SCHOOL OF LAW
CONVEYANCING AND LEGAL DRAFTING
L411 TUTORIAL THREE
1st March 2023
Kasamba Mulenga has entered into a contract of sale with Tehillah Chimfwembe for the purchase of Stand
010382 Mumbwa at a consideration of K900,000. The parties have agreed that the purchase price shall be paid
in four (4) instalments namely K90,000 on exchange of contracts on 17th April 2022, second instalment of
K210,000 on 11th June 2022, third instalment of K300,000 on 30th September 2022 and the final instalment
of K300,000 on 21st December 2022. Kasamba takes possession of the property on 11th June 2022. Council
Rates for the year 2022 have been paid in full by Tehillah, the Vendor, at K800 per half year. On the subject
property are two bedsitter flats that are rented out at K1000 per month each and the two flats are rented out by
a Financial Service Provider “Zambia National Commercial Bank”, also known as “ZANACO”. ZANACO
has been renting the two bedsitters and has paid rent in advance for the entire 2022, commencing 1st January
2022. In a completion statement, show how you will account for the following:
1. Interest; (10 Marks)
2. Council Rates; and (10 Marks)
3. Rent paid for the Bedsitters. (5 Marks)
MODEL ANSWER
COMPLETION STATEMENT IN RESPECT OF STAND NO 34887, MUMBWA, LUSAKA
ADD interest payable for the K600,000.00 as the whole
period 11/06/22 to 29/09/22 i.e outstanding balance because that
111 days @K246.58 per day at was the balance after the second K27,369.27
15% per annum on an outstanding instalment was paid and
balance of K600,000.00 possession was given after the
second instalment.
ADD interest payable for the K300,000.000 was the balance
period 30/09/22 to 20/12/22 i.e 82 that was outstanding as at
days @K123.29 per day at 15% 30/09/22 because from the initial
per annum on an outstanding K600,000,000 only K300,000,000 K10,109.78
balance of K300,000.000 was paid, thus there was still an
outstanding balance, which
equally required interest.
TOTAL INTEREST DUE K37,479.05
ADD rates payable for the period Per half year because rates are
11/06/22 to 30/06/22 i.e 20 days paid per half year, and property
owners usually pay for the whole
@K4.42 per day at K800 per half
year. However, when calculating,
year. you need to calculate per half year
thus, you need to know how many K88.40
days are in each half year, bearing
in mind that each month has a
different number of days.
ADD rates payable for the period There was no need to calculate the
01/07/22 to 31/12/22 @K800 per number of days here because the
refund was for the entire half year.
half year. K800.000
There were no days utilised, thus
it was an express refund of K800.
TOTAL RATES TO REFUND The Purchaser has to refund the K888,40.00
Vendor because they have taken
possession before completion.
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LESS rent payable for the period You equally needed to know how
11/06/22 to 30/06/22 i.e 20 days many days for rent were utilised
@K333.33 per day per flat because rent was paid for the
@K1,000 per flat multiplied by whole year, for both flats. And K1,333.20
two (because the flats were two) REMEMBER, rent is refundable
to the purchaser. Thus, you
needed to calculate how much rent
was paid per day. So here you
needed to deal with the half year
first, then proceed to the second
half of the year.
LESS rent payable for the months There was no need to calculate the K12,000.00
of July, August, September, number of days for the second half
October November and December of the year because, all the months
@ a monthly rate of K1,000 for of the year were not yet utilised,
each flat multiplied by two thus thus it was an express refund of
K2,000. K6,000 for each flat multiplied by
two giving you K12,000.00.
TOTAL RENT TO REFUND Rent is Refundable by the Vendor K13,333.20
to the Purchaser because the
Purchaser is now in possession,
thus they need to enjoy the fruits
of ownership.
TUTOR’S SIDE NOTE:
1. REMEMBER that the Vendor is responsible for all outgoings until the Purchaser takes possession.
Once the Purchaser has taken possession, the rentals from the flat are due to the Purchaser.
2. Interest will ALWAYS be calculated from the date when POSSESSION is given until the next date of
payment for the outstanding balance. If at the next date of payment, an instalment has been made
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towards that outstanding balance, then interest will again be calculated on the outstanding balance until
it has been paid off.
3. Always be AWARE that interest according to the LAZ General Conditions of Sale is calculated at 15%
per annum (this is for local currency) whereas foreign currency is calculated at 5% per annum.
4. As per the formula for calculating interest, rates and rent, REMEMBER what I said in the TUTORIAL,
that is your guide.
You must keep your mind on the objective and not the obstacles !
Best wishes thus far !