Subleasing can be a practical solution for medical practices looking to optimise their space and reduce costs. This guide and checklist will help you understand the key considerations and steps involved in subleasing commercial spaces.
Subleasing
Subleasing occurs when a tenant rents out part or all of their leased space to another party (the subtenant). This arrangement can be beneficial for both parties, but it is important to navigate it correctly to avoid legal issues.
Risks
As the primary tenant, you remain liable to the landlord for the entire leased space. Ensure that the subtenant adheres to the terms of the original lease.
It is also important to choose a subtenant whose business activities are compatible with your medical practice to avoid disruptions.
Original Lease Agreement
Before you consider subleasing, review your original lease agreement. Ensure that subleasing is permitted and understand any conditions or restrictions imposed by your landlord. Some leases may require landlord consent before you can sublease, while others may restrict subleasing altogether.
Landlord Consent
If required, seek written consent from your landlord. Provide details about the proposed subtenant and the terms of the sublease. Landlords typically want to ensure that the subtenant is financially stable and that the sublease will not negatively impact the property.
Checklist
A "no" or "unsure" response to any of the questions in the checklist indicates that you have identified an area that your sublease may not be legally compliant or market standard. You should seek independent legal advice on the relevant area.
The checklist is not an exhaustive list of all legal matters that should be considered and is not a substitute for obtaining specific legal, tax and accounting advice.
Related Subleases
Where the landlord and tenant are related entities, such as in a self-managed super fund (SMSF) arrangement, and the tenant subleases to a third party, it is crucial to ensure that the sublease incorporates all the required terms to protect both the landlord and the tenant. This ensures potential disputes with the third-party subtenant are minimised. Properly drafted sublease agreements help maintain the integrity of the leasing arrangement and provide legal clarity and protection for all parties involved.
We can help you
Avant Law is a full-service commercial law firm specialising in the medical sector. Feel free to contact us to ensure that your sublease agreement complies with the relevant laws and regulations. We can help you address any potential legal issues and ensure that your rights are protected.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
