Question 26

Constructive notice occurs when a new owner records the deed.

Constructive notice is established when a new owner records the deed, thereby providing public notice of their ownership. This act ensures that the ownership is legally recognized and can be relied upon by third parties.

A) new owner records the deed.

This option is correct because recording a deed is a formal action that publicly documents ownership of the property. Once recorded, it provides constructive notice to the world, meaning that anyone interested in the property is presumed to have knowledge of the ownership.

B) title company does a title search.

This option is incorrect because a title search conducted by a title company is a means of discovering existing claims or interests in a property, but it does not constitute constructive notice. It is an investigative process rather than an act of public declaration.

C) property owner finds a squatter living on his property.

This option is incorrect as finding a squatter does not create constructive notice. While it may indicate an issue with possession, it does not serve as a public declaration of ownership or interest in the property.

D) potential buyer learns the person in possession is a tenant.

This option is incorrect because simply learning about a tenant's presence does not provide constructive notice. Constructive notice requires a formal and public act, such as recording a deed, rather than informal awareness of tenant status.

Conclusion

The correct answer is definitively A, as recording a deed is the key action that establishes constructive notice in real estate. All other options fail to meet the criteria for constructive notice, as they do not involve the formal recording of ownership, which is essential for providing legal notice to third parties.