Set 15 Conditions in Your Sublet Consent

If your lease is like most, it requires the tenant to get your written consent if it wants to sublet all or a portion of its space to a third party. But when giving your written consent to a sublet, make sure the consent includes key protections. Without those protections, you risk giving away too much to the tenant or the subtenant. For example, if the consent doesn't say that it applies only to the current sublet, a tenant could argue, and a court may agree, that you've consented to future sublets as well.

To avoid this and many other problems, clearly describe in the written consent the conditions under which you're authorizing the sublet, says Chicago attorney Richard S. Rosenstein. He suggests putting 15 conditions in your written consent. There's a Model Consent on pp. 3–4 that you can adapt and use that includes those conditions.

Get Signatures of All Parties

Your written consent, like our Model Consent, should be signed by you, the tenant, and the subtenant to show that all parties accept your conditions, says Rosenstein. So if one of the other parties later violates the written consent, you can sue that party for damages or ask a court to force the party to follow the consent's conditions, he explains.

Practical Pointer: If there's a lease guarantor, require him to acknowledge in the consent that he agrees to be bound by its conditions, says Rosenstein.

15 CONDITIONS FOR SUBLET CONSENT

Make sure your written consent, like our Model Consent, includes the following 15 conditions:

* No Release for Tenant

Say in your written consent that neither the tenant nor the subtenant is released from any liabilities or obligations that it has under the lease or sublease, says Rosenstein [Consent, par. 1]. Otherwise the tenant could argue, for example, that it no longer must indemnify you and defend you if you're sued by someone who was injured in the sublet space, he explains.

* No Waiver of Your Lease Rights

Say that by signing the sublet consent, you're not waiving any of your lease rights, says Rosenstein [Consent, par. 1]. Otherwise the tenant might argue that you've waived important rights, such as the right to consent to alterations, he warns.

* No Approval of Sublease

Make it clear in the written consent that you're consenting only to the particular sublet, says Rosenstein. But you're not consenting to the terms of the sublease, he says [Consent, par. 2]. This way, you haven't waived your right to object to any action by the tenant or subtenant that's permitted by the sublease but violates the lease, he explains. For example, you could demand that the subtenant remove hazardous materials from the sublet space if the lease bars those materials, even if the sublease allows them to be stored there.

* No Sublease Amendment Without Your Consent

Require the tenant and subtenant to get your approval before they change any of the sublease's terms, says Rosenstein. Although you're not consenting to the terms of the sublease—and don't want to be bound by them—you still should know what its terms are, he explains. If the tenant and subtenant can change the sublease without your approval, you'll lose control over the sublet.

Plus say in the written consent that a sublease amendment may not modify the lease in any way, says Rosenstein. And if it does, make it clear that you're not bound by it even if you approve it, he says [Consent, par. 3].

* Other Sublets Require Separate Consent

Don't inadvertently give your consent to future sublets, warns Rosenstein. To avoid that, say in your written consent that you're agreeing only to the current sublet. And say that you reserve the right to withhold consent to all future sublets, sub-sublets, or assignments of the lease or sublease, or to alterations, he says [Consent, par. 4].

* Tenant Remains Responsible

Say that the tenant remains responsible for any lease violation by either the tenant or the subtenant, says Rosenstein. Also say that you can enforce the lease against the tenant and/or the subtenant, he adds [Consent, par. 5]. Then if the subtenant's actions violate the lease, you can take action against the tenant or subtenant, or both, he explains.

* Sublease Is ‘Subject to’ Lease

Say that the sublease must be “subject to” and not conflict with the terms and conditions of the lease, says Rosenstein [Consent, par. 6]. This subject to language means that the tenant and subtenant must follow the lease's provisions if the lease and sublease conflict, he explains.

* Tenant Must Share Sublet Profits

Even if the lease has a sublet profit-sharing clause, it's a good idea to say in your written consent that the tenant must share sublet profits with you in accordance with that clause, says Rosenstein [Consent, par. 7]. This prevents a tenant from arguing that in return for its agreement to sign the written consent, you're releasing it from following the sublet profit-sharing clause, he says.

* Tenant Must Pay Your Sublet Costs

Make the tenant pay all your sublet-related costs, such as your legal fees for reviewing the sublease and related documents, says Rosenstein. And say that if the tenant doesn't promptly pay those costs after getting your bill, it will have violated the lease, says Rosenstein [Consent, par. 7].

* Sublease May Continue After Lease Ends

If the lease ends early, then by law the sublease ends, too. But give yourself the option in your written consent to keep the sublease in effect and have the subtenant pay rent directly to you, say Rosenstein. Then you don't have to be left with an empty space if the lease ends early, he explains.

If you exercise this option, you'll need to require the subtenant to “attorn” to you—that is, recognize you as its new sublandlord (or its new landlord, depending on how you structure the deal), says Rosenstein. So say in the sublet consent that if you exercise the option, the subtenant must sign an agreement—known as an attornment agreement—saying that all of its obligations that were formerly owed to the tenant are now owed to you, he explains. And require the attornment agreement to be in a form that's acceptable to you [Consent, par. 8].

* Subtenant Pays for Services and Additional Charges

Require the tenant and subtenant to agree that, if the subtenant so requests, you can furnish services to the sublet space that aren't required by the lease, says Rosenstein. And say that you can bill the subtenant directly for those services, he says. For example, the subtenant may want overtime air conditioning at the sublet space.

Require the subtenant to pay you directly for those services. But say that if it fails to do so, the tenant must pay the service costs on the subtenant's behalf, he says. Make sure you call those costs “additional rent.” That way, if the tenant doesn't pay them, that'll be viewed as a nonpayment of rent, triggering a lease violation, he explains [Consent, par. 9].

* Subtenant Has No Legal Relationship with You

Say that the subtenant has no direct legal relationship—in legal terms, “privity”—with you, says Rosenstein [Consent, par. 10]. This way, you've no responsibility to the subtenant, only to the tenant, he explains. And only the tenant—not the subtenant—has the right to force you to carry out your lease responsibilities, he adds.

* Tenant and Subtenant Must Send You Notices

Require the subtenant to send copies to you of any notices it sends to the tenant, and require the tenant to do the same for any notices it sends to the subtenant, he says. And indicate how you want the notices sent to you, he adds [Consent, par. 11]. By getting copies of these notices, you'll find out about problems between the tenant and subtenant, says Rosenstein. For example, you'll know if the subtenant isn't paying its rent.

* Tenant and Subtenant Must Indemnify You for Broker's Fees

Require both the tenant and subtenant to jointly and severally indemnify you—that is, reimburse you—for all broker's fees and costs due or claimed to be due in connection with the sublet, says Rosenstein [Consent, par.12]. So for example, if a broker claims that it's entitled to a fee for the sublet, you can demand reimbursement from both or either party, he explains.

* Parties Agree to Be Bound by Consent

Make sure the tenant and subtenant agree to be bound by the terms of the written consent, says Rosenstein [Consent, par. 13]. This way, you can enforce its terms against both parties, he explains.

Practical Pointer: As a precaution, require the tenant and subtenant to sign the written consent before you do, says Rosenstein. If you sign it first, they may forget or deliberately fail to sign it. And since you'll want to see the final version of the sublease before you sign the written consent, have the tenant and subtenant attach a copy of the signed sublease to the written consent they've signed, he adds.

CLLI Source

Richard S. Rosenstein, Esq.: Law Offices of Richard S. Rosenstein, 55 E. Monroe St., Ste. 3850, Chicago, IL 60603; (312) 263-1686.