diff --git a/vcsserver/config/settings_maker.py b/vcsserver/config/settings_maker.py
--- a/vcsserver/config/settings_maker.py
+++ b/vcsserver/config/settings_maker.py
@@ -71,12 +71,13 @@ class SettingsMaker:
         Special case string function that detects if value is set to empty quote string
         e.g.
 
-        core.binar_dir = ""
+        core.binary_dir = ""
         """
 
         input_val = cls._string_func(input_val, lower=lower)
         if input_val in ['""', "''"]:
             return ''
+        return input_val
 
     @classmethod
     def _dir_func(cls, input_val, ensure_dir=False, mode=0o755):
diff --git a/vcsserver/http_main.py b/vcsserver/http_main.py
--- a/vcsserver/http_main.py
+++ b/vcsserver/http_main.py
@@ -716,7 +716,9 @@ def sanitize_settings_and_apply_defaults
     settings_maker.make_setting('pyramid.default_locale_name', 'en')
     settings_maker.make_setting('locale', 'en_US.UTF-8')
 
-    settings_maker.make_setting('core.binary_dir', '/usr/local/bin/rhodecode_bin/vcs_bin', parser='string:noquote')
+    settings_maker.make_setting(
+        'core.binary_dir', '/usr/local/bin/rhodecode_bin/vcs_bin',
+        default_when_empty=True, parser='string:noquote')
 
     temp_store = tempfile.gettempdir()
     default_cache_dir = os.path.join(temp_store, 'rc_cache')