If I sublet my commercial space, am I still on the hook if the subtenant doesn't pay?
The short answer
Generally yes — when you sublet commercial space, you remain fully liable to the landlord under the original lease. The subtenant's rent goes to you, and you remain obligated to pay the landlord whether or not the subtenant pays. A sublease does not transfer your obligations to the landlord; it creates a separate relationship between you and the subtenant while your obligations under the master lease continue unchanged. A lease assignment, by contrast, transfers the lease to the buyer — but typically requires landlord consent and, in most cases, does not release the original tenant from liability unless the landlord expressly agrees. Scan your lease to see what consent is required for subletting and what liability you retain.
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What a sublease structure usually means for liability
In a sublease, the original tenant (sublandlord) remains a party to the master lease and continues to owe all obligations to the landlord: full rent on time, compliance with use restrictions, maintenance requirements, and personal guarantee obligations if any. The subtenant pays rent to the sublandlord under the sublease agreement — but if the subtenant defaults, the sublandlord must still pay the landlord. The landlord's counterparty is the original tenant, not the subtenant.
A lease assignment differs: it transfers the tenant's position in the lease to the buyer directly, making the buyer the landlord's counterparty. However, many commercial lease assignments do not release the original tenant from liability — the landlord may hold both the original tenant and the assignee responsible unless a written release is obtained. Whether a sublease or assignment is the better structure for a given situation depends on what the landlord will consent to and what liability reduction is achievable.
Why people worry
Tenants who sublet commonly report not fully appreciating that a subtenant default creates an immediate cash obligation to the landlord, funded by the original tenant. The gap between what the subtenant pays and what the original lease requires can be material. Additionally, a subtenant who damages the space, violates the use restrictions, or otherwise breaches the master lease creates liability that flows back to the original tenant.
What to look for in your lease
- Whether subletting requires the landlord's prior written consent and on what standard.
- Whether a recapture right allows the landlord to terminate the lease rather than consent to a sublease.
- Whether subleasing at a higher rent than the master lease rent entitles the landlord to a share of the premium.
- What the sublease must require — use restrictions, maintenance standards, insurance — to keep the original tenant in compliance with the master lease.
- Whether the personal guarantee remains in place after a sublease and covers the subtenant's defaults.
Questions to ask before signing
- Ask the landlord what subletting conditions apply under this lease and whether consent is required.
- Ask the other party to clarify whether a sublease releases any of your personal guarantee obligations.
- Confirm whether the landlord is entitled to any portion of sublease rent that exceeds master lease rent.
- Consider having the sublease agreement reviewed to ensure the subtenant's obligations mirror your obligations under the master lease.
Why scan instead of guess
The general rule tells you the baseline. Your lease tells you what you’re actually being asked to sign — and the wording is what binds. Dang reads the document and flags the clauses worth reviewing, in plain English.
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Common questions
What is the difference between a sublease and an assignment?
In a sublease, the original tenant creates a separate agreement with a subtenant and remains fully liable to the landlord. In an assignment, the original tenant's position in the master lease is transferred to a new party who becomes the landlord's direct counterparty. Assignments typically require landlord consent and may not release the original tenant unless the landlord expressly agrees to a release.
Can I sublet at a higher rent than I'm paying?
Possibly, but many commercial leases include a provision requiring the tenant to share any sublease premium — the difference between sublease rent and master lease rent — with the landlord. Whether this applies depends on the lease. Confirming before negotiating a sublease rate is advisable.
What happens if my subtenant violates the master lease terms?
The original tenant remains responsible to the landlord for those violations. A subtenant who violates use restrictions, maintenance requirements, or other master lease terms creates a default that the original tenant — as the landlord's counterparty — must cure. The sublease agreement should pass through the master lease's key obligations to the subtenant.
No account required · File deleted after analysis · Not legal advice. Dang reports contract findings in plain English — general information, not legal advice about your situation. For consequential decisions, consult a licensed attorney in your state.