DEFINITION of 'Key Money'

A payment made to a building owner, manager or landlord by a potential tenant in an attempt to secure a desired tenancy. Key money can be considered a type of deposit on a housing unit such as an apartment unit.


Key money also refers to a security deposit paid by a lessor or a lessee for a leased property.

BREAKING DOWN 'Key Money'

Key money is paid by a prospective tenant to a property owner or manager in the hopes of securing a rental contract in a particular property. In certain circumstances, key money can be considered a bribe to ensure that a property coming up for rent is secured by the payer of the key money, and as such, the transaction is conducted in an unofficial manner.

RELATED TERMS
  1. Lease

    A legal document outlining the terms under which one party agrees ...
  2. Lessee

    The person who rents land or property from a lessor. The lessee ...
  3. Tenancy At Sufferance

    An agreement in which a property renter is permitted to live ...
  4. Lessor

    The owner of an asset that is leased under an agreement to the ...
  5. Tenancy At Will

    A tenancy agreement where a tenant occupies property with the ...
  6. Tenancy In Common

    A way for two or more people to have equal ownership interests ...
Related Articles
  1. Personal Finance

    Who is a Lessor?

    A lessor is the owner of an asset that is leased.
  2. Investing

    How Does a Lease Work?

    A lease is an agreement between two parties where the lessor owns property that it allows the lessee to use pursuant to terms of the agreement.
  3. Retirement

    Could Being a Landlord Pay for Your Retirement?

    If you have the money to buy them and the energy to run them – or the funds to pay a good manager – rental properties can help pay for your retirement.
  4. Managing Wealth

    4 Things Landlords Aren't Allowed To Do

    Whether you're a landlord or a tenant, you need to know the rules.
  5. Financial Advisor

    3 Things to Consider When Renting By the Room

    Although renting by the room can increase returns on rental property, it does come with a few caveats.
  6. Managing Wealth

    Nonfreehold Estates In Real Property

    If you have an interest in real estate, read on to find out which type of property you have.
  7. Investing

    How Does a Modified Gross Lease Work?

    A modified gross lease is a rental agreement where, in addition to their rent, tenants pay a share of other costs associated with the property.
  8. Managing Wealth

    Millennials Guide: How To Read a Lease

    Everything you need to know before you rent a home.
RELATED FAQS
  1. What are the differences between single, double and triple-net leases?

    Learn the ins and outs of net lease agreements, including the key differences between single net, double net and triple net ... Read Answer >>
  2. What are the three "nets" of an NNN lease?

    Learn what the three "nets" are in an NNN lease and how they affect the responsibilities of both landlord and tenant in a ... Read Answer >>
  3. Do landlords set up escrow accounts for their tenants' security deposits?

    Learn when and why landlords place rental property security deposits in separate escrow accounts to make sure the money is ... Read Answer >>
  4. What kinds of real estate transactions use triple net (NNN) leases?

    Learn how a net-net-net or triple net lease works and why it is popular in commercial real estate transactions. It is also ... Read Answer >>
  5. How does the value of the real estate impact the value of a triple net (NNN) lease?

    Understand how the value of the real estate involved in a triple-net lease impacts the value of the lease both positively ... Read Answer >>
Hot Definitions
  1. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  2. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  3. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  4. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  5. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
  6. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
Trading Center