Assigning a lease
According to Canadian law, when a tenant assigns a lease it means that they renounce their right to return to the rental unit. In that event, the tenant cedes all rights and responsibilities in connection with the apartment and must notify the landlord and find another tenant. It is up to the landlord to accept or reject the proposed new tenant, but he cannot “unreasonably refuse consent to an assignment”.
For example, if you decide to buy a condo or a house and you need to relinquish your apartment, it’s your best option. Properly executed, assigning a lease will free you of all responsibility for the apartment and you can make the move to your new home without unwanted baggage.
If you assign your lease and change your address, you need to inform your broker in order to transfer your insurance to your new dwelling. The people who move into your old apartment cannot ordinarily take over the policy you had at that address.
Long-term sublet
Again according to the law, when you sublet, you remain the tenant with all your rights and obligations intact. Unlike a lease assignment, in the case of a sublet, even on a long-term basis, the tenant remains completely responsible for the dwelling. The original tenant must act as the resource person for whoever is subletting the dwelling. The landlord must be advised and is bound to agree to the sublet unless he or she has compelling reasons to reject it.
When you rent out a condo or house that you own, you need to be just as careful. It’s advisable to draw up a clear rental agreement with the tenant.
A typical example of a long-term sublet is a student who has to leave town for three or four months for an internship abroad. By subletting, students in this situation can return to their apartment and avoid having to pay rent while they are away!
As for the insurance policy, although the lease is still in your name, if you no longer reside on the premises, your insurer sees the risk differently. Contact them about your particular situation as they will need to assess it.
Short-term sublet
Organizations like Airbnb and Homeaway leave no doubt that short-term sublets are an increasingly widespread phenomenon. Unfortunately, we tend to hear more about the horror stories and illegal practices.
If you want to sublet and you are not the landlord, you have to advise your landlord. And you also need to notify your broker, whether you are the landlord or not.
It’s true that many insurers are not at ease with this, as it poses additional risk. It’s a complex issue that has to be assessed on a case-by-case basis.
