Can a Holdover Tenant Claim Constructive Eviction?

The tenant’s right of quiet enjoyment lasts for as long as the lease remains in effect. If the landlord does something to interfere with that right, the tenant is entitled to vacate and stop paying rent on the grounds of constructive eviction. But what happens when the original lease expires and the tenant holds over? Does the tenant’s right of quiet enjoyment end with the lease or continue through the holdover? Stated differently, can a tenant use constructive eviction as a defense for not paying rent during the holdover period?

In many states, the answer is yes, provided that the landlord consents to the holdover tenancy. Here are two cases, both from Texas, illustrating how these principles play out in real life.

Landlord IS Liable for Constructive Eviction

Facts: A dental practice tenant claimed that it properly exercised its three-year renewal option; the landlord disagreed and contended that it was a holdover tenant. The landlord continued to invoice the tenant at the original $12 per foot square foot rate even though the lease provided for a rental rate of $18 per square foot in the event of a holdover. A few months into this now month-to-month arrangement, a dance studio moved in next door. The dental practice tenant complained about the noise and vibration, but the landlord ignored the complaints. The tenant accused the landlord of constructive eviction; the landlord responded by sending it a default notice and trying to evict it. The jury sided with the tenant, but the court took the unusual step of nullifying the verdict. The tenant appealed.

Ruling: The Texas appeals court reinstated the verdict.

Explanation: The lower court was wrong to conclude that constructive eviction doesn’t apply to a holdover tenancy. Sure, a landlord can terminate the lease once it becomes month-to-month. But it must refrain from interfering with the tenant’s quiet enjoyment for as long as the holdover tenant remains in the premises. In this case, the landlord accepted the tenant’s holdover rent but disregarded its complaints about the disturbances from the neighboring dance studio. As a result, the jury was right to find the landlord liable for constructive dismissal [Daftary v. Prestonwood Mkt. Square, Ltd., 404 S.W.3d 807, 2013 Tex. App. LEXIS 6997, 2013 WL 2456324].

Landlord Is NOT Liable for Constructive Eviction

Facts: After giving the current month-to-month tenant the required 30-day nonrenewal notice, the landlord began demolition work on the property. But the tenant was still there. And it claimed that the Dumpsters, barricades, and big trucks in front of its property were interfering with its business. So the landlord sued for eviction—and won. Only then did the tenant move out. But it looked like the tenant would have the last laugh when the court found the landlord guilty of constructive eviction. Then came the appeal.  

Ruling: The Texas federal court nixed the ruling and the $91,694 damages award that came with it.

Explanation: As illustrated by the Daftary case above, in Texas, holdover tenants can assert constructive eviction claims against their landlord, the court acknowledged. But the difference was that the tenant in this case wasn’t a holdover tenant. Unlike in Daftary, the landlord didn’t accept its rent or consent to its holding over. On the contrary, it sought to evict the tenant immediately after learning it was still on the property. As a result, the tenant was a trespasser and had no claim for constructive eviction. And even if it was a holdover tenant, the court added, although it didn’t need to, its constructive eviction claim was faulty because the tenant remained in place after the “triggering events”—that is, the Dumpsters and such—occurred and didn’t vacate until after being evicted [Joseph Kemp & KRR HH Retail, LLC v. Subrina Brenham & Subrina’s Tax Servs., 2020 Tex. App. LEXIS 311].

The Takeaway

There are four key points to remember:

1. The tenant’s right of quiet enjoyment continues through the holdover period.
2. If the landlord consents to the holdover tenancy, it must honor and refrain from interfering with the tenant’s quiet enjoyment rights for as long as it remains in effect.
3. However, the landlord doesn’t have to consent to the holdover.
4. If the landlord doesn’t accept the holdover, either expressly or implicitly by accepting rent during the holdover period, the tenant can’t claim constructive eviction.