Cash for keys: the Illinois landlord’s dirty secret

keys and locks for tenantsNot every Illinois landlord or tenant has heard of “cash for keys” but, chances are, if they hang around the rental markets long enough, they will… or should. Cash for keys is an alternative to the eviction process.  It works like this: a landlord offers some amount of cash to a tenant the landlord would otherwise want to evict in exchange for the tenant’s return to the landlord of an empty rental unit and the keys to that unit. It’s that easy.

At first blush, many landlords bristle at this concept.  The tenant who the landlord wants to evict usually owes the landlord money.  Why give the tenant any cash?  The answer: time, money, and certainty.  Let’s take a look at each of those concepts.

Time: an eviction lawsuit, after the service of a notice, in the first district of Cook County takes, at a minimum, about three months of time to complete.  (it can take longer in the other districts)  In a perfect world, cash for keys or at least a cash for keys offer should take a week or, at most, ten days.

Money: a landlord who hires an attorney to handle an eviction is likely to spend a thousand dollars in attorney’s fees, court costs, clerk fees, service of process fees, and sheriff’s fees, minimum.  A nice round number for cash for keys is usually one month’s rent or so.  This is usually the same or less than the cost of the attorney and the process.

Certainty: finally, perhaps the biggest benefit of cash for keys is the certainty of it.  If the landlord pays the tenant and the tenant moves out, the landlord is finished.  In a Cook County eviction, that three month time-frame is just the starting point.  The length of the action can take longer (much longer) if, for instance, there is trouble getting service on the tenant or if the tenant puts on a defense.  Similarly, delays, a tenant defense, and extra effort getting service of process mean increased attorney’s fees and costs.

All of that mess of time, money, and uncertainty can be avoided with cash for keys.  A savvy landlord may also negotiate other issues, such as a general release with the tenant and might even deal with the tenant’s security deposit rights and interest payment in a simple agreement with the tenant as part of the cash for keys process.  By the way, we prepare these sorts of agreements for our landlords all the time and find them to have great value.

But what about the back rent owed by the tenant?  In most cases, a landlord should forget it.  I don’t say that in a cavalier way by any means.  I just try to be realistic about it.  Each situation must, of course, be taken on its own facts, but, on the whole, most judgments against tenants go uncollected.  Can a landlord prevail in a collection action against a tenant?  Sure.  I have one case right now where every two weeks, I receive a check for between $75-$150 from a tenant’s employer.  It will be 2014 before my landlord is paid off.  Many tenants disappear into the night or don’t have jobs to collect from.

Ideally, the landlord will make a cash for keys offer with a short time deadline.  A tenant, delinquent in rent, who is not willing to get out in a week to ten days will also usually be unwilling to get out without a judge’s order and a Sheriff at the door.  That same landlord will only provide a payment to the tenant when the tenant is out.  It does not make any sense for the landlord to turn over a dollar to the tenant prior to the tenant getting out.

I tell just about every one of my landlords to consider cash for keys before hiring me.  When a landlord adds up the lost rent for three or more months during the eviction plus at least a thousand dollars in fees and costs along with the uncertainty that both the time and money could be more, it makes sense to consider buying the tenant out.  Its faster and cheaper than I can do it.  In addition, if a landlord makes such an offer to the tenant, the landlord can sometimes find peace with the lengthy and costly eviction process knowing that reasonable steps were taken to avoid the system.

If you are a landlord and want to discuss the cash for keys concept or the process to evict a tenant and to explore the possibility of engaging Reda | Ciprian | Magnone, LLC to represent you, please give me a call at 773-399-1122.

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6 Responses to Cash for keys: the Illinois landlord’s dirty secret

  1. JDN says:

    I’ve been looking all over for this type of information. The best.

    Can you still pursue a judgement against the tenant for the back rent and damages if you’ve already gone through the cash for keys process with the tenant?

    • Richard Magnone says:

      I’m glad you like our blog. Thanks for the kind comment.

      Whether or not you can pursue a judgment depends on what the “deal” is with the tenant. I do, however, seriously doubt that any smart tenant would take cash for keys with the prospect of the landlord coming back later. In practical reality, it would be extremely rare to do anything other than jump for joy after getting those keys back.

  2. Andy says:

    Excellent advice for landlords. Cash for keys is much better than 3 months of lost rent and possible RLTO lawsuits.

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