how to cover yourself in "cash for keys" proposal

2 Replies

Hi bigger pockets fiends,

There are two sides to the "cash for keys" situation. 

1) I am a landlord and I'm interested in the best way of handling and covering myself when proposing "cash for keys" to the tenants. How do I make sure I will not give cash or wire the money to the tenant's account and then the tenant will not move out by agreed date.

2) My aunt who lives in the same apartment in Brooklyn last 15 years, was just offered $10K for moving out because the owner is selling the building and the buyers would like the building to be vacant at closing. For her, it is like winning a lottery and she wants to take advantage of this situation. She is afraid that the owner could give her a check which will bounce later after she moves out. Also, she thinks taking $10K cash on the weekend means she will check if the cash is real on Monday after handing over the keys. Any advice for my stressed aunt would be much appreciated ;-)

Best,

Marcin

1. If you have a real estate attorney, ask them if they have a "Cash for Keys Agreement". My attorney gives them out free. The occupant agrees to: Move out date. Property moveout condition/cleanout. Final walkthrough date. Amount to be paid on completion of the agreement. Non-payment and eviction actions if the occupant fails to complete agreement. After the walkthrough, get a receipt for monies paid and the keys. Then change the locks immediately. 

2. Get it in writing (see above). I suppose they could write a bad check, maybe request certified funds or a wire on moveout day? Also, be aware, she may get a 1099. 

As always, don't trust the internet, seek professional advice. Good luck!