What Notices Do I Have to Send Before I Dispose of Repossessed Collateral?

Take a moment for “Bits & Bytes,” as Deanne Koll explains what notices need to be sent before a lender can dispose of repossessed collateral.

Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.

After default on a secured loan, the lender often ends up with the collateral in its possession and wants to dispose of it. There are specific notices a lender must send to the defaulted borrower before it disposes of the collateral.

In Wisconsin, the law requires a lender to provide reasonable notice to the borrower (and any secondary obligors or subordinate lienholders) prior to disposing of collateral.

The timing of the notice—or what constitutes “reasonable notice”—is a question of fact. Meaning, there are no specifics. However, in a non-consumer transaction, a 10-day notice period is presumed to be reasonable notice prior to disposition.

So, what has to go into the actual notice? The notice must provide for a description of the lender, a description of the collateral to be sold, the method of intended disposition, the borrower’s entitlement of an accounting of the proceeds and the time and place of the sale.

There are specific form notices directly in the Wisconsin Statutes available for lenders. You should also note that the specifics of the requirements within the notice depend on whether the goods to be disposed of result from a consumer or non-consumer transaction.

If you are not familiar with the rules of disposition of secured collateral or do not have appropriate procedures in place for this, you should consult with an attorney.

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A New Edition of the Municipal Law Alert is Now Available

A new edition of the Municipal Law Alert is now available online. This article discusses a recent Wisconsin Supreme Court ruling regarding the effect of a homeowner’s refusal to allow a tax assessor entry into their home for purposes of assessing the property.

View the latest article by clicking the title below, or click here for a print-friendly version. Archives of the Municipal Law Alert, including the ability to key word search, are also available.

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Refusing Entry to Tax Assessor

On July 7, 2017, the Wisconsin Supreme Court issued a ruling in Milewski v. Town of Dover. In this case, the Milewskis refused to allow the tax assessor entry into their home for purposes of assessing the property.  The assessor increased the Milewskis’ assessment by 10.5%.  Under state statute, the Milewskis had waived the ability to challenge the increased assessment at the Board of Review, by refusing to allow the assessor to enter their residence. The Milewskis challenged both their increased assessment and the constitutionality of the state statute.  Ultimately the Wisconsin Supreme Court ruled in favor of the Milewskis on constitutional grounds.

The Wisconsin Supreme Court held that a taxing authority cannot force a homeowner to choose between allowing a tax assessor entry into the residence or giving up the right to appeal the assessment. In arriving at its decision, the Court reasoned that a homeowner has a constitutional right to challenge their property tax assessment, and the exercise of that right cannot be conditioned on the homeowner consenting to a search of their home.  However, the Court also noted that, while the homeowner cannot be denied the opportunity to challenge their tax assessment, they still have a heavy burden to overcome—a burden which they may not be able to meet without providing information about the inside of their residence.

The Court’s decision changes the rules governing property tax assessment. Following Milewski, property owners can no longer be denied the right to appeal their property tax assessment to a Board of Review for refusing to allow the assessor to enter into their homes.  Additionally, the legislature is currently considering Senate Bill 158 which would alter the state statutes to be in line with the Supreme Court’s ruling.  It is likely that the final form of this bill will contain additional or different procedural requirements for tax assessors.

Given the changes and potential for additional changes in the future, it is important that municipal taxing authorities monitor this website for any new developments.  Municipalities should contact their municipal attorney with any questions.

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