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American College of Mortgage Attorneys — Partner with the Best®

Formed in 1974, the American College of Mortgage Attorneys (ACMA) is comprised of over 500 lawyers in North America who are experts in mortgage law.

United States

West Virginia

SECURITY INSTRUMENT USED

A deed of trust must: (1) describe the property to be encumbered; (2) identify the grantor, the beneficiary (creditor) and the trustee(s) by name and address (including the county of residence); (3) describe the debt secured, including the maturity date (a copy of the unexecuted promissory note is customarily attached to ensure there is no ambiguity concerning the indebtedness secured by the instrument); (4) identify the person who prepared the instrument by name and address at the end of the document; and (5)&nbsp;be executed and acknowledged by the grantor. W.Va. Code &sect;&sect;&nbsp;38-1-2, 39-1-2 and 39-1-2a. In lieu of recording the full deed of trust, a memorandum of the deed of trust, executed and acknowledged by the grantor in the manner to entitle a conveyance to be recorded under West Virginia law, may be recorded. A memorandum of deed of trust must contain at least the following information with respect to the deed of trust: (1)&nbsp;the name and address of the grantor, the trustee and the beneficiary; (2)&nbsp;a description of the debt secured including the amount and date incurred or, if evidenced by a promissory note or other contact, the date such note or contract was executed; (3) the date of execution of the deed of trust if different from the date of execution of the promissory note or contract evidencing the debt; (4)&nbsp;the maturity date of the debt; (5)&nbsp;a description of the property to be encumbered; (6) if the deed of trust is a credit line intended to secure future advances, then a title that complies with the West Virginia credit line deed of trust statute found at W.Va. Code &sect;&nbsp;38-1-14; (7) a statement of whether future advances are obligatory if the debt is a line of credit; (8) a description of the provisions of the deed of trust regarding substitution of trustee; (9) a summary of the notice and publication requirements upon the occurrence of a default; (10)&nbsp;a statement regarding whether the loan was originated or is to be serviced pursuant to the programs of the Federal Housing Administration, Veterans Administration, Federal National Mortgage Association, Federal Home Loan Administration, United States Department of Agriculture or West Virginia Housing Development Fund, and if so, any deed of trust form number used; and (11)&nbsp;the name of the person from whom a copy or the original of the deed of trust may be obtained. A memorandum of deed of trust is valid against creditors and purchasers as if the complete deed of trust were recorded on the date the memorandum is admitted to record. Prior to commencement of any foreclosure or other execution of the deed of trust, the original deed of trust must be recorded. W.Va. Code &sect; 38-1-2. West Virginia has adopted the Revised Uniform Law on Notarial Acts. W.Va. Code &sect;&sect;&nbsp;39-4-1 et seq. Under the Revised Uniform Law on Notarial Acts, a notarial act may be performed in West Virginia by a notary public of the State of West Virginia or a judge, clerk or deputy clerk of a court of the State of West Virginia. W.Va. Code &sect;&nbsp;39-4-10. Upon declaration of a State of Emergency and a lawful suspension of the provisions of W.Va. Code &sect;&nbsp;39-4-6 that require an individual to appear in person before a notary during the performance of a notarization, a document may be notarized electronically. W. Va. Code of State Rules &sect; 153-45-1 et seq. A notarial act performed in another state has the same effect under the law of the State of West Virginia as if performed by a West Virginia notarial officer, if the act performed in that state is performed by a notary public of that state; a judge, clerk or deputy clerk of a court of that state; or any other individual authorized by the law of that state to perform the notarial act. W.Va. Code &sect;&nbsp;39-4-11. The following short form certificates of notarial acts are sufficient under the Revised Uniform Law on Notarial Acts: &nbsp;(1) For an acknowledgment in an individual capacity: State of _________________ County of _______________ This record was acknowledged before me on [Date] by [Name(s) of individual(s)]. [Signature of notarial officer] Stamp &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title of office

RECORDING REQUIREMENTS

My commission expires: ________________________ &nbsp;(2) For an acknowledgment in a representative capacity: State of _________________ County of _______________ This record was acknowledged before me on [Date] by [Name(s) of individual(s)] as [Type of authority, such as officer or trustee] of [Name of party on behalf of whom record was executed]. [Signature of notarial officer] Stamp &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title of office

My commission expires

My commission expires: ________________________

STATUTES TO BE WAIVED

Late charges on consumer credit sales and loans (including refinancings or consolidations) are limited to the greater of (1)&nbsp;5% of the unpaid amount of the installment (not to exceed $30), or (2)&nbsp;an amount equivalent to the deferral charge that would be permitted to defer the unpaid amount of the installment for the period that it is delinquent. A delinquency charge may only be collected once, no matter how long it is outstanding. For consumer credit sales, no delinquency charge may be collected on any installment paid in full within 10 days even if other installments remain outstanding. If 2 installments or parts thereof, are in default for 10 or more days, the creditor may elect to convert the sale or loan from a precomputed sale or loan to one in which the finance charges are based on unpaid balances and not delinquency fees. W.Va. Code &sect;&nbsp;46A-3-112. Partial payments made to a creditor on a precomputed consumer credit sale or loan may be held by the creditor in a suspense or unapplied funds account, the amount of which must be disclosed to the consumer. Once the funds accumulated in such account are sufficient to cover a full payment installment, then the creditor must apply the funds as a payment on the consumer credit sale or loan in the order in which the installment falls due. W.Va. Code &sect;&nbsp;46A-3-111(b). Upon prepayment in full, except a first lien purchase money residential mortgage or a loan made by a federally insured depository institution, certain unearned prepaid finance charges must be rebated. W.Va. Code &sect;&nbsp;46A-3-111(e) Deeds of trust and other agreements evidencing a consumer credit sale or loan may only provide for the collection by the creditor of certain default charges and reasonable costs and expenses incurred in connection with realizing on a security interest. W.Va. Code &sect;&nbsp;46A-2-115. Allowable default charges may only be assessed and collected from the consumer if certain conditions have been met including, without limitation, any such charges must have been incurred by the creditor between the end of the consumer's cure period and before the date, if any, on which the consumer reinstates the loan, and the consumer and the creditor have agreed to cancel any pending foreclosure sale on the real property securing the consumer loan. W.Va. Code &sect;&nbsp;46A-2-115. A prepayment penalty of 1% of the original principal amount may be charged if prepayment is made in the first 3 years, but no penalty may be charged on a refinancing within the first year. A prepayment penalty may not be assessed under any industrial loan company licensee or secondary mortgage lender licensee contract. W.Va. Code &sect;&nbsp;46A-3-110. Under W.Va. Code &sect;&nbsp;61-3-39e, dishonored check charges cannot exceed $25, and the form of the notice must be substantially as follows: “you are hereby notified that a check, number &hellip;&hellip;, issued by you on (date of check), drawn upon (name of bank), and payable to (name of payee), has been dishonored. Pursuant to West Virginia law, you have 10 days from the date of this notice to tender payment of the full amount of the check plus a fee of $............ (not to exceed twenty-five dollars) to the undersigned at &hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;. You are further notified that in the event the above amount is timely paid in full you will not be subject to legal proceedings, civil or criminal. Dated&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;, 20&hellip; &hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip;&hellip; (Signed).”

UNUSUAL TREATMENT OF STANDARD PROVISIONS

Future advances can be secured using a Credit Line Deed of Trust. Statutes provide that such deeds of trust must (i)&nbsp;be either entitled “A CREDIT LINE DEED OF TRUST” or state conspicuously at the top of the first page “This instrument secures an obligation that may increase and decrease from time to time”; (ii)&nbsp;include specific provisions permitting future advances and state whether such advances are obligatory or nonobligatory (a nonobligatory advance will not retain priority over the lien of a junior secured creditor, a judgment lien creditor, mechanics' lienor who records and notifies the senior creditor of such interest prior to such advance); and (iii)&nbsp;set forth a maximum amount, which the aggregate principal amount shall not exceed. W.Va.&nbsp;Code &sect;&nbsp;38-1-14.

SECURING FUTURE ADVANCES

The deed of trust must set forth the grantor's obligation to maintain and insure the property, and to pay all taxes due thereon; such advances may increase the aggregate principal amount outstanding in a credit line deed of trust above the stated maximum amount. If the deed of trust contains a covenant that the consumer shall perform certain duties such as maintaining insurance, payment of taxes, and the creditor pays such obligations on behalf of the consumer, the creditor may add the amount to the debt. Within a reasonable time of advancing any sums, the creditor shall state to the consumer in writing the amount of the sums advanced, any charges with respect to this amount, any revised payment schedule, and if the duties of the consumer performed by the creditor pertain to insurance, a brief description of the insurance paid for by the creditor including the type and amount of coverages. No further information need be given. W.Va. Code &sect;&sect;&nbsp;46A-3-115, 38-1-14. Advances made by the creditor after recording of a credit line deed of trust to pay taxes, insurance premiums or other obligations the creditor has agreed to pay or has a right to pay under the credit line deed of trust, shall have priority over any mechanic's lien, judgment lien, notice of lis pendens or junior deed of trust recorded prior to the date the creditor makes any such collateral protection advances. W.Va. Code &sect;&nbsp;38-1-14(e).

SECURING ADDITIONAL ADVANCES TO PROTECT THE COLLATERAL, INCLUDING PAYMENT OF TAXES AND INSURANCE

In West Virginia, either a corporation or a person may be a trustee of a deed of trust. W.Va. Code &sect;&nbsp;38-1A-2.

CORPORATE OR INDIVIDUAL

Yes; the trustee must be a state resident (or a corporation chartered under the laws of the State of West Virginia or the United States of America), and if the trustee is a corporation, it must have its principal office located in West Virginia. Customarily, lender's local counsel serves as trustee. W.Va. Code &sect;&nbsp;38-1A-2.

RESIDENCY REQUIRED

Unless the Deed of Trust provides for notice, the beneficiary under a Deed of Trust, or assignee or personal representative of the beneficiary, is not required to provide notice to a Trustee of the substitution of such Trustee if there has been a death, removal, declination, resignation or refusal of, or inability to act by, the original Trustee name in the instrument.

NOTICE OF SUBSTITUTION OF TRUSTEE

2 types of real property foreclosure sales: judicial sales and trustee sales. The statutory provisions for judicial sales are found in W. Va. Code &sect;&nbsp;55-12-1 et seq. and are not discussed herein. Trustee sales are by far the most common. Upon an event of default as defined in the deed of trust, and if all other conditions precedent to sale by trustee pursuant to the trust deed have been satisfied, at the creditor's request, the trustee shall sell the property (or the necessary portion thereof), at public auction after publishing notice in an appropriate newspaper once a week for 2 consecutive weeks and giving notice via certified mail to the debtor and other secured parties at least 20 days prior to the sale. Notice of sale shall state: (1)&nbsp;sale time and place; (2)&nbsp;names of parties to the deed of trust pursuant to which the sale will be made; (3)&nbsp;date of the deed of trust; (4)&nbsp;deed of trust's recording information (office, book, and page); (5)&nbsp;quantity and description of land or property to be conveyed at the sale; and (6)&nbsp;the terms of sale. W.Va. Code &sect;&sect;&nbsp;38-1-3 and 38-1-4.

BRIEF DESCRIPTION OF PROCEDURE

TYPICAL LENGTH OF PROCEDURE

Reasonable value (generally no less than approximately 70% of appraised value); if not otherwise specified in the deed of trust, then 1/3 of the purchase money must be paid cash in hand, 1/3 with interest must be paid in 1 year, and the final 1/3, with interest, must be paid in 2 years from the date of sale. W.Va. Code &sect;&nbsp;38-1-5.

FORECLOSURE BID REQUIREMENTS

Borrower may redeem up until the moment before the sale by paying the full indebtedness and costs of sale to the creditor.

REDEMPTION PERIOD AND PRICE

WAIVER OF REDEMPTION; REDUCTION OF REDEMPTION PERIOD

A trust deed grantor, the obligor on the debt secured by the deed of trust, including any maker, comaker, guarantor, surety or other accommodation party, or other defendant in a civil action seeking a deficiency judgment on the debt secured by the deed of trust, may not assert as a defense that the fair market value of secured real property was not obtained at a trust deed foreclosure sale conducted in accordance with Chapter 38, Article 1 of the West Virginia Code. W.Va. Code &sect;&nbsp;38-1-7(b). Statute of limitations sets the period for collection at 10 years. Statute of limitations is 5 years in merchant to merchant transactions. Statute of limitations time period commences when debt is due and upon each installment when due. W.Va. Code &sect;&nbsp;55-2-6.

DEFICIENCIES

Generally, foreclosure on real property subject to a lease eliminates the leasehold interest if the interest was acquired after the deed of trust was recorded. However, following the conveyance of residential rental property to a purchaser by a trustee pursuant to a deed of trust, the tenancy of a tenant occupying the property under an unexpired written lease that is either not of record or was placed of record after the deed of trust under which the trustee sold the residential rental property was placed of record, may be terminated by giving 90 days written notice or by giving written notice not less than 30 days prior to the expiration of the lease, whichever is shorter. However, the tenancy of a tenant occupying the property under a month to month or other tenancy may be terminated by giving 30 days written notice. The terms and conditions of the lease of the property remain fully enforceable during the notice period. If the tenant fails to timely comply with the terms of the lease, the new owner, or the agent of the new owner, may proceed under the summary eviction statutes, notwithstanding the foregoing provisions. The tenancy of a factory-built home may only be terminated as provided in W.Va. Code &sect;&sect;&nbsp;37-15-6; 38-1-16.

EFFECT OF FORECLOSURE UPON LEASES

Trustees are required to file an inventory of the property sold and an account of the sale within 2 months of the trustee's sale. W. Va. Code &sect;&nbsp;38-1-8. Pursuant to W.Va. Code &sect;&nbsp;38-1-8a, if the property conveyed in the deed of trust includes real property that is occupied, or is intended to be occupied as a residence by the grantor at the time the deed of trust is executed and delivered, the report of the trustee shall include a disclosure form with information about the sale, the buyer, the lender, etc. The specific requirements for the disclosure form are found in W.Va. Code &sect;&nbsp;38-1-8a(b).

DISCLOSURES REQUIRED IN TRUSTEE'S REPORT OF SALE

&nbsp;Effective June 16, 2021, W.Va. Code &sect;&nbsp;8-12-22 et seq. authorizes municipalities and county governments to commence court proceedings to compel a lender to foreclose under a deed of trust secured by vacant, abandoned, or “unsafe” properties.

ZOMBIE PROPERTY REMEDIATION ACT OF 2021

The usury laws in West Virginia permit parties to contract in writing for the payment of interest for a loan at a rate not to exceed 8%. W.Va. Code &sect;&nbsp;47-6-5(b). As a practical matter, however, the statutory rate is seldom applied as a result of the creation of the West Virginia Lending and Credit Rate Board, which sets maximum interest rates as an alternative to specific usury provisions. W.Va. Code &sect;&nbsp;47A-1-1 et seq. The Board set the current maximum rate at 18% (which is subject to change) in October 1994.

USURY CEILING

Usury limitations are not applicable when the borrower is a corporation, partnership, or limited partnership, or if the debt is incurred primarily for a business purpose (in the case of an individual, the debt for a business purpose must exceed $20,000). W.Va. Code &sect;&sect;&nbsp;47-6-10 and 47-6-11.

USURY EXEMPTIONS

The West Virginia Legislature adopted the revised version of UCC Article&nbsp;9 recommended by the American Law Institute and the National Conference of Commissioners on Uniform State Laws, effective as of July&nbsp;1, 2001. West Virginia Legislature Acts 2000, c.&nbsp;272.

FINANCING STATEMENTS

Revised UCC Article&nbsp;9 provides that the proper place to file to perfect a security interest is the place of the debtor's “location.” The one exception to this general rule is fixture filings and filings made to perfect a security interest in as-extracted collateral and timber to be cut, which must be filed in West Virginia if the collateral, timber, or fixtures are located in West Virginia. W.Va. Code &sect;&nbsp;46-9-301. For purposes of Revised UCC&nbsp;9, the debtor's “location” is as follows: (i)&nbsp;an individual's location is his or her principal residence, W.Va. Code &sect;&nbsp;46-9-307(b)(1); (ii)&nbsp;for an entity created by filing with a state, the entity's location is that state, W.Va. Code &sect;&nbsp;46-9-307(e); (iii)&nbsp;for an entity not created by a filing, the entity's location is the place of business if the entity has only 1 place of business, W.Va. Code &sect;&nbsp;46-9-307(b)(2); and (iv)&nbsp;for an entity not created by a filing and with more than 1 place of business, the entity's location is its chief executive office, W.Va. Code &sect;&nbsp;46-9-307(b)(3). If West Virginia is the proper location to file because either the debtor, fixtures, as extracted collateral, or timber are located in West Virginia, the office in which to file a financing statement to perfect the security interest or agricultural lien is the county clerk where the real estate is located if (a)&nbsp;the collateral is as-extracted collateral or timber to be cut or (b)&nbsp;the financing statement is filed as a fixture filing and the collateral is goods that are or are to become fixtures. In all other cases, the filing should take place with the West Virginia Secretary of State, including cases in which the collateral is goods that are or are to become fixtures and the financing statement is not filed as a fixture filing. W.Va. Code &sect;&nbsp;46-9-501(a).

LOCATIONS FOR FILING

For a transmitting utility, the proper office in which to file a financing statement to perfect a security interest in collateral, including fixtures, is the West Virginia Secretary of State. The financing statement also constitutes a fixture filing as to the collateral indicated in the financing statement that is or is to become fixtures. W.Va. Code &sect;&nbsp;46-9-501(b).

TRANSMITTING UTILITY

As to cosigners of consumer credit sales or loan transactions, certain notice provisions must be furnished to the cosigner in a separate statement. W.Va. Code &sect;&nbsp;46A-2-104.

UNUSUAL PROVISIONS OR REQUIREMENTS

On negotiable instruments, waive presentment and notice of dishonor, as well as defenses based on suretyship and impairment of collateral. A waiver of notice contained in a consumer sales agreement loan agreement does not effectively waive the cosigner's right to receive notice. W.Va. Code &sect;&sect;&nbsp;46-3-504 and 46-3-605.

All parties obligated on a consumer debt must be given a special form of notice of their right to cure any default as a condition to enforcement by the creditor, with certain exceptions. Notice shall be in writing and shall conspicuously state the name, address and telephone number of the creditor to whom payment or other performance is owed, a brief description of the transaction, the consumer's right to cure such default and the amount of payment and other required performance and date by which it must be paid or accomplished in order to cure the default. A copy of the notice required by the section shall be certified in the manner prescribed by this section by an officer or other authorized representative of such creditor; and notarized by a person licensed as a notary under the laws of the state of West Virginia or any other state or territory of the United States as follows: “I, _________ (name of person certifying) the _________ (title of person certifying) of _________________ (creditor's name), hereby certify that the notice of consumer's right to cure default on which this certification appears (or to which this certification is attached) was on this ______ day of __________, 20__, mailed to the person(s) whose name(s) appear herein (therein) at the address(es) set forth herein (therein). ________________________(Signature)” W.Va Code &sect;&nbsp;46A-2-106.

SPECIAL PROBLEMS IN ENFORCEMENT OF GUARANTY

The obligor on the debt secured by the deed of trust, including any maker, comaker, guarantor, surety or other accommodation party, or other defendant in a civil action in which the creditor is seeking a deficiency judgment on the debt secured by the deed of trust, may not assert as a defense that the fair market value of secured real property was not obtained at a trust deed foreclosure sale conducted in accordance with Chapter 38, Article 1 of the West Virginia Code. W.Va. Code &sect; 38-1-7(b).

ISSUES AND GUIDELINES RELATED TO SEEKING/OBTAINING DEFICIENCY JUDGMENTS

The statute of limitations period on a deed of trust is the following: (i)&nbsp;If the final maturity date of the obligation is ascertainable from the lien instrument, the lien expires 5 years after that date; and (ii)&nbsp;If the final maturity date of the obligation is not ascertainable from the lien instrument, the lien expires 35 years after the date of the lien instrument. However, if the lienholder re-records the lien instrument prior to 35 years from the date of the lien instrument and includes a copy of the obligation secured by the lien so that the final maturity is ascertainable, the lien expires 5 years after the date of maturity. W.Va. Code &sect;&nbsp;55-2-5.

STATUTE OF LIMITATION PERIOD

A release in West Virginia must be signed and acknowledged by the beneficiary of the deed of trust, must describe the lien to be released, and must identify intent to discharge. The release must be furnished without cost to the grantor within 30 days after the debt is satisfied. W.Va. Code &sect;&sect;&nbsp;38-1-14(f); 38-12-1 et seq.

REQUIREMENTS FOR RELEASE OF LIEN

A homestead is exempt up to the value of $5,000 from all debts and liabilities except debts incurred for the purchase money thereof or for the erection of permanent improvements thereon. Value in excess of $5,000 can be subject to the demands of creditors. The exemption can be waived in the deed of trust if the security interest cannot be satisfied without encroaching upon the exemption. See W.Va. Code &sect;&nbsp;38-9-6; 38-9-4; 38-9-3.

HOMESTEAD ISSUES

W.Va. Code &sect;&nbsp;43-1-1 abolished dower. A married person who conveys an interest (including creating a security interest) in real estate is required to notify his or her spouse before or within 30 days after the conveyance if the conveyance involves an interest in real estate to which dower would have attached if it had been made prior to the abolition of dower. A person making a conveyance has the burden of proof to show compliance by: (i)&nbsp;the spouse's signature on the conveyance instrument, or (ii)&nbsp;such other forms of competent evidence as are admissible in a court of general jurisdiction in West Virginia under the rules of evidence. Nothing shall be construed to create a lien or claim against an interest in real estate conveyed in violation of this notice requirement. The consequence for the non-owning spouse's failure to join as a grantor or not giving notice to the non-owner spouse is that the value of the real estate conveyed will then be part of the conveyancer's marital property in the event of a subsequent divorce within 5 years of the conveyance. W.Va. Code &sect;&nbsp;43-1-2.

COMMUNITY PROPERTY

MORTGAGE TAX

DOCUMENTARY STAMP TAX

West Virginia has state and county excise taxes on the privilege of transferring real property. The same apply to foreclosure sales and deeds in lieu thereof. W.Va. Code &sect;&nbsp;11-22-2.

TRANSFER TAX

Enforceable so long as the contract bears a substantial relationship with the jurisdiction whose laws the parties chose to govern the agreement and the application of those laws would not offend the public policy of West Virginia.

ENFORCEABILITY OF AGREEMENT OF BORROWER AND LENDER AS TO CHOICE OF LAW PROVISIONS

Courts can and will appoint receivers and order them to sell certain real property. The receiver must be a West Virginia resident and be bonded prior to any property sale. W.Va. Code &sect;&sect;&nbsp;55-12-1 et seq.

RECEIVER AVAILABLE

West Virginia regulates the finance charges associated with obtaining and servicing loans to consumers, and has created the West Virginia Lending and Credit Rate Board to establish and revise alternative maximum finance charges to be charged for such services. W.Va. Code &sect;&sect;&nbsp;46A-3-101 et seq. and 47A-1-1 et seq. The West Virginia Lending and Credit Rate Board last set the maximum charges at 18% in October 1994, which rate is subject to periodic review and change.

ANY PROHIBITION OR SPECIAL RULES REGARDING LOAN APPLICATION, LOAN FEES OR COMMITMENT FEES

A person may not engage in this state in the business of lender or broker unless and until he or she first obtains a license to do so from the commissioner, which license remains unexpired, unsuspended and unrevoked, and no foreign corporation may engage in business in this state unless it is registered with the Secretary of State to transact business in this state. All mortgage loan originators, as that term is defined by W.Va. Code &sect;&nbsp;31-17A-2(h), shall obtain a mortgage loan originator license pursuant to W.Va. Code &sect;&nbsp;31-17A-3. These licensure requirements do not apply to loans brokered by a federally insured depository institution. W.Va. Code &sect;&sect;&nbsp;31-17-1 et seq.

LENDER QUALIFICATION AND/OR LICENSURE

If modification or renewal of a loan agreement is undertaken when no additional principal is advanced to exceed the original principal amount of the loan, the original deed of trust is sufficient for the purpose of securing the loan, regardless of any change in the rate of interest. W.Va. Code &sect;&nbsp;38-1-15. However, where additional principal is advanced beyond the original principal amount, a new deed of trust must be used to secure that portion of the loan that exceeds the original principal amount. In the event of a loan modification that extends the maturity date of the loan secured by the deed of trust, a written instrument confirming the extended maturity dated, in the form of an amendment to the deed of trust, a notice of extension agreement or by affidavit, is required to be recorded in the office of the county clerk of the county commission of the county where the deed of trust is recorded. W.Va. Code &sect;&nbsp;55-2-5.

MODIFICATION

West Virginia has not enacted a statute authorizing the state to impose an environmental lien or superlien to recover its unreimbursed costs related to environmental cleanups. Congress, however, adopted a federal lien provision in the 1986 Superfund Amendments and Reauthorization Act, which allows the federal government to place a lien on real property, owned by a potentially responsible party, that is subject to a mandated cleanup under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). CERCLA &sect;&nbsp;107(1), 42 U.S.C. &sect;&nbsp;9607(I). Under CERCLA, West Virginia has enacted the Superfund Lien Recordation Act empowering the clerk of the county commission, for the county in which the contaminated property is located, to record in the federal tax lien docket the federal superlien(s) on the property of any person. W.Va. Code &sect;&nbsp;38-10D-1 et seq. The lien imposed by CERCLA is subordinate to “the rights of any purchaser, holder of a security interest, or judgment lien creditor whose interest is perfected under applicable State law before notice of the [CERCLA] lien has been filed in the appropriate office within the state ... as designated by State law in which the real property subject to the lien is located.” 42 U.S.C. &sect;&nbsp;9607(I)(3). See W.Va. Code &sect; 38-10D-1.

ENVIRONMENTAL LIEN LAW ISSUES

West Virginia does not have a local bar opinion report that articulates standard accepted opinion practices for the jurisdiction. LABOR AND MATERIAL (L&M) LIEN CLAIMS—PRIORITY ISSUES

LEGAL OPINIONS

Any work performed or materials supplied, including architectural (landscape or otherwise); surveying and engineering services, prior to the date of the recordation of the deed of trust, would relate back to the first day on which the services were performed or materials supplied. If work is performed prior to the date of the recordation of the deed of trust, the lender would be advised to obtain an affidavit from the owner and/or a release or waiver of mechanic's lien from the parties who worked or supplied material to the property, and consult with the title insurance company for any additional documentation that may be required by the company to issue insurance coverage. W.Va Code &sect;&nbsp;38-2-1 et seq. A notice of mechanics' lien that is duly recorded and perfected after the recording of a credit line deed of trust will have priority over non-obligatory future advances made by the lender under the credit line deed of trust after receipt by the lender of written notice of the mechanics' lien. W.Va. Code &sect;&nbsp;38-1-14(e).

INCEPTION OF L&M LIEN (Priority of Lien of Deed of Trust or Mortgage)

A perfected security interest in fixtures has priority over a conflicting interest of the owner or encumbrancer of real estate if the debtor has an interest of record in or is in possession of the real property and; (1)&nbsp;the security interest is a purchase money security interest, (2)&nbsp;the interest of the encumbrancer or owner arises before the goods become fixtures, and (3)&nbsp;the security interest is perfected by a fixture filing before the goods become fixtures or within 20 days thereafter. W.Va. Code &sect;&nbsp;46-9-334(d).

PRIORITY AS TO REMOVABLE FIXTURES (Priority of Lien of Deed of Trust or Mortgage)

Lenders require a policy that generally or specifically conforms to the 2006 ALTA Loan Policy Form (6-17-06). The ALTA Short Form Residential Loan Policy is often required by lenders and includes many coverages that would otherwise only be included by separate endorsements.

FORM USUALLY REQUIRED BY LENDER

Most standard ALTA endorsements are available in West Virginia although title company forms for owners, residential and commercial transactions, including endorsements, premium rates, and rating manuals, must be filed with the West Virginia Insurance Commissioner for approval prior to use in West Virginia. The following types of endorsements are commonly requested by WV lenders:

ENDORSEMENTS USUALLY REQUESTED

Street Assessments (ALTA Form 1)—insures lender against loss/damage sustained due to assessments for street improvements under construction or completed at the date of the policy that are not listed as exceptions.

Street Assessments (ALTA Form 1)

Truth-in-Lending (ALTA Form 2)—insures lender against loss/damage resulting from any final judgment that either the lien of the insured loan has been terminated by a valid exercise of the right of rescission under the Federal Truth-in-Lending Act.

Truth-in-Lending (ALTA Form 2)

Zoning (ALTA Form 3 & 3.1)—insures lender as to the zoning classification of the land, that the current use(s) are allowed under the classification. This endorsement also insures against loss for court decree prohibiting the use of the land as specified or requiring the removal or alteration of the structure at date of policy.

Zoning (ALTA Form 3 & 3.1)

Condominium (ALTA Form 4 & 4.1)—insures against loss/damage resulting from the insured unit's failure to be a part of a condominium within the statutes, that the documents required by the condominium statute have been met, present violations of any restrictive covenants, subordination of the lien of the insured loan to any charges or assessments (at the date of policy), etc.

Condominium (ALTA Form 4 & 4.1)

Planned Unit Development (ALTA Form 5 & 5.1)—insures against loss due to present violations of restrictive covenants restricting the use of the land (except as noted on the policy), priority of any lien for homeowner's association assessments and for enforced removal of any existing structure due to encroachment onto adjoining land or easements.

Planned Unit Development (ALTA Form 5 & 5.1)

Variable Rate (ALTA 6, 6.1 & 6.2)—insures against loss/damage due to the insured lien's invalidity or unenforceability as a result of changes in the interest rate as calculated pursuant to the formula provided in the insured instrument at policy date. This endorsement DOES NOT provide for loss based upon usury or any consumer credit protection or truth in lending law.

Variable Rate (ALTA 6, 6.1 & 6.2)

Manufactured Housing Unit (ALTA Form 7)—specifically defines “land” to include the manufactured housing unit located on the land at the date of policy.

Manufactured Housing Unit (ALTA Form 7)

Environmental Liens (ALTA Form 8.1 & 8.2)—insures against loss/damage resulting from the insured lien's lack of priority due to any environmental protection lien recorded or provided for by any state statute in effect at policy date.

Environmental Liens (ALTA Form 8.1 & 8.2)

Restrictions, Encroachments & Minerals (ALTA Form 9-06 & 9.7-06)—insures that the lien cannot be subordinated or extinguished, its validity, priority, or enforceability impaired under any of the covenants, conditions or restrictions as set forth in the policy. Unless specifically noted in the policy, assurance is given that there are no current violations or encroachments of existing improvements on the land onto adjoining land for, conversely, no encroachments on the insured premises of existing improvements located on adjoining land. Also insures against damage to improvements on the insured land or future improvements resulting from the exercise of rights to use the surface for the extraction or development of minerals or subsurface substances excepted in Schedule B of the policy.

Restrictions, Encroachments & Minerals (ALTA Form 9-06 & 9.7-06)

Assignment of Mortgage (ALTA Form 10)—amends the policy to reflect the current lien holder as well as provides against loss/damage resulting from the assignment's failure to vest title in the assignee.

Assignment of Mortgage (ALTA Form 10)

Modification of Mortgage (ALTA Form 11)—insures against loss/damage by reason of the invalidity or unenforceability of the lien of the insured loan as a result of the modification agreement except for specific named actions (i.e., fraud, violation of doctrine of equitable subordination, failure to timely record the instrument of transfer, etc.).

Modification of Mortgage (ALTA Form 11)

Access and Entry (ALTA Form 17-06)—insures against loss in the event the insured land does not abut a public street as shown on survey.

Access and Entry (ALTA Form 17-06)

Single Tax Parcel (ALTA Form 18-06)—insures against loss if insured land is not separately taxed.

Single Tax Parcel (ALTA Form 18-06)

Contiguity (ALTA Form 19-06)—insures against loss if multiple parcels of land are not contiguous.

Contiguity (ALTA Form 19-06)

Location (ALTA 22-06)—insures against loss if building/improvement is not located within the boundaries of the insured land.

Location (ALTA 22-06)

Same as Survey (ALTA 25-06)—insures against loss in the event that the insured land as described in the policy is not the same as that shown on the survey.

Same as Survey (ALTA 25-06)

Credit Line Endorsement—insures future advances made after the date of recording will have priority over what would otherwise be intervening liens provided the requirements of W.Va. Code &sect; 38-1-14 are satisfied. Required to be used for construction loans and for revolving loans.

Credit Line Endorsement

A real estate reporting person is required to collect, withhold, and pay to the West Virginia State Tax Department, income tax on sales or exchanges of West Virginia real property and associated tangible personal property when the seller is a nonresident individual or entity. Withholding is only required when the sale causes a change of ownership on the land books of a county assessor. The real estate reporting person can include the person (including any attorney or title company) responsible for closing the transaction or the mortgage lender. W.Va. Code &sect;&nbsp;11-21-71b. &nbsp;

West Virginia

Mortgage Law Summary

Continue reading the
Mortgage Law Summary for West Virginia

West Virginia

Mortgage Law Summary

Continue reading theMortgage Law Summary for West Virginia

Continue reading the
Mortgage Law Summary for West Virginia