Is your commercial tenant subleasing? Here’s what you need to know

If you own a commercial property and your current tenant has decided to start subleasing the space, you may have a lot of questions about what that means for you. In some ways, such a move can be a positive, but it may also put you in unpredictable or unfortunate situations, so it's vital to know where you stand and what to do.

The first thing you need to understand about subleasing is whether the lease agreement you signed in the first place even allows it. If not, you may want to put a stop to the effort – or even terminate that lease agreement – before something can potentially go wrong, according to Coleman Greig. However, if the agreement doesn't prohibit subleasing, you may still want to require tenants and subtenants to have all appropriate insurance coverage to reduce liability.

Moving forward

Ideally, your tenant would reach out to you about the subleasing situation before such an agreement is reached, so that you can work together to come up with ground rules, financial obligations and so on, according to LegalVision. That may include checking any prospective subtenant's business plan, developing contingencies for how to proceed if the subtenant or primary tenant cannot afford rent, determining how long the sublease can last and addressing any of the litany of situations that can arise in these circumstances.

Understanding the positives and negatives

One thing you need to keep in mind about a sublease as the owner of the property is that it doesn't have to be a sign of difficulties for yourself or your primary tenant, according to Home Loan Experts. In fact, it can be a positive, as long as you take the time to carefully lay out plans and rules for how any such agreements should proceed. You also need to be able to identify when situations are going from acceptable to untenable, and react appropriately so that everyone can emerge from the situation in the best possible shape.

For more guidance on owning commercial property and potentially expanding your portfolio, get in touch with the experts at Ray White Surfers Paradise. We can help you understand more about what you need to know before you proceed, and then help you at every step of the process along the way.