Cash for keys is not talked about very often, and it can be a tricky situation for landlords to manage. When using these agreements, landlords have to be careful as they navigate the legal minefield that goes along with offering this type of agreement.
Let’s take a closer look at what a cash for keys agreement is and when it’s used in real estate.
Cash for Keys Agreements
As the name implies, a cash for keys agreement is an arrangement in which the landlord offers the current tenant cash to vacate the property. Some common reasons landlords would use a cash for keys agreement include:
- If a tenant is consistently late paying rent;
- If tenants intentionally damage the property in some way;
- If the landlord wants to sell or remove the property from the real estate market; or
- If the landlord wants to increase the property without passing the cost on to the tenant.
Most of the time, tenants who live in apartments for rent in the financial district nyc also accept these cash offers from landlords, especially when they can’t afford to pay the rent. A cash settlement in exchange for having a tenant vacate a property can be a win-win situation for both the tenant and the landlord. It is also a better option than pursuing the eviction process.
How Cash for Keys Programs Work
The process of cash for keys is efficient, fast, and simple. It involves the following steps:
Talking with the Tenant: The landlord talks with their tenant about why he or she needs to vacate the property and what they will offer him or her for leaving voluntarily.
Sign Cash for Keys Agreement: If the tenant accepts the offer and agrees to vacate the property, he or she will sign a formal written agreement with the landlord acknowledging that agreement.
Maintain Documentation: Once the agreement is signed, the landlord maintains a copy of the agreement and pays the tenant the agreed-upon amount to leave the property by the date specified in the agreement. The landlord keeps a record of the cash paid as part of the agreement and offers the departing tenant a cash receipt. Infect, Office website nyrentownsell also helps to do it.
Tips for Cash for Keys Agreements
When speaking with the tenant, clearly communicate that they are violating the terms of their lease agreement. Also let them know that you, as their landlord, have a right to initiate their eviction as a result.
Discuss the Alternative
Offer them the option of leaving the property within a certain time in exchange for a reasonable and fair cash payment. Explain the financial benefits of doing that instead of going through the eviction process.
Be There on Moving Day
Find out when the tenant plans to move out and plan to be there. Once all of their personal property is moved out of the property, you should conduct a walk-through to look for any damage and to confirm nothing is missing from the property.
Once the property is empty, get rid of any garbage that was left behind and change the exterior door locks in preparation for the next tenant.
Things to Avoid in Cash for Keys Agreements
While the process is quite simple, there are a few things you should avoid when offering a cash for keys option for removing a tenant.
While landlords have the right to evict tenants, it does not mean that you can make tenants’ lives miserable to expedite the move-out process. Tactics like cutting off amenities, refusing to respond to maintenance calls, changing door locks before the tenant moves out, or using any other method to coerce the tenant to leave is illegal.
It is against the law to verbally or physically threaten tenants or harass their family members. You have to remain professional no matter how bad the situation is or how much you want them to leave the property.
Tenants may try to play to the situation and attempt to negotiate a higher cash offer before they agree to leave. Make sure you’ve done your homework by researching reasonable cash offers for cash for keys agreements in your area. Even if you don’t find an ideal or benchmark amount to offer, it’s always better to start with a low amount and then incrementally offer more until you reach the maximum offer amount that you’re comfortable (and able) to pay the tenant in exchange for leaving.
How Much Cash Should You Offer?
There is no definite or ideal figure when using this type of agreement, but generally, it should be enough to cover their next security deposit, moving cost, and a small cash bonus. What you offer will depend on a host of factors that you can determine beforehand, such as what kind of condition the property is in, how early you want the tenant to leave, and your plans for the property.
The Bottom Line
Having said all that, there may be situations when the tenant might not be ready to vacate the property. To avoid such a situation, consider talking to the tenant and, possibly, working together to arrive at a reasonable cash payout amount.
Of course, proper and prudent applicant screening can help stave off the need for cash for keys agreements in the first place. Take the necessary steps to help ensure you get a tenant who is willing to consistently abide by the lease agreement.
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