<SUBMISSION>
<ACCESSION-NUMBER>0000950153-02-001139
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>8
<PERIOD>20020620
<ITEMS>5
<ITEMS>7
<FILING-DATE>20020621
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>MERITAGE CORP
<CIK>0000833079
<ASSIGNED-SIC>1531
<IRS-NUMBER>860611231
<STATE-OF-INCORPORATION>MD
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>001-09977
<FILM-NUMBER>02684604
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>6613 N SCOTTSDALE RD
<STREET2>STE 200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
<PHONE>6029988700
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>6613 NORTH SCOTTSDALE ROAD
<STREET2>SUITE200
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85250
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MONTEREY HOMES CORP
<DATE-CHANGED>19970113
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>EMERALD MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19900502
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>HOMEPLEX MORTGAGE INVESTMENTS CORP
<DATE-CHANGED>19920703
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>p66729e8vk.htm
<DESCRIPTION>8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e8vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P align="center"><FONT size="4"><B>SECURITIES AND EXCHANGE COMMISSION<BR>
WASHINGTON, DC 20549</B>
</FONT>

<P align="center"><FONT size="4"><B>FORM 8-K</B>
</FONT>

<P align="center"><FONT size="4"><B>CURRENT REPORT</B>
</FONT>

<P align="center"><FONT size="4"><B>PURSUANT TO SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>
</FONT>

<P align="center"><FONT size="2"><B>Date of report (Date of earliest event reported): June&nbsp;20, 2002</B>
</FONT>

<P align="center"><FONT size="6"><B>MERITAGE CORPORATION</B>
</FONT>

<DIV align="center"><FONT size="2"><B>(Exact Name of Registrant as Specified in Charter)</B>
</FONT></DIV>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="36%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="27%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="27%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD align="center" valign="top"><FONT size="2"><B>Maryland</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
<B>I-9977</B>
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2"><B>86-0611231</B></FONT></TD>
</TR>
<TR>
        <TD align="center" valign="top"><HR size="1" noshade></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
<HR size="1" noshade>
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD align="center" valign="top"><FONT size="2"><B>(State or Other Jurisdiction of<BR>
Incorporation)</B></FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2">
<B>(Commission<BR>
File Number)</B>
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="center" valign="top"><FONT size="2"><B>(IRS Employer<BR>
Identification Number)</B></FONT></TD>
</TR>
</TABLE>
</CENTER>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>
<DIV align="center"><FONT size="2"><B>6613 NORTH SCOTTSDALE ROAD, SUITE 200, SCOTTSDALE, ARIZONA 85250</B>
<HR size="1" width="65%" noshade>
<B>(Address of Principal Executive Offices) (Zip Code)</B>
</FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>
<DIV align="center"><FONT size="2"><B>(877)&nbsp;400-7888</B>
<HR size="1" width="45%" noshade>
<B>(Registrant&#146;s telephone number, including area code)</B>
</FONT></DIV>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</FONT>
<DIV align="center"><FONT size="2"><B>Not applicable</B>
<HR size="1" width="55%" noshade>
<B>(Former Name or Former Address, if Changed Since Last Report)</B>
</FONT></DIV>

<P align="center"><FONT size="2">&nbsp;</FONT>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<!-- link2 "ITEM 5. OTHER EVENTS." -->
<P align="left"><FONT size="2"><B>ITEM 5. OTHER EVENTS.</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;References to &#147;we,&#148; &#147;our&#148; and &#147;us&#148; in this Current Report on Form&nbsp;8-K
refer to Meritage Corporation and its consolidated subsidiaries.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On June&nbsp;20, 2002, we priced a public offering for 1,750,000 shares of our
common stock at $42.00 per share, subject to an option to offer an additional
262,500 shares of common stock to cover over-allotments (such offered shares
and the shares subject to the over-allotment option are referred to as the
&#147;Shares&#148;). In connection with the offering, we filed a Prospectus Supplement
to our shelf registration statement on Form&nbsp;S-3 (Registration No.&nbsp;333-87398)
pursuant to Rule&nbsp;424(b) under the Securities Act of 1933, as amended, with the
Securities and Exchange Commission. A copy of our press release announcing the
pricing of the offering is attached hereto as Exhibit&nbsp;99.1. The Underwriting
Agreement covering the issue and sale of the Shares and certain other material
documents are also attached hereto as exhibits.
</FONT>
<!-- link2 "ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS." -->
<P align="left"><FONT size="2"><B>ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.</B>
</FONT>

<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(a)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(b)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Not applicable.</FONT></TD>
</TR>
<TR>
        <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
        <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="1%" align="left" nowrap><FONT size="2">(c)</FONT></TD>
        <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
        <TD width="91%"><FONT size="2">Exhibits:</FONT></TD>
</TR>
</TABLE>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="95%">
<TR valign="bottom">
        <TD width="9%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="86%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD nowrap align="center"><FONT size="1">Exhibit No.</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap><FONT size="1">Description</FONT></TD>
</TR>
<TR valign="bottom">
        <TD nowrap align="center"><HR size="1" noshade></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Underwriting Agreement</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Restated Articles of Incorporation</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Opinion of Venable, Baetjer, Howard &#038; Civiletti, LLP regarding legality</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Eighth Modification Agreement and Modification Letter to Guaranty
Federal Bank Loan, dated May&nbsp;31, 2002</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Deferred Bonus Agreement between the Company and Larry W. Seay</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Deferred Bonus Agreement between the Company and Richard T. Morgan</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">23</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Consent of counsel (contained in the opinion filed as Exhibit&nbsp;5)</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">99.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Press release</FONT></TD>
</TR>
</TABLE>
</CENTER>
<!-- link1 "SIGNATURES" -->
<P align="center"><FONT size="2"><B>SIGNATURES</B>
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="45%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="3%">&nbsp;</TD>
        <TD width="46%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD colspan="3" valign="top" align="left"><FONT size="2">MERITAGE CORPORATION</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">Date: June&nbsp;21, 2002</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">\s\ Larry W. Seay</FONT></TD>
</TR>
<TR>
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Larry W. Seay</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Chief Financial Officer and</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">Vice-President-Finance</FONT></TD>
</TR>
</TABLE>
</CENTER>
<P align="center"><FONT size="2">&nbsp;</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<!-- link1 "EXHIBIT INDEX" -->
<P align="center"><FONT size="2"><B>EXHIBIT INDEX</B>
</FONT>

<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%">
<TR valign="bottom">
        <TD width="9%">&nbsp;</TD>
        <TD width="5%">&nbsp;</TD>
        <TD width="86%">&nbsp;</TD>
</TR>
<TR valign="bottom">
        <TD nowrap align="center"><FONT size="1">Exhibit No.</FONT></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap><FONT size="1">Description</FONT></TD>
</TR>
<TR valign="bottom">
        <TD nowrap align="center"><HR size="1" noshade></TD>
        <TD><FONT size="1">&nbsp;</FONT></TD>
        <TD nowrap align="center"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Underwriting Agreement</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Restated Articles of Incorporation</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">5</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Opinion of Venable, Baetjer, Howard &#038; Civiletti, LLP regarding legality</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Eighth Modification Agreement and Modification Letter to Guaranty
Federal Bank Loan, dated May&nbsp;31, 2002</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.2</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Deferred Bonus Agreement between the Company and Larry W. Seay</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">10.3</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Deferred Bonus Agreement between the Company and Richard T. Morgan</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">23</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Consent of counsel (contained in the opinion filed as Exhibit&nbsp;5)</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR><TD><TR><TD><TR><TD><TR><TD>
<TR valign="bottom">
        <TD valign="top" align="center"><FONT size="2">99.1</FONT></TD>
        <TD><FONT size="2">&nbsp;</FONT></TD>
        <TD align="left" valign="top"><FONT size="2">
Press release</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">&nbsp;</FONT>



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</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>3
<FILENAME>p66729exv1.txt
<DESCRIPTION>EXHIBIT 1
<TEXT>
<PAGE>
                                                                       EXHIBIT 1

                              MERITAGE CORPORATION














                                1,750,000 Shares
                                  Common Stock
                                ($.01 Par Value)

                             UNDERWRITING AGREEMENT


June 20, 2002
<PAGE>
                              MERITAGE CORPORATION


                                  Common Stock


                                ($.01 Par Value)


                             UNDERWRITING AGREEMENT


                                                                   June 20, 2002

Deutsche Bank Securities Inc.
UBS Warburg LLC
A.G. Edwards & Sons, Inc.
JMP Securities LLC

c/o Deutsche Bank Securities Inc.
31 West 52nd Street
New York, New York 10019

and

c/o UBS Warburg LLC
299 Park Avenue
New York, New York  10171-0026

Ladies and Gentlemen:

         Meritage Corporation, a Maryland corporation (the "COMPANY"), proposes
to issue and sell to the underwriters named in Schedule A annexed hereto (the
"UNDERWRITERS") an aggregate of 1,750,000 shares (the "FIRM SHARES") of Common
Stock, $.01 par value (the "COMMON STOCK") of the Company. In addition, solely
for the purpose of covering over-allotments, the Company proposes to grant to
the Underwriters the option to purchase from the Company up to an additional
262,500 shares of Common Stock (the "ADDITIONAL SHARES"). The Firm Shares and
the Additional Shares are hereinafter collectively sometimes referred to as the
"SHARES." The Shares are described in the prospectus which is referred to below.

         The Company has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the "ACT"), with the Securities and Exchange Commission (the
"COMMISSION") a registration statement on Form S-3 (File No. 333-87398)
including a prospectus, relating to the Shares, which incorporates by reference
documents which the Company has filed or will file in accordance with the
provi-
<PAGE>
                                      -2-

sions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the "EXCHANGE ACT"). The Company has
prepared a prospectus supplement (the "PROSPECTUS SUPPLEMENT") to the prospectus
included in the registration statement referred to above setting forth the terms
of the offering, sale and plan of distribution of the Shares and additional
information concerning the Company and its business. The Company has furnished
to you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses, containing the prospectus included in the registration
statement, as supplemented by a preliminary Prospectus Supplement relating to
the Shares, and the documents incorporated by reference therein (each such
preliminary prospectus being referred to herein as a "PRELIMINARY PROSPECTUS").
Except where the context otherwise requires, the registration statement referred
to above, as amended when it became effective, including all documents filed as
a part thereof or incorporated by reference therein, and including any
information contained in a prospectus subsequently filed with the Commission
pursuant to Rule 424(b) under the Act and deemed to be part of the registration
statement at the time of its effectiveness and also including any registration
statement filed pursuant to Rule 462(b) under the Act, is referred to herein as
the "REGISTRATION STATEMENT", and the prospectus included in the Registration
Statement, including all documents incorporated therein by reference, as
supplemented by the final Prospectus Supplement relating to the Shares, in the
form filed by the Company with the Commission pursuant to Rule 424(b) under the
Act on or before the second business day after the date hereof (or such earlier
time as may be required under the Act), is herein called the "PROSPECTUS". Any
reference herein to the Registration Statement, the Prospectus, any Preliminary
Prospectus or any amendment or supplement thereto shall be deemed to refer to
and include the documents incorporated by reference therein, and any reference
herein to the terms "AMEND", "AMENDMENT", or "SUPPLEMENT" with respect to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the filing after the execution hereof of any
document with the Commission deemed to be incorporated by reference therein. For
purposes of this Agreement, all references to the Registration Statement, the
Prospectus or any Preliminary Prospectus or to any amendment or supplement
thereto shall be deemed to include any copy thereof filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
("EDGAR").

         The Company and the Underwriters agree as follows:

         1.       Sale and Purchase. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A annexed hereto at a purchase price of $39.69 per Share. The Company
is advised by you that the Underwriters intend (i) to make a public offering of
their respective portions of the Firm Shares as soon after the execution and
delivery of this Agreement as in your judgment is advisable and (ii) initially
to offer the Firm Shares upon the terms set forth in the Prospectus. You may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as you may determine.
<PAGE>
                                      -3-



         In addition, the Company hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Underwriters shall
have the right to purchase, severally and not jointly, from the Company, ratably
in accordance with the number of Firm Shares to be purchased by each of them
(subject to such adjustment as you shall determine to avoid fractional shares),
all or a portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm Shares, at the
same purchase price per Share to be paid by the Underwriters to the Company for
the Firm Shares. This option may be exercised by you on behalf of the several
Underwriters at any time (but not more than once) on or before the thirtieth day
following the date hereof, by written notice to the Company. Such notice shall
set forth the aggregate number of Additional Shares as to which the option is
being exercised and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "ADDITIONAL TIME
OF PURCHASE"); provided, however, that the Additional Time of Purchase shall not
be earlier than the Time of Purchase (as defined below) nor earlier than the
second business day (1) after the date on which the option shall have been
exercised nor later than the tenth business day after the date on which the
option shall have been exercised. The number of Additional Shares to be sold to
each Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of Firm
Shares set forth opposite the name of such Underwriter on Schedule A hereto
bears to the total number of Firm Shares (subject, in each case, to such
adjustment as you may determine to eliminate fractional shares).

         2.       Payment and Delivery. Payment of the purchase price for the
Firm Shares shall be made to the Company by Federal Funds wire transfer against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company ("DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on June 26, 2002 (unless another time shall be agreed to by you and
the Company or unless postponed in accordance with the provisions of Section 9
hereof). Concurrently with the payment of the purchase price for the Firm
Shares, the Underwriters shall make a payment of $367,500 (such amount divided
by the total number of Firm Shares, the "EXPENSE REIMBURSEMENT AMOUNT") to the
Company by Federal Funds wire transfer to reimburse the Company for a portion of
its expenses incurred in connection with this Agreement. The time at which such
payments and delivery are actually made is hereinafter referred to as the "TIME
OF PURCHASE." Certificates for the Firm Shares shall be delivered to you in
definitive form in such names and in such denominations as you shall specify no
later than the second business day preceding the Time of Purchase. For the
purpose of expediting the checking of the certificates for the Firm Shares by
you, the Company agrees to

------------

1        As used herein "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
<PAGE>
                                      -4-



make such certificates available to you for such purpose at least one full
business day preceding the Time of Purchase.

Payment of the purchase price for the Additional Shares shall be made to the
Company at the Additional Time of Purchase in the same manner and at the same
office as the payment for the Firm Shares. Concurrently with the payment of the
purchase price for the Additional Shares, the Underwriters shall make a payment
to the Company by Federal Funds wire transfer to reimburse the Company for a
portion of its expenses incurred in connection with this Agreement in an amount
equal to the product of (a) the number of Additional Shares so purchased and (b)
the Expense Reimbursement Amount. Certificates for the Additional Shares shall
be delivered to you by the Company in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the Additional Time of Purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you for such purpose at least one
full business day preceding the Additional Time of Purchase.

         3.       Representations and Warranties of the Company. The Company
represents and warrants to each of the Underwriters that:

                  (a)      The Registration Statement became effective under the
         Act on May 14, 2002 and the conditions to the use of Form S-3 have been
         satisfied. No order of the Commission preventing or suspending the use
         of any Preliminary Prospectus has been issued and no proceedings for
         that purpose have been instituted or, to the knowledge of the Company,
         are contemplated by the Commission; each Preliminary Prospectus, at the
         time of filing thereof, conformed in all material respects to the
         requirements of the Act and the last Preliminary Prospectus distributed
         in connection with the offering of the Shares, as of its date, did not
         contain an untrue statement of a material fact or omit to state a
         material fact required to be stated therein or necessary to make the
         statements therein, in light of the circumstances under which they were
         made, not misleading; the Registration Statement complied, when it
         became effective, complies and will comply in all material respects
         with the provisions of the Act and the Prospectus will comply in all
         material respects with the provisions of the Act and any statutes,
         regulations, contracts or other documents that are required to be
         described in the Registration Statement or the Prospectus or to be
         filed as exhibits to the Registration Statement have been and will be
         so described or filed; the Registration Statement did not, when it
         became effective, does not and will not contain an untrue statement of
         a material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading and
         the Prospectus will not contain an untrue statement of a material fact
         or omit to state a material fact required to be stated therein or
         necessary to make the statements therein, in light of the circumstances
         under which they were made, not misleading; provided, however, that the
         Company makes no warranty or representation with respect to any
         statement contained in the Preliminary Prospectus, the Registration
         Statement or the Prospectus in reliance upon and in
<PAGE>
                                      -5-


         conformity with information concerning an Underwriter and furnished in
         writing by or on behalf of such Underwriter through you to the Company
         expressly for use in the Preliminary Prospectus, Registration Statement
         or the Prospectus; and the Company has not distributed any offering
         material in connection with the offering or sale of the Shares other
         than the Registration Statement, the Preliminary Prospectus, the
         Prospectus or any other materials, if any, permitted by the Act;

                  (b)      As of the date of this Agreement, the Company has an
         authorized capitalization as set forth under the heading entitled
         "Actual" in the section of the Registration Statement and Prospectus
         entitled "Capitalization" and, as of the Time of Purchase, the Company
         shall have an authorized capitalization as set forth under the heading
         entitled "As Adjusted" in the section of the Registration Statement and
         Prospectus entitled "Capitalization". All of the issued and outstanding
         shares of capital stock or other equity interests of the Company have
         been duly authorized and validly issued, are fully paid and
         nonassessable and were not issued in violation of any preemptive or
         similar right. Attached as Exhibit A is a true and complete list of
         each entity in which the Company has, or will have as of the Time of
         Purchase, a direct or indirect majority equity or voting interest,
         their jurisdictions of incorporation or formation, their stockholders
         and percentage equity ownership by the Company. The term "SUBSIDIARIES"
         as used herein shall refer to all of the subsidiaries listed on Exhibit
         A hereto. All of the issued and outstanding shares of capital stock or
         other equity interests of each of the Subsidiaries have been duly and
         validly authorized and issued, are fully paid and nonassessable, were
         not issued in violation of any preemptive or similar right and, except
         as set forth in the Registration Statement and Prospectus or on Exhibit
         A hereto, are owned, directly or indirectly, by the Company free and
         clear of all liens. Except as set forth in the Registration Statement
         and Prospectus, there are no outstanding options, warrants or other
         rights to acquire or purchase, or instruments convertible into or
         exchangeable for, any shares of capital stock of any of the Company or
         any of the Subsidiaries.

                  (c)      Each of the Company and the Subsidiaries (a) is a
         corporation, limited liability company, partnership or other entity
         duly organized and validly existing under the laws of the jurisdiction
         of its organization; (b) has all requisite corporate, limited liability
         company, partnership or other similar power and authority, and has all
         governmental licenses, authorizations, consents and approvals necessary
         to own its property and carry on its business as now being conducted,
         except if the failure to obtain any such license, authorization,
         consent and approval would not, individually or in the aggregate,
         reasonably be expected to have a Material Adverse Effect; and (c) is
         qualified to do business and is in good standing in all jurisdictions
         in which the nature of the business conducted by it makes such
         qualification necessary and where failure to be so qualified and in
         good standing, individually or in the aggregate, could reasonably be
         expected to have a Material Adverse Effect. A "MATERIAL ADVERSE EFFECT"
         means any material adverse effect on the business, condition (financial
         or other), results of
<PAGE>
                                      -6-


         operations, performance, properties or prospects of the Company and the
         Subsidiaries, taken as a whole.

                  (d)      The Company has all requisite corporate power and
         authority to execute, deliver and perform all of its obligations under
         this Agreement and to consummate the transactions contemplated hereby.

                  (e)      This Agreement has been duly and validly executed and
         delivered by the Company.

                  (f)      The capital stock of the Company, including the
         Shares, conforms in all material respects to the description thereof
         contained in the Registration Statement and Prospectus, the
         certificates for the Shares are in due and proper form, and the holders
         of the Shares will not be subject to personal liability by reason of
         being such holders.

                  (g)      The Shares to be issued and sold by the Company have
         been duly and validly authorized and, when issued and delivered against
         payment therefor as provided herein, will be duly and validly issued
         and fully paid and nonassessable.

                  (h)      No approval, authorization, consent or order of or
         filing with any national, state or local governmental or regulatory
         commission, board, body, authority or agency is required in connection
         with the issuance and sale of the Shares or the consummation by the
         Company of the transaction as contemplated hereby other than (A) such
         as have been or will be obtained or made on or prior to the Time of
         Purchase, (B) registration of the offer and sale of the Shares under
         the Act, which has been effected as described herein, (C) such
         approvals as have been obtained in connection with the listing of the
         Shares on the NYSE, (D) any necessary qualification under the
         securities or blue sky laws of the various jurisdictions in which the
         Shares are being offered by the Underwriters or under the rules and
         regulations of the National Association of Securities Dealers, Inc.
         ("NASD"), and any approvals, authorizations, consents or orders the
         failure to obtain or make would not adversely affect consummation of
         the transactions contemplated by this Agreement.

                  (i)      Except as described in the Registration Statement and
         Prospectus, no person has the right, contractual or otherwise, to cause
         the Company to register under the Act any shares of capital stock or
         other equity interests as a result of the filing or effectiveness of
         the Registration Statement or the sale of Shares to the Underwriters
         contemplated thereby, nor does any person have preemptive rights,
         co-sale rights, rights of first refusal or other rights to purchase any
         of the Shares other than those that have been expressly waived prior to
         the date hereof.

                  (j)      All taxes, fees and other governmental charges that
         are due and payable on or prior to the Time of Purchase in connection
         with the execution, delivery and per-
<PAGE>
                                      -7-


         formance of this Agreement and the delivery and sale of the Shares
         shall have been paid by or on behalf of the Company at or prior to the
         Time of Purchase.

                  (k)      None of the Company or any Subsidiary is (A) in
         violation of its charter, bylaws or other constitutive documents, (B)
         in default (or, with notice or lapse of time or both, would be in
         default) in the performance or observance of any obligation, agreement,
         covenant or condition contained in any bond, debenture, note,
         indenture, mortgage, deed of trust, loan or credit agreement, lease,
         license, franchise agreement, authorization, permit, certificate or
         other agreement or instrument to which any of them is a party or by
         which any of them is bound or to which any of their assets or
         properties is subject (collectively, "AGREEMENTS AND INSTRUMENTS"), (C)
         in violation of any law, statute, rule or regulation applicable to the
         Company or any Subsidiary or their respective assets or properties or
         (D) in violation of any judgment, order or decree of any domestic or
         foreign court or governmental agency or authority having jurisdiction
         over the Company or any Subsidiary or their respective assets or
         properties, which in the case of clauses (B), (C) and (D) herein,
         individually or in the aggregate, could reasonably be expected to have
         a Material Adverse Effect.

                  (l)      The execution, delivery and performance by the
         Company of this Agreement, including the consummation of the offer and
         sale of the Shares, does not and will not violate, conflict with or
         constitute a breach of any of the terms or provisions of or a default
         (or an event that with notice or lapse of time or both, would
         constitute a default) under, or require consent under, or result in the
         creation or imposition of a lien, charge or encumbrance on any property
         or assets of the Company or any Subsidiary pursuant to (A) the charter,
         bylaws or other constitutive documents of any of the Company or any
         Subsidiary, (B) any of the Agreements and Instruments, except as would
         not reasonably be expected to have a Material Adverse Effect, (C) any
         law, statute, rule or regulation applicable to the Company or any
         Subsidiary or their respective assets or properties or (D) any
         judgment, order or decree of any domestic or foreign court or
         governmental agency or authority having jurisdiction over the Company
         or any Subsidiary or their respective assets or properties.

                  (m)      Except as set forth in the Registration Statement and
         Prospectus, there is (A) no action, suit or proceeding before or by any
         court, arbitrator or governmental agency, body or official, domestic or
         foreign, now pending or, to the knowledge of the Company, threatened or
         contemplated, to which the Company or any Subsidiary is or may be a
         party or to which the business, assets or property of such person is or
         may be subject, (B) no statute, rule, regulation or order that has been
         enacted, adopted or issued or, to the knowledge of the Company, that
         has been proposed by any governmental body or agency, domestic or
         foreign, (C) no injunction, restraining order or order of any nature by
         a federal or state court or foreign court of competent jurisdiction to
         which the Company or any Subsidiary is or may be subject that (x) in
         the case of clause (A) above, if determined adversely to the Company or
         any Subsidiary, could,
<PAGE>
                                      -8-


         individually or in the aggregate, reasonably be expected (1) to have a
         Material Adverse Effect or (2) to interfere with or adversely affect
         the issuance of the Shares in any jurisdiction or adversely affect the
         consummation of the transactions contemplated hereby and (y) in the
         case of clauses (B) and (C) above, could, individually or in the
         aggregate, reasonably be expected (1) to have a Material Adverse Effect
         or (2) to interfere with or adversely affect the issuance of the Shares
         in any jurisdiction or adversely affect the consummation of the
         transactions contemplated hereby. Every request of any securities
         authority or agency of any jurisdiction for additional information with
         respect to the Shares that has been received by the Company or any
         Subsidiary or their counsel prior to the date hereof has been, or will
         prior to the Time of Purchase be, complied with in all material
         respects.

                  (n)      Except as could not reasonably be expected to have a
         Material Adverse Effect, no labor problem or dispute with the employees
         of the Company or any of the Subsidiaries exists or, to the best
         knowledge of the Company, is threatened.

                  (o)      Except as described in the Registration Statement and
         Prospectus, the Company and each Subsidiary (A) is in compliance with,
         or not subject to costs or liabilities for violations under, laws,
         regulations, rules of common law, orders and decrees, as in effect as
         of the date hereof, and any present judgments and injunctions issued or
         promulgated thereunder, relating to pollution or protection of public
         and employee health and safety, emissions, discharges, releases or
         threatened releases of hazardous or toxic substances or wastes into the
         environment (including, without limitation, ambient air, surface water,
         ground water, land surface or subsurface strata), pollutants or
         contaminants applicable to it or its business or operations or
         ownership or use of its property (including, but not limited to, the
         (i) the manufacture, processing, distribution, use, generation,
         treatment, storage, disposal, transport or handling of hazardous
         materials, and (ii) underground and above ground storage tanks and
         related piping, and emissions, discharges, releases or threatened
         releases therefrom) ("ENVIRONMENTAL LAWS"), other than noncompliance or
         such costs or liabilities that, individually or in the aggregate, could
         not reasonably be expected to have a Material Adverse Effect, and (B)
         possesses all permits, licenses or other approvals required under
         applicable Environmental Laws, except where the failure to possess any
         such permit, license or other approval could not reasonably be expected
         to have, either individually or in the aggregate, a Material Adverse
         Effect. All currently pending and, to the knowledge of the Company,
         threatened proceedings, notices of violation, demands, notices of
         potential responsibility or liability, suits and existing environmental
         conditions by any governmental authority which the Company or the
         Subsidiaries could reasonably expect to result in a Material Adverse
         Effect are fully and accurately described in all material respects in
         the Registration Statement and Prospectus.

                  (p)      The Company and each Subsidiary have (A) all
         licenses, certificates, permits, authorizations, approvals, franchises
         and other rights from, and has made all
<PAGE>
                                      -9-


         declarations and filings with, all applicable authorities, all
         self-regulatory authorities and all courts and other tribunals (each, a
         "LICENSE"), necessary to engage in the business conducted by it in the
         manner described in the Registration Statement and Prospectus, except
         where failure to hold such Licenses could not, individually or in the
         aggregate, be reasonably expected to have a Material Adverse Effect,
         and (B) no reason to believe that any governmental body or agency,
         domestic or foreign, is considering limiting, suspending or revoking
         any such License, except where any such limitations, suspensions or
         revocations could not, individually or in the aggregate, reasonably be
         expected to have a Material Adverse Effect. All such Licenses are valid
         and in full force and effect and the Company and each Subsidiary are in
         compliance in all material respects with the terms and conditions of
         all such Licenses and with the rules and regulations of the regulatory
         authorities having jurisdiction with respect to such Licenses, except
         for any invalidity, failure to be in full force and effect or
         noncompliance with any License that could not, individually or in the
         aggregate, reasonably be expected to have a Material Adverse Effect.

                  (q)      The Company and each Subsidiary have valid title in
         fee simple to all items of real property and valid title to all
         personal property owned by each of them (excluding land banks,
         homeowners' associations, golf clubs and district properties) described
         in the Registration Statement and Prospectus, in each case free and
         clear of any pledge, lien, encumbrance, security interest or other
         defect or claim of any third party, except (i) such as do not
         materially and adversely affect the value of such property and do not
         interfere with the use made or proposed to be made of such property by
         the Company or such Subsidiary to an extent that such interference
         could reasonably be expected to have a Material Adverse Effect, and
         (ii) liens securing debt described in the Registration Statement and
         Prospectus. Any real property and buildings held under lease by the
         Company or any such Subsidiary are held under valid, subsisting and
         enforceable leases, with such exceptions as do not materially interfere
         with the use made or proposed to be made of such property and buildings
         by the Company or such Subsidiary.

                  (r)      Except as set forth in the Registration Statement and
         Prospectus, the Company and each Subsidiary owns, possesses or has the
         right to employ all patents, patent rights, licenses, inventions,
         copyrights, know-how (including trade secrets and other unpatented
         and/or unpatentable proprietary or confidential information, systems or
         procedures), trademarks, service marks and trade names (collectively,
         the "INTELLECTUAL PROPERTY") necessary to conduct the businesses
         operated by it as described in the Registration Statement and
         Prospectus, except where the failure to own, possess or have the right
         to employ such Intellectual Property could not reasonably be expected
         to have a Material Adverse Effect. Except as set forth in the
         Registration Statement and Prospectus, none of the Company or any
         Subsidiary has received any notice of infringement of or conflict with
         (and none of them knows of any such infringement or a conflict with)
         asserted rights of others with respect to any of the foregoing that, if
         such
<PAGE>
                                      -10-


         assertion of infringement or conflict were sustained, could reasonably
         be expected to have a Material Adverse Effect. Except as set forth in
         the Registration Statement and Prospectus, the use of the Intellectual
         Property in connection with the business and operations of the Company
         and the Subsidiaries does not infringe on the rights of any person,
         except for such infringement as could not reasonably be expected to
         have a Material Adverse Effect.

                  (s)      All material tax returns required to be filed by the
         Company and each Subsidiary have been filed in all jurisdictions where
         such returns are required to be filed, except where valid extensions
         have been obtained; and all taxes, including withholding, value added
         and franchise taxes, penalties and interest, assessments, fees and
         other charges that are due and payable have been paid (or, with respect
         to those based on good faith estimates, have been paid to the extent of
         such estimates), other than those being contested in good faith and for
         which reserves have been provided in accordance with generally accepted
         accounting principles or those currently payable without penalty or
         interest and except where the failure to make such required filings or
         payments could not, individually or in the aggregate, reasonably be
         expected to have a Material Adverse Effect. To the knowledge of the
         Company, there are no material proposed additional tax assessments
         against any of the Company and the Subsidiaries or their assets or
         property.

                  (t)      None of the Company or the Subsidiaries has any
         liability for any prohibited transaction or accumulated funding
         deficiency (within the meaning of Section 412 of the Internal Revenue
         Code of 1986, as amended) or any complete or partial withdrawal
         liability with respect to any pension, profit sharing or other plan
         which is subject to the Employee Retirement Income Security Act of
         1974, as amended ("ERISA"), to which the Company or any Subsidiary
         makes or ever has made a contribution and in which any employee of the
         Company or any Subsidiary is or has ever been a participant. With
         respect to such plans, the Company and each Subsidiary are in
         compliance in all material respects with all applicable provisions of
         ERISA.

                  (u)      None of the Company or any Subsidiary is an
         "investment company" or a company "controlled" by an "investment
         company" incorporated in the United States within the meaning of the
         Investment Company Act of 1940, as amended.

                  (v)      The Company and each Subsidiary maintains a system of
         internal accounting controls sufficient to provide reasonable assurance
         that: (A) transactions are executed in accordance with management's
         general or specific authorizations; (B) transactions are recorded as
         necessary to permit preparation of its financial statements in
         conformity with generally accepted accounting principles and to
         maintain accountability for assets; (C) access to assets is permitted
         only in accordance with management's general or specific authorization;
         and (D) the recorded accountability for its
<PAGE>
                                      -11-


         assets is compared with the existing assets at reasonable intervals and
         appropriate action is taken with respect to any differences.

                  (w)      The Company and each Subsidiary maintains insurance
         covering their properties, assets, operations, personnel and
         businesses, and, in the good faith estimate of management, such
         insurance is of such type and in such amounts as is in accordance with
         customary industry practice in the locations where the Company and each
         Subsidiary conduct operations, taking into account the costs and
         availability of such insurance.

                  (x)      KPMG LLP and, to the knowledge of the Company,
         McGladrey & Pullen, LLP and Kolkhorst & Kolkhorst are independent
         accountants within the meaning of the Act. The historical financial
         statements and the notes thereto included in the Registration Statement
         and Prospectus present fairly in all material respects the consolidated
         financial position and results of operations of the Company and the
         Subsidiaries, the combined financial position and results of operations
         of Hancock Communities Limited Liability Company and HC Builders, Inc.
         (collectively, "HANCOCK") at the respective dates and for the
         respective periods indicated. Such financial statements comply as to
         form in all material respects with the applicable requirements of
         Regulation S-X promulgated under the Exchange Act and have been
         prepared in accordance with generally accepted accounting principles
         applied on a consistent basis throughout the periods presented (except
         as disclosed in the Registration Statement and Prospectus). The other
         financial and statistical information and data included in the
         Registration Statement and Prospectus are accurately presented in all
         material respects and prepared on a basis consistent with the financial
         statements and the books and records of the Company and the
         Subsidiaries and Hancock.

                  (y)      Except as described in the section entitled
         "Underwriting" in the Prospectus Supplement, there are no contracts,
         agreements or understandings between the Company or any Subsidiary and
         any other person other than the Underwriters that would give rise to a
         valid claim against the Company, any Subsidiary or the Underwriters for
         a brokerage commission, finder's fee or like payment in connection with
         the issuance, purchase and sale of the Shares.

                  (z)      The statistical and market-related data included in
         the Registration Statement and Prospectus are based on or derived from
         sources that the Company believes to be reliable and accurate in all
         material respects and represent its good faith estimates that are made
         on the basis of data derived from such sources.

                  (aa)     The Company has obtained (or will obtain prior to the
         Time of Purchase) the written agreement in substantially the form
         attached hereto as Exhibit B (the "LOCK-UP LETTER AGREEMENT") of each
         of the Company's directors and executive officers.
<PAGE>
                                      -12-



                  (bb)     Neither the Company nor any of the Subsidiaries has
         either sent or received any notice of termination of any of the
         contracts or agreements expressly referred to or described in the
         Prospectus, and no such termination has been threatened by the Company
         or any of the Subsidiaries or, to the knowledge of the Company, any
         other party to any such contract or agreement.

                  (cc)     Neither the Company nor any of the Subsidiaries or
         any of their respective directors and officers has taken, directly or
         indirectly, any action designed to or which has constituted or which
         might reasonably be expected to cause or result, under the Exchange Act
         or otherwise, in stabilization or manipulation of the price of any
         security of the Company to facilitate the sale or resale of the Shares.

                  (dd)     The Company has not distributed and will not
         distribute, prior to the later of the Additional Time of Purchase and
         the completion of the Underwriters' distribution of the Shares, any
         offering material in connection with the offering and sale of the
         Shares other than any Preliminary Prospectus, the Prospectus or the
         Registration Statement.

                  (ee)     The Common Stock is registered pursuant to Section
         12(b) of the Exchange Act and is listed on the New York Stock Exchange
         ("NYSE"), and the Company has taken no action designed to, or likely to
         have the effect of, terminating the registration of the Common Stock
         under the Exchange Act or delisting the Common Stock from the NYSE, nor
         has the Company received any notification that the Commission or the
         NYSE is contemplating terminating such registration or listing.

                  (ff)     Any certificate signed by an officer of the Company
         or any Subsidiary delivered to you or to counsel for the Underwriters
         pursuant to this Agreement or in connection with the Closing
         contemplated hereby shall be deemed to be a representation and warranty
         by the Company to each Underwriter as to the matters covered thereby.

4.       Certain Covenants of the Company.  The Company hereby agrees:


                  (a)      to furnish such information as may be required and
         otherwise to cooperate in qualifying the Shares for offering and sale
         under the securities or blue sky laws of such states as you may
         designate and to maintain such qualifications in effect so long as
         required for the distribution of the Shares; provided that the Company
         shall not be required to qualify as a foreign corporation or to consent
         to the service of process under the laws of any such state (except
         service of process with respect to the offering and sale of the
         Shares); and to promptly advise you of the receipt by the Company of
         any notification with respect to the suspension of the qualification of
         the Shares for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose;
<PAGE>
                                      -13-



                  (b)      to make available to the Underwriters in New York
         City, as soon as practicable after the execution and delivery of this
         Agreement and thereafter from time to time to furnish to the
         Underwriters, as many copies of the Prospectus (or of the Prospectus as
         amended or supplemented if the Company shall have made any amendments
         or supplements thereto after the effective date of the Registration
         Statement) as the Underwriters may reasonably request for the purposes
         contemplated by the Act; in case any Underwriter is required to deliver
         a prospectus beyond the nine-month period referred to in Section
         10(a)(3) of the Act in connection with the sale of the Shares, the
         Company will prepare promptly upon request such amendment or amendments
         to the Registration Statement and such prospectuses as may be necessary
         to permit compliance with the requirements of Section 10(a)(3) of the
         Act;

                  (c)      to advise you promptly and (if requested by you) to
         confirm such advice in writing, (i) when any post-effective amendment
         to the Registration Statement becomes effective and (ii) when the
         Prospectus is filed with the Commission pursuant to Rule 424(b) under
         the Act (which the Company agrees to file in a timely manner under such
         rule);

                  (d)      to advise you promptly, confirming such advice in
         writing, of any request by the Commission for amendments or supplements
         to the Registration Statement or Prospectus or for additional
         information with respect thereto, or of notice of institution of
         proceedings for, or the entry of a stop order suspending the
         effectiveness of the Registration Statement and, if the Commission
         should enter a stop order suspending the effectiveness of the
         Registration Statement, to use its best efforts to obtain the lifting
         or removal of such order as soon as possible; to advise you promptly of
         any proposal to amend or supplement the Registration Statement or
         Prospectus and to file no such amendment or supplement to which you
         shall object in writing;

                  (e)      to file in a timely manner all reports and any
         definitive proxy or information statement required to be filed by the
         Company with the Commission in order to comply with the Exchange Act
         subsequent to the date of the Prospectus and for so long as the
         delivery of a prospectus is required in connection with the offering or
         sale of the Shares, and to promptly notify you of such filing;

                  (f)      if necessary or appropriate, to file promptly a
         registration statement pursuant to Rule 462(b) under the Act;

                  (g)      upon your request, to furnish to you and each of the
         other Underwriters for a period of two years from the date of this
         Agreement (i) copies of any reports or other communications which the
         Company shall send to its stockholders or shall from time to time
         publish or publicly disseminate, (ii) copies of all annual, quarterly
         and current reports filed with the Commission on Forms 10-K, 10-Q and
         8-K, or such other similar form as may be designated by the Commission,
         (iii) copies of documents
<PAGE>
                                      -14-


         or reports filed with any national securities exchange on which any
         class of securities of the Company is listed, and (iv) such other
         information as you may reasonably request regarding the Company or its
         Subsidiaries, in each case as soon as such communications, documents or
         information becomes available;

                  (h)      to advise the Underwriters promptly of the happening
         of any event known to the Company within the time during which a
         Prospectus relating to the Shares is required to be delivered under the
         Act which, in the judgment of the Company, would require the making of
         any change in the Prospectus then being used, so that the Prospectus
         would not include an untrue statement of material fact or omit to state
         a material fact necessary to make the statements therein, in the light
         of the circumstances under which they are made, not misleading, and,
         during such time, to prepare and furnish, at the Company's expense, to
         the Underwriters promptly such amendments or supplements to such
         Prospectus as may be necessary to reflect any such change and to
         furnish you a copy of such proposed amendment or supplement before
         filing any such amendment or supplement with the Commission;

                  (i)      to make generally available to its security holders,
         and to deliver to you, as soon as it is practicable to do so, but in
         any event not later than 15 months after the effective date of the
         Registration Statement, an earnings statement of the Company (which
         will satisfy the provisions of Section 11(a) of the Act) covering a
         period of twelve months beginning after the effective date of the
         Registration Statement (as defined in Rule 158(c) of the Act);
         provided, however, that this Section 4(i) will not be construed to
         require the Company to file any periodic report referred to in Rule 158
         prior to the time at which such report is otherwise due;

                  (j)      to furnish to its stockholders as soon as
         practicable, but in no event prior to the delivery of its proxy
         statement to its shareholders in accordance with applicable securities
         laws, after the end of each fiscal year an annual report (including a
         balance sheet and statements of income, stockholders' equity and of
         cash flow of the Company) for such fiscal year, accompanied by a copy
         of the certificate or report thereon of nationally recognized
         independent certified public accountants;

                  (k)      to furnish to you conformed copies of the
         Registration Statement, as initially filed with the Commission, and of
         all amendments thereto (including all exhibits thereto) in such
         quantities as you shall reasonably request for distribution to each of
         the Underwriters;

                  (l)      to furnish to you as early as practicable prior to
         the Time of Purchase and the Additional Time of Purchase, as the case
         may be, but not later than two business days prior thereto, a copy of
         the latest available unaudited interim consolidated financial
         statements, if any, of the Company and its Subsidiaries which have been
         read
<PAGE>
                                      -15-


         by the Company's independent certified public accountants, as stated in
         their letter to be furnished pursuant to Section 7(e) hereof;

                  (m)      not to take, directly or indirectly, any action
         designed to cause or result in, or that has constituted or might
         reasonably be expected to constitute, the stabilization or manipulation
         of the price of any securities of the Company to facilitate the sale or
         resale of the Shares;

                  (n)      to apply the net proceeds from the sale of the Shares
         in the manner set forth under the caption "Use of Proceeds" in the
         Prospectus;

                  (o)      to furnish to you, before filing with the Commission
         subsequent to the effective date of this Agreement and during the
         period referred to in paragraph (e) above, a copy of any document
         proposed to be filed pursuant to Section 13, 14 or 15(d) of the
         Exchange Act;

                  (p)      not to sell, offer or agree to sell, contract to
         sell, grant any option to sell or otherwise dispose of, directly or
         indirectly, any shares of Common Stock or securities convertible into
         or exchangeable or exercisable for Common Stock or warrants or other
         rights to purchase Common Stock or any other securities of the Company
         that are substantially similar to Common Stock or permit the
         registration under the Act of any shares of Common Stock, for a period
         of 90 days after the date hereof, without the prior written consent of
         Deutsche Bank Securities Inc. ("DEUTSCHE BANK") and UBS Warburg LLC
         ("UBS WARBURG"), except for (i) the registration of the Shares and the
         sales to the Underwriters pursuant to this Agreement, (ii) issuances of
         Common Stock upon the exercise of outstanding options, warrants and
         debentures disclosed as outstanding in the Registration Statement,
         (iii) the granting of options and the issuances of Common Stock upon
         the exercise thereof pursuant to stock option and employee benefit
         plans of the Company in existence on the date hereof, and (iv)
         issuances as consideration for the acquisition of assets, businesses or
         companies; and

                  (q)      to take all action necessary to list the Shares on
         the NYSE.

         5.       Payment of Expenses. The Company agrees with each Underwriter
to pay all expenses, fees and taxes (other than any transfer taxes incurred by
the Underwriters for the resale of the Shares and, except as set forth under
Section 6 hereof and (iv) and (vi) below, fees and disbursements of counsel for
the Underwriters, such transfer taxes, counsel fees and disbursements to be paid
by the Underwriters) in connection with (i) the preparation and filing of the
Registration Statement, each Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the printing and furnishing of copies of
each thereof to the Underwriters and to dealers (including costs of mailing and
shipment), (ii) all air travel-related expenses incurred by the Company and the
Underwriters and all hotel expenses attributable to the Company, in each case,
in connection with any meetings with prospective investors in the Shares, (iii)
the issuance, sale and delivery of the Shares by the Company, (iv) the word
proc-
<PAGE>
                                      -16-


essing and/or printing of this Agreement, any Agreement Among Underwriters, any
dealer agreements, any Statements of Information, the Letter of Instruction and
the reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (v) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the reasonable legal fees and filing fees and other disbursements of
counsel to the Underwriters) and the printing and furnishing of copies of any
blue sky surveys or legal investment surveys to the Underwriters and to dealers,
(vi) the listing of the Shares on the NYSE, (vii) the filing, if any, for review
of the public offering of the Shares by the NASD (including the reasonable legal
fees and filing fees and other disbursements of counsel to the Underwriters),
and (viii) the performance of the Company's other obligations hereunder.

         6.       Reimbursement of Underwriters' Expenses.

         If the Shares are not delivered for any reason other than the
termination of this Agreement pursuant to clauses (iii) through (vi) of the
second paragraph of Section 8 or the last paragraph of Section 9 hereof, or the
default by one or more of the Underwriters in its or their respective
obligations hereunder, the Company shall, in addition to paying the amounts
described in Section 5 hereof, reimburse the Underwriters for all of their
reasonable out-of-pocket expenses, including the fees and disbursements of their
respective counsel.

         7.       Conditions of Underwriters' Obligations. The several
                  obligations of the Underwriters hereunder are subject to the
following conditions:

                  (a)      All of the representations and warranties of the
         Company contained in this Agreement shall be true and correct in all
         material respects, or true and correct where such representations and
         warranties are already qualified by materiality or Material Adverse
         Effect, on the date of this Agreement and, in each case after giving
         effect to the transactions contemplated hereby, at the Time of Purchase
         (and the several obligations of the Underwriters at the Additional Time
         of Purchase are subject to the accuracy of the representations and
         warranties of the Company contained in Section 3 hereof, on the date
         hereof and at the Time of Purchase (unless previously waived) and at
         the Additional Time of Purchase, as the case may be), except that if a
         representation and warranty is made as of a specific date, and such
         date is expressly referred to therein, such representation and warranty
         shall be true and correct (or true and correct in all material
         respects, as applicable) as of such date. The Company shall have
         performed or complied with all of the agreements and covenants
         contained in this Agreement and required to be performed or complied
         with by them at or prior to the Time of Purchase and at the Additional
         Time of Purchase.

                  (b)      The Company shall furnish to you at the Time of
         Purchase and at the Additional Time of Purchase, as the case may be, an
         opinion of Snell & Wilmer L.L.P., counsel for the Company, addressed to
         the Underwriters, and dated the Time of
<PAGE>
                                      -17-


         Purchase or the Additional Time of Purchase, as the case may be, with
         reproduced copies for each of the other Underwriters and in form
         reasonably satisfactory to Cahill Gordon & Reindel, counsel for the
         Underwriters, stating that:

                           (i) each of the Subsidiaries (other than Legacy
                  Operating Company, L.P. ("LOC"), Meritage Holdings, L.L.C.
                  ("MERITAGE HOLDINGS"), Hulen Park Venture, L.L.C. ("HPV"),
                  Texas Home Mortgage Corporation ("THMC"), and MTH-Homes Texas,
                  L.P. ("MTH-HOMES")) (a) is a corporation, limited liability
                  company or partnership duly incorporated or formed, as the
                  case may be, is validly existing and in good standing under
                  the laws of the jurisdiction of its organization and (b) has
                  the requisite corporate, limited liability company or
                  partnership power and authority, as the case may be, necessary
                  to own its property and carry on its business as now being
                  conducted;

                           (ii) the Registration Statement and Prospectus
                  (except as to the financial statements and schedules and other
                  financial and statistical data contained therein, as to which
                  such counsel need express no opinion) comply as to form in all
                  material respects with the applicable requirements of the Act;

                           (iii) the Registration Statement has become effective
                  under the Act and, to such counsel's knowledge, no stop order
                  proceedings with respect thereto are pending or threatened
                  under the Act and any required filing of the Prospectus and
                  any supplement thereto pursuant to Rule 424 under the Act has
                  been made in the manner and within the time period required by
                  such Rule 424;

                           (iv) no approval, authorization, consent or order of
                  or filing with any national, state or local governmental or
                  regulatory commission, board, body, authority or agency is
                  required on the part of the Company in connection with the
                  issuance and sale of the Shares and consummation by the
                  Company of the transaction as contemplated hereby other than
                  such approvals, authorizations, consents, orders and filings
                  as have been obtained or made (except such counsel need
                  express no opinion as to any necessary qualification under the
                  state securities or blue sky laws of the various jurisdictions
                  in which the Shares are being offered by the Underwriters or
                  under the rules and regulations of the NASD);

                           (v) to such counsel's knowledge, there are no
                  contracts, licenses, agreements, leases or documents of a
                  character which are required to be filed as exhibits to the
                  Registration Statement or to be summarized or described in the
                  Prospectus which have not been so filed, summarized or
                  described as required;
<PAGE>
                                      -18-



                           (vi) except as set forth in the Registration
                  Statement and Prospectus or as shown on the litigation
                  searches referenced on a schedule attached to the opinion, to
                  such counsel's knowledge there is (a) no action, suit or
                  proceeding before or by any domestic court, arbitrator or
                  governmental agency, body or official, now pending or
                  threatened to which the Company or any Subsidiary is a party
                  and (b) no injunction, restraining order or order of any
                  nature by a federal or state court or foreign court of
                  competent jurisdiction to which the Company or any Subsidiary
                  is subject that such counsel believes (x) in the case of
                  clause (a) above, could, individually or in the aggregate,
                  reasonably be expected (1) to have a Material Adverse Effect
                  if determined adversely to the Company or any Subsidiary or
                  (2) to interfere with or adversely affect the issuance of the
                  Shares in any jurisdiction or adversely affect the
                  consummation of the transactions contemplated by this
                  Agreement and (y) in the case of clause (b) above, could,
                  individually or in the aggregate, reasonably be expected to
                  (1) have a Material Adverse Effect or (2) interfere with or
                  adversely affect the issuance of the Shares in any
                  jurisdiction or adversely affect the consummation of the
                  transactions contemplated by this Agreement;

                           (vii) The execution, delivery and performance by the
                  Company of this Agreement, including the consummation of the
                  offer and sale of the Shares, does not and will not violate,
                  conflict with or constitute a breach of any of the terms or
                  provisions of or a default (or an event that with the giving
                  of notice or lapse of time or both, would constitute a
                  default) under, or require consent under, or result in the
                  creation or imposition of a lien, charge or encumbrance on any
                  property or assets of the Company or any Subsidiary pursuant
                  to, (A) the charter, bylaws or other constitutive documents of
                  the Company or any Subsidiary (other than LOC, Meritage
                  Holdings, HPV, THMC and MTH-Homes), (B) any agreement or
                  instrument binding upon the Company or any Subsidiary that is
                  filed as an exhibit to the Company's Annual Report on Form
                  10-K for the year ended December 31, 2001, to the Company's
                  Quarterly Report on Form 10-Q for the quarter ended March 31,
                  2002 or to the Company's Current Report on Form 8-K dated June
                  14, 2002, as filed with the Securities and Exchange
                  Commission, or incorporated by reference therein, (C) any law,
                  statute, rule or regulation applicable to the Company or any
                  Subsidiary or their respective assets or properties or (D) any
                  judgment, order or decree of any domestic court or government
                  agency or authority having jurisdiction over the Company or
                  any Subsidiary or their respective assets or properties;

                           (viii) the Company is not, and after the offering and
                  sale of the Shares, will not be, an "investment company" or an
                  entity controlled by an "investment company," as such terms
                  are defined in the Investment Company Act; and
<PAGE>
                                      -19-



                           (ix) except as described in the Registration
                  Statement and Prospectus, no person has, pursuant to the terms
                  of any contract, agreement or other instrument known to such
                  counsel (i) any preemptive rights, rights of first refusal,
                  resale rights or similar rights with respect to the sale of
                  the Shares to the Underwriters or (ii) the right to cause the
                  Company to register under the Act any shares of capital stock
                  or other equity interests as a result of the filing or
                  effectiveness of the Registration Statement or the sale of the
                  Shares to the Underwriters as contemplated hereby.

         In addition, such counsel shall state that, in connection with the
preparation of the Registration Statement and Prospectus, it has, from time to
time, had discussions with officers, directors, employees and representatives of
the Company and the Subsidiaries, the independent accountants who examined the
consolidated financial statements of the Company, the Subsidiaries and Hancock
included in the Registration Statement and Prospectus, and the Underwriters and
their counsel and representatives at which the contents of the Registration
Statement and Prospectus and related matters were discussed and, although such
counsel has not independently verified and is not passing upon, and does not
assume responsibility for, the accuracy, completeness or fairness of the
information contained in the Registration Statement and Prospectus, based upon
the participation and discussions described above, such counsel shall state that
(relying as to materiality to the extent it deems appropriate upon officers or
other representatives of the Company) no facts have come to its attention that
cause it to believe that the Registration Statement or any amendment thereto at
the time such Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein not misleading, or that the Prospectus
or any supplement thereto at the date of such Prospectus or such supplement, and
at all times up to and including the Time of Purchase or Additional Time of
Purchase, as the case may be, contained or contains an untrue statement of a
material fact, or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such counsel has not
been requested to and need not make any comment with respect to the financial
statements and the notes thereto, and the other financial, demographic,
statistical and accounting data included in the Registration Statement and
Prospectus).

                  (c)      The Company shall furnish to you at the Time of
         Purchase and at the Additional Time of Purchase, as the case may be, an
         opinion of Venable, Baetjer, Howard and Civiletti LLP, counsel for the
         Company, addressed to the Underwriters and dated the Time of Purchase
         or the Additional Time of Purchase, as the case may be, with reproduced
         copies for each of the other Underwriters and in form reasonably
         satisfactory to Cahill Gordon & Reindel, counsel for the Underwriters,
         stating that:

                           (i) the Company (a) is a corporation duly organized,
                  validly existing and in good standing under the laws of the
                  State of Maryland and (b) has the requisite corporate power
                  and authority to carry on its business as now being
<PAGE>
                                      -20-


                  conducted, as that business is described in the Registration
                  Statement and Prospectus.

                           (ii) the Company has the requisite corporate power
                  and authority to execute, deliver and perform all of its
                  obligations under this Agreement and to consummate the
                  transactions contemplated hereby to be consummated by it
                  including, without limitation, the requisite power and
                  authority to issue, sell and deliver the Shares. The Company
                  has duly authorized the execution, delivery and performance of
                  this Agreement and the Company has duly executed and delivered
                  this Agreement.

                           (iii) the execution, delivery and performance by the
                  Company of this Agreement and the consummation by the Company
                  of the transactions contemplated hereby do not and will not
                  violate or conflict with its charter or bylaws.

                           (iv) the Company has authorized and outstanding
                  shares of capital stock as set forth in the Registration
                  Statement and Prospectus; the outstanding shares of capital
                  stock of the Company have been duly and validly authorized and
                  issued and are fully paid, non-assessable and, except as
                  described in the Registration Statement and Prospectus, are
                  free of any preemptive rights, resale rights, rights of first
                  refusal and similar rights under the Maryland General
                  Corporation Law ("MGCL"); the Shares to be issued and sold by
                  the Company have been duly authorized and when issued and
                  delivered to and paid for by the Underwriters will be duly and
                  validly issued and will be fully paid and non-assessable. The
                  certificates for the Shares are in due and proper form and
                  conform in all material respects to the requirements of the
                  MGCL, and the holders of the Shares will not be subject to
                  personal liability by reason of being such holders; and

                           (v) the capital stock of the Company, including the
                  Shares, conforms to the description thereof contained under
                  the caption "Description of Capital Stock" in the Registration
                  Statement and Prospectus.

                  (d)      You shall have received at the Time of Purchase and
         at the Additional Time of Purchase, as the case may be, an opinion of
         Cahill Gordon & Reindel, counsel for the Underwriters, dated the Time
         of Purchase or the Additional Time of Purchase, as the case may be,
         with respect to matters as the Underwriters may require.

                  (e)      You shall have received from KPMG LLP, independent
         public accountants for the Company, from McGladrey & Pullen LLP,
         independent public accountants for Hancock and from Kolkhorst &
         Kolkhorst, independent public accountants for Hammonds Homes, Ltd. and
         Crystal City Land & Cattle, Ltd., letters dated the date of this
         Agreement and, in the case of KPMG LLP, the Time of Purchase and
         Additional Time of Purchase, as the case may be, and addressed to the
         Underwriters (with
<PAGE>
                                      -21-


         reproduced copies for each of the Underwriters) in the forms heretofore
         approved by Cahill Gordon & Reindel, counsel for the Underwriters.

                  (f)      The Prospectus shall have been filed with the
         Commission pursuant to Rule 424(b) under the Act, at or before 2:00
         P.M., New York City time, on the business day following the date of
         this Agreement, unless a later time (but not later than 5:00 P.M., New
         York City time, on the second full business day after the date of this
         Agreement) shall be agreed to by the Company and you in writing or by
         telephone, confirmed in writing; provided, however, that the Company
         and you and any group of Underwriters, including you, who have agreed
         hereunder to purchase in the aggregate at least 50% of the Firm Shares
         may from time to time agree on a later date.

                  (g)      Prior to the Time of Purchase or the Additional Time
         of Purchase, as the case may be, (i) no stop order with respect to the
         effectiveness of the Registration Statement shall have been issued
         under the Act and remain in effect and proceedings initiated under
         Section 8(d) or 8(e) of the Act shall be pending; (ii) no action shall
         have been taken and no statute, rule, regulation or order shall have
         been enacted, adopted or issued by any governmental body, agency or
         official that would prevent the issuance of the Shares and, except as
         disclosed in the Registration Statement and Prospectus, no action, suit
         or proceeding shall have been commenced and be pending against or
         affecting or, to the best knowledge of the Company, threatened against
         the Company before any court or arbitrator or any governmental body,
         agency or official that, if adversely determined, could reasonably be
         expected to have a Material Adverse Effect; (iii) the Registration
         Statement and all amendments thereto, or modifications thereof, if any,
         shall not contain an untrue statement of a material fact or omit to
         state a material fact required to be stated therein or necessary to
         make the statements therein not misleading; (iii) the Prospectus and
         all amendments or supplements thereto, or modifications thereof, if
         any, shall not contain an untrue statement of a material fact or omit
         to state a material fact required to be stated therein or necessary to
         make the statements therein, in the light of the circumstances under
         which they are made, not misleading; and (iv) the Company shall not
         have amended or supplemented the Registration Statement or Prospectus
         unless the Underwriters shall previously have been advised of such
         proposed amendment or supplement at least two business days prior to
         the proposed use, and shall not have reasonably objected to such
         amendment or supplement.

                  (h)      Between the time of execution of this Agreement and
         the Time of Purchase or the Additional Time of Purchase, as the case
         may be, (a) neither the Company nor any Subsidiary shall have incurred
         any liabilities or obligations, direct or contingent, except in the
         ordinary course of business and consistent with past practice, that,
         individually or in the aggregate, could reasonably be expected to have
         a Material Adverse Effect and (b) there shall not have been any event
         or development in respect of the business or condition (financial or
         other) of the Company or the Subsidiaries that,
<PAGE>
                                      -22-


         individually or in the aggregate, could reasonably be expected to have
         a Material Adverse Effect.

                  (i)      You shall have received a certificate, dated the Time
         of Purchase or Additional Time of Purchase, as the case may be, signed
         by a Chief Executive Officer and the Chief Financial Officer of the
         Company, confirming, as of the Time of Purchase or the Additional Time
         of Purchase, as the case may be, to their knowledge, the matters set
         forth in paragraphs (a), (f), (g) and (h) of this Section 7.

                  (j)      You shall have received Lock-Up Letter Agreements,
         dated the date of this Agreement, from each of the Company's directors
         and executive officers (as set forth on Schedule B hereto);

                  (k)      Between the time of execution of this Agreement and
         the Time of Purchase or Additional Time of Purchase, as the case may
         be, there shall not have occurred any downgrading, nor shall any notice
         or announcement have been given or made of (i) any intended or
         potential downgrading or (ii) any review or possible change that does
         not indicate an improvement, in the rating accorded any securities of
         or guaranteed by the Company or any Subsidiary by any "nationally
         recognized statistical rating organization", as that term is defined in
         Rule 436(g)(2) under the Act.

                  (l)      All government authorizations required in connection
         with the issue and sale of the Shares as contemplated under this
         Agreement and the performance of the Company's obligations hereunder
         shall be in full force and effect.

                  (m)      The Underwriters shall have been furnished with such
         other information as they may reasonably request.

                  (n)      Cahill Gordon & Reindel, counsel to the Underwriters,
         shall have been furnished with such documents as they may reasonably
         request to enable them to review or pass upon the matters referred to
         in this Section 7 and in order to evidence the accuracy, completeness
         or satisfaction in all material respects of any of the representations,
         warranties or conditions contained in this Agreement.

                  (o)      The NYSE shall have approved the listing (subject to
         official notice of issuance) of the Shares.

         8.       Effective Date of Agreement; Termination. This Agreement shall
become effective when the parties hereto have executed and delivered this
Agreement.

         The Underwriters shall have the right to terminate this Agreement at
any time prior to the Time of Purchase or the Additional Time of Purchase, as
the case may be, by notice to the Company from the Underwriters, without
liability (other than with respect to Sections 10 and 11) on the Underwriters'
part to the Company if, on or prior to such date, (i) the Company
<PAGE>
                                      -23-


shall have failed, refused or been unable to perform in any material respect any
agreement on its part to be performed under this Agreement when and as required,
(ii) any other condition to the obligations of the Underwriters under this
Agreement to be fulfilled by the Company pursuant to Section 7 is not fulfilled
when and as required and not waived in writing by the Underwriters, (iii)
trading in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, or minimum prices shall have been established thereon by the
Commission, or by such exchange or other regulatory body or governmental
authority having jurisdiction, (iv) a general banking moratorium shall have been
declared by federal or New York authorities, (v) there is an outbreak or
escalation of hostilities or other national or international calamity, in any
case involving the United States, on or after the date of this Agreement, or if
there has been a declaration by the United States of a national emergency or war
or other national or international calamity or crisis (economic, political,
financial or otherwise) which affects the U.S. and international financial or
capital markets, making it, in the Underwriters' reasonable judgment,
impracticable to proceed with the offering or delivery of the Shares on the
terms and in the manner contemplated in the Registration Statement and
Prospectus or (vi) there shall have been such a material adverse change or
material disruption in the financial, banking or capital markets generally or
the effect (or potential effect if the financial markets in the United States
have not yet opened) of international conditions on the financial markets in the
United States shall be such as, in the Underwriters' reasonable judgment, to
make it inadvisable or impracticable to proceed with the offering or delivery of
the Shares on the terms and in the manner contemplated in the Registration
Statement and Prospectus.

         If you or any group of Underwriters elects to terminate this Agreement
as provided in this Section 8, the Company and each other Underwriter shall be
notified promptly by letter or telegram from such terminating Underwriter.

         If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply with any of the terms of this Agreement, the Company shall not
be under any obligation or liability under this Agreement (except to the extent
provided in Sections 5, 6 and 10 hereof), and the Underwriters shall be under no
obligation or liability to the Company under this Agreement (except to the
extent provided in Section 10 hereof) or to one another hereunder.

         9.       Increase in Underwriters' Commitments. Subject to Sections 7
and 8, if any Underwriter shall default in its obligation to take up and pay for
the Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 8 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting


<PAGE>
                                      -24-

Underwriters, as hereinafter provided. Such Shares shall be taken up and paid
for by such non-defaulting Underwriter or Underwriters in such amount or amounts
as you may designate with the consent of each Underwriter so designated or, in
the event no such designation is made, such Shares shall be taken up and paid
for by all non-defaulting Underwriters pro rata in proportion to the aggregate
number of Firm Shares set opposite the names of such non-defaulting Underwriters
in Schedule A.

         Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that they
will not sell any Firm Shares hereunder unless all of the Firm Shares are
purchased by the Underwriters (or by substituted Underwriters selected by you
with the approval of the Company or selected by the Company with your approval).

         If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the Time of Purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.

         The term Underwriter as used in this agreement shall refer to and
include any Underwriter substituted under this Section 9 with like effect as if
such substituted Underwriter had originally been named in Schedule A.

         If the aggregate number of Shares which the defaulting Underwriter or
Underwriters agreed to purchase exceeds 10% of the total number of Shares which
all Underwriters agreed to purchase hereunder, and if neither the non-defaulting
Underwriters nor the Company shall make arrangements within the five business
day period stated above for the purchase of all the Shares which the defaulting
Underwriter or Underwriters agreed to purchase hereunder, this Agreement shall
be terminated without further act or deed and without any liability on the part
of the Company to any non-defaulting Underwriter and without any liability on
the part of any non-defaulting Underwriter to the Company. Nothing in this
paragraph, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.

         10.      Indemnification. (a) The Company agrees to indemnify and hold
harmless each Underwriter, each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, the agents, employees, officers and directors of each Underwriter and the
agents, employees, officers and directors of any such controlling person from
and against any and all losses, liabilities, claims, damages and expenses
(including, but not limited to, reasonable attorneys' fees and any and all
reasonable expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim and any and all reasonable
amounts paid in settlement of any claim or litigation) (collectively, "LOSSES")
to which they or any of them may become subject under
<PAGE>
                                      -25-

the Act, the Exchange Act or otherwise insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact (i) contained in the Registration Statement
(or in the Registration Statement as amended by any post-effective amendment
thereof by the Company) or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in the
Registration Statement or necessary to make the statements therein not
misleading, or (ii) contained in the Prospectus (the term Prospectus for the
purpose of this Section 10 being deemed to include any Preliminary Prospectus,
the Prospectus and the Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in the Prospectus or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided, however, that (A) the Company will not be liable
in any such case to the extent, but only to the extent, that any such Loss
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission relating to any Underwriter made
therein in reliance upon and in conformity with written information relating to
such Underwriter furnished to the Company by or on behalf of such Underwriter
expressly for use therein and (B) that with respect to any untrue statement or
omission of material fact made in any Preliminary Prospectus, the indemnity
agreement contained in this Section 10(a) shall not inure to the benefit of any
Underwriter from whom the person asserting any such Loss purchased the Shares,
to the extent that any such Loss of such Underwriter occurs under the
circumstance where it shall have been determined by a court of competent
jurisdiction by final and nonappealable judgment that (w) the Company had
previously furnished copies of the Prospectus to you, (x) delivery of the
Prospectus was required by the Act to be made to such person, (y) the untrue
statement or omission of a material fact contained in the Preliminary Prospectus
was corrected in the Prospectus and (z) there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Shares to
such person, a copy of the Prospectus, unless the failure to send or give a copy
of the Prospectus to such person was the result of noncompliance by the Company
with Section 4(b) hereof.

         (b)      Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, and each of their respective agents, employees, officers and
directors and the agents, employees, officers and directors of any such
controlling person from and against any Losses to which they or any of them may
become subject under the Act, the Exchange Act or otherwise insofar as such
Losses (or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus, or arises
out of or is based upon any omission or alleged omission to state a material
fact required to be stated in such Registration Statement or Prospectus or
necessary to make such information (with respect to the Prospectus, in light of
the circumstances under which it was made) not misleading, in each case to the
extent, but only to the extent, that any such Loss arises out of or is based
upon any untrue statement or alleged untrue statement or omission or
<PAGE>
                                      -26-

alleged omission relating to such Underwriter made therein in reliance upon and
in conformity with information relating to such Underwriter furnished in writing
to the Company by or on behalf of such Underwriter expressly for use therein.
The only such information furnished by or on behalf of the Underwriters
expressly for use therein is the information set forth in the fifth and ninth
paragraphs under the caption "Underwriting" in the Prospectus (collectively, the
"UNDERWRITER INFORMATION"); provided, however, that with respect to any such
untrue statement or omission made in the Preliminary Prospectus, the indemnity
contained in this Section 10(b) (to the extent and only to the extent that such
Losses resulted from an untrue statement or omission in the Preliminary
Prospectus that was corrected in the Prospectus) shall not inure to the benefit
of the Company if it shall be established that (1) both (A) a copy of the
Prospectus was sent or given by such Underwriter to the person asserting any
such Losses, and (B) the untrue statement or omission in the Preliminary
Prospectus was corrected in the Prospectus or (2) such failure to deliver the
Prospectus was a result of noncompliance by the Company with Section 4.

         (c)      Promptly after receipt by an indemnified party under
subsection 10(a) or 10(b) above of notice of the commencement of any action,
suit or proceeding (collectively, an "ACTION"), such indemnified party shall, if
a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify each party against whom indemnification is to be sought
in writing of the commencement of such action (but the failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
that it may have under this Section 10 except to the extent that it has been
prejudiced in any material respect by such failure or from any liability which
it otherwise may have). In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement of
such action, the indemnifying party will be entitled to participate in such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense of such action with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such action, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action or (iii) the
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses of counsel shall be borne by the indemnifying
parties; provided, however, that the indemnifying party will not be liable for
the fees and expenses of more than one counsel (together with appropriate local
counsel) designated by the indemnified party or parties at any time for all
indemnified parties in connection with any one action or separate but similar or
related actions arising out of the same general allegations or
<PAGE>
                                      -27-

circumstances. An indemnifying party shall not be liable for any settlement of
any claim or action effected without its written consent which consent may not
be unreasonably withheld. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.

         11.      Contribution. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 10 of this
Agreement is for any reason held to be unavailable from the indemnifying party,
or is insufficient to hold harmless a party indemnified under Section 10 of this
Agreement, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such aggregate Losses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Underwriters, on the other hand, from the
offering of the Shares or (ii) if such allocation is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, on the
one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, shall be deemed to
be in the same respective proportion as (x) the total proceeds from the offering
of the Shares (net of discounts and commissions but before deducting expenses)
received by the Company are to (y) the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the Company, on
the one hand, and Underwriters, on the other, shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.

         The Company and each Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 11 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 11, (i) in no case shall any Underwriter be required
to contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by such Underwriter and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of any untrue statement
or alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 11, each person,
if any, who controls any Underwriter within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act and each director, officer, employee and
agent of such Underwriter shall
<PAGE>
                                      -28-

have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each director, officer, employee and agent
of the Company or person who controls the Company shall have the same rights to
contribution as the Company. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 11, notify such party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 11 or otherwise, except to
the extent that it has been prejudiced in any material respect by such failure;
provided, however, that no additional notice shall be required with respect to
any action for which notice has been given under Section 10 for purposes of
indemnification. Anything in this section to the contrary notwithstanding, no
party shall be liable for contribution with respect to any action or claim
settled without its written consent, provided, however, that such written
consent was not unreasonably withheld.

         12.      Notices. All communications with respect to or under this
Agreement, except as may be otherwise specifically provided in this Agreement,
shall be in writing and, if sent to the Underwriters, shall be mailed,
delivered, or telegraphed or telecopied and confirmed in writing to Deutsche
Bank Securities Inc., 31 West 52nd Street, New York, New York 10019, Attention:
General Counsel (telecopier no: (212) 469-3665), with a copy to Deutsche Bank
Securities Inc., One South Street, Baltimore, Maryland 21202, Attention:
Syndicate Manager (telephone: (410) 895-3630, fax: (410) 895-2740), and to UBS
Warburg LLC, 299 Park Avenue, New York, New York 10171 (telephone: (212)
821-3000, fax: (212) 821-6890), Attention: Syndicate Department, with a copy to
Cahill Gordon & Reindel, 80 Pine Street, New York, New York 10005 (telephone:
(212) 701-3000, fax: (212) 269-5420), Attention: Daniel J. Zubkoff, Esq.; and if
sent to the Company, shall be mailed, delivered or, telegraphed or telecopied
and confirmed in writing to Meritage Corporation, 6613 North Scottsdale Road,
Suite 200, Scottsdale, AZ 85260 (telephone: (480) 998-8700, fax: (480)
998-9178), Attention: Larry W. Seay, with a copy to Snell & Wilmer L.L.P., One
Arizona Center, 400 E. Van Buren St., Phoenix, AZ 85004 (telephone: (602)
382-6252, fax: (602) 382-6070), Attention: Steven D. Pidgeon, Esq.

         13.      Governing Law; Construction. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("CLAIM"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.

         14.      Submission to Jurisdiction. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of
<PAGE>
                                      -29-

such matters, and the Company consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Claim arising out of
or in any way relating to this Agreement is brought by any third party against
Deutsche Bank, UBS Warburg or any indemnified party. Each of Deutsche Bank, UBS
Warburg and the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates) waives all right
to trial by jury in any action, proceeding or counterclaim (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final determination or final judgment in
any such action, proceeding or counterclaim brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other courts
in the jurisdiction of which the Company is or may be subject, by suit upon such
judgment.

         15.      Parties at Interest. The Agreement herein set forth has been
and is made solely for the benefit of the Underwriters, the Company, and to the
extent provided in Sections 10 and 11 hereof the controlling persons, directors
and officers referred to in such sections, and their respective successors,
assigns, heirs, personal representatives and executors and administrators. No
other person, partnership, association or corporation (including a purchaser, as
such purchaser, from any of the Underwriters) shall acquire or have any right
under or by virtue of this Agreement.

         16.      Counterparts. This Agreement may be signed by the parties in
one or more counterparts which together shall constitute one and the same
agreement among the parties.

         17.      Successors and Assigns. This Agreement shall be binding upon
the Underwriters, the Company and their respective successors and assigns and
any successor or assign of any substantial portion of the Company's and any of
the Underwriters' respective businesses and/or assets.
<PAGE>
                                       S-1

         If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.

                                           Very truly yours,

                                           MERITAGE CORPORATION


                                           By: /s/ Larry W. Seay
                                              _________________________________
                                              Name:  Larry W. Seay
                                              Title: Chief Financial Officer
                                                     and Vice President-Finance
<PAGE>
                                      S-2

Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A

DEUTSCHE BANK SECURITIES INC.
UBS WARBURG LLC
A.G. EDWARDS & SONS, INC.
JMP SECURITIES LLC

DEUTSCHE BANK SECURITIES INC.


By:    /s/ Richard W. Thaler, Jr.
    ____________________________
    Name:  Richard W. Thaler, Jr.
    Title: Managing Director

By:    /s/ Stephan Sachman
    _________________________
    Name:  Stephan Sachman
    Title: Director

UBS WARBURG LLC


By:    /s/ Donal J. Orr
    _________________________
    Name:  Donal J. Orr
    Title: Managing Director

By:    /s/ Robert C. Crowley
    _________________________
    Name:  Robert C. Crowley
    Title: Executive Director

A.G. EDWARDS & SONS, INC.

By:    /s/ Michael L. Essex
    _________________________
    Name:  Michael L. Essex
    Title: Vice President


JMP SECURITIES LLC


By:   /s/  Carter Mack
    _________________________
    Name:  Carter Mack
    Title: Managing Director
<PAGE>
                                   SCHEDULE A

<TABLE>
<CAPTION>
                                                                                         Number of
Underwriter                                                                             Firm Shares
-----------                                                                             -----------
<S>                                                                                     <C>
DEUTSCHE BANK SECURITIES INC.                                                              700,000
UBS Warburg LLC                                                                            700,000
A.G. EDWARDS & SONS, INC.                                                                  175,000
JMP SECURITIES LLC                                                                         175,000
                                                                                           -------
                  Total............................................................      1,750,000
                                                                                         =========
</TABLE>
<PAGE>
                                   SCHEDULE B

                        Directors and Executive Officers

1.  John R. Landon
2.  Steven J. Hilton
3.  Larry W. Seay
4.  Richard T. Morgan
5.  Peter L. Ax
6.  William G. Campbell
7.  Raymond Oppel
8.  Robert G. Sarver
9.  C. Timothy White
<PAGE>
                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                                                              %
                                      Jurisdiction                                         Owned by
                                           of                                             the Company
                                    Incorporation or                                     (directly or
          Subsidiary                    Formation                Stockholders             indirectly)
          ----------                    ---------                ------------             -----------
<S>                                 <C>                     <C>                           <C>
Monterey Homes Arizona, Inc.             Arizona            Meritage Corporation             100%
Monterey Homes Construction, Inc.        Arizona            Meritage Corporation             100%
Meritage Homes of Arizona, Inc.          Arizona            Meritage Corporation             100%
Meritage Paseo Crossing, LLC             Arizona            Meritage Homes of Arizona,       100%
                                                            Inc.
Meritage Homes Construction, Inc.        Arizona            Meritage Corporation             100%
Meritage Paseo Construction, LLC         Arizona            Meritage Homes                   100%
                                                            Construction, Inc.
Hancock-MTH Communities, Inc.            Arizona            Meritage Corporation             100%
Hancock-MTH Builders, Inc.               Arizona            Meritage Corporation             100%
MTH-Texas GP, Inc.                       Arizona            Meritage Corporation             100%
MTH-Texas LP, Inc.                       Arizona            Meritage Corporation             100%
Legacy/Monterey Homes, L.P.              Arizona            MTH-Texas LP, Inc.                99%
                                                            MTH Texas GP, Inc.                 1%
Meritage Holdings, L.L.C.                Texas              Legacy/Monterey Homes, L.P.
                                                            Legacy Operating Company,         99%
                                                            L.P.                               1%
Legacy Operating Company, L.P.           Texas              Legacy/Monterey Homes, L.P.      100%
Hulen Park Venture, L.L.C.               Texas              Legacy/Monterey Homes, L.P.      100%
Texas Home Mortgage Corporation          Texas              Meritage Corporation             100%
</TABLE>
<PAGE>
<TABLE>
<S>                                      <C>                <C>                              <C>
Meritage Homes of Northern               California         Meritage Corporation             100%
California, Inc.
MTH-Homes Texas, L.P.                    Texas              MTH-Texas LP II, Inc.             99%
                                                            MTH-Texas GP II, Inc.              1%
MTH-Texas GP II, Inc.                    Arizona            Meritage Corporation             100%
MTH-Texas LP II, Inc.                    Arizona            Meritage Corporation             100%
</TABLE>
<PAGE>
                                    EXHIBIT B

                              MERITAGE CORPORATION

                                LOCK-UP AGREEMENT



                                  JUNE 20, 2002


Deutsche Bank Securities Inc.
31 West 52nd Street
New York, NY  10019

UBS Warburg LLC
299 Park Avenue
New York, NY  10171

                  Re: Meritage Corporation - Lock-Up Agreement

Ladies and Gentlemen:

         The undersigned is an owner of record or beneficially of certain shares
of common stock, par value $0.01 per share ("COMMON STOCK"), of Meritage
Corporation, a Maryland corporation (the "COMPANY"), or securities convertible
into or exchangeable or exercisable for shares of Common Stock. The undersigned
understands that you, as representatives (the "REPRESENTATIVES"), propose to
enter into an Underwriting Agreement on behalf of the several Underwriters named
in such agreement (collectively, the "UNDERWRITERS"), with the Company,
providing for a public offering of newly issued shares of Common Stock (the
"OFFERED SHARES") pursuant to a Registration Statement on Form S-3 (File No.
333-87398) filed with the Securities and Exchange Commission (the "SEC").

         In consideration of the agreement by the Underwriters to offer and sell
the Offered Shares, and of other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period beginning from the date of the final prospectus covering the public
offering of the Offered Shares and continuing to and including the date 90 days
after the date of such final prospectus, the undersigned will not offer, sell,
contract to sell, hypothecate, pledge, loan, grant any option to purchase, make
any short sale or otherwise dispose of or grant any rights with respect to any
shares of Common Stock, or any options or warrants to purchase any shares of
Common Stock, or any securities convertible into, exchangeable for or that
represent the right to receive shares of Common Stock, whether now owned or
hereinafter acquired, owned directly by the undersigned
<PAGE>
(including holding as a custodian) or with respect to which the undersigned has
beneficial ownership within the rules and regulations of the SEC (collectively
the "UNDERSIGNED'S SHARES").

         The foregoing restriction is expressly agreed to preclude the
undersigned from engaging in any hedging or other transaction which is designed
to or which reasonably could be expected to lead to or result in a sale or
disposition of the Undersigned's Shares even if the Undersigned's Shares would
be disposed of by someone other than the undersigned. Such prohibited hedging or
other transactions would include without limitation any short sale (whether or
not against the box) or any purchase, sale or grant of any right (including,
without limitation, any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from the Undersigned's Shares.

         Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein, (ii) to any trust for the direct or indirect benefit of the undersigned
or the immediate family of the undersigned, provided that the trustee of the
trust agrees to be bound in writing by the restrictions set forth herein, and
provided further that any such transfer shall not involve a disposition for
value, (iii) if the undersigned is a corporation, to any wholly-owned subsidiary
of such corporation, (iv) in connection with a simultaneous sale of all or
substantially all of the Common Stock of the Company (by means of a merger,
consolidation, tender offer or otherwise) or (v) with the prior written consent
of the Representatives on behalf of the Underwriters. For purposes of this
Lock-Up Agreement, "immediate family" shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. It shall be a condition
to any transfer permitted by the first sentence of this paragraph (other than
clause (iv) thereof) that (a) the transferee execute an agreement stating that
the transferee is receiving and holding the Undersigned's Shares subject to the
provisions of this Agreement and there shall be no further transfer of the
Undersigned's Shares except in accordance with this Agreement and (b) any such
transfer shall not involve a disposition for value. The undersigned also agrees
and consents to the entry of stop transfer instructions with the Company's
transfer agent and registrar against the transfer of the Undersigned's Shares
except in compliance with the foregoing restrictions.

         The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
<PAGE>
                                    Very truly yours,



                                    ______________________________________
                                    Exact Name of Record and/or Beneficial Owner


                                    ______________________________________
                                    Authorized Signature

                                    ______________________________________
                                    Title


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>4
<FILENAME>p66729exv3.txt
<DESCRIPTION>EXHIBIT 3
<TEXT>
<PAGE>
                                                                       EXHIBIT 3

                           MONTEREY HOMES CORPORATION

                             ARTICLES OF RESTATEMENT


         Monterey Homes Corporation, a Maryland corporation (the "Corporation"),
having its principal office in Phoenix, Arizona, hereby certifies to the State
Department of Assessments and Taxation of Maryland that:

       FIRST: The Corporation desires to restate its charter as currently in
effect as follows:

                                    ARTICLE I

                                      NAME

         The name of the corporation (which is hereinafter called the
"Corporation") is:

                           Monterey Homes Corporation.

                                   ARTICLE II

                                    PURPOSES

         The purposes for which and any of which the Corporation is formed and
the business and objects to be carried on and promoted by it are:

            (a) To engage in any one or more businesses or transactions, or to
acquire all or any portion of the securities of any entity engaged in any one or
more businesses or transactions which the Board of Directors of the Corporation
may from time to time authorize or approve, whether or not related to the
business described elsewhere in this Article II or to any other business at the
time or theretofore engaged in by the Corporation.

            (b) To purchase, lease, hire or otherwise acquire, hold, own,
construct, develop, erect, improve, manage, operate and in any manner dispose
of, and to aid and subscribe toward the acquisition, construction or improvement
<PAGE>
of, buildings, machinery, equipment and facilities, and any other property or
appliances which may have an interest; and to contract for, for terms of years
or otherwise, procure or make use of, personal services of officers, employees,
agents or contractors, and of services of any firm, association or corporation.

            (c) To acquire the whole or any part of the goodwill, rights,
property, franchise and business of any corporation, joint stock company,
syndicate, association, firm, trust, partnership, joint venture or person
heretofore or hereafter engaged in any business and to hold, utilize, enjoy and
in any manner dispose of, the whole or any part of the goodwill, rights,
property, franchise and business so acquired, and to ensure in connection
therewith any liabilities of any such corporation, joint stock company,
syndicate, association, firm, trust, partnership, joint venture or person.

            (d) To acquire by purchase, subscription or otherwise, and to
receive, hold, own, guarantee, sell, assign, exchange, transfer, mortgage,
pledge or otherwise dispose of or deal in and with any of the shares of capital
stock, or any voting trust certificates or depository receipts in respect of the
shares of capital stock, scrip, warrants, rights, options, bonds, debentures,
notes, trust receipts, and other securities, obligations, chooses in action and
evidences of indebtedness or other rights in or interests issued or created by
any corporation, joint stock company, syndicate, association, firm, trust,
partnership, joint venture or person, public or private, or by the government of
the United States of America, or by any foreign government, or by any state,
territory, province, municipality or other political subdivision, or by any
governmental agency, or by any other entity, and to issue in exchange therefor
or in payment thereof its own capital stock, bonds or other obligations or
securities, or otherwise pay therefor in money or other property; to possess and
exercise as owner thereof all the rights, powers and privileges of ownership
including the right to execute consents and vote thereon, and to do any and all
acts and things necessary or advisable for the preservation, protection,
improvement and enhancement in value thereof.

            (e) To cause to be organized, under the laws of the United States of
America, or any foreign government, or any state, territory, province,
municipality or other political entity, a corporation, joint stock company,
syndicate, association, firm, trust, partnership, or joint venture, for the
purpose of accomplishing any and all of the objects and purposes of the
Corporation and to dissolve, wind up, liquidate, merge or consolidate any such
corporation, joint stock company, syndicate, association, firm, trust,
partnership, or joint venture or cause the same to be dissolved, terminated,
wound up, liquidated, merged or consolidated.

            (f) To carry out all or any part of the foregoing objects as
principal, or otherwise, either alone or through or in conjunction with, as
partner, joint venturer or otherwise, any corporation, joint stock company,


                                       2
<PAGE>

syndicate, association, firm, trust, partnership, joint venture or person; and,
in carrying on its business and for the purpose of attaining or furthering any
of its objects and purposes, to make and perform any contracts and do any acts
and things, and to exercise any powers suitable, convenient or proper for the
accomplishment of any of the objects and purposes herein enumerated or
incidental to the powers herein specified, or which at any time appear conducive
to or expedient for the accomplishment of any of such objects and purposes.

            (g) To purchase or otherwise acquire, and to hold, sell or
otherwise dispose of, and to retire and reissue, shares of its own stock of any
class and any other securities issued by it in any manner now or hereafter
authorized or permitted by law.

            (h) To make contracts and guarantees, incur liabilities and borrow
money; to sell, mortgage, lease, pledge, exchange, convey, transfer, and
otherwise dispose of all or any part of the property and assets of the
Corporation; and to issue bonds, notes and other obligations and secure the same
by mortgage or deed of trust of all or any part of the property, franchises and
income of the Corporation.

            (i) To aid in any manner any corporation, joint stock company,
syndicate, association, firm, trust, partnership, joint venture or person of
which the shares of capital stock, or voting trust certificates or depository
receipts in respect of the shares of capital stock, scrip, warrants, rights,
options, bonds, debentures, notes, trust receipts, and other securities,
obligations, chooses in action and evidences of indebtedness or other rights in
or interests issued or created by are held by or for the Corporation, or in the
welfare of which the Corporation shall have any interest, direct or indirect;
and to do any acts or things designed to protect, preserve, improve and enhance
the value of any such property or interest, or any other property of the
Corporation.

            (j) To guarantee the payment of dividends or distributions upon any
shares of capital stock, interests in or other securities of, or the performance
of any contract by, any other corporation, joint stock company, syndicate,
association, firm, trust, partnership, joint venture or person in which, or in
the welfare of which, the Corporation has any interest, direct, or indirect; and
to endorse or otherwise guarantee the payment of the principal and interest, or
either, on any bonds, debentures, notes or other securities, obligations and
evidences of indebtedness created or issued by any of the same.

            (k) To carry out all or any part of the objects and purposes of the
Corporation and to conduct its business in all or any of its branches, in any or
all states, territories, districts and possessions of the United States of
America and in foreign countries; and to maintain offices

                                        3
<PAGE>
and agencies in any or all states, territories, districts and possessions of the
United States of America and in foreign countries.

         The foregoing enumerated purposes and objects shall be in no way
limited or restricted by reference to, or inference from, the terms of any other
clause of this or any other Article of the charter of the Corporation, and each
shall be regarded as independent; and they are intended to be and shall be
construed as powers as well as purposes and objects of the Corporation and shall
be in addition to and not in limitation of the general powers of corporations
under the General Laws of the State of Maryland.

                                   ARTICLE III

                                PRINCIPAL OFFICE

         The present address of the principal office of the corporation in this
State is c/o The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202.

                                   ARTICLE IV

                                 RESIDENT AGENT

         The name and address of the resident agent of the Corporation are The
Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland. Said
resident agent is a Maryland corporation.

                                    ARTICLE V

                                  CAPITAL STOCK

            (a) The total number of shares of stock of all classes which the
Corporation has authority to issue is fifty million (50,000,000) shares of
capital stock, par value one cent ($0.01) per share, amounting in aggregate par
value to Five Hundred Thousand Dollars ($500,000). All of the authorized shares
are classified as Common Stock of the same class (the "Common Stock").

            (b) Each share of Common Stock shall entitle the owner thereof to
vote at the rate of one (1) vote for each share held.

            (c) The Corporation shall not issue fractional shares of its Common
Stock.

                                        4


<PAGE>




            (d) All persons who acquire shares of Common Stock in the
Corporation shall acquire such shares subject to the provisions of these
Articles of Incorporation and the Bylaws of the Corporation.


            (e) Simultaneously with the effective date of the merger (December
31, 1996, the "Effective Date"), of Monterey Homes Construction II, Inc., an
Arizona corporation and Monterey Homes Arizona II, Inc., an Arizona corporation
with and into the corporation (the "Merger") and immediately after the Merger,
each share of Common Stock, par value $0.01 per share, issued and outstanding
following the Merger (the "Old Common Stock") shall automatically and without
any action on the part of the holder thereof be reclassified and changed into
one-third (1/3) of a share of the Corporation's Common Stock, par value equal to
the par value of the Old Common Stock (the "New Common Stock"), subject to the
treatment of fractional share interests as described below (the "Stock Change").
Each holder of a certificate or certificates which immediately following the
Merger represented outstanding shares of Old Common Stock (the "Old
Certificates," whether one or more) shall be entitled to receive upon surrender
of such Old Certificates to the Corporation's Transfer Agent for cancellation, a
certificate or certificates (the "New Certificates," whether one or more)
representing the number of whole shares of the New Common Stock into which and
for which the shares of the Old Common Stock formerly represented by such Old
Certificates so surrendered, are reclassified and changed under the terms
hereof. From and after the Effective Date and immediately following the Merger,
Old Certificates shall represent only the right to the number of shares of New
Common Stock into which the Old Common Stock shall have been reclassified and
changed and the right to receive New Certificates therefor pursuant to the
provisions hereof. No certificates or scrip representing fractional share
interests in New Common Stock will be issued, and no such fractional share
interest will entitle the holder thereof to vote, or to any rights of a
shareholder of the Corporation. All fractional shares for one share or more
shall be increased to the next higher whole number of shares and all fractional
shares of less than one-half (1/2) share shall be decreased to the next lower
whole number of shares, respectively. If more than one Old Certificate shall be
surrendered at one time for the account of the same stockholder, the number of
full shares of New Common Stock for which New Certificates shall be issued shall
be computed on the basis of the aggregate number of shares represented by the
Old Certificates so surrendered. In the event that the Corporation's Transfer
Agent determines that a holder of Old Certificates has not tendered all his
certificates for exchange, the Transfer Agent shall carry forward any fractional
share until all certificates of that holder have been presented for exchange
such that rounding for fractional shares to any one person shall not exceed one
share. If any New Certificate is to be issued in a name other than that in which
the Old Certificates surrendered for exchange are issued, the Old Certificates
so surrendered shall be properly endorsed and otherwise be in proper form for
transfer, and the person or persons requesting such exchange shall affix any

                                        5
<PAGE>
requisite stock transfer tax stamps to the Old Certificates surrendered, or
provide funds for their purchase, or establish to the satisfaction of the
Transfer Agent that such taxes are not payable. From and after the Effective
Date and immediately following the Merger, the amount of capital represented by
the shares of the New Common Stock into which and for which the shares of the
Old Common Stock are reclassified and changed under the terms hereof shall be
the same as the amount of capital represented by the shares of Old Common Stock
so reclassified and changed, until thereafter reduced or increased in accordance
with applicable law.

                                   ARTICLE VI

                                   DIRECTORS

         The number of directors of the Corporation shall be as set forth in the
bylaws of the Corporation, but shall never be less than the minimum number
permitted by the Maryland General Corporation Law now or hereinafter in force.
The directors shall be divided into two classes designated Class I and Class II.
Each Class shall consist of one-half of the directors or as close thereto as
possible. The Class I directors shall stand for election at the 1996 annual
meeting of shareholders and shall be elected for a two-year term. The Class II
directors shall stand for election at the 1996 annual meeting of shareholders
and shall be elected for a one-year term. At each annual meeting of
shareholders, commencing with the annual meeting to be held during fiscal 1997,
each of the successors to the directors of the Class whose term shall have
expired at such annual meeting shall be elected for a term running until the
second annual meeting next succeeding his or her election and until his or her
successor shall have been duly elected and qualified.

                                   ARTICLE VII

                   RIGHTS AND POWERS OF DIRECTORS AND OFFICERS
         The following provisions are hereby adopted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:

            (a) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of its Common Stock, whether
now or hereafter authorized, or securities convertible into shares of its Common
Stock, whether now or hereafter authorized, for such consideration as may be
deemed advisable by the Board of Directors and without any action by the
stockholders.

                                        6
<PAGE>
            (b) No holder of any shares of Common Stock or any other securities
of the Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any shares of Common Stock or any
other securities of the Corporation other than such, if any, as the Board of
Directors, in its sole discretion, may determine and at such price or prices and
upon such other terms as the Board of Directors, in its sole discretion, may
fix; and any shares of Common Stock or other securities which the Board of
Directors may determine to offer for subscription may, as the Board of Directors
in its sole discretion shall determine, be offered to the holders of shares of
Common Stock of the exclusion of any other holders of shares of Common Stock.

            (c) The Board of Directors of the Corporation shall have power from
time to time and in its sole discretion to determine in accordance with sound
accounting practice, what constitutes annual or other net profits, earnings,
surplus, or net assets in excess of capital; to fix and vary from time to time
the amount to be reserved as working capital, or determine that retained
earnings or surplus shall remain in the hands of the Corporation; to set apart
out of any funds of the Corporation such reserve or reserves in such amount or
amounts and for such proper purpose or purposes as it shall determine and to
abolish any such reserve or any part thereof; to distribute and pay
distributions or dividends in stock, cash or other securities or property, out
of surplus or any other funds or amounts legally available therefor, at such
times and to the stockholders of record on such dates as it may, from time to
time, determine; and to determine whether and to what extent and at what times
and places and under what conditions and regulations the books, accounts and
documents of the Corporation, or any of them, shall be open to the inspection of
stockholders, except as otherwise provided by statute or by the Bylaws, and,
except as so provided, no stockholder shall have any right to inspect any book,
account or document of the Corporation unless authorized so to do by resolution
of the Board of Directors.

            (d) A contract or other transaction between the Corporation and any
of its directors or between the Corporation and any other Corporation, firm or
other entity in which any of its directors is a director or has a material
financial interest is not void or voidable solely because of any one or more of
the following: the common directorship or interest; the presence of the director
at the meeting of the Board of Directors which authorizes, approves, or ratifies
the contract or transaction; or the counting of the vote of the Director for the
authorization, approval, or ratification of the contract or transaction. This
Section (d) applies if:

                  (1) the fact of the common directorship or interest is
disclosed or known to: the Board of Directors and the Board authorizes,
approves, or ratifies the contract or transaction by the affirmative vote of a
majority of disinterested directors, even if the disinterested directors
constitute less than a quorum; or the stockholders entitled to vote, and the

                                        7
<PAGE>
contract or transaction is authorized, approved, or ratified by a majority of
the votes cast by the stockholders entitled to vote other than the votes of
shares owned of record or beneficially by the interested director or
Corporation, firm, or other entity; or

                  (2) the contract or transaction is fair and reasonable to the
Corporation.

         Common or interested directors or the stock owned by them or by an
interested Corporation, firm, or other entity may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or at a meeting of
the stockholders, as the case may be, at which the contract or transaction is
authorized, approved, or ratified. If a contract or transaction is not
authorized, approved, or ratified in one of the ways provided for in clause (1)
of this Section (d), the person asserting the validity of the contract or
transaction bears the burden of proving that the contract or transaction was
fair and reasonable to the Corporation at the time it was authorized, approved,
or modified. The procedures in this Section (d) do not apply to the timing by
the Board of Directors of reasonable compensation for a director, whether as a
director or in any other capacity.

            (e) Except for contracts, transactions, or acts required to be
approved under the provisions of Section (d) of this Article VII, any contract,
transaction, or act of the Corporation or of the Board of Directors which shall
be ratified by a majority of a quorum of the stockholders having voting powers
at any annual meeting, or at any special meeting called for such purpose, shall
so far as permitted by law be as valid and as binding as though ratified by
every stockholder of the Corporation.

            (f) Unless the Bylaws otherwise provide, any officer or employee of
the Corporation (other than a director) may be removed at any time with or
without cause by the Board of Directors or by any committee or superior officer
upon whom such power of removal may be conferred by the Bylaws or by authority
of the Board of Directors.

            (g) Notwithstanding any provision of law requiring the authorization
of any action by a greater proportion than a majority of the total number of
shares of Common Stock or of the total number of shares of Common Stock, such
action shall be valid and effective if authorized by the affirmative vote of the
holders of a majority of the total number of shares of Common Stock outstanding
and entitled to vote thereon, except as otherwise provided in the charter.

            (h) The Corporation shall indemnify (1) its directors to the full
extent provided by the general laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures provided by such
laws; (2) its officers to the same

                                        8
<PAGE>
extent it shall indemnify its directors; and (3) its officers who are not
directors to such further extent as shall be authorized by the Board of
Directors and be consistent with law. The foregoing shall not limit the
authority of the Corporation to indemnify other employees and agents consistent
with law.

            (i) The Corporation reserves the right from time to time to make any
amendments of its charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its charter, of any of its outstanding Common Stock by classification,
reclassification or otherwise but no such amendment which changes such terms or
contract rights of any of its outstanding Common Stock shall be valid unless
such amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon, by a vote at a
meeting or in writing with or without a meeting.

            (j) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of this
Corporation shall be personally liable to the Corporation or its stockholders
for money damages. No amendment of the charter of the Corporation or repeal of
any of its provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal.

         The enumeration and definition of particular powers of the Board of
Directors included in this Article VII shall in no way be limited or restricted
by reference to or interference from the terms of any other clause of this or
any other Article of the charter of the Corporation, or construed as or deemed
by inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.

                                  ARTICLE VIII

                        RESTRICTION ON TRANSFER OF SHARES

         (a) In order to preserve the net operating loss carryovers, capital
loss carryovers and built-in losses (the "Tax Benefits") to which the
Corporation is entitled pursuant to the Internal Revenue Code of 1986, as
amended, or any successor statute (collectively the "Code") and the regulations
thereunder, the following restrictions shall apply until the earlier of (x) the
business day following the fifth anniversary of the effectiveness of this
Article VIII, (y) the repeal of Sections 382 and 383 of the Code (or successor
provisions) if the Board of Directors determines

                                        9
<PAGE>
that the restrictions are no longer necessary, or (z) the beginning of a taxable
year of the Corporation to which the Board of Directors determines that no Tax
Benefits may be carried forward, unless the Board of Directors shall fix an
earlier or later date in accordance with paragraph (i) of this Article VIII
(such date is sometimes referred to herein as the "Expiration Date"):

            (i) No person (as herein defined), including the Corporation, shall
engage in any Transfer (as herein defined) with any person to the extent that
such Transfer, if effective, would cause the Ownership Interest Percentage (as
herein defined) of any person or Public Group (as herein defined) to increase to
4.9 percent or above, or from 4.9 percent or above to a greater Ownership
Interest Percentage, or would create a new Public Group; provided, however, that
the foregoing restriction on such Transfers shall not be applicable to the
Transfer of shares of Stock pursuant to (1) the exercise of any option that is
issued by the Corporation and is outstanding on the Effective Date and
immediately following the Merger, (2) the exercise of those certain options
initially covering 750,000 shares of stock (before the effect of the Stock
Change) referred to in the Stock Option Agreement dated December 21, 1995
between the Corporation and Alan D. Hamberlin, (3) the issuance of the 800,000
shares of Contingent Stock (before the effect of the Stock Change) referred to
in the Agreement and Plan of Reorganization dated as of September 13, 1996 (the
"Agreement") or (4) the exercise of those certain options initially covering an
aggregate of 1,000,000 shares of stock (before the effect of the Stock Change)
referred to in those Stock Option Agreements dated December 31, 1996 between the
Corporation and each of William W. Cleverly and Steven J. Hilton.

         For purposes of this Article VIII:

                     (A) "person" refers to any individual, corporation, estate,
              trust, association, company, partnership, joint venture, or other
              entity or organization, including, without limitation, any
              "entity" within the meaning of Treasury Regulation Section
              1.382-3(a);

                     (B) a person's "Ownership Interest Percentage" shall be the
              sum of such person's direct ownership interest in the Corporation
              as determined under Treasury Regulation Section 1.382-2T(f)(8) or
              any successor regulation and such person's indirect ownership
              interest in the Corporation as determined under Treasury
              Regulation Section 1.382-2T(f)(15) or any successor regulation,
              except that, for purposes of determining a person's direct
              ownership interest in the Corporation, any ownership interest in
              the Corporation described in Treasury Regulation Section
              1.382-2T(f)(18)(iii)(A) or any successor regulation shall be
              treated as stock of the Corporation, and for purposes of
              determining a person's indirect ownership interest in the
              Corporation, Treasury Regulations Sections 1.382-2T(g)(2),
              1.382-2T(h)(2)(i)(A), 1.382-2T(h)(2)(iii) and

                                       10
<PAGE>
              1.382-2T(h)(6)(iii)  or any successor  regulations shall not apply
              and  any  Option  Right  to  acquire  Stock  shall  be  considered
              exercised;

                     (C)  "Transferee"   means  any  person  to  whom  Stock  is
              Transferred;

                     (D) "Stock" shall mean shares of stock of the Corporation
              (other than stock described in Section 1504(a)(4) of the Code or
              any successor statute, or stock that is not described in Section
              1504(a)(4) solely because it is entitled to vote as a result of
              dividend arrearages), any Option Rights to acquire Stock, and all
              other interests that would be treated as stock of the Corporation
              pursuant to Treasury Regulation Section 1.382- 2T(f)(18) (or any
              successor regulation);

                     (E) "Public Group" shall mean a group of individuals,
              entities or other persons described in Treasury Regulation Section
              1.382-2T(f)(13) or any successor regulation;

                     (F) "Option Right" shall mean any option, warrant, or other
              right to acquire, convert into or exchange or exercise for, or any
              similar interests in, shares of Stock;

                     (G) "Transfer" shall mean any issuance, sale, transfer,
              gift, assignment, devise or other disposition, as well as any
              other event, that causes a person to acquire or increase an
              Ownership Interest Percentage in the Corporation, or any agreement
              to take any such actions or cause any such events, including (a)
              the granting or exercise of any Option Right with respect to
              Stock, (b) the disposition of any securities or rights convertible
              into or exchangeable or exercisable for Stock or any interest in
              Stock or any exercise of any such conversion or exchange or
              exercise right, and (c) transfers of interests in other entities
              that result in changes in direct or indirect ownership of Stock,
              in each case, whether voluntary or involuntary, of record, and by
              operation by law or otherwise;

                     (H) "Optionee" means any person holding an Option Right to
              acquire Stock.

         (ii) Any Transfer that would otherwise be prohibited pursuant to the
preceding subparagraph may nonetheless be permitted if information relating to a
specific proposed transaction is presented to the Board of Directors and the
Board (including a majority of the Independent Directors, as such term is
defined in the Agreement) determines in its discretion (x) based upon an opinion
of legal counsel or independent public accountants selected by the Board, that
such transaction will not jeopardize or create a material limitation on the
Corporation's then current or future ability to utilize its Tax Benefits, taking
into account both the proposed transaction and potential future transactions, or
(y) that the overall economic benefits of such

                                       11

<PAGE>
transaction to the Corporation outweigh the detriments of such transaction.
Nothing in this subparagraph shall be construed to limit or restrict the Board
of Directors in the exercise of its fiduciary duties under applicable law.

         (b) Unless approval of the Board of Directors is obtained as provided
in subparagraph (a)(ii) of this Article VIII, any attempted Transfer that is
prohibited pursuant to subparagraph (a)(i) of this Article VIII, to the extent
that the amount of Stock subject to such prohibited Transfer exceeds the amount
that could be Transferred without restriction under subparagraph (a) (i) of this
Article VIII (such excess hereinafter referred to as the "Prohibited
Interests"), shall be void ab initio and not effective to transfer ownership of
the Prohibited Interests with respect to the purported acquiror thereof (the
"Purported Acquiror"), who shall not be entitled to any rights as a shareholder
of the Corporation with respect to the Prohibited Interests (including, without
limitation, the right to vote or to receive dividends with respect thereto), or
otherwise as the holder of the Prohibited Interests. All rights with respect to
the Prohibited Interests shall remain the property of the person who initially
purported to Transfer the Prohibited Interests to the Purported Acquiror (the
"Initial Transferor") until such time as the Prohibited Interests are resold as
set forth in subparagraph (b)(i) or subparagraph (b)(ii) of this Article VIII.

         (i) Upon demand by the Corporation, the Purported Acquiror shall
Transfer any certificate or other evidence of purported ownership of the
Prohibited Interests within the Purported Acquiror's possession or control,
along with any dividends or other distributions paid by the Corporation with
respect to the Prohibited Interests that were received by the Purported Acquiror
(the "Prohibited Distributions"), to an agent designated by the Corporation (the
"Agent"). If the Purported Acquiror has sold the Prohibited Interests to an
unrelated party in an arms-length transaction after purportedly acquiring them,
the Purported Acquiror shall be deemed to have sold the Prohibited Interests as
agent for the Initial Transferor, and in lieu of Transferring the Prohibited
Interests to the Agent shall Transfer to the Agent the Prohibited Distributions
and the proceeds of such sale (the "Resale Proceeds") except to the extent that
the Agent grants written permission to the Purported Acquiror to retain a
portion of the Resale Proceeds not exceeding the amount that would have been
payable by the Agent to the Purported Acquiror pursuant to the following
subparagraph (b)(ii) if the Prohibited Interests had been sold by the Agent
rather than by the Purported Acquiror. Any purported Transfer of the Prohibited
Interests by the Purported Acquiror other than a Transfer described in one of
the two preceding sentences shall not be effective to Transfer any ownership of
the Prohibited Interests.

         (ii) The Agent shall sell in an arms-length transaction (on the New
York Stock Exchange, if possible) any Prohibited Interests transferred to the
Agent by the Purported Acquiror, and the proceeds of such sale (the "Sales
Proceeds"), or the Resale Proceeds, if applicable, shall be allocated to the
Purported Acquiror up to the following amount: (x) where applicable, the

                                       12


<PAGE>
purported purchase price paid or value of consideration surrendered by the
Purported Acquiror for the Prohibited Interests, and (y) where the purported
Transfer of the Prohibited Interests to the Purported Acquiror was by gift,
inheritance, or any similar purported Transfer, the fair market value of the
Prohibited Interests at the time of such purported Transfer. Subject to the
succeeding provisions of this subparagraph, any Resale Proceeds or Sales
Proceeds in excess of the amount allocable to the Purported Acquiror pursuant to
the preceding sentence, together with any Prohibited Distributions, shall be the
property of the Initial Transferor. If the identity of the Initial Transferor
cannot be determined by the Agent through inquiry made to the Purported
Acquiror, the Agent shall publish appropriate notice (in The Wall Street
Journal, if possible) for seven consecutive business days in an attempt to
identify the Initial Transferor in order to transmit any Resale Proceeds or
Sales Proceeds or Prohibited Distributions due to the Initial Transferor
pursuant to this subparagraph. The Agent may also take, but is not required to
take, other reasonable actions to attempt to identify the Initial Transferor. If
after ninety (90) days following the final publication of such notice the
Initial Transferor has not been identified, any amounts due to the Initial
Transferor pursuant to this subparagraph may be paid over to a court or
governmental agency, if applicable law permits, or otherwise shall be
transferred to an entity designated by the Corporation that is described in
Section 501(c)(3) of the Code. In no event shall any such amounts due to the
Initial Transferor inure to the benefit of the Corporation or the Agent, but
such amounts may be used to cover expenses (including but not limited to the
expenses of publication) incurred by the Agent in attempting to identify the
Initial Transferor.

         (c) Within thirty (30) business days of learning of a purported
Transfer of Prohibited Interests to a Purported Acquiror, the Corporation
through its Secretary shall demand that the Purported Acquiror surrender to the
Agent the certificates representing the Prohibited Interests, or any Resale
Proceeds, and any Prohibited Distributions, and if such surrender is not made by
the Purported Acquiror within thirty (30) business days from the date of such
demand the Corporation shall institute legal proceedings to compel such
Transfer; provided, however, that nothing in this paragraph (c) shall preclude
the Corporation in its discretion from immediately bringing legal proceedings
without a prior demand, and also provided that failure of the Corporation to act
within the time periods set out in this paragraph (c) shall not constitute a
waiver of any right of the Corporation under this Article VIII.

         (d) Upon a determination by the Board of Directors that there has been
or is threatened a purported Transfer of Prohibited Interests to a Purported
Acquiror, the Board of Directors may take such action in addition to any action
required by the preceding paragraph as it deems advisable to give effect to the
provisions of this Article VIII, including, without limitation, refusing to give
effect on the books of this Corporation to such purported Transfer or
instituting proceedings to enjoin such purported Transfer.

                                       13


<PAGE>
         (e) In the event of any Transfer which does not involve a Transfer of
"securities" of the Corporation within the meaning of the Maryland Securities
Act, as amended ("Securities"), but which would cause a person or Public Group
(the "Prohibited Party") to violate a restriction provided for in subparagraph
(a) of this Article VIII, the application of subparagraphs (b) and (c) of this
Article VIII shall be modified as described in this paragraph (e). In such case,
the Prohibited Party and/or any person or Public Group whose ownership of the
Corporation's Securities is attributed to the Prohibited Party pursuant to
Section 382 of the Code and the Treasury Regulations thereunder (collectively,
the "Prohibited Party Group") shall not be required to dispose of any interest
which is not a Security, but shall be deemed to have disposed of, and shall be
required to dispose of, sufficient Securities (which Securities shall be
disposed of in the inverse order in which they were acquired by members of the
Prohibited Party Group), to cause the Prohibited Party, following such
disposition, not to be in violation of subparagraph (a) of this Article VIII.
Such disposition shall be deemed to occur simultaneously with the Transfer
giving rise to the application of this provision, and such amount of Securities
which are deemed to be disposed of shall be considered Prohibited Interests and
shall be disposed of through the Agent as provided in subparagraphs (b) and (c)
of this Article VIII, except that the maximum aggregate amount payable to the
Prohibited Party Group in connection with such sale shall be the fair market
value of the Prohibited Interests at the time of the prohibited Transfer. All
expenses incurred by the Agent in disposing of the Prohibited Interests shall be
paid out of any amounts due the Prohibited Party Group.

         (f) The Corporation may require as a condition to the registration of
the transfer of any shares of its Stock that the proposed Transferee furnish to
the Corporation all information reasonably requested by the Corporation with
respect to all the proposed Transferee's direct or indirect ownership interests
in, or options to acquire, Stock.

         (g) All certificates evidencing ownership of shares of Stock that are
subject to the restrictions on Transfer contained in this Article VIII shall
bear a conspicuous legend referencing the restrictions set forth in this Article
VIII.

         (h) Any person who knowingly violates the restrictions on Transfer set
forth in this Article VIII will be liable to the Corporation for any costs
incurred by the Corporation as a result of such violation.

         (i) Nothing contained in this Article VIII shall limit the authority of
the Board of Directors to take such other action to the extent permitted by law
as it deems necessary or advisable to protect the Corporation and the interests
of the holders of its securities in preserving the Tax Benefits. Without
limiting the generality of the foregoing, in the event of a change in law or
Treasury Regulations making one or more of the following actions necessary or
desirable,

                                       14
<PAGE>
the Board of Directors may (i) accelerate or extend the Expiration Date, (ii)
modify the Ownership Interest Percentage in the Corporation specified in the
first sentence of subparagraph (a)(i), or (iii) modify the definitions of any
terms set forth in this Article VIII; provided that the Board of Directors shall
determine in writing that such acceleration, extension, change or modification
is reasonably necessary or advisable to preserve the Tax Benefits under the Code
and the regulations thereunder or that the continuation of these restrictions is
no longer reasonably necessary for the preservation of the Tax Benefits, which
determination shall be based upon an opinion of legal counsel or independent
public accountants to the Corporation.

         (j) The Corporation and the Board of Directors shall be fully protected
in relying in good faith upon the information, opinions, reports or statements
of the chief executive officer, the chief financial officer, or the chief
accounting officer of the Corporation or of the Corporation's legal counsel,
independent auditors, transfer agent, investment bankers, and other employees
and agents in making the determinations and findings contemplated by this
Article VIII, and neither the Corporation nor the Board of Directors shall be
responsible for any good faith errors made in connection therewith.


























                                       15

<PAGE>


                                    ARTICLE IX

                                    DURATION

            The duration of the Corporation shall be perpetual.

            SECOND: The Corporation's charter is not amended by these Articles
of Restatement. The provisions set forth in these Articles of Restatement are
all of the provisions of the Corporation's charter currently in effect.

            THIRD: The foregoing restatement has been unanimously approved by
the Board of Directors of the Corporation at a meeting of the Board of Directors
on July 17, 1997.

            FOURTH: The Corporation currently has 5 directors; the directors
currently in office are:

              William W. Cleverly
              Steven J. Hilton
              Alan D. Hamberlin
              Robert G. Sarver
              C. Timothy White

            FIFTH: The current address of the principal office of the
Corporation is c/o the Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202 and the Corporation's current resident agent is The
Corporation Trust Incorporated, whose address is 32 South Street, Baltimore,
Maryland 21202

            SIXTH: These Articles of Restatement do not increase the authorized
stock of the Corporation or the aggregate par value of such authorized stock.


            IN WITNESS WHEREOF, the Corporation has caused these Articles of
Restatement to be signed in its name and on its behalf by its President and
attested by its Secretary all as of September 22, 1997.


                                       16
<PAGE>
         The undersigned President acknowledges these Articles of Restatement to
be the corporate act of the Corporation and states that, to the best of his
knowledge, information and belief, the matters and facts set forth herein with
respect to the authorization and approval hereof are true in all material
respects and that this statement is made under penalties of perjury.

ATTEST:                                      MONTEREY HOMES CORPORATION

By:                                          By:
   ------------------------------               --------------------------------
   Larry W. Seay, Secretary                     Steven J. Hilton, President


                                       17





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>5
<FILENAME>p66729exv5.txt
<DESCRIPTION>EXHIBIT 5
<TEXT>
<PAGE>





                                                                       EXHIBIT 5

                    Venable, Baetjer, Howard & Civiletti, LLP
                            1201 New York Avenue, NW
                                   Suite 1000
                            Washington, DC 20005-3917



                                  June 21, 2002

Meritage Corporation
6613 North Scottsdale Rd., Suite 200
Scottsdale, Arizona 85250

         RE:  PUBLIC OFFERING OF COMMON STOCK OF MERITAGE CORPORATION
              PURSUANT TO A REGISTRATION STATEMENT ON FORM S-3 AND A
              PROSPECTUS SUPPLEMENT DATED JUNE 20, 2002

Ladies and Gentlemen:

         We have acted as special Maryland counsel for Meritage Corporation, a
Maryland corporation (the "Registrant"), in connection with the Registrant's
proposed public offering of 1,750,000 shares of its Common Stock , $0.01 par
value per share, subject to an option to offer an additional 262,500 shares of
Common Stock to cover over-allotments, if any (such offered shares and the
shares subject to the over-allotment option, the "Shares"), pursuant to a
Registration Statement filed on Form S-3 (Registration No. 333-87398) (the
"Registration Statement"). On June 21, 2002, the Registrant filed with the
Securities and Exchange Commission (the "Commission") a final prospectus
supplement (the "Prospectus Supplement") to the Prospectus dated May 14, 2002
included in the Registration Statement (the "Prospectus") with respect to the
Shares.

         In connection with this opinion, we have considered such questions of
law as we have deemed necessary as a basis for the opinion set forth below, and
we have examined or otherwise are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of the following:

         (i) the Registration Statement, including the Prospectus, and the
Prospectus Supplement, in substantially final form;

         (ii) a certificate, dated June 21, 2002, issued by the Maryland State
Department of Assessments and Taxation (the "SDAT") to the effect that the
Registrant is duly incorporated and existing under the laws of the State of
Maryland and is in good standing and duly authorized



<PAGE>


Meritage Corporation
June 21, 2002
Page 2


to transact business in the State of Maryland (upon which we have relied as to
those matters addressed therein);

         (iii) the Registrant's (a) Articles of Amendment and Restatement, as
filed with the SDAT on July 12, 1988, as certified by the SDAT on June 7, 2002,
(b) Articles of Amendment, as filed with the SDAT on April 12, 1990, as
certified by the SDAT on June 7, 2002, (c) Articles of Merger of Monterey Homes
Construction II, Inc. and Monterey Homes Arizona, II, Inc. into Homeplex
Mortgage Investments Corporation, as filed with the SDAT on December 31, 1996,
as certified by the SDAT on June 7, 2002, (d) Articles of Restatement, as filed
with the SDAT on September 24, 1997, as certified by the SDAT on June 5, 2002,
(e) Articles of Amendment, as filed with the SDAT on September 16, 1998, as
certified by the SDAT on June 5, 2002, and (f) Certificate of Correction, filed
with the SDAT on June 20, 2002, as certified by the SDAT on June 20, 2002
(collectively, the "Charter");

         (iv) the Bylaws of the Registrant as certified by the Secretary of the
Registrant on June 21, 2002; (the "Bylaws")

         (v) certain resolutions adopted by the Board of Directors of the
Registrant relating to the authorization and issuance of the Shares pursuant to
the Registration Statement and the Prospectus Supplement, as certified by the
Secretary of the Registrant on June 21, 2002;

         (vi) a certificate of the Secretary of the Registrant dated June 21,
2002, relating to such resolutions and certain other matters; and

         (vii) such other documents as we have deemed necessary or appropriate
as a basis for the opinion set forth below.

         In our examination, we have assumed, without independent verification,
the genuineness of all signatures, the legal capacity of all natural persons,
the accuracy, completeness and authenticity of all documents submitted to us as
originals, the conformity with the original documents of all documents submitted
to us as certified, facsimile, photostatic or reproduced copies and the
authenticity, accuracy and completeness of the originals of such copies. As to
any facts material to this opinion that we did not independently establish or
verify, we have relied upon statements and representations of officers and other
representatives of the Registrant and others.

         Based upon the foregoing, we are of the opinion that the Shares have
been duly authorized for issuance and that when sold, issued, paid for and
delivered in the manner


<PAGE>


Meritage Corporation
June 21, 2002
Page 2

contemplated by the Prospectus Supplement, the Shares will be validly issued,
fully paid and nonassessable.

         This letter is strictly limited to the matters expressly set forth
herein and no statements or opinions should be inferred beyond such matters.
This opinion is limited to the corporate law of the State of Maryland governing
matters such as the authorization and issuance of stock (without regard to the
principles of conflicts of laws thereof) and is based upon and limited to such
laws in effect as of the date hereof. We assume no obligation to update the
opinion set forth herein. This opinion does not extend to the securities or
"blue sky" laws of Maryland or any other state, to the federal securities laws
or to any other laws.

         We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Form 8-K filed with the Commission this day by the Registrant, the incorporation
by reference of this opinion into the Registration Statement and the reference
to our firm under the caption "Legal Matters" in the Prospectus Supplement
comprising part of the Registration Statement. In giving such consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act or the Rules and Regulations of the Commission
thereunder. This opinion is intended solely for use in connection with the
transactions described above. It may not be relied upon for any other purpose
without our prior written consent.

                                                 Very truly yours,

                                                 /s/ Venable, Baetjer, Howard
                                                     and Civiletti, LLP
                                                 ------------------------------






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>6
<FILENAME>p66729exv10w1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
<PAGE>
                          EIGHTH MODIFICATION AGREEMENT            EXHIBIT 10.1

         This EIGHTH MODIFICATION AGREEMENT (this "Agreement") is made and
entered into as of May 31, 2002, by and between LEGACY/MONTEREY HOMES L.P., an
Arizona limited partnership, ) HANCOCK-MTH COMMUNITIES, INC., an Arizona
corporation and HANCOCK-MTH BUILDERS, INC., an Arizona corporation, jointly and
severally (collectively, "Borrower"), and GUARANTY BANK, a federal savings bank
("Lender").

                              W I T N E S S E T H:

         WHEREAS, pursuant to a certain Master Loan Agreement (the "Loan
Agreement") dated as of January 31, 1993, between Lender and Borrower, Lender
made a loan (the "Loan") to Borrower, evidenced by a certain Revolving
Promissory Note (the "Note") dated as of January 31, 1993, payable to Lender in
the stated principal amount of SEVENTY-FIVE MILLION AND NO/100 DOLLARS
($75,000,000.00), with interest and principal payable as set forth therein; and

         WHEREAS, to secure the Note and Loan, Master Form Deed(s) of Trust
(With Security Agreement and Assignment of Rents and Leases) (hereinafter
collectively referred to as the "Master Deeds of Trust," whether one or more),
which Master Deeds of Trust have been recorded in certain counties in the State
of Texas as more particularly described on Exhibit A attached hereto; and which
Master Deeds of Trust are incorporated by reference pursuant to the terms and
provisions of certain Deeds of Trust Incorporating by Reference a Master Form
Deed of Trust (With Security Agreement and Assignment of Rents and Leases)
(hereafter collectively referred to as the "Supplemental Deeds of Trust,"
whether one or more) recorded in such counties and encumbering certain real and
other property (the "Property") described in such Supplemental Deeds of Trust
(such Master Deeds of Trust and Supplemental Deeds of Trust hereafter
collectively referred to as the "Deeds of Trust," whether one or more); and

         WHEREAS, the Deeds of Trust were modified pursuant to a Modification
Agreement (the "First Modification"), and recorded in various counties in Texas,
which First Modification modified certain terms and provisions of the Loan as
set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Second
Modification Agreement (the "Second Modification") dated as of May 19, 1998, and
recorded in various counties in Texas, which Second Modification modified
certain terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Third
Modification Agreement (the "Third Modification") dated as of March 30, 1999,
and recorded in various counties in Texas, which Third Modification modified
certain terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Fourth
Modification Agreement (the "Fourth Modification") dated as of July 31, 1999,
and recorded in various counties in Texas, which Fourth Modification modified
certain terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Fifth
Modification Agreement (the "Fifth Modification") dated March 24, 2000, and
recorded in various counties in Texas, which Fifth Modification modified certain
terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Sixth
Modification Agreement (the "Sixth Modification") dated as of July 31, 2000, and
recorded in various counties in Texas, which Sixth Modification modified certain
terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Deeds of Trust were further pursuant to a Seventh
Modification Agreement (the "Seventh Modification") dated as of
_________________, 2001, and recorded in various counties in Texas, which
Seventh Modification modified certain terms and provisions of the Loan as set
forth therein; and

EIGHTH MODIFICATION AGREEMENT -- Page 1
<PAGE>
         WHEREAS, the Deeds of Trust were further pursuant to a Ratification and
Assumption Agreement (the "Ratification Agreement") dated as of December _____,
2001, and recorded in various counties in Texas, which Ratification Agreement
modified certain terms and provisions of the Loan as set forth therein; and

         WHEREAS, the Note and the Loan are guaranteed pursuant to that certain
Guaranty Agreement dated as of June 30, 1997 (the "Guaranty"), executed by
MTH-Texas GP, Inc., an Arizona corporation, MTH-Texas LP, Inc., an Arizona
corporation, and Meritage Corporation, a Maryland corporation ("Guarantor,"
whether one or more); and

         WHEREAS, the Loan Agreement, the Note, the First Modification, the
Second Modification, the Third Modification, the Fourth Modification, the Fifth
Modification, the Sixth Modification, the Seventh Modification, the Ratification
Agreement, the Deeds of Trust and all other documents evidencing and/or securing
the Loan are hereinafter collectively called the "Loan Instruments"; and

         WHEREAS, Lender, the owner and holder of the Note and the Deeds of
Trust and all rights and titles evidenced thereby, and Borrower, the record
owner of the Property and being liable for the payment of the Note and Loan,
desire to modify the Loan Instruments as herein provided.

         NOW, THEREFORE, in consideration of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:

         1. The stated maturity date of the Note is hereby extended to and
including May 31, 2003, when the entire unpaid principal balance of the Note,
together with all accrued and unpaid interest shall be due and payable;
provided, however, such date may be extended as set forth in the Loan Agreement.

         2. Borrower shall execute and deliver to Lender a letter agreement (in
form and substance satisfactory to Lender in its sole discretion) (the "Letter
Agreement") dated as of the date hereof amending certain other terms and
provisions of the Loan Instruments. (Hereafter, this Agreement and the Letter
Agreement shall be included in the defined term "Loan Instruments.")

         3. Borrower and Lender acknowledge and agree that Section 3.2 of the
Deeds of Trust shall be deleted and replaced with the following:

                  3.2 Notice of Changes: Grantor shall not change (a) the
         location of its place of business or its chief executive office if it
         has more than one place of business, (b) the location of any of the
         Mortgaged Property, (c) Grantor's name or business structure, including
         Grantor's state of organization or registration, without in each
         instance the prior written consent of Beneficiary, which consent shall
         not be unreasonably withheld, delayed or conditioned. Beneficiary's
         consent will, however, be conditioned upon, among other things, the
         execution and delivery of additional financing statements, security
         agreements and other instruments which may be necessary to effectively
         evidence or perfect Beneficiary's security interest in the Mortgaged
         Property as a result of such changes. Grantor's principal place of
         business and its chief executive office as of the date hereof are
         located at the address set forth in the initial paragraph of this Deed
         of Trust.

         4. Borrower and Lender acknowledge and agree that the following shall
be added as new Section 6.17 to the Deeds of Trust:

                  Section 6.17 Prohibited Person Compliance:

                  (a) Grantor warrants, represents and covenants that neither
         Grantor nor any of its affiliated entities is or will be an entity or
         person (i) that is subject to Executive Order 13224 issued on September
         24, 2001 ("EO13224"), (ii) whose name appears on the United States
         Treasury Department's Office of Foreign Assets Control ("OFAC") most
         current list of "Specifically Designated National


EIGHTH MODIFICATION AGREEMENT -- Page 2
<PAGE>
         and Blocked Persons," (iii) who commits, threatens to commit or
         supports "terrorism," as that term is defined in EO13224, or (iv) who
         is otherwise affiliated with any entity or person listed above (any and
         all parties or persons described in subparts [i] - [iv] above are
         herein referred to as a "Prohibited Person").

                  (b) Grantor covenants and agrees that neither Grantor nor any
         of its affiliated entities will conduct any business, nor engage in any
         transaction or dealing, with any Prohibited Person, including, but not
         limited to, the making or receiving of any contribution of funds,
         goods, or services, to or for the benefit of a Prohibited Person.

                  (c) In addition to any other indemnification provided herein,
         Grantor hereby indemnifies and holds Beneficiary harmless from all
         liability, damage or expense imposed on or incurred by Beneficiary from
         any claims resulting from Grantor conducting any business, or engaging
         in any transaction or dealing, with any Prohibited Person (including,
         without limitation, the making or receiving of any contribution of
         funds, goods or services, to or for the benefit of a Prohibited
         Person).

                  Grantor covenants and agrees to deliver (from time to time) to
         Beneficiary any such certification or other evidence as may be
         requested by Beneficiary in its sole and absolute discretion,
         confirming that (i) Grantor is not a Prohibited Person, and (ii)
         Grantor has not engaged in any business, transaction or dealings with a
         Prohibited Person, including, but not limited to, the making or
         receiving of any contribution of funds, goods, or services, to or for
         the benefit of a Prohibited Person.

         5. Borrower and Lender acknowledge and agree that Sections 9.1, 9.2,
9.3 and 9.4 of the Deeds of Trust shall be deleted and replaced with the
following:

                  Section 9.1 Grantor's Warranties. Grantor hereby represents
         and warrants that, to the best of Grantor's knowledge, no hazardous
         waste (as defined in 42 U.S.C. Section 6901, et seq.) or hazardous
         substance (as defined in 42 U.S.C. Section 9601, et seq.), health
         hazards (including, without limitation, mold), other prohibited or
         harmful materials (together "Hazardous Materials") are now located on
         the Mortgaged Property and that neither Grantor nor, to the best of
         Grantor's knowledge, any other person has ever caused or permitted any
         Hazardous Materials to be placed, held, located or disposed of on,
         under or at the Mortgaged Property or any part thereof. To the best of
         Grantor's knowledge, no part of the Mortgaged Property has ever been
         used as a manufacturing, storage or dump site for Hazardous Materials,
         nor is any part of the Mortgaged Property affected by any Hazardous
         Materials ("Hazardous Materials Contamination"). To the best of
         Grantor's knowledge and belief, no property adjoining the Mortgaged
         Property has ever been used as a manufacturing, storage or dump site
         for Hazardous Materials nor is any other property adjoining the
         Mortgaged Property affected by Hazardous Materials Contamination.

                  Section 9.2 Grantor's Covenants. Grantor agrees to (a) give
         notice to Beneficiary immediately upon Grantor's acquiring knowledge of
         the presence of any Hazardous Materials on the Mortgaged Property or of
         any Hazardous Materials Contamination with a full description thereof;
         (b) promptly comply with any court order or other governmental
         requirement requiring the removal, treatment or disposal of such
         Hazardous Materials or Hazardous Materials Contamination and provide
         Beneficiary with satisfactory evidence of such compliance; and (c)
         provide Beneficiary, within thirty (30) days after demand by
         Beneficiary, with a bond, letter of credit or similar financial
         assurance evidencing to Beneficiary's satisfaction that the necessary
         funds are available to pay the cost of removing, treating and disposing
         of such Hazardous Materials or Hazardous Materials Contamination and
         discharging any assessments which may be established on the Mortgaged
         Property as a result thereof.

                  Section 9.3 Indemnification. Grantor shall defend, indemnify
         and hold harmless Beneficiary and Trustee from any and all liabilities
         (including strict

EIGHTH MODIFICATION AGREEMENT -- Page 3
<PAGE>
         liability), actions, demands, penalties, losses, costs or expenses
         (including, without limitation, reasonable attorneys' fees and remedial
         costs), suits, costs of any settlement or judgment and claims of any
         and every kind whatsoever which may now or in the future (whether
         before or after the release of this Deed of Trust) be paid, incurred or
         suffered by or asserted against, Beneficiary or Trustee by any person
         or entity or governmental agency for, with respect to, or as a direct
         or indirect result of, the presence on or under, or the escape,
         seepage, leakage, spillage, discharge, emission, discharging or release
         from the Mortgaged Property of any Hazardous Materials or any Hazardous
         Materials Contamination or which arise out of or result from the
         environmental condition of the Mortgaged Property or the applicability
         of any court order or governmental requirement relating to Hazardous
         Materials, regardless of whether or not caused by or within the control
         of Beneficiary or Trustee. The representations, covenants and
         warranties contained in this Article 9 shall survive the foreclosure,
         deed-in-lieu of foreclosure and/or release of this Deed of Trust.

                  Section 9.4 Beneficiary's Right to Remove Hazardous Materials.
         Beneficiary shall have the right (but not the obligation), without in
         any way limiting Beneficiary's other rights and remedies under this
         Deed of Trust, to enter onto the Mortgaged Property or to take such
         other actions as it deems necessary or advisable to clean up, remove,
         resolve or minimize the impact of, or otherwise deal with (together
         with restoring the Mortgaged Property), any Hazardous Materials or
         Hazardous Materials Contamination on the Mortgaged Property following
         receipt of any notice from any person or entity asserting the existence
         of any Hazardous Materials or Hazardous Materials Contamination
         pertaining to the Mortgaged Property. All reasonable costs and expenses
         paid or incurred by Beneficiary in the exercise of any such rights
         shall be secured by this Deed of Trust and shall be payable by Grantor
         to Beneficiary upon demand.

         6. Borrower acknowledges and agrees, that as an accommodation to
Borrower, Exhibit A hereto (which exhibit describes the recording information of
the Master Deeds of Trust) shall be attached to this Agreement (and to any and
all other documents which may require the attachment of a description of the
recording information of the Master Deeds of Trust) after Borrower's execution
of same. Accordingly, Borrower hereby authorizes and directs Lender to attach
such Exhibit A to this Agreement.

         7. Notwithstanding anything to the contrary in any of the Loan
Instruments, Borrower acknowledges and agrees, that to the extent that Lender is
relying on Chapter 303 of the Texas Finance Code to determine the Maximum Lawful
Rate (hereafter defined) payable on the Note and/or the Related Indebtedness
(hereafter defined) Lender will utilize the weekly ceiling from time to time in
effect as provided in such Chapter 303, as amended. To the extent United States
federal law permits Lender to contract for, charge, take, receive or reserve a
greater amount of interest than under Texas law, Lender will rely on United
States federal law instead of such Chapter 303 for the purpose of determining
the Maximum Lawful Rate. Additionally to the extent permitted by applicable law
now or hereafter in effect, Lender may, at its option and from time to time,
utilize any other method of establishing the Maximum Lawful Rate under such
Chapter 303 or under other applicable law by giving notice, if required, to
Borrower as provided by applicable law now or hereafter in effect. As used
herein, the term "Maximum Lawful Rate" shall mean the maximum lawful rate of
interest which may be contracted for, charged, taken, received or reserved by
Lender in accordance with the applicable laws of the State of Texas (or
applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as hereafter defined) made in
connection with the transaction evidenced by the Note and the other Loan
Instruments. As used herein, the term "Charges" shall mean all fees, charges
and/or any other things of value, if any, contracted for, charged, received,
taken or reserved by Lender in connection with the transactions relating to the
Note and the other Loan Instruments, which are treated as interest under
applicable law. As used herein, the term "Related Indebtedness" shall mean any
and all debt paid or payable by Borrower to Lender pursuant to the Loan
Instruments or any other communication or writing by or between Borrower and
Lender related to the transaction or transactions that are the subject mater of
the Loan Instruments, except such debt which has been paid or is payable by
Borrower to Lender.

         8. Notwithstanding anything to the contrary contained in the Deeds of
Trust or other

EIGHTH MODIFICATION AGREEMENT -- Page 4
<PAGE>
Loan Instruments, with respect to any amendment to the Master Deeds of Trust,
the following terms and provisions shall apply:

         With respect to any amendment or modification of the Master Deeds of
         Trust now or hereafter executed by Borrower (or any future owner of the
         Property if different from Borrower) and duly recorded in the
         appropriate official public records, Borrower acknowledges and agrees
         that such amendment or modification of the Master Deeds of Trust shall
         constitute an amendment or modification to the terms and provisions of
         any such Supplemental Deeds of Trust (and shall be incorporated into
         any such Supplemental Deeds of Trust and made a part thereof for all
         purposes, as though such amendment or modification of the Master Deeds
         of Trust specifically referred to such Supplemental Deeds of Trust)
         without the necessity of any specific reference in such amendment or
         modification to any such Supplemental Deeds of Trust; and no such
         amendment or modification of the Master Deeds of Trust shall impair the
         obligations of Borrower under any such Supplemental Deeds of Trust or
         any other of the Loan Instruments.

         9. Borrower hereby expressly promises to pay to the order of Lender,
the principal amount of the Note (as modified and extended) and all accrued and
unpaid interest now or hereafter to become due and payable under the Note, and
Borrower hereby expressly promises to perform all of the obligations of Borrower
under the Loan Instruments (as modified and extended).

         10. The liens of the Deeds of Trust are hereby acknowledged by Borrower
to be good, valid and subsisting liens, and such liens are hereby renewed and
extended so as to secure the payment of the Note and Loan (as modified and
extended).

         11. Borrower hereby represents and warrants to Lender that (a) Borrower
is the sole legal and beneficial owner of the Property; (b) Borrower has the
full power and authority to make the agreements contained in this Agreement
without joinder or consent of any other party; (c) the execution, delivery and
performance of this Agreement will not contravene or constitute an event which
itself or which with the passing of time or giving of notice or both would
constitute a default under any deed of trust, loan agreement, indenture or other
agreement to which Borrower or Guarantor is a party or by which Borrower or any
of its property is bound; and (d) there exists no default under the Loan
Instruments (as modified). BORROWER HEREBY AGREES TO INDEMNIFY AND HOLD LENDER
HARMLESS AGAINST ANY LOSS, CLAIM, DAMAGE, LIABILITY OR EXPENSE (INCLUDING
WITHOUT LIMITATION, ATTORNEYS' FEES) INCURRED AS A RESULT OF ANY REPRESENTATION
OR WARRANTY MADE BY BORROWER HEREIN PROVING TO BE UNTRUE IN ANY MATERIAL
RESPECT.

         12. The terms and conditions hereof may not be modified, amended,
altered or otherwise affected except by instrument in writing executed by Lender
and Borrower.

         13. All Loan Instruments are hereby amended and modified in a manner
consistent with the modifications, terms and/or provisions contained herein.
Except as expressly modified hereby, the terms and conditions of the Loan
Instruments are and shall remain in full force and effect.

         14. Borrower agrees to pay to Lender, contemporaneously with the
execution and delivery hereof, all costs and expenses incurred in connection
with this transaction, title insurance endorsement premiums, reasonable fees of
Lender's counsel and recording fees.

         15. Borrower hereby agrees to execute and deliver to Lender such
further documents and instruments evidencing or pertaining to the Loan, as
modified and increased hereby, as may be reasonably requested by Lender from
time to time so as to evidence the terms and conditions hereof.

             [The balance of this page is intentionally left blank.]

EIGHTH MODIFICATION AGREEMENT -- Page 5
<PAGE>
         EXECUTED on the date(s) set forth in the acknowledgment(s) below to be
EFFECTIVE as of the date first above written.

                                     BORROWER:

                                     LEGACY/MONTEREY HOMES L.P.,
                                     an Arizona limited partnership

                                     BY:      MTH-TEXAS GP, INC.,
                                              an Arizona corporation,
                                              General Partner


                                              By:
                                                   ----------------------------
                                                   Name:
                                                          ---------------------
                                                    Title:
                                                          ---------------------

                                     HANCOCK-MTH COMMUNITIES, INC.,
                                     an Arizona corporation


                                     By:
                                          -------------------------------------
                                          Name:
                                                 ------------------------------
                                           Title:
                                                 ------------------------------


                                     HANCOCK-MTH BUILDERS, INC.,
                                     an Arizona corporation


                                     By:
                                          -------------------------------------
                                          Name:
                                                 ------------------------------
                                           Title:
                                                 ------------------------------



                                     LENDER:

                                     GUARANTY BANK
                                     a federal savings bank


                                     By:
                                          -------------------------------------
                                          Name:
                                                 ------------------------------
                                           Title:
                                                 ------------------------------


EIGHTH MODIFICATION AGREEMENT -- Page 6
<PAGE>
STATE OF _____________   )
                         )
COUNTY OF ___________    )

         This instrument was ACKNOWLEDGED before me on _________________, 2002,
by _________________________________________, _______________________________ of
MTH-TEXAS GP, INC., an Arizona corporation, as General Partner of
LEGACY/MONTEREY HOMES L.P., an Arizona limited partnership, on behalf of said
limited partnership.


[S E A L]                                     _________________________________
                                              Notary Public

My Commission Expires:
                                              _________________________________
_____________________                         Printed Name of Notary Public



STATE OF _____________  )
                        )
COUNTY OF ___________   )

         This instrument was ACKNOWLEDGED before me on _________________, 2002,
by _________________________________________, _______________________________ of
HANCOCK-MTH COMMUNITIES, INC., an Arizona corporation, on behalf of said
corporation.



[S E A L]                                     _________________________________
                                              Notary Public

My Commission Expires:
                                              _________________________________
_____________________                         Printed Name of Notary Public



STATE OF _____________  )
                        )
COUNTY OF ___________   )


         This instrument was ACKNOWLEDGED before me on _________________, 2002,
by _________________________________________, _______________________________ of
HANCOCK-MTH BUILDERS, INC., an Arizona corporation, on behalf of said
corporation.



[S E A L]                                     _________________________________
                                              Notary Public

My Commission Expires:
                                              _________________________________
_____________________                         Printed Name of Notary Public


EIGHTH MODIFICATION AGREEMENT -- Page 7
<PAGE>
STATE OF _____________  )
                        )
COUNTY OF ___________   )
         This instrument was acknowledged before me on the _____ day of
________________, 2002, by _________________________________,
___________________ of GUARANTY BANK, a federal savings bank, on behalf of said
federal savings bank.


                                                _______________________________
                                                Notary Public in and for the
                                                above county and state

My Commission Expires:
                                                _______________________________
_____________________                           Printed Name of Notary Public






EIGHTH MODIFICATION AGREEMENT -- Page 8
<PAGE>
                              CONSENT OF GUARANTOR

         Each of the undersigned, as a guarantor ("Guarantor," whether one or
more) of the loan (the "Loan"), evidenced by the Note and secured by the Deeds
of Trust described in the foregoing Eighth Modification Agreement (the
"Agreement") to which this Consent is attached, hereby acknowledge and consent
(jointly and severally) to the terms of the Agreement and agree (jointly and
severally) that the execution and delivery of the Agreement will in no way
change or modify Guarantor's respective obligations under their respective
Guaranty (as defined in the Agreement); and each Guarantor acknowledges and
agrees (jointly and severally) that the Indebtedness (as defined in the
respective instruments comprising the Guaranty) includes the Loan, together with
any and all other Indebtedness now or at any time hereafter owing by Guarantor
to Lender; and each Guarantor (jointly and severally) hereby unconditionally and
absolutely guarantees to Lender the payment when due of such Indebtedness, and
hereby acknowledge and agree that their respective Guaranty is in full force and
effect, and that there are no claims, counterclaims, offsets or defenses to
their respective Guaranty; and each Guarantor acknowledges and consents (jointly
and severally) to the terms of any and all prior modifications to the terms of
the Loan (including, without limitation, any and all extensions of the term
thereof and increases in the principal thereof prior to the date hereof, if
any).

         EXECUTED on the date(s) set forth in the acknowledgment(s) below to be
EFFECTIVE as of the 31st day of May, 2002.

                                        GUARANTOR:

                                        MERITAGE CORPORATION,
                                        a Maryland corporation



                                        By:
                                           -----------------------------------
                                             Name:
                                                  ----------------------------
                                             Title:
                                                   ---------------------------


                                        MTH-TEXAS GP, INC.,
                                        an Arizona corporation



                                        By:
                                           -----------------------------------
                                             Name:
                                                  ----------------------------
                                             Title:
                                                   ---------------------------


                                        MTH-TEXAS LP, INC.,
                                        an Arizona corporation

                                        By:
                                           -----------------------------------
                                             Name:
                                                  ----------------------------
                                             Title:
                                                   ---------------------------


EIGHTH MODIFICATION AGREEMENT - Page 9
<PAGE>
STATE OF _____________  ) (section symbol)
                        ) (section symbol)
COUNTY OF ___________   ) (section symbol)
         This instrument was ACKNOWLEDGED before me on _________________, 2002,
by _________________________________________, _______________________________ of
MERITAGE CORPORATION, a Maryland corporation, on behalf of said corporation.


[S E A L]                                     _________________________________
                                              Notary Public

My Commission Expires:
                                              _________________________________
_____________________                         Printed Name of Notary Public



STATE OF _____________  ) (section symbol)
                        ) (section symbol)
COUNTY OF ___________   ) (section symbol)

         This instrument was ACKNOWLEDGED before me on _________________, 2002,
by _________________________________________, _______________________________ of
MTH-TEXAS GP, INC., an Arizona corporation, on behalf of said corporation.


[S E A L]                                     _________________________________
                                              Notary Public

My Commission Expires:
                                              _________________________________
_____________________                         Printed Name of Notary Public


EIGHTH MODIFICATION AGREEMENT - Page 10

<PAGE>
                               As of May 31, 2002




Guaranty Bank
8333 Douglas Avenue
Dallas, Texas 75225

         Re:      Modification of an existing $75,000,000.00 guidance line from
                  Guaranty Bank, a federal savings bank ("Lender") to
                  Legacy/Monterey Homes L.P., an Arizona corporation,
                  Hancock-MTH Communities, Inc., an Arizona corporation and
                  Hancock-MTH Builders, Inc., an Arizona corporation, jointly
                  and severally (collectively "Borrower"); such loan and other
                  indebtedness being guaranteed by Meritage Corporation, a
                  Maryland corporation, MTH-Texas GP, Inc., an Arizona
                  corporation and MTH-Texas LP, Inc., an Arizona corporation
                  (collectively referred to as "Guarantor")

Gentlemen:

         Reference is made to that certain Master Loan Agreement dated as of
January 31, 1993 (and all amendments thereto, if any) (the "Loan Agreement")
between Lender and Borrower governing a $75,000,000.00 loan (as increased) (the
"Loan") for the acquisition and/or refinancing of residential lots located in
certain counties in the States of Texas and Arizona as described therein, and
the construction of single-family residences thereon. Unless otherwise expressly
defined herein, each term used herein with its initial letter capitalized shall
have the meaning given to such term in the Loan Agreement. As used in this
letter agreement, the term "Loan Instruments" shall mean and include (i) the
"Loan Instruments" as defined in the Loan Agreement, (ii) the modification
agreements dated as of even date herewith, executed by and between the parties
hereto, and (iii) this letter agreement and all other documents executed in
conjunction herewith (and all amendments thereto, if any).

         Borrower and Lender desire to amend and modify certain terms and
provisions of the Loan and the Loan Instruments as follows:

         1. The stated maturity date of the Note is hereby extended to and
including May 31, 2003, when the entire unpaid principal balance of the Note,
together with all accrued and unpaid interest shall be due and payable;
provided, however, such date may be extended as set forth in Paragraph 9 of the
Loan Agreement (as amended hereby).

         2. Exhibit A to the Loan Agreement is hereby modified by deleting such
exhibit in its entirety and replacing it with Exhibit A attached hereto.
<PAGE>
Guaranty Bank
As of May 31, 2002
Page 2


         3. All Loan Instruments hereby are amended and modified in a manner
consistent with the modifications, terms and/or provisions contained herein.
Except as modified hereby, all the terms, provisions and conditions of the Loan
Instruments shall remain in full force and effect.

         4. This letter agreement constitutes the "Letter Agreement" referred to
in the Sixth Modification Agreement of even date herewith executed by and
between the parties hereto.

         5. The terms and provisions of this letter agreement may not be
modified, amended, altered or otherwise affected except by instrument in writing
executed by Lender and Borrower.

         6. Each Guarantor by its execution hereof agree to the amendments and
modifications to the Loan Instruments set forth herein and in the prior
amendments and modifications to the Loan Instruments and agree that all of such
modifications do not and will not waive, release or in any manner modify either
Guarantor's obligations and liabilities under and pursuant to the Guaranty.

             (The balance of this page is intentionally left blank.)
<PAGE>
Guaranty Bank
As of May 31, 2002
Page 3

         If this letter agreement correctly sets forth our understanding of the
subject matter contained herein, please indicate this by executing this letter
agreement in the space furnished below and then return a fully-executed copy to
the undersigned.

                                    Very truly yours,

                                    BORROWER:

                                    LEGACY/MONTEREY HOMES L.P.,
                                    an Arizona limited partnership

                                    BY:      MTH-TEXAS GP, INC.,
                             an Arizona corporation,
                                 General Partner


                                             By:
                                                 -------------------------------
                                                 Name:
                                                       -------------------------
                                     Title:
                                                        ------------------------

                                    HANCOCK-MTH COMMUNITIES, INC.,
                                    an Arizona corporation


                                    By:
                                         ---------------------------------------
                                         Name:
                                                --------------------------------
                                          Title:
                                                --------------------------------


                                    HANCOCK-MTH BUILDERS, INC.,
                                    an Arizona corporation


                                    By:
                                         ---------------------------------------
                                         Name:
                                                --------------------------------
                                          Title:
                                                --------------------------------
<PAGE>
Guaranty Bank
As of May 31, 2002
Page 4

                                    GUARANTOR:

                                    MERITAGE CORPORATION,
                                    a Maryland corporation


                                    By:
                                             -----------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------


                                    MTH-TEXAS GP, INC.,
                                    an Arizona corporation,


                                    By:
                                        ----------------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------


                                    MTH-TEXAS LP, INC.,
                                    an Arizona corporation


                                    By:
                                         ---------------------------------------
                                             Name:
                                                   -----------------------------
                                             Title:
                                                    ----------------------------
<PAGE>
Guaranty Bank
As of May 31, 2002
Page 5



ACCEPTED AND AGREED TO:

LENDER:

GUARANTY BANK,
a federal savings bank


By:
    ----------------------------------------
    Name:
          ----------------------------------
    Title:
           ---------------------------------
<PAGE>
                                    EXHIBIT A

                                TO LOAN AGREEMENT

1.       Introductory Paragraph. RESIDENCE AND INVENTORY LOT LIMITATIONS. At any
         given time, Residences and Inventory Lots financed under the Loan shall
         be limited to the following numbers, unless modified by Lender in
         writing:

         Total Residences: Nine Hundred Fifty  (950).
         Specs:            One Hundred Sixty (160).
         Models:           Seventy (70).
         Inventory Lots:   One Thousand Four Hundred (1,400).

         Borrower may increase the number of Specs allowed above by the same
         number by which Borrower is short of Models allowed above. Borrower
         covenants and agrees not to allow, and is prohibited from allowing, any
         more than fifteen (15) Specs, four (4) Models or two hundred (200)
         Inventory Lots to exist in any Approved Subdivision (as hereinafter
         defined).

         The outstanding aggregate amount of the Loan Allocations for all Specs
         and Models at any time shall never exceed $31,250,000.00.

         The outstanding aggregate amount of the Loan Allocations for all
         Inventory Lots at any time shall never exceed $22,500,000.00.

         The term "Specs" means a Residence which is not a Model and is not
         Under Contract.

         The term "Model" means a Residence specifically utilized for the
         purposes of marketing other residential products.

         The term "Under Contract" shall mean Residences under written contract
         to sell to bona fide third parties unrelated to Borrower, having no
         contingency or any other conditions not reasonably susceptible to being
         satisfied, providing for earnest money deposits of at least $2,000.00,
         and for which Lender has received preliminary loan approval from a bona
         fide residential permanent lender.

         The term "Inventory Residence" means any Residence which is not a
         Model.

2.       Introductory Paragraph. APPROVED SUBDIVISIONS. The following
         subdivisions and any additional subdivisions approved in writing by
         Lender (the "Approved Subdivisions") are approved by Lender for the
         Residences and Inventory Lots:

<TABLE>
<CAPTION>
         Subdivision                                 County
         -----------                                 ------
<S>                                                  <C>
         Auburn Ridge - Pinelakes                    Harris
         Bethany Ridge                               Collin
         Candle Meadow                               Dallas
         Canyon Gate at The Brazos                   Fort Bend
         Canyon Gate at Cinco Ranch                  Fort Bend
         Cypress Mills                               Harris
         Cypress Point                               Denton
         Parks at Deer Creek                         Tarrant
         El Dorado Heights                           Collin
         Forest Creek                                Williamson
         Forest Oaks                                 Denton
         Hillcrest Estates                           Collin
         Indian Pointe Estates                       Dallas
         Lakeside Village Estates                    Dallas
         Legend Bend                                 Denton
         Legend Crest                                Collin
         McCreary Estates                            Tarrant
         Parkwood Hills                              Tarrant
</TABLE>


EXHIBIT A, Page 1
<PAGE>
<TABLE>
<S>                                                  <C>
         Pine Lakes                                  Harris
         Plum Creek                                  Hays
         Ryan Ranch                                  Denton
         Springbrook Glen                            Williamson
         Spring Meadow                               Collin
         Stone Gate                                  Tarrant
         Stone Meadow                                Tarrant
         Village at Western Oaks                     Travis
         Westchester Square                          Dallas
         Westwood Shores                             Dallas
         Wimbledon Champions                         Harris
         Winding Hollow                              Dallas
         Windy Hills Farm                            Collin
</TABLE>

3.       Introductory Paragraph. APPROVED PRICE RANGE. The Residences shall be
         in the $70,000.00 to $400,000.00 price range; provided, however,
         Residences in any Approved Subdivision in the Austin, Texas
         metropolitan area may have a $70,000.00 to $900,000.00 price range.

4.       Paragraph 1(c). GUARANTOR. Guarantor of the Loan shall be: Meritage
         Corporation, a Maryland corporation; MTH-Texas G.P., Inc., an Arizona
         corporation; and MTH-Texas L.P., Inc., an Arizona corporation.

5.       Paragraph 2(h).  LOAN FINANCE CHARGE.   None.

6.       Paragraph 2(k) and 6(g). INSPECTION FEE. An inspection fee of $30.00
         per Residence shall be paid to Lender on the day the Mortgage
         pertaining to such Residence is recorded in the Real Property Records.

7.       Paragraph 4(c). LOAN RATIOS. With respect to Residences Under Contract,
         the Loan Allocation shall not exceed the lesser of (1) one hundred
         percent (100%) of the direct costs of a Property, as determined by
         Lender or, (2) eighty percent (80%) of the lowest of the values as
         provided in Paragraph 4(c) (i), (ii) and (iii) of this Loan Agreement.

         With respect to Specs, Models and Inventory Lots, the Loan Allocation
         shall not exceed the lesser of (1) one hundred percent (100%) of the
         direct costs of a Property, as determined by Lender or, (2)
         seventy-five percent (75%) of the lowest of the values as provided in
         Paragraph 4(c) (i), (ii) and (iii) of this Loan Agreement.

8.       Paragraph 6(q). OTHER ENTITIES. The Mortgages shall additionally secure
         all other indebtedness now or hereafter owed by the following entities
         to Lender: None.

9.       Paragraph 6(s). REQUIRED RELEASES. Borrower shall cause: (a) Inventory
         Residences to be released from a Mortgage nine (9) months from the day
         such Mortgage is recorded in the Real Property Records, (b) Models to
         be released from a Mortgage twenty-four (24) months from the day such
         Mortgage is recorded in the Real Property Records, and (c) Inventory
         Lots to be released from a Mortgage twelve (12) months from the day
         such Mortgage is recorded in the Real Property Records; provided,
         however, if no default then exists under any Loan Instruments, Lender
         may, at its option, extend the Required Release Date for periods of six
         (6) months (the "Extended Release Date"); provided, such Extended
         Release Date shall in no event go beyond the Stated Maturity Date (as
         hereinafter defined) or the Extended Maturity Date (as hereinafter
         defined), if applicable.

10.      Paragraph 7. REQUIRED PRINCIPAL REDUCTIONS. Prior to the date that
         Lender gives Borrower the notice described in Paragraph 4(f) above, the
         following shall apply: in the event a Property has been granted an
         Extended Release Date (as provided in Paragraph 9 of this Exhibit A)
         and a Mortgage remains covering such Property beyond the following
         periods from the date such Mortgage is recorded, then Borrower shall
         make a principal payment of the Note in an amount equal to ten percent
         (10%) of the Loan Allocation with respect to such Property (and the
         Loan Allocation for such Property shall be reduced by the same amount),
         as determined by Lender:


EXHIBIT A, - Page 2
<PAGE>
         Inventory Residences:      Fifteen (15) months.
         Models:                    Twenty-four (24) months.
         Inventory Lots:            Twelve (12) months.

         From and after the date that Lender gives Borrower the notice described
         in Paragraph 4(f) of the Loan Agreement, the following shall apply: in
         the event a Property has been granted an Extended Release Date, as
         provided in Paragraph 9 of this Exhibit A, Borrower shall make a
         principal payment on the Note of ten percent (10%) of that portion of
         the Loan advanced by Lender for such Property, within the following
         periods from the date a Mortgage covering such Property is recorded in
         the Real Property Records:

         Inventory Residences:      Fifteen (15) months.
         Models:                    Twenty-four (24) months.
         Inventory Lots:            Twelve (12) months.

11.      Paragraph 9. MATURITY AND EXTENSION. The maturity date of the Note
         shall be the later of the maturity date as provided in the Note (May
         31, 2003) (the "Stated Maturity Date"), or nine (9) months after the
         recording in the Real Property Records of the last Mortgage (the
         "Extended Maturity Date") approved by Lender and recorded prior to the
         expiration of the Stated Maturity Date. After the Stated Maturity Date,
         no additional Mortgage shall be recorded.

12.      Paragraph 10. ADDITIONAL DEFAULTS. In addition to the events of default
         stipulated in the Loan Instruments, it shall be a default under this
         Loan Agreement if Borrower fails to comply with any of the following:
         None.

13.      Paragraph 11. ADDITIONAL LOAN COVENANTS. Borrower shall fully perform
         and satisfy the following "Additional Loan Covenants":

         (a)      The aggregate net worth of Borrower (determined in accordance
                  with generally accepted accounting principles, consistently
                  applied) shall not fall below $50,000,000.00.

         (b)      The ratio of total liabilities to equity (as determined by
                  Lender) shall not exceed 3.0 to 1.0.

         (c)      John Landon shall at all times retain management control of
                  Borrower.

         (d)      In no event shall Meritage Corporation, a Maryland
                  corporation, be in default under any secured indebtedness.

         If Borrower or Guarantor (if applicable to Guarantor) breaches any of
         the Additional Loan Covenants then, at Lender's election, no additional
         Mortgages shall be recorded in the Real Property Records; provided,
         however, that a breach of any Additional Loan Covenants shall not be
         considered a default under the Loan Instruments.

14.      Paragraph 16(d). RELEASE PRICE. The partial release price shall be a
         cash amount equal to the Loan Allocation for the Property multiplied by
         the Stage (expressed as a percentage) of the Property, all as
         determined by Lender; provided, however, if Lender shall have given
         Borrower the notice described in Paragraph 4(f) of the Loan Agreement,
         then the partial release price shall be an amount in cash equal to one
         hundred and one hundred percent (100%) of the outstanding balance of
         the Loan advanced by Lender for the Property.

15.      Paragraph 16(e). EXTENSION FEE. If Lender extends the Required Release
         Date, as provided in Paragraph 9 of this Exhibit A, Borrower shall pay
         to Lender an extension fee of one percent (1%) of that portion of the
         Loan advanced by Lender for each such Property times a fraction, the
         numerator of which is the number of days the Required Release Date is
         extended and the denominator of which is 365.


EXHIBIT A, - Page 3
<PAGE>
                                    EXHIBIT A

                       Description of the Deed(s) of Trust


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>7
<FILENAME>p66729exv10w2.txt
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<PAGE>
                                                                  EXHIBIT 10.2
                            DEFERRED BONUS AGREEMENT

                                 2001 AWARD YEAR



         THIS DEFERRED BONUS AGREEMENT (the "Agreement") is entered into as of
May 1, 2002, by Larry W. Seay (the "Executive") and Meritage Corporation, an
Arizona corporation (the "Company").

1.       PURPOSE.

         The purpose of this Agreement is to reward Executive for his service
for the Company.

2.       COMPANY CONTRIBUTION.

         The Company agrees to make a "Company Contribution" of $45,000 to the
Deferred Bonus Account established pursuant to Section 3 effective as of
December 31, 2001. The purpose of this Company Contribution is to further
compensate Executive for his many years of service to the Company as a tool to
retain the valuable services of the Executive.

3.       DEFERRED COMPENSATION ACCOUNT.

         The Company shall maintain a bookkeeping account (the "Deferred Bonus
Account") to which it shall credit the Company Contribution in accordance with
Section 2. Interest shall be credited to the Deferred Bonus Account in
accordance with Section 5, below. The Deferred Compensation Account is a
bookkeeping account only and Executive shall not have any claim to any
particular assets of the Company.

4.       VESTING.

         (a) As of the date of this Agreement, the Company Contribution credited
to Executive's Deferred Bonus Account shall be unvested and subject to
forfeiture on the termination of Executive's employment for any reason prior to
January 1, 2005. If Executive continues to be employed by the Company on and
through December 31, 2004, Executive shall be fully vested in amounts credited
to his Deferred Bonus Account and his rights and interests therein shall not be
forfeitable.

         (b) Not withstanding the previous paragraph 4(a), if the Executive is
terminated without "cause", upon a "change of control", or upon the "death" or
"disability" of Executive, (as defined in the Executives' Employment Agreement),
all amounts due under this Agreement shall fully vest and shall be payable
within 30 days of the Executives' termination.

5.       INTEREST.

         Each December 31, the Company shall credit the Deferred Bonus Account
with interest calculated at an annual rate equal to 1.5% plus the prime rate as
announced in the Wall Street Journal on the first business day of each year
compounded annually (or, if no prime rate is announced in the Wall Street
Journal on such date, then on the first day of each year in which the prime rate
is reported in the Wall Street Journal), or such other greater interest rate as
determined by the Company in its discretion.


                                       1
<PAGE>
6.       DISTRIBUTION OF BENEFITS.

         (a) DISTRIBUTION OF BENEFITS. Payment to Executive shall occur within
thirty (30) days of the effective date of Executive's vesting in his Deferred
Bonus Account. For purposes of determining the distributable amount, the
Deferred Bonus Account shall be valued through the day prior to the day on which
the Deferred Bonus Account is distributed, less any claim, debt, reimbursement,
recoupment, or offset the Company may have against Executive.

         (b) IN-SERVICE DISTRIBUTIONS. Executive shall have no right to borrow
money from his Deferred Bonus Account nor shall he be allowed to receive a
distribution except as provided above.

         (c) METHOD OF DISTRIBUTION. Distribution of benefits shall be made in
one cash lump sum.


7.       INALIENABILITY OF BENEFITS.

         (a) GENERAL PROHIBITION. Executive, nor creditors of Executive, shall
have any right to assign, pledge, hypothecate, anticipate or in any way create a
lien upon Executive's interest created under this Agreement. All payments to be
made to Executive shall be made only upon his personal receipt or endorsement,
and no interest under this Agreement shall be subject to assignment or transfer
or otherwise be alienable, either by voluntary or involuntary act or by
operation of law or equity, or subject to attachment, execution, garnishment,
sequestration, levy or other seizure under any legal, equitable or other
process, or be liable in any way for the debts or defaults of Executive.

         (b) PERMITTED ARRANGEMENTS. This Section shall not preclude
arrangements for the withholding of applicable taxes from payments under this
Agreement, or arrangements for direct deposit of benefit payments to an account
in a bank, savings and loan association or credit union (provided that such
arrangement is not part of an arrangement constituting an assignment or
alienation).

8.       BINDING NATURE OF AGREEMENT.

         This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of any and all interested parties,
present and future.

9.       NATURE OF PAYMENTS.

         Executive shall, for the purpose of this Agreement, be treated as
general creditors of the Company. Nothing in this Agreement or any action taken
pursuant to this Agreement shall create or be construed to create a fiduciary
relationship between the Company and Executive, or any other person.

10.      DISPUTE RESOLUTION.

         All claims, disputes and other matters in question between the parties
arising under this Agreement shall, unless otherwise provided herein, be
resolved in accordance with the dispute resolution provisions set forth in
Executive's Employment Agreement. If no such agreement is

                                       2
<PAGE>
in effect, or if the Employment Agreement in effect at the time of Executive's
termination of employment does not include a dispute resolution provision, all
claims, disputes and other matters in question between the parties arising under
this Agreement shall be decided in accordance with the dispute resolution
provisions stated below:

         (a) MEDIATION. Any and all disputes arising under, pertaining to or
touching upon this Agreement, or the statutory rights or obligations of either
party hereto, shall, if not settled by negotiation, be subject to non-binding
mediation before an independent mediator selected by the parties pursuant to
Section 10(d). Notwithstanding the foregoing, both Executive and Company may
seek preliminary judicial relief if such action is necessary to avoid
irreparable damage during the pendency of the proceedings described in this
Section 10. Any demand for mediation shall be made in writing and served upon
the other party to the dispute, by certified mail, return receipt requested, at
the address specified in the signature blocks of this agreement. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties within 30 days of the date of selection or appointment of the
mediator.

         (b) ARBITRATION. In the event that the dispute is not settled through
mediation, the parties shall then proceed to binding arbitration before an
independent arbitrator selected pursuant to Section 10(d). The mediator shall
not serve as the arbitrator. EXCEPT AS PROVIDED IN SECTION 10(a), ALL DISPUTES
INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY ALLEGED
BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT COMMITTED BY COMPANY OR
A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE
DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS
SECTION 10 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY
TRIAL. The arbitration hearing shall occur at a time and place convenient to the
parties within 90 days of selection or appointment of the arbitrator, or as
otherwise agreed to. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Sections 1-16 and the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") in effect on the date of the first notice of demand for arbitration.
Notwithstanding any provisions in such rules to the contrary, the arbitrator
shall issue findings of fact and conclusions of law, and an award, within 15
days of the date of the hearing unless the parties otherwise agree.

         (c) DAMAGES. In case of breach of contract or policy, damages shall be
limited to contract damages. In cases of discrimination claims prohibited by
statute, the arbitrator may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrator may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1-16, except that court review of the arbitrator's award
shall be that of an appellate court reviewing a decision of a trial judge
sitting without a jury.

         (d) SELECTION OF MEDIATOR OR ARBITRATOR. The parties shall select the
mediator and arbitrator from a panel list made available by the AAA. If the
parties are unable to agree to a mediator or an arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five mediators or
arbitrators obtained by Company from the AAA. Executive shall have the first
strike.


                                       3
<PAGE>
         (e) FEES AND EXPENSES. The fees of the AAA and Mediation/Arbitration
shall be borne equally by the parties, unless ordered otherwise by the
Arbitrator. Each party shall bear its own attorney's fees and other expenses,
unless ordered otherwise by the Arbitrator.

11.      VALIDITY.

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

12.      NO EMPLOYMENT OR SERVICE CONTRACT.

         Except as may be otherwise provided in the Executive's Employment
Agreement, nothing in this Agreement shall confer upon Executive any right to
continue in the service of the Company (or any parent or subsidiary corporation
of the Company employing or retaining Executive) for any period of time.

13.      AMENDMENT AND TERMINATION.

         Any amendment, modification, change, or termination of this Agreement
must be done so in writing and signed by both parties.

14.      GOVERNING LAW.

         The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Arizona.

15.      COUNTERPARTS.

         This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one
and the same instrument.

16.      EFFECT ON EMPLOYMENT AGREEMENT.

         This Agreement supplements, and does not replace, Executive's
Employment Agreement as it may be amended or replaced from time to time. If
there are any conflicts between the provisions of this Agreement and Executive's
Employment Agreement, the provisions of this Agreement shall control.

17.      ENTIRE AGREEMENT.

         This Agreement sets forth the entire agreement between Executive and
the Company concerning the subject matter discussed in this Agreement and
supersedes all prior agreements, promises, covenants, arrangements,
communications, and representations or warranties, whether written or oral, by
any officer, employee, or representative of the Company. Any prior agreements or
understandings with respect to the subject matter set forth in this Agreement
are hereby terminated and canceled.


                                       4
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.


                                   MERITAGE CORPORATION

                                   6613 N. Scottsdale Rd., Suite 200
                                   Scottsdale, AZ 85250


                                   By:
                                      ----------------------------------------

                                   Its:
                                       ---------------------------------------


                                   EXECUTIVE


                                   Larry W. Seay
                                      ----------------------------------------

                                   Address:
                                            ----------------------------------

                                      ----------------------------------------

                                       5

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>8
<FILENAME>p66729exv10w3.txt
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.3
                            DEFERRED BONUS AGREEMENT

                                 2001 AWARD YEAR



         THIS DEFERRED BONUS AGREEMENT (the "Agreement") is entered into as of
May 1, 2002, by Richard T. Morgan (the "Executive") and Meritage Corporation, an
Maryland corporation (the "Company").

1.       PURPOSE.

         The purpose of this Agreement is to reward Executive for his service
for the Company.

2.       COMPANY CONTRIBUTION.

         The Company agrees to make a "Company Contribution" of $40,000 to the
Deferred Bonus Account established pursuant to Section 3 effective as of
December 31, 2001. The purpose of this Company Contribution is to further
compensate Executive for his many years of service to the Company as a tool to
retain the valuable services of the Executive.

3.       DEFERRED COMPENSATION ACCOUNT.

         The Company shall maintain a bookkeeping account (the "Deferred Bonus
Account") to which it shall credit the Company Contribution in accordance with
Section 2. Interest shall be credited to the Deferred Bonus Account in
accordance with Section 5, below. The Deferred Compensation Account is a
bookkeeping account only and Executive shall not have any claim to any
particular assets of the Company.

4.       VESTING.

         As of the date of this Agreement, the Company Contribution credited to
Executive's Deferred Bonus Account shall be unvested and subject to forfeiture
on the termination of Executive's employment for any reason prior to January 1,
2005. If Executive continues to be employed by the Company on and through
December 31, 2004, Executive shall be fully vested in amounts credited to his
Deferred Bonus Account and his rights and interests therein shall not be
forfeitable.

5.       INTEREST.

         Each December 31, the Company shall credit the Deferred Bonus Account
with interest calculated at an annual rate equal to 1.5% plus the prime rate as
announced in the Wall Street Journal on the first business day of each year
compounded annually (or, if no prime rate is announced in the Wall Street
Journal on such date, then on the first day of each year in which the prime rate
is reported in the Wall Street Journal), or such other greater interest rate as
determined by the Company in its discretion.



                                       1
<PAGE>
6.       DISTRIBUTION OF BENEFITS.

         (a) DISTRIBUTION OF BENEFITS. Payment to Executive shall occur within
thirty (30) days of the effective date of Executive's vesting in his Deferred
Bonus Account. For purposes of determining the distributable amount, the
Deferred Bonus Account shall be valued through the day prior to the day on which
the Deferred Bonus Account is distributed, less any claim, debt, reimbursement,
recoupment, or offset the Company may have against Executive.

         (b) IN-SERVICE DISTRIBUTIONS. Executive shall have no right to borrow
money from his Deferred Bonus Account nor shall he be allowed to receive a
distribution except as provided above.

         (c) METHOD OF DISTRIBUTION. Distribution of benefits shall be made in
one cash lump sum.


7.       INALIENABILITY OF BENEFITS.

         (a) GENERAL PROHIBITION. Executive, nor creditors of Executive, shall
have any right to assign, pledge, hypothecate, anticipate or in any way create a
lien upon Executive's interest created under this Agreement. All payments to be
made to Executive shall be made only upon his personal receipt or endorsement,
and no interest under this Agreement shall be subject to assignment or transfer
or otherwise be alienable, either by voluntary or involuntary act or by
operation of law or equity, or subject to attachment, execution, garnishment,
sequestration, levy or other seizure under any legal, equitable or other
process, or be liable in any way for the debts or defaults of Executive.

         (b) PERMITTED ARRANGEMENTS. This Section shall not preclude
arrangements for the withholding of applicable taxes from payments under this
Agreement, or arrangements for direct deposit of benefit payments to an account
in a bank, savings and loan association or credit union (provided that such
arrangement is not part of an arrangement constituting an assignment or
alienation).

8.       BINDING NATURE OF AGREEMENT.

         This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of any and all interested parties,
present and future.

9.       NATURE OF PAYMENTS.

         Executive shall, for the purpose of this Agreement, be treated as
general creditors of the Company. Nothing in this Agreement or any action taken
pursuant to this Agreement shall create or be construed to create a fiduciary
relationship between the Company and Executive, or any other person.




                                       2
<PAGE>
10.      DISPUTE RESOLUTION.

         All claims, disputes and other matters in question between the parties
arising under this Agreement shall be decided in accordance with the dispute
resolution provisions stated below:

         (a) MEDIATION. Any and all disputes arising under, pertaining to or
touching upon this Agreement, or the statutory rights or obligations of either
party hereto, shall, if not settled by negotiation, be subject to non-binding
mediation before an independent mediator selected by the parties pursuant to
Section 10(d). Notwithstanding the foregoing, both Executive and Company may
seek preliminary judicial relief if such action is necessary to avoid
irreparable damage during the pendency of the proceedings described in this
Section 10. Any demand for mediation shall be made in writing and served upon
the other party to the dispute, by certified mail, return receipt requested, at
the address specified in the signature blocks of this agreement. The demand
shall set forth with reasonable specificity the basis of the dispute and the
relief sought. The mediation hearing will occur at a time and place convenient
to the parties within 30 days of the date of selection or appointment of the
mediator.

         (b) ARBITRATION. In the event that the dispute is not settled through
mediation, the parties shall then proceed to binding arbitration before an
independent arbitrator selected pursuant to Section 10(d). The mediator shall
not serve as the arbitrator. EXCEPT AS PROVIDED IN SECTION 10(a), ALL DISPUTES
INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY ALLEGED
BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT COMMITTED BY COMPANY OR
A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE
DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS
SECTION 10 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY
TRIAL. The arbitration hearing shall occur at a time and place convenient to the
parties within 90 days of selection or appointment of the arbitrator, or as
otherwise agreed to. The arbitration shall be governed by the Federal
Arbitration Act, 9 U.S.C. Sections 1-16 and the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") in effect on the date of the first notice of demand for arbitration.
Notwithstanding any provisions in such rules to the contrary, the arbitrator
shall issue findings of fact and conclusions of law, and an award, within 15
days of the date of the hearing unless the parties otherwise agree.

         (c) DAMAGES. In case of breach of contract or policy, damages shall be
limited to contract damages. In cases of discrimination claims prohibited by
statute, the arbitrator may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrator may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1-16, except that court review of the arbitrator's award
shall be that of an appellate court reviewing a decision of a trial judge
sitting without a jury.

         (d) SELECTION OF MEDIATOR OR ARBITRATOR. The parties shall select the
mediator and arbitrator from a panel list made available by the AAA. If the
parties are unable to agree to a mediator or an arbitrator within 10 days of
receipt of a demand for mediation or arbitration, the

                                       3
<PAGE>
mediator or arbitrator will be chosen by alternatively striking from a list of
five mediators or arbitrators obtained by Company from the AAA. Executive shall
have the first strike.

         (e) FEES AND EXPENSES. The fees of the AAA and Mediation/Arbitration
shall be borne equally by the parties, unless ordered otherwise by the
Arbitrator. Each party shall bear its own attorney's fees and other expenses,
unless ordered otherwise by the Arbitrator.

11.      VALIDITY.

         The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.

12.      NO EMPLOYMENT OR SERVICE CONTRACT.

         Nothing in this Agreement shall confer upon Executive any right to
continue in the service of the Company (or any parent or subsidiary corporation
of the Company employing or retaining Executive) for any period of time.

13.      AMENDMENT AND TERMINATION.

         Any amendment, modification, change, or termination of this Agreement
must be done so in writing and signed by both parties.

14.      GOVERNING LAW.

         The validity, interpretation, construction, and performance of this
Agreement shall be governed by the laws of the State of Arizona.

15.      COUNTERPARTS.

         This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together will constitute one
and the same instrument.

16.      ENTIRE AGREEMENT.

         This Agreement sets forth the entire agreement between Executive and
the Company concerning the subject matter discussed in this Agreement and
supersedes all prior agreements, promises, covenants, arrangements,
communications, and representations or warranties, whether written or oral, by
any officer, employee, or representative of the Company. Any prior agreements or
understandings with respect to the subject matter set forth in this Agreement
are hereby terminated and canceled.



                                       4
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.


                              MERITAGE CORPORATION

                              6613 N. Scottsdale Rd., Suite 200
                              Scottsdale, AZ 85250


                              By:
                                 -------------------------------------------

                              Its:
                                  ------------------------------------------


                              EXECUTIVE


                              Richard T. Morgan

                                  ------------------------------------------

                              Address:
                                       -------------------------------------

                                  ------------------------------------------

                                       5


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>9
<FILENAME>p66729exv99w1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>
                                                                  EXHIBIT 99.1
            MERITAGE CORPORATION ANNOUNCES PRICING OF PUBLIC OFFERING

         SCOTTSDALE, ARIZ. AND DALLAS (JUNE 21, 2002) - MERITAGE CORPORATION
(NYSE: MTH) today announced that it has priced a public offering of its common
stock. Meritage is offering 1,750,000 shares of common stock at a price of $42
per share. Deutsche Bank Securities and UBS Warburg are serving as Joint Book
Managers and A.G. Edwards & Sons, Inc. and JMP Securities are serving as
Co-Managers. The underwriters have a 30-day option to purchase up to 262,500
additional shares from Meritage to cover over-allotments, if any. The net
proceeds of the offering to be received by Meritage will be used for general
corporate purposes, which may include the development of new residential
properties, the repayment of debt, land acquisitions and possible acquisitions
of other homebuilders.

         The offering is expected to close on June 26, 2002 and is subject to
customary closing conditions. The shares of common stock will be sold pursuant
to Meritage's Shelf Registration Statement covering the issuance from time to
time of $300,000,000 of various securities of Meritage. A Shelf Registration
Statement relating to the shares was previously declared effective on May 14,
2002 by the Securities and Exchange Commission. The shares may be offered only
by means of a prospectus, including a prospectus supplement. A copy of the
prospectus, including the prospectus supplement, may be obtained from Deutsche
Bank Securities, 1 South Street, Baltimore, MD 21202, (410) 895-2080 or UBS
Warburg, 299 Park Avenue, New York, NY 10171, (212) 821-3000.

         ABOUT MERITAGE CORPORATION

         Meritage Corporation designs, builds and sells distinctive
single-family homes ranging from first-time to semi-custom luxury. We operate in
the Phoenix and Tucson, Arizona markets as Monterey Homes, Hancock Communities
and Meritage Homes, in the Dallas/Ft. Worth, Austin and Houston, Texas markets
as Legacy Homes and in the San Francisco East Bay and Sacramento, California
markets as Meritage Homes. Please visit our web site at: www.meritagehomes.com.

         Certain matters discussed in this press release are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include statements

                                     -more-
<PAGE>
MERITAGE CORPORATION ANNOUNCES PRICING OF PUBLIC OFFERING/2

concerning future Company actions and their expected results. Such statements
are based upon the current beliefs and expectations of our management and are
subject to significant risks and uncertainties. Actual results may differ from
those set forth in the forward-looking statements

         With respect to the offering of our common stock, these risks and
uncertainties include: the offering could result in a lowering of our stock
price; our charter and bylaws and ownership structure could prevent a third
party from acquiring us or limit the price investors might be willing to pay for
shares of our common stock; we have broad discretion in how we use the net
proceeds from this offering and ultimately may not use them effectively; and our
stock price is volatile and could decline substantially.

         In addition, our business is subject to a number of risks and
uncertainties including: the strength and competitive pricing environment of the
single-family housing market; changes in the availability and pricing of
residential mortgages; changes in the availability and pricing of real estate in
the markets in which we operate; our high level of indebtedness; demand for and
acceptance of our homes; the success of planned marketing and promotional
campaigns; the success of our program to integrate existing operations with our
planned new operations or those of past or future acquisitions; our ability to
raise additional capital; our success in locating and negotiating favorably with
possible acquisition candidates; recent legislative or other initiatives that
seek to restrain growth in new housing construction or similar measures; the
economic impact of foreign hostilities or military action; general economic slow
downs; and other factors identified in documents filed by us with the Securities
and Exchange Commission, including those set forth in Meritage's Form 10-K
Report for the year ended December 31, 2001 under the captions "Market for the
Registrant's Common Stock and Related Stockholder Matters - Factors that May
Affect Future Stock Performance" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and in Exhibit 99.1 of the
Company's Form 10-Q for the quarter ended March 31, 2002. As a result of these
and other factors, the prices of Meritage's securities may fluctuate
dramatically.

                                     # # # #



</TEXT>
</DOCUMENT>
</SUBMISSION>
