FINA 210 Lecture 4: Lesson 4 Notes
8 Feb 2017
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Distinguish between the duties and liabilities of principals and agents. After completing this lesson you will be able to: The legal environment in real estate transactions includes two parties: principal and agent. They are governed by the law of agency. Definition: the law of agency entails rules set forth when another individual is doing something on one"s behalf. In real estate, a principle hires an agent to sell his house, or a principal can hire an agent to purchase a house on his behalf. Agency is created when one person is given the right to act on behalf of, or under the control of, another. The law of agency concerns the legal rights, duties, and liabilities of the principal (p), the agent (a) and a third party (tp), based on contracts and/or the relationship between them. The person for whom an agent acts is a principal; therefore, in signing a listing agreement an owner becomes a principal.
