3 Crucial Things To Know Before You Sublet Your Space (Or List It on Airbnb!)

Who wants to stick around in one space 365 days a year? Not you.

After all, the world is your oyster.

Maybe you’re going to motorcycle through North America for two months. Maybe you’ve decided to move-in with your significant other, but both of you are several months away from the end of your respective leases. Maybe you’ve been offered a dream 3-month-long stint at your company’s overseas headquarters in Australia.

Whatever the reason for your great escape, you need to sublet your apartment or home.

Before you post pictures of your kitchen on Craigslist, or create a profile on AirBnb, there are three critical (and mildly irritating) laws we thought you should know about.

#1: Your Lease Might Restrict Subletting

Did you read your lease carefully? (Be honest … did you really?) Many landlords include explicit “no subletting” clauses within their leases.

If your lease includes wording that says you “may not assign” the lease, or you “may not transfer” the lease, that means you can’t sublet, plain and simple. (The keywords “non-assignable” and “non-transferrable” also carry that same meaning.)

Why do landlords restrict this?

Many landlords like to screen each tenant that lives in the space.

They’ll check things like the tenant’s credit report, job and income history, criminal background, and references. If you sublet the space, you can’t conduct that same level of due diligence. (After all, you probably don’t have the authority to check someone else’s credit report.) That means your landlord might get stuck with a deadbeat.

Furthermore, some units (particularly condos, townhomes, and other dwellings inside a covenant-controlled community) are governed by a Homeowner’s Association, or HOA, that may restrict leasing or subletting. In this situation, even if an individual landlord wanted to grant you the right to sublet or assign the lease, he or she couldn’t. Her hands would be bound by the HOA.

If any of this is something that’s in your lease, you’re on the hook until your lease expires. Sorry!

#2: You Could Be Responsible for Any / All Damages

Here’s another rub: You might be responsible for all damages that your subletter causes. If they spill red wine on the carpet, crack the bathroom mirror, or punch a hole through the drywall, there’s a decent chance the cost of those damages will get taken out your security deposit.

Ruh-roh.

Why is this? To make a long story short: Your security deposit is in the landlord’s hands. Their’s isn’t. When you sublet “under the table,” the subletter is considered your “guest.” And you’re responsible for damages that your guests inflict.

Can you collect a deposit from the subletter? It depends. Many states, such as Georgia, require that deposits are held by a third-party escrow account. You’re not personally allowed to hold a security deposit — and you’re especially not allowed to co-mingle that money with your personal funds inside of your bank account.

Will you get arrested for accepting a security deposit? Probably not. But if a judge finds out that you’ve held the deposit (illegitimately), she’ll probably rule in favor of the subletter. In other words: You can ask for a deposit from your subletter. But that deposit is “unenforceable,” in the technical sense of the word.

The only way to get the deposit liability off your hands is to connect your subletter with your landlord directly. The landlord would need to return your deposit and accept a new one from the subletter.

In order to do this, the landlord would be required to conduct a move-out inspection and furnish you with a written report, before he returns your deposit. He’d also need to perform a written move-in inspection before he collects a new deposit from the subletter.

At this point, you’re functionally processing an early move-out.

#3: Your State Might Restrict AirBnb

Here’s a final worry: your state laws might restrict short-term rentals, such as AirBnb.com or VRBO.com rentals. Many states and municipalities restrict rentals that are less than 30 days in length.

Here’s an abridged portion of the disclaimer that AirBnb shows on its website:

“Some cities have laws that restrict your ability to host paying guests for short periods. These laws are often part of a city’s zoning or administrative codes. In many cities, you must register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether.”

These laws are sporadically enforced. In May 2013, a young man in New York City named Nigel Warren was fined $2,400 for subletting his room on AirBnb. Although the website supported Warren at his hearing, an administrative law judge upheld the penalty.

If you want to learn about the local laws in your municipality, check out the Short-Term Rental Advocacy Center, at stradvocacy.org. This organization was created by AirBnb, HomeAway, FlipKey and TripAdvisor as a joint effort to promote the interests of short-term (less than 30 day) rentals.

Better Safe Than Sorry …

So what are your options, should you need to get out of your lease, but you’re not allowed to sublet? The easiest and most direct thing to do is to read your lease and see if there’s a clause or provision that outlines the process for breaking your lease early. Some landlords will charge either one months’ rent, or a flat fee, as a penalty for any tenant who wants to break the lease.

We know — that sounds like a stiff penalty. But at least you’ll make a clean break from your lease. And you won’t be on the hook for any spilled wine, cracked mirrors or damaged drywall.

That kind of peace-of-mind is certainly worthwhile.