B-175939, JUN 19, 1972

B-175939: Jun 19, 1972

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

THE VOUCHER MAY NOT BE CERTIFIED FOR PAYMENT SINCE UNDER LOCAL CUSTOM THE PURCHASER IS RESPONSIBLE FOR PAYING HIS OWN CLOSING COSTS. HUGHEY: REFERENCE IS MADE TO YOUR LETTER OF MAY 5. THE CLAIMED REIMBURSEMENT FOR "BUYER'S CLOSING COSTS" PAID BY THE SELLER WAS PREVIOUSLY DISALLOWED BECAUSE OF DOUBT AS TO WHETHER PAYMENT WAS PROPER IN VIEW OF SECTIONS 4.2C AND 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 WHICH PROVIDE THAT COSTS OF THE TYPE INVOLVED MAY BE REIMBURSED ONLY IF THEY ARE CUSTOMARILY PAID BY THE PURCHASER OR SELLER AS THE CASE MAY BE IN THE LOCATION WHERE THE TRANSACTION TOOK PLACE. MAROVELLI STATED IN HIS RECLAIM VOUCHER: " *** THESE EXPENSES WERE INCURRED WHEN I HAD TO NEGOTIATE UNFAVORABLY IN ORDER TO EFFECT SALE OF HOUSE.".

B-175939, JUN 19, 1972

CIVILIAN EMPLOYEE - SALE OF RESIDENCE - "BUYER'S CLOSING COSTS" - REIMBURSEMENT CONCERNING THE PROPRIETY OF REIMBURSEMENT TO ROBERT L. MAROVELLI FOR "BUYER'S CLOSING COSTS" PAID IN CONNECTION WITH THE SALE OF HIS RESIDENCE INCIDENT TO A TRANSFER OF PERMANENT STATION. THE VOUCHER MAY NOT BE CERTIFIED FOR PAYMENT SINCE UNDER LOCAL CUSTOM THE PURCHASER IS RESPONSIBLE FOR PAYING HIS OWN CLOSING COSTS.

TO MR. ROYAL D. HUGHEY:

REFERENCE IS MADE TO YOUR LETTER OF MAY 5, 1972, IN WHICH YOU REQUEST OUR DECISION AS TO WHETHER YOU MAY CERTIFY FOR PAYMENT A VOUCHER FOR MR. ROBERT L. MAROVELLI IN THE AMOUNT OF $500 REPRESENTING REIMBURSEMENT FOR "BUYER'S CLOSING COSTS" PAID BY HIM, AS SELLER, IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN BLOOMINGTON, MINNESOTA, INCIDENT TO A TRANSFER OF PERMANENT STATION.

THE CLAIMED REIMBURSEMENT FOR "BUYER'S CLOSING COSTS" PAID BY THE SELLER WAS PREVIOUSLY DISALLOWED BECAUSE OF DOUBT AS TO WHETHER PAYMENT WAS PROPER IN VIEW OF SECTIONS 4.2C AND 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56 WHICH PROVIDE THAT COSTS OF THE TYPE INVOLVED MAY BE REIMBURSED ONLY IF THEY ARE CUSTOMARILY PAID BY THE PURCHASER OR SELLER AS THE CASE MAY BE IN THE LOCATION WHERE THE TRANSACTION TOOK PLACE.

MR. MAROVELLI STATED IN HIS RECLAIM VOUCHER:

" *** THESE EXPENSES WERE INCURRED WHEN I HAD TO NEGOTIATE UNFAVORABLY IN ORDER TO EFFECT SALE OF HOUSE."

ALSO MR. BERNARD G. RICE, EXECUTIVE VICE-PRESIDENT OF THE GREATER MINNEAPOLIS AREA BOARD OF REALTORS, STATED IN A LETTER TO MR. MAROVELLI DATED FEBRUARY 23, 1972:

"OBVIOUSLY, PAYMENT FOR CLOSING COSTS IS A NEGOTIABLE ITEM. WHILE IT IS NOT UNCOMMON FOR THE SELLER TO PAY THE 'BUYER'S CLOSING COSTS', MORE FREQUENTLY CERTAINLY THE BUYER PAYS HIS OWN CLOSING COSTS."

WE HAVE BEEN INFORMALLY ADVISED BY THE MINNEAPOLIS INSURING OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT THAT IN THE MINNEAPOLIS AREA, THE PURCHASER PAYS HIS OWN CLOSING COSTS IN A MAJORITY OF CASES REGARDLESS OF THE REAL ESTATE MARKET CONDITIONS. THUS, IT MUST BE CONCLUDED THAT UNDER LOCAL CUSTOM THE PURCHASER IS RESPONSIBLE FOR THE PAYMENT OF HIS OWN CLOSING COSTS.

IT HAS BEEN HELD THAT EVEN IF THE REAL ESTATE MARKET CONDITIONS DID FORCE A SELLER TO ASSUME THE PURCHASER'S CLOSING COSTS, THE SELLER MAY NOT BE REIMBURSED UNLESS IT APPEARS THAT IT WOULD BE UNUSUAL FOR THE PURCHASER TO PAY HIS OWN CLOSING COSTS. SEE OUR DECISION OF SEPTEMBER 30, 1968, B- 165202, COPY ENCLOSED.

IN VIEW OF THE EVIDENCE OF LOCAL CUSTOMARY PRACTICE IN REAL ESTATE TRANSACTIONS CITED ABOVE, WE MUST CONCLUDE THAT IT WOULD NOT BE UNUSUAL FOR THE PURCHASER OF A RESIDENCE IN THE MINNEAPOLIS AREA TO PAY HIS OWN CLOSING COSTS.

THEREFORE, THE VOUCHER RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.