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Cash for Keys in California: When It Makes Sense
- "Cash for keys" means paying a tenant to move out by an agreed date, instead of (or in the middle of) an eviction.
- It can be faster and cheaper than a contested case, and the move out date is certain.
- Put everything in a written agreement, and pay only when the keys are returned and the unit is empty.
- Some cities regulate these "buyout" agreements, including Los Angeles for rent stabilized units and Santa Monica.
Every landlord wants the unit back quickly and with as little cost as possible. Sometimes the fastest route is not a trial but a negotiated move out. That is what landlords call cash for keys: the tenant agrees to leave by a certain date, return the keys and leave the unit in agreed condition, and the landlord pays an agreed amount when that happens.
When cash for keys makes sense
- The tenant is contesting the eviction and a trial, possible appeal and sheriff lockout could take months.
- The case has a weak spot, such as a questionable notice, a habitability complaint, or a rent control issue.
- You need the unit by a specific date for a sale, renovation or family member.
- The tenant has no money to collect, so a money judgment would be worth little.
- No fault terminations, where relocation payments are already required and a slightly larger amount can buy a firm date.
What the agreement should include
- The names of all adult occupants, not only the person on the lease.
- The exact move out date and time, and what happens if the tenant does not leave.
- The amount, when it is paid (at key handover after inspection), and how.
- The condition the unit must be left in, and what happens to belongings left behind.
- How the security deposit will be handled, consistent with Civil Code 1950.5.
- Whether unpaid rent is waived, and mutual releases if appropriate.
- If a case is already filed, a stipulation for judgment or dismissal so you can go straight to the sheriff if the tenant does not leave.
Local rules on buyout agreements
Some cities regulate payments to tenants to give up their tenancy. In the City of Los Angeles, buyout agreements for units covered by the Rent Stabilization Ordinance require a specific disclosure to the tenant and filing with the city, and the tenant has a period to cancel. Santa Monica also regulates tenant buyout agreements. An agreement that skips these steps can be unenforceable, so check before you sign.
How much to offer
There is no standard number. Landlords usually compare the offer with the rent that will be lost during a contested case, attorney fees, turnover costs and the risk of losing at trial. In covered no fault situations the offer should be at least the relocation assistance the law already requires. We help clients set a number that makes financial sense and document it so it is enforceable.
Common mistakes
- Paying in advance. Pay when the keys are in your hand and the unit is empty.
- Leaving out other adult occupants, who can then claim a right to stay.
- Pressuring the tenant. Threats or harassment can violate state and local law.
- Dismissing a pending case before the tenant has actually moved out.
Related: How long an eviction takes | Talk to us about a cash for keys agreement
This article is general information about California law as of its date, not legal advice for your situation. Laws and local ordinances change, and court decisions can be reviewed or reversed. Reading it does not create an attorney client relationship.