Cheryl,

Thanks for the update.  I like the progress.

I realize that we can not cover us 100% for the future contract but at least 
it will help.  What I think we need is some way to protect us incase he gives 
us a very high bid price to build the house  because we are captive.  What do 
you suggest as a possible remedy?  Some sort of checks on allowing others to 
bid?   Some sort of out on re-purchasing the lot at a set price?  Without a 
cost plus methodology we could be very vulnerable here.  What do you think?

A few of the other issues you addressed in the earlier fax.

2. Earnest money:  I like putting it in title company vs. Flair.  
3. Title policy:  Lets go ahead and take the additional coverage, I think it 
is prudent especially with the new subdivision. How much does an additional 
15% cost?  I don't have any idea.
4.  have provided
5.  not sure i understand this
6.  yes, delete 
7. definitely change and check b1 and hire an inspector
8. add in clarifying statement
9. agree to add builder obligation.  I am fine with a quick closing date and 
needs specificity.  Does he have an estimated time of completion?
10. Rollback taxes:  I agree, clarify as to the exemption, we need to be 
protected here.
11. add this to contract.  Flare may want the money but we should try it.

I hope this helps.  After you review and discuss these issues, let's get 
together via phone and discuss outstanding issues.  Please call Cathy 
Phillips with a time to talk.  She can be reached at 713 853-6898

Thanks,
m




"Cheryl Bach" <cheryl@flex.net> on 02/26/2001 09:23:59 AM
To: <Mike.Mcconnell@enron.com>
cc: <mmccontex@aol.com> 
Subject: Unimproved Property Contract

Dear Mike:

On Friday, February 23, 2001 we received by fax a copy of the Residential
Construction Contract Mr. Kent intends on using in connection with the
construction of your home.  Upon receipt we noticed that it was not a Cost
Plus Contract.  Therefore, we spoke with him about this matter.  He
indicated that although he believes he will be doing the home on a cost plus
basis, no final agreement regarding this matter had yet been made.

The Residential Construction Contract form he uses is a Greater Houston
Builders Association form which is, for the most part, a good one although
it is written primarily to protect the builder.  Therefore, we may ask that
a number of minor changes be made to the Contract as it relates to notice
requirements to you regarding problems in construction and some changes in
the indemnity language.  In addition, there may be some other changes we
request.  Under any circumstance, we can dictate a letter to Mr. Kent at the
appropriate time.

Mr. Kent also indicated that he will make sure we receive a copy of the Deed
Restrictions as soon as possible.

We assume that you will acquire financing for the construction of the home
itself.  When you close, Flair Construction Co., Inc. will also have to
provide to you a Disclosure Statement which spells out some of your rights
and responsibilities under Texas law and a Contractors List of
Subcontractors and Suppliers which tells you the names and addresses of the
Subcontractors Flair intends on using.  We are sure that the construction
lender will require that these documents be provided at the appropriate
time.

Should you have any questions or comments, please call us.