B-174011, NOV 15, 1971

B-174011, NOV 15, 1971

CIVILIAN PERSONNEL - SALE AND PURCHASE OF RESIDENCE - REIMBURSEMENT OF EXPENSES ALLOWING, IN PART, REIMBURSEMENT OF EXPENSES TO MR. JACK R. GEORGE INCIDENT TO HIS TRANSFER OF OFFICIAL STATION. A VA APPRAISAL FEE, ACCEPTED BY FHA IS ALLOWABLE TO THE EXTENT IT EXCEEDS THE PREVIOUSLY ALLOWED "INSPECTION FEE" ASSESSED BY THE LENDING INSTITUTION; A LOAN RELEASE FEE, WHICH HAS BEEN DISTINGUISHED FROM A MORTGAGE RELEASE FEE IS ALLOWED UNDER SEC. 4.2C OF OMB CIR. NO. A-56; LEGAL FEES FOR THE PREPARATION OF DOCUMENTS ARE ALSO ALLOWED UNDER SEC. 4.2C BUT ANY PORTION COVERING ATTENDANCE AT THE SETTLEMENT CONFERENCE IS FOR DISALLOWANCE; THE FEE PAID AS "TITLE INSURANCE PREMIUM" IS NOT GENERALLY REQUIRED AND MUST THEREFORE BE DISALLOWED UNDER SEC. 4.2D, OMB CIR. NO. A-56

TO FEDERAL MEDIATION AND CONCILIATION SERVICE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF AUGUST 31, 1971, WITH ENCLOSURES, REQUESTING AN ADVANCE DECISION ON THE RECLAIM OF MR. JACK R. GEORGE, AN EMPLOYEE OF YOUR SERVICE, FOR EXPENSES INCIDENT TO HIS TRANSFER OF OFFICIAL DUTY STATION.

THE RECORD INDICATES THAT THE SUBJECT EXPENSES AROSE FROM BOTH THE SALE OF HIS FORMER RESIDENCE IN VIRGINIA AND THE PURCHASE OF A RESIDENCE AT HIS NEW DUTY STATION IN GEORGIA. THOSE COSTS INCIDENT TO THE SALE OF THE FORMER RESIDENCE ARE AS FOLLOWS:

(1) VA APPRAISAL WHICH WAS ACCEPTED BY FHA IN

LIEU OF ITS OWN APPRAISAL $ 35.00

(2) LOAN RELEASE FEE FOR TERMINATING FIRST

TRUST AT TIME OF SETTLEMENT 13.00

(3) LEGAL FEE FOR PREPARING CLOSING DOCUMENTS

AND CONDUCTING SAME 35.00

THE COSTS INCIDENT TO THE PURCHASE OF A RESIDENCE AT NEW DUTY STATION ARE AS FOLLOWS:

(4) LEGAL FEES FOR TITLE SEARCH AND CLOSING

OF SALE 190.50

(5) TITLE INSURANCE PREMIUM 109.50

TOTAL RECLAIM $383.00

ITEM (1) IS A VA APPRAISAL FEE AND IS REIMBURSABLE. YOU HAVE STATED, HOWEVER, THAT THE EMPLOYEE WAS PREVIOUSLY ALLOWED THE AMOUNT OF $25 AS AN "INSPECTION FEE." WE HAVE INFORMALLY LEARNED THAT THIS WAS A FEE ASSESSED BY THE LENDING INSTITUTION WHICH WAS CONSIDERING A LOAN TO THE BUYER OF MR. GEORGE'S FORMER RESIDENCE IN VIRGINIA. IT WAS DESCRIBED TO US AS IN THE NATURE OF AN INDEPENDENT APPRAISAL BY SUCH LENDING INSTITUTION. ACCORDINGLY, IT WOULD BE FOR DISALLOWANCE SINCE ONLY ONE APPRAISAL FEE MAY BE REIMBURSED. SEE 47 COMP. GEN. 306 (1967). THE DIFFERENCE OF $10 MAY BE REIMBURSED TO THE EMPLOYEE.

THE LOAN RELEASE FEE OF $13 IN ITEM (2) HAS BEEN INFORMALLY EXPLAINED TO US AS A FEE ASSESSED BY THE LENDING INSTITUTION TO PREPARE AND RECORD A RELEASE OF THE DEED OF TRUST WHICH SECURED MR. GEORGE'S OBLIGATION ON THE RESIDENCE HE SOLD. IT COULD ALSO REFLECT A FEE REQUIRED BY THE TRUSTEES TO EFFECT SUCH RELEASE. IT IS THEREFORE DISTINGUISHABLE FROM THE MORTGAGE RELEASE FEE WHICH IS OFTEN ASSESSED AGAINST THE SELLER TO RELEASE HIM FROM PERSONAL LIABILITY ON AN EXISTING MORTGAGE WHICH IS ASSUMED BY A PURCHASER. CONSEQUENTLY, THIS FEE MAY BE REIMBURSED UNDER SECTION 4.2C OF CIRCULAR NO. A-56 AS "COSTS OF PREPARING CONVEYANCES, OTHER INSTRUMENTS," AND RELATED "RECORDING FEES."

ITEM (3) IS A LEGAL FEE PAID TO THE SETTLEMENT ATTORNEY FOR PREPARING THE DOCUMENTS REQUIRED FOR THE CLOSING, FOR DISBURSING MONIES AT THE TIME OF SETTLEMENT, AND FOR HANDLING THE CLOSING. IN VIEW THEREOF, WE CONCLUDE THAT THIS ITEM IS REIMBURSABLE UNDER 4.2C IF OTHERWISE PROPER.

THE LEGAL FEES CLAIMED BY ITEM (4) RELATE TO THE PURCHASE OF A RESIDENCE AT THE EMPLOYEE'S NEW DUTY STATION IN GEORGIA. THE RECORD INCLUDES A STATEMENT FROM MR. GEORGE'S ATTORNEY DESCRIBING THE AMOUNT OF $190.50 AS "ATTORNEY FEES FOR TITLE SEARCH AND CLOSING OF SALE." WE HAVE BEEN INFORMALLY ADVISED THAT CERTAIN PORTIONS OF THE SUBJECT AMOUNT ARE FOR THE TITLE SEARCH AND PREPARATION OF A WARRANTY DEED AND SUPPORTING AFFIDAVITS. WE CANNOT DEFINITELY ASCERTAIN THE AMOUNT WHICH, IF SUBSTANTIATED, WOULD BE REIMBURSABLE. IT HAS ALSO BEEN INDICATED THAT SOME PORTION OF THE $190.50 IS FOR REPRESENTATION AND ATTENDANCE AT THE ACTUAL SETTLEMENT CONFERENCE. SUCH PORTION WOULD BE FOR DISALLOWANCE. THE EMPLOYEE CAN SECURE A FURTHER BREAKDOWN FROM THE ATTORNEY ALONG THE LINES INDICATED ABOVE, THEN SOME PART OF ITEM (4) COULD BE CONSIDERED FOR ALLOWANCE UNDER SECTION 4.2C OF CIRCULAR NO. A-56.

WITH RESPECT TO ITEM (5) WE INFORMALLY CONTACTED THE FINANCIAL INSTITUTION HOLDING THE LOAN WHICH THE EMPLOYEE ASSUMED. ITS REPRESENTATIVE ADVISED US THAT WHILE AN OWNER'S TITLE INSURANCE POLICY IS RECOMMENDED IT IS NOT GENERALLY REQUIRED IN THE CASE OF LOAN ASSUMPTIONS. A COPY OF THE SALES AGREEMENT RECITES THAT MR. GEORGE WAS TO ASSUME THE "EXISTING FIRST AND SECOND LOANS" ON THE SUBJECT PROPERTY. THEREFORE, THE AMOUNT OF $109.50 FOR AN OWNER'S TITLE INSURANCE POLICY WOULD BE FOR DISALLOWANCE UNDER SECTION 4.2D OF CIRCULAR NO. A-56.

THE RECLAIM VOUCHER, TOGETHER WITH SUPPORTING DOCUMENTS AND OTHER ENCLOSURES, IS RETURNED HEREWITH FOR DISPOSITION ACCORDING TO THE PRECEDING INSTRUCTIONS.