B-161459, JUNE 27, 1967, 46 COMP. GEN. 884

B-161459, JUNE 27, 1967, 46 COMP. GEN. 884

OFFICERS AND EMPLOYEES - TRANSFERS - RELOCATION EXPENSES - HOUSE SALE - INSURANCE THE COST OF AN OWNER'S TITLE INSURANCE POLICY PROCURED IN ACCORDANCE WITH LOCAL CUSTOM BY A TRANSFERRED EMPLOYEE FOR THE BENEFIT OF THE PURCHASER OF HER RESIDENCE AT THE OLD DUTY STATION IS A REIMBURSABLE EXPENSE, THE PROHIBITION IN SECTION 4.2D OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 AGAINST REIMBURSING A TRANSFERRED EMPLOYEE FOR THE COST OF OWNER'S TITLE INSURANCE HAVING REFERENCE TO THE INSURANCE OBTAINED BY AN EMPLOYEE FOR HIS OWN PROTECTION WHEN PURCHASING A RESIDENCE AND NOT TO THE OWNER'S TITLE INSURANCE POLICY THE EMPLOYEE AS SELLER IS REQUIRED BY LOCAL CUSTOM TO PURCHASE FOR THE BENEFIT OF THE BUYER OF THE RESIDENCE IN LIEU OF SHOWING A MARKETABLE TITLE BY A TITLE SEARCH, AN ABSTRACT OF TITLE, OR A LEGAL OPINION.

TO R. E. PERRY, GENERAL SERVICES ADMINISTRATION, JUNE 27, 1967:

WE REFER TO YOUR LETTER OF MAY 5, 1967, YOUR REFERENCE 3BCPA BY WHICH YOU FORWARDED FOR OUR ADVANCE DECISION THE RECLAIM TRAVEL VOUCHER OF MRS. MARGUERITE S. FARLEY, AN EMPLOYEE OF THE GENERAL SERVICES ADMINISTRATION, REGION 7, FORT WORTH, TEXAS, FOR REIMBURSEMENT OF CERTAIN COSTS SHE INCURRED IN SELLING HER RESIDENCE AT HER OLD DUTY STATION INCIDENT TO HER PERMANENT CHANGE OF STATION FROM DALLAS TO FORT WORTH, TEXAS, WHICH WAS EFFECTIVE ON AUGUST 27, 1966.

THE ITEM INVOLVED IS THE COST OF AN OWNER'S TITLE INSURANCE POLICY WHICH WAS PURCHASED BY MRS. FARLEY FOR $140 FOR THE BENEFIT OF THE PURCHASER OF HER RESIDENCE IN DALLAS. IT IS ASSERTED THAT IN THE DALLAS AREA IN REAL ESTATE TRANSACTIONS OF THE TYPE INVOLVED THE PURCHASE OF SUCH A POLICY BY THE SELLER FOR THE BENEFIT OF THE BUYER IS THE CUSTOMARY METHOD OF INSURING THAT THE SELLER HAS MARKETABLE TITLE. THE PURCHASE OF SUCH TITLE POLICY IS SAID TO BE IN LIEU OF A TITLE SEARCH, AN ATTORNEY'S OPINION, OR AN ABSTRACT OF TITLE.

SECTION 4.2 OF BUREAU OF THE BUDGET CIRCULAR NO. A-56 DESCRIBES CERTAIN EXPENSES WHICH ARE REIMBURSABLE AND WHICH ARE NOT REIMBURSABLE IN CONNECTION WITH THE SALE AND PURCHASE OF RESIDENCES AS AUTHORIZED FOR TRANSFERRED EMPLOYEES BY SECTION 23 (4) OF THE ADMINISTRATIVE EXPENSES ACT OF 1946, AS ADDED BY THE ACT OF JULY 21, 1966, 5 U.S.C. 5724 (A). PUBLIC LAW 89-516. SECTION 4.2D OF CIRCULAR NO. A-56 PROVIDES IN PERTINENT PART:

* * * THE COST OF A MORTGAGE TITLE POLICY ON THE DWELLING PURCHASED BY THE EMPLOYEE IS ALSO REIMBURSABLE. COSTS OF OTHER TYPES OF INSURANCE, INCLUDING "RECORD TITLE" POLICIES, OWNERS' TITLE POLICIES, MORTGAGE INSURANCE, AND INSURANCE AGAINST DAMAGE OR LOSS OF PROPERTY ARE NOT REIMBURSABLE. * * *

ALTHOUGH THAT SECTION SPECIFICALLY PROHIBITS REIMBURSEMENT OF THE COST OF AN OWNER'S TITLE INSURANCE POLICY, IN CONTEXT IT MUST BE INTERPRETED AS HAVING REFERENCE TO AN OWNER'S TITLE INSURANCE POLICY WHICH THE PURCHASER OF A RESIDENCE MAY OBTAIN FOR HIS OWN PROTECTION. THE SENTENCE INVOLVED MAKES IT CLEAR THAT AN EMPLOYEE WHO PURCHASES A RESIDENCE AT HIS NEW DUTY STATION MAY NOT BE REIMBURSED THE COST OF THE VARIOUS TYPES OF INSURANCE WHICH HE MAY PURCHASE FOR HIS OWN PROTECTION. SECTION 4.2 DOES NOT PROHIBIT REIMBURSEMENT OF THE COST OF INSURANCE POLICIES IN ALL CASES; IN FACT, THE COST OF INSURANCE FOR THE PROTECTION OF THE LENDER, WHEN UNDER THE CUSTOM OF THE AREA THE PURCHASER MUST PAY SUCH COSTS IN ORDER TO SECURE FINANCING, IS SPECIFICALLY ALLOWABLE. FURTHERMORE, SECTION 4.2 AUTHORIZES REIMBURSEMENT OF THE CUSTOMARY COSTS OF SEARCHING TITLE. ACCORDINGLY, THE REGULATION DOES CONTEMPLATE REIMBURSEMENT OF COSTS INVOLVED IN PROVING OR GUARANTEEING THAT TITLE TO PROPERTY IS MARKETABLE.

FOR THE REASONS STATED, IF THE CUSTOM OF AN AREA IS THAT THE SELLER PURCHASE A TITLE INSURANCE POLICY FOR THE BENEFIT OF THE BUYER IN LIEU OF SHOWING MARKETABLE TITLE BY A TITLE SEARCH, AN ABSTRACT OF TITLE OR A LEGAL OPINION, WE BELIEVE THAT THE COST OF SUCH INSURANCE IS REIMBURSABLE.

IF IT IS SHOWN THAT THE COST OF TITLE INSURANCE IS CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE IN THE DALLAS AREA AND IF THE COVERAGE OF THE POLICY IN THIS CASE IS THAT WHICH IS CUSTOMARILY FURNISHED THE VOUCHER WHICH IS RETURNED HEREWITH MAY BE CERTIFIED FOR PAYMENT.