key money


Definition of key money

1 British : a payment required of a tenant especially of an apartment on taking possession of the key
2 : a bribe paid by a prospective tenant in order to obtain housing the key money for an average studio in Paris is in the neighborhood of one thousand dollars— Paul Bowles

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More Definitions for key money

key money


Financial Definition of key money

What It Is

Key money is money paid to a landlord or property owner in order to reserve a spot as a tenant on the property.

How It Works

Let's say Company XYZ is a restaurant firm that wants to open a location in the new ABC outdoor mall. The mall is under construction, but Company XYZ likes the location and the demographics of the surrounding population, so it writes a $5,000 check to the ABC landlord. This "gets the keys" and reserves a spot for Company XYZ.

Why It Matters

Key money is essentially a security deposit, but in many cases it is a payment to persuade the landlord to rent property to a tenant. For this reason, many people consider key money to be pretty much a bribe.

Source: Investing Answers

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