Picture a woman named Dana who closes her design studio after six years. She has three years left on her lease and no way to pay for them. A friend-of-a-friend runs a growing consultancy and wants the space. They shake hands, Dana's landlord signs a one-page consent, and Dana walks out feeling lighter than she has in months. Fourteen months later the consultancy stops paying. The landlord does not call the consultancy. The landlord calls Dana.
She is stunned. She doesn't live there, doesn't use the space, and hasn't touched a key in over a year. But her name is still on the only contract the landlord ever agreed to, and that contract never stopped being hers.
That gap between using a space and owing for it is what this article is about.
Two relationships that don't connect
A sublease creates two separate agreements, and the law treats them as strangers to each other.
The first is the prime lease: you and your landlord. The second is the sublease: you and your subtenant. In the second one you are the landlord. You collect the rent, you enforce the terms, and you carry the risk if the subtenant misbehaves.
What's missing is any contract between the landlord and the subtenant. Lawyers call the idea privity of contract, meaning a direct agreement between two parties that lets one sue the other on it. In a typical sublease the subtenant has that with you, and you have it with the landlord. The landlord and subtenant have it with no one.
This cuts in a direction people don't expect. Because the subtenant never promised the landlord anything, the landlord usually can't sue the subtenant for rent. The only person who promised to pay is you.
Why consent is not a release
Most leases require the landlord's written consent before you sublease. Tenants often hear that consent and assume the landlord has approved the whole arrangement, including the idea that the tenant is now out of the picture.
It doesn't mean that. Consent says the landlord won't treat the sublease itself as a breach. It is permission, not forgiveness. Unless the consent document says in plain words that the landlord releases you from future obligations, you remain liable for the rent, the maintenance, the insurance and every other covenant for the rest of the term.
A release of that kind is sometimes called a novation: a new arrangement in which one party steps out and another steps in. Landlords rarely volunteer one, because the original tenant's credit is often the reason they signed the lease at all. If your business had a strong balance sheet and your replacement doesn't, a release trades something good for something worse. Most landlords will say no, and many consent forms actually restate that you stay liable.
Sublease versus assignment: a distinction that matters less than you think
People often assume an assignment (transferring the whole lease) cleanly ends their duties, while a sublease doesn't. The reality is more uncomfortable.
In an assignment, the new tenant steps into your shoes and takes on a direct relationship with the landlord through what's called privity of estate, the connection that comes from holding the leasehold. That makes the assignee directly answerable to the landlord. But in most places the original tenant stays on the hook under the contract unless the landlord expressly releases them. So after an assignment you may have two parties responsible, and you're the backstop.
After a sublease, you are the only party the landlord can reach directly. Either way, without a written release, your name is the one that holds the risk. The label on the transfer matters less than the question: did the landlord agree, in writing, to let me go?
What a subtenant's default does to you
The danger runs in more than one direction. A few mechanics deserve attention:
- Their default becomes yours. If the subtenant leaves a mess, skips a repair the prime lease requires, or lets insurance lapse, the landlord sees a violation by the tenant, which is you. Cure periods on the prime lease keep running whether or not you knew.
- The sublease usually ends if the prime lease does. A sublease is derived from your rights. If you default and the landlord terminates the lease, the subtenant's right to occupy typically falls with it, even if the subtenant has paid every month. That's a risk you need to disclose and, ideally, address in your sublease terms.
- You can't give away more than you hold. A sublease generally can't run longer than your own term or grant rights your prime lease doesn't give you. Subleasing for the full remaining term, with no gap, can even be treated as an assignment under some lease language or local law, which changes the analysis.
- The landlord may share in your upside. Many consent clauses say any rent you collect above what you pay gets split with the landlord, often described as a profit-sharing or excess-rent provision. A subtenant who also pays for your furniture or goodwill can raise questions about how that money is counted.
A related risk is the landlord's recapture right. Some leases let the landlord take the space back when you ask to sublease. That is a separate topic, but it is another reason to read the transfer clause before you tell anyone you're planning to leave.
The subtenant is also taking a risk
It helps to see the other side's position, because a good sublease works for both. The subtenant is renting from someone with no authority beyond the prime lease. They inherit terms they may never have read, they can lose the space if you default, and they have no direct line to the landlord if something breaks. A subtenant who has been burned before will ask for the prime lease, for a copy of the landlord's consent, and for assurance that you're current on rent. If yours doesn't ask, that's a sign they may not be careful about paying either.
Your next moves
If you are considering a sublease, or you already have one, here is what to do this week:
- Pull your prime lease and read the assignment and subletting clause start to finish. Find out whether consent is required, whether the landlord can withhold it for any reason or only a reasonable one, and whether there is a fee, a recapture right, or an excess-rent split. Write the answers on one page.
- Ask for a release in writing before you sign anything. Send the landlord a short request that asks directly whether they will release you from obligations arising after the transfer. If the answer is no, you at least know exactly what you are carrying.
- If there's no release, read the consent form for restated liability. Look for phrases like "Tenant shall remain fully liable." Then negotiate the things you can: a notice right if the subtenant falls behind, and a longer window to cure.
- Make the sublease mirror the prime lease. Attach the prime lease as an exhibit, state that the subtenant must follow its terms, and give yourself the right to enter and inspect. Require the subtenant to carry insurance that names both you and the landlord.
- Collect a real security deposit and a guaranty if you can. A deposit covering several months of rent, and a personal or parent-company guaranty from the subtenant, are the cheapest protection you'll find against the exact situation Dana ended up in.
- Put the prime lease's key dates on a calendar you check. Rent due dates, insurance renewal, and cure deadlines still apply to you, regardless of who is sitting in the space.
Where this leaves you
A sublease can be a perfectly good tool, and for many tenants it's the only sensible way out of a space they can no longer afford. The mistake is thinking it ends your lease. It adds a second contract on top of the first, and the first one still has your name on it.
This is the kind of detail that gets lost between a consent form, a prime lease and a sublease, each written at a different time by a different person. Closeout is built for that moment: it reads a commercial lease and the documents attached to it and surfaces the obligations that stay with you, so you can see what you're still carrying before you hand over the keys. If you're weighing a sublease or an exit, you can try it at closeout.lumenlabs.works.