Part 2 - Main Benefits
Chapter 8. Sale and Purchase of a Residence

8.01 General

This chapter sets out the entitlements related to the disposal and acquisition of a residence in Canada, and is subject to certain limitations and enhancements provided for in Part 3 of this directive.

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Section 8.1 Commonalities


8.1.01 Introduction

This section contains the administrative and benefit commonalities for both sale and purchase of a residence.

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8.1.02 Additional entitlements

In addition to the benefits outlined in this chapter, a member may be entitled to be reimbursed under CAFRD 3.4.04 (Professional cleaning).

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8.1.03 No Entitlement

Except where authorized under CAFRD 14.5.14 (Purchase of replacement residence at an IPR outside Canada), a member is not entitled to any of the benefits contained in this chapter in respect of a sale or purchase of a residence that is outside of Canada.

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8.1.04 Time limits

  1. A member is entitled to claim benefits in this chapter provided that the closing date of the sale or purchase transaction is no more than one year before the earlier of, or two years after the later of:
    1. the COS date; or
    2. the load date for the shipment of HG&E to the new place of duty.
  2. When the member is tasked to perform duty outside the geographical boundaries of the new permanent workplace for a period of 30 days or more that commences before the time limit expires, the time limit shall be extended by the equivalent number of days if the contracted relocation service provider receives the local authorities’ confirmation:
    1. of the number of days tasked; and
    2. that there is no intent to post the member out of the current place of duty during the one year following the expected date of purchase.

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8.1.05 Arm’s length transactions

Any reimbursement under this chapter requires that the associated transaction be an arm’s length transaction.

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8.1.06 Limitation – lot size

  1. Reimbursement of expenses under this chapter is limited to a lot size of:
    1. 1.25 acres (½ hectare); or
    2. up to 4 acres (1.62 hectares) where the larger lot size is required by zoning laws and city bylaws.
  2. For a larger lot size, a member is entitled to reimbursement only for that portion of costs which would have been reimbursed within the above limitations.
  3. The above limitations do not apply to CAFRD 8.2.04 (Appraisal fees).

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8.1.07 Income-producing property

  1. A member who sells or purchases an income-producing property such as a duplex, triplex, multiple-unit building, or a small store or confectionery shall only be reimbursed expenses for that part of the building used as their principal residence.
  2. This limitation does not apply to CAFRD 8.2.04 (Appraisal fees).

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8.1.08 Co-ownership

  1. Where the member co-owns the residence with a person or persons who are not a dependant of the member, reimbursement shall be for expenses proportional to the member’s legal share based on the percentage of ownership as stipulated in the deed or similar legal document.
  2. This limitation does not apply to CAFRD 8.2.04 (Appraisal fees).
  3. Where the residence is or was co-owned by the member’s spouse, common-law partner or dependant, reimbursement shall be at 100%.

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8.1.09 Attending Fees and Power of Attorney

  1. When there is a requirement for a member to be present for the sale or purchase of a residence and for service reasons the member is unable to attend, the member is entitled to be reimbursed from the Core Account for:
    1. costs to courier documents between legal firms;
    2. costs related to a Power of Attorney; and
    3. mandatory attending fees charged by a lawyer or notary as per provincial requirements.
  2. The local authority must certify that for service reasons the member could not attend the closing of the purchase or sale transaction.

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Section 8.2 Sale of principal residence


8.2.01 Introduction

This section sets out the entitlements established to assist in the disposal of a principal residence in Canada.

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8.2.02 Entitlement – Occupancy requirements

A member is entitled to the benefits contained in the section in respect of a principal residence if the member or the member’s dependants occupied the residence immediately prior to:

  1. the sale of the principal residence;
  2. the move of HG&E at public expense from that principal residence;
  3. the notification of the posting; or
  4. the notification of the DCBA authority to move HG&E for a period of Class “B” or “C” Reserve service.

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8.2.03 Real Estate Incentive (REI)

  1. This incentive is not payable for any moves under Section 11.2 (Unaccompanied Moves) or under Chapter 14 (Moves to Intended Place of Residence (IPR)).
  2. When a member elects to retain their principal residence, the member is entitled to receive from the Core Account, 80% of the real estate commission that would have been payable based on the appraised value of the residence, up to a maximum of $12,000 if all the following conditions are satisfied:
    1. the member’s principal residence is appraised under CAFRD 8.2.04;
    2. the member has not received any Temporary Dual Residence Assistance (TDRA) benefits under CAFRD 8.2.07;
    3. the decision to elect this incentive is made within 15 working days after receipt of that appraisal; and
    4. the member signs a waiver foregoing any future reimbursement of real estate fees, legal fees and other related disposal costs under this section for the residence.
  3. The election to receive this incentive is irrevocable.
  4. Should the member choose to re-occupy the residence on a subsequent posting, the residence would be designated as a principal residence for any further relocation that might occur after re-occupancy.

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8.2.04 Appraisal fees

  1. An appraisal is conducted in order to:
    1. help establish market value;
    2. facilitate disposal; and
    3. establish a home value for funding purposes.
  2. A member is entitled to be reimbursed for appraisal fees not exceeding the pre-negotiated corporate rates from:
    1. the Core Account for,
      1. one professional appraisal, and
      2. a second appraisal if specifically requested by the CAF or by the contracted relocation service provider; and
    2. the Custom Account for any additional appraisals requested by the member.
  3. Appraisal fees are payable for the entire property. They are not reduced in the case of a property that exceeds the lot size (CAFRD 8.1.06), or is an income-producing (CAFRD 8.1.07) or a co-owned (CAFRD 8.1.08) property.
  4. When more than one appraisal is obtained under this subsection and the appraised values are different:
    1. the Custom funding shall be calculated using the home value determined by the initial appraisal; and
    2. for all other purposes, the most recent appraised value shall be used.

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8.2.05 Marketing incentives

  1. When market conditions warrant, a member may use marketing incentives to attract potential buyers.
  2. A member is entitled to be reimbursed from the Custom Account for actual and reasonable marketing incentives if all the following conditions are satisfied:
    1. the real estate agent recommends using marketing incentives to sell the property; and
    2. those marketing incentives are clearly identified on the original or amended Property Listing and on the Offer to Purchase documents.
  3. Subject to paragraph (4), a marketing incentive may be anything that is deemed in writing by the member’s real estate agent to be both appropriate and consistent with common practices in the real estate industry. A marketing incentive may be, but is not limited to:
    1. a closing bonus, decorating bonus, upgrading bonus, or other type of bonus payable to the purchaser on closing;
    2. the payment of a maximum of one year of property taxes or condominium fees for that residence; or
    3. an interest buy-down benefit.
  4. The following are not acceptable marketing incentives:
    1. anything that is in or at the residence (e.g. appliances or fuel oil);
    2. the demolition, renovation, restoration, construction, maintenance or repair of anything normally considered maintenance or upkeep that a prudent homeowner would address;
    3. any bonus or incentive to a real estate agent; and
    4. any bonus or incentive instigated at the offer stage as a negotiation tool.

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8.2.06 Home inspections

  1. When it is a condition necessary for the sale of the property, a member is entitled to be reimbursed actual and reasonable expenses from the Core Account – not exceeding the applicable pre-negotiated corporate rates – for a:
    1. building/structural inspection;
    2. heating, ventilation and air conditioning (HVAC) system inspection;
    3. pyrite, radon, wood basement and termite inspection(s);
    4. well and septic system inspection(s); and
    5. Wood Energy Technology Transfer (WETT) inspection.
  2. Only one inspection of each type will be reimbursed.

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8.2.07 Temporary Dual Residence Assistance (TDRA)

  1. A member is responsible for the expenses associated with one residence. When it is necessary to maintain two residences at the same time, actual and reasonable expenses for one residence may be reimbursed.
  2. Subject to paragraphs (5) and (6), a member is entitled to claim the following TDRA expenses for the former residence provided it remains unoccupied and actively marketed:
    1. interest charges for any mortgage on that residence;
    2. property and school taxes;
    3. utilities, such as electricity, heating, water/sewage, alarm monitoring;
    4. property maintenance costs such as lawn cutting, snow removal, and other minor maintaining of the property – but excluding repair, replacement, painting, or driveway resurfacing costs;
    5. condo fees for the related property maintenance activities as at subparagraph (d), where the receipt or statement clearly identifies the breakdown of the specific costs;
    6. house insurance including additional insurance costs for an unoccupied residence; and
    7. rental of a mobile home pad.
  3. TDRA ceases on the day that the sale of the residence is finalized.
  4. TDRA is reimbursed from:
    1. the Core Account for six months of expenses; and
    2. the Custom Account for any additional months of expenses.
  5. A member may receive either TDRA or the Real Estate Incentive (REI) at CAFRD 8.2.03, but not both.
  6. A member who is posted outside of Canada is not entitled to TDRA for any days for which the member has been reimbursed under CBI 10.5.11 (Waiver of Rent Share).

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8.2.08 Return trip to finalize sale

  1. A member is entitled to claim expenses in accordance with paragraph (2) to return to the previous place of duty to finalize the sale if all the following conditions are satisfied:
    1. the member qualified for TDRA;
    2. the member subsequently sold the former residence;
    3. the sale could not be completed through a power of attorney or by the courier of documents/materials between legal firms;
    4. the member clearly demonstrates that all other avenues were exhausted; and
    5. in cases where both the member and the member’s spouse travel, the member clearly demonstrates that there was a legal requirement (e.g. a letter from the lawyer) for both to be personally present to finalize the sale.
  2. The following shall be reimbursed from the Core Account for the member, and if subparagraph (1)(e) applies the member’s spouse:
    1. up to two days travelling expenses as if travel was for a DIT;
    2. one night lodging; and
    3. transportation by the most economical means (commercial air travel must be arranged by the contracted relocation service provider).

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8.2.09 Real estate commission

A member is entitled to be reimbursed from the Core Account for the real estate commission, not to exceed the pre-negotiated corporate rates.

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8.2.10 Private sales

  1. A member who sells their principal residence privately is entitled to be reimbursed from the Core Account for actual and reasonable expenses related to the sale.
  2. Reimbursement shall not exceed the real estate commission that would have been payable under CAFRD 8.2.09 had the residence been sold by a licensed real estate agent.

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8.2.11 Legal fees and disbursements

A member is entitled to be reimbursed for legal fees and disbursements incurred to complete the sale of a principal residence as follows:

  1. from the Core Account:
    1. land survey costs, if the member’s lawyer or notary certifies that
      1. the last survey is more than five years old,
      2. there have been observable changes to the lot since the last survey, or
      3. the seller is required by law to provide a survey;
    1. charges such as administrative fees and mortgage disbursement fees levied by a lender for the disposal of one mortgage on the property;
    2. legal fees necessarily incurred as the result of the deed transfer in the applicable land titles system; and
    3. municipal fees associated with municipal name change for tax rolls; and
  2. from the Custom Account for charges such as administrative fees and mortgage disbursement fees levied by a lender for the disposal of a second mortgage on the property.

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8.2.12 Mortgage early repayment penalties (MERP)

  1. A member who is required to pay an MERP in relation to the discharge of one or more mortgages held against the principal residence at the time of its sale, is entitled to be reimbursed the amount of the MERP incurred if:
    1. the terms of the mortgage or mortgages require MERP to be paid; and
    2. at the new place of duty the member either
      1. does not purchase a replacement residence, or
      2. purchases a replacement residence and the transfer of the discharged mortgage to that residence was not permitted (i.e. the mortgage could not be ported).
  2. MERP is funded from:
    1. the Core Account for the sum of all penalties including all related administrative fees and taxes not to exceed the equivalent of three months of mortgage interest or $5,000, whichever is less; and
    2. the Custom Account for the sum of all penalties including all related administrative fees and taxes not to exceed the equivalent of six months of mortgage interest minus the amount reimbursed under subparagraph (a).

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8.2.13 Home Equity Assistance (HEA)

  1. A member is entitled to be assisted for any financial loss incurred in relation to the sale of their principal residence if the sale price is less than the purchase price paid by the member.
  2. Despite the definition of purchase price in Section 1.4, in relation to a principal residence that was a new home construction, the purchase price is the sum of the costs:
    1. identified in the Building Agreement; and
    2. incurred during the first year of occupancy of the residence for initial landscaping if those costs were not identified in the Building Agreement.
  3. The reimbursable amount is equivalent to the difference between the original purchase price and the sale price, minus any reduction in the sale price that is identified in the agreement of purchase or sale and attributable to anything in the principal residence that required repair or replacement.
  4. The reimbursable amount is funded:
    1. from the Core Account for 80% of the reimbursable amount or $30,000, whichever is less; and
    2. from the Custom Account for any remaining reimbursable amount not reimbursed under subparagraph (a).

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8.2.14 HEA – Taxation

HEA reimbursements may have income tax implications. A member who receives this benefit should confirm the taxation rules applicable to their circumstances.

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Section 8.3 Purchase of replacement residence


8.3.01 Introduction

  1. This section sets out the entitlements established to assist in the acquisition of a replacement residence at the new place of duty in Canada.
  2. When selecting a replacement residence, a member must get gaining CO approval if the member wishes to reside outside of the geographical boundaries of the new permanent workplace (see Section 2.6).

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8.3.02 Eligibility

  1. A member is entitled to the benefits outlined in this section if all of the following conditions are met:
    1. the member is posted for more than one year;
    2. the member purchases within the geographical boundaries of the new permanent workplace unless a move to a location outside the geographical boundaries has been approved under Section 2.6; and
    3. the member does not re-occupy their owned residence at the new place of duty.
  2. For the purposes of subparagraph (1)(a), a member is deemed to be posted for more than one year in cases where the initial posting is less than one year and either:
    1. the appropriate posting authority provides advance confirmation that the member should remain at the same place of duty immediately following the original posting for a further period of one year or more, or
    2. the member is subsequently posted to another permanent workplace within 40 km of their new permanent workplace, for a further period of one year or more.

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8.3.03 Purchase after move

  1. A member who originally moved HG&E into rental accommodation at the new location and subsequently purchases a residence within the established time limits remains entitled to the benefits in this section.
  2. Unless an exception at CAFRD 7.07 (Purchase of a replacement residence) applies, the sum of the reimbursements under this section shall be reduced by the sum of the reimbursements previously made under CAFRD 7.04 (Rent in advance of move) and CAFRD 7.05 (Rental finding fees).
  3. There is no entitlement to be reimbursed any other expenses in respect of the move from the rented residence to the purchased residence.

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8.3.04 New residence construction

  1. A member who contracts the construction of a new residence or purchases a newly-built residence is entitled to the same benefits under this section as if a resale home were purchased. However, all costs identified in the building agreement are deemed as part of the original purchase price and are not to be reimbursed separately.
  2. Sales taxes such as the goods and services tax, the provincial sales tax and/or the harmonized sales tax paid for a new residence are not reimbursable.

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8.3.05 Interest on a short term loan

  1. A member is entitled to be reimbursed from the Core Account for a maximum of two years interest on a short-term personal loan or a personal line of credit obtained solely to pay the minimum deposit on the purchase of a replacement residence or a new residence construction at the new place of duty.
  2. The required minimum deposit amount must be in accordance with the offer to purchase and shall not exceed the minimum amount required by the local market.
  3. For a new home construction, when the building agreement describes a payment schedule or advance payments, the interest on those payments is not reimbursable.

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8.3.06 Home inspections

  1. Costs for inspections on each residence where an offer to purchase is made (including new homes and resale homes under warranty) shall be reimbursed from the Core Account as follows:
    1. the first building/structural inspection;
    2. one HVAC system inspection;
    3. one well, water potability, and septic system inspection (including the pumping when required for the inspection); and
    4. one follow-up termite, radon, wood basement and pyrite inspection, when recommended in writing by the building inspector.
  2. The following may be reimbursed from the Custom Account:
    1. any subsequent inspection of any type listed at paragraph (1) on the same residence; and
    2. any other types of inspections.

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8.3.07 Bridge financing and lines of credit

  1. A member is entitled to be reimbursed the costs associated with obtaining a short-term bridge loan and/or a line of credit to replace the proceeds from the sale of the former residence that are not yet available to be transferred to the replacement residence.
  2. Subject to the limitations at paragraph (3), the following costs are reimbursable:
    1. interest costs; and
    2. the associated administration fees charged by the financial institution.
  3. This benefit is payable only:
    1. for the duration that the proceeds from the sale are unavailable; and
    2. on that portion of the short-term financing that is lesser than or equal to the amount of the proceeds from the sale of the former residence.
  4. For the purposes of subparagraph (3)(b), the amount of the proceeds from a residence that is not yet subject to an accepted offer of purchase is calculated using the appraised value.
  5. This benefit is payable from:
    1. the Core Account, when the closing date of the replacement residence is after the closing date of the sold residence; and
    2. the Custom Account in any other case.

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8.3.08 Second mortgage

  1. This benefit is not payable while in receipt of a benefit under CAFRD 8.2.07 (TDRA) or CAFRD 8.3.11 (RTDRA).
  2. When a bridge financing loan cannot be obtained because the principal residence has not sold, and it remains actively marketed and unoccupied, a member is entitled to be reimbursed from the Custom Account for interest, legal and administrative costs for:
    1. a second mortgage; or
    2. a HELOC used as a second mortgage.

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8.3.09 Legal fees and disbursements

  1. A member is entitled to be reimbursed from the Core Account for the following legal fees and disbursements related to the purchase of a replacement residence:
    1. sheriff’s fees;
    2. land transfer tax/welcome tax;
    3. name change fee when transferring ownership from builder to purchaser;
    4. deed transfer charges;
    5. survey costs or Title Insurance premium (both cannot be claimed unless they are deemed necessary to obtain clear title);
    6. certificate of execution;
    7. appraisal and water test fees incurred at the request of the lender to obtain a first or second mortgage;
    8. legal fees incurred as a result of deed transfer in the applicable land titles system; and
    9. fees associated with municipal name change for tax rolls.
  2. When a purchase transaction fails based on the legal conditions of the purchase (e.g., home inspection, financing, etc), any of the above expenses incurred remain reimbursable for the failed purchase and for a subsequent successful purchase.

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8.3.10 Mortgage Default Insurance (MDI)

  1. A member who is required to pay a mortgage default insurance premium in relation to the purchase of their replacement residence, is entitled to receive an amount equal to the assessed insurance premium and to be reimbursed for any administrative fees incurred in relation to the policy of insurance.
  2. These amounts will be paid from the Core Account when:
    1. the member sells their principal residence in relation to their current posting, and they use 100% of the equity from the sale for the purchase of their new residence; or
    2. the member sold their principal residence before a posting to a new place of duty where they were prohibited from purchasing a residence, and in relation to the current posting, they use 100% of the equity from that sale for the purchase of their new residence, if this posting immediately follows the posting in respect of which they were prohibited from purchasing a residence.
  3. These amounts will be paid from the Custom Account:
    1. for either of the conditions under the Core benefit when they use less than 100% of the equity from the sale for the purchase of their new residence, but only when a MDI premium would have been required had 100% of the equity had been used;
    2. when on the date that the member finalizes the purchase of their new residence, their current principal residence has not been sold, and
      1. it is being actively marketed, or
      2. it is subject to a valid agreement of purchase and sale, and the sale will be finalised at a later date;
    3. when the member is renting their current residence, and they
      1. are not eligible to receive benefits under subparagraph (2)(b), or
      2. have not received the Real Estate Incentive in relation to the posting from their last principal residence; or
    4. when the member is a first-time home buyer.
  4. MDI may be paid by the member as a single lump-sum, or added to the mortgage and amortized over the life of the mortgage. Regardless of which means the member elects to pay the MDI, the claimable amount remains the same and is not adjusted for additional mortgage interest.

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8.3.11 Reverse TDRA (RTDRA)

  1. A member is responsible for the expenses associated with one residence. When it is necessary to maintain two residences at the same time, actual and reasonable expenses for one residence may be reimbursed.
  2. When a member takes possession of a replacement residence prior to the move of their HG&E from their current residence, the following RTDRA expenses may be claimed for the replacement residence:
    1. interest charges for any mortgage on that residence;
    2. property and school taxes;
    3. utilities, such as electricity, heating, water/sewage, alarm monitoring;
    4. property maintenance costs such as lawn cutting, snow removal, and other minor maintaining of the property – but excluding repair, replacement, painting, or driveway resurfacing costs;
    5. condo fees for the related property maintenance activities as at subparagraph (d), where the receipt or statement clearly identifies the breakdown of the specific costs;
    6. house insurance including additional insurance costs for an unoccupied residence; and
    7. rental of a mobile home pad.
  3. RTDRA ceases on the earlier of:
    1. the day that the HG&E is delivered to the new residence; or
    2. the day that the sale of the former principal residence is finalized.
  4. RTDRA is reimbursed from:
    1. the Core Account for one month of expenses; and
    2. the Custom Account for any additional months of expenses.

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8.3.12 Mortgage interest differential

When the interest rate on the new mortgage is higher than the one discharged for the sold residence, a member is entitled to be reimbursed from the Core Account for the interest differential, to a maximum of $5,000, calculated using the formula:

((AB) ÷ 100) × (C ÷ 12) × D

where

A is the interest rate on the first day of the new mortgage,

B is the interest rate on the last day of the discharged mortgage,

C is the number of months remaining on the discharged mortgage, and

D is the lesser of

  1. the remaining principal on the discharged mortgage; and
  2. the principal on the new mortgage.

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8.3.13 Home renovations for the disabled

  1. This subsection applies only in relation to an expense that is not reimbursable under CBI 211.01 (Home Modifications Benefit) for an ill or injured member.
  2. A member who is disabled, or has a dependant who is disabled, and requires special modifications on the replacement residence to allow proper access/use is entitled to be reimbursed from the Custom Account for the actual and reasonable expenses for those disability-related modifications.

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