Or, are you in the process of being evicted because the property you rent is being foreclosed?
In either case, you might be able to negotiate cash for keys agreement.
What Is Cash For Keys?
With cash for keys, you agree to move out of your home by a certain date in return for a lump sum of money to help with your relocation costs.
Whether you are a tenant facing eviction or a homeowner about to have their property foreclosed, the bank might make cash for keys offer but why is this?
The Cost of Eviction
Mortgage companies know it can take from three to six months to evict someone. The cost of eviction can also spiral. Not only must the mortgage servicer pay court fees, they typically need to pay for repairs, too. Damage caused by disgruntled tenants and homeowners facing eviction is not uncommon.
The sooner the occupier can move out, then, the less the overall cost.
So, to encourage a homeowner to leave amicably with the property in a good condition, it’s cheaper for the new owner to offer a cash incentive to the occupant to speed up the process.
The Cash For Keys Agreement Form
A cash for keys agreement should be in written form. The agreement should include:
- The date to hand the keys over
- The sum of money offered/accepted
Standard cash for keys agreement form can be found on this website [1].
If you agree to this deal with your bank after a foreclosure, you will sign to say you accept the amount offered along with the terms.
When you sign the agreement, you are also accepting the foreclosure.
Bear in mind, however, that the amount the bank pays you is tax-deductible.
You might be tempted to remove fixtures and appliances from the property when you leave. It’s understandable, too, if you’re disinclined to clean it thoroughly but there is a silver lining…
You could be offered anywhere between $500 and $5000 for leaving the property in a saleable condition [2]. You could also be offered a further bonus for vacating promptly.
When the day comes for you to move out, someone from the bank will check the property is broom clean before you hand over the keys.
What Does Broom Clean Mean?
When you vacate a property the cash for keys agreement will expect you to leave the property in a suitable condition for immediate sale or rental.
The property must be empty of all personal belongings and even items that might of some value such as a dishwasher. All trash must be removed along with all furniture and white goods.
Everything should be cleaned to a high standard from the oven and fridge wiped to the freezer and cupboards.
No fixtures must be removed, though. If there is a garden, the lawn must be mowed and the landscaping intact.
How Do I Get Cash For Keys?
It is not a legal obligation for lenders to offer you cash for keys when your home is foreclosed.
So, how do you go about getting an offer?
Well, banks typically send you a letter offering a certain amount if you vacate within a few days.
The cash is supposed to cover your move to rented accommodation and elements like the deposit on a rental property, utilities, and general moving expenses.
If you refuse or get greedy, the company might just press ahead with the eviction proceedings with no cash incentive at all.
The company should offer you a reasonable amount to cover the costs of moving. It’s crucial to remember that no company is legally obliged to offer you cash for keys. You are not in the position to play hardball.
If you are not happy with the amount offered for cash for keys arrangement, it’s best to seek the help of a foreclosure lawyer.
For Homeowners
When you sign the cash for keys agreement and return it to the bank, understand this will finalize the process. You will no longer have any legal right to fight the foreclosure and your signature will infer your consent and willingness to walk away.
It’s also vital to ensure that you are not faced with a deficiency judgment after you’ve left the property. You must get this in writing.
It’s advisable to consult with a foreclosure attorney who will be better placed to negotiate your cash for keys agreement and help you avoid a damaging deficiency judgment.
It’s always best to leave on good terms as cash for keys is a voluntary agreement and you won’t end up with an eviction notice on your record. You’ll want to avoid an eviction notice as this can impede your ability to rent properties in the future.
For Tenants
If you’ve just discovered that you’re being evicted because your landlord has been foreclosed, you’re likely to be shocked, furious and above all else extremely stressed.
A homeowner will have had some notice of the pending foreclosure. For a renter, though, this can suddenly crop up as a very unpleasant surprise.
It’s important you know your rights in this situation. The new owner will want you out of the property as soon as possible.
In 2018, Trump authorized the Protecting Tenants at Foreclosure Act [3]. The act says that a tenant can stay in a foreclosed property for at least 90 days or for the duration of their lease, whichever is the longest. Previously, this only stretched to 30 days.
If you’ve received a letter telling you that you have only days to vacate the property, you should consult an attorney immediately.
As a renter, you might be able to strike a deal with your landlord to vacate the property in return for a cash sum.
A good attorney will be able to negotiate better cash for keys settlement on your behalf than if you attempted to do it yourself. Often, it’s worth paying a professional to conduct legal affairs on your behalf. You’ll simply get a better deal so you could consider the fee as an investment rather than an expense.
Landlords
If you’re trying to evict tenants from a property, taking matters into your own hands could create costly trouble.
You must follow the law. If you don’t, you could end up paying compensation to your tenants.
Rather than harass the occupier to vacate, cash for keys agreement is the ideal solution. You stay within the law and it incentivizes the occupier to move out peacefully.
That said, you might want to hire a lawyer to do the negotiating for you. They will know what strategies are most likely to keep the amount of cash you offer to a minimum.
To reach the foreclosure defense lawyers at Fine Law Offices, please do so here or by calling (800) 939-3819