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Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

Sandwich Lease

A sandwich lease is a lease arrangement where a tenant (middle party) leases property from an owner and simultaneously subleases to an occupant, earning spread income while remaining primarily liable to the landlord under the master lease.

Exam context

Sandwich lease: tenant subleases to occupant while liable on master lease. Middle tenant owes owner if subtenant defaults. Owner consent often required for sublease.

Structure and risk

The middle tenant signs a master lease with the property owner and a sublease with the end occupant. If the subtenant stops paying, the middle tenant must still satisfy the master lease obligation. Owners often require consent for subleasing. Sandwich structures appear in commercial arbitrage and residential rent-to-rent strategies where regulations permit.

Compliance considerations

Local short-term rental bans, rent control, and zoning may prohibit sandwich leasing. Master leases may forbid subletting without approval. Agents should disclose who holds primary liability and verify that proposed sublease terms comply with the master lease and municipal law before marketing the arrangement.

Examples

  • Commercial spread

    A tenant leases a retail strip under a master lease at $8,000 per month and subleases individual bays totaling $10,500, keeping the spread while managing common area obligations.

  • Subtenant default

    A subtenant vacates without paying April rent. The middle tenant must pay the landlord under the master lease even though the sublease is in default.

Keep studying

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