Cash for Keys: Don’t Get Locked Out of Compliance in CaliforniA

For the wholesale real estate clients I advise day-to-day, Cash for Keys agreements are a frequent topic. Knowing the ins and outs of these agreements in California is important, especially when it comes to whether a real estate license is required.

Under Section 10131 of the California Business and Professions Code, anyone actively soliciting or negotiating Cash for Keys agreements on behalf of an owner, lender, or servicer must be a licensed real estate broker or a supervised real estate sales agent. Without the proper licensure, negotiating or facilitating these agreements risks not only regulatory issues but also the possibility of rendering the Cash for Keys agreement unenforceable.

But here’s the key distinction that matters: If someone is simply handling the exchange of a check for keys—no negotiations, just the basics—that’s generally considered ministerial and doesn’t necessarily require a license. This line between negotiation and ministerial work is paramount for wholesalers aiming to stay compliant.

Also, keep in mind those pesky local regulations. In many California cities and counties, specific renter relocation assistance guidelines apply, particularly in rent-controlled or tenant-friendly areas. Drafting Cash for Keys agreements to comply with these local rules—and including the necessary notices—ensures your agreements are solid and payment terms enforceable, protecting everyone involved.

If you need help navigating these requirements, feel free to reach out. Our office is here to draft these agreements and make the process smooth and compliant so you can handle Cash for Keys with confidence and avoid any legal missteps.