Why Cash-For-Keys Can Be Better than Evicting
So, you have a nightmare tenant that you just want to get rid of! Though most property owners are all too familiar with the legal process of eviction, there is a viable alternative. If the seeds for eviction have been sown, “Cash for Keys” is a less intensive way to expedite the inevitable.
What is Cash-For-Keys?
“Cash-for-Keys” is a strategy where a tenant is paid to leave their home, so the landlord or owner can obtain possession of the property. While savvy landlords have used the concept for a long time, banks really made it popular during the Great Recession, when they used Cash-for-Keys instead of foreclosing on homeowners. Investors have also used it to vacate buildings they want to redevelop. It’s a perfectly legal method to regain possession of tenant occupied properties.
When To Use Cash-For-Keys
As a landlord or property owner, “Cash for Keys” is a useful tool to:
- Obtain possession of a property quicker than eviction.
- Get rid of problem tenants cheaper than evicting them.
- Get rid of squatters faster than calling the police or evicting them.
- Get occupants out of a property you bought at aforeclosure or tax auction.
- Vacate a building of occupants that you want to redevelop.
This tactic is quicker than pursuing an eviction, usually results in less property damage and may save you money. If a tenant decides not to accept the agreement, emphasize the fact that they will force you to evict them, and if warranted, that they can be sued in small claims court for any damages or back rent payments.
How to Make it Work
Before presenting a tenant with a “Cash for Keys” option, it’s recommended you send them an eviction notice — this will set the tone for your proposal. You can send it prior to your proposal or include it with your Cash-for-Keys offer.
The tenant needs to understand the gravity of the situation, and that this is in their best interest as well. It is important to stay rational, unintimidating, and follow local laws when presenting your offer to the tenant. Threatening to force them out, changing the locks or disconnecting utilities is usually illegal and will only make matters worse.
Let them know their other option is eviction, a lengthy process that will tarnish their credit rating and make future renting problematic.
If they agree to the “Cash for Keys” offer, it’s time to present them with a written agreement for them to sign. At the very least is should include, the amount of money both parties have agreed to and the move-out day.
It should also include any requirements and expectations like the property must be “broom clean” secure and all appliance, etc. still on site, BEFORE they will get the agreed upon funds. Never give any money upfront! There should also be a clause stating that if the terms are not met, that eviction will follow.
Keeping in mind that if this process is in the property owner’s best interest as well, it may be wise to allow for minor concessions. Do not over-negotiate, the tenant has not done anyone any favors, this is just a way to make the best of a crappy situation.
It’s also very important to remember that the security deposit plays no part in this process, it must be handled per state law.
No property owner enjoys the hassle of getting rid of bad tenants, but offering Cash for Keys is a less complicated way of resolving an already uncomfortable situation. As financially and psychologically painful as it is to give slum-tenants cash, it is a quicker, easier, and cheaper way to get the property back to start collecting rent again.
Image courtesy of Maria Ziegler https://www.schluesseldienstvergleich.eu