Cash for Keys Buyouts in Santa Monica
Updated: 02/03/24 – In January 23, 2024 the city council approved new rules regarding cash for keys agreements in Santa Monica and the article has been updated to reflect those changes. A Cash for Keys agreement is a contract where landlords offer tenants money in exchange of leaving the unit. Most of the terms of the agreement are negotiated between the parties (landlord and tenant). Some terms of the agreement are regulated by statute. Cash 4 keys provides a legal way for landlords to vacate tenants from the property, and for the tenant to get money to leave. These agreements are popular especially for rent controlled tenants, who can often cash in for large amounts. Cash for keys could be beneficial for both parties. Landlords are able to increase the rent price to reflect the current market rate. As the market rises, landlords can make a greater profit on new potential tenants. On the other hand, renters can receive cash for vacating the property if they find it difficult to pay rent, or if they were already thinking about moving anyway. Quick Q&As Why Would Property Owners Offer Cash for Vacating a Unit? Property owners are able to adjust the rent to the current market rate for new tenants. With market rent in place, property value increases as well. In situation where tenants are protected by a Rent Stabilization ordinance, like in Santa Monica or Los Angeles, occupants can only be evicted for cause. This means that renters can stay in the apartment indefinitely, paying very little rent. There’s little alternative to property owners to vacate units. Ellis Act evictions are expensive and long, and once invoked the unit can no longer be rented again to tenants. In addition, once the tenant is paid and vacates the premises, a higher rent can mean higher property value. Why Should Tenants Consider Cash for Keys buyouts? When properly negotiated, cash for keys buyouts can be substantial. It is not unusual for some tenants to get over $20,000 in buyouts, sometimes even more. In 2024 the city passed a law that requires all buyouts to meet new minimum amounts based on bedrooms: If the household includes seniors, disabled people, or minors, the amounts are higher: These minimum amounts are equal to the mandatory relocation fee for no-fault evictions. Tenants who already want to leave or are having difficulty paying the current rent can take the cash and more somewhere more affordable, pay bills, or satisfy credit card debt. What is the Legal Process in Santa Monica? Who can Qualify for a Cash 4 Keys Agreement? Tenants and landlords qualify for cash for keys agreements. Also, banks and homeowners can execute buyouts. Rent controlled tenants and tenants under the just cause ordinance are subject to the cash for keys rules. What Rights Tenants and Landlords have under the Cash 4 Keys Laws? City rules provide the tenant with strong protections in cash buyouts. Do You Need a Lawyer to Draft and Sign a Cash for Keys Agreement? A lawyer is not required but highly recommended for cash 4 keys agreements. Tenants should not only know the full extent of their rights but have someone on their side to negotiate a payment that is fair. Landlords should always hire an attorney to coordinate the cash for keys process to make sure they are legally protected from any liability. Cash for keys buyouts are especially common right after, or before a commercial property transaction. Why is it important to hire a lawyer to negotiate a cash for keys agreement? Moving out of your home is already strenuous enough. Hiring a lawyer will ensure you get the most value for your property. Tenants may not realize the leverage they have with their unit. Having a lawyer on your side will decrease your troubles in obtaining the best deal possible. For landlords, most of the compliance falls on the landlords when it comes to cash for keys agreements. The legal framework in Los Angeles and Santa Monica place strict requirements on the property owner alone to follow. Failure to follow the rules can subject you to fines and cancellation of the buyout agreement. Hiring an experienced attorney can mitigate this risk. Steps you should take before getting into an agreement Whether you are a tenant or landlord, negotiation can be difficult between the two parties. Before getting into an agreement, it is crucial to contact a lawyer to walk you through the process. If you want to go through the process yourself, make sure to follow the local rules in your city for cash for keys agreements. In Santa Monica, you will have to comply with: Contacting the team at Sinai Law will ensure an easy process. What Provisions Must be Included in a Cash for Keys Agreement in Santa Monica? What is the Average buyout for a Tenant in Santa Monica? Buyout for Cash for Keys will vary in respect to the area and makeup of the home. A large factor is the difference between market rent and the current rent for the unit. Buyout agreements can range from as low as $1,500 to as high as $75,000 (or more in extreme cases). The Rent Control Board in the City of Santa Monica provides data on Cash 4 Keys buyouts. In 2021, the average buyout in Santa Monica was a $38,037. While in 2020, 22 buyout agreements averaged to $35,693. In 2024, new required minimum amount for cash for keys passed a city council vote. If your Landlord Offered you a Buyout what should you do? If a landlord approaches you, you should first contact an attorney. Our team at Sinai Law offers counsel for Cash 4 Keys buyouts from start to finish. Contact us as soon as you receive a buyout notice from your landlord. It is important that you consult with an experienced attorney since you only have one shot to get the maximum value for your buyout. New for 2024, landlords can’t continue to offer cash for keys buyouts […]
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