<PAGE>

                                                                   EXHIBIT 10.1

                          CORNERSTONE REALTY FUND, LLC

                                ESCROW AGREEMENT


         This Escrow Agreement ("Agreement") is entered into ____________ , 2001
by and among U.S. Bank, National Association (the "Escrow Agent"), Cornerstone
Realty Fund, LLC, a California limited liability company (the "Fund") and
Pacific Cornerstone Capital, Incorporated, a California corporation (the "Dealer
Manager").


                                 R E C I T A L S

          A. The Fund proposes to offer up to $50,000,000 of limited liability
company units ("Units") in the Fund, pursuant to a Prospectus dated ____________
, 2001, as amended or supplemented from time to time (the "Prospectus"), with a
minimum investment required of five Units at $500 per Unit (or two Units at $500
per Unit for tax-qualified retirement plans).

          B. The Dealer Manager and others (collectively, the "Participating
Brokers") have been named as Participating Brokers in connection with the
proposed offering of the Units and are entitled to certain commissions and
selling expense allowances set forth in those certain selling agreements among
the Fund, the Participating Brokers and the Managing Member of the Fund,
Cornerstone Industrial Properties, LLC, a California limited liability company
("Managing Member").

          C. In compliance with the Prospectus and each Selling Agreement, the
Fund proposes to establish an escrow fund with the Escrow Agent for the offering
proceeds received prior to the Initial Closing Date (as hereafter defined).

          D.        If subscriptions for at least $3,000,000 are not accepted
by the Fund prior to _______________, 2002 (the "Minimum Offering Termination
Date"), no Units in the Fund will be sold.

          E.        The Escrow Agent has agreed to act as escrow agent in
connection with the proposed offering.

                                A G R E E M E N T

          It is agreed as follows:

          1.        INCORPORATION OF RECITALS AND GENERAL PROVISIONS. The
recitals set forth above and the General Provisions attached hereto as
Exhibit "A" shall constitute and shall be deemed to be an integral part of
this Agreement.

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          2.        ESCROW.

                    2.1 ESCROW AGENT. For a period commencing on the date hereof
and terminating 15 days after the Minimum Offering Termination Date, the Escrow
Agent shall act as an escrow agent and shall receive and disburse the proceeds
from the sale of the Units in accordance with the terms of this Agreement. The
Escrow Agent hereby represents and warrants to each Participating Broker that it
is a "Bank" as such term is defined in Section 3(a)(6) of the Securities
Exchange Act of 1934, as amended (the "Act").

                    2.2 ESCROW ACCOUNT. Commencing on the date hereof, the
parties shall establish an interest-bearing escrow account with the Escrow Agent
(the "Escrow Account"). The Participating Brokers will instruct subscribers to
make checks for subscriptions of Units payable to the order of the Escrow Agent.
Any checks received that are made payable to a party other than the Escrow Agent
shall be returned to the Participating Broker who submitted the check.


          3. DEPOSITS INTO THE ESCROW ACCOUNT. Proceeds from the sale of Units
(the "Proceeds") shall be received by the Escrow Agent from the Participating
Brokers and deposited no later than noon on the following business day in the
Escrow Account; provided, however, that Proceeds received by the Escrow Agent
within 48 hours prior to a scheduled Initial or Additional Closing Date (as
hereinafter defined) may be held by the Escrow Agent until such closing (but not
longer than 48 hours) and, upon joint instruction of the Managing Member and the
Dealer Manager, deposited directly into the Fund's account or returned to the
subscriber(s).


          4. SUBSCRIBER INFORMATION. Each Participating Broker shall provide the
Escrow Agent with the name, address, social security number or taxpayer
identification number, and the amount to be deposited for each subscriber whose
funds are deposited with the Escrow Agent pursuant to Section 2 hereof. Such
Participating Broker shall also notify the Escrow Agent if a properly executed
U.S. Treasury Department Form W-9 has not been received from any subscriber
whose funds are deposited with the Escrow Agent.

          5. INVESTMENT OF PROCEEDS. The Escrow Agent shall invest all Proceeds
deposited with it hereunder as directed by the Fund, in (i) Bank accounts, (ii)
Bank money-market accounts, (iii) short-term certificates of deposit of Banks
located in the United States, or (iv) short-term securities issued or guaranteed
by the U.S. government. The term "Bank" is defined in Section 3(a)(6) of the
Act. Such investments shall be made in a manner consistent with the requirement
that the Proceeds be available for delivery by the Escrow Agent at the times
described herein. After any reductions made in accordance with Section 10
hereof, income received from investment of the Proceeds shall be credited to the
subscribers in proportion to the amounts deposited with respect to each
subscriber and in proportion to the number of days the collected Proceeds from
each subscriber are held in the Escrow Account. Pursuant to the provisions of
this Agreement, Escrow Agent shall disburse all income earned (less any amounts
required to be withheld by the Escrow Agent under the applicable federal income
tax laws) directly to the Fund with respect to the Proceeds, and the Managing
Member shall determine and disburse to each subscriber his or her proportionate
share of such income computed as provided above. The Fund is aware that there
may be a forfeiture of interest in the event of early withdrawal from an
interest bearing account of investment.

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          6. INITIAL CLOSING DATE. The term "Qualifying Subscriptions" shall
refer to all subscriptions which have been received by the Managing Member and
which the Managing Member intends to accept into the Fund. If Qualifying
Subscriptions have been received for at least $3,000,000 of Units on or before
the Minimum Offering Termination Date, the Managing Member shall notify the
Escrow Agent and by instructions (which may accompany such notice or be provided
subsequently) given at least 2 business days in advance, shall specify the
"Initial Closing Date" (which must be not more than 10 days after the Minimum
Offering Termination Date), the approximate amount of Qualifying Subscriptions
for the Fund to be accepted as of such Initial Closing Date, the identity of the
subscribers whose subscriptions are anticipated to be accepted as of the Initial
Closing Date, and the approximate amount of the Proceeds to be paid to the Fund
and to each Participating Broker, respectively. On the Initial Closing Date, the
Escrow Agent, upon telephonic notice from the Managing Member and the Dealer
Manager that all contingencies for payment have been satisfied as required by
Rule 15c2-4 under the Act (which notice the Managing Member shall promptly
confirm in writing) shall pay to the Fund and each Participating Broker the
amounts specified by such notice, and shall additionally pay to the Fund the
interest earned on such Proceeds for disbursement to subscribers pursuant to
Section 5 hereof.

          7. REJECTED SUBSCRIPTIONS. From time to time, upon instructions from
the Managing Member identifying those subscribers whose subscriptions have been
rejected, the Escrow Agent shall return such funds to the subscribers so
identified with such interest as has been credited to them pursuant to Section 5
hereof. If the Managing Member rejects any subscription for which the Escrow
Agent has already collected funds, the Escrow Agent shall promptly issue a
refund check to the rejected subscriber. If the Managing Member rejects any
subscription for which the Escrow Agent has not yet collected funds but has
submitted the subscriber's check for collection, the Escrow Agent shall promptly
issue a check in the amount of the subscriber's check to the rejected subscriber
after the Escrow Agent has cleared such funds. If the Escrow Agent has not yet
submitted a rejected subscriber's check for collection, the Escrow Agent shall
promptly remit the subscriber's check directly to the subscriber.

          8. FAILURE TO MEET MINIMUM SUBSCRIPTION. If Qualifying Subscriptions
for at least $3,000,000 of Units have not been received by the Minimum Offering
Termination Date, then the Escrow Agent, upon instructions from the Managing
Member, shall promptly return all collected funds and uncollected checks and
other instruments to the subscribers, with such interest as has been credited to
them pursuant to Section 5 hereof. Prior to the Initial Closing Date, the Fund
is aware and understands that it is not entitled to any funds received into
escrow and no amounts deposited in the Escrow Account shall become the property
of the Fund or any other entity, or be subject to the debts of the Fund or any
other entity.

          9. NOTICE OF EXTENSION OR TERMINATION OF OFFERING. Upon final
termination of the offering, the Managing Member shall instruct Escrow Agent
pursuant to Section 6 as to the disposition of any remaining funds and
interest thereon.

          10. FEES. The Escrow Agent, for services rendered under this
Agreement, shall receive a fee as set forth on Exhibit "B" hereto. The fees of
the Escrow Agent shall be paid by the Fund. If Qualifying Subscriptions for at
least $3,000,000 of Units have not been received by the Minimum Offering
Termination Date, then the fees of the Escrow Agent shall be paid by the
Managing Member. In no event shall the fees of the Escrow Agent be deducted from
or otherwise offset against the Proceeds (or interest earned thereon) of
subscribers.

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          11. RESIGNATION. The Escrow Agent shall have the right to resign at
any time and be discharged from its duties as escrow agent hereunder by giving
the Fund at least 30 days prior written notice thereof; provided, however, that
if the Escrow Agent shall exercise its right of resignation hereunder, it shall
receive as its fee for services rendered as escrow agent a fee as provided in
Section 10 hereof.

          12.       DUTIES AND RESPONSIBILITIES OF ESCROW AGENT. The Escrow
Agent shall have no duties or responsibilities other than those set forth
herein and shall:

                    (a)       Be under no duty to enforce payment of any
subscription which is to be paid to and held by it hereunder;

                    (b) Be under no duty to accept funds, checks, drafts or
instruments for the payment of money from anyone other than the Participating
Brokers or the Managing Member or to give any receipt therefor except to the
Participating Brokers or the Managing Member;

                    (c) Be protected in acting upon any notice, request,
certificate, approval, consent or other paper believed by it to be genuine,
signed by the proper party or parties and in accordance with the terms of this
Agreement;

                    (d) Be deemed conclusively to have given and delivered any
notice required to be given or delivered hereunder if the same is in writing,
signed by any one of its authorized officers and mailed, by registered or
certified mail, in a sealed postpaid wrapper, addressed to the Fund at the
following address:

                           Cornerstone Realty Fund, LLC
                           4590 MacArthur Blvd.
                           Suite 610
                           Newport Beach, CA 92660

                    (e) Be indemnified and held harmless by the Managing Member
from any and all claims made against it (including claims regarding the
disbursement of funds), or any and all expenses incurred by it (including
reasonable attorneys' fees), by reason of its acting or failing to act in
connection with any of the transactions contemplated hereby and against any loss
it may sustain in carrying out the terms of this Agreement, except such claims,
expenses or losses which are occasioned by its bad faith, negligence or willful
misconduct; and

                    (f)       Not be liable for any forgeries or
impersonations concerning any documents to be handled by it.

          13. DISPUTES. If the Managing Member, the Participating Brokers, or
anyone else, disagree on any matter connected with this escrow, (i) Escrow Agent
will not have to settle the matter, (ii) Escrow Agent may wait for a settlement
by appropriate legal proceedings or other means Escrow Agent may require, and in
such event Escrow Agent will not be liable for interest or damage, (iii) Escrow
Agent will be entitled to such reasonable compensation for services, costs and
attorneys' fees as a court may award if Escrow Agent intervenes in or is made a
party to any legal proceedings, (iv) Escrow Agent shall be entitled to hold
documents and funds deposited in this escrow pending settlement of the
disagreement by

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any of the above means, and (v) Escrow Agent shall be entitled to file an
interpleader action and deposit any Proceeds or property with an appropriate
court.

          14.       NO LEGAL ADVICE. This transaction is an escrow and Escrow
Agent is an escrow holder only and as escrow holder Escrow Agent may not give
legal advice as to any conditions or requirements in this escrow.

          15.       NOTICES TO ESCROW AGENT. Any written notice required to
be given or delivered to the Escrow Agent shall be deemed conclusively given
and delivered hereunder if the written notice is mailed, by registered or
certified mail, in a sealed postpaid wrapper, addressed as follows:


                           U.S. Bank, National Association
                           4100 Newport Place
                           Suite 130
                           Newport Beach, CA 92660
                           Attn: Gloria Garriott


          16. INSTRUCTIONS; COPIES OF NOTICES. Any instructions or other
communications to the Escrow Agent provided for herein shall be in writing, but
may be in telegraphic or telex form if promptly confirmed in writing. A copy of
this Agreement, or any amendment or addendum hereto, or closing statement or
document deposited in this escrow shall be furnished by Escrow Agent to those
persons outside of this escrow designated from time to time by the Fund.

          17. PAYMENTS. All disbursements from the escrow account shall be made
to the party concerned, by Escrow Agent's cashier's check to such party's order
or to deposit to such party's bank account. All checks, documents, and
correspondence shall be mailed to such party at the address given by the
Managing Member.

          18.       MISCELLANEOUS. Nothing in this Agreement is intended to
or shall confer upon anyone other than the parties hereto any legal or
equitable right, remedy or claim. This Agreement shall be construed in
accordance with the laws of the State of California and may be modified only
in writing.

         IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed on the day and year first hereinabove written.

                     CORNERSTONE REALTY FUND, LLC,
                     a California limited liability company

                             By:  CORNERSTONE INDUSTRIAL PROPERTIES, LLC,
                                  a California limited liability company

                                  By:  CORNERSTONE VENTURES, INC.,
                                       its Operating Partner


                                       By:
                                            ----------------------------------
                                            Terry G. Roussel, President



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                     PACIFIC CORNERSTONE CAPITAL, INCORPORATED,
                     a California corporation


                     By:
                          ----------------------------------
                           Terry G. Roussel, President





ACKNOWLEDGED AND AGREED


U.S. BANK, NATIONAL ASSOCIATION


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






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                                                                    EXHIBIT "A"

                               GENERAL PROVISIONS


DEPOSITS - All funds received in escrow shall be deposited in an interest
bearing escrow account of U.S. Bank, National Association.


RESPONSIBILITY FOR DEPOSITED PROPERTY - Escrow Agent is not a party to, or bound
by, any provisions contained in any agreements which may be deposited under,
evidenced by, or arise out of these instructions, and with respect thereto, acts
as a depository only and is not responsible or liable in any manner whatsoever
for the sufficiency, correctness, genuineness, or validity of any Property or
with respect to the form or execution of any agreements, or the identity,
authority or right of any person executing or depositing any property herein.

DEFAULTS - Escrow Agent shall not be required to take or be bound by notice of
any default of any person, including any Principal, or to take any action with
respect to such default whether or not such action involves any expense or
liability. These instructions shall not be subject to modification or rescission
except upon receipt by Escrow Agent (at the office named above) of written
instructions from each of the Principals or their successors in interest, and no
such rescission or modification shall be effective unless and until consented to
by Escrow Agent in writing.

NOTICES - Principals hereby indemnify and hold Escrow Agent harmless against any
loss, liability, damage, cost or expense, including reasonable attorneys' fees,
(a) related in any way to Escrow Agent's acting upon any notice, request,
waiver, consent, receipt or other paper or document believed by Escrow Agent to
be signed by Principals or any other proper person, and (b) incurred in
connection with any act or thing done hereunder.

EXERCISE OF JUDGMENT - Escrow Agent shell not be liable for any error of
judgment or for any act done or step taken or omitted by it in good faith or for
any mistake of fact or law or for anything which Escrow Agent may do or refrain
from doing in connection herewith, except its own gross negligence or willful
misconduct. Escrow Agent shall have duties only to Principals, and no person or
entity shall be deemed a third party beneficiary of these instructions.

COUNSEL - Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of these instructions or Escrow
Agent's duties thereunder, and Escrow Agent shall incur no liability and shall
be fully protected in acting in accordance with the opinion and instructions of
counsel,

DISAGREEMENTS - In the event of any disagreement between the Principals, or any
of them or any other person or persons whether or not named in these
instructions, and adverse claims or demands are made in connection with or for
any of the Property, Escrow Agent shall be entitled at its option to refuse to
comply with any such claim or demand so long as such disagreement shall
continue, and in so doing, Escrow Agent shall not be or become liable for
damages or interest to the Principals, or any of them, or to any other person or
persons for Escrow Agent's failure or refusal to comply with such conflicting or
adverse claims or demands. Escrow Agent shall be entitled to continue so to
refrain and refuse so to act until:

                                       A-1
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          a.        the rights of the adverse claimants have been fully
adjudicated in a court assuming and having jurisdiction of the claimants and
the Property; or

          b. all differences shall have been adjusted by agreement, and Escrow
Agent shall have been notified thereof in writing by all persons deemed by
Escrow Agent, in its sole discretion, to have an interest therein.

In addition, Escrow Agent, in its sole discretion, may file a suit in
interpleader for the purpose of having the respective rights of all claimants
adjudicated, and may deposit with the court all of the Property deposited in
escrow; and the Principals agree to pay all costs and counsel fees incurred by
Escrow Agent in such action, such costs and fees to be included in the judgment
in any such action.

INDEMNITY - In consideration of this appointment by Escrow Agent, the Principals
agree to indemnify and hold Escrow Agent harmless as to any liability incurred
by Escrow Agent to any person, firm or corporation by reason of its having
accepted same or in carrying out any of the terms hereof, and to reimburse
Escrow Agent for all its expenses, including among other things, counsel fees
and court costs incurred by reason of its position or actions taken pursuant to
these Escrow Instructions. The Principals hereby agree that the Escrow Agent
shall not be liable to any of them for any actions taken by Escrow Agent
pursuant to the terms hereof.

COURT ORDERS - Escrow Agent is hereby authorized, in its exclusive discretion,
to obey and comply with all writs, orders, judgments or decrees issued by any
court or administrative agency affecting any money, documents or things held by
Escrow Agent, Escrow Agent shall not be liable to any of the parties hereto,
their successors, heirs or personal representatives by reason of Escrow Agent's
compliance with such writ, order, judgment or decree, notwithstanding if such
writ, order, judgment or decree is later reversed, modified, set aside or
vacated.

ATTORNEY'S FEES - If any action be brought to interpret or enforce these
instructions, or any part thereof, the Principals jointly and severally agree to
pay to Escrow Agent all Escrow Agent's attorney fees, accounting fees, special
and extra service fees and other costs related to such action.

CANCELLATION - In the event the escrow established hereby is cancelled, the
Principals jointly and severally shall nevertheless pay to the Escrow Agent the
initial fee together with all costs end expenses of Escrow Agent, including
attorney fees. Notwithstanding anything in these instructions to the contrary,
Escrow Agent may, in its sole discretion, upon ten (10) days written notice to
any of the Principals, resign as Escrow Agent and shall be entitled to
reimbursement for those costs and expenses incurred to the date of such
resignation. Upon cancellation by the Principals or resignation by Escrow Agent,
after deducting Escrow Agent's fees, costs and expenses, the balance of any
funds or Property shall be returned to the respective Principals who shall have
deposited same.

FEES AND CHARGES - In the event that (a) Escrow Agent performs any services not
specifically provided for herein or (b) there is an assignment or attachment of
any interest in the subject matter of the escrow established hereby or any
modification thereof, or (c) any dispute or controversy arises hereunder, or (d)
Escrow Agent is named a party to, or intervenes in, any litigation pertaining to
this escrow or the subject matter thereof, Escrow Agent shall, in addition to
fees and charges for ordinary services, be reasonably compensated therefore and
reimbursed for all costs and expenses, including attorneys' fees, occasioned
thereby. Escrow Agent shall have a first lien on the Property for such
compensation and

                                       A-2
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expenses, and the Principals agree jointly and severally to pay the same for
its ordinary services hereunder.

Escrow Agent shall be entitled to an initial, non-refundable set-up fee
("initial fee") of $1,500.00, payable concurrently with its acceptance, and to
additional compensation for wire fees, messenger fees, $250.00 yearly hold-open
fee (due if escrow open over 1 year from the date of these instructions), and/or
any other reasonable and necessary out-of-pocket expenses incurred by Escrow
Agent.

The Principals understand that Escrow Agent will charge additional fees,
including premium hourly fees, for any services performed according to these
Escrow Instructions, or any modification or any service not specifically
provided therein, that involve concerted effort, employees working overtime,
expedited handling of any aspect of the Escrow, or other similar services.

SIGNATURES - These instructions may be executed in counterparts, each of which
so executed shall be deemed as original, irrespective of the date of its
execution and delivery, and said counterparts together shall constitute one and
the same instrument.









                                       A-3
<PAGE>


                        U.S. BANK, NATIONAL ASSOCIATION

                                SCHEDULE OF FEES

                                       FOR

                          CORNERSTONE REALTY FUND, LLC

<TABLE>
<S>                                                                                    <C>
Acceptance Fee (Non-Refundable).......................................................  $1,500.00

Additional Escrow Fees of $1.00 per $1,000.00 subscription funds
  as received in escrow in excess of $1,500,000.00. Yearly Hold-Open Fee
  (due if escrow open over 1 year from the date of these instructions)................  $  250.00

Wire fee, per wire....................................................................  $   25.00

Disbursement fee, per check...........................................................  $   25.00

Reasonable and customary charges for unscheduled services, including messenger
   fees, federal express charges or other
   out-of pocket expense..............................................................    various
</TABLE>






                                       A-4