A Brief Introduction About the Cash for Keys Agreement
A cash for keys agreement is an arrangement between a property owner and a tenant through which the tenant is asked to vacate a particular property by paying him a certain amount in cash. This agreement usually comes into play during foreclosure proceedings and during evictions. During foreclosure proceedings, such an agreement may be created between a bank and the owner of the property.
Through this agreement, the tenant (or the owner as the case may be) is asked to move out within a given time period, and if he does so, he is paid a lump-sum amount. The tenant is required to leave the property in a well maintained and clean condition in what is commonly known as a “broom clean” condition. If this is not done, he might not receive the money.
It is a very easy and quick option as compared to an eviction process, which can be expensive and time-consuming. A cash for keys agreement may be used by a lender to vacate a homeowner or a tenant from a foreclosed property or by a homeowner to vacate a tenant who has violated the terms of a lease agreement.
Who Take the Cash for Keys Agreement? – People Involved
The people involved in a cash for keys agreement are the owner of the property and the tenant who is residing in such property. In foreclosure proceedings, the people involved may be the lender (which is usually a bank) and the owner or tenants of the property.
Purpose of the Cash for Keys Agreement – Why Do You Need It?
The purpose of cash for keys agreement is to remove a tenant from a particular property without going through a lengthy and stressful legal eviction process. It may seem strange to pay a tenant to move out of the property, but it is a suitable option as it saves time and money of the parties and is a quick and easy option.
A homeowner may use this option when the tenant is no longer able to pay the rent or when the tenant is causing some damage to the property. He agrees to pay the tenant a certain amount of money to vacate the property instead of starting the eviction process as it is a cheaper alternative.
The tenant, in most cases, will agree to this arrangement as he gets a lump-sum amount, and he can also avoid a judgment on his record. If the tenant is evicted, it can become extremely difficult for him to find housing in the future with an eviction on record.
Where foreclosure proceedings are concerned, the bank is one of the parties to the transaction. In such a case, the bank would like to recover the property as quickly as possible while at the same time ensuring that there is no damage is caused to the property. It is for this reason that the bank will offer an agreed sum of cash for the homeowner (tenant) to leave the property.
Contents of the Cash for Keys Agreement
A cash for keys agreement must contain all the important points that are necessary to provide evidence of the entire transaction. The agreement must lay down the date by which the keys must be turned over by the tenant, and the property must be vacated. There must be a clause that details the amount of money that will be payable to a tenant and the manner in which such payment will be made. This clause can provide a higher amount if the tenant vacates in a very short period of time.
The owner must also insist that the agreement should have a clause stating that the landlord and the tenant will both go through the property on the day the tenant vacates it to assess any damages. The payment will be made to the tenant only after the property has been thoroughly inspected, and the owner finds it in good condition.
The agreement is a fairly simple and straightforward one, and it does not need to be lengthy. As long as all the major points are covered in the contract, it will be binding in nature.
How to Draft the Cash for Keys Agreement?
Here are the following steps to follow while drafting cash for keys agreement:
- The owner of the property should inform the tenant that he has breached the terms of the lease agreement (if that is the case) and state that he will be starting eviction proceedings against the tenant. This will show that the owner is serious about his intention.
- The owner can then provide the alternative of the cash for keys arrangement by stating that he will provide the tenant with a particular amount of money if the tenant vacates the property by a certain date without causing any damage to the property.
- A cash for keys agreement must be drafted, and it must include all the details of the arrangement, the date on which the property must be vacated, and the amount that will be payable to the tenant.
- The day that the tenant moves out, the owner must inspect the property, and then all the final papers must be signed. The tenant will be paid the amount provided in the agreement in exchange for the keys of the property. It is recommended that this amount should be paid by cheque so that the owner has evidence of the payment being made. If the amount is paid in cash, the owner should provide the tenant with a receipt and maintain a record of it as well.
- The basic negotiation strategy is to guarantee that the agreement is fair on both the parties and that their rights & interests are protected. The amount that is paid to the tenant must be sufficient to cover his moving out expenses.
- It must be negotiated in a way that the agreement is fair, balanced, and benefits both parties.
Benefits and Drawbacks of the Cash for Keys Agreement
Here are the following benefits and drawbacks of having cash for keys agreement:
- A major benefit of the agreement is that it provides solid evidence of the existence of the cash for keys arrangement between the property owner and the tenant.
- A major benefit of the agreement for the owner is that it will save his time and money, and he does not need to go through a time-consuming eviction process.
- A benefit for the tenant is that as no eviction proceedings shall be initiated against him, he can avoid an eviction on his record.
- The agreement will serve as proof of the terms and conditions under which the arrangement has been agreed to by the parties. The details such as the date by which the property shall be vacated and the amount that is payable can be verified from the agreement. This can prevent any miscommunication or conflict between the parties as to the agreed terms.
- It helps to secure the rights and interests of both parties. The tenant is paid a certain amount of money, and the owner has the right to ensure that the property has not been damaged by the tenant(1) in any way except for ordinary wear and tear.
What Happens in Case of Violation?
Every cash for keys agreement has a clause that mentions the date by which the tenant has to vacate the property. If the tenant does not do so or if he causes any damage to the property, the owner can cancel the cash for keys arrangement and start an eviction process(2) against the tenant as provided for by the laws of the state where they are residing. This is the only option available to the owner of the tenant violates the terms under the agreement.
In conclusion, this cash for keys agreement is very important when a homeowner wishes to avoid a long and stressful eviction process. This agreement is very useful in ensuring that the tenant moves out of the property in a short period of time and that he leaves the property in a clean state. It is a very convenient option and a great way to make a tenant vacate a property. It is a mutually beneficial agreement and makes sure that the interests of both parties are adequately protected.