For the foreclosing parties or the buyers of foreclosed properties to evict current owners or tenants as soon as possible they may make an offer to these people to achieve this goal.Therefore cash for key is a money offer a new owner or the lender makes to the owners or the tenants in exchange for vacating the property. Due to the fact that acceptance of this offer will give away your rights after foreclosure among others such as to demand for instance your security deposit, careful consideration should be done before taking it.
HOW IT WORKS
Thelender initiates the foreclosure process opening that channel of offering the owner an amount in exchange for the keys.This amount can either be a portion of the appraisal value of the home or a static payment. The acceptance of the borrower to this offer reverts the ownership of the home to the foreclosing partyfrom the owner.A moving date is set and the time for the owner to negotiate the offer is when it is made to him so as to attain a better deal. After all the debtor’s idea is for you to leave. By all means ensure that this agreement is in writing and signed by the new owner or their legal representative so as to make it easy to bring an action against the lender or new owner in the event s/he reneges on the payment of this amount by suing them in a small claim court to recover this amount.
CONSIDERATIONS TO KEEP IN MIND
The first one should be the protection at your disposal that is guaranteed by the state laws. Whether they stall or deny eviction or provide for a longer notice period thus they should offer you more as it is in your great interest to continue staying in your current home.
Secondly this offer is usually accompanied by a moving date within which you are required to have left in order to keep you side of the bargain.You have to determine whether you will have found a place to move in by then and whether it is convenient for you to move out then as it’s acceptable to reject the offer on the grounds that the convenience of the lender is not convenient to you.
Thirdly the security deposit in reference to the cash for keys amounts, whereby the offer should be higher than the security having it. Otherwise would mean that you are giving up on the difference, this is because most lenders are likely to indicate in the cash for keys agreement that it settles all claimsyou have against the lender thus you cannot sue him/her for your deposit.
The cost of moving is another element to consider that includes security, pets and other deposits such as for utilities, changing your address everywhere and the hassle of it all, and see if the lender is willing to pay this amount or closer to it.
Sources
https://tenantsforeclosure.blogspot.com/2009/05/what-is-cash-for-keys.html
www.nolo.com/legal-encyclopedia/your-options-after-foreclosure-sale.htm
www.wisegeek.org/what-is-cash-for-keys.htm