Read further to learn more about the rules & regulations surrounding subletting in Alabama, whether for residential or commercial tenancy.
What is a Sublease Agreement?
A sublease is a special agreement that is an addendum (addition) to a lease contract. It used to transfer some rights under a lease to a third-party. Unless the lease agreement specifically allows a sublease, the original tenant under the original lease (“Master Lease”) of a rental unit must get a landlord’s written permission to contract for a sublease with a third party.
Original Lease Tenant’s Responsibilities Under a Sublease
One reason why people wish to sublease a rental unit is that finding a new tenant may be easier than trying to break an existing lease. If the original tenant’s needs have changed and there is still a considerable amount of time remaining on the original lease, a sublease may be an effective way to pass the rights/obligation under the Master Lease onto a third party.
Besides needing the landlord’s permission, making a prudent choice about a potential tenant for a sublease is important. When subleasing to a third party, in most cases the original tenant remains responsible for all the terms and conditions under the original lease agreement. For example, if a third party who signs a sublease fails to pay the rent, it is common that the original lease tenant must pay the missing rent payment.
This means a tenant who wishes to sublease a rental unit is usually responsible for the actions (good or bad) of the third party that subleases the rental unit.
To avoid problems, be sure to check the background and credit history (with the new potential tenant’s written permission to do so) before agreeing to sublease a rental unit. This can cause many more problems than it solves if the new tenant is a bad one. Be careful and at the same time do not discriminate against any potential tenant.
Sublease Value and Proportional Sublease
One thing that may happen with a sublease is that it has added-value over the original lease. For example, a lease for a desirable rental unit or parking space on excellent terms may be very attractive to another renter who may be willing to pay a premium for the rental unit by agreeing to a sublease.
Sometimes a valuable lease may be subleased for a profit. Also, a sublease may be used for a portion of a rental unit if permitted by the landlord. An example of this is a storefront building with living quarters above. Each part of that rental unit serves a different function and may be a good candidate for a sublease of half the building as a proportion of it, instead of all of it.
Standardized Alabama Sublease Forms
A standard form can be used in Alabama to create a sublease. There are specific state laws that must be followed for a sublease, which include all the state laws found under Alabama Code section 35 – 9, called the Landlord and Tenant Act, which apply to any lease.
If the circumstances of a sublease are complex and not of a standard nature, it is wise to consult with competent legal counsel in the preparation of the sublease agreement to be sure to follow the state law and mitigate (lower) as much of the risk as possible.
Assuming that the lease allows a sublease or the tenant has written permission to sublease the rental unit; here are the important things to include in an Alabama sublease agreement:
- The Names of the Parties: The original tenant under the lease is named in the sublease and is called the “Sublessor.”. The third party that is subleasing the rental unit is named in the sublease and is called the “Sublessee.”
- Rental Unit Location: The rental unit location is given in the sublease using the same language that matches how the rental unit is described in the original lease.
- Term: The term of the sublease is described by stating the exact date the sublease begins and the date that it ends.
- Rent: The amount of rent is stated in the sublease and whether it is paid weekly or monthly. How the rent is paid is described by stating the day of the week for a weekly type or the day of the month for a monthly type that the rent is due and to whom the rent should be paid.
- Utilities: The utilities to be paid by the Sublessor and those that are to be paid by the Sublessee are described in detail.
- Liability: This clause describes the liability or the Sublessee (the new tenant). It states that the Sublessee will be liable for any damages to the Sublessor. The Sublessor continues to have the ultimate responsibility to pay for any damages that impact the landlord as stated in the original lease agreement.
- Authorized Occupants: This identifies the new tenant(s) and those that are authorized to live in the rental unit including any policy about short-term guests (such as a limit of 48 hours that guests are permitted to stay in the rental unit).
- Security Deposit: This security deposit is held by the Sublessor (not the landlord). There is no state law requirement to pay interest on such a security deposit held or to keep the funds separate from other money. Alabama state law does require that the security deposit be limited to no more than one month’s rent, except a pet deposit may be an additional amount.An additional pet deposit is not limited to any dollar figure. The only other exception is if the type of use of the rental unit creates additional risk for the landlord. An example of this might be a hobby, such as welding metal sculptures in a garage, which creates additional risk to the rental unit. An additional security deposit for that activity is allowed under the state law.
- Return of Security Deposit: Alabama law requires the security deposit to be returned within 60 days after a tenant vacates a rental unit. Any legitimate deductions for repairs that need to be made, by damage caused by the tenant, must be explained in writing with the return of the remaining balance of the security deposit (if any).If the cost of the repairs exceeds the security deposit, a written notice should itemize the cost of the repairs that should be paid by the Sublessee (“excessive damages”). The Sublessor has the right to sue the Sublessee for excessive damages and under state law may recover those actual costs plus reasonable attorney’s fees.
- Inventory of Included Items: This is a list of items in the rental unit that are part of the sublease. It could be furniture, appliances, or anything else that comes with the rental unit.
- Lead-Based Paint Notice Under Alabama state law, if the rental unit’s premises were built before 1978, the Sublessee must be given a written warning notice, called a Lead-Based Paint Disclosure, about the potential hazards that says the property might contain lead-based paint.
- Master Lease Inclusion: This is a statement that incorporates the entire Master (original) Lease as a part of the sublease agreement. All of the terms and conditions in the Master Lease are included in the sublease by reference. A copy of the Master Lease is attached to the sublease. If there are any exceptions about things in the Master Lease that are not included they should be clearly stated in this section.
- Disputes: These include a description of how disputes between the Sublessor and Sublessee are to be settled, which may include mediation and/or binding arbitration to avoid more expensive legal proceedings.
- General Conditions: A statement is included here that the written sublease agreement contains all of the agreements between the parties and can only be modified by written consent of the parties to the agreement.
- Smoking Policy: Alabama law permits the designation of a property as a non-smoking area. If smoking is restricted in the rental unit, any designated smoking areas are identified in the sublease.
- Landlord’s Consent This section describes how the landlord is asked to give consent (if consent is not already included in the Master Lease) and if the landlord has given consent. It is possible to create a signed sublease that is conditional on being accepted thereafter by the landlord as a prior condition before the sublease becomes fully-effective. If that is the case, the procedures of how to get a landlord’s consent are described in this section.
- Governing Law: The governing law is stated to be Alabama law and specifically to include all the terms and conditions under the Alabama Code section 35 – 9, called the Landlord and Tenant Act. Note that Alabama law allows a lease or sublease to include these terms by reference only to the state law and they do not have to be explicitly stated in the agreement.
- Signature: This section includes the date signed and the signatures of the Sublessor, the Sublessee, any Co-Sublessors and Co-Sublessees (if they exist), and the signature of the Landlord giving consent to the sublease. Also, include a place for the initials of the parties to indicate that a copy of the Master Lease is attached.
Chapter 9 – Landlord and Tenant