Are you in foreclosure? You could try on option and that is cash-for-keys route. The banks also have their headaches when they foreclose – the house is either vandalized or the occupants are not willing to exit. Cash-for-keys is a simple and fast solution for banks to address these twin problems.
The term cash-for-keys has not been used for a good number of years by the banks but things changed with the housing crisis following the sub-prime mortgage mayhem. It led to a deluge of foreclosures and compelled the banks to bring back again the concept of cash-for-keys; soon it became a standard procedure.
By this procedure the occupants, whether house owner or tenant, facing foreclosure, are given cash by the lender. In return they vacate the house in good condition handing over the keys to the bank without fuss. In general an agreement is reached between both parties wherein the whole thing is placed in writing – the bank’s promise to pay and the occupants promise to hand over the house in good condition. The occupants agree not to yank off fixtures and fittings, vandalize the unit or leave behind pets.
The business of banks is lending and not being landlords; but circumstances have thrust them into this role. The banks are compelled to take on the responsibilities of properties they are swallowing through foreclosure. If banks have to spend huge amounts for the upkeep of the houses their losses multiply.
Evicting occupants also involves huge expenses; it takes up plenty of time and effort as the whole thing has to go through court.
What amount of cash changes hand in this arrangement of cash-for-keys?
The sum varies from one instance to another; it is negotiable. Usually the banks do not automatically come forward with this offer – it is the occupant who is keener on it. For moving out the occupant has to incur certain expenses pertaining to paying security deposit to the next landlord; payment has to be made to movers, for renting trucks, for making utility deposits and for carrying on expenses for temporary accommodation in places like motels.
The banks however add bonus cash if the occupant agrees to move out immediately. But banks are wary – if pressed too far they might go back on the offer. The bank is Goliath in the face of David – this must not be forgotten. Thus the occupants should approach warily with courtesy and good behaviour.
There are many angles to this approach known as cash-for-keys. First of all despite all good behaviour nothing is guaranteed unless it is in writing. So David should have the agreement pertaining to cash-for-keys in writing from Goliath. It is not unknown for banks to have backtracked on their verbal promises.
How much time should the occupant ask for before exiting? It depends on how soon an alternative arrangement can be found. Thus the date of exit should be mentioned in the agreement also. Those with children or disability problems would require more time.
If the bank reneges on the agreement then the other party can bring a legal suit against the offending entity at Small Claims Court.
If the troubled borrower is covered by eviction protections under just cause then there is no compulsion that cash-for-keys will have to be accepted. Any belligerent representative of the bank can be asked to leave; if there is any show of threat then police help can be sought.
Thus before opting for cash-for-keys mull over local and state laws and then take decision, only if you find it will better for you to exit; if it is more convenient for you to hang on then refuse cash-for-keys offer.