B-179573, DEC 13, 1973

B-179573, DEC 13, 1973

1. ATTORNEY FEES INCIDENT TO PURCHASE OF A RESIDENCE WHICH ARE ALLOWABLE UNDER 5 U.S.C. 5724AA)(4) AND SECTION 4, OMB CIRCULAR NO. A 56 INCLUDE (1) FEE FOR PREPARATION OF MORTGAGE AND (2) FEE FOR PREPARATION OF PROMISSORY NOTE. FEE FOR REPRESENTATION AT CLOSING IS NOT REIMBURSABLE, CITING B- 173775, SEPTEMBER 17, 1971. 2. THREE FEES INCLUDED ON ATTORNEY'S ITEMIZED BILL ARE REIMBURSABLE BECAUSE THEY WERE INCIDENT TO PURCHASE OF TITLE INSURANCE POLICY OF WHICH THE BENEFICIARY IS THE MORTGAGEE OF THE RESIDENCE. THESE ARE (1) A FEE FOR SERVICES OF THE ATTORNEY FOR ORDERING THE POLICY AND EXAMINING IT FOR ACCURACY; (2) A FEE CHARGED BY THE TITLE INSURANCE COMPANY FOR EXAMINING THE REPORTING THE STATUS OF THE TITLE, AND (3) A SEPARATE CHARGE BY THE TITLE INSURANCE COMPANY FOR ITS CONDUCT OF JUDGMENT SEARCHES AND PREPARATION OF MUNICIPAL LIEN REPORTS. SEE B 164867, SEPTEMBER 4, 1968, AND B-176663, FEBRUARY 20, 1973.

TO MS. JUNET M. BLEDSOE:

THIS REFERS FURTHER TO YOUR LETTER OF AUGUST 23, 1973, BY WHICH YOU REQUESTED A DECISION AS TO WHETHER CERTAIN CLAIMS FOR REIMBURSEMENT OF EXPENSES INCURRED BY MR. DOUGLAS A. ROSS INCIDENT TO THE PURCHASE OF A NEW RESIDENCE ON TRANSFER OF STATION MAY BE APPROVED FOR PAYMENT. THE EXPENSES IN QUESTION ARE OF THE KIND AUTHORIZED FOR REIMBURSEMENT UNDER SUBSECTION 5724AA)(4) OF TITLE 5, U.S.C. AND THE IMPLEMENTING REGULATION, SECTION 4, OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR NO. A-56.

THE SPECIFIC ITEMS CLAIMED, SUPPORTED BY AN ITEMIZED STATEMENT OF MR. ROSS' ATTORNEY, ARE THE FOLLOWING:

(1) PREPARATION OF MORTGAGE $50

(2) ORDERING AND EXAMINATION OF TITLE POLICIES $50

(3) EXAMINATION AND REPORTING OF TITLE $55

(4) JUDGMENT SEARCHES AND MUNICIPAL LIEN REPORTS $21

ITEM NUMBER (1), PREPARATION OF MORTGAGE, IS ALLOWABLE UNDER SUBSECTION 4.2C OF CIRCULAR NO. A-56, SUPRA, SINCE THIS WAS THE PREPARATION OF AN INSTRUMENT REQUIRED TO COMPLETE THE TRANSACTION.

ITEM NUMBER (2), "ORDERING AND EXAMINATION OF TITLE POLICIES" ($50), IS LISTED ON THE ATTORNEY'S BILL AS A FEE FOR PROFESSIONAL SERVICES AND ITEM NUMBER (3), "EXAMINATION AND REPORTING OF TITLE" ($55), IS LISTED THEREON UNDER THE CAPTION "DISBURSEMENTS."

THE ENCLOSURES TO YOUR LETTER INCLUDE A COPY OF A POLICY OF TITLE INSURANCE OF WHICH THE CITIZENS FIRST NATIONAL BANK OF RIDGEWOOD, MORTGAGEE OF THE PROPERTY, IS THE BENEFICIARY. SUBSECTION 4.2D OF CIRCULAR NO. A-56, SUPRA, AUTHORIZES, INTER ALIA, REIMBURSEMENT FOR "THE COST OF A MORTGAGE TITLE POLICY PAID FOR BY THE EMPLOYEE ON A RESIDENCE PURCHASED BY HIM ***." THE POLICY PURCHASED IN THIS CASE APPEARS TO BE OF THE NATURE THAT OUR DECISIONS HAVE HELD TO BE COVERED BY THE ABOVE-QUOTED LANGUAGE. SEE B-164867, SEPTEMBER 4, 1968, AND B 176663, FEBRUARY 20, 1973, COPIES ENCLOSED.

WE HAVE BEEN ADVISED BY A MEMBER OF THE LAW FIRM WHICH PRESENTED THE ITEMIZATION OF FEES THAT THE $50 FEE FOR "ORDERING AND EXAMINATION OF SEARCH" AND THE $55 ITEM FOR "EXAMINATION AND REPORTING OF TITLE - N. J. REALTY TITLE INSURANCE" ARE RELATED TO THE PURCHASE OF THE TITLE INSURANCE POLICY. THIS ITEM REPRESENTS THE COST OF THE SERVICE RENDERED BY THE TITLE INSURANCE COMPANY FOR THE TITLE SEARCH ON WHICH INSURANCE IS BASED. THE $50 FEE FOR PROFESSIONAL SERVICES REPRESENTS THE SERVICES OF THE ATTORNEY WHO REVIEWED THE TITLE INSURANCE BINDER TO DETERMINE ITS ACCURACY WITH RESPECT TO ALL ASPECTS OF THE TRANSACTION.

WITH RESPECT TO ITEM NUMBER (4), "JUDGMENT SEARCHES AND MUNICIPAL LIEN REPORTS" ($21), LISTED ON THE ATTORNEY'S BILL AS A DISBURSEMENT, WE WERE ADVISED THAT THIS REPRESENTS A SEPARATE CHARGE BY THE TITLE INSURANCE COMPANY FOR THESE ELEMENTS OF ITS ENTIRE TITLE SEARCH.

SINCE EACH OF THE FEES DESCRIBED IN ITEMS 2, 3, AND 4 IS A PART OF THE COST OF PURCHASING THE MORTGAGE TITLE INSURANCE POLICY THEY ARE ALLOWABLE UNDER THE PROVISION OF SUBSECTION 4.2D, SUPRA.

IN REVIEWING THE MEMORANDUM OF AUGUST 29, 1972, DEALING WITH THE PREVIOUS VOUCHER SUBMITTED BY MR. ROSS, WE NOTE TWO ITEMS WHICH WE BELIEVE SHOULD BE CALLED TO YOUR ATTENTION.

AMONG THE ITEMS DISALLOWED ADMINISTRATIVELY IS AN ITEM OF $50 FOR THE PREPARATION OF A PROMISSORY NOTE. THIS ITEM WAS DISALLOWED AS BEING EXCLUDED BY SUBSECTION 4.2D OF CIRCULAR NO. A-56 BY REASON OF BEING A FINANCE CHARGE UNDER PROVISION OF PUBLIC LAW 90-321, MAY 29, 1968. SECTION 106(E) OF THAT ACT PROVIDES THAT FEES FOR THE PREPARATION OF A DEED, SETTLEMENT STATEMENT, OR OTHER DOCUMENTS ARE NOT INCLUDED IN THE COMPUTATION OF THE FINANCE CHARGE. THEREFORE, MR. ROSS IS ENTITLED TO REIMBURSEMENT FOR THAT ITEM.

AMONG THE ITEMS ALLOWED, HOWEVER, WE NOTE AN AMOUNT OF $40 INCLUDED IN THE SUM OF $65 FOR "ATTORNEY'S FEE" WHICH APPEARS ON THE ATTORNEY'S BILL, OPPOSITE THE CAPTION "ATTENDANCE AT AND HANDLING OF CLOSING." WE BELIEVE THE AMOUNT ALLOWED FOR THIS $40 ITEM SHOULD BE OFFSET FROM THE REIMBURSEMENT NOW ALLOWED SINCE OUR DECISIONS HAVE HELD THAT AN ATTORNEY FEE FOR REPRESENTATION AT CLOSING IS NOT SUBJECT TO REIMBURSEMENT. SEE B- 173775, SEPTEMBER 17, 1971.

THE VOUCHER, RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT IN ACCORDANCE WITH THE FOREGOING.