Rude Awakening for ‘Dream House’ Buyers : Land dispute: Owners of 100 homes built on 96 acres that were supposed to remain open space are waiting to see how the situation is resolved. Despite reassurances, they remain uneasy.

When Marina Hills resident Rick Mortensen opened his newspaper one morning and found a front-page story with a map of his neighborhood, it was “kind of a novelty.” But as more articles appeared almost daily, Mortensen began to worry.

Especially troubling to Mortensen were accounts of a stormy City Council meeting at which angry environmentalists demanded that the public be compensated for the loss of 96 acres of land which had been set aside in 1985 as open space to buffer the Salt Creek Corridor Regional Park from development.

Since May the Orange County district attorney has been trying to find out how the land wound up in the hands of Taylor Woodrow Homes California Ltd. Mortensen and his wife, Fayme, own one of about 100 homes that now stand on the disputed land.

“I read about the people pounding the table and saying, ‘I want my 96 acres back. . . .’ ” Mortensen said. “I’m just afraid people will forget about the people who live here.”

Mortensen and his wife managed to save enough to “squeak in” to their first home in April. They paid $300,000 for their “dream house”: a two-story, red-tile-roofed home that sits on a corner lot, a bike ride from the ocean, with three bedrooms and fourth room that will “hopefully” become a nursery.

“You can really see the stars at night and it’s crisp and clear,” the 29-year-old computer consultant said. “We lived in an area in L.A. that was near a sewage plant and a petroleum plant. You wouldn’t even want to go out at night.”

The land dispute now hangs over them like the smog they left behind in the city.

Two weeks ago Laguna Niguel officials announced plans to sue Taylor Woodrow over the property and to try to take back the land not yet built upon. The council also imposed a moratorium on new building permits for the property. Council officials have assured homeowners like Mortensen that they will take no action against them and that the controversy will in no way cloud the title to their homes.

Executives from Taylor Woodrow and the title insurance company that backed the purchase of their homes gave similar assurances at a meeting last week with the homeowners.

Still, Mortensen is uneasy. “I just hope that things work out, that we get to keep title to our house, that the powers that be recognize there’s a bunch of little people that could get hurt by all this.”

At issue is 96 acres lying just north of the Salt Creek Corridor Regional Park. It was set aside as open space in a 1985 deed to the county from AVCO-Bredero Niguel, then the major developer in the area. The county later passed its rights to the land to the Laguna Niguel Community Services District.

In February, 1988, Laguna Niguel Councilman James F. Krembas, then the district vice president, signed a deed to Taylor Woodrow relinquishing the public’s right to the land. Krembas has said he signed the deed under the mistaken belief that it was part of another transaction.

For their part, company executives have maintained that the transaction was approved by other members of the district board as well as county officials. The land transfer has become the focus of a criminal inquiry, in part because Krembas’ wife was hired by Taylor Woodrow three months after Krembas signed the deed.

Last week, the company requested a rehearing before the City Council in an attempt to stave off the threatened suit and to rescind the moratorium.

Caught in the cross-fire are the homeowners who live on the property in question.

“It’s a little shocking to read about it and then look at a map and realize your house is in the area they’re talking about,” said Eric Moore, a 32-year-old fire battalion chief who moved into his Calella Street home in May. “Here you are in a house you think is your dream house and all of a sudden you’re in a controversial thing.”

When Eric Moore hears other citizens demand a return of their parkland, he worries. “I just hope other people know we are victims,” Moore said.

But Sandy and Mike Brown, who moved in two months ago, said they were reassured by the meeting last week with Taylor Woodrow President Gordon Tippell and a representative of the title insurance firm.

“I love the development,” Mike Brown said. “I just think there was a miscommunication.”

Brown said some of his neighbors worry about a “worst-case scenario” in which the city would take back the land, despite its assurances to the contrary, and the residents would lose their homes.

Homeowners were disturbed to learn at the meeting last week that, should the city seize the land, the title insurance company would reimburse them only for the price they paid for the home, and not for any appreciation or money spent on home improvements, he said.

“That made everybody a little uneasy,” Brown said, but he added, “I just don’t think the city would do anything like that.”

Across the street from the Browns live Amy and Ronald Zitka and their three children. Had he known of the land controversy earlier, Ronald Zitka said, he would have reconsidered the move.

“I don’t want to be caught up in any controversy,” Zitka said, and then wondered aloud what effect the dispute might have on resale value: “Will that have a negative impact on the sale here if they’re continuing to fight it out?”

Standing amid a garage full of boxes, Gerrie Glossip, whose home backs up to Salt Creek, said the parkland behind her home is her main concern.

“The only reason we bought this is because that was supposed to be park and we want it to stay that way,” said Glossip. “I don’t want to pay extra for this home because it looks out over a park and it not be a park.”

Times staff writer George Frank contributed to this story.