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What is a Commercial Sublease?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 24 August 2016
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A commercial sublease is a tenant-to-tenant agreement that is created and signed to govern the occupancy of a commercial property. Usually, the leasing of a commercial property involves two parties: a person or company who owns commercial property and the person or company who agrees to lease that property. A commercial sublease, however, adds another party to this arrangement. Essentially, a commercial sublease is a contract that allows a person or business to rent from the original tenant of a commercial lease.

Instead of having a contract with the owner of a commercial property, a commercial sublettor has a contract with the original renter. The original renter doesn’t cancel or otherwise give up the lease he’s signed with the owner of the property. Instead, he has two contracts. He maintains the original lease he has with the owner and has a separate contract with the commercial sublettor.

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In some cases, commercial subleases are used when a business owner needs to vacate his leased property before the lease term has expired. For example, a business owner may lease a storefront, signing a two-year lease. After several months, he may decide that he wants to close his business or move it to a new location. Trying to end his lease early could prove problematic, so he may instead decide to rent the property out to a new tenant. When this sort of arrangement goes smoothly, the business owner finds a way out of paying rent on a property he doesn’t want to use, without breaking his lease.

Sometimes a businessperson does plan to use a commercial space he has rented but does not need all of it. This is another situation in which a commercial sublease may work well. For example, if a commercial tenant is leasing office space but finds that he only needs about half the space he has rented, he may offer the remaining space to a sublettor. This allows him to remain in the leased space without having to pay the rent on his own.

When an original renter is planning to offer a prospective tenant a commercial sublease, it’s important that he carefully checks the terms of the original lease first. Some commercial leases may prohibit subleasing or require the original tenant to obtain the landlord's consent first. If the terms of the original lease prohibit subleasing, a commercial sublease contract would be considered void and could result in legal action.

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