Foreclosure occurs when debtors do not pay the mortgage on a home they own, and their lender (usually, a bank) requires 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 an individual or company can acquire 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 discover that an ownership change is happening since of a foreclosure, tenants might get lost in the legal shuffle and not know how to pay lease or who to contact 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 safeguard occupants in this scenario.

When Does the PFTA Apply?

The PFTA uses to the majority of occupants when their property managers deal with foreclosure. The PFTA applies to all domestic homes, including single units and multi-unit residential or commercial properties, and or commercial properties. And the law applies to tenants with any type of occupancy.

The PTFA does NOT use to an occupant if:

- the tenant is the individual whose name is on the mortgage (this is uncommon, a lease is various than the mortgage).

• the renter is the partner, parent, or kid of the person whose name is on the mortgage.
• the rental arrangement is not the outcome of an arm's length deal (example: the tenant and property manager had an individual, financial, or business relationship prior to getting in into the lease).
• the lease is well below market rate, unless the lease is decreased because it is subsidized
  
  How Do You Determine if a Foreclosure is Happening?
  
  Below are 3 options for discovering out more information about whether a foreclosure has actually been filed 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). Find out the legal name of the person or entity that owns the residential or commercial property. Your lease might have the appropriate name of the person who owns it, however another method to discover out the legal name of the titleholder is to search on your city assessor's office/online lookup. Use that information to search on CCAP. Click "I agree" and after that plug in either the personal name of the owner (under "celebration name") or business name of the company that owns the residential or commercial property (under "service name"). The city assessor's site has various methods to identify the residential or commercial property (parcel number, legal description, street address), so utilize the assessor's information to comb through all that while considering what might 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 should be able to assist 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 a Renter After a Foreclosure?
  
  The PFTA requires the brand-new owner (the owner who buys the residential or commercial property in the foreclosure) to provide the occupant with a minimum of 90 days' notice before requiring the renter to leave, or, if the lease term extends beyond 90 days, permit the occupant to stay in the unit for the lease term.
  
  If the brand-new owner will be living in the residential or commercial property, the new owner can terminate the lease with 90 days' notification even if the lease term extends beyond 90 days.
  
  Tenants with a Section 8 Housing Choice Voucher have additional 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 support payment agreement. Transfer of ownership after a foreclosure is not great cause for ending an Area 8 lease.
  
  Foreclosure is not a legitimate reason for forcing out a tenant. But a tenant can be forced out if they do not pay lease or comply with the other requirements under the lease.
  
  The proprietor continues to be responsible for repairs till the residential or commercial property is sold in the foreclosure. Once offered, the brand-new owner should is accountable for repairs and gathering lease. Within 10 days of becoming the new owner, the brand-new owner needs to supply to the tenant, in writing, the name and address of the individual accountable for gathering rent and making repairs.
  
  Do I Still Need to Pay Rent?
  
  Yes. If renters stop paying their rent on time while their landlord 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 obliged to pay rent to the legal owner of their residential or commercial property unless a court has said that the occupant ought to pay lease to another person (for example, a "receiver"). Tenants are accountable for understanding who this is and paying lease to the best person. The most convenient 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 between the bank and proprietor or you are unsure 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 rent (or information your efforts to pay lease) and to who, and why. You need to consist of copies of any essential documents 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 include that details in the letter and keep the lease owed in an account so that it can be paid in complete when the owner or the court offers you the info 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 alert occupants in writing of the names and addresses of individuals who will gather rent 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 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 final in court.
  
  Can I Use My Security Deposit for Last Month's Rent?
  
  No, not unless you and your proprietor participate in a composed agreement that allows you to use your security deposit for the last month's lease. If you don't have a written agreement and withhold your last month's lease, the landlord may file an expulsion action against you.
  
  When you vacate, the individual who lawfully 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 valid reason to evict you, you can still be forced out 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 wish to move before the 90-day duration ends or before your lease ends, you can contact your property owner and ask if they will participate in a composed arrangement to equally end the lease early. Similarly, if you desire to stay in the system after the 90-day duration or your lease ends, you can contact 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 offered, the court may not know that tenants are living in the foreclosed residential or commercial property, and the property manager does not provide the occupant any notice when they need them to leave the residential or commercial property.
  
  After foreclosure, the court may presume the previous owner occupies the residential or commercial property. The new owner can request a "writ of help" to remove the previous owner. This is different from a "writ of restitution," which gets rid of renters after a judgement of eviction. When the sheriff shows up to remove the previous owner, they might discover the tenant instead. Tenants have various rights than the previous owner who had a foreclosure action submitted versus them. Only a writ of restitution approved by a judge or court commissioner after a judgment for expulsion authorizes a sheriff to get rid of a tenant.
  
  You can describe the situation to the court, sheriff, and brand-new owner, and reveal them any essential documents such as your lease and proof of lease payments. You might also wish to contact a lawyer.
  
  Here is a step-by-step introduction of the foreclosure process:
  
  1. The property manager defaults on payment of a mortgage loan.
• A foreclosure action is filed in court by the bank.
• The property owner has a defined variety of days to states a defense versus the foreclosure filing.
• Once that duration is over, the court decides whether to accept or decline the defenses to the foreclosure. If the court rejects these defenses, they get in a judgment of foreclosure. NOTE: This is not the same thing as appointing a brand-new owner.
• After the judgment of foreclosure, the property manager starts a "redemption period" where they can pay back the quantity owed to the bank. During this time, the property owner might cure the default or sell the residential or commercial property, ending the foreclosure and permitting the proprietor to continue as owner. A redemption duration can be numerous months, depending upon the kind of foreclosure submitted. NOTE: During the redemption duration, the property owner still collects rent and is accountable for repairs.
• Once the redemption period ends, if the property owner hasn't paid back the cash, there is a constable's sale where the residential or commercial property is offered to a brand-new owner or (usually) to the bank that took legal action against for foreclosure.
• Once a residential or commercial property is offered, a hearing is scheduled to verify the sale.
• The verification of sale hearing occurs and, if the sale is validated, results in the "date of confirmation sale." The title of the home is transferred at the hearing. The new owner might be going to agree to a brand-new lease, however that is not needed.
• The court might approve the new owner a "writ of assistance" 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 gotten rid of if they live in the residential or commercial property.
  
  More comprehensive info about foreclosure and the PFTA is readily available in this Wisconsin Bar short article.
  
  -- * The Tenant Resource Center is not a law practice and our personnel and volunteers do not offer legal suggestions. Nothing on our website or other products makes up legal advice. For assistance discovering a lawyer, take a look at our attorney referral list.