B-168448, DEC. 24, 1969

B-168448: Dec 24, 1969

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

BECAUSE AVAILABLE INFORMATION INDICATED THIS WAS CUSTOM OF LOCATION AT TIME OF SALE. INASMUCH AS EMPLOYEE WAS ALSO REIMBURSED FOR TITLE INSURANCE AND DEED RECORDING UPON PURCHASE OF NEW RESIDENCE IN BETHESDA. SINCE UNDER ABOVE SEC. 4.2D SAME TYPE OF COSTS ARE NOT REIMBURSABLE AT BOTH LOCATIONS. WAS PAID JULY 3. THE INTERNAL AUDITORS OF YOUR OFFICE ARE NOW QUESTIONING THE ABOVE-MENTIONED PAYMENTS AND YOU DESIRE ADVICE AS TO WHETHER THE PAYMENTS WERE PROPER. A CHARGE MADE FOR PREPAYMENT OF A MORTGAGE IN CONNECTION WITH THE SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION IS REIMBURSABLE IF THE TERMS IN THE ORIGINAL CONTRACT OR MORTGAGE INSTRUMENT PROVIDE FOR SUCH A COST. ARE REIMBURSABLE TO THE EXTENT SUCH COSTS ARE CUSTOMARILY PAID BY THE SELLER AT THE LOCATION OF THE OLD OFFICIAL STATION OR BY THE PURCHASER AT THE LOCATION OF THE NEW OFFICIAL STATION.

B-168448, DEC. 24, 1969

OFFICERS AND EMPLOYEES--TRANSFERS--RELOCATION EXPENSES--HOUSE SALE- CLOSING CHARGES UPON TRANSFER OF OFFICIAL STATION WHERE EMPLOYEE SOLD OLD RESIDENCE IN IDAHO FALLS, IDAHO, EMPLOYEE MAY BE REIMBURSED FOR CLOSING COSTS COMPRISED OF SERVICE CHARGE, CREDIT REPORT, RECORDING FEES AND TITLE INSURANCE UNDER SEC. 4.2D, BUREAU OF BUDGET CIR. NO. A-56, REVISED OCT. 12, 1966, BECAUSE AVAILABLE INFORMATION INDICATED THIS WAS CUSTOM OF LOCATION AT TIME OF SALE; HOWEVER, INASMUCH AS EMPLOYEE WAS ALSO REIMBURSED FOR TITLE INSURANCE AND DEED RECORDING UPON PURCHASE OF NEW RESIDENCE IN BETHESDA, MD; AREA OF NEW PERMANENT STATION, EMPLOYEE SHOULD REFUND SUCH CHARGES, RETAINING AT HIS ELECTION HIGHER AMOUNTS, SINCE UNDER ABOVE SEC. 4.2D SAME TYPE OF COSTS ARE NOT REIMBURSABLE AT BOTH LOCATIONS.

TO MR. ROBERT L. LEITH:

WE REFER TO YOUR LETTER OF NOVEMBER 19, 1969, WITH ENCLOSURES, CONCERNING THE REIMBURSEMENT MADE TO MR. SHERMAN B. BOIVIN IN CONNECTION WITH THE TRANSFER OF OFFICIAL STATION FROM IDAHO FALLS, IDAHO, TO GERMANTOWN, MARYLAND, AS AN EMPLOYEE OF THE ATOMIC ENERGY COMMISSION.

YOU SAY THAT MR. BOIVIN'S CLAIM FOR REIMBURSEMENT OF REAL ESTATE TRANSACTION COSTS UNDER THE PROVISIONS OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, WAS PAID JULY 3, 1967. THE PAYMENT INCLUDED $289.10 IDENTIFIED AS BUYER'S CLOSING COSTS, COMPRISED OF $216 SERVICE CHARGE, $11.50 CREDIT REPORT, $13.50 RECORDING FEES AND $48.10 TITLE INSURANCE, INCIDENT TO THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL DUTY STATION IN IDAHO FALLS, IDAHO. THE INTERNAL AUDITORS OF YOUR OFFICE ARE NOW QUESTIONING THE ABOVE-MENTIONED PAYMENTS AND YOU DESIRE ADVICE AS TO WHETHER THE PAYMENTS WERE PROPER.

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

"D. FINANCING COSTS. A CHARGE MADE FOR PREPAYMENT OF A MORTGAGE IN CONNECTION WITH THE SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION IS REIMBURSABLE IF THE TERMS IN THE ORIGINAL CONTRACT OR MORTGAGE INSTRUMENT PROVIDE FOR SUCH A COST, BUT NOT OTHERWISE. FEES FOR LOAN APPLICATIONS, LENDER'S LOAN ORIGINATION, CREDIT REPORTS, MORTGAGE AND TRANSFER TAXES, STATE AND FEDERAL REVENUE STAMPS, AND SIMILAR FEES AND CHARGES, ARE REIMBURSABLE TO THE EXTENT SUCH COSTS ARE CUSTOMARILY PAID BY THE SELLER AT THE LOCATION OF THE OLD OFFICIAL STATION OR BY THE PURCHASER AT THE LOCATION OF THE NEW OFFICIAL STATION, BUT THE SAME TYPES OF COSTS ARE NOT REIMBURSABLE AT BOTH LOCATIONS. THE COST OF A MORTGAGE TITLE POLICY ON THE DWELLING PURCHASED BY THE EMPLOYEE IS ALSO REIMBURSABLE. COSTS OF OTHER TYPES OF INSURANCE, INCLUDING -RECORD TITLE- POLICIES, OWNERS' TITLE POLICIES, MORTGAGE INSURANCE, AND INSURANCE AGAINST DAMAGE OR LOSS OF PROPERTY ARE NOT REIMBURSABLE. MORTGAGE DISCOUNTS (-POINTS-), INTEREST ON LOANS AT THE OLD AND NEW POSTS OF DUTY, PROPERTY TAXES, AND OPERATING OR MAINTENANCE COSTS ARE NOT REIMBURSABLE.'

UNDER THAT REGULATION CERTAIN EXPENSES SPECIFIED THEREIN MAY BE REIMBURSABLE TO AN EMPLOYEE IN CONNECTION WITH THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL STATION ONLY IF SUCH EXPENSES ARE CUSTOMARILY PAID BY THE SELLER IN THE AREA INVOLVED.

YOU SAY THAT PRIOR TO PAYMENT YOUR OFFICE CONTACTED THE FEDERAL HOUSING ADMINISTRATION OFFICE AT BOISE, IDAHO, AND WERE ADVISED THAT CLOSING COSTS CUSTOMARILY PAID BY THE PURCHASER WERE BEING PAID BY THE SELLER IN ORDER TO SELL THEIR HOMES. YOU HAVE ALSO FURNISHED A COPY OF A LETTER DATED JULY 29, 1969, FROM THE PRESIDENT OF THE BOARD OF REALTORS, IDAHO FALLS, IDAHO, READING AS FOLLOWS: "IT IS CUSTOMARY IN THIS AREA AND BY THE MEMBERS OF THE IDAHO FALLS BOARD OF REALTORS, WHEN THE BUYER PAYS THE FULL F.H.A. VALUATION OF THE PROPERTY, FOR THE SELLER TO PAY THE BUYER'S CLOSING COSTS WITH THE EXCEPTION OF PRE-PAID ITEMS.' THE AGREEMENT TO PURCHASE INDICATES THAT THE BUYERS OF THE PROPERTY IN IDAHO FALLS PAID THE FULL FHA VALUATION FOR THE PROPERTY. WHILE THE ABOVE-QUOTED LETTER DOES NOT ADDRESS ITSELF TO THE CUSTOM FOLLOWED IN 1967, IN VIEW OF THE INFORMATION OBTAINED BY YOUR OFFICE PRIOR TO MAKING PAYMENT, WE ASSUME THE CUSTOM OF THE SELLER PAYING THE BUYER'S CLOSING COSTS WAS IN EFFECT IN 1967, THE YEAR OF THE SALE. THEREFORE, THE SELLER WOULD BE ENTITLED TO REIMBURSEMENT OF SUCH SELLING EXPENSES NOT OTHERWISE PROHIBITED BY THE REGULATION.

WE NOTE THAT UNDER THE ABOVE-QUOTED SECTION 4.2D THE SAME TYPE OF COSTS ARE NOT REIMBURSABLE AT BOTH LOCATIONS. IN THAT CONNECTION THE PAID VOUCHER DATED JULY 3, 1967, SHOWS THAT MR. BOIVIN WAS REIMBURSED FOR TITLE INSURANCE AND RECORDING OF A DEED INCIDENT TO THE SALE OF HIS RESIDENCE AT IDAHO FALLS AND FOR THE SAME EXPENSES INCIDENT TO THE PURCHASE OF HIS RESIDENCE IN BETHESDA, MARYLAND.

ASSUMING THE EMPLOYEE WOULD ELECT TO RETAIN THE HIGHER AMOUNTS, IT WOULD APPEAR THAT HE SHOULD REFUND THE SUM OF $54.00 ($48.10 PLUS $5.90).