eSignature Licitness for Sublease Agreement in Canada

How to eSign a document: e-signature licitness for Sublease Agreement in Canada

Now two concepts we're gonna talk about in this video is, subleasing or sometimes called subletting, and assignment of leases. Now, a couple of things before we get going. Remember, all real estate contracts can be assigned, unless the contract strictly prohibits it. So absence of some kind of prohibition, every real estate contract including, a lease contract, can be assigned. So I'm gonna explain the differences between assignment of a lease and subleasing so, check this out. So, in a typical landlord-tenant relationship. We have, two parties. We have the lessor, and the lessor is the landlord. And there's a lease agreement, that's entered into, with the lessee, L-E-S-S-E-E, that is the tenant. All right so, let's say it's a one year, lease. And it's 500 bucks a month and this is a single family house. Now it doesn't matter what type of contract, it is or what type of property it can be, a single family home, an apartment, a commercial space, it doesn't matter. Conceptually, it's all the same. So this is a one year lease, two months into that one year lease, the tenant decides they wanna move, and they found a friend of theirs that wants to take the lease over. So what's going to happen is, the tenant is gonna do one or two things. If the lease agreement strictly prohibits it, the tenant may go to the landlord, and get written permission to do it. Or in the case where the lease agreement doesn't have any kind of prohibition, then the tenant is free to do it. Now remember, the relationship here, here are the legal terms, in this relationship between the landlord and tenant. The landlord is the lessor, with an O-R, and the tenant is the lessee. All right, now at the point that the tenant wants to assign the lease agreement over to somebody else, the relationships change and so do the legal names. Alright, so the tenant, wants to assign the lease agreement over to one of their friends. So the tenant becomes what's called the assignor, A-S-S-I-G-N-O-R. And the person that's receiving, the assigned lease agreement is the, you guessed it, assignee with two Es. Alright, so the relationship between these two, is called the, Assignor or the assignee, but this relationship between the landlord and tenant still exists which, becomes the lessor, or which is the lessor and lessee. Right, that's why I drew this the way it is. Now, here's the deal. The original term, of this lease agreement was one year, for 500 bucks a month, so on and so forth. So let's say that it's Tom, that is receiving the assignment. So, the tenant is going to assign the lease over to Tom. Tom, still must abide by all the terms of the original lease agreement. So, it's still gonna be for the remaining, the balance of the one year, it's gonna be 500 bucks a month and all the other rules and regs. In fact, Tom is more than likely gonna pay monthly rent, to the landlord. It can go through the tenant, but typically it doesn't. It kinda depends on how the assignment is set up. So you have to know for the real estate licensing exam, who the parties are. Landlord-tenant or lessor-lessee, but at the time that the assignment happens, then the tenant is legally known as the assignor, and Tom is the assignee. Now let's talk about, the same scenario but we're doing subleasing here. Now that's a different beast. Alright, so we have the, the landlord, which is the lessor. And they have a relation or a contract, a lease agreement with the lessee, with two Es. Now what happens instead of the tenant assigning, the contract, the tenant becomes the landlord. So what happens is the tenant becomes what's called the sub lessor, O-R, lessor because they are, a sub-tenant or a sub-landlord. And they turn around and rent the property out to what's called, a sub-tenant, or a sub-lessee. All right, so here's how this works. The landlord rents, the property out, it's a one year lease agreement at $500 per month. But the tenant says, Hey, I think I can I think this property is under rented. I think I can make a couple of hundred extra dollars a month. So the tenant, finds a tenant, and then says, Hey, I'll move out you can move in, but guess what the rent is $700 a month. So, the subtenant is gonna pay, the original tenant $700 a month, and then the original tenant's gonna pay, the landlord $500 a month. So, the tenant's gonna make, 200 bucks a month, extra. That's how that one works. Now here's the interesting thing, that if, the sub tenant stops paying the rent, just like in our assignment, the tenant, the original tenant is still responsible for all the terms and conditions of that original lease agreement. Even though they have a separate, lease agreement here, they're still bound by it. So, if this particular tenant stops paying the rent, and an eviction has to happen, the landlord actually has to evict both of them. It can be very complicated legally. Now up here, Tom, as I said, has to abide by the original terms of the contract. And the same would exist if somebody stops paying the rent here, then the landlord's gonna evict both of them. The thing to remember is the process, how it all works, and you have to understand, who is who.