NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contingencies Prior to our merger with Oasis Residential, Inc., Oasis had been contacted by certain regulatory agencies with regard  to alleged failures to comply with the Fair Housing Amendments Act (the “Fair Housing Act”) as it pertained to nine  properties (seven of which we currently own) constructed for first occupancy after March 31, 1991. On February 1, 1999,  the Justice Department filed a lawsuit against us and several other defendants in the United States District Court for  the District of Nevada alleging (1) that the design and construction of these properties violates the Fair Housing Act and  (2) that we, through the merger with Oasis, had discriminated in the rental of dwellings to persons because of handicap.  The complaint requests an order that (i) declares that the defendants’ policies and practices violate the Fair Housing Act;  (ii) enjoins us from (a) failing or refusing, to the extent possible, to bring the dwelling units and public use and common  use areas at these properties and other covered units that Oasis has designed and/or constructed into compliance with  the Fair Housing Act, (b) failing or refusing to take such affirmative steps as may be necessary to restore, as nearly as  possible, the alleged victims of the defendants’ alleged unlawful practices to positions they would have been in but for  the discriminatory conduct, and (c) designing or constructing any covered multifamily dwellings in the future that do  not contain the accessibility and adaptability features set forth in the Fair Housing Act; and requires us to pay damages,  including punitive damages, and a civil penalty. With any acquisition, we plan for and undertake renovations needed to correct deferred maintenance, life/safety and Fair  Housing matters. On January 30, 2001, a consent decree was ordered and executed in the above Justice Department  action. Under the terms of the decree, we were ordered to make certain retrofits and implement certain educational  programs and Fair Housing advertising. These changes are to take place by July 31, 2006. The costs associated with  complying with the decree have been accrued for and are not material to our consolidated financial statements. We are subject to various legal proceedings and claims that arise in the ordinary course of business. These matters are  generally covered by insurance. While the resolution of these matters cannot be predicted with certainty, management  believes that the final outcome of such matters will not have a material adverse effect on our consolidated financial  statements. On October 6, 2004, a purported class action complaint was filed in the General Court of Justice, Superior Court Division,  of the State of North Carolina, County of Mecklenburg, by an alleged Summit stockholder. This complaint names as  defendants Camden, Summit and each member of the board of directors of Summit and principally alleges that the  merger and the acts of the Summit directors constitute a breach of the Summit defendants’ fiduciary duties to Summit  stockholders. The plaintiff in the lawsuit seeks, among other things (1) a declaration that each defendant has committed  or aided and abetted a breach of fiduciary duty to the Summit stockholders, (2) to preliminarily and permanently enjoin the  Merger, (3) to rescind the Merger in the event that it is consummated, (4) an order to permit a stockholders’ committee to  ensure an unspecified “fair procedure, adequate procedural safe-guards and independent input by plaintiff” in connection  with any transaction for Summit shares, (5) unspecified compensatory damages and (6) attorneys’ fees. On November, 3,  2004, Camden removed the lawsuit to the United States District Court for the Western District of North Carolina, Charlotte  Division, and filed an Answer and Counterclaim for declaratory judgment denying the plaintiff’s allegations of wrongdoing.  Management believes that the final outcome of such matters will not have a material adverse effect on our consolidated  financial statements.  In the ordinary course of our business, we issue letters of intent indicating a willingness to negotiate for acquisitions,  dispositions or joint ventures. Such letters of intent are non-binding, and neither party to the letter of intent is obligated  to pursue negotiations unless and until a definitive contract is entered into by the parties. Even if definitive contracts  are entered into, the letters of intent relating to the purchase and sale of real property and resulting contracts generally  contemplate that such contracts will provide the purchaser with time to evaluate the property and conduct due diligence,  during which periods the purchaser will have the ability to terminate the contracts without penalty or forfeiture of any  deposit or earnest money. There can be no assurance that definitive contracts will be entered into with respect to any  matter covered by letters of intent or that we will consummate any transaction contemplated by any definitive contract.  Furthermore, due diligence periods for real property are frequently extended as needed. An acquisition or sale of real  property becomes probable at the time that the due diligence period expires and the definitive contract has not been  terminated. We are then at risk under a real property acquisition contract, but only to the extent of any earnest money  deposits associated with the contract, and are obligated to sell under a real property sales contract. transforming camden 89