Cash For Keys: What It Is & What Landlords Should Know
Every landlord has dealt with a difficult tenant. No matter how well you screen prospective tenants, there may come a time that they become a problem - whether they are violating the lease or refusing to pay rent. Unfortunately, the eviction process can be time-consuming and expensive.
There is an alternative to traditional evictions: a cash for keys deal. In this type of arrangement, the tenant agrees to move out in exchange for money. These agreements are often much more cost-effective for landlords - and can get a tenant out of the property more quickly.
At Eaton Realty, we provide full-service property management services to landlords in the Tampa Bay region. We help our clients make the most out of their rental properties so that they can reap the profits - without the stress. To learn more about how we can help you, reach out to our office today.
What Is Cash For Keys?
In Florida, as in many states, tenants have a lot of rights. This is particularly true when it comes to evictions. Under Florida’s Residential Landlord-Tenant Act, if a tenant violates some part of a lease, the landlord must provide notice, give the tenant an opportunity to correct before going to court to seek an eviction.
Cash for keys is an alternative to the traditional eviction process. In its simplest form, cash for keys is an agreement between two parties (the landlord and the tenant) where the tenant agrees to move out of the rental unit in exchange for a cash payment. It is legal in all 50 states, including Florida. \
There are a lot of benefits to a cash for keys offer, but it isn’t without its pitfalls. Understanding the basics of a cash for keys arrangement is critical to ensuring that it doesn’t actually cost you more time and money than a traditional eviction would.
The Benefits Of Cash For Keys Offers
There are a lot of good reasons why Florida requires landlords to go through a formal eviction process rather than engage in an illegal self-help eviction such as changing the locks. That being said, it can be incredibly frustrating to deal with a tenant who is in violation of their lease and have to spend a substantial amount of time and money to get them out of the unit.
In Florida, there is a multi-step process that must be followed to lawfully evict a tenant:
- Provide written notice to vacate, with an opportunity to cure any violations (such as non-payment of rent or breaking lease terms);
- Serve a summons and complaint for an eviction.
- Allow time for the tenant to respond
- Go to court for a hearing on the complaint.
- If the hearing is successful, post a writ of possession and give the tenant 24 hours to vacate the premises.
Each step of this process takes time. At a minimum, it may take 3 to 4 weeks to evict a tenant. This process can take even longer if the tenant dodges service or fights the eviction. Throughout this time, you may be losing money from non-payment of rent, or dealing with property damage from lease violations.
An eviction also costs money, from court filing fees to service fees to paying for a lawyer to make sure that the eviction is done right. All told, it could cost hundreds or even thousands of dollars to evict a tenant even if you are clearly in the right.
A cash for keys arrangement avoids the time and expense of eviction. In exchange for cash, a tenant voluntarily leaves the premises. This can often be the easiest way to be done with a problem tenant. Cash for keys is also the only option available to property owners if they want to sell a property before the lease agreement ends.
The Cash For Keys Process
If you’re interested in a cash for keys agreement, it is important to learn exactly what to do - and what to avoid - before getting started. This way, you can have a game plan and avoid many of the problems that landlords may experience in this process.
Serve An Eviction Notice
You can begin the eviction process once you've posted required violation notices if the tenant is still in violation of their lease. You are not legally required to serve your tenant with an eviction notice before starting the cash for keys process. It is a good idea to start with a formal eviction notice, however. Doing so allows you to get the ball rolling on an eviction in case the agreement falls through. It also puts pressure on the tenant, which will often give you a stronger negotiating position.
Verbally Offer Cash For Keys
Once the tenant is served with the eviction notice, the next step is to talk to them in person or over the phone. At this point, you can float the idea of a cash for keys offer. If they seem receptive, you can get into the details.
Before you have this conversation, you should have a number in mind for how much you are going to offer. This amount will depend on factors such as the cost of an eviction and what you would potentially lose in rental income or property damage if the eviction takes a lot of time. The offer should be low enough that you aren’t losing money on the deal, but high enough to be attractive to the tenant.
Do not threaten your tenant or engage in hostility. Remember, your goal here is to save time and money by getting them to agree to this arrangement. Emphasize how this deal benefits both of you. For example, you might note that a formal eviction will damage their credit and make it harder to rent in the future.
When you make your offer, be firm and clear. Do not leave anything open to interpretation. If you want, you could offer a lower initial amount to give the tenant an opportunity to negotiate and feel like they won something. Just make sure that you don’t go higher than the amount that you had previously set.
You will also need to discuss a move-out date. This date should be reasonable; if the tenant has been living there for a while or has a family, they probably can’t move out within 2 - 3 days. As with the dollar figure, you should consider how long you are willing to let the tenant stay before you start this conversation. If you want the tenant out as soon as possible, you could tie the monetary amount to how long they stay to incentivize a quick exit.
Create A Written Cash For Keys Agreement
Once you have agreed on a number and move-out date, the next step is to put it in writing. Having a written contract is critical, as it reduces the likelihood that the tenant will bail on the agreement. It also can be useful if you have to go to court.
You can hire a lawyer to help you draft the agreement, or use an online template. At a minimum, the contract should include the following:
- The amount of money you are paying the tenant to vacate the property;
- The move-out date;
- The condition that you expect the property to be in for the tenant to receive the money;
- Any other conditions, such as the removal of all personal property;
- That the tenant is exchanging their right of occupancy for the agreed-upon sum; and
- When and how the tenant will receive the payment.
There should also be a space for each party to sign the agreement. An attorney can help make sure that this contract conforms to Florida law and protects your interests.
Schedule A Signing Date
Once you have a written agreement in hand, make a date to meet, review, and sign the contract. Be sure to bring at least two copies so that each of you has the agreement in hand.
Conduct A Move Out Inspection
The final step is to go to the rental property on the agreed-upon moving date and conduct an inspection. If the property isn’t in the condition specified, then you may choose to withhold all or a portion of the payment. This is a judgment call, as the tenant may refuse to move out if you do not provide the money - and you may have to go to court to enforce the contract and/or seek a legal eviction.
Cash For Keys Vs. Legal Evictions
In many cases, it costs less money and takes less time to do a cash for keys agreement than it does to pursue a formal eviction. Before deciding what to do, you should carefully evaluate the cost and time of each option.
Average Cost Of A Legal Eviction
The cost of an eviction depends on a number of factors, including whether you do it yourself or hire an attorney. The typical expenses include:
- $185+ for court filing fee and summons (varies by county)
- $5 for e-filing
- $10 for issuance of summons (each tenant)
- $50+ for service of process per tenant
- $90+ for Sheriff’s fee for Writ of Possession
- $500+ for attorney fees
At a minimum, if you do not request damages and only one tenant has to be served, you may spend an average of $840 to evict a tenant. If the tenant contests the case, that amount will increase significantly.
In addition to the direct costs, you may face additional expenses. This may include property damage if a tenant is in violation of the lease, unpaid rent, and/or lost opportunities to rent or sell the property.
Average Length Of Time For A Legal Eviction
On average, it may take 3 to 4 weeks to evict a residential tenant in Florida. This timeline holds true if the tenant does not fight (contest) the eviction. It may be possible to seek a summary eviction, which shortens the time for the tenant to respond from 20 days to 5 days.
If the tenant files a response and/or hires a lawyer to fight the eviction, it can take much longer to complete an eviction. Depending on their defenses, the judge may even decline to issue a Writ of Possession.
Are Cash For Keys Deals Legal?
Yes. This arrangement is a separate, legally binding agreement between the landlord and tenant that is generally legal under Florida law. However, you should not threaten or coerce your tenant into signing the agreement. Having a licensed Florida attorney review the agreement is a good way to ensure that you are in compliance with Florida law.
How Much Should You Offer In A Cash For Keys Agreement?
The amount of money that you should offer depends on several factors, including the cost of an eviction and the current rent amount. A good way to come up with a number is by calculating the cost of an eviction in your area, and then determining the value of avoiding an eviction.
One option to consider is making a graduated offer that is based on how quickly the tenant moves out of the unit. This can help avoid the losses associated with unpaid rent and the time that it takes to get the property rented again.
Cash For Keys Agreement Tips
There are a number of ways to optimize the chances of a cash for keys agreement working out in your favor. They include:
- Emphasize to your tenant that this arrangement benefits both parties.
- Be honest about the impact of an eviction on the tenant.
- Avoid negotiating with the tenant by standing firm on your offer.
- Follow the law, and do not engage in illegal actions like self-help eviction.
- Put everything in writing.
- Do not delay; get the agreement signed and have the tenant move out as soon as possible.
- Keep the security deposit separate, as you may need these funds to repair damages.
Common Cash For Keys Agreement Mistakes
The biggest mistake that a landlord can make in a cash for keys deal is getting angry or emotional. It can be incredibly stressful to deal with a problem tenant. If you view this as a business matter, however, it will increase the likelihood of success.
Another common mistake that many landlords make is breaking the law to encourage the tenant to sign the agreement and/or move out. In Florida, you cannot change the locks, shut off utilities, or otherwise take steps to force a tenant out of your property. You could be on the hook for fines if you do any of this - and you may not be able to evict the tenant.
Similarly, avoid harassing or threatening the tenant. Some tenants can be difficult or obstinate, and may jerk you around rather than simply coming to an agreement. If you find yourself in this situation, take a step back and reconsider your options. You may be better off proceeding with an eviction if the tenant is being unreasonable.
Some landlords make the mistake of starting negotiations without having a firm number and move-out date in mind. While negotiation strategies may vary - you may start low to give yourself room to offer more, or start high to make it an attractive offer - the key is to know exactly what numbers make sense for you. Avoid the common mistake of spending more on a cash for keys deal than you would be going through an eviction.
In addition to getting the agreement in writing, you should also get proof of payment. In other words, don’t make the mistake of giving your tenant cash unless you get them to sign a receipt. You will want to have evidence that you held your end of the bargain.
Finally, do not skip the usual move-out procedures. Make sure that you conduct an inspection and only deduct an appropriate amount for damage from the security deposit. A cash for keys offer allows you to avoid the eviction process - it does not exempt you from other laws, like returning a security deposit.
What Happens If A Tenant Won’t Move After A Cash For Keys Deal Is Made?
If the tenant won’t move out on the specified date, then you have two options. You can move forward with the traditional eviction process - something that you should have gotten started by serving the tenant with a formal eviction notice - or you can go to court to enforce the agreement. In most cases, the eviction process will be quicker and easier, with a cash for keys agreement in place, particularly if the agreement is written properly so that the tenant has given up their right to the property.
A Florida real estate lawyer can help you determine what your best option is if the tenant refuses to move out after the deal is struck. They can also draft the agreement to comply with Florida law and protect your rights.
Earn Rental Income Without The Headaches With Eaton Realty
Being a landlord can be profitable - and it can also be a massive headache. When issues arise, it is important to follow the law to avoid being penalized by the courts. A cash for keys arrangement is one way that you can comply with the law while minimizing expenses and delays.
Eaton Realty represents property investors and homeowners throughout the Tampa Bay region. For each client, we work hard to market your property, get in the best tenants, and handle any problems that arise - giving you peace of mind. Want to learn more? Fill out our online contact form or give us a call at 813-672-8022 to talk to a team member.