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The Overholding Tenant And Goodyear V. Burnhamthorpe Revisited

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DID YOU KNOW?

That the "overholding clause" in a lease, while in many cases overlooked by parties when negotiating the lease, is commonly looked to upon the expiry of the term? At that point, if not properly drafted, there can be serious ramifications.

A lease without an overholding clause has different consequences than a lease with such a clause. In any case, where the tenant remains in possession after the expiry of the term with or without the landlord's consent but without a notice to quit, a new tenancy is created by implication of law.

LEASE WITHOUT AN OVERHOLDING CLAUSE

Wilful Overholding

Where there is no clause in a lease for a term of years, s. 58 of the Commercial Tenancies Act ("Act") applies. The section essentially provides that:

  1. where there is a lease for a term of years;
  2. the tenant wilfully (i.e., without landlord's consent) holds over after the term (e.g., the Landlord has served the tenant with a notice to quit as of the last day of the term and the tenant ignores the notice); and,
  3. The landlord has delivered written notice to the tenant demanding possession (a notice to quit and demand for possession cannot be embodied in the same document (Stefanik v. Blazewich [1946] 3 D.L.R. 676 C.A.)).

The tenant must pay rent equal to twice the yearly value of the land overheld (which does not necessarily mean twice the rent the tenant was paying in the last year of the term (Yonge-Rosedale Devs. Ltd. v. Levitt (1978), 18 O.R. (2d) 295)) until possession is given to the landlord. This amount can be recovered by action and the tenant has no relief from the penalty.

In order to obtain possession, the landlord can bring an application in the Ontario Court (General Division) pursuant to s. 74 of the Act for an order for possession. However, the order cannot grant the "double rent" claim pursuant to s. 58. This would have to be claimed in a separate action. (Yonge-Rosedale Devs. Ltd. v. Levitt, supra .)

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