“Cash for keys” is a term often used to describe the offer made when a bank or investor wishes to avoid the foreclosure process while securing a vacant property. It refers to a proposition put forth by a lender or new owner who wishes to legally “evict” homeowners or existing tenants.
In the case of a homeowner “cash for keys” offer, a bank or mortgage lender offers the homeowner—who is facing foreclosure—a cash agreement for possession of the house. This provides the homeowner with the opportunity to walk away from the property without completion of the foreclosure process.
Cash for keys is not a formal program, but rather, a practice with no specified guidelines. Homeowners and tenants living in properties currently under foreclosure or recently acquired after foreclosure are urged to exercise caution when considering acceptance of a cash for keys offer.
An Overview of the Cash for Keys ‘Program’
Lenders wishing to quickly and inexpensively remove tenants or homeowners from a property are the parties who most typically put forth a cash for keys offer. This method is less time-consuming than going through the formal foreclosure process.
A standard foreclosure requires numerous waiting periods and can take anywhere from several months to a year or more. In addition, cash for keys may save a lender the cost of having to hire an attorney or pay for other regulatory expenses associated with a foreclosure.
The lender’s objective when making a cash for keys offer is to secure a vacant property as efficiently as possible. These offers are simply a matter of conserving a bank’s, lender’s or investor’s resources.
Cash for Keys Offers for Owner-Occupied Homes
A bank or mortgage lender may offer a homeowner a cash for keys agreement to avoid having to complete the foreclosure process. In this case, the homeowner may agree to a fixed amount in exchange for vacating the property on an agreed-upon date.
A cash for keys agreement may also include such stipulations as the homeowner:
- must maintain and leave the property in a certain condition;
- cannot vacate the property without advance notice; and
- must waive legal claims to the property and agree to forgo any legal action to preserve rights to the home.
A cash for keys offer may include other requirements specific to the circumstances of the property and its owner.
Cash for Keys Offers for Rental Properties
A new owner or investor in a rental property may make a cash for keys offer in order to legally vacate existing tenants. This would require a tenant to waive his or her rights granted under the Protecting Tenants at Foreclosure Act of 2009.
Consider speaking to a real estate or foreclosure attorney before signing a cash for keys agreement. This may help you protect your rights as a homeowner or renter and prevent you from signing away your best financial interests. Call (312) 775-0980 to schedule a free case consultation in Chicago.
