A holdover clause is a provision in a residential lease agreement that states the required legal actions if a tenant stays on the property past the end of their lease term.
Sample Holdover Clause
Below is an example of a holdover clause that could be incorporated into a residential lease agreement:
The Tenant(s) shall surrender the possession of the Premises to the Landlord upon the termination of this Lease Agreement. If the Tenant(s) fails to vacate the Premises at the end of the Lease Term, the Tenant shall become a Tenant at sufferance only, and shall pay the Landlord a rental rate of _____ percent of the original Rent, effective at the termination of this lease agreement, plus expenses or damages suffered by the Landlord and/or any future occupants to whom the Premises shall subsequently be leased to. These payments will be made to the Landlord upon move-out or deducted from the Tenant(s)’s security deposit. If the tenant fails to adhere to the terms of this agreement, the Landlord may give the Tenant(s) a ___ day notice to quit.
Why Include a Holdover Clause in a Residential Lease Agreement?
A holdover clause gives landlords financial protection from tenants who overstay their lease term. For example, landlords may enforce a rent increase for holdover tenants—encouraging them to either renew their lease or move out in a timely manner.
Tenants can also benefit from this clause—as it provides more time and flexibility if housing arrangements fall through. Depending on the circumstances, the landlord has a few options:
- Enter into a month-to-month tenancy
- Increase the rent (e.g., by 150% or even 200%)
- Evict the tenants
If the landlord has not found new tenants to move into the unit, then they may benefit from a month-to-month agreement. However, if they need the tenants to vacate immediately, a steep rent increase or an eviction would be most effective.
What Happens if a Tenant Refuses to Leave the Property After Their Lease Expires?
If a tenant remains on the property past the end of their lease without the landlord’s outright objection or approval, they are considered a tenant at sufferance. If the lease includes a holdover clause, the landlord can send a written notice to the tenant informing them of the next steps (i.e., moving out or renewing the lease). If the tenant ignores the notice, the landlord may begin the eviction process.
It is important to note that if the landlord accepts rent from the tenant after the lease term, they cannot legally evict the tenant. To avoid this, the clause should specify that any additional rent payments should either be taken out of the tenant’s security deposit or paid upon move-out.
How Much Notice is Required for an Eviction?
Eviction laws vary depending on the location. In California, if a landlord accepts rent past the lease term, the tenant automatically becomes a holdover tenant and the landlord must provide a 30-day notice to vacate before proceeding with an eviction. In Texas, landlords are only required to provide 3-days’ notice.
What to Include in a Holdover Clause
Landlords should include the following information in their holdover clause:
- What will happen if a tenant stays past the end of their lease (e.g., rent increase, month-to-month tenancy, or eviction)
- Percentage of rent increase (if applicable)
- Required eviction notice from the landlord (if applicable)
- Acknowledgment that the tenants will be held liable for any financial damages caused by the holdover period
- Any additional terms or conditions
State and local laws vary when it comes to holdover tenants and eviction proceedings. Landlords should research rules and regulations in their area before creating their agreement.