March 4, 2014
by William (Nick) Foshag
Gray & Associates, L.L.P. – USFN Member (Wisconsin)
Under Chapter 846, Wis. Stats., the foreclosure process in Wisconsin after judgment but before sale has traditionally been driven by the creditor. A recent interpretation of Wis. Stat. § 846.102 by the Wisconsin Court of Appeals appears to put the debtor, or the city, in the driver’s seat as well, at least in relation to abandoned properties. The Bank of New York v. Carson, Appeal No. 2013AP544 (Wis. Ct. App. Dist 1, Nov. 26, 2013).
Wis. Stat. § 846.102 was revised in 2011. The language at issue provides in part that, “the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.” Similar language is found throughout Chapter 846 but has never before been interpreted to mean that a sale is mandatory after a judgment of foreclosure is entered, and has never before been interpreted to mean that a sale must be held within a certain period of time.
In April 2011, the creditor in Carson obtained a default foreclosure judgment with a waiver of any deficiency under Wis. Stat. § 846.103(2), allowing for a three-month redemption period. In November 2012, Carson filed a motion relying upon § 846.102, asking that the judgment be amended to indicate that the property had been abandoned, and asking the circuit court to order the creditor to schedule a sheriff’s sale. The circuit court agreed with the creditor that it did not have the authority to order a sale, and Carson appealed.
The Court of Appeals interpreted § 846.102 to allow any party to the case (not just the creditor) and the city to support a request for finding the property to be abandoned. Next, it interpreted the word “shall” of § 846.102 to mandate that the creditor schedule a sheriff’s sale upon the expiration of the five-week redemption period.
The Carson decision raises more questions than it answers; e.g., must the creditor enter a bid at the sale? Must the creditor then move to confirm the sale; and, if so, when? Wis. Stat. § 846.18 addresses “tardy confirmation of sale,” allowing the purchaser at a sheriff’s sale who has taken possession to move the court to confirm the sale.
The Bank of New York has petitioned the Wisconsin Supreme Court for review; however, if the petition is denied, or if the Carson holding is not overturned, foreclosing creditors must seriously consider the impact of their decision to obtain a judgment of foreclosure.
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