Preservation advocates lost a legal battle last week when they failed to post the $50,000 bond needed to delay demolition of a row of Victorian houses in the 1900 block of N Street NW. In the wake of court action, a wrecking crew razed the five town-houses to make way for a high-rise office building in the Dupont Circle area.

"A high bond requirement like that prices us right out of the courts," said Betts Abel, executive director of Don't Tear It Down, Inc., a local preservation group. "It makes it unrealistic for a public interest group to bring law suits to represent the public's voice."

Don't Tear It Down, the Dupont Circle Citizens' Association and the North Dupont Community Association went to court Feb. 7 to prevent the issuance of a demolition permit for the town-houses.

An application to create a Dupont Circle Historic District is pending before a federal-city committee. A hearing is scheduled for March 9.

The civic groups hoped that any action on the town houses could be forestalled until historic district status is granted. Within historic districts, the law, provides for a 180-day delay in demolition when citizens challenge the action.

Judge Norma Johnson of D.C. Superior Court granted the group a temporary restraining order but it depended on the posting of a $50,000 bond. The group found it could not come up with the money.

The civic groups asked Judge Johnson to decrease the amount of the bond but she refused. Such bonds are required to cover losses a developer might suffer because of the delay in the event he eventually wins the case.

"This is the highest bond we've ever been asked to post," said Betts Abel. "We only had to post $100 to delay demolition of the Willard Hotel."

A spokesman for the developer said that a delay would cause heavy losses in real estate taxes and future rental income, and might mean the loss of a financing commitment at an advantageous rate.

Since the groups could not raise the money for the required bond, a demolition permit was issued by the city government. A crew from the Federal Wrecking Co. began tearing down the houses on Friday.

"They're just smashing beautiful carved terra cotta lintels," said Ron Alvarez, chairman of the historic preservation committee of the Dupont Circle Citizens Association, who watched the wrecking crew at work. "This south boundary of the Dupont Circle residential area is the most fragile," said Alvarez, "because it's closest to the new downtown. The demolition will bring pressure for sale of the houses that remain in the area."

Until recently the townhouses were owned by the law firm of Arnold and-Porter. The firm used them as additional office space.

"I'm distressed to look out and find a vacuum where those houses used to be," said S. G. Fisher, a spokesman for Arnold and Porter. "Our original sale was to a purchaser who intended to rehabilitate the townhouses."

However, George Wheeler, chairman of the Advisory Neighborhood Council that includes the Dupont Circle area, said that the law firm was not acting as a "good neighbor" and should have made the sale only on condition that the town houses be retained.

In October, Arnold and Porter sold the town houses, together with about 7,500 square feet of vacant land, to developer Robert N. Wolpe of Bethesda for $1.4 million. Wolpe planned to renovate the houses and to use the vacant land for another building.But he said he later decided the project was not financially feasible and sold the contract on the property to another area developer, Lenkin-Studley. They plan to put an $8 million office building on the site. Until construction of the eight-story building begins, the land may be used as a parking lot, according to Edward Lenkin of Lenkin-Studley.

Lenkin said he has agreed to meet with citizens groups to present plans for the new building. "I'm all for historic preservation," said Lenkin, "and those houses weren't unattractive.But there are property rights that come with ownership of land."

Lenkin said that the proposed Dupont Circle Historic District is very large and would adversely affect the rights of a lot of property owners. He predicted a fight when the Joint Committee on Landmarks meets to consider the historic district on March 9.

Don't Tear It Down, meanwhile, is working on proposals to strengthen District laws on preservation. The organization will probably propose a moratorium on demolitions in areas where a historic district application is pending.