B-162738, JAN. 10, 1968

B-162738, JAN. 10, 1968

EMPLOYEES - TRANSFERS - PUBLIC LAW 89-516 - TRANSFERS - HOME SALE/PURCHASE EXPENSES DECISION TO CERTIFYING OFFICER OF DEPT. OF AGRICULTURE CONCERNING REIMBURSEMENT FOR ESCROW EXPENSES IN CONNECTION WITH PURCHASE OF HOME AT NEW OFFICIAL STATION IN NORTHERN CALIFORNIA. EMPLOYEE WHO, INCIDENT TO TRANSFER, PURCHASED RESIDENCE AT ORINDA, CALIFORNIA, AND CLAIMS ESCROW FEE OF $108 WHICH REPRESENTS 40 PERCENT OF TOTAL COST, $270, OF TITLE POLICY MAY HAVE CLAIM CERTIFIED FOR PAYMENT ON BASIS OF FLAT 40 PERCENT OF TITLE INSURANCE PREMIUM. RECORD INDICATES THAT INSURANCE COMPANIES IN NORTHERN CALIFORNIA DO NOT SEPARATE ESCROW COST FROM TITLE POLICY AND THAT IT IS CUSTOMARY FOR SPLIT SERVICES ON 40 PERCENT BASIS WHEN ONE COMPANY HANDLES ESCROW WORK AND ANOTHER ISSUES TITLE POLICY. RECORD ALSO SHOWS PERCENTAGE IS CLOSE TO AVERAGE COST IN SOUTHERN CALIFORNIA WHERE TITLE COMPANIES SEPARATE THE TWO COSTS.

TO MR. L. P. WILSEY:

THIS IS IN REPLY TO YOUR LETTER OF OCTOBER 17, 1967, REFERENCE 6540, REQUESTING OUR DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A RECLAIM VOUCHER FOR $108 FOR ESCROW EXPENSES SUBMITTED BY MR. PAUL E. NEFF, AN EMPLOYEE OF THE FOREST SERVICE, DEPARTMENT OF AGRICULTURE.

WE ASSUME THAT MR. NEFF IS CLAIMING THE COST OF AN ESCROW FEE IN CONNECTION WITH THE PURCHASE OF A DWELLING AT HIS NEW OFFICIAL STATION UNDER PUB.L. 89-516, APPROVED JULY 21, 1966, 80 STAT. 323, ALTHOUGH YOU DO NOT SO STATE AND NO COPY OF HIS TRANSFER ORDER IS ENCLOSED. THE CLAIM FOR $108 REPRESENTS 40 PERCENT OF THE TOTAL COST, $270, OF AN OWNER'S TITLE POLICY ON A RESIDENCE IN ORINDA, CALIFORNIA, AND IS ATTRIBUTED TO ESCROW COSTS. HOWEVER, IT APPEARS FROM THE RECORD THAT NORTHERN CALIFORNIA TITLE COMPANIES DO NOT BREAK DOWN THE OVERALL TITLE INSURANCE PREMIUM COST, WHICH INCLUDES THE ESCROW EXPENSE, TO REFLECT A SEPARATE FEE FOR THAT ITEM.

YOU POINT OUT THAT SUBSECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A -56 OF OCTOBER 12, 1966, AFTER DETAILING A NUMBER OF EXPENSES THAT ARE PAYABLE, PROVIDES FOR PAYMENT OF "SIMILAR FEES AND CHARGES" WHICH YOU CONCLUDE SHOULD INCLUDE ESCROW FEES. HOWEVER, YOU ALSO RECOGNIZE THAT UNDER THE SAME SUBSECTION EXPENSES OF OWNERS' TITLE POLICIES ARE NOT REIMBURSABLE. SINCE THE RECORD INDICATES THAT THE INSURANCE COMPANIES IN NORTHERN CALIFORNIA DO NOT SEPARATE THE ESCROW COST FROM THE OWNER'S TITLE POLICY PREMIUM YOU ARE DOUBTFUL WHETHER THE FORMER EXPENSE IS REIMBURSABLE. YOU INQUIRE AS TO WHETHER A FLAT 40 PERCENT OF TITLE INSURANCE PREMIUM MAY BE ALLOCATED TO THE ESCROW COST. IN THAT CONNECTION THE COPY OF THE LETTER FROM THE FINANCIAL TITLE COMPANY, WALNUT CREEK, CALIFORNIA, ATTACHED TO THE FILE INDICATES THAT THE CUSTOMARY SPLIT IN NORTHERN CALIFORNIA WHEN ONE COMPANY HANDLES THE ESCROW WORK AND ONE COMPANY ISSUES THE OWNER'S TITLE POLICY IS 40 PERCENT FOR ESCROW SERVICES. ALSO, THE RECORD SHOWS THAT THAT FIGURE IS VERY CLOSE TO THE AVERAGE ESCROW COST IN SOUTHERN CALIFORNIA WHERE THE TITLE COMPANIES SEPARATE THE TWO COSTS.

UNDER THE RELATED CIRCUMSTANCES WE SEE NO OBJECTION TO ASSIGNING A FIGURE OF 40 PERCENT OF THE PREMIUM OF THE OWNER'S TITLE POLICY TO ESCROW COSTS.

ACCORDINGLY, THE VOUCHER RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.