3 Safety Tips for Subletters

Last Updated Aug 19, 2010 4:39 PM EDT

While there is no official statistic indicating a rise in subletting across America this year, I'm betting this has become an increasingly popular housing strategy, both as renters look to add a roommate or sublet their homes to make extra money, and as subletters look for more flexible month-to-month housing commitments amid the shaky job market. Subletters typically don't go through lengthy credit checks, either, which is attractive to folks whose credit reports may be on the mend after a foreclosure or recent bankruptcy.
For those seeking to sublet from a renter, either temporarily or for a year or two, there are certain precautions you need to make. Here are three tips.
Make Sure It's Legal
Whether you find a listing on Craigslist or through a broker, do your due diligence and make sure that subletting is, in fact, legal in the apartment building or housing community. Better yet, make sure it's even allowed in the town or city. New York's Governor Patterson recently signed a bill banning short-term subletting in New York City. Starting May 2011 the ban will prevent folks from renting out their apartments for less than 30 days. Typically these sublets went to vacationers looking for more affordable lodging versus the $374-a-night Hilton Garden Inn by Times Square. You may need the building landlord's approval or the green light from board members. Ask for permission first. If you're asked not to contact the building manager, take that as a sign the sublet is not legal.
Get It In Writing
While subletting is less formal than fully leasing a place for a year or two, you should still get everything in writing, signed and notarized. Because sublets are often managed directly by renters, people don't always go through the necessary paperwork. Don't settle for an agreement done via email or a "handshake" agreement. In many states, renting or subletting without a contract leaves you and the person you're subletting from with no rights. There's no guarantee that you won't be kicked out on a day's notice and, in some cases, you can't be penalized for not paying rent, since technically, there's no record of you living at the address. (Don't get any ideas!) You may be able to find templates for rental agreements online at your state's real estate board web site. Or, for $15 you can download this form from nolo.com, which helps you set up a standard month-to-month rental agreement. Some important quesitons to answer when you draft the contract: Who do you write the check to each month? What furnishings will be provided? Who will pay for utilities (and how)?
Seek a Second Opinion
For further legal protection, pay a real estate attorney or broker for an hour of their time to review your contract and to answer any questions. If you cannot arrive at the rental location to inspect everything before moving in -- if you live too far away, for example -- enlist the help of a local friend or friend-of-a-friend (search on Facebook) to visit the place, take notes on the condition (do the faucets work? heater work? good size? safe neighborhood?) and take photos. Don't forget to bring that person a bottle of wine when you move into town.

Take these three steps before you sign the contract, of course.
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    Farnoosh Torabi is a personal finance journalist and commentator. She is the author of the new book Psych Yourself Rich, Get the Mindset and Discipline You Need to Build Your Financial Life. Follow her at www.farnoosh.tv and on Twitter at @farnoosh.

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