I was not quite sure whether "Problem Tenants" is the right section, because my question referrs to legal issues as well.
But anyways. What is the landlord supposed to do from the legal point of view if he or she discovers that the tenants have been "re-renting" the house to a third party? My father faced such situation; he simply canceled the agreement with the tenant; but I'm sure there should some kind of legal liability?

Hi there! The instance that you refer too is called 'subletting'. Some tenants do this to help them with costs. The tenant whose signature is on the tenancy agreement, is the one who is responsible for the rent. Ideally, tenant needs to ask his/her landlord's permission to do so and if both parties are happy, why not? Of course, it's worth putting a clause about subletting into your tenancy agreement to avoid any misunderstanding in the future.

thanks for correcting me .
of course, it is all right if subletting was pre-agreed. but what should happen to the tenant, if it was not? moreover, in the situation I'm talking about, the tenant did not actually live in the apartment; rather, he lended it overnight.

If your tenancy agreement does not allow for any subletting, then tenant would be in breach of agreement. Think that legal remedy would be a claim via small claims court and landlord will probably have the right to, put it politely, expect the tenant to leave asap. I would have thought that the person who is subletting from your tenant will have no right over the property, but would welcome more informed replies. Crashing at someone's place overnight? Do you mean the tenant in question let the other person stay in exchange for money? As otherwise, it like having guests staying over at yours overnigh.

no, it's not that the tenant was inviting friends to stay over for money. he did not live in the flat himself; rather, he actually rented it overnight to couples or business travelers. neighbors told my farther that they have noticed different people coming in and out of the flat every night.