Sub-Lease Agreement for Commercial Property

This Commercial Sublease Agreement can be used when a commercial property is being subleased by an existing tenant (Sub Lessor) to another tenant (Sub Lessee).

For commercial properties, this Sublease will provide a quick and easy way to outline all of the terms of the agreement between the parties.

A tenant can use this Agreement to Sublet the property with the permission of the Lessor/Property Owner to other parties. Sometimes, some space in the leased premises may be vacant, or the intended project may be delayed for some time. During such situations, the Tenant can Sublease such vacant portion of the whole property for a specific period to monetize such gap.

This Sublease will create a legally binding contract between the parties, outlining the rights and responsibilities of both the Sub Lessor and Sub Lessee. This lease contains a number of variable terms, including:

• whether other items (such as fixtures) are included with the Sublease;
• the duration of the Sublease;
• whether the Sub Lessee will have options to renew the Sublease;
• the amount of rent and the frequency of payments;
• whether a security deposit will be held;
• the purpose and limitations of using the property;
• how the agreement can be terminated;
• the parties' rights after a breach; and
• any other special conditions.

This Sublease agreement is different from that of the Commercial Lease Agreement. Under the Lease Agreement the agreement is between the Lessor/Property Owner and a tenant. On the other hand, under the Sublease Agreement an existing tenant sublets the leased property to another party as Sub-Tenant or Sub Lessee.

How to use this document?

This document is intended for the sublease of commercial properties only, including offices, warehouses, shops and so on. It cannot be used for residential property such as apartments, houses and so on.

In most cases, before subleasing property, the written consent of the Lessor/Property Owner may be required. To find out such consent requirement, the parties shall refer to the original lease deed.

The completed document should be provided to all parties (including any guarantors, if applicable). Each party should be given the opportunity to read the agreement and may need some time to do this given the length of the document.

The Sublease Deed would need to be printed on non-judicial stamp paper or e-stamp paper which is available in certain states. The value of the stamp paper would depend on the state in which it is executed as well as the duration of the lease and the lease rent. Each state in India has provisions in respect of the amount of stamp duty payable on the sublease deed and the same would need to be determined based on the specific facts of the case. Information regarding the stamp duty payable can be found on the State government websites.

After printing the document on stamp paper or e-stamp paper, as applicable, both parties should sign the sublease deed and each party should keep a copy of the sublease deed.

Pursuant thereto, the sublease deed would need to be registered if, the period of lease is more than one year. For the purposes of registration, both the Sub Lessor and Sub Lessee must go to the sub-registrar office.

Applicable law

The provisions of the Transfer of Property Act, 1882 are applicable to the sublease of commercial premises. Further, the Goods and Services Tax may also be applicable on the lease under the Goods and Services Tax Acts, 2017.

In terms of the Transfer of Property Act, 1882 read with the Registration Act, 1908 all leases for terms of more than one year are compulsorily registrable. However, leases for a duration of one year or less do not need to be registered with the Sub-registrar.

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