What is Constructive Notice in Transfer of Property Act?

We are all aware that there are numerous illegal activities that take place in the real estate industry. Some of these include tiling faults, failure to complete projects on time, charging more than authorised, withholding certain project-related information, and selling the same flat to many buyers. Unfortunately, I was also trapped in one such fraud and I know a few more of my friends who have been a victim of similar frauds. So, if you are also planning to invest in a property, you must know what is constructive notice in Transfer of Property Act.

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The implementation of RERA, 2016, which provides a venue for clients to settle their concerns and the imposition of penalties and fines on developers and builders, helps to curb these malpractices. The Transfer of Property Act, 1882's Section 3 specifies the conditions in which someone is deemed to have knowledge of fact or notice.

Actual and constructive notice in Transfer of Property Act

Sections 39, 40, 41, 53, and 53(A) of the Transfer of Property Act all mention notice. The legal concept of notice describes the need for a disputing party to be aware of the legal process and to be aware of a fact that may influence their rights, obligations, and liabilities. A person may have constructive notice, actual notice, or notice attributable.

Actual Notice: A person is said to have received an actual notice of a fact when they have direct, express knowledge of it or receive an indication of it. Actual notice is when another party interested in the transaction expressly or formally notifies another party of a specific fact related to the transaction.

Constructive Notice: A person is said to have notice of a fact under Section 3 if, for his or her "gross negligence" or "willful abstention from undertaking an inquiry or search," they are unaware of a fact. In other words, facts that a person should have known but does not because of egregious negligence or willful omission constitute constructive notice.

Constructive notice in Transfer of Property Act

Constructive notice is therefore the knowledge of those facts that a court assumes a person has. He will be assumed to have known a specific fact related to the transfer transaction if the circumstances suggest that a reasonably prudent person should have known it.

Wilful abstention from enquiry or search: A beginning point, tip, or suspicion that would necessitate further investigation to ascertain the truth of a transaction is necessary for deliberate abstention. The court will presume that the transferee was aware of that fact if, in such circumstances, they neglect to inquire with the deceptive goal of remaining ignorant of the genuine situation.

Gross Negligence: Constructive notice is also applicable where the transferee should have been aware of a fact but isn't because of egregious carelessness. It denotes a level of carelessness that is "aggravated," which reveals a "mental indifference to obvious risks."

Therefore, constructive notice requires the transferee to exercise due diligence with regard to transactions connected to the transfer.

This is what is constructive notice in Transfer of Property Act.