Board of Contract Appeals

                 General Services Administration

                      Washington, D.C. 20405



                      _____________________



                          March 27, 2002

                      _____________________





                         GSBCA 15737-RELO





                  In the Matter of FRED BORAKOVE





     Fred Borakove, Prospect, KY, Claimant.



     Donald M. Suica and David K. Barnes, General Legal Services, Office of Chief

Counsel, Internal Revenue Service, Washington, DC, appearing for Department of the

Treasury.



NEILL, Board Judge.



     Claimant, Mr. Fred Borakove, an employee of the Internal Revenue Service (IRS),

asks that we review his agency's ruling that he is not entitled to reimbursement of more than

fifty percent of certain relocation benefits associated with the purchase of a residence at a

new permanent duty station (PDS).  We affirm the agency determination.  



                            Background



     In July 1998, Mr. Borakove was transferred from IRS headquarters in Washington,

D.C., to the agency's office in Dallas, Texas.  The transfer was deemed to be in the

Government's interest.  At the same time, his fiancee, Ms. Sultan, who also worked at the

agency's Washington office, elected to transfer to Dallas as well, for her own convenience

and not for the benefit of the Government.  In early November 1998, Mr. Borakove and Ms.

Sultan took up joint residence in a recently purchased home in the Dallas area.  A little less

than a year later, they were formally married.  



     Shortly thereafter Mr. Borakove submitted a relocation voucher claiming closing costs 

for the purchase of his new residence near Dallas.  The agency paid only half of the amount

claimed.  The reason behind this fifty percent reduction was that, in addition to his own

name, the name of Mr. Borakove's fiancee also appeared on the title to his new residence. 

Because Mr. Borakove and his fiancee were not married at the time the residence was

purchased, the agency did not consider Mr. Borakove's fiancee to be part of his immediate

family.  Under the applicable provision in the Federal Travel Regulation (FTR), where a

name in addition to that of the employee appears on the title to the property being purchased,

full closing costs normally will be paid only if that other individual is a member of the

employee's immediate family.  41 CFR 302-6.1(c) (1998) (FTR 302-6.1(c)).



     Mr. Borakove appealed his agency's determination to this Board.  He argued that, even

before his formal marriage, he and his fiancee had an informal marriage and that she was

already a virtual member of his immediate family at the time the home was purchased.  We

concluded, however, that the regulation, as written, did not cover the situation described by

the claimant and that the agency had, therefore, acted correctly.  Fred Borakove, GSBCA

15379-RELO, 01-1 BCA   31,409.  



     In initially arguing his claim before the Board for 100% reimbursement of closing

costs, Mr. Borakove presented an alternative argument which he had not presented previously

to his agency.  This alternative argument was based upon one of a limited number of

exceptions in the FTR to the general rule that title to the property in question must be in the

name of the employee alone or, in the case of joint names, in the name of the employee and

one or more members of his or her immediate family.  The exception relied upon by Mr.

Borakove in making his alternative argument was that which permits full reimbursement of

the closing costs if the other person's name is included on the title as an accommodation

party.  See FTR 302-6.1(c)(3)(iii).  



     We dismissed Mr. Borakove's claim, based upon this alternative argument, as

premature.  The claimant had not yet submitted to his agency a fully documented claim based

upon this theory and, as a result, the agency had never been given the opportunity to pass on

the adequacy of any such submission.  



     In the course of arguing his case before us, Mr. Borakove had also claimed that he

alone had made the payments on the home which he and his fiancee had occupied both before

and after their formal marriage.  This led us to suggest, on returning the case for further

consideration by the agency, that the parties also consider whether the claimant might be

entitled to full reimbursement of closing costs based upon another exception to the normal

rule, which also appears in the FTR.   Specifically, we had in mind the exception which

permits reimbursement of all closing costs even if the property is held jointly by the

employee and an individual who is not a member of the employee's immediate family when, 

among other things, it can be demonstrated to the agency's satisfaction that the employee

made all payments on the property.  See FTR 302-6.1(c)(3)(v). 



     Following our first decision on Mr. Borakove's claim, the agency did consider whether

the claimant was entitled to full reimbursement of the claimed closing costs based upon the

theory that his wife's name was on the title to his home only as an accommodation party or

based upon the theory that he, notwithstanding her name on the title, had, in fact, made all

payments on the property.  The agency ultimately concluded that full payment could not be

justified on either ground.  It is this determination which Mr. Borakove now asks us to

review.     



                            Discussion



     We turn first to the claimant's contention that his wife's name appears on the title to

his home solely as an accommodation party.  The FTR states:



     An accommodation party is an individual who signs an employee's financing

     agreement (e.g., a mortgage) to lend his/her name (i.e. credit) to the

     arrangement.  



FTR 302-6.1(c)(3)(iii).  The FTR also lists some specific conditions which must be met

before an individual whose name appears with that of the employee on the property title can

be considered to be an accommodation party.  One condition of particular interest to us in

this case is the requirement that the lender actually required that the signature of the

accommodation party be on the financing document.  Another condition is that the employee

be liable for payments under the financing arrangement and that the accommodation party

have no financial interest in the property unless the employee defaults on that financing

arrangement.  A third condition of importance here is that the employee provide acceptable

documentation of the accommodation.  Id,  



     In support of his claim that his fiancee, Ms. Sultan, was actually required to sign the

financing document as an accommodation party, Mr. Borakove has submitted two letters. 

The first is from the loan officer who actually assisted him with the loan to purchase the

house in which he and his fiancee planned to live.  She writes: 



          As the loan officer for Mr. Borakove and Ms. Sulten [sic], it was my

     responsibility to structure this loan so that the process and closing would occur

     quickly and simply for my customers.  After reviewing their financial situation,

     I determined that it would be in their best interest to add Ms. Sulten [sic] to the

     loan for income qualification, which would improve the debt to income ratio. 

     Since that was agreeable to both parties, we pursued that avenue for the

     approval process.  



          As a result, their loan was approved quickly, due to the added strength

     of using Ms. Sulten's [sic] income for approval purposes.  



     The second letter provided is from a loan officer associated with a different mortgage

firm.  She writes: 



          As requested, I have reviewed your previous application for a mortgage

     loan.  I've determined that, given the obligations that you had at the time, your

     ratios would have been beyond our guidelines if we considered your income

     alone.  Having a second Borrower was necessary for the approval.  



     Mr. Borakove readily admits that there are no documents that would, per se, limit Ms.

Sultan's financial interest in the property purchased prior to her formal marriage to him. 

From this we conclude that there is no documentation of the alleged accommodation itself. 

This lack of documentation is particularly troublesome when one reads the letter of the loan

officer who, by her own admission, was the "loan officer for Mr. Borakove and Ms. Sulten

[sic]," who considered both these individuals to be "my customers," and who assisted them

in obtaining approval of "their loan."  Neither does her letter specifically state that Ms.

Sultan's signature on the financing document was required as a condition to approval.  Rather

it strongly suggests instead that, by including her as an applicant for the loan, the application

was of course strengthened and thus expeditious approval assured.  From this it appears much

more likely that Ms. Sultan participated in the loan transaction simply as a co-borrower with

full expectation of becoming a co-owner of the property rather than as a formal

accommodation party. 



     The warranty deed and the deed of trust, both of which are included in the record, tend

to confirm that Mr. Borakove's fiancee figured in the purchase of the new home as a

co-borrower and co-owner rather than as an accommodation party.  The warranty deed

identifies both "Fred S. Borakove, a single person and Terri J. Sultan, a single person" as

together being the "Grantee," while the deed of trust identifies the same two parties as

together being the "Borrower."  



     Admittedly, the letter from the second loan officer indicates that the addition of Ms.

Sultan to the loan transaction as a co-borrower would have been necessary for purposes

beyond that of simply expediting approval for financing.  However, in the absence of any

documentation confirming the actual existence of an accommodation, the letter can be read

as indicating only that, without Ms. Sultan's assistance as a actual co-borrower and co-owner

it would have been impossible for Mr. Borakove to obtain his residence of choice.  Ms.

Sultan's  apparent willingness to support the transactions in this capacity is, of course, not to

be wondered at since, at the time, she and the claimant apparently considered themselves

already informally married and were in fact later formally married. 



     When the issue of Mr. Borakove's fiancee being an accommodation party was first

broached to the Board, the agency argued that, even though this issue had not been raised

previously at the agency level, we should rule that this basis for reimbursement was

obviously not available to the claimant.  In the opinion of the agency, Mr. Borakove's fiancee

could not qualify as an accommodation party because, as an accommodation party, she was

to have no beneficial interest in the property other than that to which she might accede in the

event Mr. Borakove should default on his financing arrangement.  We rejected this argument. 

We agreed that there is undoubtedly a beneficial interest to which a genuine accommodation

party has no right unless the actual purchaser defaults on the financing arrangement. 

However, that interest was not to be confused with the beneficial enjoyment of the premises

which an actual owner, on his or her volition, might choose to offer to an accommodation

party.  Neither did we see such a gratuitous benefit as being in conflict with the potential

right of an accommodation party to the premises in the event that the actual owner should

default on his financing agreement.   



     The claimant should not, however, understand our ruling that living with the claimant

did not necessarily disqualify his fiancee as an accommodation party as somehow relieving

him of his duty to demonstrate that, as an accommodation party, Ms. Sultan met the

regulatory requirement that she be free of any financial interest in the premises.  Our ruling

applied only to the benefit which Ms. Sultan allegedly derived from sharing Mr. Borakove's

home with him.  We simply held that this fact, in and of itself, did not necessarily disqualify

her from serving as an accommodation party.  In recommending that Mr. Borakove be given

an opportunity to provide the agency with acceptable documentation of the alleged

accommodation, we did not intend that he be excused from demonstrating that she was free

of any financial interest in the new home.  



     We, therefore, fully expected the claimant, in making his case to the agency that his

fiancee was in fact an accommodation party, to demonstrate, among other things, that she

was free of any financial interest in the property unless he should default on its financing. 

We agree with the agency that he has failed to demonstrate this.  In the absence of

convincing proof that there was in fact an accommodation, we find that the documentation

he has provided indicates rather that, as a co-owner of record of the property, Ms. Sultan,

from the time of purchase, has had an undisputed financial interest in the property. 



     The case made by Mr. Borakove for the theory that he alone made payments on the

house is equally unconvincing.  The agency is prepared to accept the fact that the down

payment on the purchase of the home, although made from a joint account, was derived

solely from Mr. Borakove's personal funds.  Where the agency contends that the claimant's

case fails, however, is in his apparent inability to demonstrate that, prior to his formal

marriage, he made all monthly mortgage payments from his own funds.  Mr. Borakove states

that initial monthly mortgage payments were made with funds from his own checking

account but that subsequent payments were made from a joint checking account with

co-mingled funds.  He argues, however, that this is not a pivotal issue because, at the time

he and his fiancee were cohabiting, they were informally married and, later, formally

married.  



     We disagree.  The FTR requirement is that the employee or one or more members of

his immediate family "made payments on the property."  See FTR 302-6.1(c)(3)(v)(C).  The

agency contends that, despite repeated requests to Mr. Borakove, he has failed to submit

financial documents proving that only he or members of his immediate family made

payments on the property.  There are, of course, two issues here which understandably are

of concern to the agency.  First is the question of whether the payments in question were

actually made by the claimant himself.  The second is whether this FTR requirement can be

considered met if some of these payments, although actually made by the claimant's fiancee

prior to their marriage, were nonetheless made with funds readily traceable to him.  



     Unfortunately, Mr. Borakove has provided nothing which would be responsive to

either of these two concerns.  He does not challenge the agency's statement that he has failed

to submit any documents proving that he or a family member made payments on the property. 

As to the issue of whether payments   by whomever made   were from his personal funds,

he simply states without any documentary support: "Suffice it to say that I had enough funds

in the accounts to make the mortgage payments without using Ms. Sultan's funds."  In the

absence of any documentary evidence relevant to these concerns, the agency cannot be

faulted for refusing to allow full reimbursement of closing costs based solely upon the bare

but unsubstantiated contention of Mr. Borakove that only he made payments on the property. 



     The agency's determination that Mr. Borakove's closing costs cannot be paid either

on the grounds that his fiancee was an accommodation party or that he alone made payments

on the property is affirmed.  The claim is denied.  





                                        __________________

                                        EDWIN B. NEILL

                                        Board Judge