Virginia Land Banks & The Receivership Statute: How They Work Together to Address Blight

Article by By Laura A. Wakefield

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Introduction

Across Virginia, localities are grappling with vacant, abandoned, and blighted properties that threaten neighborhood stability and public safety. Two legal tools have emerged as particularly important in addressing these challenges: land banks and the receivership statute. Each has a distinct role, but together they form a powerful framework for reclaiming derelict properties and returning them to productive community use.

What is a Land Bank in Virginia?

Virginia authorizes land banks under the Virginia Land Bank Entities Act (Va. Code § 15.2-7500 et seq.). A land bank is a public or nonprofit entity that localities may create (individually or jointly) to acquire, manage, and repurpose troubled properties.

Key powers of a land bank include:

• Acquiring property through donation, purchase, tax foreclosure, or transfer from local governments.
• Clearing title and extinguishing liens.
• Holding, managing, and maintaining property until it can be redeveloped.
• Conveying property in furtherance of community development objectives, such as affordable housing, green space, or economic revitalization.

Notable examples include the Maggie Walker Community Land Trust, designated by Richmond, Chesterfield, and Henrico as their regional land bank; the Chesapeake Land Bank Authority; and the Danville Neighborhood Development Corporation. Currently the Virginia Land Banks are located only in a handful of jurisdictions – typically those experiencing struggling housing markets (e.g., Danville, Roanoke, Chesapeake, Martinsville) while rapidly growing regions like Northern Virginia generally have not.

The Maggie Walker Community Land Trust (MWCLT) was founded in 2016 as a nonprofit 501(c)(3) organization governed by a volunteer Board of Directors. The purpose was to create permanent affordable homeownership opportunities for low- and moderate-income households in Richmond. The MWCLT retains ownership of the land, while qualified homebuyers purchase the house at a reduced price. The homeowners enter into a long-term ground lease (typically 99 years) and agree to resale restrictions that ensure affordability even when they sell. When they resell, the homeowners keep all of their down payment and a portion of the appreciated value, while the rest of the appreciation stays embedded in the home to keep it affordable for the next buyer. So far MWCLT is on track to close on its 100^th home sale since founding. The MWCLT was named in honor of the first Black woman to charter and lead a U.S. bank.

Note the statute provides land banks with very broad powers:

“The land bank entity may acquire real property or interests in real property by gift, devise, transfer, exchange, purchase, or otherwise on terms and conditions and in a manner the land bank entity considers proper.” (Va. Code § 15.2-7507).

The definition of “real property” in Virginia law is not limited to residential use. This means commercial property is eligible for acquisition, management, and disposition by a land bank. So, on the face of the statute, a Virginia land bank can acquire, hold, and dispose of commercial property just like residential property.

That being said, the main focus of Virginia Land Banks is to focus on residential blight and affordable housing, because that’s where the need is most acute and where local governments direct resources. Even where commercial properties are eligible, many localities use other tools—economic development authorities, redevelopment and housing authorities, or downtown development corporations—for commercial revitalization.

What Is the Receivership Statute?

Virginia law also provides a court-supervised enforcement tool to address derelict housing: the receivership statute (Va. Code § 15.2-907.2).

Under this law, a circuit court may appoint either a locality or a land bank entity as a receiver for a derelict and blighted residential dwelling. Receivership is available only after:

1. The locality has declared the property to be a derelict building in compliance with the provisions of Va. Code § 15.2-907.1. “Derelict building” means a residential or nonresidential building or structure, whether or not construction has been completed, that might endanger the public’s health, safety, or welfare and for a continuous period in excess of six months, it has been (i) vacant, (ii) boarded up in accordance with the building code, and (iii) not lawfully connected to electric service from a utility service provider or not lawfully connected to any required water or sewer service from a utility service provider (Va. Code § 15.2-907.1.).
2. The property has been found to be blighted under the spot blight abatement process (Va. Code § 36-49.1:1). A locality can petition a court to appoint a receiver (i.e., land bank entity) to take control of a property if the owner fails to remedy the blight. “Blighted area” means any area that endangers the public health, safety or welfare; or any area that is detrimental to the public health, safety, or welfare because commercial, industrial, or residential structures or improvements are dilapidated, or deteriorated or because such structures or improvements violate minimum health and safety standards (Va. Code § 36-3).
3. The owner has failed to comply with remediation requirements. The owner or owners of record shall have 30 days from the date the notice is sent in which to respond in writing with a spot blight abatement plan to address the blight within a reasonable time. Notice is sent by regular mail to the last address listed for the owner on the locality’s assessment records for the property, together with a copy of such spot blight abatement plan prepared by the agency, authority, or locality. If the owner or owners of record fail to respond within the 30-day period with a written spot blight abatement plan that is acceptable to the chief executive of the agency, authority or locality, the agency, authority or locality may request the locality to declare the property as blighted, which declaration shall be by ordinance adopted by the governing body. (Va. Code § 36-49.1:1)

Once appointed, the receiver can then repair, rehabilitate, or even sell the property to eliminate the conditions that endanger health, safety, or welfare, provided that repairs comply with the Uniform Statewide Building Code and do not change the property’s zoning use. Importantly, receivership does not transfer ownership outright, but it gives the receiver control until costs are recovered and compliance achieved. A receivership may last up to two years, and a lis pendens must be recorded to provide notice.

How Receivership Liens Work

One of the most powerful features of the statute is the treatment of a receiver’s costs. All expenses—plus reasonable attorney’s fees—become a lien on the property that is on par with delinquent real estate taxes. This gives the lien super-priority status, meaning it outranks mortgages and other encumbrances until satisfied.

Required sales process to enforce the lien.
A receiver can’t just sell the property unilaterally. Enforcement requires:

1. Court order of sale on application;
2. Court appoints a special commissioner (a locality attorney may serve);
3. Newspaper notice published three times (1^st notice no more than 35 days before sale; and the 3^rd notice appearing no less than 7 days before the sale);
4. Public auction;
5. Accounting and confirmation by the court;
6. Deed passes free and clear to purchaser upon confirmation;
7. Surplus (after receiver’s lien, taxes, penalties, interest, attorney’s fees, costs, and recorded liens) goes to the former owner/heirs/assignees.
8. Owners may redeem any time before the 2-year receivership expires while property is still subject to receivership or prior to the confirmation of the sale at public auction by paying all amounts in full.

Provided the owner does not redeem the real property, the result is clear title for the purchaser, free and clear of prior liens.

The Relationship Between Land Banks and Receivership

The land bank and receivership statutes are complementary.

• The receivership statute is a legal mechanism for dealing with specific blighted properties where the owner is unresponsive. It’s about enforcement and remediation.
• The land bank provides the long-term stewardship mechanism to manage, rehabilitate, and redevelop those properties once control is secured.

Virginia law explicitly allows land banks to serve as receivers. This means a court can appoint a land bank as receiver for a blighted property, giving it authority to repair or auction the property and then manage it in line with community development goals.

Step-by-step: a typical receivership case with a land bank

1. Locality has an ordinance and tax-abatement program under § 15.2-907.1; it declares the structure derelict.
2. Locality also completes spot blight steps under § 36-49.1:1.
3. Owner is notified and has 30 days to comply.
4. Owner fails to comply within said 30 days; locality petitions to appoint itself or its land bank as receiver and records a lis pendens.
5. Court appoints the receiver; receiver procures repairs (public-procurement rules apply).
6. Receiver’s costs become a lien with tax-lien parity.
7. If not repaid, receiver applies for order of sale → public auction via special commissioner → proceeds pay the receiver/taxes first; surplus to prior owner/heirs.
8. Owner can redeem by paying all amounts before confirmation.

Practical Implications for Localities

Localities considering these tools should be mindful of several practical points:

• Residential scope only: Receivership under § 15.2-907.2 applies only to residential dwellings. Other types of blight require different statutes.
• Program prerequisites: A derelict-building tax abatement program under § 15.2-907.1 must be in place before receivership can be pursued.
• No zoning changes via repairs: Court orders will not permit repairs that alter zoning use.

Due process protections: Under § 15.2-907.2 owners retain the right to redeem the property at any time prior to the expiration of the two-year period or prior to confirmation of sale at public auction by paying the receiver’s lien in full and the taxes, penalties, interest, reasonable attorney fees, costs, and any recorded liens chargeable against the property. Partial payment shall not be sufficient to redeem the property and shall not operate to suspend the receivership. The courts oversee all auctions and deed transfers.

Conclusion

Virginia’s land bank statute and receivership statute work hand in hand to provide both the legal authority and the organizational capacity to address blight. Receivership offers a judicial pathway to intervene when private owners fail, while land banks provide the long-term infrastructure for stewardship and redevelopment. Together, they empower localities to transform vacant and derelict or blighted housing into assets that stabilize and strengthen communities. Land banks are governmental or quasi-governmental units and, as such, constitutional notice requirements may come into play.  Should you find yourself dealing with the sale of property out of a land bank, or find that one is in the recent chain of title, you may want to reach out to your title insurer’s counsel to determine what specific steps, requirements or exceptions, if any, they want you to take or include.

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