A cash for keys agreement is a voluntary deal where a landlord pays a tenant a sum of money to move out of a rental unit. Both sides sign the agreement, the tenant vacates by an agreed date, and the landlord regains possession without going through the Landlord and Tenant Board.
Used correctly, this approach saves landlords months of waiting for a hearing and saves tenants from an eviction record. Used incorrectly, it can expose landlords to harassment claims and tenants to deals they later regret. The Residential Tenancies Act, 2006 (RTA) sets the rules, and a few rules trip people up most often.
This guide breaks down how cash for keys agreements work in Ontario, what the law requires, how much to offer, what to put in writing, and the mistakes that cost people money.
What Is a Cash for Keys Agreement
A cash for keys agreement is a private, voluntary deal between an Ontario landlord and tenant to end a tenancy in exchange for money. The tenant agrees to move out by a specific date. The landlord agrees to pay a specific amount. Both sides sign, and the tenancy ends without a Landlord and Tenant Board (LTB) hearing.
The standard way to formalize the deal is the Landlord and Tenant Board Form N11, Agreement to End the Tenancy. The N11 records the agreed move out date and ends the tenancy by mutual consent under section 77 of the Residential Tenancies Act, 2006. The payment terms typically sit in a side agreement so that both sides have a clear record of what changed hands.
The tenant has no obligation to accept. They can refuse, negotiate, or walk away from the conversation. A landlord who pushes too hard crosses into harassment territory, which the RTA prohibits.
As Demet Altunbulakli, founding lawyer at Insight Law Professional Corporation, explains it, “A cash for keys offer only works when the tenant feels free to say no. The moment the conversation feels like pressure, you have stepped from a voluntary deal into a legal problem.”
Is Cash for Keys Legal in Ontario
Yes. Cash for keys agreements are fully legal in Ontario when both sides enter the deal freely. The arrangement is not specifically named in the RTA, but the Act recognizes that landlords and tenants can mutually agree to end a tenancy at any time under section 37.
Three rules govern every cash for keys deal in Ontario.
Voluntary consent. The tenant must agree freely. No pressure, no threats, no manipulation. A signed N11 form obtained under duress is not legally binding, and the tenant can apply to the LTB to set it aside.
No harassment. Section 23 of the RTA states that a landlord shall not harass, obstruct, coerce, threaten, or interfere with a tenant. Aggressive demands to leave, repeated visits, or implied threats about future actions can give the tenant grounds to file an Application About Tenant Rights (Form T2) with the LTB.
No circumvention of mandatory notice rules. A landlord cannot use a cash for keys offer to skip required notice periods or compensation under sections 48, 49, 50, 52, and 48.1 of the RTA. The tenant always has the option to refuse the deal and require the landlord to follow the formal process.
The penalties for getting this wrong are steep. Under section 238 of the RTA, an individual landlord convicted of an offence (including bad faith eviction or harassment) can face a fine of up to $50,000. A corporation can face a fine of up to $250,000. A tenant can also win up to 12 months of rent in a bad faith eviction case under section 57. For the full list of offences, see Ontario’s rental housing offences page.
When Landlords Use Cash for Keys
Landlords typically consider a cash for keys offer in these situations.
The landlord or a family member plans to move in. This is the most common scenario. The formal route requires a Form N12 with at least 60 days notice and one month of rent compensation under section 48.1. A cash for keys deal can close out the tenancy faster, but the tenant can always refuse and require the N12 process.
The property has been sold and the buyer wants vacant possession. The purchaser can serve an N12 only if the property has three or fewer residential units and the buyer (or qualifying family) genuinely intends to occupy. Where the buyer is a corporation, an N12 for purchaser’s own use is not valid. A cash for keys offer can give the seller more flexibility on closing timing.
Major renovations or demolition are planned. The formal route is Form N13 under section 50, which requires 120 days notice and compensation under section 52 (three months rent if the residential complex has five or more units, one month if fewer than five). A cash for keys deal can speed this up.
Rent arrears or ongoing conflict. When both sides see the relationship is over, a clean financial settlement often works better than an eviction battle. The tenant gets a fresh start, the landlord gets the unit back, and the LTB backlog is avoided. For arrears situations, the formal alternative is a Form N4 under section 59.
The landlord wants to sell and re list at market rent. This is the most risky scenario and the one tenants should scrutinize hardest. Re renting at higher rates after evicting the previous tenant under false pretenses is the textbook example of bad faith eviction.
How Much Should You Offer
There is no statutory amount for cash for keys deals in Ontario. The market reality is that offers tend to fall between one and six months of rent, depending on the circumstances.
A few factors drive the negotiation.
The statutory minimum the landlord would otherwise pay. Under section 48.1, the N12 path requires one month of rent. Under section 52, the N13 path requires up to three months of rent. Most tenants know the formal numbers, so the offer needs to beat them to make sense.
Length of tenancy. A tenant who has lived in the unit for 10 years has deeper roots and higher moving costs than a tenant of 6 months. Long term tenants also often pay below market rent, which means relocating to comparable housing will cost significantly more.
The gap between current rent and market rent. This is the single biggest factor in negotiations. If the tenant pays $1,800 and the market rate for a similar unit is $2,800, the tenant faces a $12,000 per year jump. Many landlords offer 6 to 12 months of the rent gap as part of the package.
Speed and certainty the landlord needs. A landlord on a tight closing timeline pays more for fast, guaranteed cooperation than one with months to spare.
Tenant circumstances. Disability, school age children, low income, or limited rental options can affect both the moving timeline and what is fair compensation.
Useful add ons besides cash include moving cost reimbursement, paid professional movers, an extended move out window, a positive landlord reference, and a release from any outstanding rent or damage claims.
How to Put the Agreement in Writing
A handshake deal will fail you at the worst possible moment. The agreement needs to be in writing and signed by both parties before any money changes hands.
The combination most Ontario lawyers use is the Form N11 plus a side written agreement.
The Form N11 records that both sides agree to end the tenancy on a specific date. It must be signed by the landlord and every tenant named on the lease. After signing, the landlord has 30 days from the termination date to file a Form L3 with the LTB if the tenant does not vacate.
The side agreement should include the following.
The names of all parties and the rental unit address. The total amount the landlord will pay, broken down (cash, last month’s rent application, moving expenses, etc.). The exact payment schedule (some deals split payment between signing and key handover). The agreed move out date and time. A confirmation that the tenant is leaving voluntarily and not under pressure. Confirmation that the unit will be left in reasonable condition (define what that means). A mutual release of all claims related to the tenancy. Statements that each party has had the chance to consult independent legal advice.
Keep proof of payment. If the deal includes cash, get a signed receipt. If you pay by e transfer or cheque, save the bank record. If the tenant later disputes that they received the money, your records are your only defence.
Benefits and Risks for Both Sides
Landlord benefits. Avoid the months of LTB hearing backlog. Avoid legal fees and lost rent during the process. Guarantee a move out date. Minimize the risk of property damage from a hostile tenant. Keep the conversation private rather than entering the LTB’s public record.
Landlord risks. Overpaying when a tenant would have left for less. The tenant accepting the money and then refusing to leave (this is why payment should be tied to key handover). A poorly drafted agreement being challenged later as obtained under duress. Stepping over the harassment line and facing a T2 application from the tenant.
Tenant benefits. A financial cushion to cover moving costs and the rent gap at a new unit. A clean record with no eviction on file. A flexible move out timeline negotiated to fit the tenant’s life. Avoiding the stress of an LTB hearing.
Tenant risks. Signing for too little, then realizing comparable units are far more expensive. Waiving rights the tenant didn’t realize they had (such as the right to compensation if the N12 plan was never genuine). Misunderstanding the move out date and exposure to an eviction order later.
Cash for Keys vs Formal Eviction
| Issue | Cash for Keys | Formal Eviction |
| Timeline | 2 to 6 weeks typical | 6 to 18 months including hearing backlog |
| Notice required | None, mutual agreement | 60 to 120 days depending on reason |
| Compensation set by law | No, fully negotiated | Yes, under sections 48.1 and 52 of the RTA |
| Tenant consent | Required | Not required |
| LTB involvement | Optional, only if tenant breaches | Required, landlord must apply with Form L2 |
| Privacy | Private agreement | Public LTB record |
| Risk of bad faith claim | Low if properly documented | High if landlord re rents at higher price |
| Form used | N11 plus side agreement | N12, N13, or N4 plus L2 |
| Cost to landlord | Higher direct payment | Lower payment plus legal fees and lost rent |
| Eviction record for tenant | None | Yes, can affect future rentals |
Mistakes That Cost Landlords and Tenants Money
Landlord pressures the tenant. Repeated calls, showing up unannounced, threatening to “make life difficult,” or hinting at legal action turn a voluntary deal into harassment. Section 23 of the RTA gives the tenant a clear path to file Form T2 and recover damages.
Verbal agreements. Money changes hands, the tenant changes their mind, and now the landlord has no paper trail. Get every term in writing before any payment.
No proof of payment. Cash with no receipt is the worst combination. Always pay by traceable method (e transfer or cheque) or get a signed receipt.
Failing to sign Form N11. Without the N11, the tenancy has not technically ended under the RTA. If the tenant changes their mind, the landlord has nothing to file with the LTB.
Tenant signs without legal advice. Tenants often discover after signing that they could have negotiated double or that they were entitled to mandatory compensation the landlord did not disclose. Independent legal advice is cheap insurance.
Using cash for keys to avoid mandatory N12 or N13 compensation. A landlord who serves an N12 and then offers a small cash for keys to avoid paying the one month statutory compensation under section 48.1 is on shaky ground. The tenant can usually negotiate higher, and an LTB will scrutinize the arrangement closely.
Re renting too quickly after a cash for keys deal tied to landlord’s own use. Even with a signed N11, if the tenant was led to believe the landlord or family was moving in, and the unit is then re rented at a higher rate, the former tenant can still file a Form T5 for bad faith eviction.
Frequently Asked Questions
Is a tenant required to accept a cash for keys offer in Ontario?
No. A cash for keys offer is voluntary on both sides. A tenant can refuse, counter offer, or end the conversation. If the landlord wants vacant possession, the landlord must follow the formal route under the RTA (Form N12, N13, or N4 depending on the reason).
How much is a fair cash for keys offer in Ontario?
Offers in Ontario typically range from one to six months of rent, with three to four months being common in the GTA. The right number depends on the gap between the tenant’s current rent and market rent, length of tenancy, urgency of the landlord’s timeline, and the statutory minimum the landlord would have to pay anyway (one month under section 48.1 for N12, up to three months under section 52 for N13).
What form should we use for a cash for keys agreement?
The Landlord and Tenant Board Form N11, Agreement to End the Tenancy, is the standard form. It records that both sides agree to end the tenancy on a specific date. Pair it with a side written agreement that sets out the payment terms, conditions, and a mutual release. Without the N11, the tenancy has not formally ended under the RTA.
Can a landlord use cash for keys to avoid paying N12 or N13 compensation?
In practice, landlords sometimes try, but this is risky. The tenant has the right to refuse the deal and require the landlord to follow the formal process with mandatory compensation. If the offer is unreasonably low compared to what the law would require, a court or the LTB may view the deal as obtained through pressure or misrepresentation. Tenants should always check what the formal route would pay before accepting a cash for keys offer.
What happens if the tenant takes the money but refuses to leave?
If the landlord has a signed Form N11 and the tenant does not vacate by the agreed termination date, the landlord can file a Form L3 application with the LTB within 30 days of the termination date. This is much faster than a contested eviction because the N11 is already proof of agreement. To reduce the risk, structure the deal so that final payment happens only when keys are handed over.
Can a tenant sue a landlord later for accepting a cash for keys deal?
Yes, in two main scenarios. First, if the tenant can show the agreement was obtained through harassment, coercion, or misrepresentation, the LTB can set it aside under section 77. Second, if the tenant accepted the deal because the landlord said they or a family member needed the unit, and the landlord then re rents the unit at a higher rate, the former tenant can file a Form T5 within one year for bad faith eviction. Penalties can include up to 12 months of rent in compensation plus relocation costs.
Final Word
A cash for keys agreement can be the cleanest way out of a stuck tenancy in Ontario. For landlords, it saves months of LTB delays. For tenants, it provides a financial bridge and a clean record. The framework only works when both sides treat it as what it actually is, a voluntary contract.
Get the deal in writing. Use Form N11. Document the payment. Avoid any conduct that could be called pressure. And before signing anything, talk to a lawyer who handles landlord and tenant matters under the Residential Tenancies Act, 2006.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
