Condo Owners Say ‘Deal’ Was a Bust

When Sharon and Clayton Benson bought a condominium in Mountain Grove Villas in 1982, they never dreamed that the Sylmar development would be falling apart six years later.

What a deal, they thought: $1,000 down and a low-interest loan with a five-year balloon payment.

Yet earlier this year, several of their neighbors were turned down in attempts to refinance their loans. When the Bensons asked why, they discovered that even though property values were skyrocketing in the growing Sylmar area, their condominium was worth less than the $62,500 they paid for it.

It was the most sobering, but not the first, sign of decline.

Few Clues

The Bensons and owners of the other 80 condominiums said they had little indication of decay and poor workmanship a year after moving in: just a leak here, a creaky board there.

They weren’t too worried, they said, until another year passed and problems became more noticeable. Large concrete slabs surrounding the swimming pool began buckling, and steps along both sides of the complex began sinking. An overhang connecting two buildings pulled away from one of the structures, and exterior paneling warped so much that its nails sprang loose from the walls.

“I always think in an earthquake, we’re going to be doomed,” Sharon Benson said.

What may turn out to be the most insidious problem, said Joel B. Castro, an attorney representing the owners, initially seemed small. The condominiums are built on cinder-block foundations, through which owners said water seeps from sprinklers and rain. Now those waterlogged blocks are beginning to crumble.

“I really don’t see this place standing in two, three years,” said Mark Shelton, vice president of the condominium owners association. “With those cinder blocks disintegrating, there goes our foundations.”

Many of the owners question how the complex could have passed Los Angeles city inspection in the first place. But Robert Kline, principal city building inspector in Van Nuys, said that frequently problems do not arise until months after inspectors’ tours. He added that when he visited the complex a few weeks ago, “Physically it didn’t look like it was that bad.”

North Hollywood attorney Donald Wilson represents the partners who built the project--investor Josef S. Noble and general contractor Howard Bracker.

Wilson said that a $3-million-plus lawsuit the owners filed against his clients in San Fernando Superior Court was a “typical lawsuit that seems to be becoming more popular these days.” He said that during a recent field trip to the complex to look into the owners’ claims, he and the developers were “not able to see what they’re talking about.”

But Wilson said construction experts would do more analysis. He refused to comment further on the case.

Castro said reports by architects he hired to inspect the project confirm the owners’ complaints.

“I haven’t seen too many associations that have the number and scope of problems they have at Mountain Grove,” Castro said.

Wilson estimated that the suit could drag on for at least three more years.

Castro said he plans to try to move the case onto a faster judicial track, which could get it into a courtroom by the end of the year.

Subcontractors Blamed

Cross-complaints filed by the developers indicate that if any defects are found, they intend to blame subcontractors for “negligence in planning, designing, engineering, constructing, landscaping and/or developing the project so as to cause material and substantial latent defects.”

Many of the subcontractors have responded with their own cross-complaints, blaming the developers. One, Holt Electric, said it acted only as an “agent, servant and employee” of the developer.

Some owners fear that even if they win the suit, they will not get enough money to make all necessary repairs. Andy Schaeffer is among those who have opted to sell rather than gamble on winning the suit.

“I’ve just decided to put mine up on the block, see if I can get something for it,” Schaeffer said. “The association can’t paint the outsides of these things. They’ll never have that kind of money in their account here. And the roof was bad at the beginning, where it should be replaced normally in 10 years. There is no way this association is ever going to be able to repair any of this.”

Meanwhile, condominium association representatives feel stuck. Even though the association receives a fee of $82.50 a month from each owner, there is not enough money to make needed repairs, Shelton said. In fact, he said, the association is broke because it tried to make a dent in the problems by replacing a swimming pool filter and exterior lighting. He said both were inadequate for such a large project.

Association Treasurer Richard Yanez said $40,000 in fees still is owed by owners who became so disgusted with the situation that they stopped paying. He said several of the original residents bailed out when the five-year balloon payment came due, leaving the units to be repossessed by the lending institutions.

“The five-year balloons exploded and everybody took off,” said Yanez, who bought a repossessed unit earlier this year. “You’ve got water coming through your walls, you get depressed and just leave.

Conflicting Stories

The continuing lawsuit and complications don’t jibe with the comforting words more recent buyers said they received from their real estate agents.

“They told us the lawsuit was right on the verge of being settled, that all these repairs would be made,” said Michelle Harmon, who bought a repossessed condominium last July.

Instead, Harmon said she has had to replace soggy drywall and rotted floors in the bathrooms. When she started putting up wallpaper, she said she noticed that her walls were bowed.

“Recently the floorboards have gotten creaky,” she said.

Yanez said he only learned of the pending lawsuit during the final stage of escrow, but he decided to buy anyway. At $78,500 for a two-bedroom townhouse, he said he figured he could hardly go wrong. He is counting on winning the suit.

He laughs as he rereads his purchase papers, which say a “sharp, luxury townhouse with pool-side location will delight your buyer.”

First Impressions

Still, the allegations of misleading advertising by recent buyers sound minor next to stories told by the earliest residents.

The Bensons said the developers gave them a tour of the site, pointing out a graded field where the second phase of the condominium project--complete with added recreational amenities--would be built.

“They told us, ‘This is phase one and that’s phase two,”’ Sharon Benson said, gesturing toward the new construction. “You clicked, ‘Good investment.’ A playground for your children, a ‘rec’ place, a bigger pool.”

“There was no reason not to believe it,” Clayton Benson said.

Instead, developers Noble and Bracker sold the second phase to another developer who has fenced it off from Mountain Grove Villas. Easement and subdivision records in building inspector Kline’s office show that they planned as early as 1980 to split the property.

Owners’ Claims

Owners say the new developer has sliced through their swimming pool plumbing while building his pool, ripped out their mailboxes to make way for his driveway and has made holes in a wall to let his property drain down their driveway.

Attorney Castro said he believes work on the second development added to the pre-existing drainage and sinking problems.

The new developer, Murray Ozer, and his company’s vice-president, Leo Aceves, strongly denied the allegations against them.

But Aceves and Ozer agreed that Mountain Grove Villas was poorly constructed.

“The whole job is going downhill there,” Aceves said. “It’s caving in.”