B-172369, MAY 27, 1971

B-172369, MAY 27, 1971

CIVILIAN EMPLOYEE - REIMBURSEMENT OF CLOSING COST AFFIRMING PRIOR DECISION WHICH DISALLOWED CLAIM FOR EXPENSES INCURRED INCIDENT TO A CHANGE OF STATION. ALTHOUGH THE FISCAL MANAGEMENT DIVISION OF CLAIMANT'S AGENCY ADVISED OTHERWISE, THE GOVERNMENT IS NOT RESPONSIBLE FOR THE CLOSING COSTS INVOLVED IN THE PURCHASE OF A HOME, WHEN THIS EXPENSE IS A PART OF THE PURCHASE PRICE, AND THE COST WILL BE DEFERRED OVER THE PERIOD OF THE MORTGAGE.

TO MR. HENRY G. AMADO:

WE REFER TO YOUR LETTER OF MARCH 4, 1971, REQUESTING RECONSIDERATION OF OUR OFFICE SETTLEMENT DATED MARCH 1, 1971, WHICH DISALLOWED YOUR CLAIM FOR REIMBURSEMENT OF CLOSING COSTS IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT YOUR NEW OFFICIAL STATION.

THE FACTS, AS RELATED IN THAT SETTLEMENT LETTER, ARE AS FOLLOWS:

"PURSUANT TO TRAVEL ORDER NO. CP:A:69-3 DATED AUGUST 9, 1968, YOU REPORTED FOR DUTY AT YOUR NEW OFFICIAL STATION ON SEPTEMBER 9, 1968. JUNE 13, 1969, YOU ENTERED INTO A CONTRACT TO PURCHASE A HOUSE WHICH WAS UNDER CONSTRUCTION. DUE TO EXISTING CIRCUMSTANCES WHICH PRECLUDED SETTLEMENT WITHIN THE ONE-YEAR PERIOD, YOU REQUESTED AND WERE AUTHORIZED AN ADDITIONAL PERIOD OF TIME, AS PROVIDED BY SECTION 4.1E OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969. SETTLEMENT DATE FOR THE PURCHASE OF YOUR NEW RESIDENCE WAS OCTOBER 24, 1969, AND YOU ARE NOW CLAIMING EXPENSES IN CONNECTION WITH SUCH PURCHASE TRANSACTION IN A TOTAL AMOUNT OF $1,214.33, ON THE BASIS OF THE AUTHORIZED EXTENSION OF TIME.

"THE RECORD SHOWS THAT THE PURCHASE AGREEMENT SIGNED BY YOU ON JUNE 13, 1969, PROVIDED FOR THE FINANCING TO BE ARRANGED BY THE SELLER AND THAT THE PURCHASER WOULD PAY NO CLOSING COSTS. THE RECORD FURTHER SHOWS THAT CLOSING COSTS AMOUNTING TO $1,143.53, FOR WHICH YOU CLAIM REIMBURSEMENT, WERE INCLUDED IN THE PURCHASE PRICE OF THE PROPERTY."

THE DISALLOWANCE OF YOUR CLAIM WAS PREDICATED ON THE FACT THAT THE COSTS FOR WHICH YOU REQUESTED REIMBURSEMENT WERE INCLUDED IN THE PURCHASE PRICE OF YOUR RESIDENCE AND WERE PAID BY THE SELLER. YOU WERE ADVISED BY OUR SETTLEMENT LETTER THAT REGARDLESS OF THE FACT THAT SETTLEMENT COSTS WERE AN ELEMENT WHICH WENT INTO ESTABLISHING THE PURCHASE PRICE OF YOUR RESIDENCE, THERE WAS NO BASIS FOR TREATING ANY PART OF THAT PRICE AS OTHER THAN THE PRICE OF THE REALTY. YOU INDICATE YOUR DISAGREEMENT WITH THIS DETERMINATION IN THAT YOU HAD BEEN ADVISED BY PERSONS IN THE FISCAL MANAGEMENT DIVISION OF YOUR AGENCY THAT THEY WERE FAMILIAR WITH THE PRACTICE OF THE COMPANY FROM WHICH YOU PURCHASED YOUR RESIDENCE OF INCLUDING CLOSING COSTS IN THE SELLING PRICE AND THEY ASSURED YOU THAT THERE WOULD BE NO DIFFICULTY IN OBTAINING REIMBURSEMENT OF SUCH COSTS IF YOU WOULD SUBMIT A STATEMENT FROM THE SELLER INDICATING THE AMOUNT OF THE PURCHASE PRICE ATTRIBUTABLE TO CLOSING COSTS. THIS YOU HAVE DONE.

WE DO NOT UNDERSTAND THE ADVICE GIVEN TO YOU BY YOUR AGENCY. NEVERTHELESS IS A WELL-ESTABLISHED PRINCIPLE OF LAW THAT THE GOVERNMENT IS NOT BOUND BY THE UNAUTHORIZED ACTS OF ITS AGENTS. WE HAVE HELD THAT THERE IS NO BASIS UNDER THE CONTROLLING LAW AND REGULATIONS FOR TREATING ANY PART OF THE SELLING PRICE OF A RESIDENCE AS OTHER THAN THE PRICE OF THE REALTY, IRRESPECTIVE OF THE VARIOUS ELEMENTS THAT MIGHT BE CONSIDERED IN ESTABLISHING THAT PRICE. THE FACT THAT YOU WERE INCORRECTLY ADVISED WITH REGARD TO THE REIMBURSABILITY OF SUCH EXPENSES WOULD NOT PROVIDE A BASIS FOR THE ALLOWANCE OF YOUR CLAIM. SEE COPIES OF B-165280, MARCH 3, 1969, AND B-165841, JANUARY 22, 1969, ATTACHED.

THE PURPOSE OF REIMBURSING TRANSFERRED EMPLOYEES CERTAIN COSTS IS TO DEFRAY IMMEDIATE EXPENSES TO WHICH THEY ARE SUBJECTED BECAUSE OF THE TRANSFER. IT IS NOT TO REIMBURSE THEM FOR HIGHER CONTINUING LIVING COSTS FOR WHICH THEY OBLIGATE THEMSELVES INCIDENT TO THE TRANSFER. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, ACCORDINGLY, PROVIDES FOR REIMBURSEMENT ONLY OF SUCH EXPENSES AS ARE ACTUALLY PAID BY THE EMPLOYEE. IN A SITUATION WHERE THE AMOUNT ATTRIBUTABLE TO CLOSING COSTS IS INCLUDED IN THE SELLING PRICE OF THE PROPERTY AND A MORTGAGE IS EXECUTED ON THE BASIS OF THAT TOTAL PRICE, THE PURCHASER HAS NOT INCURRED OR PAID ANY AMOUNT ATTRIBUTABLE TO CLOSING COSTS AT THE TIME OF CLOSING. HE HAS DEFERRED THAT COST OVER THE PERIOD OF THE MORTGAGE.

FOR THE FOREGOING REASONS, THE DISALLOWANCE OF YOUR CLAIM MUST BE SUSTAINED.