Question About Tenant Wanting To Sublease

[Millions]

My current tenants, a young couple, have broken up and are wanting to break the lease 4 months early. Their lease expires on April 30, 2020. They told me this at the end of December and I have started advertising it on Rentfaster. Because it's January, I've had 2 inquiries, both of which flaked out. I told them to expect this as in my experience, it's a terrible time to be renting a place.

They're now asking about a sublease. In my lease, it says no subleasing is allowed. So, my first question is: Do I have to allow this? Is there an act that says I must or is my lease okay in this situation?

Second, if they do have friends or people they know interested, should I allow it?

My concerns are that A) I have raised the rent as it's too low right now. So a new tenant would be paying $100/mo more than the current ones. With a sublease, it would be the same rent, but in May I would need to raise it. If they've only been there 2-3 months, they probably won't like that and having people move in and out every few months is probably going to cause damage.

Second, my tenant is saying that with a sublease, the new tenants would not have to pay a deposit because they are taking over the current lease with their deposit. This seems odd, since I can almost guarantee they would lose some of the deposit due to cleaning and damage, AND I also have in the lease a $300 re-rental fee.

Thoughts?

 

[Thomas Beyer]

Sublease at YOUR discretion not theirs. Subleasing without your approval is a breach of the lease.


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[Millions]

That's what I figure. But, according to the Alberta Tenant Act, it says I cannot refuse without reasonable grounds and must give the tenant their reasons in writing within 14 days after receiving the request.

I'm not sure what my reasonable grounds would be.

But even if I do allow it, I'm wondering how it works with their security deposit, rental increase on May 1st when the real lease expires, etc. I guess I would just carry on as if the same tenants were in there?

 

[Thomas Beyer]

You can raise rents by any amount in AB with three month notice. So give that in January for May 1. If you want them all out give a very high increase.

Check out tenant if they have a new room mate. Might be ok.


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[Millions]

Okay, I thought with fixed leases, no notice was necessary, but I might as well let them know, so if I do allow sublease, they can let them know too.

 

[Matt Crowley]

It's usually better to try and work something out. If they were good tenants, I've let it go before and just re-rented. In any case, you need to do a full reference and application check on the sublease tenants if you would entertain the idea.

Really, options are totally on the table. You could end their lease and agree with the other group to a short lease. Release to someone else completely, let the new renters assume the previous lease. If there is no DD left, then make sure you have enough security. You can't ask for another DD.

 

[Thomas Beyer]

Okay, I thought with fixed leases, no notice was necessary, but I might as well let them know, so if I do allow sublease, they can let them know too.

Fixed leases automatically end indeed in Alberta but you should chat with tenant to confirm as you or they may prefer month to month or another fixed term. Or you may wish to continue with them but at a higher rate.


Thomas Beyer, Asset Manager, Investor, Community Improver, Author, Father, Mentor www.prestprop.com

 

[Millions]

It's usually better to try and work something out. If they were good tenants, I've let it go before and just re-rented. In any case, you need to do a full reference and application check on the sublease tenants if you would entertain the idea.

Really, options are totally on the table. You could end their lease and agree with the other group to a short lease. Release to someone else completely, let the new renters assume the previous lease. If there is no DD left, then make sure you have enough security. You can't ask for another DD.

What happens with the DD if someone sublets? Their DD is $1200. one month rent. So, do I just let it become the DD of the subletters?

 

[Matt Crowley]

If you are looking for a stop-gap solution and want to help these tenants, then I would cancel the lease with the existing group, do a full reference check on the new group and then have the new group sign a short term lease.

There would be a re-rental fee agreed with the previous renters.

I'd do that only if I can't find a longer term lease also. Why accept a 3 month tenant unless there is no other option?

 

[Martin1968]

I would agree that you would manage this to the best of your ability, work with the current tenants and work hard to find new tenants. Yes it’s winter, but in my experience it’s usually not to big of a problem to find tenants. People move year around.

About the sublease I think you and your current tenants may misunderstand what it means. If you were to allow this, your current tenants are the ones that enter into an agreement with the tenants they have brought on, and thus stay responsible for ALL terms and conditions under the original contract. This includes the damage or security deposit. (In other words no you don’t have to return but you also can’t charge the sublease tenants a new damage or security deposit)

Subleasing as per your contract says no, and AB tenancy act says you can’t withhold without reasonable grounds. So, what are your selection and approval criteria? What do you use for tenant verification? If you can’t approve you let the current tenants know ASAP, you can complete an application and verification within 24 hrs. What is stopping you from approving if indeed a good tenant?

The only word of advice is to not sublease, or in other words have the current lease assumed by others, and this is in both yourself and the current tenants interest. You would need to educate your current tenants what the risk is if you allow sublease, and what it means for your current tenants when rent is unpaid and property damaged. As said, they will stay responsible for ALL.......

Seeing that the lease is expiring end of April, at all times you want to enter into a new agreement yourself with the new tenants.