Most persons who walk by the garden apartment at 2201-2207 Champlain St. NW would not imagine its tenants fighting to remain in the dilapidated building, with its broken windows, peeling paint and cracked cement for a front yard. Inside, the conditions are no better.

But for the apartment's remaining 10 families, who said they have endured winter days with no heat or hot water, chased rats from their kitchens and lived with damaged walls and ceilings, the building is home.

The low- to moderate-income tenants, some of whom have lived there for 15 years, have been fighting eviction for the past year. The building's owner, Thomas Nash, is trying to sell the 32-unit building for $600,000, saying the city's rent control laws have made it too expensive for him to hold on to the property for use as housing.

"It made more sense to close it down than to operate it," said Nash, a lawyer and real estate broker. He added that he offered to sell the building to the tenants for $550,000, but the tenants have offered only $300,000.

"That was my compromise, or my attempt at it," said Nash, who added that he has had several offers from developers to purchase the property at his asking price. But any sale to a developer has been delayed pending resolution of the tenants' effort to buy.

The building is located in a rapidly changing area of Adams-Morgan just east of 18th Street NW that has caught the eye of many land developers. The community is on the cutting edge of a gentrification process that is displacing some of its low-income housing stock with upscale condominiums. Recently, some home buyers have paid up to $200,000 for two-bedroom cooperative apartments on the same street where the tenants facing eviction are paying $90 to $200 a month for their one-bedroom apartments, which house up to five people.

The neighborhood's gentrification "is hindering us because Nash feels he can make a killing at our expense," said Rasheedah Ahmad, president of the building's tenant group, called The Last Holdouts.

The group, formed last April, said its $300,000 offer is as much as the structure is worth because of its deteriorated condition.

The building and property currently are assessed by the D.C. government at $297,000.

The tenant group has raised about $5,000 through various fund-raising events, including cookouts and food booths at local carnivals and discos. The Last Holdouts also have been approved for a $13,000 low-interest city loan to help with a down payment for the apartment's purchase.

Numerous groups have offered the tenants their support, including three neighborhood civic organizations and businesses that have donated equipment and supplies for the various fund-raising events.

The Ministry United To Support Community Life Endeavors (MUSCLE), a nonprofit, city-funded housing development corporation, has surveyed the building and determined that it could be kept for housing.

But Fernando Lemos, a MUSCLE project specialist, said the building's $600,000 price tag is too high, especially because the building will require more than $500,000 in renovation costs if it is to remain as housing. Since 1978, MUSCLE has helped 18 low-income tenant groups in the city to purchase their buildings.

Some neighborhood residents said they are afraid Nash is trying to sell the property to a commercial developer, who would turn the site into an office complex. Such development would be permitted because of the street's unusual mixed-use zoning, which allows commercial structures to be built next to housing.

Nash, however, said he had "no idea" what the interested buyers are planning for the property.

D.C. housing inspectors last year found more than 400 housing code violations in about 20 of the building's apartments, including cracked walls and ceilings, peeling paint, leaky faucets and defective windows. About half of the apartments were inspected because many of the building's tenants had left their units, which then were boarded by Nash.

The remaining tenants claimed that Nash, because of his desire to sell the property, has done little to remedy the lengthy list of housing code violations and has refused to provide many normal building services, such as cleaning the halls.

But Nash said he has made some of the required repairs, adding, "They're not even supposed to be in there at this point so I don't see any point in going into the condition of the building."

The tenant eviction battle began in December 1984, when Nash sent a letter to the building's residents "suggest ing that you start looking for another place to live in immediately." A month later, Nash sent another letter offering free rent for January, February and March of 1985 "so long as you vacate the apartment you rent from me by March 2."

But the District's Rental Accommodations Office ruled that the eviction notices were illegal because they did not inform the tenants of their rights, including relocation expenses, and an opportunity to purchase the building.

The landlord and tenant branch of the D.C. Superior Court also criticized Nash's eviction procedures. "Plaintiff wanted to clear out his buildings, but without all the trouble and expense involved in doing it according to law . . . such misconduct could hardly be clearer," Judge Harriett R. Taylor wrote last July.

In the meantime, however, most of the tenants moved from the apartment building because some were unaware of their rights and others were illegal aliens, Ahmed said.

Rozanne Look, a Legal Aid Society attorney representing the remaining 10 families, said Nash "has attempted to circumvent" housing laws "by trying to scare people" to move from their apartments.

Look won her first legal battle last spring when Nash agreed to reduce the tenants' rent by 30 perent because of the building's living conditions. Later she charged that because Nash was improperly licensed to operate the apartment building, rent increases since 1973 should be rolled back. The Rental Accommodations Office partially agreed, but said rent increases were invalid only back to 1983. Look is appealing the decision in an effort to have the rent increases invalidated back to 1973.

Last year Nash filed the appropriate legal notices to evict the remaining families, according to Nash's attorney, Phil Musolino. He said the tenants were given two notices to vacate the building. One notice expired last month, and the second is expected to expire at the end of April. If the tenants do not leave, Musolino said he will file suit seeking to evict them forcibly.

Look said she is confident she can prove that all the eviction notices have not conformed with city regulations and that Nash has not "been bargaining in good faith" to sell the building to the tenants.

DeCarlo Murchison, a building resident for 13 years, said, "We don't want to live here in limbo. But we shall not move until we have our day in court."