The Montgomery County Consumer Affairs Department has dropped an investigation into sales representations by U.S. Home, developer of a Rockville subdivision where buyers of luxury houses complained they were not provided the kind of community they were promised.

Consumer Affairs Director Barabara B. Gregg wrote the 33 families at Timberlawn Feb. 12 that she found "insufficient evidence" that U.S. Home violated consumer laws when it changed plans from building a community of luxury, detached houses on third-of-an-acre lots to building more than 900 attached houses. She told them the investigation was closed.

Gregg said homeowners could pursue court actions or independent opposition to U.S. Home's request for a zoning change. "All I'm trying to say is that we didn't find the kind of evidence we would need to recommend that the county attorney take action," she said. She would not discuss details of the eight-month investigation.

Originally, those families who paid $200,000 and more for large houses opposed U.S. Home's request for higher-density zoning. Their community group, the Timberlawn Homeowners Civic Association, hired an attorney to contest the zoning, but dropped the opposition when the developer agreed to make changes in the site plans.

Several families joined surrounding neighborhood groups in challenging U.S. Home's zoning request in hearings before county planners last month. Sudesh Kapur and her husband, Shakti, told the hearing examiner that town houses would not be compatible with the rest of the neighborhood, that traffic would increase, and that they bear a heavy property tax to keep a large lot, but the benefits are undone by being surrounded by town houses.

Robert L. Sithens, president of U.S. Home's Maryland Division, has said that his company decided not to continue building and selling the large houses because of discouraging sales and financing trends in the housing market. When the company sold each house, Sithens said, "we had every intention of completing the Timberlawn project as it was begun. . . . We did not mislead these home owners."

The county Planning Board is continuing hearings in March concerning the builder's zoning application to build smaller detached houses and town houses on the southern tract of Timberlawn.