Board of Contract Appeals General Services Administration Washington, D.C. 20405 ____________________ August 31, 1998 ____________________ GSBCA 14542-RELO In the Matter of NICHOLAS A. MENDALOFF Nicholas A. Mendaloff, Fairmont, WV, Claimant. Terre Duffy, Travel and Transportation Section, National Finance Center, Department of Agriculture, New Orleans, LA, appearing for Department of Agriculture. PARKER, Board Judge. Nicholas A. Mendaloff has asked the Board to review the Department of Agriculture's (USDA's) decision to deny portions of his claim for reimbursement of expenses incurred in connection with Mr. Mendaloff's June 1997 relocation to Bridgeport, West Virginia. As discussed below, we find that USDA reasonably denied the disputed portions of Mr. Mendaloff's claim. Mr. Mendaloff was informed in late May 1997 that he was to report for duty in Bridgeport no later than June 22. Mr. Mendaloff, who was living in rented quarters in Shadyside, Ohio, paid his landlord two months' rent ($700 for June and $700 for July), which he maintains was due in settlement of an oral lease. USDA denied Mr. Mendaloff's claim for reimbursement of this payment because Mr. Mendaloff was unable to produce a written lease setting forth terms for early termination. Mr. Mendaloff bought a house at his new duty station. He entered into a transaction with the seller whereby the price of the house was raised by $3,000 in return for the seller's agreement to pay Mr. Mendaloff's settlement costs. By raising the price of the house and having the seller pay his settlement costs, Mr. Mendaloff was able to take out a bigger mortgage, thus, in essence, financing his settlement costs. At settlement, the seller paid the costs and then refunded the difference to Mr. Mendaloff. USDA denied Mr. Mendaloff's claim for reimbursement of the settlement costs because the seller, rather than Mr. Mendaloff, had actually paid them. Mr. Mendaloff paid the seller $150 for the right to occupy the house earlier than thirty days after settlement. He also incurred a $75 expense for installing a handrail which he 2 maintains was required in order for the house to pass inspection. Mr. Mendaloff's claims for reimbursement for these items were also denied by USDA. Discussion The Government is required to reimburse a transferred employee for certain expenses incurred in connection with the settlement of an unexpired lease at the old duty station. 41 CFR 302-6.1 (1997). A basic condition for reimbursement, however, is that the leasehold interest in the property be in the name of the employee alone, or in the joint names of the employee and one or more members of his or her immediate family, or solely in the name of one or more members of his/her immediate family. This required interest is always determined by reference to the title (or lease) document. 41 CFR 302-6.1(c)(2), (3). Another condition for reimbursement requires that either applicable laws or the terms of the lease provide for payment of settlement expenses. 41 CFR 302-6.2(h). Without a written lease, there is no persuasive proof that these conditions have been satisfied. Although Mr. Mendaloff has shown that he paid the landlord at his old duty station a total of $1,400 for the months of June and July, he has not shown (1) that he had the required legal or equitable interest in the property or (2) that the terms of a lease provided for payment of settlement expenses. USDA's decision not to reimburse Mr. Mendaloff for these expenses was thus reasonable. USDA's decision to deny Mr. Mendaloff's claim for reimbursement of settlement costs allegedly incurred in connection with the purchase of a house at the new duty station was also correct. The Government is required to reimburse a transferred employee for expenses "required to be paid by him/her . . . for purchase (including construction) of one dwelling at his/her new official station." 41 CFR 302-6.1. However, "[a]n employee shall be reimbursed only for expenses actually incurred and paid by the employee." 41 CFR 302-6.1(f). In determining what expenses an employee actually incurred and paid in connection with a housing transaction, the Board looks to the settlement sheet. Harlan C. Thiel, GSBCA 13668-RELO, 97-1 BCA 28,710 (1996). The Government is not authorized to reimburse its employees for theoretical expenses of the bargain that the parties may have contemplated, but did not technically make. Id. Here, Mr. Mendaloff and the seller agreed that Mr. Mendaloff would pay more for the house in return for the seller paying the buyer's settlement expenses. This is the bargain that was made and it is one to which we must look in applying the applicable law and regulation. Under this bargain, the seller, not Mr. Mendaloff, paid the costs for which Mr. Mendaloff seeks 3 reimbursement. The Government is not required to reimburse Mr. Mendaloff in these circumstances. Mr. Mendaloff also claimed reimbursement for a $150 payment to the seller for the right to occupy the house within thirty days after settlement. Although Mr. Mendaloff claims that such an expense is a "local custom," there is no evidence in the record that this unusual expense is one "required to be paid . . . for purchase." 41 CFR 302-6.1. Without such evidence, reimbursement is not authorized. Mr. Mendaloff's claim for reimbursement of the $75 charge for installing a handrail in his new home suffers from a similar defect. Although Mr. Mendaloff has explained that the charge was "needed to comply with inspection of the property," he has not explained whether the inspection was required by the lender, or by the state or local government, or whether it is customary for the purchaser, rather than the seller, to pay to repair defects identified in such an inspection. Generally, the Government does not reimburse employees for improvements to their property. USDA was correct in denying Mr. Mendaloff's claim for reimbursement in these circumstances. Decision For the reasons discussed above, the claims are denied. __________________________ ROBERT W. PARKER Board Judge