B-165577, JAN. 6, 1969

B-165577, JAN. 6, 1969

TO MR. CURTIS L. SMITH:

YOUR LETTER OF OCTOBER 22, 1968, REFERENCE 6540, REQUESTS OUR DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER FOR $1,069.43 IN FAVOR OF MR. JAMES M. RUPPELT, AN EMPLOYEE OF YOUR AGENCY, REPRESENTING EXPENSES INCURRED BY HIM IN THE PURCHASE OF A RESIDENCE AT HIS NEW OFFICIAL STATION, JUNEAU, ALASKA.

MR. RUPPELT, WHO REPORTED FOR DUTY ON APRIL 9, 1967, PURCHASED A LOT ON JULY 25, 1967, OBTAINED A FEDERAL HOUSING ADMINISTRATION COMMITMENT TO FINANCE A HOME ON AUGUST 7, 1967, AND ENTERED INTO CONTRACT FOR THE CONSTRUCTION OF HIS HOME ON OCTOBER 2, 1967. THE CONTRACT SPECIFIED THAT THE HOUSE WAS TO BE COMPLETED WITHIN 150 WORKING DAYS. THE EMPLOYEE MOVED INTO THE HOUSE ON FEBRUARY 20, 1968. HOWEVER, THE FINAL LOAN CLOSING WAS NOT MADE UNTIL AUGUST 7,1968, WHICH WAS MORE THAN 1 YEAR AFTER THE EMPLOYEE REPORTED AT HIS NEW OFFICIAL STATION. THE DELAY WAS CAUSED BY SUCH FACTORS AS THE INABILITY TO LAY SOD BECAUSE OF FROZEN GROUND, THE UNFORESEEN REQUIREMENT OF OBTAINING CERTIFICATION OF CARPET PADDING FROM THE MANUFACTURER IN SEATTLE, WASHINGTON, AND THE NECESSITY OF DEALING WITH THE ANCHORAGE FHA OFFICE BY MAIL.

SECTION 4.1D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, WHICH GOVERNS THE MATTER, READS AS FOLLOWS:

"D. THE SETTLEMENT DATES FOR THE SALE AND PURCHASE OR LEASE TERMINATION TRANSACTIONS FOR WHICH REIMBURSEMENT IS REQUESTED ARE NOT LATER THAN ONE YEAR AFTER THE DATE ON WHICH THE EMPLOYEE REPORTED FOR DUTY AT THE NEW OFFICIAL STATION, EXCEPT THAT AN APPROPRIATE EXTENSION OF TIME MAY BE AUTHORIZED BY THE HEAD OF THE DEPARTMENT OR HIS DESIGNEE WHEN SETTLEMENT IS NECESSARILY DELAYED BECAUSE OF LITIGATION.'

IN 46 COMP. GEN. 677 THE SETTLEMENT DATE WAS REGARDED AS THE DATE OF EXECUTION OF THE "CONTRACT FOR DEED" BECAUSE THE PURCHASE TRANSACTION WAS COMPLETED AT THAT TIME. IN THAT CASE THERE WAS NO SEPARATE SETTLEMENT TRANSACTION SUCH AS WOULD BE INVOLVED WHEN A MORTGAGE LOAN IS OBTAINED AND A MORTGAGE EXECUTED BY THE PURCHASER. 46 COMP. GEN. 677 WAS DISTINGUISHED BY B-160799, MAY 20, 1968, CITED IN YOU LETTER. THIS DECISION INVOLVED A SEPARATE SETTLEMENT TRANSACTION OCCURRING AFTER THE EXPIRATION OF 1 YEAR FROM THE DATE OF TRANSFER.

IN B-164044, JUNE 7, 1968, ALSO CITED IN YOUR LETTER, WE ALLOWED REIMBURSEMENT TO AN EMPLOYEE FOR CERTAIN EXPENSES INCURRED IN PURCHASING A LOT AND CONTRACTING FOR THE CONSTRUCTION OF A RESIDENCE SINCE UNDER THE CIRCUMSTANCES NO SEPARATE SETTLEMENT TRANSACTION OCCURRED FOLLOWING THE EXPIRATION OF THE 1-YEAR TIME LIMITATION.

THE FACT THAT AN EMPLOYEE MOVES INTO HIS NEW RESIDENCE WITHIN 1 YEAR OF HIS TRANSFER DOES NOT IN AND OF ITSELF ENTITLE AN EMPLOYEE TO REIMBURSEMENT. SEE B-163700, MAY 6, 1968, COPY ENCLOSED. CF. B 164638, AUGUST 13, 1968, COPY ENCLOSED, WHEREIN THE EMPLOYEE MOVED INTO HIS NEW HOME AND THE BUILDER IN WHOM TITLE VESTED GAVE THE EMPLOYEE A WARRANTY DEED TO THE PROPERTY WITHIN THE TIME LIMIT.

THE PRESENT CASE INVOLVES TWO SEPARATE LOANS -- A CONSTRUCTION LOAN OBTAINED WITHIN 1 YEAR OF THE TRANSFER DATE AND A LONG TERM INSTALLMENT LOAN (360 MONTHS) FOR WHICH THE PURCHASER EXECUTED A DEED OF TRUST NOTE PAYABLE TO THE NATIONAL BANK OF ALASKA SECURED BY A DEED OF TRUST ALSO EXECUTED BY HIM. NEITHER OF THE LATTER INSTRUMENTS WAS EXECUTED WITHIN THE ALLOWABLE 1-YEAR PERIOD. IN SUCH A SITUATION THE DATE OF SETTLEMENT IS REQUIRED TO BE REGARDED AS THE DATE ON WHICH THE OBLIGATIONS OF THE RESPECTIVE PARTIES FINALLY ARE DETERMINED, THAT IS AUGUST 7, 1968, AT WHICH TIME THE BALANCE OWING THE CONTRACTOR AS WELL AS AMOUNTS OWING UNDER THE CONSTRUCTION LOAN WERE PAID OFF AND THE PURCHASER ASSUMED THE NEW OBLIGATION UNDER THE LONG TERM INSTALLMENT NOTE SECURED BY THE DEED OF TRUST.

IN VIEW OF THE ABOVE AND SINCE FINAL SETTLEMENT WAS NOT MADE WITHIN 1 YEAR OF THE EMPLOYEE'S TRANSFER THE VOUCHER RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.