Reletting Versus Subleasing: What’s the Difference?

When you enter into a lease agreement— whether commercial or residential— it is important to understand the differences between reletting and subleasing.  Many lease agreements are very restrictive about either reletting or subleasing, but they do sometimes allow for such arrangements with the written consent of the landlord.  If you are considering entering into a lease that you may ultimately need to terminate before the agreement’s expiration, be aware that subleasing and subletting often present major challenges.   In the event that either reletting or subleasing is permitted, it is important to understand the effects and potential consequences of each.

Reletting involves early cancellation of the original lease, releasing the original tenant from the agreement’s terms and obligations, and the landlord enters into an entirely new agreement with a new tenant.  This scenario is most common where the original tenant and landlord enter into a mutual agreement to terminate the original lease early.  The original tenant often remains responsible for rent and other terms of the agreement until the premises are relet.  However, the landlord is required to make diligent efforts to find a new tenant for the property.  Once the new tenant enters into an agreement to rent the property, the original tenant is not responsible for any unpaid rent and is not bound by any other terms or conditions of the original lease.   The new tenant is solely liable to the landlord under the new lease.

Subleasing, on the other hand, occurs when the original tenant— rather than the landlord— rents a portion of, or all of, the property to another.  Subleasing almost always requires the written consent of the landlord, according to the terms of the original lease.  When a sublease is permitted, the sublessee is responsible for paying rent set forth in the sublease and complying with the terms of the original lease, but the original tenant remains on the hook for any rent that goes unpaid by the sublessee and for other terms and conditions of the original lease.   Therefore, if the sublessee fails to pay, the original tenant must pay.  Likewise, if the sublessee causes damage to the property, the original tenant remains liable for damage not repaired by the sublessee.

The world of reletting and subleasing can get complex quickly, whether from the landlord’s perspective or the tenant’s perspective.  It is in your best interest to seek legal counsel from your attorney to protect your best interests if you are considering an arrangement involving reletting or subleasing.

Tamlyn Frederick