RESTATED GUARANTY AGREEMENT

Exhibit 10.4

THIS RESTATED GUARANTY AGREEMENT RESTATES IN ITS ENTIRETY THAT CERTAIN GUARANTY AGREEMENT DATED AS OF SEPTEMBER 20, 2005, EXECUTED BY AVATAR HOLDINGS INC. IN FAVOR OF WACHOVIA BANK, NATIONAL ASSOCIATION, AS AGENT ON BEHALF OF THE LENDERS IDENTIFIED ON SCHEDULE A ATTACHED HERETO.

RESTATED GUARANTY AGREEMENT

      THIS RESTATED GUARANTY dated as of October 21, 2005 (together with any amendments or modifications hereto in effect from time to time, the “Restated Guaranty” ), made by AVATAR HOLDINGS INC. , a Delaware corporation, having an address at 201 Alhambra Circle, 12th Floor, Coral Gables, Florida 33134 ( “Guarantor” ), in favor of the lending institution(s) identified on Schedule A attached hereto and made a part hereof and such other lending institutions which may become parties hereto pursuant to the “Credit Agreement (as hereinafter defined) (individually, a “Lender” and collectively, the “Lenders” ) and WACHOVIA BANK, NATIONAL ASSOCIATION, having an office at 200 East Broward Boulevard, Suite 200, Fort Lauderdale, Florida 33301 ( “Agent” ).

     WHEREAS, Guarantor entered into that certain Guaranty Agreement dated as of September 20, 2005 (“ Guaranty Agreement ”) to induce Lenders to make loans, extensions of credit or other financial accommodations pursuant to the Credit Agreement dated as of even date herewith to AVATAR PROPERTIES INC. , a Florida corporation ( “Borrower” ) (the “Credit Agreement”) and to secure the observance, payment and performance of the “Liabilities” (as defined below), and with full knowledge that Lenders would not make the said loans, extensions of credit or financial accommodations without such Guaranty Agreement, which shall be construed as a contract of suretyship;

     WHEREAS, Guarantor desires to amend and restate the Guaranty Agreement to include the guarantee of full, prompt and unconditional performance of each term and condition to be performed by Borrower under the additional Notes evidencing a Facility Increase (as such term is defined in the Credit Agreement) in the aggregate amount of Twenty Five Million Dollars ($25,000,000.00);

     NOW THEREFORE, Guarantor unconditionally agrees as follows:

1. LIABILITIES GUARANTEED .

     Guarantor hereby guarantees and becomes surety to Lenders for the full, prompt and unconditional payment of the Liabilities, when and as the same shall become due, whether at the stated maturity date, by acceleration or otherwise, and the full, prompt and unconditional performance of each term and condition to be performed by Borrower under the Notes (as herein defined) and the Credit Agreement. This Restated Guaranty is a primary obligation of Guarantor and shall be a continuing inexhaustible Guaranty. This is a guaranty of payment and not of collection. Agent, in accordance with the Credit Agreement, may require Guarantor to pay and perform its liabilities and obligations under this Restated Guaranty and may proceed immediately against Guarantor without being required to bring any proceeding or take any action against Borrower, any other guarantor or any other person, entity or property prior thereto, the liability of Guarantor hereunder being joint and several, and independent of and separate from the liability of Borrower, any other guarantor or person, and the availability of other collateral security for the Notes.

2. DEFINITIONS .

     2.1. “Notes” means those certain Consolidated Revolving Promissory Notes dated as of even date herewith in the principal amounts as follows: Sixty-Eight Million Dollars ($68,000,000) from Borrower to Wachovia Bank, National Association; Thirty Two Million Dollars ($32,000,000) from Borrower to Guaranty Bank; and Twenty Five Million Dollars ($25,000,000) from Borrower to

Guaranty Bank; and Twenty Five Million Dollars ($25,000,000) from Borrower to Franklin Bank, SSB, a Texas Savings Bank.

     2.2. “Liabilities” means, collectively: (i) the repayment of all sums due under the Notes (and all extensions, renewals, replacements and amendments thereof) and the other “Loan Documents” (as defined herein); (ii) the performance of all terms, conditions and covenants set forth in the Loan Documents, including the Obligations, as defined in the Credit Agreement; (iii) the repayment of all sums due or that may become due under or in connection with any present or future swap agreements (as defined in 11 U.S.C. §101) between Borrower and Agent (or any of Agent’s affiliates); (iv) the repayment of all reimbursement obligations due or that may become due under or in connection with any present or future letters of credit for the account of Borrower in accordance with and pursuant to the Credit Agreement; and (v) all other obligations or indebtedness of Borrower to Lenders incurred in connection with the Credit Agreement, including without limitation, principal, interest, fees, late charges and expenses, including attorneys’ fees.

     2.3. “Loan Documents” shall have the meaning set forth in the Credit Agreement. The terms of the Loan Documents are hereby made a part of this Restated Guaranty to the same extent and with the same effect as if fully set forth herein.

     2.4 All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Loan Documents.

3. REPRESENTATION AND WARRANTIES . Guarantor represents and warrants to Lenders as follows:

     3.1. Organization, Powers . Guarantor (i) is a Delaware corporation, duly organized, validly existing and in good standing under the laws of the state of its organization, and is authorized to do business in each other jurisdiction wherein its ownership of property or conduct of business legally requires such authorization; (ii) has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated; and (iii) has the power and authority to execute, deliver and perform, and by all necessary action has authorized the execution, delivery and performance of, all of its obligations under this Restated Guaranty and any other Loan Document to which it is a party.

     3.2. Execution of Restated Guaranty . This Restated Guaranty and each other Loan Document to which Guarantor is a party have been duly executed and delivered by Guarantor. Execution, delivery and performance of this Restated Guaranty and each other Loan Document to which Guarantor is a party will not: (i) violate any of its organizational documents, provision of law, order of any court, agency or instrumentality of government, or any provision of any indenture, agreement or other instrument to which it is a party or by which it or any of its properties is bound; (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature, other than the liens created by the Loan Documents; and (iii) require any authorization, consent, approval, license, exemption of, or filing or registration with, any court or governmental authority.

     3.3. Obligations of Guarantor . This Restated Guaranty and each other Loan Document to which Guarantor is a party are the legal, valid and binding obligations of Guarantor, enforceable against it in accordance with their terms, except as the same may be limited by bankruptcy, insolvency, reorganization or other laws or equitable principles relating to or affecting the enforcement of creditors’ rights generally. The loans or credit accommodations made by Lenders to Borrower and the assumption by Guarantor of its obligations hereunder and under any other Loan Document to which Guarantor is a party will result in material benefits to Guarantor. This Restated Guaranty was entered into by Guarantor for commercial purposes.

     3.4. Litigation . There is no action, suit, or proceeding at law or in equity or by or before any governmental authority, agency or other instrumentality now pending or, to the knowledge of Guarantor,

threatened against or affecting Guarantor or any of its properties or rights which, if adversely determined, would materially impair and adversely affect: (i) the value of any collateral securing the Liabilities; (ii) Guarantor’s right to carry on its business substantially as now conducted (and as now contemplated); (iii) its financial condition; or (iv) its capacity to consummate and perform its obligations under this Restated Guaranty or any other Loan Document to which Guarantor is a party.

     3.5. No Defaults . Guarantor is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained herein or in any material agreement or instrument to which it is a party or by which it or any of its properties is bound.

     3.6. No Untrue Statements . No Loan Document or other document, certificate or statement furnished to Lenders by or on behalf of Guarantor contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. Guarantor acknowledges that all such statements, representations and warranties shall be deemed to have been relied upon by Lenders as an inducement to extend credit to Borrower pursuant to the Credit Agreement (collectively, “Loan” ).

4. NO LIMITATION OF LIABILITY .

     4.1. Without incurring responsibility to Guarantor, and without impairing or releasing the obligations of Guarantor to Lenders, and without reducing the amount due under the terms of this Restated Guaranty, Agent may at any time and from time to time, without the consent of or notice to Guarantor, upon any terms or conditions, and in whole or in part:

          4.1.1. Change the manner, place or terms of payment of (including, without limitation, the interest rate and monthly payment amount), and/or change or extend the time for payment of, or renew or modify, any of the Liabilities, or any of the Loan Documents evidencing same, and the Restated Guaranty herein made shall apply to the Liabilities and the Loan Documents as so changed, extended, renewed or modified;

          4.1.2. Exercise or refrain from exercising any rights against Borrower or other obligated parties (including Guarantor);

          4.1.3. Settle or compromise any Liabilities, whether in a proceeding or not, and whether voluntarily or involuntarily, and subordinate the payment of any of the Liabilities, whether or not due, to the payment of liabilities owing to creditors of Borrower other than Lenders and Guarantor;

          4.1.4. Apply any sums it receives, by whomever paid or however realized, to any of the Liabilities;

          4.1.5. Add, release, settle, modify or discharge the obligation of any maker, endorser, guarantor, surety, obligor or any other party who is in any way obligated for any of the Liabilities;

          4.1.6. Accept security for the Liabilities; and/or

          4.1.7. Take any other action which might constitute a defense available to, or a discharge of, Borrower or any other obligated party (including Guarantor) in respect of the Liabilities.

     4.2. The invalidity, irregularity or unenforceability of all or any part of the Liabilities or any Loan Document, or the impairment or loss of any security therefor, whether caused by any action or inaction of Agent, or otherwise, shall not affect, impair or be a defense to Guarantor’s obligations under this Restated Guaranty.

5. LIMITATION ON SUBROGATION. Until such time as the Liabilities are indefeasibly paid in full in cash, Guarantor waives any present or future right to which Guarantor is or may become entitled to be subrogated to Lenders’ rights against Borrower or to seek contribution, reimbursement, indemnification,

payment or the like, or participation in any claim, right or remedy of Lenders against Borrower or any security which Lenders may hereafter acquire, whether or not such claim, right or remedy arises under contract, in equity, by statute, under common law or otherwise. If, notwithstanding such waiver, any funds or property shall be paid or transferred to Guarantor on account of such subrogation, contribution, reimbursement, or indemnification at any time when all of the Liabilities have not been paid in full, Guarantor shall hold such funds or property in trust for Lenders and shall forthwith pay over to Agent such funds and/or property to be applied by Agent to the Liabilities.

6. COVENANTS .

     6.1. Financial Covenants .

     Guarantor shall maintain the financial covenants set forth in the Credit Agreement (“ Financial Covenants ”) during the term of the Notes, compliance of which shall be determined on the basis of the “Financial Reporting” (as hereinafter defined) and other information to be provided to Agent by Guarantor required by the Credit Agreement or the other Loan Documents. Except as may be specifically provided otherwise in the Credit Agreement, review of the Financial Covenants shall be tested quarterly during the term of the Notes, within forty-five (45) days of each quarter end and within one hundred twenty (120) days of each fiscal year end, subject to Agent’s receipt of the Financial Reporting on a timely basis.

     6.2. Financial Statements