B-210474, AUG 29, 1983

B-210474: Aug 29, 1983

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HIS 5-ACRE RIVERFRONT RESIDENCE SITE IS WORTH MORE THAN THE AVERAGE 5-ACRE PARCEL OF LAND IN THE COUNTY AND HIS PRO RATA REIMBURSEMENT FOR FEES ASSESSED ON THE BASIS OF THE PURCHASE PRICE SHOULD BE BASED ON THE HIGHER VALUE OF COMPARABLE RIVERFRONT PROPERTIES. STANTON: THIS ACTION IS IN RESPONSE TO A REQUEST BY AN AUTHORIZED CERTIFYING OFFICER AT THE DEPARTMENT OF THE AIR FORCE FOR AN ADVANCE DECISION ON THE RECLAIM VOUCHER OF MR. THIS MATTER WAS FORWARDED THROUGH THE PER DIEM. WAS TRANSFERRED FROM TYNDALL AIR FORCE BASE. STANTON WAS NOT PAID THAT AMOUNT BUT HAS REVISED HIS CLAIM FOR REAL ESTATE EXPENSES AND HAS RECLAIMED $3. IS THIS RECLAIM VOUCHER UPON WHICH AN ADVANCE DECISION IS REQUESTED.

B-210474, AUG 29, 1983

DIGEST: TRANSFERRED EMPLOYEE, WHO PURCHASED A 100-ACRE PARCEL OF LAND INCLUDING A 5-ACRE RESIDENCE SITE, MAY NOT INCLUDE AN ADDITIONAL 1-1/2 ACRES FOR AN ACCESS ROAD ACROSS THE REMAINDER OF HIS PROPERTY TO DETERMINE HOW MUCH ACREAGE REASONABLY RELATES TO THE RESIDENCE SITE FOR THE PURPOSE OF DETERMINING HIS ENTITLEMENT TO PRO RATA REIMBURSEMENT OF REAL ESTATE PURCHASE EXPENSES. HOWEVER, HIS 5-ACRE RIVERFRONT RESIDENCE SITE IS WORTH MORE THAN THE AVERAGE 5-ACRE PARCEL OF LAND IN THE COUNTY AND HIS PRO RATA REIMBURSEMENT FOR FEES ASSESSED ON THE BASIS OF THE PURCHASE PRICE SHOULD BE BASED ON THE HIGHER VALUE OF COMPARABLE RIVERFRONT PROPERTIES.

JOHN F. STANTON:

THIS ACTION IS IN RESPONSE TO A REQUEST BY AN AUTHORIZED CERTIFYING OFFICER AT THE DEPARTMENT OF THE AIR FORCE FOR AN ADVANCE DECISION ON THE RECLAIM VOUCHER OF MR. JOHN F. STANTON FOR REIMBURSEMENT OF REAL ESTATE EXPENSES INCURRED INCIDENT TO A PERMANENT CHANGE OF DUTY STATION. THIS MATTER WAS FORWARDED THROUGH THE PER DIEM, TRAVEL AND TRANSPORTATION ALLOWANCE COMMITTEE AND HAS BEEN ASSIGNED PDTATAC CONTROL NO. 83-3.

MR. STANTON, AN EMPLOYEE OF THE DEPARTMENT OF THE AIR FORCE, WAS TRANSFERRED FROM TYNDALL AIR FORCE BASE, FLORIDA, TO WASHINGTON, D.C., IN JULY OF 1981. IN CONNECTION WITH THAT TRANSFER HE PURCHASED A 100 ACRE PARCEL OF LAND IN KING GEORGE COUNTY, VIRGINIA, ON WHICH HE PLACED A MOBILE HOME. MR. STANTON INITIALLY SUBMITTED A CLAIM FOR REIMBURSEMENT OF REAL ESTATE PURCHASE EXPENSES IN THE AMOUNT OF $5,757. THE AGENCY DETERMINED THAT 5 OF THE 100 ACRES, HAVING A VALUE EQUAL TO LESS THAN 1/10 OF THE PURCHASE PRICE OF THE LAND RELATED TO THE RESIDENCE SITE. BASED ON THIS DETERMINATION THE AGENCY APPROVED PRO RATA REIMBURSEMENT IN THE AMOUNT OF $677. MR. STANTON WAS NOT PAID THAT AMOUNT BUT HAS REVISED HIS CLAIM FOR REAL ESTATE EXPENSES AND HAS RECLAIMED $3,731 IN EXPENSES. IS THIS RECLAIM VOUCHER UPON WHICH AN ADVANCE DECISION IS REQUESTED.

AT THE OUTSET WE NOTE THAT THE AGENCY AND THE EMPLOYEE DISAGREE ON THE AMOUNT OF LAND UPON WHICH REIMBURSEMENT IS TO BE BASED AND VALUE OF THE RESIDENTIAL PORTION OF THE PROPERTY.

THE FEDERAL TRAVEL REGULATIONS (FTR) (FPMR 101-7, MAY 1973, APPLICABLE AT THE TIME OF MR. STANTON'S TRANSFER) AT PARA. 2-6.1F PERMIT PRO RATA REIMBURSEMENT WHEN INCIDENT TO A TRANSFER AN EMPLOYEE PURCHASES OR SELLS LAND IN EXCESS OF THAT WHICH REASONABLY RELATES TO THE RESIDENCE SITE. UNDER THIS REGULATION MR. STANTON'S ENTITLEMENT TO REIMBURSEMENT DEPENDS ON THE DETERMINATION OF HOW MUCH LAND "REASONABLY RELATES TO THE RESIDENCE SITE." BOTH THE AGENCY AND THE EMPLOYEE AGREE THAT THE RESIDENCE SITE CONSISTS OF 5 ACRES. HOWEVER, THE EMPLOYEE CLAIMS THAT AN ACCESS ROAD THROUGH THE REMAINDER OF HIS PROPERTY, ACCOUNTING FOR AN ADDITIONAL 1-1/2 ACRES, REASONABLY RELATES TO THE RESIDENTIAL SITE.

THE CRITERIA TO BE CONSIDERED IN DETERMINING WHAT LAND PERTAINS TO THE RESIDENTIAL SITE AND WHAT LAND IS EXCESS WERE DISCUSSED AT LENGTH IN MATTER OF COURTNEY, 56 COMP.GEN. 597 (1975).ALSO SEE MATTER OF LINDERMAN. 60 COMP. 384 (1981). WHILE THE ACCESSIBILITY OF PROPERTY IS A CONSIDERATION IN DETERMINING WHETHER LAND IS EXCESS, WE HAVE NEVER HELD THAT A DRIVEWAY OR ACCESS ROAD CROSSING EXCESS LAND OWNED BY THE EMPLOYEE RELATES TO THE RESIDENTIAL SITE. IF THE EMPLOYEE HAD PURCHASED ONLY THE 5 -ACRE PARCEL, HE COULD HAVE BEEN ALLOWED A RIGHT OF WAY THROUGH THE ADJOINING LAND. HOWEVER, WHAT WOULD HAVE BEEN DONE IN THAT CASE IS SPECULATIVE, THEREFORE, WE FIND THAT THE AGENCY'S DETERMINATION TO BASE PRO RATA REIMBURSEMENT ON A 5-ACRE RESIDENTIAL SITE IS REASONABLE.

WITH REGARD TO THE VALUE TO BE ASSIGNED TO THE PROPERTY, THE AGENCY DETERMINED THAT THE AVERAGE VALUE OF 5 ACRES OF LAND IN KING GEORGE COUNTY, VIRGINIA, IS $15,000 AND PRORATED REIMBURSEMENT USING THIS FIGURE. FN1 THE EMPLOYEE OBJECTS STATING THAT THE RESIDENTIAL SITE IS WATERFRONT PROPERTY BORDERING THE POTOMAC RIVER AND HE CONTENDS THAT THE VALUE OF THE 5 ACRES IS $50,000. IN MATTER OF COURTNEY, CITED ABOVE, WE RECOGNIZED THAT REAL ESTATE EXPENSES ASSESSED ON THE BASIS OF PURCHASE PRICE RATHER THAN ACREAGE SHOULD BE PRORATED ON THE BASIS OF A RATIO FORMULA OF RESIDENCE SITE VALUE TO PURCHASE PRICE OF THE PROPERTY. BECAUSE THAT DECISION CONTEMPLATES PRORATION BASED ON THE VALUE OF THE PARTICULAR RESIDENCE SITE, THE AGENCY SHOULD NOT HAVE BASED ITS DETERMINATION ON THE AVERAGE VALUE OF LAND IN THE COUNTY. MR. STANTON'S RESIDENTIAL SITE IS LOCATED ON THE POTOMAC RIVER AND THE AGENCY SHOULD HAVE DETERMINED ITS VALUE ON THE BASIS OF COMPARABLE SALES OF RIVERFRONT PROPERTIES.

WE HAVE HELD THE AGENCY'S PRORATION DETERMINATION MAY BE MADE ON THE BASIS OF INFORMATION OBTAINED FROM RELIABLE REAL ESTATE BROKERS AND APPRAISERS. 54 COMP.GEN. 597. WE NOTE THAT THE FILE CONTAINS A BILL FROM A REAL ESTATE APPRAISER FOR AN APPRAISAL OF MR. STANTON'S PROPERTY TO BE FURNISHED TO A LOCAL BANK FOR FINANCING PURPOSES. THE FILE DOES NOT CONTAIN A COPY OF THAT APPRAISAL, ALTHOUGH MR. STANTON HAS STATED THAT THE PROPERTY WAS APPRAISED AS FOLLOWS:

10 ACRES RESIDENTIAL $100,000

20 ACRES FARMLAND 40,000

20 ACRES WOODED 10,000

50 ACRES MARSH/STEEP 5,000

SUBJECT TO THE AGENCY'S VERIFICATION OF THIS APPRAISAL IT APPEARS THAT $50,000 WOULD BE THE VALUE OF THE 5-ACRE RESIDENTIAL SITE AND THAT THIS FIGURE SHOULD BE USED IN COMPUTING REIMBURSEMENT.

BEFORE CONSIDERING THE SPECIFIC ITEMS CLAIMED BY MR. STANTON WE POINT OUT THAT UNDER THE PROVISIONS OF FTR PARA. 2-6.2G(2), REIMBURSEMENT OF THE COSTS INCIDENT TO PURCHASE TRANSACTIONS IS LIMITED TO THE LESSER OF $4,000 OR 5 PERCENT OF THE PURCHASE PRICE OF THE EMPLOYEE'S NEW RESIDENCE. SINCE FTR PARA. 2-6.1B DEFINES THE RESIDENCE TO INCLUDE "A MOBILE HOME AND/OR THE LOT ON WHICH SUCH MOBILE HOME IS LOCATED," THE PURCHASE PRICE IS $70,000, THE SUM OF $50,000 ALLOCABLE TO THE RESIDENCE SITE AND THE $20,000 COST OF THE MOBILE HOME. FIVE PERCENT OF THE PURCHASE PRICE OF $70,000 IS $3,500. ADDITIONALLY PART 6 OF CHAPTER 2 OF THE FEDERAL TRAVEL REGULATIONS LIMITS REIMBURSEMENT TO AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE. PARA. 2-6.3C STATES THAT "TECHNICAL ASSISTANCE IN DETERMINING THE REASONABLENESS OF AN EXPENSE MAY BE OBTAINED FROM THE LOCAL AREA OFFICE OF THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT SERVING THE AREA IN WHICH THE EXPENSE OCCURRED."

THE AGENCY LIMITED MR. STANTON'S CLAIM FOR REIMBURSEMENT OF THE SETTLEMENT FEE, TITLE SEARCH, AND SURVEY FEE TO FLAT FEES OF $125, $150, AND $150 RESPECTIVELY. THE EMPLOYEE'S RECLAIM IS FOR PRO RATA REIMBURSEMENT FOR THE SETTLEMENT AND SURVEY FEES. HE CLAIMS REIMBURSEMENT FOR THE FULL AMOUNT OF THE TITLE SEARCH FEE. WE WERE INFORMED BY THE AGENCY THAT THEIR REDUCTION IN REIMBURSABLE EXPENSES WAS BASED ON EXPERIENCE WITH CLAIMS FROM EMPLOYEES WHO PURCHASED HOUSES IN OTHER PARTS OF VIRGINIA. THE FEDERAL TRAVEL REGULATIONS AT PARA. 2 6.2 PERMIT REIMBURSEMENT OF EXPENSES IF THEY ARE CUSTOMARILY PAID BY THE PURCHASER TO THE EXTENT THEY DO NOT EXCEED THE AMOUNT CUSTOMARILY CHARGE IN THE LOCALITY OF THE RESIDENCE. SINCE THE AGENCY'S LIMITATIONS OF MR. STANTON'S REIMBURSEMENT WAS NOT BASED ON LOCAL CUSTOM IN KING GEORGE COUNTY, IT DOES NOT ACCORD WITH THE FOLLOWING STANDARDS SET FORTH IN MATTER OF COURTNEY:

"IN PRORATING THE EXPENSES, HOWEVER, THE CERTIFYING OFFICER SHOULD ALSO TAKE INTO ACCOUNT THE PRACTICE OF BILLING BY ATTORNEYS, REAL ESTATE BROKERS AND SURVEYORS IN HIS LOCALITY. THERE ARE CERTAIN LEGAL SERVICES WHICH ARE PROVIDED FOR A FLAT FEE SUCH AS RECORDING OF A DOCUMENT OR DRAWING A DEED WHEREAS A SETTLEMENT FEE MIGHT BE BASED ON A PERCENTAGE OF THE PURCHASE/SALE PRICE OF THE PROPERTY AND MIGHT INCLUDE A FLAT FEE FOR TITLE SEARCH. IN THIS CONNECTION, BROKERAGE FEES ARE ALMOST ALWAYS BASED ON A PERCENTAGE OF THE SALE PRICE. IF THE TITLE EXAMINATION, FOR EXAMPLE, IS BASED ON A PERCENTAGE OF THE PURCHASE PRICE, THE AMOUNT OF THE EXPENSE SHOULD BE PRORATED IN ACCORDANCE WITH A RATIO FORMULA OF RESIDENCE SITE VALUE TO PURCHASE PRICE OF THE PROPERTY. ON THE OTHER HAND, IF THE ATTORNEY CHARGES A FLAT FEE FOR TITLE EXAMINATION, WHETHER IT CONCERNS 1 ACRE OR 5 ACRES, THE REIMBURSABLE EXPENSES SHOULD NOT BE PRORATED AT ALL BUT SHOULD BE PAID IN TOTAL, PROVIDING THE FEE IS REASONABLE IN AMOUNT AND IN LINE WITH OTHER CHARGES FOR SIMILAR SERVICES IN THE LOCALITY CONCERNED.

"SIMILAR CONSIDERATIONS SHOULD BE APPLIED TO THE SURVEYOR'S FEE. WE UNDERSTAND THAT A SURVEYOR'S FEE MIGHT BE COMPOSED OF A CHARGE FOR THE SURVEYOR'S SEARCH OF THE LAND RECORDS AND A CHARGE FOR THE FIELD WORK COVERING THE ACTUAL MEASUREMENT OF THE LAND NECESSARY FOR THE LEGAL DESCRIPTION OF THE PROPERTY. IN SUCH CASES CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE CHARGES. THOSE THAT ARE RELATED TO THE FIELD WORK SHOULD BE PRORATED ACCORDING TO THE SIZE OF THE PROPERTY AND THE RATIO FORMULA DETERMINED AS ABOVE WHILE ALL CHARGES ATTRIBUTABLE TO WORK ON THE LAND RECORDS SHOULD BE PAID BECAUSE A SEARCHER COULD SPEND AS MUCH TIME WORKING ON THE LAND RECORDS TRACING THE EVOLUTION OF A SMALL PARCEL OF LAND AS HE/SHE WOULD ON A LARGE TRACT."

THE AGENCY SHOULD RECONSIDER MR. STANTON'S CLAIM FOR THESE THREE ITEMS OF EXPENSE USING THE GUIDANCE SET FORTH IN THAT DECISION.

MR. STANTON'S CLAIM FOR PRORATED REIMBURSEMENT OF THE SETTLEMENT COST ($50) AND RECORDING FEE ($41) FOR A SECOND TRUST WERE DISALLOWED BY THE AGENCY BECAUSE THE SECOND TRUST WAS CLASSIFIED AS A COMMERCIAL LOAN ON THE SETTLEMENT STATEMENT AND THE AGENCY REGARDED IT AS A "PERSONAL BUSINESS TRANSACTION." COSTS INCIDENT TO A SECOND TRUST ARE ALLOWABLE, AND MR. STANTON IS ENTITLED TO BE REIMBURSED FOR ONE-THIRD OF THE FEE FOR RECORDING THE SECOND TRUST AND ALL OR A PRO RATA PORTION OF THE RELATED SETTLEMENT FEE, DEPENDING ON THE BILLING PRACTICES OF LOCAL ATTORNEYS. MATTER OF PUTNAM AND VERBLE, B-183251, MAY 29, 1975.

THE AGENCY DISALLOWED MR. STANTON'S CLAIM FOR A 1 PERCENT FEE PAID TO THE FEDERAL LAND BANK ON THE GROUNDS THAT THIS FEE WAS A FINANCE CHARGE. FIND THE DISALLOWANCE WAS CORRECT, AS THE PROVISIONS FTR PARA. 2-62D APPLICABLE AT THE TIME OF MR. STANTON'S TRANSFER PRECLUDED REIMBURSEMENT OF ANY FEE, COST, CHARGE, OR EXPENSE "WHICH IS DETERMINED TO BE A PART OF THE FINANCE UNDER THE TRUTH IN LENDING ACT ***." IT IS WELL SETTLED THAT A LOAN ORIGINATION FEE COVERING THE BANK'S ADMINISTRATIVE EXPENSES, SUCH AS THAT CHARGED MR. STANTON BY THE FEDERAL LAND BANK, IS A FINANCE CHARGE UNDER THE TRUTH IN LENDING ACT. MATTER OF POKORSKI, B-194314, JUNE 28, 1979.

THE AGENCY ALLOWED MR. STANTON A PRORATED REIMBURSEMENT BASED ON THEIR PRORATED 10 PERCENT OF THE PURCHASE PRICE FOR MORTGAGE TITLE INSURANCE, MR. STANTON HAS REQUESTED PRORATED REIMBURSEMENT OF BOTH MORTGAGE TITLE INSURANCE AND OWNER'S TITLE INSURANCE. FTR PARA. 2-6.2D PERMITS REIMBURSEMENT OF MORTGAGE TITLE INSURANCE BUT SPECIFICALLY PRECLUDES REIMBURSEMENT OF OWNER'S TITLE INSURANCE. HE MAY BE REIMBURSED FOR MORTGAGE TITLE INSURANCE PRORATED AT THE REVISED PROPERTY VALUATION. MATTER OF BREWSTER, B-193750, AUGUST 28, 1979.

FINALLY, MR. STANTON HAS RECLAIMED REIMBURSEMENT OF THE $375 FEE PAID FOR A PERCOLATION TEST WHICH WAS ORIGINALLY DISALLOWED IN TOTAL BY THE AGENCY. THAT DISALLOWANCE IS IN ACCORDANCE WITH OUR HOLDING IN MATTER OF DRIECHAUP, B-205510, FEBRUARY 8, 1982, AND, THEREFORE, IS SUSTAINED.

ACCORDINGLY, THE VOUCHER IS RETURNED AND MR. STANTON'S CLAIM SHOULD BE RECONSIDERED BY THE AGENCY IN ACCORDANCE WITH THIS DECISION.

FN 1 WE HAVE BEEN INFORMALLY ADVISED BY THE AGENCY THAT THE VALUATION WAS DERIVED BY CONSULTING WITH THE KING GEORGE COUNTY TAX ASSESSOR'S OFFICE.