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Legalease
Legalease, Attorney
Category: Landlord-Tenant
Satisfied Customers: 16333
Experience:  15 yrs residential & commercial leasing experience.
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I am researching subletting commercial space. landlord and

Customer Question

I am researching subletting commercial space.
I am The landlord and my tenant wants to sublet part of his space for an undetermined amount of time. He is already only paying half of what the property is worth. My partners want to have a direct contract with the sublet-tor. I am not sure about any of the legalities.
Submitted: 1 year ago.
Category: Landlord-Tenant
Customer: replied 1 year ago.
The commercial space is in South Chicago Heights, IL. Market value is $5/sq foot, this tenant is paying $2/sq foot. My partners want to have a Sublease contract with the sub lessor directly so we can charge him more, but he would be on a month-to-month. When he is done, then it would go back to the original tenant at the original price for the duration of the lease. I am worried that the minute I take payments directly from the sub lessor it changes the nature of the relationship and the original tenant doesn't have to assume that specific space back.
Expert:  Legalease replied 1 year ago.

Hello there --

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It appears that the original attorney requested by you is not online and not available at this time so customer service forwarded this question to me for review because I have a significant amount of commercial leasing experience. If you want to wait for the other attorney, please let us know (we cannot be certain when he will be online again because each of us works as independent contractors, coming onto the website to answer questions at our own convenience).

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Unless your lease with the original tenant states something differently, then you as the landlord have the legal right to consent or not to consent to this arrangement. However, what you and your partners are talking about here are actually two different legal arrangements for the tenancy of the subtenant, as follows:

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(A) Assignment -- This is where the original tenant assigns his tenancy to the new tenant with the LL's permission. In a situation where a lease has been assigned, the original tenant remains responsible for the lease through his/her original lease termination date. The original tenant actually becomes a "guarantor" of the new tenant's performance under the lease through the original termination date set forth in the original lease (including payment of rent AND any non monetary defaults such as physical damages to the unit, etc). In the event that the new tenant fails to pay rent, you can look to the original tenant to pay the rent and pursue him in court if he does not.

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(B) Subletting: In this situation, the original tenant becomes the new sub-tenant's Landlord and is responsible for enforcing all of the terms of the lease between the Landlord and the Sub-tenant (the original tenant is called the Sub-Landlord to the Sub-Tenant). The SubLandlord can set different rental amounts and payment arrangements with the SubTenant and it is perfectly permissible under the law for the SubLandlord to collect an upcharge in the rent amount from the Subtenant, so long as the SubLandlord continues to pay you (the Master Landlord or Over Landlord) the agreed upon rental amount in your lease with him or her.

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From a legal standpoint, there are no laws which set forth any provision that governs the assignment and subletting between landlord and tenants and from a commercial standpoint, you are free to approach this matter in any way that you consider to be reasonable, including refusing to permit such assignment or subletting if it is not within the overall business plan of you and your partners. Including permitting a subletting situation where the original tenant can collect the rent but must pay to you almost all of any additional rent that the subtenant pays for this space that is beyond the rental amount that the original tenant is set to pay you each month pursuant to the terms of his or her original lease agreement with you and your partners. AND, in both the assignment of the lease and the subletting of the lease, the original tenant remains responsible for the payment of his rent and performance under the original lease until it expires by its terms.

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Under the circumstances where you and your partners want to collect the additional rent from the subtenant and prevent the original tenant from receiving a windfall each month for a space he was already in default in by not paying you the entire rent, I suggest that you insist that the original tenant agree to the assignment of the lease which then will permit you to deal with the subtenant directly and collect the additional rent. Your original tenant may not want to sign such an assignment of lease, but you should remind him that he is already in default and can be sued for everything that he owes under the lease with you and your partners and that the Assignment is a "win-win" for both sides because it can be written to absolve him of any responsibility for anything at the unit prior to the subtenant taking over the unit and/or you can forgive the past rental amounts from him that are now due, etc. In short, you can agree to anything you want in an Assignment of Lease document, including letting the original tenant completely off the hook for the remainder of the lease term and putting all of the responsibility onto the shoulders of the new tenant coming into the unit (in other words, you can legally cancel the lease for the original tenant and enter into a new lease with the proposed subtenant).

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I hope that all of this helps to give you some direction in these matters. Please let me know if you have any follow up questions. If not, can you please press a positive rating above in the ratings section (either the fourth or fifth star on the right) so that I will be paid for my time assisting you tonight. I am paid NOTHING unless you press a positive rating before leaving the website so I really appreciate it. Pressing a positive rating will NOT cost you any additional money -- it simply acts as the trigger to Just Answer to pay me for my time assisting you with this question tonight. THANK YOU VERY MUCH !!!

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MARY

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Expert:  Legalease replied 1 year ago.
Hello again --
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I notice that you reviewed the answer a few days ago. Do you have any further questions for me on this issue? If not, can you please press a positive rating in the ratings section (the fourth or fifth star) so I will be paid for my time. I truly am paid nothing unless you press a positive rating. Doing so will not cost you any additional money and you can ask follow up questions for several weeks after pressing a positive rating as well. THANK YOU VERY MUCH
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If you are having problems with the ratings section, you can state in a response box that the answer was good and that there are problems with the rating button section.
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MARY
Expert:  Legalease replied 1 year ago.

Hello there --

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Can I be of further assistance to you in these matters??

MARY

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