B-164604, JUL. 29, 1968

B-164604, JUL. 29, 1968

TO MR. R. J. SCHULLERY:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 13, 1968, YOUR REFERENCE MS-430, CONCERNING THE PAYMENT MADE TO MR. LOUIS H. JACOBSEN, AN EMPLOYEE OF THE FEDERAL AVIATION ADMINISTRATION, TO REIMBURSE HIM CERTAIN CLOSING COSTS HE INCURRED IN CONNECTION WITH THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL STATION INCIDENT TO HIS TRANSFER FROM OKLAHOMA CITY, OKLAHOMA, TO WASHINGTON, C., WHICH WAS EFFECTIVE IN AUGUST 1967.

MR. JACOBSEN CLAIMED AND WAS REIMBURSED THE $267.75 HE PAID FOR "BUYER'S CLOSING COSTS" IN CONNECTION WITH THE SALE OF HIS RESIDENCE. YOU NOW QUESTION WHETHER PAYMENT OF THAT AMOUNT WAS PROPER IN VIEW OF SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 WHICH PROVIDES THAT COSTS OF THE TYPE INVOLVED MAY BE REIMBURSED ONLY IF THEY ARE CUSTOMARILY PAID BY THE BUYER OR PURCHASER AS THE CASE MAY BE IN THE LOCATION WHERE THE TRANSACTION TOOK PLACE. PAYMENT OF MR. JACOBSEN'S CLAIM WAS BASED ON ADVICE YOU RECEIVED FROM THE DIRECTOR OF THE OKLAHOMA CITY OFFICE OF THE FEDERAL HOUSING ADMINISTRATION IN HIS LETTER OF MAY 24, 1968, WHICH WAS IN PERTINENT PART AS FOLLOWS: "BECAUSE OF THE INCREASED COMPETITION AND SLOW SALES, MORE AND MORE SELLERS ARE HAVING TO PAY THE BUYER'S CLOSING COSTS. HOWEVER, THIS DOES NOT INCLUDE ANY PREPAID ITEMS. MOT REAL ESTATE BROKERS ARE USING THE SELLERS PAYING AS AN ITEM OF NEGOTIATION IN CLOSING THE SALE. ,IN THOSE CASES WHERE THE SELLER MUST PAY THE BUYER'S CLOSING EXPENSE, IT SHOULD BE CONSIDERED AS JUSTIFIABLE SELLER'S EXPENSE.'

IN THE DECISION OF JULY 25, 1967, B-161620, COPY ENCLOSED, WE SAID:

"SINCE THE CUSTOM OR PRACTICE IN ACCORDANCE WITH WHICH THE SELLER OF REAL ESTATE FURNISHES TITLE INSURANCE FOR THE BENEFIT OF THE BUYER IS NOT UNIFORM THROUGHOUT THE UNITED STATES INFORMATION MUST BE OBTAINED WITH REGARD TO THE CUSTOM AT THE PLACE WHERE A SALE OCCURS PRIOR TO REIMBURSING AN EMPLOYEE THE COST OF THE TITLE INSURANCE PURCHASED IN CONNECTION WITH THE SALE OF HIS RESIDENCE AT HIS OLD OFFICIAL STATION. IF IT IS SHOWN THAT UNDER LOCAL CUSTOM THE SELLER FURNISHES TITLE INSURANCE COVERAGE OF THE TYPE INVOLVED REIMBURSEMENT IS AUTHORIZED. IN THAT CONNECTION WE CONSIDER THAT IT IS THE CUSTOM IN A LOCALITY FOR THE SELLER TO FURNISH TITLE INSURANCE ONLY IF IT WOULD BE UNUSUAL FOR RESIDENTIAL PROPERTY TO BE SOLD IN THAT AREA WITHOUT PAYMENT BY THE SELLER OF THE COST OF TITLE INSURANCE OF THE TYPE INVOLVED.'

WE BELIEVE THAT THE SAME CRITERION SHOULD BE APPLIED WITH REGARD TO REIMBURSEMENT OF THE EMPLOYEE IN THIS CASE. IN VIEW OF THE STATEMENT OF THE FEDERAL HOUSING ADMINISTRATION, AS QUOTED ABOVE, IT DOES NOT APPEAR THAT IT WOULD BE UNUSUAL IN THE OKLAHOMA CITY AREA FOR THE BUYER TO PAY "BUYER'S CLOSING COSTS.' THEREFORE, THE $267.75 PAID TO MR. JACOBSEN IN REIMBURSEMENT OF SUCH COSTS SHOULD BE RECOVERED. WE ARE AWARE OF THE FACT THAT CERTAIN OF THE COSTS INCLUDED IN THAT $267.75 ARE COVERED BY SECTION 4.2C RATHER THAN 4.2D OF CIRCULAR NO. A 56. HOWEVER, UNTIL SOME OTHER INTENT IS STATED IN THE SUBJECT REGULATIONS, WE BELIEVE THAT THE RESTRICTION AGAINST PAYMENT OF COSTS NOT CUSTOMARILY PAID BY THE SELLER OR PURCHASER AS THE CASE MAY BE MUST BE APPLIED TO ITEMS OF COST REIMBURSABLE UNDER ALL PERTINENT PROVISIONS OF SECTION 4.2.

REGARDING THE OTHER ITEMS OF REIMBURSEMENT PAID TO MR. JACOBSEN IN CONNECTION WITH THE SALE OF HIS RESIDENCE IN OKLAHOMA CITY, WE NOTE THAT HE WAS REIMBURSED THE AMOUNTS HE PAID FOR BOTH CONVENTIONAL AND FEDERAL HOUSING ADMINISTRATION LOAN APPRAISALS. UNDER THE DECISION 47 COMP. GEN. 306, ONLY ONE APPRAISAL FEE MAY PROPERLY BE REIMBURSED. THEREFORE, REIMBURSEMENT MADE ON ACCOUNT OF ONE OF THE APPRAISAL FEES SHOULD ALSO BE RECOVERED.