In lien redemption calculations, which amount is used?

• A. Amount due
• B. Amount sold plus interest
• C. Principal
• D. Interest

Answer: (B)

In lien redemption calculations, focus is on the investor’s return, not the unpaid taxes alone. When a tax lien is sold at auction, the buyer pays a specific price—the amount sold. Over time, interest accrues on that lien at the contract rate. When the property owner redeems, they must reimburse the purchaser for that initial amount plus the interest that has accrued up to the redemption date. So the redemption amount equals the amount sold plus interest.

For example, if the lien sold for 2,000 and three months of interest at 1% per month have accrued, the redemption amount would be 2,000 plus 60, totaling 2,060. This explains why the best choice is amount sold plus interest: it reflects both the purchaser’s investment and the earnings on that investment through the accrued interest.