Notes to Consolidated Financial Statements
    

Note 12 - Related Party Transactions

The Company acquired substantially all of the assets and assumed substantially all of the related liabilities of Old William Lyon Homes as described in Note 2.

The Company purchased real estate projects for a total purchase price of $8,468,000 during the year ended December 31, 2000 from entities controlled by William Lyon and William H. Lyon.

On October 26, 2000, the Company's Board of Directors (with Messrs. William Lyon and William H. Lyon abstaining) approved the purchase of 579 lots for a total purchase price of $12,581,000 from an entity controlled by William Lyon and William H. Lyon. The terms of the purchase agreement provide for an initial option payment of $1,000,000 and a rolling option takedown of the lots. Phase takedowns of approximately 20 lots each are anticipated to occur at two to three month intervals for each of several product types through September 2004. In addition, one-half of the net profits in excess of six percent from the development are to be paid to the seller. This land acquisition qualifies as an affiliate transaction under the Company's $200,000,000 12 1/2% Senior Notes due

July 1, 2001 Indenture dated as of June 29, 1994 ("Indenture")- Pursuant to the terms of the Indenture, the Company has determined that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person. The Company has delivered to the Trustee under the Indenture a resolution of the Board of Directors of the Company set forth in an Officers' Certificate certifying that the land acquisition is on terms that are no less favorable to the Company than those that would have been obtained in a comparable transaction by the Company with an unrelated person and the land acquisition has been approved by a majority of the disinterested members of the Board of Directors of the Company. Further, the Company has delivered to the Trustee under the Indenture a determination of value by a real estate appraisal firm which is of regional standing in the region in which the subject property is located and is MAI certified.

The Company purchased land for a total purchase price of $7,128,000 during the year ended December 31, 2000 from one of its unconsolidated joint ventures.

The Company purchased real estate projects for a total purchase price of $680,000 during the year ended December 31, 1999, from entities controlled by William Lyon and William H. Lyon.

Sales of lots, land and other for the year ended December 31, 1998 include a bulk lot sale of $6,996,000 to Old William Lyon Homes. The Company received the full purchase price in cash and recognized a gain of $265,000 on the sale.

For the year ended December 31, 2000, the Company earned management fees and accrued on-site labor costs of $330,000 and $593,000, respectively, for managing and selling real estate owned by entities controlled by William Lyon and William H. Lyon of which $39,000 was due the Company at December 31, 2000.

For the year ended December 31, 1999, the Company earned management fees and accrued on-site labor costs of $268,100 and $367,800, respectively, for managing and selling real estate owned by entities controlled by William Lyon and William H. Lyon. In addition, the Company earned fees of $50,100 for tax and accounting services performed for entities controlled by William Lyon and William H. Lyon.

For the years ended December 31, 2000 and 1999, the Company incurred charges of $717,000 and $145,500, respectively, related to rent on its corporate office, from a trust of which William H. Lyon is the sole beneficiary.