Last week, this column reported that the Rockville City Council sold the 99-year-old Dawson Farmhouse to the Peerless Rockville preservation group on Feb. 28. The story said the group would restore the house and sell it. The settlement on the property actually did not occur until last Friday. Peerless Rockville bought the house and sold it the same day to Steve and Erin Owens, who agreed to restore the 107-year-old home themselves and live in it.

The Rockville City Council last week sold a 99-year-old farmhouse for $1 to a local preservation corporation that will restore and sell it as a residence, ending an eight-month dispute over the house.

The city sold the Dawson Farmhouse to Peerless Rockville, the preservation group, after officials decided they could not find any buyers willing to restore it as a home. The group says it has found a couple willing to buy the farmhouse once it is restored.

Last November, the city considered selling the house to Philip Cantelon, who agreed to renovate the house but wanted to use part of it for his businesses. Neighbors opposed his plan at a public hearing because they did not want business in the area.

City Clerk Helen M. Heneghan said the local civic association was pleased with the new plan for the house. "Most of the neighbors wanted to see the home restored. One hundred percent of them wanted to see it as a residence," she said.

In a separate decision, the city awarded a $962,356 contract to Lisbon-Madeira Inc. of Kensington for the reconstruction and widening of North Washington Street, part of the Town Center Plan for renovation.

Construction includes brick sidewalks in the downtown area, brick walls and a granite city logo set into the pavement approaching Courthouse Square.

Other affected areas are sections of West Middle Street and West Montgomery Avenue. The work was authorized by the council in February 1982.

Public information officer Sue Patterson said Mayor John R. Freeland stressed at the meeting that the city was taking special pains to limit the construction's impact on access to downtown business, the reconstruction of merchant parking areas and traffic movement. Work is scheduled to begin next month and to end by December.

In other business, the council:

* Learned that the revenue it will receive on its lease of the Town Center parking garage to redevelopers Eisinger and Kilbane Associates will drop from $445,622 to $438,803 a year. The decline results from reserving part of the garage space for parking for a hotel the city approved two weeks ago. The city is expected to sign the parking garage contract at its meeting Monday, Heneghan said.

* Awarded a $40,120 contract to Nazario Construction of Beltsville to build sewer and water mains serving 25 new town houses in the College Square subdivision.

* Introduced an ordinance to reallocate budget funds. A miscalculation in the budget for the water and sewer funds resulted in the sewer fund spending more than expected, while the water fund is spending less than expected.