Subletting Space Key Terms

Avoid costly mistakes by understanding subletting key terms

With the high cost of commercial real estate, it's easy to see why a company or individual would think about subleasing, or subletting, space. Whether you're thinking about getting a sublet space or becoming a master tenant to rent out your extra space, it's helpful to understand a few key terms that are related to subletting. If you don't carefully read the lease, for example, you may be stuck in a year-long lease that doesn't have the permitted uses you need. Cover your tracks by learning these terms.

 

Master tenant, subtenant and co-tenant

The master tenant is the person or company that originally rented the space, who in turn rents to the subtenant or co-tenant. The co-tenant deals directly with the landlord while a subtenant will only deal with the master tenant.
Try: The Housing Rights Committee of San Francisco explains the differences between the types of renters and explains your rights in some potentially confusing situations.

Permitted uses

Zoning laws restrict business owners from doing certain tasks in a space. For example, if the area is zoned for residential use only, you cannot conduct commercial business. This is important to know before signing your sublet agreement.
Try: The City of Raleigh is a good source for some examples of zoning restrictions and permitted uses for areas. Of course, check the laws of your own city before signing.

Holdover

The length of a sublet is usually one year. After that, if the subtenant or co-tenant decides to stay, it's called a holdover. Typically, a tenant in a holdover situation can vacate whenever they choose as long as they give a 30 or 60 day notice. Some agreements, however, assume that a holdover means another year-long commitment.
Try: LegalMatch describes a holdover.

Base rent and net rent

When subletting a commercial space, you are often responsible for paying rent on the space that you use, but also a portion of the rent for common areas. The base rent is the rent for only the space you use, typically listed per-square foot. The net rent is the total monthly rent for the space.
Try: Learn more about base and net rent from How to Lease Space in Shopping Centers by Barry Fleisher.

Inspection checklist

Before moving into the space, you should go through an inspection checklist with the landlord or master tenant. This is an agreement about the condition of the property upon move-in. If the property is not in the same condition when you leave, you will not receive your security deposit back.
Try: Scroll down to see a copy of an inspection checklist at the Internet Legal Research Group.

Landlord's Consent to Sublease

Before a master tenant can sublet space, the landlord must agree to it. They'll present a legal document called the Landlord's Consent to Sublease.
Try: 1040 Tools offers an example of a Landlord's Consent to Sublease.

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