Section 7: Incidental Expenses - 90-Day Owner-Occupants

Overview

Incidental expenses are costs of services incurred by a displacee that are incidental to the purchase of a replacement residential property. TxDOT reimbursements for these expenses are limited to costs necessary, reasonable, and customarily paid by
homebuyers
 in the subject project area.
TxDOT reimbursement of incidental costs shall not be a factor in advising a displacee about services that he/she should obtain in purchasing a replacement residential property. Incidental expense payments
should not
 include costs for services that are normally paid by
sellers
 of residential properties, or provided by title companies or closing agents as part of other services. Charges made by title companies and closing agents for the sole purpose of seeking TxDOT reimbursement are not eligible for payment. Unconventional expenses incurred when purchasing a replacement dwelling that is not located in the United States are not eligible for reimbursement.
Eligible incidental expenses normally paid by buyers of residential properties may include the following.

Cash Purchase, No Mortgage on Displacement Property

When there is no mortgage on the displacement property, the incidental expenses may include recording fees, appraisal cost, reasonable cost of replacement housing inspection, owner’s title policy, and in special situations, a closing agent fee. If the displacement agency determines that the displacee needs to obtain a loan to relocate (as in the case of an owner-occupant with a partial interest who must obtain a loan to purchase replacement property), then the cost of obtaining the loan could be considered necessary and would be an eligible, incidental expense.

Purchases with Mortgage Financing

When there is a valid lien on the displacement property for at least
180 days
 immediately preceding the initiation of negotiations, reasonable necessary costs incurred in obtaining mortgage financing to acquire replacement property may be eligible for TxDOT reimbursement. Any additional cost in securing a larger mortgage on the replacement property than existed on the displacement property is not considered a necessary expense. The following are eligible incidental expenses normally incurred by buyers of residential properties with mortgage financing:
  • legal, closing, and related costs, including costs incurred for title search, preparing conveyance instruments, notary fees, preparing surveys and plats and recording fees;
  • lender, FHA and VA application and appraisal fees;
  • loan origination or assumption fees and purchaser’s discount points that do not represent prepaid interest;
  • professional home inspection, certification of structural soundness and termite inspection;
  • credit report;
  • owner’s and mortgagee’s evidence of title (e.g., title insurance not to exceed costs for a comparable replacement dwelling);
  • escrow agent’s fee;
  • state revenue or documentary stamps, sales or transfer taxes (not to exceed costs for a comparable replacement dwelling); and
  • other costs that TxDOT determines incidental to the purchase and normally paid by the buyer.