In a decision that could affect hundreds of condominium owners, a state appeals court has upheld a West Hollywood law prohibiting the conversion of apartment buildings to condominiums without the city's approval.
The Court of Appeal directed a lower court to issue a restraining order barring future condominium conversions that violate a ban that has been in effect since West Hollywood became a city in 1984.
The three-judge panel's unanimous ruling left unresolved the outcome of scores of conversions that occurred after cityhood, saying that West Hollywood officials are best equipped to deal with the "variety of problems" the conversions pose.
Elated city officials interpreted the ruling as giving them control over what happens to 30 buildings with a total of about 600 units, many of which have been sold to people whose property rights appear to be clouded.
"We fought for cityhood to make our own land-use decisions, to protect tenants and to promote and retain affordable housing, and this court decision reaffirms our right to do those things," Mayor Abbe Land said.
News of the decision was greeted with shock by condo owners who bought their properties after the law was enacted, and whose purchases are now in question.
"It's outrageous to imply that we might not really own our properties," said Eric Brown, who bought his condo at 1351 Crescent Heights Blvd. last year rather than move after the owners decided to convert the building.
"The irony is, I did everything possible to try to stop this conversion," said Brown, who was a tenant in the building for 10 years. "And the same City Hall that told me it was too late, that the conversion was a fait accompli, is now suggesting they may question the rightful ownership of my property?"
Lawyers for various owners of the buildings said they intend to ask the appeals court to rehear the case. Failing that, they said, they will appeal to the state Supreme Court.
"The consequences (of the ruling) can be mind-boggling," said Craig Mordoh, one of the lawyers.
The ban on conversions began as a moratorium imposed by the newly elected City Council the day West Hollywood became a city in 1984. The council followed up with an ordinance in 1986 that prohibited the owners of apartment buildings from converting rental units without obtaining conditional-use permits from the city.
After the owners went ahead with the conversions, citing permission from the county prior to cityhood, the city went to court in a bid to halt the sales. But on three occasions, Los Angeles Superior Court judges ruled in favor of the building owners.
City officials estimate that about 100 apartments were sold as condos after the law was enacted. Lawyers for owners of some buildings converted to condominiums say the figure is much higher.
"It is our position that all of the units in all of the buildings where no sales occurred before incorporation are apartment units as a matter of law," City Atty. Michael Jenkins said.
As for people who have bought condos and are living in them, he said: "We want to deal with that on a case-by-case basis. We're not anxious to create a situation where we're throwing people out of their condominiums. On the other hand, these are apartments, they're not condominiums, and they should never have been sold."
Stephen L. Jones, a lawyer representing several of the building owners, predicted there would be chaos if the city prevails and challenges the property rights of people who bought condos.
"I think you would have buyers who would consider suing not only the seller, but the seller's (real estate) broker, their own broker, and the title company. And you could forget paying the mortgage because you don't own anything, and so the lending institutions would be in the middle of it, too," he said.
He and other lawyers for the building owners expressed confidence that the appeals court ruling will be overturned.
"I've been practicing law for 30 years and have seen hundreds of real estate transactions, and I've never seen anything like this," said Melvin Malat, who represents two of the building owners.
"I've never seen so much power given a city to regulate people's property rights. It's preposterous what could happen," he said.
Owners of the buildings contend the conversions were valid because they acquired subdivision tract maps from the county to convert the properties prior to West Hollywood's gaining cityhood. State law requires tract maps be acquired before rental units can be converted to condominiums.
In addition, most of the owners also obtained approvals for the sale of condominiums from the state Department of Real Estate.
West Hollywood went to court seeking a restraining order and then a temporary injunction to halt the sales, but lost both times. The city filed its appeal after a judge dismissed the case in 1987.
But in its ruling, issued Friday in Los Angeles, the appellate court concluded that "in this case we decide a county's prior approval of a final tract map does not by itself exempt a condominium conversion from an ordinance a newly-created city enacts, regulating condominium conversions within its borders."
At a news conference Tuesday held outside a 56-unit building that was converted to condos last year, City Atty. Jenkins said the ruling is important because it "reaffirms the rights of cities to control condominium conversions" even when a county has already issued tract maps.
He said the county issued the maps "in a willy-nilly fashion," without considering whether the properties offered adequate parking, storage space, open space and noise abatement.
Calling many of the buildings "terribly deficient," Jenkins said that "from a physical standpoint alone" they should not have been approved as condos.
Asked about how the city intends to deal with people who bought their condos after the law was enacted, he declined to be specific, saying only that city officials "will explore a number of alternatives."
"The court decision came down on Friday and this is only Tuesday," he said. "These are going to be complicated issues."