Recitals

First Amendment to Purchase Contract

by Apple Residential Income Trust Inc
August 3rd, 1998




                                                                   EXHIBIT 10.16

                      FIRST AMENDMENT TO PURCHASE CONTRACT
                              (NEWPORT APARTMENTS)

     This First Amendment to Purchase  Contract (the "Amendment") is made by and
between New Emerald  Texas,  Ltd., a Texas limited  partnership  ("Seller")  and
Cornerstone  Realty Group,  Inc., a Virginia  corporation  ("Purchaser"),  to be
effective as of the 9th day of April, 1998.


                                    RECITALS

     I. Effective on or about March 10, 1998,  Seller and Purchaser entered into
a certain Purchase  Contract (the  "Contract")  relating to a parcel of land and
the improvements thereon located in Austin, Travis County, Texas. All terms used
herein with their initial letter capitalized shall,  unless otherwise  specified
herein, have the meaning given to such terms in the Contract.

     J. The parties desire to amend the Contract to extend the Inspection Period
stated in Section 3.7 of the Contract  and have  entered into this  Amendment to
reflect such agreements.


                                   AGREEMENTS

     NOW,  THEREFORE,  in  consideration  of the  premises  and  other  good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, Purchaser and Seller hereby agree as follows:

     1. The Inspection Period stated in Section 3.7 of the Contract shall expire
at 11:59 p.m. CST on April 17, 1998,  subject to any extension of the Inspection
Period  provided in the Contract,  and the Purchase  Price shall be increased by
$5,000.

     2. Except as modified herein, the Contract remains in full force and effect
without modification.

     3.  Purchaser and Seller hereby ratify and confirm the Contract,  as herein
modified, for all purposes.

     4. This  Amendment may be executed in  counterparts,  each of which will be
deemed to be an  original,  but all of which  will  constitute  one and the same
document.  A counterpart  signed by a party and  transmitted by facsimile to the
other party will have the same effect as the delivery of an original.







     IN WITNESS  WHEREOF,  this  Amendment is executed  effective as of the date
first set forth above.



SELLER:                                    NEW EMERALD TEXAS, LTD.,
                                           a Texas limited partnership

                                           By: /s/ Robert J. Werra
                                              ----------------------------------

                                           Name: Robert J. Werra
                                                --------------------------------

                                           Title: General Partner
                                                 -------------------------------


PURCHASER:                                 CORNERSTONE REALTY GROUP, INC.
                                           a Virginia corporation



                                           By: /s/ Gus G. Remppies
                                              ----------------------------------

                                           Name: Gus G. Remppies
                                                --------------------------------

                                           Title: V.P. Acquisitions
                                                 -------------------------------




                                PURCHASE CONTRACT
                                -----------------

         THIS  AGREEMENT  made and  entered  into  this day of March  1998  (the
"Effective  Date"),  between  CORNERSTONE  REALTY  GROUP,  INC. or its  nominee,
(hereinafter  called  "Purchaser") and NEW EMERALD TEXAS,  LTD., a Texas Limited
Partnership (hereinafter called "Seller").

                                    ARTICLE I
                                  THE PROPERTY

         1.1 SALE OF PROPERTY.  Seller agrees to sell and convey,  and Purchaser
agrees to purchase,  Seller's real property known as NEWPORT  APARTMENTS located
in AUSTIN,  TX, with all buildings and  improvements  located  thereon,  as more
particularly described in the attached legal description in EXHIBIT A including,
but not limited to 200 individually heated and air conditioned  apartment units,
with  all  appurtenances,  together  with  all  appliances,  drapes,  carpeting,
shrubbery  and all other  personal  property  owned by Seller and located on and
used in connection with operation and maintenance the premises,  including,  the
inventory of all personal property (other than appliances in apartment units) of
$100 in value to be  supplied  by Seller and  attached  hereto as EXHIBIT B (all
such real and  personal  property  hereinafter  collectively  referred to as the
"Property",  subject  to  Purchaser's  inventory  prior to  closing,  unless the
context clearly indicates otherwise).  Seller agrees that it will not remove any
of the personal property from the date of this Agreement to the date of closing.

                                   ARTICLE II
                            PAYMENT OF PURCHASE PRICE

         2.1 PURCHASE PRICE. The total purchase price shall be SIX MILLION THREE
HUNDRED TWENTY FIVE THOUSAND ($6,325,000) DOLLARS payable as follows:

         2.2 PAYMENT:

                 (A) DEPOSIT.  TWENTY FIVE THOUSAND  ($25,000)  DOLLARS upon the
execution of this  Agreement by Seller and Purchaser  and an additional  SEVENTY
FIVE  THOUSAND  ($75,000)  DOLLARS  to be  placed  in  escrow  at the end of the
"Inspection  Period" described in Article VI below. Said deposit shall be placed
in escrow with American Title Company, 1330 Summit Avenue, Fort Worth, TX 76102,
Attention:  Joanna Cloud,  or its authorized  agent (the "Title  Company") as an
earnest money deposit which may be credited






against the purchase price or applied as per Article XI below. The Title Company
shall hold the funds in an interest-bearing account with interest to be credited
in the same manner as the deposit.

                 (B) EXISTING MORTGAGE.

                     (a) The Property  shall be conveyed  subject to Purchaser's
assumption and promise to pay in accordance with its terms the loan (the "Loan")
evidenced by that certain  Promissory  Note (the "Note"),  dated 12/21/89 in the
original  principal  sum  of SIX  MILLION  TWO  HUNDRED  SEVENTY  FIVE  THOUSAND
($6,275,000) DOLLARS payable to the order of MTRUST CORP., NATIONAL ASSOCIATION,
(the  "Lender"),  and  assumption  and  promise to  perform  all  covenants  and
obligations  of Seller under the documents or instruments  governing,  securing,
evidencing   or   pertaining   to  the   indebtedness   evidenced  by  the  Note
(collectively,  the "Loan  Documents"),  including,  but not  limited  to,  that
certain  Indenture of  Mortgage,  Deed of Trust,  Deed to Secure Debt,  Security
Agreement,  Fixture  Filing,  Financing  Statement  and  Assignment of Rents and
leases of even date with the Note (the  "Deed of  Trust")  recorded  in the Real
Property Records of Travis County, Texas.

                     (b) Seller  represents  and  warrants  that (i) Seller will
deliver to Purchaser true and complete copies of the existing Deed of Trust, the
Note  secured  thereby  and any  extensions  and  modifications  thereof  in its
possession or in the possession of its attorney,  and (ii) there are no monetary
defaults by Seller under the terms of the Loan  Documents and it has received no
written notice of any default under any of the terms of the Loan Documents. From
and after the  Effective  Date of this  Agreement  to the Closing  Date,  Seller
agrees to pay to Lender all installments of principal,  interest and escrows and
any other sums of which  Seller has notice  that are due and  payable  under the
Loan  Documents,  as and when such payments are due. Seller shall use reasonable
efforts to provide  Purchaser  with an  Estoppel  Certificate  from the  Lender.
Failure of  Purchaser  to receive an Estoppel  Certificate  from Lender prior to
Closing  shall give the  Purchaser an option to  terminate  this  Agreement  and
receive a refund of the deposit or waive the requirement and proceed to Closing.

                     (c) Seller  shall  immediately  upon the  execution of this
Agreement  take whatever  steps are necessary to contact the Lender and initiate
the  procedure  to procure  the right to assign the  mortgage  to the  Purchaser
pursuant to an Assignment  and  Assumption  Agreement.  The Purchaser and Seller
agree to  cooperate  with the other in  procuring  permission  for  Purchaser to
purchase the Property and assume the Loan set forth herein above.  Seller agrees
to provide copies of all correspondence  and applications to the Purchaser.  The
parties further agrees to use their best efforts to procure said approval within
the Purchaser's Inspection Period (30 days from the date of this Agreement).



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                     (d)  Purchaser  agrees to execute and deliver to the Lender
all documents and instruments  reasonably  requested by the Lender in connection
with the assumption and further agrees to pay to the Lender all reasonable  fees
and  reasonable  expenses  of the Lender,  and its  reasonable  counsel  fees in
connection with the assumption, including, but not limited to, any assumption or
transfer  fee  provided  for in the Deed of  Trust  and the  reasonable  fees of
Lender's  attorney in connection with  preparation of the assumption  documents.
Purchaser  shall also pay all  premiums  for any  endorsements  required  by the
Lender in connection  with the  assumption to the Lender's  mortgagee  policy of
title  insurance or the cost of a new mortgagee  policy of title  insurance,  if
required by the lender.  Seller  shall not be  obligated  to incur any  expenses
other than normally required in a sale and its legal fees.

                     (e) If there is a mortgagee escrow account or reserve fund,
Seller shall  assign it to  Purchaser,  if it can be assigned,  and in that case
Purchaser  shall pay the amount in the escrow  account or reserve fund to Seller
at Closing.

                     (f) Purchaser agrees that it will reasonably cooperate with
Seller in attempting to obtain the full and unconditional release of Seller from
the obligations arising out of the Note and Loan Documents,  but Purchaser shall
not be obligated to expend any sum or incur any additional  liability on account
thereof.  In the event Seller and/or  Purchaser is unable to obtain the full and
unconditional release of Seller from all obligations arising out of the Note and
Loan  Documents,  in addition to other  indemnities  provided in this Agreement,
Purchaser agrees at all times after Closing to indemnify,  protect, defend, save
and hold harmless  Seller and its General  Partners from and against any and all
debts,  duties,  obligations,  liabilities,  suits, claims,  demands,  causes of
action,  damages,   losses,  liens,  costs  and  expenses  (including,   without
limitations,  attorney's fees and expenses incurred in connection with enforcing
this  indemnity or opposing any such claims,  damages,  or causes of action) and
court costs  asserted or incurred at any time after the Closing Date relating to
or arising out of (i) the failure by Purchaser or its  successors and assigns to
perform  all  covenants  and  obligations  of  borrower  under the Note and Loan
Documents or (ii) a default by Purchaser or its successors and assigns under the
Note and Loan Documents.  This indemnity shall relate to matters first occurring
after the Closing Date.  This  indemnification  and the  obligations  thereunder
shall  survive  the  closing of the  transaction  evidenced  by this  Agreement.
However,  the Seller shall notify the Purchaser of any claims as made and Seller
shall give Purchaser the right to defend any claims which they feel are invalid.

                 (C)  BALANCE.  Balance  at  Closing  as  evidenced  by  cash or
immediately available cash equivalent.

         2.3 INDEPENDENT CONTRACT CONSIDERATION. Purchaser



                                        3






shall,  concurrently with its execution hereof, deliver to Seller a check in the
amount of FIFTY ($50) DOLLARS (the "Independent Contract Consideration"),  which
amount Seller and Purchaser  agree has been bargained for as  consideration  for
Seller's  execution  and  delivery of this  Contract  and  Purchaser's  right to
inspect the Property.  The Independent Contract  Consideration is in addition to
and  independent  of any other  consideration  or payment  provided  for in this
Contract and is non-refundable in all events.

                                   ARTICLE III
                                  TITLE MATTERS

         3.1 TITLE.  Seller, shall convey good and indefeasible title by Special
Warranty Deed in the form attached  hereto as EXHIBIT D, subject only to general
taxes for the current year not yet due and payable,  rights of tenants  claiming
under the  leases,  none of which  shall be for more than one year or other than
residential purposes, except laundry room leases, and utility easements which do
not  interfere  with  the  present  use  of the  Property,  and  the  "Permitted
Exceptions".  "Permitted  Exceptions" are those title  exceptions  listed in the
title commitment, which are not objected to pursuant to section 3.2 below.

             (A) Title  shall be free from any and all  liens,  except the liens
securing  unpaid  taxes not yet due and  payable and  mortgages  as set forth in
Paragraph 2.2(B),  and Seller shall be responsible for any prepayment  penalties
necessary to deliver such free title.

         3.2 TITLE DEFECTS;  ELECTION TO CURE. Seller shall furnish to Purchaser
at Seller's  expense a commitment  for Title  Insurance  from the Title Company,
(the  "Commitment"  or the "Title  Report")  within  fifteen (15) days after the
Effective Date, covering the Property binding the Title Company to issue a Texas
Owner  Policy of Title  Insurance  (the  "Title  Policy") on the  standard  form
prescribed  by the Texas State Board of Insurance  at the  Closing,  in the full
amount of the  Purchase  Price,  insuring  Purchaser's  fee simple  title to the
Property to be good and  indefeasible,  together with true and correct copies of
all  instruments  listed on Schedule B to the  Commitment  (as well as any other
documents or instruments  listed therein which will not be released at closing).
If the title  commitment  shows any  exceptions,  which  are not  acceptable  to
Purchaser in Purchaser's sole discretion, Purchaser shall give written notice of
 .such  defects in title to Seller and  Seller's  counsel  during the  Inspection
Period.  If Purchaser  fails to notify  Seller of any  exceptions  which are not
acceptable to Purchaser  during the Inspection  Period,  then Purchaser shall be
deemed to have  accepted  those  matters  not  objected  to.  Seller may, at its
option,  elect  whether to cure said  defects or by written  notice to Purchaser
indicate its intention not to cure.


                                        4






         3.3 ELECTION NOT TO CURE DEFECTS. Should Seller elect not to cure title
defects,  this Agreement,  at Purchaser's option (exercised within five (5) days
of the  notice  by  Seller  that it will  not  cure the  objections  during  the
Inspection Period), shall be terminated;  each party shall thereupon be released
from all obligations  hereunder,  except as provided in Paragraph 6.2.2; and all
deposits shall be immediately returned to Purchaser. If Purchaser does not elect
to terminate  this  Agreement,  all title defects that remain uncured at Closing
shall be deemed "Permitted Exceptions."

         3.4 SURVEY.  As soon as  reasonably  possible,  and in any event within
twenty (20) days after the Effective Date,  Seller shall,  at Seller's  expense,
deliver  or cause to be  delivered  to the  Seller,  the Title  Company,  and to
Purchaser a current or updated on-the-ground  perimeter survey (the "Survey") of
the Property  prepared by a Registered  Professional  Land  Surveyor  reasonably
acceptable to the Purchaser.  The Survey shall show the location and size of all
of the following on or adjacent to the Property, if any:

               buildings,  buildings lines,  improvements,  streets,  pavements,
               easements,  rights-of-way,  protrusions,  encroachments,  fences,
               100-year flood plain, public utilities, and recording information
               of easements.

The Survey  shall  show the gross  land area and the Net Land  Area.  The Survey
shall  be in a form  and of a date  acceptable  to  Purchaser  and to the  Title
Company,  and in  acceptable  form in order to allow the Title Company to delete
the survey  exception from the Title Policy.  The term "Net Land Area" means the
gross  land  area of the  Property  less  the  land  area  included  in  utility
easements, drainage easements, ingress/egress easements, rights-of-way, 100-year
flood plain and  encroachments  on or across the  Property.  The area within the
100-year  flood plain shall be as defined by the  Federal  Emergency  Management
Agency or other applicable governmental authority.

         3.5 The  Survey  shall  show no  encroachments  onto the Land  from any
adjacent  property,  no encroachments by or from the Land onto adjacent property
and  no  violation  of  or  encroachments  upon  any  recorded  building  lines,
restrictions or easements  affecting the Property.  If the Survey  discloses any
such  encroachment or violation,  Purchaser shall give written notice thereof to
Seller and Seller shall have ten (10) days from the date of  Purchaser's  notice
(with a commensurate extension of the closing date) to request the Title Insurer
issue its  endorsement  insuring  against damage caused by such  encroachment or
violation and to provide evidence  thereof to Purchaser,  and if Seller fails to
or is unable to have the same insured  against  within such ten (10) day period,
Purchaser may elect,  on or before the expiration of the Inspection  Period,  to
(i) terminate this Agreement (in which case



                                        5






the Earnest Money shall be returned to  Purchaser)  and neither party shall have
any further  liability or obligation to the other hereunder,  except as provided
in Paragraph 6.2.2 or (ii) accept the property subject to any such  encroachment
or violation, as "Permitted Exceptions".

         3.6  Purchaser  agrees to  deliver to  Seller,  within  the  Inspection
Period,  notice  as to  which  items  on the  title  report  or the  Survey  are
objectionable.

         3.7 COMMENCEMENT AND TERMINATION OF INSPECTION PERIOD. It is understood
that  the  Inspection  Period  begins  on the date on which  both  parties  have
executed  this  Agreement,  with  date  inserted  on the first  page,  and shall
terminate  at 5:00 p.m.  CST on the  thirtieth  (30th) day unless  said 30th day
shall be a Saturday or Sunday,  in which case the next business day shall be the
date of the termination of the Inspection  Period. It is further understood that
unless there is an extension in writing, the Inspection Period must be completed
by said date.

         3.8 NOTICE REQUIRED.  The parties agree that whenever a notice shall be
required  by either  party,  said notice  must be given  within the  "Inspection
Period", except notices dealing with the closing or survival.

                                   ARTICLE IV
                                   PRORATIONS

         4.1 INCOME AND EXPENSE ALLOCATIONS. The following shall be prorated, on
a  calendar-month  basis, to the 1st day of the month of the closing:  rents and
other income from the Property;  operating  expenses (on such service  contracts
and other  obligations  as Purchaser may agree to assume);  and general and real
property taxes and personal and business  property taxes for the year of closing
(based on the most recent  assessment  and the most recent levy).  If funding by
Purchaser does not occur by noon CST on Closing Date, adjustments shall be as of
the date of funding prior to noon CST.

         4.2 CLOSING COSTS. Purchaser and Seller shall pay their customary share
of all  taxes,  recording  fees,  if any,  imposed  on the  Deed,  or any  other
documents  executed in  connection  with the  transfer of the  Property.  Seller
agrees to pay cost of title insurance and Purchaser agrees to pay the additional
premium to obtain  "Survey  deletion".  Except as set forth in  Section  3.1(A),
Purchaser  shall  pay any  prepayment  penalty  charged  by the  holders  of any
existing notes or assumption fees, if any.

         Seller and Purchaser  acknowledge  that  Purchaser is purchasing one or
more  additional  properties  from  partnerships  affiliated  with  Seller  upon
substantially  the same  terms and  provisions  as set forth in this  Agreement.
Notwithstanding the


                                        6






foregoing,  Seller shall pay the title insurance  premium for title insurance on
all properties  purchased by Purchaser as if issued under one owner's policy for
the full amount of the total  accumulated  purchase price of all properties.  If
Purchaser  desires separate  owner's policies on each property,  Purchaser shall
pay the incremental cost of the issuance of separate owner's policies.

         4.3  ALLOCATION  OF RENTS.  Rents  collected by Seller prior to Closing
shall be prorated as agreed in 4.1 above.  Purchaser  shall apply rents received
after  Closing  first to payment of the current rent due to  Purchaser,  then to
delinquent  rents  due to  Purchaser,  and last to rents due to Seller as of the
Closing but uncollected  prior to settlement.  Purchaser  agrees to use its best
efforts in good faith to collect the amount of any rental  arrears  from tenants
and Purchaser  agrees to remit promptly to Seller any such arrears actually paid
by such tenants to  Purchaser.  Seller shall retain the right to commence  legal
action against a tenant for any delinquent rent apportioned to the Seller.

         4.4 PRIOR  LEASE  CONCESSIONS.  Seller  agrees to  maintain  its normal
leasing  procedure  until the Closing.  Seller  agrees that it will not give any
free rent concession other than in the ordinary course of business.  If any free
rent is given by Seller  under its normal  leasing  procedure  after the date of
this Agreement, all free rent must be given in the first month of the lease term
and  shall  not be for a  period  in  excess  of one (1)  month.  Upon  request,
Purchaser may waive this clause.

         4.5 ADJUSTMENT OF PRORATION.  In the event Purchaser or Seller provides
notice to the  other  within  six (6)  months  of  Closing  that any of the rent
prorated  pursuant  to Section 4.3 above or the  security  or cleaning  deposits
transferred to Purchaser at Closing pursuant to Section 7.2(D) below is in error
on account of a  misstatement  or error in the certified  rent roll delivered to
Purchaser at Closing  pursuant to Section  7.2(F)  below,  Seller and  Purchaser
shall  adjust such  proration or deposit  transfer  between  themselves  by cash
payment so as to achieve accurate proration or deposit transfer.

                                    ARTICLE V
                           POSSESSION OF THE PROPERTY

         5.1  POSSESSION.  Possession  of the  Property  shall be  delivered  to
Purchaser at closing, subject to the rights of the tenants under existing leases
and rental agreements and Permitted Exceptions.

                                   ARTICLE VI
                         CONDITIONS PRECEDENT TO CLOSING

         6.1 CONDITIONS PRECEDENT. Purchaser's obligation to



                                        7






purchase shall be subject to and contingent upon the satisfaction
of the following conditions precedent:

             (A) Receipt by Purchaser of an  engineering  report of building and
site conditions,  satisfactory to Purchaser in its sole discretion,  said report
to include in part, a description of any hazardous waste sites, hazardous wastes
and/or hazardous materials affecting the property.  Purchaser shall have fifteen
(15) days, but no later than the  termination of the Inspection  Period in which
to review the  reports  set forth  herein and  exercise  its right to reject the
Property based thereon or the right hereunder shall be deemed waived.

             (B) The receipt by Purchaser of Seller  documents  described in 7.2
below.

             (C) Sellers  representations  and  warranties  described in Article
VIII below remain true and correct.

             (D) There have been no material or adverse  changes to the property
or leases since the expiration of the Inspection Period.

             (E) Seller  acknowledges that Purchaser is a public entity and that
it is required to furnish  financial  statements to the  Securities and Exchange
Commission  in  connection  with  this  acquisition.  Seller  agrees to make the
information  available for Purchaser to audit the last 12 months of operation of
the  Property  so that a report  can be  generated  that is in  compliance  with
accounting Regulation S-X of the Securities and Exchange Commission.

             (F) Purchaser  determining  during the  Inspection  Period that all
water,  sewer, gas, electric,  telephone,  and drainage facilities and all other
utilities required by law or by the normal use and operation of the Property are
and at the time of closing will be installed  to the property  line,  are and at
the time of closing will be connected pursuant to valid permits,  and are and at
the time of closing  will be adequate to service the Property and to permit full
compliance with all  requirements of law and normal usage of the Property by the
tenants thereof and their licensees and invitees.

             (G) Purchaser  acknowledges that the selling  partnership  requires
the approval of its Limited Partners. Seller represents that it has commenced to
seek the approval of its Limited  Partners and has twenty-one (21) days from the
date hereof to do so. Seller shall inform  Purchaser  within said period of time
whether or not the Limited Partners have approved the sale. Seller may terminate
this  Agreement in the event it does not obtain the  requisite  consent from its
Limited  Partners.  Upon  termination  on account  of the  failure to obtain the
consent of the Limited



                                        8






Partners of Seller, all earnest money shall be returned to Purchaser.

         6.2  INSPECTION.  This  Agreement  shall  be  further  subject  to  and
contingent upon Purchaser's satisfactory inspection as follows herein below.

         6.2.1  PREPARATION FOR INSPECTION.  At the execution of this Agreement,
Seller  shall  deliver to  Purchaser  copies of the  following to the extent not
previously delivered to Purchaser: (The Inspection Period shall be extended as a
result of any delays by Seller in producing  the items  requested  herein unless
the Seller does not have them and notifies  Purchaser  with an extension of time
to reflect  delays of  notification.)  The current  rent roll for the  Property;
detailed  statements of income and expenses with respect to the Property for the
past two years;  the most recent tax bills for the  Property;  utility bills for
the  Property  for the twelve  (12)  months  previous  to the date  hereof;  all
contract,  mortgages, and other documents creating liens of security interest on
the Property,  or any part thereof and all promissory notes secured thereby; all
insurance policies  applicable to the Property to include loss runs for the last
three (3) years;  Plans and  Specifications  for the  Property  to the extent in
Seller's possession, service contracts,  Certificates of Occupancy to the extent
reasonably  available;  a copy of title  policy and most  recent  survey for the
Property.  A copy of any  environmental or engineering  reports on the property.
The rent  roll  shall be  certified  by  Seller to be  materially  accurate  and
complete to Seller's knowledge. Except as expressly set forth in this Agreement,
the  delivery of the  documents by Seller does not  constitute a  representation
(expressed or implied) by Seller of the truth, accuracy,  source or completeness
of such  information  and  Purchaser  agrees to look to its own  inspection  and
studies to  determine  such  matters.  However,  Seller  warrants  that all such
documents  were used by  Seller in the  ordinary  course  of  business  and were
produced from Seller's files.

         6.2.2  INSPECTION  OF  BOOKS  AND  RECORDS;   ACCESS.   Purchaser,  its
employees,  agents and  contractors  shall have  during  the  Inspection  Period
provided in  paragraph  3.7 above,  to enter upon the  Property  (subject to the
rights of the tenants)  during normal  business  hours for the purpose of making
physical  inspections  thereof,  including  but not  limited to roofs,  heating,
cooling,  electrical  and  plumbing  systems,  swimming  pool,  appliances,  and
structural  elements of the  buildings.  Upon the  conclusion of the  Inspection
Period this contract shall be deemed to be a firm agreement of purchase and sale
binding the parties hereto,  except as it may be terminated  prior to the end of
the  Inspection  Period  and  subject  to the other  provisions  and  conditions
contained  herein,  including  but  not  limited  to the  condition  imposed  by
Paragraph 6.1(A) above.



                                        9






         Purchaser's  rights to inspect the Property are subject to  Purchaser's
agreement  that (i) the Property is not damaged by Purchaser,  (ii) the Property
is left in a clean and safe  condition  (if found that way),  (iii) no tenant of
Seller is unreasonably  disturbed,  (iv) no employee,  independent contractor or
representative  of Seller or any tenant is injured,  interfered with or harassed
as a result of Purchaser's  actions, (v) such inspection does not interfere with
Seller's  operation  of the  Property,  and  (vi)  Purchaser  maintains  general
liability  (occurrence)  insurance in terms and amounts  satisfactory  to Seller
covering any accident  arising in  connection  with the presence of Purchaser or
its agents on the Property.  The inspection rights afforded herein are expressly
made subject to the rights of tenants under the Leases.  All  inspections  fees,
appraisal  fees,  engineering  fees and other  expenses of any kind  incurred by
Purchaser  relating  to the  inspection  of  the  Property  will  be  solely  at
Purchaser's  expense.  Seller shall  cooperate  with Purchaser in all reasonable
respects in making such  inspections;  however,  Seller shall not be required to
spend any sums to cooperate with  Purchaser,  except pay its employees and other
normal  costs.  Seller  hereby  reserves the right to have a  representative  of
Seller present at the time any such  inspection is made.  Except as specifically
provided in this Agreement, Purchaser acknowledges that Seller has no obligation
whatsoever to undertake any remedial work or other  curative  action as a result
of  Purchaser's  inspections.   Purchaser  shall  notify  Seller  no  less  than
forty-eight  (48) hours in advance of making  any  inspection  of the  interiors
apartment units on the Property.  Purchaser agrees to indemnify and hold Seller,
its tenants,  contractors  and  employees  harmless  from any and all  injuries,
losses,  liens,  claims,  judgments,  liabilities,  costs,  expenses  or damages
(including  reasonable attorney's fees and court costs) sustained against Seller
which  result from or arise out of any  inspections  or entry on the Property by
Purchaser  or its  representatives  or agents  pursuant to this  Agreement.  The
indemnification obligation set forth in the immediately preceding sentence shall
survive the  termination  or  cancellation  of this Agreement and the closing of
transaction evidenced by this Agreement for six (6) months.

         6.2.3 RIGHT OF TERMINATION  DURING INSPECTION  PERIOD.  Purchaser shall
also be permitted to review all original leases,  expense records,  tenant cards
and occupancy data  available.  If Purchaser is not  satisfied,  in its sole and
exclusive  discretion,  with the state of maintenance and repair of the Property
or the rents,  occupancy  or  expenses  of the  Property,  then  notwithstanding
anything  contained  herein to the contrary,  Purchaser  shall have the right to
terminate  this  Agreement by giving  written notice to Seller before the end of
the Inspection  Period,  and no party hereto shall have any further liability to
any other party hereto,  except as provided in Paragraph 6.2.2, and all deposits
shall be returned to Purchaser.



                                       10






         6.2.4 MORTGAGE  ASSIGNMENT  DUE  DILIGENCE.  Purchaser and Seller agree
that this  Agreement in addition to permitting  an  Inspection  Period of thirty
(30) days,  is  subject to the  approval  of the  Lender and the  acceptance  by
Purchaser  of  the  terms  for  assumption  of the  Loan,  which  may  not be to
Purchaser's liking.  Therefore, only as to the approval to assume the underlying
Loan, the  Inspection  Period shall continue until five (5) days after the final
consent for the sale subject to the mortgages is received.

         6.2.5 "RENT  READY".  On or prior to the Closing  Date,  Purchaser  may
inspect all apartment  units at the Property and note any missing  appliances or
personal  property or dead-bolt locks and provide Seller written notice of same.
Seller  may  elect,  but  shall  have no  obligation,  to  replace  any  missing
appliances or personal  property or dead-bolt locks that in fact were located at
the Property as of the expiration of the Inspection Period.

         6.2.6 CONDITION OF PERSONAL PROPERTY AT CLOSING.  All personal property
included in the sale and all mechanical,  electrical, heating, air conditioning,
sewer,  water and plumbing systems will be in the same working order at the time
of closing and in the same condition as at the time of the initial inspection by
Purchaser  reasonable  wear and tear  excepted.  If Seller  fails to replace any
missing  appliances or personal property or dead-bolt locks that were located on
the Property as of the expiration of the Inspection Period, Purchaser shall have
the option of waiving such requirement,  in writing,  and proceeding to closing,
or Purchaser  may  terminate  this  Agreement  and obtain a prompt return of its
deposit.

                                   ARTICLE VII
                                     CLOSING

         7.1  CLOSING.  Closing will be held on or about ten (10) days after the
agreement by the Lender as to the  assignment  and the assumption of the Loan by
the Purchaser,  however,  no later than ninety (90) days after the completion of
the Inspection Period, at such place and at such time as the parties may agree.

         7.2 SELLER'S DELIVERIES.  At closing,  Seller shall execute and deliver
to Purchaser  the Special  Warranty  Deed  referred to in Paragraph 3 hereof and
shall also execute, where necessary,  and deliver to Purchaser, the following in
a form reasonably acceptable to Seller and Purchaser:

             (A) A Bill of Sale, with special warranty of title transferring the
personal  property  (as shown in  Schedule  B) to  Purchaser  free of all liens,
charges and encumbrances, except those assumed by the Purchaser.

             (B) The  Title  Policy  issued  by the  underwriter  for the  Title
Company pursuant to the Title Commitment, subject only to



                                       11






the Permitted Exceptions, in the full amount of the Purchase Price, dated as of
the date of Closing.

             (C) Originals or copies of all signed leases and rental  agreements
in effect with tenants of the Property not for more than one (1) year.

             (D) All security and cleaning deposits made by such tenants. Seller
will give the tenants the required  notice of such transfer in  compliance  with
the laws of TEXAS so that  Seller  is no  longer  responsible  for the  tenants'
security deposits.

             (E) An  affidavit  of Seller  in such form as will  cause the Title
Company  to omit from the title  insurance  policy  the  exclusion  relating  to
unrecorded mechanic's and materialmen's liens.

             (F) A rent roll  certified  by Seller to Seller's  knowledge  to be
materially  accurate  and  complete  as of the date of  closing  in the form and
content  of the rent roll  normally  kept by Seller  in its  ordinary  course of
business,  however,  containing the actual rental, apartment number, any escrow,
security deposit, etc.

             (G) An  affidavit  of Seller,  as the title  company  may  normally
require,  that to the best of its  information and belief there are, on the date
of closing, no unsatisfied judgments, creditor's claims other than in the course
of business, tax liens, or pending bankruptcies involving Seller.

             (H)  Purchaser  shall cause an  inspection to be made by a licensed
extermination  contractor,  who is  regularly  engaged in the  business  of pest
control.  If said  contractor's  report  indicates  that there is any termite or
other wood-boring insects infestation and/or damage to the Property,  the Seller
shall proceed to have any and all corrective  treatment of the infestation,  but
not repair of damage,  completed  prior to closing.  (If not  possible  prior to
closing,  Seller shall deposit  sufficient sums as required by the extermination
contractor to make the treatment.)

             (I)  Assignments  of all Seller's  interest in the following in the
form  attached  hereto as EXHIBIT E: (1) all  assignable  licenses,  and permits
relating to the operation of the Property,  (2) the leases and rental agreements
with tenants of the Property, (3) the existing Property telephone number and (4)
the business and trade name as set forth in Par. 1.1.

             (J) Assignments  without  recourse of all warranties and guarantees
(see  Exhibit E) to the extent  such are still in effect and  provide  Purchaser
with copies of all such warranties in Seller's possession and guarantees without
limitation for all appliances, dishwashers,  disposals,  refrigerators,  heating
and air conditioning units, washers and dryers.



                                       12






             (K) Consent of the Seller's  authorized  officer to the sale of the
Property and any other approvals required under Seller's  partnership  agreement
or other organizational  documents,  which may affect Seller's ability to convey
indefeasible title.

             (L)  Satisfactory  evidence of the power and authority of Seller to
enter into and consummate this agreement acceptable to the title company.

             (M) Affidavit that to the knowledge of Seller,  Seller has received
no notice of the presence of asbestos and/or any other hazardous material at the
Property,  except  as set  forth  in any  reports  or  information  provided  to
Purchaser pursuant to Paragraph 6.2.1.

             (N)  Seller  shall  provide  a   satisfactory   and  valid  written
termination of the management  agreement executed by the existing management and
rental agent for the Property, without cost to the Purchaser.

             (O) A notice letter to all the  residents of the apartment  complex
as to change of ownership in the form prepared by the Purchaser.

             (P)  All  such  other  documents  as are  normally  transferred  at
settlement  in  the  jurisdiction  in  which  the  property  is  located  or are
reasonably requested by Purchaser or its counsel.

             (Q) A representation  letter as normally required by auditors for a
public  company in the form  attached  hereto as EXHIBIT  F. This  clause  shall
survive closing for one year.

         7.3 PURCHASER'S  DELIVERIES.  At closing and contemporaneously with the
Seller's compliance with the provisions of Section 7.2, Purchaser shall:

             (A) Pay to Seller the cash portion of the purchase price,  adjusted
for the prorations herein provided for in Article IV.

             (B) Execute and deliver an assumption of obligations  under leases,
securities,  any contracts  which may be accepted by the Purchaser and any other
obligations  specifically  set forth herein  (Exhibit "E") in a form  reasonably
acceptable to Purchaser and Seller.

             (C) Deliver to the Seller a resolution of the Purchaser that:

                 (i) This  Agreement  has been  duly  authorized,  executed  and
delivered by the  Purchaser  and is a valid and binding  agreement of Purchaser,
and



                                       13






                 (ii)  Purchaser  has  complete  unrestricted  power  to buy the
Property from the Seller and to execute any documents required to effectuate the
transfer.

             (D) Execute all such other documents as are normally transferred at
settlement  in  the  jurisdiction  in  which  the  property  is  located  or are
reasonably requested by Seller or its counsel.


                                  ARTICLE VIII
               SELLER'S REPRESENTATIONS, WARRANTIES AND C0VENANTS

         8.1  REPRESENTATIONS OF THE PARTIES.  Seller warrants (which warranties
shall not survive  settlement  unless designated to the contrary) that as of the
date hereof and as of closing hereof:

         As  used  in  this  Agreement,  the  phrase  "Seller's  current  actual
knowledge",  "Seller's  knowledge"  or words of like  effect  (i) shall mean and
apply to the  knowledge of Robert J. Werra,  who is a General  Partner of Seller
and  directly  involved  in the  negotiation  of sale and  purchase  transaction
described  herein and not to any other  parties,  (ii)  shall  mean the  current
actual knowledge of such person,  it being understood and acknowledged  that (a)
such person, in many instances,  is not involved in the day-to-day operations of
the  Property  and in many  instances,  is not  involved in the  negotiation  or
execution  of the leases,  management  contracts,  service  contracts,  or other
agreements in question, and (b) such person is not charged with the knowledge of
all of the acts and/or omissions of the predecessors in title to the Property or
with knowledge of all of the acts/or  omissions of Seller's agents or employees,
and (iii) shall not apply to or be construed to apply to information or material
which may be in the possession of Seller generally,  or incidentally,  but which
is not  actually  known to Robert J. Werra.  As used herein,  the term  "current
actual  knowledge"  of a party shall mean that no facts have come to the party's
attention in the ordinary course of business that would give the party knowledge
or notice that any such facts are not true, correct, and complete, and the party
has undertaken no investigation,  inquiry, or verification as to such matters to
determine  the  existence  or absence of such  facts,  and no  inference  of the
party's knowledge of the existence or absence of such facts should be drawn from
the statements made herein.

             (A) That Seller, is the owner in fee simple of the Property and has
the power to convey same.

             (B)  That  Seller  is  not  subject  to  any  other  agreements  or
arrangements,  with the  exception of the  requirement  to procure its partners'
consent and those  contained  in any  existing  mortgage  documents  which would
prevent  Seller from  selling the Property to  Purchaser.  This  warranty  shall
survive for one year following closing.



                                       14






             (C) All necessary  action has been taken by Seller to authorize the
execution of this Agreement and the performance of the obligations  contemplated
hereunder, which are not excluded elsewhere in existing mortgage documents. This
warranty shall survive for one year following closing.

             (D) Seller has no  knowledge  and to Seller's  knowledge it has not
been advised in writing that it is in default under any lease,  rental agreement
service or equipment contract, or mortgage or other encumbrances relating to the
Property. This warranty shall survive for one year following closing.

             (E)  Seller  has  no  knowledge  of  any  existing  or   threatened
litigation  which relates to or which would affect the  Property.  This warranty
shall survive for one year following closing.

             (F) Seller has no  knowledge  that any part of the  Property or the
operation  of the  Property,  is in  violation  or may violate any  governmental
statute,  regulation,  ordinance or building code or of any private restriction,
that any governmental authority requires any work to be done on or affecting the
Property, or that any governmental  authority has expressed an intent to condemn
or to make  special  improvements  for the  benefit of the  Property or any part
thereof. This warranty shall survive for one year following closing.

             (G) That Seller is not a "foreign person" within the meaning of the
Internal  Revenue Code of 1954,  as amended (the  "Code"),  and that Seller will
furnish to  Purchaser  prior to closing an  affidavit  in form  satisfactory  to
Purchaser confirming the same.

             (H) That to Seller's  current  knowledge,  the  Property  was never
utilized as a disposal site for hazardous waste products.

             (I) Seller  covenants  and agrees  that,  between this date and the
date of  closing,  Seller  shall  continue to  maintain,  operate and manage the
Property  in  a  manner  consistent  with  its  prior  practices,  making  every
reasonable  effort to do  nothing  which  might  damage  the  reputation  of the
Property or the  relationships  with the  tenants.  Seller  shall not permit the
modification,   extension  or  cancellation  of  any  tenant  lease  (except  in
accordance  with the terms of such lease) or any dealing  with any tenant  other
than the ordinary  course of managing the  Property,  without the prior  written
consent of  Purchaser.  If the leases of any tenants  expire  before thirty (30)
days after the date of  closing,  Seller  shall,  up to the date of closing  and
without  cost to the  Purchaser,  continue its normal  course of operation  with
respect to causing tenants to be obtained for apartments which are unrented.

             (J) Seller agrees that prior to closing, it will



                                       15






comply with the keyless,  dead-bolt lock  requirement to the extent set forth in
Paragraph 6.2.5.

         8.2  CONTINUATION OF  REPRESENTATIONS,  WARRANTIES AND COVENANTS TO THE
DATE OF CLOSING.  If each of the  warranties  set forth in this section does not
remain true up to and including the time of closing as to any material  matters,
this  Agreement,  at Purchaser's  election,  shall be  terminated,  Seller shall
return all payments made by Purchaser,  or Purchaser may elect to close the sale
and waive failure of the warranties.

         8.3 BREACH OF  REPRESENTATIONS,  WARRANTIES AND  COVENANTS.  The Seller
agrees to notify the Purchaser  upon  acquiring  knowledge  that any of Seller's
representations,  warranties or covenants contained herein do not remain true as
of the date of  Closing.  Purchaser  shall  have the  right  to  terminate  this
Agreement  for a material  breach and  receive the refund of the deposit and any
interest  earned  thereon.  However,  if Seller fails to notify  Purchaser  upon
acquiring such knowledge,  notwithstanding  the provisions of 8.2 above,  Seller
shall indemnify  Purchaser for all reasonable  costs incurred as a result of the
failure of any of Seller's  representations,  warranties or covenants  contained
herein to remain true as of the date of closing.

         8.4 "AS IS". EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, PURCHASER
ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY
NEGATES AND  DISCLAIMS ANY  REPRESENTATIONS,  WARRANTIES,  PROMISES,  COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR
IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH
RESPECT TO (A) THE VALUE, NATURE, QUALITY CONDITION OF THE PROPERTY,  INCLUDING,
WITHOUT  LIMITATION,  THE WATER, SOIL AND GEOLOGY,  (B) THE INCOME TO BE DERIVED
FROM  THE  PROPERTY,  (C)  THE  SUITABILITY  OF THE  PROPERTY  FOR  ANY  AND ALL
ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREOF, (D)THE COMPLIANCE OF OR
BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS
OF  ANY  APPLICABLE  GOVERNMENTAL  AUTHORITY  OR  BODY,  (E)  THE  HABITABILITY,
MERCHANTABILITY,  MARKETABILITY,  PROFITABILITY  OR  FITNESS  FOR  A  PARTICULAR
PURPOSE  OF THE  PROPERTY,  (F) THE MANNER OR  QUALITY  OF THE  CONSTRUCTION  OR
MATERIALS,  IF ANY,  INCORPORATED  INTO THE PROPERTY,  (G) THE MANNER,  QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY,  OR (H) ANY OTHER MATTER WITH
RESPECT TO THE PROPERTY,  AND  SPECIFICALLY,  THAT SELLER HAS NOT MADE, DOES NOT
MAKE, AND SPECIFICALLY  DISCLAIMS ANY REPRESENTATIONS  REGARDING COMPLIANCE WITH
ANY ENVIRONMENTAL  PROTECTION,  POLLUTION OR LAND USE LAWS, RULES,  REGULATIONS,
ORDERS  OR  REQUIREMENTS,   INCLUDING  SOLID  WASTE,  AS  DEFINED  BY  THE  U.S.
ENVIRONMENTAL  PROTECTION  AGENCY  REGULATIONS  AT 40 C.F.R.,  PART 261,  OR THE
DISPOSAL  OR  EXISTENCE,  IN OR ON THE  PROPERTY,  OF ANY  HAZARDOUS  MATERIALS.
PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY
TO INSPECT THE PROPERTY, PURCHASER IS RELYING SOLELY ON ITS OWN INVESTIGATION OF
THE



                                       16






PROPERTY AND NOT ON ANY INFORMATION  PROVIDED OR TO BE PROVIDED BY SELLER.  UPON
CLOSING,  PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS,  INCLUDING,  BUT
NOT LIMITED TO, ADVERSE PHYSICAL AND ENVIRONMENTAL  CONDITIONS MAY NOT HAVE BEEN
REVEALED BY PURCHASER'S  INSPECTIONS AND INVESTIGATIONS.  EXCEPT AS SET FORTH IN
THIS AGREEMENT,  PURCHASER FURTHER  ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
PROVIDED OR TO BE PROVIDED  WITH RESPECT TO THE  PROPERTY  WAS  OBTAINED  FROM A
VARIETY OF SOURCES AND THAT SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR
VERIFICATION OF SUCH INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY
OR COMPLETENESS OF SUCH INFORMATION.  SELLER SHALL NOT BE LIABLE OR BOUND IN ANY
MANNER BY ANY  VERBAL OR  WRITTEN  STATEMENTS,  REPRESENTATIONS  OR  INFORMATION
PERTAINING TO THE  PROPERTY,  OR THE  OPERATION  THEREOF,  FURNISHED BY ANY REAL
ESTATE  BROKER,  AGENT,  EMPLOYEE,  SERVANT OR OTHER PERSON.  PURCHASER  FURTHER
ACKNOWLEDGES  AND AGREES THAT THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS
MADE ON AN "AS IS"  CONDITION AND BASIS WITH ALL FAULTS.  IT IS  UNDERSTOOD  AND
AGREED THAT THE PURCHASE PRICE HAS BEEN ADJUSTED BY PRIOR NEGOTIATION TO REFLECT
THAT ALL OF THE PROPERTY IS SOLD BY SELLER AND PURCHASED BY PURCHASER SUBJECT TO
THE  FOREGOING.  THE  PROVISIONS OF THIS PARAGRAPH 8.4 SHALL SURVIVE THE CLOSING
AND SHALL BE INCORPORATED IN THE DEED AND BILL OF SALE.

                                   ARTICLE IX
                           CONDEMNATION; RISK OF LOSS

         9.1 PROPERTY DAMAGE. If, prior to closing,  any part of the Property is
damaged by fire or other  casualty  in an amount not  greater  than TWO  HUNDRED
THOUSAND  ($200,000,  DOLLARS,  Purchaser  agrees to accept the Property with an
assignment of: (i) the insurance proceeds,  (ii) any deductible,  and (iii) rent
loss insurance proceeds.  Seller may repair such damage before the date provided
herein  for  closing.  In the event that the damage as a result of fire or other
casualty shall be over TWO HUNDRED THOUSAND  ($200,000)  DOLLARS and such damage
cannot  reasonably be repaired by such time,  this  Agreement may be canceled at
the option of the Purchaser.  In the event of  cancellation  as aforesaid,  this
Agreement  shall become null and void and the parties shall be released,  except
as provided in Paragraph  6.2.2 and all payments made shall be returned.  Should
Purchaser  elect to carry out this  Agreement  despite such damage  Seller shall
assign to Purchaser all insurance  proceeds and any deductible arising from such
damage and will compensate  Purchaser for lost rent collections to the extent of
insurance proceeds  received.  Seller shall promptly notify Purchaser in writing
upon the occurrence of any such damage.

         9.2  CONDEMNATION.  In the event of any  actual or  threatened  taking,
pursuant to the power of eminent domain, all or any part thereof,  or any actual
or proposed sale in lieu thereof,  the Seller shall give written  notice thereof
to the Purchaser promptly after Seller learns or receives notice thereof. Upon a
taking of a material part of the Property greater than TWO HUNDRED


                                       17






FIFTY THOUSAND ($250,000) DOLLARS or any part of the building or more than 5% of
the parking area, Purchaser may elect to either (a) terminate this Agreement, in
which event the Deposit shall be immediately returned to Purchaser and all other
rights and obligations of the parties hereunder shall terminate immediately,  or
(b) to waive its right to terminate  this  Agreement and proceed to closing,  in
which  event  all  proceeds,  awards  and  other  payments  arising  out of such
condemnation  or sale (actual or  threatened)  shall be paid to the Purchaser at
closing,  if such  payment  has been  received.  If payment  has not as yet been
received,  but an amount has been agreed upon,  Seller shall assign the claim to
Purchaser.

         9.3 RISK OF LOSS.  Prior to  closing,  all  risks of loss or  damage by
every casualty shall be borne by the Seller.

                                    ARTICLE X
                               BROKER'S COMMISSION

         10.1  COMMISSION.  Purchaser  agrees to pay a brokerage fee to PINNACLE
REALTY,  pursuant to a separate  agreement.  Said  brokerage fee shall be deemed
earned if, and only if,  settlement  occurs  hereunder,  and shall not be deemed
earned even if Purchaser  and/or Seller  wrongfully  fail(s) to  consummate  the
purchase  and sale  herein  contemplated.  Seller and  Purchaser  represent  and
warrant  to each  other  that no other  brokerage  fees are or shall be owing in
connection  with this  transaction  or in any way with the Apartments and Seller
and  Purchaser  hereby  indemnify  and hold the other  harmless from any and all
claims of any other person so claiming.

                                   ARTICLE XI
                                     DEFAULT

         11.1 DEFAULT  DEFINED.  Default for the purpose of this Agreement shall
mean any failure by Seller or Purchaser to fulfill all the terms, conditions and
covenants  contained  herein,  however,  it shall not be an event of default for
either party to exercise its rights to terminate  this  contract as contained in
other provisions herein.

         11.2 SELLER'S  DEFAULT.  Upon Seller's default,  the Purchaser,  at its
election,  may as Purchaser's sole and exclusive remedy, pursue one, but not all
of the following:  (1) require specific  performance of Seller,  (2) cancel this
Agreement  and  obtain a prompt  return  of the  deposit,  in  which  case  this
Agreement  shall be terminated  and the parties  released  from all  obligations
hereunder,  except as set forth in Section 6.2.2, or (3) the Purchaser may waive
such defaults and proceed to settlement.  Seller shall  indemnify  Purchaser for
any  reasonable  attorneys'  fees  incurred by Purchaser if Purchaser  elects to
pursue its option (1) noted above.  Purchaser shall have no other remedy against
Seller in the event of Seller's default.


                                       18






         11.3  Purchaser's  Default.  Upon Purchaser's  default,  this Agreement
shall be terminated and both parties  released from all  obligations  hereunder,
except as provided in Paragraph  6.2.2, and the deposit shall be retained by the
Seller as  liquidated  damages.  Such  amount and terms are  agreed  upon by and
between  Seller and Purchaser as liquidated  damages,  due to the difficulty and
inconvenience of ascertaining and measuring actual damages,  and the uncertainty
thereof,  and the  payment of the deposit and the terms  provided  herein  shall
constitute full  satisfaction of Purchaser's  obligations  under this Agreement.
Such amount is agreed upon by and between  Seller and  Purchaser as a reasonable
estimate of just compensation for the harm caused by Purchaser's default. Seller
shall  have no other  remedy  against  Purchaser  in the  event  of  Purchaser's
default.

                                   ARTICLE XII
                            MISCELLANEOUS PROVISIONS

         12.1  ENTIRE   AGREEMENT.   This   Agreement   sets  forth  the  entire
understanding  between the parties;  it supersedes  all previous  agreements and
representations which are deemed merged herein and may not be modified except in
writing.

         12.2  ASSIGNMENT.  Purchaser  may assign  this  Agreement  without  the
consent of Seller to APPLE RESIDENTIAL  INCOME TRUST, INC. or a company owned by
APPLE RESIDENTIAL INCOME TRUST, INC.

         12.3 SEVERABILITY.  If any provision,  sentence, phrase or word of this
Agreement or the application thereof to any person or circumstance shall be held
invalid,  the remainder of this Agreement or the  application of such provision,
sentence,  phrase, or word to persons or  circumstances,  other than those as to
which it is held invalid, shall remain in full force and effect.

         12.4 BINDING EFFECT.  The parties to the Agreement  mutually agree that
it shall be binding  upon and inure to the  benefit of their  respective  heirs,
representatives, successors in interest and assigns.

         12.5  CONTROLLING  LAW. It is the intent of the parties hereto that all
questions with respect to the  construction of this Agreement and the rights and
liabilities of the parties shall be determined in accordance with the provisions
of the laws of the State of Texas.

         12.6  COUNTERPARTS.  To  facilitate  execution,  this  Agreement may be
executed in as many  counterparts as may be required.  It shall not be necessary
that the signature on behalf of both parties  hereto appear in each  counterpart
hereof,  and it shall be sufficient that the signature on behalf of both parties
hereto  appear  on  one  or  more  such  counterparts.  All  counterparts  shall
collectively constitute a single contract.

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         12.7 INCORPORATION BY REFERENCE. All of the Exhibits referred to herein
and/or attached hereto shall be deemed to constitute a part of the Agreement.

         12.8  HEADINGS.  The headings of the  Articles and sections  hereof are
inserted for  convenience  only and shall not be deemed to  constitute a part of
the Agreement.

         12.9  CONSTRUCTION  OF CONTRACT.  Each party  hereto have  reviewed and
revised (or  requested  revisions of) this  Agreement,  and therefore the normal
rule  of  construction  that  any  ambiguities  are  to be  resolved  against  a
particular party shall not be applicable in the construction and  interpretation
of this Contract or any amendments or exhibits hereto.

         12.10   CONFIDENTIALITY.   The  parties  shall  keep  confidential  the
existence  of  this  Agreement,  the  transactions  described  herein,  and  all
information  obtained  from the other  party both during and  subsequent  to the
transaction.  However, the covenants contained in this paragraph shall not apply
in respect to any  information  which (a) was already known to either party when
such information was received from the other,  (b) was readily  available to the
general public at the time of such receipt,  (c)  subsequently  becomes known to
the  general  public  through no fault or omission  by the other  party,  (d) is
subsequently  disclosed  by a third  party which has the bona fide right to make
such  disclosure,  or (e) is required to be disclosed  by law or a  governmental
agency. This clause shall survive closing.

         12.11  TIME OF THE  ESSENCE.  Both  parties  agree  that time is of the
essence.  However, any times set forth in this Agreement for Closing are subject
to receiving permission from Seller's mortgagee to transfer. The parties further
agree that the Closing will take place within ten (10) days after receipt of the
written  approval and completion of the documents  among  Purchaser,  Seller and
lender.

         12.12 HOLIDAYS. If any of the deadlines in this Contract ends on, or if
any event is to occur on, a Saturday,  Sunday, or legal holiday, the deadline or
the date for performance  shall  automatically be extended to the next day which
is not a Saturday, Sunday, or legal holiday.

         12.13 LEAD  WARNING  STATEMENT.  Every  purchaser  of any  interest  in
residential  real  property on which a  residential  dwelling was built prior to
1978 is notified that such property may present exposure to lead from lead-based
paint that may place young children at risk of developing lead  poisoning.  Lead
poisoning in young children may produce permanent neurological damage, including
learning disabilities,  reduced intelligence quotient,  behavioral problems, and
impaired memory. Lead poisoning also poses a particular risk. to pregnant women.
The seller of any interest in


                                       2O






residential  real property is required to provide the buyer with any information
on lead-based paint hazards from risk assessments or inspections in the seller's
possession and notify the buyer of any known  lead-based  paint hazards.  A risk
assessment or inspection  for possible  lead-based  paint hazards is recommended
prior to purchase.

         12.13.1.  Seller has no knowledge of lead-based paint and/or lead-based
paint hazard in the housing.

         12.13.2.  Seller has no reports or  records  pertaining  to  lead-based
paint and/or lead-based paint hazards in the housing.

         12.13.3.  Purchaser  is  hereby  granted a 10-day  opportunity  (or the
length  of the  Inspection  Period,  whichever  is  longer)  to  conduct  a risk
assessment or inspection for the presence of lead-based paint and/or  lead-based
paint hazards.

         12.14 EXHIBITS.  The following  exhibits are attached to this Agreement
and are  incorporated  into this  Agreement  by this  reference  and made a part
hereof for all purposes:

                       (a)     EXHIBIT A, the legal description of the Land.
                       (b)     EXHIBIT B, list of personal property
                       (c)     EXHIBIT C, (intentionally omitted)
                       (d)     EXHIBIT D, the form of Deed.
                       (e)     EXHIBIT E, the form of the Assignment and
                               Assumption of Personal Property, Service
                               Contracts, Warranties and Leases.
                       (f)     EXHIBIT F, the form of the Representation Letter.

         12.15 PURCHASER'S FAILURE TO PREVAIL.  Notwithstanding  anything to the
contrary contained or implied elsewhere herein, in the event Purchaser (i) files
a Lis Pendens or an action for specific  performance against Seller or otherwise
clouds  Seller's  title to the  Property  or any  portion  thereof  and fails to
prevail  in a  final,  non-appealable  judgment,  or (ii)  breaches  Purchaser's
agreements of indemnity contained in this Agreement, which survive, Seller shall
be entitled to pursue any remedies available at law or in equity,  including but
not limited to, suit for damages from Purchaser (including,  but not limited to,
attorney's fees and costs incurred by Seller in connection therewith).

         12.16 GENERAL  RELEASE.  In the event this  Agreement is terminated and
under the terms of the termination, the Purchaser is entitled to a refund of the
deposit and any  interest  thereon and  Purchaser  is  satisfied  that it has no
additional  claims,  it shall  forward a  General  Release  of Seller  and Title
Company to the escrow holder/Title Company),  which shall immediately refund the
deposit to the Purchaser with any interest thereon and expenses.  A copy of said
General Release shall be sent to Seller.


                                       21






         12.17  LIMITATION  DATE.   Purchaser  and  Seller  hereby  agree  that,
notwithstanding  any provision of this  Agreement or any provision of law to the
contrary, any action which may be brought by Purchaser against Seller for breach
of this Agreement or any  representations and warranties under this Agreement or
arising out of or in connection with the sale and purchase transaction described
herein,  shall be forever  barred unless  Purchaser:  (i) delivers to Seller not
later than one (1) year after the  Closing  Date a written  notice of its claims
setting  forth in  reasonable  detail  the  factual  basis  for such  claim  and
Purchaser's good faith estimate of damages arising out of such claim, (ii) files
a  complaint  or  petition  against  Seller  alleging  such  claim in a court of
competent appropriate jurisdiction no later than two (2) years after the Closing
Date (the "Limitation  Date"). No warranties or  representations or covenants of
Seller as set forth in this Agreement  shall survive beyond the Limitation  Date
and no action based thereon shall be commenced after the Limitation Date.

         12.18 NO RECORDATION. This Agreement shall not be recorded by Purchaser
for any reason,  except for a breach of this Agreement by Seller, and an attempt
to do so shall render the Purchaser  liable to Seller for any damages  allowable
at law or in equity on account of such breach.

                                  ARTICLE XIII
                                     NOTICE

         13.1 NOTICE.  All notices  required or permitted to be given under this
Agreement  shall be in writing and shall be sent or delivered to the address set
forth below (or such other address as may be hereafter specified in writing):

                     To Seller:                 New Emerald Texas, Ltd.
                                                Attention: John R. Werra
                                                6210 Campbell Road, suite 140
                                                Dallas, TX    75248
                                                Fax: (972) 931-0015

                     With a copy to
                       Seller's Attorneys:      Nathan M. Rosen, Esq.
                                                Nathan M. Rosen, P.C.
                                                4949 Westgrove Drive, suite 300
                                                Dallas, TX    75248
                                                Fax (972) 818-7606

                     To Purchaser:              Mr. Gus Remppies
                                                Cornerstone Realty Group, Inc.
                                                306 E. Main Street
                                                Richmond, VA 23219
                                                Fax: (804) 782-9302



                                       22






                  With a copy to
                   Purchaser's Attorneys: Harry S. Taubenfeld, Esq. 
                                          Zuckerbrod & Taubenfeld
                                          575 Chestnut St., P.O. Box 488
                                          Cedarhurst, NY    11516  
                                          FAX: (516) 374-3490

                                                   -and

                                          Robert E.Morrison, Esq. Brown
                                          McCarroll & Oaks Hartline 300 Crescent
                                          Court, Suite 1400 Dallas, TX 7S201
                                          Fax: (214) 999-6170

         l3.2 DELIVERY OF NOTICE. Notices sent either by Registered or Certified
Mail,  Return Receipt  Requested,  or by overnight  express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, or delivered to
a reliable  overnight  courier or by fax and  confirmed by hard copy by reliable
overnight  courier  Notices  sent in any other manner shall be deemed given only
when actually delivered at the specified address.

         IN WITNESS  WHEREOF,  the Seller and the  Purchaser  have  caused  this
Agreement to be executed this day and date first written above.

SELLER:

NEW EMERALD TEXAS, LTD.

BY: /s/ R. J. Werra
________________________

Its:_______________________

PURCHASER:

CORNERSTONE REALTY GROUP, INC.

BY:_________________________

Its:________________________



                                       23





                    With a copy to
                      Purchaser's Attorneys:     Harry S. Taubenfeld, Esq.
                                                 Zuckerbrod & Taubenfeld
                                                 575 Chestnut St., P.O. Box 488
                                                 Cedarhurst, NY    11516
                                                 Fax: (516) 374-3490

                                                                 -and

                                                 Robert E. Morrison, Esq.
                                                 Brown McCarroll & Oaks Hartline
                                                 300 Crescent Court, Suite 1400
                                                 Dallas, TX    75201
                                                 Fax: (214) 999-6170

         13.2 DELIVERY OF NOTICE. Notices sent either by Registered or Certified
Mail,  Return Receipt  Requested,  or by overnight  express mail shall be deemed
given when deposited in the United States Mail, postage prepaid, or delivered to
a reliable  overnight  courier or by fax and  confirmed by hard copy by reliable
overnight  courier.  Notices sent in any other manner shall be deemed given only
when actually delivered at the specified address.

         IN WITNESS  WHEREOF,  the Seller and the  Purchaser  have  caused  this
Agreement to be executed this day and date first written above.

SELLER:

NEW EMERALD TEXAS, LTD.

BY: ________________________

Its:_______________________

PURCHASER:

CORNERSTONE REALTY GROUP, INC.

BY: /s/ Gus G. Remppies
________________________

Its: V.P. Acquisitions
_______________________

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