B-180986, SEP 18, 1974

B-180986, SEP 18, 1974

EMPLOYEE WHO, INCIDENT TO CHANGE OF OFFICIAL STATION, SOLD RESIDENCE AT OLD DUTY STATION TO PURCHASER WHO WAS A LICENSED REAL ESTATE BROKER AT PRICE WHICH REFLECTED REDUCTOIN EQUAL TO CUSTOMARY 6 PERCENT BROKER'S COMMISSION, $1,440, MAY NOT BE REIMBURSED AMOUNT AS BROKER'S FEE UNDER SUBSECTION 4.2A OF OMB CIRCULAR NO. A-56, ABSENT SHOWING THAT HE WAS UNDER LEGAL OBLIGATION TO PAY COMMISSION TO BROKER/PURCHASER FOR SALE OF HOUSE TO BROKER HIMSELF. CF. 47 COMP. GEN. 559 (1968).

ROBERT W. PEARSON - REAL ESTATE BROKER'S FEE:

BY LETTER DATED MARCH 28, 1974, MR. D.F. SLOAN, CERTIFYING OFFICER, DRUG ENFORCEMENT ADMINISTRATION, DEPARTMENT OF JUSTICE, REQUESTED DECISION AS TO WHETHER A VOUCHER IN THE AMOUNT OF $1,440 SUBMITTED BY MR. ROBERT W. PEARSON, A DRUG ENFORCEMENT ADMINISTRATION EMPLOYEE, MAY BE CERTIFIED FOR PAYMENT. MR. PEARSON HAS CLAIMED THE $1,440 AMOUNT AS A BROKER'S FEE INCURRED IN CONNECTION WITH THE SALE OF HIS FORMER LEVITTOWN, PENNSYLVANIA, RESIDENCE INCIDENT TO HIS TRANSFER ON APRIL 1, 1973, FROM PHILADELPHIA, PENNSYLVANIA, TO WASHINGTON, D.C.

ON APRIL 27, 1973, MR. PEARSON SOLD HIS LEVITTOWN RESIDENCE TO A PURCHASER WHO WAS LICENSED AS A REAL ESTATE AGENT BY THE COMMONWEALTH OF PENNSYLVANIA. THE HOUSE, WHICH HAD BEEN APPRAISED AT FROM $24,000 TO $24,500, WAS ULTIMATELY SOLD TO THE AGENT/PURCHASER FOR $22,500. THE $22,500 SALES PRICE WAS ARRIVED AT AS FOLLOWS: THE CUSTOMARY 6 PERCENT REAL ESTATE COMMISSION OF $1,440 THAT WOULD HAVE BEEN PAYABLE IF THE HOUSE HAD BEEN SOLD AT THE LESSER APPRAISED PRICE OF $24,000, WAS DEDUCTED FROM THE HIGHER APPRAISED VALUE OF $24,500, AND FROM THE REDUCED PRICE OF $23,060 AND ADDITIONAL AMOUNT OF $560 WAS DEDUCTED IN CONSIDERATION FOR THE PURCHASER'S AGREEMENT TO ALLOW THE EMPLOYEE AND HIS FAMILY TO REMAIN IN THE HOUSE UNTIL THEY COULD FIND A HOME AT THE NEW DUTY STATION.

ALTHOUGH THE STATEMENT OF SETTLEMENT SHOWS THAT THE HOUSE WAS CONVEYED FOR A CONSIDERATION OF $22,500, IN SUBMITTING HIS VOUCHER FOR REIMBURSEMENT OF REAL ESTATE EXPENSES UNDER 5 U.S.C. 5724A, MR. PEARSON HAS INDICATED THAT THE SALES PRICE WAS IN FACT $24,500 AND HAS CLAIMED REIMBURSEMENT FOR $1,440 AS A BROKER'S FEE, INDICATING THAT THAT AMOUNT WAS DEDUCTED FROM THE $24,500 SELLING PRICE.

SUBSECTION 4.2A OF OFFICE OF MANAGEMENT AND BUDGET (OMB) CIRCULAR NO. A- 56, REVISED, AUGUST 17, 1971, IN EFFECT AT THE TIME OF THE REAL ESTATE TRANSACTION HERE INVOLVED, PROVIDED FOR REIMBURSEMENT OF BROKER'S FEES AND REAL ESTATE COMMISSIONS AS FOLLOWS:

"A. BROKER'S FEES AND REAL ESTATE COMMISSIONS. A BROKER'S FEE OR REAL ESTATE COMMISSION PAID BY THE EMPLOYEE FOR SERVICES IN SELLING HIS RESIDENCE IS REIMBURSABLE BUT NOT IN EXCESS OF RATES GENERALLY CHARGED FOR SUCH SERVICES BY THE BROKER OR BY BROKERS IN THE LOCALITY OF THE OLD OFFICIAL STATION. ***"

LIMITATIONS ON THE ALLOWANCES FOR REAL ESTATE EXPENSES ARE ENUMERATED AT SECTION 4.1 OF THE CIRCULAR WHICH, AT SUBSECTION F, PRESCRIBES AS A CONDITION THAT "THE EXPENSES FOR WHICH REIMBURSEMENT IS CLAIMED BE PAID BY THE EMPLOYEE." ALSO, WE HAVE CONSTRUED THE LANGUAGE OF SUBSECTION 4.2A AS AS RESTRICTING REIMBURSEMENT FOR BROKERAGE FEES TO AMOUNTS WHICH ARE LEGALLY REQUIRED TO BE PAID BY THE EMPLOYEE. THUS, IN B 165747, JANUARY 7, 1969, WE DENIED REIMBURSEMENT TO AN EMPLOYEE FOR THE $500.07 AMOUNT WHICH HE PAID TO HIS FORMER WIFE FOR SELLING THE HOUSE AT HIS OLD DUTY STATION ON THE BASIS THAT THERE WAS NO LEGALLY ENFORCEABE DEBT ARISING OUT OF THE SERVICES PERFORMED BY THE WIFE WHO WAS NOT LICENSED AS A REALTOR. A SIMILAR PRINCIPLE WAS INVOLVED IN B 163253, MAY 24, 1968.

MOST CLOSELY IN POINT IS OUR DECISION IN 47 COMP. GEN. 559 (1968), IN WHICH THE EMPLOYEE HAD ENTERED INTO AN ORAL ARRANGEMENT WITH A LICENSED BROKER TO SELL HIS RESIDENCE AT HIS OLD DUTY STATION FOR $17,500 WITH THE USUAL 6 PERCENT COMMISSION. AFTER THE PROPERTY HAD BEEN ON THE MARKET FOR 2 MONTHS, THE BROKER HIMSELF OFFERED TO PURCHASE THE HOUSE AT THE AGREED PRICE. AS PART OF THE TRANSACTION THE EMPLOYEE DID IN FACT PAY THE BROKER/ PURCHASER 6 PERCENT OF THE PROCEEDS OF THE SALE AS THE AGREED-UPON COMMISSION. IN THAT CASE WE RECOGNIZED THAT, WHILE A BROKER EMPLOYED TO SELL PROPERTY WHO BUYS THE PROPERTY HIMSELF IS NOT ORDINARILY ENTITLED TO A COMMISSION, HE MAY IN FACT BE ENTITLED TO HIS COMMISSION WHERE THE PARTIES HAVE AGREED THAT HE SHALL NEVERTHELESS RECEIVE IT, AND THAT SUBSECTION 4.2A OF OMB CIRCULAR NO. A-56 CONTAINS NO RESTRICTION UPON REIMBURSEMENT TO AN EMPLOYEE FOR PAYMENT OF A BROKERAGE FEE TO A BROKER WHO PURCHASES A RESIDENCE FOR HIMSELF. WE THERE HELD THAT THE 6 PERCENT COMMISSION WAS REIMBURSABLE INASMUCH AS THE BROKER HAD SECURED A PURCHASER -ALBEIT HIMSELF-AND SINCE THE EMPLOYEE HAD IN FACT BORNE THE COST OF THE COMMISSION AS HE WAS LEGALLY OBLIGATED TO DO.

IN THE INSTANT CASE MR. PEARSON HAS MADE NO SHOWING THAT HE WAS LEGALLY OBLIGATED TO PAY A 6 PERCENT REAL ESTATE COMMISSION TO THE PURCHASER/ BROKER IN CONNECTION WITH THE SALE OF HIS RESIDENCE TO THE BROKER HIMSELF OR TO ANY PURCHASER. IN THE ABSENCE OF ANY SUCH SHOWING, THERE IS NO MORE OF A BASIS FOR PAYMENT OF THE $1,440 AMOUNT CLAIMED THAN THERE WOULD BE IF THE EMPLOYEE HAD SOLD THE HOUSE TO A PURCHASER WHO WAS NOT A LICENSED BROKER.

ACCORDINGLY, ON THE BASIS OF THE RECORD BEFORE US, THE VOUCHER SUBMITTED BY MR. PEARSON MAY NOT BE CERTIFIED FOR PAYMENT.