What do you need to know about subletting in commercial leasing contracts?

Director of GM Law, Mark McAvoy shares his thoughts on this matter:

1. What are the rules for subletting in Queensland?

If a tenant wants to sublet some space in a rental property, they must obtain written permission from the property manager or owner. Approved occupants should also be listed in the special terms of the tenancy agreement.

When a tenant named on an agreement gives another person the right to rent part or all of the property, they are called a head-tenant.

As a head-tenant, they have similar responsibilities to the property manager/owner.

2. What documents are usually needed for subletting?

It is advisable for the head-tenant to provide the sub-tenant with a written tenancy agreement and an Entry Condition Report.

The tenancy or lease agreement may need to include arrangements for sharing bills (e.g., gas, electricity, or internet).

The Owner may require a deed of consent to be entered into with all parties.

Depending on the circumstances, there may be other requirements. It’s better to consult a legal expert to understand the full list of requirements.

3. What are the financial responsibilities between the head-tenant, tenant and property owner?

The Head Tenant will still remain responsible to the Owner for the rent and outgoings under the head lease.

4. What is the difference between assignment and subletting?

An assignment transfers the entire interest of the Head Tenant (in the Head-Lease) to a third party and may release a tenant from legal responsibility. In contrast, a sublease allows a tenant to transfer some of the obligations of the lease to another party while retaining legal liability under the lease.

An assignment is ideal if a tenant wants to completely waive the obligations under the lease and is permitted to do so under the Head-Lease. Conversely, subletting is more suitable if a tenant still needs to use part of the space but wants to offset the rent or is unable to transfer the entire lease.

5. What are the most common reasons for subletting in GM Law’s experience?

In GM Law’s experience, a common reason for subletting is that a Head Tenant may wish to earn revenue until it grows sufficiently to be in a position to use that space.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

Don't forget we offer the following:

1. What are the rules for subletting in Queensland?

2. What documents are usually needed for subletting?

3. What are the financial responsibilities between the head-tenant, tenant and property owner?

4. What is the difference between assignment and subletting?

5. What are the most common reasons for subletting in GM Law’s experience?

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