The original amount of money borrowed in a loan, excluding interest.
Why Principal matters on the exam
This term belongs to Real Estate Math. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Principal
Every Freehold question shows why the right answer is right — and cites its source.
Which of the following is NOT a fiduciary duty an agent owes to a principal?
Loyalty to the principal's interests
Guaranteeing the principal a minimum sale price
Accounting for all funds received
Disclosure of material facts
Show answer & explanation
Guaranteeing the principal a minimum sale price — Fiduciary duties include obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care (OLD CAR). An agent never guarantees results such as a minimum price — only faithful representation of the principal's interests.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
A broker hired under a listing agreement to sell one property is typically what kind of agent?
A universal agent
A general agent
A special agent
A designated principal
Show answer & explanation
A special agent — A special agent is authorized to perform one specific transaction for the principal, which is exactly what a listing agreement creates. A general agent handles a range of ongoing matters, like a property manager.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
Which event terminates an agency relationship by operation of law?
The death of the principal
The agent presenting a full-price offer
A verbal disagreement about marketing
The buyer requesting repairs
Show answer & explanation
The death of the principal — Agency terminates by operation of law upon the death or incapacity of either party, destruction of the property, or bankruptcy affecting the transaction. A full-price offer alone does not end the agency.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
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