Tenants who are subletting should make sure they understand their rights and responsibilities. In this blog, we explain different subletting arrangements and best practices for protecting the original and new tenants’ interests.
We get a lot of questions about subletting, especially from college students. Subletting is when the original renter (the “sublessor”) remains responsible for a lease, and either lives with a sublessee (the new tenant), or has a sublessee take their place living in the home. For example, if a student is going to work in another city for the summer but doesn’t want to lose their apartment, they may sublet their apartment (or their part of a lease if they are living with others) to a sublessee.
But, with subletting, the new tenant does NOT replace the original tenant. Because the original tenant remains legally responsible for all terms of the original rental agreement, subletting comes with a lot of risk for the original tenant.
Under Wisconsin law (Wis. Stat. 704.09(1)), the original tenant to a lease must get the consent of the landlord to sublease when:
- the lease requires the tenant to get the landlord’s authorization before subletting, or
- the original tenant is a month-to-month or periodic tenant (you can figure out what kind of lease you have here).
Some landlords charge a sublet fee to tenants to have the option to sublet. There is no law specifically covering a sublet fee. Tenants who are able to do so may want to contact an attorney if their lease requires a sublet fee, especially if the fee is a large amount. Here is a list of legal service providers, some that charge fees, and some that provide free services.
Subletting arrangements generally fall into one of the following categories:
1. The original renter becomes a co-tenant with the sublessee.
In this situation, the sublessor and sublessee are legal co-tenants to the landlord because they both enter into a rental agreement with the landlord. The original tenant (the sublessor) becomes a co-tenant and joint and severally liable with the sublessee. (It is important to understand the concept of joint and several liability. Essentially, if $1,000 is due in rent, and there are 5 co-tenants named on the lease as joint and severally liable, then the landlord has a right to the full $1,000, and it doesn't matter if it's evenly divided among the tenants. If the rent is not paid, the landlord can choose to evict any of the tenants.)
- A tenant leaves town for 2 months and gets landlord’s consent to rent to a friend for that time. The landlord offers the sublessee (the friend) a sublet agreement.
- There are 5 original tenants, and 1 of them needs to move out. The 5 co-tenants and the landlord work together to replace the tenant who is leaving by finding a sublessee. The landlord adds the sublessee as a co-tenant on the lease, with the consent of everyone who is on the lease. There are now 6 co-tenants on the lease – the 5 original tenants plus the sublessee.
- A tenant attempts to break a lease. The landlord tells the tenant that the only option is to sublet. The landlord then finds a new tenant to sublet the unit from the original tenant, and the landlord enters into a rental agreement with the sublessor and sublessee.
NOTE: The tenant can always choose to break the lease instead of subletting. Under Wis. Stat. 704.29(1), landlords are required to try to find a new tenant if a tenant breaks their lease. A lease is void and unenforceable if it includes language that the landlord is not responsible to mitigate their damages. Wis. Stat. 704.44(3m). That does not mean there is a best option for every situation. There are very real consequences to breaking a lease that must be weighed against the risk of subletting.
(Here is a sample letter for the situation where a lease includes language that subletting is the only option available when a tenant wants to leave the unit.
2. The original tenant becomes the landlord to the sublessee.
In this situation, the original renter is still a tenant with the landlord and must comply with the terms of their original lease. But that original renter is also the landlord to the sublessee because the sublease is between the sublessor and sublessee, not with the landlord.
The original renter must follow all the laws applicable to landlords, including providing notice of landlord entry in the places where the sublessee has exclusive possession and returning a security deposit. The original tenant must ALSO comply with all the requirements as a tenant as it applies to their own lease. The original tenant is liable for all the actions of their “guests or invitees,” and is therefore responsible for any unpaid rent or damage done by the sublessee. In addition, if the original tenant is evicted or their lease is not renewed, the sublessee has no right to stay in the unit. This is because the sublessee does not have an agreement with the landlord, only the sublessor.
- A tenant rents out a spare room in their apartment with or without the landlord’s consent. The original tenant signs a lease with the sublessee for $300/month in exchange for staying in the spare room.
- A group of roommates needs to replace a tenant who is moving out and offers a lease to someone to take the person’s place. The group of roommates offers the lease to the new member, so they all (including the roommate moving out) become the landlord to the new sublessee.
Sublet arrangements also come up when there is more than one tenant on a lease. When one tenant wants to leave and the other tenants want to stay in the unit, the tenant who wants to move out may consider subletting their portion of the lease. We most frequently see this scenario with students living in the big houses around Madison. It can become contentious.
In a situation where there are many people on a lease, they are all co-tenants and jointly and severally liable for all the obligations under the lease. Subletting in this situation might actually be the best choice available for the one tenant who wants to leave. The reason is that breaking or otherwise voiding a lease (more here if you don't know about these options) will only work if ALL of the tenants choose to take that course of action.
Here are two options for the tenant who wants to move out of a unit with roommates:
Option 1: Mutual Agreement to Terminate
Contracts, including leases, can be changed if all the parties to the contract (the people who signed the contract) agree to those changes. The landlord and all the original tenants can choose to end or amend the lease. It is very important that the new or amended agreement is in writing.
- There are 5 original tenants on the lease, and one of those tenants wants to leave. The 4 remaining tenants agree to let the 5th tenant off the lease if that tenant pays an extra month of rent for the time that their room will remain vacant. The 4 remaining tenants will look for a new 5th tenant during that month, and the landlord agrees to let that new person onto the lease if the new prospective tenant meets the landlord's application criteria.
Questions that should be considered if a tenant is entering into an agreement with their landlord and roommates to mutually terminate their tenancy:
- How much time will the unit be vacant until it can be filled by someone else?
- What will happen to the security deposit once it is fully or partially returned? Will the original tenant receive a proportionate portion?
- Will the vacant unit be filled? If so, who will live in the unit? If the unit needs to be filled, but no one has yet been identified, who will search for a new co-tenant?
Option 2: Subletting
If a tenant living with 4 other roommates cannot terminate their tenancy, the other option may be to try to sublet. This option carries more risk to the original tenant because, as discussed, they stay on the lease.
If subletting, the next steps may be:
- The tenants who stay in the unit search for a sublessee. The benefit is that the tenants who remain in the home will get to choose their new roommate.
- The leaving tenant searches for the sublessee. The benefit of this option is that the tenant moving out can pick a sublessee they trust, which is important because the original tenant remains liable for the rent and damages on the lease.
- The landlord will not allow any sublessee. The landlord’s consent will be required if the lease includes that requirement or if it’s a periodic tenancy or tenancy at will.
- No sublessee is found. If a sublessee cannot be found, the tenants who remain in the unit could be forced to pay the entire rent (possibly with the option to sue the tenant who left, if there was some kind of roommate agreement about how financial responsibilities are allocated), or could be evicted for not being able to pay it. The person who leaves the unit is still legally responsible but often has less of a reason to continue to pay if they are not living in the unit.
NOTE: Landlords are not required to follow the terms of a roommate agreement. The landlord can still enforce all the terms of the lease and their rights under the landlord tenant laws. A roommate agreement only helps the roommates to hold one another responsible for what is owed and their obligations to one another.
Best Practices in Subletting
The following are best practices when setting up a subletting agreement.
- Rent Payments Should Go to the Landlord: Sublessees should almost always pay rent directly to the landlord if this arrangement is possible. If the sublessee pays the original tenant, that person may not pass the payment along to the landlord and it could result in an eviction action where the sublessee, not the original tenant, loses their housing.
Security Deposits: The safest way to deal with the security deposit is for the original tenant, the new tenant, and the landlord to meet in the apartment for a “check-in/check-out” and to refund the original deposit owed to the sublessor, while collecting the new security deposit owed from the sublessee. However, the landlord may not agree to do this. Many landlords are not willing to be this involved in the sublet process.
- Check-in and Check-out Procedures: Original tenants should complete a check-out form and sublessees should complete a check-in form. Renters should make copies of the completed forms and send originals to the landlord. This will prevent future disputes regarding damages to the apartment. If any furniture, appliances, or other items are left in the unit to be used by the sublessee, both original tenant and sublessee should carefully document the condition of the items.
- Sublet Agreement: All sublets should have a written agreement. Tenants should consider adding the following information to a sublet agreement:
- The exact address of the rental unit
- The names, addresses, phone numbers, and email addresses of the sublessor and sublessee
- The amount of rent the sublessee will pay and when
- Whether the sublessee paid a security deposit to the sublessor or the landlord
- Any utilities the sublessee will be responsible for paying
- The period of time the sublessee will be living in the unit