By Marc Rauch and Ralph J. Kreitzman

This article is reprinted with permission from theMay 29, 2002, edition of the New York Law Journal 2002 NLP IP Company.All rights reserved. Further duplication without permission is prohibited.

Nearly every real estate lawyer discovers early in his or her career that subleasing office space is a lot more complicated than many attorneys -- and clients -- seem to think.

In a typical scenario, a young lawyer receives a call like this: "I need a sublease right away . . . . And keep it simple!" A brief summary of "business terms" soon arrives by fax or email, inspiring an anxious search for a sample sublease. Relief appears to be at hand when an office mate volunteers a sublease that he or she once used, or is able to recall where one can be found. The sense of relief from having a form in hand proves short lived, however, for as soon as the actual drafting begins, the "form of sublease" leads only to confusion, if not despair.

Reason for Difficulty

The main reason for the difficulty of subleasing is that drafting or reviewing a sublease requires mastery of three interrelated documents. First there is the Sublease itself, an occupancy agreement between the Sublandlord (actually the tenant under the prime or underlying lease, here referred to as the "Overlease") and the Subtenant. Next there is the Overlease between the building landlord, or Overlandlord, and the Sublandlord, which imposes many constraints upon the Sublandlord and Subtenant. Finally there is the "Overlandlord's Consent" a document that can be much more than a simple consent, and which may modify the Sublease, the Overlease or both.

A further complication is, for brevity's sake, many of the operative provisions of a sublease are not commonly set forth in the sublease itself. These provisions are borrowed from the Overlease, sometimes with modifications agreed to by the parties, using a technique known as "incorporation by reference."

City Bar to the Rescue

The Real Property Law Committee of the Association of the Bar of the City of New York has prepared a Model Form of Sublease and a Model Form of Overlandlord's Consent. A related Commentary, from which much of this article is drawn, was issued with the Model Forms. The Model Forms and Commentary may be viewed at, and downloaded from, the Association's website -- www.abcny.org -- free of charge. Blumberg's Law Products also will publish the Model Forms and Commentary on its Web site which allows completion, printing and e-mailing of forms online.

The Model Forms are intended to provide a practical, user-friendly starting place for drafting. The Commentary seeks to alert the lawyers for both parties, Sublandlord and Subtenant, to some of the quirks and potential pitfalls of subleasing, as well as to point out key interrelationships among the sublease documents. Seasoned as well as young lawyers will find the Model Forms and Commentary of assistance.

The key assumptions underlying the Model Forms, and the context for which they are intended, are discussed in the Commentary and below.

Basic Assumption

The most basic assumption underlying the Model Form of Sublease is that it is almost always the Sublandlord's lawyer who will be drafting the Sublease. This means that a model form of sublease must be -- and the Model Form of Sublease is certainly intended to be -- a form that a Sublandlord's attorney will feel comfortable using. It does not mean, however, that the Model Form of Sublease is entirely Sublandlord-oriented or that the proper concerns of the Subtenant have been neglected. Such an approach would not be appropriate, since the Sublandlord is most often a typical office tenant, not a professional landlord, and since the parties to a sublease negotiation are usually equally sophisticated (or unsophisticated) and have roughly equal bargaining power. It does mean that the Sublandlord's concerns are more often reflected in the language of the Model Form of Sublease itself, while the Subtenant's concerns are more often noted in the Commentary.

The 'Typical' Agreement

The "typical" sublease that the drafters of the Model Form of Sublease had in mind is one for up to 20,000 rentable square feet of office space in the New York metropolitan area.

While the Model Form of Sublease will be useful for larger deals as well, a fully negotiated sublease for a much larger block of space will likely contain numerous additional provisions tailored to the terms of the particular transaction.

The Model Form of Sublease may also be used whether or not all of the space occupied by the Sublandlord under the Overlease is to be sublet. The Commentary notes concerns that the Sublandlord or Subtenant may have depending on whether all or only part of the space covered by the Overlease is to be sublet.

Although many issues that arise in subleasing are similar to those that must be addressed in drafting or reviewing a prime lease, the Commentary has largely -- and intentionally -- been limited to concerns peculiar to subleasing.

First Article

The Model Form of Sublease is structured so that the definitions and basic terms are in the first article. Accordingly, the Commentary begins with detailed instructions for filling in the blanks. The remaining sections of the Commentary focus on sections of the Model Form of Sublease and the Model Form of Overlandlord's Consent that, in the drafters' view, require explanation or are otherwise worthy of comment. Each section of the Commentary is thus intended to be read side by side with the corresponding section of the Model Forms.

Since the overlandlord's consent is generally a condition precedent to the effectiveness of any sublease, negotiation of the form of consent can become a critical last minute obstacle to closing a sublease deal. The drafters of the Model Form of Consent observed a trend in recent years for landlords' counsel to propose forms of consent that are longer than necessary, repetitive, sometimes inconsistent with the overlease, and that sometimes expose the parties to the risk of unintended consequences. In an effort to counteract this trend and to make subleasing go more smoothly for all three parties, the drafters provided the Model Form of Overlandlord's Consent.

Read Commentary Carefully

We cannot stress too strongly the importance of carefully reading the Commentary. We also strongly recommend that it be reviewed or at least consulted every time the Model Form of Sublease is used. In addition to saving time by explaining certain provisions and how they work, the Commentary expresses many valuable thoughts and considerations relevant to the Model Forms and their negotiation. It also discusses matters that are not specifically covered by the Model Forms, but are appropriate to consider or include in certain instances.

The Commentary importantly includes the following word of caution:

The critical first step for any lawyer preparing to draft a sublease is to obtain the Overlease (including all amendments) and to review it carefully. No matter how rushed the circumstances, a lawyer who plunges headlong into drafting a sublease, without first reviewing the Overlease, will inevitably be forced to start over.

In addition to saving time by explaining certain provisions and how they work, the Commentary expresses many valuable thoughts and considerations relevant to the Model Forms and their negotiation.