Holding over: Overview, definition, and example
What is holding over?
Holding over refers to a situation where a tenant continues to occupy leased premises after the expiration of the lease agreement, without a new agreement in place. In some cases, holding over can occur with the consent of the landlord, while in others, it may be considered a breach of the lease. Holding over often results in a month-to-month tenancy unless otherwise agreed upon in the original lease.
For example, if a tenant's lease expires but they continue to occupy the property without signing a new lease, they may be considered to be holding over. The landlord can either allow the tenant to remain or take legal action to remove them.
Why is holding over important?
Holding over is important because it can create uncertainty for both the landlord and tenant. It can affect the landlord's ability to lease the property to another tenant and can result in unexpected rent terms or disputes. For the tenant, it can mean that they are subject to different conditions, such as increased rent or a new set of terms, even if they continue to occupy the space.
For businesses, understanding the implications of holding over clauses is important for ensuring clear and enforceable agreements related to the occupancy of property.
Understanding holding over through an example
Imagine a tenant leases office space for a one-year term, but at the end of the term, they continue to occupy the space without a new lease agreement. The landlord sends a letter notifying the tenant that their continued occupancy constitutes holding over and that the landlord may require them to vacate or negotiate new terms for a month-to-month tenancy.
In another example, a business signs a lease for a retail space. When the lease expires, the business owner continues to operate from the store without renewing the lease. The landlord allows the tenant to stay but increases the rent in accordance with the holding over clause specified in the original lease agreement.
An example of a holding over clause
Here’s how a holding over clause might look in a lease agreement:
“If the Tenant remains in possession of the Premises after the expiration of the Lease Term without the Landlord’s written consent, the Tenant shall be considered to be holding over. Such holding over shall create a month-to-month tenancy subject to all the terms and conditions of this Lease, except that the monthly rent shall be increased by [insert percentage] from the rent due during the last month of the Lease Term.”
Conclusion
Holding over refers to the continuation of a tenant's occupancy beyond the expiration of their lease, which can lead to uncertainty and legal issues if not properly addressed. Understanding and managing holding over provisions is essential for both landlords and tenants to avoid misunderstandings and ensure a smooth transition after the lease term ends.
By including clear holding over clauses in lease agreements, businesses can protect their interests, establish proper occupancy terms, and reduce potential disputes when a lease term expires.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.