PAYMENT GUARANTY

(Construction Loan)

        THIS PAYMENT GUARANTY (“ Guaranty ”) made as of April 6, 2005, by WELLSFORD REAL PROPERTIES, INC., a Maryland corporation (“ Guarantor ”), to and for the benefit of KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors and assigns (“ Lender ”).

R E C I T A L S

A.     On the date hereof, Gold Peak at Palomino Park LLC, a Colorado limited liability company (“ Borrower ”), and Lender entered into that certain Construction Loan Agreement (“ Loan Agreement ”) whereby Lender agreed to make a secured revolving construction loan (the “ Loan ”) available to Borrower in a principal amount not to exceed the sum of Twenty Million Dollars ($20,000,000.00), to finance the development and construction of a 259-unit condominium project consisting of thirty-nine (39) two (2) story buildings with attached garages and surface parking for seven hundred twenty-three (723) cars located in Highlands Ranch, Douglas County, Colorado more particularly described therein (the “ Project ”). Capitalized terms used and not otherwise defined herein shall have the meanings given to them in the Loan Agreement.

B.     In connection with the Loan, Borrower has executed and delivered a promissory note (the “ Note ”) in favor of Lender of even date herewith in the amount of the Loan, payment of which is secured by (i) a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing (Construction Loan) (“Deed of Trust”) made by Borrower in favor of Lender on the Project and (ii) the other Loan Documents.

C.     Guarantor will derive material financial benefit from the Loan evidenced and secured by the Note, the Deed of Trust and the other Loan Documents.

D.     Lender has relied on the statements and agreements contained herein in agreeing to make the Loan. The execution and delivery of this Guaranty by Guarantor is a condition precedent to the making of the Loan by Lender.

AGREEMENTS

        NOW, THEREFORE, intending to be legally bound, Guarantor, in consideration of the matters described in the foregoing Recitals, which Recitals are incorporated herein and made a part hereof, and for other good and valuable consideration the receipt and sufficiency of which are acknowledged, hereby covenants and agrees for the benefit of Lender and its respective successors, indorsees, transferees, participants and assigns as follows:

1

All amounts due, debts, liabilities and payment obligations described in subsection (a) of this Section 1 shall be hereinafter collectively referred to as the “ Indebtedness .”

2.     In the event of any default by Borrower in the payment of the Indebtedness, after the expiration of any applicable cure or grace period set forth in the Loan Agreement, Guarantor agrees, on demand by Lender or the holder of the Note, to pay the Indebtedness regardless of any defense (other than payment in full), right of set-off or claims which Borrower or Guarantor may have against Lender or the holder of the Note.

        All of the remedies set forth herein and/or provided for in any of the Loan Documents or at law or equity shall be equally available to Lender, and the choice by Lender of one such alternative over another shall not be subject to question or challenge by Guarantor or any other person, nor shall any such choice be asserted as a defense, setoff, or failure to mitigate damages in any action, proceeding, or counteraction by Lender to recover or seeking any other remedy under this Guaranty, nor shall such choice preclude Lender from subsequently electing to exercise a different remedy. The parties have agreed to the alternative remedies provided herein in part because they recognize that the choice of remedies in the event of a default hereunder will necessarily be and should properly be a matter of good faith business judgment, which the passage of time and events may or may not prove to have been the best choice to maximize recovery by Lender at the lowest cost to Borrower and/or Guarantor. It is the intention of the parties that such good faith choice by Lender be given conclusive effect regardless of such subsequent developments.

3.     Guarantor does hereby (a) waive notice of acceptance of this Guaranty by Lender and any and all notices and demands of every kind which may be required to be given by any statute, rule or law, (b) agree to refrain from asserting, until after repayment in full of the Loan, any defense (other than payment in full), right of set-off or other claim which Guarantor may have against Borrower (c) waive any defense, right of set-off or other claim which Guarantor or

2

Borrower may have against Lender, or the holder of the Note, (d) waive any and all rights Guarantor may have under any anti-deficiency statute or other similar protections, (e) waive any and all rights and benefits Guarantor may have under C.R.S. 13-50-103, (f) waive presentment for payment, demand for payment, notice of nonpayment or dishonor, protest and notice of protest, diligence in collection and any and all formalities which otherwise might be legally required to charge Guarantor with liability, and (g) waive any failure by Lender to inform Guarantor of any facts Lender may now or hereafter know about Borrower, the Project, the Loan, or the transactions contemplated by the Loan Agreement, it being understood and agreed that Lender has no duty so to inform and that Guarantor is fully responsible for being and remaining informed by Borrower of all circumstances bearing on the risk of nonperformance of Borrower’s obligations. Credit may be granted or continued from time to time by Lender to Borrower without notice to or authorization from Guarantor, regardless of the financial or other condition of Borrower at the time of any such grant or continuation. Lender shall have no obligation to disclose or discuss with Guarantor its assessment of the financial condition of Borrower. Guarantor acknowledges that no representations of any kind whatsoever have been made by Lender. No modification or waiver of any of the provisions of this Guaranty shall be binding upon Lender except as expressly set forth in a writing duly signed and delivered by Lender.

4.     Guarantor further agrees that Guarantor’s liability as guarantor shall not be impaired or affected by any renewals or extensions which may be made from time to time, with or without the knowledge or consent of Guarantor of the time for payment of interest or principal under the Note or by any forbearance or delay in collecting interest or principal under the Note, or by any waiver by Lender under the Loan Agreement, Deed of Trust or any other Loan Documents, or by Lender’s failure or election not to pursue any other remedies it may have against Borrower or Guarantor, or by any change or modification in the Note, Loan Agreement, Deed of Trust or any other Loan Document, or by the acceptance by Lender of any additional security or any increase, substitution or change therein, or by the release by Lender of any security or any withdrawal thereof or decrease therein, or by the application of payments received from any source to the payment of any obligation other than the Indebtedness even though Lender might lawfully have elected to apply such payments to any part or all of the Indebtedness, it being the intent hereof that, subject to Lender’s compliance with the terms of this Guaranty, Guarantor shall remain liable for the payment of the Indebtedness (subject to the limitations on liability set forth in Section 15 below), until the Indebtedness has been paid in full, notwithstanding any act or thing which might otherwise operate as a legal or equitable discharge of a surety. Guarantor further understands and agrees that Lender may at any time enter into agreements with Borrower to amend and modify the Note, Loan Agreement, Deed of Trust or other Loan Documents, and may waive or release any provision or provisions of the Note, Loan Agreement, Deed of Trust and other Loan Documents or any thereof, and, with reference to such instruments, may make and enter into any such agreement or agreements as Lender and Borrower may deem proper and desirable, without in any manner impairing or affecting this Guaranty or any of Lender’s rights hereunder or Guarantor’s obligations hereunder.

5.     This is an absolute, present and continuing guaranty of payment and not of collection. Guarantor agrees that this Guaranty may be enforced by Lender without the necessity at any time of resorting to or exhausting any other security or collateral given in connection herewith or with the Note, Loan Agreement, Deed of Trust or any of the other Loan Documents through foreclosure or sale proceedings, as the case may be, under the Deed of Trust or

3

otherwise, or resorting to any other guaranties, and Guarantor hereby waives any right to require Lender to join Borrower in any action brought hereunder or to commence any action against or obtain any judgment against Borrower or to pursue any other remedy or enforce any other right. Guarantor further agrees that nothing contained herein or otherwise shall prevent Lender from pursuing concurrently or successively all rights and remedies available to it at law and/or in equity or under the Note, Loan Agreement, Deed of Trust or any other Loan Documents, and the exercise of any of its rights or the completion of any of its remedies shall not constitute a discharge of Guarantor’s obligations hereunder, it being the purpose and intent of Guarantor that the obligations of Guarantor hereunder shall be absolute, independent and unconditional under any and all circumstances whatsoever. None of Guarantor’s obligations under this Guaranty or any remedy for the enforcement thereof shall be impaired, modified, cha