Glossary / Lease terms and deal stages
Also known as: Sublet, subletting
A sublease is a lease by an existing tenant of all or part of its space to a new party, the subtenant, for a period shorter than the tenant's own remaining term. The original tenant stays liable to the landlord, and sublease commissions are governed by their own agreement.
Cornell LII defines a sublease as "a lease by the lessee of an estate to a third person, conveying all or part of the estate for a shorter term than that for which the lessee holds originally." The original tenant becomes the sublessor, and there is no direct legal relationship between the landlord and the subtenant.
Because of that, the original tenant remains liable for the lease. Wikipedia notes that the sublessor stays responsible for all remaining rent, and must cover any shortfall if the subtenant pays less than the rent owed to the landlord. An Assignment of lease is different because it transfers the whole remaining term. Rules vary by state and by lease, and the lease may require the landlord's consent to sublet.
On a sublease, the party paying your commission and the rent it is based on are set by your agreement, not by the original lease. Sublease rent can also reduce the commission on a separate deal. A Grubb & Ellis commission agreement excluded "rentals credited to Tenant by reason of a lease takeover or Landlord takeback or sublease" from its commission base.
Timing depends on the sublease's own signing and commencement and on any landlord consent the original lease requires. This is not legal advice; check the lease and your agreement.
If you represent the subtenant, ask early who is paying your fee and on what schedule, because the landlord may not be a party to your commission arrangement at all.
Get a written commission agreement with the party paying you on any sublease, since the master lease will not cover your fee.
