What happens if a commercial tenant is holding over on an expired lease when the property is sold?

A commercial tenant who stays in possession after their lease term has expired, with the landlord's acquiescence, generally becomes what's known as an overholding tenant under the default rules in the Commercial Tenancies Act, typically continuing on terms similar to the expired lease, often treated much like a month-to-month arrangement, until it's properly ended through the required notice. This continues to apply after a sale: a new owner steps into the landlord's position and inherits both the benefit of continuing rent and the more uncertain footing of an overholding arrangement rather than a fixed-term lease.

The practical risk for a buyer is that an overholding tenancy is inherently less secure than a fixed-term lease. It can typically be ended with proper notice more readily than a tenant still within their original term, which cuts both ways depending on whether the buyer wants that tenant to stay or leave. A buyer planning to redevelop or reposition a property may see an overholding tenant as an opportunity, while a buyer counting on stable long-term income may see the same tenant as a risk.

Buyers should confirm at due diligence whether any tenant is actually overholding rather than under a current fixed-term lease, since this changes both the tenant's security of tenure and the buyer's own planning options.