June 6, 1997 GSBCA 13649-RELO In the Matter of EDWARD C. BRANDT Edward C. Brandt, Texarkana, TX, Claimant. M. D. Greenblatt, Director for Finance and Accounting Policy Implementation, Defense Finance and Accounting Service, Indianapolis, IN, appearing for Department of Defense. GOODMAN, Board Judge. Mr. Edward C. Brandt, a civilian employee at the Red River Army Depot, Texarkana, Texas, submitted a claim for real estate expenses incurred in the purchase of his home as the result of a permanent change of station (PCS) move from Sacramento, California to Texarkana, Texas. Various costs were disallowed by the agency official at the Red River Army Depot. The claim was subsequently forwarded to the Defense Finance and Accounting Service, which then forwarded the claim on behalf of the employee to the General Accounting Office (GAO) for review. Pursuant to the Federal Travel Regulation (FTR), 41 CFR chs. 301-304 (1995), if a federal civilian employee is transferred from one official station to another and various conditions are met, miscellaneous expenses involved in the employee s sale and/or purchase of a residence shall be reimbursed by the Government under certain circumstances. The circumstances are that the expenses are customarily paid by the seller of a residence in the locality of the old official station or by the purchaser of a residence at the new official station, to the extent they do not exceed specifically stated limitations, or in the absence thereof, amounts customarily paid in the locality of the residence. 41 CFR 302- 6.2(d). The FTR also states that the local or area office of the Department of Housing and Urban Development (HUD) will . . . furnish upon request information concerning local custom and practices with respect to charging of closing costs related to either a sale or purchase, including information as to whether such costs are customarily paid by the seller or purchaser . . . . 41 CFR 302-6.3(c). After the Army declined to reimburse Mr. Brandt for various costs and the claim was forwarded to GAO, the GAO adjudicator requested clarification from HUD verifying what expenses are customarily paid by the seller or purchaser in the Texarkana, Texas area. The requested information was furnished to this Board by facsimile from the agency on September 25, 1996. The information was inconclusive as to which costs were paid by buyer and seller, and was not specific as to Texarkana, Texas. The Army denied the costs which are set forth below in our discussion as to entitlement for reimbursement. Loan Application Fee ($250) Both the FTR, 41 CFR 302-6.2(d)(1)(i), and the Joint Travel Regulations (JTR), C14002-A.4.a(1), lists a loan application fee for a VA or FHA loan as reimbursable, but Mr. Brandt s loan was not a VA or FHA loan. This fee was properly disallowed. Lender s Inspection Fee ($120) The agency denied reimbursement because it did not find justification for reimbursement of lender s inspection fees in the regulations. JTR C14002-A.6. allows reimbursement for: Other Expenses of Sale and Purchase of Residences. Incidental charges made for required services in selling and purchasing residences are reimbursable if they are customarily paid by the seller of a residence at the old duty station or if customarily paid by the purchaser of a residence at the new duty station, to the extent that they do not exceed amounts customarily charged in the locality of the residence. The GAO held that required services includes those services imposed on the employee which are required by a lending institution or by state or local law as a precondition of sale. Such fees as lender inspection fees, termite inspection, roof inspection, and other such fees required by lenders are required services to which a seller or purchaser is entitled. Leonard J. Garofolo, 67 Comp. Gen. 449 (1988). The record in this case contains no information upon which we can rely to conclude that $120 does not exceed the amount customarily charged in the locality for such inspection services. Mr. Brandt is therefore entitled to be reimbursed the lender's inspection fee in the amount which is customarily charged in the locality or $120, whichever is less. The agency must determine the amount which is customarily charged and make this determination. Attorney Fees ($75) The agency refused reimbursement of the attorney fees for the following reason: [T]he JTR says the legal fees are reimbursable only if they are in connection with preparing and searching title, not in connection with processing the loan. . . . The location of the Attorney Fees on the settlement sheet indicate that these fees were not for any title related issues, but instead were related to processing the loan. The JTR does list a catch-all category of other fees and charges similar in nature to those listed above, unless specifically prohibited.... See JTR, C14002,1,d,(1),6. These fees seem similar to the Loan Origination Fee which is a reimbursable expense. The JTR, however, states that Loan Origination Fees and similar charges are only reimbursable up to one percent of the loan amount. . . . Since I had already authorized maximum payment, I denied the Application Fee, Inspection Fee, and Attorney Fees. The agency official misreads the regulation. Apparently, she is referring to C14002-A.4.a(6), which deals with items similar in nature to a list of miscellaneous reimbursable expenses. The one percent limitation to which she refers is found in C14002- A.4.a.(2) and refers to charges similar to loan origination fees. The applicable regulation is C14002-A.3, which reads, in relevant part: Legal and Related Costs. To the extent such costs have not been included in broker's or similar services for which reimbursement is claimed under other categories, the following expenses are reimbursable with respect to the sale and purchase of residences if they are customarily paid by the seller of a residence at the old official station or if customarily paid by the purchaser of a residence at the new duty station, to the extent they do not exceed amounts customarily charged in the locality of the residence: a. costs of searching title, preparing abstract and legal fees for a title opinion, or where customarily furnished by the seller, the cost of a title insurance policy; b. costs of preparing conveyances, other instruments, and contracts; c. related notary fees and recording fees; d. costs of making surveys, preparing drawings or plats when required for legal or financing purposes; and e. expense[s] similar to those in items a through d. When a single over-all legal fee is charged, such fee may be paid without itemization if it is within the customary range of charges in the locality of the residence transaction. (56 Comp. Gen. 561 (1977)). Costs of litigation are not reimbursable. The Comptroller General decision cited in the regulation overruled previous decisions which placed various limitations on the recovery of legal fees in the sale and purchase of residences. That decision reads, in relevant part: It has thus been recognized by the Congress that the nature of real estate transfer services customarily performed by the attorney, the realtor, the title insurance carrier, and the financing institution varies greatly from location to location. In addition, the definition of 'practice of law' governing the functions of attorneys and other persons and entities regarding real estate transactions differs among the various jurisdictions. In view of these differences and complexities, it is not uncommon for buyers and sellers of real property to obtain the services of an attorney to provide the legal services involved in a real estate transaction. Consequently, we are of the view that obtaining necessary and reasonable legal services incident to the purchase or sale of residential housing is not merely prudent, but is customary. In addition, we have observed, from the matters referred to us for decision, that while the nature of the legal services rendered incident to a real estate transaction varies from location to location, attorneys frequently assess a single overall fee for the rendition of a combination of such services. Such a fee structure recognizes the fact that frequently some of the services provided by the attorney are a necessary continuation of other services, and that information developed by his consultations and investigations is used in its entirety to provide such services. It thus appears that in the usual case, an attorney may, incident to providing the agreed services, be required to render advice and otherwise represent the employee. We have, therefore, reconsidered the position taken in [previous cases] and have determined that those cases will no longer be followed. As noted above, FTR para. 2- 6.2c (May 1973)[] provides for reimbursement of several stated categories of legal expenses and of "similar expenses." In view of the circumstances described above, we hold that necessary and reasonable legal fees and costs customarily charged incident to the purchase or sale of a residence in the locality of the transaction, except fees and costs of litigation, constitute "similar expenses" within the meaning of the regulations. George W. Lay, 56 Comp. Gen. 562 (1977). The attorney fees of $75 was apparently within the customary range as the agency would have paid it but for the misreading of the regulation. Accordingly, pursuant to the regulation, Mr. Brandt is entitled to reimbursement of the attorney fees. Escrow Fees ($90) The agency states that escrow fees are reimbursable if paid by the person who customarily paid the fee, and the fee does not exceed what is customary in the area. Mr. Brandt incurred and paid $190 in escrow fees. The agency official disallowed $90, as the buyer and the seller customarily split the Escrow Fees, and each party customarily pays no more than $100 each." Mr. Brandt has submitted no information to rebut the agency s contention that the fees incurred were excessive. Since the claimant is demanding payment from the Government, the burden is on the claimant to show us why he should prevail. Paul B. Garvey, GSBCA 13658-RELO, 97-1 BCA  28,690 (1996). In the absence of any information relevant to the matter in dispute, this claim for reimbursement of escrow fees must be denied. Title Insurance-Owner s Coverage ($953) With regard to owner s coverage title insurance, the agency states that such is reimbursable if paid by the person who customarily paid the fee, and the fee does not exceed what is customary in the area. Mr. Brandt paid for this coverage $953, which the agency disallowed because it alleged that such costs are customarily paid by the seller and not the buyer. Mr. Brandt has submitted no information to rebut the agency s contention that the seller customarily pays these fees. Since the claimant is demanding payment from the Government, the burden is on claimant to show us why he should prevail. Garvey. In the absence of any information relevant to the matter in dispute, this claim for reimbursement of escrow fees must be denied. Title Insurance-Lender s Coverage ($15) JTR C14002-A.4.(a)(8) allows reimbursement of this expense if paid by the purchaser. The total amount incurred by the claimant for this coverage was $200. The agency official authorized reimbursement in the amount of $185 and denied reimbursement of $15 because the cost of this coverage customarily does not exceed $185. No further explanation is offered. Mr. Brandt requests reimbursement of the $15 disallowed. Mr. Brandt has offered no information contrary to the agency's assertion that the cost of this coverage customarily does not exceed $185. Claimant's claim for this item is denied, as claimant has failed in his burden of proof. Recording Fees ($30) Mr. Brandt incurred $90 in recording fees. The agency official disallowed $30, for which Mr. Brandt seeks reimbursement. The official explains the disallowance as follows: Mr. Brandt was charged ($90) for Recording Fees ($20 for the deed, $40 for the mortgage, $12 for the release, and $18 for the P/A). In this area, the buyer customarily pays for only the deed and mortgage fees, so I authorized payment in the amount of $60. Mr. Brandt suggested that perhaps the reason he was charged more was because it was a new construction. I pointed out to Mr. Brandt that the JTR only authorizes reimbursement for expenses associated with a new construction that would have been incurred if the buyer had purchased an existing home. Again, Mr. Brandt has offered no information contrary to the agency s assertion that he was reimbursed all fees that are customarily paid by the buyer. We must therefore deny his claim for reimbursement for recording fees. Summary Mr. Brandt is entitled to be reimbursed the following amounts: lender s inspection fee - the amount customarily charged or $120, whichever is less; attorney fees - $75. His claim for additional reimbursement of the loan application fee, escrow fees, title insurance-owner s coverage, title insurance-lender s coverage, and recording fees is denied. _______________________ ALLAN H. GOODMAN Board Judge