Subletting occurs when one tenant temporarily rents out their property to another tenant. This is typically done if the tenant is leaving the area for a period of time or moving out completely. It can often seem like an attractive options to landlords who don’t want to deal with a vacancy before the end of the lease term, but it also comes with a few risks that you need to be aware of.
We don’t recommend subletting, and we think your lease agreement should specifically prohibit tenants from subletting your home. Here are five of the most important reasons why.
Risk No. 1: Nothing is Official or Documented
A lot of subletting happens completely outside of the lease agreement. This means there is no explanation or stipulation about how rent will be paid, what will happen to the security deposit, or how maintenance will be handled. If something breaks, will it be the responsibility of the landlord or the original tenant or the tenant who is subletting the property?
There are a lot of variables and a lot of uncertainties. Without a specific lease agreement in place between you and the two parties renting your home, you could get into trouble. There will be a lot of confusion.
Risk No. 2: Tenants May be Unreliable or Unscreened
Unless you’re screening the new people who are moving into your tenant’s property, you have no idea who they are. Maybe they have been evicted from every apartment they’ve ever rented, and that’s why they’re looking for a place to sublet. Maybe they’re not planning to pay rent or perhaps they are listed on the national sex offender list. You don’t know, and that’s a huge risk.
Risk No. 3: Property Damage is Possible
You have to worry about who is subletting your property and you also have to worry about how they’re going to treat the property. When your lease your home to tenants, you can hold those tenants accountable for any property damage that’s left behind after they move out. In a sublet situation, the damage can be disputed between the original tenant and the new tenant. You could find yourself mediating arguments or being left to pay for the damage yourself.
Risk No. 4: Insurance Policies May Not Cover You
There aren’t a lot of insurance policies set up for subletting. Your landlord policy won’t cover any of the tenant’s belongings or personal possessions, and that tenant’s renter’s insurance policy is unlikely to cover a tenant who sublets and isn’t named on the property. That’s going to leave you at a greater risk. If the tenant who is subletting leaves a pot on the stove and starts a fire, renter’s insurance may not cover it. You’ll be left to file a claim against your own policy, and there’s no guarantee you’ll be covered.
Risk No. 5: Removing a Tenant Can be Difficult
What happens if the tenant who is subletting your property doesn’t leave? Without a lease agreement in place between you and that party, it can be difficult to get possession of your property back. You may want to re-rent it to a long term tenant, and that’s going to be nearly impossible if someone is still living in it. An eviction will be longer and more expensive.
These are just a few of the reasons not to allow subletting in your Redwood City rental home. If you’d like to hear more about this, please contact our team at Five Star Property Management.