Foreclosure of time shares
Under current law, a time-share estate is defined as a right to occupy a real
property unit during at least four separated periods over at least four years, together
with a property interest in the real property unit. A time-share license is defined
as a right to occupy a unit, or any of several units, under a license or lease agreement
during at least four separated periods over at least four years, without a property
interest in the real property unit. Currently, a person's interest in a time-share
estate may be foreclosed in a court proceeding (judicial foreclosure) in the same
manner as an interest in real property is foreclosed if the person defaults in
payments to a creditor that has a security interest in the time-share estate, or if the
person does not pay assessments that were imposed for time-share expenses and
that have become a lien. Current law specifies that a lien for assessments against
a time-share license may be foreclosed as provided under the Uniform Commercial
Code (UCC). This substitute amendment sets out a nonjudicial (administrative)
procedure for foreclosing security interests in, and assessment liens against,
time-share estates. The substitute amendment provides that a person seeking to
foreclose an owner's interest in a time-share estate may use the judicial procedure
or the administrative procedure, except that the owner of a time-share estate may
object to the use of the administrative procedure, in which case the foreclosing entity
must use the judicial foreclosure procedure. In addition, the substitute amendment
provides that a foreclosing entity that uses the administrative procedure to foreclose
an owner's interest in a time-share estate waives the right to a deficiency if the
proceeds of the sale in the administrative procedure do not cover what is owed to the
foreclosing entity.
Nonjudicial (administrative) procedure for time-share estates
To use the administrative procedure to foreclose an owner's interest in a
time-share estate, the foreclosing entity must first send notice to the owner,
informing the owner of the default, of the amount of the default, and that he or she
may, within 30 days, cure the default or object to the use of the administrative
procedure. If the owner does not timely cure the default or object to the use of the
administrative procedure, he or she has waived the right to a judicial foreclosure,
and the foreclosing entity may proceed with the administrative foreclosure, which
includes sale by public auction. The foreclosing entity must publish notice of the
foreclosure sale in a newspaper having general circulation in the county in which the
time-share estate is located. The notice must be published once in each of three
successive weeks, and the first publication must be at least 30 days before the date
of the sale. In lieu of publishing the full notice three times in a newspaper, the
foreclosing entity may post the full notice on an Internet site for three successive
weeks and publish the Internet site in a newspaper once in each of three successive
weeks. In addition to publishing notice of the sale, the foreclosing entity must mail
written notice of the date, time, and place of the sale to the time-share estate owner
and all persons having a lien of record on the time-share estate.
The foreclosure sale must take place on the time-share estate property or at
another location in the county where the time-share estate is located and must be
conducted by a registered auctioneer or an attorney who is a member of the State Bar
of Wisconsin. The successful buyer at the foreclosure sale, which extinguishes the
former owner's right to redeem, takes the time-share estate free and clear of any
assessments owed by the former owner. The time-share estate is still subject,
however, to any outstanding taxes and to any liens or other encumbrances that were
recorded before the mortgage or assessment lien on which the administrative
foreclosure is based. The foreclosing entity must: 1) within 10 days after the
foreclosure sale, deliver to the buyer a deed or other instrument transferring title
and an affidavit attesting that all requirements under the statutes for
administrative foreclosure have been met; 2) within 30 days after delivering the deed
or other instrument and the affidavit, mail the former owner and all persons holding
liens that were junior to that of the foreclosing entity a notice that details the results
of the sale; and 3) within 30 days after the foreclosure sale, apply the sale proceeds
first to the expenses of the sale and then to the amount owed to the foreclosing entity.
If there are any surplus proceeds after that, the foreclosing entity may pay the junior
lienholders or may turn the surplus proceeds over to the court and ask the court to
determine the proper distribution. If there are no junior lienholders or if they have
all been paid, the foreclosing entity must pay any surplus to the former owner, or to
the state treasurer if the foreclosing entity is unable to locate the former owner
within one year after the sale.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB328-ASA1,3,5
2707.28 Foreclosure of time-share estates and licenses. (1) Definition. 3In this section, "foreclosing entity" means a person that holds a mortgage or a lien
4for assessments under s. 707.37 on a time-share estate and that seeks to foreclose
5the mortgage or lien.
AB328-ASA1,3,9
6(2) Available procedures. (a)
Time-share estates. A mortgage or a lien for
7assessments under s. 707.37 on a time-share estate may be foreclosed in the same
8manner and subject to the same requirements as a foreclosure of mortgages on real
9property in this state or in the manner provided under this section.
AB328-ASA1,3,1110
(b)
Time-share licenses. A security interest in, or a lien for assessments under
11s. 707.37 on, a time-share license may be foreclosed under chs. 401 to 411.
AB328-ASA1,3,17
12(3) Nonjudicial time-share estate foreclosure procedure. (a)
Notice of
13default; nonjudicial foreclosure. 1. To foreclose a mortgage or a lien for assessments
14under s. 707.37 on a time-share estate under this section, a foreclosing entity shall
15first provide written notice to the time-share owner in default at the time-share
16owner's last-known address by certified mail, with return receipt requested, and by
171st class mail, subject to s. 707.38 (5).
AB328-ASA1,4,418
2. The notice shall inform the time-share owner of his or her default and the
19amount that he or she owes to the foreclosing entity; that he or she has the right to
20a judicial foreclosure conducted in the manner provided in ch. 846; that, within 30
21days from the date on which the notice was mailed under subd. 1., or 30 days from
1the last date the notice was mailed if the mailings were not on the same date, he or
2she may cure the default or object in writing to nonjudicial foreclosure; and that, if
3he or she does not timely cure the default or object to the nonjudicial foreclosure in
4writing, the foreclosing entity may proceed with a nonjudicial foreclosure.
AB328-ASA1,4,75
3. The notice shall include, for use by the time-share owner, a separate form
6objecting to nonjudicial foreclosure that includes the address of the foreclosing
7entity.
AB328-ASA1,4,168
4. If, within the 30-day period under subd. 2., the time-share owner returns
9the objection form under subd. 3. or otherwise objects in writing to the use of
10nonjudicial foreclosure, the foreclosing entity must use the procedure under ch. 846
11to foreclose the mortgage or lien. However, if the time-share owner does not, within
12the 30-day period under subd. 2., object in writing to nonjudicial foreclosure, he or
13she waives his or her right to foreclosure conducted in the manner provided under
14ch. 846, and, if he or she does not within that 30-day period cure the default, the
15foreclosing entity may proceed with a foreclosure sale of the time-share estate by
16public auction as provided in this section.
AB328-ASA1,4,1817
(b)
Notice of sale; general requirements. The foreclosing entity shall provide
18notice of the foreclosure sale under this section as follows:
AB328-ASA1,4,2319
1. a. Except as provided in subd. 1. b., notice of the sale as provided in par. (c)
20or (d), whichever is applicable, must be published once in each of 3 successive weeks
21in a newspaper having general circulation in the county in which the time-share
22estate is located. The first publication must be no later than 30 days before the date
23of the sale, excluding the date of that first publication and the date of the sale.
AB328-ASA1,5,1024
b. In lieu of publishing the notice of sale in a newspaper as provided in subd.
251. a., notice may be given by posting a copy of the notice of sale as provided in par.
1(c) or (d), whichever is applicable, for 3 successive weeks on the Internet and
2publishing, once a week for 3 successive weeks in a newspaper having general
3circulation in the county in which the time-share estate is located, a notice, in at
4least 10-point boldface type, that states at a minimum that the notice of sale for the
5foreclosure of the time-share estate is posted on the Internet, the Internet site where
6the notice is posted, and the name and street address of the property in which the
7time-share estate exists. The posting on the Internet shall begin on the same date
8as the first newspaper publication, which date must be no later than 30 days before
9the date of the sale, excluding the date of that first publication and the date of the
10sale.
AB328-ASA1,5,1411
2. At least 30 days before the date of the sale, excluding the date of the sale,
12written notice of the date, time, and place of the sale, which may be a copy of the
13notice under par. (c) or (d), whichever is applicable, must be mailed to all of the
14following:
AB328-ASA1,5,1715
a. Subject to s.707.38 (5), the time-share owner at the time-share owner's
16last-known address by certified mail, with return receipt requested, and by 1st class
17mail.
AB328-ASA1,5,1918
b. All persons having a lien of record on the time-share estate by certified mail,
19with return receipt requested.
AB328-ASA1,5,2420
3. The notice provided to the time-share owner under subd. 2. a. must include
21the following language: "You are hereby notified that you have a right to petition the
22Circuit Court for _______ County (the county in which the time-share estate is
23located), with service on _________ (the foreclosing entity) and upon such bond as the
24Court may require, to enjoin the scheduled foreclosure sale."
AB328-ASA1,6,4
14. If more than one time-share estate in the same time-share property will be
2sold at the foreclosure sale, all such time-share estates may be combined into one
3notice of sale, with one property description, as described in par. (c) or (d), whichever
4is applicable.
AB328-ASA1,6,85
5. The notice of sale as provided in par. (c) or (d), whichever is applicable;
6published, or posted and published, and mailed in accordance with the requirements
7under this subsection; together with such other or further notice, if any; constitutes
8sufficient notice of the sale.
AB328-ASA1,6,119
(c)
Form of notice to foreclose lien for assessments. The notice of foreclosure sale
10for foreclosing a lien for assessments under s. 707.37 on a time-share estate under
11this section shall be in substantially the following form:
AB328-ASA1,6,1312
NOTICE OF SALE OF TIME-SHARE ESTATE OR ESTATES UNDER
13CHAPTER 707 OF THE WISCONSIN STATUTES
AB328-ASA1,6,1914
By virtue of the (project instrument or time-share instrument, whichever is
15applicable) of the .... (name and address of the time-share property), and Chapter
16707 of the Wisconsin Statutes establishing a lien for failure to pay assessments on
17the time-share estate (or estates, if more than one) held by the time-share owner (or
18owners, if more than one) listed below, the time-share estate (or estates, if more than
19one) will be sold at public auction, commencing at ...., on ...., 20.., at ...., Wisconsin.
AB328-ASA1,6,2320
(For each time-share estate, list the name and address of the time-share
21owner, a general description of the time-share estate, and the recording information
22for the deed or other instrument vesting the time-share estate in the time-share
23owner.)
AB328-ASA1,7,324
TERMS OF SALE: (State the deposit amount to be paid by the buyer at the time
25and place of the sale and the times for payment of the balance or the whole, as the
1case may be. The time-share estates, if more than one, must be sold in individual
2lots unless there are no individual bidders, in which case they may be sold as a
3group.)
AB328-ASA1,7,44
Other terms to be announced at the sale.
AB328-ASA1,7,66
Holder of the lien or authorized agent.
AB328-ASA1,7,97
(d)
Form of notice to foreclose mortgage lien. The notice of foreclosure sale for
8foreclosing a mortgage lien on a time-share estate under this section shall be in
9substantially the following form:
AB328-ASA1,7,1110
NOTICE OF SALE OF TIME-SHARE ESTATE OR ESTATES UNDER
11CHAPTER 707 OF THE WISCONSIN STATUTES
AB328-ASA1,7,1812
By virtue of Chapter 707 of the Wisconsin Statutes and the rights contained in
13a certain mortgage (or mortgages, if more than one) on the time-share estate (or
14estates, if more than one) given by the time-share owner (or owners, if more than
15one) set forth below for breach of the conditions of the mortgage (or mortgages, if
16more than one) and for the purpose of foreclosing, the time-share estate (or estates,
17if more than one) will be sold at public auction, commencing at ...., on ...., 20.., at ....,
18Wisconsin.
AB328-ASA1,7,2219
(For each time-share estate, list the name and address of the time-share
20owner, a general description of the time-share estate, the recording information for
21the deed or other instrument vesting the time-share estate in the time-share owner,
22and the recording information for the mortgage.)
AB328-ASA1,8,223
TERMS OF SALE: (State the deposit amount to be paid by the buyer at the time
24and place of the sale and the times for payment of the balance or the whole, as the
25case may be. The time-share estates, if more than one, must be sold in individual
1lots unless there are no individual bidders, in which case they may be sold as a
2group.)
AB328-ASA1,8,33
Other terms to be announced at the sale.
AB328-ASA1,8,55
Holder of the mortgage or authorized agent.
AB328-ASA1,8,146
(e)
Sale procedure. 1. The foreclosure sale must take place on the time-share
7property in which the time-share estate exists or at another location in the same
8county in which that time-share property is located. The sale must be by public
9auction, conducted by an auctioneer registered under ch. 480 or by an attorney who
10is a member of the State Bar of Wisconsin. At his or her discretion, the auctioneer
11or attorney may dispense with the reading of the names of the time-share owners
12if there is more than one time-share owner, of the descriptions of the time-share
13estates if there is more than one time-share estate, and of the recording information
14if there is more than one instrument.
AB328-ASA1,9,215
2. Upon the sale of the time-share estate, the time-share owner's right to
16redeem the time-share estate is extinguished. Unless the successful buyer is the
17time-share owner, the successful buyer at the foreclosure sale takes title to the
18time-share estate free and clear of any outstanding assessments owed by the
19previous time-share owner to the managing entity or other person specified in the
20project instrument or time-share instrument, but subject to municipal or other taxes
21and to any liens and encumbrances that were recorded prior to the recording of the
22mortgage or the assessment lien. A buyer at a foreclosure sale under this section is
23not required to complete the purchase if the time-share estate is subject to
24outstanding liens and encumbrances, other than those included in the notice of sale,
25that are not stated at the sale. The buyer shall have a period of 5 days from the
1foreclosure sale date to determine if the time-share estate is subject to any such liens
2or encumbrances.
AB328-ASA1,9,103
3. No later than 10 days after the foreclosure sale date, the foreclosing entity
4shall deliver to the successful bidder a foreclosure deed or other appropriate
5instrument transferring title to the time-share estate and an affidavit in recordable
6form attesting that all requirements described in this section have been met. Within
730 days after the delivery of the foreclosure deed or other instrument of transfer and
8affidavit, the buyer shall record the foreclosure deed or other instrument of transfer
9and affidavit with the register of deeds of the county in which the time-share estate
10is located.
AB328-ASA1,9,1511
4. Subject to s. 707.38 (5), within 30 days after delivering the foreclosure deed
12or other instrument of transfer and affidavit to the buyer, the foreclosing entity shall
13mail by 1st class mail to the last-known address of the former time-share owner and
14to each party that held a lien or security interest junior to that of the foreclosing
15entity a notice detailing the results of the foreclosure sale.
AB328-ASA1,9,1916
(f)
Application of sale proceeds. 1. No later than 30 days after the foreclosure
17sale, the foreclosing entity shall apply the proceeds of the sale first to the expenses
18of the sale and then to the amount owed to the foreclosing entity, as set forth in the
19notice to the former time-share owner under par. (a).
AB328-ASA1,9,2120
2. Any surplus after the payments under subd. 1. are made shall be applied as
21follows:
AB328-ASA1,9,2522
a. If there are any parties that held a lien or security interest junior to that of
23the foreclosing entity, the foreclosing entity may make an equitable and proper
24distribution of the surplus to those parties, or may bring an action of interpleader,
25turn the surplus over to the court, name the parties with the junior liens or security
1interests, and ask the court to determine the proper distribution of the surplus. The
2foreclosing entity shall recover reasonable attorney fees in any interpleader action
3under this subd. 2. a.
AB328-ASA1,10,94
b. If no party held a lien or security interest junior to that of the foreclosing
5entity, or if all parties holding junior liens or security interests have been paid, any
6surplus shall be paid to the former time-share owner. If the foreclosing entity is
7unable to locate the former time-share owner within one year after the foreclosure
8sale, the foreclosing entity shall deliver the surplus to the state treasurer as provided
9under ch. 177.
AB328-ASA1,10,12
10(4) Waiver of deficiency. Any foreclosing entity that forecloses a mortgage or
11lien under this section waives the right to bring an action for any deficiency that may
12remain due to the foreclosing entity after the sale of the time-share estate.
AB328-ASA1,11,414
707.37
(6) Enforcement of lien. A lien may be enforced and foreclosed by a
15managing entity
, or any other person specified in the time-share instrument, in the
16same manner
, and subject to the same requirements, as a foreclosure of mortgages
17on real property in this state or, in the case of a time-share license, under chs. 401
18to 411 provided in s. 707.28 (2). The managing entity may recover costs and actual
19attorney fees. The managing entity may, unless prohibited by the project instrument
20or time-share instrument, bid on the time share at foreclosure sale and acquire, hold,
21mortgage
, and convey the time share. Suit to recover a money judgment for unpaid
22time-share expenses shall be maintainable without foreclosing or waiving the lien
23securing the time-share expenses.
Suit Except as provided in s. 707.28 (4), suit for
24any deficiency following foreclosure may be maintained in the same proceeding. No
25action may be brought to foreclose the lien unless brought within 3 years after the
1recording of the statement of time-share lien and
, except as provided in s. 707.28 (3)
2(a) and (b), unless 10 days' prior written notice is given to the time-share owner by
3registered mail, return receipt requested, to the address of the time-share owner
4shown on the books of the managing entity.
AB328-ASA1,11,76
(1) This act first applies to foreclosures of mortgage or assessment liens on
7time-share estates that are commenced on the effective date of this subsection.
