What is a sublease agreement? Explanation and usage

What is a sublease agreement? It is the agreement by which a tenant (the main tenant) sublets the leased property, in whole or in part, to another party, the subtenant. This creates a triangle: the main landlord rents to the main tenant, and the main tenant subsequently sublets. In that second relationship, the main tenant acts as the landlord themselves, with all the associated obligations. The crucial point of the matter is almost always the same: is the main tenant permitted to sublet, and what happens to the subtenant when the main lease ends?.

The short answer

• What: a rental agreement between main tenant and subtenant concerning (part of) a space rented by the main tenant himself.
• The triangle: main landlord, main tenant, and subtenant, with two separate contracts that are legally independent of each other.
• Permission: subletting is often only permitted with the permission of the main landlord (Art. 7:221 BW).
• Risk: subletting without permission can lead to the dissolution of the main lease.
• Termination of main lease: in the case of independent residential accommodation, the subtenant is sometimes protected (Art. 7:269 BW); for business premises, different rules apply.

What is a sublease agreement in practice?

In subletting, a person does not rent a space directly from the owner, but from a party that is itself a tenant. Examples include an entrepreneur who rents an office building and sublets two rooms to a freelancer, or a shopkeeper who makes part of their retail space available to another entrepreneur. The main tenant remains fully bound by their own lease agreement with the main landlord. Additionally, they assume a secondary role as a landlord towards the subtenant.

Important to understand: the two contracts are legally separate. In principle, the subtenant has no direct connection to the main landlord. If something breaks in the property, the subtenant holds the main tenant liable, not the owner. And vice versa: the main landlord adheres to their own tenant and, in principle, does not need to interfere with the subtenant.

The triangle: three parties, two contracts

The core of subletting is that triangular relationship. Clearly define the roles:

• Main landlord: the owner or investor who rents the property to the main tenant.
• Main tenant: rents from the owner and sublets. Dual role, dual obligations.
• Subtenant: rents from the main tenant and usually has no direct relationship with the owner.

That separation has consequences. The main tenant must ensure that what he promises to the subtenant aligns with what he himself agreed with the owner. If, for example, he promises a longer rental period than his own contract allows, he will find himself in a difficult position when the main lease ends.

Permission from the main landlord

Whether subletting is permitted depends on the law and the main lease agreement. Pursuant to Article 7:221 of the Dutch Civil Code, a tenant may allow another person to use the leased property, in whole or in part, unless he should have assumed that the landlord had reasonable objections to doing so. In practice, virtually every commercial lease agreement contains a clause prohibiting subletting without written permission. That agreement takes precedence over the general rule.

Subletting without the required permission is risky. It can constitute a breach of the main lease agreement, allowing the main landlord to claim dissolution of the main lease. If the main lease ceases to exist, the subtenant generally loses their legal basis. Therefore, always request permission in advance and record it in writing.

What happens when the main lease ends?

This is the most sensitive point. Because the sublease is dependent on the main lease, the subtenant's position comes under pressure as soon as the main lease ends. The law distinguishes between residential and commercial premises.

In the case of independent living accommodation, Article 7:269 of the Dutch Civil Code offers protection: if the main lease ends, the main landlord automatically continues the sublease and takes the place of the main tenant. The subtenant then becomes an ordinary tenant of the owner. However, the main landlord may seek termination from the court within six months on a limited number of grounds. This protection does not apply to non-independent living accommodation, such as a room.

The situation is different for commercial premises. For premises for small and medium-sized enterprises (Article 7:290 of the Dutch Civil Code, such as shops and hospitality establishments), the subtenant may, under certain circumstances, request continuation from the main landlord pursuant to Article 7:306 of the Dutch Civil Code. For other commercial premises (Article 7:230a of the Dutch Civil Code, such as offices and storage facilities), this protection does not exist, and the sublease generally ends with the main lease. Therefore, explain in the sublease agreement what happens upon termination of the main lease so that the subtenant knows where they stand.

A practical example

A graphic design agency rents a 200-square-meter office and uses half of it. The agency wants to sublet the other half to a freelancer friend. The main lease prohibits subletting without permission. The agency requests written approval from the owner, establishes the sublease for the same duration as the main lease, and stipulates that the sublease ends as soon as the main lease terminates. This way, the freelancer knows exactly where they stand, and the agency runs no risk of its own contract being terminated.

Honest recommendation

You do not always need a lawyer. If you sublet a single room to an acquaintance for a short period and with the owner's written permission, a simple agreement stating the parties, the space, the price, and the duration is often sufficient. However, always have the main landlord's permission put in writing. Only engage a lawyer when longer terms are involved, commercial premises are involved, or significant interests are at stake, or when the position at the end of the main lease truly matters. It is precisely then that the main lease and the sublease can easily become misaligned, and in the event of a dispute, this will cost more than a well-drafted contract beforehand.

Read more about this topic: drafting a sublease agreement and having a sublease agreement drafted. You can have this arranged immediately via sublease agreement.

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