West Virginia Shortens Tax Sale Redemption Periods By Amy J. Tawney & Sandra M. Murphy, Bowles Rice In the 2022 regular legislative session, the West Virginia legislature significantly revised the process and timeline for redemption of real estate sold at a tax sale. The new law, effective June 10, 2022, overhauls the process for payment of property taxes, tax sales and redemptions with the goal of streamlining the process. It also amends the current statute to allow for payment plans and payment by credit card. During the legislative session, the banking industry worked with the State Auditor’s Office to ensure that the new legislation would incorporate specific requirements for the service of the notice of redemption included in the existing law to provide protection to real estate owners and lien holders. Although these specific notice requirements are included in the revised statute, the new law significantly shortens the timeline for redemption from a minimum of four months to 45 days. Most financial institutions take proactive steps to address the risk presented by a potential tax sale. Many lenders roll property taxes into the borrowers’ loan payments and then make the tax payments on behalf of the property owners. Some lenders require borrowers to establish escrow accounts for taxes or hazard insurance as permitted under the Real Estate Settlement Procedures Act. Other lenders include in their loan agreements that the failure to keep current on property taxes constitutes default of the loan and would allow the bank to demand immediate payment of the remaining balance. While these steps can reduce the risk that a tax sale will occur, they cannot prevent a tax sale from jeopardizing a bank’s collateral position in all cases. In response to the new West Virginia law, banks should review their internal controls and procedures to consider the shortened time periods. The new redemption procedure and timeline is set forth below: Tax Purchaser Prepares List of Persons to be Served. Under WV Code § 11A-3-52, following the tax sale by the Auditor, a tax sale purchaser must prepare a list of interested parties to be served with a notice to redeem. This list must be prepared within 120 days following the Continued on page 22 Pub. 13 2022 I Issue 3 Fall 21 West Virginia Banker
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