B-175424, JUN 8, 1972

B-175424, JUN 8, 1972

CIVILIAN EMPLOYEE - CHANGE OF STATION - SALE OF RESIDENCE - LAND PURCHASE - REIMBURSEMENT CONCERNING THE ENTITLEMENT OF EUGENE B. ROCHE TO CERTAIN REAL ESTATE EXPENSES INCIDENT TO A TRANSFER OF OFFICIAL STATION FROM SALT LAKE CITY TO KANSAS CITY, MO. UNDER THE PROVISIONS OF SECTION 4.2C OF OMB CIRCULAR NO. A-56, MR. ROCHE MAY BE REIMBURSED FOR THE COST OF A TITLE INSURANCE POLICY ON HIS OLD RESIDENCE SINCE SUCH PAYMENT BY THE SELLER IS CUSTOMARY IN THE SALT LAKE CITY AREA. THE COST OF THE MORTGAGE PREPAYMENT PENALTY IS ALSO ALLOWABLE, PURSUANT TO SECTION 4.2D, SINCE THE CHARGE DID NOT EXCEED 3 MONTHS PREVAILING INTEREST ON THE LOAN BALANCE. WITH REGARD TO THE PURCHASE OF THE 110 ACRES OF LAND, THERE IS NO BASIS FOR REIMBURSEMENT UNTIL THE RESIDENCE BEING BUILT IS COMPLETED AND OCCUPIED, AND SUCH OCCURS WITHIN THE TIME LIMIT PRESCRIBED BY SECTION 4.1E OF THE CIRCULAR. FURTHER, SECTION 4.1F LIMITS THE EMPLOYEE TO PRO RATA REIMBURSEMENT OF LAND PURCHASED IN EXCESS OF THAT WHICH REASONABLY RELATES TO THE RESIDENCE SITE. FUTURE REQUESTS FOR ADVANCE DECISIONS SHOULD SET FORTH THE FACTS INVOLVED AND THE REASONS FOR SUBMITTING THE MATTER FOR DECISION.

TO MISS ROSE M. SPERLING:

WE REFER TO YOUR LETTER OF MARCH 10, 1972, WITH ENCLOSURES, AND YOUR SUPPLEMENTARY LETTER OF APRIL 14, 1972, REQUESTING AN ADVANCE DECISION AS TO WHETHER THE ENCLOSED VOUCHER IN THE AMOUNT OF $898.50 REPRESENTING VARIOUS REAL ESTATE EXPENSES INCURRED BY MR. EUGENE B. ROCHE INCIDENT TO TRANSFER OF OFFICIAL STATION FROM SALT LAKE CITY, UTAH, TO KANSAS CITY, MISSOURI, AS OF OCTOBER 4, 1971, MAY BE CERTIFIED FOR PAYMENT.

YOUR REQUEST FOR AN ADVANCE DECISION CONSISTED MERELY OF A TRANSMITTAL OF THE VOUCHER AND SUPPORTING PAPERS WITHOUT ANY EXPLANATION OF THE REASON SUSPENDED ITEMS WERE QUESTIONED. SEE IN THIS CONNECTION 31 U.S.C. 82D. FUTURE REQUESTS SHOULD SET FORTH THE FACTS INVOLVED AND THE REASONS FOR SUBMITTING THE MATTER HERE FOR DECISION.

PAYMENT WAS SUSPENDED ON THE FOLLOWING ITEMS REPRESENTING EXPENSES INCURRED IN THE SALE OF A RESIDENCE AT SANDY, UTAH:

(1) TITLE INSURANCE $315.00

(2) MORTGAGE PREPAYMENT PENALTY 140.00

PAYMENT WAS ALSO SUSPENDED ON THE FOLLOWING ITEMS REPRESENTING EXPENSES INCURRED IN THE PURCHASE OF 110 ACRES OF LAND NEAR TONGANOXIE, KANSAS:

(3) CREDIT REPORT AND APPRAISAL 15.00

(4) ABSTRACTING 52.50

(5) ATTORNEY'S OPINION 50.00

(6) "LOAN APPLICATION FEE" 230.00

(7) KANSAS MORTGAGE TAX 77.50

(8) "MORTGAGE RELEASE AND DEEDS" 18.50

TOTAL RECLAIM $898.50

ITEM (1) REPRESENTS THE COST OF A TITLE INSURANCE POLICY PURCHASED IN CONNECTION WITH THE SALE OF THE RESIDENCE AT SANDY, UTAH. SECTION 4.2C OF OFFICE OF MANAGEMENT AND BUDGET CIRCULAR NO. A-56, REVISED AUGUST 17, 1971, AUTHORIZES THE REIMBURSEMENT OF THE COST OF A TITLE INSURANCE POLICY "IF CUSTOMARILY PAID BY THE SELLER OF A RESIDENCE AT THE OLD OFFICIAL STATION." PAYMENT IS AUTHORIZED TO THE EXTENT THAT "SUCH COSTS HAVE NOT BEEN INCLUDED IN BROKERS' OR SIMILAR SERVICES FOR WHICH REIMBURSEMENT IS CLAIMED UNDER OTHER CATEGORIES" AND TO THE EXTENT THAT SUCH COSTS "DO NOT EXCEED AMOUNTS CUSTOMARILY CHARGED IN THE LOCALITY OF THE RESIDENCE."

IT IS STATED IN YOUR LETTER DATED APRIL 14, 1972, THAT THE LOCAL OFFICE OF REGION VIII OF HOUSING AND URBAN DEVELOPMENT ADVISED YOUR OFFICE THAT TITLE INSURANCE PAID BY THE SELLER AND THE REAL ESTATE COMMISSION OF 6 PERCENT ARE NORMAL CHARGES IN THE SALT LAKE CITY AREA. THEREFORE, ITEM (1) MAY BE REIMBURSED.

ITEM (2) REPRESENTS THE COST OF A MORTGAGE PREPAYMENT PENALTY INCURRED IN THE SELLING OF MR. ROCHE'S RESIDENCE IN SANDY, UTAH. SECTION 4.2D OF CIRCULAR NO. A-56 PROVIDES IN PERTINENT PART AS FOLLOWS:

" *** A CHARGE MADE FOR PREPAYMENT OF A MORTGAGE OR OTHER SECURITY INSTRUMENT IN CONNECTION WITH THE SALE OF A RESIDENCE AT THE OLD OFFICIAL STATION IS REIMBURSABLE TO THE EXTENT THE TERMS IN THE MORTGAGE OR OTHER SECURITY INSTRUMENT PROVIDE FOR SUCH COST. THIS PREPAYMENT PENALTY IS ALSO REIMBURSABLE WHEN THE MORTGAGE OR OTHER SECURITY INSTRUMENT DOES NOT SPECIFICALLY PROVIDE FOR PREPAYMENT, PROVIDED SUCH PENALTY IS CUSTOMARILY CHARGED BY THE LENDER, BUT IN THAT CASE THE REIMBURSEMENT MAY NOT EXCEED 3 MONTHS PREVAILING INTEREST ON THE LOAN BALANCE. *** "

WHILE THE RECORD DOES NOT SHOW WHETHER THE TERMS OF THE MORTGAGE SPECIFICALLY PROVIDE FOR SUCH CHARGE, IT DOES SHOW THAT SUCH CHARGE WAS MADE AND DID NOT EXCEED 3 MONTHS PREVAILING INTEREST ON THE LOAN BALANCE. ACCORDINGLY, ITEM (2) IS FOR ALLOWANCE CONSISTENT WITH THE PORTION OF CIRCULAR NO. A-56 QUOTED ABOVE.

IN REGARD TO THE PURCHASE OF 110 ACRES OF LAND IN THE VICINITY OF TONGANOXIE, KANSAS, THE RECORD INDICATES THAT NO RESIDENCE WAS LOCATED THEREON. YOUR DOUBT IN THE MATTER APPARENTLY ARISES IN VIEW OF THIS SINCE THE REGULATIONS ONLY AUTHORIZE REIMBURSEMENT FOR CERTAIN EXPENSES INCURRED INCIDENT TO THE PURCHASE (INCLUDING CONSTRUCTION) OF ONE DWELLING AT THE NEW OFFICIAL STATION. THE REGULATIONS ALSO PLACE A 1 YEAR TIME LIMITATION ON THE ELIGIBILITY FOR REIMBURSEMENT OF REAL ESTATE EXPENSES. SEE SECTION 4.1E OF CIRCULAR NO. A-56.

WE HAVE HELD THAT ALTHOUGH THE PURCHASE OF LAND AND CONSTRUCTION OF A RESIDENCE THEREON MAY BE VIEWED AS A SINGLE TRANSACTION, THE CONTROLLING DATE IN GENERAL FOR COMPLIANCE WITH THE TIME LIMITATION OF CIRCULAR NO. A- 56 IS THE DATE THE COMPLETED RESIDENCE IS ACCEPTED AND THE EMPLOYEE MOVES INTO SAME. SEE B-168975, APRIL 17, 1970, COPY ENCLOSED. IT IS INDICATED IN THE RECORD THAT A RESIDENCE IS BEING CONSTRUCTED. HOWEVER, IN VIEW OF THE RULING CITED ABOVE THERE IS NO BASIS WHEREBY REIMBURSEMENT OF OTHERWISE PROPERLY ALLOWABLE EXPENSES MAY BE MADE UNTIL THE RESIDENCE IS COMPLETED AND OCCUPIED, AND SUCH OCCURS WITHIN THE TIME LIMITATION.

IN CONNECTION WITH THE PURCHASE OF THE 110 ACRES OF LAND, YOUR ATTENTION IS INVITED TO SECTION 4.1F OF CIRCULAR NO. A-56 WHICH LIMITS AN EMPLOYEE TO PRO RATA REIMBURSEMENT WHEN HE PURCHASES LAND IN EXCESS OF THAT WHICH REASONABLY RELATES TO THE RESIDENCE SITE. ALSO, IF THE RESIDENCE IS TIMELY COMPLETED AND OCCUPIED, THE ITEMS LISTED ABOVE CLAIMED INCIDENT TO THE PURCHASE OTHERWISE APPEAR PROPER FOR ALLOWANCE WITH THE EXCEPTION OF THE LOAN APPLICATION FEE WHICH APPEARS TO BE A FINANCE CHARGE. SEE SECTION 4.2D OF CIRCULAR NO. A-56.

THE VOUCHER, WITH ATTACHMENTS, IS RETURNED HEREWITH FOR PROCESSING IN ACCORDANCE WITH THE FOREGOING.