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Simple English definitions for legal terms
underlease
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A quick definition of underlease:
An underlease is when a person who is renting a property leases it to someone else for a shorter period of time than their own lease. The original renter still owns the lease and will get the property back when the underlease ends. The person who is subleasing the property is called a sublessee or subtenant, and the original renter is called a sublessor or underlessor.
A more thorough explanation:
An underlease is a type of lease agreement where a lessee (the original tenant) leases some or all of the leased property to a third party for a shorter term than their own lease. The lessee retains a reversion in the lease, meaning they still have some rights to the property. This is also known as a sublease.
- John leases an apartment from the landlord for a year. After six months, he decides to move out but still has six months left on his lease. He finds a friend, Sarah, who agrees to rent the apartment from him for the remaining six months. John is now the sublessor and Sarah is the sublessee.
- ABC Company leases a warehouse from the landlord for five years. After two years, they realize they don't need the entire space and decide to sublease a portion of it to another company, XYZ Inc., for the remaining three years. ABC Company is now the sublessor and XYZ Inc. is the sublessee.
These examples illustrate how a lessee can lease some or all of their leased property to a third party for a shorter term. The original lessee still has some rights to the property, but the sublessee also has certain rights as outlined in the sublease agreement.