Holdover Tenant

When a commercial lease expires and neither party has executed a renewal or new agreement, the tenant who continues to occupy the space becomes a holdover tenant. In Illinois, a holdover tenancy in commercial real estate is typically governed by the terms of the expired lease, but the landlord may have the right to charge significantly higher rent — often 125% to 150% of the final month's rent — as a penalty. More critically, holding over exposes the tenant to eviction proceedings and potential liability for damages if the landlord has another tenant lined up for the space. For healthcare practices, holdover situations are particularly risky because of the operational disruption and patient impact of a forced relocation on short notice. Proactive lease renewal planning is essential — most advisors recommend initiating renewal conversations 12–18 months before expiration.

Holdover situations can expose healthcare practices to significant legal and financial risk, including eviction, penalty rents, and forced emergency relocation. Always begin lease renewal negotiations well in advance of expiration.

A medical practice whose 5-year lease expires in December continues operating without a new agreement. The landlord, who has signed a lease with a new tenant for January, initiates eviction proceedings — forcing the practice to relocate in 30 days.