Be Prepared to Comply with Lease Terms in Holdover Period

If you hold over in a space, don’t assume that the expired or terminated lease’s terms will no longer apply to you. Rather, if your lease has a typical holdover clause, you should expect that those terms will apply during the holdover period, and that you must continue performing your lease obligations.

A typical holdover clause says that if you continue occupying your space after the lease ends, you’ll become a tenant “at will” or a month-to-month tenant, subject to all of the terms, covenants, and conditions of the lease. So if you’re a holdover tenant and you don’t perform your obligations under the lease—such as making required repairs and paying holdover rent and CAM costs/operating expenses—you could suffer serious consequences.

While owners discourage tenants from holding over a space by including holdover provisions in their leases that penalize tenants for failing to move out according to their lease terms, you can still protect your own interests by negotiating modifications to your owner's holdover provisions. For negotiating tips, see “Make Five Modifications to Owner's Holdover Clause,” in the May 2010 issue of the Insider, available in our online Archive.

Not a subscriber? Click here for a free trial issue!