What is a Sublease Agreement in NYC?

The Sublease Agreement in NYC Explained

What Is a Sublease Agreement in NYC?

A sublease agreement is a legally binding document between an existing tenant of an apartment and a new tenant who wishes to rent the apartment before the existing tenant’s lease has expired. The new tenant is referred to as the under-tenant or sublessee, while the existing tenant is referred to as the over-tenant or sublessor.

The sublease agreement will reference the master lease agreement between the existing tenant and the landlord. Most master lease agreements will require the tenant to obtain landlord approval before subleasing their apartment.

Pro Tip: Shareholders of co-op apartments are technically tenants who hold a proprietary lease to their apartment. As a result, anytime a co-op apartment owner wants to rent their apartment, they are technically subletting their apartment since the entire building is owned by the cooperative corporation.

Do You Need Board Approval to Sublease?

You do not need board approval to sublease an apartment if it is a condo or part of a multi-family property such as a sub-divided townhouse which will not have a board of directors. You will only need the approval of the landlord to sublease the apartment. With that said, you’ll still need to follow any building rules and city regulations around minimum lease terms. For example, buildings generally will not allow lease terms shorter than 30 days. In fact New York passed a law in 2016 prohibiting even the advertisement of rental listings for terms shorter than 30 days.

If you live in a co-op building, then you will most likely need coop board approval unless you are the sponsor and you are renting out a sponsor unit. This can be a tedious process as some co-op boards will require potential sublessees to fill out the same lengthy co-op board application as prospective purchasers in the building.

Hauseit NYC Buyer Closing Credit

Coops Prefer Owner Occupancy

This can be highly discouraging for someone who simply wants to rent an apartment and is not expecting to have their personal privacy completely invaded. Having a lengthy board package requirement just to sublet an apartment can make a co-op apartment extremely tough to rent out. However, that’s precisely the intention of many co-op buildings which have a strong preference for owner occupancy.

Pro Tip: With interest rates still at historic lows, why not buy an apartment in NYC instead of continuing to pay sky high rent to your landlord? Do a buying vs renting analysis first and then check out our Closing Cost Calculator for Buyers in NYC to see if you can afford to become a homeowner.

Subletting a Co-Op Sponsor Unit

The sublease process for a sponsor owned apartment, otherwise known as a sponsor unit, is dramatically easier. That’s because the original sponsor, or developer, of a co-op building will have many special rights when it comes to apartment units that it has retained. These apartments that the sponsor has retained are called unsold shares of the coop because they have never been sold, and the units are typically in original condition from when the building was first developed by the sponsor.

A rental application will still be required, but you can expect it to be much simpler than your typical co-op board package. In fact, a rental application for a sponsor owned co-op apartment will resemble your typical condo application which can often only be a page or two.

Pro Tip: If you’re not interested in ever completing a lengthy and invasive co-op board package, consider buying a new construction home or a re-sale condo in NYC. Better yet, pair your purchase with our First Time Buyers Program where you can earn a credit of up to $20,000 or more against your closing costs in NYC.

Read the Full Article: https://www.hauseit.com/the-sublease-agreement-in-nyc-explained/

Disclosure: Hauseit (https://www.hauseit.com) and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The services marketed on Hauseit.com are provided by licensed real estate brokers and other third party professional service providers. Hauseit LLC is not a licensed real estate broker nor a member of any multiple listing service (MLS).



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