B-175041, MAR 30, 1972

B-175041, MAR 30, 1972

CIVILIAN EMPLOYEE - PERMANENT CHANGE OF STATION - REIMBURSEMENT OF CLOSING COSTS - LEGAL EXPENSES CONCERNING THE CLAIM OF JAMES T. BRADLEY FOR REIMBURSEMENT OF REAL ESTATE EXPENSES INCIDENT TO HIS PERMANENT CHANGE OF OFFICIAL STATION FROM NEW YORK CITY TO LAKELAND, FLA. THERE IS NO BASIS FOR ALLOWANCE OF THE CLAIM UNDER SECTION 4.2C OR 4.2D OF OMB CIRCULAR NO. A-56, SINCE THE RECORD FAILS TO ESTABLISH THAT ANY PORTION OF THE PURCHASER'S CLOSING EXPENSES IS CUSTOMARILY PAID BY THE SELLER. HOWEVER, THE AMOUNT PREVIOUSLY CLAIMED FOR LEGAL COSTS MAY PROPERLY BE REIMBURSED UNDER SECTION 4.2C OF THE AFOREMENTIONED REGULATION.

TO MR. R. P. HOGAN:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 19, 1972, WITH ENCLOSURES, YOUR REFERENCE AD571X23, WHICH REQUESTS AN ADVANCE DECISION ON A RECLAIM SUBMITTED BY MR. JAMES T. BRADLEY FOR REAL ESTATE EXPENSES INCIDENT TO HIS PERMANENT CHANGE OF OFFICIAL STATION FROM NEW YORK CITY TO LAKELAND, FLORIDA, AUTHORIZED ON MAY 21, 1970.

THE RECLAIM VOUCHER IS IN THE AMOUNT OF $1,231.38 AND IS ITEMIZED ONLY AS "THE BALANCE OF THE BROKER'S COMMISSION WHICH I PAID." THIS AMOUNT, AS INDICATED IN THE FILE, IS THE DIFFERENCE BETWEEN THE EMPLOYEE'S ORIGINAL CLAIM FOR $2,700, AS THE BROKER'S COMMISSION ON THE SALE OF THE FORMER NEW YORK RESIDENCE, AND THE PREVIOUSLY REIMBURSED AMOUNT OF $1,468.62 FOR SUCH COMMISSION. THE LATTER AMOUNT IS APPROXIMATELY 6 2/3 PERCENT OF THE SALE PRICE AND WAS IDENTIFIED IN THE RECORD AS THE "ACTUAL COMMISSION" AFTER PAYMENT OF THE NEW PURCHASER'S CLOSING EXPENSES FOR WHICH THE EMPLOYEE INDIRECTLY OBLIGATED HIMSELF IN A FORMAL AGREEMENT WITH HIS BROKER.

IT IS INDICATED THAT THE PURCHASERS OF THE EMPLOYEE'S OLD RESIDENCE COULD NOT HAVE ENTERED INTO THE TRANSACTION UNLESS THEIR CLOSING EXPENSES WERE PAID. THE EMPLOYEE'S ATTORNEY STATED IN A LETTER DATED JUNE 25, 1971, THAT IT IS COMMON PRACTICE IN SOME PARTS OF NEW YORK CITY FOR SELLERS TO ASSUME SUCH COSTS. WE INFORMALLY CHECKED THIS WITH A REPRESENTATIVE FROM THE NEW YORK OFFICE OF THE FEDERAL HOUSING ADMINISTRATION WHO INFORMED US THAT TO HIS KNOWLEDGE THERE IS NO SUCH PREVAILING CUSTOM AND THAT THIS ARRANGEMENT IS UNUSUAL. SINCE THE RECORD DOES NOT ESTABLISH THAT ANY PORTION OF THE PURCHASER'S CLOSING EXPENSES IS CUSTOMARILY PAID BY THE SELLER, THERE IS NO BASIS FOR ALLOWANCE OF THE CLAIM UNDER SECTION 4.2C OR 4.2D OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969.

IN REVIEWING THE ENCLOSURES PROVIDED WITH YOUR SUBMISSION WE NOTE THAT THE AMOUNT OF $250, CLAIMED FOR LEGAL COSTS CONNECTED WITH HANDLING THE CLOSING ON THE OLD RESIDENCE, WAS ADMINISTRATIVELY DISALLOWED. IN A LETTER DATED FEBRUARY 15, 1971, THE EMPLOYEE'S ATTORNEY INDICATED THE LEGAL SERVICES AS INCLUDING PREPARATION OF A CLOSING STATEMENT, PROCURING AND PERFECTING A SATISFACTION OF MORTGAGE, OBTAINING THE NECESSARY SERVICES OF A TITLE COMPANY TO PRESUMABLY VERIFY MARKETABLE TITLE FOR THE NEW PURCHASERS, AND CONDUCTING AND ATTENDING THE CLOSING. THE RECORD NOW ESTABLISHES THAT THE AMOUNT CLAIMED WAS PROPER FOR REIMBURSEMENT UNDER SECTION 4.2C OF THE CITED CIRCULAR NO. A-56.

ALTHOUGH THE VOUCHER RETURNED HEREWITH MAY NOT BE PAID, A SUPPLEMENTAL VOUCHER MAY BE PREPARED AND CERTIFIED FOR PAYMENT IN THE AMOUNT OF $250 REPRESENTING LEGAL COSTS INCIDENT TO THE SALE OF THE NEW YORK RESIDENCE.