What is Cash for Keys?
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A cash for keys offer is a deal which a bank may make with a homeowner, in which the homeowner is given a cash settlement in exchange for vacating his or her foreclosed home. Cash for keys offers are also made to renters. The advantage of cash for keys from the point of view of the bank is that it gets people out of the house quickly, and the house is often left in better condition than it would be in the event that an eviction was needed. However, it is important for people to be aware that a cash for keys offer is a last resort, because once the paperwork is signed, you typically have no recourse.
In a classic example of a cash for keys offer, the bank will initiate the foreclosure process on a home, and indicate that it is willing to pay the homeowner a set amount of cash in exchange for the keys. The cash may be based on a percentage of the appraised value of the home, or it may simply be a static payment. If the homeowner accepts, ownership of the home reverts to the bank, and a moving date is set. The time to negotiate is when the offer is made; if you feel that the offer is unfair, say so, and you may be able to get a better deal, since the bank just wants you out of the home.
In the case of renters, some banks offer renters cash for keys when they foreclose on a home to compensate the renters for their trouble. The cash for keys settlement can be used to help with moving expenses, and it is also designed to keep the renters from complaining. For renters, foreclosure can be extremely frustrating, because they may not be aware that the foreclosure process has begun, let alone proceeded to the point where they are expected to vacate a home.
Without voluntary surrender of the keys to a home, banks face a lengthy eviction process. Running an eviction is expensive, and time consuming, because while eviction notices are served and the eviction is finally enforced, the house is simply sitting there, and the bank cannot put it on the market. By getting a so-called “broom clean” house in exchange for a small cash settlement, the bank can quickly turn it around; most banks do not like to hold on to a real estate inventory, so they welcome the opportunity to sell off their foreclosed properties.
In addition to helping banks cover their losses quickly, cash for keys can also prevent damage to the house. In some cases, people who are evicted feel resentful and angry, and they may stop maintaining the house or actively damage it out of spite. As a result, a bank might need to invest in some basic repairs to make a house salable before putting it on the market, and this eats up more time and money.
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I have recently received a default letter from the bank on a house that I am currently renting. My leasing company says I technically have till the end of the year to stay in the house. Being a single mother of two kids, I do not think I should wait it out. I heard from a friend about Cash for Keys program. How can I be eligible for this? I really need assistance in getting into another home and most importantly funds to pay my deposits. - anon51377
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What a sad situation! We also rented a home that sold today on auction. It reverted back to the bank and I am sure that someone will come knocking on my door telling me that I have so many days to get out. I thought with Obama's signing of the renter's law in May 2009 that renters had 90 days to leave the property. I am in a month to month lease at the moment and lost just over $10,000 in rent. I want to stay in the house through Christmas and not disrupt my children during that time. This is a horribly frustrating situation. - anon50714
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please help i just got told on this week that i have to move out of my home (rented) by the end of the month due to foreclosure. how can i qualify for cash for keys? --nanette - anon50432
21
If a renter has not been paying, and the house goes into foreclosure, is the renter eligible for cash for keys? How do i let the new buyer know that this guy is a shyster and specifically waiting for this "cash for keys" money? - anon50317
20
cash first keys later. well I need first month
last month plus deposit, and how am I to move out if I need the money to move? It does not make sense to wait for the money after I move out, because I don't have the money to move out. In the other hand once I move, and what if the money is not given? do not sign anything unless the money comes first. - anon50195
19
my house was scheduled to be sold as forclosure today. would i qualify for cash for keys? - anon47729
18
when it comes down to "cash for keys", the tenant needs the money to move out, yet the person who bought our house at auction doesnt want to give any money over until the house has been emptied and "inspected". how do yu get over this hurdle? - anon46846
17
my ex is trying to move back into a foreclosed home where he was a tenant, and was already evicted and moved out, to benefit from cash for keys, but he never had a lease or any contract or anything in writing saying that he was a tenant. he paid no security deposit and only paid first month move in and that's it. he has damaged the home by putting holes in the wall etc. and it was bought by a private party and is not owned by the bank or the state. is he eligible for cash for keys or is he kidding himself? - anon41869
16
My landlord was collecting rent from us while trying to sell the house we live in. He stopped collecting rent and now the house has been sold. The realtor told us that the final sale will be finished on August 31 and they are saying that we have 5 days after that to vacate the property. We were told by our roommate that this was happening and he found out over the phone. Don't they have to serve us with eviction papers? Do we qualify for cash-for-keys? What legal rights do we have? Please help! - anon40876
15
What I want to know is we are the owner of the home we are currently residing. We were told by a childhood friend who is a reality that our house is not in a foreclosed status. Our lender told us that our home is up for sale/auction on Aug 10. How do we get cash for keys from our lender before the sale date? With the person who purchase our house in the next week and a half? Can we ask for cash for keys or does it have to be offered to us?
- anon39209
14
I recently moved into this house in October of last year. I had to come up with 3200.00 to move in. Each month I paid my rent. There were months that I also paid for repairs that my landlord did not complete. For all practical purposes I was acting as if this was *my* own property. In early May at 7 a.m. the landlord came to my door telling me he has decided to let the property go into foreclosure since he did not qualify for a remod of his loan because this was not his primary residence. I immediately went down to my county recorders office and found that he stopped payments the month after I moved in. He also approached me asking if I would allow him to hang out here and put all utilities in his name and then he could just "tell" the remod people he lived here and get the loan. This was totally unacceptable to me. He informed me that he wants me out so he could get someone else to move in and be able to get the "move in" and, in his words, "let them deal with the bank." So, you see, not all the landlords that are allowing foreclosures are not getting rent. This man, here in Stockton, Ca., was getting his rent and improvements to his property and didn't give a rat's butt about a disabled woman with children! So, where's the justice in that? - anon35665
13
My Girlfriend recently signed a year lease just last friday, a gentleman came to her door to let her know that the house is now owned by the bank on the spot he offered here $1900.00 now he is offering her $1500.00 and threatening eviction. My questions are 1. What rights does she have? 2. How do you place an Eviction on someone's credit that you have no info on? 3. What is a fair amount for cash for keys on a 3400 sq ft home? 4. Is there a program that helps with relocation opposed to money? She just paid out a total of $6500.0 in Jan. Also just paid her rent of 1650.00 please help. She is broke and so am I. - Mrdvs27
12
My house is in foreclosure next month. I need the tenant to move out because I have to shut off water and electricity when I move out. The house has a front and back, so I lease the front house and live in the back house. The tenant did not pay rent for 2 months and is way behind on utilities bill. All the bills are under my name so I have to come up with the money to pay every month. Plus I need my furniture back since I leased it furnished.His lease was up last month and he refused to leave, he told me that he will stay for free in this house until the new owner take over. What are my rights? Please help! - anon33212
11
I believe that the cash for keys meant for renters means that the renters vacate the premises and hand over the keys. When a landlord surrenders their foreclosed property it is no longer theirs. Once a foreclosure notice is posted the renters have 60 days renting under the current contract that they signed when they first got the place. Usually if it is a bank they will just want the renters gone, they don't want to deal with that so they will go for the cash for keys. If it is a new landlord they have to honor the previous rent contract for 60 days, including your previous rent payment to the last landlord provided that you have receipt of that payment, i.e. rent is due on May 1st, you pay that to company A, then the property goes to auction on the 6th and company B buys it. You then give a copy of the receipt for May's rent from company A to validate your rent for that month. Then on June 1st you owe rent to company B at whatever rate was negotiated with them. - ylrocker
10
If the house is in foreclosure then the renter is going to have to move regardless of whether or not there is a cash for keys deal. Most landlords won't let the house foreclose if they are receiving rent, so most of these stories about landlords keeping the cash for keys are probably not receiving rent from the renters anyway and deserve whatever they can get from the foreclosure. - anon28412
9
This certainly seems to be a new scam for people that own houses that they sold to people that allowed it to go into foreclosure. They make the people move out, then rent it out to someone else for monthly rent money while they try to resale and quicksale it, throw the renters out when the bank offers cash for keys, then they keep the cash for keys instead of giving it to the person that has to pay for the move. A LOT of them are doing this now, if it isn't illegal, I'm surprised. It should be. That's just stealing from Peter to pay Paul and robbing the poor....it's a sad world we live in. I heard someone in Jersey took their landlord to court and "won" that money back. - rrredhd50
8
Just a month ago I found out that the house I'm renting has been foreclosed and I have already given him the money for that month's rent. Am I entitled to take back the money that I gave him after the house was foreclosed? Even though I took the Cash for Keys. - jester670818
7
my cousin lives in rental in cal-- it was foreclosed on by bank. a real estate agent has contacted about cash for keys-- but she needs a lot more money than being offered to her. she is ignoring offer- and is scheduled for major surgery in early jan. she cannot move for several months-- maybe 6 or more-- what are her options????? - sherryace
5
If a renter of a home that has been foreclosed upon has accepted "cash for keys," does the Realtor who rented that person the home have the right to tell the renter that they should not have accepted any money because now they will try to get that money back from the owner of the home and ask that the renter give the money to the Realtor? - rrredhd50
3
Can a renter of a sold at auction home expect to get her security deposit back from the new owner (the bank) when she moves out, even though the security deposit was paid to the former owner? - anon22358
2
Does a landlord have the right to take all the cash- for-keys money, even if the landlord does not live in the house, and not have to give any of it to the renters? Then the renters are the ones who have to scramble out of the house with no cash-for-keys money. - jovialj
1
If a renter of a home that has been foreclosed upon has accepted "cash for keys," does the Realtor who rented that person the home have the right to tell the renter that they should not have accepted any money because now they will try to get that money back from the owner of the home and ask that the renter give the money to the Realtor? - littlemuffin
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Written by
S.E. Smith
Last Modified: 05 November 2009
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