Foreclosure takes place when debtors do not pay the mortgage on a home they own, and their lending institution (usually, 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 versus the owner of the residential or commercial property. The bank that is owed the mortgage, or a specific or company can acquire the residential or commercial property in foreclosure.

Tenants might not know that a foreclosure has actually been filed on the residential or commercial property they are renting. Even if they find that an ownership modification is happening because of a foreclosure, occupants might get lost in the legal shuffle and not know how to pay lease or who to get in touch with when there's a repair work concern, which can put their housing at threat. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to help secure renters in this situation.

When Does the PFTA Apply?

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

The PTFA does NOT use to an occupant if:

- the tenant is the individual whose name is on the mortgage (this is unusual, a lease is different than the mortgage).
- the tenant 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 deal (example: the occupant and proprietor had an individual, financial, or company relationship prior to participating in the lease).
- the lease is well below market rate, unless the rent is lowered due to the fact that it is subsidized

How Do You Figure Out if a Foreclosure is Happening?

Below are three alternatives for finding out more details about whether a foreclosure has been filed on the residential or commercial property you are residing in.

1. Call your county Register of Deeds.
2. Use the Wisconsin Court's public online records (CCAP). Determine the legal name of the individual or entity that owns the residential or commercial property. Your lease might have the correct name of the person who owns it, however another way to learn the legal name of the titleholder is to browse on your city assessor's office/online lookup. Use that details to search on CCAP. Click "I agree" 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 "organization name"). The city assessor's site has different ways to recognize the residential or commercial property (parcel number, legal description, street address), so use the assessor's info 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 should have the ability to help you figure out 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 new owner (the owner who purchases the residential or commercial property in the foreclosure) to supply the occupant with at least 90 days' notification before needing the tenant to leave, or, if the lease term extends beyond 90 days, permit the occupant to remain in the system for the lease term.

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

Tenants with an Area 8 Housing Choice Voucher have extra rights under the PFTA. They might have the ability to stay in the system under the existing lease and the brand-new owner is required to continue the housing help payment agreement. Transfer of ownership after a foreclosure is not excellent cause for ending an Area 8 lease.

Foreclosure is not a valid reason for kicking out an occupant. But an occupant can be kicked out if they don't pay rent or comply with the other requirements under the lease.

The property manager continues to be responsible for repairs until the residential or commercial property is sold in the foreclosure. Once sold, the brand-new owner should is responsible for repairs and collecting lease. Within 10 days of becoming the new owner, the new owner needs to supply to the occupant, in composing, the name and address of the person responsible for collecting rent and making repair work.

Do I Still Need to Pay Rent?

Yes. If renters stop paying their rent on time while their proprietor is dealing with foreclosure or after the foreclosure, the initial or new owner may submit an expulsion.

Do I Pay Rent to My Landlord or the Bank?

Tenants are bound to pay rent to the legal owner of their residential or commercial property unless a court has said that the renter must pay rent to somebody else (for example, a "receiver"). Tenants are accountable for understanding who this is and paying lease to the ideal person. The most convenient method for an occupant to identify a residential or commercial property's present owner is to contact their city assessor.

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

If you are unable to contact the owner who you believe you must be paying rent to, make certain to include that information in the letter and keep the lease owed in an account so that it can be paid completely when the owner or the court provides you the details 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 new owner has 10 days to alert tenants in writing of the names and addresses of individuals who will gather lease and are accountable for repair work 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 verification sale." This is the term for the date when the sale of a residential or commercial property in foreclosure is made final in court.

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

No, not unless you and your property manager participate in a written arrangement that enables you to utilize your security deposit for the last month's lease. If you don't have a written arrangement and withhold your last month's rent, the landlord might submit an expulsion action versus you.

When you move out, the individual who legally owns the residential or commercial property should follow all the laws about security deposits even if they didn't collect this cash from the old owner.

Can I Be Evicted During a Foreclosure?

While your landlord's foreclosure isn't a legitimate reason to evict you, you can still be kicked out for non-payment of lease or violating your lease.

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

If you want to move before the 90-day period expires or before your lease ends, you can call your landlord and ask if they will enter into a written contract to equally terminate the lease early. Similarly, if you wish to remain in the unit after the 90-day duration or your lease ends, you can call the new owner to inquire 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 might not know that occupants are living in the foreclosed residential or commercial property, and the property owner doesn't provide the renter any notification when they require them to leave the residential or commercial property.

After foreclosure, the court might presume the previous owner occupies the residential or commercial property. The brand-new owner can ask for a "writ of help" to remove the previous owner. This is different from a "writ of restitution," which eliminates tenants after a judgement of eviction. When the constable shows up to get rid of the previous owner, they may find the occupant 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 expulsion authorizes a sheriff to remove a tenant.

You can explain the scenario to the court, sheriff, and brand-new owner, and reveal them any essential files such as your lease and proof of rent payments. You may also wish to call a lawyer.

Here is a detailed summary of the foreclosure process:

1. The proprietor 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 versus the foreclosure filing.
4. Once that period is over, the court chooses 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 designating a brand-new owner.
5. After the judgment of foreclosure, the landlord starts a "redemption period" where they can repay the amount owed to the bank. During this time, the property manager may treat the default or sell the residential or commercial property, ending the foreclosure and enabling the landlord to continue as owner. A redemption period can be numerous months, depending upon the type of foreclosure filed. NOTE: During the redemption period, the proprietor still gathers lease and is accountable for repairs.
6. Once the redemption duration ends, if the proprietor hasn't repaid the money, there is a constable's sale where the residential or commercial property is sold to a new owner or (normally) to the bank that demanded foreclosure.
7. Once a residential or commercial property is offered, a hearing is arranged to verify the sale.
8. The confirmation of sale hearing happens and, if the sale is verified, leads to the "date of confirmation sale." The title of the home is moved at the hearing. The brand-new owner may be ready to concur to a brand-new lease, however that is not required.
9. The court may give the new owner a "writ of assistance" in the verification of sale hearing in step # 8, which will allow the brand-new owner to go to the sheriff and have the previous owner gotten rid of if they reside in the residential or commercial property.

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

-- * The Tenant Resource Center is not a law company and our staff and volunteers do not supply legal guidance. Nothing on our site or other products makes up legal suggestions. For aid finding a lawyer, inspect out our attorney referral list.