Claim for Real Estate Expenses

A GAO Claims Division decision which denied a claim for real estate expenses was appealed. An employee stationed on Guam received orders transferring him to California. After listing his house for sale with a real estate broker, he accepted a transfer to an overseas post and later contracted to sell his house. The claim was denied on the basis that under applicable law, real estate expenses may not be paid incident to a transfer to an overseas duty station. The employee argued that he entered into a binding contract to sell his house at a time when he fully intended to move to California and was under orders to do so. Legislation provides that employees are entitled to reimbursement for certain real estate expenses incident to a transfer of official duty station if both the old and new duty stations are located within the United States, its territories or possessions. In this case, the employee would be entitled to reimbursement of those expenses incident to his transfer from Guam to California, but not those incident to his transfer to an overseas duty station. It has been held that where a transfer of official duty station has been cancelled, certain expenses that would have been reimbursable had the transfer been completed may be reimbursed if they were incurred prior to the cancellation of the transfer. The record indicated that the employee did not enter into a binding contract to sell his house until after his transfer to California had been cancelled, and there was no indication that he incurred any expenses prior to the cancellation of the transfer. The real estate listing agreement provided for payment of a commission if he withdrew the property from the market before the agreement expired. If this provision is enforcable under local law, the employee may be reimbursed the brokerage commission incurred upon the subsequent sale of the house. Therefore, the claim was to be allowed if the listing agreement provision was enforceable.