Define: Hand Money

Hand money, also known as earnest money or a deposit, is a sum of money paid by a buyer to a seller as a sign of good faith and commitment to a transaction.

The refundability of hand money depends on the terms agreed upon between the buyer and seller. Generally, if the buyer fails to fulfill their obligations as outlined in the contract, the hand money may be forfeited. However, if the seller breaches the contract, the hand money is typically returned to the buyer.

The amount of hand money required can vary depending on the specific transaction and negotiation between the parties involved. It is usually a percentage of the total purchase price, often ranging from 1% to 5%.

Yes, hand money can be paid in various forms, including cash, certified checks, or wire transfers. The form of payment is typically specified in the purchase agreement.

Hand money is typically paid at the time of signing the purchase agreement or shortly thereafter. The specific timing is usually outlined in the contract.

Yes, hand money is often credited towards the purchase price of the property. This means that the buyer will deduct the amount of hand money paid from the total amount due at closing.

If the buyer decides to back out of the transaction without a valid reason, they may forfeit the hand money. However, if there are legitimate reasons, such as failure to secure financing or discovering significant defects in the property, the hand money may be returned to the buyer.

Whether the seller can keep the hand money in case of the buyer’s failure to secure financing depends on the terms agreed upon in the purchase agreement. If the agreement specifies that the transaction is contingent upon the buyer obtaining financing, and they are unable to do so, the hand money is typically returned to the buyer.

Hand money is generally held in escrow by a neutral third party until the closing of the transaction. It cannot be used for any other purpose unless explicitly agreed upon by both parties.

If the transaction falls through due to reasons beyond the buyer’s control, such as the seller’s breach of contract, the hand money is typically returned to the buyer. However, if the buyer is at fault, the hand money may be forfeited to the seller. The specific circumstances and terms of the purchase agreement will determine the outcome.