B-164181, JUL. 22, 1968

B-164181, JUL. 22, 1968

TO MR. R. P. HOGAN:

THIS IS IN REPLY TO YOUR LETTER OF APRIL 29, 1968, REFERENCE AD57 X 12, SUBMITTING A RECLAIM VOUCHER OF MR. LORNE E. BAILY, AN EMPLOYEE OF THE DEPARTMENT OF COMMERCE, FOR CERTAIN EXPENSES INCIDENT TO A CHANGE OF OFFICIAL STATION FROM DENVER, COLORADO, TO WILLISTON, NORTH CAROLINA, IN SEPTEMBER 1967.

THE VOUCHER FOR $247.53 COVERS CLOSING EXPENSES IN CONNECTION WITH A REAL ESTATE TRANSACTION WHICH ARE BY CUSTOM IN THE AREA CONSIDERED TO BE BUYER'S COSTS BUT IN THIS CASE THE CONTRACT PROVIDED THAT THEY WOULD BE BORNE BY THE SELLER MR. BAILY. THE VARIOUS FEES AND EXPENSES INVOLVED ARE FOR RECORDING DOCUMENTS, A GI APPRAISAL, LOAN SERVICE, PROPERTY SURVEY, CERTIFICATE OF TAXES DUE AND A CREDIT REPORT. A LETTER FROM THE REALTOR INDICATES THAT IT IS QUITE COMMON FOR A SELLER TO AGREE TO PAY A BUYER'S LOAN CLOSING COSTS, ADJUSTMENT EXPENSES AND PREPAID ITEMS.

YOU HAVE DOUBT ABOUT THE PROPRIETY OF CERTIFYING SUCH EXPENSES FOR PAYMENT AND ALSO SUBMIT THE FOLLOWING QUESTIONS FOR GUIDANCE IN FUTURE CASES:

"/1) WITH RESPECT TO EXPENSES THAT ARE AUTHORIZED FOR REIMBURSEMENT IN CONNECTION WITH EITHER THE SALE OF A HOUSE AT THE OLD LOCATION OR THE PURCHASE OF A HOUSE AT THE NEW LOCATION UNDER PROVISIONS OF SECTION 4.2 OF CIRCULAR A-56, MAY CONSIDERATION BE GIVEN TO REIMBURSEMENT TO A TRANSFERRED EMPLOYEE BUYING A HOME FOR AN EXPENSE NORMALLY ASSOCIATED WITH THE SALE OF A HOME PROVIDED THAT THE CHARGE IS CONSIDERED REASONABLE AND IS CUSTOMARY TO CLOSING COSTS PAID BY THE BUYER IN THE AREA?

"/2) WITH RESPECT TO SECTION 4.2 AND QUESTION (1) ABOVE, MAY CONSIDERATION ALSO BE GIVEN TO REIMBURSEMENT TO A TRANSFERRED EMPLOYEE SELLING A HOME FOR AN EXPENSE PAID BY HIM WHICH IS NORMALLY AN ALLOWABLE BUYER'S EXPENSE IN A PURCHASE TRANSACTION PROVIDED THAT THE CHARGE IS REASONABLE AND IS COMMON TO CLOSING COSTS CUSTOMARILY PAID BY THE SELLER IN THE AREA?

WITH RESPECT TO REIMBURSABLE AND NONREIMBURSABLE EXPENSES IN CONNECTION WITH A REAL ESTATE TRANSACTION, SECTION 4.2, BUREAU OF THE BUDGET CIRCULAR NO. A-56, PROVIDES 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, 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 * *

"D. FINANCING COSTS. A CHARGE MADE FOR PREPAYMENT OF A MORTGAGE IN CONNECTION WITH THE SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION IS REIMBURSABLE IF THE TERMS IN THE ORIGINAL CONTRACT OR MORTGAGE INSTRUMENT PROVIDE FOR SUCH A COST, BUT NOT OTHERWISE. FEES FOR LOAN APPLICATIONS, LENDER'S LOAN ORIGINATION, CREDIT REPORTS, MORTGAGE AND TRANSFER TAXES, STATE AND FEDERAL REVENUE STAMPS, AND SIMILAR FEES AND CHARGES, ARE REIMBURSABLE TO THE EXTENT SUCH COSTS ARE CUSTOMARILY PAID BY THE SELLER AT THE LOCATION OF THE OLD OFFICIAL STATION OR BY THE PURCHASER AT THE LOCATION OF THE NEW OFFICIAL STATION * * *.'

RELATIVE TO YOUR FIRST QUESTION, WE INDICATED IN B-161459, JUNE 27, 1967, 46 COMP. GEN. 884 (COPY ENCLOSED), THAT AN EXPENSE NORMALLY ASSOCIATED WITH THE BUYER, SUCH AS TITLE INSURANCE, MAY BE BORNE BY THE SELLER IF IT IS A CUSTOM IN THE AREA FOR THE SELLER TO PURCHASE SUCH INSURANCE FOR A BUYER IN ORDER TO SHOW A MARKETABLE TITLE. ACCORDINGLY, YOUR QUESTION IS ANSWERED IN THE AFFIRMATIVE.

OUR ANSWER TO QUESTION (2) IS THE SAME AS THE ANSWER TO QUESTION (1) PROVIDING YOUR LANGUAGE IN QUESTION (2) "COMMON TO CLOSING COSTS CUSTOMARILY PAID" IS IDENTICAL TO "IS CUSTOMARY TO CLOSING COSTS PAID" USED IN QUESTION (1).

WITH RESPECT TO THE CLAIM IN QUESTION, THE INCLUSION OF THE STATEMENT IN THE SALES AGREEMENT THAT "SELLERS AGREE TO PAY BUYERS CLOSING COSTS" INDICATES THAT THE COSTS ARE CUSTOMARILY THOSE OF THE BUYER WHICH THE SELLER IN THIS INSTANCE AGREES TO ASSUME. THE FACT THAT THE PRACTICE OF A SELLER ASSUMING A BUYER'S CLOSING COSTS BY CONTRACT IS QUITE COMMON DOES NOT RAISE IT TO THE STATUS OF A CUSTOM. INFORMATION IN THE RECORD INDICATES THAT IT IS NOT CUSTOMARY FOR A SELLER IN THE DENVER AREA TO ASSUME A BUYER'S CLOSING COSTS. SINCE THE EXPENSES COVERED BY THE VOUCHER ARE NOT CUSTOMARILY BORNE BY THE SELLER THEY ARE NOT REIMBURSABLE UNDER THE ABOVE REGULATIONS.

ACCORDINGLY, THE VOUCHER WHICH, TOGETHER WITH THE ATTACHED PAPERS, IS RETURNED HEREWITH MAY NOT BE CERTIFIED FOR PAYMENT.