Buyer Beware

Barbara Diamond

Great expectations can lead to great disappointments when it comes to

buying property or remodeling a home in Laguna Beach.

“We have to reduce the width between expectations and reality,”

said Councilman Wayne Baglin, a Laguna Beach real estate broker.

The couple told they can build their dream home on the lot they

are considering buying; the growing family assured of their right to

double the size of their two-bedroom home; or buyers promised that

killer views will never be obstructed may be in for a shock.

Realtors, architects, the city guidelines and yes, the property

owners, play a significant role in raising expectations to levels

that won’t ever be realized, according to city officials and

disenchanted property owners.

“We never would have considered spending $3.5 million on a

condominium without assurances that we would never completely lose

our view,” said Ron Schwartz, owner of a villa at Montage Resort and

Spa. “We are pretty sophisticated buyers but we trusted the promises

that were made.”

Montage representatives claimed that Schwartz and other

condominium owners in the upscale development were well informed

about what to expect when homes were built on the estate lots.

An 80-page design and construction guideline for the residences at

montage, a specific plan for the entire resort property, was

presented to Ron and Sindi Schwartz during escrow. The guidelines

outlined the philosophy of the Montage development and detailed the

specifics of the 14 estate-lot homes, which must be first approved by

the Montage Design Review Committee and then presented to the city’s

Design Review Board.

The Schwartzes said they relied more on the guideline’s pledge to

“promote harmonious design” and “to protect and enhance property

values.”

“We felt good about that,” Schwartz said. “It seemed consistent

with the verbal promises made by the Realtor hired by Montage that we

would lose some view when the estate homes were built, but view

corridors would be maintained.”

The Schwartzes moved into their villa in September. In

mid-February, stakes went up for the first home proposed for the

estate lots.

“We were concerned when the stakes went up, but we counted on the

city’s design review board to protect us,” Schwartz said.

He and other villa owners were shocked to learn that the board

majority felt obliged to abide by the Montage guidelines for maximum

heights and lot coverage, hammered out in detail more than five years

ago for each of the 14 estate lots.

“We will lose 98% to 100% of our white water and park views,

Schwartz said. “The only thing left is the horizon.”

This wasn’t what the Schwartzes expected -- he said they thought

they had a deal with Montage. It wasn’t what the Aitkins, who also

own a Montage villa, expected. Don Morris, who lives south of

Montage, and submitted three designs until he got his home approved,

didn’t expect it either.

What they did expect -- and were sorely disappointed when it

didn’t happen -- was that the city’s design review board would

overrule the Montage committee’s approval.

The Design Review Board often takes the hit for information given

by Realtors, architects, home designers and developers or contained

in city documents that property owners or buyers take as gospel.

North Laguna resident Clifford Bernstein has been before the board

as an opponent to a project and as an applicant.

When he bought his home, he said, the previous owner told him that

all attempts to build on a nearby vacant lot had failed -- it was

virtually unbuildable. The lot includes a drainage course, generally

considered sacred in Laguna Beach. Bernstein verified the information

at City Hall.

“There is only a small building pad on the pie-shaped lot and you

have to cross the watercourse to get to it,” Bernstein said. “We

never thought we would have any problems.”

The lot owner has hired a new architect and a consultant and

submitted a proposal for a 4,000-foot proposal which needed a

variance, according to Bernstein.

“He bought the lot cheap because of the watercourse and now he

wants to build a house on it,” City Manager Ken Frank said at a

Laguna North Community Assn. meeting.

A downsized version of the project is due to come back to the

Design Review Board, Frank said.

“When I went to design review with my addition, I stayed well

within the envelope and brought down the roof six feet and asked for

no variances,” Bernstein said. “I never thought I’d have a problem

getting the project approved, but I am coming back to the board for

the fourth time. I am so frustrated. It makes you want to leave town.

“There’s gotta be rules.”

The city’s rules are maximums and not absolutes.

“Although our DRB is one of the most restrictive, we still have an

envelope and people think they can build to that,” Baglin said.

He would like to see stronger language in the development

department handout available at City Hall given to prospective

builders or remodelers.

“It doesn’t say: ‘Rarely are maximums approved; typically, it is

considerably less,’” Baglin said. “It is up to staff to come to the

City Council and propose changes in the ordinance that would make it

more consistent with what is allowed.”

Also: the city’s 500-plus Realtors need to be educated about their

role in raising expectations, a formidable task, Baglin said.

“I went to a preview a couple of weeks ago,” Baglin said. “I

looked at three houses clients might be interested in and at two out

of the three, the Realtors exaggerated what could be done. I was just

amazed.”

Realtors take a chance when they encourage expectations that can’t

be met. Companies discourage it, Baglin said.

He recalled a home purchased several years ago on Victoria Drive

with the assurances that it could be used as a short-term rental. The

buyer later found out she had to get a city approval for the use and

was, in fact, turned down.

“The buyer filed suit and the real estate company had to pay,”

Baglin said.

However, buyers bear some of the responsibility for unrealistic

expectations, according long-time Laguna Beach Realtors.

“It’s like your first date: the guy might be a bum, but you are

too excited to notice,” said Lloyd Milne, whose mother opened a real

estate office in Laguna Beach almost 60 years ago. “People come into

town. They don’t know the prices. They don’t know the town. They are

very naive. The broker should feed them accurate information.”

“People come to a Realtor with a concept -- I’ve always wanted to

have a cottage in Laguna Beach, I have always wanted an ocean view, I

have always wanted to open a little restaurant -- and they make

everything you tell them fit the concept,” said Bobbi Cox, a Realtor

here since 1988. “They don’t go to City Hall to check the records on

the property, they don’t talk to a planner.”

Anyone can walk into City Hall and talk to a planner from 8:30

a.m. to noon, Monday to Friday. No appointment required.

“If they do go to City Hall, they still might not be hearing

anything that doesn’t fit their concept,” Cox said. “Then when they

are ready to go -- they find out they can’t because of zoning, or

topography or neighborhood opposition or financial feasibility.

Most Laguna Beach Realtors are ethical, Cox said. And most of them

know the rules -- they are required to take 45 hours of continuing

education, including consumer protection, every four years to be

re-licensed.

“Caveat Emptor” is more than a chi-chi “tagline” warning buyers to

be wary. Building or buying a dream home or adding square footage

should not turn into a nightmare if reality is the architect.