Foreclosure occurs when debtors do not pay the mortgage on a home they own, and their loan provider (typically, a bank) forces a sale of the residential or commercial property to cover the financial obligation owed. A rental residential or commercial property foreclosure is a legal action against the owner of the residential or commercial property. The bank that is owed the mortgage, or a specific or business can acquire the residential or commercial property in foreclosure.

Tenants may not know that a foreclosure has been filed on the residential or commercial property they are leasing. Even if they discover that an ownership modification is happening because of a foreclosure, renters may get lost in the legal shuffle and not know how to pay rent or who to get in touch with when there's a repair issue, which can put their housing at danger. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to assist safeguard tenants in this situation.

When Does the PFTA Apply?

The PFTA applies to many renters when their landlords deal with foreclosure. The PFTA uses to all domestic homes, consisting of single units and multi-unit residential or commercial properties, and subsidized residential or commercial properties. And the law uses to occupants with any kind of occupancy.

The PTFA does NOT use to a tenant if:

- the occupant is the individual whose name is on the mortgage (this is uncommon, a lease is different than the mortgage).
- the occupant is the spouse, moms and dad, or kid of the individual whose name is on the mortgage.
- the rental agreement is not the result of an arm's length transaction (example: the tenant and property manager had a personal, monetary, or organization relationship prior to getting in into the lease).
- the lease is well below market rate, unless the rent is reduced due to the fact that it is subsidized

How Do You Figure Out if a Foreclosure is Happening?

Below are three options for finding out more information about whether a foreclosure has 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 appropriate name of the individual who owns it, however another way to discover out the legal name of the titleholder is to search on your city assessor's office/online lookup. Use that info to search on CCAP. Click "I concur" and then plug in either the personal name of the owner (under "party name") or the organization name of the organization that owns the residential or commercial property (under "company name"). The city assessor's website has different ways to identify the residential or commercial property (parcel number, legal description, street address), so use the assessor's details to comb through all that while considering what might be on CCAP.
3. Go to the Register of Deeds workplace at the City-County Building in Room 110, 210 Martin Luther King Jr. Blvd. Madison, WI. Staff must have the ability to help you identify if the residential or commercial property is in foreclosure.
4. The constable keeps records for upcoming sales on this page.

What Are My Rights as a Tenant After a Foreclosure?

The PFTA requires the new owner (the owner who buys the residential or commercial property in the foreclosure) to offer the renter with a minimum of 90 days' notification before needing the tenant to move out, or, if the lease term extends beyond 90 days, enable the occupant to stay in the unit for the lease term.

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

Tenants with an Area 8 Housing Choice Voucher have extra 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 assistance payment agreement. Transfer of ownership after a foreclosure is bad cause for ending an Area 8 lease.

Foreclosure is not a valid reason for evicting a renter. But a renter can be forced out if they do not pay rent or abide by the other requirements under the lease.

The landlord continues to be accountable for repairs till the residential or commercial property is sold in the foreclosure. Once sold, the brand-new owner needs to is accountable for repair work and collecting rent. Within 10 days of ending up being the new owner, the new owner needs to provide to the occupant, in writing, the name and address of the individual responsible for gathering lease and making repair work.

Do I Still Need to Pay Rent?

Yes. If occupants stop paying their lease on time while their property owner is dealing with foreclosure or after the foreclosure, the original or new owner may file an expulsion.

Do I Pay Rent to My Landlord or the Bank?

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

If there's a disagreement in between the bank and property owner or you are unsure who to pay, you can write a letter to everybody involved, consisting of the judge in charge of the foreclosure case, informing them how you are paying lease (or detail your attempts to pay rent) and to who, and why. You must include copies of any important files and keep a copy.

If you are not able to call the owner who you think you ought to be paying lease to, be sure to consist of that info in the letter and keep the lease owed in an account so that it can be paid in full when the owner or the court gives 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 notify tenants in writing of the names and addresses of individuals who will gather lease and are accountable for repairs and maintenance of the residential or commercial property. Wis. Stat. 704.09( 3 ), ATCP 134.04( 1 )( b).

If your property manager is foreclosed on, you will receive this letter after the "date of confirmation 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 landlord participate in a written contract that permits you to use your down payment for the last month's rent. If you don't have a written contract and keep your last month's rent, the proprietor might file an eviction action versus you.

When you vacate, the person who lawfully owns the residential or commercial property should follow all the laws about security deposits even if they didn't collect this money 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 evicted for non-payment of lease or breaching your lease.

Can I Move Before the Lease Ends or Remain In the Unit After the Foreclosure?

If you wish to move before the 90-day duration ends or before your lease ends, you can call your property manager and ask if they will participate in a composed contract to equally terminate the lease early. Similarly, if you want to remain in the unit after the 90-day period or your lease ends, you can call 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 sold, the court may not understand that occupants are residing in the foreclosed residential or commercial property, and the landlord does not offer the occupant any notification when they need them to leave the residential or commercial property.

After foreclosure, the court might presume the previous owner inhabits the residential or commercial property. The new owner can request a "writ of help" to eliminate the previous owner. This is various from a "writ of restitution," which eliminates tenants after a judgement of eviction. When the sheriff shows up to get rid of the previous owner, they may find the renter instead. Tenants have different rights than the previous owner who had a foreclosure action submitted against them. Only a writ of restitution approved by a judge or court commissioner after a judgment for eviction licenses a sheriff to remove a tenant.

You can discuss the scenario to the court, constable, and brand-new owner, and show them any important documents such as your lease and evidence of lease payments. You might also want to get in touch with an attorney.

Here is a detailed overview of the foreclosure procedure:

1. The property owner defaults on payment of a mortgage loan.
2. A foreclosure action is submitted in court by the bank.
3. The proprietor has a specified number of days to states a defense against the foreclosure filing.
4. Once that duration is over, the court decides whether to accept or reject the defenses to the foreclosure. If the court turns down these defenses, they go into a judgment of foreclosure. NOTE: This is not the very same thing as appointing a brand-new owner.
5. After the judgment of foreclosure, the property manager starts a "redemption duration" where they can repay the quantity owed to the bank. During this time, the property owner might cure 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 upon the type of foreclosure filed. NOTE: During the redemption period, the property owner still gathers rent and is accountable for repair work.
6. Once the redemption period ends, if the property manager hasn't paid back the money, there is a constable's sale where the residential or commercial property is offered to a brand-new owner or (normally) to the bank that demanded foreclosure.
7. Once a residential or commercial property is offered, a hearing is scheduled to validate the sale.
8. The verification of sale hearing takes location and, if the sale is verified, results in the "date of verification sale." The title of the home is moved at the hearing. The new owner may be ready to concur to a new lease, however that is not needed.
9. The court may grant the brand-new owner a "writ of help" in the confirmation of sale hearing in action # 8, which will permit the brand-new owner to go to the sheriff 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 available in this Wisconsin Bar post.

-- * The Tenant Resource Center is not a law office and our staff and volunteers do not supply legal guidance. Nothing on our site or other products constitutes legal advice. For help finding an attorney, take a look at our lawyer recommendation list.