B-163690, MAR. 29, 1968

B-163690: Mar 29, 1968

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RAND: THIS IS IN REPLY TO THE LETTER OF YOUR ASSISTANT REGIONAL COMMISSIONER (ADMINISTRATION) FOR THE NORTH-ATLANTIC REGION DATED FEBRUARY 28. HONECKER WAS REIMBURSED $155 FOR LEGAL AND RELATED COSTS IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN AMHERST. THESE COSTS WERE BROKEN DOWN AS FOLLOWS: PREPARATION OF DEED. HONECKER IS CLAIMING AN ADDITIONAL $325. THE FOLLOWING QUESTIONS WERE SET FORTH IN THE LETTER: "1. MAY LEGAL FEES AND SEARCHING COSTS BE PAID IN BOTH THE SALE OF THE OLD HOME AND PURCHASE OF A NEW HOME IF THE PURPOSE FOR THESE CHARGES ARE DIFFERENT? "2. IN THIS CASE THE LEGAL FEE CLAIMED AND PAID IN THE SALE OF THE OLD HOME WAS $100.00. THE LEGAL FEE IN THE PURCHASE OF A NEW HOME WHICH IS BEING QUESTIONED IS $250.00.

B-163690, MAR. 29, 1968

TO MR. JACK H. RAND:

THIS IS IN REPLY TO THE LETTER OF YOUR ASSISTANT REGIONAL COMMISSIONER (ADMINISTRATION) FOR THE NORTH-ATLANTIC REGION DATED FEBRUARY 28, 1968, REFERENCE AD:FF, REQUESTING OUR DECISION AS TO THE PAYMENT OF REAL ESTATE EXPENSES UNDER PUB.L. 89-516, 80 STAT. 323, INCURRED BY MR. ERNEST HONECKER, AN EMPLOYEE OF THE INTERNAL REVENUE SERVICE IN CONNECTION WITH A CHANGE OF OFFICIAL STATION FROM BUFFALO, NEW YORK, TO NEW YORK, NEW YORK.

THE RECORD INDICATES THAT MR. HONECKER WAS REIMBURSED $155 FOR LEGAL AND RELATED COSTS IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN AMHERST, NEW YORK. THESE COSTS WERE BROKEN DOWN AS FOLLOWS: PREPARATION OF DEED, $50; PREPARATION OF MORTGAGE STATEMENT, $25; TAX AND TITLE SEARCH, $25; SEARCH CONTINUATION, $25; AND SURVEY, $30. MR. HONECKER IS CLAIMING AN ADDITIONAL $325, IN CONNECTION WITH THE PURCHASE OF A RESIDENCE IN NICKHAM WOODS, NEW JERSEY, REPRESENTING $250 FOR EXAMINATION AND CERTIFICATION OF TITLE, PREPARATION OF MORTGAGE PAPERS AND ATTENDANCE AT CLOSING AND SUPERVISING SAME ON BEHALF OF BUYER AND $75 FOR A STAKED SURVEY.

THE FOLLOWING QUESTIONS WERE SET FORTH IN THE LETTER:

"1. MAY LEGAL FEES AND SEARCHING COSTS BE PAID IN BOTH THE SALE OF THE OLD HOME AND PURCHASE OF A NEW HOME IF THE PURPOSE FOR THESE CHARGES ARE DIFFERENT?

"2. IN THIS CASE THE LEGAL FEE CLAIMED AND PAID IN THE SALE OF THE OLD HOME WAS $100.00. THE LEGAL FEE IN THE PURCHASE OF A NEW HOME WHICH IS BEING QUESTIONED IS $250.00. IF THESE COSTS MAY NOT BE PAID AT BOTH PLACES, MAY WE PAY THE LARGER OF THE TWO, EVEN THOUGH THE SMALLER AMOUNT WAS CLAIMED PRIOR TO THE GREATER AMOUNT?

"3. IS IT POSSIBLE TO GET A CLEAR DEFINITION OF WHAT IS MEANT BY TYPE OF COST AS STATED IN SECTION 4.2C OF CIRCULAR A-56. FOR EXAMPLE, WE ARE PRESENTLY INTERPRETING THE GENERAL TERM -LEGAL FEES' AS A TYPE OF COST RATHER THAN THE SPECIFIC SERVICES FOR WHICH THE LEGAL FEES ARE CHARGED SUCH AS -PREPARATION OF WARRANTY DEED- AND -PREPARATION OF STATEMENT OF MORTGAGE BALANCE.-"

SECTION 4.2C OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, AUTHORIZES REIMBURSEMENT OF LEGAL AND RELATED COSTS. PROVIDES THAT TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN THE BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES, CUSTOMARY COSTS OF SEARCHING TITLE, PREPARING CONVEYANCES AND OTHER INSTRUMENTS AND PREPARING CONTRACTS, RELATED NOTARY FEES, RECORDING FEES, MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES AND SIMILAR EXPENSES MAY BE REIMBURSED EITHER WITH RESPECT TO SALE OF THE RESIDENCE AT THE OLD OFFICIAL STATION OR PURCHASE OF A DWELLING AT THE NEW OFFICIAL STATION BUT THE SAME TYPES OF COSTS SHALL NOT BE PAID AT BOTH LOCATIONS.

THE SEARCH OF TITLE, PREPARATION OF MORTGAGE PAPERS AND SURVEY WERE TYPES OF COSTS FOR WHICH MR. HONECKER WAS REIMBURSED IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN AMHERST, NEW YORK. SECTION 4.2C OF THE REGULATIONS PRECLUDES FURTHER REIMBURSEMENT OF SUCH COSTS, EVEN THOUGH THE PURPOSES FOR THE SAME TYPE CHARGES WERE DIFFERENT. ACCORDINGLY, INSOFAR AS THE LEGAL FEE CLAIMED COVERS THE SAME TYPE CHARGES, THE FIRST QUESTION IS ANSWERED IN THE NEGATIVE.

WITH RESPECT TO THE SECOND QUESTION WHILE MR. HONECKER HAS ALREADY BEEN REIMBURSED FOR THE EXPENSES OF SEARCHING THE TITLE, PREPARATION OF MORTGAGE PAPERS AND A SURVEY IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN AMHERST, HE MAY NOW ELECT TO BE REIMBURSED INSTEAD FOR THOSE COSTS ARISING FROM THE PURCHASE OF A NEW RESIDENCE. THE EXPENSE ALLOWED FOR SUCH ITEMS INCIDENT TO THE SALE OF HIS RESIDENCE WOULD BE FOR DEDUCTION AND THE BALANCE ALLOWED IF OTHERWISE PROPER. IN THAT REGARD WE POINT OUT THAT THE PORTION OF THE LEGAL FEE OF $250 ALLOCABLE TO "ATTENDANCE AT CLOSING AND SUPERVISING THE SAME ON BEHALF OF PURCHASER" WOULD NOT BE REIMBURSABLE. THEREFORE NO PART OF THE LEGAL FEE IS PAYABLE UNLESS AND UNTIL THAT PORTION OF THE FEE IS IDENTIFIED AND DELETED FROM THE CLAIM. SEE B-161562, NOVEMBER 2, 1967 (COPY ENCLOSED). YOUR SECOND QUESTION IS ANSWERED ACCORDINGLY.

WITH RESPECT TO YOUR THIRD QUESTION, SECTION 4.2C OF THE REGULATIONS MAKES NO PROVISION FOR PAYMENT OF AN ALL INCLUSIVE SERVICE SUCH AS REPRESENTED BY THE TERM "LEGAL FEES.' ONLY THOSE PARTS OF A "LEGAL FEE" THAT REPRESENT A SERVICE OF THE TYPE ENUMERATED IN SECTION 4.2C WOULD BE REIMBURSABLE. FOR INSTANCE, PRELIMINARY STUDY BY AN ATTORNEY OF THE REAL ESTATE CONTRACT OR ADVISING THE PURCHASER AT A CLOSING ARE TYPES OF SERVICES FOR WHICH A "LEGAL FEE" WOULD BE ASKED AND YET THEY ARE NOT REIMBURSABLE ITEMS OF COST. SEE B-161891, AUGUST 21, 1967, AND B-162858, DECEMBER 5, 1967 (COPIES ENCLOSED).

THEREFORE, LEGAL COSTS ARE REIMBURSABLE AS SPECIFIC ITEMS OF SERVICE AND NOT UNDER THE GENERAL HEADING OF LEGAL FEES. THE THIRD QUESTION IS ANSWERED ACCORDINGLY. THE VOUCHER WITH ENCLOSURES IS RETURNED.