The D.C. Redevelopment Land Agency yesterday gave developers of the long-delayed hotel and office complex atop the Gallery Place subway station until Nov. 15 to complete their purchase of a city block for the project, but only after the developers offered to start demolition of buildings on the site.

City officials have been frustrated by the four-year delay in developing the now-deserted block bounded by Sixth, Seventh, F and G streets NW, a tract that is viewed as a key link in promoting the revitalization of the old downtown sector.

But James E. Clay, RLA's chairman and the city's housing director, said the agreement on the latest in a series of delays "couldn't be better," because the developers, Capital Landmark Associates, have pledged to start the demolition by late October. The five-member RLA board was unanimous in voting for the extension.

The demolition work, costing about $400,000, will be paid for by Capital Landmark, a group controlled by partners headed by William B. Fitzgerald, president of Independence Federal Savings and Loan Association.

"We'd end up with a cleared site if they don't proceed" to complete the $17 million purchase of the tract, Clay said.

The city had hoped to complete the sale on Aug. 17, but shortly before that date, Capital Landmark sought a 90-day delay of the settlement on the property. The developers said that Riggs National Bank, their chief lender for the $96.8 million construction project, needed more time to find other banks to help with the financing.

Philip M. Horowitz, an attorney for Capital Landmark, told the RLA board yesterday that there now are commitments to cover 25 percent of the loan and that the remainder should be secured within two weeks.

The RLA's staff recommended that the board declare Capital Landmark in default for not closing the deal on Aug. 17 and that it be forced to pay $100,000 for the right to extend the settlement date to Oct. 16.

But Horowitz told the RLA that Capital Landmark did not "have the dollars in the budget to pay an extension fee." Instead, he said, Capital Landmark would start the demolition work to show that it intends to eventually complete the land purchase and start construction on a 900-room hotel.

The board's policy is to impose penalties on developers who seek to delay their projects, but the terms vary from case to case. Board member Stephen Klein called the Capital Landmark offer to start demolition work "a pretty good consideration."