{"id":15439,"date":"2022-04-22T15:00:00","date_gmt":"2022-04-22T19:00:00","guid":{"rendered":"https:\/\/www.renthop.com\/content-manager\/?p=15439"},"modified":"2023-07-22T11:36:30","modified_gmt":"2023-07-22T15:36:30","slug":"the-definition-and-legality-of-key-money","status":"publish","type":"post","link":"https:\/\/www.renthop.com\/blog\/the-definition-and-legality-of-key-money\/","title":{"rendered":"The Definition and Legality of Key Money"},"content":{"rendered":"\r\n

Trying to rent a home in New York City<\/a> can be a hassle. You\u2019ll need to find a borough to live in, browse through the spaces available, make sure what you\u2019re signing is not a scam, and dread the looming rent surges in an almost-post-COVID<\/a> world.\u00a0Many looking to rent in NYC are probably familiar with a broker\u2019s fee<\/a>, which is a commission a real estate broker is paid to provide their services. These services include finding tenants to live at a place on behalf of a landlord or overseeing the closing. The fee that is charged can range from one month of the rent to 15% of the annual rent, which can become pretty hefty.\u00a0But we\u2019re not talking about legal fees that renters are required to pay. A term that probably doesn\u2019t come up much anymore is “key money.” So, what is key money?<\/p>\r\n\r\n\r\n\r\n\r\n\r\n

What is Key Money?<\/h2>\r\n\r\n\r\n\r\n

Key money is when a landlord<\/a> asks for extra money on top of what you are paying to secure an apartment. These transactions are usually a hush-hush deal between the landlord and the tenant. In some ways, it\u2019s like a deposit that a renter would have to put down to secure their unit. However, it can be considered a bribe and, therefore not legal. This practice is illegal because only licensed real estate brokers<\/a> can collect a commission for a rental. Landlords usually verbally demand key money, and it’s is hard to challenge without witnesses or evidence.\u00a0<\/p>\r\n\r\n\r\n\r\n

But why do some people even agree to this kind of bribery? Normally, key money is served as a settlement for a lease that holds a particular value. If a rental was available for a good deal, the management might take advantage of that and ask a potential tenant for key money up front in order to guarantee their spot for the apartment. While this kind of bribery definitely still happens throughout NYC, it has become less frequent and even less reported, unless there is some sort of argument between the landlord and tenant. Today, this practice is most commonly seen in the restaurant business. Business owners will try to sell off the remainder of their lease in order to redeem some of their investment.\u00a0<\/p>\r\n\r\n\r\n\r\n

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