A tenant who leases commercial property may then lease that property to a third party.
A commercial sublease agreement is a lease that allows the current tenant to sublease all or part of the leased property to a third party. In most contracts of this type, the third party, also known as a sublessee or sublessee, makes the payment directly to the lessee. The tenant continues to make payments to the landlord according to the terms and conditions found in the original lease.
In some cases, the landlord may wait until the proposed sublessee is found before granting permission for the commercial sublease.
While there are exceptions, tenants typically must obtain permission from landlords before attempting to sublease the property. It is not uncommon for the landlord to review the terms and conditions of the commercial sublease agreement before granting permission. This helps protect the landlord’s rights and also helps minimize the possibility of any confusion about the length of the sublease or what the tenant requires of the sublessee.
In some cases, the landlord may wait until the proposed sublessee is found before granting permission for the commercial sublease. If the landlord has reason to believe that the sublessee will not be able to meet its obligations, which could affect the lessee’s ability to meet its obligations to the landlord, the sublease may be refused. This benefits both the owner and the tenant, as it helps minimize the chance of either party experiencing financial hardship as a result of the sublease. If the landlord approves the sublessee, the commercial sublease agreement can be drawn up and signed without delay.
Typically, a commercial sublease agreement makes the sublessee directly liable to the tenant. This means that if the subtenant damages the property in any way during the sublease period, the tenant is entitled to claim damages. At the same time, the tenant remains liable to the owner of the sublease property and must pay damages, whether or not the sublessee pays the tenant.
For example, if the sublessee damaged floors or broke windows in buildings located on the sublease property, the sublessee would work with the tenant to pay for the cost of repairs to the floors and windows. If the sublessee does not do so, he must pay for the repairs out of his own pocket, so that the owner does not incur any damages due to negligence of the sublessee. Since the commercial sublease agreement is a legally binding document, the sublessee would be subject to civil action if he did not pay damages.