A regular Florida lease or rental agreement also exists between the tenant and the landlord of the rental property. The two agreements form a chain of occupancy, but the second agreement itself does not need to exist in writing. It is common for a third lease or agreement to be formed between the new tenant and any guests who want to stay for more than two weeks.
Subleasing in Florida does not involve the landlord but occurs through the legal rights of the tenant. The tenant has no legal authority to enter an agreement where they are collecting money and keeping the right to occupy the property. If the subtenant does not pay rent to the tenant , this does not terminate the sublease agreement.
The idea behind subleasing in Florida is to allow the tenant to save money of their own while allowing someone else to occupy the unit. Another reason to sublease is that one or more of the tenants has moved out of the unit for a temporary period, so the master tenant may want to sublease the property to the subtenant to save money.
New tenants tend to be seasonal, horizon students and contracted employees. For commercial purposes, new tenants may be companies that need additional office space for a limited period of time.
Legal Aspects of Subleasing in Florida
In most sublease scenarios, the original lease agreement will require that sublessors obtain landlord approval for a sublease. Even in the absence of this explicit requirement, however, a quick phone call to your landlord’s office is a good idea prior to seeking safeguards by way of an executed sublease agreement. In some cases, a rent-controlled landlord may be able to terminate an original lease agreement or charge extra rent to a tenant if a sublease is completed without prior approval.
Once you have the go-ahead from your landlord, clarify whether you are permitted to significantly change the terms of the original lease agreement to suit your needs. If so, insist on a written amendment to the original lease agreement; make certain your landlord has initialed each page of the amendment document, including the last, blank page. Since a sublease agreement changes the residence status of the original tenant (i.e. the sublessor), be certain that a copy of the sublease agreement is delivered to the landlord office or individual responsible for processing the change.
Crafting a Solid Sublease Agreement
A Florida sublease agreement should contain the key components of all leases and include some additional considerations. Subleases of space less than 12 months do not need to be in writing but are recommended to avoid misunderstandings. In addition to the general terms outlining duration, payment provisions and obligations of both parties for common area maintenance and property repairs, the agreement should contain the following:
- A reference to the prime lease.
- The effective date of the sublease and the date it will terminate (which will likely be the same date as the prime lease).
- A description of the space and what is included. Parking rights, additional storage, and the right to access common areas should be specified if the sublessor (the original tenant) is entitled to space that is not part of the leased space.
- If the sublessee will be permitted to make changes to the space or build out, the sublease should address the work and state that at the end of the term, the space must be returned to its original state. Although modifications may benefit the sublessor, if the sublessor is the tenant, it would normally be responsible to remove any work it performed at the end of the term.
- Tenants are entitled to possession of the space. Ideally, subtenants should have privity of contract with the landlord who would then have recourse against them for the payment of rent. This may not be possible and may only occur if the prime lease permits it. When this occurs, the subtenant would enter into a separate lease with the landlord. Sublessors and sublessees that do not have the right to enforce the prime lease should have recourse against the sublessee for nonpayment, etc. Therefore, the sublease should require the payment of rent and compliance with all prime lease terms. The sublessor (the original tenant) should have the right to terminate the sublease if obligations under the prime lease are not complied with.
- As will be discussed below, a Florida real estate lawyer who knows the issues should structure the sublease so that the sublessor can terminate it upon a landlord default under the prime lease. While the sublessor may want recourse against the sublessee for nonpayment or other defaults, terminating the sublease in the event of a prime lease default may be a more important consideration.
Potential Challenges – How to Address Them
The risks associated with subleasing are twofold. Either the landlord suffers the consequences of an unstable or unreliable subtenant, or the tenant who subleases suffers the consequences of a landlord being well within its rights to terminate the sublease at its discretion once it is aware of its existence. A sublease arguably creates a risk of default between the landlord and the original tenant, especially since the tenant assigns a portion of its rights under the lease to the subtenant. Therefore, if the subtenant is unable to pay rent or damages the property, the original tenant may be left liable for the damages if the subtenant lacks the ability to pay.
Landlords can protect themselves from potentially risky subleasing by adding extensive approval rights within the main lease agreement. For instance, the landlord may require the original tenant to obtain consent before subleasing, including credit, financial references, and background checks for the intended subtenant. Indeed, leasing lawyers drafting leases in Florida have developed many commercially reasonable methods to combat even the most evasive of subleasing tactics. Examples of such methods include forbidding any subtenants to use a shared mailbox, forbidding any subtenants to commence the process of registering an assumed name, and requiring the subtenant to sign a sublease agreement that the landlord controls as to form and content .
From the tenant’s perspective, the biggest subleasing risk is that the landlord will terminate the primary lease and the sublease. To mitigate this risk, many landlords include a subordination clause in the main lease agreement, which may or may not have the sublease survive a termination of the primary lease. A subordination clause may look like this: "Any lease entered into pursuant to the terms of this paragraph shall be subordinate to and effectively canceled by any mortgage or deed of trust which may hereafter be placed upon the property whether or not the said mortgage or deed of trust shall have been recorded." A common strategy to overcome this is to have the main lease agreement and the sublease signed by the same parties, so as to have them unfavorably influence a foreclosure court. Another strategy is to ensure that the sublease is not further assignable so as to unequivocally demonstrate to outside observers that the sublet is not and may never be investment grade. Yet another strategy is to treat the sublease as effectively a standalone, arms-length lease so that it has the greatest potential leverage against the making of repairs or returning the premises at the end of the sublease term.
How to Efficiently Sublet a Property in Florida
Once you are aware that subleasing is permitted under your Florida residential lease, there are procedural steps you should take:
- Review the lease for language regarding subleasing and evictions. Even before speaking with your landlord, examine the terms of your initial lease agreement with the landlord to see what rights, if any, you may have regarding subleasing, and what obligations you may have if you sublease without permission from the owner/landlord.
- Inform your landlord of intent to sublease. No matter what the terms of your original lease provide, it is always best to notify your landlord of your intention to sublease. First, you must check to make sure you actually want to sublease the property. If determined that you do refer to your lease and proposed sublease to see if there are any provisions or stipulations that govern your actions.
- Prepare a sublease agreement and have your landlord review it. If you have completed step two, then your landlord may be willing to discuss a mutually beneficial agreement with you and should be willing to approve it in writing without making the approval of the prospective tenant contingent on additional requirements that may be unreasonable. If necessary, be open to negotiations regarding the terms of your sublease. Keep in mind that your landlord may wish to see information regarding the proposed sublessee’s employment, character references, etc.. Being open to reasonable negotiations will go a long way, and hopefully save both you and your landlord time and money.
- Review the terms of the sublease with the subtenant once mutually agreed upon. After you and your landlord have reached an agreement regarding your ability to sublease to a specific tenant, present the sublease to the proposed subtenant and review it in detail to be sure that the tenant understands what is required of them. If necessary, require the subtenant’s signature on a second copy of the lease so that you have an exact copy of the lease signed by both of you. After all, if there is ever a dispute between you and the subtenant, it will only be resolved by evidence in writing. Unfortunately, it will be nearly impossible to prove to a judge what either of you said in a verbal conversation.
- Notify your landlord of the proposed subtenant’s acceptance of the sublease. Once you receive a signed and accepted copy of the sublease agreement from the prospective subtenant, you can send a copy to your landlord, again referencing that you were previously granted permission to sublease the property and advising him that you are now effecting the sublease.
- Comply with all the reasonable terms and conditions applicable to the sublease. Expect that your landlord may submit a final sublease agreement for your signature and that you and your landlord may have to initiate action against the subtenant if they fail to perform in accordance with the sublease. It is wise to proceed with extreme caution and not attempt to rush through the process of drafting a sublease or submitting a demand for action to the subtenant. Take your time, and be sure to hire a qualified Florida real estate attorney to assist you with this process, ensure your right to sublease the property, and protect your legal interests as a tenant against both the landlord and the subtenant.
Common Pitfalls and How to Sidestep Them
Subleases in Florida: Common Mistakes and How to Avoid Them
When it comes to subleasing, there are many potential pitfalls. Being a contractual behavior, the quick fix is often to tighten up the language of the sublease agreement. Yet, as we’ll see, these mistakes occur all over the logistical map as well.
Logistical Mistakes
In this day and age of online listings, it’s easy to find a sublease or to advertise one’s own unit as a sublease for rent. However, the website won’t code the ad as a sublease – only the parties involved can do that. We’ve said before that whether you call an agreement a sublease or not, if it acts like a sublease, it’s going to be interpreted as one. So, advertising one’s rentback arrangement as a sublease when the true nature of the arrangement is a rental agreement can land the parties in the courts. So, all parties need to be aware that it’s not enough to merely market your interest as a sublease. The parties will eventually need to execute a sublease agreement in order to secure their rights under the contract.
Legal Mistakes
Even though one almost never gets a court to invalidate a sublease based on ambiguity in the lease, that doesn’t mean that the lease can be vague. In fact, creating an ambiguous situation on purpose is a bad faith act and may allow a court to rule in favor of the non-breaching party . Even worse, it’s just as likely to make sure that no party winds up with the relief they want – enforcement of their original contract terms. The lease needs to be crystal clear about which other interests are permissible or prohibited in the unit.
Practical Solutions
Often, the best approach is a judicial one. In some cases, one can contract out a right to go to court through binding arbitration. But, one cannot contract out of the court’s equitable jurisdiction. Thus, if all parties want a special kind of enforcement of the sublease terms, then they need to obtain a court order early on. Courts generally love this sort of proactive approach and will bend over backward to accommodate a request for a declaratory judgment. A declaratory judgment is a court-ordered assessment of what the terms of the lease actually mean. This is useful when you have a complex matrix of rental agreements with various parties each with their own interests. It’s also important to remember that any change in the parties’ legal relationship needs to be in writing. What that means is that if the landlord and tenant are giving the tenant permission to lease out the unit subject to certain conditions, that arrangement must be documented in a written sublease contract.
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