8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) December 31, 2007

AMERICAN COMMUNITY PROPERTIES TRUST

(Exact name of registrant as specified in its charter)

MARYLAND (State or other jurisdiction of incorporation) 1-14369 (Commission File Number) 52-2058165 (I.R.S. Employer Identification No.)  

222 Smallwood Village Center

St. Charles, Maryland 20602

(Address of principal executive offices)(Zip Code)

(301) 843-8600

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On December 31, 2007, American Community Properties Trust (“ACPT” or the “Company”) amended its Purchase and Development Agreements with U.S. Home Corporation, a subsidiary of Lennar Corporation (“Lennar”).  The amendment requires Lennar to purchase approximately 100 lots for a total base purchase price of $7.5 million.  The first 51 lots, with an aggregate base purchase price of approximately $3.8 million, were purchased on December 31, 2007 (“December 2007 Takedown”).  The remaining lots subject to the amendment are required to be purchased by Lennar on or before June 1, 2008 (the “Initial 2008 Takedown”).  The Company further agreed that upon settlement of the December 2007 Takedown, Lennar will have satisfied their lot takedown requirements for calendar year 2007, resulting in 78 lot sales to Lennar for an initial price of approximately $6.0 million.

The amendment reduces the final purchase price for the lots within the December 2007 and Initial 2008 Takedowns to 22.5% of the selling price of homes constructed on such lots, provided the final price for a lot is not less than $78,000 per single family building lot or $68,000 per townhome building lot.  Lots required to be purchased subsequent to the Initial 2008 Takedown will be governed by the terms of the previous agreement.

The complete text of the amendment is attached and filed as Exhibit 10.4 to this current report on Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(d)	Exhibits
10.1	Purchase Agreement
10.2	Development Agreement
10.3	First Amendment to Purchase Agreement
10.4	Second Amendment to Purchase Agreement and to Development Agreement
99.1	Press Release dated January 4, 2008

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AMERICAN COMMUNITY PROPERTIES TRUST
	(Registrant)
Dated: January 4, 2008	By:/s/Matthew M. Martin
	Matthew M. Martin  Vice President and Chief Accounting Officer

EX-10.1

PURCHASE AGREEMENT

FAIRWAY VILLAGE, ST. CHARLES

THIS AGREEMENT, made this 4th day of  March, 2004, by and between ST. CHARLES COMMUNITY, LLC, a Delaware limited liability company (hereinafter referred to as “Seller”) and U.S. HOME CORPORATION, a Delaware corporation (hereinafter referred to a “U.S. HOME” or “Purchaser”).

WITNESSETH, that for and in consideration of the sum of ten dollars ($10.00) paid by the Purchaser to the Seller and other good and valuable consideration, the receipt of which is hereby acknowledged and in further consideration of the mutual promises and covenants herein contained, the parties agree as follows:

1.           PURCHASE PROVISIONS

1.01.          Property.  Seller hereby grants to U.S. HOME the right to purchase approximately 1,950 developed single family detached and single family attached home lots on the parcel of land in St. Charles, Charles County, Maryland (the “County”) as shown in Parcel C3, D2, Sheffield Neighborhood, Fairway Village, attached hereto as Exhibit A, and made a part hereof, (hereinafter referred to as the “Property”), individually a “Lot” or “Lots” collectively.  U.S. HOME may elect to purchase so many of such Lots as it deems appropriate in accordance with the schedules set forth in paragraph 1.03 below.

1.02           Purchase Price.  The purchase price for the Lots to be acquired by the Purchaser from the Seller shall be equal to thirty percent (30%) of the "selling price" of the homes Purchaser intends to construct on the Lots being acquired at any given Closing.  For purposes of this paragraph, the “selling price” shall be the gross sales price of any Lot and the residence and structure constructed or to be constructed thereon in accordance with the Purchaser's published retail prices in effect at the time of the applicable Closing, and shall include the Lot and any Lot premium charged by the Purchaser, the structure or structures built or to be built on the Lot, all of the Purchaser’s standard features for the model of the home in question, and unfinished basement, garage, porch and all floor coverings and standard finishes for the model in question, but shall not include charges for any upgrades or optional features selected by the third party homebuyer which are not routinely included in or with residences built by the Purchaser at the time of the closing in question, including but not limited to sunrooms and finished basements.  Additionally, for purposes of this section, "upgrades or optional features" shall only include those items or things which are traditionally upgrades or optional features for new homes sold in the Charles County area as of the date of the closing in question.  Sales incentives, commissions, closing help and closing costs paid by the Purchaser shall not be deducted.  In the event Purchaser substitutes house types on any Lot following Closing, then Purchaser shall so notify Seller, and at the time of closing from the Purchaser to the home purchaser, Purchaser shall pay to Seller, or Seller shall pay to Purchaser, as applicable, any difference in price of the affected Lot which results from the substitution of house types.  Purchaser shall keep the Seller informed of any price adjustments made from time to time during the term of this Agreement in the Purchaser's retail price of the homes to be constructed on the Lots by the Purchaser.

1.03.           U.S. HOME's Pace. Subject to Paragraph 2.13 hereof, Seller may terminate the rights granted to U.S. HOME herein if U.S. HOME fails to purchase two hundred (200) Lots per calendar year (prorated for any partial calendar year) provided that the Lots have been developed in accordance with the terms of this Agreement. The first year will commence after U.S. HOME has received certification from the Seller that the lots are fully subdivided and ready for issuance of building permits.

Lots purchased in excess of the number required by U.S. HOME during any period of time shall be carried over to and credited against requirements applicable to subsequent periods of time, and such carrying over and crediting shall be cumulative.

1.04.        Right of Entry. From and after the date of execution and delivery hereof, U. S. HOME and the agents and contractors of U. S. HOME, at the expense and risk of U. S. HOME, shall have the right to enter upon the Property for the purpose of surveying, the conduct of engineering studies and related engineering work, test borings and such other similar work as U. S. HOME shall consider reasonable and appropriate in connection with the development of the Property; provided, however, that from and after the date of this Agreement and until the date of settlement hereunder, neither of the parties hereto shall have any right to commit waste upon the Property without the prior written consent of the other party. U. S. HOME shall indemnify, defend and hold the Seller harmless from any and all costs, claims and liabilities arising out of the activities undertaken by U. S. HOME, its employees, agents or invitees pursuant to this Paragraph.

II.            GENERAL PROVISIONS

2.01.   Exercise of Rights. U. S. HOME's commitment to purchase specific lots shall be

made by giving at least five (5) days notice to Seller in the manner and at the place prescribed hereinafter.  Notices under this paragraph may be sent by overnight courier service or regular first-class mail or be given by telephone.

2.02.         Place of Settlement. Settlement shall be held at the place designated by U. S. HOME in the Baltimore-Washington Metropolitan Area during normal business hours.

2.03.        Terms at Settlement. At settlement, for any lot purchased hereunder, U. S. HOME shall pay the full purchase price thereof in cash, by wire transfer or by a U. S. HOME check. All taxes, metropolitan, district charges, front foot or other benefit charges or assessments charged on an annual or other periodic basis by a State, County, District, Commission or any agency or subdivision thereof shall be adjusted and pro-rated to the date of settlement, except that "rezoning transfer tax", "agricultural transfer tax" or assessments for improvements, existing in or on the Property prior to the date of settlement, even if payable thereafter, shall be paid by Seller. The cost of all documentary stamps, transfer taxes, recordation taxes or other taxes on the act of transfer of conveyance required to be paid in connection with the transfer of any lot shall be divided paid in full by U. S. HOME.  Recording costs, title examination and title insurance premiums shall be paid by U. S. HOME. Seller shall pay for the preparation of the Deed of Conveyance and any release fees and recording costs incurred to release liens paid at settlement.

2.04.       Purchaser’s Requirements.

(a)           Purchaser agrees that it will pay to Seller, at closing, in addition to the agreed purchase price for the Lots, any charges then in effect for connection to the sewer and/or water system including any charges per dwelling unit for the purpose of providing a sewer connection to the Mattawoman Interceptor or other interceptor, which charge is currently $6,543.00 per Lot.  Seller and Purchaser acknowledge and agree that all refunds, rebates and/or credits resulting from such payments, and all rights to seek repayment and/or refund of or credit against such payments, are hereby assigned to and shall be the sole property of the Seller and shall inure to the benefit of and be repaid directly to the Seller.  Seller and Purchaser further acknowledge and agree that any difference between the sewer connection charge applicable to the development outside of St. Charles and the connection fee charged on each lot within St. Charles, which difference currently equals $1,608, shall be the sole and exclusive property of Seller.  This fee will be due at the time of each closing of the Lots.

(b)           Purchaser will pay to Seller a fee of $200.00 per dwelling unit for off-site construction of interceptors, pumping or treatment facilities. This fee will be due at the time of each closing of the Lots.

(c)           Purchaser agrees that it will pay to the Seller (if such fees have previously been paid by Seller) or appropriate government unit at closing, any applicable school construction impact fees, any off-site road fees or the like then in effect and imposed by any appropriate governmental unit. Seller and Purchaser acknowledge and agree that all refunds, rebates and/or credits resulting from such payments, and all rights to seek repayment and/or refund of or credits against such payments, are hereby assigned to and shall be the property of the Seller and shall inure to the benefit of and be repaid directly to the Seller. The current charge per single family dwelling unit for the school construction impact fee is approximately $9,700.00, which is paid by the homebuyer as an excise tax and the current charge per dwelling unit for the off-site road fee is $750.00, which will be paid to Seller or appropriate governmental unit, as set forth above, at closing of each Lot.

2.05           Title.

(a)           Lots sold hereunder shall be conveyed by Seller with good and marketable, fee simple title, insurable at standard rates, free and clear of all liens and encumbrances of any kind, except:

(1)           Zoning regulations of the County or city in which the lots lie;

(2)   Ad valorem taxes and assessments not then due and payable;

(3)The matters set forth in Schedule B-2 of that title policy issued to Seller for the Property, a copy of which is attached hereto as Exhibit B and incorporated herein by reference;

(4)           Covenants, conditions, easements and restrictions of record ordinarily recorded in the development of residential housing developments and uniformly applicable to all Lots in each group or section submitted to Purchaser, and typical and customary utility agreements and subdivision agreements, provided such agreements shall not prevent or materially affect Purchaser’s ability to construct, market and sell Purchaser’s standard single family homes thereon.

(5)           Sewer and water facility charges (public and private).

(6)           Zoning indentures and orders for the St. Charles PUD, being Docket 90 and all amendments thereto, public and private utility, stormwater management and drainage easements and agreements, and the covenants, conditions and restrictions of the St. Charles PUD, including, but not limited to the architectural approval requirements of the Planning Design Review Board.

(b)           The Lots purchased hereunder shall be conveyed by Seller subject to the Declaration of Easements, Covenants, Conditions and Restrictions recorded for Fairway Village and Sheffield Neighborhoods and Fairway Village Architectural Covenants, as such Covenants may be amended from time to time.  At Closing, conveyance of the Property to the Purchaser shall be effected by a good and sufficient special warranty deed.

(c)           Should Seller be unable to deliver title to any Lot in accordance with the provisions of this Agreement or any extension of time agreed upon by the parties, it is agreed that Purchaser's liability as to any such Lot shall terminate; provided, however, that if the defects of title are of such nature that they can readily be remedied by legal action, such action shall be promptly undertaken by Seller, at its expense, and the time of Closing extended for a period not to exceed sixty (60) days for such action.

2.06           Development by Seller. Lots shall be deemed to be developed and available for closing hereunder when the following improvements have been installed and the following actions have been accomplished by Seller as to the Lot(s) to be settled:

(a)           Operational public sanitary sewer with a sewer house connection installed from the sewer main to one foot inside the Lot line, and any and all off-site sewer extensions installed and operational and all fees paid in full.  Seller will install the sewer house connection at a depth of not more than eight feet (8’) at the property line.

(b)           All storm drainage and storm drainage systems as required by the appropriate governmental authority for the Lot(s) in question, including payment of all off-site fees and charges in respect thereto.

(c)           Public water by way of governmentally approved system serving the Lot(s) in question, with a water house connection installed one foot inside the Lot line, and any and all off-site extensions installed and operational and all fees paid in full.  Seller will install the water house connection at a depth of not more than eight feet (8’) at the property line.

(d)           Clearing, grubbing and grading of streets and rights of way, and the construction of concrete curbs and gutters, sidewalks other than those located on the Lots and base course paved streets and roads, including paved access to a public thoroughfare, as required by the appropriate governmental authority for the Property. Bonds shall be posted by Seller, as required by appropriate County authorities, to cover the cost of final paving, other roadway improvements and any other items which are required by the County to be bonded, and Seller shall remain obligated for the completion of the final course of paving following Closing. Construct public pathways required by the County, if any.

(e)           Lots will be cleared, grubbed and graded to + or – 0.2’, based upon U. S. HOME’s grading plans, and balanced such that house construction can occur on each individual Lot without the need to import or export significant (i.e. in excess of six standard dump truck loads per Lot) material.  When part or all of the foundation, at the design elevation of a house sited on a given Lot, cannot be placed at natural grade, Seller will supply control-fill house pads with the following dimensions:  overall length and width of the dwelling unit and garage, plus five (5) feet on all sides.  Seller will utilize clean, controlled fill and provide compaction certifications (95% compaction) from a geotechnical engineer chosen by Seller and reasonably acceptable to U. S. HOME for all such fill Lots.  A copy of these certifications and daily inspection reports shall be provided by Seller to U. S. HOME no less than ten (10) days prior to Lot Inspection of any Lot hereunder.

(f)           Such underground electric, telephone and cable television lines, and gas lines, as shall be necessary to service residential units, installed as required by the appropriate private or public utility, to each unit shown on the final approved plans of the Lot(s) in question, with connection stubs located at the property line of each Lot.  Gas stubs have been provided to the lots by Washington Gas Light with the intention to use natural gas for heating and hot water.

(g)           Street signs, and street trees, if any, as required by appropriate governmental authority for the Property either paid for or bonded with bonds approved by the appropriate governmental authority.

(h)           Sediment and erosion control measures on the Lot(s) in question for street and utility construction and overlot grading as required by the appropriate governmental authority. Seller shall establish and maintain those facilities as required by appropriate governmental authorities.  Purchaser shall provide sediment and erosion control for house construction.

(i)           Seller shall install all recreational areas, trees and shrubbery, if any, as shown on the public areas of Seller's final approved plans, as soon as practical, but not as a condition precedent to any closing hereunder; provided, however that such recreation areas, trees and shrubbery shall be completed in a timely manner so as not to delay or impede Purchaser's ability to obtain building and/or occupancy permits for the homes to be constructed on the Lots by Purchaser.

(j)           Delivery by Seller to Purchaser of an engineer's certificate from Whitman, Requardt and Associates, project engineer, certifying in writing that the improvements in Subparagraphs 2.06 (a) through 2.06 (f) and 2.06(h) above have been completed in compliance with the governmentally approved plans and local subdivision and development standards as to the Lot(s) to be settled.

(k)           Purchaser is able to obtain a building permit from appropriate County authorities, and upon completion of construction in accordance with the approved plans, Purchaser is able to obtain an occupancy permit, for a typical Purchaser single-family home of the type which Purchaser wishes to build in the subdivision.

(l)           If VA or FHA require a bond or letter of credit, the Seller shall bond any improvements that are Seller's responsibility and Purchaser will bond any improvements that are Purchaser's responsibility.

(m)           Seller shall have prepared and recorded appropriate documents to subject the Lots to the Declaration of Easements, Covenants, Conditions and Restrictions for Fairway Village and Sheffield Neighborhoods, which will, upon submission, be approved for FHA/VA financing.

(n)           Provide survey controls necessary for construction stakeout and any permanent monuments required by law. The Seller shall install all property markers at the earliest practical time in accordance with governmental regulations or post a bond as required. The Seller will assign to Purchaser whatever warranties the Seller obtains from its engineers.

(o)           These development obligations shall survive the settlement on any or all of the Lots.

(p)           Seller represents and warrants that water and sewer services shall be furnished by the Charles County Department of Utilities or such other legal entity responsible for furnishing water and sewer services and such services shall be available to Purchaser for each dwelling unit, as and when required by Purchaser, in accordance with the rates, rules and regulations then in effect.

(q)           (i)    Seller is including in the sale price of the Lots as set forth herein all amenities, including but not limited to parks, playgrounds, school sites and neighborhood centers with swimming pool.  The Seller will keep the Purchaser informed as to the projected start date of any such center. In the interim, the Seller will arrange for all of the Purchaser’s homebuyers to have access and full use of a neighborhood facility until the Sheffield Neighborhood Center is completed. A fee for maintenance of community facilities and the use of the interim facility will be applicable in accordance with any assessments applied as specified herein, i.e. no more than 75 cents per hundred dollars of tax valuation of property annually.

(ii)           Seller will sell, donate or dedicate to the appropriate County authority all school sites, i.e. one elementary and one high school site required for Fairway Village, as soon as practical, but not as a condition precedent to any Closing hereunder; provided, however, that such school sites shall be sold, donated or dedicated in a timely manner so as not to delay or impede Purchaser's ability to obtain building and/or occupancy permits for the homes to be constructed on the Lots by Purchaser. 

 When the foregoing have been accomplished by Seller as to any Lot or group of Lots, which Seller intended to sell as a part of the Lots hereunder to the Purchaser, Seller shall provide written notice thereof to Purchaser, and closing shall occur in the manner and time periods required by this Agreement.

2.07           Purchaser's Responsibilities.  Purchaser will be responsible for the following:

(a)           Construct and pay all costs for water, sewer, gas, telephone, cable TV, and electric installation from the Seller improvements, as shown on the final plans approved by the County, required by Section 2.06(f) to the dwelling and all charges of tap-in connection to the sewer and water systems as described in Section 2.06(a) and (c).  Purchaser will use its best efforts to provide gas to each house to the fullest extent possible.

(b)           Perform final grading for dwelling. Provide sediment control measures as may be required by the County for home construction on the lots only.

(c)           Construct sidewalks (on lot only) as may be required by the County, adjacent to the dwelling unit or as required by the final plans for the Property, including those sidewalks within street rights-of way adjacent to the Lots.

(d)           Provide and install all mailboxes onto provided mailbox structures as required by local Post Office and the Fairway Village Planning and Design Review Board.  Purchaser will contact St. Charles Community, LLC, Land Development Division, at least two weeks prior to a move-in where a mailbox stand is needed.  Provide a light fixture in the front yard of each unit, such fixture as approved by the Design Review Board, or at the option of the Seller pay Two Hundred Dollars ($200.00) per unit towards a street light program.

(e)           Keep the Lots clean of paper and construction debris on a continuing basis and do not store construction materials behind the curb in the road right of way.

(f)           Sediment and erosion controls on individual building Lots as required for construction of a dwelling on that Lot. Sediment control measures must be installed on the Lot only and not within the road right of way.

(g)           Enter the Lots through the construction entrance only, provided a construction entrance is maintained by Seller.

(h)           Repair any damage to the curb and gutter or street which results from Purchaser's construction activity pursuant to Subparagraph (k) below and clean the street of dirt or other materials which results from Purchaser's activity.

(i)           Purchaser shall pay all fines imposed by Maryland Department of the Environment due to failure of Purchaser to comply with Erosion and Sediment Control Ordinances caused by Purchaser's construction activities, whether such fines are assessed against Purchaser and/or Seller. Purchaser will defend and indemnify Seller for any and all costs and expenses (including reasonable legal fees and court costs) in any action arising from actions taken by the Maryland Department of the Environment due to failure of Purchaser to comply with Erosion and Sediment Control Ordinances

(j)           Purchaser will preserve trees designated to be saved as shown on the Final Development Plan.

(k)           Prior to each settlement hereunder, representatives of Seller and Purchaser shall inspect the Seller's improvements relating to that Lot or Lots and agree on a list of damage deficiencies (Lot Inspection Report) a copy of which is attached as Exhibit C, for correction or completion by Seller. Seller shall complete or correct all items listed on the Lot Inspection Report within 30 days following the date thereof.  Responsibility for any damage to said improvements beyond the Lot Inspection Report, not caused by Purchaser's agents or employees, that occurs after said inspection shall be borne by Seller.  Any damage caused by Purchaser’s agents or employees shall be repaired by Purchaser, on terms as follows:  Said responsibility shall include, but not be limited to, repair or replacement of such damage to the satisfaction of the appropriate governmental authority. Purchaser shall commence said repairs within twenty (20) days of written request by Seller. Notwithstanding the above, Seller shall remain responsible for faulty workmanship or defects in any of Seller’s construction work, including but not limited to road subgrade, pavement and utility construction. After Purchaser has obtained a final inspection for all houses built on Lots purchased by Purchaser under this Agreement, at Purchaser's request, representatives of Seller and Purchaser shall again inspect the total improvements relating to those lots and agree on a list of repairs or replacements (using the Lot Inspection Report attached hereto as Exhibit C) to be accomplished by Purchaser at its expense. Responsibility for any damage to said improvements beyond the Lot Inspection Report shall be borne by the party causing such damage, upon a specific showing that said party, by its employees, agents or contractors caused such damage. All repairs required of Purchaser hereunder shall be to the reasonable satisfaction of the Seller, provided, however that if Seller fails to notify Purchaser in writing of any deficiencies in Purchaser’s repair work within thirty (30) days following Purchaser’s notice to Seller that Purchaser has completed all such repairs, then Purchaser's responsibility for repairs shall be deemed satisfied and Seller shall be completely and solely responsible for satisfying the appropriate County authorities and obtaining a release of Seller's bonds.

In the event that Seller and Purchaser are unable to agree as to the cause of and/or the responsibility for any such damages, the dispute shall be submitted to an engineering firm mutually agreed upon by both parties to act as arbitrator. The decision of the arbitrator shall be binding upon both Seller and Purchaser and shall be enforceable by any Maryland court having jurisdiction.

(l)           Purchaser will maintain a furnished model in the subdivision.  The model will be open at published hours to be determined by Purchaser.  Purchaser has the option to maintain additional models if desired.

(m)           Purchaser represents and warrants that its intention in acquiring the Property is for the purpose of building and selling single-family units.

(n)           The Seller advises Purchaser and Purchaser agrees to and shall advise all purchasers of lots from the builder, that the County has the right and authority to subject said lots to uniform front-foot benefit charges, in accordance with Charles County policies and regulations.  In addition, Purchaser shall provide all homebuyers with the Charles County required notice of the now applicable School Construction Excise Tax.

(o)           Purchaser agrees that any dwelling units constructed by it on the aforesaid Lots shall be in accord with the standards, specifications, rules and regulations of all applicable governmental agencies.

(p)           Architectural Approval.

(i)           Purchaser shall submit to the Fairway Village Planning Design and Review Board for its written approval, floor plans, elevations, plans for styles and exteriors, for all new dwelling units proposed to be constructed by the Purchaser on the Lots and for any other structures from which sales of dwelling units will be made. The Purchaser acknowledges that the Fairway Village Planning and Design Review Board or other committee designated by that Board, has the absolute right to approve or disapprove in its sole but reasonable discretion any and all site plans and architectural plans for structures to be constructed in the Fairway Village.

(ii)           Written approval or disapproval of plans, elevations and other materials submitted by the Purchaser to the Planning and Design Review Board shall be delivered to the Purchaser within thirty (30) days after submission of such plans by the Purchaser. In the event that the Fairway Village Planning and Design Review Board or any committee designated by that Board shall fail to deliver written approval or disapproval of the Purchaser's plans within thirty (30) days after submission of such plans to the Board, it shall be conclusively presumed that the plans submitted have been approved.  

(q)           Purchaser agrees that in its sales program, advertising, publicity and public relations campaign, copy for newspapers, radio, television, billboard and other advertising media and in brochures, circulars and the like, the name and logo “St. Charles” shall be publicized in a prominent manner, and that all advertising copy shall be submitted to and approved by Seller prior to being used by Purchaser. Provided, however, that Purchaser reserves the right to place advertisements which feature more than one Purchaser community and this paragraph shall not apply to such type of advertising.

(i)           Purchaser agrees that any advertisement for the sale of housing constructed by it at St. Charles will adhere to the following restrictions:

    (ii)          All advertising in any communications medium or any printed matter made available to the public shall contain the equal housing opportunity logo, statement or slogan of the Department of Housing and Urban Development (37 F.R. 6702, Table II).

    (iii)         Seller shall provide the necessary signs from the road to the model home site.

(r)           Purchaser agrees that all of the Lots conveyed under this Agreement are subject to all restrictive covenants referred to herein, as such covenants may be amended from time to time; provided that no such amendment shall have a material adverse effect on Purchasr’s ability to construct, market and sell its proposed homes on the Lots. The covenants will contain the power of assessment in the Sheffield Neighborhood Association, Inc., its successors and assigns. Such assessment shall be prorated between the Purchaser and Seller as of the date of settlement. The assessment shall not be more than 75 cents per hundred dollars of tax valuation of the Property annually.

(s)           Purchaser agrees that prior to and during the period in which a home or homes on the Property are being constructed, Purchaser shall permit Comcast, or its purchaser or assignee, and its agents, employees and contractors, to lay CATV cable in the same trenches opened for the running of electric lines and, at reasonable times and upon reasonable notice, to enter the premises and pre-wire the premises for cable television service. The right of access granted hereby shall be for the benefit of and exercisable by Comcast, or any successor or assignee thereto succeeding to the ownership or operation of its cable television system in St. Charles. Seller agrees to indemnify Purchaser for any claims filed against Purchaser by Comcast.

(t)           Purchaser agrees that neither it nor anyone authorized to act for it will refuse to sell, after the making of a bona fide offer, or refuse to negotiate for the sale of or to otherwise make unavailable or deny a Lot covered by this Agreement to any person because of race, color, religion, sex, national origin, family status, handicap, age, or other discriminatory basis.

(i)           Seller and Purchaser agree that any restrictive covenant on the Property relating to race, color, religion, sex, or national origin, or other discriminatory basis is recognized as being illegal and void and is specifically disclaimed.

2.08           Removal of Debris. Each party shall remove all of its equipment, material and all debris resulting from their respective development.

2.09           Common and Recreational Areas and Open Space. The parties hereto recognize that provisions may have to be made for the maintenance and management of common areas, open space, and recreation facilities and areas. It will be Seller's responsibility to establish such provision through an overall community association and such other appropriate means as Seller may elect. Purchaser agrees to be a member of any such association while Purchaser owns Lots within such association's jurisdiction, and to otherwise cooperate fully with the establishment and observance of such provisions for the maintenance and management of the common and recreational areas and open space. Purchaser also agrees to make all sales subject to such approved provisions as may be applicable thereto.

2.10           Seller's Representations and Warranties. The Seller represents and warrants to Purchaser that, as of the date of execution and delivery of the Agreement and as of the date of each closing:

(a)           The Seller (i) has the full right, power and authority to enter into this Agreement; (ii) has the full power and authority to bind all persons having any interest in the Property (excluding any mortgagee of the Property and any party secured by any deed of trust encumbering the Property) to the obligations of the Seller set forth in this Agreement; (iii) has obtained all consents and approvals necessary to make this Agreement binding upon the Seller and to permit performance by the Seller of the terms and provisions of this Agreement.

(b)           This Agreement does not violate the terms of any other agreement to which the Seller is a party or by which the Seller or the Property is bound.

(c)           The Seller is not a "foreign person" within the meaning of the Internal Revenue Code and the transaction contemplated hereby does not constitute a disposition of a U.S. real property interest by a foreign person, and Seller will sign an affidavit to this effect at each Closing.

(d)  Seller has good and marketable title to the Property subject only to the matters described in Sections 2.05(a)(1)-(6).

(e)  There is no pending, nor, to the best of Seller’s knowledge, threatened condemnation affecting the Property or any portion thereof.

(f)  Seller has not received notice of violation of any laws, ordinances, regulations, statutes, rules or restrictions pertaining to and affecting the Property.

(g)  There are no legal actions, suits or other legal or administrative proceedings, pending, that affect the Property or any portion thereof.

(h)  Except as disclosed (i) elsewhere in this Agreement or (ii) in the public records (including but not limited to zoning records), no written or verbal commitments have been made to any governmental authority, utility company, school board, church or other religious body, or any homeowners association, or to any other organization, group, or individual, relating to the Property which would impose an obligation upon Purchaser or their successors or assigns to make any contribution or dedications of money or land or to construct, install, or maintain any improvements of a public or private nature on or off the Property.

(i)  There has been no excavation, dumping or burial of any refuse materials or debris of any nature whatsoever on the Property and to the best of Seller’s knowledge, there are no Hazardous Materials (as defined below) on the Property that would subject Purchaser to any liability under either Federal or state laws, including, but not limited to, the disposal of any foreign objects or materials upon or in the Property, lawful or otherwise, and without limiting the generality of the foregoing, to the best of Seller’s knowledge:  (1) the Property is not now and has never been used to generate, manufacture, refine, transport, treat, store, handle, dispose, transfer, produce, process or in any manner deal with Hazardous Materials (as that term is hereinafter defined);  (2) no Hazardous Materials have ever been installed, placed, or in any manner dealt with on the Property; and (3) no owner of the Property or any tenant, subtenant, occupant, prior tenant, prior subtenant, prior occupant or person (collectively, “Occupant”) has received any notice or advice from any governmental agency or any Occupant with regard to Hazardous Materials on, from or affecting the Property.  The term “Hazardous Materials” as used herein includes, without limitation, gasoline, petroleum products, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, polychlorinated biphenyls or related or similar materials, asbestos or any material containing asbestos, or any other substance or material as may be defined as a hazardous or toxic substance by any Federal, state or local environmental law, ordinance, rule, or regulation including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601, et seq.), the Hazardous Materials Transportation Act, as amended (42 U.S.C. Section 1801, et seq.) the Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 1251, et seq.), the Clean Air Act, as amended (42 U.S.C. Section 7401, et seq.) and in the regulations adopted and publications promulgated pursuant thereto.

(j)  To the best of Seller’s knowledge, no part of the Property has been designated as inhabited by any endangered species by any governmental agency having jurisdiction.

(k)  Seller has not filed, voluntarily or involuntary, for bankruptcy relief within the last year under the laws of the United States Bankruptcy Code, nor has any petition for bankruptcy or receivership been filed against Seller within the last year.

(l)  Purchaser is the sole contract purchaser of the Property, including all surface and mineral estates.

(m)  Seller has not received notice, either oral or written, and has no knowledge that any governmental or quasi-governmental agency or authority intends to commence construction of any special or off-site improvements or impose any special or other assessment against the Property or any part thereof.

(n)  There are no oral or written service, maintenance, landscaping, security, management or other similar contracts which affect the operation or maintenance of the Property.

(o)  There are no leases, oral or written, affecting the Property or any part thereof.

(p)  To the best of Seller’s knowledge, there is no annexation of the Property into any city or town currently in process and contemplated.

(q)  There are no adverse or other parties in possession of the Property, or any part thereof.

(r)  The mineral or other subsurface estates have not been severed from the surface estate.

2.11           Purchaser's Representations and Warranties.  Purchaser represents and warrants to the Seller that, as of the date of execution and delivery of this Agreement and as of the date of each Closing:

(a)           Purchaser (i) has the full right, power and authority to enter into this Agreement; and (ii) has obtained all consents and approvals necessary to make this Agreement binding upon Purchaser and to permit performance by Purchaser of the terms and provisions of this Agreement.

(b)           This Agreement does not violate the terms of any other agreement to which Purchaser is a party or by which Purchaser or its property is bound.

(c)           Purchaser will promptly apply for and diligently pursue its application for building and other permits.

2.12           Real Estate Commissions.  Each party represents and warrants to the other that it has not used the services of any real estate agent, broker or finder with respect to the transaction contemplated herein, and each party agrees to defend, indemnify and hold the other party harmless from any claims for brokerage commissions resulting from any agreement between any broker and the indemnifying party.

2.13.         Default.

(a)           U. S. HOME's Default. If U. S. HOME is the defaulting party, after notice given and after a ten (10) day cure period, because of the difficulty in calculating damages, the parties agree that Seller's sole and exclusive remedy at law if the Purchaser fails to meet the pace of take downs as described in Section 1.03, or any other default covered in this contract, the Seller shall have the right to terminate this Agreement and retain the Deposit as full liquidated damages as Seller’s sole remedy.  Upon any such termination, neither party shall have any further rights or obligations under this Agreement, except with respect to Lots previously purchased by U.S. HOME hereunder.  Without limitation to the foregoing, upon such termination, Seller shall have the right to sell and convey any one or more Lots not previously purchased by U.S. HOME to any third party home builder or developer of Seller’s selection.

          (b)             Upon any default hereunder by Seller, after notice given and after a ten (10) day cure period, if Seller fails to cure or correct the default, U.S. HOME shall have available all remedies at law or in equity, including, without limitation, the right to specific performance of this Agreement.

In any action or proceeding brought to enforce the provisions of this Agreement by either party, in addition to all other rights and remedies set forth above, the prevailing party shall be entitled to an award of its costs incurred in connection with such action or proceeding, including, without limitation, all of its reasonable attorney’s fees.

     For purposes of this Agreement, a default under this Agreement by Seller shall also constitute a default by Seller under that Development Agreement, dated March 4, 2004, between Seller, as "Developer" thereunder, and Purchaser, as "Builder" thereunder (the "Development Agreement"), and a default under the Development Agreement by either party shall also constitute a default under this Agreement by that party; however, a default under this agreement by Purchaser shall not constitute a default by Purchaser under the Development Agreement.

 2.14           Notices. All notices authorized or required herein shall be in writing and shall be considered given when delivered if hand delivered, one (1) business day following deposit with a national overnight courier service, or three (3) business days following deposit, postage prepaid, with the U.S. Postal Service, by registered or certified mail, return receipt requested, to Seller or U. S. HOME at their respective addresses as set forth below (or any substitute address if notice of substitution is given in accordance with this section):

SELLER:                             St. Charles Community, LLC

                                                            222 Smallwood Village Center

                                                            St. Charles, Maryland 20602

                                                            Attention:  Edwin L. Kelly

With copy to:                  Chapman, Bowling & Scott, P.A.

                                                           P.O. Box 610

                                                           La Plata, MD 20646

                                                           Telecopy No.  301-870-6471

                                                           Attention:  Stephen H. Scott, Esq.

PURCHASER:                  U. S. HOME CORPORATION

10230 New Hampshire Avenue

                                                           Suite 300

                                                           Silver Spring, MD 20903

                                                           Attention:  Philip F. Barber, Division President

With a copy to:              U.S. Home Corporation

                                                          Legal Department

10707 Clay Road

                                                          Houston, TX 77041

                                                          Telecopy No.: 713-877-2471

And to:                            Walsh, Colucci, Lubeley, Emrich & Terpak, P.C.

 13663 Office Place, Suite 201

 Woodbridge, VA 22192

 Telecopy No.:  703-690-2412

 Attention:  David J. Bomgardner, Esq.

2.15           Headings. The headings of the paragraphs herein are for convenience only and shall not affect the meanings or interpretations of the contents thereof.

2.16           Complete Agreement. This Agreement represents the complete understanding between the parties hereto and supersedes all prior negotiations, representations or agreements, whether written or oral, as to the matters described herein. This Agreement may be amended only by written instrument signed by both parties. No requirement, obligations, remedy or provision of this Agreement shall be deemed to have been waived, unless so waived expressly in writing, and any such waiver of any provision shall not be considered a waiver of any right to enforce such provision thereafter. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement shall be construed according to the laws of the State of Maryland and uncertainties shall not be construed against the drafter.

2.17           Severabilitv. If any provision of this Agreement shall be held violative of any applicable law or unenforceable for any reasons, the invalidity of unenforceability of any such provision shall not invalidate or render unenforceable any other provision hereof, which shall remain in full force and effect.

2.18           Survival. The covenants, agreements and conditions herein contained shall survive recordation of the Deeds of Conveyance and shall inure to the benefit of and bind the successors and assigns of the parties hereto.

2.19           Assignment of Agreement. U. S. HOME and Seller shall not have the right to assign this Agreement without the prior written consent of the other party, which shall not be unreasonably withheld. In considering an assignee, each party shall be entitled to adequate assurances of the assignee's financial capability to perform under this Agreement and the assignee's ability to physically perform under this Agreement. And purported assignment of this Agreement in violation hereof shall be voidable at the option of the other party.  Notwithstanding the above, Purchaser shall have the right to assign this Agreement, without the Seller’s approval, to Lennar Corporation (Purchaser’s corporate parent) or to any affiliate of Lennar Corporation or Purchaser.  Upon any such assignment, the assignee shall become the Purchaser for all purposes of this Agreement.

2.20           Authority. Each signer of this Agreement warrants to the other party that he or she has full authority to execute this Agreement.

2.21           Time.  Time is of the essence with respect to each and every provision of this Agreement.

(SIGNATURES APPEAR ON FOLLOWING PAGE)

IN WITNESS WHEREOF, the Parties by their respective duly authorized officers, have executed this agreement and affixed their respective corporate seals hereto, the day and year first above written.

                                                                PURCHASER:

  U. S. HOME CORPORATION

             By: /s/ Philip F. Barber

Name: Philip F. Barber

        Its: Division President

Date: March 4, 2004

                                                                             SELLER:

   ST. CHARLES COMMUNITY, LLC

                                                                   By: /s/ Edwin L. Kelly

       Edwin L. Kelly, Chairman of the Management Committee

    Date: March 4, 2004

EX-10.2

DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (this “Agreement”) is made this 4th day of March, 2004 (the “Effective Date”), by and between ST. CHARLES COMMUNITY, LLC, a Maryland limited liability company (the “Developer”) and U.S. HOME CORPORATION, a Delaware corporation (the “Builder”).

RECITALS:

A.           The Developer is engaged in the subdivision and development of a residential planned unit development community located in Charles County, Maryland and known as St. Charles (“St. Charles”).

B.           A portion of the St. Charles community identified by cross-hatching on the drawing attached hereto as Exhibit A is being developed by the Developer as a residential community known as Fairway Village (“Fairway Village”).  The development plans for Fairway Village contemplate that from and after the Effective Date, Fairway Village will be developed with an additional approximately 1,950 residential lots (each, a “Lot” and collectively, the “Lots”), such Lots to be for the construction of attached and detached single family homes (and not condominiums or multifamily units) (each, a “Unit” and collectively, the “Units”).

C.           The Developer and the County Commissioners of Charles County, Maryland, a body corporate (the “County”) are parties to an Order dated as of December 13, 1989, as amended on August 15, 1994, as further amended on July 22, 2002 (collectively, the “Order”), pursuant to which the Developer has agreed, inter alia, to make certain public facility improvements as more fully described in the Order (the “Public Facility Improvements”) to facilitate the development of Fairway Village.

D.           The Developer and the County have further agreed, on terms and conditions more fully set forth in the Order, that the cost of the Public Facility Improvements will be financed through the issuance by the County of its general obligation bonds (the “Bond Financing”).

E.           The County has required that the Developer secure its obligations with respect to the Bond Financing with the posting of one or more letters of credit (each, an “LOC” and collectively, the “LOC’s”), from time to time with the County.

F.           To facilitate the development of Fairway Village, the Builder has agreed to post one or more of the LOC’s required in connection with the Bond Financing, on the terms and conditions set forth in this Agreement, and in return therefor, the Builder will have the right to purchase Lots in Fairway Village on a preferential basis, also on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which is acknowledged, the Developer and the Builder agree as follows:

1.           Letters of Credit.  The Builder agrees that at any time, and from time to time, upon not less than thirty (30) days written notice from the Developer, the Builder will provide one or more LOC’s in form substantially similar to the form attached hereto as Exhibit B, to secure the obligations of the Developer to the County pursuant to the Bond Financing.  In no event shall the aggregate face amount of LOC’s posted by the Builder from time to time be required to exceed a sum equal to Twenty Million Dollars ($20,000,000.00).  Each LOC shall be issued by a financial institution acceptable to the County in its sole discretion, shall be irrevocable for a period of one year, and shall contain an “evergreen” provision, which provides for automatic renewal of the LOC unless prior written notice of non-renewal is given by the issuer of the LOC not less than thirty (30) days prior to the expiration thereof, in which event the County shall have the right to draw upon the full amount thereof and hold such proceeds as cash collateral hereunder in lieu thereof, unless a substitute LOC acceptable to the County is posted by the Builder at least fifteen (15) days prior to such expiration date.  The Developer agrees that Bank One will be an acceptable issuer of the LOC.  The Builder shall pay all costs and expenses associated with providing the LOC’s from time to time, including, without limitation, all issuance fees, and such LOC’s shall be issued solely on the credit of the Builder.  The Builder acknowledges that the aggregate face amount of the LOC’s required to be provided by the Builder may both increase and decrease from time to time, provided that the maximum amount secured by the LOC’s at any time shall not exceed $20,000,000.00.

2.           Right to Purchase Lots.  (a)  In consideration of the Builder’s fulfillment of its obligations pursuant to this Agreement, the Developer grants to the Builder the right to purchase, on an exclusive basis, all of the Lots as such Lots are subdivided and developed from time to time.  The purchase of the Lots by Builder shall be on the terms and conditions set forth in this Agreement, and otherwise on the terms and conditions of the form purchase and sale agreement attached hereto as Exhibit C.  The mix of the lots between townhouse lots, large single family lots and small single family lots shall be in accordance with the existing approvals for the Fairway Village Project, which currently include approximately 591 townhouse lots, approximately 752 large single family detached lots and approximately 599 small single family detached lots.    At the request of the Builder, the Developer shall make reasonable efforts to change the Lot mix, so long as the change will not result in a material delay in any of the subdivision and development efforts for the Fairway Village Project.  The purchase price for the Lots to be acquired by the Builder from the Developer shall be equal to thirty percent (30%) of the "selling price" of the homes Builder intends to construct on the Lots being acquired at any given Closing.  For purposes of this paragraph, the “selling price” shall mean the gross sales price of any Lot and the residence and structure constructed or to be constructed thereon in accordance with the Builder's published retail prices in effect at the time of the applicable Closing, and shall include the Lot and any Lot premium charged by the Builder, the structure or structures built or to be built on the Lot, all of the Builder's standard features for the model of home in question, and unfinished basement, garage, porch, and all floor coverings and standard finishes for the model in question, but shall not include charges for any upgrades or optional features selected by the third party homebuyer which are not routinely included in or with residences built by the Builder at the time of the Closing in question, including but not limited to sunrooms and finished basements.  Additionally, for purposes of this section "upgrades or optional features" shall only include those items or things which are traditionally upgrades or optional features for new homes sold in the Charles County area as of the date of the Closing in question.  Sales incentives, commissions, closing help and closing costs paid by the Builder shall not be deducted.   In the event Builder substitutes house types on any Lot following Closing, then Builder shall so notify Developer, and at the time of closing from the Builder to the home purchaser, Builder shall pay to Developer, or Developer shall pay to Builder, as applicable, any difference in price of the affected lot which results from the substitution of house types.  Builder shall keep the Developer informed of any price adjustments made from time to time during the term of this Agreement in the Builder's retail price of the homes to be constructed on the lots by the Builder.

 (b)  The parties anticipate that Developer will develop Lots at the rate of two hundred (200) Lots per year.  The Builder covenants and agrees to purchase not less than two hundred (200) Lots per calendar year (pro rated for any partial calendar year) from the Developer to the extent that the same are available pursuant to this Agreement.  Developer shall develop the Lots timely so as to have sufficient Lots available for Builder to purchase one-twelfth of its required annual number of Lots each month.  If Developer does not maintain its development pace to allow Builder to purchase one-twelfth of its required annual number of Lots each month, then Builder’s annual purchase requirement shall be reduced by the shortfall in available Lots.  If at any time Builder fails to purchase any Lots made available to the Builder pursuant to this Agreement, the Developer shall be free to sell such Lots to any other party and on any other terms, in the Developer’s sole discretion, and such Lots shall count against the number of Lots which the Builder is entitled to purchase on a preferential basis pursuant to this Agreement or call the Builder in default of the Agreement and exercise the remedies as set forth in Section 4.

(c)           The Builder acknowledges that the Developer cannot guarantee that a certain number of Lots will be offered to the Builder pursuant to this Agreement, and that the Developer cannot guarantee the timing when Lots will be made available or the exact mix of types of Lots.  The Builder further acknowledges that the Lots will be subject to the lien, operation and effect of all covenants, conditions and restrictions, and reservations of easements, which exist from time to time for the portions of St. Charles community and Fairway Village in which such Lots are located.

(d)           The Builder shall have the right to assign its right to purchase the Lots which it is entitled to purchase hereunder to third parties reasonably acceptable to the Developer, provided, however, such ultimate purchasers shall purchase the Lots on the terms and conditions of and subject to this Agreement, and such assignment shall in no way relieve the Builder of any of its duties or obligations pursuant to this Agreement.  Developer agrees that Washington Homes, Ryan Homes, Pulte and Centex are all acceptable third parties to which Builder may assign its right to purchase Lots hereunder.  In addition, the Builder shall have the right to assign its right to purchase any or all of the Lots which it is entitled to purchase hereunder to any affiliate of Builder, however, upon such assignment such Lots shall remain subject to the restrictions on transfers set forth in this Agreement.  For purposes of this Agreement, an “affiliate” of Builder shall mean any other person or entity who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with Builder.  As used in this paragraph, the term “control” (including the terms “controlling”, “controlled by”, or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such party, whether through ownership of voting securities or otherwise.

3.           Security for Developer’s Obligations.  (a)   The parties acknowledge and agree that from time to time all or part of the property which constitutes Fairway Village may be subject to one or more land loans or development loans, which loans will be secured by a first priority lien against all or such parts of Fairway Village (collectively, the “Senior Liens”).  To secure the obligation of the Developer to reimburse the Builder for any Developer’s Reimbursement Obligation (as defined below), the Developer will grant to the Builder a recorded subordinate lien on the Lots owned by the Developer from time to time (the “Junior Lien”), which Junior Lien shall also encumber any portion of Fairway Village owned by the Developer from time to time which the Developer's development plans indicate as being intended to be, but which have not yet been, developed into Lots.  The Junior Lien shall at all times be junior and subordinate to the Senior Liens, as the same may be amended, extended, modified, replaced or refinanced from time to time; provided, however, that in no event shall the amount of the Senior Liens to which Builder’s Junior Lien is subordinate exceed a sum equal to Ten Thousand Dollars ($10,000.00) times the number of single-family detached and single-family attached Lots owned by Developer, which amount shall be increased on an annual basis by a percentage amount equal to the increase, if any, in the Consumer Price Index (Urban Wage Earners and Clerical Workers for All Items – U.S. City Average) for the preceding year.  The Builder covenants and agrees from time to time to provide written evidence of such subordination in form and substance reasonably satisfactory to the Developer and any lenders extending loans to the Developer secured in whole or in part by liens on all or parts of Fairway Village.  Developer agrees to use its best efforts to obtain an intercreditor agreement between the holder of any Senior Liens which affect the Lots as of the date hereof and Builder, and to obtain such an agreement from any person or entity who acquires a Senior Lien subsequent to the date hereof, substantially in the form attached hereto as Exhibit D.  Developer’s procurement of such an agreement from the holder of any Senior Liens (whether of record now or in the future) shall be a condition precedent to Builder’s obligations hereunder.

(b)           As the Developer sells each Lot in Fairway Village, the Builder shall release such lot from the Junior Lien provided that, in each instance, the Developer shall take Ten Thousand Two Hundred Fifty Six Dollars ($10,256.00) of the proceeds of the purchase price for such Lot and escrow the same with an escrow agent mutually acceptable to Developer and the Builder, for the sole purpose of paying Developer’s obligations with respect to the Bond Financing as and when the same come due.  At the time the last section of Lots in Fairway Village is platted, the partial release escrow amount for the Lots in such section shall be adjusted as necessary so that, once all of the Lots have been sold, sufficient funds are contained in the said escrow account to pay off the Bond Financing in full and permit Builder to obtain the full and complete release of its LOC’s.  As the escrowed proceeds are used to pay the Developer’s obligations with respect to the Bond Financing (which shall occur on a not less frequently than annual basis), the Builder shall be entitled to reduce its LOC’s on a pro rata basis.  Developer agrees to procure from the applicable governmental authorities, in form and content reasonably acceptable to Builder, written confirmation that such authorities will permit Builder to reduce its LOC’s as set forth above.

(c)           Provided that the Builder is not in default under Section 2 of this Agreement and a draw is made by the County on one or more LOC’s posted by the Builder pursuant to this Agreement (a “Draw”), the Developer shall reimburse the Builder for the amount of such Draw, together with interest at the rate of ten percent (10%) per annum on all amounts of such LOC’s drawn and outstanding from time to time, prorated on a daily basis from the date of the Draw to the date on which such reimbursement is made, within thirty (30) days of written notice from the Builder of the occurrence of such Draw (such reimbursement obligation, including all principal and interest accrued thereon, hereinafter being referred to collectively as “Developer’s Reimbursement Obligation”).

(d)           From and after any time when the Developer fails to timely satisfy a Developer’s Reimbursement Obligation, the Builder shall have the following remedies:

(i)           if (A) the value of all remaining Lots owned by the Developer is reasonably estimated to exceed (B) the sum of the obligations of the Developer with respect to the loans secured by the Senior Liens, the Junior Lien and all other junior liens securing other builders, the Builder shall not have the right to foreclose on the Junior Lien, but the Builder shall be entitled to apply the amount of such unpaid Developer’s Reimbursement Obligation on a pro rata basis based on the number of lots remaining to be made available to the Builder pursuant to this Agreement until such Developer’s Reimbursement Obligation has been paid in full; and

(ii)           if (A) the value of all remaining Lots owned by the Developer is not reasonably estimated to exceed (B) the sum of the obligations of the Developer with respect to the loans secured by the Senior Liens, the Junior Lien and all other junior liens securing other builders, then the Builder may elect either (X) the remedy set forth in Section 3(d)(i) above, or (Y) the Builder may convert the amount due to a five-year fully-amortizing recourse term loan at an interest rate of ten percent (10%) per annum, which requires Developer to make monthly payments of principal and interest to Builder.  In the event Builder elects option (Y) as described above, and Developer thereafter defaults in its obligations under such recourse term loan, Builder may foreclose on the Junior Lien pursuant to the provisions of applicable law.

For so long as any delinquent Developer’s Reimbursement Obligation remains unpaid, Developer shall place no new Senior Liens against Fairway Village, nor shall the maximum amount secured by any then-existing Senior Liens be increased, without the prior written consent of the Builder.

4.           Security For Builder’s Obligations.  The Builder acknowledges that the posting of the LOC’s as and when required hereunder is a vital component of the Developer’s ability to develop the infrastructure required for Fairway Village pursuant to the Bond Financing, and that the Developer will be significantly harmed if the Builder fails to comply with such obligation.  The Builder further acknowledges that this Agreement and the rights granted to the Builder hereunder are of significant and material benefit to the Builder.  Accordingly, the Builder covenants and agrees that, if the Builder breaches this Agreement, and such breach is not cured within twenty (20) days following written notice thereof from the Developer, then in addition to any other rights and remedies to which the Developer may be entitled at law or in equity, all LOC’s posted by the Builder pursuant to this Agreement shall be immediately forfeited in favor of the Developer, and the Builder shall have no further rights to purchase Lots on the terms of this Agreement; provided, however, that upon any such default, Developer shall use its good faith commercially reasonable efforts to attempt to obtain an agreement by any subsequent purchaser of the Lots which were to be purchased by Builder pursuant to this Agreement to post its own LOC’s in substitution for Builder’s LOC’s, and upon the posting of substitute LOC’s by such subsequent purchaser of such Lots, all LOC’s posted by the Builder (or, if said LOC’s had previously been drawn upon and converted into cash, then the cash derived from said LOC’s) shall be returned to the Builder.

5.           Title to Lots.  The Developer hereby represents and warrants to the Builder that the status of title to the Lots is as set forth on Developer’s title policy, a copy of which is attached to this Agreement as Exhibit E and incorporated herein by reference, and that the Lots are not subject to any exceptions to title other than those identified in Schedule B-2 of the said policy.  Following the date of this Agreement, Developer shall not, without the prior written consent of Builder, which consent shall not unreasonably be withheld, conditioned or delayed, create any new encumbrances on or exceptions to title to the Lots which will survive closing on the sale of such Lots to Builder, other than (i) covenants, conditions, easements and restrictions ordinarily recorded in the development of residential housing developments, and typical and customary utility agreements and subdivision agreements, provided such covenants, conditions, easements restrictions and agreements shall not prevent or materially affect Purchaser’s ability to construct, market and sell Purchaser’s standard single family homes thereon; (ii) ad valorem taxes and assessments not then due and payable; (iii) zoning regulations of the County or city in which the lots lie; (iv) sewer and water facility charges; and (v) the Declaration of Easements, Covenants, Conditions and Restrictions recorded for Fairway Village and Sheffield Neighborhoods and Fairway Village Architectural Covenants.

6.           Notices. All notices and other communications hereunder shall be in writing and shall be delivered personally against receipt or shall be sent by registered mail, certified mail, or Express Mail service, postage prepaid and return receipt requested, or by a nationally-recognized overnight delivery service, addressed to the parties as follows:

To the Builder:                      U.S. Home Corporation                                                                

10230 New Hampshire Avenue

Suite 300

Silver Spring, MD  20903

Attn:  Philip F. Barber,

                                                     Division President

Fax No.: (301) 408-0443

With a copy to:                    U.S. Home Corporation

Legal Department

10707 Clay Road

Houston, Texas 77041

Fax No.: (713) 877-2471

And to:                                  David J. Bomgardner

Walsh, Colucci, Stackhouse,

Emrich & Lubeley, P.C.

13663 Office Place, Suite 201

Woodbridge, VA  22192

Fax No.: (703) 690-2412

To the Developer:                Mr. Edwin L. Kelly

President

American Community Properties Trust

222 Smallwood Village Center

St. Charles, Maryland 20602

With a copy to:                    Stephen H. Scott, Esq.

                                   Chapman, Bowling & Scott, P.A.

                                   112 La Grange Ave

                                               PO Box 610

                                               La Plata, Maryland 20646

7.           Counterparts. This Agreement may be executed in a number of identical counterparts.  If so executed, each of such counterparts shall, collectively, constitute one agreement; but in making proof of this agreement, it shall not be necessary to produce or account for more than one such counterpart.

8.           Non-Business Days. If the date for delivery of a notice or performance of some obligation of the County or the Developer falls on a Saturday, Sunday or legal holiday in the State of Maryland, then the date for such notice or performance shall be postponed until the next business day.

9.           Governing Law.  This Agreement, and the validity, construction, interpretation and enforcement thereof, shall be governed by the laws of the State of Maryland.

10.         Condition Precedent.  Builder acknowledges that it has obtained the written approval of this transaction from the Corporate Investment Committee of Lennar Corporation, and has thus satisfied a condition precedent to its obligations under this Agreement.

 11.             Cross Default.  For purposes of this Agreement, a default under this agreement by either party shall also constitute a default by that party under the Purchase Agreement, and a default under the Purchase Agreement by Developer shall also constitute a default under this agreement by Developer; however, a default under the Purchase Agreement by Builder shall not constitute a default under this Agreement by Builder.

WITNESS the signatures of the parties set forth below:

THE BUILDER:

U.S. HOME CORPORATION

By: /s/ Philip F. Barber

Name: Philip F. Barber

Title: Division President

THE DEVELOPER:

ST. CHARLES COMMUNITY, LLC

By: /s/ Edwin L. Kelly

Edwin L. Kelly, Chariman of the Management

Committee

EX-10.3

FIRST AMENDMENT TO PURCHASE AGREEMENT

THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (the “First Amendment”) is made by and between ST. CHARLES COMMUNITY, LLC, a Delaware limited liability company (hereinafter referred to as “Seller”) and U.S. HOME CORPORATION, a Delaware corporation (hereinafter referred to as “Purchaser”), this 20th day of June, 2006.

RECITALS

R-1.           Seller and Purchaser are parties to that Purchase Agreement, dated March 4, 2004 (the “Contract”), for the purchase and sale of certain property located within the Fairway Village section of the St. Charles project, in Charles County, Maryland, as more particularly described therein (the “Property”).

R-2.           Seller and Purchaser desire to amend certain terms of the Contract as set forth herein.

 NOW, THEREFORE, for Ten Dollars ($10.00) cash in hand paid, and the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Seller and Purchaser, Seller and Purchaser hereby agree as follows:

1.           Incorporation of Recitals.  Each of the recitals set forth above is hereby incorporated by references as if set forth fully at this point in this First Amendment.

2.           Defined Terms.  Capitalized terms used in this First Amendment and not defined herein shall have the meaning ascribed to them in the Contract.

3.           Payment of Purchase Price.  Paragraph 1.02 of the Contract sets the purchase price of the Lots at 30% of the “selling price” of the homes to be constructed by Purchaser on each respective Lot.  However, the “selling price” of homes is often not known at the time of Closing on the Lots under the Contract.  Therefore, Seller and Purchaser agree that, with respect to single family detached Lots (including Lots which are subject to the “Everything’s Included” program as described in Paragraph 4 below), Purchaser shall pay Seller the sum of One Hundred Thirty Thousand and No/100 Dollars ($130,000.00) for each Lot and the time of Closing thereon.  Within thirty-five (35) days following closing by Purchaser on the sale of the completed home located on each respective Lot, Purchaser shall give Seller written notice of the “selling price” of such home, and shall pay to Seller any amount of purchase price for such Lot in excess of $130,000.00, based upon the “selling price” of the home constructed thereon.  In the event the purchase price of any such Lot would have been less than $130,000.00, based upon the “selling price” of the home constructed thereon, Seller shall refund the amount of any overpayment to Purchaser within thirty-five (35) days after receipt of such written notice from Purchaser.  The obligations described in this paragraph shall survive Closing on each of the Lots.

4.           Calculation of Purchase Price for “Everything’s Included” Homes. Seller and Purchaser acknowledge that Purchaser has commenced marketing homes under an “Everything’s Included” program, whereby improvements which are customarily sold as upgrades or optional features are included in the base sale price of homes.  For all single-family detached homes sold by Purchaser under its “Everything’s Included” program, or any equivalent program, (i) the gross selling price, including all options and upgrades, and including all consideration paid for the house, shall be shown in total on line 101 of the HUD-1 Settlement Statement for each closing, and (ii) the purchase price to be paid to Seller by Purchaser for the affected Lots will be calculated as follows: total selling price of the home as shown on Line 101 of the HUD-1 settlement statement, or on any other applicable part of the HUD-1 settlement statement minus $50,000.00, multiplied by 30%.  For purposes of this Section 4 of this First Amendment, “selling price” shall not have the meaning as defined and described in Section 1.02 of the Contract.

5.           Temporary Purchase Price Modification.  Commencing with the first home sale settled on by Purchaser after March 1, 2006 and continuing through and including the 45^th home sale settled on by Purchaser after March 1, 2006, the purchase price of the Lots upon which such homes are constructed shall be calculated at the rate of thirty-one percent (31%) of the “selling price” of such homes, rather than 30%.  Commencing with the 46^th home sale settled on by Purchaser after March 1, 2006, the purchase price of the Lots shall revert to being 30% of the “selling price” of the home constructed thereon.

6.           Effect of Amendment.    Except as expressly modified by the terms and provisions of this First Amendment, the Contract shall remain in full force and effect and binding upon Seller and Purchaser.

7.           Counterparts.   This First Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

(SIGNATURES APPEAR ON FOLLOWING PAGE)

IN WITNESS WHEREOF, the said parties have hereunto set their hands and seals.

SELLER:

ST. CHARLES COMMUNITY, LLC

By: /s/ Edwin L. Kelly

Name: Edwin L. Kelly

Its: President

Date: June 20, 2006

PURCHASER:

U.S. HOME CORPORATION

By: /s/ Robert J. Jacoby

Name: Robert J. Jacoby

Its:  Division President

Date: June 8, 2006

EX-10.4

SECOND AMENDMENT TO PURCHASE AGREEMENT

AND TO DEVELOPMENT AGREEMENT

This SECOND AMENDMENT TO PURCHASE AGREEMENT AND TO DEVELOPMENT AGREEMENT (the “Second Amendment”) is made this 31st day of December, 2007, by and between St. Charles Community, LLC, a Delaware limited liability company (“Seller/Developer”), and U.S. Home Corporation, a Delaware corporation (“Purchaser/Builder”).

WITNESSETH:

WHEREAS, Seller/Developer and Purchaser/Builder are parties to a certain Purchase Agreement dated March 4, 2004, as amended by a certain First Amendment to Purchase Agreement dated June 20, 2006 (collectively, the “Contract”), for the purchase and sale of certain property located within the Fairway Village section of the St. Charles Planned Unit Development project in Charles County, Maryland, as more particularly described in the Contract (the “Property”); and

WHEREAS, Seller/Developer and Purchaser/Builder are also parties to a certain Development Agreement dated March 4, 2004, as amended by a certain First Amendment to Development Agreement dated September 20, 2004 (collectively, the “Development Agreement”), whereby Seller/Developer and Purchaser/Builder have made certain agreements with respect to the development of infrastructure for the Property in connection with the purchase of residential Lots in the Property by the Purchaser/Builder under the Contract; and

WHEREAS, Seller/Developer and Purchaser/Builder desire to amend and modify certain terms of the Contract and the Development Agreement as more particularly set forth below in this Second Amendment.

NOW, THEREFORE, in consideration for the mutual promises and covenants of the parties, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller/Developer and Purchaser/Builder hereby agree as follows:

1.           Incorporation of Recitals.  Each of the recitals set forth above are hereby incorporated by reference as if set forth fully at this point in this Second Amendment.

2.           Defined Terms.  Capitalized terms used and not defined in this Second Amendment shall have the meanings ascribed to them in the Contract and the Development Agreement.

3.           December 2007 Lot Takedown and Initial 2008 Lot Takedown Prior to June 1, 2008.  On or before December 31, 2007, time being of the essence, Purchaser/Builder shall purchase and settle under the Contract and Development Agreement, a number of Lots in the Property, being approximately 51 Lots, with an aggregate base purchase price under the Contract of Three Million Seven Hundred Seventy-Eight Thousand Dollars ($3,778,000.00) (the “December 2007 Takedown”).  On or before June 1, 2008, time being of the essence, Purchaser/Builder shall purchase and settle under the Contract and Development Agreement, a number of Lots in the Property, being approximately 49 Lots (which, together with the December 2007 Takedown, shall not exceed 100 Lots), with an aggregate base purchase price under the Contract of Three Million Seven Hundred Twenty-Two Thousand Dollars ($3,722,000.00) (the “Initial 2008 Takedown”).  For purposes of this Section, the aggregate base purchase price of the December 2007 Takedown and the Initial 2008 Takedown shall be determined by the minimum Lot prices set forth in Section 4 below in this Second Amendment.  Seller/Developer represents that there is, as of the date of this Second Amendment, a sufficient number of Lots finished in accordance with the Development Agreement so as to be ready for closing in accordance with the December 2007 Takedown and the Initial 2008 Takedown to allow the Purchaser/Builder to acquire Lots with an aggregate base purchase price of Seven Million Five Hundred Thousand Dollars ($7,500,000.00).  The parties acknowledge that, prior to the execution of this Second Amendment, Seller/Developer has provided Purchaser/Builder with information regarding available Lots in the Property for settlement in accordance with the December 2007 Takedown and the Initial 2008 Takedown.  The December 2007 Takedown and the Initial 2008 Takedown shall otherwise be on all terms and conditions set forth in the Contract and the Development Agreement.  Upon settlement of the December 2007 Takedown on or before December 31, 2007, Seller/Developer acknowledges that Purchaser/Builder will have satisfied the takedown requirements of the Contract for calendar year 2007.  The Initial 2008 Takedown may be in one or more settlements, provided that all such settlements are completed prior to June 1, 2008, time being of the essence.

4.           Temporary Purchase Price Modification. The final purchase price of Lots purchased by the Purchaser/Builder in the December 2007 Takedown and the Initial 2008 Takedown shall be 22.5% of the “selling price” of homes constructed on such Lots by the Purchaser/Builder, rather than 30%, provided that this temporary purchase price reduction shall not apply to Lots purchased by the Purchaser/Builder under the Contract and Development Agreement prior to December 1, 2007.  The minimum price paid by the Purchaser/Builder under the Contract for Lots shall be Seventy-Eight Thousand Dollars ($78,000.00) for single family building Lots and Sixty-Eight Thousand Dollars ($68,000.00) for townhome building Lots.   The foregoing provisions of this Section 4 shall apply only to Lots purchased by the Purchaser/Builder in the December 2007 Takedown and the Initial 2008 Takedown.  From and after the December 2007 Takedown and the Initial 2008 Takedown, the final purchase price for Lots purchased in the Property by the Purchaser/Builder shall revert to that shown and set forth in the Contract and Development Agreement.  The timing of calculation and basis or formula for calculation of the final purchase price of Lots is not modified by this Amendment, and shall be as set forth in the Contract and the Development Agreement, whether for the Lots purchased in the December 2007 Takedown or the Initial 2008 Takedown and subject to this temporary purchase price reduction, or for Lots purchased under the pricing terms of the Contract and Development Agreement and not a part of the December 2007 Takedown or the Initial 2008 Takedown.  The base purchase price, minimum purchase price and percentage used to determine total purchase price for Lots purchased prior to December 1, 2007, shall be as set forth on Exhibit A, attached hereto and made a part hereof, and shall be in no event less than the minimum prices shown on Exhibit A.

5.           Effect of Amendment.  Except as expressly modified by the terms and provisions of this Second Amendment, the Contract and the Development Agreement shall each remain in full force and effect in accordance with their terms, and are hereby ratified and confirmed by the parties as binding and enforceable for all purposes.  The parties acknowledge that, as of the date of this Amendment, neither Seller/Developer nor Purchaser/Builder is in default under the Contract or the Development Agreement.

 6.              Counterparts.  This Second Amendment may be executed in any number of counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

           IN WITNESS WHEREOF, the undersigned duly authorized representatives of the Seller/Developer and Purchaser/Builder have hereunto placed their hands and seals as of the date and year first above written.

                                                                SELLER/DEVELOPER:

St. Charles Community, LLC,

a Delaware limited liability company

By: /s/ Edwin L. Kelly (SEAL)

                                                                                                Edwin L. Kelly,

Chairman of the Management Committee

PURCHASER/BUILDER:

U.S. Home Corporation, a Delaware corporation

                By: /s/ Robert Jacoby (SEAL)

                                                                Name: Robert Jacoby

        Title: Division President

Exhibit A

Summary of Lennar Lot Inventory

St. Charles Fairway Village

As of November 30, 2007

Lot Number	Date Settled		Initial Takedown	Confirmed Minimum	True Up Method
Single Family
	34 F	10/11/06	130,000	125,000	30%
	49 F	11/10/06	100,000	100,000	30%
	4 M	12/12/06	100,000	100,000	30%
	23 M	06/11/07	112,500	112,500	30%
Townhomes
	51 I	07/11/07	85,000	65,000	30%
	1 I	08/14/07	85,000	65,000	20.5%
	2 I	08/14/07	85,000	65,000	30%
	3 I	08/14/07	85,000	65,000	20.5%

EX-99.1

News Release

FOR IMMEDIATE RELEASE	CONTACT
January 4, 2008	Craig Renner
	301-843-8600

ACPT TEMPORARILY AMENDS SALES AGREEMENT WITH LENNAR

ST. CHARLES, MD.— American Community Properties Trust (AMEX:APO) announced today that it has reached agreement on a temporary revision of its lot sales agreement with Lennar Corp. related to the St. Charles planned development in Charles County, Maryland.

Under the terms of the amendment to the sales agreement, Lennar purchased 51 lots in St. Charles’ Sheffield neighborhood for an aggregate base purchase price of $3,778,000 on December 31, 2007.  ACPT further agreed to accept this settlement as satisfaction of Lennar’s lot take down requirements for 2007 resulting in 78 lot sales to Lennar for an initial price of approximately $6.0 million.

Lennar also agreed to purchase lots with an aggregate base purchase price of an additional $3,722,000, making a total of $7,500,000, on or before June 1, 2008.  In exchange, ACPT agreed to reduce the final purchase price payable to ACPT in respect of these $7.5 million of base purchase price lots to 22.5% of the selling price of the home constructed on each such lot, rather than 30%, with the final sales price of each lot subject to floor prices of $78,000 per single family lot and $68,000 per town home lot. Lots purchased by Lennar after the additional $3,722,000 of aggregate base purchase price lots are taken by Lennar in 2008 will be governed by the terms of the previous agreement.

“Our concession in entering into the amendment reflects the strength of our partnership with Lennar, tempered by our recognition of the realities of the market Lennar is facing for sales of new homes, regionally and nationally,” said Edwin L. Kelly, President and Chief Operating Officer of ACPT.

ACPT will include the full text of the agreements and related amendments in a Form 8-K filed with Securities and Exchange Commission.

ACPT  is a diversified real estate organization with operations in Maryland and Puerto Rico that specializes in community development, multifamily rental properties, and asset management services. ACPT common shares are currently listed on the American Stock Exchange under the symbol AmCmntyProp (APO).

For more information about ACPT, visit www.acptrust.com. For more information about the planned community of St. Charles, visit www.stcharlesmd.com.