“Cash-for-Keys” is a fairly common practice that has been used by landlords for years. It’s a scenario where a landlord offers their tenant a lump sum of money so that the tenant will willingly vacate the rental unit. Tenants in most of these cases have lived in their homes for a number of years and abide by their obligations under the law. Typically, it’s a landlord offering their tenants a cash-for-keys deal, not the other way around. However, there are also tenants who try to negotiate settlements with landlords seeking to evict them under a no-fault eviction ground.
Should tenants accept a cash-for-keys deal?
You know that old adage, if a deal seems to be too good to be true, it might be? Cash-for-keys can be like that for tenants. Landlords typically only offer them because they know convincing a tenant to leave their home is lucrative for the landlord in the long run (either by renting the unit to someone new for double the price, or, selling the property). Of course, tenants are free to ask and negotiate with their landlord for a cash-for-keys deal. It’s up to the landlord to decide whether or not to accept.
Either way, tenants need to seriously consider whether or not they’ll end up paying more over time to find a comparable rental unit in their community if they accept a cash-for-keys deal. For some tenants, likely those who suspect they will be evicted regardless, it might make sense to accept a cash-for-keys deal. Choosing to accept one depends on a number of factors and each situation might be different. Therefore, it’s always a good idea for a tenant to get legal advice in these scenarios.
Why are they happening?
Cash-for-keys is enabled by the Ontario policy of vacancy decontrol (which allows landlords to charge whatever they want in asking rent for a vacant unit.) Vacancy decontrol encourages landlords to try and evict sitting tenants whose units are protected by rent control so they can charge far more to someone new. When average asking rents in Toronto are now at a record high of $2,521.00 per month for a 1-bedroom unit, plenty of landlords know there’s a lot of money to be made by getting rid of their existing tenants.
Most tenants being pushed out of their homes are unable to find a comparable unit for a similar rent in their community. In some instances, tenants are evicted into homelessness or forced to leave their communities entirely.
Compared to years past, there is also a proliferation of financialized landlords in Ontario. These landlords routinely scoop up the existing affordable units in a community. Once they own the property, they then attempt to dramatically increase the rents to meet the expectations of their shareholders. That means they will do whatever they can to get rid of existing tenants, including offering them cash-for-keys.
How bad are the increases to rents? Well, last year, a CMHC study found that average asking rents for vacant units have increased by 26% in Hamilton, in Ottawa by 17%, and in Toronto by 29%. What hasn’t increased in that time, though, are people’s incomes. There is simply no way for most renters in Ontario to continue to pay these kinds of rental costs, and yet landlords will not stop demanding it.
For obvious reasons, renters do not have much choice in the matter. They need a home even if they can barely afford the rent. It isn’t a small segment of our population being affected by this, either. Renters now make up one-third of Ontario’s population, and that’s projected to grow over time.
What if a landlord wants to sell their property?
Under Ontario law, just because a property is sold doesn’t mean tenants have to leave. Any landlord or purchaser should know how the law works. If a property has existing tenants, the purchaser inherits those tenants and becomes their new landlord.
The ongoing delays at the Landlord and Tenant Board may further incentivize landlords to offer these kinds of deals to their tenants to get them out faster, whether or not a tenant has done anything wrong. We want to highlight that landlords have many legal options to evict tenants if the tenant is at fault (most eviction applications that go to the Landlord and Tenant Board are for rental arrears). It is when a tenant is not at fault and the landlord just wants them to leave is often when we hear these cash-for-keys deals being offered. It’s always worth remembering there is a difference between what a landlord wants and what the law allows.
Framing cash-for-keys as a tenant extorting or scamming their landlord is misleading. After all, tenants bear the ultimate burden and cost of leaving their home, sometimes even their community. There can be long-term ramifications for their finances, their well-being, and their dignity. They also do not benefit from the gains made to the landlord’s investment, even though tenants are the ones paying their landlords mortgage and bills.
The affordable housing crisis is only this dire is because our governments abandoned the provision of rental housing almost entirely to the private market decades ago and hollowed out rent control protections at the same time. Any discussion of cash-for-keys should be considered within this context. At present, the rental housing market still largely works in the favour of landlords at the expense of renters. After all: if it wasn’t profitable, they wouldn’t be landlords.