B-175710, JUL 17, 1972

B-175710, JUL 17, 1972

CIVILIAN EMPLOYEE - SALE OF RESIDENCE - LEGAL FEES DECISION REGARDING CERTIFICATION FOR PAYMENT OF A RECLAIM VOUCHER IN THE AMOUNT OF $2,300 SUBMITTED BY ALBERT E. JOHNSON FOR LEGAL EXPENSES INCURRED INCIDENT TO THE SALE OF A RESIDENCE IN CONNECTION WITH A PERMANENT CHANGE OF STATION FROM WASHINGTON, D.C., TO SAN DIEGO, CALIF. THE ONLY LEGAL EXPENSES WHICH MAY BE REIMBURSED ARE THOSE ENUMERATED IN SECTION 4.2C OF OMB CIRCULAR NO. A-56, IN THIS INSTANCE, THE CHARGE FOR DRAFTING AND EDITING DOCUMENTS. THE OTHER CHARGES LISTED ON THE ITEMIZED STATEMENT WERE PRIMARILY ANALYSIS AND ADVISORY SERVICES, AND ARE NOT REIMBURSABLE. SEE B-174644, APRIL 20, 1972.

TO MRS. DOLORES T. HODGES:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 29, 1972, IN WHICH YOU REQUEST AN ADVANCE DECISION AS TO THE PROPRIETY OF CERTIFYING FOR PAYMENT A RECLAIM VOUCHER IN THE AMOUNT OF $2,300 SUBMITTED BY MR. ALBERT E. JOHNSON FOR LEGAL EXPENSES INCURRED BY HIM INCIDENT TO THE SALE OF HIS RESIDENCE IN CONNECTION WITH HIS PERMANENT CHANGE OF STATION FROM WASHINGTON, D.C., TO SAN DIEGO, CALIFORNIA.

THE FEE IN QUESTION WAS EXPLAINED IN LETTER DATED FEBRUARY 16, 1972, FROM THE LAW FIRM WHICH REPRESENTED MR. JOHNSON AS FOLLOWS:

"STARTING MAY 26, 1970, WE WERE INVOLVED. WE HAD NUMEROUS CONTACTS AND CONFERENCES WITH MANY REAL ESTATE AGENTS (CONTE, PECORA, KRAMM, STUART & MAURY, REUTLINGER, AND ESPECIALLY MR. CONNOR OF BOSS & PHELPS, WHO ULTIMATELY HANDLED THE SALE), WITH THE CLIENTS, THEIR CPA, AND THE BUYERS, MR. AND MRS. ANSARY, AND THE BUYERS' ATTORNEY, MR. SABIN. AFTER MR. ANSARY PROPOSED TO BUY ON HIS VERY UNUSUAL PLAN OF DEFERRED PURCHASE SECURED BY STOCK, WE DID SOME INDEPENDENT CHECKING ON REAL ESTATE AND RENTAL VALUES, ANALYZED CERTAIN TAX IMPLICATIONS, ANALYZED MR. ANSARY'S STOCK, AND HAD IT APPRAISED BY A PROFESSIONAL. WE PUT THE DEAL TOGETHER ON PAPER, NEGOTIATED WITH THE BUYERS' ATTORNEY, AND REVIEWED PAPERS PREPARED BY HIM. WE ATTENDED SETTLEMENT, AND PARTICIPATED IN NEGOTIATIONS WITH THE ESCROW AGENT, AMERICAN SECURITY AND TRUST. WE DEALT WITH A FEW SMALL POST-SALE COMPLAINTS BY THE BUYERS, AND OTHER FOLLOWUP DETAILS."

SUBSEQUENTLY, BY LETTER DATED MARCH 7, 1972, THE LAW FIRM FURNISHED AN ITEMIZATION OF THE $2,300 FEE AS FOLLOWS:

"CONTACTS, CONFERENCES,

NEGOTIATIONS AND FOLLOWUP $1,550.00

DRAFTING AND EDITING DOCUMENTS 500.00

ARRANGING FOR AND ANALYZING

APPRAISALS 150.00

TAX ANALYSIS 100.00

$2,300.00"

THE CONTROLLING REGULATION, OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969, SECTION 4.2C, PROVIDES WITH REGARD TO REIMBURSEMENT OF LEGAL EXPENSES INCIDENT TO THE SALE OR PURCHASE OF A RESIDENCE AS FOLLOWS:

"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."

THE STATEMENT RENDERED BY THE LAW FIRM INDICATES THAT OF THE SERVICES ITEMIZED, $500 REPRESENTED THE COST OF DRAFTING AND EDITING DOCUMENTS. THAT PARTICULAR SERVICE WOULD APPEAR TO BE OF THE TYPE ENUMERATED IN SECTION 4.2C AS "COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS" AND, THEREFORE, WE WOULD HAVE NO OBJECTION TO THE PAYMENT OF THAT AMOUNT AS AN ALLOWABLE LEGAL EXPENSE. WITH REGARD TO THE REMAINING SERVICES, HOWEVER, IT WOULD APPEAR THAT THEY WERE ALL PRIMARILY IN THE NATURE OF ANALYSIS, NEGOTIATIONS, AND ADVISORY SERVICES, IN CONJUNCTION WITH THE RATHER COMPLEX SALES AGREEMENT. WE HAVE CONSISTENTLY HELD THAT UNDER THE ABOVE-QUOTED REGULATION NO REIMBURSEMENT IS TO BE ALLOWED FOR LEGAL SERVICES WHICH ARE OF AN ADVISORY NATURE. B-174644, APRIL 20, 1972; B-150304, FEBRUARY 18, 1972. WHERE A LEGAL FEE PAID INCLUDES AMOUNTS FOR LEGAL REPRESENTATION AND COUNSELING, THE FULL AMOUNT OF THE FEE IS NOT REIMBURSABLE. ONLY THOSE PARTS OF AN ATTORNEY'S FEE THAT REPRESENT SERVICES OF THE TYPES ENUMERATED IN 4.2C ARE REIMBURSABLE. B-169621, JUNE 25, 1970. WHILE WE APPRECIATE THAT THE COMPLEXITY OF THE REAL ESTATE TRANSACTION HEREIN INVOLVED MADE IT INCUMBENT THAT MR. JOHNSON BE REPRESENTED BY AN ATTORNEY, THERE IS NO LEGAL BASIS UNDER WHICH WE CAN AUTHORIZE THE PAYMENT OF ANY OF THE LEGAL EXPENSES OTHER THAN THOSE WHICH ARE ENUMERATED IN SECTION 4.2C AS INDICATED.

ACCORDINGLY, THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT ONLY IN ACCORDANCE WITH THE FOREGOING.