B-163203, MAR. 24, 1969

B-163203, MAR. 24, 1969

TO MR. CHARLES G. KNUDSEN:

ON JANUARY 2, 1969, FILE REFERENCE AD571, THE CHIEF, VOUCHER EXAMINATION SECTION, OFFICE OF THE ADMINISTRATOR, ENVIRONMENTAL SCIENCE SERVICES ADMINISTRATION (ESSA), DEPARTMENT OF COMMERCE, FORWARDED YOUR RECLAIM VOUCHER AND ENCLOSURES RECOMMENDING FAVORABLE CONSIDERATION OF THE $450 ATTORNEY FEE PAID BY YOU INCIDENT TO YOUR PURCHASE OF A DWELLING AT BABYLON, NEW YORK, WHICH FEE WAS NOT ALLOWED IN OUR DECISION OF MARCH 1, 1968, B-163203, TO YOU.

THE SAID ENCLOSURES DO NOT GIVE A BREAKDOWN OF THE $450 AS WAS SUGGESTED BY US ON MARCH 1, 1968. THE LETTER OF DECEMBER 4, 1968, FROM THE ASSISTANT STATE DIRECTOR, FEDERAL HOUSING ADMINISTRATION, LARGELY RELATES TO THE LEGAL EXPENSES WHICH A LENDER-MORTGAGEE MAY COLLECT FROM A MORTGAGOR-PURCHASER. IN THAT REGARD, WE NOTE THAT THE SERVICE CHARGE OF $300 BY THE DIME SAVINGS BANK INCLUDED AN UNDESIGNATED AMOUNT "FOR THEIR LAWYER" AS PART OF THE BANK'S CHARGE "FOR PROCESSING OF THE MORTGAGE APPLICATION, APPRAISAL OF THE PROPERTY AND LEGAL EXPENSES.' THAT $300 PLUS $160 FOR MORTGAGE TITLE EXAMINATION WAS INCLUDED IN OUR CERTIFICATE OF SETTLEMENT DATED DECEMBER 21, 1967. SEE ESSA FILE REFERENCE AD571 LETTER DATED DECEMBER 11, 1967.

WE DO NOT QUESTION THE FACTS RECITED IN THE EASTERN REGION HEADQUARTERS,ESSA, LETTER DATED DECEMBER 19, 1968, REFERENCE WFE511, OR THE NARRATIVE STATEMENT BY YOUR ATTORNEY -- WHICH SAYS HIS $450 FEE COVERED "PREPARATION FOR, ATTENDING AT, AND CLOSING OF CONTRACT; PREPARATION OF ALL PAPERS AND PREPARING FOR, ATTENDING AT, AND ACTUALLY CLOSING TITLE.' WE RECOGNIZE ALSO THAT THE ONE PERCENT CHARGE ($450) IS THE CUSTOMARY MAXIMUM FEE CHARGEABLE IN THE NASSAU SUFFOLK AREA AS SET BY THE BAR ASSOCIATION OF THOSE TWO COUNTIES, AND SUCH A FEE IS PERMITTED IN THE SCHEDULE OF CLOSING COSTS ISSUED BY THE FEDERAL HOUSING ADMINISTRATION. HOWEVER, WE POINT OUT THAT SUCH A CUSTOMARY "MAXIMUM FEE" OR A LUMP-SUM FEE SCHEDULE DOES NOT CONFORM TO THE REQUIREMENTS FOR REIMBURSEMENT OF ALLOWABLE ITEMS AS SPECIFIED IN SECTION 4.2C OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED, QUOTED IN OUR DECISION OF MARCH 1, 1968, TO YOU.

MOREOVER, WE RECOGNIZE THAT A NEW YORK STATE COURT MAY RECOMMEND AND EXPECT THAT THE CONTRACTING PARTIES AS A MATTER OF PRUDENCE SHOULD PROCURE THEIR OWN LEGAL COUNSEL TO REPRESENT THEM, BUT THE LEGAL FEES AND CHARGES REIMBURSABLE BY THE UNITED STATES IN CASES SUCH AS YOURS MUST BE STATED (ITEMIZED) WITHIN THE GUIDELINES OF SECTION 4.2C, REFERRED TO ABOVE.

YOUR CASE IS NOT UNIQUE IN THIS RESPECT. AN EXAMPLE OF A SIMILAR CASE IS FOUND IN THE ENCLOSED COPY OF OUR DECISION B-163690 DATED MARCH 29, 1968. SEE ALSO B-163949 DATED MAY 28, 1968, B-165686 DATED DECEMBER 20, 1968, AND B-165740 DATED JANUARY 13, 1969. AS STATED IN B-163690, THE REGULATION (SECTION 4.2C) MAKES NO PROVISION FOR PAYMENT OF AN ALL INCLUSIVE SERVICE "LEGAL FEE.'

IN THE CIRCUMSTANCES, REIMBURSEMENT OF THE WHOLE SUM OF $450 IS NOT ALLOWABLE. WE MAY ALLOW ONLY THE REASONABLE PARTS THEREOF WHICH COME WITHIN THE ITEMS SPECIFIED IN SAID SECTION 4.2C. IN THAT RESPECT, YOUR ATTORNEY'S STATEMENT OF ACCOUNT DATED MAY 26, 1967, HAD ITEMS, SUCH ,"ORDERING NEW SURVEY OF PREMISES FROM HARRY T. LEONARD" AND "FORWARDING ORIGINAL LINEN SURVEY TO TITLE COMPANY.' WE NOTE THAT YOU WERE ADMINISTRATIVELY REIMBURSED FOR MR. LEONARD'S $70 FEE WHICH WAS CLAIMED ON YOUR VOUCHER DATED JUNE 7, 1967, PAID JUNE 15, 1967, BY ESSA.

THEREFORE, UNLESS AND UNTIL WE RECEIVE ACCEPTABLE EVIDENCE WHICH MEETS THE FEDERAL REQUIREMENTS AS INDICATED IN SECTION 4.2C CONCERNING LEGAL EXPENSES AND RELATED COSTS, NO PART OF THE $450 CLAIMED BY YOU IS ALLOWABLE.