Legal Question in Real Estate Law in Maryland
Does this lease arrangement create a sublease violation?
My company offers value added services to clients who have been turned down by Apartment Landlords on their applications due to bad credit. Among other things my company absorbs that risk by signing as the leaseholder, with our clients listed as the approved occupants in the leases. A Landlord is now taking my company to court contending that we are in violation of the lease provision prohibiting subleasing. The Landlord asserts that by my company collecting a monthly fee from the named occupants which exceeds the monthly rent we pay him, in so doing we have created a sublease. Therefore we are in breach of our lease.
The contractual arrangement we do have with our clients (the named occupants in our Landlord�s lease) clearly identifies our arrangement as a ''Licensing Agreement'' and not a sublease.
Is the Landlord unfairly singling my company out? After all isn't the motivation of any company offering an apartment to someone the measurable monetary profits directly and indirectly anticipated from revenue returns exceedng the cash outlay for the apartment itself? How can a lease provision about no subleasing be applied to occupants approved buy the Landlord in the Lease and there is no co-signing?
2 Answers from Attorneys
Re: Does this lease arrangement create a sublease violation?
A sublease may be prohibited by the original lease, or require written permission from the owner. The question here is whether your written lease agreement with the landlord contains a provision that allows you to sublet the apartment. If yes, you don't have a problem. The landlord appears concerned that he has lost the opportunity to make an additional profit because he is not leasing directly to your client. Based on the definition of a sublease, it is not created when a tenant leases his premises at an amount greater than the rent. Even if it is created this way, its fine because the written terms of the original lease allows you to create a sublease.
Please feel free to either use lawguru's research links or call me for additional clarification.
Re: Does this lease arrangement create a sublease violation?
As I understand the scenario, the landlord is aware at the time of execution of the lease that someone other than the named lessee (i.e., your company) will be occupying the premises. If so, I would argue that, whether or not your arrangement with the occupant is technically a sublease, the landlord has waived enforcement of that clause by the lease's approval of the arrangement at the outset. As long as your company is in compliance with the other lease provisions, I think you have a valid court defense. Is the occupant whose apartment is the subject of the court action causing problems in the building? It seems the landlord has some agenda for trying to break the lease beyond the four corners of the document itself. If I can be of further assistance, you can contact me at 301 986-4555.
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