Key Money
Key Money is a real estate term investors use to assess closing certainty, enforceability, tenant risk, title risk, and whether the investor can actually get the asset/control promised in the spreadsheet.
Why it matters
Key Money matters because it changes closing certainty, enforceability, tenant risk, title risk, and whether the investor can actually get the asset/control promised in the spreadsheet. The mistake is treating it as paperwork when it is really a deal constraint.
Worked example
An investor reviewing a Canadian property tags key money as a diligence item, links it to source documents, and reruns the model if the answer changes purchase price, closing certainty, rent, financing, capex, or exit value.
How investors read it
Use key money as a decision filter: if it cannot be verified, priced, insured, financed, or managed, the right move is a lower offer, stronger condition, larger reserve, or a walk-away.
Common mistakes
- · Treating a legal, tax, lending, municipal, or operating constraint as a small admin item.
- · Using broker, seller, or contractor assumptions without source documents and date-stamped rules.
- · Ignoring timing, reserves, professional advice, and downside scenarios because the base-case spreadsheet looks good.
Educational Canadian investor content only. Verify current municipal, provincial, federal, lender, insurer, tax, accounting, and legal rules before relying on it in a transaction.