Who is considered a principal in a real estate transaction?

In a real estate transaction, the principal is defined as any major party that authorizes another individual, known as an agent, to act on their behalf. This encompasses not only the seller of the property but also the buyer and any other parties that engage an agent to facilitate the transaction.

The principal has the legal authority to make decisions regarding the transaction, and the agent operates under the principal's direction to perform specific tasks, such as negotiations or facilitating the sale. This relationship is fundamental to the law of agency, which establishes how agents operate and the duties they owe to their principals.

Understanding who can be a principal in such transactions is critical, as it ensures that all parties involved know their rights and responsibilities. It emphasizes the importance of having a clear relationship between agent and principal, which is vital for effective communication and legal accountability within the transaction.