February 1, 2024
Last Updated
Rather than a lengthy and costly eviction process, some landlords are offering a “Cash for Keys” program to get problem tenants to move out.
Even the best tenants can run into some financial difficulties, and it’s up to each landlord to determine when to give someone a break and when to start the eviction process. When you really need your tenants to move out for non-payment of rent, but want to avoid the time and costs of the eviction process, consider offering the tenants a “Cash for Keys” incentive.
What is Cash for Keys?
The idea behind cash for keys is to provide an incentive for tenants who can no longer pay rent to move out by a certain date, then receive a cash reward from the landlord. While it seems counterintuitive to pay tenants who cannot pay rent, many landlords are finding that the program actually costs less than filing fees, attorney fees and lack of rent payments during the eviction process, which can drag on for a month or longer.
How Does it Work?
Once you’ve determined that your tenant is in default, you have two options. First, you can begin the unlawful detainer process by serving a notice to pay or quit—the first step in the eviction process. Second, you can offer Cash for Keys incentives to the tenant so you can quickly regain possession of the rental property and get it re-rented as soon as possible.
The amount of cash you can offer is between you and the tenant. A good rule of thumb is that you will pay an amount equivalent to a deposit on a new rental, or perhaps the equivalent of two weeks of rent.
Is Implenting a Cash for Keys Program Legal?
Cash for Keys is legal. However, you must protect yourself and your property from tenants who agree to hand over the the keys for cash, but still don’t move out.
Make sure that there is a legally enforceable right for you to evict the tenants should they not comply with the written cash for keys agreement. In other words, the cash for keys agreement should specify that the tenants understand that failure to comply means they waive their right to a trial and are giving up possession of the property. This way, you can get a writ of possession quickly in case they don’t move out after all. An experienced attorney can help you draft comprehensive cash for keys agreement that is legally binding.
As a landlord, you’ll experience times when your tenants are having a hard time making the rent payments. You must trust your instincts and know when to be creative and work out an arrangement on unpaid rent and when it’s time to get possession of your rental property and get the tenants out. If you choose a cash for keys method, make sure it’s beneficial to you and your business and make sure that ultimately you regain possession of the property faster than you would via an eviction.
Cash for Keys Agreement Form
If you want to implement a Cash for Keys program, for legal purposes it’s important that you use an agreement form.
The cash for keys agreement form is a part of our landlord form bundle.
You can get the form bundle by clicking here.