[Code of Federal Regulations]
[Title 41, Volume 4]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 41CFR302-6.2]

[Page 160-162]
 
           TITLE 41--PUBLIC CONTRACTS AND PROPERTY MANAGEMENT
 
                   CHAPTER 302--RELOCATION ALLOWANCES
 
PART 302-6--ALLOWANCE FOR EXPENSES INCURRED IN CONNECTION WITH RESIDENCE TRANSACTIONS--Table of Contents
 
Sec. 302-6.2  Reimbursable and nonreimbursable expenses.

    (a) Brokers' fees and real estate commissions. A broker's fee or 
real estate commission paid by the employee for services in selling his/
her residence is reimbursable but not in excess of rates generally 
charged for such services by the broker or by brokers in the locality of 
the old official station. No such fee or commission is reimbursable in 
connection with the purchase of a home at the new official station.
    (b) Other advertising, selling, and appraisal expenses. Costs of 
newspaper, bulletin board, multiple-listing services, and other 
advertising for sale of the residence at the old official station are 
reimbursable if the employee has not paid for such services in the form 
of a broker's fee or real estate agent's commission. The customary cost 
of an appraisal also may be reimbursed.
    (c) Legal and related expenses. To the extent such costs have not 
been included in brokers' or similar services for which reimbursement is 
claimed under other categories, the following expenses are reimbursable 
with respect to the sale and purchase of residences if they are 
customarily paid by the seller of a residence at the old official 
station or if customarily paid by the purchaser of a residence at the 
new official station, to the extent they do not exceed amounts 
customarily charged in the locality of the residence: costs of (1) 
searching title, preparing abstract, and legal fees for a title opinion, 
or (2) where customarily furnished by the seller, the cost of a title 
insurance policy; costs of preparing conveyances, other instruments, and 
contracts and related notary fees and recording fees; costs of making 
surveys, preparing drawings or plats when required for legal or 
financing purposes; and similar expenses. Costs of litigation are not 
reimbursable.
    (d) Miscellaneous expenses--(1) Reimbursable items. The following 
expenses are reimbursable in connection with the sale and/or purchase of 
a residence, provided they are customarily paid by the seller of a 
residence in the locality of the old official station or by the 
purchaser of a residence at the new official station, to the extent they 
do not exceed specifically stated limitations, or in the absence 
thereof, amounts customarily paid in the locality of the residence:
    (i) FHA or VA fee for the loan application.
    (ii) Loan origination fees and similar charges such as loan 
assumption fees and loan transfer fees. A loan origination fee is a fee 
paid by the borrower to

[[Page 161]]

compensate the lender for administrative type expenses incurred in 
originating and processing a loan. Reimbursement for a loan assumption 
fee or a loan transfer fee or a similar charge also may be allowed, if 
it is assessed in lieu of a loan origination fee and reflects charges 
for services similar to those covered by a loan origination fee. An 
employee may be reimbursed for these fees in an amount not in excess of 
1 percent of the loan amount without itemization of the lender's 
administrative charges. Reimbursement may exceed 1 percent only if the 
employee shows by clear and convincing evidence that:
    (A) The higher rate does not include prepaid interest, points, or a 
mortgage discount; and
    (B) The higher rate is customarily charged in the locality where the 
residence is located.
    (iii) Cost of preparing credit reports.
    (iv) Mortgage and transfer taxes.
    (v) State revenue stamps.
    (vi) Other fees and charges similar in nature to those listed in 
paragraphs (d)(1)(i) through (v) of this section, unless specifically 
prohibited in paragraph (d)(2) of this section.
    (vii) Charge for prepayment of a mortgage or other security 
instrument in connection with the sale of a residence at the old 
official station to the extent the terms in the mortgage or other 
security instrument provide for this charge. This prepayment penalty is 
also reimbursable when the mortgage or other security instrument does 
not specifically provide for prepayment, provided this penalty is 
customarily charged by the lender, but in that case the reimbursement 
may not exceed 3 months' interest on the loan balance.
    (viii) Mortgage title insurance policy, paid for by the employee, on 
a residence purchased by the employee for the protection of, and 
required by, the lender.
    (ix) Owner's title insurance policy, provided it is a prerequisite 
to financing or the transfer of the property; or if 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 the 
property.
    (x) Expenses in connection with construction of a residence, which 
are comparable to expenses that are reimbursable in connection with the 
purchase of an existing residence.
    (xi) Expenses in connection with environmental testing and property 
inspection fees when required by Federal, State, or local law; or by the 
lender as a precondition to sale or purchase.
    (2) Nonreimbursable items. Except as otherwise provided in paragraph 
(d)(1) of this section, the following items of expense are not 
reimbursable:
    (i) 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;
    (ii) Interest on loans, points, and mortgage discounts;
    (iii) Property taxes;
    (iv) Operating or maintenance costs;
    (v) No fee, cost, charge, or expense determined to be part of the 
finance charge under the Truth in Lending Act, title I, Pub. L. 90-321, 
as amended, and Regulation Z issued by the Board of Governors of the 
Federal Reserve System (12 CFR part 226), unless specifically authorized 
in paragraph (d)(1) of this section; and
    (vi) Expenses that result from construction of a residence.
    (e) Losses due to prices or market conditions at the old and new 
posts of duty. Losses are not reimbursable when they are incurred by an 
employee:
    (1) Due to failure to sell a residence at the old official station 
at the price asked, or at its current appraised value, or at its 
original cost;
    (2) Due to failure to buy a dwelling at the new official station at 
a price comparable to the selling price of the residence at the old 
official station; or
    (3) Any similar losses.
    (f) Other expenses of sale and purchase of residences. Incidental 
charges made for required services in selling and purchasing residences 
may be reimbursable if they are customarily paid by the seller of a 
residence at the old official station or if customarily paid by the 
purchaser of a residence at the new official station, to the extent they 
do

[[Page 162]]

not exceed amounts customarily charged in the locality of the residence.
    (g) Overall limitations--(1) Sale of the residence at the old 
official station. The total amount of expenses that an agency may 
reimburse in connection with the sale of the residence at the old 
official station shall not exceed 10 percent of the actual sales price 
of the residence.
    (2) Purchase of a residence at the new official station. The total 
amount of expenses that an agency may reimburse in connection with the 
purchase of a residence at the new official station shall not exceed 5 
percent of the actual purchase price of the residence.
    (h) Settlement of an unexpired lease. Expenses incurred for settling 
an unexpired lease (including month-to-month rental) for residence 
quarters occupied by the employee at the old official station may 
include broker's fees for obtaining a sublease or charges for 
advertising an unexpired lease. Such expenses are reimbursable when (1) 
applicable laws or the terms of the lease provide for payment of 
settlement expenses, (2) such expenses cannot be avoided by sublease or 
other arrangement, (3) the employee has not contributed to the expense 
by failing to give appropriate lease termination notice promptly after 
he/she has definite knowledge of the transfer, and (4) the broker's fees 
or advertising charges are not in excess of those customarily charged 
for comparable services in that locality. Itemization of these expenses 
is required and the total amount shall be entered on an appropriate 
travel voucher. This voucher may be submitted separately or with a claim 
that is to be made for expenses incident to the purchase of a dwelling. 
Each item must be supported by documentation showing that the expense 
was in fact incurred and paid by the employee.

[54 FR 20321, May 10, 1989, as amended by FTR Amdt. 21, 56 FR 51177, 
Oct. 10, 1991; FTR Amdt. 27, 57 FR 45001, Sept. 30, 1992; FTR Amdt. 31, 
58 FR 53137, Oct. 14, 1993; FTR Amdt. 40, 59 FR 46357, Sept. 8, 1994; 
FTR Amdt. 44, 60 FR 49348, Sept. 25, 1995; FTR Amdt. 59, 62 FR 13756, 
Mar. 21, 1997; 62 FR 26375, May 13, 1997]