Board of Contract Appeals General Services Administration Washington, D.C. 20405 _____________________ September 14, 1999 _____________________ GSBCA 15085-RELO In the Matter of JACQUELYN B. PARRISH Jacquelyn B. Parrish, Suwanee, GA, Claimant. Cynthia S. Whitt, Chief, Accounting Branch, Financial Management Office, Centers for Disease Control and Prevention, Public Health Service, Department of Health and Human Services, Atlanta, GA, appearing for Department of Health and Human Services. DeGRAFF, Board Judge. In early 1998, Jacquelyn Parrish transferred from Virginia to Georgia to accept a position with the Department of Health and Human Services (HHS). In connection with the transfer, HHS agreed to reimburse Ms. Parrish for the expenses she incurred in purchasing a house at her new duty station. During negotiations with the builder of the newly constructed house that she wanted to buy, Ms. Parrish explained that HHS would not reimburse her for any closing costs until after she purchased the house, and that she did not have sufficient cash to pay the closing costs. The builder agreed to increase the price of the house to cover the closing costs, so that Ms. Parrish could pay those costs as part of her purchase price when she made her mortgage payments. The builder provided a letter that documented this agreement with Ms. Parrish, and stated that the closing costs consisted of the following: Mortgage title policy 356.00 Lender s inspection fee 75.00 Flood certification 22.00 Loan origination fee 1,580.45 Underwriting fee 250.00 Tax service fee 76.00 Ga Res Mtg Per Loan 6.50 Document preparation fee 100.00 Settlement or closing fee 350.00 Recording fees 10.00 State tax/stamps 630.50 Recording/admin fee to Clerk of Court 68.00 Tax report/review 10.00 Courier fee 25.00 $3,559.45 The builder s statement that it increased the price of the house to include Ms. Parrish s closing costs is consistent with a Job Initiation Order and a Contract Net Sheet that were prepared in connection with Ms. Parrish s purchase. The settlement sheet shows that the closing costs listed above were paid by the seller. After she purchased her house, Ms. Parrish asked HHS to reimburse her for the expenses that she incurred when she purchased her house, including all of the expenses listed above. HHS decided not to reimburse any of these expenses, based upon our decision in Nicholas A. Mendaloff, GSBCA 14542-RELO, 98-2 BCA 29,983. Ms. Parrish asks that we review HHS s decision.[foot #] 1 Provided that certain requirements are met, when an employee transfers in the interest of the Government, the employing agency is required to reimburse the employee for expenses of the purchase of a residence at the employee s new duty station. 5 U.S.C. 5724a(d) (Supp. III 1997); 41 CFR pt. 302-6 (1998). One of the requirements that must be met is that the employee must actually incur an expense in order for the Government to reimburse the employee for that expense. 41 CFR 302-6.1(f)(1). The General Accounting Office (GAO), which considered claims for relocation expenses until mid-1996, decided that an employee could be reimbursed for closing costs that were included in the purchase price of a house and paid by the seller at closing, so long as the employee could establish that (1) the closing costs were clearly discernible and separable from the price paid for the house, (2) both the seller and the purchaser regarded the costs as having been paid by the purchaser, and (3) documentation showed the amount of the closing costs and the purchaser s liability for them. GAO recognized that although the seller might initially pay the closing costs, the purchaser actually paid the costs as part of the purchase price. If a settlement sheet showed that the seller had paid the closing costs, GAO required the employee who purchased the house to provide a statement from the seller, a real estate agent, or some other person with knowledge of the transaction, that the costs were ----------- FOOTNOTE BEGINS --------- [foot #] 1 HHS also decided not to reimburse Ms. Parrish for some other expenses that she incurred in connection with the purchase of her house. According to HHS s submission to us, Ms. Parrish does not take issue with the decision concerning these other expenses, and so we do not discuss them. ----------- FOOTNOTE ENDS ----------- actually paid by the purchaser as a part of the purchase price. Philibert A. Ouellet, B-200257 (Aug. 18, 1981); Louis E. Sheffield, Jr., B-193665 (Jun. 27, 1979); D.W. Holcombe, B-191235 (Oct. 25, 1978); Richard D. Abeyta, B-186814 (Mar. 8, 1977); Henry F. Holley, 56 Comp. Gen. 298 (1977); James L. Humphrey, 52 Comp. Gen. 11 (1972). Our decision in Mendaloff should not be read as departing from the GAO precedent, which is both long-standing and well- reasoned. Mendaloff did not expressly or impliedly reject the GAO precedent. In fact, we noted in Mendaloff that the Government was not obligated to reimburse an employee for the theoretical expenses of a bargain that the employee did not actually make. This is consistent with the GAO precedent, which requires an employee to establish the precise nature of the bargain that he or she actually made by providing facts to show that the three requirements enumerated in the preceding paragraph are met. When an employee claims that the purchase price of a house was increased to include closing costs, and can establish that the closing costs are clearly discernible and separable from the price paid for the house, that both the seller and the purchaser regard the costs as having been paid by the purchaser, and that documentation shows the amount of the closing costs and the purchaser s liability for them, then the agency is required to reimburse the employee for those closing costs, provided, of course, that the costs are otherwise allowable under 41 CFR pt. 302-6. Provided that the expenses claimed by Ms. Parrish are otherwise allowable, HHS should reimburse her for those expenses. The itemized list of closing costs provided by Ms. Parrish s builder establishes that the closing costs were clearly discernible and separable from the price paid for the house. The builder s letter and Ms. Parrish s claim establish that they both regarded the closing costs as having been paid by Ms. Parrish as part of the purchase price of the house. The builder s letter constitutes the documentation needed to show the amount of the closing costs and Ms. Parrish s liability for them. Ms. Parrish is not asking to be reimbursed for the theoretical expenses of a bargain that she did not make. The claim is granted, provided that the expenses claimed by Ms. Parrish are otherwise allowable under 41 CFR pt. 302-6. __________________________________ MARTHA H. DeGRAFF Board Judge