Cash for keys question

[Rachid B.]

My tenant has finally agreed to takee the money and move out. But, he is asking me to give him an additional free month stay on top of the cash i am offering him. 

How do I proceed? Should i accept?

Also, I would appreciate if someone can share a document to have him sign before giving him the cash.

[Joe Splitrock]

@Rachid B. cash for keys is a horrible mistake in most cases. The only way to legally regain rights to your property is to have them evicted. Once you win an eviction, three things happen:

1. You can have them force-ably removed by the sheriff, even if they come back to the property. Even if they sign a "Cash for Keys" agreement, it gives you no such rights. Remember, they are already in violation of lease, so why would signing another agreement make them suddenly honest people?

2. You get can ask for a judgement, so the court mandates they pay you rents owed. This may be easier to collect than you think. If someone wants to rebuild credit or even buy a home, they are usually forced to settle judgments. Cash for keys not only gives up your rights to compensation, but you actually pay them MORE money. 

3. Their record is marked with an eviction and judgement, which will make it harder for them to rent a property in the future. This alone usually scares tenants into leaving upon being served notice to vacate. (most people who are offered cash for keys, would have left anyways)

I will say that four years ago when I first joined BP, hardly anyone was doing cash for keys. The frequency has increased as people keep recommending it as the first course of action. This has very dangerous repercussions to the rental property business. Instead of using the existing legal framework, landlords are choosing first to pay tenants to leave. The has two damaging effects to our industry. 

1. Bad tenants will not show up easily in screening. What good is running an eviction report if landlords get lazy and stop evicting? 

2. Tenants are getting trained to believe they can stop paying and ask for money to leave. This is happening already. I see stories where tenants ask landlords for cash to move out. This is a direct result of landlords training them. Even tenant advocacy groups are now aware of the practice and telling tenants to ask for money!

In your case Rachid, it seems you are inexperienced. This leaves you at risk of making major mistakes. If you are stuck on doing cash for keys, then do the following:

1. DO NOT give them any money while they are still inside the property. When you do give them money, it should be a check and not cash. It has to be a check so that it is traceable as a business expense AND for proof should you end up in court. Also keep in mind that in the event something goes wrong, you can stop pay the check.

2. Tell them no to the extra month. You need to start taking control instead of letting them push you around. One month turns into two and two into three. Honestly, you should have filed eviction paperwork a long time ago. My guess is you already let this go way too far. There has to be a firm deadline and you have to be willing to stand firm.

3. Do not use "cash for keys" agreements that you get for free from people here on BP. Contact your attorney for state specific documents that they are comfortable defending. If this winds up in court, a poorly written document can do more harm than good. The first words from your attorney will be, "why didn't you include me earlier?"

Personally, I would tell the tenant they have 48 hours to get out or the deal is off. Furthermore if they don't take the offer, I will spend every penny I have securing an eviction and judgment against them. No matter how long it takes... I would tell them the eviction will make it hard for you to rent in the future and the judgment will make it hard for you to get loans. 

This is no different than the bully stealing your lunch money in elementary school. You have to stand up to people or you will be pushed around the rest of your life. Once you offer cash for keys, the power shifts to the tenant. They will keep asking for more, because they know you are scared.