What are my options if my tenant wants to sublease or assign his lease?
When a tenant wants to leave before the expiration of his lease and asks the landlord to agree to a substitute tenant to take his place, the landlord’s options may depend upon (1) state statutes, (2) the legal obligations under the lease agreement, and (3) the details of the proposed arrangement.
In general, you could allow a lease transfer conditional upon the proposed replacement tenant qualifying under your standard qualification and screening practices.
Most often, depending upon the circumstances, it may be a better business practice for you to consider creating a new tenancy with the proposed substitute tenant. You would need to terminate the original tenant’s lease agreement conditioned on the substitute tenant’s qualification and acceptance under your tenant screening and selection standards. At termination of the original lease agreement, you and the substituted tenant would create a new tenancy in accordance with your established policies and procedures for new tenants. This would provide a clear and direct relationship between you and the new tenant.
The same screening standards used to evaluate any rental applicant, such as financial stability, credit history, employment, references, or other criteria must be used to evaluate a proposed substitute tenant. If the proposed new tenant fails to qualify under your rental standards, you are not obligated to offer tenancy under a new lease or transfer options. To help reduce potential claims of discrimination, there should be written documentation of the screening and qualification process and the business justified reason for the rejection.
Lease agreements may instead be transferred through a subleasing agreement or through an assignment of lease. Some states have landlord-tenant statutes prohibiting subleasing unless agreeable to the landlord, while other states do not address the issue and leave the decision of subleasing to the landlord. Many lease agreements contain language that prohibits assigning the lease to someone new or subleasing the unit on a short-term basis without the landlord’s express, written consent.
In many states a landlord may not unreasonably withhold consent to a transfer of the lease agreement through subleasing or assignment despite any lease language to the contrary.
If the landlord is willing to work with the original tenant on a conditional basis pending screening and approval of the substitute tenant, a transfer of the lease agreement could be accomplished by a sublease or by an assignment of the existing lease.