Thinking of subletting? Check your contract

On Behalf of | Nov 16, 2020 | Business Litigatioon |

If business has been slow recently, you might wish you had chosen a smaller space. One thing some companies have been doing is to sublet part of their premises to someone else. Not only can it help pay the rent or mortgage, but you can benefit from the new clients that the other business brings in. However, it is not always an option.

Some contracts prohibit subletting

Before you start offering your space to others, you should check your contract. If you lease your premises, the landlord may have included a clause to prohibit subletting.

If you own the property, there might still be barriers. Perhaps you own an office in a block or commercial development. There may be some overall control limiting subletting. Check any zoning laws that apply. You may be able to rent out space to certain types of businesses but not to others.

Subletting may not be as simple as it seems

If you are allowed to sublet, consider if it is the best option. The landlord might hold you responsible for any damage your subtenant causes. If you choose a business that is incompatible with yours, it could harm your trade. It could also cause problems with your neighbors. You might be thrilled about having a hot dog stand in front of your convenience store. The designer clothes shop next door may feel the smell of sizzling onions will prevent their customers from entering.

If you see subletting as a viable way to help pay the bills, take great care when writing a contract. Ensure both parties are clear about what the agreement includes and what it does not. Otherwise, you could find your sublet creates more problems than it solves.