What is Cash for Keys?
Cash for keys is an arrangement where a property owner pays an occupant (tenant, former owner, or squatter) a sum of money in exchange for voluntarily vacating the property by a specified date and leaving it in acceptable condition. The payment incentivizes the occupant to leave without the cost, time, and uncertainty of formal eviction proceedings.
When cash for keys is used
The most common scenarios are: after purchasing a foreclosure or REO property where the former owner is still occupying the home, when a tenant refuses to leave after lease termination, when acquiring a property with holdover tenants you do not want to keep, and when a deed in lieu includes a relocation payment.
Typical amounts
Cash for keys payments vary by market and situation. Common ranges are $1,000-$5,000 for most residential situations. The payment should be less than the cost of formal eviction ($3,000-$10,000 in legal fees, court costs, lost rent, and property damage risk). In expensive markets or complex situations, payments can be higher.
Structuring the agreement
A cash for keys agreement should be in writing and include: the payment amount, the vacancy date, the condition the property must be in (broom-clean, all personal property removed, no intentional damage), and confirmation that the occupant releases all claims to the property. Payment should be made at or after move-out, not before, to ensure compliance.
Some investors structure payments in stages: half when the agreement is signed and a move-out date is set, half upon verified vacancy and property inspection. This reduces the risk of paying and having the occupant remain.
Legal considerations
Cash for keys is legal in all states as a voluntary agreement between the property owner and occupant. It does not constitute duress or coercion as long as the occupant freely agrees and has the option to refuse. However, it does not replace the legal eviction process -- if the occupant refuses, you must still go through formal eviction. Never threaten, harass, or attempt self-help eviction if cash for keys negotiations fail.
Economics for investors
Cash for keys almost always saves money compared to eviction. An eviction in tenant-friendly states can take 3-12 months and cost $5,000-$15,000+ in legal fees, lost rent, and potential property damage. A $2,000-$3,000 cash for keys payment that results in vacancy within 1-2 weeks is a far better economic outcome. Factor cash for keys into your acquisition budget when buying occupied properties.