What does the "law of agency" govern?

The law of agency governs the relationship between agents and their principals, establishing how agents must act on behalf of their principals. In real estate, this relationship is crucial, as it defines the rights and responsibilities of both parties. For instance, an agent must act in the best interest of their principal, provide them with loyalty, disclose important information, and follow lawful instructions. This framework ensures that the agent operates ethically and effectively, fostering trust and clear communication in transactions.

The other options, while relevant to real estate, do not pertain specifically to the law of agency. The process of property appraisal, the mechanics of property taxation, and the rules for land usage each involve different legal principles and regulations distinct from the fiduciary nature of the agency relationship. Thus, the law of agency specifically focuses on how agents and their clients interact, making it pivotal for understanding real estate practices.