Cash for Keys: When Your Tenant Wants to Sell You Their Lease

The Surprising Phone Call

A few years back, I got a call from a good tenant in one of my nicer units. He was halfway through a two-year lease, always paid on time, and never caused a fuss. So I was surprised when he said, “I’m willing to move out early if you buy me out of the rest of my lease.”

I’d heard of cash for keys before, but usually it was the landlord offering money to end a bad tenancy. Now the tenant was making the offer. It caught me off guard, and I had to think through why he’d want that and whether it made sense for me.

What Is a Leasehold Interest?

In simple terms, a lease isn’t just permission to live somewhere — it’s a legal right. When a tenant signs a lease, they get a “leasehold interest,” which is basically ownership of the right to use that property for a set period. It’s an asset. And like any asset, it can be bought, sold, or surrendered for a price.

In commercial real estate, tenants buy and sell leasehold interests all the time. Residential tenants do it less often, but the concept still applies. If your tenant signed a 12-month lease and still has six months left, they hold something of value — the right to stay there for six months. If you want that right back before the lease ends, you might have to pay for it.

Why Would a Tenant Offer to Sell You Their Lease?

There are a few reasons, and they’re usually practical:

• They want to move sooner. Maybe they found a new job, need a bigger place, or just want a change. They know breaking the lease could cost them, so they’re looking for a way out that doesn’t hurt their record.
• They’ve done the math. They might figure that if you can re-rent the unit at a higher rate quickly, you’ll come out ahead. So they’re asking for a piece of that upside to cover their moving costs.
• They’ve heard about cash for keys. Tenants talk. Especially in hot markets, tenants know landlords sometimes pay people to leave so they can raise rents or remodel. They’re just flipping the script and making the first move.

I’m not a lawyer, but in most places, a tenant who leaves before the lease is up might still owe rent until you find a new tenant, but that can be messy. This approach avoids all that friction.

Why You Might Say Yes

When that tenant called me, I looked at my numbers. He was paying $1,200 a month on a lease with six months left. I knew I could easily rent that same unit for $1,500 because the market had jumped. If I let him stay, I’d collect $7,200 over the next six months. If I bought him out, paid him, say, two months’ rent ($2,400), re-rented it in a month, I’d get five months at $1,500 = $7,500. I’d actually make a little more, and on top of that, I’d end up with a tenant paying a higher rate long-term.

But beyond the numbers, there’s the headache factor. No eviction, no small claims court, no vacancy while I chase a skip. Just a clean handover of the keys.

How I Handled It

I told him, “Let’s put it in writing.” We signed a mutual termination agreement. I paid him the agreed amount only after he was fully moved out, the unit was clean, and he handed over the keys. I always keep the money contingent on two things: the property being in good condition and the tenant actually leaving. Never pay before the unit is empty and inspected.

Also, I made sure the agreement said he was voluntarily surrendering his leasehold interest, and I documented everything. In some areas, you might need a specific legal form, so check your local laws or ask a real estate attorney. I’m not a lawyer and this isn’t legal advice — here’s what I would do, but check your local laws and talk to a qualified attorney first.

Is It Always a Good Deal?

Not always. If you’re in a soft market where you can’t re-rent quickly, or if the rent won’t cover your costs, you might be better off holding the tenant to the lease. Remember, you’re not obligated to accept. The tenant made an offer, and you can say no. The lease is a two-way contract. If they want to break it, they might owe you rent until the place is re-rented. But if you want to avoid the hassle and the math works, a lease buyout can be a clean exit for everyone.

The Bottom Line

If your tenant offers to sell you their leasehold interest, don’t dismiss it out of hand. Look at your market, run the numbers, and think about what’s best for your property long-term. It could be a win-win, or it could be a loss — but you won’t know until you do the math. And always get it in writing.

Disclaimer: I’m not a lawyer, and this isn’t legal or financial advice. Lease buyouts and early terminations are governed by state and local laws. Always consult a qualified professional before taking action.