B-173775, SEP 17, 1971

B-173775, SEP 17, 1971

CHANGE OF STATION - PURCHASE OF RESIDENCE - INCIDENTAL COSTS DECISION DENYING CLAIM FOR CLOSING COSTS IN CONNECTION WITH THE PURCHASE OF A RESIDENCE INCIDENT TO A CHANGE OF STATION. THE SALE AGREEMENT CLEARLY SHOWS THAT THE AMOUNTS CERTIFIED AS CLOSING COSTS WERE INCLUDED IN THE SALE PRICE OF THE HOUSE AND NO BASIS EXISTS UNDER PRESENT LAW FOR TREATING ANY PART OF THE SELLING PRICE AS OTHER THAN THE PRICE FOR THE REALTY.

TO MR. LOWELL K. THOMAS:

FURTHER REFERENCE IS MADE TO YOUR LETTER DATED JULY 16, 1971, IN EFFECT REQUESTING REVIEW OF SETTLEMENT OF OUR CLAIMS DIVISION DATED MAY 19, 1971, WHICH DISALLOWED YOUR CLAIM FOR REIMBURSEMENT OF CERTAIN COSTS IN CONNECTION WITH THE PURCHASE OF A RESIDENCE AT YOUR NEW OFFICIAL STATION INCIDENT TO YOUR PERMANENT CHANGE OF STATION FROM LEXINGTON PARK, MARYLAND, TO WASHINGTON, D.C., PURSUANT TO TRAVEL ORDER NO. T-26-69, DATED AUGUST 12, 1968.

THE ITEM, FOR $551.35 REPRESENTING THE CLOSING COSTS WAS DISALLOWED FOR THE REASON THAT SUCH AMOUNT WAS INCLUDED IN THE PURCHASE PRICE OF THE HOUSE. THE INFORMATION FURNISHED SHOWS THAT YOU PURCHASED A RESIDENCE IN STERLING PARK, VIRGINIA, FROM STERLING PARK DEVELOPMENT CORPORATION FOR A PURCHASE PRICE OF $32,125 ON WHICH YOU SECURED A LOAN FOR $32,100 AND THE SALE AGREEMENT CONTAINED THE PROVISION THAT ALL SETTLEMENT COSTS WERE TO BE AT THE EXPENSE OF THE VENDOR EXCEPT PREPAID ITEMS. THE DEVELOPMENT CORPORATION CERTIFIED THAT CLOSING COSTS IN THE AMOUNT OF $551.35 WERE INCLUDED IN THE SALE PRICE OF THE HOUSE.

WE HAVE CONSISTENTLY HELD THAT THERE IS NO BASIS UNDER THE CONTROLLING LAW OR REGULATIONS FOR TREATING ANY PART OF THE SELLING PRICE OF A RESIDENCE AS OTHER THAN THE PRICE OF THE REALTY IN ESTABLISHING THAT PRICE. SEE B-165280, MARCH 3, 1969, B-165841, JANUARY 22, 1969, B-163816, MAY 3, 1968, AND B-162835, DECEMBER 21, 1967, COPIES HEREWITH. THE SALE AGREEMENT CLEARLY SHOWS THAT THE AMOUNTS CERTIFIED AS CLOSING COSTS WERE INCLUDED IN THE SALE PRICE AND WERE ACTUALLY PAID BY THE SELLER. THEREFORE, THERE IS NO BASIS UPON WHICH YOU MAY BE REIMBURSED FOR SUCH EXPENSES.

AS TO THE LEGAL FEE ITEM, WE POINT OUT THAT THE CLASSES OF LEGAL FEES THAT ARE ALLOWABLE IN CONNECTION WITH REAL ESTATE TRANSACTIONS ARE SET FORTH IN SECTION 4.2C OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A 56, REVISED OCTOBER 12, 1966, AS FOLLOWS:

"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, BUT THE SAME TYPES OF COSTS SHALL NOT BE PAID AT BOTH LOCATIONS. COSTS OF LITIGATION ARE NOT REIMBURSABLE."

THE RECEIPTED STATEMENT OF PREIS, COOPER AND OGENS SHOWS THAT THEIR CHARGES WERE FOR CONSULTATION REGARDING REAL ESTATE PURCHASE OF PROPERTY SETTLEMENT. WE HAVE HELD THAT A FEE WHICH AN EMPLOYEE PAYS TO RETAIN AN ATTORNEY TO REPRESENT AND COUNSEL HIM IN CONNECTION WITH A REAL ESTATE TRANSACTION PROPERLY MAY NOT BE REIMBURSED UNDER THE PROVISIONS OF SECTION 4.2C ABOVE. SEE B-163949, MAY 28, 1968, AND B 163420, MARCH 25, 1968, COPIES HEREWITH. THE AMOUNT CERTIFIED BY THE DEVELOPMENT CORPORATION AS CLOSING COSTS INCLUDED A LEGAL FEE IN THE AMOUNT OF $165 WHICH APPARENTLY COVERED THE USUAL COSTS OF LEGAL SERVICES IN CONNECTION WITH THE REAL ESTATE TRANSACTION. THE FEE CLAIMED BY YOU REPRESENTS THE SERVICES PERFORMED BY YOUR OWN ATTORNEY IN REPRESENTING AND COUNSELING YOU AT THE TIME OF SETTLEMENT. ACCORDINGLY, THERE IS NO AUTHORITY FOR ALLOWANCE OF ANY PART OF THE $75 ATTORNEY'S FEE.

THE SETTLEMENT OF MAY 19, 1971, DISALLOWING YOUR CLAIM IS SUSTAINED.