USA Foreclosure Wiki

McKeithen v. City of Richmond (2023)

4 min read

McKeithen v. City of Richmond (2023)

Citation: Record No. 210389 (Va. Oct. 19, 2023) · Court: Supreme Court of Virginia (opinion by Justice D. Arthur Kelsey) · Decided: October 19, 2023

The Virginia analogue to tyler-v-hennepin-county, decided ~4 months later but resting on the Virginia Constitution rather than the Fifth Amendment. After a judicial tax sale fully satisfied the City of Richmond’s priority tax lien, the Court held that diverting the remaining surplus to the City — rather than to an unsatisfied junior lienor — was an unconstitutional taking of a vested property interest. The case is the controlling virginia authority on who owns the surplus from a surplus-funds judicial tax sale.

Facts

Charles Davis owned real property in the City of Richmond when he died in 2006. Property taxes went unpaid for roughly the next decade. The City brought a judicial tax-sale proceeding under Va. Code § 58.1-3340 to enforce its priority tax lien, and the property was sold. The sale proceeds fully satisfied the City’s tax lien, leaving an unclaimed surplus (reported as roughly $14,000). The Caldwell Trust (through Ken McKeithen as successor trustee) held a junior judgment lien against the property. Reading Va. Code § 58.1-3967, the circuit court concluded the statute directed the surplus to the City rather than to the unsatisfied junior lienor, and entered judgment for the City. McKeithen appealed.

Holding

The Supreme Court of Virginia reversed, holding that the escheat provision of Va. Code § 58.1-3967, as applied to these facts, violated Article I, Section 11 of the Constitution of Virginia. A judgment lien is a vested property right; once the City’s own (already-paid) tax lien was satisfied, the surplus belonged to the junior lienor whose secured interest remained unpaid, not to the government. The State could not, by statute, redirect that vested interest to itself.

Reasoning

  • Article I, § 11 protects vested property. Virginia’s constitution protects private property from uncompensated government seizure. A perfected judgment lien is a vested property right that a retroactive or escheat-style statute cannot diminish in favor of the sovereign.
  • The City was already made whole. Because the judicial sale satisfied the City’s priority tax lien in full, the City had no remaining secured claim on the proceeds. Allowing it to also capture the surplus would give the government value beyond what it was owed — the same structural defect the U.S. Supreme Court condemned in tyler-v-hennepin-county.
  • As-applied, not facial. The Court did not strike § 58.1-3967 on its face; it held the statute unconstitutional as applied where a junior lienholder’s unsatisfied secured interest exists in the surplus.

Practical impact

  • For former owners and junior lienholders: In virginia, surplus from a judicial tax sale that exceeds the taxing authority’s satisfied lien is reachable by remaining lienholders (and, under tyler-v-hennepin-county principles, by the former owner once superior liens are paid) rather than escheating to the locality.
  • For investors/operators: Confirms that a Virginia locality cannot pocket sale surplus once its tax lien is paid; due-diligence on junior-lien priority and surplus distribution is essential when valuing Virginia tax-sale assets. See surplus-funds and lien-priority-waterfall-reading.
  • Notice ties in: Surplus claimants of record are entitled to notice consistent with mullane-v-central-hanover; an unknown-heir or unlocatable senior claimant does not forfeit a junior lienholder’s vested interest.

Good-law status

Still good law as of last_verified 2026-06-02. A published Supreme Court of Virginia decision; not overruled or superseded. It harmonizes Virginia surplus practice with tyler-v-hennepin-county.

Why it matters

McKeithen is the post-Tyler Virginia surplus anchor: it establishes, on independent state constitutional grounds, that a locality may not retain tax-sale surplus once its lien is satisfied, and identifies the junior lienholder (and behind them the former owner) as the rightful claimant.

Applies in →

virginia (binding state authority). Concept cross-links: surplus-funds, lien-priority-waterfall-reading, due-process-notice.

Legal information, not legal advice. This page summarizes a court decision for educational purposes and does not create an attorney-client relationship. Verify against the primary opinion and consult a licensed attorney in the relevant jurisdiction before acting. Last verified 2026-06-02.

Graph View

Backlinks