A Certificate of Purchase (CP) is said to be "redeemed" when the landowner pays all taxes paid by the CP holder, plus interest and fees. The landowner pays this amount to the Treasurer's Office, and the Treasurer's Office then passes it on to the CP holder.
Here's a breakdown of what's collected from the landowner at the time of redemption:
- The CP Amount
- A 3% penalty on the CP Amount
- Interest on the CP Amount at 15% per year
- Any subsequent taxes paid by the CP Holder
- Interest on the subsequent taxes at 15% per year
The 3% penalty on the CP Amount allows the CP holder to get some return on the money paid at the sale even if the landowner redeems the property right away. For example, if a certificate is purchased at the tax sale for $500, and the landowner redeems the property the next day, the CP Holder won't receive much interest, but will be reimbursed all the money paid at the tax sale plus the 3% penalty. So, the CP Holder would receive an additional $15 for their 1 day investment.