Maryland Commercial Landlords Beware: Understanding Holdover Tenants
Maryland commercial landlords need to know that tenants are considered in holdover only when the lease has expired, even if the tenant is in breach of the lease.
In a recent case, The Supreme Court of Maryland Supreme Court highlighted two important points:
- Lawyers must be meticulous when drafting lawsuits.
- There is a significant difference between lease termination and lease expiration, especially concerning holdover tenants.
Case Overview
A restaurant’s lease included a clause allowing the landlord to terminate the lease if the restaurant failed to pay rent on time. After the restaurant missed two rent payments, the landlord terminated the lease. Even though its lease was terminated, the restaurant refused to vacate the premises. The landlord then filed a “holdover” action against the restaurant. For those unfamiliar, a tenant who remains in the rented space after the lease has expired is termed a “holdover.”
In the lawsuit, the landlord argued that the restaurant had no right to occupy the space because the lease was terminated, this made the restaurant a holdover. After prolonged litigation in Frederick County’s Circuit Court and District Court, the case reached the Supreme Court of Maryland. In its ruling the court noted that the statute regarding holdover tenants clearly states that holdover tenants are those who remain after a lease has expired. In this case, the tenant remained after the lease was terminated but not expired. Consequently, the landlord filed the wrong type of lawsuit, allowing the tenant to remain on the property until a proper lawsuit is filed.
Conclusion
Maryland law is clear: holdover tenants are those who remain beyond the lease expiration date. If landlords want to reclaim their property before the lease expires, they should explore and be advised on alternative legal options. Additionally, litigation can be unpredictable, so a negotiated settlement is usually preferable to litigation. Even if the law is on your side, a judge may disagree with you, leaving you with the choice to accept the decision or pursue an uncertain, time-consuming, and costly appeal process.
Click here to read the opinion – Copinol Restaurant, Inc. v. 26 North Market, LLC
0 Comments