B-171041, DEC. 14, 1970

B-171041, DEC. 14, 1970

TRANSFERS - INCIDENTAL EXPENSES - TITLE INSURANCE ALLOWING CLAIM ON A CONDITIONAL BASIS FOR EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF A RESIDENCE ON CHANGE OF OFFICIAL STATION FROM WASHINGTON, D.C., TO JUNEAU, ALASKA. WHERE TRANSFEREE PAID $242, THE PREMIUM FOR AN OWNER'S TITLE INSURANCE POLICY 80% OF WHICH BEING THE CHARGE FOR AN ABSTRACTING FEE, THEN TOTAL REIMBURSEMENT IS ALLOWED IF, BY LOCAL CUSTOM, OWNER'S TITLE INSURANCE POLICY IS A PREREQUISITE TO OBTAINING FINANCING INCIDENT TO THE PURCHASE OF A RESIDENCE; 80% OF TOTAL REIMBURSEMENT IS ALLOWED IF ONLY ABSTRACT COST IS CUSTOMARILY BORNE BY THE PURCHASER; NO REIMBURSEMENT IS ALLOWED IF NEITHER COST OF ABSTRACTING NOR COST OF TITLE INSURANCE IS CUSTOMARILY BORNE BY THE PURCHASER.

TO MR. JOHN O. FURUNESS:

WE REFER TO YOUR LETTER OF OCTOBER 13, 1970, CONCERNING THE RECLAIM OF AN ITEM OF EXPENSE WHICH YOU DEDUCTED FROM A VOUCHER DATED JUNE 18, 1970, SUBMITTED BY MR. ROBERT W. MCVEY, COVERING REIMBURSEMENT OF EXPENSES INCURRED IN CONNECTION WITH THE PURCHASE OF A RESIDENCE UPON CHANGE OF OFFICIAL STATION FROM WASHINGTON, D.C., TO JUNEAU, ALASKA.

THE EXPENSE IN QUESTION $242 REPRESENTS PAYMENT OF THE PREMIUM FOR AN OWNER'S TITLE INSURANCE POLICY BY MR. MCVEY AT THE TIME HE PURCHASED HIS NEW RESIDENCE. A LETTER FROM THE TRANSAMERICA TITLE INSURANCE COMPANY, DATED SEPTEMBER 14, 1970, INDICATES THAT PART OF THE PREMIUM CHARGED FOR THE OWNER'S TITLE POLICY COVERS THE COST OF TITLE ABSTRACTING SERVICES. THE LETTER REFERS TO THE FACT THAT TRANSAMERICA HAS HISTORICALLY DIVIDED THE TOTAL CHARGE BETWEEN ABSTRACTING AND TITLE INSURANCE AT AN 80 TO 20 RATIO, 80 PERCENT OF THE TOTAL CHARGE BEING AN ABSTRACTING FEE. YOU REQUEST A DETERMINATION AS TO THE PROPRIETY OF CERTIFYING PAYMENT OF THE 80 PERCENT FIGURE.

THE COST OF AN OWNER'S TITLE POLICY FOR THE PROTECTION OF THE PURCHASER OF A RESIDENCE IS NOT REIMBURSABLE UNDER SECTION 4.2(D) OF BUREAU OF THE BUDGET CIRCULAR NO. A-56, REVISED JUNE 26, 1969. HOWEVER, WHEN THE COST OF AN OWNER'S TITLE POLICY IS INCURRED BY THE PURCHASER AS A PREREQUISITE TO THE TRANSFER OF THE PROPERTY OR TO OBTAINING FINANCING INCIDENT TO SUCH TRANSFER IT IS REIMBURSABLE UNDER SECTION 4.2(D) OF THE CITED CIRCULAR IF IN THE AREA INVOLVED IT IS CUSTOMARILY PAID FOR BY THE PURCHASER. COMP. GEN. 884. ALSO, SEE B 164867, SEPTEMBER 4, 1968 (COPY ENCLOSED), WHEREIN BASED ON INFORMATION OBTAINED FROM THE FEDERAL HOUSING ADMINISTRATION IN SAN FRANCISCO, WE NOTED THAT A PARTICULAR OWNER'S TITLE POLICY WAS ISSUED AFTER A SEARCH OF PUBLIC RECORDS AND THAT THE TITLE COMPANY INSURED THE OWNERSHIP OF THE LAND.

WE ENCLOSE A COPY OF A LETTER DATED NOVEMBER 16, 1970, FROM THE FEDERAL HOUSING ADMINISTRATION OFFICE IN ANCHORAGE ADVISING US THAT THE CUSTOMS OF THE JUNEAU AREA IN REGARD TO TITLE INSURANCE AND ABSTRACTS VARY FROM TIME TO TIME. THEREFORE WE SUGGEST THAT YOU CONTACT THE EMPLOYEE'S LENDING INSTITUTION TO DETERMINE WHETHER AN OWNER'S TITLE INSURANCE POLICY IS A PREREQUISITE TO OBTAINING FINANCING INCIDENT TO THE PURCHASE OF A RESIDENCE. IF YOU ESTABLISH THAT IT IS THE CUSTOM IN JUNEAU THAT THE PURCHASER OF A RESIDENCE PAYS THE COST OF TITLE INSURANCE AS A PREREQUISITE TO THE TRANSFER OR THE OBTAINING OF CREDIT INCIDENT THERETO, THE ENTIRE AMOUNT CLAIMED IN THE VOUCHER MAY BE REIMBURSED. IF YOU DETERMINE THAT SUCH IS NOT THE CASE BUT THAT THE COST OF OBTAINING AN ABSTRACT IS CUSTOMARILY BORNE BY THE PURCHASER THEN THE 80 PERCENT OR $193.60 MAY BE REIMBURSED. IF NEITHER THE COST OF ABSTRACTING NOR THE COST OF TITLE INSURANCE IS CUSTOMARILY BORNE BY THE PURCHASER NO REIMBURSEMENT SHOULD BE GRANTED.

THE PAPERS SUBMITTED WITH YOUR LETTER ARE RETURNED HEREWITH.