What Exactly Does Key Money Mean?

What Exactly Does Key Money Mean?

Key cash is the advance payment not included in the monthly lease amount for an apartment or any other leased property. In states such a payment, which is not contained in the terms of the lease, is contrary to the law. However, landlords might demand key money knowing that it will be hard to prove this type of payment in courtroom.

Rent Controls and Key Money

Key money is most common in places where rents are regulated by law and don’t match the prevailing rents in neighboring communities, or buildings, which aren’t subject to rent control. Landlords of rent-controlled apartments demand an integral money payment, which might equal a few months’ rent, in exchange for the benefit of obtaining a comparatively inexpensive lease.

Commercial Leases

Commercial tenants trying to rent property for a company might also be asked for crucial money. The fee has to be given in the rental, however, as any off-the-books payments made to your best of leasing a property are prohibited, regardless of when they occur or how they’re named. If these undocumented fees are billed at any stage during the term of the rental, the tenant has the right to sue for recovery of the key cash, in addition to damages and costs to the business.

Crucial Money Abroad

In other countries, the law may expressly allow the payment of key money, under the guise of fees or special fees. These payments might be contained in the written terms of a rental. This gives the landlord with more income when renting to a different tenant. An operator may also provide discounts to prospective tenants who can be triggered by means of a waiver of the fee.

California’s Proposition 13

In California, many rent-control laws date to the passing of Proposition 13, which limited the state’s ability to raise property taxes. The rent-control legislation were designed to keep housing affordable for tenants who, it was presumed, would have to share a greater burden of the state’s overall revenue needs in the form of higher income and earnings taxes.

Mobile Homes

Rent control is much more common for mobile-home parks compared to apartments in the country. These laws are made to facilitate the rising cost to mobile-home owners of renting land. Mobile homes typically decrease in value as they’re transferred from place to place through recent years. Key cash, therefore, is a feature of lease negotiations in a mobile-home park.

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