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Subleasing the Smart Way

Imagine getting a knock on the door at night, “police, open up!” It’s not your property and you rent from a local owner. You give the owner a call but he’s standing right behind the police. The owner is being fined because there has been a report of illegal subletting.

You’ve been renting out your bedroom on Airbnb while you travel on weekends and use the rent received to pay rent to the owner and the electric bill. In an age where technology and app development dominate main stream society and entrepreneurs are popping up like irises in Spring, it’s easy to assume there aren’t any legal complications but depending on the town you live and depending on what is written in your lease, you could face fines of thousands of dollars and have some serious explaining to do.

The good news for those of us taking advantage of third party booking sites is that it can be a win-win for property owners to receive the rent on time and for tenants to make extra money to pay bills using the same property. Out of respect for the owner you rent from, it’s always advisable to get an owner’s permission when making any changes to their property or when hosting guests. A good rule in general is, when in doubt, ask.

More good news for those of us using third party sites like Airbnb, Homeaway or TripAdvisor is that there aren’t a lot of vacation rental laws particularly in smaller states. In larger states when officials discover flagrant and ongoing illegal subletting, they prosecute landlords under a 2010 state law banning short-term rentals in residential properties. Landlord lawyer Sherwin Belkin weighs in, I’m aware of instances where owners or landlords having nothing to do with the short-term rental; neither advertising, participating in or profiting, were fined tens of thousands of dollars by the city,” because they were found to be violating other building or fire code rules. Checking a building’s CC&Rs (covenants, conditions, and restrictions) is the key to finding out what is allowable and legal to do on the property. Some properties ban short-term rentals and the town can go after an owner if it causes enough problems and disturbances such as damage to the property, having disruptive parties displaying loud noise, bringing along pets when prohibited or smoking on premise when prohibited. 

Larger states like Florida, California and New York do have set laws in this area and there have been a couple major lawsuits surrounding this issue. The outcome for many of them, even a class action law suit from the West coast, was dismissed. In New York, where subletting is more common, it is legal for tenants to rent out spare rooms in their apartments as long as they remain in residence with guests. Homeowners can lease out rooms in a unit they live in, but they can’t rent out other units in a two or three family home for less than 30 days. Notice this state law says “homeowner” which means a tenant cannot sublet in the state of NY. Know the laws of where you live and you’ll be all set.

In a previous article we talked about the importance of lease agreements. Whether you are a tenant or landlord/landlady, everything important must be clearly written in the lease. Be sure to include an section in the lease where subletting is addressed. As always, consult a local Real Estate professional who is trained to know state specific laws and can issue valid contracts.

Should you have any subleasing questions please don't hesitate to reach out to any of our highly skilled Realtors; in Lincoln at (603) 745-3601 or Campton (603) 726-4580.

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