The Basics Of A “Cash For Keys” Transaction

If a tenant refuses to vacate rental property after lease termination, breaching the lease, or some other valid reason, the landlord can file an unlawful detainer action seeking a court order requiring the tenant to move. “Cash for Keys” transactions provide an alternative to eviction litigation that may result in saving time and resources if the right deal is consummated.

What Is Cash for Keys?

Cash for Keys transactions are used to convince a tenant to vacate a property in exchange for an agreed upon sum of money. These transactions are common in situations where tenants can no longer afford the rent or are damaging the property. It may also be an option when a landlord purchases a new rental property and, for whatever reason, wants to move on from the existing tenants.

A Cash for Keys transaction’s purpose is to get a tenant to vacate a unit willingly by offering a cash incentive. Paying them to leave, especially if they agree to do so quickly and peacefully, will allow you to avoid the time and expense of the eviction process. In exchange for the funds, the tenant will be required to vacate the home by a set deadline, and leave the property in satisfactory condition.

How to Offer Cash for Keys

Communication With Tenant. The first step in the process is to contact the tenant(s) and communicate the specifics of the cash for keys transaction you had in mind. Give the tenants a date you’d like them and their belongings to be out of the property and tell them you will give them a sum of cash to do so. In this conversation you should also inform the tenants that the only other option is an eviction. Tell them that an eviction will potentially result in a judgment that will stay on their records for several years, and possibly include an award of damages in your favor. Make sure they are aware of the severity of the situation if they do not move out of the property.

Reduce The Agreement To Writing. If accepted, reduce the agreement to writing and obtain the tenant’s signature agreeing to its terms. This is essential and necessary for your records. Also make sure to retain a receipt confirming any amounts paid to the tenant as consideration for their agreement to move out.

The Offer Amount. The offer amount of a cash for keys agreement will depends primarily on the cost of living in your location. Generally, the amount is usually half a month’s rent plus security deposit, or a full month’s rent. Another option is to offer an amount equal to the cost of an eviction. Whatever amount you offer, make it reasonable under all the facts and circumstances.

Inspect The Property On The Move-Out Date. It is important that you show up to the property on the agreed-upon move-out date, inspect the property for cleanliness and any damage, collect the keys, and give the tenant the cash. Afterwards, immediately change the locks. Don’t return the tenant’s security deposit until after you complete a formal, thorough move-out inspection. As a landlord, you can withhold funds from the security deposit if used to cover unpaid rent or property damage, among other things.

The Benefits of Offering Cash for Keys

There are several potential benefits of a cash for keys transaction. From the tenant’s perspective, it provides the tenant with the cash needed to move out or put a deposit down on a new place, and allows him or her to avoid having an eviction on record. From your standpoint, it will allow you to find a new tenant and restore your rental income in days rather than the months it may take for an eviction to run its course.

Assistance on Cash For Keys transactions is just a click or phone call away. Lynx Legal Service can be reached at 888-441-2355 or at info@lynxlegal.com. Our experienced professionals are standing by to answer any questions you may have.