AGREEMENT OF SALE

AGREEMENT OF SALE

by and between

OWINGS MANOR REALTY, LLC and

GMAC COMMERCIAL REALTY PARTNERS, L.P.,

Seller

and

BERKSHIRE INCOME REALTY, INC.

Buyer

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AGREEMENT OF SALE

THIS AGREEMENT (" Agreement ") made this 16th day of March, 2005 by and among OWINGS MANOR REALTY, LLC, a Maryland limited liability company, and GMAC COMMERCIAL REALTY PARTNERS, L.P., a Delaware limited partnership (each a “Member” , and collectively, the “Members” or the “Seller” ) of OWINGS MANOR INVESTORS, LLC (the " Company "), a Delaware limited liability company, having an office c/o Apartment Services, Inc. 216 Schilling Circle, Suite 300, Hunt Valley, Maryland 21031 and BERKSHIRE INCOME REALTY, INC. or its nominee (" Buyer "), a Maryland corporation, having an office at One Beacon Street, Suite 1500, Boston, MA 02108.

WHEREAS, Owings Manor Realty, LLC is the managing Member of the Company vested with forty percent (40%) membership interest in the Company and GMAC Commercial Realty Partners, L.P. is a Member of the Company vested with a sixty percent (60%) interest in the Company.

(a)   Real Property . That certain lot or parcel of real property located in Baltimore County, Maryland and commonly known as Owings Manor Apartments, which is more particularly described on Exhibit "A" hereto, and the buildings and improvements situated on each such parcel (collectively, the " Premises "), together with all the rights and appurtenances pertaining to the Premises, including any right, title and interest of Company (if any) in and to adjacent streets and rights-of-way:

(b)   Personal Property . The fixtures, furnishings, equipment and other items of personal property, if any, owned by Company and located on, and used in connection with the operation of the Premises, including, without limitation the items, if any, listed on Exhibit "B" hereto (collectively, the " Personal Property ", and, together with the Premises, the " Property "); and

(c)   Intangible Property. Company’s right, title and interest in and to any intangible property now or hereafter owned by Company related to the Premises or the Personal Property including, without limitation, any trademarks, trade styles, service marks, software, domain names and websites related to the Premises or the Personal, all rights under any certificates of occupancy, licenses, permits and approvals relating to the Premises or the Personal Property, and all contract rights, escrow or security deposits, utility agreements or other rights related to the ownership of or use and operation of the Premises or the Personal Property (the “ Intangible Property ”).

(a)   Purchase Price . The purchase price to be paid by Buyer to Seller for the Membership Interests is the sum of Sixty-Seven Million Two Hundred Thirty Five Thousand Dollars ( $67,235,000.00 ) (the " Purchase Price "), adjusted in accordance with Section 7 hereof. At Closing, Buyer shall pay the Purchase Price to Seller, adjusted as hereinafter provided, either directly or, if the Closing occurs in escrow with the Title Company, through the Title Company, by wire transfer of immediate federal funds, to one or more accounts specified by Seller at one or more banks designated by Seller.

(b)   Escrow Amount . At the Closing, Seller and Buyer shall enter into an escrow agreement in the form attached hereto as Exhibit “M” (the " Escrow Agreement "), pursuant to which Seller shall deposit One Million and 00/100 Dollars ($1,000,000.00) (the " Escrow Amount ") with the Escrowee, which shall be held by the Escrowee in a segregated account as security for Seller’s indemnification obligations under this Agreement and for breaches of representations and warranties of

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Seller under this Agreement. All interest accruing on the Escrow Amount shall be for the benefit of Seller. In the event Buyer makes a written claim or demand for indemnification under Section 22(f) hereof (an " Indemnification Claim "), and Seller does not dispute such Indemnification Claim, or is determined to be liable for and in respect of such Indemnification Claim by a court of competent jurisdiction, then the Escrowee promptly thereafter shall pay such Indemnification Claim in full to Buyer, all as more particularly provided in the Escrow Agreement. The Escrow Agreement shall expire upon the termination of the Survival Period (as defined in Section 23(b) hereof), and immediately thereafter the Escrow Agent shall pay the portion, if any, of the then remaining Escrow Amount not in dispute to Seller; provided, however, that if prior to the expiration of the Survival Period, Buyer shall have made an Indemnification Claim or commenced litigation or any other proceeding on account of any such claim, the term of the Escrow Agreement shall be extended, and the Escrow Agent shall continue to hold in escrow the portion of the then Escrow Amount in dispute, in each case until the final resolution of such Indemnification Claim or litigation or proceeding relating thereto, all as more particularly provided in the Escrow Agreement.

3.     Deposit . The sum of Five Hundred Thousand Dollars ( $500,000.00 ) (the " Initial Deposit ") shall be deposited with the Title Company, as hereinafter defined (the " Escrowee ") within 24 hours of the execution of this Agreement by Buyer and Seller and delivery of a fully-executed counterpart to each (the " Effective Date "). Within 24 hours of the expiration of the Inspection Period, as hereinafter defined, an additional Five Hundred Thousand Dollars ( $500,000.00 ) (the " Second Deposit "), in immediately available funds, shall be deposited with the Title Company. The First Deposit and the Second Deposit, together with any interest earned thereon are hereinafter referred to as the " Deposit ". All interest earned on the Deposit shall be added to and made a part of the Deposit for all purposes hereof. Except for a breach of this Agreement by the Seller, and subject to Buyer’s termination rights as set forth in this Agreement, the Deposit shall be non-refundable at the expiration of the Inspection Period.

3.1.1               Escrow Agent . Upon receipt from Buyer of the Deposit, Escrowee shall invest the Deposit in an interest-bearing account or money market fund acceptable to Buyer and Seller. All interest on the Deposit shall accrue to Buyer, except as otherwise provided in Section 15(a) hereof. At the Closing, Escrowee shall release the Deposit to Seller, which Deposit shall be credited against the balance of the Purchase Price owed by Buyer to Seller. Escrowee shall agree to hold and dispose of the Deposit in accordance with the terms and provisions of this Agreement.

3.1.2               Escrow Provisions . Escrowee agrees to hold, keep and deliver the Deposit and all other sums delivered to it pursuant hereto in accordance with the terms and provisions of this Agreement. Escrowee shall not be entitled to any fees or compensation for its services hereunder. Escrowee shall be liable only to hold said sums and deliver the same to the parties named herein in accordance with the provisions of this Agreement, it being expressly understood that by acceptance of this Agreement, Escrowee is acting in the capacity of a depository only and shall not be liable or responsible to anyone for any damages, losses or expenses unless same shall have been caused by the gross negligence or willful malfeasance of Escrowee. In the event of any disagreement between Buyer and Seller resulting in any adverse claims and demands being made in connection with or for the monies involved herein or affected hereby, Escrowee shall be entitled to refuse to comply with any such claims or demands so long as such disagreement may continue; and in so refusing Escrowee shall make no delivery or other disposition of any of the monies then held by it under the terms of this Agreement, and in so doing Escrowee shall not become liable to anyone for such refusal; and Escrowee shall be entitled to continue to refrain from acting until (a) the rights of the adverse claimants shall have been finally adjudicated in a court of competent jurisdiction of the monies involved herein or affected hereby, or (b) all differences shall have been adjusted by agreement between Seller and Buyer, and Escrowee shall have been notified in writing of such agreement signed by the parties hereto. Escrowee shall not be required to disburse any of the monies held by it under this Agreement unless in accordance with either a

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joint written instruction of Buyer and Seller or an Escrow Demand (as hereinafter defined) from either Buyer or Seller in accordance with the provisions hereinafter. Upon receipt by Escrowee from either Buyer or Seller (the “ Notifying Party ”) of any notice or request (the “ Escrow Demand ”) to perform any act or disburse any portion of the monies held by Escrowee under the terms of this Agreement, Escrowee shall give written notice to the other party (the “ Notified Party ”). If within five (5) days after the giving of such notice, Escrowee does not receive any written objection to the Escrow Demand from the Notified Party, Escrowee shall comply with the Escrow Demand. If Escrowee does receive written objection from the Notified Party in a timely manner, Escrow Agent shall take no further action until the dispute between the parties has been resolved pursuant to either clause (a) or (b) above. Further Escrowee shall have the right at all times to pay all sums held by it (i) to the appropriate party under the terms hereof, or (ii) into any court of competent jurisdiction after a dispute between or among the parties hereto has arisen, whereupon Escrowee’s obligations hereunder shall terminate.

3.1.3               Indemnification . Seller and Buyer jointly and severally agree to indemnify and hold harmless said Escrowee from any and all costs, damages and expenses, including reasonable attorneys’ fees, that said Escrowee may incur in its compliance of and in good faith with the terms of this agreement; provided, however, this indemnity shall not extend to any act of gross negligence or willful malfeasance on the part of the Escrowee.

4.     Closing . The closing of the transfers contemplated hereby (the " Closing ") shall be held and completed on or before April 15, 2005 (the " Closing Date "), through an escrow with the Title Company or in another mutually agreeable manner and location. Time shall be of the essence in respect of Buyer's obligation to purchase the Premises on the Closing Date.

(a)   Title to Premises . Fee simple title to the Premises shall be owned by the Company at the completion of Closing, subject only to the Permitted Encumbrances (hereinafter defined). Title to the Premises shall be such as will be insured by the Title Company (as hereinafter defined) pursuant to the standard stipulations and conditions of the most current standard ALTA form of Owner's Title Insurance Policy in use in the State of Maryland, free and clear of all liens and encumbrances, except for the Permitted Encumbrances. The term " Permitted Encumbrances " shall mean (w) the Existing Leases (as hereinafter defined) in effect as of the Closing Date, (x) the additional matters affecting the Premises as set forth in the Title Commitment (as defined below) and not objected to under Section 5(c), and (y) any matters reflected on any update of the Buyer's Title Commitment as to which Buyer does not timely object in accordance with this Paragraph 5. Title to the Personal Property, if any, shall also be subject to the Permitted Encumbrances, to the extent applicable.

(b)   Survey . Seller has delivered to Buyer a physical survey, from a licensed surveyor, of the Premises, to be certified to Seller, Buyer and the Title Company as being in accordance with current ALTA/ACSM "minimum detail" standards (the " Seller's Survey Plan "). Nothing contained in this Agreement, including the provisions of Paragraph 1(a) hereof, shall constitute any warranty, representation or agreement by Seller as to the location of separate lots in, or acreage of, the Premises. The Buyer may obtain, at the Buyer's expense, by the end of the Inspection Period, a current ALTA survey (the " Buyer's Survey ") of the Property prepared by a duly licensed surveyor selected by the Buyer. Buyer shall promptly provide a copy of the Buyer’s Survey to Seller, at no cost to Seller. At any time prior to the end of the Inspection Period, the Buyer may give the Seller notice in writing of any unacceptable aspects of the Buyer’s Survey. Matters of survey not timely objected to by Buyer shall be deemed to have been accepted by Buyer. In the event that either the Seller’s Survey Plan or the Buyer’s Survey is unacceptable to Buyer as provided above, and Buyer so notifies Seller within the aforesaid period, Seller shall, within ten (10) days after receipt of such notice from Buyer, notify Buyer in writing

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either (a) that Seller is unwilling to correct such unacceptable survey matters, or (b) that Seller, at its sole cost and expense, shall undertake to eliminate or modify all such unacceptable matters to the reasonable satisfaction of Buyer. In the event Seller elects not to cure such unacceptable survey matters or is unable to satisfy said objections within ten (10) days after its receipt of such notice from Buyer, then the Buyer may, at its election: (i) terminate this Agreement, in which event the Deposit referred to in Paragraph 3 and all interest earned thereon shall be promptly returned to the Buyer and the parties shall be relieved from further obligations to one another under this Agreement; or (ii) accept the Property subject to all matters of survey as of the date of the Buyer’s Survey, without an adjustment to the Purchase Price, and proceed with Closing hereunder. If Buyer does not elect alternative (i) by written notice to Seller given within ten (10) days after the date of Seller's notice electing not to cure or the expiration of the aforesaid ten (10) day period without Seller having successfully cured the survey objections (whichever is applicable), the Buyer shall be deemed to have elected alternative (i).

(c)   Title Defects . Seller has delivered to Buyer a copy of Seller’s owner’s title policy from Commonwealth Land Title Insurance Company (the " Title Company ") with respect to the Premises. Buyer shall have until the end of the Inspection Period to object to any matter contained in the Title Commitment (as hereinafter defined). Any matter not objected to within such period shall be deemed a Permitted Encumbrance. The Buyer shall, at the Buyer's expense, shall obtain a commitment (the " Title Commitment ") from a title insurance company of the Buyer's choice which is licensed to do business in the State of Maryland for an owner's title insurance policy on a Standard ALTA Policy. Buyer shall promptly provide a copy of the Title Commitment to Seller, at no cost to Seller. If the Title Commitment shows exceptions to title which are objectionable to Buyer, the Buyer may give the Seller notice thereof at any time prior to the end of the Inspection Period enumerating in writing the unacceptable aspects of the Title Commitment. Matters affecting title in existence on the date of the Title Commitment and not timely objected to by Buyer shall be deemed to have been accepted by Buyer and shall be deemed Permitted Encumbrances.

In the event that the Title Commitment is unacceptable to Buyer as provided above, and Buyer so notifies Seller within the aforesaid time period, Seller shall, within ten (10) days after receipt of such notice from Buyer, notify Buyer in writing either (a) that Seller is unwilling to correct such unacceptable title matters, or (b) that Seller, at its sole cost and expense, shall undertake to eliminate or modify all such unacceptable matters to the reasonable satisfaction of Buyer. In the event Seller elects not to cure such unacceptable title matters or is unable to satisfy said objections within ten (10) days after its receipt of such notice from Buyer, except for the satisfaction of monetary liens at Closing which Seller shall be required to pay off at Closing, then the Buyer may, at its election: (i) terminate this Agreement, in which event the Deposit referred to in Paragraph 3 and all interest earned thereon shall be promptly returned to the Buyer and the parties shall be relieved from further obligations to one another under this Agreement; or (ii) accept title to the Property subject to all matters of record as of the date of the Seller’s Title Policy, without an adjustment to the Purchase Price, and proceed with Closing hereunder. If Buyer does not elect alternative (i) by written notice to Seller given within ten (10) days after the date of Seller's notice electing not to cure or the expiration of the aforesaid ten (1) day period without Seller having successfully cured the title objections (whichever is applicable), the Buyer shall be deemed to have elected alternative (i). Seller covenants that it will not voluntarily create or cause or permit a lien or encumbrance to attach to the Property between the Effective Date and Closing; any lien or encumbrance so attaching, as well as any lien or encumbrance, which is a mortgage, deed of trust, judgment lien, or similar monetary lien against the Property, shall be discharged by the Seller at or prior to Closing.

(d)   Reliance on Title Policy . Notwithstanding anything contained in this Agreement to the contrary, with respect to all matters affecting title to the Premises and any liens or other encumbrances affecting the Premises, Buyer acknowledges and agrees it is relying upon its own title insurance policy. If Buyer has a claim under its title insurance policy and the subject matter of that claim

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also constitutes a breach of any warranty made by Seller in this Agreement, Buyer agrees that it will look first to its title insurance policy for recovery on such claim, and Buyer shall not assert any claim against Seller for a breach of a representation, warranty or covenant with respect to such claim unless and until Buyer has pursued its remedies against the Title Company to final judgment and has not been made whole. The provisions of this subparagraph (d) shall survive Closing. To the extent of any recovery Buyer obtains from Title Company under Buyer’s title insurance policy, Buyer hereby unconditionally waives any right which it may otherwise have against Seller on account of the matter as to which Buyer obtained such recovery, it being intended by the parties hereto that Title Company not be subrogated to any such claim which Buyer may have against Seller, to the extent of such recovery.

(a)   Existing Leases . During the period from the expiration of the Inspection Period through Closing (or earlier termination of this Agreement or default by Buyer hereunder), Seller shall not enter into new leases for portions of the Premises now vacant or for portions of the Premises which may become vacant, or enter into any amendments of any Existing Leases or consent to any renewals, extensions or expansions of Existing Leases or agree to any rental concessions (other than (i) those to which the tenant is entitled pursuant to the terms of the Existing Leases, (ii) those for which the rent is greater than the rent shown on the Rent Roll (as hereinafter defined) for the applicable unit, (iii) the following rental concessions: 10% discounts for law enforcement officers, 5% discount for teachers, 5% discount for hospital personnel, and 3% discount for senior citizens (such discounts are taken off market rent, on one year leases only and cannot be combined with any other discount or concession), so long as not more than twenty (20) new leases subject to such concessions are executed after the expiration of the Inspection Period, and (iv) those rental concessions which are paid by Seller prior to the Closing Date, and in all events using forms substantially the same as those used for the Existing Leases) without first submitting such a copy of such proposed lease or lease amendment (including any renewal, extension or expansion as to which the lessor's consent is required) to Buyer for Buyer's approval. If Buyer does not disapprove in writing such a proposed lease or amendment (or renewal, extension or expansion agreement) within five (5) business days of Buyer's receipt of a copy thereof, Buyer shall be deemed to have approved the proposed lease or amendment (or renewal, extension or expansion agreement). All such new leases and modifications approved or deemed approved by Buyer (and renewals, extensions or expansions approved or deemed approved by Buyer or as to which the lessor's consent is not required), all new leases entered into prior to the expiration of the Inspection Period, and the presently existing leases that are listed on Exhibit "C" hereto are collectively herein called the " Existing Leases ". The termination or expiration of any of the Existing Leases prior to Closing shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price.

(b)   Ready Work . On or prior to the Closing Date, Seller shall attempt to perform all Ready Work (as hereinafter defined). In the event that all Ready Work has not been completed prior to the Closing Date Buyer shall proceed to close the transaction, and receive a credit on account of the incomplete Ready Work in an amount equal to $1,250 per unit. “Ready Work” shall mean all work necessary pursuant to Seller’s standard practices (which include supplying operable kitchen appliances, new carpet, or carpet cleaning [as appropriate] and repainting) to make all apartments within the Property that have been vacant for more than seven (7) days prior to the Closing Date ready for occupancy by incoming tenants, consistent with Seller’s past practices.

(c)   Existing Agreements . During the period from expiration of the Inspection Period through Closing (or earlier termination of this Agreement or default by Buyer hereunder), Seller shall not have the right to enter into new service or maintenance agreements or modify any existing service or maintenance agreements in any material respect without Buyer's approval, which may not be unreasonably withheld or delayed and shall be deemed given if Buyer does not disapprove

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within five (5) business days of a request for approval; provided , however , that Buyer's approval shall not be required for any such new agreement that shall be terminable, without penalty or premium, prior to the Closing. The termination or expiration of any of the Existing Agreements (as defined below) prior to Closing shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price. The “ Existing Agreements ” shall mean the existing agreements listed on Exhibit “D” hereto (together with any other agreements entered into in accordance with this paragraph (c)).

(d)   Ongoing Operations . During the pendency of this Agreement, Seller shall carry on its business and activities relating to the Premises, including (a) the leasing of the Premises, substantially in the same manner as it did for the one year period preceding the date of this Contract and maintain staffing at the same levels; (b) all maintenance, repair and replacement work in accordance with Seller’s policies and practices prior to the date of this Agreement including: (i) replacement of carpet and appliances (including individual air-conditioning units) in the ordinary course of business, (ii) interior painting in the ordinary course of business, and (iii) day to day maintenance and repair of roofs and other building systems, decks, patios, stairways, parking lots and structures, landscaping, gates and fences and other items requiring periodic maintenance and repair. Notwithstanding the foregoing, nothing contained in this Section shall affect or otherwise diminish the rights and obligations of Buyer and Seller under Section 17 with respect to a casualty.

(e)   Management . During the pendency of this Agreement, Seller will manage the Premises in substantially the same manner as Seller managed the Premises prior to the date hereof. Seller shall maintain inventories of supplies, building materials, etc. at the same levels it has maintained them during the one (1) year period prior to the date of this Agreement. Seller will not remove any Personal Property except as may be required for necessary repair or replacement, and replacements shall be of equal quality and quantity as existed as of the time of its removal.

(i)                Taxes and Fees . Real estate taxes for the real estate tax year in which the Closing occurs and annual municipal or special district assessments (on the basis of the actual fiscal tax years for which such taxes are assessed), lienable water and sewer rentals, sums paid to or paid or payable by Seller under the Existing Agreements, license, permit and inspection fees and rentals, sales tax and other sums paid to and received by Seller under the Existing Leases shall be apportioned as is customary in Maryland closings as of the Closing Date between Buyer and Seller.

(ii)               Rent . Rent, including, without limitation, fixed rent, prepaid rent, additional rent and percentage rent, if applicable, shall be apportioned as of the Closing Date in accordance with the provisions of this Paragraph 7. All rent under the Existing Leases collected by Buyer after Closing shall be applied first to unpaid rent accruing on or after the Closing Date, then to any rents past due for the month of Closing and then to unpaid rent accruing for any month prior to the month in which the Closing Date occurs. During the three (3) month period following Closing, Buyer shall use good faith commercially reasonable efforts to recover any rent (or other tenant charge) arrearages in respect of the period prior to the Closing Date, provided that Buyer shall not be required to incur any cost or commence any legal proceeding in connection therewith. Seller (upon notification to Buyer) shall be entitled to sue a tenant, before and/or after Closing, for any delinquent rent (or other tenant charges) due to Seller (and not previously paid to Seller) under an Existing Lease, so long as such suit does not seek a termination of such Existing Lease or eviction of such tenant.

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(iii)              Leasing Costs . Seller shall pay all leasing commissions and tenant costs (including, without limitation, tenant improvement costs, rental concessions (except for those listed in subparagraph 6 (a)(iii), moving costs, design costs incurred by the tenant, lease buyout costs and similar tenant inducement costs) in connection with Existing Leases (and renewals, extensions or expansions thereof) entered into (or, in the case of renewals, extensions and expansions, exercised) prior to Closing.

(iv)              Other Apportionments . Amounts payable under the Existing Agreements and other Premises operation and maintenance expenses and other recurring costs shall be apportioned as of the Closing Date.

(v)               Contract Arrearages . Any portion of any payments received by Buyer after the date of Closing under any of the Existing Agreements that relates to periods prior to Closing shall be determined by Buyer upon receipt of such payment and shall promptly be paid by Buyer to Seller. Any portion of any payments received by Seller after the date of Closing under any of the Existing Agreements that relates to periods after the Closing shall be determined by Seller upon receipt of such payment and shall promptly be paid by Seller to Buyer. Any income payable in connection with any Existing Agreement will be prorated, and any lump sum or up front payments paid to Seller with respect to any Existing Agreement will be prorated.

(vi)              Preliminary Closing Adjustment . Seller and Buyer shall jointly prepare a preliminary Closing Statement on the basis of the Existing Leases. Existing Agreements, real estate taxes and other sources of income and expenses for the Property, and shall deliver such preliminary Closing Statement to each other and the Title Company on or prior to the Closing Date. All apportionments and prorations provided for in this Paragraph 7 to be made as of the Closing Date shall be made, on a per diem basis, as of midnight of the day immediately preceding the Closing Date. The preliminary Closing Statement and the apportionments and/or prorations reflected therein shall be based upon actual figures to the extent available. If any of the apportionments and/or prorations cannot be calculated accurately based on actual figures on the Closing Date, then (other than with respect to determination of real estate taxes that shall be computed as set forth in Clause (vi) above) they shall be calculated based on Seller's and Buyer's good faith estimates thereof, subject to reconciliation as hereinafter provided.

(vii)             Post-Closing Reconciliation . If there is an error on the preliminary Closing Statement or, if after the actual figures are available as to any items that were estimated on the preliminary Closing Statement (including, without limitation, real estate taxes that were computed in accordance with Clause (v) above) or not included on the preliminary Closing Statement, it is determined that any actual proration or apportionment varies from the amount thereof reflected on the preliminary Closing Statement, the proration or apportionment shall be adjusted based on the actual figures as soon as feasible but not later than six (6) months after the Closing Date. Either party owing the other party a sum of money based on such subsequent proration(s) shall promptly pay said sum to the other party.

(b)   Tenant Security Deposits . At Closing, Seller shall deliver or cause its property manager to deliver to Buyer (or give Buyer a credit for), without consideration, all security deposits then held by or for Seller under the Existing Leases together with accrued interest as required by law or the Existing Leases, as shown on Exhibit "C" hereto. Buyer will cause the security deposits to be maintained after Closing in accordance with the requirements of applicable law and shall indemnify and defend Seller from and hold Seller harmless from, all claims of tenants with respect to the security

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deposits actually delivered to Buyer or for which Buyer received a credit at Closing. Seller will cause the security deposits to be maintained prior to the Closing in accordance with the requirements of applicable law and shall indemnify and defend Buyer from and hold Buyer harmless from, all claims of tenants with respect to the security deposits that were not maintained in accordance with the requirements of applicable law prior to the Closing.

(c)   Utility Readings . Seller shall use reasonable efforts to obtain readings of the water and electric meters on the Premises to a date no sooner than ten (10) days prior to the Closing Date. At or prior to Closing, Seller shall pay all charges based upon such meter readings and such charges accruing through the Closing Date. However, if after reasonable efforts Seller is unable to obtain readings of any meters prior to Closing, Closing shall be completed without such readings and upon the obtaining thereof after Closing, Seller shall pay the charges incurred prior to Closing as reasonably determined by Seller and Buyer based upon such readings.

8.     Closing Costs . Buyer shall pay (i) the costs of its counsel, architect, engineers and other professionals and consultants, (ii) any recording and filing fees, (iii) fifty percent (50%) of any State and local transfer or deed recordation taxes, deed stamps and similar taxes required to be paid in connection with this transaction, (iv) all Title Company charges and (v) the cost of obtaining the Buyer’s Survey. Seller shall pay the costs of its counsel, architect, engineers and other professionals and consultants, and fifty percent (50%) of any State and local transfer or deed recordation taxes, deed stamps and similar taxes required to be paid in connection with this transaction. The provisions of this Section 8 shall survive the Closing.

(a)   Assessments . Buyer shall pay all unpaid installments becoming due on or after the Closing Date in respect of assessments against the Premises or any part thereof for improvements or other work (including any fines, interest or penalties thereon due to the non-payment thereof), and shall indemnify, defend and save Seller harmless from any claims therefor or any liability, loss, cost or expenses arising therefrom. Seller shall pay all unpaid installments becoming due prior to the Closing Date in respect of assessments against the Premises or any part thereof for improvements or other work (including any fines, interest or penalties thereon due to the non-payment thereof), and shall indemnify, defend and save Seller harmless from any claims therefor or any liability, loss, cost or expenses arising therefrom.

(a)   Seller hereby represents to Buyer, as of the date hereof and, as of Closing, as follows:

(i)                Company is a Delaware limited liability company duly organized and validly existing under the law of the State of Delaware and qualified to do business in the State of Maryland.

(ii)               Company is organized and governed by an amended and restated operating agreement dated as of June 11 2003, as amended by that First Amendment to

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Amended and Restated Limited Liability Company Agreement dated as of December, 2004 (as amended, the " Operating Agreement ") a true copy of which has been delivered to Buyer.

(iii)              Company has all requisite power and authority to own and operate its business, to carry on the same as now conducted, and to effectuate any action contemplated hereby.

(iv)              All of the Membership Interests were validly issued and are fully paid and non-assessable.

(vi)              Maryland is the only state in which Company owns real and personal property.

(vii)             Company has filed any and all federal and state income, estimated income, excise, property, franchise, or license tax returns that Seller at any time heretofore has been, or hereafter at or before Closing is, required by law to file, and has paid any and all taxes, interest, penalties, or other sums shown thereby to be due from Seller.

(viii)            Company is a single purpose entity whose sole real estate asset is the Property. No Member has sold, transferred, or encumbered any of the Membership Interests, and each Member has the right to assign and transfer the Membership Interests to the Buyer or its assignee in accordance with the provisions of this Agreement, free and clear of any and all right, title, or interest therein of any other person whatsoever.

(ix)              The Buyer, or its assignee, upon the receipt of an assignment of Membership Interests by the Members to the Buyer will be immediately and unconditionally vested with the full and exclusive legal and beneficial title to and ownership of all of the Membership Interests, free and clear of any liens, encumbrances, or other ownership, contractual or other rights.

(x)               There is no action, suit, litigation, or proceeding pending against Company or to Seller's knowledge against any of the Members, or any of the Membership Interests, at law or in equity, or before or by any federal, state, municipal, or other governmental department, commission, board, agency, or instrumentality that is not covered by insurance.

(xi)              Each Member is the sole legal and beneficial owner of its respective Membership Interests.

(xii)             There are outstanding no options, warrants, or rights to acquire any or all of such Membership Interests.

(xiii)            None of the Membership Interests is the subject of any voting trust agreement or other agreement relating to the ownership of any of the Membership Interests or any of the rights held by the holder thereof, or restricting in any way the sale or other transfer thereof which will survive Closing.

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(xiv)            No Condemnation . To Seller's knowledge, except as set forth on Exhibit "E" annexed hereto, there are no existing or pending condemnation proceedings or deeds in lieu of condemnation affecting the Premises.

(xv)             Existing Leases . To Seller's knowledge, (1) the list of Existing Leases set forth in Exhibit "C" hereto is true and correct in all material respects, (2) the Existing Leases are in full force and effect and non of them has been modified, amended or extended, (3) there are no security deposits or other deposits other than those set forth in the Rent Roll, (4) there are no unpaid installments of leasing or brokerage commissions that are payable after Closing with respect to the current term of Existing Leases entered into prior to the date hereof, (5) except as expressly set forth in the Existing Leases, there are no unpaid landlord obligations for tenant improvements that are payable after Closing in connection with the current term of Existing Leases entered into prior to the date hereof, (6) Seller has not given to any tenant nor received from any tenant any written notice of default that remains uncured under any of the Existing Leases, (7) no rental or monetary concessions have been granted to tenants not contained in the Existing Leases, (8) no tenant, or any other person, entity or association has an option to purchase, right of first refusal, right or first offer or other similar right in respect of all or any unit of the Premises, (9) no action or proceeding instituted against Company by any tenant of any unit in the Premises is presently pending, and (10) no uncompleted work (outside the ordinary course of the operation of the Premises) with respect to any part of the Premises demised under any of the Existing Leases to be performed by Seller will remain incomplete after the time of Closing. Seller represents that (A) at the time of Closing, Seller shall have accepted no prepayment of rent under any of the Existing Leases (except for rental for the current month and payments that are required to be made in advance pursuant to the terms and provisions of the Existing Leases), (B) at the time of Closing, Seller