As a startup or small business, you may have more office space than you need, and you may consider subleasing that space to help you cover rent and other business expenses. Before you enter into a sublease arrangement with a new tenant, you should consider the following factors to determine whether subleasing is a good decision for you.

 

Can you sublet your space?

First, you need to determine whether your lease allows you to sublease your property. Read your lease to see if it explicitly allows or prohibits you from subleasing. In either case, you should talk to your landlord directly about finding a tenant to rent the space you aren’t using. If your landlord consents or your lease allows you to sublet space, you should amend your original lease to reflect your decision to sublet space.

 

Factors to Consider Before Taking on a Tenant:

Before entering into a sublease agreement with another person or company, you should consider the impact it will have on your business.

Consider the growth projections for your own company in terms of headcount and operations. You may have too much space now, but you must ensure that you have enough space to conduct business. Your decision to sublet can’t be allowed to hinder operations and growth.

Second, consider whether the amount of space you have available to sublease is practical. If it’s too small, you may not attract any tenants, or you may not be able to rent the space for an amount that would benefit you.

Third, should think about the types of tenants you want to share your space with. Research all prospective tenants to ensure that their business is reputable and that it doesn’t clash with your company’s culture. If your businesses have clashing ideals, practices, and goals, it may disrupt productivity and chase away clients.

 

What to include in your sublease agreement:

Once you’ve decided to sublease your office space, you should begin drafting a general rental agreement that would work for most tenants. You can also look at the lease you have with your landlord to get some ideas for what you may want to include in your agreement. You should also read your city and state laws to see if there are any provisions that must be included in the lease.

 

At minimum, your agreement should include the following:

  • The term of the lease: six months, twelve months, and month-to-month are most common
  • Information about rent: Include the amount due and when the rent is due. Late fees should also be considered
  • The circumstances under which a default would occur, and the remedies for that default
  • The duties of the landlord and the tenant regarding the maintenance and the use of the property

 

If you consider the preceding factors, procure a solid lease agreement, and find the right tenant, your company can benefit from a sublease arrangement without hindering your growth or productivity.

- Claire Kalia

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