Who is referred to as the principal in an agency relationship?

In an agency relationship, the principal is the person who grants authority to another (the agent) to act on their behalf. In this context, the client is the principal because they are the party who engages the agent to perform specific tasks, like buying or selling property. The agent, on the other hand, is the person employed by the principal to carry out these activities.

The term "principal" signifies that this person has the ultimate decision-making authority in the relationship, and their interests are to be represented by the agent. Therefore, when considering the dynamics of agency in real estate, the client (the principal) is key, as they are the one for whom the agent is acting.

Understanding the roles within this relationship is crucial because it influences how the agent is expected to conduct themselves, the duties they owe to the principal, and the overall legal obligations within real estate transactions. This is foundational knowledge in real estate practice and agency law. Other terms such as agent, broker, and seller do not encapsulate this role of grantor of authority as the principal does.