Foreclosure happens when debtors do not pay the mortgage on a home they own, and their lending institution (normally, a bank) forces a sale of the residential or commercial property to cover the debt owed. A rental residential or commercial property foreclosure is a legal action versus the owner of the residential or commercial property. The bank that is owed the mortgage, or a private or business can buy the residential or commercial property in foreclosure.

Tenants might not understand that a foreclosure has actually been filed on the residential or commercial property they are renting. Even if they find that an ownership change is taking place due to the fact that of a foreclosure, tenants might get lost in the legal shuffle and not know how to pay rent or who to contact when there's a repair issue, which can put their housing at threat. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to assist safeguard tenants in this circumstance.

When Does the PFTA Apply?

The PFTA uses to a lot of renters when their landlords face foreclosure. The PFTA uses to all residential homes, including single units and multi-unit residential or commercial properties, and subsidized residential or commercial properties. And the law applies to renters with any kind of occupancy.

The PTFA does NOT apply to a tenant if:

- the tenant is the person whose name is on the mortgage (this is unusual, a lease is various than the mortgage).
- the renter is the spouse, moms and dad, or child of the individual whose name is on the mortgage.
- the rental agreement is not the outcome of an arm's length deal (example: the tenant and landlord had a personal, monetary, or organization relationship prior to entering into the lease).
- the rent is well listed below market rate, unless the rent is reduced because it is subsidized

How Do You Find out if a Foreclosure is Happening?

Below are three options for discovering out more information about whether a foreclosure has actually been submitted on the residential or commercial property you are living in.

1. Call your county Register of Deeds.
2. Use the Wisconsin Court's public online records (CCAP). Determine the legal name of the person or entity that owns the residential or commercial property. Your lease may have the right name of the individual who owns it, but another method to learn the legal name of the titleholder is to browse on your city assessor's office/online lookup. Use that details to browse on CCAP. Click "I concur" and after that plug in either the individual name of the owner (under "party name") or the company name of the organization that owns the residential or commercial property (under "company name"). The city assessor's site has various ways to identify the residential or commercial property (parcel number, legal description, street address), so utilize the assessor's info to comb through all that while considering what might be on CCAP.
3. Go to the Register of Deeds office at the City-County Building in Room 110, 210 Martin Luther King Jr. Blvd. Madison, WI. Staff must be able to help you identify if the residential or commercial property is in foreclosure.
4. The sheriff keeps records for upcoming sales on this page.

What Are My Rights as an Occupant After a Foreclosure?

The PFTA needs the brand-new owner (the owner who buys the residential or commercial property in the foreclosure) to offer the tenant with at least 90 days' notification before needing the renter to leave, or, if the lease term extends beyond 90 days, permit the tenant to remain in the system for the lease term.

If the new owner will be living in the residential or commercial property, the new owner can terminate the lease with 90 days' notice even if the lease term extends beyond 90 days.

Tenants with an Area 8 Housing Choice Voucher have additional rights under the PFTA. They may be able to remain in the system under the existing lease and the new owner is needed to continue the housing help payment agreement. Transfer of ownership after a foreclosure is bad cause for ending a Section 8 lease.

Foreclosure is not a legitimate factor for kicking out a tenant. But an occupant can be forced out if they don't pay lease or abide by the other requirements under the lease.

The proprietor continues to be accountable for repair work up until the residential or commercial property is offered in the foreclosure. Once offered, the new owner needs to is responsible for repair work and collecting lease. Within 10 days of becoming the new owner, the brand-new owner should supply to the tenant, in writing, the name and address of the individual responsible for collecting lease and making repairs.

Do I Still Need to Pay Rent?

Yes. If renters stop paying their lease on time while their property owner is facing foreclosure or after the foreclosure, the original or new owner might submit an expulsion.

Do I Pay Rent to My Landlord or the Bank?

Tenants are obligated to pay rent to the legal owner of their residential or commercial property unless a court has actually stated that the tenant ought to pay lease to another person (for example, a "receiver"). Tenants are accountable for knowing who this is and paying lease to the best individual. The easiest way for a tenant to figure out a residential or commercial property's current owner is to call their city assessor.

If there's a disagreement in between the bank and property manager or you are not sure who to pay, you can compose a letter to everyone included, consisting of the judge in charge of the foreclosure case, telling them how you are paying lease (or information your efforts to pay lease) and to who, and why. You ought to include copies of any essential documents and keep a copy.

If you are unable to get in touch with the owner who you think you must be paying rent to, make sure to consist of that details in the letter and keep the rent owed in an account so that it can be paid in full when the owner or the court provides you the information on how to pay lease.

After Foreclosure, How Will I Know Who My New Landlord Is?

In Wisconsin, when a rental residential or commercial property changes owners, the brand-new owner has 10 days to inform renters in writing of the names and addresses of the individuals who will collect lease and are responsible for repairs and maintenance of the residential or commercial property. Wis. Stat. 704.09( 3 ), ATCP 134.04( 1 )( b).

If your property owner is foreclosed on, you will receive this letter after the "date of verification sale." This is the term for the date when the sale of a residential or commercial property in foreclosure is made last in court.

Can I Use My Security Deposit for Last Month's Rent?

No, not unless you and your proprietor get in into a composed arrangement that enables you to utilize your down payment for the last month's rent. If you don't have a written arrangement and keep your last month's lease, the property manager might submit an expulsion action against you.

When you move out, the person who legally owns the residential or commercial property should follow all the laws about down payment even if they didn't gather this cash from the old owner.

Can I Be Evicted During a Foreclosure?

While your proprietor's foreclosure isn't a legitimate factor to evict you, you can still be kicked out for non-payment of rent or breaching your lease.

Can I Move Before the Lease Ends or Stay in the Unit After the Foreclosure?

If you want to move before the 90-day duration expires or before your lease ends, you can call your property manager and ask if they will enter into a composed contract to equally end the lease early. Similarly, if you wish to remain in the system after the 90-day duration or your lease ends, you can contact the brand-new owner to ask about a renewal of your lease.

Can the Sheriff Force Me to Leave When I Haven't Received Any Notices?

After a residential or commercial property in foreclosure is offered, the court might not know that occupants are residing in the foreclosed residential or commercial property, and the proprietor doesn't provide the occupant any notification when they require them to leave the residential or commercial property.

After foreclosure, the court may assume the previous owner occupies the residential or commercial property. The new owner can ask for a "writ of help" to get rid of the previous owner. This is different from a "writ of restitution," which gets rid of tenants after a judgement of expulsion. When the sheriff gets here to eliminate the previous owner, they may discover the tenant instead. Tenants have different rights than the previous owner who had a foreclosure action submitted against them. Only a writ of restitution given by a judge or court commissioner after a judgment for expulsion authorizes a sheriff to get rid of a tenant.

You can discuss the scenario to the court, constable, and brand-new owner, and reveal them any essential files such as your lease and evidence of rent payments. You may likewise want to contact a lawyer.

Here is a detailed summary of the foreclosure procedure:

1. The property manager defaults on payment of a mortgage loan.
2. A foreclosure action is filed in court by the bank.
3. The property owner has actually a defined variety of days to states a defense against the foreclosure filing.
4. Once that period is over, the court decides whether to accept or decline the defenses to the foreclosure. If the court declines these defenses, they go into a judgment of foreclosure. NOTE: This is not the same thing as designating a brand-new owner.
5. After the judgment of foreclosure, the landlord begins a "redemption period" where they can pay back the quantity owed to the bank. During this time, the landlord may treat the default or offer the residential or commercial property, ending the foreclosure and enabling the proprietor to continue as owner. A redemption duration can be numerous months, depending on the type of foreclosure submitted. NOTE: During the redemption duration, the landlord still collects lease and is accountable for repair work.
6. Once the redemption period ends, if the property manager hasn't paid back the cash, there is a sheriff's sale where the residential or commercial property is sold to a new owner or (normally) to the bank that took legal action against for foreclosure.
7. Once a residential or commercial property is sold, a hearing is set up to verify the sale.
8. The verification of sale hearing occurs and, if the sale is verified, results in the "date of verification sale." The title of the home is transferred at the hearing. The new owner might be going to consent to a new lease, but that is not required.
9. The court may grant the new owner a "writ of assistance" in the verification of sale hearing in action # 8, which will enable the brand-new owner to go to the constable and have the previous owner eliminated if they live in the residential or commercial property.

More in-depth info about foreclosure and the PFTA is offered in this Wisconsin Bar post.

-- * The Tenant Resource Center is not a law practice and our personnel and volunteers do not supply legal advice. Nothing on our website or other materials makes up legal recommendations. For aid finding a lawyer, have a look at our attorney referral list.