What is an Airbnb Sublease Agreement?
An Airbnb sublease agreement is an agreement between two parties where one party (the "tenant" or "sublessee") rents a property (or a portion of a property) from its owner (the "sublessor" or "sublandlord") for a short period of time and, in turn, leases the same property (or a portion of a property) to a third party subtenant. The tenant pays the owner for the use of the property, and the subtenant pays the tenant. Typically, a simple rental rate deduction and payment system is in place so that the sublessor receives rent from the tenant each month, the tenant receives rent from the subtenant each month, and the subtenant uses the property for a short stay. The tenant assumes the same obligations under the sublease that would be imposed if the property were available for long-term leasing .
The sublease agreement is a tourism-oriented sublease agreement designed specifically for use in conjunction with Airbnb. Use of this agreement and its provisions will vary by state, and it is important to research the state laws in your jurisdiction to ensure that you adhere to all applicable statutes; numerous states allow for short-term leases for fewer than 30 days. However, some states specifically prohibit subleases such as those offered for less than 30 days; you should also check your condo association or HOA bylaws, as certain properties may not permit short-term leasing.
The Airbnb sublease agreement differs from a long-term lease in that it does not last longer than 90 days and is assumed without viewings or inspections. Use of the Airbnb sublease agreement to profit from property owned by another may be considered a bad faith exercise if the tenant hides its intent to sublease to the owner.
Essential Components of an Airbnb Sublease Agreement
At the very least, an Airbnb sublease agreement should cover the following elements:
The term of the sublease. The terms should cover how long the sublease will last; for example, will it be weekly, monthly or for a longer period? Up-front communication about the term can help you avoid issues down the line.
Rental due dates and late fees. The agreement should clearly outline when rent is due. If it is not received by the due date, a fee should be outlined. The late fee should be a reasonable amount and cover bank and/or administrative fees incurred as a result of the delayed payment.
Occupancy by subtenant. The sublease should address the occupancy restrictions, including whether or not the subtenant can allow additional guests or pets on the property.
Condition of the property. The agreement should stipulate that the property is being rented in its current condition and that the tenants will take care of it. This includes returning it in the same condition it was received with the exception of normal wear and tear.
Liability. The agreement should address liabilities. Who is responsible for damages, cleaning fees, broken appliances, etc.? If a security deposit is established, it should clearly outline the situations in which the security deposit could be withheld or returned in full.
Governing laws. The agreement should state which state’s laws apply in the case of any issues or disputes arising from the agreement.
Termination. The agreement should state the conditions under which the sublease can be terminated early. Do both parties need to agree or is 30 days’ notice acceptable?
Considerations for Subletting on Airbnb
Not every state allows tenants to sublease their apartments and homes. Even when a state does not explicitly prohibit subleasing, there might be provisions in your lease that do not allow it. Before you consider subleasing your home on Airbnb, here’s what you need to know about the legal considerations involved.
Regardless of whether your state allows subleasing, your landlord agreement is a good place to start when determining whether or not you can legally sublease your apartment or home. Even when a state allows tenants to sublease properties, if the written agreement between the landlord and tenant does not allow subleasing, the tenant cannot-without facing legal ramifications in doing so. Likewise, in states where subleasing has been outlawed altogether, an agreement between a landlord and tenant in writing that explicitly allows subleasing will likely be upheld, provided the agreement also abides by the terms of the law.
Even if you have permission to sublease, it’s important to know the city laws regarding short-term rentals. In many cities, short-term rentals (defined as a stay of under 30 days) is illegal. But even if it is not illegal, it may end up being very expensive if a city’s short-term rental cap is reached in the middle of the calendar year. In these cities, once the cap is reached, short-term rentals will not be permitted for the remainder of the year.
It’s also important to know how your state defines short-term rental. For some states, short-term rentals aren’t defined by time. For example, if a state has outlawed short-term rentals of any kind, this would include a sublease for a night or a week. In other states, short-term rentals are defined narrowly, such as the practice by which someone rents their property for any period of less than 30 days. It is, of course, within this latter definition that we find Airbnb.
Pros and Cons of Subleasing Through Airbnb
For primary tenants, subleasing can be a quick way to make money off of a vacant rental. A primary tenant can tack any profit from the sublease onto their next rent payment. Secondary tenants get the advantage of living in a place that’s usually cheaper than the market rate. The subtenant also gets the benefits of a twofold relationship. Not only do they pay a fee for the sublease, but they often don’t have to worry about other costs that come with a standard rental contract, such as property tax, cleaning, maintenance and repair, insurance and, in some locations, utilities.
However, a primary tenant has to be careful about how they set up a subrent agreement with a secondary tenant. If the property owner finds out that a subtenant is renting for a digressive cost, the initial rental agreement with the primary tenant may get canceled. The primary tenant may be forced to pay the market rate for the unit. In some situations, it may be a fight to keep the subtenant.
For the secondary, subleased tenants – and especially those intending to use the property for short-term Airbnb-like stays – there are potential drawbacks. While the terms of the rental contract may allow it, a primary tenant who doesn’t follow the provisions of the primary rental agreement risks being evicted by the landlord. If the secondary tenant does anything to damage the property, such as being unusually loud or hourly drinking parties or causing problems other tenants, the primary tenant may not be able to recoup the cost of the damages if the sublet agreement isn’t carefully worded to protect them.
A solid primary-tenancy agreement can help to protect against these risks. For example, let’s say a secondary tenant pays up front for three months of lodging through Airbnb. The primary tenant should be sure to include language in the sublet agreement that protects them after they have left. As long as the primary tenant doesn’t sign their name to more than what they owe under the written primary-tenancy agreement, they shouldn’t be liable for legal trouble related to the actions of their short-term guest.
How to Draft an Airbnb Sublease Agreement
To create an Airbnb sublease agreement, a host first needs to make the decision about the structure they want to follow. For example, they can create an Airbnb co-hosting agreement where one host works as a manager to assist another host with large responsibilities, or they can go forward with a typical sublease agreement. In either case, a short-term rental agreement can help ensure that everyone is on the same page.
Before beginning to write the sublease agreement, it’s best practice for the host to check with the sub lessee regarding the number of guests, the registration process, and the duration of the stay. The rest is up to the host’s discretion.
The host needs to look up the regulations in his or her area because some places don’t allow a subleasing situation. Many of these regulations can be found online by doing a simple search query for the name of the local city and "short-term rentals." Once the information has been gathered, it is time to draft an Airbnb sublease agreement . Airbnb provides simple services for creating these agreements on its dedicated website. However, the agreement only serves as a template for Airbnb users; it is always a good idea to edit any standard document to fit the situation more appropriately.
When creating this type of short-term rental agreement, it’s best to include the following basic elements:
— Start the sublease agreement with a statement that identifies the parties and includes an accurate description of the property being rented.
— Specify the duration of the rental and how the amount to be paid will be calculated over that time.
— Include a statement about terminating the agreement.
— Outline what will happen if either party does not uphold their end of the bargain.
— Clarify who is responsible for utilities fees and taxes.
— Lastly, say how you want parties to dispute any perceived violations of the agreement.
For those hosts who are renting space on a regular basis (i.e. more than five times a year), making sure that you are 100 percent prepared is the best way to avoid future legal trouble.
Mitigating Risks and Best Practices
While the desire to make a little extra money through Airbnb subleasing is certainly tempting, not every scenario is a good fit. Some homeowners associations have outright bans on any sort of short-term rentals, while others may have specific rules about the number of guests allowed as well as fees that must be paid to the association for additional visitors.
If you are in a gated community where some or all units are owned by a limited number of owners, the regulations regarding subleasing may be particularly strict. In addition, you may run afoul of ordinances if your city has passed restrictions on short-term renting. Check the regulations beforehand so that you know the cost of being caught out of compliance.
The best way to manage your potential risks with Airbnb subleasing is to run a tight ship. First, find out if your condo association permits short-term rentals. If so, obtain copies of any leasing forms that are required. If your unit is, for example, planning to be rented 180 days a year, the association might want its own rental agreement in effect for each rental to provide a layer of protection.
Associations may even have their own Rental Registry that they prefer to use, to reduce the burden on their own property management staff. As with any agreement, you should always read the fine print to ensure it won’t allow you to be held in endless rental responsibility if there are damages.
Since your goal is to not be later found responsible for damages that the tenant has caused, you should also consider screening your tenants, even though Airbnb has its own system for vetting. In addition, you might want to charge a higher Airbnb sublease price in order to cover the fact that your liability insurance may rise. However, while the pricing of your apartment may be important to your potential tenants, you shouldn’t allow the price to drop so much that it will unexpectedly increase tax burden on you in the future.
While most Airbnb guests are quite polite and responsible, the current state of the economy seems to be putting some tourists on a budget, and thus making them much more eager to cut costs by bending some rules. That’s why you must also be particularly strict about enforcing your own house rules. Administratively, you should document each rule in your listing page, and remind your tenants of the rules when they check in. In addition, you should be strict about the security deposit policy and follow up with your tenants who fail to abide by the rules of the rental. Lastly, make sure to file claims for any damages or late fees within the time limit that your attorney advises you to.
Common Questions about Airbnb Sublease Agreements
Below are answers to some common questions about subleasing agreements:
Can I sublet on Airbnb if I have a mortgage?
Subletting could violate your mortgage agreement. Review the terms of your mortgage or speak with a real estate attorney before you list your property for rent on Airbnb.
Do I need to tell my landlord if I can legally sublet my apartment on Airbnb?
If your name is on the lease, you have the right to sublet your apartment per the rental agreement. However, it may create bad blood with your landlord if you do not inform them.
How do I obtain permission from my landlord to sublet my apartment on Airbnb?
If you have good reason to want to sublet your apartment on Airbnb, your landlord may grant you permission for an Airbnb listing . Prepare to present your landlord with a plan that includes the length of your stay, a list of potential renters, and contact details for the extended guest.
What happens if my Airbnb renter violates their rental agreement?
Whether you can evict your renter may depend on the terms of your agreement with Airbnb. In most cases, you will need to contact Airbnb with a complaint and provide evidence that your renter violated the rental agreement before Airbnb will help you with the eviction process. You may also be able to share information regarding the violation on the app or website. You can also alert law enforcement if you feel this is necessary.