What does cash for keys mean?

Homeowners and tenants facing eviction can get money for moving expenses from the lender or property owner.

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Elissa SuhSenior Editor & Disability Insurance ExpertElissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.

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Key takeaways

  • If you’re facing foreclosure eviction, the mortgage company may offer a cash incentive for vacating the property on their terms

  • You must leave the property in broom-swept condition, or cleaned and with fixtures intact, as part of the agreement

  • Cash for keys does not affect your credit, but foreclosure itself does

  • Homeowners can negotiate a cash-for-keys deal during the eviction process if it isn’t offered to them

Homeowners facing foreclosure may be evicted. The eviction process can be costly for the mortgage company or new property owner, especially if the homeowner does not want to leave. To prevent disagreements and unnecessary court action, the mortgage company or new property owner may offer cash for keys — an agreement in which the evicted homeowner gets money in exchange for vacating the home in a timely manner. The money is typically meant to help with relocation costs, like moving expenses or a security deposit on a new place to live.

A cash-for keys agreement is a win-win situation for all parties involved, since foreclosed homeowners get money, the property is vacated and damage-free, and everyone avoids court as much as possible.

Renters may also similarly experience a cash-for-keys scenario when they are facing eviction and the landlord wants to a cost effective way to remove them from the property.

In this article:

How does cash for keys work?

If you don’t pay your mortgage, your lender may foreclose on your home. That means the mortgage company has the right to seize your house and sell it. If you’re the homeowner, you will be forced to leave after the sale. Some homeowners might stay longer than they're legally allowed to in the foreclosed property. Rather than go through the eviction process, which can be time-consuming and costly, the mortgage company can pay you to vacate the house according to their terms.

A cash-for-keys agreement typically happens between a homeowner facing eviction as part of the foreclosure process and the mortgage lender, like a bank or credit union. (Cash for keys may still happen when the homeowner opts for deed in lieu of foreclosure, since under these terms you would still have to leave the property.)

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A landlord can also offer a tenant cash for keys. This might happen if the rental property itself is being foreclosed on, independent of the tenant’s actions, or if the tenant is being evicted because they violated the terms of the lease or if the building owner is selling the property.

Here is commonly run-down of how cash for keys works:

Eviction notice

Homeowners facing foreclosure usually have a period of time when then they can repay their missed payments to prevent the mortgage lender from selling their home. If you don’t, then there will be a foreclosure sale, after which the new owner (usually the bank) will set a date for you to vacate your home and give you advanced notice. If you fail to do so, then the eviction process will begin. The new owner may also approach you with a cash-for-keys agreement at some point in this process.

Negotiate cash for keys

If no one has offered cash for keys, you can always negotiate with the mortgage lender or the property owner, or ask a foreclosure attorney to do so on your behalf. How much you’ll be offered can vary widely based on the location and circumstances, and if you're a renter or homeowner. It might be anywhere from a few hundred to a few thousand dollars or more. To aid your negotiation, you could research how much court fees would cost to make sure you are getting as much as you can.

Make sure the property is in ‘broom swept condition’

In a cash-for-keys agreement, you must typically leave the property in “broom-clean” or “broom-swept” condition, which means that you’ve swept and vacuumed the home, and removed all your possessions(but not necessarily done a deep cleaning). It is more important to see that you haven’t vandalized the property or removed fixtures, like lights or doors, or broken any windows.

Get cash for keys

Before you vacate your home, someone — the lender, or a representative from the lender, or the landlord — will come by and inspect the house to make sure it’s in the specified condition. If everything looks good, then you’ll give them the keys and they’ll give you the money.

A cash-for-keys agreement can be legally binding in court. Homeowners should get the agreement in writing and keep a copy of it handy with other documents they’ve received throughout the foreclosure process.

Renters should be aware of whether or not they are in a rent-stabilized or rent-controlled property, since the state may have a few more laws in place regulating evictions and proposed buyouts (which happen when the landlord or property owner offer current tenants a very large sum of money in hopes to get new tenants to charge more money or demolish the building).

Does cash for keys affect your credit?

Receiving a cash incentive for handing in your keys won’t affect your credit score — but the reason a cash for keys agreement happens in the first place is because you're facing foreclosure, which does affect your credit. Foreclosure can negatively affect your credit score and leave a mark on your credit report for many years.

A deed in lieu of foreclosure prevents the home from being foreclosed on, so you won’t have that on your records. The homeowner voluntarily transfers the property title to the bank in exchange for some mortgage debt relief. The bank may also include cash for keys as part of the deal — just keep in mind the money offered is just part of the terms and that cash for keys itself does not constitute a deed in lieu of foreclosure.

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