B-171208, JAN 8, 1971

B-171208: Jan 8, 1971

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11 OF WHICH WERE USED EXCLUSIVELY AS A RESIDENCE SITE. $1.49 IN LEGAL FEES CONSISTING OF 20 MINUTES OF LEGAL WORK IN CONNECTION WITH PREPARATION OF TITLE OPINION (COMPUTED AT $25/HOUR MULTIPLIED BY 11/61.55 TO INCLUDE ONLY THAT LAND USED FOR A RESIDENCE) IS ALLOWED ALONG WITH SIMILARLY PRORATED AMOUNTS FOR RECORDING OF THE QUIT CLAIM DEED ($0.27). THE COSTS OF A FINAL SURVEY AND DESCRIPTION OF HOUSE LOCATION ARE ALLOWED IN FULL ($20.50). THE INITIAL SURVEY FEE ($150) IS DISALLOWED ON THE BASIS THAT THIS IS CUSTOMARILY PAID BY THE SELLER IN THE LOCAL AREA. FEES FOR SURVEY OF THE BUILDING SITE ARE DISALLOWED AS THESE ARE RELATED TO THE CONSTRUCTION OF THE RESIDENCE. THE AMOUNT OF $248.47 FOR THE MORTGAGE TITLE POLICY AS INSURANCE REQUIRED BY THE LENDER IS REIMBURSABLE AND NEED NOT BE PRORATED AS THE COST OF INSURING THE TITLE APPEARS TO RELATE TO THE HOME MORTGAGE POLICY AND NOT PURCHASE OF THE LAND.

B-171208, JAN 8, 1971

TRANSFERS - INCIDENTAL EXPENSES DENYING IN PART AND AFFIRMING IN PART CLAIM OF AN EMPLOYEE OF THE ATOMIC ENERGY COMMISSION FOR REIMBURSEMENT OF EXPENSES INCURRED INCIDENT TO CHANGE OF PERMANENT DUTY STATION TO IDAHO FALLS, IDAHO AND PURCHASE OF 61.55 ACRES OF LAND, 11 OF WHICH WERE USED EXCLUSIVELY AS A RESIDENCE SITE. OF THE $736.16 IN LEGAL FEES FOR WHICH CLAIMANT ASKS REIMBURSEMENT, $1.49 IN LEGAL FEES CONSISTING OF 20 MINUTES OF LEGAL WORK IN CONNECTION WITH PREPARATION OF TITLE OPINION (COMPUTED AT $25/HOUR MULTIPLIED BY 11/61.55 TO INCLUDE ONLY THAT LAND USED FOR A RESIDENCE) IS ALLOWED ALONG WITH SIMILARLY PRORATED AMOUNTS FOR RECORDING OF THE QUIT CLAIM DEED ($0.27), AND PREPARATION OF DEEDS ($3.11); THE COSTS OF A FINAL SURVEY AND DESCRIPTION OF HOUSE LOCATION ARE ALLOWED IN FULL ($20.50). THE INITIAL SURVEY FEE ($150) IS DISALLOWED ON THE BASIS THAT THIS IS CUSTOMARILY PAID BY THE SELLER IN THE LOCAL AREA; FEES FOR SURVEY OF THE BUILDING SITE ARE DISALLOWED AS THESE ARE RELATED TO THE CONSTRUCTION OF THE RESIDENCE. THE AMOUNT OF $248.47 FOR THE MORTGAGE TITLE POLICY AS INSURANCE REQUIRED BY THE LENDER IS REIMBURSABLE AND NEED NOT BE PRORATED AS THE COST OF INSURING THE TITLE APPEARS TO RELATE TO THE HOME MORTGAGE POLICY AND NOT PURCHASE OF THE LAND.

TO MR. W. HARTEN:

WE REFER FURTHER TO YOUR LETTER OF OCTOBER 20, 1970, CONCERNING THE REIMBURSEMENT OF EXPENSES TO GERALD MCGOVERN INCIDENT TO A CHANGE OF PERMANENT DUTY STATION.

ACCORDING TO THE DATA SUBMITTED, MR. MCGOVERN AS AN EMPLOYEE OF THE ATOMIC ENERGY COMMISSION UNDER PERMANENT CHANGE OF STATION ORDERS REPORTED AT HIS NEW DUTY STATION IN IDAHO FALLS, IDAHO, ON JANUARY 1, 1969. YOU ENCLOSED A COPY OF MR. MCGOVERN'S REQUEST OF DECEMBER 10, 1969, FOR REIMBURSEMENT OF $1,413.23 FOR RELOCATION EXPENSES. THESE CONSIST PRIMARILY OF LEGAL AND RELATED COSTS INCURRED INCIDENT TO THE PURCHASE OF 61.55 ACRES OF LAND, AND COSTS RELATED TO THE FINANCING OF THE PROPERTY INCLUDING A NEW RESIDENCE CONSTRUCTED THEREON. YOU ALSO ENCLOSED A COPY OF A REQUEST SUBMITTED BY MR. MCGOVERN FOR REIMBURSEMENT IN THE SAME AMOUNT ON A REVISED FORM AEC-150 DATED OCTOBER 13, 1970.

YOU STATE THAT MR. MCGOVERN HAS DECLINED SETTLEMENT IN THE AMOUNT OF $285.27 AND ASKS THAT HIS FILE BE FORWARDED HERE FOR REVIEW AND DECISION. THE $1,413.23 CLAIMED BY MR. MCGOVERN IS FOR EXPENSES INCIDENT TO THE PURCHASE OF A RESIDENCE FOR $32,832.57 AT HIS NEW DUTY STATION WITH DATE OF SETTLEMENT ON SEPTEMBER 19, 1969. THE $1,413.23 AS PRESENTED IN SUMMARY CONSISTS OF $736.16 FOR LEGAL AND RELATED COSTS, $248.47 FOR MORTGAGE TITLE POLICY, $27 FOR ESCROW AGENT'S FEE, AND $401.60 FOR LENDER'S LOAN ORIGINATION FEE.

THE ATTACHMENT TO THE COPY OF AEC-FORM 150 SHOWS THE FOLLOWING WITH REFERENCE TO THE $736.16 CLAIMED FOR LEGAL AND RELATED COSTS:

"4. LEGAL AND RELATED COSTS:1

TOTAL DUE FOR LEGAL SERVICES RENDERED 2 $479.00

TOTAL COST EXPENDED3 169.54

SUBTOTAL $648.54

LESS4 (14.88)

ADDITIONAL SURVEY FEES5 85.10

PREPARATION OF DEEDS & RECORDING6 17.40

TOTAL LEGAL FEES $736.16

"NOTES:

1. I PURCHASED PROPERTY FROM MILTON F. EBERHARD, ROUTE 2, BLACKFOOT, IDAHO UNDER CONTRACT ON WHICH I HAD MY HOUSE BUILT. THE DESCRIPTION AND PLOT OF THE PROPERTY ARE SHOWN IN ATTACHMENT 1. NEGOTIATIONS FOR THE PURCHASE OF THE PROPERTY EXTENDED OVER THE PERIOD OF JUNE 1968 THROUGH MARCH 1969, DURING WHICH TIME THE LEGAL SERVICES OF J. H. STOUT, ATTORNEY AT LAW, BLACKFOOT, IDAHO WERE RETAINED FOR THE PURPOSES OF PROTECTING MY INTERESTS AND INSURING A WARRANTY DEED FOR THE PROPERTY AND CLEAR TITLE TO THE BUILDING SITE WERE OBTAINED. HIS SERVICES WERE RETAINED FROM AUGUST 13, 1968, TO MARCH 24, 1969. THE HOUSE WAS BUILT DURING JULY-SEPTEMBER 1969. I MOVED IN FOR PERMANENT OCCUPANCY SEPTEMBER 7, 1969.

2. SEE ATTACHMENT 2.

3. THESE COSTS WERE OUT-OF-POCKET EXPENSES INCURRED BY THE ATTORNEY, WHICH CONSISTED OF THE FOLLOWING:

DATE DESCRIPTION FEE

8-28-68 LONG DISTANCE TELEPHONE CALL $ 2.86

8-29-68 LONG DISTANCE TELEPHONE CALL 13.58

10-15-68 SURVEY OF PROPERTY 150.00

12-18-68 RECORD QUIT CLAIM DEED 1.50

3-17-69 LONG DISTANCE TELEPHONE CALL 1.60

TOTAL $169.54

4. THESE COSTS WERE ASSOCIATED WITH INQUIRIES TO THE BUREAU OF LAND MANAGEMENT OF RIPARIAN LAND ADJOINING THE PROPERTY AND AS SUCH ARE NOT CONSIDERED TO BE REIMBURSABLE EXPENSES. THEY CONSIST OF THE FOLLOWING:

DATE DESCRIPTION FEE

8-28-68 LONG DISTANCE TELEPHONE CALL $ 2.86

12-18-68 15 MIN. TO PREPARE LETTER AT

RATE OF $25/HOUR 6.25

1-13-69 10 MIN. TO PREPARE LETTER 4.17

3-17-69 LONG DISTANCE TELEPHONE CALL 1.60

TOTAL $14.88

5. THE ADDITIONAL SURVEY FEES CONSIST OF THE FOLLOWING:

DATE DESCRIPTION FEE

3-21-69 PREPARATION OF LEGAL DESCRIPTION

OF BUILDING SITE FOR WARRANTY

DEED (ATTACHMENT 3) $10.00

6-11-69 SURVEY OF BUILDING SITE AND

HOUSE LOCATION PRIOR TO

CONSTRUCTION (ATTACHMENT 4) 54.60

8-3-69 FINAL SURVEY OF HOUSE LOCATION

AND PREPARATION OF LEGAL DESCRIPTION

(ATTACHMENT 5). SEE ENTRY TITLED

"SURVEY" OF ATTACHMENT 6 FOR

VERIFICATION OF FEE. 20.50

TOTAL $85.10

6. THIS COST WAS INCURRED IN THE PREPARATION AND RECORDING OF THE FINAL WARRANTY DEED FOR THE PROPERTY TRANSACTION. ATTACHMENT 7 IS A COPY OF THE RECEIPT FOR PAYMENT."

MR. MCGOVERN AND YOU APPEAR TO BE IN AGREEMENT THAT CERTAIN OF THE OTHERWISE REIMBURSABLE EXPENSES INCIDENT TO THE PURCHASE OF THE 61.55 ACRES OF LAND, AND THE BUILDING OF HIS HOME THEREON, ARE SUBJECT TO REIMBURSEMENT ON A PRO RATA BASIS. HE STATES IN HIS LETTER OF FEBRUARY 16, 1970, THAT 11 ACRES ARE USED EXCLUSIVELY AS A RESIDENCE SITE WITH THE REMAINDER OF THE 61.55 ACRES BEING OPERATED AS A SMALL FARM. WHERE APPLICABLE FOR PRORATION PURPOSES WE CONCUR THAT THE PROPOSED PRO RATA BASIS OF 11/61.55 IS APPROPRIATE.

WITH RESPECT TO THE LEGAL AND RELATED COSTS OF $736.16, MR. MCGOVERN URGES IN HIS LETTER OF JUNE 17, 1970, AS FOLLOWS:

"1. LEGAL SERVICES AND COSTS - I FEEL THAT THE FULL AMOUNT, MINUS THE INITIAL SURVEY FEE, SHOULD BE REIMBURSABLE ON A 11/61.55 PRO RATA BASIS OR:

11/61.55 (648.54 - 150) $89.10

"2. RELATED COSTS - SURVEYS - THIS PARTICULAR SURVEY WAS REQUIRED IN PROCESSING THE LOAN APPLICATION AND WAS NOT DIRECTLY ASSOCIATED WITH THE HOUSE CONSTRUCTION. THEREFORE, I FEEL THE FULL AMOUNT OF $85.10 SHOULD BE REIMBURSABLE.

"3. PREPARATION OF DEEDS AND RECORDINGS - ONLY A PRO RATA SHARE (11/61.55) OF THE REIMBURSABLE AMOUNT ($17.40) IS ALLOWED. THIS EXPENSE WOULD HAVE BEEN THE SAME REGARDLESS OF THE SIZE OF PROPERTY PURCHASED AND REGARDLESS OF THE PROPORTION OF THE PROPERTY WHICH WAS USED FOR RESIDENCE. THEREFORE, I FEEL THIS CLAIM SHOULD NOT BE PRO RATED, RATHER THE FULL AMOUNT OF $17.40 SHOULD BE ALLOWED."

YOU PROPOSE TO ALLOW $1.49 FOR REIMBURSABLE LEGAL FEES CONSISTING OF 20 MINUTES OF LEGAL WORK ON AUGUST 13 AND 27, 1968, RELATED TO THE INITIAL CONTACT WITH THE ATTORNEY AND AN EXPENSE NECESSARY TO PREPARE TITLE OPINION. THE $1.49 REPRESENTS A RATE OF $25 AN HOUR REDUCED BY 11/61.55. YOU PROPOSE TO REDUCE THE AMOUNT FOR THE RECORDING OF THE QUIT CLAIM DEED ON DECEMBER 18, 1968, FROM $1.50 TO $.27, I.E., PRORATE AT 11/61.55. SIMILARLY YOU PROPOSE TO REDUCE THE AMOUNT FOR PREPARATION OF DEEDS AND RECORDING FROM $17.40 TO $3.11. YOU WOULD ALLOW IN FULL THE EXPENSE OF $20.50 OF AUGUST 3, 1969, FOR THE FINAL SURVEY AND DESCRIPTION OF THE HOUSE LOCATION.

YOU PROPOSE TO DISALLOW THE INITIAL SURVEY FEE OF OCTOBER 15, 1968, FOR $150 ON THE BASIS THAT THIS IS CUSTOMARILY PAID BY THE SELLER IN THE LOCAL AREA. MR. MCGOVERN APPARENTLY CONCURS IN THIS. ALSO YOU PROPOSE TO DISALLOW THE FEE OF $54.60 ON JUNE 11, 1969, FOR SURVEY OF THE BUILDING SITE AND HOUSE LOCATION PRIOR TO CONSTRUCTION TOGETHER WITH A FEE OF $10 ON MARCH 3, 1969, FOR PREPARATION OF LEGAL DESCRIPTION OF THE BUILDING SITE NEEDED FOR THE WARRANTY DEED AS THESE ITEMS ARE RELATED TO CONSTRUCTION OF THE RESIDENCE. IN THIS CONNECTION THE LENDING INSTITUTION WOULD NOT CONFIRM MR. MCGOVERN'S CONTENTION THAT THESE EXPENSES WERE REQUIRED FOR THE HOME LOAN. WE CONCUR WITH THE FOREGOING PROPOSALS.

YOUR JUSTIFICATION FOR DENIAL OF REIMBURSEMENT OF THE REMAINDER OF THE LEGAL AND RELATED COSTS OF $736.16 IS THAT THE ITEMS ARE NOT WITHIN THE REACH OF THE APPLICABLE REGULATION - SET FORTH BELOW - AND OUR PERTINENT DECISIONS. YOU CITE AMONG OTHERS: B-165280, DECEMBER 31, 1969; B-163203, MARCH 24, 1969; B-163690, MARCH 29, 1968; B-163420, MARCH 25, 1968; B- 165686, DECEMBER 20, 1968.

SECTION 4.2C OF BUREAU OF THE BUDGET CIRCULAR NUMBER A-56, REVISED JUNE 26, 1969, 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, THE FOLLOWING EXPENSES ARE REIMBURSABLE WITH RESPECT TO THE SALE AND PURCHASE OF RESIDENCES IF THEY ARE CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION OR IF CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE; COSTS OF (1) SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION, OR (2) WHERE CUSTOMARILY FURNISHED BY THE SELLER, THE COST OF A TITLE INSURANCE POLICY; COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS; RELATED NOTARY FEES AND RECORDING FEES; COSTS OF MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES; AND SIMILAR EXPENSES. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

WE HAVE REVIEWED THE 49 ITEMS SUPPORTING THE BILL FROM THE ATTORNEYS ATTACHMENT 2 REFERENCED IN MR. MCGOVERN'S PRESENTATION OF THE $736.16 ITEM SET FORTH ABOVE - TOGETHER WITH YOUR PRESENTATION, PARTICULARLY PAGES 3 THROUGH 9 OF YOUR COMMENTS OF OCTOBER 16, 1970. EXCEPT AS PROPOSED TO BE ALLOWED ABOVE, THE ATTORNEY SERVICES AS SHOWN ON THE RECORD FROM AUGUST 13, 1968, TO MARCH 24, 1969, CANNOT BE IDENTIFIED AS COMING WITHIN SECTION 4.2C OF CIRCULAR NO. A-56.

YOU PROPOSE TO ALLOW IN FULL THE AMOUNT OF $248.47 ENTITLED "MORTGAGE TITLE POLICY." AS YOU POINT OUT THIS AMOUNT WAS DETAILED ON THE CLOSING STATEMENT AS FOLLOWS:

TITLE COSTS:

(1) TITLE INSURANCE $175.75

(2) ESCROW FEES - RESIDENCE SITE 64.00

(3) RECORDING COSTS 5.00

(4) MISCELLANEOUS PHOTO COPIES 2.40

(5) TELEPHONE 1.32

$248.47 AS REPORTED THE INSURANCE IS A MORTGAGEE TITLE POLICY REQUIRED BY THE LENDER AND AS SUCH COMES WITHIN SECTION 4.2D OF CIRCULAR NO. A-56. THE RELATED COSTS ALSO WOULD BE REIMBURSABLE. B 164491, AUGUST 20, 1968; B-163000, JANUARY 17, 1968. WE AGREE THAT THE AMOUNT NEED NOT BE PRORATED AS THE COST OF INSURING THE TITLE APPEARS TO RELATE TO THE HOME MORTGAGE POLICY AND NOT THE PURCHASE OF THE LAND.

WE CONCUR IN YOUR PROPOSAL TO ALLOW THE ESCROW AGENT'S FEE ON A PRO RATA BASIS, I.E., 11/61.55 OF $27 $4.82. SEE B-162738, JANUARY 10, 1968.

THE LENDERS' LOAN ORIGINATION FEE IS INCLUDED IN AN ITEM OF $401.60 SHOWN ON THE LOAN CLOSING STATEMENT AS FOLLOWS:

APPRAISAL FEES $30.00

INSPECTION FEES 68.60

CREDIT REPORT CHARGE 7.00

SERVICE CHARGE 296.00

$401.60 APPRAISAL FEES AND CREDIT REPORT CHARGES ARE WITHIN SECTION 4 OF CIRCULAR NO. A-56 AND WE CONCUR IN YOUR PROPOSAL TO PRORATE THESE ITEMS.

THE SERVICE CHARGE, OR LENDERS' LOAN ORIGINATION FEE, MAY NOT BE REIMBURSED IN VIEW OF THE JUNE 26, 1969, REVISION OF CIRCULAR NO. A-56, EFFECTIVE JULY 1, 1969. SEE B-168674, FEBRUARY 10, 1970.

WE AGREE WITH YOUR CONCLUSION THAT THE INSPECTION FEES OF $68.60 ARE NOT REIMBURSABLE SINCE BUT FOR THE CONSTRUCTION THE FEES WOULD NOT HAVE OCCURRED. SEE SECTION 4.2D OF CIRCULAR NO. A-56.

IN ACCORDANCE WITH THE FOREGOING WE WOULD HAVE NO OBJECTION, IF OTHERWISE CORRECT, TO THE CERTIFICATION OF THE VOUCHER FOR PAYMENT IN THE AMOUNT OF $285.27. YOUR FILE IS RETURNED HEREWITH.