Key Money Law and Legal Definition

Key money refers to a payment as rent or security which is required from a new tenant in exchange for a key to the leased property. It is also a payment made by a prospective tenant to a landlord to increase the chance of obtaining a lease in an area where there is a housing shortage. Key money is also referred to as a legal transaction. In landlord-tenant transactions, key money is generally considered an up-front bonus payment made by the tenant in order to secure the tenancy. However, key money is also referred to as an illegal bribe that violates housing laws.

The following is a case law defining key money:

Key money, includes any amount of money a landlord demands or requires in order to initiate, continue, or renew a lease, including money denominated as rent.[Edamerica, Inc. v. Superior Court, 114 Cal. App. 4th 819 (Cal. App. 2d Dist. 2003)].