Eviction v. Cash for Keys/ Tenant Buyouts

Many times during consultations I am asked what is the difference between eviction and Cash for Keys. The difference is simple- one requires a tenant to move out (eviction) and the other the tenant is voluntarily agreeing to move out (Cash for Keys). Let me explain.

There are few grounds in which a tenant can be evicted in most jurisdictions in Los Angeles. There are ‘At Fault’ evictions, that is an eviction based on the tenant not paying rent, violating the lease, or committing an offense that is grounds to terminate a tenancy. For ‘At Fault’ evictions, there is no relocation money, meaning the property owner is not required to pay a tenant because the tenant is being given a notice to leave for something the tenant has allegedly done wrong.

Then there are ‘No Fault, Just Cause’ reasons to end a tenancy. ‘No Fault’ meaning the tenant is required to leave not because they failed to pay rent or violated the lease, but because of the owner’s allowed reason to end the tenancy, such as owner occupancy or Ellis Act. The law in the case of these ‘No Fault, Just Cause’ evictions sets out what a tenant is required to receive by virtue of the property owner ending their tenancy. That amount of money is referred to as a relocation payment and it is mandatory for the property owner to pay a tenant. The amount varies by jurisdiction, and can be higher if the tenant is elderly, disabled, has minor children, or lived in the rental for an extended period of time.

The term ‘Relocation’ is used loosley when talking about Cash for Keys, because that relocation payment amount as set for ‘No Fault, Just Cause’ evictions is used as a baseline or guiding figure for offers and negotiations. Even though you may not have a ‘No Fault, Just Cause’ reason to evict you may offer the tenant relocation because its an ascertainable figure that the local jurisdiction has already decided is what a tenant should get IF they had to vacate. Even when property owners have a ‘No Fault, Just Cause’ reason to end a tenancy, they may offer Cash for Keys to one or many units in a property because it has its upsides.

One of those upsides is that if a tenant agrees to a Cash for Keys deal, often the tenant is given more money or time than they would be entitled to under the ‘No Fault, Just Cause’ reason. A Cash for Keys deal increases the chances the tenant does actually move out. Otherwise, a tenant who received a proper eviction notice may not necessarily move out at the expiration of the notice, which would require an owner to file an eviction to enforce the notice and get possession of the premises. Evictions are very expensive and can take a long time to resolve. Once an eviction is filed much of the matters is in the hands of the judge and eventually, if not resolved, 12 strangers empaneled for a jury. Evictions are expensive because they are highly technical court proceedings and the court system itself is already highly used and thus can be slow.

Another upside, is that the owner has less strings attached to that unit. They can keep it vacant, move themselves or family into it, sell the property, or re-rent it at market rent. Sometimes owners do need to occupy a unit for themselves or family, but may not need to do so for the time period required. Additionally, a property owner may simply want to remodel and get market rent, or increase equity.

Lastly, a Cash for Keys agreement does require that the agreement be in writing, have specific language as required by the local jurisdiction, and be filed with said applicable local jurisdiction in order to be enforceable. However, the bulk of the agreement is mutually agreed upon by property owner and tenant, and can be used to mitigate past or future liability, if any.

The goal of Cash for Keys agreements is to reach a deal that makes sense for both property owner and tenant that avoids the unfriendly, expensive, and emotionally taxing circus that is the eviction courts. Or as I like to see it, to avoid the unsavory, gamesmanship tactics that landlord-tenant laws have staunchy curbed, to increase property value and cash flow of a propety.

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.