October 24, 2008

Tips & Trends
From Rory S. Coakley on some of the latest real estate news and happenings.

To Avoid Sublet Headaches, Cover All Your Legal Bases
Think Like a Landlord: Don't Hand Over Keys Without Credit Check, Security Deposit and a Written Contract

So you landed a spot on the next dating reality show, but you still have to pay rent during the two months of taping. Why not sublet?

Although subletting can be a great way for a renter to recoup money during a long vacation, the arrangement can be risky and complicated, with rules varying by state and landlord.

First, check your lease to see whether it allows subleasing. Don't try to fly under the radar or you may violate your lease and find yourself homeless or in court.

If the landlord allows a sublet, get approval in writing. The landlord often will want to qualify the subletter using the same requirements as a renter. This could mean a criminal background check or employment verification. A landlord may also ask a subletter to sign a sublease.

"Without a lease, the subletter wouldn't have any legal obligations to the owner and vice versa," says Michael Semko, counsel at the National Apartment Association.

If your landlord doesn't require any checks, do it yourself. For example, run a credit check and ask for reference letters from prior landlords and employers. To run a credit check, you must have written approval from the potential subletter.

"The most important thing is be careful who you get involved with," said Eric Kahan, a partner at law firm Sperber Denenberg & Kahan, who specializes in tenant and landlord rights.

"You remain responsible for the lease terms. You don't want to get involved with a subtenant who proves untrustworthy," he said.

Requiring credit checks and reference letters is likely to shrink your pool of potential subletters. Some would-be subletters won't jump through so many hoops for temporary housing. But for the renter, it's worth waiting for so you have peace of mind.

And if you're thinking of pocketing some candy money while subletting, think again. Although there's not a hard and fast rule for every state, generally most renters can't profit off a sublet by charging more than the rent, Kahan said.

When you get potential subletters through the door, don't market your apartment by masking drawbacks. Instead, be upfront about any problems. Offer suggestions to mitigate those issues. Only you know how to manipulate the quirks of the place.

For example, point out that if someone runs the water in the kitchen sink while you're showering, the hot water blinks in and out. If a subletter knows what she's getting into, she's less likely to bail on the arrangement because the plumbing's a little off.

Once you find a trustworthy subletter, protect yourself with a contract between you and him, Kahan said. This sublease contract should spell out the terms, including rent, utility payments and duration, and anything else that needs to be addressed. Will the subletter keep the cable and Internet? Can he use your towels and sheets? Do you want her to feed your fish?

The contract also should stipulate how the apartment should be left. Otherwise, you could return jet-lagged after a 14-hour flight from Egypt to find no clean towels, sheets or dishes. You might want to arrange for a professional cleaning service to come in immediately after the sublease on the subletter's dime.

It would be considerate, too, to have a professional cleaning before the subletter arrives.

A sublease contract also protects the subletter who otherwise is blindly relying on an oral promise.

David Fulco, 27, of New York, ran into that problem when the original renter returned one month earlier than expected with three family members in tow. There were two other subletters in the apartment plus a "random dude" who slept on the futon.

"I was told there would be me and two flamenco dancers in a three-bedroom," Fulco said. "One month. Seven people in a three-bedroom."

Set up a local contact for your subletter, such as a friend or colleague who has an extra pair of keys in case of an emergency and who can pick up rent and utility payments for you. Make sure to leave the contact information for the landlord and maintenance staff, too. Your landlord should also have your subletter's information and your contact information.

Make sure to ask for a security payment, too, just as a landlord would. Typically, it's equal to one month's rent in case the subletter skips out on a payment. Also, you can use the money to make any repairs that may be needed, Kahan said.

"The number one thing to remember is that the original resident, and not the subletter, is going to be on the hook for all obligations in the lease," Semko said.

Story By J.W. Elphinstone - Associated Press - The Washington Post