_________________________ May 16, 1997 _________________________ GSBCA 13656-RELO In the Matter of ROBERT J. VOLTZ Robert J. Voltz, Oviedo, FL, Claimant. Kenneth J. Allen, Office of the Staff Judge Advocate, Ft. Ritchie, MD, appearing for the Department of the Army. WILLIAMS, Board Judge. Claimant, Robert J. Voltz, a contract specialist with the Department of the Army, seeks reimbursement of real estate expenses in the amount of $2,496.50, incurred in connection with the sale of his residence at his old duty station incident to his transfer. The agency had denied half of his claimed real estate expenses because claimant was not the sole owner of the property, and the co-owner listed on the deed, his former wife, was not his dependent or a member of his immediate family. Because the agency did not address the question of whether claimant established his "equitable title" to the residence entitling him to reimbursement of 100% of the allowable real estate expenses, we return the claim to the agency for such a determination and dismiss this matter. Background On September 21, 1994, claimant, a civilian employed by the Department of Defense, was authorized a permanent change of station from Pennsylvania to Florida. He reported for duty at the new station on November 1, 1994. He sold his residence on December 15, 1994, and claimed $5,082.63 in real estate expenses. The agency denied reimbursement of $89.63 for a final water and sewer bill, and this amount is not contested. The agency also denied half of the claimed real estate expense reimbursement because the sellers listed on the settlement documents were claimant and his former wife, Catherine D. Terreri, who was at the time of this transaction neither his dependent nor a member of his immediate family. Claimant and Catherine Terreri were divorced effective October 7, 1992, over two years before the real estate transaction at issue. In a notarized statement, claimant's former wife stated that: As part of our divorce agreement, I was paid cash for my investment in the property at . . . Blue Ridge Summit, PA. My name was left on the deed to that property but I have not had any financial interest or responsibility in it since that time. [Claimant] has taken care of all payments, repairs and improvements on the house. I am writing this letter on behalf of [claimant] to assure you that I am not owed any money from the sale of the property. Further, in a statement dated December 1, 1994, claimant's former wife directed that all proceeds from the sale of the home be paid to claimant. Claimant has advised the Board that the agency informed him that a "Quit Claim Deed" executed by his former wife would have eliminated this problem. Claimant had considered executing a quit claim deed several years ago, but was informed at that time that it would have no legal bearing. Discussion The statutory authority for reimbursing an employee for real estate expenses incurred incident to a transfer is 5 U.S.C.  5724a(a)(4) (1994). The Federal Travel Regulation (FTR), which implements this statute, delineates the conditions and requirements under which real estate expenses may be reimbursed. FTR 302-6.1(c)(1) specifies one such condition: Title Requirements. The title to the residence . . . is in the name of the employee alone, or in the joint names of the employee and one or more members of his/her immediate family, or solely in the name of one or more members of his/her immediate family. 41 CFR 302-6.1(c)(1) (1994). The Joint Travel Regulations (JTR), which supplement the FTR for Department of Defense (DOD) civilian personnel, contain a similar requirement. JTR C14000-E.1. The FTR and the JTR set forth additional provisions to assist agencies in determining title. They provide that the title interest must have been acquired prior to notification of transfer. 41 CFR 302-6.1(c); JTR C14000-E.l. In addition, FTR 302-6.1(c)(2) specifies: "Except as provided in paragraph (c)(3), title to the residence is determined by the name of the party (or parties) on the title document (e.g., the deed)." The exceptions in FTR 302-6.1(c)(3) and the parallel provision of the JTR, C14000-E.5, provide circumstances in which equitable title, in lieu of legal title, may suffice for purposes of establishing title to the residence for reimbursement under these regulations. FTR 302-6.1(c)(3) and JTR C14000-E.5 delineate certain types of title interests which could be considered "equitable title interests" which would qualify for establishing title to the residence. These include title held in trust, title held by a financial institution, title which includes an accommodation party, title held by the seller of the property under a financing agreement providing for fixed periodic payments and transfer of title, and "other equitable title situations." FTR 302-6.1(c)(3)(v) describes "other equitable title situations" as follows: The title is held both in the names of: (1) the employee singularly or the employee and one of more members of his/her immediate family jointly, or one or more members of his/her immediate family; and (2) an individual who is not an immediate family member. In addition, [the following five conditions apply:] (A) The property is the employee's residence . . . (B) The employee and/or a member(s) of the immediate family has right to use the property and to direct conveyance of the property. (C) Only the employee and/or a member(s) of the immediate family has made payments on the property. (D) The employee and/or a member(s) of the immediate family received all proceeds from the sale of the property. (E) The employee must provide suitable documentation to the agency that the conditions listed [in the above four subparagraphs] have been met. Agencies shall issue policy defining acceptable documentation. Such documentation must include financial documents proving that only the employee and/or a member(s) of the immediate family made payments on the property, and financial documents proving that the employee and/or a member(s) of the immediate family received all proceeds from the sale of the property. FTR 302-6.1(c)(3)(v). DOD's parallel provision to subparagraph 302-6.1(c)(3)(v)(E) above, JTR C14000-E.5(e), provides that the following condition for establishing equitable title applies: (e) the employee must provide suitable documentation to the DOD component concerned that the conditions listed above have been met. Such documentation must include financial documents proving that only the employee and/or dependent(s) made payments on the property, and financial documents proving the employee and/or dependent(s) received all proceeds from the sale of the property. Any other documentation acceptable to the DOD component concerned. [sic] To date, DOD has not issued any further policy defining acceptable documentation for establishing equitable title pursuant to FTR 302-6.1(c)(3)(v)(E). Prior to the promulgation of the "equitable title" rules, the General Accounting Office (GAO) filed comments concurring in proposed amendments to this section of the FTR. In those comments, GAO elucidated the rationale for the "equitable title" provisions: The FTR amendment would allow reimbursement for residence transaction expenses based on a transferred employee's equitable ownership in his/her residence. As you are aware, this Office has suggested the proposed changes because of inequities that are caused in those cases where it is necessary for the employee to obtain an accommodation endorser to assist the employee in obtaining financing. Although accommodation endorsers acquire no interest in the property so long as the employee makes all of the mortgage payments, the accommodation endorser's name appears on the title to the property and thereby prevents the employee from receiving full reimbursement under the FTR as currently written. We believe that this creates an unfair result not required by 5. U.S.C. 5724a(a)(4) (1988). Similarly, inequities have been caused in other cases by the current title requirements of 41 C.F.R. 302-6.1(c) (1993). The proposed amendment would eliminate these inequities. In addition to the accommodation endorser provision, the FTR amendments would permit 100 percent reimbursement of real estate expenses under 5 U.S.C. 5724a(a)(4), in those cases where title to the residential property is held (1) in trust for the employee's benefit; (2) in the name of a financial institution pursuant to state law; (3) by the seller under a financial arrangement for periodic payments by the employee and transfer of title upon completion of the payments; and (4) jointly by the employee and others who are not members of the employee's immediate family under specified conditions. Larry A. Tucker, B-240555, B-240555.3 (May 16, 1994) (emphasis added) (GAO's Comments to the General Services Administration on Proposed Amendments to the FTR). In the instant case, the agency denied claimant half of his real estate expenses because his former wife's name was listed on the deed and she was no longer a member of his immediate family. The agency's decision comports with GAO decisions which have based entitlement to reimbursement for real estate expenses exclusively on legal title -- but which have not addressed equitable title. For example, the Comptroller General has consistently ruled that where the employee held title jointly with a person who is not a member of his immediate family, the agency properly limited real estate expense reimbursement to 50%. E.g., Kathleen Juenger Chandler, B-250378 (Aug. 5, 1993); Bernard Mowinski--Real Estate Expenses, B-228614 (Dec. 30, 1987) (employee entitled to 50% reimbursement when he owned property as joint tenants with his brother); 66 Comp. Gen. 44 (1986) (real estate expense reimbursement limited to 50% where employee held title jointly with a friend when she purchased residence at new duty station, even though she later married her friend); Anthony Stampone, III, B-223018 (Sept. 30, 1986) (employee reimbursed at 50% when property jointly held with fianc‚); Denise M. Wempe, B-236769 (Feb. 8, 1990) (employee held title with her sister who was not a member of her immediate family nor her dependent and was limited to a 50% interest in the real estate expenses). However, none of these cases address the situation of a divorced employee whose former spouse has legally relinquished her rights to the property, but has not executed a formal quit claim deed. Further, the decisions were issued prior to the 1994 amendments to the regulations. This situation may fall within the "equitable title" provision. In this case the agency did not have the benefit of the full extent of the documentation before this Board. The employee has provided a statement from his former wife indicating that she no longer held any financial interest in the property since their divorce, as well as a copy of the divorce decree, and a statement from his former wife directing that all proceeds from the sale be paid to claimant. That documentation or other documentation in the possession of claimant may suffice to demonstrate that the employee held "equitable title" within the meaning of FTR 302-6.1(c)(3)(v)(E) at the time of sale -- if he establishes to DOD's satisfaction the four conditions specified in FTR 302-6.1(c)(3)(E)(v), i.e., that: the property was his residence; he had the right to use and convey it; and only he (or a member of his immediate family) made payments on the property and received all proceeds from the sale of the property. The agency in the first instance is entrusted under the FTR and the JTR with determining whether an employee has supported his claim for equitable title with the requisite financial documentation. We, therefore, return the matter to the agency so it may determine whether claimant is entitled to full reimbursement of allowable real estate expenses, under the equitable title provisions of the FTR and JTR. Decision Claimant may be entitled to 100% reimbursement of his real estate expenses if the agency determines pursuant to FTR 302-6.1(c)(3)(E)(v) and JTR C14000-E.5(e) that claimant can establish his equitable title through sufficient financial documentation. This matter is returned to the agency for such a determination, and this case is dismissed. If the agency denies the claim after consideration of the equitable title provisions and claimant's documentation, claimant may again pursue its claim with the Board consistent with statute. __________________________ MARY ELLEN COSTER WILLIAMS Board Judge