B-171363, FEB 2, 1971

B-171363: Feb 2, 1971

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IF DOWN PAYMENT AND CLOSING COSTS HAVE BEEN PAID IN FULL.". YOU NOTE THAT NO DISTINCTION IS MADE AS TO SELLER'S AND BUYER'S EXPENSES AND THAT THE $1. 300 WHICH WAS REFUNDED EXCEEDS THE AMOUNT OF $533.50 EXPENSES CLAIMED BY THE EMPLOYEE BUYER. SINCE THE ABOVE ARRANGEMENT COULD BE VIEWED AS INCLUDING REPAYMENT BY THE SELLER OF THE CLOSING EXPENSES YOU HAVE DOUBT WHETHER ANY REIMBURSABLE EXPENSES HAVE IN FACT BEEN INCURRED BY THE BUYER AS REQUIRED BY THE APPLICABLE REGULATIONS. TO THE EFFECT THAT REIMBURSEMENT IS PRECLUDED WHERE EXPENSES CLAIMED HAVE NOT BEEN PAID IN FACT. 300 DISCOUNT WAS GIVEN TO MR. ALLEN STATES THAT THE DISCOUNT REPRESENTS THE SAVING OF BROKERAGE WHICH THE SELLER WOULD HAVE HAD TO PAY ON AN FHA LOAN AND THE SAVINGS AS SUCH WERE PASSED ON TO MR.

B-171363, FEB 2, 1971

TRANSFERS - INCIDENTAL EXPENSES - REFUND ALLOWING PAYMENT OF REAL ESTATE EXPENSES ARISING FROM THE PURCHASE OF A HOME AT FORT HOOD, TEXAS, INCIDENT TO A CHANGE OF DUTY STATION EVEN THOUGH A $1300 REFUND ALLOWED THE PURCHASER EXCEEDS THE EXPENSES CLAIMED. A DISCOUNT GIVEN AS THE RESULT OF SECURING A CONVENTIONAL LOAN RATHER THAN AN FHA LOAN RESULTED IN SAVING OF BROKERAGE WHICH THE SELLER PASSED ON TO THE BUYER DOES NOT REPRESENT A REFUND OF CLOSING EXPENSES, AND, THEREFORE, THE BUYER MAY BE REIMBURSED.

TO LIEUTENANT COLONEL ROY E. WRATISLAW:

WE REFER FURTHER TO YOUR MEMORANDUM OF AUGUST 10, 1970, REFERENCE AKPHO- CT-FI-P, REQUESTING A DECISION ON THE REIMBURSABILITY TO MR. JAMES H. LYLE OF REAL ESTATE EXPENSES ARISING FROM THE PURCHASE OF A RESIDENCE AT FORT HOOD, TEXAS, HIS NEW DUTY STATION, INCIDENT TO A PERMANENT CHANGE OF DUTY DURING 1970.

YOU STATE THAT THE APPLICABLE CONTRACT OF SALE PROVIDES FOR A PURCHASE PRICE OF $22,000 TO BE PAID BY A $15,800 CONVENTIONAL LOAN PLUS $6,200 CASH. THE CONTRACT STATES,

"SELLER AGREES TO GIVE PURCHASER A DISCOUNT OF $1,300 *** TO BE CREDITED TO DOWN PAYMENT, OR, IF PURCHASER DESIRES, IN CASH, IF DOWN PAYMENT AND CLOSING COSTS HAVE BEEN PAID IN FULL."

YOU NOTE THAT NO DISTINCTION IS MADE AS TO SELLER'S AND BUYER'S EXPENSES AND THAT THE $1,300 WHICH WAS REFUNDED EXCEEDS THE AMOUNT OF $533.50 EXPENSES CLAIMED BY THE EMPLOYEE BUYER.

SINCE THE ABOVE ARRANGEMENT COULD BE VIEWED AS INCLUDING REPAYMENT BY THE SELLER OF THE CLOSING EXPENSES YOU HAVE DOUBT WHETHER ANY REIMBURSABLE EXPENSES HAVE IN FACT BEEN INCURRED BY THE BUYER AS REQUIRED BY THE APPLICABLE REGULATIONS. YOU CITE OUR DECISION B 161910, JULY 26, 1967, TO THE EFFECT THAT REIMBURSEMENT IS PRECLUDED WHERE EXPENSES CLAIMED HAVE NOT BEEN PAID IN FACT.

THE EMPLOYEE SETS FORTH EXPENSES TOTALING $533.50 CONSISTING OF LOAN ORIGINATION $316, RECORDINGS $9.50, MORTGAGEE'S TITLE POLICY $143, APPRAISAL FEE $15, AND ATTORNEY FEE (EXAMINATION OF TITLE POLICY AND PREPARATION NOTE AND DEED) $50.

ONE OF THE DOCUMENTS SUBMITTED - REAL ESTATE AGENT FLOYD D. ALLEN'S STATEMENT OF JULY 10, 1970 - SHOWS THAT THE $1,300 DISCOUNT WAS GIVEN TO MR. LYLE BECAUSE HE AGREED TO SECURE A CONVENTIONAL LOAN ON THE PROPERTY RATHER THAN AN FHA LOAN. MR. ALLEN STATES THAT THE DISCOUNT REPRESENTS THE SAVING OF BROKERAGE WHICH THE SELLER WOULD HAVE HAD TO PAY ON AN FHA LOAN AND THE SAVINGS AS SUCH WERE PASSED ON TO MR. LYLE.

IN THE CIRCUMSTANCES WE DO NOT THINK A REFUND OF CLOSING EXPENSES OCCURRED FROM THE SELLER TO THE BUYER. RATHER, HERE WE HAVE AN ADJUSTMENT IN SELLING PRICE CONDITIONED TO THE FORM OF FINANCING EMPLOYED BY THE BUYER AND THE EFFECT THEREOF ON THE SELLER.

WITH RESPECT TO REIMBURSEMENT, HOWEVER, THE ITEM OF $316 FOR LOAN ORIGINATION FEE IS NO LONGER ALLOWABLE. SEE B-168674, FEBRUARY 10, 1970, COPY ENCLOSED.

THE VOUCHER WHICH IS RETURNED HEREWITH MAY BE PAID IN ACCORDANCE WITH THE ABOVE IF OTHERWISE CORRECT.