You’re out for a Sunday drive with your significant other. You turn the corner, and BAM, there it is: your dream house. Better yet, there’s a For Sale sign in the lawn.
You didn’t expect such good fortune. You were going to hunt for a home of your own when your current lease expires in eight months. But your dream place is for sale right now -- and as it turns out, at a price you can handle.
You have 240 days to go on your lease, and the place is certain to be sold by then. So what can you do?
One option is to buy the house and sublet your rental to someone else. In that situation, you become a landlord. And therein lies the rub. If your tenant doesn’t pay their rent, or is habitually late, you are still responsible for paying your own landlord until your lease expires.
But let’s back up a moment. Your first step is to determine whether or not you can sublet. Check your lease to see what it has to say on the subject. And while you’re at it, check the laws in your community.
Even if you are within your legal rights to sublet, it’s always a good idea to let your landlord know. She may object, in which case you’ll either have to drop the idea or go to court, say the folks at ApartmentList, a free service that helps people find rentals.
But let’s say your landlord agrees. After all, the alternative could be a disgruntled tenant at best -- or, if you simply break the lease and move out, lost rent at worst. (By the way, if you do move out clandestinely in the middle of the night, you’ll not only lose your deposit, but your rental record will be tarnished forever, making it difficult to find another place to rent, should the need ever arise.)
Property manager Wallace Gibson advises her Charlottesville, Virginia, clients to be understanding. “Situations arise and you should do your best to work with your tenants to find a solution that satisfies everybody,” she says. “If you’re not willing to be flexible, you may find word-of-mouth can hurt you, and finding tenants can be much more difficult.”
So now the ball’s back in your court. Your next step is finding a viable tenant.
One way is to search online bulletin boards like Nextdoor and Craigslist. You can also run an ad in your local paper or, if you’re near a college or hospital, put your place in the hat with their housing offices. Another possibility is to tack a notice on local restaurants’ or grocery stores’ bulletin boards.
Once you’ve found two or three candidates who seem rent-worthy, check them out thoroughly. Here, references, credit checks, rental histories, even a criminal background search are all in order.
A thorough screening process may be somewhat costly, but it’s an absolute necessity to protect yourself against a bad apple who fails to pay rent and leaves you holding the bag. Consequently, you’ll want to know if they’ve been the subject of previous evictions, ever failed to pay rent or been arrested and convicted of a crime.
At this point, some landlords might want to screen your candidates themselves. If they know what they’re doing, they should be better at it than a novice like you. In fact, if they’re going to all that trouble, maybe they’ll let you out of your lease altogether and sign up one of your prospects to replace you.
If the landlord wants you to remain as a “sublessor,” you should insist on a lease with your “sublessee.” A handshake just won’t do, even if the guy taking over your lease is your best friend. You can find standard lease forms at your local office supply store, or perhaps your landlord will allow you to use one.
Finally, make sure you obtain a security deposit. This will give you at least one month’s cushion should your tenant miss a payment or, like you, decide to move out early.
As you can see, subletting can work, but it is fraught with risk. There’s no guarantee your subtenant won’t experience a life change -- a new job in another city, for example, or a major illness in a loved one back home -- so you could be stuck paying rent for a place you no longer occupy, as well as the mortgage for the house that started this whole process in the first place.
And if your renter turns out to be a dud, or even causes a full-on fiasco, you’re still responsible -- not only for the rent, but also any damages. So if you decide to go this route, proceed carefully.