“Cash for keys” is a term used to describe a situation where a landlord offers a tenant a sum of money to vacate the rental property voluntarily. If done properly, cash for keys can be a good way for landlords to get an unwanted tenant to move out willingly. Plus, it can be more cost-effective than an eviction, which involves court fees, notices, a lengthy eviction process, lost rent, etc.
In this article, we discuss how cash for keys can be a useful tool for landlords who want to avoid the cost and hassle of eviction.
What is Cash for Keys?
A cash for keys agreement is a written contract between a landlord and a tenant, in which the landlord offers a sum of money to the tenant in exchange for vacating the rental property voluntarily. This alternative to eviction can be beneficial for both parties, as it can help avoid the costs and legal complexities associated with eviction proceedings.
However, landlords should keep in mind a few things before considering cash for keys as an option.
- Cash for keys should be voluntary: The tenant should not be coerced or threatened into accepting the offer. The decision to accept the offer should be made voluntarily by the tenant.
- The amount offered should be fair: The amount offered should be reasonable based on the circumstances, including the tenant’s length of tenancy, the rental market, and the cost of relocation.
- Get the agreement in writing: It’s important to have a written agreement that outlines the terms of the cash for keys deal, including the amount offered, the date of move-out, and any other conditions.
- Keep communication open: Maintain good communication with the tenant throughout the process. This can help ensure that both parties understand their responsibilities and can avoid misunderstandings or disputes.
- Consider the legal implications: Cash for keys doesn’t terminate a tenancy, so it is important to follow proper legal procedures to end the lease agreement. This includes providing proper notice and complying with state and local laws.
What Should You Include in a Cash for Keys Written Agreement?
A cash for keys agreement should include the following information:
Names and contact information of both parties
The agreement should identify the landlord and tenant by their full names, and include their current addresses and phone numbers.
Amount of money offered
The agreement should clearly state the amount of money that the landlord is offering to the tenant in exchange for vacating the property.
Date of move-out
The agreement should specify the date by which the tenant must vacate the property. This should be a mutually agreed-upon date that provides the tenant with enough time to move out and the landlord with enough time to prepare the property for the next tenant.
Condition of the property
It should state the condition in which you expect the tenant to leave the property. This may include cleaning the property, repairing any damage caused by the tenant, and returning keys and any other property belonging to the landlord.
Release of liability
It should include a clause that releases the landlord from any liability related to the tenancy, including any claims for damages or injuries that may arise.
Compliance with local laws
The agreement should specify that both parties will comply with all applicable local laws and regulations related to the tenancy.
Signatures and date
All parties should sign and write the date on the agreement.
Both the landlord and tenant should keep a copy of the agreement for their records. You can find templates of customizable cash for keys agreement on the EZLandlordForms website.
Why Would a Landlord Offer Cash for Keys?
Here are a few common scenarios where a landlord may consider offering cash for keys:
- To encourage a tenant to leave voluntarily: In some cases, a tenant may not be paying rent or may be violating the lease agreement, but may not be willing or able to leave voluntarily. Offering cash for keys can provide an incentive for the tenant to leave voluntarily, which can be a more peaceful and less stressful solution for both parties.
- To avoid the time and expense of eviction: Evicting a tenant can be a lengthy and costly process. Offering cash for keys can be a quicker and more cost-effective way to end the tenancy.
- To avoid damage to the property: In some cases, a tenant may be causing damage to the property, or may have a history of damaging rental properties. In these situations, a landlord may offer cash for keys as a way to avoid further damage to the property.
- To maintain a positive rental history: A landlord may want to maintain a positive rental history for their property. Eviction proceedings can negatively impact a property’s rental history, which can make it harder to find tenants in the future. By offering cash for keys, a landlord can end the tenancy in a way that is more positive and amicable.
Common Cash for Keys Mistakes
Here are some of the most common cash for keys mistakes that landlords should avoid:
1. Failing to get the agreement in writing
It is important to have a written agreement that outlines the terms of the agreement, including the amount of cash offered, the date by which the tenant must vacate the property, and any other conditions that must be met.
2. Offering too little or too much money
The amount offered should be reasonable and fair, based on factors such as the length of the tenancy, the condition of the property, and the local rental market.
3. Failing to specify the condition of the property
The agreement should specify the condition in which the property should be left, including any required cleaning or repairs.
4. Not following through on the agreement
If the landlord fails to follow through on the agreement by providing the agreed-upon cash payment, the tenant may be able to challenge the agreement in court.
5. Coercing or threatening the tenant
Both parties must enter into the agreement voluntarily and without coercion or threats. Any attempts to coerce or threaten the tenant to accept the agreement can render the agreement invalid.
6. Failing to comply with fair housing laws
The agreement must comply with all applicable fair housing laws and regulations, and cannot be used to discriminate against protected classes of tenants.
7. Ignoring legal requirements
Landlords must comply with all applicable local, state, and federal laws, including lease termination and security deposit requirements.
Cash for Keys Frequently Asked Questions
Most landlords offer half a month’s rent plus a security deposit while others offer a full month’s rent. However, the amount typically ranges between $1,000 and $3,000.
Yes, a cash for keys agreement is legal, as long as it is done properly and in compliance with applicable laws and regulations. The agreement must be voluntary, with no coercion or threats, and the amount offered must be reasonable and fair.
Bear in mind that a cash for keys agreement is not a substitute for the legal process of eviction. If a tenant refuses to vacate the property voluntarily or does not comply with the terms of the agreement, the landlord may still need to pursue legal eviction proceedings.
Cash for keys and eviction are two different processes for ending a tenancy. Cash for keys is a voluntary agreement between the landlord and tenant, while eviction is a legal process that involves a court action to regain possession of the rental property. Therefore, the eviction process can last for over a month and usually costs more than a cash for keys agreement. On average, an eviction can cost between $4,000 and $7,000.
Cash for Keys: Landlord Gurus Takeaway
Offering cash for keys can be a useful tool for landlords who want to end a tenancy without the cost and hassle of eviction proceedings. It can also be a way to avoid damage to the property and maintain a positive rental history.
Before leasing your rental, make sure to do proper tenant screening. Some of the tools we recommend for online tenant screening are RentPrep, ApplyConnect, and Avail. Also, use proper forms for the written cash for keys agreement.
We also recommend setting up automated rent collection. Some of the best online rent payment services for landlords include PayRent, Avail, Baselane, Hemlane, RentRedi, Rentec Direct, and TurboTenant.
Most importantly, get legal help if needed. It’s always a good idea to consult a lawyer who specializes in landlord-tenant law before offering cash for keys. A lawyer or service such as Rocket Lawyer can help ensure that the agreement is legally sound and that all parties are protected.
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