A growing number of tenants are capitalizing on delays at the Landlord and Tenant Board (LTB) and pushing for higher cash-for-keys settlements from landlords.
This involves tenants under threat of eviction agreeing to vacate a rental property sooner in exchange for a cash sum. This practice is gaining traction as landlords – who are feeling the squeeze from high interest rates and nonpayment of rent – seek alternatives to lengthy eviction processes.
It’s unclear exactly how many cash-for-keys deals are being made as they’re most often settled privately, but paralegals report a surge in demand for such agreements over the past couple of years. Tenants’ requests range from covering moving costs to, incredibly, landlords buying them a new property.
Whether or not the deal goes through “depends on the severity of the situation and the vulnerability of the owner,” said Daniel Vyner, principal broker at DV Capital.
Property managers and owners considering a cash-for-keys agreement are advised to do a thorough risk-benefit analysis first. Bob Aaron, a Toronto real estate lawyer, suggests asking critical questions such as, "What percentage of the sale price is the tenant asking for?” and “What is the landlord's downside risk if the tenant stays there?"
Getting the agreement in writing is crucial to minimize the risk of future disputes and ensure clarity for all parties involved.
The cash-for-keys trend may not stick around for long. The LTB has increased staffing to address the case backlog and introduced free online resources for owners and tenants while they wait for a hearing. But until hearings can happen in a timely fashion, landlords and property managers may need to be prepared to negotiate.
More rental market headlines