Who is the individual that authorizes the agent to act on their behalf?

The term "Principal" refers to the individual who grants authority to another party, known as the agent, to act on their behalf. This relationship is fundamental in various contexts, including real estate transactions and title insurance.

In this scenario, the principal is the one who retains control over their affairs and decides to empower the agent to perform specific tasks or make decisions in their place, which can include negotiating terms or completing necessary documentation in the transaction process. The authority given by the principal creates a fiduciary relationship, where the agent is expected to act in the best interest of the principal.

The agent, on the other hand, is the individual acting under the authority provided by the principal. The insurer typically refers to the company providing the insurance coverage and does not have the same function as a principal in this context. Meanwhile, a third party usually indicates an outside entity involved in the transaction that is not directly connected to the principal-agent relationship. Understanding this dynamic is essential for anyone involved in real estate and title insurance practices.