Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

Musings on Cash for Keys & Foreclosures

by Melissa Zavala on June 28, 2011 · 3 comments

  
cash for keys and foreclosures

Agents, homebuyers and individuals facing foreclosure frequently ask me about this thing called ‘cash for keys.’ Somebody’s uncle’s cousin’s sister told someone that they can get ‘cash for keys’ if the property goes to foreclosure, and homeowners generally want to know whether this is true.

And, yes, in a nutshell, it’s true.

What is Cash for Keys?

Here’s the deal: It is the general practice of many entities that have foreclosed on properties to offer those individuals currently residing on the property ‘cash for keys.’ Usually, this comes in the form of a cash incentive provided in the form of a cashier’s check when the resident provides the keys to a broom clean property.

The first order to business after the property is foreclosed is for the new owner (or a representative of the new owner) to contact the resident and offer cash for keys. If the resident agrees, then a Cash for Keys Agreement is usually signed. This agreement may even include a W-9 (which would indicate that a 1099 may be in the future).

Note that this agreement does not preclude the new owner from beginning eviction proceedings on the property under certain circumstances. However, generally, things move more quickly and efficiently in a Cash for Keys Agreement versus eviction proceedings.

The other day I received a phone call from a woman whose property had been foreclosed and purchased at auction. The new owner was calling her and dropping by the property and stating that he would be changing the locks in 48 hours, so she had better get out. While laws do vary from state to state, there are specific rules as to how a new owner can reclaim his property and court proceedings are usually required.

So, if you have purchased a foreclosure and you have some tenants that you need to move, make sure to get familiar with the laws surrounding eviction proceedings and the policies surrounding cash for keys in your state.

Photo: flickr creative commons by Bohman

Email *
  



{ 2 comments… read them below or add one }

Kalina June 29, 2011 at 11:49 am

Does anyone know how I can get Fannie Mae to give me documentation that they are now the owner of my property? I signed a deed in lieu of foreclosure in March; have been told that they own the property as of April; three calls to their headquarters and each person I spoke to refulsed to provide me with documentation. Meanwhile, I am still being billed for association dues and fees, insurance, and lease rent. Also, my name has been sent to a lawyer for collection by my condo association. I need to prove that I am no longer the owner.

Reply

Jeff Morris (Real Estate Agent) June 30, 2011 at 3:30 pm

Great post Melissa!
Note that this agreement does not preclude the new owner from beginning eviction proceedings on the property under certain circumstances. However, generally, things move more quickly and efficiently in a Cash for Keys Agreement versus eviction proceedings.

I am having a query, are you a lawyer?
It’s always like, I found your articles interesting, and helpful.
Great!

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

{ 1 trackback }

Previous post:

Next post: