Life is filled with little surprises. You get a job transfer. You win the lottery. You get married. On the down side, maybe you lose your job or get a divorce–or your roommate moves out and leaves you stuck with too much apartment and an astronomical monthly rent.
Any one of these changes in circumstance can call for a change in residence. Yet you can’t just walk away from your lease, and breaking a lease can be difficult.
But, with a little luck, you can sublease your apartment. Landlords and management firms say that’s the way to go, if you simply have to move before your lease expires.
Subleasing is a peaceful way to transfer your space without legal fees or acrimony. All you have to do is locate another responsible tenant who likes your apartment and is willing to accept the terms of your existing lease or negotiate a new one.
According to City of Chicago Residential Landlord and Tenant Ordinance, landlords must accept any qualified substitute tenant. However, this may not be the case in all suburbs. If you live outside Chicago, you’ll need to check your lease and contact your city or village authorities.
Wherever you live, you’ll have to notify your landlord of your intentions before you do anything. He or she is legally entitled to know what you’re up to. In Chicago, you don’t have to give a reason for wanting to move, but if you do have a good one, you’ll find building management a lot more cooperative.
According to Ross LeBleu, property supervisor for Kromelow & Tarre Inc., Chicago, building managers and landlords are usually more than willing to help you find a replacement tenant. Since, in Chicago, they’re required to accept a subtenant, it’s in their best interest to help you locate somebody who’s satisfactory to both them and you. Often, they’ll take over the entire process, including advertising and interviewing likely candidates.
You may have to pay for any ads and for a background check on applicants, though. That should be the limit of upfront costs to you. Real estate lawyers say a landlord in Chicago cannot levy any additional fees, fines or penalties against a tenant who chooses to sublease.
LeBleu says his management firm works out subleases on a regular basis and has little difficulty with the process. “I arranged three subleases just last week,” he says. “We seldom have problems because we do a thorough background check” of the prospective subtenant.
Even if you have a good buddy or a relative who’s willing to take over your lease, or if you conduct your own search, you can’t overlook that little word “qualified” in the tenant ordinance. As George Hausen of the Lawyers Committee for Better Housing puts it, “You have to think like a landlord.” In other words, in order to be acceptable, a subtenant most likely must be employed, have a good credit record and have no history of evictions.
Once you’ve located a suitable replacement, the subleasing process is relatively simple, though it can vary from situation to situation, depending to a great extent on your relationship with your landlord and how far he or she wishes to go to accommodate you.
What happens to your security deposit is also up to your landlord and whether he elects to negotiate a new lease or simply allow the sublessee to assume the old one.
“The terms of a sublease depend on how a landlord agrees to handle it,” says Hausen. “Strictly speaking, there is nothing in the tenant’s ordinance that requires a landlord to sign a new contract. If a new lease is signed, the former tenant’s deposit will be returned and the new tenant will be asked for a security deposit on the space.”
If a new lease is not signed, the old contract remains in effect, the tenant who signed it remains responsible for the rent and the premises as stated in the lease and the landlord retains the security deposit against damages until the lease terminates.
“From the tenant standpoint, the best way to go is to make a deal that includes a new lease. That way, the former tenant absolves himself or herself of all further responsibilities,” says Hausen, “but landlords don’t have to do it that way.”
What they will do depends on the individual situation, according to LeBleu. “Whether we negotiate a new lease or allow the sublessee to assume the old one with option to renew depends on the circumstances,” he explains. “If a tenant has been with us a number of years, we’re more amendable to terminating a lease and issuing a new one. The length of time left on the existing lease is also a factor. If it’s only a month or two, it’s usually more simple to issue a new lease.”
Unfortunately, things aren’t always all that simple. You may be in a bind and are having difficulty, even with your landlord’s help, finding a suitable subtenant for your space. In that case, Hausen suggests, you may have to compromise and settle for a lesser rent than that stipulated in your lease in order to re-rent your unit quickly.
“Say, for example, somebody has to move to Minneapolis for a big job, so he needs to sublease quickly,” Hausen explains, “He may decide to sublease for $700 or $750 per month, although he is paying $800 . . . He is still locked into the rent specified in his lease and he’ll have to make up the difference. The landlord has a right to receive $800 per month until that lease expires.”
This also applies if your landlord locates a replacement tenant at a lower rental, he notes. In that case, there will probably be no new lease issued and you’ll have to make up the difference until your lease expires, unless, of course, you can locate a more agreeable substitute on your own.
Glenn Udell, a real estate lawyer with offices in Chicago, warns primary tenants to protect themselves by insisting on a written acknowledgement from the landlord or manager before attempting to negotiate a sublease. He also suggests that the sublessor request an indemnification agreement, if no new lease is issued.
“To protect himself, the original tenant should have an agreement, signed by the sublessee, indemnifying him (the original tenant) from all damages and financial responsibilities from the date of the transfer,” Udell said.
Hausen acknowledges that such an agreement would be ideal but adds a warning, “You have to go with what the market will bear. If indemnification increases the cost, it might make it harder to re-rent the unit.”
Short-term subleases are another scenario. Maybe you’re not being transferred to Minneapolis; instead you’ve been assigned there until a specific business project is completed. You’ll only be away two or three months, so you don’t want to give up your apartment but you’d prefer to have somebody occupying it–and paying the rent–while you’re gone.
If you can locate a substitute tenant for that time, you’re entitled to sublease for a brief period. Hausen says there’s nothing in the tenant ordinance which specifies that a sublease has to be in effect for the remainder of the lease. However, you still must notify your landlord of your plans. No changes will be made in the lease and you will still be the tenant of record with all attendant legal obligations, including the timely payment of your rent. Your security deposit will not be affected, unless your subtenant damages the property.
THE OTHER PARTY
If you’re shopping for an apartment, subleasing is not a bad way to go. You can sometimes negotiate your way into a real sweet deal, especially if the original tenant is getting desperate. If you have your heart set on a particular building and there’s a waiting list, you can sometimes move to the head of the line by working out a deal with an existing tenant.
Just be sure you don’t dive into a murky agreement head first.
The first thing you should do to protect yourself, according to Chicago real estate lawyer Glenn Udell, is request a copy of the acknowledgement indicating that the building management is aware of the proposed tenancy change. If you’re assuming another tenant’s lease and hope to remain in the space after that lease expires, you should also make sure the existing lease contains a renewal clause, he adds. “You’re better off when you can renegotiate a new lease directly with the landlord,” he concludes.
George Hausen of the Lawyers Committee for Better Housing also recommends a new lease whenever possible. If it’s not possible, he cautions prospective sublessees to “make sure there is enough time on the lease that you’re assuming to make a move worthwhile, because the landlord is under no obligation to renew to you, unless he has agreed, in writing, to do so.”
In addition, you should take the same precautions you would take any time you’re shopping for new space: Inspect the apartment to be sure it has been correctly represented in the ad or locator’s description; check closely for damages so you won’t be held liable down the road; find out something about building management and how it operates and the building condition and maintenance as well.
