EX-10.4 RESTRICTED STOCK UNIT AGREEMENT

Exhibit 10.4

RESTRICTED STOCK UNIT AGREEMENT

     This RESTRICTED STOCK UNIT AGREEMENT (“ Agreement ”), dated June 26, 2007, by and between Avatar Holdings Inc., a Delaware corporation (the “ Company ”) and Randy Kotler (the “ Participant ”).

     1. AWARD. Pursuant to the provisions of the Avatar Holdings Inc. Amended and Restated 1997 Incentive and Capital Accumulation Plan (2005 Restatement), as the same may be amended, restated, modified or supplemented (the “ Plan ”), the Committee (as defined in the Plan, the “ Committee ”) hereby awards to the Participant, on July 9, 2007, subject to the Participant commencing employment with the Company pursuant to the employment agreement between the Company and the Employee, dated as of the date hereof, and further subject to the terms and conditions of the Plan and the terms and conditions set forth herein, an opportunity to receive 2,500 Performance Conditioned Restricted Stock Units (“ Units ”). Capitalized terms used but not defined herein shall have the meanings assigned to them in the Plan. This award is intended to constitute a Performance-Based Award within the meaning of the Plan.

     2. TERMS AND CONDITIONS. The award evidenced by this Agreement is subject to the following terms and conditions:

     (a) Subject to Section 4 hereof, the Participant shall be granted, automatically and without further authorization on the part of the Committee, 2,500 Units upon satisfaction of the following condition (the date on which such condition is satisfied is hereinafter referred to as the “ Grant Date ”): (i) the closing stock price of the Common Stock on its principal trading market shall have been at least $83.89 per share for twenty (20) trading days out of thirty (30) consecutive trading days or (ii) the Company consummates a transaction which results in the stockholders of the Company receiving cash, securities, or other property (or any combination thereof) having a “value” as determined by the Committee of at least $83.89 per share in either case, during the period beginning on July 9, 2007 and ending on July 8, 2010 (the “ Hurdle Price Condition ”); provided , however , that, except as provided in Sections 4(c) and 4(d), no Units shall be granted if the Participant’s employment with the Company has terminated for any reason on or prior to the time the Hurdle Price Condition is satisfied. For purposes of this Section 2(a), “ value ” shall mean the amount received by the stockholders of the Company taking into account the net present value of any debt, securities, future payments, contingent rights or other non-cash consideration to be paid to such stockholders.

     (b) The Participant shall not possess any incidents of ownership (including, without limitation, dividend, interest and voting rights) in shares of Common Stock in respect of the Units or the Change in Control Amount, as applicable, until such Units or the Change in Control Amount, as applicable, shall have vested and been distributed to the Participant in the form of shares of Common Stock or, in the case of a Change in Control Amount, a single, lump sum cash payment, in accordance with Sections 3 and 4 hereof.

     (c) Except as provided in this Section 2(c), the Units and any interest of the Participant therein may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of. Any attempt to transfer Units in contravention of this Section 2(c) is void ab initio . Units shall not be subject to execution, attachment or other process. Notwithstanding the foregoing, with the written consent of the Committee, the Participant shall be permitted to transfer such Units to members of his immediate family ( i.e. , children, grandchildren or spouse), trusts for the benefit of such family members, and partnerships whose only partners are such family members; provided , however , that no consideration can be paid for the transfer of the Units and the transferee of the Units shall be subject to all conditions applicable to the Units (including all of the terms and conditions of this Agreement) prior to transfer.

     (d) Each reference contained in this Agreement to:

     “ Anniversary ” shall mean, with respect to any date, the annual recurrence of such date.

     “ Change in Control ” shall mean any of the following events: (a) a person or entity or group of persons or entities, acting in concert, becomes the direct or indirect beneficial owner (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities of the Company representing 50.1% or more of the combined voting power of the issued and outstanding Common Stock; (b) the Board of Directors of the Company approves any merger, consolidation or like business combination or reorganization of the Company, the consummation of which would result in the occurrence of the event described in clause (a) above, and such transaction shall have been consummated; (c) the Company ceases to be engaged, directly or indirectly, and does not intend to be engaged at any time in the foreseeable future, in any real estate business; or (d) the Company sells, transfers or otherwise disposes of all or substantially all of its assets in one transaction or a series of transactions. The date on which a Change in Control is consummated, with respect to clauses (a) and (b), or occurs, with respect to clauses (c) and (d), is herein referred to as the “ Change in Control Date .”

     “ Change in Control Amount ” shall have the meaning set forth in Section 4(e) hereof.

     “ Common Stock ” shall mean common stock, par value $1.00 per share, of the Company.

     “ Fair Market Value ” shall mean the average of the closing prices of the Common Stock for the fifteen trading days ending with and including the measuring date if the Common Stock is readily tradeable on a national securities exchange, the National Association of Securities Dealers Automated Quotation System or other national market system, provided, however, if such exchange or system is not open for business on any day during such period or the Common

Stock was not traded on any day during such period, the Fair Market Value shall be determined as of the most recent fifteen (15) trading days ending with and including the measuring date on which such exchange or system shall have been open for business and the Common Stock was traded, and if the Common Stock is not readily tradable as set forth above, Fair Market Value shall mean the amount determined in good faith by the Committee as the fair market value of the Common Stock of the Company.

     3. VESTING AND CONVERSION OF UNITS. On July 8, 2010, the Units granted to the Participant pursuant to Section 2(a) hereof, if any, shall vest in full and such vested Units shall be converted into an equivalent number of shares of Common Stock that will be immediately distributed to the Participant; provided , however , that subject to the provisions of Section 4 hereof, no Units shall vest or be converted and distributed to the Participant unless the Participant is an employee of the Company on July 8, 2010.

     Upon the distribution of the shares of Common Stock in respect of the Units, the Company shall issue to the Participant or the Participant’s personal representative a stock certificate representing such shares of Common Stock, free of any restrictions, subject to Section 8 hereof.

     4. TERMINATION OF EMPLOYMENT; CHANGE IN CONTROL.

     (a) For purposes of this Section 4, the terms Cause, Without Cause, Good Reason, Without Good Reason and Disability shall have the meanings ascribed to such terms in the Participant’s employment agreement with the Company, dated as of the date hereof, as amended or restated from time to time; provided , however , if the Participant is no longer employed pursuant to such employment agreement, each such term shall have the meaning ascribed to it in the employment agreement last in effect which contains such defined term.