January 12, 1999


Lake Royal Apartments
c/o Ms. Jacqueline Mistry
177-19th Street
Oakland, CA 94612

Re: Lockett v. Lake Royal Apartments

Dear Members:

As you may know, this office provides general legal counsel services to Lake Royal Apartments. My office has been informed of a lawsuit entitled William Lockett v. Lake Royal Apartments, filed in Alameda County Superior Court. The lawsuit alleges that the plaintiff, Mr. Lockett, was denied the ability to lease an apartment at Lake Royal on account of impermissible racial discrimination.

The lawsuit was served on the Association on December 28, 1998. The responsive pleading will be due January 25, 1999. No trial date has been set.

The allegations of the complaint have not been proven in court. The Association has asked its insurance company to provide a defense. The Association intends to deny the allegations of the complaint, and to contend that Mr. Lockett was denied the ability to lease a unit because he failed to meet the Association's financial qualifications, and not because of any discrimination based upon his race..

If you are planning to sell your lease, the pendency of this lawsuit should be disclosed to any potential purchaser in order to comply with California law regarding disclosures in connection with transfers of real property.

The Association will be unable to provide information regarding this lawsuit directly to purchasers or to their agents.

This office, or defense counsel retained by the insurance company, will provide the Association and its members with periodic updates on the progress of the litigation, which will be maintained in a Disclosure File at the Association office. Association members may have access to the Disclosure File by making an appointment with the manager.

Very truly yours,


Ann Rankin