Holdover

A holdover occurs when a tenant stays in its space after the lease expires, without a renewal or extension. Most commercial leases charge holdover rent at a premium, commonly 150% to 200% of the last rent, to discourage it.

What the holdover clause covers

A typical holdover clause sets:

• Holdover rent, as a percentage of the last month’s base rent, sometimes rising after a set period
• Additional rent, with recoveries continuing at the same share
• The tenancy, usually month to month or at will, terminable on short notice
• Damages, making the tenant liable for the landlord’s losses if the holdover costs it a new tenant
• No renewal, stating that accepting rent does not extend the term

Example

A tenant paying $18,500 a month in base rent, with holdover rent at 150%:

$18,500 x 150% = $27,750 per month

Recovery estimates continue unchanged.

Why it happens

Holdovers are usually unplanned: a renewal negotiation that runs past expiration, a tenant whose new space is not ready, or an expiration nobody was watching. Each is visible months in advance as a critical date, alongside any renewal option window that has passed without notice.

Planned holdovers

When both sides want a short extension, documenting it as a short amendment at an agreed rent is cleaner than relying on the holdover clause. It avoids the penalty rate and leaves the lease abstract with a clear record of the new term.

The commercial lease administration guide covers expirations and the dates that come before them.