W. Hollywood Condo Owners Left in Limbo

Howard Shatsky knew that he was in trouble last month, when, after several attempts, he couldn’t enlist a real estate broker to help him sell his West Hollywood condominium.

“Nobody wants to touch it,” said Shatsky, who with his wife, Michelle, bought their modest, one-bedroom condo a year ago after scraping together the $9,500 down payment.

Now, they want to sell it, but as the result of a state Court of Appeal ruling that upheld a West Hollywood law prohibiting the conversion of apartment buildings to condominiums without the city’s approval, they and scores of other condo owners are left in limbo.

And, convinced that they’ve become pawns in a legal tug of war between the city and the developers who sold the units, some condo owners have accused city officials of dragging their feet in finding a solution to help them.

‘A Lot of Talk’

“We’ve heard a lot of talk, but that’s all it is, talk,” said condo owner Landon Baretto, who angrily got up and walked out recently while two members of the City Council met with his condominium association.

The ruling, issued in July by the Court of Appeal in Los Angeles, directed a lower court to issue a restraining order barring future condominium conversions that violate a ban imposed by West Hollywood officials in 1984.

But the three-judge panel left unresolved the outcome of conversions that occurred in violation of the ban, saying West Hollywood officials are best equipped to deal with the “variety of problems” the conversions pose.

City officials have interpreted the ruling as giving them control over what happens to 26 buildings with about 600 units, at least 300 of which have been sold to individuals whose property rights now appear to be under a cloud.

West Hollywood officials insist that they are not interested in penalizing individual condo owners, saying that they want to bring to account the developers who sold the units in violation of the ban.

Settlements Close

Mayor Abbe Land said last week that the city is near to settling with three of the estimated 20 developers, which may soon clear up problems with three of the buildings. She declined to identify the buildings or say how many units are involved.

“When we get these (three) negotiations finalized, we hope that it will serve as an incentive for a lot of the other developers to sit down and talk with us,” the mayor said.

The ban on conversions began as a moratorium imposed by the City Council the day West Hollywood became a city in 1984. The council followed that up with an ordinance in 1986 that prohibited the owners of apartment buildings from converting rental units without first obtaining conditional-use permits from the city.

After the developers who owned the buildings went ahead with the conversions, citing permission from the county before cityhood, the city went to court to halt the sales. But on three occasions, Los Angeles Superior Court judges ruled in favor of the building owners.

City Atty. Michael Jenkins said West Hollywood is “bending over backward” in its talks with the developers and is not seeking to levy fines against them.

Contribute Money

Instead, he said, they are being asked to contribute money to provide affordable housing in West Hollywood that is roughly equivalent to the so-called “in-lieu” fees charged developers as part of any new project.

Lawyers for various owners of the buildings who sold units as condos have appealed the court decision to the state Supreme Court, which is expected to decide by November whether to hear the matter.

Some condo owners, after having met with city officials, are upset that the city has not simply exempted them from the condo conversion law and thus dispelled the uncertainty surrounding their property titles.

But city officials and several lawyers familiar with the dispute say that to do so would cause the city to lose any legal leverage it has in encouraging the developers to come to terms.

“If (city officials) say, ‘OK, we recognize that these are condominiums and not apartments,’ then what basis does the city have to go after the developers in court, if need be?” real estate lawyer Phillip Chronis said.

“At this point, if they let the little guys off the hook, then the big guys get off the hook with them,” he said.

Grown Impatient

That is no consolation to Shatsky and other condo owners who have grown impatient in the two months since the appellate court decision.

“Nobody’s going to buy a condo when you’ve got a city claiming, in effect, that if you do, you won’t really own it, because it was illegally converted,” Shatsky said.

He and his wife were counting on being able to sell the condo to repay an individual loan they obtained recently to help them buy a house in Los Angeles, Shatsky said.

And, to add insult to injury, as far as they are concerned, under West Hollywood’s tough rent control law, the couple cannot charge enough rent for their condo to cover the mortgage payment, real estate taxes and condo association fees.

“It wouldn’t be as bad if there was a sense that the city was concerned about us,” he said. “But here we are, trying to be patient, and who’s doing anything for us?”

Not everyone has been willing to wait.

Filed Suit Against City

Last month, Stephen and Allison Sapunor, who bought one of the affected condos less than a week after the court ruling, filed suit against the city and the seller, as well as the title company, escrow company and real estate broker involved in the sale, claiming that they should have been warned about any problems that might affect the title.

“To say that my clients, and, I’m sure, others as well, are innocent victims is an understatement,” said Ronald M. Greenberg, the couple’s lawyer. The suit seeks to have the couple’s condo excluded from the list of properties the city says were illegally converted.

Meanwhile, a renters’ rights activist has criticized city officials for ignoring the plight of tenants in the former apartment buildings who were evicted when the apartments were converted to condominiums.

“We sympathize with condo buyers and don’t wish them any more trauma, but the ones who got the short end of the stick were those tenants who got evicted needlessly,” said Larry Gross, executive director of the Coalition for Economic Survival.

He said the city’s negotiations with developers should “include some kind of remedy for (the tenants), whether it is in the form of a financial settlement or assisting them to obtain affordable housing.”