Selling duplex with tenant, cash for keys and not paying rent

New York, New York
General Landlording & Rental Properties
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Selling duplex with tenant, cash for keys and not paying rent

Anna Antipkina
Rental Property Investor · Bridgewater, NJ · Member since 2022 · 42 posts · 12 votes

Hi everyone! My husband and I have been investing for the past few years and are currently selling our house hack duplex that will basically give us a huge capital boost in our ability to acquire more serious properties. We are very nervous because the house is in the wonderful state of NY which many of you may know is not landlord friendly. Our tenant's lease is good through end of October 2022, but the buyers want the house vacant for their own use so we offered a very sweet cash for keys agreement to our tenants which they signed, took the cash, and agreed to move out by June 28th. Our closing is scheduled for on or about June 30th 2022. They have stopped paying rent for May and June and are problem tenants in general. My main concern is that they will take our cash and not move out. If they don't move out, they will kill the deal we have under contract for purchase and set us back huge! Our purchase contract on the next property is contingent on the sale of this house. I have two questions, 1. If the tenants don't move out and we don't close, can we at least get our deposit back since the purchase contract is contingent on the sale of our duplex? 2. Can we sue the tenant for damages and get our cash for keys money back successfully in the state of NY?  The communities feedback and any other advise on this situation is highly appreciated. Thank you!

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Tim Johnson
Real Estate Agent · Skagit Valley, WA · Member since 2021 · 257 posts · 283 votes
4y

Hi Anna, wow.... I guess the first question would be.....why would you give them the cash without them giving you the keys? (That's sort of the point of that exercise......)  I can't speak for NY laws in regard to suing your tenants over the cash... but in terms of your earnest money deposit on your other offer...... it should all be VERY CLEARLY spelled out in the contract. No one here will be able to help you clear that up. In most cases, the obligation to follow through and close on the NEW deal is CONTINGENT on your selling the initial property. If you have not breached some other clause of the agreement you should be able to get your earnest money back. 

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  • Tim Johnson
    Real Estate Agent · Skagit Valley, WA · Member since 2021 · 257 posts · 283 votes
    4y

    Hi Anna, wow.... I guess the first question would be.....why would you give them the cash without them giving you the keys? (That's sort of the point of that exercise......)  I can't speak for NY laws in regard to suing your tenants over the cash... but in terms of your earnest money deposit on your other offer...... it should all be VERY CLEARLY spelled out in the contract. No one here will be able to help you clear that up. In most cases, the obligation to follow through and close on the NEW deal is CONTINGENT on your selling the initial property. If you have not breached some other clause of the agreement you should be able to get your earnest money back. 

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  • Terry Miller
    Akron, OH · Member since 2015 · 178 posts · 189 votes
    4y

    If they hint at doing it, pursue a fraud charge against them. It is fraud for them to take that "money for keys" arrangement with no intention of fulfilling their end of the agreement.

    That may help to change their minds about playing you.

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  • Greg M.
    Rental Property Investor · Los Angeles, CA · Member since 2017 · 2k+ posts · 5k+ votes
    4y

    I assume you understand that you screwed up massively. Cash for keys is pretty literal in its meaning. Unit is empty and I give you cash and you give me the keys. What you did was piss away money for a promise.

    The tenants may or may not actually move out. Given the fact they stopped paying rent, I'm guessing that very close to the date you wanted them out they "aren't going to have enough money for moving expenses" and you'll be asked for a lot more money for them to leave. Then they have you over a barrel. 

    You should have filed the eviction paperwork the day they failed to pay rent. Do it now. 

    Yes, you can sue them for breach of contract and potentially your losses associated with this breach. If it were me, I'd do this and haunt them for the rest of their lives. You have a near zero chance of the DA going after them for fraud. 

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Anna Antipkina:

    Hi everyone! My husband and I have been investing for the past few years and are currently selling our house hack duplex that will basically give us a huge capital boost in our ability to acquire more serious properties. We are very nervous because the house is in the wonderful state of NY which many of you may know is not landlord friendly. Our tenant's lease is good through end of October 2022, but the buyers want the house vacant for their own use so we offered a very sweet cash for keys agreement to our tenants which they signed, took the cash, and agreed to move out by June 28th. Our closing is scheduled for on or about June 30th 2022. They have stopped paying rent for May and June and are problem tenants in general. My main concern is that they will take our cash and not move out. If they don't move out, they will kill the deal we have under contract for purchase and set us back huge! Our purchase contract on the next property is contingent on the sale of this house. I have two questions, 1. If the tenants don't move out and we don't close, can we at least get our deposit back since the purchase contract is contingent on the sale of our duplex? 2. Can we sue the tenant for damages and get our cash for keys money back successfully in the state of NY?  The communities feedback and any other advise on this situation is highly appreciated. Thank you!


    As others have stated, you don't pay the tenant a dime until the terms are met. That means they are out, house is in the condition agreed upon, keys are turned in. I would even require them to sign a short statement that they are leaving in exchange for cash, won't come back, etc.

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  • Anna Antipkina
    OP
    Rental Property Investor · Bridgewater, NJ · Member since 2022 · 42 posts · 12 votes
    4y

    Thank you all for your feedback. Yes we definitely had a hard time with this one because the tenant we're dealing with wouldn't sign the agreement unless we gave them the cash up front. This person is probably the biggest POS we've ever came across in our lives so a very difficult person to deal with. There's no reasoning with him and to make it even worse he's uneducated and thinks he's right and everyone around him is scum, to include the girlfriend he beats. Just real trash of a person. Yes, we are learning a HUGE lesson when it comes to tenant screening and hopefully in the future we'll be able to sniff out POS type people better. 

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