B-165280, MAR. 3, 1969

B-165280, MAR. 3, 1969

TO MR. DOUGLAS FIRST:

WE REFER TO YOUR LETTER OF DECEMBER 13, 1968, WITH ENCLOSURE, REQUESTING REVIEW OF OUR OFFICE SETTLEMENT DATED DECEMBER 9, 1968, WHICH DISALLOWED YOUR CLAIM FOR REIMBURSEMENT OF VARIOUS EXPENSES INCURRED BY YOU IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT YOUR NEW OFFICIAL STATION.

YOUR CLAIM FOR REIMBURSEMENT OF CLOSING COSTS IN THE AMOUNT OF $860.80 WAS DISALLOWED BY OUR CLAIMS DIVISION ON THE GROUND THAT THE EVIDENCE OF RECORD SHOWED THAT SUCH COSTS WERE PAID BY THE SELLER BUILDER OF YOUR NEW HOME. IN THAT REGARD WE POINT OUT THAT THE AGREEMENT EXECUTED BY AND BETWEEN YOU AND P.K. BUILDERS, INC., ON MAY 25, 1966, CONTAINS THE FOLLOWING PROVISION:

"* * * IT IS UNDERSTOOD AND AGREED THAT THE GROSS AMOUNT OF THE MORTGAGE NOTE SHALL BE APPLIED AS A FULL CREDIT TO THE PURCHASE PRICE AND THAT ALL EXPENSES IN CONNECTION WITH THE ORIGINATION OF SAID MORTGAGE, INCLUDING ATTORNEY'S FEES, DOCUMENTARY STAMPS, RECORDING EXPENSE, SURVEYS AND ANY AND ALL OTHER CHARGES MADE IN CONNECTION WITH SAID MORTGAGE APPLICATION SHALL BE ASSUMED AND PAID BY THE SELLER BUILDER. * * *"

YOU HAVE FURNISHED A COPY OF A LETTER DATED MAY 16, 1966, FROM P.K. BUILDERS, INC., STATING THAT THE CLOSING COSTS ARE TO BE INCLUDED IN THE PURCHASE PRICE OF YOUR NEW HOME. YOU BELIEVE THAT SUCH LETTER ESTABLISHES THE FACT THAT YOU WERE REQUIRED TO PAY THE CLOSING COSTS IN QUESTION.

OUR OFFICE CONSISTENTLY HAS HELD THAT THERE IS NO BASIS UNDER THE CONTROLLING LAW OR REGULATIONS FOR TREATING ANY PART OF THE SELLING PRICE OF A RESIDENCE AS OTHER THAN THE PRICE OF THE REALTY IRRESPECTIVE OF THE VARIOUS ELEMENTS (SUCH AS CLOSING COSTS) THAT MIGHT BE CONSIDERED IN ESTABLISHING THAT PRICE. SEE B-165841, JANUARY 22, 1969, AND B-162835, DECEMBER 21, 1967, COPIES HEREWITH. THE DOCUMENTS OF MAY 16 AND MAY 25, 1966, DISCUSSED ABOVE, CLEARLY SHOW THAT THE PURCHASE PRICE OF YOUR HOME ($42,600) INCLUDED AN AMOUNT WHICH APPROXIMATED THE CLOSING COSTS AND THAT SUCH COSTS WERE ACTUALLY PAID BY THE SELLER. THEREFORE, THERE IS NO BASIS UNDER LAW TO REIMBURSE YOU FOR SUCH EXPENSES.

YOUR CLAIM FOR REIMBURSEMENT OF AN ATTORNEY'S FEE OF $250 PAID BY YOU WAS DISALLOWED BY OUR CLAIMS DIVISION BECAUSE YOU REPEATEDLY FAILED TO F4RNISH EVIDENCE SHOWING THE EXACT NATURE OF THE SERVICES PERFORMED BY YOUR ATTORNEY AND THE AMOUNT OF THE FEE THAT IS ALLOCABLE TO EACH ITEM. ON TWO OCCASIONS OUR CLAIMS DIVISION REQUESTED YOU TO FURNISH SUCH ITEM. ON TWO OCCASIONS OUR CLAIMS DIVISION REQUESTED YOU TO FURNISH SUCH INFORMATION.

THE PURPOSES FOR WHICH LEGAL FEES ARE ALLOWABLE IN CONNECTION WITH REAL ESTATE TRANSACTIONS ARE SET FORTH IN SECTION 4.2C OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED OCTOBER 12, 1966, AS FOLLOWS:

"LEGAL AND RELATED COSTS. TO THE EXTENT SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES, CUSTOMARY COSTS OF SEARCHING TITLE, PREPARING CONVEYANCES AND OTHER INSTRUMENTS, AND PREPARING CONTRACTS, RELATED NOTARY FEES, RECORDING FEES, MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES, AND SIMILAR EXPENSES, MAY BE REIMBURSED EITHER WITH RESPECT TO SALE OF THE RESIDENCE AT THE OLD OFFICIAL STATION OR PURCHASE OF A DWELLING AT THE NEW OFFICIAL STATION, BUT THE SAME TYPES OF COSTS SHALL NOT BE PAID AT BOTH LOCATIONS. COSTS OF LITIGATION ARE NOT REIMBURSABLE.'

WE HAVE HELD THAT THE FEE WHICH AN EMPLOYEE PAYS TO RETAIN AN ATTORNEY TO REPRESENT AND COUNSEL HIM IN CONNECTION WITH A REAL ESTATE TRANSACTION PROPERLY MAY NOT BE REIMBURSED UNDER SECTION 4.2C ABOVE. SEE B-163949, MAY 28, 1968, AND B-163420, MARCH 25, 1968, COPIES HEREWITH. SINCE YOU HAVE FAILED TO SUBMIT THE NECESSARY INFORMATION REQUESTED BY OUR CLAIMS DIVISION, WE MAY NOT ALLOW ANY PORTION OF 3HE ATTORNEY'S FEE ON THE BASIS OF THE PRESENT RECORD.

FOR THE REASONS DISCUSSED ABOVE, WE SUSTAIN THE DISALLOWANCE OF YOUR CLAIM.