Newport Beach : Court OKs Arbitration in Leasehold Dispute

Arbitration of an ongoing rent dispute between Newport Beach leaseholders and the owner of the land their houses sit on was assured earlier this week when a state appeals court denied a request to overturn a lower court ruling compelling a negotiated settlement.

The 4th District Court of Appeal denied the request, filed last month by attorneys representing 180 residents of Newport Shores. The leaseholders sought to overturn an April 3 ruling by Superior Court Judge Judith Ryan ordering that the homeowners’ association and Signal Landmark Inc., the Irvine firm that owns the property, to provide arbitrators to end a rent dispute.

The dispute stems from the original lease agreements, written in 1959. According to those agreements, the leaseholders were required to pay Signal Landmark yearly rent in the amount of 6% of the market value of the property, with a rent adjustment after 25 years.

The disagreement between the company and the leaseholders hinges on how the individual lots should be appraised. The renters believe that the increase should be based on the value of the lots before improvements, while Signal maintains that the property should be appraised at current market value.

Under the arbitration arrangement, the Newport Shores Community Assn. and Signal Landmark each selected single arbitrators. The two will in turn pick a third arbitrator to act as a tie breaker.

Lawyers for both sides say they hope to begin the arbitration process soon, possibly by early June.