B-175781, JUL 24, 1972, 52 COMP GEN 43

B-175781: Jul 24, 1972

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THAT A SUBSEQUENT CONTRACT OF SALE WITH ANOTHER PURCHASER WAS NOT EXECUTED UNTIL SHORTLY AFTER THE EXPIRATION OF THE 1-YEAR PERIOD. REGARDLESS OF WHETHER IT HAD BEEN CANCELED AND WAS NOT IN EXISTENCE AT THE EXPIRATION OF THE INITIAL YEAR. THE PURCHASER'S LOAN APPLICATION WAS NEVER PERFECTED SINCE THE FINANCING SOURCE REPORTED THAT ALLEGED BANK DEPOSITS WERE NOT VERIFIED AND THAT DOMESTIC DIFFICULTIES COMPLICATED THE POSSIBILITY OF LOAN APPROVAL. THE RELEASE AGREEMENT WAS EXECUTED JULY 3. A SUBSEQUENT CONTRACT OF SALE WAS NOT EXECUTED WITH ANOTHER PURCHASER UNTIL JULY 23. YOU RAISE A QUESTION WHETHER SUCH EXTENSION WAS VALID INASMUCH AS THE FIRST CONTRACT OF SALE WAS EFFECTIVELY CANCELED ON JULY 3.

B-175781, JUL 24, 1972, 52 COMP GEN 43

OFFICERS AND EMPLOYEES - TRANSFERS - RELOCATION EXPENSES - "SETTLEMENT DATE" LIMITATION ON PROPERTY TRANSACTIONS - EXTENSION NOTWITHSTANDING THE CONTRACT FOR THE SALE OF A RESIDENCE INCIDENT TO A PERMANENT CHANGE OF STATION THAT HAD BEEN ENTERED INTO WITHIN THE 1 YEAR TIME LIMIT PRESCRIBED BY SECTION 4.1E OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 HAD BEEN CANCELED, AND THAT A SUBSEQUENT CONTRACT OF SALE WITH ANOTHER PURCHASER WAS NOT EXECUTED UNTIL SHORTLY AFTER THE EXPIRATION OF THE 1-YEAR PERIOD, THE COST OF SELLING THE RESIDENCE MAY BE REIMBURSED TO THE EMPLOYEE UNDER SECTION 4.1E, SINCE THE HEAD OF AN AGENCY, OR HIS DESIGNEE, MAY EXTEND THE TIME LIMITATION IN SITUATIONS OTHER THAN LITIGATION, AND A REASONABLE RELATIONSHIP BETWEEN THE SALE OR PURCHASE OF A RESIDENCE AND A STATION TRANSFER MAY BE ASSUMED WHEN A CONTRACT HAD BEEN ENTERED INTO IN THE INITIAL YEAR, REGARDLESS OF WHETHER IT HAD BEEN CANCELED AND WAS NOT IN EXISTENCE AT THE EXPIRATION OF THE INITIAL YEAR. CONTRARY HOLDINGS OVERRULED.

TO GILBERT H. DAWSON, NATIONAL SECURITY AGENCY, JULY 24, 1972:

THIS REFERS TO YOUR LETTER DATED APRIL 20, 1972, WITH ENCLOSURES, REFERENCE SERIAL: N41/0537F, REQUESTING AN ADVANCE DECISION ON THE CLAIM OF MR. ROBERT C. TARR, A CIVILIAN EMPLOYEE OF THE NATIONAL SECURITY AGENCY, FOR COSTS OF SELLING A RESIDENCE PURSUANT TO A PERMANENT CHANGE OF STATION FROM FORT GEORGE G. MEADE, MARYLAND, TO FRIENDSHIP ANNEX III, FRIENDSHIP, MARYLAND.

YOUR LETTER ENCLOSURES INDICATE THAT THE EMPLOYEE COMMENCED HIS DUTY AT THE NEW STATION ON JULY 13, 1970, AND EXECUTED A CONTRACT OF SALE ON HIS VIENNA, VIRGINIA, RESIDENCE ON MARCH 27, 1971. THE PURCHASER'S LOAN APPLICATION WAS NEVER PERFECTED SINCE THE FINANCING SOURCE REPORTED THAT ALLEGED BANK DEPOSITS WERE NOT VERIFIED AND THAT DOMESTIC DIFFICULTIES COMPLICATED THE POSSIBILITY OF LOAN APPROVAL. UNDER THESE CIRCUMSTANCES THE PROSPECTIVE PURCHASER SOUGHT A RELEASE FROM THE CONTRACT OF SALE WHICH THE EMPLOYEE ACCEPTED IN CONSIDERATION OF THE PURCHASER'S FORFEITURE OF HIS DEPOSIT. THE RELEASE AGREEMENT WAS EXECUTED JULY 3, 1971; HOWEVER, A SUBSEQUENT CONTRACT OF SALE WAS NOT EXECUTED WITH ANOTHER PURCHASER UNTIL JULY 23, 1971.

YOUR LETTER STATES THAT THE CHAIRMAN OF THE "DIRNSA PCS COMMITTEE" APPROVED AN EXTENSION OF THE SETTLEMENT PERIOD FOR THE SALES CONTRACT EXECUTED ON JULY 23, 1971, TO SEPTEMBER 17, 1971. YOU RAISE A QUESTION WHETHER SUCH EXTENSION WAS VALID INASMUCH AS THE FIRST CONTRACT OF SALE WAS EFFECTIVELY CANCELED ON JULY 3, 1971, AND A SECOND CONTRACT WAS NOT IN EXISTENCE UNTIL JULY 23, 1971, OR "NINE DAYS AFTER THE INITIAL ONE YEAR PERIOD HAD EXPIRED."

SECTION 4.1E OF OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR NO. A 56, REVISED JUNE 26, 1969, PROVIDES THAT THE HEAD OF AN AGENCY OR HIS DESIGNEE MAY EXTEND THE 1-YEAR TIME LIMIT FOR PURCHASING A RESIDENCE ONLY IN THOSE CASES, OTHER THAN SITUATIONS INVOLVING LITIGATION, WHEN HE DETERMINES THAT CIRCUMSTANCES JUSTIFYING THE EXCEPTION EXIST WHICH PRECLUDE SETTLEMENT WITHIN THE INITIAL 1-YEAR PERIOD OF THE SALE/PURCHASE CONTRACT ENTERED INTO IN GOOD FAITH BY THE EMPLOYEE WITHIN THE INITIAL 1-YEAR PERIOD.

OUR OFFICE HAS HELD THAT SECTION 4.1E AUTHORIZES AN EXTENSION OF THE 1- YEAR LIMITATION FOR SETTLEMENT (OTHER THAN LITIGATION) ONLY FOR AN EXISTING PURCHASE OR SALE CONTRACT WHICH WAS ENTERED INTO DURING THE INITIAL 1 YEAR FOLLOWING A TRANSFER OF OFFICIAL STATION. SEE B-171882, APRIL 2, 1971; B-168392, DECEMBER 16, 1969, AND JUNE 12, 1970.

APPARENTLY THE BASIS FOR THE REQUIREMENT THAT A CONTRACT OF SALE OR PURCHASE BE ENTERED INTO DURING THE INITIAL 1-YEAR PERIOD BEFORE AN EXTENSION OF TIME COULD BE GRANTED WAS TO ENSURE TIMELY SALE OR PURCHASE OF A RESIDENCE AND TO SHOW A REASONABLE CONNECTION BETWEEN SUCH A TRANSACTION AND THE TRANSFER OF OFFICIAL STATION. UPON FURTHER CONSIDERATION OF THIS SUBJECT MATTER OUR VIEW IS THAT A REASONABLE RELATIONSHIP BETWEEN THE SALE OR PURCHASE OF A RESIDENCE AND A TRANSFER OF STATION MAY BE ASSUMED WHEN A CONTRACT HAS BEEN ENTERED INTO THE INITIAL YEAR REGARDLESS OF WHETHER IT HAS BEEN CANCELED AND THUS NOT IN EXISTENCE AT THE EXPIRATION OF THE INITIAL YEAR. WE NOTE THAT THE REGULATION IS SILENT AS TO ANY REQUIREMENT THAT A CONTRACT BE IN EXISTENCE AT THE END OF THE 1-YEAR PERIOD. ACCORDINGLY, WE NOW HOLD THAT UNDER THE CIRCUMSTANCES RELATED THE HEAD OF AN AGENCY IS NOT PRECLUDED FROM GRANTING AN EXTENSION OF TIME IN ANY CASE WHERE A CONTRACT HAS BEEN ENTERED INTO DURING THE INITIAL YEAR BUT CANCELED BEFORE THE EXPIRATION THEREOF. THE DECISIONS CITED IN THE PRECEDING PARAGRAPH AND OTHERS SIMILAR THERETO NO LONGER WILL BE FOLLOWED.

IN THE INSTANT CASE AN EXTENSION WAS ACTUALLY GRANTED BASED ON A CONTRACT ENTERED INTO DURING THE FIRST YEAR. ACCORDINGLY, THE VOUCHER WITH SUPPORTING PAPERS IS RETURNED HEREWITH AND MAY BE PROCESSED FOR PAYMENT IF OTHERWISE CORRECT.