Foreclosure happens when borrowers do not pay the mortgage on a home they own, and their lender (generally, a bank) forces a sale of the property to cover the debt owed. A rental property foreclosure is a legal action against the owner of the property. The bank that is owed the mortgage, or an individual or company can purchase the property in foreclosure.

Tenants may not know that a foreclosure has been filed on the property they are renting. Even if they find that an ownership change is happening because of a foreclosure, tenants may get lost in the legal shuffle and not know how to pay rent or who to contact when there’s a repair issue, which can put their housing at risk. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to help protect tenants in this situation.

When Does the PFTA Apply?

The PFTA applies to most tenants when their landlords face foreclosure. The PFTA applies to all residential properties, including single units and multi-unit properties, and subsidized properties. And the law applies to tenants with any type of tenancy. 

The PTFA does NOT apply to a tenant if:

• the tenant is the person whose name is on the mortgage (this is uncommon, a lease is different than the mortgage)
• the tenant is the spouse, parent, or child of the person whose name is on the mortgage
• the rental agreement is not the result of an arm’s length transaction (example: the tenant and landlord had a personal, financial, or business relationship prior to entering into the lease)
• the rent is well below market rate, unless the rent is reduced because 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 filed on the property you are living in.

1. Call your county Register of Deeds.
2. Use the Wisconsin Court’s public online records (CCAP). Figure out the legal name of the person or entity that owns the property. Your lease may have the correct name of the person who owns it, but another way to find 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 then plug in either the personal name of the owner (under “party name”) or the business name of the organization that owns the property (under “business name”). The city assessor’s website has different ways to identify the property (parcel number, legal description, street address), so use the assessor's information to comb through all that while considering what may be on CCAP.
3. 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 help you determine if the property is in foreclosure.
4. The sheriff 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 property in the foreclosure) to provide the tenant with at least 90 days’ notice before requiring the tenant to move out, or, if the lease term extends beyond 90 days, allow the tenant to stay in the unit for the lease term.

If the new owner will be living in the property, the new owner can terminate the lease with 90 days’ notice even if the lease term extends beyond 90 days. 

Tenants with a Section 8 Housing Choice Voucher have additional rights under the PFTA. They may be able to stay in the unit under the existing lease and the new owner is required to continue the housing assistance payment contract. Transfer of ownership after a foreclosure is not good cause for terminating a Section 8 lease.

Foreclosure is not a valid reason for evicting a tenant. But a tenant can be evicted if they don’t pay rent or comply with the other requirements under the lease.

The landlord continues to be responsible for repairs until the property is sold in the foreclosure. Once sold, the new owner must is responsible for repairs and collecting rent. Within 10 days of becoming the new owner, the new owner must provide to the tenant, in writing, the name and address of the person responsible for collecting rent and making repairs.

Do I Still Need to Pay Rent?

Yes. If tenants stop paying their rent on time while their landlord is facing foreclosure or after the foreclosure, the original or new owner may file an eviction.

Do I Pay Rent to My Landlord or the Bank?

Tenants are obligated to pay rent to the legal owner of their property unless a court has said that the tenant should pay rent to someone else (for example, a “receiver”). Tenants are responsible for knowing who this is and paying rent to the right person. The easiest way for a tenant to determine a property's current owner is to contact their city assessor.

If there's a disagreement between the bank and landlord or you are not sure who to pay, you can write a letter to everyone involved, including the judge in charge of the foreclosure case, telling them how you are paying rent (or detail your attempts to pay rent) and to who, and why. You should include copies of any important documents and keep a copy.

If you are unable to contact the owner who you believe you should be paying rent to, be sure to include that information in the letter and keep the rent 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 rent.

After Foreclosure, How Will I Know Who My New Landlord Is?

In Wisconsin, when a rental property changes owners, the new owner has 10 days to notify tenants in writing of the names and addresses of the people who will collect rent and are responsible for repairs and maintenance of the property. Wis. Stat. 704.09(3), ATCP 134.04(1)(b).

If your landlord 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 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 landlord enter into a written agreement that allows you to use your security deposit for the last month’s rent. If you don't have a written agreement and withhold your last month’s rent, the landlord may file an eviction action against you.

When you move out, the person who legally owns the property must 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 landlord's foreclosure isn't a valid reason to evict you, you can still be evicted for non-payment of rent or violating your lease.

Can I Move Before the Lease Ends or Stay in the Unit After the Foreclosure?

If you want to move before the 90-day period expires or before your lease ends, you can contact your landlord and ask if they will enter into a written agreement to mutually terminate the lease early. Similarly, if you want to stay in the unit after the 90-day period 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 property in foreclosure is sold, the court may not know that tenants are living in the foreclosed property, and the landlord doesn’t give the tenant any notice when they require them to leave the property.

After foreclosure, the court may assume the previous owner occupies the property. The new owner can request a “writ of assistance” to remove the previous owner. This is different from a “writ of restitution,” which removes tenants after a judgement of eviction. When the sheriff arrives to remove the previous owner, they may find the tenant instead. Tenants have different rights than the previous owner who had a foreclosure action filed against them. Only a writ of restitution granted by a judge or court commissioner after a judgment for eviction authorizes a sheriff to remove a tenant.

You can explain the situation to the court, sheriff, and new owner, and show them any important documents such as your lease and proof of rent payments. You may also want to contact an attorney.

Foreclosure Process

Here is a step-by-step overview of the foreclosure process:

1. The landlord defaults on payment of a mortgage loan.
2. A foreclosure action is filed in court by the bank.
3. The landlord has a specified number of days to states a defense against the foreclosure filing.
4. Once that period is over, the court decides whether to accept or reject the defenses to the foreclosure. If the court rejects these defenses, they enter a judgment of foreclosure. NOTE: This is not the same thing as appointing a 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 landlord might cure the default or sell the property, ending the foreclosure and allowing the landlord to continue as owner. A redemption period can be several months, depending on the type of foreclosure filed. NOTE: During the redemption period, the landlord still collects rent and is responsible for repairs.
6. 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 that sued for foreclosure.
7. Once a property is sold, a hearing is scheduled to confirm the sale.
8. The confirmation of sale hearing takes place and, if the sale is confirmed, results in the “date of confirmation sale.” The title of the home is transferred at the hearing. The new owner might be willing to agree to a new lease, but that is not required.
9. The court may grant the new owner a “writ of assistance” in the confirmation of sale hearing in step #8, which will allow the new owner to go to the sheriff and have the previous owner removed if they live in the property.

More detailed information about foreclosure and the PFTA is available in this Wisconsin Bar article.

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* The Tenant Resource Center is not a law firm and our staff and volunteers do not provide legal advice. Nothing on our website or other materials constitutes legal advice. For help finding an attorney, check out our attorney referral list.