If you're delinquent in paying the property taxes on your West Virginia home, you could eventually lose ownership of the property.
If you're delinquent in paying property taxes in West Virginia, you could eventually lose your home.
How Do Property Taxes Work?
People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property's assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on your behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, you must pay them directly.
When homeowners don't pay their property taxes, the overdue amount becomes a lien on the property. A lien effectively makes the property collateral for the debt.
All states, including West Virginia, have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes. In West Virginia, the tax lien, including interest and other charges, attaches to the home on July 1st. (W. Va. Code § 11A-1-2).
How Does West Virginia Handle Property Tax Non-Payment?
County sheriff's departments mail tax tickets to property owners each year showing what tax is due and how the tax may be paid. (W. Va. Code, § 11A-1-8).
In West Virginia, the first installment of taxes is due on September 1st and becomes delinquent on October 1st. The second installment is due on the following March 1st and becomes delinquent on April 1st. (W. Va. Code § 11A-1-3).
What Are the Consequences of Not Being Able to Pay Taxes in West Virginia?
When taxes are unpaid, property owners get placed on the delinquent list by the sheriff's departments. These lists are presented to county commissions by May 15 each year and then sent to the State Auditor's Office by June 1. (W. Va. Code, § 11A-2-14).
On or before September 10, the county sheriff's departments prepare a second list of delinquent properties. (W. Va. Code, § 11A-3-2). If taxes are still unpaid on October 31, those properties are certified to the State Auditor's Office. (W. Va. Code, § 11A-3-2, § 11A-3-44, § 11A-3-8).
If the taxes on the property are still unpaid, the property is certified for public auction beginning March 1. (W. Va. Code, § 11A-3-44). The auctions are then held in each county sometime later. (W. Va. Code, § 11A-3-45).
Can I Redeem My Home in West Virginia?
Many states give delinquent taxpayers the chance to pay off the amounts owed and keep the home. This process is called "redeeming" the property.
You Can Redeem Before Certification
In West Virginia, the property may be redeemed at any time prior to the auditor's certification of such property to the deputy commissioner for sale by auction. (W. Va. Code § 11A-3-38, § 11A-3-42 to 11A-3-45).
You Can Redeem Before a Tax Deed Is Issued
Property sold by the commissioner at a public auction may be redeemed at any time before a tax deed is issued. (W. Va. Code § 11A-3-56).
How Much Will It Cost to Redeem My West Virginia Home?
To redeem prior to certification, you'll have to pay:
- the overdue amount of taxes, interest, and charges plus 12% interest per year from the date of certification
- all assessed taxes for the year in which certification occurred plus 12% interest per year from the date you fell delinquent, and
- all taxes that would have been assessed since the certification (as if the certification had not occurred), except those for the current year, plus 12% interest per year. (W. Va. Code § 11A-3-38).
The amount needed to redeem a property sold at public auction but before a deed is issued is:
- an amount equal to the taxes, interest, and charges due on the date of the sale, with interest thereon at the rate of 1% per month from the date of sale
- all other taxes thereon, which have since been paid by the purchaser, or their heirs, with interest at the rate of 1% per month from the date of payment
- additional expenses incurred in preparing the list of those to be served with notice to redeem, and for any licensed attorney's title examination incident thereto, with interest at the rate of 1% per month from the date of payment, but the amount required to pay, excluding said interest, for such expenses incurred for the preparation of the list of those to be served with notice to redeem and for any licensed attorney's title examination incident thereto, can't exceed $500
- all additional statutory costs the purchaser paid, and
- the auditor's fee and commission. (W. Va. Code § 11A-3-56, § 11A-3-66).
What Options Do I Have If I Can't Afford to Pay My Property Taxes in West Virginia?
Even though you'll get a redemption period after a West Virginia tax lien sale, in most cases, it's better to take action before you become delinquent on your taxes to make them more affordable.
You could, for example, find out if you meet the criteria for a property tax abatement or request a change in the property's assessment if you feel your assessed property value isn't reflective of the fair market value.
Does a Mortgage Survive a Tax Deed Process in West Virginia?
If your loan isn't escrowed and you fail to pay the property taxes, your loan servicer will probably pay the delinquent amount and then bill you for them. But why is the servicer concerned about unpaid property taxes? Because a property tax lien has priority.
Property Tax Liens Get Priority
Property tax liens almost always have priority over other liens, including mortgage liens and deed of trust liens. (For purposes of this discussion, the terms "mortgage" and "deed of trust" are used interchangeably.)
Because a property tax lien has priority, if you lose your home in a tax sale process, the process wipes out any mortgages. So, the loan servicer will usually advance money to pay delinquent property taxes to prevent this from happening. Most mortgages have a clause allowing the lender to then add the amount it paid to your loan balance. You'll then have to make repayment arrangements with the servicer.
You Might Face a Foreclosure If You Don't Reimburse the Servicer
The terms of most mortgage contracts require the borrower to stay current on the property taxes. If you don't reimburse the servicer for the tax amount it paid, you'll be in default. The servicer can then foreclose on the home in the same manner as if you had fallen behind in monthly payments, using the using the process that West Virginia law allows.
Your Servicer Might Set Up an Escrow Account
After demanding repayment of the amount it paid for the taxes, penalties, plus interest (and assuming you repay this tax debt), your servicer will probably set up an escrow account for the loan.
Each month, you'll have to pay approximately one-twelfth of the estimated annual cost of property taxes—and perhaps other expenses, like insurance—along with your usual monthly payment of principal and interest. This money goes into the escrow account.
The loan servicer then pays the cost of the taxes and other escrow items on your behalf through the escrow account.
What Gives the Servicer the Right to Set Up an Escrow Account?
Many mortgages have a clause that gives the lender the ability to establish an escrow account basically at any time it chooses. The servicer sets up and manages the account on behalf of the lender.
To find out if and when the lender can set up an escrow account for your loan, read your mortgage contract and any other relevant documentation you've signed, like an escrow waiver.
Upsides and Downsides to Having a Mortgage Escrow Account
The downside to having an escrow account is that you'll have to make a bigger payment to the servicer each month. On the positive side, having an escrow account saves you from having to come up with a large amount of money when tax bills, and perhaps other bills, are due.
Getting Help
If you're facing a property tax lien sale in West Virginia and have questions (or need help redeeming your property), consider talking to a foreclosure, tax, or real estate lawyer.
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