Introduction to West Virginia Statute Changes with Randy Saunders
Brian Seidensticker, CEO of Tax Sale Resources, recently hosted another insightful podcast with attorney Randy Saunders of the law firm Nelson Mullins. Saunders is an experienced tax sales expert who provided an update on major statutory changes in West Virginia that are of particular interest to investors.
An Overview of the Statute Revisions in West Virginia
West Virginia Senate Bill 552 was passed in 2022, and 2023 is the first year the changes it represents have been implemented. The legislation was an effort to favor the interests of local West Virginia property owners over those of out-of-state parties, helping the landowners save money. Another goal was to centralize and consolidate some of the state’s tax sale procedures to streamline the process and make it more efficient.
The Beneficial Value of West Virginia Land Usage
The state also wants to ensure that when property changes hands through a tax sale, it is subsequently used to benefit the state and the local community. Traditionally, the primary goal of tax sale investors is to make a profit. Still, legislators wanted to avoid the relatively rare scenarios where investors acquire tracts of land and leave them undeveloped to earn money from such things as mineral rights. So, they inserted language into the bill stating that those who purchase property through tax sales should derive the highest and best use from it. That’s typically done through development for the rental market or reselling the property after upgrades to enhance its market value.
West Virginia Works to Ease the Taxpayer Burden
The statute also attempts to relieve some of the burden of interest payments incurred by delinquent taxpayers. It did this by implementing a reduction in the amount of interest that must be paid to successfully redeem a property. Whereas that rate used to be 12%, it is now 7.5 percent. The other component of the statute relates to the interest taxpayers must pay when they become delinquent, which was lowered from 9% to 3%.
Investors Need Not Worry about the Interest Rate
Investors need to note that this only impacts the taxpayer and doesn’t affect the interest-earning potential of the tax sale investor. Many people mistakenly interpreted the statute incorrectly, assuming that the rate they received went from 12% to 3%. But that’s simply not true. The 3% only applies to the taxpayer’s tax bill that they owed when they became delinquent and does not impact the interest earned by investors who hold a tax certificate purchased at a tax sale auction.
New Certifications by the State Auditor in West Virginia
The process used to be that there was a sheriff’s tax sale in each of the 55 counties in the state, followed by an 18-month redemption period. Then, if the investor acquired the deed to the property, it would be issued immediately, and the investor would take possession of the property. Under the revised statute in Bill 552, the property may still be redeemed until the state auditor has taken over responsibility from the sheriff and has certified the deed. So, instead of requesting the deed from the county, you request it from the state auditor. It remains to be seen if there will be backlogs in that process that effectively extend the redemption period − since one state office is now handling all certifications throughout the state.
Property Owner Interest Payment Plans-A Taxpayer Benefit
Now, delinquent property owners whose properties are their principal residence can also use a payment plan to redeem if they demonstrate financial hardship. They used to have to pay everything owed in one lump sum payment, but now they can break it up into as many as three incremental payments, which may impact the number of properties that get redeemed in West Virginia.
Changes to the West Virginia Tax Sale Schedule
Under the new statute, the state auditor will now conduct tax sales in each county between May 1st and October 1st of each year, versus the old way, in which sales only took place during the two months of October to November. That gives investors more time to do their due diligence and decide what properties they want to bid on in the auction.
West Virginia is Hopeful
The changes to the West Virginia process benefit both taxpayers and investors, opening the market a bit and granting investors more time for due diligence. However, the new bill does lean more heavily toward taxpayer rights. Be sure to listen to the entire interview with Randy Saunders for all the insight.
