Legal Question in Landlord & Tenant Law in Wisconsin

Purchased forclosed rental units at a sherriffs sale, is the previous owner required to pass security deposits on to new owners? Wood county WI property was purchased by my brother and me as an investment, which is our 1st experience with renting property. Previous landlord says he will pay the security deposit to the renters when they move out, says this follows WI statutes which I could not find any reference to this, and which we do not believe he would follow through with. We would like the deposits paid to us now, which would give us a little protection when a renter would move out. Our backup plan is to have all renters sign a new lease with us, we do have copies of their current lease, and recollect the security deposit from the renters, telling them to reqest their original security deposit from the previous landlord. My brother and I are looking for a fair resolution that follows the laws for all involved. Is there such a statutes where the previous owner of a rental unit can hold the security deposits of the renter, even when he no longer owns the rental units? Do we have any course of action we can take?


Asked on 2/06/13, 1:32 pm

1 Answer from Attorneys
JAY Nixon nixon law offices

You must immediately retain an experienced real estate attorney for your own protection, since foreclosure purchases are extremely risky, particularly with commercial properties involving residential tenants, with the potential for major liabilities against you. Any attorney would have warned you about this before you purchased, and your auction purchase is usually on a strict "as is" basis with no warranties against the existence of such legal issues concerning the property. Tenants who are not properly given back their security deposits can sue their landlords for double the deposit (or more), plus actual reasonable attorney fees. The only question in this situation is whether you are truly their landlord, having purchased the property from the sheriff on a foreclosure auction. This would normally insulate you from all liabilities of the previously owner. However, here, the tenants (if you choose to keep them as tenants), would normally have independent rights against their landlord, who may or may not be you now. Since you have no contractual relationship with the former landlord, there is a reasonable argument that he has not duties to you whatsoever. He may still might have some duties to the tenants upon termination of their tenancy, but that is strictly his problem, over which you have no control. When or if their tenancy was terminated (triggering these duties to promptly refund security deposits) in this situation is an open issue here. Tenant have more rights in this situation than they did formerly under recently amendments to WI landlord tenant law, so it is critical that you immediately hire a lawyer for a formal legal opinion here. This answer does not make me your lawyer, so you need to consult one of your own before acting upon this. For further discussions, you may contact my office at 333 Main St, Racine, WI 53403, 262-633-3090, during business hours, or see me on the web at www.jayknixonlaw.com. See over 15 years of my previous answers to consumer questions at http://www.lawguru.com/answers/atty_profile/view_attorney_profile/jknixon. Attorney answers may contain advertising materials.

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Answered on 2/13/13, 6:21 am


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