Judicial Sales for the Collection of Delinquent Real Estate Taxes

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One of the methods available to collect delinquent real estate taxes under the Code of Virginia is the judicial sale process, also referred to as a bill in equity, where delinquent real estate parcels and improvements are sold. 

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About Judicial Sales

When Does a Property Become Eligible for Judicial Sale?

Virginia law specifically governs the judicial sale process (Article 4 of Chapter 39, Title 58.1 of the Code of Virginia, Code Sections 58.1-3965 et. seq.). Tax parcels are eligible for judicial sale in most cases when "any taxes on [such] real estate are delinquent on December 31 following the second anniversary of the date on which such taxes become due."

What Are the General Steps of the Judicial Sale Process?

Depending on the property, the judicial sale process can take several months to approximately 18 months. The owner of the property can redeem the property at any time during the process prior to the sale by paying all taxes, penalties, interest and costs. Generally, before a property can be sold, the following steps are completed:

  • At least 30 days prior to any action, a notice must be sent to the last known address of each property owner and in some circumstances, to the address of the property itself.
  • At least 30 days prior to filing a suit in Circuit Court, a list of properties planned for judicial sale must be published at least once by newspaper. (At a later date, another notice is published in the newspaper announcing the public sale of the property.)
  • Suit is filed in the Circuit Court against the owners to have the property sold at a judicial sale.
  • Once the Court determines that the sale is warranted, a special commissioner of sale is appointed by the Circuit Court.
  • The special commissioner of sale, at his discretion, may obtain offers through a private bid, through a public auction or list the property with a real estate agent.
  • Once the special commissioner of sale has completed the bid process, reports are filed and a hearing is scheduled with the Circuit Court to ask the Court to approve the offer.
  • If the sale is confirmed by the Circuit Court, the Court directs the special commissioner of sale to complete the sale by collecting the purchase price, preparing and executing the deed and by preparing a report accounting for all sale proceeds and disbursements.
  • The special commissioner then distributes the proceeds in order of priority, as approved by the Court, and makes a final accounting to the Court. The proceeds are distributed as follows in order of priority:
    • Costs of the suit, including attorney's fees
    • Payment of all delinquent real estate taxes and pro rata share of current taxes
    • Payment to any lien creditors (e.g. mortgage creditors, judgment lien creditors, state or federal tax liens) in their order of priority as determined by law
    • Any remaining proceeds are paid to the owners of the property. If owners cannot be located or identified, the Court can direct the remaining proceeds belonging to such absent owner be paid over to and held by the Clerk of the Circuit Court.