After the Lease Expires: Holdover Tenants
In a general month-to-month tenancy in Ohio, the landlord must give a tenant at least thirty (30) days notice of termination prior to the periodic rental date, which is the date on which rent is due. For example, if monthly rent is due on May 1, the landlord must give notice on or before April 1. If the landlord does not give notice until April 3, however, the tenant can stay until May 31.
But what happens if notice is given but the tenant does not leave? A landlord can either 1) have the tenant evicted or 2) accept payment from the holdover tenant. (Baltimore & Ohio RR. Co. v. West, 57 Ohio St. 161, 165-166 (1897)). If a lease expires and the tenant continues to pay rent, and the landlord continues to accept the rent payment, the “holdover tenant” has created a new periodic tenancy.
The length of the term of the new tenancy is based on the expired lease. A lease that provided for annual rent will be held as a year-to-year tenancy, and one that required rent to be paid monthly will be a month-to-month tenancy. A provision that states an annual Base Rent payable in equal monthly installments is considered, under Ohio law, a year-to-year tenancy. (Cesta v. Manfredi, 101 Ohio App.3d 326, 329 (1995)).
For example, imagine a tenant who rents a commercial space for $12,000 annually (payable in monthly installments) from June 1, 2012 until May 31, 2013. If the tenant continues to pay rent after the lease expires, and the rent is accepted by the landlord, a new one year term is created. Assuming the tenant is still paying the annual rent in equal $1000 monthly installments, he can argue that a year tenancy was created and can occupy the premises until May 31, 2014, regardless of when notice to vacate is given by the landlord. If the holdover tenant vacates prior to the end of the term, the landlord can require him to pay the annual $12,000 that is due for the entire new term, but the landlord is still under a duty to mitigate damages, including finding a new tenant.
As always, it is essential for both landlords and tenants – particularly in commercial settings – to ensure that their lease has a well-drafted holdover clause.