- Who sends it
- The new owner, usually the lender, or its agent, broker or lawyer
- What it starts
- Nothing until you sign. Then a move-out date and condition terms you must meet to get paid
- Do this first
- Get the full offer in writing and show it to legal aid before signing
What this offer is
After a foreclosure sale, a new owner who wants the home empty can go to court to evict you, or it can pay you to leave. The payment is often called cash for keys or relocation assistance. In exchange, you agree to move out by a date and leave the home empty and clean.
Similar money can come before a foreclosure. Fannie Mae offers a $7,500 relocation incentive with its short sale and its deed in lieu (Mortgage Release) when the home was your main home (for a short sale, only when you are not required to put in cash). Freddie Mac says its short sale and deed in lieu options may come with a relocation incentive. See short sale and deed in lieu.
What it does and does not mean
- It is not an eviction notice and not a court order. 603 Legal Aid in New Hampshire says an offer of money to leave is not a lawful eviction notice.
- You do not have to accept it. Without a deal, the owner usually must still give notice and go to court. See notice to vacate.
- It can be negotiated. You can ask for more money or more time.
- Accepting it does not by itself give up your right to any surplus money from the sale, unless the paper says so. Read for that.
What official programs pay
- FHA loans: after occupants fail to leave following the first notice to quit, HUD's handbook lets the lender offer up to $3,000 per home if everyone moves out within 30 days of the offer. Before paying, the lender inspects to make sure the home is broom-swept and all built-in appliances and fixtures are still there.
- Fannie Mae short sale or Mortgage Release: a $7,500 relocation incentive for a main home (for a short sale, when no cash contribution is required). Mortgage Release also offers a move out right away, a three-month rent-free transition, or a twelve-month lease at market rent.
- Freddie Mac short sale or deed in lieu: may include a relocation incentive. Ask your servicer for the amount in writing.
- Other buyers, such as investors, set their own amounts. No law we found requires them to offer anything.
What to check before you sign
- The amount, and exactly when and how you get paid. Is it paid when you hand over the keys, or weeks later after an inspection?
- The move-out date. Can you really be out by then? Ask for more time if not. Georgia Legal Aid notes these deals often require the home to be empty and broom-clean by a set date.
- The condition terms. Many offers require you to leave built-in appliances and fixtures. Take dated photos when you leave.
- Who is in the deal. It should cover everyone living in the home. Renters may have their own rights to stay longer and should get their own advice.
- Release language. Look for words like "release", "waive" or "all claims". Signing could give up claims about the foreclosure, your right to redeem, or your right to challenge the sale.
- Surplus and redemption rights. Make sure the paper does not sign away surplus sale money or a redemption right your state gives you. In Florida, the official surplus claim form says you do not need a lawyer and do not have to assign your rights to anyone.
- Money you may still owe. The offer may not release you from a deficiency. Ask in writing.
- That the person making the offer really represents the new owner. Check the recorded deed in the county land records, or call the lender at a number you already have.
603 Legal Aid says cash for keys can make sense if you already have a new place and are satisfied with the amount, and may not be right if you cannot leave quickly or cannot leave the home broom-clean. Before you sign, call legal aid or a HUD-approved housing counselor at (800) 569-4287. They can read it with you for free. See lawyers by city.
Where these offers show up, by state
Cash for keys can come in any state. State pages that discuss it include Georgia, where the buyer must demand possession first, New Hampshire, where 603 Legal Aid explains these offers, and Idaho, where we found no law that requires the buyer to offer money or extra time. In redemption states such as Kansas, Michigan and Minnesota, check whether you are entitled to stay longer before agreeing to leave early.
Scams tied to these offers
- Anyone who asks you to pay a fee, deposit or "processing charge" to receive relocation money. Real offers pay you, not the other way around.
- Anyone who offers to buy your redemption right or surplus for a small amount while promising you can stay. The Kansas Attorney General warns about this.
- Anyone who asks you to sign a deed or power of attorney as part of a move-out deal.
- Pressure to sign the same day. A real offer can wait a day or two while you get advice.
See foreclosure rescue scams. Report scams at ReportFraud.ftc.gov or to the CFPB.
How much time do you have? It depends on your state.
See the foreclosure timeline, deadlines and free local help for the state where the home is.
Common questions
Do I have to take a cash for keys offer?
No. It is your choice. If you say no, the new owner usually must still give you notice and get a court order before you can be removed. Ask legal aid how much time you would likely have either way.
Can I ask for more money or time?
Yes. Offers are often negotiable. Put your counteroffer in writing and get any final deal signed by the new owner or its agent before you move.
Will taking the money affect my surplus or my right to redeem?
It should not, unless the paper says you give them up. Read the release language carefully and ask legal aid. Your state's after the sale page explains surplus and redemption rules.
I am a renter. Should I take the offer?
Renters often have more rights than former owners, such as 90 days' notice in California or up to the end of the lease in Maryland. Learn your rights from legal aid before you agree to leave early.
Keep reading
- Late notice and early intervention letterThis letter is a warning, not a foreclosure. Federal rules make your servicer reach out early and tell you about help. In most cases a foreclosure cannot start until you are more than 120 days behind, so this is the best time to act.
- Breach letter (demand or notice of intent to accelerate)A breach letter says you are in default and gives you a date to catch up. If you do not, the lender can call the whole loan due and move toward foreclosure. Many standard mortgages and deeds of trust require at least 30 days to cure.
- Notice of defaultIn many states that foreclose without a court, a recorded notice of default is the official start of the foreclosure. It is not a sale and not an eviction. It starts a waiting period before a sale can be set, and you can usually still catch up or apply for help.
- Notice of intent to forecloseMany states make the lender send a warning letter before it can start a foreclosure. These letters often give you a set number of days, a cure amount and a list of free counselors. The deadline in the letter matters, so act on it now.
- Lis pendens (notice of pendency)A lis pendens is a public notice, filed in the land records, that a lawsuit or foreclosure affecting your home is pending. It does not mean the home is sold or that you must move. It usually means the court papers are coming or have already been served.
- Foreclosure summons and complaintA summons and complaint means the lender has sued to foreclose. You have a short, firm deadline to respond in writing, often 20 to 30 days from the day you were served. Missing it can let the lender win without your side being heard.
Sources
- HUD Handbook 4000.1, Update 18, III.A.2 Cash for Keys Consideration (forward mortgages)
- Fannie Mae Servicing Guide D2-3.3-01, short sale
- Fannie Mae Servicing Guide D2-3.3-02, Mortgage Release (deed in lieu)
- Freddie Mac: Options to leave your home
- HUD: Avoiding foreclosure
- CFPB: Find a housing counselor
- FTC: Mortgage relief scams
- FTC: ReportFraud.ftc.gov
- CFPB: Submit a complaint