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A holdover tenant is a tenant who continues to reside on rental property after his or her lease has expired. In some instances, this type of tenant remains with the permission of the landlord while a new lease is being prepared. At other times, the holdover tenant does not have permission from the landlord to continue occupying the premises, a situation that will often lead to legal action designed to remove the tenant from the property.
Depending on the terms of the lease, it is sometimes possible for a tenant to gain holdover status through two specific situations. One common reason for this status is that the most current lease has expired and the landlord has voiced an intention to prepare a new one in the short-term. In the interim, the tenant remains in residence, usually paying the same amount of rent as before, until the new lease is signed.
An alternative situation occurs when the tenant does not wish to renew a lease when it expires, owing to plans to move to another location. Here, the landlord and holdover tenant may come to an agreement on maintaining their relationship on a month to month basis, as the tenant prepares to vacate the premises. Some lease agreements already account for this possibility by including a month-to-month clause that goes into effect when the original lease term is completed, which technically prevents the renter from being classified as a holdover tenant.
While there are situations where the holdover tenant continues to remain in possession of the residential rental property with the permission of the landlord, there are also instances where no permission is granted. This typically occurs when the current lease has expired and the landlord has specifically stated that the lease will not be renewed, or a new lease offered to the tenant. Should that tenant continue to occupy the property after whatever grace period may be allowed by local law, the tenant is in breach of contract and the landlord is free to take legal action. Often, this involves formally evicting the tenant with the assistance of local law officials.
When a holdover tenant is forcibly ejected from a property, he or she may not be entitled to the return of any security deposit that was tendered at the beginning of the relationship. This is particularly true if the tenant is in arrears regarding the rent, and has disregarded prior instructions from the landlord to vacate the premises. Since local laws regarding tenant rights and eviction practices vary from one area to another, both landlords and tenants should take the time to learn exactly what rights and responsibilities each have under those laws, and conduct their business relationships accordingly.