Home > Denial is the Key To making money with Real Estate

When Renting To Tenants key Money will pay your bills and make it hard for them to fight you in court because it is near untracable. Key money is used differently in different parts of the world and sometimes means money paid to an existing tenant who assigns a lease to a new tenant where the rent is below market. In other parts of the world it is used synonymously with security deposits.

In the United States and the United Kingdom, it is illegal for landlords to require key money. A cash payment of key money may be required in those parts of North America with strict rent controls, most notably New York City. Because it is paid in cash, it is very difficult to trace and usually impossible to prove in court.

In France it is the norm that a tenant that assigns a lease is paid an amount for a lease that is below market. The Capitalization factor is financial and strategic, depending on cost of money, importance of the site to the taker and the location of the site. The ratio used goes from 0 (poor locations) to 12 (top locations e.g. Champs Elysées). Remaining number of years of the contract has little/no impact unless it falls under the legal provision of "déplafonnement du loyer", meaning the owner is automatically legally allowed to ask for a new rent irrespective of the rent paid so far :

It is also common in many countries to require 'Key Money' in the form of a security deposit. In the United States, for example, it is common for a landlord to require the equivalent of one or two months rent as a security deposit to offset delinquent rent payments or damage to the property during occupancy. This deposit is held in escrow and is refunded when the tenant moves out, less any repair costs. It is common for landlords to take some or all of this deposit and claim spurious costs for nonexistent repairs. Don't be the victim of Tenants always require key money and if a court appearance is needed simple deny it because no one can prove you ever accepted it.