Presentation on theme: "1 Real Estate Claims Guidance Your guide to completing the DD Form 1705 for the Sale and Purchase of Residence."— Presentation transcript:
1 Real Estate Claims Guidance Your guide to completing the DD Form 1705 for the Sale and Purchase of Residence
2 Helpful Tips A civilian employee making a Permanent Change of Duty Station Move may be authorized to claim for real estate reimbursement for the Sale or Purchase of their residence. Employees have up to two years to sell or buy their residence upon arrival at their new duty station. Note: not all expenses incurred in the sale/purchase are reimbursable! The real estate reimbursement claim for sale/purchase of a residence cannot be filed until after the closing and the seller/purchaser has incurred the expenses. JTR Vol. 2, Chapter 4 does not allow for an advance on real estate expenses. Although the form provides a column for sale expenses claimed at the old address and a column for purchase expenses claimed at the new duty station, this does not mean you must wait until both are accomplished before submitting your claim. To the contrary, it is well advised that you separate the sale and purchase claims in order to be paid on one while awaiting administrative processing on the other claim.
3 What do you need? Submit the completed DD 1705 (Reimbursement for Real Estate Sale and/or Purchase Closing Cost Expenses) and two (2) copies after expenses have been incurred and paid. The following should accompany the DD 1705: 1.DD Form , signed and dated. Do not fill in money amount until claim is approved by Legal Office. Do not write below the signature line. 2.Three (3) copies of travel orders, DD Form 1614, including amendments. 3.Three (3) copies of HUD Settlement Statement. This is the itemized list of charges for the sale or purchase of a residence and requires the signatures of both the buyers and the sellers. 4. Three (3) copies of the sale and/or purchase agreement with the signatures of both the buyers and the sellers. 5.Three (3) copies of receipts for any and all expenses claimed that were paid outside of closing for expenses in excess of $75. 6.Three (3) copies of the Deed. 7.If you made a prior claim for a sale or purchase (same residence) and a change or addition is required, be sure to submit the prior property settlement documents and approved claim. 8.Any additional substantiation for claimed expenses that are not listed on paperwork from your bank or real estate agent.
4 Additional Items You Will Need If this is a purchase, truth in lending statement, finance charge disclosure statement, and a loan closing statement If this is a sale, please submit mortgage documents, if you are claiming a pre-payment fee. Note: All claims should be filed through the local Air Force Civilian Personnel Flight (CPF). If your sale or purchase claim is outside of that area to which the claim is being filed, the claim will be coordinated to the closest AF CPF within the state that the property was sold or purchased for review.
5 Allowable Expenses – Purchase of Home The following expenses are typically reimbursable when reasonable in amount and customarily paid by the buyer in the location where the property is situated: FHA or VA fees for the loan application Loan origination fee (generally up to 1% of the loan amount) Credit report fee Mortgage and transfer taxes State revenue stamps Mortgage title insurance policy paid for by the purchaser for the protection of, and as required by, the lender (Please note: Normally, any title insurance purchased for the protection of the buyer is NOT reimbursable.) Expenses in connection with the construction of a residence that are comparable to the expenses incurred in purchasing a pre-existing residence One (1) lender’s appraisal fee Survey expenses Recording fees Document preparation fees Reasonable attorney’s fees for settlement/closing Expenses connected with environmental and property inspection fees when required
6 Non-Reimbursable Expenses – Purchase of Home The following items are generally NOT reimbursable: Owner’s title insurance policy, “record title” insurance policy, mortgage insurance or insurance against loss or damage of property, or any other optional insurance Tax service fee (charged to buyer to compute and prorate a tax obligation) Any interest on loans, points, mortgage discounts or rate buy-down fees Homeowner’s warranty Property taxes Operating or maintenance costs Fees for cashier’s checks Any fee, cost, charge or expense that is determined to be part of the finance charge or necessary for the extension of credit to the buyer Fees or payments associated with any home improvements VA fund fee Any expenses paid by the seller on behalf of the buyer Expenses resulting from the construction of a residence that would not be reimbursable when purchasing a pre-existing residence Legal fees that result from a sale that does not go to settlement or closing Any loss as a result of prices or market conditions at the old or new duty station
7 Allowable Expenses – Sale of Home The following expenses are typically reimbursable when reasonable in amount and are customarily paid by the seller in the locality where the property is situated: Broker’s fees or realtor commissions Advertising and selling expenses (newspaper advertisements, bulletin boards, multiple listing services, etc.) only if the residence is not listed with a real estate broker Cost for title search, preparing the abstract, and any legal fees associated with a title opinion/title insurance policy (when customarily paid by the seller) Cost of preparing conveyances and other instruments or contracts Notary fees and recording fees Cost of surveys and preparing drawings or plats when required for financing Inspections required by the lender Transfer taxes Reasonable attorney fees Mortgage prepayment charges
8 Completing DD Form 1705 – Page 1 Page 1 is the easy stuff – It’s all about you and your old or new residence Blocks 1- 4 – Your Information – Name, Address, SSN Blocks – Transfer/Move information – Locations and Dates Blocks Residence Information – Addresses, Dates and Amounts Blocks 16 and 17 are your certifications for either purchase or sale of residence – read, sign and date the appropriate blocks. Now on to Page 2 - this is where documentation and explanation is key. Reference lines are where amounts can be located on your Purchase or Sales Agreement – this will be very helpful in preparing Page 2.
9 Line 21 Line 21 Sales/Broker’s fees: Home Sales Only Includes fees for listing when not included in commission payment HUD Lines Completing Page 2 of DD 1705
10 Expenses Itemization Chart As you fill out a line on DD Form 1705 you must itemize each individual expense on the form titled “Expenses Itemization Chart” in Columns 1 and 2. Example: if the amount you filled in on Line 24 of the DD Form 1705 ($600) is the total of HUD Lines 1102 (Title Search) (i.e. $400) and 1109 (Lender’s Coverage) (i.e. $200) from your HUD form, you must do two entries (lines) on the expenses chart to itemize the total from Line 24 of the DD Form In this example your first entry on the Expenses Itemization Chart will list Line 24 for the DD 1705 line number and HUD Line 1102 for the HUD line number. The amount claimed will be $400. Your second entry on the Expenses Itemization Chart would list Line 24 for the DD 1705 line number and HUD Line 1109 for the HUD line number. The amount claimed will be $200. Failure to itemize expenses will result in your package being returned without action. Column 1 Column 2
11 Line 22 Line 22: Advertising Fees Only when you sell the home yourself. Sale without use of broker or agent. Need receipts Advertising and Brokerage fees can’t both be claimed. Not listed on closing statement
12 Line 23 Line 23: Appraisal Fee Sale Only Not Often Charged HUD Line 803
13 Line 24 Line 24: Legal and Related Costs Settlement/Closing Fee – HUD Line 1101 Abstract/Title Search – HUD Line 1102 Title Exam – HUD Line 1103 Title insurance Binder – HUD Line 1104 Document Preparation – HUD Line 1105 Deed/Mortgage Recording – HUD Line 1201 Survey – HUD Line 1301 Reminder: make sure you itemize each expense being claimed on the Expenses Itemization Form!
14 Line 25a Line 25a: Prepayment Charge Sale Only When seller is required to pay penalty when loan refinanced Separate receipt required
15 Line 25b Line 25b: Lender’s Appraisal Purchase Only Only when required by lender HUD Line 803
16 Line 25c Line 25c: FHA/VA Application Fee When required by lender Separate receipt required
17 Line 25d Line 25d: Certification Fee Structural Soundness/Physical Condition Lender’s Inspection Fees Only when required by lender or for new construction HUD Lines 805 and 1302.
18 Line 25e Line 25e: Credit Report Fee Only if required by Mortgage, Lender, FHA or VA. HUD Line 804
19 Line 25f Line 25f: Mortgage Title Policy Fee Amount for Mortgage or Lender’s Title Insurance Only (HUD Line 1109) Not for Owner’s Coverage (HUD Line 1110) If only HUD Line 1108 is filled in and HUD Line 1109 and 1110 are blank, you must get substantiation from lender for how much of HUD Line 1108 was coverage for the Lender or your package will be returned. Mortgage Insurance on Life of Borrower and/or Owner’s Title Insurance are NOT reimbursable. HUD Lines 1108, 1109, and 1110
20 Line 25g Line 25g: Escrow Agent's Fee Amount paid to escrow agent or other agent used to close real estate transaction HUD Line 1101
21 Line 25h Line 25h: Revenue Stamps City/Parish/State Tax Stamps Usually one or the other - rarely both HUD Lines 1202 and 1203
22 Line 25i Line 25i: Sales or Transfer Tax; Mortgage Tax Not often charged
23 Line 26 Line 26: Other Incidental Expenses Loan Origination Fee, etc. Remember to itemize on expenses itemization chart! Must be reasonable and customary If you are submitting a reimbursement for a sale, you must provide proof that each expense claimed is reasonable and customary for that area (i.e. a letter from a title company)