When a Virginia taxpayer makes a partial payment on real estate taxes that include both general taxes and special-district or CDA taxes, how should the treasurer allocate it?

Plain-English summary

Loudoun County's Treasurer presented the AG with a recurring tax-administration headache. When a piece of real estate sits within a Special Tax District or a Community Development Authority (CDA), the property gets hit with three (or more) different real-estate-based taxes at the same time: the general real estate tax, the special district tax (for sanitary or service districts), and a CDA-requested special tax. They all become delinquent at the same time. If the taxpayer pays only part of what's owed, which tax bucket does the treasurer credit first?

The AG laid out a two-step rule, drawing on three Virginia statutes.

Step 1 (always): apply to the most delinquent account first. Va. Code § 58.1-3913 directs that any payment of local levies received by the treasurer be credited first against the most delinquent local account. That foundational rule controls. If the taxpayer owes 2022 taxes and 2023 taxes, the 2022 taxes get paid down first regardless of category.

Step 2 (when accounts are equally delinquent): apply ratably or pro-rata. Once you've worked through the oldest delinquencies, you reach a level where multiple taxes accrued at the same time and are equally overdue. Here the Code is silent on priority. Va. Code § 58.1-3340 declares that "[t]here shall be a lien on real estate for the payment of taxes and levies assessed thereon prior to any other lien or encumbrance," but it doesn't rank the various real estate tax liens against each other.

The AG categorized the three taxes presented:

• General real estate tax under Title 58.1, Chapter 32: clearly an assessment "thereon" on real estate.
• Special District taxes (sanitary and service districts): the enabling statutes authorize the district to "levy and collect an annual tax upon all the property in such sanitary district subject to local taxation" (and the parallel language for service districts). That makes them taxes upon real estate.
• CDA taxes: a CDA may "[r]equest annually that the locality levy and collect a special tax on taxable real property within the development authority's jurisdiction." Also a tax on real estate.

Since all three are first-priority liens under § 58.1-3340, and the Code does not rank them, the only sensible rule is pro-rata allocation. The treasurer should credit a payment ratably across the equally delinquent buckets.

The AG's response answers both of the treasurer's specific questions: (1) general tax versus special district / CDA taxes (when equally delinquent: pro-rata), and (2) competing special district / CDA taxes when general taxes have been paid off (when equally delinquent: pro-rata).

The opinion noted that the Special District and CDA levies are "in addition to, and not in lieu of, the general real estate tax, which is for the general support of the government." That purpose difference, the AG concluded, does not change the priority analysis: all three are taxes on real estate constituting first-priority liens, so payments are applied oldest-first and then pro-rata.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is a Special District?
A geographic area within a locality created for a specific public purpose (water supply, sewer, garbage, fire, streetlighting, sidewalks, certain emergency services), in the form of a sanitary district or a service district. The locality levies an additional property tax on real estate within the district, with the proceeds dedicated to the district's authorized purposes.

What is a Community Development Authority (CDA)?
A separate political subdivision created by a locality to finance public infrastructure (roads, utilities, schools, parks) within a particular development project. A CDA can request the locality to levy a special tax on real property in its boundaries to repay revenue bonds used to fund the infrastructure. Common in large master-planned communities.

Why does the source of taxing authority not change the priority?
Because Va. Code § 58.1-3340 makes any "tax or levy assessed" on real estate a first-priority lien, ahead of all other liens or encumbrances. The Code does not subdivide that first-priority status among different kinds of property-tax liens. A general real estate tax, a service-district tax, and a CDA tax all sit at the same priority level on the same property.

What if my locality has an ordinance setting a different priority?
The AG's analysis is the default rule "absent a local ordinance providing otherwise." Section 58.1-3913 expressly allows a locality to set priority by ordinance. A treasurer with an ordinance should follow it; a treasurer without one falls back to pro-rata.

Does this apply when the taxpayer specifies what bill they're paying?
The AG didn't address that scenario. Most treasurer offices, including Loudoun's apparently, treat partial payments as undifferentiated and follow the statutory allocation rules. A taxpayer who wants to direct the payment to one tax type would need to take that up with the treasurer (and may or may not find the treasurer willing to honor the designation if doing so would conflict with § 58.1-3913).

Are these taxes liens on the property?
Yes. All three (general real estate, Special District, and CDA taxes) are liens on the real estate that take priority over all other liens and encumbrances under § 58.1-3340. That's why they're treated alike in the allocation analysis.

Background and statutory framework

Three statutes do most of the work:

• Va. Code § 58.1-3340: "There shall be a lien on real estate for the payment of taxes and levies assessed thereon prior to any other lien or encumbrance." Establishes first-priority status of property tax liens.
• Va. Code § 58.1-3913: directs treasurers to credit payments first against "the most delinquent local account." Sets the chronological rule.
• The enabling statutes for special districts (sanitary and service districts) and CDAs: quoted in the opinion without their section numbers, they authorize the additional taxes that share the same priority level.

The opinion observed that the Special District and CDA levies are "in addition to, and not in lieu of, the general real estate tax, which is for the general support of the government." What this 2013 opinion adds is the rule that the purpose difference does not translate into a priority difference for collection allocation: all three are first-priority liens under § 58.1-3340, applied oldest-first under § 58.1-3913 and then pro-rata.

Citations

• Va. Code § 58.1-3340 (first-priority lien for real estate taxes)
• Va. Code § 58.1-3913 (payment credited to most delinquent account)

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2013/12-109_Zurn.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

May 17, 2013

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

The Honorable H. Roger Zurn, Jr.
Treasurer, County of Loudoun
Post Office Box 347
Leesburg, Virginia 20178

Dear Mr. Zurn:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issues Presented

You present two related questions regarding the application of payments of delinquent local real estate taxes when a locality has established special tax districts ("Special Districts") and/or community development authorities ("CDAs") and such taxes accrue at the same time as general real estate taxes, thus becoming delinquent at the same time. You first ask whether payments must be applied first to the general real estate taxes or, alternatively, whether the Treasurer should apply payments ratably or pro-rata between the general taxes and the taxes for the Special Districts and/or the CDAs. You then ask, assuming that general real estate taxes have been paid, and taxes for more than one Special District and/or CDA have accrued at the same time and remain delinquent, whether the Treasurer should allocate payments pro-rata or ratably between the taxes for the Special Districts and/or the CDAs or whether there is any way, absent a local ordinance, to determine priority between such Special Districts and/or CDAs for the payment of taxes that are equally delinquent.

Response

It is my opinion that, because the Code does not distinguish between the source of taxing authority, with each of the presented taxes constituting an assessment against real estate, and because the Code does not otherwise provide for priority of liens based on delinquent payments of such assessed taxes, the Treasurer, in both of the scenarios you present, should apply any payment first to the most delinquent assessed taxes, and, second, ratably or pro-rata between such taxes when they have accrued at the same time.

Applicable Law and Discussion

Section 58.1-3340 of the Code of Virginia provides that "[t]here shall be a lien on real estate for the payment of taxes and levies assessed thereon prior to any other lien or encumbrance." This provision makes clear that any tax or levy assessed on a piece of real estate constitutes a lien against such property which must be paid before other liens or judgments, but it does not establish a priority amongst local taxes and levies that become delinquent at the same time.

In the situation you present, the taxes at issue, although established for distinct purposes, are all "taxes and levies assessed" on real estate within the meaning of § 58.1-3340. Clearly, the general real estate tax levied pursuant to Chapter 32 of Title 58.1 is categorically such an assessment. Furthermore, a tax assessed by a Special District is likewise a tax on the real estate within such district. Specifically, sanitary districts are authorized to "levy and collect an annual tax upon all the property in such sanitary district subject to local taxation . . .," and service districts have the authority to "levy and collect an annual tax upon any property in such service district subject to local taxation. . . ." Finally, CDAs are authorized to "[r]equest annually that the locality levy and collect a special tax on taxable real property within the development authority's jurisdiction to finance the services and facilities provided by the authority." Although the levies imposed by Special Districts and CDAs are in addition to, and not in lieu of, the general real estate tax, which is for the general support of the government, it is my opinion that they constitute taxes upon real estate.

Section 58.1-3913 instructs that any payment of local levies received by the Treasurer is to be credited first against the most delinquent local account; this foundational statutory directive remains in force. Nevertheless, this section does not provide further guidance for instances when there are numerous delinquent local accounts, all of which became delinquent at the same time. Because both the general real estate tax and taxes from Special Districts and CDAs are taxes on real estate that constitute first priority liens on such real estate, and without statutory guidance that one should take precedence over the other if they come due at the same time, I conclude that the Treasurer should apply the payment ratably or pro-rata between the general real estate tax and the taxes for the Special Districts and/or the CDAs.

Similarly, in response to your second question, assuming general real estate taxes have been paid, and taxes for the Special Districts and/or the CDAs have accrued at the same time and remain delinquent, the Treasurer should allocate payments pro-rata or ratably between the taxes for the Special Districts and/or the CDAs.

Conclusion

Accordingly, it is my opinion that, because the Code does not distinguish between the source of taxing authority, with each of the presented taxes constituting an assessment against real estate, and because the Code does not otherwise provide for priority of liens based on delinquent payments of such assessed taxes, the Treasurer, in both of the scenarios you present, should apply any payment first to the most delinquent assessed taxes, and, second, ratably or pro-rata between such taxes when they have accrued at the same time.

With kindest regards, I am

Kenneth T. Cuccinelli, II
Attorney General