Sublet a business property: Commercial Sublease
What is a Commercial Sublease?
Using a Commercial Sublease Agreement, you can lease property that you may no longer need or part of a property that you also occupy. Often, Commercial Leases are long-term and include expensive penalties for terminating the contract early – so many tenants may benefit from Commercial Subleases.
If your Commercial Lease states that you can sublet the property, you may consider subletting all or part of the property if you are looking to decrease expenses, need to move to another property, or are going out of business. You may even choose to sublet to multiple businesses.
When to use a Commercial Sublease:
- You want to sublease part of a commercial space that you are leasing.
- You want to sublease the entire property that you still hold a lease on.
Have questions about your Commercial Sublease?
Whether you're preparing your Commercial Sublease, reviewing one someone sent you, or just want to understand it better, here's how to get help.
- Understand what it says or review it. Use our AI legal assistant to ask questions about your Commercial Sublease, understand what it says, and spot anything that may need a closer look.
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Sample Commercial Sublease
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Commercial Sublease
This Commercial Sublease (this "Sublease") is made effective as of , by and between and ("Tenant"), and and ("Subtenant"). Tenant has previously entered into a lease agreement with ("Landlord") ("Subtenant"). Tenant has previously entered into a lease agreement with and ("Landlord") dated (the "Prime Lease"), a copy of which is attached as an exhibit to this Sublease. Tenant now desires to sublet the leased property to Subtenant and Subtenant desires to sublet the leased property from Tenant. Therefore, the parties agree as follows:
PREMISES. Tenant, in consideration of the sublease payments provided in this Agreement, sublets to Subtenant located at , , (the "Premises"). The legal description for the Premises is: The legal description for the Premises is attached as an Exhibit. A sketch of the Premises subject to this Sublease is attached as an exhibit.
TERM AND POSSESSION. The term of this Sublease will begin on and unless terminated sooner pursuant to the terms of this Sublease, it will continue for the remainder of the term provided in the Prime Lease, which terminates . terminate on . Subtenant shall be entitled to possession on the first day of the term of this Sublease, and shall yield possession on the last day of the term of this Sublease, unless otherwise agreed by both parties in writing.
SUBLEASE PAYMENTS. Subtenant shall pay to sublease payments of per month, payable in advance on the day of each month, for a total sublease payment of . sublease payments of per , payable in advance on the of each , for a total sublease payment of . Sublease payments shall be made to at , , , which may be changed from time to time by .
Subtenant shall pay for all utilities used or consumed at the Demised Premises during the term of this Agreement as currently obligated by the Tenant under the Prime Lease. The utilities shall be paid directly to the utility company if separately metered; otherwise, the utilities shall be prorated by Tenant in a fair and equitable manner as mutually agreed to by Tenant and Subtenant and be billed to Subtenant at the same rates as billed to Tenant by the utility company for payment to Tenant. The bills shall be due and payable within ten days of receipt.
DEFAULTS. Subtenant shall be in default of this Sublease if Subtenant fails to fulfill any lease obligation or term by which Subtenant is bound. Subject to any governing provisions of law to the contrary, if Subtenant fails to cure any financial obligation within days (or any other obligation within days) after written notice of such default is provided by Landlord to Subtenant, Landlord may take possession of the Premises without further notice (to the extent permitted by law), and without prejudicing Landlord's rights to damages. In the alternative, Landlord may elect to cure any default and the cost of such action shall be added to Subtenant's financial obligations under this Sublease. Subtenant shall pay all costs, damages, and expenses (including reasonable attorney fees and expenses) suffered by Landlord by reason of Subtenant's defaults. All sums of money or charges required to be paid by Subtenant under this Sublease shall be additional rent, whether or not such sums or charges are designated as "additional rent". The rights provided by this paragraph are cumulative in nature and are in addition to any other rights afforded by law.
LATE PAYMENTS. For any payment that is not paid within days after its due date, Subtenant shall pay a late fee of .LATE PAYMENTS. For each payment that is not paid within days after its due date, Subtenant shall pay a late fee of per day, beginning with the day after the due date.LATE PAYMENTS. For each payment that is not paid within days after its due date, Subtenant shall pay a late fee equal to % of the required payment.
SECURITY DEPOSIT. At the time of the signing of this Sublease, Subtenant shall pay to Landlord, in trust, a security deposit of to be held and disbursed for Subtenant damages to the Premises or other defaults under this Sublease (if any) as provided by law.
CUMULATIVE RIGHTS. The rights of the parties under this Sublease are cumulative, and shall not be construed as exclusive unless otherwise required by law.
NON-SUFFICIENT FUNDS. Subtenant shall be charged for each check that is returned to Landlord for lack of sufficient funds.
PROPERTY INSURANCE. Lessor, Tenant and Subtenant shall each maintain appropriate insurance for their respective interests in the Premises and property located on the Premises. Subtenant shall maintain casualty insurance on the Premises in an amount not less than . % of the full replacement value. Lessor and Tenant shall be named as an additional insured in such policies. Subtenant shall deliver appropriate evidence to Tenant as proof that adequate insurance is in force issued by companies reasonably satisfactory to Tenant. Tenant shall receive advance written notice from the insurer prior to any termination of such insurance policies. Subtenant shall also maintain any other insurance which Tenant or Lessor may reasonably require for the protection of Tenants or Lessors interest in the Premises. Subtenant is responsible for maintaining casualty insurance on its own property.
LIABILITY INSURANCE. Subtenant shall maintain liability insurance on the Premises in a total aggregate sum of at least . with personal injury limits of at least for injury to one person, and for any one accident, and a limit of at least for damage to property. Subtenant shall deliver appropriate evidence to Tenant as proof that adequate insurance is in force issued by companies reasonably satisfactory to Tenant and Lessor. Tenant and Lessor shall receive advance written notice from the insurer prior to any termination of such insurance policies.
WAIVER OF RIGHTS. Each of Tenant and Subtenant agrees to, and does hereby, waive all rights of recovery and causes of action against the other, their respective agents and employees, and all persons claiming through or under the other, relating to loss of business, business interruption or loss of rentals resulting from any damage or destruction to the Demised Premises or any of Subtenant's property contained therein, notwithstanding that any such damage or destruction may be due to the negligence of Tenant or Subtenant, their respective agents or employees. Tenant and Subtenant also waive all rights of recovery and causes of action against Lessor for loss of business, business interruption or loss of rentals, resulting from any such damage or destruction, notwithstanding that such damage or destruction may be due to the negligence of Tenant or Subtenant, their respective agents and employees.
NOTICE. Notices under this Sublease shall not be deemed valid unless given or served in writing and forwarded by mail, postage prepaid, addressed as follows to every interested party:
TENANT:
,
SUBTENANT:
,
LANDLORD:
,
Such addresses may be changed from time to time by any party by providing notice to the other interested parties as described above.
GOVERNING LAW. This Sublease shall be construed in accordance with the laws of the State of Commonwealth of .
LANDLORD'S CONSENT. The Prime Lease requires the prior written consent of Landlord to any subletting of the Premises. Such consent has been obtained and a copy is attached as an exhibit. The effectiveness of this Sublease is expressly conditioned upon Landlord's written consent to this Sublease. Tenant agrees to use its best efforts to obtain such consent. If Landlord's consent cannot be obtained, this Sublease shall be null and void and neither party shall have any further obligations to the other arising out of it.
INCORPORATION OF PRIME LEASE. This Sublease is subject to all of the terms of the Prime Lease with the same force and effect as if each provision of the Prime Lease were included in this Sublease, except as otherwise provided in this Sublease. All of the obligations and rights of Tenant under the Prime Lease shall be binding upon Subtenant. All of the obligations of Landlord under the Prime Lease shall inure to the benefit of Subtenant. It is the intent of the parties that, except as otherwise provided in this Sublease, the relationship between Tenant and Subtenant shall be governed by the various provisions of the Prime Lease as if those provisions were included in this Sublease in full, except that the terms "Landlord," "Tenant" and "Lease" as used in the Prime Lease, shall instead refer to, respectively, "Tenant," "Subtenant" and "Sublease." The Subtenant herein executes this Sublease with the express acknowledgement that Subtenant has read, reviewed, understands and agrees to comply with all obligations, rights, limitation and responsibilities contained in the Prime Lease.
RELEASE OF TENANT. Tenant is hereby released by Subtenant from any and all further obligations, which may now or later exist under the Prime Lease or this Sublease. This Sublease shall be construed and effected as a full and complete assignment, without recourse, of Tenant's interests, burdens and benefits arising out of the Prime Lease, and an acceptance of those interests, burdens and benefits by Subtenant.
TENANT
| By: | Date: |
| By: | Date: |
SUBTENANT
| By: | Date: |
| By: | Date: |
LANDLORD
| By: | Date: |
| By: | Date: |
Final Checklist for Commercial Sublease
Property Address:
,
Make It Legal
| _____ | The Commercial Sublease should be signed by and . |
| _____ | The Commercial Sublease should also be signed by and . |
| _____ If the Landlord has not already consented to the Sublease and such consent is required by the terms of the Prime Lease, the Landlord must sign the Sublease for it to be effective. The Landlord's signature is also required if the Tenant is to be released from any further obligations under the Prime Lease. |
| _____ | Some states require that if a sublease exceeds a specified number of years, it must be recorded in the public records, which, in turn, usually requires that the document be notarized. If the original term of the Sublease will extend beyond one year, you should investigate the specific requirements of your state with respect to notarizing and/or recording the Sublease. |
Copies
Give a signed copy of the Sublease to:
| _____ |
| _____ |
| _____ |
| _____ |
| _____ |
| _____ |
Attachments
| _____ Copy of the Prime Lease |
| _____ Legal description of the leased property |
| _____ Copy of the document giving the Landlord's consent to the Sublease |
Other Information
| * In addition to a local attorney, there are several sources of information that may be available to provide you with additional information about the landlord/tenant laws of your state and city. Many cities have housing authorities or other governmental divisions that provide useful information. Also, some civil rights groups have information available related to housing needs and laws. Also, consider low-income housing groups and legal services organizations. Often, these groups have a broad range of experience with landlord/tenant issues and can provide both advice and information at minimal or no cost. |
Reasons to Update
| * | Current Sublease is expiring and property will be re-leased. |
| * | Change in circumstances of either Tenant or Subtenant which requires changes in Sublease, mutually agreed upon by both parties. |
Commercial Sublease FAQs
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What is included in a standard Commercial Sublease Agreement?
Sublease Agreements include items that most Commercial Lease Agreements cover, such as terms, payments, and what happens if the contract is terminated.
- Contract information
Names, addresses, and contract information for both parties. - Location of property
Physical address of the building, as well as a description of the specific space to be subleased. - Terms
How long the agreement lasts and when it starts. - Payments
How much the payments are, when payments are due, and how they can be paid. Includes information about late fees as well. - Utilities and services
Defines which portion of the utilities and services will need to be paid. In some cases, it may be necessary for the subtenant to obtain their own services. Items often covered include utilities, refuse services, internet, building security, and cleaning services. - Termination
What happens if the contract is terminated, and what expenses may occur. This could include collection, legal, cleaning, and damage fees.
- Contract information
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How do I know if I can sublet my space?
If your lease does not specifically state whether you can sublease or not, you can ask for a Consent to Sublease from your landlord or property manager. This document proves that you have permission from the landlord to sublet the space. You'll want to make sure you get this permission — otherwise, you may be found in violation of your lease and risk termination. Your landlord may also have opinions on what types of businesses can move in.
Additional items to consider including in a shared space agreement:
There are many other things to consider beyond the basic items included in a Commercial Sublease Agreement. Often, parts of the space are shared, so you may want to include details that will help all tenants get along and keep businesses running smoothly. These topics may not need to be in the actual lease, but should be agreed upon. Additionally, some of these items may be in the original lease, so you want to make sure your subtenant doesn't cause you to violate the original lease agreement.
- Shared or communal space
This could include lobby space, break rooms, bathrooms, conference rooms, hallways and stairwells, storage rooms, and interview rooms. It should be decided how these spaces will be kept clean. You'll also want to include information about how conference and interview rooms can be reserved. - Shared equipment
Equipment used by multiple renters could include office equipment and break room appliances. Ownership of these items should be established, as well as maintenance responsibilities. You can also decide how new items will be managed. - Parking space
Most office or retail spaces come with parking spaces. You should define who gets which parking spaces, as well as where customers are to park if applicable. - Emergency procedures
It's important to outline actions to take during an emergency. All tenants should also know where medical supplies and fire extinguishers are located. - Signage and advertising
You may benefit from specifying what kind of signage is allowed and where it can be located. This could include outside signage, as well as signage inside shared spaces such as the lobby. - Building alterations
This may be included in the main lease and needs to be shared with subtenants, such as whether they can paint or otherwise alter the space they are renting. - Visitors
If there are restrictions on visitors, that information should be shared. It could include restrictions on children and pets or anything that violates the original lease.
- Shared or communal space
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How do subtenants communicate with the property manager?
For the most part, subtenants are required to work through the sublandlord (the primary tenant) rather than directly with the property management company. This puts a greater burden on you if you are the one managing the Sublease Agreement. However, it also prevents numerous parties from contacting the property manager about the same property.
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Am I still responsible for rent and lease obligations as the original tenant?
Yes, as the original tenant, you are still responsible for fulfilling your lease obligations, including paying rent and adhering to lease terms, even if you sublease the commercial space to a subtenant. However, you may have recourse against the subtenant if they fail to fulfill their obligations under the sublease agreement.
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What happens if my landlord rejects the Commercial Sublease?
If your landlord rejects the sublease, you may not be able to proceed with the subleasing arrangement. In such cases, you may need to explore other options or renegotiate the terms of your lease with your landlord.
