Claim for Temporary Quarters and Real Estate Expenses

An authorized certifying officer of the Department of Agriculture requested GAO to decide on the propriety of the claim of an employee for temporary quarters subsistence expenses and certain items and amounts representing real estate expenses in connection with the purchase of his residence. Shortly after the employee and his family relocated, the employee executed an earnest money agreement for the purchase of a residence and moved into that residence under a rental agreement extending until execution of the final settlement. Due to numerous difficulties, the final closing was not completed for several months. The employee claimed that, since the agreement was not signed by the sellers until several months later, he was entitled to temporary quarters subsitence expenses during that period. In connection with the purchase of his residence, the employee stated that the seller's delay in executing the sales documents resulted in the bank's application for two extensions of the house closing through the lender, which the employee had to pay at settlement. Temporary quarters refer to any lodging obtained from private or commercial sources to be occupied temporarily by the employee or members of his immediate family who have vacated the residence quarters in which they were residing at the time the transfer was authorized. Previous GAO decisions have held that claims for temporary quarters subsistence allowance for the period in which the individual occupies a residence which he subsequently purchases is not reimbursable. Further, regulations prohibit the reimbursement of any item which is found to be a finance charge. GAO held that the loan origination fees related to the processing and handling of the loan and computed as a percentage of the loan amount are finance charges and may not be reimbursed. In addition, GAO held that the tax fee paid to a tax service to report taxes and assessments on mortgaged real property is a finance charge and is not reimbursable. The extension fees were paid to extend the period of time for maintaining the loan commitment and would be in the nature of a commitment fee. Since the commitment fee is clearly required as incident to the extension of credit, and, as such is part of the finance charge, it is not a reimbursable item. Accordingly, the temporary subsistence expenses and real estate expenses claimed may not be reimbursed.