Tenants at Beverly Court, a Columbia Road apartment building that has housed local artists for years, have signed a contract to convert the building to a tenant-controlled cooperative.

The Beverly Court group will apparently become the first Washington tenants' association to finance such a conversion through private lending institutions.

"Assuming we close, what's important about Beverly Court is that if nothing else, we've demonstrated that tenants can carry the weight on converting a building from rental to ownership," said Hank Leland, the tenants' association president. "And, just maybe, we've made it easier on the next tenants' organization that wants to do the same. We've proven that tenants can do it in the private market with no dollars -- no cash -- from the government."

The struggle to buy the dingy fivestory building at 1736 Columbia Rd. NW began last May when two tenants standing in the columned lobby of the building were approached by two men. One of the tenants, a lawyer, could tell by the questions that the strangers were interested in buying the building.

Word spread quickly among the tenants, many of them artists who moved to Beverly Court because they wanted cheap apartments with dramatic, spacious rooms for studios, meetings or exercise classes -- extras that went a long way toward helping the tenants forget the peeling plaster, leaky faucets and a quirky elevator that they had to put up with as the building deteriorated.

"It's a nice low-rent building for eccentric people," is the way tenant Onka Dekkers summed up her home. "It's a building that generates creativity," said artist Gay Glading.

The tenants immediately began to meet, incorporated as an association, and notified the estate of the owner, who had died in 1977, that they wanted to buy the building themselves. Under D.C. law, when a building is sold, tenants have firsr right to purchase.

The estate attorney responded that someone indeed did want to buy Beverly Court, located on a strip of fastfood stores, laundromats and liquor stores in Adams-Morgan. a racially and economically mixed neighbor hood, popular with young professionals, where real estate prices and condominium conversions have soared in recent years.

The tenants were offered the building for $425,000, and given 45 days to come up with a contract and deposit. After they raised a $20,000 deposit, they were given 90 days to go to settlement. Later they were granted an extension of that deadline.

Tenants estimate that when finished, the purchase and rehabilitation will have cost $930,000, including money spent for such things as loan fees and points, interest, building permits, closing costs, and engineers and appraisers fees. The cooperative units are selling for between $14,200 and $45,000, Leland said.

After months of work, the tenants finally received a commitment for $631,000 in permanent financing from Perpetual Federal Savings and Loan Association. The lending institution will give the tenants $375,000 at settlement, and the rest after rehabilitation is finished.

The D.C. National Bank also has approved a construction loan with some conditions that still have to be met, according to the bank president. The construction loan will be used for repair of the building's plumbing and heating systems, building a new roof, fixing up the bathrooms, kitchens and the elevator, and, in general, bringing the building up to code standards.

Leland said that when the tenants realized they had a limited amount of time to accomplish what seemed like the impossible, "We commenced running around like a chicken with its head cut off."

They held discos in an empty three-bedroom apartment, raised $2,000 at one rummage sale, and are holding another this Saturday. They met with lenders, lawyers, community organizations, city officials, citywide tenants' groups, federal housing officials, their councilman, David Clarke (D-Ward One), and numerous others. And they discovered there was no federal or local money available to help them when they needed it, Leland added.

There were meetings to discuss whether they should convert to condominiums, in which a purchaser actually owns his unit, or to cooperatives, in which a cooperative corporation owns the property and allows residents to "purchase" the right to live in a unit.

They chose cooperatives because legal fees were cheaper and they could control who bought the apartments, thereby ensuring they remained for lower-income and moderate-income people, Leland said.

In other words, the last year has been an almost continuous struggle, tenants say. One described the process as a "holy terror" whose effect can be seen in the tripling of gray hairs on his head. Hardly anyone in the building knew anything about real estate, and even fewer know how to begin forming a cooperative.

There were days and weeks when suspicions and uneasiness were rampant, Leland and others said. Many tenants were unfamiliar with the concept of cooperatives, and nearly all the elderly tenants have chosen not to remain.

But they raised the $20,000 for a deposit -- with the help of a $6,000 loan and grant from the United Planning Organization, where Leland works -- and entered into a contract last August.

Jeff Morris, an urban loan specialist for Perpetual, said that Beverly Court is the third such cooperative project that Perpetual is financing. Perpetual is opening a branch office at 18th Street and Columbia Road NW in a couple of weeks and has pledged to help finance cooperatives in the Adams-Morgan area.

In addition, Morris said, Perpetual is working with another "20 or 30" buildings across the city whose tenants are trying to do the same thing.

Two Hispanic-oriented agencies that rent commercial space at Berverly Court will be allowed to remain. They will lease commercial space in the building's basement for a total of about $1,925 a month, Leland said.

Tenants set up two price schedules. Existing tenants had to make down payments ranging from $2,400 up to $6,700, while the 17 apartments that sold within four days to "outsiders" were sold with down payments ranging from $4,000 up to $18,000.

After conversion, monthly payments will range from $170 up to $470 a month, Leland said. Minority tenants were encouraged to "purchase" cooperatives at the all-white building, Leland said, and some tenants received subsidies so that they paid as little as a dollar for their down payment.

Manon Cleary, an artist and an art teacher at the University of the District of Columbia who has lived at Beverly Court for 7 years, and others, spoke of the uncertainty of committing themselves to something as foreign as a cooperative. "I thought I'd be transient forever," Cleary admitted. "It's terrifying. At 36. I'll suddenly have to be an adult, one of 'them.'"

Tenants wanted to fight to remain, they said because they realized there were few other places they could afford, particularly in Adams-Morgan.

Tom Goodwin is an independent television and film producer who has lived at Beverly Court for 5 1/2 years and served as bartender and bouncer at the discos. "I love New York City," Goodwin said. "This place was the most like the upper West Side... I can't think of any other place I'd ever live in Washington."

Despite their struggles, the tenants also had many factors working in their favor.

For example, Leland works as a developer and analyst for the United Planning Organization and his employer allowed him to spend most of his time this past year trying to pull the Beverly Court project together. In addition, there were tenants knowledgeable about insurance, the law, and architecture that could be called on for help.

Plus, acknowledged Leland, "We had a low price, and a cohesive small building where the tenants already knew each other, at least casually. We had a seller interested in selling to the tenants. All of those factors, as difficult as it was, made it easier."