Tenants Suing Irvine Co. in Condo Disclosure Issue

When 2,000 people moved into new apartments throughout the county over the past couple of years, little did they suspect that the units were to be sold as condominiums, says an attorney for three such tenants.

Now tenants are living in limbo, the attorney says; they’ve received notices from the landlord--the Irvine Co.--that their six-month leases will not be renewed.

On Friday, the three tenants sued the company in Orange County Superior Court. The lawsuit, which could be joined by other tenants, alleges that the huge Newport Beach developer intentionally neglected to tell tenants that their apartments had been built as condominiums--and were meant all along to be sold.

“Tenants moved into the projects thinking they were moving into apartments, and they made their homes there,” said L. Scott Karlin, an attorney representing the plaintiffs. “Then when the company decided it needed to raise cash, it told them that they would either have to move or buy their units.

The company began putting some of its apartments on the market in July and plans to sell almost 1,500 units in several phases over the next three years. Those units are in six complexes: Mandevilla, Rancho Veracruz and Shadow Canyon in Tustin; Santiago Hills in Orange, and Big Canyon and Villa Point in Newport Beach.

Residents can stay until at least the end of their lease; they will get at least six months’ notice from the developer before they must move.

The company offered tenants relocation expenses of $500 to $1,000, but that’s not enough to cover all costs, the tenants at Friday’s conference complained.

The suit asks the court to award more money for expenses and emotional duress to tenants who have already had to move. It requests that tenants still living in the apartments be allowed to remain indefinitely. Furthermore, the suit demands that the Irvine Co. pay punitive damages to all tenants.

The suit asks that the developer be required to warn tenants in leases that their apartments could be sold as condominiums.

But the firm said the suit’s demand for disclosure is a moot point. Since last fall, the company has included in its leases a warning that the apartments might be sold as condominiums later, spokeswoman Dawn McCormick said.

“At the time that the tenants (involved in the class-action suit) signed their leases, the company had no intention of putting apartments on the market,” McCormick said.

The company owns about 10,000 apartments in the county, most of which were built to condominium specifications.