A new law has recently been passed that will affect rental property owners that may be in the unfortunate position of having their properties foreclosed upon as well as those individuals that may be purchasing a property that has been foreclosed. Sen. Lena Taylor’s bill referred to as the “Tenant Protection Act” (SB 78) was incorporated into the budget repair bill that was recently passed.
The new law requires that the property owner notify any prospective tenant in writing that (a) a foreclosure action has been commenced, and (b) if a judgment for foreclosure has already been entered, the date when the redemption period expires. Further any rental agreement that is entered into while a foreclosure action is pending must include a separate written statement, signed by the tenant, stating that the owner has provided the above notice to the new tenant. The rental agreement will be voidable at the option of the tenant if it does not include the written statement.
With regard to current tenants, the new law requires that the plaintiff in the foreclosure action (typically a financial institution) give the tenants several notices advising them as to the status of the foreclosure action. Failure to provide the notices will allow the tenant to be awarded $250 in damages plus reasonable attorney’s fees.
Also under the new law, if a tenancy is terminated as a result of a foreclosure judgment the tenant may retain possession of the unit for up to 2 months after the end of the month in which the sale of the property is confirmed (but the tenant must pay rent during this period at the same rate that was applicable prior to the confirmation). Also the tenant may withhold rent in an amount equal to the security deposit during the last month of possession. Furthermore, no eviction judgment for the removal of the tenant whose tenancy was terminated as a result of a foreclosure judgment, may be executed before the end of the second month after the foreclosure sale was confirmed.
Finally, if an eviction action was commenced against a tenant and their removal from the rental property was due to a mortgage foreclosure then no information regarding that eviction can be included on CCAP.
The newly enacted law can be viewed here (it starts on page 108)
#1 by Annna Morton on January 12th, 2011
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Landlord’s wife gave a verbal notice mid December that property was in foreclosure, husband and wife going though fighting and divorce. (that’s why wife shared this information with me, husband is denying home is in foreclosure.) So January, I did not pay rent, my concern is I have not received anything legally stating how far the foreclosure process is and will I lose my security deposit. How can I protect myself and kids from last minute notice and a landlords who have not been forthcoming. Am I liable for rent and how can I find out If property is in foreclosure and how far in the process to protect myself. Do landlord legally have to provide notification and dates.
#2 by Tristan R. Pettit, Esq. on January 14th, 2011
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Anna — Thanks for your question. In Wisconsin there is a law that requires landlords to provide notices to their tenants if the property that they are renting is being foreclosed upon. That statute is sec. 846.35, Wis. Stats and is entitled Protections for Tenants In Foreclosure Actions. You will also want to refer to sec. 704.35, Wis. Stats. entitled Residential Rental Property In Foreclosure. There is also a federal law entitled Title VII – Protecting Tenants In Foreclosure Act, which is Public Law 111-22 and went into effect on May 20, 2009.
If the property in foreclosure i sin Wisconsin, all foreclosure actions are listed on CCAP (the online circuit court docketing system) – to find a link to that website go to my “relevant links” tab on the front of my blog and click on the link entitled CCAP — you can then enter the owner of the property’s name, and see what documents have been filed to date and when the next court hearing will be.