Subleasing for Medical Practices: A Simple Guide and Checklist
Sunday, 23 February 2025
Subleasing can be a practical solution for medical practices looking to optimise their space and reduce costs. This guide and checklist will help you understand the key considerations and steps involved in subleasing commercial spaces.
Subleasing
Subleasing occurs when a tenant rents out part or all of their leased space to another party (the subtenant). This arrangement can be beneficial for both parties, but it is important to navigate it correctly to avoid legal issues.
Risks
As the primary tenant, you remain liable to the landlord for the entire leased space. Ensure that the subtenant adheres to the terms of the original lease.
It is also important to choose a subtenant whose business activities are compatible with your medical practice to avoid disruptions.
Original Lease Agreement
Before you consider subleasing, review your original lease agreement. Ensure that subleasing is permitted and understand any conditions or restrictions imposed by your landlord. Some leases may require landlord consent before you can sublease, while others may restrict subleasing altogether.
Landlord Consent
If required, seek written consent from your landlord. Provide details about the proposed subtenant and the terms of the sublease. Landlords typically want to ensure that the subtenant is financially stable and that the sublease will not negatively impact the property.
Checklist
A “no” or “unsure” response to any of the questions in the checklist indicates that you have identified an area that your sublease may not be legally compliant or market standard. You should seek independent legal advice on the relevant area.
The checklist is not an exhaustive list of all legal matters that should be considered and is not a substitute for obtaining specific legal, tax and accounting advice.
Related Subleases
Where the landlord and tenant are related entities, such as in a self-managed super fund (SMSF) arrangement, and the tenant subleases to a third party, it is crucial to ensure that the sublease incorporates all the required terms to protect both the landlord and the tenant. This ensures potential disputes with the third-party subtenant are minimised. Properly drafted sublease agreements help maintain the integrity of the leasing arrangement and provide legal clarity and protection for all parties involved.
We can help you
Avant Law is a full-service commercial law firm specialising in the medical sector. Feel free to contact us to ensure that your sublease agreement complies with the relevant laws and regulations. We can help you address any potential legal issues and ensure that your rights are protected.
To contact us please call 1800 867 113, or to organise a confidential discussion at a time that suits you, please click here
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About the authors
Vincent has 18 years of experience as a seasoned property lawyer. In that time has acted for major healthcare and aged care providers, as well as private doctors, surgeons, specialists, medical companies and hospitals. Vincent is known for offering clear legal advice with a commercial focus, specialising in aligning legal strategies with business goals and providing practical solutions.
Ali is an Associate within the Property team at Avant Law, based in Melbourne. He has experience in dealing with both residential and commercial property matters. Ali’s main priority is to assist clients by providing a clear understanding of their legal matter and building a strong client relationship.
Ali is proficient in drafting and reviewing property law related contracts and evaluating legal documents in order to effectively ascertain the best possible outcome for our clients. Ali also speaks Arabic and is able to provide assistance to those from an Arabic speaking background who are faced with English language barriers.
The information in this article does not constitute legal advice or other professional advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of this content. The information in this article is current to 24 February 2025. Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners employed by Avant Law Pty Limited are members of the scheme. © Avant Mutual Group Limited 2025