Should You Pay a Tenant to Leave? Are Landlords Allowed to Even Do That?
Are you a landlord struggling with an unwanted tenant?
You’ve seen posts from other landlords talking about Cash-for-Keys, but is this legal?
Finding yourself in the midst of a difficult evasion situation can be extremely stressful, but knowledge is power. Before you attempt any drastic measures—like paying a tenant to leave—it’s important to understand your rights and responsibilities as a landlord when it comes to evicting a tenant.
What Is Cash for Keys?
As a landlord, you may have heard of the concept of “Cash-for-Keys”, which is a common and innovative way to deal with delinquent tenants, paying them to vacate your property.
The idea is simple: Rather than paying the expensive fees associated with eviction proceedings or wallowing in the tenant’s unpaid rent, Cash-for-Keys lets the landlord offer money to cover those costs while allowing a swift and organized resolution to common rental disputes.
For most landlords (and even tenants), Cash-for-Keys is a win-win solution. Landlords get to avoid the expensive and time-consuming eviction process; tenants won’t have an eviction on their records. But the legality of Cash-for-Keys begs for more discussion, which we’ve provided below.
Exploring the Legalities of Cash for Keys
Of course, one important question is if such an arrangement is even legal, and fortunately, the answer is yes! It’s legal in all 50 states, given that you follow the correct process, check local laws, and have it in a written agreement. In general, the process of Cash-for-Keys is broken down into four steps:
Step #1: Offer Cash-for-Keys to Your Tenant
Before approaching your tenant, think of the maximum amount you’re willing to pay. You might have a negotiation or back-and-forth with the tenant regarding the specific amount, so ensure that you have your numbers ready to avoid paying too much.
Additionally, don’t forget to discuss specifics like the deadline for the tenant to vacate the property and the requirements for giving the security deposit back (if there’s any).
Step #2: Schedule a Date to Sign
After agreeing on a cash-for-keys transaction, schedule a date to sign the written agreement. During the signing, review the terms and conditions of the contract with the tenant to ensure that everyone understands and agrees on the process.
You have two options when to pay your tenant: You can pay upon signing the document or pay when your tenant moves out of your property. Ultimately, it’s up to your discretion, but we don’t recommend paying anything until the tenant moves out. Otherwise, they could stay and still force you to evict them!
Step #3: Turn Your Verbal Offer Into a Written Agreement
You should have a written document that follows the local laws to make it legally binding. You can check out this cash-for-keys agreement from the National Association of Income Property Owners to write your own. You still have to work with a local real estate attorney to guide you through the process, though.
Step #4: Conduct a MoveOut Inspection
Conduct a move-out inspection in the presence of your tenant on the agreed move-out date. Inspect your property for any damages and present the report to your tenant—like you would with a typical move-out. After the move-out process is done, you can change the locks and prepare for the next tenant or buyer.
ONLY pay the tenant upon satisfactory move-out inspection and have them sign an agreement they are giving up both possession of the home and of any personal belongings they leave behind.
Cash for keys allows both landlords and tenants alike to reap its financial benefits, offering a win-win situation that could save both parties considerable time and resources.
When Can You Ask for the Keys?
Well, the appropriate time to ask your tenant for the keys typically arises when you, as a landlord, are faced with the ever-so-dreaded prospect of evicting a tenant. Asking for the keys is never an enjoyable process. So, in the spirit of expedited resolutions and mutual benefit, consider offering your tenant cash as an incentive to relinquish the keys and vacate the premises posthaste.
In what situations can you ask for the keys?
- The tenant has been behind in paying rent
- The tenant isn’t taking care of your property and creating too much damage to your property
- You’re selling your property and the buyer wants the property to be vacant
While paying your tenant to leave could spare you an otherwise lengthy legal process, it could also help avoid any costly damages that a disgruntled tenant might inflict upon your property. In addition, a little cash upfront could save you a veritable fortune in the end.
Some Tenants Can Be Difficult: Should You Pay a tenant to Leave?
Cash-for-Keys works well as a last resort when other options are not possible or fiscally feasible—just make sure to assess the pros and cons and read up on the legalities before making your plan of action. Though its legal use needs to be monitored and understood, it can be a viable solution for a landlord when faced with an evacuation order.