Commercial Sublease Agreement

Purpose of This Template

A Commercial Sublease Agreement allows an original tenant (Sublandlord) to lease all or part of their commercial space to a new tenant (Subtenant). This document:

• Transfers Occupancy Rights while maintaining Sublandlord's obligations under the Master Lease
• Protects All Parties by clearly defining rights, responsibilities, and liabilities
• Ensures Compliance with Master Lease terms and landlord requirements
• Addresses Key Issues including rent, maintenance, insurance, and default remedies

Critical Understanding: Liability Structure

The Sublease Relationship

LANDLORD (Property Owner)
|
| Master Lease
v
SUBLANDLORD (Original Tenant)
|
| Sublease Agreement
v
SUBTENANT (New Occupant)
KEY POINT: The Sublandlord remains fully liable to the Landlord under the Master Lease, regardless of the Subtenant's performance. If the Subtenant fails to pay rent or damages the property, the Sublandlord is responsible to the Landlord.

Pre-Sublease Checklist

Master Lease Review

☐ Review Master Lease for subletting provisions
☐ Identify consent requirements (typically required)
☐ Review prohibited uses
☐ Identify required notice periods
☐ Confirm Master Lease term extends beyond proposed sublease term
☐ Review any assignment/sublease fees

Landlord Consent

☐ Written consent required: ☐ Yes ☐ No
☐ Consent standard:
☐ "Sole discretion" (landlord has broad rights to refuse)
☐ "Not unreasonably withheld" (must have legitimate reason)
☐ No standard specified (varies by state law)
☐ Landlord's consent form obtained
☐ Consent fee paid (if applicable): $_______

Subtenant Due Diligence

☐ Financial statements reviewed
☐ Credit check completed
☐ Business references verified
☐ Prior landlord references checked
☐ Business licenses verified
☐ Insurance capability confirmed

Commercial Sublease Agreement

Parties

SUBLANDLORD:
| Field | Information |
|-------|-------------|
| Legal Name | |
| Business Type | ☐ Corporation ☐ LLC ☐ Partnership ☐ Individual |
| Address | |
| Phone | |
| Email | |
| Contact Person | |

SUBTENANT:
| Field | Information |
|-------|-------------|
| Legal Name | |
| Business Type | ☐ Corporation ☐ LLC ☐ Partnership ☐ Individual |
| Address | |
| Phone | |
| Email | |
| Contact Person | |

MASTER LANDLORD (for reference):
| Field | Information |
|-------|-------------|
| Legal Name | |
| Address | |
| Phone | |

Article I: Premises and Master Lease

Section 1.1 - Master Lease Reference

☐ Master Lease dated: _________________________________
☐ Between: _________________________________ (Landlord)
☐ And: _________________________________ (Tenant/Sublandlord)
☐ Master Lease copy attached as Exhibit A

Section 1.2 - Subleased Premises

☐ Entire Premises - All space under Master Lease
☐ Partial Premises - Portion of space under Master Lease

Description of Subleased Premises:
| Element | Description |
|---------|-------------|
| Property Address | |
| Suite/Unit Number | |
| Floor | |
| Square Footage | sq. ft. |
| Common Areas Included | |

☐ Floor plan attached as Exhibit B showing subleased area

Section 1.3 - Permitted Use

☐ Use limited to: _________________________________
☐ Use must comply with Master Lease
☐ Prohibited uses: _________________________________
☐ Compliance with all applicable laws and zoning required

Section 1.4 - Condition of Premises

☐ Premises delivered "AS IS"
☐ Sublandlord to complete improvements: _________________________________
☐ Subtenant to complete improvements: _________________________________
☐ Walk-through inspection completed: Date _____________
☐ Condition report attached as Exhibit C

Article II: Term

Section 2.1 - Sublease Term

☐ Sublease term does not exceed Master Lease term (REQUIRED)
☐ Master Lease expiration date: _________________________________

Section 2.2 - Early Access

☐ Early access for setup: ☐ Yes ☐ No
☐ Early access period: From _____________ to _____________
☐ Rent during early access: ☐ Full rent ☐ Reduced rent ☐ No rent

Section 2.3 - Renewal Options

☐ No renewal option
☐ Renewal option granted:
- Number of renewal terms: _____________
- Length of each renewal: _____________
- Notice required: _____________ days before expiration
- Renewal rent: ☐ Same rate ☐ Market rate ☐ Specified increase: ___%
- Conditions for renewal: _________________________________

☐ Any renewal subject to Master Lease term and Landlord approval

Article III: Rent and Security

Section 3.1 - Base Rent

Rent Schedule:
| Period | Monthly Rent | Annual Rent |
|--------|--------------|-------------|
| Year 1 | $ | $ |
| Year 2 | $ | $ |
| Year 3 | $ | $ |

Section 3.2 - Rent Payment Terms

☐ Rent due on the _____ day of each month
☐ First payment due upon execution: $_____________
☐ Prorated rent for partial month: $_____________
☐ Payment method: ☐ Check ☐ ACH ☐ Wire ☐ Other: _____________
☐ Payment address: _________________________________

Section 3.3 - Late Payment

☐ Grace period: _____ days
☐ Late fee: $_____ or _____% of monthly rent
☐ Interest on late payments: _____% per annum
☐ Returned check fee: $_____

Section 3.4 - Security Deposit

Security Deposit Terms:
☐ May be applied to last month's rent: ☐ Yes ☐ No
☐ Interest bearing: ☐ Yes (rate: _____%) ☐ No
☐ Return deadline: _____ days after lease termination
☐ Deductions allowed for:
☐ Unpaid rent
☐ Damages beyond normal wear
☐ Cleaning costs
☐ Other: _________________________________

Section 3.5 - Additional Rent/Operating Expenses

☐ Gross Lease - Base rent includes operating expenses
☐ Modified Gross - Base rent plus:
☐ Utilities
☐ Property taxes (pass-through)
☐ Insurance (pass-through)
☐ Triple Net (NNN) - Base rent plus pro rata share of:
☐ Property taxes: Est. $_____________/month
☐ Insurance: Est. $_____________/month
☐ CAM charges: Est. $_____________/month

Subtenant's Proportionate Share: _____% of building/complex

Section 3.6 - Utilities

☐ Included in rent: _________________________________
☐ Paid separately by Subtenant:
☐ Electricity - Account in Subtenant's name
☐ Gas - Account in Subtenant's name
☐ Water/Sewer - Account in Subtenant's name
☐ Trash removal
☐ Internet/Phone
☐ Other: _________________________________

Article IV: Master Lease Compliance

Section 4.1 - Incorporation of Master Lease Terms

This Sublease is subject to all terms of the Master Lease. Except as modified herein, Subtenant shall comply with all obligations of "Tenant" under the Master Lease as they relate to the Subleased Premises, including but not limited to:

☐ Operating hours and restrictions
☐ Signage requirements
☐ Parking allocation and rules
☐ Common area use
☐ Prohibited activities
☐ Maintenance standards
☐ Alteration restrictions
☐ Environmental compliance

Section 4.2 - Subtenant Acknowledgment

☐ Subtenant has received copy of Master Lease
☐ Subtenant has reviewed Master Lease
☐ Subtenant agrees to comply with Master Lease terms
☐ Subtenant understands violations may terminate this Sublease

Section 4.3 - Sublandlord's Master Lease Obligations

Sublandlord represents and warrants:
☐ Master Lease is in full force and effect
☐ Sublandlord is not in default under Master Lease
☐ Sublandlord has right to sublease (with consent if required)
☐ Sublandlord will maintain Master Lease in good standing

Section 4.4 - Landlord Consent

☐ Landlord's written consent attached as Exhibit D
☐ Landlord consent date: _________________________________
☐ Conditions of Landlord consent: _________________________________

Article V: Insurance Requirements

Section 5.1 - Subtenant's Insurance Obligations

Subtenant shall maintain the following insurance:

Commercial General Liability:
☐ Required: ☐ Yes ☐ No
☐ Minimum coverage: $_____________ per occurrence
☐ Minimum coverage: $_____________ aggregate
☐ Additional insureds:
☐ Sublandlord
☐ Master Landlord
☐ Property Manager

Property Insurance:
☐ Required for Subtenant's property/improvements
☐ Coverage amount: $_____________
☐ Type: ☐ Replacement cost ☐ Actual cash value

Business Interruption Insurance:
☐ Required: ☐ Yes ☐ No
☐ Minimum coverage: _____________

Workers' Compensation:
☐ Required if Subtenant has employees
☐ Statutory limits required

Other Required Insurance:
☐ _________________________________

Section 5.2 - Insurance Requirements

☐ Insurance companies rated A- or better by A.M. Best
☐ Certificates of insurance due before occupancy
☐ 30 days' notice of cancellation required
☐ Annual renewal certificates required

Section 5.3 - Sublandlord's Insurance

Sublandlord shall maintain insurance as required by Master Lease.

Section 5.4 - Waiver of Subrogation

☐ Mutual waiver of subrogation agreed
☐ Each party's insurer to provide waiver endorsement

Article VI: Maintenance and Repairs

Section 6.1 - Subtenant's Responsibilities

Subtenant shall maintain:
☐ Interior of Subleased Premises
☐ All fixtures and equipment installed by Subtenant
☐ Cleanliness and orderly condition
☐ HVAC filters (if applicable)
☐ Interior lighting and bulbs
☐ Plumbing fixtures within Subleased Premises
☐ Other: _________________________________

Section 6.2 - Sublandlord's Responsibilities

Sublandlord shall maintain (or cause Landlord to maintain per Master Lease):
☐ Structural components
☐ Building systems (HVAC, electrical, plumbing - main)
☐ Common areas
☐ Exterior and roof
☐ Other: _________________________________

Section 6.3 - Reporting Maintenance Issues

☐ Subtenant shall promptly report needed repairs to Sublandlord
☐ Emergency contact: _________________________________
☐ Non-emergency reporting method: _________________________________

Section 6.4 - Alterations and Improvements

☐ No alterations without prior written consent of:
☐ Sublandlord
☐ Master Landlord
☐ Subtenant improvements remain property of: ☐ Subtenant ☐ Sublandlord
☐ Removal required at termination: ☐ Yes ☐ No
☐ Restoration required at termination: ☐ Yes ☐ No

Article VII: Default and Remedies

Section 7.1 - Events of Default by Subtenant

The following constitute default:
☐ Failure to pay rent within _____ days of due date
☐ Failure to pay other amounts within _____ days of notice
☐ Violation of Sublease terms not cured within _____ days of notice
☐ Violation of Master Lease terms
☐ Abandonment of Premises
☐ Bankruptcy filing by Subtenant
☐ Assignment without consent
☐ False representations in Sublease application

Section 7.2 - Sublandlord's Remedies

Upon default, Sublandlord may:
☐ Terminate Sublease upon written notice
☐ Re-enter and take possession
☐ Pursue unpaid rent and damages
☐ Accelerate remaining rent
☐ Re-let premises and recover deficiency
☐ Exercise all remedies available under Master Lease and law

Section 7.3 - Holdover Rent

If Subtenant remains after expiration:
☐ Holdover rent rate: _____% of Base Rent (typically 150-200%)
☐ Tenancy type during holdover: ☐ Month-to-month ☐ At will
☐ Subtenant liable for all damages from holdover, including damages to Sublandlord under Master Lease

Section 7.4 - Default by Sublandlord

If Sublandlord defaults under Master Lease:
☐ Subtenant may cure default and offset against rent
☐ Subtenant may terminate Sublease if Master Lease terminated
☐ Sublandlord shall promptly notify Subtenant of any default notices

Article VIII: Indemnification and Liability

Section 8.1 - Subtenant's Indemnification

Subtenant shall indemnify and hold harmless Sublandlord and Landlord from:
☐ Claims arising from Subtenant's use of Premises
☐ Claims arising from Subtenant's negligence
☐ Claims arising from Subtenant's breach of Sublease
☐ Claims arising from Subtenant's violations of law
☐ Claims by Subtenant's employees, customers, or invitees

Section 8.2 - Sublandlord's Indemnification

Sublandlord shall indemnify and hold harmless Subtenant from:
☐ Claims arising from Sublandlord's negligence
☐ Claims arising from Sublandlord's breach of Sublease
☐ Claims arising from Sublandlord's breach of Master Lease (to extent affecting Subtenant)

Section 8.3 - Limitation of Liability

☐ Neither party liable for consequential damages
☐ Sublandlord not liable for acts of Landlord or other tenants
☐ Sublandlord not liable for utility interruptions beyond its control

Article IX: Assignment and Further Subletting

Section 9.1 - Restrictions

☐ Subtenant shall not assign or further sublet without:
☐ Sublandlord's prior written consent
☐ Master Landlord's prior written consent
☐ Consent standard: ☐ Sole discretion ☐ Not unreasonably withheld
☐ Any approved assignment does not release Subtenant from obligations

Section 9.2 - Conditions for Consent

If consent requested, Sublandlord may require:
☐ Financial statements of proposed assignee/sub-subtenant
☐ Business plan
☐ References
☐ Assumption agreement
☐ Increased security deposit

Article X: Termination and Surrender

Section 10.1 - Surrender of Premises

Upon termination, Subtenant shall:
☐ Surrender Premises in good condition (normal wear excepted)
☐ Remove all Subtenant's property
☐ Remove alterations if required
☐ Restore Premises if required
☐ Return all keys and access devices
☐ Provide forwarding address

Section 10.2 - Abandoned Property

☐ Property left after _____ days deemed abandoned
☐ Sublandlord may dispose of abandoned property
☐ Subtenant responsible for disposal costs

Section 10.3 - Early Termination

☐ No early termination right
☐ Early termination permitted:
- Notice required: _____ days/months
- Termination fee: $_____________
- Conditions: _________________________________

Article XI: Miscellaneous Provisions

Section 11.1 - Notices

All notices shall be in writing and delivered:
☐ By personal delivery
☐ By certified mail, return receipt requested
☐ By overnight courier
☐ By email (with confirmation for non-legal notices)

To Sublandlord: _________________________________
To Subtenant: _________________________________

Section 11.2 - Governing Law

This Sublease governed by laws of: State of _________________________________

Section 11.3 - Dispute Resolution

☐ Mediation required before litigation
☐ Binding arbitration - Arbitration association: _________________________________
☐ Litigation - Venue: _____________ County

Section 11.4 - Attorneys' Fees

☐ Prevailing party entitled to reasonable attorneys' fees
☐ Each party bears own costs regardless of outcome

Section 11.5 - Entire Agreement

This Sublease (including exhibits) constitutes the entire agreement. No oral modifications permitted.

Section 11.6 - Severability

Invalid provisions shall not affect remaining provisions.

Section 11.7 - Binding Effect

This Sublease binds and benefits parties and their successors and permitted assigns.

Section 11.8 - Quiet Enjoyment

Provided Subtenant performs all obligations, Sublandlord covenants that Subtenant shall peacefully enjoy the Premises.

Signature Page

Sublandlord Signature

Subtenant Signature

Landlord Consent Form

Consent to Sublease

The undersigned Master Landlord hereby consents to the sublease of the Premises described above from Sublandlord to Subtenant, subject to the following terms:

☐ Consent is granted without conditions
☐ Consent is granted subject to the following conditions:
_________________________________________________________________
_________________________________________________________________

☐ This consent does not release Sublandlord from any obligations under the Master Lease
☐ Subtenant agrees to comply with all terms of the Master Lease
☐ This consent does not constitute consent to any future sublease or assignment

MASTER LANDLORD:
| | |
|---|---|
| Entity Name | _________________________________ |
| By (Signature) | _________________________________ |
| Printed Name | _________________________________ |
| Title | _________________________________ |
| Date | _________________________________ |

Exhibits Checklist

☐ Exhibit A: Copy of Master Lease
☐ Exhibit B: Floor Plan/Premises Description
☐ Exhibit C: Condition Report/Inspection Checklist
☐ Exhibit D: Landlord Consent
☐ Exhibit E: Rules and Regulations
☐ Exhibit F: Certificates of Insurance

Important Notices

Sublandlord Continues Responsible

The Sublandlord remains fully responsible to the Landlord under the Master Lease. If the Subtenant defaults, the Sublandlord must still perform under the Master Lease.

Master Lease Controls

If there is any conflict between this Sublease and the Master Lease, the Master Lease controls, except as between Sublandlord and Subtenant.

Landlord Consent Essential

In most cases, subleasing without Landlord consent is a default under the Master Lease. Always obtain written consent.

Insurance Critical

Ensure adequate insurance coverage. The Subtenant's insurance should name both the Sublandlord and Master Landlord as additional insureds.

This template is provided for informational purposes only and does not constitute legal advice. Consult with a qualified attorney licensed in your jurisdiction before executing any legal documents.