Real Estate Broker · Franklin Park, IL · Member since 2019 · 22 posts · 16 votes
Hello BP Community,
I'm a first time landlord, I recently purchased a multifamily building in Chicago, Cook County. I made a cash for keys agreement with a tenant. About a week before the vacancy date on our agreement, i gave the money to the tenant so they can move into their new apartment. Both the agreement and the reciept of the money was documented and notarized. As you may have already guessed, the tenant did not vacate the property. Aside from the traditional eviction process, are there any other options available to remove the tenant from my property? Does the notorized cash for keys agreement, carry any weight? Is breaking the agreement a criminal offense? If anyone can shed some light on this topic or offer a suggestion, I would greatly appreciate it. Thank You!
Chrystian, I know you won't like hearing this, and I know you will probably ignore the advice. Sell the complex at your first possible chance, and get out of this business. The basic premise of "Cash for Keys" is that the tenant is a slimeball who is so horrible that you know you won't get a penny out of them even if you were to get a judgement for back rent. You NEVER give cash for keys until the tenant has moved everything out, and they have signed an agreement saying that they are giving you back the unit voluntarily, of their own free will, and you have locked the windows and changed the locks so that they cannot get back in. Then you give them their money. No matter what they say, no matter what agreement they sign, no matter if it's notarized by GOD. The fact that you didn't understand the basic idea that someone who is so awful that you are PAYING them to leave, could never be expected to honor a contract, makes it clear that you are unsuited for this line of business.
Having made such a serious error makes it obvious that you are not cut out for this business. That's okay, most people aren't. Better to realize it now, than later, after you have lost a lot more money. Take my advice - sell it and get out of this type of work/investing. It's not for you.
Wow, Karen. Please spill your secrets about how you have a 100% win rate on every deal , have never had a contractor or tenant take advantage of you, or lost money in any way.
Plenty of successful RE investors have made much bigger mistakes than losing a thousand or two woth a bad tenant.
@Chrystian Tapia The notarized docs may help you with the evictions judge's attitude when you get there. Don't evict w/o a lawyer. Breaking the agreement is not a criminal offense. There is no good news for now unfortunately. Was this an inherited tenant? If you ever do cash for keys again the former tenant gets the money on the sidewalk right after they handed you the keys to the completely vacant apartment, and signed a document saying good bye.
I agree with @Bjorn Ahlblad. It's not a criminal offense and if the cops were called they'll just tell you it's a civil matter. Unfortunately, it sounds like an expensive lesson learned....never pay the money until they're completely out and they hand you the keys. Then change the locks immediately.
Sorry this happened to you but you're likely back at square one and going to need to evict to recover possession of the property.
You should not have given up your money until the tenants' butt is out and you have the keys. I am sure you know by now that you made a mistake.
have the utilities turned off, file a rent notice, remover the doors to be painted for two weeks, hold an open house for tenants or for sale, post no trespassing signs on the building. Change the locks, start your renovations while they are there, hang dry wall and sand it, notify all the neighbors to keep an eye out on the property and to call you if they see any issues, make sure the toilet flashes, sometimes something gets stuck in the vent line, like a bird or tennis ball that causes a problem, replace the water lines (this requires no water service until completion).
Sell a "wolf ticket" meaning to sue them, or other threats...
Thanks for your input. This was not an inherited tenant. I actually got scammed from the beginning. The applicant for the unit never moved in, he handed the keys over to his girlfriend who apparently did not want to go thru the application process herself. I collected the first months rent and move in fee. Since then nothing, now she's 2 months behind in rent. Followed by a costly mistake in my part, but lesson learned, i'll never give the money up front. Thanks again guys
@Chrystian Tapia You can tack on the cash for keys to your damages. You can't file now, but once the stay at home is lifted, you should file against both her boyfriend and her. The boyfriend for breach of lease and girlfriend for breach of cash for keys agreement. As stated above, cash for keys means you get the cash when you give me the keys on your way out. These people took advantage of you.
Chrystian, I know you won't like hearing this, and I know you will probably ignore the advice. Sell the complex at your first possible chance, and get out of this business. The basic premise of "Cash for Keys" is that the tenant is a slimeball who is so horrible that you know you won't get a penny out of them even if you were to get a judgement for back rent. You NEVER give cash for keys until the tenant has moved everything out, and they have signed an agreement saying that they are giving you back the unit voluntarily, of their own free will, and you have locked the windows and changed the locks so that they cannot get back in. Then you give them their money. No matter what they say, no matter what agreement they sign, no matter if it's notarized by GOD. The fact that you didn't understand the basic idea that someone who is so awful that you are PAYING them to leave, could never be expected to honor a contract, makes it clear that you are unsuited for this line of business.
Having made such a serious error makes it obvious that you are not cut out for this business. That's okay, most people aren't. Better to realize it now, than later, after you have lost a lot more money. Take my advice - sell it and get out of this type of work/investing. It's not for you.
Chrystian, I know you won't like hearing this, and I know you will probably ignore the advice. Sell the complex at your first possible chance, and get out of this business. The basic premise of "Cash for Keys" is that the tenant is a slimeball who is so horrible that you know you won't get a penny out of them even if you were to get a judgement for back rent. You NEVER give cash for keys until the tenant has moved everything out, and they have signed an agreement saying that they are giving you back the unit voluntarily, of their own free will, and you have locked the windows and changed the locks so that they cannot get back in. Then you give them their money. No matter what they say, no matter what agreement they sign, no matter if it's notarized by GOD. The fact that you didn't understand the basic idea that someone who is so awful that you are PAYING them to leave, could never be expected to honor a contract, makes it clear that you are unsuited for this line of business.
Having made such a serious error makes it obvious that you are not cut out for this business. That's okay, most people aren't. Better to realize it now, than later, after you have lost a lot more money. Take my advice - sell it and get out of this type of work/investing. It's not for you.
Wow, Karen. Please spill your secrets about how you have a 100% win rate on every deal , have never had a contractor or tenant take advantage of you, or lost money in any way.
Plenty of successful RE investors have made much bigger mistakes than losing a thousand or two woth a bad tenant.
Oh, we've definitely learned some things the hard way. But to be so trusting as to PAY a non-paying squatter to leave, BEFORE they leave? I'm just telling the man the truth. He's not cut out for this business.
Mistakes were made, lessons were learned. Move forward with your enhanced knowledge. A semester of college is like $15k so you've learned a lot for less than that (hopefully). Your real estate investment career doesn't need to end, just be careful moving forward.
I’m sorry, but you’ve demonstrated that you’re in over your head. I’m not saying that to be mean, but your next step should be to hire a lawyer and get him to handle everything from here on out with this tenant. Take it as a learning experience.
one mistake is no reason to quit. I've been a landlord for 20+ years and there are tricks I still haven't learned or mastered. Tenants seem to have a brotherhood that teaches them new ways to get over on the landlord and NOW BIG Brother is giving them a helping hand doing so. BUT I agree that making this kind of mistake indicates that Chrystian is a bit naive. So.... guy... you really need a mentor to make it in this business ... next time ask what to do BEFORE you do something that will cost you money and time and self esteem and.... well you get it. This business isn't for everybody... there are some basic business and people skills you need to know just to survive and a mentor will help you develop them and save you a ton of money and headaches in the process.
Oh, we've definitely learned some things the hard way. But to be so trusting as to PAY a non-paying squatter to leave, BEFORE they leave? I'm just telling the man the truth. He's not cut out for this business.
God bless you Karen :)
I won't be walking away from this business anytime soon. I have 5 other paying tenants in this property, so i think i'll survive. I don't take anything personal even when tenants try to screw you over. You live and you learn, key is not to make the same mistake twice. Stay positive, it feels better.
Thanks for all the replies, advice and constructive criticism. I really do appreciate it. I do have a mentor with 40+ years experience guiding me. He has just under 100 doors here in Chicago. This one slipped by the both of us. Again thanks for your feedback.
I wish you luck. Glad you have a mentor. And yes, we made some HORRIBLE mistakes with our first property. Suffice it to say that our very first tenant wound up arrested, convicted, and the court made him pay us for years, it was that terrible, what he and the people whom let in did. And it wasn't anything that we had not been warned about - we just had to learn the hard way.
I had one last year. I offered the foreclosed homeowner cash for keys. Got her out of the house and most of her stuff gone, asked for the keys on the doorstep. Only to find out she did not have a key for her own home. Had been an open door policy there for many years. LOL
Thanks for all the replies, advice and constructive criticism. I really do appreciate it. I do have a mentor with 40+ years experience guiding me. He has just under 100 doors here in Chicago. This one slipped by the both of us. Again thanks for your feedback.
You'll be fine my friend. We all make mistakes - there are some huge property owners with much worse ones than this. Write this one down and remember it, and move forward. Like you, I have a mentor in my market (los Angeles) who guides me on various issues, and it's invaluable. Chicago is a fantastic market and I hope you continue to grow the portfolio there.
Chalk it up to lesson learned. Hire an attorney and go through the motions of doing it right. If they play dirty, they probably know some other tricks to drag it out.
What are your thoughts on professional property management? I’ve used it from the beginning on rental #1 and every one since. I allow someone who is good at that one thing, to be good at it with my properties. Therefore, I am free to go out and do what I’m good at: finding deals.
With Cash for Keys I don’t give them a cent until they Have removed EVERYTHING from the apartment. EVERYTHING. I give them the money outside while the locks are being changed. You now have to go the traditional eviction process which is at a moratorium for now in Cook County. Nothing you can do but issue a 5 day notice and then contact an attorney.
I like you me attitude man. I have made mistakes with people and you just have to move on. What I do is pretty simple. I follow all of the state notice laws at the same time as a “cash for keys” drop dead date. That way I lose no time in getting them out.
This is for Washington but this is what my timeline will look like.
1st of the month: issue 14 day notice/ negotiate a cash for keys for the soonest possible
15th day: do Summons of complaint and other paperwork.
Some questions:
Tenant: don’t you trust that I will be out?
Me: of course but I have to run this like a business. If you were in my shoes you would do the same thing.
This way you really get the best of both worlds. If they leave great! If not, you lose no time.
What are your thoughts on professional property management? I’ve used it from the beginning on rental #1 and every one since. I allow someone who is good at that one thing, to be good at it with my properties. Therefore, I am free to go out and do what I’m good at: finding deals.
I'm looking forward to using a property management company at some point. I just want to be hands on in the beginning, and acquire a few more properties before I hand over the reins.
Not sure if this is legal in all states...but it works in mine...Pennsylvania.... I
have a Notice to Quit Wavier in my lease where the tenant waives the
right to notice. This way I don't have to post or wait 10 days to
file. It has been tested in court and the judge approved it. Matter of fact asked it I had this clause in my lease. Have been to court 3 times with this lease and never posted notice. Here's the wording....
NOTICE TO QUIT
WAIVER
THE TENANT HEREBY SPECIFICALLY WAIVERS HIS (HER) (THEIR) RIGHT TO RECEIVE
30 DAY NOTICE ON ANY
“NOTICE TO QUIT” THE LANDLORD TENANT ACT. THE TENANT FURTHER
UNDERSTANDS THAT THE LANDLORD SHALL HAVE THE ABSOLUTE RIGHT TO DEMAND
THE IMMEDIATE VACATION OF THE PREMISES BY THE TENANT AND THAT THE
LANDLORD MAY EXERCISE THEIR RIGHT AT ANY TIME THAT THE LANDLORD FEELS
THAT ANY TERMS OF THE LEASE MAY HAVE BEEN VIOLATED.
Put in a clause recently having to do with abandonment of property. Some of my locations require a landlord to STORE contents of a unit that was an evicted tenant for 30 days. LIKE NO!!!!! So I added an abandonment clause. Not court tested yet....but it should work.
My lease is now 10 pages long in an attempt to cover it all. All from lessons learned.
Not sure if this is legal in all states...but it works in mine...Pennsylvania.... I
have a Notice to Quit Wavier in my lease where the tenant waives the
right to notice. This way I don't have to post or wait 10 days to
file. It has been tested in court and the judge approved it. Matter of fact asked it I had this clause in my lease. Have been to court 3 times with this lease and never posted notice. Here's the wording....
NOTICE TO QUIT
WAIVER
THE TENANT HEREBY SPECIFICALLY WAIVERS HIS (HER) (THEIR) RIGHT TO RECEIVE
30 DAY NOTICE ON ANY
“NOTICE TO QUIT” THE LANDLORD TENANT ACT. THE TENANT FURTHER
UNDERSTANDS THAT THE LANDLORD SHALL HAVE THE ABSOLUTE RIGHT TO DEMAND
THE IMMEDIATE VACATION OF THE PREMISES BY THE TENANT AND THAT THE
LANDLORD MAY EXERCISE THEIR RIGHT AT ANY TIME THAT THE LANDLORD FEELS
THAT ANY TERMS OF THE LEASE MAY HAVE BEEN VIOLATED.
Put in a clause recently having to do with abandonment of property. Some of my locations require a landlord to STORE contents of a unit that was an evicted tenant for 30 days. LIKE NO!!!!! So I added an abandonment clause. Not court tested yet....but it should work.
My lease is now 10 pages long in an attempt to cover it all. All from lessons learned.
Hello Anne, I'll have to run it by an attorney here, but it's an excellent addition to your lease.