⏳ What Is a Holdover Clause in Real Estate?

A holdover clause in real estate outlines what happens if the seller (or in some cases the buyer) remains in the property past the agreed move-out or closing date. It defines fees, responsibilities, and remedies when a party “holds over” after they were contractually required to vacate.

How a Holdover Clause Works

A holdover clause activates if a party stays in the home beyond the date specified in the purchase agreement or occupancy terms. It protects the non-holding party (usually the buyer) from delays, damages, or additional costs caused by the extended occupancy.

Common components of a holdover clause include:

  • Daily holdover fee — often based on market rent or a percentage of the purchase price.
  • Responsibility for utilities or damages during the extra occupancy period.
  • Liability protection for the buyer if the seller delays the move-out.
  • Defined end date for the holdover period or instructions for eviction options.
  • Insurance requirements during the extended stay.

The purpose is to prevent disputes and compensate the buyer for any inconvenience or financial impact caused by the seller’s delay.

Why a Holdover Clause Matters

Benefits for Buyers:

  • Protects against delays when planning movers, jobs, or new leases.
  • Compensates the buyer if the seller stays past closing.
  • Creates a defined structure rather than informal agreements.
  • Prevents conflicts over extended occupancy.

Benefits for Sellers:

  • Clear terms if they unexpectedly need extra time.
  • Avoids disputes by outlining fees and responsibilities upfront.
  • Gives certainty about costs for staying after the deadline.

Example of a Holdover Clause

A typical holdover clause might say:

  • If the seller fails to move out by 5 p.m. on the day of closing, they must pay the buyer $150 per day as a holdover fee.
  • The seller remains responsible for all damages, utilities, and insurance until they vacate.
  • The buyer may pursue legal remedies if the seller does not move out within the additional period.

This ensures the buyer is compensated and protected if the seller delays possession.

Why It Matters for FSBO Sellers

FSBO sellers often lack buffer time and may underestimate move-out logistics. A holdover clause prevents accidental contract breaches and protects both parties.

  • Clear rules for late move-out situations.
  • Reduces disputes and protects the closing timeline.
  • Assigns fair compensation for extended occupancy.
  • Ensures smoother transitions for buyers and sellers.

When listing with Flat Fee MLS through Brokerless, sellers can include holdover terms to avoid last-minute conflicts.

Frequently Asked Questions

Is a holdover the same as a rent-back?
No. A rent-back is a formal agreement where the seller stays after closing with permission. A holdover occurs when someone stays too long without agreement.

Can a buyer refuse a holdover?
Yes. The buyer can enforce the contract and require the seller to vacate, or accept compensation as specified in the clause.

What is a typical holdover fee?
Fees range from daily rent rates to 1/30th of the buyer’s mortgage payment, depending on state norms and contract language.

Does a holdover clause apply before closing?
Usually no — before closing is covered by a pre-closing occupancy agreement, not a holdover clause.