Sublease
An arrangement where a tenant rents out all or part of their leased space to another party (subtenant) while remaining responsible to the original landlord under the master lease. The original tenant becomes a sublessor and maintains liability for rent and lease terms.
Example
“When Sarah got transferred overseas, she arranged a sublease so her roommate could rent out her bedroom to cover the remaining lease payments.”
Memory Tip
A sublease is a lease living 'under' the main lease, like a submarine operating under the surface of the main ocean.
Why It Matters
Subleasing allows businesses to reduce occupancy costs when they have excess space or need to relocate before their lease expires, providing flexibility in changing market conditions.
Common Misconception
A subtenant has the same rights and direct relationship with the property owner as the original tenant.
In Practice
A law firm with a 10-year lease subleases half their office space to an accounting firm, collecting rent while remaining liable to the building owner for the full lease amount.
Etymology
From Latin 'sub' meaning 'under' combined with Old French 'laisser' meaning 'to let go,' creating a lease underneath the original lease.
Common Misspellings
Compare the best financial products for you
More in commercial
Other commercial terms you should know
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.