Make Sublease’s Cure Periods Shorter than Lease’s Cure Periods
Q: I’m subletting space to a subtenant. What should I include in the lease regarding the time period within which the subtenant can cure a default?
A: If you are subletting space, make sure that the cure periods for your subtenant in your sublease are much shorter than the cure periods in your lease. Further, make sure your lease permits you to cure a subtenant’s default before it triggers a lease default. Otherwise, you may not have enough time to declare a default under the sublease and take action to cure the subtenant’s default before it becomes your default under the lease.
For example, suppose your lease requires you to make repairs and gives you 30 days to cure a repair default. You sublet your space. In your sublease, you delegate your repair duties relating to the sublet space to the subtenant. If the sublease also gives the subtenant 30 days to cure its repair default, and if the subtenant doesn’t make a required repair, you must wait until the 30-day cure period expires to declare a default under the sublease. However, by that time, it’s too late for you to step in to make the required repair to avoid defaulting under your lease.
In general, the cure period under the sublease should be half the time allowed under your lease. As an added protection, the sublease should have a catch-all statement that any act by the subtenant that might cause you to default under the lease will result in a sublease default. Otherwise, you could be liable to the owner for the default without having a remedy against the subtenant.