What to do - SubLeasee Defaults

[RealLifeEstate]

If you sub-lease a home with the option to buy after 3 years, and you are making say 100 dollars profit from the sub-leasee, but then then the leasee defaults. What do you do? Would I (The Middleman) be responsible for making payment? Do you kick them out, or charge a fee for the late payment and make payment for them?

[Jim FL]

If you sub-lease a home with the option to buy after 3 years, and you are making say 100 dollars profit from the sub-leasee, but then then the leasee defaults. What do you do? Would I (The Middleman) be responsible for making payment? Do you kick them out, or charge a fee for the late payment and make payment for them?

Dear RLE?,
Sorry, no names, just seems weird to conversate that way, even online.
Anyway, I think what you are describing here is a 'sandwich lease option' type of deal.
This is where you sign one agreement to lease option a house/property from a seller under certain terms, with the right to sublease.
Then sub lease and sub-option to a tenant buyer of your choosing, for terms in escess of your own to create profit?
So far so good?

If that is the case, then yes, when/if your T/B'ers fail to pay, then YOU must make the payments, as you agreed to in the lease option with your sellers.
You are the landlord for the Tenants in the property, and thus must take action to cure the default, which means following your state/local landlord tenant laws for notices to be serviced and eviction proceedings, as well as the lease you sign with the tenants.

Not something to sit back and wait to cure itself.
My advice, rent is due on a certain date, so as soon after that date as your state laws allow, serve the tenants notice to pay or move/give possession, as per your state laws, and stick with it.

This is why when you do a lease option deal like this, make sure you have some money set aside to cover things like unforseen repairs, and yes, vacancies, and the cost to get the house that way.
If bewginning to invest with no money, or credit, then make sure whatever you collect upfront as non-refundable option money from your tenant-buyers, gets banked and is enough to handle these things.

Anyway, HTH,
Jim FL