Please Rotate Your Device
You would love to have it at the same price, but most overholding clauses are 200% of the net rent (not gross rent).
Many landlords will agree to a more tenant-friendly penalty of about 125%, but this has to be negotiated before the lease is signed, not when you are desperate to keep the penalty to a minimum.
Your landlord may want you to vacate so she can lease it to the next tenant, or perhaps she is keen on you signing another long-term lease.
Keep in mind that it is only your right to hold over in the premises if you have the landlord's consent. Your lease was for a specified time period and the expiry has arrived.
Here is a case study in which a medical clinic experienced a delay and wanted to remain in their premises for just a few more weeks, but the landlord had already leased their space to the next tenant: AIM Medical Group Inc. v. 40 Finchgate Limited. Here is another case study involving landlord consent here.
While any rights you have to renew your lease will have lapsed (since the lease has expired), that does not mean that your landlord does not want to work out a new deal.
There are instances beyond your control - acts of god, construction strikes, etc.
Most often though it comes down business owners focusing too much in their business and not on their business and they have left a relocation too late.
In those cases most landlords are not very sympathetic and will enforce the highest overholding their lease allows, especially if they feel you are just stalling and have intentions of moving.
Obviously paying a massive increase in rent is a big risk to your business. But so too is not having a location to work from if the landlord pulls the plug on your overholding right, so be sure to act quickly to make overholding a temporary situation.
Another risk is the landlord changing the locks with your possessions in the premises. This likely will only happen if the landlord no longer wants to provide overholding and you do not have a new location yet.
Typically you will have to look to the new landlord. Has your delay been caused by the neglect or misconduct of the new landlord?
If not, and it was some outside force (like a construction strike, or an act of nature), then what does your insurance policy state? Do you have business interruption insurance?
While you may be paying a hefty amount for your monthly hold over, you could also be compensated by an insurance policy on the other side.
A tenant committed to leasing space in a tower to be built in a major city, by a trusted developer.
The new tower was about a half mile from a major lake.
During construction the developer hit water while digging.
This delayed construction by four months. The tenant approached their existing landlord to stay for four months beyond their existing expiry.
The landlord insisted on 400% of net rent as the "renewal" rate. They claimed that given that the tenant was asking for a four-month lease term, and therefore their 150% overholding clause did not apply.
In other words, the existing landlord was simply taking advantage of the relocating tenant.
The tenant and landlord ended up bridging the gap, with help from the developer (the new landlord) and their insurance policy, but it reveals how cold landlords can be when losing tenants.
Here is a sample of an overholding clause from an actual lease:
That in the event that the Tenant remains in possession of the Leased Premises after the termination of the original Term hereby created, without a written agreement with the Landlord, it shall be at the monthly Base Rental equal to the Base Rental and Additional Rent payable during the last month of the Term hereof, times two, payable on the first day of each and every month and subject in all other respects to the terms of this Lease, including those provisions requiring the payment of Base Rental and Additional Rent in monthly installments. This overholding right can be cancelled by either party with thirty (30) days? prior written notice.
The wording for this clause is actually quite tenant favorable, with the exception that "times two" should be modified to 125%.
You want to plan ahead and avoid sticky overholding situations by signing a new lease at least 6 months in advance of your existing expiry date. That should provide you enough of a buffer to avoid costly month to month holdovers.
Ensure that you ask your new landlord what their insurance policy or company policy states with respect to assisting new tenants that have a delay due to the new landlord.
It would also we wise to have a penalty in the new lease that states that for every week of delay, there is free rent to offset your overholding costs, or better yet, the new landlord will compensate you for any out of pocket costs associated with holding over or finding temporary space.
Make sure that you have a solid insurance policy as well.
Good luck with negotiating your holding over clause!