Leasehold agreements between owners and tenants can take many forms in commercial real estate, but every form includes some sort of relationship between the lessor, the lessee, and the duration of time the lessee can inhabit the property.
While there are several types of leasehold tenancies in conventional property agreements, one form exists only when a lease has been terminated by one party — but not recognized by another. This situation is called tenancy at sufferance, and it can result in tenants overstaying their welcome.
What Is Tenancy at Sufferance?
Tenancy at sufferance occurs when a tenant does not vacate a rented property after the lease has been terminated with prior notice by the landlord. By staying longer than allotted by the lease agreement, the tenant has no legal right to stay on the land. Tenancy at sufferance exists only when a previous lease has expired and the lessee stays longer than the terms of the agreement. Because of this violation, a tenancy at sufferance allows the landlord to evict the tenant at any time, even if the tenant is still paying rent.
Tenancy at sufferance is not a form of trespassing or squatting. Trespassing occurs when an individual remains on premises unlawfully and without the landlord’s consent. Tenancy at sufferance is always the result of circumstance and can only occur if the tenant entered the property agreement lawfully in the first place.
What’s the Difference Between Tenancy at Sufferance and Other Types of Leasehold Estates?
Tenancy at sufferance is the only form of tenancy that exists in the aftermath of one of three other forms of leasehold estates. These three are tenancy for years, periodic tenancy and tenancy at will.
Tenancy for Years
Tenancy for years is a common form of leasehold estate that takes shape when a landlord and a tenant agree to a year-to-year term of tenancy within fee simple real estate. This lease agreement can be renewed each year for an indefinite amount of time, unless either party decides to break the agreement with prior notice. Tenancy for years leasehold estates can often be found in multifamily housing and office properties with long-term tenants.
Like tenancy for years, periodic tenancy is an automatically renewable form of lease holding. Also known as period-to-period tenancy, periodic tenancy occurs when the tenant and landlord agree to a definite amount of time the tenant can occupy the landlord’s property before the lease expires.
While the agreement can still be broken at any time with prior notice, periodic tenancy can be on a month-to-month, week-to-week or even day-to-day basis. In these cases, the agreement can be terminated during any month, week or day in the duration of the relationship.
Tenancy at Will
Unlike periodic tenancy and tenancy for years, a tenancy at will exists without any distinct termination or renewal timeframe. This flexibility means that no matter how long the agreement has been in effect, both the lessor and the lessee have the power to terminate the lease at their own will, as long as the property is a freehold estate.
Also called estate at will, this form of tenancy can occur when a landlord decides to sell a property and needs tenants to vacate within a certain amount of time. Tenancy at will is rarely found in commercial real estate, and is more often found in short-term rental agreements in the residential sector.
Example of a Tenancy at Sufferance in CRE
Tenancy at sufferance is considered an unlikely and undesirable result of a conventional leasehold estate. Take, for example, a circumstance where the owner of an industrial manufacturing park decides to end a lease with one of its tenants so the owner can renovate and resell the building the tenant currently occupies. If the tenant does not vacate the premises by the end of the lease, they become a tenant at sufferance — whether they continue to pay monthly rent or not. Once the last day of the lease has passed, the tenant becomes a holdover tenant.
In this case, the tenant fails to recognize the terms of the lease agreement. This situation can become more complicated if the owner takes the tenant to a court of law. In these cases, tenancy at sufferance ends in the forced removal of the tenant from the property.
Can You Avoid a Tenancy at Sufferance?
There is no guaranteed method of avoiding the circumstances of a tenancy at sufferance. Due to its circumstantial nature, tenancy at sufferance can occur if the termination of a lease is not recognized by a holdover tenant for any reason.
One way to avoid this situation is to vet your tenants thoroughly before approving them for the rental space. When possible, give the tenant as much notice as possible before ending the agreement.