B-174644, MAY 13, 1974

B-174644, MAY 13, 1974

AN EMPLOYEE WHO SOLD HIS RESIDENCE INCIDENT TO CHANGE OF DUTY STATION MAY NOT BE REIMBURSED AN ATTORNEY FEE CHARGED FOR NEGOTIATION WITH THE MORTGAGEE FOR EXTENSION OF THE MORTGAGE TO THE PURCHASER IN LIEU OF A REIMBURSABLE CHARGE WHICH COULD HAVE BEEN MADE FOR PREPAYMENT OF THE MORTGAGE.

TO MR. MICHAEL P. LESNIAK:

BY LETTER OF OCTOBER 4, 1973, AN ADVANCE DECISION WAS REQUESTED WHETHER A VOUCHER IN THE AMOUNT OF $75 MAY BE PROCESSED FOR PAYMENT, REPRESENTING REIMBURSEMENT OF AN ATTORNEY FEE INCURRED BY MR. MICHAEL P. LESNIAK IN CONNECTION WITH THE SALE OF HIS FORMER RESIDENCE INCIDENT TO HIS TRANSFER FROM NEW YORK, NEW YORK, TO PITTSBURGH, PENNSYLVANIA, DURING 1973.

IT IS STATED THAT MR. LESNIAK'S MORTGAGE AGREEMENT ON HIS RESIDENCE PROVIDED FOR PAYMENT OF 2 PERCENT OF THE MORTGAGE ($30,000) IN THE EVENT THE DEBT WAS PAID IN FULL WITHIN 3 YEARS. IN VIEW OF THE TIGHT MONEY MARKET THE LENDING INSTITUTION WAS NOT ROUTINELY ALLOWING THE ASSUMPTION OF A MORTGAGE BY A PURCHASER AND MR. LESNIAK REQUESTED HIS ATTORNEY TO CONFER WITH THE MORTGAGEE IN AN ATTEMPT TO HAVE THE MORTGAGE EXTENDED TO THE PURCHASER. IT IS STATED THAT MR. LESNIAK'S SOLE PURPOSE WAS TO SAVE THE GOVERNMENT $600 WHICH REPRESENTS THE PREPAYMENT PROVISION INDICATED ABOVE.

MR. LESNIAK'S ATTORNEY'S STATEMENT FOR PROFESSIONAL SERVICES RELATED TO THE SALE OF THE RESIDENCE READS:

"CONFERENCES, PREPARATION AND EXECUTION OF

CONTRACT OF SALE $100.00

"CONFERENCES AND NEGOTIATIONS WITH PROVIDENT

SAVINGS & LOAN ASSN. FOR EXTENSION OF

MORTGAGE TO NEW PURCHASERS 75.00

"PREPARATION AND EXECUTION OF DEED AND

ATTENDANCE AT CLOSING OF TITLE ON

FEB. 20, 1973 125.00

TOTAL $300.00"

THE ADMINISTRATIVE AGENCY DISALLOWED THE SUBJECT $75 ON THE BASIS OF DECISION B-174644, APRIL 20, 1972, WHICH AFFIRMS THE RULE THAT NO REIMBURSEMENT IS ALLOWED UNDER THE APPLICABLE REGULATIONS FOR LEGAL SERVICES OF AN ADVISORY NATURE. MR. LESNIAK URGES THAT THE ATTORNEY SERVICES WERE RENDERED NOT ONLY FOR HIS BENEFIT BUT ALSO FOR THAT OF THE GOVERNMENT SINCE THE PREPAYMENT PENALTY WOULD HAVE BEEN GREATER IN AMOUNT THAN THE ATTORNEY FEE CLAIMED.

THE REGULATIONS ISSUED UNDER THE AUTHORITY OF SECTION 5724A OF TITLE 5, U.S.C. APPLICABLE AT THE TIME WERE OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED EFFECTIVE SEPTEMBER 1, 1971, WHICH PROVIDED IN PERTINENT PART UNDER SECTION 4.2C AS FOLLOWS:

"C. 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, THE FOLLOWING EXPENSES ARE REIMBURSABLE WITH RESPECT TO THE SALE AND PURCHASE OF RESIDENCES IF THEY ARE CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION OR IF CUSTOMARILY PAID BY THE PURCHASER OF A RESIDENCE AT THE NEW OFFICIAL STATION, TO THE EXTENT THEY DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE: COSTS OF (1) SEARCHING TITLE, PREPARING ABSTRACT, AND LEGAL FEES FOR A TITLE OPINION, OR (2) WHERE CUSTOMARILY FURNISHED BY THE SELLER, THE COST OF A TITLE INSURANCE POLICY: COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS, AND CONTRACTS; RELATED NOTARY FEES AND RECORDING FEES: COSTS OF MAKING SURVEYS, PREPARING DRAWINGS OR PLATS WHEN REQUIRED FOR LEGAL OR FINANCING PURPOSES; AND SIMILAR EXPENSES. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

THE ABOVE-CITED STATUTORY REGULATIONS SET FORTH IN DETAIL THE TYPES OF LEGAL EXPENSES WHICH ARE REIMBURSABLE. SINCE AN ATTORNEY FEE FOR CONFERENCES AND NEGOTIATION WITH A MORTGAGEE LOOKING TOWARD AN EXTENSION OF THE MORTGAGE TO A NEW PURCHASER IS NOT INCLUDED IN THE REGULATION, THERE IS NO LEGAL BASIS TO AUTHORIZE PAYMENT FOR SUCH EXPENSES.

ACCORDINGLY, THE VOUCHER MAY NOT BE PROCESSED FOR PAYMENT.