West Virginia bill limiting property tax sale purchases by certain governments, bad actors clears finish line

State Senate Majority Whip Ryan Weld, R-Brooke, was the lead sponsor of SB 548, which was part of state Auditor J.B. McCuskey’s legislative agenda.

The bill prohibits citizens of or entities organized in or controlled by citizens or governments of any country designated as a “Country of Particular Concern” by the U.S. State Department from participating in any public auction and from purchasing unsold lands at county tax sales.

There are 12 nations on the State Department’s list of countries of particular concern.

They include the People’s Republic of China, Russia, Saudi Arabia, North Korea, Pakistan, Iran, Cuba, Burma, Eritrea, Nicaragua, Tajikistan, and Turkmenistan. The new law allows the State Auditor to refuse to sell unsold lands to a potential buyer that is subject to the “countries of particular concern” designation.

McCuskey, in a Friday interview in his offices at the State Capitol Building, said that to his knowledge, West Virginia is the first state in the nation to pass such a bill.

“Senator Weld and I are very proud to be leading the country in preventing not only China, but Russia and Saudi Arabia and all of the countries that the State Department has deemed as countries of concern from purchasing our land and mineral rights and farmland,” McCuskey said. “It prevents people from those places from buying our property. Their nefarious purpose is to harm American independence, energy independence, food independence, and just general livelihood.”

Weld, who participated in Friday’s interview by phone, said the bill has an additional purpose to limit individuals and businesses who try to buy up properties at tax sales and auctions for illicit purposes.

The bill prohibits anyone from participating in auctions or tax sales who are delinquent in real property taxes, who have a history of noncompliance with code enforcement, who have failed to make payments from prior auctions, who have failed to comply with raze and repair orders. Those wishing to participate in tax sales and auctions must register with the State Auditor’s Office.

“The purpose is to prevent bad actors from buying these properties at tax sales and taking advantage of lower income people, and then also leaving municipalities holding the bag with the bank with dilapidated properties that they aren’t able have control over,” Weld said.

“... And using webs of LLCs and just the general business practices of those who are trying to hide their true intentions to effectuate all of those goals,” McCuskey added.

Weld, an attorney in private practice who also serves as the Wellsburg city attorney, said he has an active lawsuit against one individual who owns property in all 55 counties but uses as many as 14 shell LLCs to move the property around.

McCuskey explained that some bad actors try to buy up properties at tax sales and use them for illegal and illicit purposes, such as collateral for bail or for money laundering. These bad actors hide their actions by registering multiple LLCs, moving the property around or abandoning the property, putting it back into the hands of the State Auditor’s Office and local governments to deal with.

Weld said sometimes these bad actors also buy these properties, do the bare minimum to fix them up, then con low-income families into contracts to lease the properties and boot them out after a single missed payment, then con another family into moving in.

“The family typically can’t get a mortgage because they don’t have credit, so they do that but then they miss a payment, so now they’re out,” Weld said. “Then it’s wash, rinse, and repeat with family B, family C. And at that point in time, the property has become so uninhabitable and dilapidated that it’s no longer livable. And then because this is in a shell LLC, (the property owners) just walk away.”

McCuskey said limiting bad actors from participating in tax sales helps clear the way for others who have better intentions for the properties.

“Once we remove the few bad actors who are making the land sale process that happens in my office difficult, what you’re then doing is opening it up to those who are good actors,” McCuskey said. “The second part of what we’re doing is then incentivizing great private partners and our municipalities, counties, and land banks to step in to fill that void so that people who do have the community’s best interest at heart end up with these properties so that they can build, tear down, and recreate their communities.”

Weld and McCuskey said SB 538 is a companion bill to two bills passed by the Legislature in 2022. Senate Bill 552 helps speed up tax sales, allowing county and local governments to buy properties not sold during tax sales. Senate Bill 772 also provides state funding to cover the cost of tearing down dilapidated properties.

Now, Weld and McCuskey are considering new companion bills to introduce next year to further capitalize on tearing down dilapidated buildings and re-developing abandoned properties. Weld said smaller towns and cities need a centralized resource to help provide them with the legal means to go after rogue property owners.

“I see the struggle and how much work goes into tracking these people down, chasing them down, trying to enforce code, and trying to file a lawsuit,” Weld said. “I think that the Legislature should come up with a plan and a way to provide not just resources in terms of money, but resources in terms of tools that they can use to be able to enforce their code ordinances, to enforce, raze and repair orders. I think that would be an unbelievably massive step forward for cities across the state.”

“One of the things that we have started doing in our office is making ourselves a resource for local governments,” McCuskey said. “I think what’s really, really smart is to sort of create a centralized state resource center for municipalities.”

McCuskey would also like to see additional penalties for individuals and LLCs that allow their properties to become so dilapidated that put the lives of first-responders at risk when entering the properties on official business or for emergencies, such as fires. McCuskey cited an incident earlier in March where a Charleston firefighter was injured in a fire at an abandoned home.

“We have to start figuring out a way, how do we punish criminally negligent landowners who put our first responders in danger and the hardworking neighbors who live next to them,” McCuskey said. “It’s becoming pretty clear to me ... that the fines and fees that we send them aren’t going to do that.”

McCuskey said the goal is not to criminalize property ownership or place undue rules and regulations on property owners for things, such as letting the grass grow too high.

“You don’t want to give tools for overzealous prosecutors to put people in jail for not mowing their lawn,” McCuskey said. “But you also need to be able to say to whoever that person was that owned that house where that firefighter almost died, you’re going to be held responsible for your actions.”

McCuskey and Weld said the work that started last year with SB 552 and 772, along with SB 548 this year, are really motivating counties, cities, and towns to remove dilapidated buildings and make their communities more attractive to economic development.

“The cities and counties are now starting to take this project in as their own and the end result of what we’re providing — the resources we’re providing them — are giving them the creativity they needed to do all of this awesome development,” McCuskey said. “We have tons of economic development happening here, and now our cities are going to start to be cleaned up in a way that causes people to drive through a town to maybe want to stay.”

“The bills that we have done and worked on the past two years are now finally going to cut the bad actors out of that process and give people or the municipalities and other public entities the chance to revitalize those homes and give them another opportunity,” Weld said.

Steven Allen Adams can be reached at sadams@newsandsentinel.com