Sublease Agreement - Commercial Lease

What is a commercial sublease agreement?

A commercial sublease agreement is an agreement that allows a tenant of a commercial property to rent out part of or the whole premises to another business or individual.

 

What is the difference between a commercial sublease agreement and a residential sublease agreement?

A commercial sublease agreement is strictly to be used where the property will be used for commercial activities. The property will be subleased to another business or individual who will be carrying on a business.

A residential sublease agreement (or a sublease agreement for Scotland) is strictly to be used where the property is a residential one and will be subleased to another individual, multiple individuals, or a family who will be living in the property.

 

Is it mandatory to have a commercial sublease agreement?

Yes, it is mandatory to have a commercial sublease agreement that clearly sets out the terms and conditions of the parties to the agreement. This is also the case because the landlord of the property will generally need to give their consent before the property can be subleased.

 

What does subtenant mean?

A subtenant is the person or business that rents commercial property from the original tenant rather than renting directly from the landlord.

 

What does sublandlord mean?

The sublandlord is the original tenant of the property who will be renting out the property to a new business or individual (i.e. the subtenant).

 

What are the prerequisites for a commercial sublease agreement?

Before entering a commercial sublease agreement, the landlord or owner of the property must first give their consent to the subleasing of the property. This will need to be done using a formal consent for subleasing of commercial premises agreement.

 

What has to be done once a commercial sublease agreement is ready?

Once completed, the parties should sign the sublease agreement. If a party is a company or LLP, the agreement should be signed by the person authorised to represent them. The parties should keep a copy of the signed agreement for their records.

 

Which documents should be attached to a commercial sublease agreement?

The following documents can be attached to a commercial sublease agreement:

• The original lease agreement (for England and Wales, see Business Lease Agreement. For Scotland, see Commercial Lease Agreement);
• The Landlord's consent to sublease;
• The schedule for rent payment; or
• Any other appendices to the sublease agreement.

 

Is it necessary to have witnesses for a commercial sublease agreement?

Yes, it is necessary to have a witness for a commercial sublease agreement. The witness must be at least 18 years old and not related to any of the parties to the agreement.

 

What must a commercial sublease agreement contain?

The commercial sublease agreement must contain:

• The duration of the sublease;
• The rent payable;
• The use permitted for the property;
• How the agreement can be terminated; and
• What will happen if the terms are not followed.

 

Which laws are applicable to a commercial sublease agreement?

Insolvency Act 1986

Law of Property Act 1925

Landlord and Tenant Act 1954

Law of Property (Miscellaneous Provisions) Act 1994

 

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