Foreclosure takes place when debtors do not pay the mortgage on a home they own, and their lender (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 private or company can purchase the residential or commercial property in foreclosure.

Tenants might not know that a foreclosure has actually been submitted on the residential or commercial property they are renting. Even if they find that an ownership change is taking place because of a foreclosure, occupants may get lost in the legal shuffle and not know how to pay rent or who to call when there’s a repair concern, which can put their housing at risk. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to assist secure occupants in this situation.

When Does the PFTA Apply?

The PFTA applies to a lot of tenants when their landlords deal with foreclosure. The PFTA applies to all houses, including single units and multi-unit residential or commercial properties, and subsidized residential or commercial properties. And the law applies to occupants with any kind of tenancy.

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 different than the mortgage).

• the renter is the spouse, moms and dad, or child of the person whose name is on the mortgage.
• the rental arrangement is not the outcome of an arm’s length deal (example: the occupant and property manager had an individual, financial, or service relationship prior to participating in the lease).
• the lease is well below market rate, unless the lease is reduced since it is subsidized
  
  How Do You Find out if a Foreclosure is Happening?
  
  Below are 3 alternatives for learning more information about whether a foreclosure has actually been submitted on the residential or commercial property you are residing in.
  
  1. Call your county Register of Deeds.
• Use the Wisconsin Court’s public online records (CCAP). Figure out the legal name of the individual or entity that owns the residential or commercial property. Your lease may have the proper name of the individual who owns it, however another method to find out 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 personal name of the owner (under “celebration name”) or the organization name of the organization that owns the residential or commercial property (under “organization 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 may be on CCAP.
• 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 figure out if the residential or commercial property remains in foreclosure.
• 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 supply the occupant with at least 90 days’ notice before needing the occupant to leave, or, if the lease term extends beyond 90 days, allow the renter to remain in the unit for the lease term.
  
  If the brand-new owner will be living 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.
  
  with an Area 8 Housing Choice Voucher have extra rights under the PFTA. They might have the ability to stay in the unit under the existing lease and the new owner is required to continue the housing help payment contract. Transfer of ownership after a foreclosure is not great cause for terminating an Area 8 lease.
  
  Foreclosure is not a valid factor for evicting a renter. But a renter can be evicted if they do not pay rent or adhere to the other requirements under the lease.
  
  The property manager continues to be accountable for repairs up until the residential or commercial property is sold in the foreclosure. Once sold, the brand-new owner must is accountable for repair work and collecting rent. Within 10 days of ending up being the brand-new owner, the new owner must supply to the occupant, in writing, the name and address of the person accountable for collecting lease and making repairs.
  
  Do I Still Need to Pay Rent?
  
  Yes. If tenants stop paying their lease on time while their property manager is dealing with foreclosure or after the foreclosure, the initial or brand-new owner may file an expulsion.
  
  Do I Pay Rent to My Landlord or the Bank?
  
  Tenants are obligated to pay lease to the legal owner of their residential or commercial property unless a court has stated that the occupant ought to pay lease to another person (for instance, a “receiver”). Tenants are responsible for understanding who this is and paying rent to the ideal individual. The easiest method for an occupant to figure out a residential or commercial property’s existing owner is to contact their city assessor.
  
  If there’s a disagreement between the bank and property manager or you are uncertain who to pay, you can compose a letter to everyone involved, including the judge in charge of the foreclosure case, informing them how you are paying lease (or information your attempts to pay rent) and to who, and why. You ought to include copies of any important documents and keep a copy.
  
  If you are not able to call the owner who you think you ought to be paying rent to, make certain to consist of that information in the letter and keep the rent owed in an account so that it can be paid in complete when the owner or the court provides you the information on how to pay rent.
  
  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 inform occupants in writing of the names and addresses of individuals who will gather lease and are responsible for repair work and upkeep of the residential or commercial property. Wis. Stat. 704.09( 3 ), ATCP 134.04( 1 )( b).
  
  If your proprietor 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?
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  No, not unless you and your proprietor enter into a composed contract that permits you to use your down payment for the last month’s rent. If you do not have a written contract and keep your last month’s rent, the proprietor may file an expulsion action versus you.
  
  When you move out, the person who legally owns the residential or commercial property needs to follow all the laws about down payment even if they didn’t collect this cash from the old owner.
  
  Can I Be Evicted During a Foreclosure?
  
  While your proprietor’s foreclosure isn’t a legitimate reason to evict you, you can still be evicted for non-payment of lease or breaking your lease.
  
  Can I Move Before the Lease Ends or Remain In the Unit After the Foreclosure?
  
  If you desire to move before the 90-day period ends or before your lease ends, you can contact your proprietor and ask if they will participate in a composed arrangement to equally end the lease early. Similarly, if you wish to remain in the unit after the 90-day duration or your lease ends, you can contact the 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 might not understand that occupants are residing in the foreclosed residential or commercial property, and the proprietor doesn’t give the renter any notice when they need them to leave the residential or commercial property.
  
  After foreclosure, the court may assume the previous owner occupies the residential or commercial property. The brand-new owner can ask for a “writ of assistance” to eliminate the previous owner. This is different from a “writ of restitution,” which removes renters after a judgement of expulsion. When the constable gets here to get rid of the previous owner, they may find the occupant instead. Tenants have various rights than the previous owner who had a foreclosure action filed versus them. Only a writ of restitution granted by a judge or court commissioner after a judgment for eviction licenses a constable to get rid of a renter.
  
  You can explain the circumstance to the court, sheriff, and brand-new owner, and show them any important documents such as your lease and proof of rent payments. You may also desire to call a lawyer.
  
  Here is a detailed overview of the foreclosure procedure:
  
  1. The landlord defaults on payment of a mortgage loan.
• A foreclosure action is filed in court by the bank.
• The property owner has actually a defined number of days to states a defense against the foreclosure filing.
• Once that duration is over, the court chooses whether to accept or decline the defenses to the foreclosure. If the court declines these defenses, they get in a judgment of foreclosure. NOTE: This is not the very same thing as designating a brand-new owner.
• 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 proprietor may treat the default or sell the residential or commercial property, ending the foreclosure and enabling the proprietor to continue as owner. A redemption duration can be several months, depending upon the type of foreclosure filed. NOTE: During the redemption period, the landlord still gathers lease and is responsible for repairs.
• Once the redemption period ends, if the proprietor hasn’t repaid the cash, there is a constable’s sale where the residential or commercial property is sold to a new owner or (typically) to the bank that sued for foreclosure.
• Once a residential or commercial property is sold, a hearing is arranged to verify the sale.
• The confirmation of sale hearing happens and, if the sale is confirmed, leads to the “date of confirmation sale.” The title of the home is transferred at the hearing. The brand-new owner may be going to accept a brand-new lease, however that is not required.
• The court may approve the brand-new owner a “writ of support” in the confirmation of sale hearing in step # 8, which will enable the new owner to go to the constable and have the previous owner removed if they live in the residential or commercial property.
  
  More detailed info about foreclosure and the PFTA is available in this Wisconsin Bar article.
  
  -- * The Tenant Resource Center is not a law firm and our staff and volunteers do not offer legal recommendations. Nothing on our site or other products constitutes legal advice. For help finding an attorney, have a look at our attorney referral list.