This summer, Richard Pazol is leaving the country for a couple months. And when he comes back he wants to return to life the way he left it: his apartment in Wrigleyville, his roommate and all his possessions. The only problem is that he doesn’t want to pay rent while he’s gone. It’s a situation that’s ripe for a sublet.
A sublet transfers the terms of the original lease to another person- whether the primary tenant wants to return to the apartment, as Pazol does, or has no intention of coming back. While a sublet gets a tenant out of a leasing bind, it can also be advantageous for the subtenant. He or she gets a short-term lease and can often negotiate with the tenant to sweeten the deal.
For example, one North Side couple is willing to supplement the rent of their high-rise two-bedroom in order to attract a tenant. After getting a job transfer to San Francisco, the couple has been paying double rent for three months, unable to find a subtenant for the apartment. So they are now lowering the price.
“There are a lot of reasons people look for sublets,” says John D’Ambrogio, a spokesman for The Apartment People, a rental agency that handles sublets as part of its services. “Job transfers and home purchases are primary reasons for subletting, but there are roommate situations that come up, or people can’t afford the rent any longer.”
Of the 4,000 apartments listed at The Apartment People, D’Ambrogio estimates that only a small percentage are sublets. “I think our number of sublets is going up, possibly because more people are aware that this is an option that is open to them.”
Rights, responsibilities
For suburban tenants, who are not covered by Chicago’s Residential Landlord and Tenant Ordinance, sublet policies may vary from lease to lease. In fact, some leases may not allow for sublets at all.
For example, at Morningside on the Green in Hoffman Estates sublets are not mentioned in the leases but there is an “early termination.”
“For job transfers, home purchases and other special situations, we do allow residents to terminate their lease, but we do require documentation, such as a letter from the employer for a job transfer,” explains Linda Kurtz, assistant manager of the 174-unit apartment complex. “We also offer a buyout option, which requires 30 days’ notice and one month’s rent. The tenant also forfeits any security deposit, which can range from $300 to $600.”
In Chicago, however, all tenants have the right to sublet their apartments and it can be a relatively simple process. But subletting does come with some responsibilities.
A sublet agreement is exactly like an apartment lease except for two elements: The length of the sublet is determined by how many months remain on the original lease, and the original tenant-not the management company-is the leasing agent.
In effect, the original tenant becomes a landlord. That means answering calls, showing the apartment and collecting a security deposit. The tenant may also have to negotiate the rent and fulfill any special lease conditions, such as cleaning or painting.
“A tenant can sublet an apartment `as is’ or the subtenant may request that certain things be done. It’s entirely between the tenant and the subtenant,” explains Desiree Morrall, assistant property manager for Planned Realty Group in Chicago. “However, if the tenant has been in the apartment for some time, and we would normally clean and paint to re-rent the apartment, we may go in and do the work for a sublet.” Even after the sublet the original tenant must take responsibility for the actions of “their” tenant.
“In most cases, sublets work out very well, but we have had cases where we have needed to go back to the original tenant for the rent,” says Maureen Vaughn, marketing director for CAMCO Neighborhood Properties, which has more than 1,650 apartments in Chicago.
Morrall also has had good experiences with sublets. “I’ve only seen one problem in four years,” she says. “In that case we went back to the original tenant for the rent and that person successfully sued the subtenant to get that money back.”
Pazol, who has experienced sublets as a tenant and a subtenant, has had both good and bad experiences. “I was in college and sublet my room for the summer. When I came back the place was totally destroyed. I called them (the subtenant) on it and they ended up paying for the damages but it was a frustrating situation,” he recalls.
Now Pazol is being more selective, especially because he wants to find someone his roommate can live with who is willing to watch over his property. “I’m hoping to find a non-smoker, someone who is neat, respectful of other people’s property and will pay the bills,” says Pazol.
The process
To follow the proper procedure for subletting in Chicago, refer to the Landlord-Tenant Ordinance. Your landlord should provide a summary of the ordinance with your lease. If you don’t have one, ask that one be provided. Although it’s not required by the ordinance, D’Ambrogio suggests that, “The first step should be to notify the landlord, preferably in writing, of when you want a sublet to begin.”
The ordinance basically says three things about sublets. The landlord must accept a “reasonable” subtenant at a “fair price,” without charging any sublet fees. The original tenant remains liable for the actions of the subtenant and the landlord must make a “good faith effort” to also find a tenant.
Specifying a “reasonable” subtenant implies that landlords have some leeway in approving a candidate. But, according to CAMCO’s Vaughn, the accepted practice is to apply the same criteria in evaluating subtenants as with tenants.
Posting a “For Rent” sign on the front door of a three-flat or in the laundry room of a high-rise would be considered a “good faith effort,” but it may not get the job done.
Claude Edelson, a resident of Eugenie Terrace, one of the CAMCO’s properties, recently bought a home and is looking to get out of his lease. “They (management) assisted me in filling out all the paperwork and gave me some ideas on finding a tenant, but it’s really on me to find someone,” he says.
According to Vaughn, “Each building maintains a list of available sublets for that building and will provide anyone interested with all the information on the apartment, if they request it, and we will help show the units. But we don’t openly advertise sublets.”
So, to find a subtenant, the tenant should be prepared to do most of the footwork and foot the bill for advertising. That includes the cost of listing with a rental agency, which can charge a fee of up to 40 percent of one month’s rent if it locates a subtenant.
So far, Pazol has placed an ad in the Reader, a weekly newspaper, and is calling local law firms, trying to locate summer interns who might be interested. He has received a steady stream of calls from people armed with the standard questions. Is parking available? Is there laundry in the building? Are pet’s OK? What’s the rent?
If an applicant meets all of Pazol’s requirements, that person will need to fill out a sublease agreement, which is signed by the tenant, the subtenant and the landlord. “We process the application as if it were a regular lease, including running a credit check,” says Vaughn.
Although CAMCO does not charge for the credit check, some management companies indicated they do require a fee of $20 to $25. If everything checks out, the apartment is officially subleased.
On the money
Monthly rental payments can be made from the subtenant to the tenant and from the tenant to the management company. However, most sublet agreements shortcut this process by having the subtenant make payments directly to the management company. The landlord can keep the original tenant’s security deposit until the end of the lease, but the tenant has the option of collecting a security deposit from the subtenant.
“We strongly recommend that the tenant collect a security deposit so that they are protected if there is any damage done to the apartment,” says Morrall. Tenants are also advised to check with the tenant or the management company periodically to see that everything is fine. If there is a problem, the tenant may be the last to know.
The relet
One fairly common option to subletting is a relet, where the old lease is terminated and the new tenant receives a regular lease. As opposed to a sublet, which every renter can do on his or her own, a relet requires prior consent from the landlord or management company. “If there are a couple months remaining on a lease, we may extend that option,” says Morrall.
In some cases the length of the relet is one year plus the remainder of the current lease. For example, if a lease expires Oct. 1 and the new tenant is moving in on July 1, the new lease could be written for 15 months. The relet releases the original tenant from any future responsibility and actually provides management with more control of the situation by eliminating the third party in a sublet agreement.
For most people looking to sublet, getting out of their lease is a necessity, not an option. It can be a tense and demanding experience, particularly if the tenant is in another city and trying to do things long distance or it’s in the dead of winter, a traditionally slow period for rentals. As D’Ambrosio says, “No one enjoys subletting, but it’s a reasonable way to handle an awkward situation.”
