BNUMBER:  B-261639
DATE:  May 24, 1996
TITLE:  Kenneth Bellamy

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Matter of:Kenneth Bellamy

File:     B-261639

Date:May 24, 1996

DIGEST

1.  A transferred employee purchased a lot near his new duty station, 
settled on it, and then constructed a residence, but final settlement 
on the residence occurred after the third anniversary of the date the 
employee reported for duty.  The employee requests that the 3-year 
time limit in  sec.  302-6.1(e), Federal Travel Regulation (FTR), be waived 
because litigation between the contractor and the employee caused the 
delay.  Since the provisions of the FTR have the force and effect of 
law, this Office is without authority to modify or waive those 
requirements.  William Buchanan, B-245281, Feb 20, 1992.

2.  A transferred employee purchased a lot near his new duty station, 
settled on it and then constructed a residence.  Although final 
settlement on the residence occurred after the third anniversary of 
the date the employee reported for duty, the employee occupied the 
nearly completed residence as his commuting residence before the time 
limit expired.  The allowable expenses he incurred at the lot purchase 
settlement may be reimbursed.  Lloyd E. McLaughlin, B-189997, Feb. 1, 
1978.

DECISION

This decision responds to a request from the Manager, Financial 
Services Branch, Federal Aviation Administration (FAA).[1]  The 
question asked is whether a transferred employee may be reimbursed for 
expenses incurred incident to the purchase of a lot when the final 
settlement on a newly constructed residence did not occur until after 
the maximum time limit for residence transactions had expired.  We 
conclude that allowable expenses incurred to purchase the lot may be 
reimbursed, but not the expenses incurred at final settlement after 
the 3-year time limit had expired.

BACKGROUND

Mr. Kenneth Bellamy, an employee of the FAA, was transferred from 
Miami, Florida, to Hampton, Georgia, and reported for duty on April 
22, 1990.  Incident to that transfer, he executed a contract on April 
2, 1991, to have a residence constructed on a lot that he was 
purchasing near his new duty station.  On April 19, 1991, he went to 
settlement on the lot purchase and on June 4, 1991, filed a claim for 
the expenses associated with that purchase ($3,667.50).  His claim was 
rejected for the reason that the expenses of the lot purchase could 
not be processed until a residence is completed and settlement is 
concluded.

Although the construction contract called for the residence to be 
completed in 6 months, it was only two-thirds complete nearly a year 
later.  Mr. Bellamy discharged the contractor for failing to comply 
with the terms of the contract and arranged to complete the additional 
work on the residence on his own.  During this time, he requested and 
received two successive 6-month extensions of the 2-year time limit, 
not to exceed April 22, 1993, the third anniversary of the date he 
reported for duty at his new permanent duty station.  On October 19, 
1992, Mr. and Mrs. Bellamy moved into the nearly completed residence 
and he began regularly commuting from there to his new duty station.

In the meantime, the contractor sued Mr. and Mrs. Bellamy for damages 
claiming that he was wrongfully discharged.  On March 11, 1994, a jury 
awarded damages to the contractor, but required the contractor to 
reconvey unencumbered title to the property to Mr. and Mrs. 
Bellamy.[2]  They were thereafter able to obtain a final mortgage and 
completed the final settlement process later in 1994.  On October 3, 
1994, Mr. Bellamy submitted an additional claim for $34,724, which 
included the real estate expenses incurred at final settlement on the 
residence in 1994 ($4,784), and $29,940 in litigation expenses.  The 
agency denied reimbursement because the time limit for settlement on 
the residence had expired on April 22, 1993.  Mr. Bellamy appeals that 
action, asserting that the delays caused by the litigation were beyond 
his control and requests that the time limit contained in section 
302-6.1(e) of the Federal Travel Regulation (FTR),[3] be waived.

OPINION

The statutory provisions governing reimbursement for real estate 
expenses incident to a transfer in 5 U.S.C.  sec.  5724a(a)(4) (1988) and 
the implementing regulations in Part 302-6 of the FTR[4] generally 
provide that a transferred employee is entitled to be reimbursed 
certain expenses for the purchase of a residence at the new duty 
station.  However, section 302-6.1(e)(1) and (2) of the FTR,[5] 
require that the settlement date for purchase transactions must occur 
not later than 3 years after the date that the employee reports for 
duty at the new official station.  Since the provisions of the FTR 
have the force and effect of law, this Office is without authority to 
modify or waive its requirements to allow reimbursement for otherwise 
proper real estate expenses that were not incurred within the 
applicable time limitation.[6]

Notwithstanding the 3-year time limitation, since an employee may 
construct a residence and be reimbursed those expenses that are 
comparable to expenses that would be reimbursable for an existing 
residence,[7] the employee's failure to go to final settlement until 
after the prescribed period has elapsed does not preclude 
reimbursement for otherwise allowable expenses properly incurred 
within the prescribed period.  Thus, in decision Lloyd E. McLaughlin, 
B-189997, Feb. 1, 1978, a transferred employee purchased a lot near 
his new duty station shortly after his transfer and began constructing 
a residence on it.  During construction, the employee occupied a 
mobile home on-site from which he regularly commuted to and from work.  
Since the house was not completed within the time limit allowed in the 
FTR, the employee could not be reimbursed for final settlement 
expenses.  However, because the lot purchase settlement had occurred 
within the time limit and he began residing in a mobile home on the 
lot before the time limit expired, we permitted reimbursement for the 
allowable expenses incurred in the purchase of the lot.[8]

The ruling in McLaughlin is controlling in Mr. Bellamy's case.  
Although he was unable to go to final settlement within the 3-year 
period authorized, since he began occupancy of the residence before 
the 3-year period expired, he may be reimbursed certain of the 
expenses incurred when he purchased the lot.

Each of the itemized expenses he claims for the lot purchase may be 
reimbursed since they are types of expenses an employee would incur to 
purchase an existing residence and are not precluded from 
reimbursement under the FTR.  Other than the loan origination fee, the 
items are reasonable and may be reimbursed.  As to the $3,000 claimed 
as a loan origination fee, section 302-6.2(d)(1)(ii) of the FTR[9] 
limits the reimbursable amount to 1 percent of the loan, unless the 
lender itemizes the administrative charges and shows that the higher 
rate does not include prepaid interest, points, or mortgage discount 
and there is a further showing that the higher rate is customarily 
charged in the locality where the property is located.  The record 
does not disclose the amount of the loan Mr. Bellamy obtained to 
purchase the lot, but its purchase price was only $53,500.  If his 
loan was for the full purchase price, the maximum amount Mr. Bellamy 
could be reimbursed for his loan origination fee would be $535.

As for Mr. Bellamy's claim for reimbursement of his litigation costs, 
section 302-6.2(c) of the FTR[10] specifically excludes the costs of 
litigation.  Accordingly, the FAA may certify Mr. Bellamy's June 4, 
1991, voucher for payment consistent with the foregoing.

/s/Seymour Efros
for Robert P. Murphy
General Counsel

1. Ms. Deborah A. Osipchak.

2. Title to the lot had been conveyed by Mr. and Mrs. Bellamy to the 
builder as part of the original construction contract.

3. 41 C.F.R.  sec.  302-6.1(e) (1995).

4. 41 C.F.R. Part 302-6 (1995).

5. 41 C.F.R.  sec.  302-6.1(e)(1) and (2) (1995).

6. William Buchanan, B-245281, Feb. 20, 1992, and decisions cited.

7. 41 C.F.R.  sec.  302-6.2(d)(1)(x) (1995).

8. See also Edmund J. Koenke, B-214362, Aug. 7, 1984, and Donnie R. 
Sparks, B-213769, May 1, 1984.

9. 41 C.F.R.  sec.  302-6.2(d)(1)(ii) (1995).

10. 41 C.F.R.  sec.  302-6.2(c) (1995).