Commercial Sublease Agreement Template

Create a high quality document online now!

A commercial sublease agreement is a form utilized if a business or individual is attempting to sublease part of the commercial space that they are currently leasing. The form is also utilized to sublease a full property when an individual or corporation still holds a lease.

Table of Contents

What is a Commercial Sublease?

A commercial sublease is the act of a tenant re-renting space they currently lease to a subtenant. The tenant is required to obtain the consent of the landlord. Depending on the terms of the consent, the tenant may be limited in who they can rent to and how much they can charge for rent.

Landlord’s Consent

Landlord’s Consent Form – Any commercial space may be subleased with the consent of the landlord. Most leases prohibit the tenant to sublet the property, therefore, consent is required from the landlord.

Download: Adobe PDF, MS Word, OpenDocument

 

 

How to Sublease (6 steps)

Subleasing commercial space consists of having the consent of the landlord and a legitimate sublease agreement. A sublease agreement does not cancel the lease agreement, the tenant remains ultimately responsible for the monthly rent and for the property to be delivered without damage at the end of the term.

Step 1 – Read the Original Commercial Lease

It will be critical to ensure that the original commercial lease agreement is reviewed in full. It is common to find provisions specifically prohibiting subletting the space. If so, the tenant must get permission from the landlord through a Landlord’s Consent Form.

Step 2 – Market the Property

Once the tenant is able to freely sublease the property, the tenant should publish the space online (themselves) or hire a commercial real estate agent. It’s recommended to use a local agent who has a good understanding of the market or hire an agent.

Find an Agent (4)

Step 3 – Negotiating with the Subtenant

When finding a subtenant, it’s important to try and get as much rent as possible in addition to making sure they are able to pay rent.

  • Background Check – It’s highly recommended that the subtenant undergoes a background check to ensure they have a reputable credit score (above 680) and no criminal history. Use a Background Check Consent before running any type of report.
  • Tax Returns – Get the last 2 years of tax returns by the subtenant. Should include both corporate and individual filings.

After the subtenant is approved, the tenant and subtenant should come to an agreement and outline the rental arrangement.

Step 4 – Create a Sublease Agreement

The tenant and subtenant will be required to come together and write a sublease agreement. The sublease cannot go further than the end date of the original lease agreement.

If required, the landlord may be needed to sign the agreement.

Step 5 – Start of the Sublease

Once the sublease has been signed the current tenant must turn over the leased space by the start date. The subtenant will be given access to the premises after paying any security deposit and first month’s rent.

After taking occupancy, the subtenant will be able to operate their day-to-day business activities until the end of the lease term.

Step 6 – End of Lease Term

At the end of the lease term, the subtenant will be required to move out of the premises (unless a lease renewal is signed). In most cases, the tenant will be let out of the original lease, and negotiations on a new lease will begin between the landlord and subtenant.

Any non-payment of rent or damage caused by the subtenant during the course of the lease will be the responsibility of the tenant.

Elements to an Agreement

  • Date of the agreement;
  • Name and address of both parties, sublessor, and sublessee;
  • The physical location of the property (street address);
  • Term (time-period);
  • Day rent is due;
  • Monthly rent amount;
  • Security deposit, late fees and penalties incurred (not paid timely, returned payments, etc.);
  • Acceptable forms of payment (PayPal, cash, check, credit card, etc.);
  • Responsible party of all services, maintenance, and utilities;
  • Grounds for termination of the contract, expenses that may be incurred and who is responsible for payments and potential legal action;
  • Communal or shared space provisions;
  • Parking and visitor policies;
  • Emergency and evacuation procedures;
  • Insurance requirements; and
  • Acceptable use of the premises.

Tenant’s Responsibility

If the sublessee (subtenant) does not pay rent or causes damage to the premises, the tenant is ultimately responsible. The tenant has the right to go seek damages from the sublessee, but the sublessee’s actions are ultimately the responsibility of the tenant.

Sample – Commercial Sublease

Download: Adobe PDF, MS Word, OpenDocument

How to Write

Download: Adobe PDF, MS Word, OpenDocument

Article I. The Parties

(1) Date Of Office Sublease Agreement. Dating this agreement will provide both Parties with a valuable reference point for when this agreement is completed and ready to be put in effect. Supply this filing information (as requested) to the available spaces in the first statement.

(2) Landlord Identity And Mailing Address. The Landlord who holds the original lease with the Tenant should be named and his or her mailing address documented.

(3) Tenant Identity And Mailing Address. The Master Tenant, the Party who has signed the original lease with the Landlord and has been authorized by the Landlord to rent the commercial space, must be identified by name and mailing address.

(4) Subtenant Identity And Mailing Address. Now, present the full name and mailing address of the Party who shall lease some or all of the commercial space from the Master Tenant.

Article II. Original Lease

(5) Original Lease Date. The calendar date when the original lease (between Master Tenant and Landlord) went  into effect should be documented.

Article III. Description Of Leased Premises

(6) Mailing Address. The commercial space being sublet should be described in this document beginning with its mailing address.

(7) Square Feet. The total number of square feet that will be sublet to the Subtenant should be reported.

(8) Type Of Space. Classify the sublet property for this document (i.e. office space, manufacturing, etc.)

(9) Additional Description. While the type of commercial space has been designated, you can provide additional content to describe the sublet commercial space to the area available after the label “Additional Description.”

Article IV Sublet

Choose Item 10 or Choose Item 11

(10) Space Being Sublet. The sublet portion of the property the Tenant shall rent to the Subtenant should be defined further with a selection of one of the checkbox statements in Section IV. Choose the first statement if the Subtenant will be renting the entire space available to the Master Tenant through the original lease

(11) Partial Space Sublet. If the Tenant shall sublet only part of the property available to him or her, then select the second statement presented in the fourth section.

V. Attached Plan

(12) Floor Plan Information. If this agreement shall have a copy of the commercial space’s floor plans or layout attached, then mark the first check box on in Section V. If not, then select the second statement to indicate that this agreement shall not be accompanied with a copy of the leased space’s floorplans.

VI. Use Of Leased Premises

(13) Formal Sublet Purpose. Document the allowable actions the Subletter may use the commercial space being rented from the Master Tenant. This will aid the Tenant in making sure the space he or she is currently responsible for is used properly (i.e. telemarketing service, toy kiosk, etc.).

VII. Lease Type

Select Item 14 Or Item 16

(14) Fixed Lease Term. The sublease being signed should match the same term as the master lease or be effective for a shorter period of time. This can be handled by setting up “Fixed Lease” terms or “Month-To-Month” terms. To set this commercial subleasing agreement as a “Fixed Lease,” mark the checkbox corresponding to this option in Section VII.

(15) Option To Continue. If the Master Tenant is in a position to offer an option or opportunity to continue the sublease after its termination date and wishes to do so, then select the first follow-up statement for these terms. If not, and the “Fixed Lease” will terminate on the date indicated, then select the second follow-up statement.

(16) Month-To-Month Lease. If this sublease shall operate on a monthly basis, where either Party retains the power to terminate this agreement at the end of every month, then locate and select the “Month-to-Month Lease” option.

(17) Monthly Sub-Lease Start Date And Notice Requirement. A monthly sublet should include the start date of occupancy as well as the number of days’ notice the Terminating Party must give before the termination date.

VIII. Rent

(18) Same Amount. If the rent amount the Subtenant must pay to uphold this agreement will remain consistent throughout its lifetime, then select the first rent option in Section VII, making sure to report the monthly rent amount that must be paid by the Subtenant and the two-digit calendar day of each month that it will be due.

(19) Different Amounts. If the rent amount the Subtenant is obligated (by this paperwork) to pay will fluctuate or change during this agreement’s lifetime then a clear report must be produced. First, establish this rent requirement by selecting “Different Amounts.”

(20) Period 1. Each period that will require a different rent amount from the Subtenant must be documented. Three areas are made available for this report however if there are more rental periods, make sure to either insert additional areas or continue on an attachment. Each rental period must be supplied display the amount that must be paid (monthly) during that period as well as the first and last date the newly defined rent amount will be expected.

(21) Period 2. The second rental period should be defined with the exact dollar amount that must be received as rent, the first calendar date of the period when the new amount must be paid by the Subtenant to the Master Tenant, and the final date when the concerned rental amount applies.

(22) Period 3. If a third period shall require a different rent amount from the previous one, then produce a record of the dollar amount expected for the third period along with this time frame’s first and last calendar date of effect.

IX. Option To Renew

Select Item 23 or Tend To Item 24 Through 26

(23) May Not Renew. It must be documented if the Subtenant will not have the option to renew this agreement. If this is the case, then locate the first checkbox statement in “Option To Renew” then select it.

(24) Renewal Option. Similarly, if it has been determined that this sublease may be renewed after it terminates, then this must be established through the language in the second checkbox statement. If this option will be available to the Subtenant, then mark the appropriate checkbox statement. The language in this statement requires that the number of times this sublease may be renewed and how long each renewal period shall be in effect be reported

Select Item 25 Or Select Item 26

(25) No Increase Required. If the sublease may be renewed and the rent will remain the same during the renewal term, then solidify this with the  “Not Increase” definition.

(26) Required Rent Increase. If the renewal of this sublease will cause the rent amount the Subtenant must pay to increase, then document this through the “Increase” option. This requires a report on whether the increase will be calculated as a percentage of the current rent, a flat dollar amount, calculated according to the Consumer Price Index of the Bureau Of Labor Statistics, or some “Other” method that is defined in the space provided. Check the appropriate statement then supply any information that may be required by your selection. 

X. Expenses

Select Item 27, Item 28, or Item 31

(27) Gross Lease. If the Subtenant will only be required to pay the rent with no additional expenses, then this will be considered a “Gross” subletting agreement. Indicate this is the type of lease being entered between the Master Tenant and Subtenant by marking the checkbox labeled “Modified Gross.” Additionally, the Subtenant and Tenant must both initial this item to show approval.

(28) Modified Gross. If the (Master) Tenant and Subtenant will modify the lease so that one or both will have to cover certain expenses while this agreement is in effect, then select “Modified Gross” as the lease type. This choice requires direct confirmation from the Subtenant and Tenant in the form of each one’s initials and will require additional information supplied.

(29) Subtenant Monthly Expenses. Any services or products that must be obtained then financially maintained by the Subtenant (for the leased commercial property) should be recorded.

(30) Tenant Monthly Expenses. If the Master Tenant agrees to take on the responsibility of maintaining and paying for any services, products, or expenses needed by the commercial space for the duration of this sublease, then provide a list of these services/products/expenses to the space provided.

(31) Triple-Net (NNN). Some Master Tenants will require the Subtenant to handle all operating expenses for the space being sublet (i.e. air conditioning, waste disposal, etc.), the associated taxes for the sublet space, and insurance coverage. If this is the agreement being set, select the “Triple-Net (NNN)” lease type, then make sure both the Tenant and Subtenant produce their initials as confirmation.

(32) Insurance. Some additional information will be needed for a Triple-Net (NNN) lease thus, locate Statement (C) in this category to submit the (dollar) amount of coverage the Subtenant must pay to protect against liability for injuries suffered on the sublet property, the death of a person in the sublet area, and property damage to the sublet area.

XI. Security Deposit

(33) Required Deposit Amount. Subletting a commercial property can be a risky endeavor. As a precaution against Commercial Subtenants damaging and/or abandoning the property, a security deposit can be requested or required by the Master Tenant. This amount will be held by the Tenant until the successful completion of the sublease then returned if the Subtenant has not defaulted on damages caused to the sublet area that he or she is responsible for correcting. Produce the dollar amount the Commercial Subletter must submit (as a security deposit) to successfully enter this agreement.

XII. Leasehold Improvements

(34) Subtenant Exceptions. Normally, a Subtenant will not be allowed to improve or alter a sublet commercial space however, if he or she has this permission and must do so for the business being conducted (i.e. the Subtenant may be a hairdresser that must have the appropriate chairs installed) or is required to by law or state codes (i.e. sidewalk repair) then he or she may be required to pay for certain property alterations or improvements. Any property improvements that the Subtenant may not be held responsible to pay for should be listed.

XVIII Default And Possession

(35) Maximum Allowable Default. Many agreements will use a penalty to discourage a default in rent. That is, if the Subtenant fails to pay the rent or any owed expenses within a certain number of days of the due date, then the Master Tenant may impose a penalty. Record the maximum number of days given after an unpaid rental period’s due date that are allotted to the Subtenant before a nonpayment penalty is imposed.

(36) Interest Rate Calculated Penalty. If the nonpayment penalty will be calculated as a percentage of the total amount owed in a single year (i.e. a full year’s rent) then select the first penalty option and document the percentage that will be used of the penalty amount.

(37) Flat Late Fee Penalty. If the default penalty will take the form of a late fee dollar amount, then produce this dollar amount to the second statement provided and mark the corresponding checkbox.

XXVI. Governing Law

(38) Jurisdiction. It is imperative that this contract include the State whose laws apply to it. Document the name of this state in Section XXVI.

XXVII. Notices

(39) Tenant. Present the address where the Subtenant should send all notices to when seeking to officially provide information to the Master Tenant.

(40) Subtenant. The Subtenant’s address must be documented. This will be the address that all notices concerning the sublease and the rented area should be sent.

XXX. Additional Terms And Conditions

(41) Required Provisions. All agreements made between the Subtenant and Tenant to be considered a part of this lease must be included to benefit from the binding power of this document. Therefore, if any additional provisions should be complied with by these parties, supply them to the space provided.

Signature

(42) Signature Date. Present the formal calendar date when these Parties enter this agreement by signature.

(43) Tenant’s Signature And Date. The Master Tenant must sign and date this document as a physical acknowledgment that he or she will adhere to the conditions of this sublease. Immediately after signing this paperwork, the Master Tenant must furnish the current date.

(44) Printed Name Of Tenant.

(45) Subtenant’s Signature And Signature Date. The Subtenant’s must produce his or her signature as well as the date it is submitted to formally enter this agreement.

(46) Printed Name of Subtenant. 

 

Related Forms (1)

Office Space Sublease Agreement

Download: Adobe PDF, MS Word, OpenDocument