A Cash for Keys agreement is a contract in which landlords offer tenants money in exchange for leaving the unit. Most of the terms of the agreement are negotiated between the parties (landlord and tenant), but some are regulated by statute.
Cash 4 keys provide 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 benefit both parties. Landlords can increase the rent price to reflect the current market rate, and 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 are already thinking about moving anyway.
Quick Q&As
in 2021 the average buyout for a tenant in Santa Monica was $38,037. In 2020 it was $35,693.
Santa Monica regulates all-cash buyouts of tenants. Before an offer is made, landlords must provide tenant disclosures about rights and submit the agreement to the city after an agreement is reached.
The agreement must be in writing and include the tenant’s legal rights. The landlord must provide the tenant with a copy of the agreement. The tenant has a right to consult with an attorney, and participation must be 100% voluntary. In 2024, the city also set minimum buyout amounts.
A lawyer is highly recommended but not required. Tenants risk not asking for the right buyout amount, and landlords risk not fully complying with the regulatory requirements.
Tenants have 30 days in Santa Monica to rescind the agreement and return to the unit (and pay back the buyout). Landlords cannot change their minds after signing the agreement and must leave the unit vacant in case the tenants want to return.
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 situations 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 for 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:
- Studio/single – $18,250
- 1 Bedroom – $25,150
- 2 Bedroom – $34,950
If the household includes seniors, disabled people, or minors, the amounts are higher:
- Studio/single – $19,050
- 1 Bedroom – $26,850
- 2 Bedroom – $37,250
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 move somewhere more affordable, pay bills, or satisfy credit card debt.
What is the Legal Process in Santa Monica?
- Before a buyout offer is made – the landlord needs to provide the tenant with a special written notice to the tenant. You can find the notice on the Santa Monica Website.
- Second, the tenant and landlord will negotiate a buyout agreement. Both parties must sign a written agreement.
- Third, the agreement should be sent to the City Counsel of Santa Monica for filing. Buyout agreements must be filed 31 days to 60 days from the agreement date.
Who can Qualify for a Cash 4 Keys Agreement?
Tenants and landlords qualify for cash for key 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 do Tenants and Landlords have under the Cash 4 Keys Laws?
City rules provide the tenant with strong protections in cash buyouts.
- The right to refuse cash for keys agreement (all buyouts must be voluntary).
- Right to cancel the agreement and return to the unit within 30 days after signing a cash-for-keys agreement.
- Tenants have a right to consult an attorney or the rent control board.
- Tenants must receive minimum buyout amounts equal to relocation fee for no-fault evictions.
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.
When it comes to cash for keys agreements, landlords are responsible for most of the compliance. The legal framework in Los Angeles and Santa Monica places strict requirements on the property owner alone. Failure to follow the rules can result in 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:
- Regulation 9011
- Santa Monica Municipal Code 4.56.050(b)
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?
- The agreement must be in writing.
- Before the negotiations begin, the contract must include a statement of the tenant’s rights similar to those mentioned in the form provided by the city.
- If the agreement does not have these mandatory requirements – the buyout is not enforceable and the tenant can rescind it at any time.
What is the Average buyout for a Tenant in Santa Monica?
The buyout for Cash for Keys will vary depending on 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 $38,037, while in 2020, 22 buyout agreements averaged $35,693.
In 2024, a 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 key buyouts to tenants after the tenant refused one in writing.
If you are a Landlord who Wants to Offer a Cash for Keys Agreement, what should you do?
The important thing to understand in cash for keys agreements: It is a legal process that, in effect, is only enforced against the property owner. Therefore, it is imperative that the process is followed to ensure minimum legal liability. There are civil fines for violating the city ordinance, and tenants have a right of redemption as well. Always consult an attorney when you are about to make an offer to a tenant for a buyout.
If you are a Landlord, How Much Should you Offer to a Tenant to Leave?
The amount you should offer a tenant is a mixture of factors that need to be taken into account, among others:
- The difference between current rent and market rent
- How much value will be created if the rent is increased
- Cost of renovations to the unit to get the extra rent
- Capital available to the property owner
- Tenant’s willingness to vacate the unit.
New in 2024 – the minimum amount required to offer tenants for buyouts must equal the amounts set in relocation fees for no-fault evictions.
Who We Represent
At Sinai Law, we represent both tenants and landlords to ensure an equitable agreement.
Tenants reserve the right to know what they are owed. Many tenants don’t realize their leverage in the negotiation process. Landlords may try to persuade tenants into unfair agreements. Our lawyers can help you understand if a deal is just.
We also represent landlords in Cash 4 Keys negotiations. Buyout agreements can be stressful for landlords. Our firm offers assistance in the negotiation process and ensures full compliance with city law.
