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Wisconsin: Legislation Changes Foreclosure Process Involving Abandoned Properties and Reduces Redemption Time Periods during Foreclosure

Posted By USFN, Tuesday, May 10, 2016
Updated: Thursday, May 5, 2016

May 10, 2016

by William (Nick) Foshag
Gray & Associates, L.L.P. – USFN Member (Wisconsin)

Significant changes to the foreclosure process under Chapter 846, Wis. Stats., have been enacted as 2015 Wisconsin Act 376, which became effective April 27, 2016. The Act’s changes relating to post-judgment pre-sale redemption periods are as follows:

Redemption Periods
Owner occupied, waiver of deficiency judgment, and property is less than 20 acres:

• If the mortgage was executed AFTER April 27, 2016, the redemption period will be 3 months.
• If the borrower demonstrates that a good faith effort is being made to sell the property, then the court may extend that period to 5 months.
• If the mortgage was executed BEFORE April 27, 2016 and recorded subsequent to January 22, 1960, then the redemption period will be 6 months.

Owner occupied, deficiency judgment, and/or property is more than 20 acres:
• If the mortgage was executed AFTER April 27, 2016, the redemption period will be 6 months.
• If the borrower demonstrates that a good faith effort is being made to sell the property, then the court may extend that period to 8 months.
• If the mortgage was executed BEFORE April 27, 2016, the redemption period will be 12 months.

Non-owner occupied and waiver of deficiency judgment:
• Regardless of whether property is more or less than 20 acres, and provided that the mortgage is recorded subsequent to May 12, 1978, the redemption period will be 3 months.

Non-owner occupied and deficiency judgment:
• Regardless of whether property is more or less than 20 acres, and provided that the mortgage is recorded subsequent to May 12, 1978, the redemption period will be 6 months.

Vacant and Abandoned Properties:
• Regardless of whether property is more or less than 20 acres, whether a deficiency judgment is sought, or when the mortgage was executed or recorded, the redemption period will be 5 weeks.

Abandoned Properties
The Act’s further changes relating to abandoned properties apply only to actions commenced on or after April 27, 2016. The Wisconsin Supreme Court had recently held that any party to a foreclosure action (or a city, town, village, or county) may move the court to find a property to be abandoned and to compel a sheriff’s sale within an undefined reasonable time after the expiration of a 5-week post-judgment pre-sale redemption period [The Bank of New York v. Carson, 352 Wis. 2d 205, 841 N.W.2d 573 (2015)]. Act 376 clarifies that only the foreclosing plaintiff (or a city, town, village, or county) may file such a motion. Further, if a property is found to be abandoned, within 12 months of the judgment, either a sheriff’s sale must be held and confirmed or the lender must satisfy the mortgage lien and vacate the judgment. If the lender does neither, only then may any party to the foreclosure action move the court to compel a sheriff’s sale.

Conclusion: The Impact of Act 376

For mortgages executed after April 27, 2016, lesser redemption periods will expedite the foreclosure process in Wisconsin. After obtaining judgment, if a property that was previously occupied is found to have become abandoned within 12 months of the judgment, the foreclosing lender should determine whether the value and overall condition of the property is such that it is in the lender’s best interests to schedule and move the court to confirm a sheriff’s sale or to, instead, release the lien and vacate the judgment.

©Copyright 2016 USFN. All rights reserved.
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