The Sebring City Council, in a 4-1 vote Tuesday, decided not to pursue legal action against the developers of Majestic Cove because it figured it had no legal grounds to sue the company.The problem, the council members said, lay in the wording of the city’s development agreement, dated Nov. 15, 2005, with the developer.Council decided Tuesday the developer used a loophole in the agreement to do short-term rentals of its condos.The city had earlier complained that the condominium was violating its development agreement by running as a hotel or motel in an area zoned as R-3 residential.