What is meant by constructive notice?

Constructive notice refers to the legal concept that information is considered to be known by an individual if it is publicly recorded, even if the individual has not actually seen or been informed of it. This means that when something is recorded in public records, such as property titles, liens, or deeds, it is deemed that anyone interested in that property has the responsibility to inspect those records.

The significance of constructive notice is that it protects the rights of parties who have publicly recorded interests in property. It establishes a legal acknowledgment that others are aware of those interests, regardless of their actual knowledge. This principle is foundational in real estate transactions, where buyers or lenders are expected to perform due diligence by checking public records to ensure that they are fully informed about any claims or encumbrances on the property.

The other options explain different types of knowledge or communication. Knowledge gained through personal interaction involves direct communication, while an unwritten understanding between parties refers to informal agreements not documented in records. Disclosure given verbally before closing indicates communication happening in person rather than through public documentation. Constructive notice, on the other hand, clearly focuses on the legal obligations stemming from recorded information.