Holdover Tenant
A tenant who remains in possession of leased space after their lease expires without signing a renewal or extension.
Definition
A holdover tenant continues occupying space after their lease term ends. This creates a month-to-month tenancy by default, governed by holdover provisions in the original lease. Most commercial leases include holdover clauses specifying increased rent (typically 125-150% of the expiring rate) to discourage extended holdover and compensate the landlord for uncertainty. Holdover situations arise from delayed relocations, stalled renewal negotiations, or tenant inattention to lease dates. For landlords, holdovers create operational challenges: inability to commit space to new tenants, uncertain income projections, and potential legal complexity if the tenant won't vacate. For tenants, holdover rates are expensive and holdover status provides minimal security. Both parties benefit from addressing renewals well before expiration.
Example
A tenant's 3-year lease expires June 30. They haven't signed a renewal but continue operating. Per the lease, holdover rent is 150% of the final rate—jumping from $14/SF to $21/SF. After 2 months of holdover while negotiating renewal terms, they've paid $3,500 in premium rent they could have avoided with earlier planning.