B-161110, APR. 13, 1967

B-161110: Apr 13, 1967

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THE CLOSING CHARGES INCIDENT TO THE PURCHASE BY THE EMPLOYEE OF A HOUSE AT HIS NEW OFFICIAL STATION ARE SAID TO BE SHOWN BY THE RECORDS AS $522.50. THE SELLER THEN PAID THE CLOSING COSTS THAT CUSTOMARILY ARE PAID BY THE PURCHASER. THE RESULT IS THAT THE PURCHASER OBTAINED A 30-YEAR LOAN FOR A PURCHASE PRICE FOR THE HOUSE WHICH COULD HAVE BEEN REDUCED BY THE AMOUNT OF THE CLOSING COSTS CUSTOMARILY PAID BY THE PURCHASER HAD THE MONIES BEEN AVAILABLE TO HIM TO PAY SUCH COSTS. THE EMPLOYEE HAS NOT MET THE REQUIREMENTS OF SECTIONS 4.1E AND 4.3A OF THE REGULATION THAT THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED MUST HAVE BEEN PAID BY HIM. - ONE WHICH IS NOT CUSTOMARY PRACTICE .

B-161110, APR. 13, 1967

TO UNITED STATES CIVIL SERVICE COMMISSION:

YOUR LETTER OF MARCH 20, 1967, REQUESTS OUR DECISION WHETHER THE CIVIL SERVICE COMMISSION MAY ALLOW UNDER SECTION 4, BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, THE CLOSING CHARGES OF A REAL ESTATE TRANSACTION TO AN EMPLOYEE OF THE COMMISSION INCIDENT TO A TRANSFER OF HIS OFFICIAL STATION.

THE CLOSING CHARGES INCIDENT TO THE PURCHASE BY THE EMPLOYEE OF A HOUSE AT HIS NEW OFFICIAL STATION ARE SAID TO BE SHOWN BY THE RECORDS AS $522.50. IN THE ABSENCE OF THE PURCHASER HAVING READILY AVAILABLE FUNDS TO MEET SUCH CHARGES THE EMPLOYEE AND REALTOR (THE SELLER) ARRANGED TO INCREASE THE SELLING PRICE OF THE HOUSE BY $550. THE SELLER THEN PAID THE CLOSING COSTS THAT CUSTOMARILY ARE PAID BY THE PURCHASER. THUS THE SELLING PRICE INCLUDES AN AMOUNT WHICH APPROXIMATES THE CLOSING CHARGES. THE RESULT IS THAT THE PURCHASER OBTAINED A 30-YEAR LOAN FOR A PURCHASE PRICE FOR THE HOUSE WHICH COULD HAVE BEEN REDUCED BY THE AMOUNT OF THE CLOSING COSTS CUSTOMARILY PAID BY THE PURCHASER HAD THE MONIES BEEN AVAILABLE TO HIM TO PAY SUCH COSTS.

UNDER THOSE CIRCUMSTANCES WE BELIEVE THAT IT MAY BE CONCLUDED THAT THE EMPLOYEE INCURRED AN OBLIGATION TO PAY OVER A PERIOD OF TIME AN AMOUNT APPROXIMATELY EQUAL TO THE CLOSING CHARGES. HOWEVER, AT THIS TIME, THE EMPLOYEE HAS NOT MET THE REQUIREMENTS OF SECTIONS 4.1E AND 4.3A OF THE REGULATION THAT THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED MUST HAVE BEEN PAID BY HIM.

MOREOVER, IT COULD BE SAID THAT UNDER THE ARRANGEMENT USED IN THIS INSTANCE --- ONE WHICH IS NOT CUSTOMARY PRACTICE --- THAT NO PROPER BASIS EXISTS FOR TREATING ANY PART OF THE $21,550 AS OTHER THAN THE SALE PRICE, IRRESPECTIVE OF THE REASON BEHIND THE INCREASE IN THE PRICE.

THUS, WE DO NOT FEEL THAT THE CASE FALLS WITHIN THE PURVIEW OF PUB.L. 89- 516 OR THE REGULATIONS ISSUED PURSUANT THERETO.