Board of Contract Appeals
                    General Services Administration
                         Washington, D.C. 20405
 
                          ___________________
 
                           November 28, 2000
                          ___________________
 
 
                            GSBCA 15343-RELO
 
 
                   In the Matter of LARRY D. GATEWOOD
 
 
        Larry D. Gatewood, King George, VA, Claimant.
 
        Marguerite  O.  Dineen,  Assistant  Counsel,  Naval  Surface
   Warfare  Center,  Dahlgren  Division,  Department  of  the  Navy,
   Dahlgren, VA, appearing for Department of the Navy.
 
   GOODMAN, Board Judge.
 
        Claimant, Larry D. Gatewood, is  a civilian employee of  the
   Department of the  Navy.  He  requested reimbursement of  certain
   real estate expenses incurred in the sale of his property and the
   agency denied reimbursement of a portion of the expenses.  He has
   requested that this Board review the agency's decision.
 
                               Background
 
        In September  1994, claimant  purchased a  one hundred  acre
   farm  in  the  rural  Spice Valley  section  of  Lawrence County,
   Indiana,  approximately  eight  miles  from  new  permanent  duty
   station.  Claimant states that he "did not purchase this farm for
   speculation or subdivision, but to serve as a place where I could
   raise  my  family and  tend  to  a  small amount  of  livestock."
   Claimant states further that he could have purchased a house on a
   one-half  acre  lot  for  the  same price  in  a  subdivision  in
   Bloomington, Indiana, but preferred the solitude of living in the
   country and the enjoyment of raising livestock.
 
        Claimant  states that he  was not a  farmer and did  not own
   farm equipment of any kind.  He purchased the property because it
   was affordable and because  he and his wife  liked the house  and
   its  setting,  and not  with the  intention of  becoming farmers.
   After living on the property  for a while, claimant and his  wife
   decided to raise  a few sheep  and cows for personal  enjoyment. 
   He states further:  "These animals were  our country pets,  along
   with our Labrador Retriever that also adapted well to the privacy
   and open spaces that this property provided."
 
                                                                   2
 
        In  October  1998,  claimant received  travel  orders  for a
   permanent  change of  station (PCS)  to  Virginia.   He sold  his
   property in Indiana  and submitted a  claim for reimbursement  of
   real estate expenses incurred  in the sale of the  property.  The
   agency denied  payment of a  portion of his real  estate expenses
   because claimant's property allegedly contained land in excess of
   that  which would  reasonably relate  to the residence  site, and
   because he incurred  costs that were not  typically reimbursed to
   the seller.
 
   The Agency's Determination
 
         The agency  determined that  claimant was  not entitled  to
   reimbursement of all real estate  expenses incurred.  The  agency
   determination read in relevant part:
 
        [T]he  property in question was determined to have been
        a dwelling and an agricultural farm consisting of about
        100 acres.   The excess  acreage was rented to  a local
        farmer for grazing of animals and harvesting of hay.
 
        Section   C14000(F)(2)(b)   [of    the   Joint   Travel
        Regulations (JTR)] provides that "The employee shall be
        limited to pro  rata reimbursement when land  in excess
        of that which reasonably relates to the residence site,
        is bought  or sold."   In light of this  requirement, a
        determination   had  to  be   made  on  the   pro  rata
        reimbursement rate  that needed  to be  applied to  the
        non-excess   acreage  property.     Decisions   of  the
        Comptroller  General  have  provided  guidance on  what
        factors  to   consider,  such   as  zoning   or  county
        assessment    information,    when     conducting    an
        apportionment  of such property.  Since the property in
        question  is located  in a  rural  portion of  Lawrence
        County, Indiana, no  zoning regulations are applicable.
        However, the Lawrence  County Assessor Office  provided
        the property  assessment forms, and  stated that  local
        policy is  to  allocate  one  acre  to  a  dwelling  in
        determining how much  land is applied to  dwellings for
        assessment purposes . . . . 
 
        . . . [The] 1999 assessment for claimant's property  in
        Lawrence County, Indiana was as follows:
 
        Land  -  -  -  $13,600,  of which  $2900  was  for  the
        homesite.   Deducting the homesite, assessment value of
        excess acreage is $10,700.
 
        Improvements (dwelling, garage, and farm buildings) - -
        -  $12,700.  All buildings were included since claimant
        did  not  rent farm  building  and used  them  to store
        personal property, according to his wife. 
 
                                                                   3
 
        Adding   value  of   homesite  ($2900)   to  value   of
        improvements ($12,700)  resulted in  assessed valuation
        of residence  totaling $15,600.  Residence  plus excess
        land equals $26,300.   The ratio of  residence to total
        property assessed valuation is 59.32%.   Therefore, the
        pro  rata reimbursement  rate  to  be  applied  to  the
        expenses claimed is 59.32%. 
 
        Claimant  sold  his  property  for  $188,760  and  paid
        $17,160  in brokerage fees, that equates  to 9% of sale
        price.   The usual  and customary brokerage  fee in the
        locality  of Williams, Indiana for the sale of property
        is  7%.   Therefore,  brokerage  fees  are  limited  to
        $13,213.20.  Applying the pro rated ratio  of 59.32% to
        the $13,213.20, $7838.07 is recommended for payment. 
 
        Claimant  incurred  $1682.71   for  legal  and  related
        expenses  (survey,  title  and  document  preparation).
        Such expenses  are reasonable and  customarily incurred
        by  a  seller  in the  locality  of  Williams, Indiana.
        Applying the pro rated ratio of 59.32% to the $1682.71,
        $998.18 is  recommended  for  payment.  Claimant  seeks
        $150.00  for settlement or  closing costs.   It  is the
        customary  practice  in   the  locality  of   Williams,
        Indiana, for  this expense to be incurred by the buyer.
        Therefore, this amount is not  recommended for payment.
        Additionally, claimant seeks $100.00  for courier fees.
        However, no  evidence  was  submitted  supporting  this
        expenses,  nor was  it  noted  on  the  HUD  Settlement
        Statement  . .  . .    Therefore, this  expense is  not
        recommended for payment. 
 
        Subject to the foregoing adjustments, total recommended
        for payment is $8836.25.
 
   Claimant's Request for Reimbursement
 
        Claimant  has  asked  this  Board  to  review  the  agency's
   decision.   He has noted that  the agency reimbursed him  in full
   for  real  estate  expenses  incurred  in  the  purchase  of  his
   residence.   He also states  that he did not  rent his land  to a
   farmer  for the  raising of  livestock  or growing  hay.   He has
   requested reimbursement in  the amount of $6059.66,  which equals
   the  40.68% of  the brokerage  fees and  legal and  related costs
   which were not reimbursed.   He has also  requested reimbursement
   of $150  in  closing costs  and $100  in courier  fees which  the
   agency did not reimburse.
 
   With regard to the closing costs of $150, claimant states:
 
        I request  reimbursement of  $150 closing  fee paid  to
        Ellison Abstract & Titles Inc.  I discussed this charge
 
                                                                   4
 
        with Mr. John Thomas of Ellison Abstracts and Title . .
        . .   According to Mr. Thomas, the  closing fee covered
        the  costs  for  tracking  down  payoffs,  seeing  that
        disbursements were paid, recording the deed, paying off
        the mortgage, ensuring  the that buyer has  clear title
        to the  property, and  handling the overall  activities
        performed  by  a  settlement agent  at  closing.   [The
        agency] stated that  it was customary for  this expense
        to  be  incurred by  the  buyer.   However,  Mr. Thomas
        informed  me that this  is the customary  practice only
        when  the  buyer  is  using  a  loan  to  purchase  the
        property.   When the  transaction is  an all-cash  deal
        with no loan involved, Mr.  Thomas indicated that it is
        customary for either the buyer or the seller to pay the
        closing  fee.       For  the  subject   property,  [the
        purchaser]  purchased the farm  from me in  an all-cash
        deal that involved  no loan financing (as  evidenced by
        the HUD Settlement Statement).  Therefore, this expense
        should be reimbursable.  
 
        In response  to  the  request for  review,  the  agency  has
   responded  that   it  agrees   with  the   prior  assessment   of
   reimbursement,  except that it  agrees with  claimant that  he is
   entitled to reimbursement of the $100 courier fee.
 
                               Discussion
 
   Brokerage Fees and Legal and Related Expenses
 
        In providing for  the reimbursement of expenses  incurred in
   connection with residence transactions  of federal employees, the
   JTR  provide:  "The  employee  shall  be  limited   to  pro  rata
   reimbursement when he/she  sells or purchases  land in excess  of
   that  which  reasonably  relates to  the  residence  site."   JTR
   C14000-F.2.b.
 
        In  Frank A. Sterbenz, GSBCA 13662-RELO,  97-1 BCA   28,871,
   we applied  this  proration rule  by  determining how  much  land
   "reasonably relates to  the residence site" and how  much land is
   "in  excess."   As  we stated  in  Sterbenz, "This  determination
   should initially  be made by  the agency  to which  the claim  is
   submitted  based upon the  prevailing and customary  practices in
   the locality of the official duty station."  Id. at 144,005.
 
        The  Comptroller General,  in  54  Comp.  Gen.  597  (1975),
   articulated guidelines  to apply  in determining  the proper  pro
   rata  reimbursement,   including  examination  of   zoning  laws,
   appraisal  by  experts,  and consideration  of  the  location and
   topography of the land as  ways of establishing reasonableness of
   the   property  size  being   sold.    The   Comptroller  General
   elaborated:
 
                                                                   5
 
        Absent  any zoning laws or regulations for the building
        of  residential dwellings or  if the area  is generally
        zoned for  agricultural use  and the  sale or  purchase
        involves a farm dwelling with appurtenant outbuildings,
        the  [agency's]  certifying  officer should  take  into
        account such factors  as the use to which  the land has
        been put in the  past, its present utilization and  the
        potential   for  future   use.     That  will   include
        consideration of crop  growing, standing timber,  other
        income  producing use,  fencing, irrigation,  etc.   In
        cases  of unimproved land which could be subdivided and
        sold as  lots in the  future, it is suggested  that the
        officer take into account the size of the lots in other
        subdivisions  in the area  and the requirements  of the
        local  or State Department  of Health which  is usually
        concerned  with  the  waste  disposal  systems  and the
        percolation quality of the soils . . . .
 
        . .  . The valuation  of the excess land  for proration
        purposes would be the  difference between the  purchase
        or sale price  less the valuation of the residence, the
        residence site and its appurtenant buildings.
 
   54  Comp.  Gen. at  598-99;  accord Michael  T.  Matarrese, GSBCA
   14769-RELO, 99-1 BCA    30,243 ; John  A. Byrd, 54 Comp.  Gen. 58
   (1984); Daniel J. Totheroh, B-204046 (Aug. 27, 1981); Franklin J.
   Rindt,  B-199900 (Feb. 10, 1981).
 
        In  the instant case,  the agency made  a determination that
   the claimant's property  contained land in  excess of that  which
   reasonably relates to the residence site.  This determination was
   made  based upon  the  fact  that the  property  was a  farm  and
   contained  a  house  and  land  which  was  suitable  for raising
   livestock.    While  claimant indicates  that  he  did  not raise
   livestock   for  commercial  purposes,  his  actual  use  is  not
   dispositive.  In  determining whether there is land  in excess of
   what  reasonably relates to  the residence, the  land's potential
   for income production,  not the current owner's actual  use, is a
   determinative factor.     Monte W.  Ausland, B-229368 (Sept.  20,
   1988).   That  properties of  similar market  value may  exist in
   other neighborhoods  which contain  single family  homes on  less
   than half-  acre lots does  not diminish the income  potential of
   claimant s property.  Also,  the fact that the agency  reimbursed
   claimant for  all of  his costs when  he initially  purchased the
   property does not require the agency to do the same when claimant
   sells the property.   The agency's determination  that claimant's
   property contained land  in excess of what reasonably  relates to
   the residence was correct.
 
        The  record in the  case contains  evidence of  the agency's
   valuation of the residence and the land reasonably related to the
   residential  site in  this  case.    The  agency  performed  this
 
                                                                   6
 
   valuation  from tax assessment  records.  Tax  assessment records
   are proper to use to determine the pro rata ratio.   See Ausland.
   Once the  agency obtains  this valuation,  it should prorate  the
   appropriate  reimbursable expenses  accordingly.  It  should make
   reimbursement  in the prorated  amount unless it  determines that
   the legal services in question would have been provided at a flat
   fee regardless of the proportion of the land which was associated
   with the  residence. See Sterbenz.   As  the brokerage  fee is  a
   percentage of the sales price, it is  presumed that this is not a
   flat rate charge.  Accordingly, the agency's determination  as to
   the pro rata reimbursement of the brokerage fees is correct.
 
        Claimant was  also reimbursed  the pro  rata charge  for the
   $1682.71 claimed for legal and  related expenses.  This amount is
   the sum of  the survey ($929.71),  title insurance ($718.00)  and
   attorney's fees ($35.00).   There is no indication  in the record
   as to  whether these  are flat  rate charges.   If  any of  these
   charges are flat rate charges, claimant should obtain appropriate
   letters indicating such and present these letters to  the agency.
   The  agency   should  evaluate   the  information  provided   and
   appropriately reimburse claimant.   If claimant does  not provide
   information within  a reasonable period  of time, the  agency may
   make payment on the assumption that  the charges were not made on
   a flat-rate basis.
 
   Closing Costs
 
        The  agency denied reimbursement  of $150 in  closing costs,
   stating  that  such  costs  are  typically  paid  by  the  buyer.
   Claimant  has submitted a  statement from his  settlement officer
   indicating  that this  is the  customary practice  only when  the
   buyer is  using a loan to purchase the property.  Claimant states
   that  when the  transaction  is  an all-cash  deal  with no  loan
   involved, as was  the case in this instance, it  is customary for
   either  the  buyer  or  the  seller to  pay  the  closing  costs.
   Claimant's   statement   does   not   support   his   claim   for
   reimbursement.   Although  claimant has  established  that it  is
   negotiable as to which party to the transaction pays these costs,
   we cannot find that  it is customary that such costs  are paid by
   the seller, as suggested by claimant.  The agency properly denied
   reimbursement of these costs.
 
   Courier Fees
 
        The  agency has  stated that  it now  believes   claimant is
   entitled to reimbursement of  courier fees in the amount of $100.
    Since claimant  was already  living in Virginia  at the  time he
   sold his residence  in Indiana, the  agency acknowledges that  it
   was  necessary for  claimant to  use  a courier  to transmit  the
   documentation.  The agency has cited us to our decision in Ramiro
   Ramirez, GSBCA 14252,  98-1 BCA   29702,  reconsideration denied,
   98-2  BCA    29,797.  In  that case,  we found that  claimant was
 
                                                                   7
 
   entitled to  reimbursement  of  courier  fees pursuant  to    JTR
   C14002-A.6 as incidental  expenses because the incurrence  of the
   fees was necessary and not merely a convenience to claimant.   In
   the  instant case,  where claimant  was  living at  his new  duty
   station at  the time  the settlement on  his prior  residence was
   accomplished, the courier  fees may well  have been necessary  as
   incidental  charges made for  required services. If  claimant can
   show that they  were, the agency's determination  to make payment
   is correct, and he should be reimbursed for these costs.
 
                                Decision
 
        The agency's assessment of claimant's pro rata reimbursement
   of broker's  fees is correct.  If  the legal and related expenses
   are flat  fee services, claimant is entitled  to reimbursement of
   these costs.   Claimant is not entitled to  reimbursement of $150
   closing costs.  If the $100 in courier fees was paid for required
   services, claimant should be reimbursed for these costs as well.
 
 
                                      _______________________
                                      ALLAN H. GOODMAN
                                      Board Judge