Question 1

What is hand money in real estate?

Accepted Answer

Hand money in real estate is the deposit a buyer pays when they sign an agreement of sale in Pennsylvania.
It shows the seller the buyer is serious, and gives both parties a financial stake in seeing the deal through. In Pennsylvania, hand money typically runs between 1% and 3% of the purchase price, which means several thousand dollars on most home sales. The funds are held by a neutral third party (an escrow agent) until closing. In other states, this deposit is called earnest money. In Pennsylvania, hand money is the term you are most likely to see in your agreement of sale.

Question 2

Can you get your hand money back?

Accepted Answer

Whether you can get your hand money back depends on the terms of your agreement of sale and why the deal fell apart.
Pennsylvania agreements of sale include contingencies: clauses that let a buyer exit under specific conditions, like a failed inspection or a financing problem. Exit under a valid contingency, and you are generally entitled to a refund. Exit outside those conditions, and the seller may have a claim to keep it. When both sides disagree on which applies, mediation is the fastest way to reach an answer without going to court.

Question 3

What voids an earnest money agreement?

Accepted Answer

An earnest money agreement can be affected by several things, including mutual consent to cancel the deal, a material breach by either party, failure of an agreed contingency, or issues with the agreement of sale itself.
If you believe something has voided the arrangement, or the other side is claiming it has, a mediator can help both parties work through what the agreement actually says, without a judge deciding for them.

Question 4

Who holds the hand money when a dispute occurs?

Accepted Answer

When a dispute occurs, the hand money is still held by the escrow agent named in your agreement of sale (usually the listing broker, title company, or an attorney).
The escrow holder cannot release the funds until both parties agree in writing or a court orders otherwise. This is why disputes drag on: the money is frozen, and neither side can move. Mediation breaks that deadlock by helping both parties reach a written agreement that lets the escrow holder release the funds.

Question 5

Who decides if hand money is returned?

Accepted Answer

No single person automatically decides if hand money is returned. Not the escrow holder. Not the mediator.
Ultimately, the parties decide together, by reaching a direct agreement, through mediation, or (if everything else fails) through arbitration or a court order. Mediation is the fastest and most private way to reach that decision.

Question 6

Do I have to mediate a hand money dispute in Pennsylvania?

Accepted Answer

If you signed a standard Pennsylvania agreement of sale, you are required to attempt mediation before either party can pursue litigation.
This obligation is set out in Paragraph 27 of the PAR (Pennsylvania Association of Realtors®) agreement of sale. Most buyers and sellers sign it without realizing it is there. If your agreement includes Paragraph 27, mediation is not optional: it is a required first step before anyone can take the matter to court.

Question 7

How long does a hand money dispute take to resolve?

Accepted Answer

How long a hand money dispute takes to resolve depends on how it is handled.
Court proceedings can take months or longer. Mediation is much faster. Many hand money disputes in Pennsylvania are addressed in a single day. The exact timeline depends on how quickly both parties are ready to participate and how complex the underlying disagreement is.

Question 8

How long can a seller hold hand money?

Accepted Answer

A seller cannot hold hand money. The funds are held by the escrow agent named in your agreement of sale, not the seller.
The escrow agent cannot release the funds without written agreement from both parties or a court directive. That means the money can stay frozen for as long as the dispute remains unresolved. If you are in this situation now, mediation is usually the most direct path to getting the funds released.

Question 9

Who keeps the hand money if the deal falls through?

Accepted Answer

Who keeps the hand money if the deal falls through depends on why it fell through and what the agreement of sale says.
Buyer exercised a valid contingency: generally entitled to a refund. Buyer walked away without a valid contingency: seller may be entitled to keep it as liquidated damages. Seller backed out: buyer may be entitled to a refund and potentially additional remedies. When both sides disagree on which of those applies, mediation gives both parties a structured, private way to work toward an agreement.

Question 10

What happens if mediation fails?

Accepted Answer

If mediation does not produce an agreement, both parties are free to pursue other options, including arbitration or litigation.
Nothing said or offered during mediation can be used against either party in court. Mediation is confidential by design. Most hand money disputes do not reach that point, but if they do, participating in mediation has not closed any doors. The matter simply moves forward through other channels.

Hand Money Dispute Mediation in Pennsylvania

What Is Hand Money in Real Estate?

What Causes Hand Money Disputes?

More on Hand Money Disputes

When Hand Money Disputes Require Mediation

Have Questions About Your Real Estate Dispute?

How Hand Money Dispute Mediation Works

Step 1: Submit your mediation request

Step 2: We contact both parties

Step 3: Both sides prepare

Step 4: The mediation takes place

Step 5: Agreement is documented

Step 6: No agreement? No doors closed

How Real Estate Mediation Service Can Help You

Common Questions About Hand Money Disputes in Pennsylvania