B-199900, FEB 10, 1981

B-199900: Feb 10, 1981

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CLAIM FOR REAL ESTATE EXPENSES OF PARCEL CONTAINING HOUSE WAS PAID BUT EXPENSES ASSOCIATED WITH PARCEL NOT CONTAINING HOUSE WERE DISALLOWED BY AGENCY. RECLAIM VOUCHER FOR REAL ESTATE EXPENSES OF PARCEL WITHOUT HOUSE MAY NOT BE PAID SINCE PARCEL OF LAND OTHER THAN THAT UPON WHICH HOUSE IS LOCATED DOES NOT REASONABLY RELATE TO RESIDENCE SITE AS REQUIRED BY PARAGRAPH 2-6.1(F) OF FEDERAL TRAVEL REGULATIONS. 2. TRANSFERRED EMPLOYEE MAY NOT BE REIMBURSED FOR SURVEY COSTS INCURRED IN CONNECTION WITH SALE OF RESIDENCE AT OLD OFFICIAL DUTY STATION BECAUSE EVIDENCE DEMONSTRATES THAT SURVEY COSTS ARE CUSTOMARILY INCURRED BY PURCHASER INCIDENT TO REAL ESTATE TRANSACTIONS IN PARTICULAR AREA IN ACCORDANCE WITH PARAGRAPH 2-6.2(C) OF THE FEDERAL TRAVEL REGULATIONS.

B-199900, FEB 10, 1981

DIGEST: 1. TRANSFERRED EMPLOYEE OF DEPARTMENT OF ENERGY SOLD PROPERTY AT OLD DUTY STATION IN TWO PARCELS TO TWO SEPARATE BUYERS. CLAIM FOR REAL ESTATE EXPENSES OF PARCEL CONTAINING HOUSE WAS PAID BUT EXPENSES ASSOCIATED WITH PARCEL NOT CONTAINING HOUSE WERE DISALLOWED BY AGENCY. RECLAIM VOUCHER FOR REAL ESTATE EXPENSES OF PARCEL WITHOUT HOUSE MAY NOT BE PAID SINCE PARCEL OF LAND OTHER THAN THAT UPON WHICH HOUSE IS LOCATED DOES NOT REASONABLY RELATE TO RESIDENCE SITE AS REQUIRED BY PARAGRAPH 2-6.1(F) OF FEDERAL TRAVEL REGULATIONS. 2. TRANSFERRED EMPLOYEE MAY NOT BE REIMBURSED FOR SURVEY COSTS INCURRED IN CONNECTION WITH SALE OF RESIDENCE AT OLD OFFICIAL DUTY STATION BECAUSE EVIDENCE DEMONSTRATES THAT SURVEY COSTS ARE CUSTOMARILY INCURRED BY PURCHASER INCIDENT TO REAL ESTATE TRANSACTIONS IN PARTICULAR AREA IN ACCORDANCE WITH PARAGRAPH 2-6.2(C) OF THE FEDERAL TRAVEL REGULATIONS.

FRANKLIN J. RINDT - RELOCATION EXPENSES:

LARRY E. HYMES, CHIEF, ACCOUNTING BRANCH - FINANCIAL MANAGEMENT DIVISION OF THE ALBUQUERQUE OPERATIONS OFFICE, DEPARTMENT OF ENERGY, REQUESTS AN OPINION ON THE CLAIM OF MR. FRANKLIN J. RINDT FOR REIMBURSEMENT OF REAL ESTATE EXPENSES INCURRED IN CONNECTION WITH HIS CHANGE OF OFFICIAL DUTY STATION FROM WASHINGTON, D. C., TO ALBUQUERQUE, NEW MEXICO, IN DECEMBER 1978. THE ISSUES PRESENTED ARE WHETHER MR. RINDT MAY BE REIMBURSED FOR COSTS INCURRED IN SELLING PROPERTY AT HIS OLD DUTY STATION IN TWO SEPARATE PARCELS, AND WHETHER SURVEY COSTS MAY BE INCLUDED IN HIS REIMBURSEMENT. OUR REVIEW INDICATES MR. RINDT IS NOT ENTITLED TO THE ADDITIONAL EXPENSES CLAIMED.

BACKGROUND

THE ADMINISTRATIVE REPORT ON MR. RINDT'S CLAIM SHOWS THAT IN LATE 1978 HE SOLD HIS RESIDENCE IN KEYMAR, MARYLAND, INCLUDING APPROXIMATELY 2.8 ACRES OF LAND AND ONE HOUSE. MR. RINDT COMPLETED THIS SALE THROUGH TWO SEPARATE TRANSACTIONS TO TWO SEPARATE PURCHASERS, SELLING ONE PARCEL OF APPROXIMATELY 1.6 ACRES, AND THE SECOND PARCEL WITH THE REMAINING ACREAGE AND THE HOUSE. MR. RINDT SUBMITTED A CLAIM FOR EXPENSES INCURRED IN CONNECTION WITH BOTH TRANSACTIONS. INCLUDED IN THAT CLAIM WERE VARIOUS FEES ($882) AND SURVEY EXPENSES ($1,112.50) ASSOCIATED WITH THE SALE OF THE PARCEL WITHOUT THE HOUSE. THE CLAIM WAS APPROVED BY THE AGENCY WITH THE EXCEPTION OF THE FEES AND SURVEY EXPENSES ASSOCIATED WITH THE PARCEL WITHOUT THE HOUSE. MR. RINDT SUBMITTED A RECLAIM TO THE AGENCY PROVIDING A LETTER IN SUPPORT OF THE RECLAIMED EXPENSES. ALSO APPEARING IN THE RECORD BEFORE US IS AN OPINION LETTER OF THE OFFICE OF CHIEF COUNSEL, ALBUQUERQUE OPERATIONS OFFICE, CONCURRING WITH THE EARLIER DENIAL OF MR. RINDT'S CLAIM. THE OFFICE OF CHIEF COUNSEL CONCLUDED THAT THE SALE OF THE PARCEL WITHOUT THE HOUSE WAS IN EXCESS OF THAT LAND WHICH REASONABLY RELATED TO THE RESIDENCE SITE, CITING AS AUTHORITY PARAGRAPH 2-6.1(F) OF THE FEDERAL TRAVEL REGULATIONS (FPMR 101-7) (MAY 1973) AND OUR DECISION B-171493, FEBRUARY 2, 1971. IN DISALLOWING THE EXTENSIVE SURVEY EXPENSES INCURRED BY MR. RINDT, THE OFFICE OF CHIEF COUNSEL CONCLUDED THAT SURVEY COSTS ARE CUSTOMARILY PAID BY THE PURCHASER AT MR. RINDT'S OLD OFFICIAL STATION AND THAT THE SURVEY WAS MADE TO MAKE THE PROPERTY MORE READILY MARKETABLE, CITING AS AUTHORITY PARAGRAPH 2-6.2(C) OF THE FEDERAL TRAVEL REGULATIONS AND OUR DECISION B-163709, APRIL 19, 1968.

MR. RINDT HAS PETITIONED THE AGENCY TO REQUEST AN OPINION OF THE COMPTROLLER GENERAL. IN ESSENCE MR. RINDT CONTENDS THAT HE SOLD ONLY ONE "RESIDENCE" REGARDLESS OF THE FACT THAT THE SALE WAS MADE UP OF TWO SEPARATE TRANSACTIONS; AND THEREFORE THE ACREAGE SOLD WAS NOT "IN EXCESS OF THAT WHICH REASONABLY RELATES TO THE RESIDENCE SITE," WITHIN THE MEANING OF THE FEDERAL TRAVEL REGULATIONS. MOREOVER, MR. RINDT ARGUES THAT BY SELLING TO TWO PARTIES HE ACTUALLY SAVED THE GOVERNMENT $150 IN BROKERS' COMMISSIONS THAT WOULD OTHERWISE HAVE BEEN REIMBURSABLE.

THE AGENCY PRESENTS MR. RINDT'S POSITION ON THE SURVEY EXPENSES AS FOLLOWS:

"MR. RINDT'S CONTENTIONS REGARDING THE SURVEY EXPENSES, IN OUR OPINION, MERIT YOUR CAREFUL CONSIDERATION. MR. RINDT ARGUES THAT THE SURVEY EXPENSES ARE ALLOWABLE IN ACCORDANCE WITH THE PROVISIONS OF FTR 2-6.2.C. BECAUSE THEY ARE OF THE TYPE 'CUSTOMARILY PAID BY THE SELLER' AND THE SURVEY WAS REQUIRED FOR 'LEGAL PURPOSES,' AND THAT THEREFORE HE IS ENTITLED TO AT LEAST A PRO RATA REIMBURSEMENT OF THE SURVEY EXPENSES ASSOCIATED WITH THE SALE OF HIS RESIDENCE. (MR. RINDT OWNED TWO CONTIGUOUS PARCELS. BY CONSTRUCTING AN ADDITION TO HIS RESIDENCE IN 1976, MR. RINDT VIOLATED THE COUNTY SETBACK REQUIREMENTS WHICH THE COUNTY WOULD HAVE ENFORCED UPON SALE OF ONE OR BOTH PARCELS ABSENT AN APPROPRIATE RESURVEY OF THE PARCELS.) EVEN THOUGH WE CONCLUDE THAT THE SURVEY WAS MADE TO MAKE THE PROPERTY SOLD MORE READILY MARKETABLE, WE CONCEDE THAT A SELLER WOULD CUSTOMARILY PAY FOR THIS TYPE OF SURVEY AND THAT THE SURVEY WAS REQUIRED FOR A LEGAL PURPOSE. ***"

FEES ASSOCIATED WITH SALE OF SEPARATE LAND PARCEL

SECTION 5724AA)(4) OF TITLE 5, U.S.C. PROVIDES FOR NECESSARY AND APPROPRIATE REIMBURSEMENT FOR ALL OR A PART OF THE EXPENSES INCURRED BY AN EMPLOYEE IN SELLING HIS RESIDENCE AT THE OLD OFFICIAL DUTY STATION IN CONNECTION WITH HIS TRANSFER AND RELOCATION. HOWEVER, EXPENSES UNDER THIS PARAGRAPH MAY NOT EXCEED THOSE CUSTOMARILY CHARGED IN THE LOCALITY WHERE THE RESIDENCE IS LOCATED, AND REIMBURSEMENT MAY NOT BE MADE FOR LOSSES ON THE SALE OF THE RESIDENCE. IMPLEMENTING REGULATIONS WHICH LIMIT AN EMPLOYEE TO A PRO RATA ENTITLEMENT FOR RESIDENCE TRANSACTION EXPENSES ARE CONTAINED AT PARAGRAPH 2-6.1(F) OF THE FEDERAL TRAVEL REGULATIONS WHICH PROVIDES IN PART AS FOLLOWS:

"F. PAYMENT OF EXPENSES BY EMPLOYEE - PRO RATA ENTITLEMENT. *** THE EMPLOYEE SHALL ALSO BE LIMITED TO PRO RATA REIMBURSEMENT WHEN HE SELLS OR PURCHASES LAND IN EXCESS OF THAT WHICH REASONABLY RELATES TO THE RESIDENCE SITE."

IN RICHARD E. LINCOLN, B-186931, SEPTEMBER 2, 1976, WE NOTED THAT THE PROVISION SET OUT ABOVE WAS ADDED TO BUREAU OF THE BUDGET CIRCULAR NO. A- 56, SECTION 4.1F, REVISED JUNE 26, 1969, AND HAS BEEN CARRIED FORWARD INTO THE FTR. THE ADDITION OF THE SENTENCE WAS EXPLAINED ON PAGE 4 OF BUREAU OF THE BUDGET TRANSMITTAL MEMORANDUM NO. 5, DATED JUNE 26, 1969, AS FOLLOWS:

"A SENTENCE IS ADDED TO RENUMBERED PARAGRAPH 4.1F TO LIMIT REIMBURSEMENT TO THE EXPENSES THAT APPLY TO SUCH LAND AS REASONABLY RELATES TO THE RESIDENCE SITE."

EVEN PRIOR TO THE ADDITION OF THE ABOVE LANGUAGE TO CIRCULAR NO. A-56, WE HELD THAT, BASED ON REGULATIONS IMPLEMENTING 5 U.S.C. 5724AA)(4) WHICH PROVIDES FOR REIMBURSEMENT ONLY OF THE COSTS INVOLVED IN THE SALE OF AN EMPLOYEE'S RESIDENCE, REIMBURSEMENT ON A PRO RATA BASIS IS REQUIRED WHEN AN EMPLOYEE SELLS PROPERTY IN ADDITION TO HIS RESIDENCE. B-163187, FEBRUARY 19, 1968.

IT IS CLEAR, THEREFORE, FROM THE FOREGOING, THAT THE INTENT OF THE REGULATIONS IS TO LIMIT REIMBURSEMENT OF RESIDENCE TRANSACTION EXPENSES TO THAT PORTION OF THE PROPERTY WHICH REASONABLY RELATES TO THE RESIDENCE SITE. IN 54 COMP.GEN. 597 (1975), WE INDICATED THAT THE CRUCIAL POINT IN PARAGRAPH 2-6.1(F) OF THE FEDERAL TRAVEL REGULATIONS IS THE DETERMINATION OF HOW MUCH LAND "REASONABLY RELATES TO THE RESIDENCE SITE" AND HOW MUCH LAND OF THE PURCHASE OR SALE IS "IN EXCESS." WE FURTHER STATED THAT A DETERMINATION SHOULD GENERALLY BE MADE BY THE AGENCY CONCERNED, AND WE SET FORTH EXAMPLES OF THE KINDS OF CONSIDERATIONS WHICH AGENCIES SHOULD TAKE INTO CONSIDERATION IN ARRIVING AT SUCH DETERMINATION.

WE HAVE EXAMINED THE RECORD AND DO NOT AGREE THAT THE LAND WHICH WAS SOLD SEPARATELY FROM THE HOUSE WAS REASONABLY RELATED TO THE RESIDENCE SITE AS REQUIRED BY THE ABOVE-QUOTED REGULATION. IN B-171493, FEBRUARY 2, 1971, AND MORE RECENTLY IN HAROLD J. GEARY, B-188717, JANUARY 25, 1978, WE RULED UPON CLAIMS INVOLVING SALES IN SIMILAR FACTUAL SITUATIONS. WE HELD THAT WHERE THE EMPLOYEE HAS DIVIDED HIS PROPERTY INTO SEPARATE PARCELS FOR SALE PURPOSES, IT MUST BE CONCLUDED THAT PARCELS OTHER THAN THAT UPON WHICH THE HOUSE IS LOCATED DO NOT RELATE TO THE RESIDENCE SITE. THEREFORE, THE CERTIFYING OFFICER IN THE PRESENT CASE WAS CORRECT IN REDUCING REIMBURSEMENT OF REAL ESTATE EXPENSES AND DISALLOWING EXPENSES ASSOCIATED WITH THE SALE OF THE SEPARATE LAND PARCEL.

SURVEY COSTS

5 U.S.C. 5724AA)(4) WHICH AUTHORIZES REIMBURSEMENT OF THE EXPENSES OF THE SALE OF A TRANSFERRED EMPLOYEE'S RESIDENCE PROVIDES THAT THE EMPLOYEE MUST BE REQUIRED TO PAY THE EXPENSES FOR WHICH HE CLAIMS REIMBURSEMENT AND THAT ALLOWABLE EXPENSES MAY NOT EXCEED THOSE CUSTOMARILY CHARGED IN THE LOCALITY WHERE THE RESIDENCE IS LOCATED. SEE GENERALLY B-163709, APRIL 19, 1968. IMPLEMENTING REGULATIONS FOR REIMBURSEMENT OF LEGAL AND RELATED EXPENSES - INCLUDING SURVEY COSTS - ARE CONTAINED IN PARAGRAPH 2-6.2(C) OF THE FEDERAL TRAVEL REGULATIONS. THE PARAGRAPH PROVIDES REIMBURSEMENT FOR A SURVEY COST PROVIDED IT IS CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION TO THE EXTENT IT DOES NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE. IN ADDITION, PARAGRAPH 2-6.3(C) OF THE FEDERAL TRAVEL REGULATIONS PROVIDES THAT THE LOCAL OR AREA OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD) SERVING THE AREA IN WHICH REAL ESTATE EXPENSES OCCURRED WILL FURNISH UPON REQUEST INFORMATION CONCERNING LOCAL CUSTOM AND PRACTICES WITH RESPECT TO CLOSING COSTS RELATED TO EITHER A SALE OR PURCHASE, INCLUDING INFORMATION AS TO WHETHER SUCH COSTS ARE CUSTOMARILY PAID BY THE SELLER OR PURCHASER. WHILE SUCH A REPORT DOES NOT APPEAR IN THE RECORD HERE, THE OFFICE OF CHIEF COUNSEL HAS STATED THAT "THE CUSTOM IN FREDERICK COUNTY IS FOR THE PURCHASER TO PAY FOR A SURVEY WHERE REQUIRED, WHICH IS PROVIDED FOR IN PARAGRAPH 6 OF THE STANDARD MARYLAND REAL ESTATE CONTRACTS." NOTE THAT THIS DETERMINATION COMPORTS WITH OUR FINDING IN W. G. MCDANIEL, B-188213, DECEMBER 12, 1977, THAT THE COST OF SURVEYOR'S REPORT IS AN EXPENSE CUSTOMARILY PAID BY THE PURCHASER INCIDENT TO THE PURCHASE OF A RESIDENCE, AND THAT A FEE OF $35 PAID FOR THE SURVEYOR'S REPORT WAS, AT THAT TIME, WITHIN THE AMOUNT CUSTOMARILY CHARGED IN THE FREDERICK, MARYLAND, AREA.

THUS, WE CONCLUDE HERE THAT THE SURVEY WHICH MR. RINDT OBTAINED WAS NOT AN EXPENSE "CUSTOMARILY PAID BY THE SELLER" IN THAT AREA WITHIN THE MEANING OF PARAGRAPH 2-6.2(C) OF THE FEDERAL TRAVEL REGULATIONS, AND ACCORDINGLY, THOSE SURVEY COSTS MAY NOT BE REIMBURSED.

FOR THE REASONS STATED ABOVE, PAYMENT UPON THE RECLAIM VOUCHER SUBMITTED BY MR. RINDT FOR ADDITIONAL REAL ESTATE EXPENSES IS NOT AUTHORIZED.