B-168710, FEB. 4, 1970

B-168710: Feb 4, 1970

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WHO INCURRED REAL ESTATE EXPENSES IN CONSTRUCTION OF HOME AFTER TRANSFER IS NOT PRECLUDED FROM ENTITLEMENT TO REIMBURSEMENT FOR OTHERWISE ALLOWABLE EXPENSES INCIDENT TO CONSTRUCTION OF RESIDENCE BY FACT THAT HE HAD PREVIOUSLY PURCHASED THE LOT. MITCHELL CLAIMS REIMBURSEMENT WERE PAID BY HIM FOR THE CONSTRUCTION OF A RESIDENCE. HAD PURCHASED THE LOT ON WHICH THE RESIDENCE WAS BUILT SOME FIVE YEARS BEFORE HIS PERMANENT CHANGE OF STATION. SETTLEMENT ON THE LOAN APPARENTLY WAS MADE ON JUNE 13. A CLOSING STATEMENT FROM THE BUILDER IS DATED THE SAME DATE. THE ABOVE DECISIONS AS WELL AS OTHERS ARE TO THE EFFECT THAT EXPENSES INCURRED IN THE CONSTRUCTION OF A RESIDENCE WILL BE ALLOWED TO THE EXTENT THEY WOULD BE COMPARABLE TO EXPENSES INCURRED IN THE PURCHASING OF A COMPLETED RESIDENCE.

B-168710, FEB. 4, 1970

CIVIL PAY--TRANSFERS--EXPENSES INCIDENT TO CONSTRUCTION OF HOME DECISION TO ACCOUNTING AND FINANCE OFFICER OF ARMY CONCERNING REIMBURSEMENT OF REAL ESTATE EXPENSES OF EMPLOYEE OF DEFENSE SUPPLY AGENCY. EMPLOYEE WHO PURCHASED A LOT IN ST. PETERSBURG, FLORIDA SOME 5 YEARS BEFORE HIS PERMANENT CHANGE OF STATION FROM BEREA, OHIO TO ST. PETERSBURG, AND WHO INCURRED REAL ESTATE EXPENSES IN CONSTRUCTION OF HOME AFTER TRANSFER IS NOT PRECLUDED FROM ENTITLEMENT TO REIMBURSEMENT FOR OTHERWISE ALLOWABLE EXPENSES INCIDENT TO CONSTRUCTION OF RESIDENCE BY FACT THAT HE HAD PREVIOUSLY PURCHASED THE LOT.

TO CAPTAIN J. E. DUNKLEY:

YOUR MEMORANDUM OF NOVEMBER 19, 1969, REFERENCE DCRA-FO, FORWARDED HERE ON DECEMBER 29, 1969, BY THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE, REQUESTS A DECISION AS TO THE REIMBURSEMENT OF CERTAIN REAL ESTATE EXPENSES TO MR. JEFFREY E. MITCHELL INCIDENT TO A CHANGE IN OFFICIAL DUTY STATION AS AN EMPLOYEE OF THE DEFENSE SUPPLY AGENCY EFFECTIVE JULY 21, 1968.

THE EXPENSES IN THE AMOUNT OF $702.59 FOR WHICH MR. MITCHELL CLAIMS REIMBURSEMENT WERE PAID BY HIM FOR THE CONSTRUCTION OF A RESIDENCE. HAD PURCHASED THE LOT ON WHICH THE RESIDENCE WAS BUILT SOME FIVE YEARS BEFORE HIS PERMANENT CHANGE OF STATION. THE EMPLOYEE SIGNED A CONTRACT FOR THE PURCHASE OF THE RESIDENCE ON SEPTEMBER 12, 1968. SETTLEMENT ON THE LOAN APPARENTLY WAS MADE ON JUNE 13, 1969. A CLOSING STATEMENT FROM THE BUILDER IS DATED THE SAME DATE. THE EMPLOYEE STATES THAT HE MOVED INTO THE HOUSE AND TOOK POSSESSION ON JUNE 17, 1969. YOU EXPRESS DOUBT AS TO THE ALLOWANCE OF MR. MITCHELL'S CLAIM IN THE LIGHT OF B-164938, AUGUST 26, 1968, AND B-164452, JULY 2, 1968.

THE ABOVE DECISIONS AS WELL AS OTHERS ARE TO THE EFFECT THAT EXPENSES INCURRED IN THE CONSTRUCTION OF A RESIDENCE WILL BE ALLOWED TO THE EXTENT THEY WOULD BE COMPARABLE TO EXPENSES INCURRED IN THE PURCHASING OF A COMPLETED RESIDENCE. IN OTHER WORDS, NO EXPENSES ARE ALLOWABLE WHICH ARE PARTICULARLY RELATED TO THE CONSTRUCTION PROCESS. SEE B-164044, JUNE 7, 1968, COPY HEREWITH. IN THAT CONNECTION SEE BUREAU OF THE BUDGET CIRCULAR NO. A-56 AS REVISED BY TRANSMITTAL MEMORANDUM NO. 5, EFFECTIVE JUNE 26, 1969. THE FIRST PARAGRAPH OF SECTION 4.1 AND THE LAST PARAGRAPH OF SECTION 4.2D OF CIRCULAR NO. A 56 WERE RESTATED TO CLARIFY THE ALLOWANCES THAT ARE PAYABLE IN CONNECTION WITH THE CONSTRUCTION OF A RESIDENCE.

WE NOTE THAT THE SETTLEMENT IN THIS CASE OCCURRED PRIOR TO JUNE 26, 1969. THEREFORE, THE REGULATIONS CONTAINED IN CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, WOULD BE APPLICABLE. UNDER THOSE REGULATIONS THE FOLLOWING ITEMS APPEAR APPROPRIATE FOR REIMBURSEMENT (NUMBERING FOLLOWS THAT OF THE FORM ATTACHED TO MR. MITCHELL'S CLAIM):

6. A. LENDER'S LOAN ORIGINATION FEE $180.00

B. LENDER'S APPRAISAL FEE 35.00

D. RECORDING FEES 7.00

E. STATE AND FEDERAL REVENUE STAMPS 27.00

F. SALES OR TRANSFER TAXES; MORTGAGE TAX 36.00

H. CREDIT REPORT 1.00

J. TITLE INSURANCE POLICY (LENDER'S

TITLE POLICY) 127.50

TOTAL $413.50

THE INSPECTION FEE OF $50 LISTED AS NO. 4 AND THE $65 LISTED AS NO. 6-G, FOR SURVEY AND PHOTOGRAPHS APPEAR TO BE ITEMS OF EXPENSE RELATED TO THE CONSTRUCTION OF THE RESIDENCE RATHER THAN BEING COMPARABLE TO EXPENSES OF ITS PURCHASE. ALSO, THE $90 LISTED AS NO. 6-I, LOAN COMPANY ATTORNEY FEE AND THE $53.50, NO. 6-M, ATTORNEY FOR BUILDERS CONTRACT APPEAR TO BE CLEARLY INCIDENT TO THE CONSTRUCTION OF THE RESIDENCE AND AS SUCH ARE NOT REIMBURSABLE.

THE FACT THAT MR. MITCHELL HAD PREVIOUSLY PURCHASED HIS LOT SOME FIVE YEARS BEFORE DOES NOT IN OUR OPINION PRECLUDE OTHERWISE REIMBURSABLE EXPENSES UNDER THE APPLICABLE REGULATIONS. OF COURSE, NO REIMBURSEMENT WOULD BE ALLOWABLE FOR EXPENSES INCIDENT TO OBTAINING THE LOT.

THE VOUCHER IS RETURNED HEREWITH FOR PROCESSING IN ACCORD WITH THIS DECISION.