What is the primary purpose of the Law of Agency in real estate transactions?

The primary purpose of the Law of Agency in real estate transactions is to establish the legal relationship between a principal and an agent. In this context, the principal is typically the client (which could be a buyer or seller) who hires an agent to act on their behalf in a real estate transaction. The Law of Agency outlines the duties, responsibilities, and authority that agents have when representing their clients.

This relationship is foundational as it determines how agents are expected to conduct themselves, including their fiduciary duties, such as loyalty, disclosure, confidentiality, and accounting. These aspects ensure that agents act in the best interests of their principals, promoting trust and effectiveness in real estate dealings.

Understanding this relationship is crucial for all parties involved in a transaction because it defines not only what agents can do on behalf of their clients but also the legal implications of those actions. Therefore, knowing the legal framework that governs the agent-principal relationship is essential for both agents and clients in the real estate industry.