B-163709, APR. 19, 1968

B-163709: Apr 19, 1968

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WHICH WAS EFFECTIVE IN JANUARY 1967. THE QUESTION ASKED WILL BE QUOTED AND ANSWERED IN THE ORDER PRESENTED. "1. WAS UNABLE TO EFFECT THE SALE OF THE PROPERTY AND SO BILLED MR. A BROKER'S FEE OR REAL ESTATE COMMISSION PAID BY THE EMPLOYEE FOR SERVICES IN SELLING HIS RESIDENCE IS REIMBURSABLE BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY THE BROKER OR BY BROKERS IN THE LOCALITY OF THE OLD OFFICIAL STATION. NO SUCH FEE OR COMMISSION IS REIMBURSABLE IN CONNECTION WITH THE PURCHASE OF A HOME AT THE NEW OFFICIAL STATION. OR OTHER ADVERTISING FOR SALE OF THE RESIDENCE AT THE OLD OFFICIAL STATION ARE REIMBURSABLE IF THE EMPLOYEE HAS NOT PAID FOR SUCH SERVICES IN THE FORM OF A BROKER'S FEE OR REAL ESTATE AGENT'S COMMISSION.

B-163709, APR. 19, 1968

TO MR. E. C. CRARY:

WE REFER TO YOUR LETTER OF FEBRUARY 9, 1968, YOUR REFERENCE 6540, RECEIVED HERE MARCH 1, 1968, REQUESTING OUR ADVANCE DECISION WHETHER YOU MAY PROPERLY CERTIFY FOR PAYMENT THE ENCLOSED VOUCHER OF MR. DALE O. HALL, AN EMPLOYEE OF THE FOREST SERVICE, UNITED STATES DEPARTMENT OF AGRICULTURE, TO REIMBURSE HIM CERTAIN EXPENSES HE INCURRED IN CONNECTION WITH THE SALE AND PURCHASE OF RESIDENCES INCIDENT TO HIS TRANSFER OF OFFICIAL STATION FROM CHALLENGE, CALIFORNIA, TO BOISE, IDAHO, WHICH WAS EFFECTIVE IN JANUARY 1967.

THE QUESTION ASKED WILL BE QUOTED AND ANSWERED IN THE ORDER PRESENTED.

"1. IN CONNECTION WITH THE DISPOSAL OF HIS RESIDENCE AT CHALLENGE, CALIFORNIA, MR. HALL ENGAGED MR. RAY B. KRONE, HIS FATHER-IN-LAW, A LICENSED REAL ESTATE BROKER. MR. KRONE, HOWEVER, WAS UNABLE TO EFFECT THE SALE OF THE PROPERTY AND SO BILLED MR. HALL ONLY FOR HIS PERSONAL SERVICES AND EXPENSES, INCLUDING ADVERTISING COSTS, AS FOLLOWS:

"ADVERTISING EXPENSE $ 54.00 AUTO

MILEAGE, 490 MILES 10 CENTS 49.00 CONSULTING

SERVICES 50.00

$153.00 "MR. HALL STATES THAT THE BROKER

VISITED THE PROPERTY, ADVISED ON SELLING MATTERS, RAN A SERIES OF ADVERTISEMENTS IN LOCAL AND METROPOLITAN NEWSPAPERS, AND RECOMMENDED A PROPERTY SURVEY TO INSURE CLEAR TITLE TRANSFER AND ON-THE-GROUND CORNER MONUMENTS FOR THE SAKE OF PROSPECTIVE BUYERS. MR. KRONE'S DOCUMENTATION OF NOVEMBER 17, SETTING FORTH THE TERMS OF THE VERBAL AGREEMENT WITH MR. HALL, SUPPORTS THE BILLING RENDERED. "MAY REIMBURSEMENT OF THE REAL ESTATE BROKER'S PERSONAL AND OTHER SERVICES AND EXPENSES AS DETAILED ABOVE BE ALLOWED NOTWITHSTANDING HIS PERSONAL RELATIONSHIP TO THE SELLER AND/OR THE FACT THAT HE DID NOT EFFECT SALE OF THE PROPERTY?

SECTIONS 4.2A AND B OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 PROVIDES:

"A. BROKER'S FEES AND REAL ESTATE COMMISSIONS. A BROKER'S FEE OR REAL ESTATE COMMISSION PAID BY THE EMPLOYEE FOR SERVICES IN SELLING HIS RESIDENCE IS REIMBURSABLE BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY THE BROKER OR BY BROKERS IN THE LOCALITY OF THE OLD OFFICIAL STATION. NO SUCH FEE OR COMMISSION IS REIMBURSABLE IN CONNECTION WITH THE PURCHASE OF A HOME AT THE NEW OFFICIAL STATION.

"B. OTHER ADVERTISING AND SELLING EXPENSES. COSTS OF NEWSPAPER, BULLETIN BOARD, MULTIPLE-LISTING SERVICES, OR OTHER ADVERTISING FOR SALE OF THE RESIDENCE AT THE OLD OFFICIAL STATION ARE REIMBURSABLE IF THE EMPLOYEE HAS NOT PAID FOR SUCH SERVICES IN THE FORM OF A BROKER'S FEE OR REAL ESTATE AGENT'S COMMISSION. CUSTOMARY COSTS OF APPRAISAL ALSO MAY BE REIMBURSED.'

THOSE PROVISIONS DO NOT AUTHORIZE REIMBURSEMENT OF PAYMENT MADE TO A BROKER FOR SERVICES EXCEPT WHEN AN ACTUAL SALE OF THE EMPLOYEE'S RESIDENCE IS CONSUMMATED BY SUCH BROKER. HOWEVER, WE SEE NO OBJECTION TO THE ALLOWANCE OF THE $54 MR. HALL PAID TO MR. KRONE FOR ADVERTISING THE SALE OF HIS RESIDENCE IN CHALLENGE SINCE IT APPEARS THAT SUCH EXPENSES WERE INCURRED UNDER AN AGREEMENT WITH THE BROKER WHO WAS ACTING ON BEHALF OF THE EMPLOYEE. YOUR FIRST QUESTION IS ANSWERED ACCORDINGLY.

"2. MR. HALL NEXT EMPLOYED ALBERT DEVOE, A LICENSED SURVEYOR, TO LOCATE AND MONUMENT THE CORNERS OF HIS PROPERTY IN CHALLENGE, CALIFORNIA. THIS WAS DONE ON THE RECOMMENDATION OF THE REAL ESTATE BROKER -FOR THE SAKE OF PROSPECTIVE BUYERS.- MR. HALL'S STATEMENT EXPLAINS THE REASON FOR THE UNUSUAL SIZE OF THE SURVEY FEE, $443.00, AS COMPARED WITH THE USUAL FEE OF AROUND $35.00 WHEN A SURVEY IS OBTAINED AT THE REQUEST OF THE MONEY LENDER TO SATISFY MORTGAGE REQUIREMENTS. THE QUESTION RAISED CONCERNING THE PROPRIETY OF THIS ITEM IS WHETHER OR NOT THIS SURVEY FEE MAY BE REIMBURSED IN VIEW OF THE FACT THAT IT WAS OBTAINED IN THE ABSENCE AT THE TIME OF ANY REQUEST FOR IT TO SATISFY LEGAL OR FINANCING PURPOSES.'

SECTION 4.2C OF CIRCULAR NO. A-56 PROVIDES:

"C. LEGAL AND RELATED COSTS. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN 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. COSTS OF LITIGATION ARE NOT REIMBURSABLE.'

5 U.S.C. 5724A (A) (4) WHICH AUTHORIZES REIMBURSEMENT OF THE EXPENSES OF THE SALE OF TRANSFERRED EMPLOYEE'S RESIDENCE PROVIDES THAT THE EMPLOYEE MUST BE REQUIRED TO PAY THE EXPENSE FOR WHICH HE CLAIMS REIMBURSEMENT AND THAT ALLOWABLE EXPENSES MAY NOT EXCEED THOSE CUSTOMARILY CHARGED IN THE LOCALITY WHERE THE RESIDENCE IS LOCATED. MR. HALL HAS SHOWN THAT THE SURVEYOR'S CHARGES WERE SIMILAR TO THE CHARGES MADE BY OTHER SURVEYORS IN THE AREA FOR SIMILAR SERVICES; HOWEVER, HE HAS NOT SHOWN THAT THE EXTENSIVE SURVEY WAS NECESSARY IN CONNECTION WITH THE SALE OF HIS RESIDENCE OR THAT SUCH A SURVEY WAS CUSTOMARY IN CONNECTION WITH THE SALE OF RESIDENCES IN THAT AREA. IF THE SURVEY OBTAINED WAS NOT REQUIRED FOR THE SALE OR CUSTOMARY IN THAT AREA BUT WAS OBTAINED MERELY TO MAKE THE PROPERTY MORE READILY MARKETABLE, REIMBURSEMENT WOULD BE AUTHORIZED ONLY TO THE EXTENT OF THE COST OF A SURVEY CUSTOMARY OR REQUIRED IN THAT AREA. YOUR SECOND QUESTION IS ANSWERED ACCORDINGLY.

"3. DOUBT ALSO CLOUDS THE CLAIM FOR REIMBURSEMENT OF THE $50.00 EXPENSE INCURRED BY MR. HALL WITH THE YUBA COUNTY TITLE GUARANTEE COMPANY, FOR QUIT CLAIM DEED SERVICES REQUIRED IN CLEARING TITLE FOR ESCROW TRANSACTION 41291, AS MORE FULLY EXPLAINED AND DOCUMENTED IN THE COMPANY'S INVOICE, ORDER NO. 41447, UNDATED. THIS EXPENSE ALSO RELATES TO THE DISPOSAL OF THE RESIDENCE IN CHALLENGE, CALIFORNIA. THERE IS QUESTION AS TO WHETHER OR NOT BUDGET BUREAU CIRCULAR A-56 REGULATIONS, SEC. 4.2C, AUTHORIZING EXPENSES FOR -CUSTOMARY COSTS OF SEARCHING TITLE- MAY BE CONSTRUED TO INCLUDE THE COSTS OF CLEARING TITLE. IN THE EVENT YOUR ANSWER TO THIS QUESTION IS IN THE AFFIRMATIVE, THERE IS ADDITIONAL DOUBT AS TO WHETHER OR NOT THIS EXPENSE WOULD BE CONSIDERED AS DUPLICATING THE ALLOWANCE IN PART OF AN ADDITIONAL $126.75 CLAIMED BY MR. HALL INVOLVING PAYMENT TO THIS SAME COMPANY FOR CERTAIN CLOSING COSTS, INCLUDING $95.00 FOR TITLE INSURANCE, UNDER ESCROW STATEMENT, APPLICATION NO. 41291, DOCUMENTING THE SALE OF THE PROPERTY.'

UNDER SECTION 4.2C OF CIRCULAR NO. A-56, QUOTED ABOVE, WE BELIEVE THAT REIMBURSEMENT IS NOT CONTEMPLATED FOR EXPENSES INCURRED IN CLEARING TITLE BY MEANS OF QUIT CLAIM DEEDS OR OTHERWISE. YOUR THIRD QUESTION IS ANSWERED ACCORDINGLY.

"4. THE ACCOUNT ALSO INCLUDES CLAIM FOR MILEAGE FOR TWO ROUND-TRIPS TO MARYSVILLE, CALIFORNIA, A TOTAL OF 152 MILES .08 PER MILE, $12.16, AND TELEPHONE TOLL CALLS MADE DURING THE PERIOD 11/21/66 AND 8/21/67 AGGREGATING $68.60, ALL RELATED TO THE DISPOSAL OF CHALLENGE RESIDENCE. MR. HALL PERSONALLY UNDERTOOK THE SALE OF THIS PROPERTY WHEN THE REAL ESTATE BROKER FAILED AND THESE EXPENSES WERE INCURRED BY HIM IN CONNECTION WITH THIS ACTIVITY. I HAVE BEEN UNABLE TO FIND ANY PROVISION IN BUDGET BUREAU CIRCULAR A-56 REGULATIONS OR ANY DECISION OF YOUR OFFICE THAT SUCH EXPENSES AS THESE ARE REIMBURSABLE, NOTWITHSTANDING THAT THEY WERE INCURRED IN CONNECTION WITH THE SALE OF EMPLOYEE'S RESIDENCE. MAY THEY BE ALLOWED IN LIEU OF A BROKER'S COMMISSIONS?

THERE IS NO PROVISION IN CIRCULAR NO. A-56 WHICH AUTHORIZES REIMBURSEMENT OF COSTS SUCH AS THOSE IN QUESTION HERE. AS INDICATED IN THE ANSWER TO YOUR FIRST QUESTION WE DO NOT CONSIDER COSTS INCURRED IN SELLING A RESIDENCE TO BE REIMBURSABLE MERELY BECAUSE THEY WERE INCURRED IN LIEU OF A BROKER'S COMMISSION. ACCORDINGLY, THE ITEMS OF TRAVEL AND TELEPHONE CALLS IN CONNECTION WITH THE SALE OF MR. HALL'S RESIDENCE IN CHALLENGE MAY NOT BE REIMBURSED.

"5. IN CONNECTION WITH THE PURCHASE OF THE RESIDENCE IN BOISE, IDAHO, MR. HALL INCURRED EXPENSE IN THE AMOUNT OF $25.00 FOR SERVICES FURNISHED BY THE YUBA COUNTY TITLE GUARANTEE COMPANY, AS DETAILED IN THAT COMPANY'S INVOICE NO. 41445, DATED OCTOBER 3, 1967. THESE SERVICES ARE STATED TO INCLUDE:

"A. PRELIMINARY TITLE REPORT,

"B. PREPARING DEED, SELLER'S INSTRUCTIONS, BUYER'S INSTRUCTIONS, AND

"C. TITLE SERVICES. "MR. HALL EXPLAINS IN HIS STATEMENT THAT THIS COVERS THE TITLE REPORT FOR PROPERTY TRANSFERRED UNDER THE TERMS OF HIS AGREEMENT TO PURCHASE THE RESIDENCE AT HIS NEW OFFICIAL STATION. I AM IN DOUBT AS TO WHETHER PAYMENT MAY BE MADE FOR ANY OF THE SERVICES ENUMERATED IN THE INVOICE, PARTICULARLY IN VIEW OF THE FACT THAT HE IS ALSO CLAIMING REIMBURSEMENT FOR A TITLE POLICY TO MEET THE LENDING INSTITUTION'S REQUIREMENT FOR THE LOAN. WE ARE AWARE OF YOUR DECISION B-161459 OF JUNE 27, 1967, THAT INDICATES THAT OWNER'S TITLE INSURANCE POLICY, WHEN PURCHASED FOR THE OWNER'S PROTECTION, IS NOT ALLOWABLE. THEREFORE, IN THIS INSTANCE THE COST OF THE SIMULTANEOUS ISSUE OF THE ALTA TITLE INSURANCE POLICY FOR THE OWNER WOULD NOT BE REIMBURSABLE. IT IS THE CUSTOM IN THE BOISE, IDAHO, AREA FOR LENDING INSTITUTIONS TO SECURE THEIR LOANS BY TITLE INSURANCE FURNISHED BY THE BORROWERS.'

WE NOTE THAT THE PURCHASE AGREEMENT INVOLVING THE BOISE RESIDENCE REFERS TO THE VALUE OF A LOT OWNED BY MR. HALL IN YUBA COUNTY, CALIFORNIA, AS BEING PART OF THE DOWN PAYMENT. IT APPEARS TO US THAT THE $25 ITEM COVERED SERVICES THAT THE YUBA COUNTY TITLE GUARANTEE COMPANY RENDERED IN CONNECTION WITH THE TRANSFER OF SUCH LOT TO THE SELLER OF THE BOISE RESIDENCE AND, THUS, MAY NOT BE CONSIDERED A PROPER ITEM FOR REIMBURSEMENT. YOUR FIFTH QUESTION IS ANSWERED ACCORDINGLY.

REGARDING REIMBURSEMENT OF THE AMOUNTS PAID BY MR. HALL UNDER THE CLOSING STATEMENTS, THE THREE AMOUNTS HE HAS CLAIMED FOR RECORDING THE CHALLENGE SALE -- $2, $1.40 AND $1.80 -- SHOULD BE DISALLOWED AS BEING SIMILAR TO THE $9.90 RECORDING FEE CLAIMED IN CONNECTION WITH THE PURCHASE IN BOISE. THE $45.50 ITEM FOR "TITLE POLICY OR ABSTRACT CHARGES" ON THE BOISE CLOSING STATEMENT SHOULD BE DISALLOWED AS BEING SIMILAR TO THE $95 "TITLE INSURANCE" ITEM CLAIMED IN CONNECTION WITH CLOSING OF THE SALE AT CHALLENGE.

THE VOUCHER WHICH TOGETHER WITH SUPPORTING PAPERS IS RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT ONLY IN ACCORDANCE WITH THE ABOVE. IF A FURTHER QUESTION DEVELOPS IN CONNECTION WITH MR. HALL'S ENTITLEMENT TO ANY ITEM, A RECLAIM VOUCHER FOR THAT ITEM MAY BE PRESENTED TO US FOR FURTHER CONSIDERATION.