A Tenant Buyout Agreement, also known as a “Cash for Keys” deal, is an agreement in which a tenant living in a rental unit covered by the Rent Stabilization Ordinance (RSO) is offered cash for vacating their rental unit. Under the RSO, the rent of a recently vacated unit may be increased to market rate only in a limited number of situations, including Tenant Buyout Agreements. According to the LA City Controller’s Office, tenants received an average buyout of approximately $25,000 through this program between 2019 and 2024. 

Cash for Keys has been criticized as problematic for targeting people who are in need of immediate funding and are ultimately left without stable long term housing as well as contributing to the loss of units covered under the RSO. Cash for Keys can be a mutually beneficial agreement for both the former tenant and the owner of the property, but it is imperative that both parties understand their protections and look closely at legal documents. According to the City Controller’s office:

“Tenants have a number of rights when presented with a “cash for keys” offer:

• The tenant is not required to accept or sign the Buyout Agreement.
• The tenant may consult with an attorney or call LAHD prior to accepting the landlord’s offer.
• The tenant may cancel the Buyout Agreement up to 30 days after signing it without obligation or penalty.
• If the owner does not comply with the requirements above, then the tenant has the right to cancel the Buyout Agreement for any reason at any time without obligation or penalty.
• If the owner does not comply with the requirements above, then the tenant may assert an affirmative defense to an Unlawful Detainer action and may have a private civil remedy against the owner.

The Tenant Buyout Notification Program went into effect on January 25, 2017 and amended the City’s Rent Stabilization Ordinance (RSO) to regulate tenant buyout agreements (also known as “cash for keys”) for rent-stabilized units. These agreements occur when a landlord pays a tenant to vacate. Before this program, these buyout agreements, which amount to voluntary evictions, were not covered by the RSO. This program requires landlords to provide a disclosure of tenant rights for these agreements, which allows tenants to refuse or rescind the offer, and provides a baseline of compensation. Under this program, landlords are required to file tenant buyout agreements with the City.”

Written by Rediet Retta