Cash for Keys Q&A Part 2

Q: If I reach a deal with a tenant, they move out and take the money, do I still need to file the buyout agreement with the rental board?

If the rental is located in a jurisdiction that has a buyout program that requires filing the buyout agreement with the applicable rental board, then yes, file it. The laws around buyouts often have provisions that if not all requirements are met tenants may be able to seek invalidating the buyout agreement. You don't want to expose yourself to potential risk of invalidation for not filing the agreement, especially if your agreement has a general release.

Q: My tenant has agreed on an amount, but they want money before they move out. Should I give them any money before they vacate?

It depends. Most buyout agreements call for the tenant to get paid when they move out- "Cash" for "Keys". However, for some tenants they may not have money on hand for rental application fees, security deposit, or moving expenses. In that case it may help the landlord's cause to give the tenant some money up front to assist with moving. That amount should not be a large portion of the buyout. In other words, the tenant should get the bulk of the money when they move out. Sometimes landlords advance money when certain milestones are met, i.e. advance the security deposit directly to the new landlord when tenant verifiably signs a new lease. If the unit is in a jurisdiction that has a clause allowing tenants to cancel the agreement during a certain window, usually 30-45 days, you may not want to advance any money until the cancellation period has expired.

Q: I approached my tenant and asked them if they were interested in Cash for Keys, they said yes, but nothing has happened since. What should I do?

I get this question more than I thought I would. If a tenant is interested in a tenant buyout, in my opinion, the burden is on the landlord to present the initial offer. Many times landlords ask the tenant "well what do you want?" And in short, every tenant wants as much as they can get, of course! So, it does very little for the landlord and the tenant for the landlord to ask the tenant to come up with an offer. If a landlord wants to engage in a tenant buyout they should offer the money and move out date initially. If a landlord has no idea where to come up with an offer then they should research the relocation amounts, if applicable, or consult with an attorney familiar with tenant buyouts.

Before approaching a tenant about buyouts get educated on the buyout requirements and consult with an attorney to discuss any questions. If you reach a deal you should have an attorney draft the agreement so that it is in accordance with applicable requirements.

The information in this post is for general information purposes only. Nothing on this post should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.