Key Money

What is Key Money?

Key disclosure refers to the seller’s obligation to disclose material facts or known defects about a property that could affect a buyer’s decision to purchase.

Why Key Money Matters in Real Estate

In Canadian real estate, key money is generally discouraged and in many provinces may be illegal unless explicitly permitted under tenancy law.

• Often paid upfront and separate from rent or deposit
• May be required for commercial or residential leases
• Can violate tenancy legislation depending on jurisdiction

Tenants should be cautious and review provincial laws before agreeing to pay key money. Landlords found demanding unauthorized payments can face legal penalties.

Understanding key money helps renters identify unethical practices and landlords ensure compliance with tenancy regulations.

Example of Key Money in Action

A landlord in a high-demand neighborhood asks for $2,000 in key money to prioritize the applicant over other interested tenants.

Key Takeaways

• Upfront payment to secure a lease.
• Often discouraged or illegal.
• Common in tight or rent-controlled markets.
• Not considered rent or damage deposit.
• May expose landlords to legal action.

Related Terms

• Security Deposit
• Lease Agreement
• Rental Application
• Residential Tenancies Act
• Landlord Responsibilities