Board of Contract Appeals

                 General Services Administration

                      Washington, D.C. 20405



         _______________________________________________

                                 

                          June 10, 2003

         _______________________________________________

                                 



                         GSBCA 16053-RELO

                                 



                 In the Matter of JACK E. HUDSON  





     Jack E. Hudson, Avon, OH, Claimant.



     Terry Burton, Supervisor, Travel Section, Financial Services Center, Department  of

Veterans Affairs, Austin, TX, appearing for Department of Veteran Affairs.

     

BORWICK, Board Judge.



     Claimant, an employee of the Department of Veterans Affairs, moved to Cleveland,

Ohio, incident to a permanent change of station.  The agency had granted claimant relocation

benefits and claimant purchased a house near Cleveland.  Claimant sought agency

reimbursement for certain real estate transaction costs he incurred in that  purchase, and the

agency denied reimbursement of some of those costs.  Claimant appealed the denial to the

Board.  We grant the claim in part.  Claimant is entitled to reimbursement of the

environmental protection fee, but we sustain the agency on its denial of reimbursement for

the remainder of the contested costs.  

     

                            Background



     Claimant was transferred in the interest of the Government from Washington, D.C.,

to Cleveland, Ohio, and reported for duty at his new station on November 5, 2001.  Claimant

purchased a home in Independence, Ohio, and incurred real estate transaction expenses in

connection with the purchase.  Claimant sought reimbursement of $3430.50 of those

expenses.  



     The agency denied claimant reimbursement of the $10 survey review fee as

unallowable under the Federal Travel Regulation (FTR).  The settlement sheet shows the

survey review fee to be an additional settlement charge of the title company.  The purpose

of that fee is not otherwise explained.  The agency did reimburse claimant $131.50 for the

survey itself.  



     The agency denied reimbursement of the $14 wire fee, the $75 tax service fee, and

the $300 commitment fee, charged by the mortgage lender, as unallowable finance charges

under the Truth in Lending Act, 15 U.S.C.   1605(a)(2000), and Regulation Z of the Federal

Reserve Board, 12 CFR 226.  



     The agency denied claimant reimbursement of the $80 mail/courier/overnight delivery

fee because the fee was not included in a list of expenses made expressly allowable as

miscellaneous fees reimbursable under the provisions of the FTR, nor was that fee similar

in nature to fees that were expressly allowable.  The settlement sheet lists that fee as incurred

by the title company, but there is no explanation as to why that fee was incurred.  



     The agency initially denied claimant reimbursement of the $75 environmental

protection fee pending clarification of the purpose of the fee.  However, based upon a letter

from the mortgage lender that the fee is required as a condition of the mortgage, the agency

now agrees that the fee is reimbursable.  



     The agency denied claimant reimbursement of $438.50 of the $688.50 claimed for

mortgage title insurance, granting $250 reimbursement for that portion identified in the

settlement sheet specifically as lender's title insurance.  Claimant secured a letter from

claimant's mortgage lender, which states that it is the policy of all mortgage lenders and this

particular mortgage company to require title insurance for a prospective mortgage.  The

mortgage company then says in the letter: 



     In the mortgage that was executed by [the mortgage lender to claimant] it

     required a LENDER'S COVERAGE OF TITLE INSURANCE (ALTA)

     policy.  All mortgages made by the [mortgage company] must have this form

     of title insurance. 



     The agency denied reimbursement of $250 for home inspection and the $135 radon

test pending a statement from the settlement company or lender that those services were

required as a precondition for completing the residence transaction.  Claimant's mortgage

lender advised that it was not a lending requirement to have home inspections or radon tests

as prerequisites for a mortgage, although it was customary to obtain private home

inspections and radon tests since some communities in the area were prone to radon

contamination. 



                            Discussion



     The agency correctly denied claimant reimbursement of the survey review fee.  The

FTR allows reimbursement of cost of surveys, cost of preparing drawings and plats when

required for legal or financing purposes, and similar expenses, as miscellaneous expense

items if the costs are customarily paid by the purchaser and the amount paid does not exceed

the amounts customarily charged in the locality of the residence.  41 CFR 302-6.2(c) (2001). 

[Foot # 1 ]  We have allowed reimbursement of the cost of the survey itself under that

provision of the FTR.  Kathleen M. Lewis, GSBCA 15613-RELO, 01-2 BCA   31,616. 

Here, there is no basis in the record to determine the purpose of the survey review, i.e.,

whether the survey review was a step in preparing drawings or plats required for legal or

financing purposes.  Nor does the record explain whether it was customary in the community

for a purchaser to pay that fee.  The record does not establish whether the charge was an

incidental charge for a required service and thus reimbursable under 41 CFR 302-6.2(f). 

Claimant has the burden of establishing entitlement to payment and has not met the burden

here.  See Larry J. Wakefield, GSBCA 15823-RELO, 03-1 BCA   32,066.  



     

****************** Footnote Begin **********

[Foot # 1 ]        The version of the FTR in effect when claimant reported for duty at his new

official station determines claimant's entitlement in this matter and we refer to that version

of the FTR. See 41 CFR 302-1.3(d), 1.4(l) (2001) and 41 CFR 302-2.3 (2002). 

****************** Footnote End ************



The agency correctly denied reimbursement of the $14 wire fee, the $75 tax service fee, and

the $300 commitment fee as unallowable finance charges under the Truth in Lending Act

and Regulation Z.  Wire fees and tax service fees are considered finance charges under the

Truth in Lending Act and Regulation Z and are not reimbursable.  41 CFR 302-6.2(d)(2)(v);

Daniel H. Coney, GSBCA 15506-RELO, 01-2 BCA   31,610.  A commitment fee is a fee

imposed by the lender in order to set aside funds for the borrower, or as a "lock-in" fee that

a consumer pays to bind the lender to make the mortgage.  See David P. Brockelman,

GSBCA 14604-RELO, 98-2 BCA   29,971.  Consistent with decisions of the General

Accounting Office, we have determined such fees to be unallowable finance charges. 

Brockelman (citing Leslie E. Russell Jr., B-217189 (May 6, 1985)).   



     The agency denied claimant reimbursement of the $80 mail/courier/overnight delivery

fee because that fee was not expressly listed as a miscellaneous fee and was not similar to

a fee that was expressly listed.  41 CFR 302-6.2(d)(1)(i)-(vi).  We have, however, allowed

courier fees under 41 CFR 302-6.2(f) as incidental fees for a required service when a

claimant could establish that the fees were for services that the claimant or someone working

with the claimant such as an attorney procured and that the services were absolutely

necessary to complete the purchase of the residence and not for the claimant's personal

convenience. Coney (citing Larry D. Gatewood, GSBCA 15343-RELO, 01-1 BCA 

 31,211.)  However, the lender's courier charges are part of the lender's cost of doing

business and are regarded as unallowable finance charges.  Coney.  Claimant has not met his

burden of establishing that the charge in this instance is reimbursable under 41 CFR 302-

6.2(f).  Although the fee was a charge of the title company, there is no explanation of why

the fee was charged or why use of a courier was necessary to complete the purchase

transaction. 



     The agency correctly determined, in light of the mortgage lender's letter, that the $75

environmental protection fee is reimbursable, since the fee was required by the lender as a

condition of the sale.  See 41 CFR 302-6.2(d)(1)(xi). 



     We turn to the title insurance.  The cost of mortgage title insurance for the protection

of, and required by, the lender is reimbursable under the FTR.  An owner's title insurance

policy is also reimbursable, provided the policy is a prerequisite to financing or the transfer

of the property or if cost of the owner's title insurance is inseparable from insurance that is

a prerequisite for financing or the transfer of the property.  41 CFR 302-6.2(d)(1)(viii), (ix). 

Here, according to the mortgage company, only the lender's coverage of title insurance was

a prerequisite to financing.  Claimant is entitled only to the $250.  



     Fees for radon and home inspection tests are only reimbursable if required by federal,

state, or local law or by the mortgage lender.  41 CFR 302-6.2(d)(1)(xi); Lewis.  Here the

mortgage lender confirms that such inspection is a matter of custom and not required by law

or by the mortgage lender.  



     The Board grants the claim in part; claimant is entitled to reimbursement of the $75

environmental protection fee.  The remainder of the claim is denied.  





__________________________

                                        ANTHONY S. BORWICK

                                        Board Judge