The “Cash for Keys” approach is one of the most controversial practices in the rental housing industry because it may be viewed by some as unethical and unprofessional. However, more landlords are now engaging in such an exchange as long as they do it fairly and that all parties would benefit from it.

Cash for keys, as the name suggests, is when a landlord offers to pay a tenant a certain amount of money to give up his keys to the rented unit. It is one of the quicker ways for them to evict a tenant without going through and spending on a legal eviction process that can often be stressful and time-consuming.

Tenants that are getting evicted can benefit from the arrangement because they will get money but, at the same time, be free from having an eviction record. A history of eviction can negatively affect their chance of getting approved for another tenancy, and it would stay on their record for up to 7 years (in most states).

Cash for keys, when executed perfectly, is beneficial for the landlord and the evicted tenant. The landlord must only take calculated steps to minimize the risk of conflict, lawsuits, or the extended tenancy of the unwanted tenant.

In the previous article, we discussed the tips to execute a cash-for-keys agreement effectively. For this article, we will discuss the common mistakes landlords make that sabotages the deal.

Depriving the Tenant

Some landlords want to discourage the tenant from staying in the unit by shutting off utilities like water and electricity, refusing repairs, or locking tenants out. Some do this to pressure a tenant to accept a small offer in exchange for the keys.

That is illegal. The landlord may have to pay fines or can even be sued by the tenant. That is even worse than going through a stressful legal eviction process.

Harassing the Tenant

Another no-no is when a landlord resorts to giving verbal or physical threats or worse, acts on it. It can be very frustrating for a landlord when a tenant is bad for business. Despite that, one needs to remain professional. When negotiating for cash for keys, the goal is to meet halfway while maintaining professionalism. It would be more difficult to come to a peaceful agreement if there is an irreparable conflict between two parties due to one party harassing the other.

Granting Bargains

If they do not agree to a cash-for-keys arrangement, both parties will have to deal with consequences. Both have something to lose and gain, so there is no need for the landlord to show desperation.

A landlord should not allow the tenant to effortlessly negotiate the amount because it would only encourage dominance on the part of the tenant, so he would be more persistent in asking for a higher amount. It is better for the landlord to offer an amount lower than what he is willing to pay. He should let the tenant negotiate for a while before raising it closer or equal to the amount he intended. That will give the tenant an impression that they are getting a better deal.

No Documentary Evidence

One of the most costly mistakes that a landlord can make in a cash-for-keys agreement is not having a paper trail. The tenant can come back, despite getting the money, and claim that he was not paid. Despite it being called “CASH for keys,” it is better to pay via check so that you have a tangible record of the transaction. If you can only pay in cash, make sure that there are signed documentation that the tenant received the money, receipts, and multiple copies to keep on file.

Forgetting about the Security Deposit

If a tenant agrees to a cash-for-keys deal, it does not mean that they automatically forfeit their right to get their security deposit back. In the same way as when a tenant ends his lease, a landlord must conduct a formal move-out inspection to determine security deposit deductions for unpaid rent, damages, etc. After that, the remaining security deposit must still be returned to the tenant.

In most states, the landlord must provide an itemized list of deductions and repair receipts along with the remainder of the deposit within a certain number of days. If the landlord fails to do so, the tenant may sue.

Once the deal is executed smoothly and successfully, then the landlord can prepare the vacated unit for new tenants. It would be easier if the listing will be published by the landlord or rental agent on Padleads. The platform lets you syndicate the listing to popular rental websites to extend your market reach.