When a lessee rents out the premises to a third party for part of the remaining lease term, what is this called?

The act of a lessee renting out the premises to a third party for part of the remaining lease term is known as a sublease. In a sublease, the original lessee becomes the sublessor, and while they retain their obligations to the original landlord, they create a new agreement with the sublessee for the use of the property. This means that the original lessee still holds responsibility for fulfilling the lease terms with the landlord while allowing the sublessee to occupy and use the premises.

In contrast, an assignment involves transferring the entire lease obligation to a third party, which means the original lessee is no longer responsible for the lease terms; this is a significant distinction from a sublease. The other choices, such as transfer of lease and rental agreement, do not specifically capture the scenario where the original lessee retains partial rights and obligations under a lease while allowing another party to occupy the property. Thus, sublease is indeed the correct term for this situation.