AVALONBAY COMMUNITIES, INC. DEFERRED COMPENSATION PLAN

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Exhibit 4.1

AVALONBAY COMMUNITIES, INC.

DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of January 1, 2004

TABLE OF CONTENTS

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AVALONBAY COMMUNITIES, INC.
DEFERRED COMPENSATION PLAN

Amended and Restated Effective as of January 1, 2004

        The AvalonBay Communities, Inc. Deferred Compensation Plan, effective as of January 1, 1996, as amended and restated as of January 1, 1999, is hereby amended and restated in its entirety as follows, effective as of January 1, 2004.

PURPOSE

        The purpose of this Plan is to provide specified benefits to a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of AvalonBay Communities, Inc. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

ARTICLE 1—DEFINITIONS

        For the purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

        1.1   "Annual Bonus" shall mean any compensation, in addition to Base Annual Salary, payable during the Plan Year to a Participant as an Employee under the Sponsor's annual bonus (cash incentive) plan, but excluding stock options and stock grants.

        1.2   "Annual Deferral Amount" shall mean that portion of a Participant's Base Annual Salary and Annual Bonus that a Participant defers in accordance with Article 3 for any one Plan Year. In the event of a Participant's termination of employment prior to the end of a Plan Year, such year's Annual Deferral Amount shall be the actual amount withheld prior to such event.

        1.3   "Base Annual Salary" shall mean the annual cash compensation included on the Federal Income Tax Form W-2 for such calendar year, excluding bonuses, commissions, overtime, fringe benefits, stock options, stock grants, relocation expenses, incentive payments, non-monetary awards, and automobile and other allowances paid to a Participant for employment services rendered (whether or not such allowances are included in the Employee's gross income). Base Annual Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or non-qualified plans of the Sponsor and shall be calculated to include amounts not otherwise included in the Participant's gross income under Code Sections 125, 132(f), 402(e)(3), or 402(h) pursuant to plans established by the Sponsor; provided, however, that all such amounts will be included in compensation only to the extent that had there been no such plan, the amount would have been payable in cash to the Employee.

        1.4   "Beneficiary" shall mean one or more persons, trusts, estates or other entities, designated in accordance with Article 8, that are entitled to receive benefits under this Plan upon the death of a Participant.

        1.5   "Beneficiary Designation Form" shall mean the form established from time to time by the Retirement Planning Committee that a Participant completes, signs and returns to the Retirement Planning Committee to designate one or more Beneficiaries.

        1.6   "Claimant" shall have the meaning set forth in Section 13.1.

        1.7   "Code" shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

        1.8   "Compensation Committee" shall mean the Compensation Committee of the Board of Directors of the Sponsor.

        1.9   "Deferral Account" shall mean (i) the sum of all of a Participant's Annual Deferral Amounts, plus (ii) amounts credited in accordance with all the applicable crediting and debiting provisions of this

Plan that relate to the Participant's Deferral Account, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account. The Deferral Account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or his or her Beneficiary, pursuant to this Plan.

        1.10 "Election Form" shall mean the form established from time to time by the Retirement Planning Committee that a Participant completes, signs and returns to the Retirement Planning Committee to make an election under the Plan.

        1.11 "Employee" shall mean a person who is an employee of the Sponsor or an affiliate of the Sponsor.

        1.12 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

        1.13 "Non-Qualified Predetermined Annuity Account" shall mean an account maintained pursuant to the terms of the Plan in effect prior to January 1, 2004. Any such account shall continue to be maintained after January 1, 2004 until such account has been distributed to a Participant pursuant to the terms hereof.

        1.14 "Participant" shall mean any Employee (i) who is selected to participate in the Plan, (ii) who signs an Election Form, (iii) whose signed Election Form is accepted by the Retirement Planning Committee, and (iv) whose participation in the Plan has not terminated.

        1.15 "Plan" shall mean the AvalonBay Communities, Inc. Deferred Compensation Plan, which shall be evidenced by this instrument, as it may be amended from time to time.

        1.16 "Plan Year" shall mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

        1.17 "Retirement," "Retire(s)" or "Retired" shall mean, with respect to an Employee, severance from employment with the Sponsor (or any affiliate thereof) for any reason other than a leave of absence or death, on or after the attainment of age sixty-five (65) or, if earlier, the satisfaction of such conditions as may be required by the Sponsor's retirement policy in effect upon the Participant's termination of employment.

        1.18 "Retirement Planning Committee" shall mean the committee described in Article 11.

        1.19 "Sponsor" shall mean AvalonBay Communities, Inc. and any successor to all or substantially all of the Sponsor's assets or business.

        1.20 "Trust" shall mean one or more trusts, if any, established by the Sponsor in its sole discretion.

        1.21 "Unforeseeable Financial Emergency" shall mean an unanticipated emergency that is caused by an event beyond the control of the Participant resulting from (i) a sudden and unexpected illness or accident of the Participant or a dependent of the Participant, (ii) a loss of the Participant's property due to casualty, or (iii) such other extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined in the sole discretion of the Retirement Planning Committee.

        1.22 "Years of Service" shall mean the total number of full years in which a Participant has been employed by the Sponsor (or any affiliate thereof). For purposes of this definition, a year of employment shall be a 365 day period (or 366 day period in the case of a leap year) that, for the first year of employment, commences on the Employee's date of hiring and that, for any subsequent year, commences on an anniversary of that hiring date. The Retirement Planning Committee shall make a determination as to whether any partial year of employment shall be counted as a Year of Service.

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ARTICLE 2—SELECTION, ENROLLMENT, ELIGIBILITY

        2.1     Selection by Compensation Committee.     Participation in the Plan shall be limited to a select group of management and highly compensated Employees of the Sponsor, as determined by the Compensation Committee in its sole discretion.

        2.2     Enrollment Requirements.     As a condition to participation, each selected Employee shall complete, execute and return to the Retirement Planning Committee an Election Form and a Beneficiary Designation Form, all within thirty (30) days after he or she is selected to participate in the Plan. In addition, the Retirement Planning Committee shall establish from time to time such other enrollment requirements as it determines in its sole discretion are necessary.

        2.3     Eligibility; Commencement of Participation.     Provided an Employee selected to participate in the Plan has met all enrollment requirements set forth in this Plan and required by the Retirement Planning Committee, including returning all required documents to the Retirement Planning Committee within the specified time period, that Employee shall commence participation in the Plan on the first day of the month following the month in which the Employee completes all enrollment requirements. If an Employee fails to meet all such requirements within the period required, in accordance with Section 2.2, that Employee shall not be eligible to participate in the Plan until the first day of the Plan Year following the delivery to and acceptance by the Retirement Planning Committee of the required documents.

        2.4     Termination of Participation and/or Deferrals.     If the Retirement Planning Committee determines in good faith that a Participant no longer qualifies as a member of a select group of management or highly compensated employees, the Retirement Planning Committee shall have the right, in its sole discretion, to (i) terminate any deferral election the Participant has made for the remainder of the Plan Year in which the Participant's membership status changes and (ii) prevent the Participant from making future deferral elections.

ARTICLE 3—DEFERRAL COMMITMENTS/VESTING/CREDITING/TAXES

        3.1     Minimum Deferrals—Annual Deferral Amount.     For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, an aggregate minimum of one percent (1%) of his or her Base Annual Salary. If an election is made for less than stated minimum amounts, or if no election is made, the amount deferred shall be zero.

        3.2     Maximum Deferral—Base Annual Salary and Annual Bonus.     For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Annual Salary and Annual Bonus. The maximum percentage for Base Annual Salary shall be ten percent (10%), and the maximum percentage for Annual Bonus shall be twenty-five percent (25%).

        3.3     Election to Defer; Effect of Election Form.     

        (a)     First Plan Year.     In connection with a Participant's commencement of participation in the Plan, the Participant shall make an irrevocable deferral election for the Plan Year in which the Participant commences participation in the Plan, along with such other elections as the Retirement Planning Committee deems necessary or desirable under the Plan. For these elections to be valid, the Election Form must be completed and signed by the Participant, timely delivered to the Retirement Planning Committee (in accordance with Section 2.2 above) and accepted by the Retirement Planning Committee.

        (b)     Subsequent Plan Years.     For each succeeding Plan Year, an irrevocable deferral election for that Plan Year, and such other elections as the Retirement Planning Committee deems necessary or desirable under the Plan, shall be made by timely delivering to the Retirement Planning Committee, in accordance with its rules and procedures, before the end of the Plan Year

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preceding the Plan Year for which the election is made, a new Election Form. If no such Election Form is timely delivered for a Plan Year, the previously elected Annual Deferral Amount shall remain in effect; provided, however, that the Retirement Planning Committee may require a Participant to re-enroll in the Plan to continue participating in the Plan in the subsequent Plan Year. Elections to defer a percentage of Annual Bonus must be made before the end of the Plan Year preceding the Plan Year in which such Annual Bonus is earned.

        3.4     Withholding of Annual Deferral Amounts.     For each Plan Year, the Base Annual Salary portion of the Annual Deferral Amount shall be withheld from each regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted from time to time for increases and decreases in Base Annual Salary. The Annual Bonus portion of the Annual Deferral Amount shall be withheld at the time the Annual Bonus is or otherwise would be paid to the Participant, whether or not this occurs during the Plan Year itself.

        3.5     Vesting.     A Participant shall at all times be 100% vested in his or her Deferral Account.

        3.6     Crediting/Debiting of Deferral Accounts.     In accordance with, and subject to, the rules and procedures that are established from time to time by the Retirement Planning Committee, in its sole discretion, amounts shall be credited or debited to a Participant's Deferral Account balance in accordance with the following rules:

        (a)     Measurement Funds.     The Participant may elect one or more of the measurement funds (the "Measurement Funds"), based on certain mutual funds or other investment indices, for the purpose of crediting or debiting additional amounts to his or her Deferral Account balance. At least once each Plan Year, the Retirement Planning Committee or its delegate shall provide the Participant with a list of Measurement Funds available. As necessary, the Retirement Planning Committee may, in its sole discretion, discontinue, substitute or add a Measurement Fund.

        (b)     Election of Measurement Funds.     A Participant, in connection with his or her initial deferral election in accordance with Section 3.3(a) above, shall elect, on the Election Form, one or more Measurement Fund(s) (as described in Section 3.6(a) above) to be used to determine the amounts to be credited or debited to his or her Deferral Account balance. The Participant may (but is not required to) subsequently elect at any time, in accordance with procedures established by the Retirement Planning Committee from time to time, to add or delete one or more Measurement Fund(s) to be used to determine the amounts to be credited or debited to his or her Deferral Account balance, or to change the portion of his or her Deferral Account balance allocated to each previously or newly elected Measurement Fund.

        (c)     Proportionate Allocation.     In making any election described in Section 3.6(b) above, the Participant shall specify on the Election Form (or such other form of communication acceptable to the Committee), in increments of one percent (1%), the percentage of his or her Deferral Account balance to be allocated to a Measurement Fund (as if the Participant was making an investment in that Measurement Fund with that portion of his or her Deferral Account balance).

        (d)     Crediting or Debiting Method.     The performance of each elected Measurement Fund (either positive or negative) will be based on the performance of the Measurement Funds themselves. A Participant's Deferral Account shall be credited or debited on a daily basis, if possible, based on the performance of each Measurement Fund selected by the Participant. A Participant's Deferral Account may also be debited by its proportionate share of the Plan's administrative expense.

        (e)     No Actual Investment.     Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant's election of any such Measurement Fund, the allocation to his or her Deferral Account thereto, the calculation of additional amounts and the crediting or debiting of

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such amounts to a Participant's Deferral Account shall not be considered or construed in any manner as an actual investment of his or her Deferral Account in any such Measurement Fund. In the event that the Sponsor, in its own discretion, decides to invest in any of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves. Without limiting the foregoing, a Participant's Deferral Account balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Sponsor or the Trust; the Participant shall at all times remain an unsecured creditor of the Sponsor.

        3.7     FICA and Other Taxes.     

        (a)     Annual Deferral Amounts.     For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Sponsor shall withhold from that portion of the Participant's Base Annual Salary and Annual Bonus that is not being deferred, in a manner determined by the Sponsor, the Participant's share of FICA and other employment taxes on such Annual Deferral Amount. If necessary, the Retirement Planning Committee may reduce the Annual Deferral Amount in order to comply with this Section 3.7.

        (b)     Distributions.     The Sponsor, or the trustee of the Trust, shall withhold from any payments made to a Participant under this Plan all federal, state and local income, employmen