__________________ November 26, 1997 __________________ GSBCA 14275-RELO In the Matter of WILLARD T. MAYS, III Willard T. Mays, III, Corpus Christi, TX, Claimant. Peter M. Kushner, Office of the General Counsel, Naval Facilities Engineering Command, North Charleston, SC, appearing for Department of the Navy. NEILL, Board Judge. Claimant in this case, Willard T. Mays, III, has appealed the denial of certain costs incurred in conjunction with the sale of his home in the Jacksonville, Florida area on the occasion of his transfer to Corpus Christi, Texas in April 1996. For the reasons set out below, we grant the claim. Background In April 1996, Mr. Mays was transferred from the Naval Air Station (NAS) in Jacksonville, Florida to the NAS in Corpus Christi, Texas. On April 25, 1996, claimant and his wife settled on the sale of their residence in the Jacksonville area. The buyer made use of commercial financing to purchase their home. By voucher dated April 26, 1996, Mr. Mays sought reimbursement for the costs he paid at settlement. The Navy paid a portion of the costs claimed but rejected others. Mr. Mays then requested reconsideration of the denial of the following costs: Abstract or Title Search $ 115.00 Title Examination 25.00 Title Insurance 630.00 Survey 225.00 TOTAL 995.00 2 In seeking reconsideration of the denial of these items of his original claim, Mr. Mays provided documentation which, in his opinion, showed that they were customarily paid by the seller in the Jacksonville area. This request was likewise denied. Mr. Mays now asks that we review the agency determination. Discussion The Joint Travel Regulations (JTR), which implement for civilian employees of the Department of Defense (DOD) the provisions of the Federal Travel Regulation (FTR), have specific provisions regarding reimbursement of the costs involved in this case. Under the JTR, which is applicable to Mr. Mays as a DOD employee, these expenses are generally reimbursable when a transferred employee sells his residence at the old duty station, provided certain conditions are met. The first is that the costs in question must be customarily paid by the seller in the area where the residence is located and the amount paid must not be in excess of that customarily charged in that locality. JTR C14002- A.3.[foot #] 1 A second condition to the reimbursement of title insurance costs deals with owners title insurance. This provision lists as a reimbursable item: Owner's title insurance policy, provided it is a prerequisite to financing or the transfer of property; or the cost of the owner's title insurance policy is inseparable from the cost of other insurance, which is a prerequisite to financing or the transfer of property[.][foot #] 2 JTR C14002-A.4.(9). The fundamental question posed in this case, therefore, is whether the four costs listed by Mr. Mays in his request to the agency for reconsideration are customarily paid by the seller in the Jacksonville area and within the range of the amounts customarily charged in that locality. In addition, with regard to the cost of title insurance, we must determine whether in this case the purchase of the owner's title insurance was a prerequisite to financing or transfer of the property. In forwarding Mr. Mays' claim for processing, the Director of the Human Resources Office at NAS Jacksonville approved the ----------- FOOTNOTE BEGINS --------- [foot #] 1 Similar provisions appear in Section 302-6.2(c) of the FTR. 41 CFR 302-6.2(c) (1996) (FTR 302-6.2(c)). [foot #] 2 A corresponding provision can be found in FTR 302-6.2(d)(1)(ix). ----------- FOOTNOTE ENDS ----------- 3 claim as "reasonable and customarily paid by a seller in this locality." The paying office disagreed with NAS Jacksonville and denied the requested four costs relating to the abstract or title search, title examination, title insurance, and survey. The letter denying these costs provided no explanation of why they were denied. On inquiry, claimant was informed that his request for reconsideration had been denied because the agency considered that the costs in question are customarily paid by the buyer in the Jacksonville area. In addition, the agency explained that the cost of owner's title insurance is expressly listed as a non-reimbursable item in JTR C14002-A.4.b.(1). The provision in question lists the following as a non-reimbursable expense: owner's title insurance policy, "record title" insurance policy, mortgage insurance or insurance against loss or damage of property, and optional insurance paid for by the employee in connection with the purchase of a residence for the protection of the employee[.] Claimant contends that this provision is inapplicable because it applies to claims filed by employees purchasing a residence. We agree and, in fact, this line of argument appears to have been abandoned by the agency in the report it subsequently filed for this case. The agency's report takes a somewhat different tack from that originally taken by the agency. Counsel explains that reimbursement of the costs has been denied because there is conflict over whether they are customarily paid by the seller in the Jacksonville area. Counsel explains that he discussed this claim with an employee in the Jacksonville Office of the Department of Housing and Urban Development (HUD). This individual is said to have advised that, at the time Mr. Mays sold his house, all of the costs in question, with the exception of the cost of owner's title insurance, were customarily paid in the Jacksonville area by the buyer rather than the seller. According to this same HUD employee, after December 1996, even the cost of owner's title insurance is now paid by the buyer. Agency counsel explains that he also discussed Mr. Mays' claim with the executive vice president of the Northeast Florida Association of Realtors. The information obtained from this discussion is said to vary somewhat from that provided by the local HUD employee. The Association's vice president is said to have advised counsel that the costs of abstract or title searching and title examination costs are customarily paid by the seller if the seller elects to purchase owner's title insurance. If the seller chooses not to purchase owner's title 4 insurance, the costs of abstract or title searching and title examination are customarily paid by the buyer. With regard to survey costs, these, according to the association's vice president, are customarily paid by the seller. In providing this information, the vice president is also said to have stated that only lender's title insurance is mandatory as a precondition to the buyer obtaining financing. In a response to the agency report, claimant has provided additional argument and documentation. Among the materials submitted is a detailed statement given under penalty of perjury by Mr. Mays' father, a licensed real estate broker. He has assisted his son in the preparation and defense of the claim which is now before us. He states that, at his son's request, he contacted the two individuals with whom counsel consulted prior to preparing the agency's report for this case. From the HUD employee, Mr. Mays' father learned that this employee's experience in real estate transactions is limited to FHA government-secured loans and that neither she nor her office had any information on any practices in conventional real estate closings.[foot #] 3 From his conversation with the executive vice president of the regional association of realtors, Mr. Mays' father learned that sellers in the Jacksonville area customarily pay for the four type of costs being claimed by Mr. Mays. This individual did not contradict the information attributed to him in the agency's report but he did elaborate on it. He is said to have repeated that owner's title insurance is not required by law but that in over 90% of closed transactions an owner's title policy is included. The association spokesman followed up his telephone conversation with a letter to Mr. Mays' father. The letter, which has since been provided for the record, states that the custom of sellers purchasing owner's title insurance is so well established in the Jacksonville area that the standard listing agreement used by realtors states that the owner will provide and pay for such a policy. A copy of the standard listing agreement, provided for the record, confirms this fact. Claimant has also submitted for the record a letter from his realtor stating that title charges are customarily the responsibility of and are paid by sellers in Northeast Florida. In addition, the attorney who assisted Mr. Mays at closing has provided a letter which is included in the record. This letter explains that the $630 being sought for title insurance by Mr. Mays represents the cost of owner's title insurance. It further states: ----------- FOOTNOTE BEGINS --------- [foot #] 3 Information provided by claimant concerning the financing profile of real estate transactions in the Jacksonville area during the current year indicates that no more than 8% involve FHA financing. ----------- FOOTNOTE ENDS ----------- 5 It is ordinary and customary in the northeast Florida area for the seller, in this case, Mr. and Mrs. Mays, to provide as a condition of closing an owners title insurance policy. The cost of this policy is a standard closing cost for the owners as sellers in this transaction. The providing of the title insurance was a condition of the contract and, therefore, legally the responsibility [of] and binding upon the seller and the failure to provide same would have been a breach of the sales agreement. We have previously stated that when questions of local custom arise, as in other matters, the burden is on the claimant to show why he or she should prevail. Board Rule 404(c) (48 CFR 6104.4(c) (1997)); Robert Messie, GSBCA 13807-RELO, 97-1 BCA 28,924; Christopher L. Cretien, GSBCA 13704-RELO, 97-1 BCA 28,701 (1996); Paul B. Garvey, GSBCA 13658-RELO, 97-1 BCA 28,690 (1996). Mr. Mays has met this burden. Of the information provided by the agency, only that said to have been provided by the HUD employee is in direct opposition to Mr. Mays' contentions. The limitations subsequently found to exist regarding this individual's knowledge and experience however, raise serious questions as to the applicability of this data to a commercially financed transaction such as that which occurred in the sale of Mr. Mays' home. Much more credible is the evidence provided by claimant and, to a limited degree, by the agency itself, supporting payment of Mr. Mays' claim. Taken as a whole, the initial determination of the Human Resources Office at NAS Jacksonville, the information and documentation provided by the vice president of the regional association of realtors, the statement of claimant's own realtor, and the explanation provided by claimant's closing attorney amply support the conclusion that, at the time of sale, the costs sought here by Mr. Mays were customarily paid by seller and were reasonable, and that the seller's purchase of title insurance in this case was a prerequisite to the transfer of the property. We, therefore, conclude that Mr. Mays' costs for abstract or title search, title examination, title insurance, and survey can and should be paid. _____________________ EDWIN B. NEILL Board Judge