Glossary
Lease Terms & Dates
Sublease
An arrangement in which a tenant leases part or all of its space to a third party while remaining responsible to the landlord under the original, or prime, lease. CAM allocation under a sublease is governed by both the prime lease and the sublease document, and the two can conflict on what costs the subtenant actually owes.
Firm impact
When a client operates under a sublease covering only part of a suite, or a different use than the prime lease permits, insurance and CAM pass-throughs from the prime lease often get applied to the subtenant without adjustment. Your firm should treat a sublease as a separate document requiring its own review, not an extension of the prime lease's terms.
How this gets abused
A subtenant occupies 40% of a suite under a sublease, but the prime tenant passes through 100% of the CAM and insurance charges billed under the prime lease, with no allocation adjustment for the smaller occupied footprint. The subtenant pays for common-area costs and coverage tied to space it never uses.
Practitioner note
Request both the prime lease and the sublease document, then confirm how each allocates CAM, taxes, and insurance to the subtenant. Look specifically for whether the sublease adjusts the prime lease's pro-rata share to reflect the smaller subleased footprint.
Related terms
FAQ
Questions about sublease
Does a subtenant pay CAM directly to the landlord?
Usually not. The prime tenant typically remains responsible to the landlord, then bills the subtenant under the terms of the sublease. The subtenant's actual obligation depends on what the sublease says, not the prime lease alone.
What should a firm check first when auditing a sublease?
Start by comparing the square footage and use permitted under the sublease against what the prime lease's CAM and insurance pass-throughs assume. A mismatch between the two is the most common source of an overcharge.
You know the term. Now check the math.
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