What Exactly is a Cash for Keys Agreement?
A cash for keys agreement is a written contract that includes agreement between a landlord and a tenant to vacate a leased premises for a sum of cash. In Florida, money for keys agreements can occur at any stage of a tenancy or post-eviction. Although there are no Florida statutes or specific case law outlining the elements or use of a cash for keys agreement, the general terms of such an agreement must include the address of the leased property, the present date and time of the surrender, the dollar amount of the cash payment to be delivered to the tenant, and give a full and unconditional release from all claims against the landlord . This document can be extremely useful for landlords with a tenant who has already vacated and left behind personal possessions for the landlord to remove, tenant who is delinquent in paying future rent, or when the tenant has otherwise breached a lease term so as to be susceptible to eviction.
Advantages of Using Cash for Keys in Florida
A cash for keys (CFK) agreement can be beneficial to both landlords and tenants. From a landlord’s viewpoint, reaching a mutual agreement with the tenant is a much easier process than administering an unlawful detainer action (eviction). Eviction litigation can prove to be not only time consuming, but also costly. If the eviction is uncontested, it can still take approximately 30-45 days to complete the entire process. If the eviction is contested by the tenant after the landlord has obtained the judgment for possession, the case can be pushed out anywhere from 2-6 months. In either event, if the landlord obtains attorney’s fees as part of the judgment, they can file a motion for attorney’s fees against the tenant after prevailing in the lawsuit.
The flipside of the coin is the tenant. The CFK provides for the opportunity to receive financial compensation for voluntarily vacating the property by a specific date. Because it is a voluntary agreement, if the agreement is not abided by by the tenant, the landlord is free to proceed with eviction litigation without the previously required 7-day notice. In addition, the FL Statutes require that the landlord provide the CFK tenant with a $50 monetary payment in order to remove property from the premises during the move-out. If the CFK tenant does not remove the property and is not able to pay the costs for storage of the items (typically $15 per day), then the landlord is permitted, by statute, to have the property stored at its convenience or disposed of at its discretion.
Legal Aspects to Consider in Florida
Lease Language: Many leases in Florida contain provisions that require the tenant to vacate without the necessity of a judicial eviction. While these clauses are not very common in commercial leases, they do exist and, when evaluated and executed along with the intended Cash for Keys Agreement, they usually provide the most efficient and effective resolution to an eviction in Florida. However, given how rare such provisions are, the parties should carefully review the lease terms with experienced legal counsel and ensure the terms align with the parties’ intent.
State Laws and Regulations: Florida Statutes Section 83.595 governs the disposition of personal property that is left behind by a tenant after the lease terminates or the tenant vacates the premises. In summary, the statute requires the landlord to give the vacating tenant seven days’ advance notice if it intends to dispose of the property after the tenant vacates. Florida law defines the personal property as being any "clothing, furniture, appliances, radios, televisions, and any other tangible personal property."
Equitable Considerations: Contract requirements are usually enforced in Florida based on public policy, but a court may set aside the requirement if it finds that requiring compliance would be inequitable in some way. For example, this could occur if the tenant is under duress or there is some other special circumstance that makes compliance unnecessarily difficult for the tenant.
How to Formulate a Cash for Keys Agreement
Confidentiality. Be sure to include a confidentiality clause in the contract so that the tenant understands that the receipt of cash for keys is confidential. Although it is a legal transaction to pay a tenant to vacate, many judges do not favor cash for keys transactions and a judge may be prejudiced against your case if they find out that you used cash for keys.
Rent Due. Include in the contract that all rents due up to the date of surrender have been paid.
Surrender of Possession. Be sure to include a section in the contract acknowledging your ownership and right to repossession of the property and setting forth the tenant’s surrender of possession.
Applicability to Landlord. I recommend adding the following to the agreement: "This Agreement shall be binding upon and inure to the benefit of both parties and their respective heirs, administrators, executors, successors, and assigns" . This makes it abundantly clear that the agreement is to be binding upon both parties, both during the landlord-tenant relationship and afterwards, especially if the agreement is ever called into question.
Release of Liability. A release of liability clause is critical to prevent the tenant from coming back at the landlord later complaining that they did not understand the terms set forth in the agreement.
No Third Party Beneficiaries. Be sure to check that the agreement contains a statement after the last word, confirming that no third party intends to confer any right or privilege on any third party under this agreement.
Execution of the Agreement. This agreement becomes legally binding when signed by the landlord and the tenant. Don’t forget the kisses at the end.
Common Issues and How to Solve Them
While cash for keys agreements can be a straightforward and effective tool for landlords, they also come with their own set of challenges. Here are some common issues you may face during the process, along with strategies for overcoming them: Educate About Eviction Alternatives The first challenge that may arise is resistance by the tenant. Sometimes tenants express a lack of trust when it comes to a cash for keys agreement. This may be due to a simple lack of understanding of what the process entails. To overcome this challenge, it’s crucial for landlords to educate and reassure their tenant that they are making the right decision. Explain to the tenant the time, money, and effort that will be saved by avoiding an eviction action. Involve Third Parties Sometimes you may encounter a stubborn tenant who refuses to cooperate despite your best attempts to explain and educate. In such cases, consider involving a third-party mediator. This could be someone from the local housing office, a community organization, or even another landlord. An outside party can help to lend credibility to the process and may be able to communicate more effectively with the tenant than you can. Proving the Validity of Your Rental Agreement Another challenge you may face is the ability to prove the validity of your rental agreement. In order to make a legal claim against a tenant, you must be able to show that there was a legally binding contract in place. If you have an unsigned rental agreement, or a rental agreement that is not legally sound, a judge may rule in favor of the tenant. If that happens, you may be forced to take the tenant to court and complete the long, expensive eviction process. Avoid Includes Cash as "Consideration" Another potential challenge to watch out for is clauses that include cash as consideration. While a cash for keys agreement may be a good idea in theory, always remember that it needs to be legally binding. According to Florida law, for a contract to be legally binding there must be "consideration," or an agreement between both parties to exchange items of value such as money or a deed of property. The right of possession is not a legal right to money, so trying to ask a judge to rule in favor of your case will be significantly harder if you have included cash for keys as "consideration." As evidenced by Jones v. Jones, in Florida, a clause that includes cash as consideration is often deemed invalid. Avoid using cash for keys as the basis of consideration in a rental agreement. Make sure you include verbiage about physical keys as consideration instead of cash. It’s also a good idea to use any rental agreement you have as an exhibit to your lease.
Success Stories and Case Studies
Cash for Keys agreements have been quite successful for landlords in Florida. Learn from their experiences to avoid common hurdles and get your tenants moving out.
Case Study 1: Avoiding All-Out War
A tenant fell behind on rent and only paid half his rent for the month of May. When he failed to pay all of June’s rent by mid-June, the landlord began sending them a series of eviction notices. The tenant agreed to vacate the premises by the end of the month when the landlord offered him a cash for keys agreement with a $500 incentive. Thanks to the agreement, the landlord was able to resolve the matter without having to file an eviction notice in the local court clerk’s office. They spent less on attorney’s fees as a result, and they received the property at the start of the month, allowing them to show it quickly to new tenants.
Case Study 2: Removing the Bad Tenants
More than three months behind on rent, a family of four was no longer making payments to their landlord. A year earlier, the landlord learned they were behind on their rent, so she got them a warranty deed for their mobile home, persuading them to title the home in her name. She understood that the deed was a deed of estopple, whereby the grantor relinquishes all interests and future interests in the property. The tenants didn’t move out even though they owed more than $5,000 in unpaid rent. Shortly thereafter, using the agreement’s language, she made a cash for keys offer to the tenants, offering them $1 , 000 in moving expenses if they complied. She was able to get them out of the property within two weeks. After the tenants left, the landlord made a cash for keys agreement with the tenant of another property she had owned for four years, who had started to pay her late rent. As soon as the tenant received his cash, he abided by the contract, which allowed the landlord to clean up the property and drop the lawsuit.
Case Study 3: Doing What’s Best for the Landlord
A landlord of three apartments in south Florida had a difficult time with his tenants, who were consistently late on their rent, paid only partial amounts, and ignored requests to vacate the properties. It became clear that the relationship could not be salvaged and that the landlord would need to go to court to vacate or evict the tenants. To expedite their vacancy, the landlord started searching for alternatives to litigation, such as cash for keys for tenants with potential financial low spots or incentives for tenants cultivating a bad reputation (e.g. smoking cigarettes in the bathroom, loud arguing, etc.). He created a plan that he would present for review and voted upon the outcome, using the money that would have otherwise gone to the litigation process. He received final notice of a case settlement shortly after the tenants read the letter, which included the cash for keys offer and the amount of cash involved. The tenants moved out promptly within the month. This landlord should serve as a great example for other landlords who are currently dealing with troublesome tenants.