Renters Blindsided by Apartment Foreclosures: New Law Provides Help to Tenants

A couple of weeks ago, Devanie Jones came home from work and found a notice on the door of the two-bedroom, downstairs unit she's been renting for more than a year in a duplex at N. 11th and W. Burleigh streets.

The notice said she had 24 hours to get out because the property had gone through foreclosure and had been sold at a sheriff's sale.

Jones, 38, was shocked and confused. "I didn't know what was going on. The landlord never said a word. I had been sending my rent to a post office box address. I've never had a problem like this before," said Jones, who works as a certified nursing assistant. "I'm finding out a lot of things that I didn't know."

After making inquiries, she was given until April 1 to move. Otherwise, she said she was told by the sheriff's office, authorities will toss her belongings into the street. Since then, she has been frantically looking for a new place to live. Tuesday, she was still searching and contemplating moving into a hotel if necessary.

While the foreclosure crisis has caused many homeowners to lose their houses, many renters, such as Jones, suddenly find themselves losing the roof over their head when the apartment or duplex they rent goes into foreclosure. Until now, many tenants learn about the foreclosure only when a sheriff's deputy knocks on their door with an eviction notice.

But a new state law passed as part of the recent budget adjustment bill now protects the rights of tenants during foreclosure. The law requires that landlords provide a written notice to tenants or prospective tenants when foreclosure action begins, and again when the deadline expires for the landlord to pay to avoid foreclosure.

The law, which went into effect March 6, affects foreclosures started after that date. It also requires:
--Banks and financial institutions to provide written notice three times to current tenants of the property in foreclosure: when the foreclosure action begins, when the court issues a judgment of foreclosure and when the property is put up for sale. Failure to provide notice carries a $250 fine plus attorney fees.
--Tenants may stay in their rental residence for up to two months following the sale of the foreclosed property.
--If there is a security deposit, the tenants can withhold rent and let the security deposit cover the last month before the foreclosure redemption period expires. That's the time allowed for a property owner to stop the foreclosure from moving forward, a period that generally lasts from six to 12 months.
--Beginning June 6, the electronic Wisconsin Circuit Court records cannot display information regarding a tenant eviction that was prompted by foreclosure.

Milwaukee Mayor Tom Barrett said the law will give residents greater rights to safe and secure rental housing during these tough economic times. "After hearing horror stories of tenants losing money and being evicted because they were living in foreclosed properties, the city requested a change in state law," he said.

The city was joined in seeking the change by others, including Legal Action of Wisconsin, the Winnebago Housing Coalition and the Metropolitan Milwaukee Fair Housing Council.
State Rep. Gordon Hintz (D-Oshkosh) and state Sen. Lena Taylor (D-Milwaukee) were the prime sponsors of the legislation.

"This has been a problem for years," said attorney Bob Anderson of Legal Action's Madison office. But the foreclosure crisis accelerated the problem and has made it much worse, he said.
"The new law makes a big difference for tenants in this situation because they have to be told of the foreclosure and given two months time to start looking for a new place," he said.
Often, tenants are given 30 days to move, but that's not much time, he said.

These situations usually occur in the middle of the month when the tenant has already paid the rent, won't get a security deposit back and must find the money for a new place, he said. They have to find a new landlord and come up with a deposit and the first month's rent, he said.
"It's so hard to find affordable housing anyway, and the 30 days that tenants have been generally given isn't enough time to find a place and for the landlord to do a background check," said Mark Silverman of Legal Action of Milwaukee.

Credit: Milwaukee Journal Sentinel, McClatchy - Tribune Business News.