BUILDING LOAN MORTGAGE NOTE

BUILDING LOAN MORTGAGE NOTE

$1,623,372.87

December 15, 2005

Claverack Housing Ventures, LLC
c/o Wellsford Real Properties
535 Madison Avenue, 26th Floor
New York, New York 10022
(Individually and collectively “Borrower”)

Wachovia Bank, National Association
12 East 49th Street
42nd Floor
New York, New York 10017
(Hereinafter referred to as “Bank”)

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at its office indicated above or wherever else Bank may specify, the sum of One Million Six Hundred Twenty- Three Thousand Three Hundred Seventy Two and 87/100 Dollars $1,623,372.87) or such sum as may be advanced and outstanding from time to time, with interest on the unpaid principal balance at the rate and on the terms provided in this Building Loan Mortgage Note (including all renewals, extensions or modifications hereof, this “Note”).

BUILDING LOAN AGREEMENT. This Note is subject to the provisions of that certain Building Loan Agreement between Bank and Borrower of even date herewith, as modified from time to time (the “Building Loan Agreement”).

NON-REVOLVING CONSTRUCTION LINE OF CREDIT. Borrower may borrow, and, upon the request of Borrower, Bank shall advance under this Note from time to time until the maturity hereof the amount so requested (each an “Advance” and together the “Advances”), so long as the total principal balance outstanding under this Note at any one time does not exceed the principal amount stated on the face of this Note, subject to the limitations described in the Building Loan Agreement to which this Note is subject. Bank’s obligation to make Advances under this Note shall terminate if Borrower is in Default. As of the date of each proposed Advance, Borrower shall be deemed to represent that each representation made in the Loan Documents is true as of such date. Advances, once repaid, may not be reborrowed.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan(s) evidenced by this Note for the commercial purposes of Borrower, as follows: for infrastructure development and the construction of 1 Home, as more specifically set forth in the Building Loan Agreement.

SECURITY.   Borrower has granted Bank a security interest in the collateral described in the Loan Documents, including, but not limited to, real and personal property collateral described in that certain security instrument of even date herewith.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note during each Interest Period from the date hereof at a rate per annum equal to the LIBOR Market Index Rate plus 220 basis points (“Interest Rate”). LIBOR Market Index Rate” means for any day, the rate for U.S. dollar deposits for a period of one month, as reported on Telerate page 3750 as of 11:00 a.m., London time, on the date on which such rate would be in effect, or if such day is not a business day, then the immediately preceding business day (or if not so reported, then as determined by the Bank from another recognized source or interbank quotation).

DEFAULT RATE. In addition to all other rights contained in this Note, if a Default (as defined herein) occurs and as long as a Default continues, all outstanding Obligations, other than Obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time) between Borrower and Bank or its affiliates, shall bear interest at the Interest Rate plus 3% (“Default Rate”). The Default Rate shall also apply from acceleration until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the basis of a 360-day year for the actual number of days in the applicable period (“Actual/360 Computation”). The Actual/360 Computation determines the annual effective yield by taking the stated (nominal) rate for a year’s period and then dividing said rate by 360 to determine the daily periodic rate to be applied for each day in the applicable period. Application of the Actual/360 Computation produces an annualized effective interest rate exceeding the nominal rate.

REPAYMENT TERMS; EXTENSION OF MATURITY. This Note shall be due and payable in consecutive monthly payments of accrued interest only, commencing on January 2, 2006, and continuing on the same day of each month thereafter until fully paid. In any event, all principal and accrued interest shall be due and payable on December 15, 2006 (the “Maturity Date”); subject to the extension as set forth in the next paragraph.

The Maturity Date may be extended at Borrower’s option to June 15, 2007, provided:

(i)

Borrower on or before October 15, 2006 gives Bank written notice of its intention to extend the Maturity Date;

(ii)

No Default exists;

(iii)

Borrower has completed the construction lien free of one Home, and a temporary or permanent certificate of occupancy has been issues for such Home; and

(iv)

Borrower has obtained approval from all required Governmental Authorities for the subdivision and development of the West Side Parcel (as defined in the Building Loan Agreement) into not less than 48 buildable lots in accordance with the proposed subdivision plan approved by the Bank.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application toward payment of the Obligations shall be applied to accrued interest and then to principal. If a Default occurs, monies may be applied to the Obligations in any manner or order deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or for any reason returned by Bank because of any adverse claim or threatened action, the returned payment shall remain payable as an obligation of all persons liable under this Note or other Loan Documents as though such payment had not been made.

DEFINITIONS. Loan Documents. The term “Loan Documents”, as used in this Note and the other Loan Documents, refers to all documents executed in connection with or related to the loan evidenced by this Note and any prior notes which evidence all or any portion of the loan evidenced by this Note, and any letters of credit issued pursuant to any loan agreement to which this Note is subject, any applications for such letters of credit and any other documents executed in connection therewith or related thereto, and may include, without limitation, the Building Loan Agreement, the Acquisition Loan Mortgage (as defined in the Building Loan Agreement), this Note, the note secured by the Acquisition Loan Mortgage, guaranty agreements, security agreements, security instruments, financing statements, mortgage instruments, any renewals or modifications, whenever any of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time). Obligations. The term “Obligations”, as used in this Note and the other Loan Documents, refers to any and all indebtedness and other obligations under this Note, all other obligations under any other Loan Document(s), and all obligations under any swap agreements (as defined in 11 U.S.C. § 101, as in effect from time to time)

between Borrower and Bank, or its affiliates, whenever executed. Certain Other Terms. All terms that are used but not otherwise defined in any of the Loan Documents shall have the definitions provided in the Uniform Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Bank a late charge equal to 5% of each payment past due for 10 or more days. This late charge shall not apply to payments due at maturity or by acceleration hereof, unless such late payment is in an amount not greater than the highest periodic payment due hereunder.

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a waiver of Bank’s right to collect such late charge or to collect a late charge for any subsequent late payment received.

If this Note is secured by owner-occupied residential real property located outside the state in which the office of Bank first shown above is located, the late charge laws of the state where the real property is located shall apply to this Note and the late charge shall be the highest amount allowable under such laws. If no amount is stated thereunder, the late charge shall be 5% of each payment past due for 10 or more days.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s reasonable expenses incurred to enforce or collect any of the Obligations including, without limitation, reasonable arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph, exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum lawful rate, and any amount received by Bank in excess of such rate s