The federal foreclosure laws expired on December 31st, 2014. Congress did not renew these protections. Wisconsin protections were eliminated in Walker's first budget. Therefore, when a landlord loses their rights, so does a tenant. Please call the Tenant Resource Center or stop by our office immediately if you are in a situation where the property you rent is being foreclosed on.
We are still making major changes to the website. Please check back to be sure you have the best information available. Unless something else is written in your lease, one of three new laws might change your rights.
Most of this information is available in our brochure for easy printing.
Unless something else is written in your lease, one of three new laws might change your rights.
Purple text applies to leases and events as of 12/21/11 (2011 Wis. Act 108)
Orange text applies to leases and events as of 3/31/12 (2011 Wis. Act 143)
Green text applies to leases and events as of 3/1/14 (2013 Wis. Act 76)
Blue text applies to leases and events as of 11/1/15 (CR 14-038)
Maroon text applies to leases and events as of 3/2/16 (2015 Wis. Act. 176)
More information on law changes is available here. Have your lease available when calling the Tenant Resource Center so we can help you know what your rights and remedies are, including whether you can double your costs when you sue a landlord.
Landlord Duty to Disclose Foreclosure to Tenants
Landlords are no longer required by state law to provide written disclosure to tenants if the rental property is subject to foreclosure. If a lease is in effect during a foreclosure, or is signed during a foreclosure process, the lease is likely valid and must be honored by the owner and the tenant unless there is fraud or deception on the part of the landlord regarding the property's foreclosure status.
In order to best enforce your rights, you should ask potential landlords if a foreclosure has been initiated against the property and receive a written response to that question, if possible. You can also check in CCAP by searching the landlord's or landlord's company, or LLC name.
If you find out there is a foreclosure case pending, you may want to write a letter to the court informing them you are a tenant living at the property in foreclosure. Legal Action of Wisconsin has written a sample letter for a pending case which you can fill out.
Do these laws apply to me?
The Protecting Tenants at Foreclosure Act (PTFA) does not apply to everyone. The laws in this page will NOT apply to you if:
- You are the person whose name is on the mortgage, or the child, spouse, or parent of the person whose name is on the mortgage.
- The lease or tenancy was not the result of an "arms-length" transaction (if the tenant and landlord had a relationship prior to signing the lease).
- The lease or tenancy requires the receipt of rent that is substantially less than fair market rent for the property.
If you are any of the above, the judge may not rule in your favor.
How long can I stay in the unit?
It depends. If you have a written lease that expires on a certain date, and it is not a single family home that the new owner intends to occupy, then you can stay until the end of your lease. For example, if you have a year-long lease in a multi-unit building, or in a single family home that the new owner intends to rent out (not live in), then you can stay until the end of your lease. The new owner may renew your lease past this date, just like any landlords. PTFA Sec. 702(a)(2)(A)
If you have a month-to-month or verbal lease, or you live in a single family home that the new owner intends to occupy, then the new landlord can serve you a written 90-day notice. They can serve this any time after the date of confirmation of sale. PTFA Sec. 702(a)(2)
Do I still have to pay rent?
Yes. Even though the property is in foreclosure proceedings, tenants must pay rent if they remain in possession. A tenant's responsibility to pay rent is not legally related to the landlord's responsibility to pay their mortgage, so a tenant may be held responsible for non-payment of rent even while a landlord is failing to pay their mortgage. (More about Eviction) A landlord can't force a tenant to leave the home unless the landlord successfully evicts a tenant, so the sheriff may not remove a tenant as a result of the foreclosure action unless:
- The tenant is not covered by the Protecting Tenants at Foreclosure Act
- The tenant agrees to end the lease early
- The tenant is evicted due to non-payment of rent or a violation of the lease.
Can I use my Security Deposit for last month's rent?
No. Security deposits are not normally used to pay for the last month's rent, and there is no exception in foreclosure situations. If you wish to use your security deposit as your last month's rent, the safest way to do so is to make a written agreement with the landlord agreeing to apply your security deposit to your last month's rent. If you withhold your last month's rent without a written agreement, assuming that the landlord will apply the security deposit to the last month's rent, the landlord can take eviction action against you.
Do I pay my rent to the landlord or to the bank?
You should pay your rent to the legal owner of the property (as listed with the City Assessor - Madison Assessor) unless the court has appointed "receivership" to someone else. Sometimes the bank will try to collect rent from the tenant after there has been an order for foreclosure. They may claim they have been awarded the "assignment of leases and rents" under their mortgage contract with the landlord. This is not the same thing as a receivership appointed by the court! In foreclosure, the mortgage agreement (which is between the bank and the landlord) is in dispute and will be settled by a judge. Until that time, it has no impact on the tenant's agreement to pay rent to the landlord. Pay rent to the landlord until you hear from a judge, or until the landlord says (in writing) to pay the bank instead.
If the bank and the landlord disagree about who should collect the rent, write a letter to everyone (including the judge who is in charge of the foreclosure case) telling them where you'll be paying your rent, and why. Include copies of any documents (such as an order for receivership) and keep a copy yourself.
As a last resort, if you still cannot decide where to pay your rent, open a separate savings (or "escrow") account and make regular deposits of the full amount on the date rent is due. Write a letter to everyone involved (including the judge who is in charge of the case) informing them that you are putting your rent in escrow. Be prepared to pay the full amount to the appropriate person(s) as soon as the issue is resolved.
Will I have an "eviction record"?
Maybe. If you are evicted because you have not paid your rent, or otherwise haven't followed the terms of your lease, then you will have an eviction record. However, you won't have an eviction record if the only issue is that the property is in foreclosure.
What happens after Sheriff's Sale or a Short-Sale?
The original owner (or the bank after foreclosure) may sell the unit(s) to a new owner. (See "Foreclosure Process" below.) The new owner, who then has the duties and responsibilities of a landlord, must notify you within 10 days of the confirmation of sale hearing with the name and address to which rent payments should be addressed. Wis. Stat. 704.09(3), ATCP 134.04(1)(b), MGO 32.08(1)(c)
Help! The sheriff is kicking me out and I have received no notices!
Why is this happening?
Occasionally, the court doesn't know that tenants are living in the foreclosed property, and/or the landlord doesn't give the tenant proper notice that they must vacate. The sheriff may show up at the tenant's door with an "order for a writ of assistance" instructing them to leave. This is not the same thing as a "writ of restitution" in an eviction. A "writ of assistance" assumes that the occupant is the legal owner. The sheriff is just following orders from the court, and it can be hard to prove you are a tenant whose foreclosure rights have been violated.
What are my rights?
If you qualify for the Protecting Tenants in Foreclosure Act, you should not be forced out after the confirmation of sale hearing! The new owner has to give you time to stay and at least some kind of notice (see above). Then they may evict you if you do not leave in time – but they may not kick you out with a writ of assistance for a foreclosure issue.
What do I do?
Send a letter to the court immediately and give copies to the Sheriff, the landlord, the new owners, and any other people involved (like attorneys in the case). Legal Action has written two sample letters for tenants who are about to be removed by a writ of assistance. Fill these out with the information for your situation:
Letter for Tenants Facing Removal By Writ of Assistance – If Fannie Mae is the bank
You should also contact Legal Action of Wisconsin or a Tenant Resource Center housing counselor to discuss your rights. Explain that you are a tenant in foreclosure who has been served a writ of assistance by the sheriff.
Legal Action of Wisconsin: 800-362-3904
- The landlord defaults on payment of a mortgage loan.
- A foreclosure action is filed in court by the bank.
- The landlord has 20 days to state a defense against the foreclosure filing.
- Once the 20 days are over, the court decides whether to accept or reject the defenses to the foreclosure (usually within several months from the point at which the 20 days expire). If those defenses are rejected, then the court enters a judgment of foreclosure. NOTE: This is not the same thing as appointing a new receiver for the rent! There is much more to the process before there is a new owner.
- After the judgment of foreclosure, the landlord starts a "redemption period" where they have the opportunity to repay the amount owed to the bank. During this time, the landlord might cure the default or might sell the property, which would end the foreclosure, and would allow the landlord to continue as owner. A redemption period can be 2, 3, 6, or 12 months, depending on the type of foreclosure filed. NOTE: During the redemption period, the landlord still collects rent and is responsible for repairs, etc.
- Once the redemption period ends, if the landlord hasn't paid back the money, there is a sheriff's sale where the property is sold to a new owner or (usually) to the bank who sued for foreclosure.
- Once a property is sold, a hearing is scheduled to confirm the sale.
- The confirmation of sale hearing takes place and, if the sale is confirmed, results in the "date of confirmation sale." Title is transferred at the hearing. At this point, a tenant's right to rent the property ends. The new owner might be willing to agree to a new lease, but that is not required. This is the first day that the new landlord can issue a 90-day notice to not renew a month-to-month, or verbal tenancy, or to a single family home renter if the new owner is going to live there. At that time, the new owner collects rent and is responsible for repairs. NOTE: Sometimes the court will appoint a "receivership" for the rent while the foreclosure is still in process. At that time, the tenant should pay the person who is named in the court order. Papers from the bank asking for rent are not the same as papers from the court.
What should I do if my rental unit is in foreclosure?
Continue to pay rent.
You still have to pay rent or you could be at risk of eviction for non-payment of rent. Continue to pay rent to your original landlord until you receive written notice of a change in ownership, or a receivership order from the foreclosure court that tells you to pay someone else the court appoints. Whoever receives your rent is responsible for all other duties and responsibilities of the landlord (e.g., maintenance, eviction, etc.).
Keep written records.
It's a really good idea to keep evidence of payment of rent (like rent receipts, money order stubs, checking account statements, etc.) because sometimes you will be asked to prove that you are a tenant. Receipts (and utility bills) can come in handy to show that you are indeed a tenant and qualify to receive the rights discussed in this page.
Continue to live in your unit.
If you have a written lease for a set term (typically a year) you do not have to move any sooner than the end of the lease, unless you live in a single family home that the new owner wishes to occupy. If you live in a single family home that the new owner intends to live in, or have a month-to-month or verbal lease, then you have at least 90 days after receiving written notice from the property's new owner after the confirmation of sale hearing.
NOTE: Many new landlords keep renting to the original tenants after a foreclosure! You can always ask for a renewal past these dates if you want to stay.
Write a letter to your landlord if:
You want to move before your lease is up or negotiate a mutual agreement to terminate early. See Ending Your Lease if you wish to try to leave before the lease's termination date.
What happens to my Security Deposit?
The person who legally owns the property when you move out is required to follow all the laws about security deposits (Madison and Fitchburg or Wisconsin) even if they didn't collect this money from the old owner.