SUBLEASES: A NEW APPROACH REVISITED

I. THE SUBLEASE DILEMMA

In the Spring 1999 issue of the Real Property, Probate and Trust Journal, the authors of this Article published an article in which we analyzed traditional approaches to subleasing and proposed an alternative approach.2 The article contained the rationale for the new

Subleases present a dilemma. Subleasing is much more complicated than direct leasing, and pressure exists to create a simple and inexpensive sublease document. A regular lease basically deals with the rights and obligations of only two parties, the landlord and the tenant. In a sublease, the rights and obligations between the prime landlord and the prime tenant or sublandlord established in the prime lease have a substantial and often controlling affect on the deal between the sublandlord and the subtenant. The sublease situation is further complicated by the lack of privity of contract between the prime landlord and the subtenant and because the subtenant's use is often different from the sublandlord's. Despite these inherent complications, the parties to a sublease seek a simple document for many reasons. Principally, they may feel that because the terms of the lease have already been negotiated between the prime landlord and the sublandlord, the parties to the sublease should not need to revisit settled issues. Additionally, the parties may not understand the complexity of the sublease situation. They may feel that because the prime lease sets forth the terms of the occupancy of the premises, it should be a simple matter to transfer those terms to a sublease. Especially in sublease situations for a short term, a small area, or both, the parties do not see a justification for dealing at length (and expensively) with complications, particularly if they do not perceive that the complications exist.