PEI Landlord Subletting and Termination: Rules When Your Tenant Sublets

Your tenant has sublet the unit — or you suspect they have — and now you want to end the tenancy. Subletting adds a layer of complexity to the termination process in PEI, because the person living in the unit may not be the person named on your lease.

How Subletting Works Under the Act

The Residential Tenancy Act covers sublets and assignments as part of the broader tenancy framework. A sublet occurs when the original tenant (the head tenant) grants temporary occupancy to another person (the subtenant) while the head tenant retains the right to return. An assignment transfers the tenancy entirely to a new tenant.

Both require landlord consent. The Act does not allow a tenant to sublet or assign without the landlord's written agreement. However, landlords cannot unreasonably withhold consent — refusing a sublet without a legitimate reason can itself become a dispute.

Unauthorized Subletting as a Termination Ground

If a tenant sublets without your written consent, this constitutes a breach of the tenancy agreement. Unauthorized occupancy falls within the cause-based termination grounds under Section 61 of the Act, allowing you to serve a Form 4A with a one-month notice period ending the day before rent is payable.

Your Form 4A must include specific particulars: the dates you became aware of the unauthorized occupant, any documentation (photos, witness statements, communications from the subtenant), and your efforts to notify the tenant that consent was not given.

The tenant has 10 days from receipt of the Form 4A to file a Form 2A dispute with the Rental Office. At the hearing, the key question is whether the landlord's consent was obtained or unreasonably withheld.

Who Do You Serve Notice On?

Your legal relationship is with the head tenant — the person on the lease. Even if the head tenant has moved out and a subtenant occupies the unit, your notice goes to the head tenant. The head tenant remains responsible for rent, for the condition of the unit, and for the conduct of anyone they allowed to occupy it.

If you also know the subtenant's identity, serving them with a copy is prudent but not a substitute for serving the head tenant. The head tenant is the party to the agreement, and the notice is only valid when served on them in accordance with Section 100 service rules.

In practice, this creates a problem when the head tenant has left the province and you cannot locate them for service. Section 100 lists posting in a conspicuous place at the rental-unit entrance as a permitted service method. Another method of substituted service requires an order from the Director after reasonable efforts to use the listed methods have failed. You may also serve at any forwarding address you have on file.

What About the Subtenant?

A subtenant in an authorized sublet has a tenancy relationship with the head tenant, not directly with you as landlord. If you end the head tenancy, the subtenancy ends with it — the subtenant's right to occupy derives from the head tenant's right, and when that right terminates, so does the subtenancy.

However, if the subtenant refuses to leave after the head tenancy has been lawfully terminated, you may need to file a Form 2B application with the Residential Tenancy Office to obtain an order of possession against the occupant.

If the head tenant assigned the lease to a new tenant with your written consent, the situation is different. An assignee steps into the head tenant's shoes entirely — they become your tenant, and you serve any termination notice on them directly.

Ending a Tenancy for Other Reasons When a Sublet Exists

Subletting does not change the availability of other termination grounds. If you need the unit for personal use (Section 62), are selling the property (Section 63), or planning demolition or renovation (Section 64), you serve the appropriate Form 4B on the head tenant regardless of whether there is a subtenant. The head tenant is responsible for notifying their subtenant.

Compensation depends on the Form 4B ground: sections 62 and 63, and qualifying demolition or conversion under section 64, require one month's rent plus reasonable moving expenses or an acceptable alternative unit. Renovation compensation depends on whether the tenant exercises the right of first refusal, and section 67's subsidized-unit ground has no compensation specified in sections 70–72. Any compensation owed under the head tenancy is owed to the head tenant as the party to your agreement. The head tenant's arrangements with their subtenant are between them.

Practical Considerations

Discovering an unauthorized sublet often surfaces other issues: the unit may have more occupants than the lease permits (unreasonable occupancy, another Section 61 ground), the subtenant may be causing disturbance, or the head tenant may be collecting rent from the subtenant at a markup.

Document everything before serving notice. A Form 4A for unauthorized subletting is stronger when you can show the timeline: when the unauthorized occupant appeared, when you notified the head tenant, and that consent was never given.

For the full process of ending a tenancy in PEI — from choosing the right ground and form through enforcement — see the Ending a Tenancy in PEI guide.

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