EXHIBIT 10.20

LOAN NO.: 26-5950380                                    THE MAYFLOWER APARTMENTS
                                                        VIRGINIA BEACH, VIRGINIA

                        ENVIRONMENTAL INDEMNITY AGREEMENT

         THIS ENVIRONMENTAL  INDEMNITY AGREEMENT (this "Agreement"),  made as of
December 12, 2000 jointly and severally by CRIT-VA, INC., a Virginia corporation
("Borrower"),  whose address is 306 East Main Street, Richmond,  Virginia 23219,
and  by  CORNERSTONE   REALTY  INCOME  TRUST,   INC.,  a  Virginia   corporation
("Principal") whose address is 306 East Main Street,  Richmond,  Virginia 23219,
Attention:  Glade M. Knight  (Borrower  and Principal  being  referred to herein
collectively as  "Indemnitors"  and individually as  "Indemnitor"),  in favor of
FIRST UNION  NATIONAL BANK, a national  banking  association  ("Lender"),  whose
address is One First Union Center,  301 South College Street,  Mailcode NC 0166,
Charlotte, North Carolina 28288, Attention: Contract Finance.

                              W I T N E S S E T H :
                              - - - - - - - - - -

         WHEREAS,  Lender has  extended to  Borrower a loan (the  "Loan") in the
principal  amount of Ten  Million  Five  Hundred  Thousand  and  No/100  Dollars
($10,500,000.00); and

         WHEREAS,  the Loan is evidenced by a Promissory Note (the "Note") dated
of even date herewith,  executed by Borrower and payable to the order of Lender,
in the stated  principal  amount of Ten Million Five Hundred Thousand and No/100
Dollars  ($10,500,000.00),  and is  secured  by a Deed  of  Trust  and  Security
Agreement (the "Deed of Trust") dated of even date  herewith,  from Borrower for
the benefit of Lender,  encumbering  that certain real property  situated in the
Virginia Beach,  Commonwealth of Virginia, as is more particularly  described on
Exhibit A attached hereto and  incorporated  herein by this reference,  together
with the buildings,  structures and other  improvements now or hereafter located
thereon (said real property, buildings,  structures and other improvements being
hereinafter  collectively referred to as the "Property"),  and by the other Loan
Documents (as defined in the Deed of Trust); and

         WHEREAS,  as a condition to making the Loan,  Lender has required  that
Indemnitors  indemnify  Lender  with  respect  to any  past,  present  or future
environmental  conditions or liabilities on, in, under,  affecting or in any way
associated with the Property as herein set forth.

         NOW, THEREFORE,  to induce Lender to extend the Loan to Borrower and in
consideration  of the  foregoing  premises  and  for  other  good  and  valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
Indemnitors hereby covenant and agree for the benefit of Lender, as follows:

         1.  Indemnity.  Indemnitors  hereby agree to pay,  protect,  defend (at
trial  and  appellate  levels  and  with  attorneys,   consultants  and  experts
reasonably acceptable to Lender),

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and save Lender harmless from and against,  and hereby indemnify Lender from and
against any and all liens, damages (including,  without limitation,  punitive or
exemplary damages), losses, liabilities (including,  without limitation,  strict
liability),  obligations,  settlement payments,  penalties,  fines, assessments,
citations,  directives, claims, litigation, demands, defenses, judgments, suits,
proceedings,  costs,  disbursements  and  expenses  of any kind or of any nature
whatsoever (including, without limitation,  reasonable attorneys',  consultants'
and  experts'  fees  and  disbursements   actually  incurred  in  investigating,
defending,   settling  or  prosecuting  any  claim,  litigation  or  proceeding)
(collectively  "Costs")  which may at any time be imposed  upon,  incurred by or
asserted or awarded  against  Lender,  Indemnitors or the Property,  and arising
from  or out  of,  whether  now,  hereafter  or  heretofore  occurring:  (i) any
violation or alleged  violation of, or liability or alleged liability under, any
local, state or federal law, rule or regulation or common law duty pertaining to
human  health  as  affected  by  the  environment,   natural  resources  or  the
environment,  including,  without  limitation,  the Comprehensive  Environmental
Response,  Compensation  and  Liability Act of 1980 (42  U.S.C.ss.9601  et seq.)
("CERCLA"), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.ss.6901
et seq.),  the Federal Water Pollution  Control Act (33  U.S.C.ss.1251 et seq.),
the Clean  Air Act (42  U.S.C.ss.  7401 et seq.),  the  Emergency  Planning  and
Community-Right-to-Know Act (42 U.S.C.ss. 11001 et seq.), the Endangered Species
Act (16 U.S.C. ss. 1531 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.
2601 et seq.), the Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.)
and the Hazardous  Materials  Transportation Act (49 U.S.C.ss.1801 et seq.), and
those relating to Lead Based Paint (as hereinafter  defined) and the regulations
promulgated   pursuant  to  said  laws,  all  as  amended  from  time  to  time,
(collectively,  "Environmental  Laws"),  relating to or affecting  the Property,
whether  or not  caused  by or  within  the  control  of  Indemnitors;  (ii) the
presence, release or threat of release of or exposure to any hazardous, toxic or
harmful  substances,   wastes,  materials  containing  more  than  1%  asbestos,
pollutants  or  contaminants  (including,  without  limitation,  polychlorinated
biphenyls, petroleum or petroleum products or byproducts,  flammable explosives,
radioactive materials, paint containing more than .05% lead by dry weight ("Lead
Based Paint"),  infectious  substances or raw materials which include  hazardous
constituents)  or any other  substances or materials which are included under or
regulated by Environmental Laws (collectively, "Hazardous Substances") or radon,
on, in, under or affecting all or any portion of the Property or any surrounding
areas,  regardless  of  whether  or not  caused  by or  within  the  control  of
Indemnitors;  (iii) any transport,  treatment,  recycling,  storage, disposal or
arrangement   therefor  of  Hazardous   Substances   whether  on  the  Property,
originating from the Property,  or otherwise  associated with the Indemnitors or
any  operations  conducted  on the  Property  at any time;  (iv) the  failure by
Indemnitors to comply fully with the terms and conditions of this Agreement; (v)
the breach of any  representation or warranty contained in this Agreement in any
material  respect;  (vi)  the  enforcement  of  this  Agreement,  or  (vii)  any
environmental investigation, assessment, audit or review conducted in connection
with the Property or the  operations  conducted at any time thereon,  including,
without  limitation,  the cost of assessment,  investigation,  and to the extent
required by Environmental Laws,  containment,  removal and/or remediation of any
and all  Hazardous  Substances  from all or any  portion of the  Property or any
surrounding  areas,  the cost of any actions  taken in response to the presence,
release or threat of  release  of any  Hazardous  Substances  on,  in,  under or
affecting  any portion of the  Property or any  surrounding  areas to prevent or
minimize  such  release  or threat of  release  so that it does not  migrate  or
otherwise cause or threaten  danger to present or future public health,  safety,
welfare or the environment, and costs incurred to comply with Environmental Laws
in connection with

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all or any portion of the Property or any surrounding areas.  "Costs" as used in
this Agreement shall also include,  but not be limited to, any diminution in the
value of the security  afforded by the  Property or any future  reduction of the
sales price of the Property by reason of any matter set forth in this Section 1.
The foregoing  indemnity shall  specifically not include any such costs relating
to Hazardous  Substances which are initially placed on, in or under the Property
after  foreclosure  or other  taking of title to the  Property  by Lender or its
successor or assigns,  or which are finally  determined  by a court of competent
jurisdiction to have been caused by the gross  negligence or willful  misconduct
of Lender.

         2.  Representations  and Warranties.  Indemnitors  hereby represent and
warrant to and covenant and agree with Lender as follows:

         (a) To the best of Indemnitors' knowledge, information and belief, none
of the Borrower nor the Property or any tenant at the Property or the operations
conducted thereon is in direct or indirect  violation of or otherwise exposed to
any liability under any Environmental Law;

         (b) To the best of Indemnitors'  knowledge,  information and belief, no
Hazardous  Substances  are  located  on,  in or  under  or  have  been  handled,
generated,  stored,  processed  or  disposed  of on, in or under or  released or
discharged from the Property (including underground  contamination),  except for
those  substances  used by Borrower in the ordinary  course of its business,  in
compliance  with all  Environmental  Laws and where such could not reasonably be
expected to give rise to liability under Environmental Laws;

         (c) To the best of  Indemnitors'  knowledge,  information  and  belief,
radon is not present at the Property in excess or in violation of any applicable
thresholds  or  standards  or in  amounts  that  require  under  applicable  law
disclosure  to any tenant or  occupant  of or invitee to the  Property or to any
governmental agency or the general public.

         (d) To the best of Indemnitors' knowledge,  information and belief, the
Property  is not  subject to any  private or  governmental  lien or  judicial or
administrative notice or action arising under Environmental Laws;

         (e) There is no pending, nor, to Indemnitors' knowledge, information or
belief,   threatened  litigation  arising  under  Environmental  Laws  affecting
Borrower or the Property;

         (f) To the best of  Indemnitors'  knowledge,  information  and  belief,
there are no and have been no  underground  storage  tanks or other  underground
storage  receptacles  or  surface   impoundments  for  Hazardous  Substances  or
landfills or dumps on the Property;

         (g)  Indemnitors  have  received  no  notice  of,  and to the  best  of
Indemnitors'  knowledge  and  belief,  there  exists no  investigation,  action,
proceeding  or claim by any agency,  authority or unit of  government  or by any
third party which could result in any liability,  penalty,  sanction or judgment
under any Environmental Laws with respect to any condition,  use or operation of
the Property,  nor do Indemnitors  know of any basis for such an  investigation,
action, proceeding or claim;

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         (h)  Indemnitors  have  received  no  notice  that,  and to the best of
Indemnitors'  knowledge  and belief,  there has been no claim by any party that,
any use,  operation  or condition of the Property has caused any nuisance or any
other liability or adverse  condition on any other property,  nor do Indemnitors
know of any basis for such a claim;

         (i)  Indemnitors  have not  received  nor to the  best of  Indemnitors'
knowledge,   information   and  belief  has  there  been  issued,   any  notice,
notification,  demand, request for information,  citation,  summons, or order in
any way  relating to any actual,  alleged or  potential  violation  or liability
arising under Environmental Laws; and

         (j) To the best of Indemnitors' knowledge,  information and belief, the
Property is not listed or, to the best of  Indemnitors'  knowledge,  information
and belief,  proposed for listing on the National  Priorities  List  promulgated
pursuant to CERCLA,  on CERCLIS (as defined in CERCLA) or on any similar federal
or state list of sites requiring environmental investigation or clean-up.

         3. Covenants of Indemnitors.

         (a) Indemnitors  shall comply with all applicable  Environmental  Laws.
Indemnitors  shall  keep or cause the  Property  to be kept free from  Hazardous
Substances  (except those  substances used by Borrower in the ordinary course of
its business, in compliance with all Environmental Laws and where such could not
reasonably be expected to give rise to liability under  Environmental  Laws) and
except in compliance with all Environmental Laws,  Indemnitors shall not install
or use any underground  storage tanks.  Indemnitors shall expressly prohibit the
use,  generation,  handling,  storage,  production,  processing  and disposal of
Hazardous  Substances by all tenants of space in the  Improvements in quantities
or conditions that would violate or give rise to any obligation to take remedial
or other action under any applicable  Environmental  Laws.  Without limiting the
generality  of the  foregoing,  during the term of this  Agreement,  Indemnitors
shall  not  install  in  the  Improvements  or  permit  to be  installed  in the
Improvements any materials containing more than 1% asbestos. Indemnitors further
acknowledge  and agree that Lender has no duty to provide  Indemnitors  with any
information regarding the Environmental Laws or any interpretation thereof.

         (b) Indemnitors shall immediately notify Lender should Indemnitors,  or
either of them,  become  aware of (i) the actual or  potential  existence of any
Hazardous Substances on the Property, other than those occurring in the ordinary
course of Borrower's  business and which do not violate,  or would not otherwise
give rise to liability under Environmental Laws, (ii) any violation of, or other
exposure to liability under, any  Environmental  Laws, (iii) any lien, action or
notice  affecting  the  Property or Borrower  resulting  from any  violation  or
alleged  violation of or liability or alleged  liability under any Environmental
Laws,  (iv)  the  institution  of  any  investigation,   inquiry  or  proceeding
concerning  Borrower  or the  Property  pursuant  to any  Environmental  Laws or
otherwise  relating  to  Hazardous  Substances,  or  (v)  the  discovery  of any
occurrence, condition or state of facts which would render any representation or
warranty  contained in this Agreement  incorrect in any material respect if made
at the time of such discovery. Immediately upon receipt of same, Indemnitors, or
either of them,  shall  deliver  to

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Lender copies of any and all requests for  information,  complaints,  citations,
summonses,  orders,  notices,  reports  or other  communications,  documents  or
instruments in any way relating to any actual, alleged or potential violation or
liability of any nature whatsoever arising under Environmental Laws and relating
to the Property or to Borrower. Indemnitors shall remedy or cause to be remedied
in a timely  manner  (and in any  event  within  the time  period  permitted  by
applicable  Environmental  Laws)  any  violation  of  Environmental  Laws or any
condition that could give rise to liability under  Environmental  Laws.  Without
limiting  the  foregoing,  Indemnitors  shall,  at their own  expense,  take all
actions required by applicable  Environmental  Laws, for the clean-up of any and
all  portions of the Property or other  affected  property,  including,  without
limitation,  all investigative,  monitoring,  removal,  containment and remedial
actions in accordance with all applicable  Environmental Laws (and in all events
in a manner satisfactory to Lender),  and shall further pay or cause to be paid,
at no expense to Lender,  all clean-up,  administrative and enforcement costs of
applicable  governmental  agencies which may be asserted against  Indemnitors or
the Property.

         (c) Upon the request of Lender following the occurrence and continuance
of an Event of Default or at such other time as Lender has reasonable grounds to
believe that Hazardous Substances are or have been released,  stored or disposed
of on or around the  Property or that the  Property  may be in  violation of the
Environmental  Laws,  Indemnitors  shall  perform or cause to be  performed,  at
Indemnitors'  sole  expense and in scope,  form and  substance  satisfactory  to
Lender,  an inspection or audit of the Property  prepared by a hydrogeologist or
environmental  engineer  or other  appropriate  consultant  approved  by  Lender
indicating the presence or absence of Hazardous Substances on the Property,  the
compliance or non-compliance status of the Property and the operations conducted
thereon with  applicable  Environmental  Laws,  or an inspection or audit of the
Property  prepared  by an  engineering  or  consulting  firm  approved by Lender
indicating the presence or absence of friable asbestos or substances  containing
in excess of 1% asbestos or lead or substances  containing lead on the Property.
If Indemnitors fail to provide reports of such inspection or audit within thirty
(30) days after such request,  Lender may order the same, and Indemnitors hereby
grant to Lender access to the Property and an  irrevocable  license to undertake
such inspection or audit. The cost of such inspection or audit shall be included
in Costs  and  shall be paid by  Indemnitors  in  accordance  with the  terms of
Section 4(c) hereof.

         (d) If, prior to the date hereof,  it was determined  that the Property
contains Lead Based Paint,  the  assessment  report  describing the location and
condition  of the Lead Based  Paint (a "Lead  Based  Paint  Report") is attached
hereto  and made a part  hereof as Exhibit  A. If, at any time  hereafter,  Lead
Based Paint is suspected of being present on the Property, Indemnitors agree, at
their sole cost and expense and within sixty (60) days  thereafter,  to cause to
be prepared a Lead Based Paint Report prepared by an expert,  and in form, scope
and substance, acceptable to Lender.

         (e) Indemnitors  agree that if it has been, or if at any time hereafter
it is,  determined  that the Property  contains  Lead Based Paint,  on or before
thirty (30) days following (i) the date hereof,  if such  determination was made
prior to the date hereof or (ii) such  determination,  if such  determination is
hereafter  made,  as  applicable,  Indemnitors  shall,  at their  sole  cost and
expenses,  develop and  implement,  and thereafter  diligently and  continuously
carry out (or cause to be

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developed and  implemented  and  thereafter  diligently  and  continually  to be
carried out), an operations,  abatement and maintenance  plan for the Lead Based
Paint on the  Property,  which plan shall be  prepared  by an expert,  and be in
form, scope and substance, acceptable to Lender (together with any plan attached
hereto as Exhibit B, the "O&M Plan"). (If an O&M Plan has been prepared prior to
the date  hereof,  same is attached  hereto and made a part hereof as Exhibit B,
and Indemnitors  agree to diligently and  continually  carry out (or cause to be
carried out) the provisions thereof.) Compliance with the O&M Plan shall require
or be  deemed  to  require,  without  limitation,  the  proper  preparation  and
maintenance of all records,  papers and forms  required under the  Environmental
Laws.

         4. Indemnification Procedures.

         (a) If any action shall be brought against Lender based upon any of the
Costs for which Lender is indemnified hereunder, Lender shall notify Indemnitors
in writing  thereof and Indemnitors  shall promptly assume the defense  thereof,
including,  without limitation,  the employment of counsel reasonably acceptable
to Lender and the negotiation of any  settlement;  provided,  however,  that any
failure  of Lender to notify  Indemnitors  of such  matter  shall not  impair or
reduce the obligations of Indemnitors hereunder.  In the event Indemnitors shall
fail to  discharge  or undertake  to defend  Lender  against any claim,  loss or
liability  for which Lender is  indemnified  hereunder,  Lender may, at its sole
option and election,  defend or settle such claim, loss or liability,  and, upon
prior  notice to  Indemnitors,  Lender  shall have the right,  at the expense of
Indemnitors  (which  expense  shall be  included in Costs),  to employ  separate
counsel in any such  action  and to  participate  in the  defense  thereof.  The
liability of Indemnitors to Lender  hereunder shall be conclusively  established
by such settlement (absent manifest error),  provided such settlement is made in
good  faith,  the  amount  of such  liability  to  include  both the  settlement
consideration  and  the  costs  and  expenses,   including,  without  limitation
reasonable  attorney's fees and  disbursements,  actually  incurred by Lender in
effecting such settlement. In such event, such settlement  consideration,  costs
and expenses  shall be included in Costs and  Indemnitors  shall pay the same as
hereinafter provided.

         (b) Indemnitors shall not, without the prior written consent of Lender,
such  consent  not  to be  unreasonably  withheld  or  delayed:  (i)  settle  or
compromise any action, suit,  proceeding or claim or consent to the entry of any
judgment that does not include as an unconditional  term thereof the delivery by
the claimant or plaintiff  to Lender of a full and complete  written  release of
Lender  (in  form,  scope  and  substance  satisfactory  to  Lender  in its sole
discretion)  from all liability in respect of such action,  suit,  proceeding or
claim and a dismissal with prejudice of such action, suit,  proceeding or claim;
or (ii) settle or compromise any action, suit, proceeding or claim in any manner
that may adversely  affect  Lender or obligate  Lender to pay any sum or perform
any obligation as determined by Lender.

         (c) All Costs shall be immediately  reimbursable  to Lender when and as
incurred and, in the event of any litigation, claim or other proceeding, without
any requirement of waiting for the ultimate outcome of such litigation, claim or
other  proceeding,  and Indemnitors shall pay to Lender any and all Costs within
ten (10) days after written  notice from Lender  itemizing in reasonable  detail
the  amounts  thereof  incurred to the date of such  notice.  In addition to any
other remedy  available for the failure of Indemnitors to periodically  pay such
Costs,  such Costs, if not paid within said ten-day period,  shall bear interest
at the  Default  Interest  Rate (as  defined  in the  Note)  and such  costs and
interest  shall be additional  indebtedness  of Borrower  secured by the Deed of
Trust and by the other Loan Documents securing all or part of the Loan.

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         5. Reinstatement of Obligations.  If at any time all or any part of any
payment made by Indemnitors or received by Lender from Indemnitors under or with
respect to this  Agreement  is or must be  rescinded  or returned for any reason
whatsoever  (including,  but not  limited  to,  the  insolvency,  bankruptcy  or
reorganization  of  either  Indemnitor),  then the  obligations  of  Indemnitors
hereunder shall, to the extent of the payment  rescinded or returned,  be deemed
to have continued in existence,  notwithstanding  such previous  payment made by
Indemnitors, or receipt of payment by Lender, and the obligations of Indemnitors
hereunder  shall continue to be effective or be reinstated,  as the case may be,
as to such payment, all as though such previous payment by Indemnitors had never
been made.

         6.  Waivers by  Indemnitors.  To the fullest  extent  permitted by law,
Indemnitors hereby waive and agree not to assert or take advantage of:

         (a) Any right to require Lender to proceed  against any other person or
to  proceed  against or exhaust  any  security  held by Lender at any time or to
pursue any other remedy in Lender's  power or under any other  agreement  before
proceeding against Indemnitors hereunder;

         (b) Any  defense  that may arise by reason of the  incapacity,  lack of
authority,  death or disability of any other person or persons or the failure of
Lender  to file or  enforce  a claim  against  the  estate  (in  administration,
bankruptcy or any other proceeding) of any other person or persons;

         (c)  Except as  expressly  provided  herein,  demand,  presentment  for
payment, notice of nonpayment,  protest, notice of protest and all other notices
of any  kind,  or the  lack of any  thereof,  including,  without  limiting  the
generality of the foregoing,  notice of the existence,  creation or incurring of
any new or additional  indebtedness or obligation or of any action or non-action
on the part of Lender,  any  endorser or creditor  of either  Indemnitor  or any
other person whomsoever under this or any other Loan Documents held by Lender;

         (d)      Any defense based upon an election of remedies by Lender;

         (e) Any right or claim of right to cause a marshaling  of the assets of
either Indemnitor;

         (f) Any principle or provision of law, statutory or otherwise, which is
or might be in conflict with the terms and provisions of this Agreement;

         (g) Any duty on the part of Lender to disclose to Indemnitors any facts
Lender may now or  hereafter  know  about the  Property,  regardless  of whether
Lender has reason to believe  that any such facts  materially  increase the risk
beyond  that which  Indemnitors  intend to assume or has reason to believe  that
such  facts are  unknown  to  Indemnitors  or has a  reasonable  opportunity  to
communicate  such facts to  Indemnitors,  it being  understood  and agreed  that
Indemnitors  are  fully  responsible  for  being  and  keeping  informed  of the
condition of the Property and of any and all  circumstances  bearing on the risk
that liability may be incurred by Indemnitors hereunder;

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         (h) Any lack of notice of  disposition  or of manner of  disposition of
any collateral for the Loan;

         (i) Any invalidity,  irregularity or  unenforceability,  in whole or in
part, of any one or more of the Loan Documents;

         (j)  Any  lack  of  commercial   reasonableness  in  dealing  with  the
collateral for the Loan;

         (k) Any  deficiencies  in the collateral for the Loan or any deficiency
in the ability of Lender to collect or to obtain performance from any persons or
entities  now or  hereafter  liable  for  the  payment  and  performance  of any
obligation hereby guaranteed;

         (l) An assertion or claim that the automatic stay provided by 11 U.S.C.
ss.362  (arising  upon the  voluntary or  involuntary  bankruptcy  proceeding of
Borrower) or any other stay provided  under any other debtor relief law (whether
statutory,  common law, case law or otherwise) of any  jurisdiction  whatsoever,
now or hereafter in effect, which may be or become applicable,  shall operate or
be interpreted to stay, interdict,  condition,  reduce or inhibit the ability of
Lender to enforce any of its rights,  whether now or hereafter  required,  which
Lender may have against Principal or the collateral for the Loan;

         (m) Any  modifications  of the  Loan  Documents  or any  obligation  of
Borrower  relating  to the Loan by  operation  of law or by action of any court,
whether pursuant to the Bankruptcy Reform Act of 1978, as amended,  or any other
debtor relief law (whether statutory,  common law, case law or otherwise) of any
jurisdiction whatsoever, now or hereafter in effect, or otherwise; and

         (n) Any action, occurrence, event or matter consented to by Indemnitors
under Section 7(i) hereof, under any other provision hereof, or otherwise.

         7. General Provisions.

         (a)  Fully  Recourse.  All  Costs  guaranteed  hereunder  are  recourse
obligations  of  Indemnitors  and not  restricted by any  limitation on recourse
liability set forth in any of the Loan Documents.

         (b) Right to Indemnification Not Affected by Knowledge.  Lender's right
to  defense,  indemnification,  payment of costs or other  remedy  based on this
Agreement  shall not be diminished  or affected in any way by any  investigation
conducted by Lender or other  knowledge  acquired (or capable of being acquired)
in any way by Lender at any time.

         (c) Unsecured Obligations. Indemnitors hereby acknowledge that Lender's
appraisal  of the  Property  is such that  Lender is not  willing  to accept the
consequences of the inclusion of

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Indemnitors'  indemnity  set forth herein among the  obligations  secured by the
Deed of Trust and the other Loan  Documents  and that Lender  would not make the
Loan but for the unsecured recourse liability  undertaken by Indemnitors herein.
Indemnitors  further hereby  acknowledge  that even though the  representations,
warranties,  covenants or  agreements  of  Indemnitors  contained  herein may be
identical or substantially similar to representations,  warranties, covenants or
agreements of Borrower set forth in the Deed of Trust and secured  thereby,  the
obligations of  Indemnitors  under this Agreement are not secured by the lien of
the Deed of Trust or the security interests or other collateral described in the
Deed of Trust or the other  Loan  Documents,  it being  the  intent of Lender to
create  separate  obligations  of  Indemnitors  hereunder  which can be enforced
against  Indemnitors  without  regard to the  existence  of the Deed of Trust or
other Loan Documents or the liens or security interests created therein.

         (d) Survival. This Agreement shall be deemed to be continuing in nature
and shall  remain in full force and effect and shall  survive the payment of the
indebtedness evidenced and secured by the Loan Documents and the exercise of any
remedy by Lender  under  the Deed of Trust or any of the other  Loan  Documents,
including, without limitation, any foreclosure or deed in lieu thereof, even if,
as a part of such remedy, the Loan is paid or satisfied in full.

         (e) No Subrogation;  No Recourse  Against Lender.  Notwithstanding  the
satisfaction by Principal of any liability  hereunder,  Principal shall not have
any right of subrogation, contribution, reimbursement or indemnity whatsoever or
any right of recourse  to or with  respect to the assets or property of Borrower
or to any collateral for the Loan. In connection  with the foregoing,  Principal
expressly  waives any and all rights of subrogation to Lender against  Borrower,
and  Principal  hereby  waives any rights to enforce any remedy which Lender may
have against  Borrower and any right to  participate  in any  collateral for the
Loan.  In addition to and without in any way limiting the  foregoing,  Principal
hereby  subordinates  any and all indebtedness of Borrower now or hereafter owed
to Principal to all  indebtedness of Borrower to Lender,  and agrees with Lender
that  Principal  shall not demand or accept any payment of principal or interest
from  Borrower,  shall not claim any offset or other  reduction  of  Principal's
obligations  hereunder  because of any such  indebtedness and shall not take any
action  to  obtain  any  of the  collateral  from  the  Loan.  Further,  neither
Indemnitor  shall  have any right of  recourse  against  Lender by reason of any
action Lender may take or omit to take under the provisions of this Agreement or
under the provisions of any of the Loan Documents.

         (f)  Reservation of Rights.  Nothing  contained in this Agreement shall
prevent  or in any way  diminish  or  interfere  with any  rights  or  remedies,
including, without limitation, the right to contribution or cost recovery, which
Lender  may  have  against  either  Indemnitor  or any  other  party  under  the
Comprehensive  Environmental  Response,  Compensation  and Liability Act of 1980
(codified at Title 42 U.S.C. ss.9601 et seq.), as it may be amended from time to
time,  or any other  applicable  federal,  state or local laws,  all such rights
being hereby expressly reserved.

         (g) Financial Statements.  Each Indemnitor hereby agrees, as a material
inducement to Lender to make the Loan to Borrower, to comply with the provisions
of  Section  1.18  of the  Deed of  Trust  as  concerns  such  Indemnitor.  Each
Indemnitor  hereby  warrants and represents unto Lender that any and all balance
sheets, net worth statements and other financial data which have heretofore been
given or may hereafter be given to Lender with respect to said Indemnitor did or
will at the time of such delivery  fairly and  accurately  present the financial
condition of said Indemnitor.

                                       9

<PAGE>


         (h) Rights Cumulative;  Payments.  Lender's rights under this Agreement
shall be in addition to all rights of Lender  under the Note,  the Deed of Trust
and the other Loan Documents.  FURTHER,  PAYMENTS MADE BY INDEMNITORS UNDER THIS
AGREEMENT SHALL NOT REDUCE IN ANY RESPECT BORROWER'S OBLIGATIONS AND LIABILITIES
UNDER THE  NOTE,  THE DEED OF TRUST AND THE OTHER  LOAN  DOCUMENTS  EXCEPT  WITH
RESPECT TO, AND TO THE EXTENT OF,  BORROWER'S  OBLIGATION  AND LIABILITY FOR THE
PAYMENT MADE BY INDEMNITORS.

         (i) No Limitation on Liability.  Indemnitors  hereby  consent and agree
that Lender may at any time and from time to time without  further  consent from
Indemnitors  do any of the following  events,  and the liability of  Indemnitors
under this Agreement shall be unconditional  and absolute and shall in no way be
impaired or limited by any of the following  events,  whether  occurring with or
without notice to Indemnitors or with or without  consideration  unless the same
shall  have the  effect  of  satisfying  Borrower's  obligations  under the Loan
Documents:  (i) any  extensions of time for  performance  required by any of the
Loan Documents or extension or renewal of the Note; (ii) any sale, assignment or
foreclosure of the Note, the Deed of Trust or any of the other Loan Documents or
any sale or transfer of the Property,  (but subject to the provisions of Section
1.5(d)(C)(5)  of the Note and Section  1.13(b)(10) of the Deed of Trust);  (iii)
any change in the composition of Borrower,  including,  without limitation,  the
withdrawal  or removal of  Indemnitors  from any  current or future  position of
ownership, management or control of Borrower; (iv) the accuracy or inaccuracy of
the  representations and warranties made by Indemnitors herein or by Borrower in
any of the Loan Documents; (v) the release of Borrower or of any other person or
entity from performance or observance of any of the agreements, covenants, terms
or  conditions  contained  in any of the Loan  Documents  by  operation  of law,
Lender's  voluntary act or otherwise;  (vi) the release or substitution in whole
or in part of any security for the Loan;  (vii)  Lender's  failure to record the
Deed of Trust or to file any financing statement (or Lender's improper recording
or filing thereof) or to otherwise perfect,  protect,  secure or insure any lien
or security  interest given as security for the Loan; or (viii) the modification
of the  terms of any one or more of the Loan  Documents.  No such  action  which
Lender shall take or fail to take in connection  with the Loan  Documents or any
collateral  for the Loan,  nor any course of dealing with  Borrower or any other
person,  shall  limit,  impair or release  Indemnitors'  obligations  hereunder,
affect this  Agreement in any way or afford  Indemnitors  any  recourse  against
Lender.  Nothing  contained in this Section shall be construed to require Lender
to take or refrain from taking any action referred to herein.

         (j) Entire Agreement; Amendment;  Severability. This Agreement contains
the entire agreement between the parties respecting the matters herein set forth
and supersedes  (except as to the Deed of Trust) all prior  agreements,  whether
written or oral, between the parties respecting such matters.  Any amendments or
modifications hereto, in order to be effective, shall be in writing and executed
by the parties hereto.  A determination  that any provision of this Agreement is
unenforceable or invalid shall not affect the  enforceability or validity of any
other provision,  and any determination that the application of any provision of
this Agreement to any person or circumstance is illegal or  unenforceable  shall
not affect the  enforceability  or validity of such provision as it may apply to
any other persons or circumstances.

                                       10

<PAGE>


         (k) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED,  EXCEPT
TO THE EXTENT THAT THE APPLICABILITY OF ANY OF SUCH LAWS MAY NOW OR HEREAFTER BE
PREEMPTED  BY FEDERAL LAW, IN WHICH CASE SUCH FEDERAL LAW SHALL SO GOVERN AND BE
CONTROLLING.

         (l) Binding  Effect;  Waiver of Acceptance.  This Agreement  shall bind
each Indemnitor and the heirs, personal representatives,  successors and assigns
of each  Indemnitor  and shall inure to the benefit of Lender and the  officers,
directors,  shareholders,  agents and  employees of Lender and their  respective
heirs,  personal  representatives,  successors and assigns.  Notwithstanding the
foregoing,  Indemnitors  shall  not  assign  any of their  respective  rights or
obligations  under this Agreement  without the prior written  consent of Lender,
which consent may be withheld by Lender in its sole discretion.  Each Indemnitor
hereby waives any  acceptance of this  Agreement by Lender,  and this  Agreement
shall immediately be binding upon Indemnitors.

         (m) Notice. All notices,  demands,  requests or other communications to
be sent by one  party to the  other  hereunder  or  required  by law shall be in
writing and shall be deemed to have been validly  given or served by delivery of
the same in person to the intended  addressee,  or by  depositing  the same with
Federal Express or another  reputable  private courier service for next business
day  delivery to the  intended  addressee  at its address set forth on the first
page of this  Agreement or at such other  address as may be  designated  by such
party as herein  provided,  or by depositing the same in the United States mail,
postage  prepaid,  registered  or  certified  mail,  return  receipt  requested,
addressed to the  intended  addressee at its address set forth on the first page
of this Agreement or at such other address as may be designated by such party as
herein provided. All notices,  demands and requests shall be effective upon such
personal  delivery,  or one (1)  business  day after  being  deposited  with the
private courier  service,  or two (2) business days after being deposited in the
United  States mail as required  above.  Rejection or other refusal to accept or
the inability to deliver because of changed address of which no notice was given
as herein  required  shall be  deemed to be  receipt  of the  notice,  demand or
request  sent.  By giving to the other party hereto at least  fifteen (15) days'
prior written  notice  thereof in accordance  with the  provisions  hereof,  the
parties hereto shall have the right from time to time to change their respective
addresses  and each shall have the right to  specify  as its  address  any other
address within the United States of America.

         (n) No Waiver; Time of Essence; Business Days. The failure of any party
hereto to enforce any right or remedy hereunder, or to promptly enforce any such
right or remedy,  shall not  constitute  a waiver  thereof  nor give rise to any
estoppel  against  such party nor excuse any of the  parties  hereto  from their
respective obligations hereunder.  Any waiver of such right or remedy must be in
writing  and  signed by the party to be bound.  This  Agreement  is  subject  to
enforcement  at law or in equity,  including  actions  for  damages or  specific
performance.  Time is of the essence  hereof.  The term  "business  day" as used
herein shall mean a weekday,  Monday through Friday, except a legal holiday or a
day on which banking institutions in New York, New York are authorized by law to
be closed.

                                       11

<PAGE>

         (o) Captions for Convenience. The captions and headings of the sections
and paragraphs of this Agreement are for convenience of reference only and shall
not be construed in interpreting the provisions hereof.

         (p) Reasonable Attorney's Fees. In the event it is necessary for Lender
to retain the  services  of an  attorney  or any other  consultants  in order to
enforce this  Agreement,  or any portion  thereof,  Indemnitors  agree to pay to
Lender any and all costs and expenses, including, without limitation, reasonable
attorney's fees, incurred by Lender as a result thereof and such costs, fees and
expenses shall be included in Costs.

         (q)  Successive  Actions.  A separate right of action  hereunder  shall
arise  each  time  Lender  acquires  knowledge  of  any  matter  indemnified  by
Indemnitors under this Agreement. Separate and successive actions may be brought
hereunder to enforce any of the  provisions  hereof at any time and from time to
time. No action hereunder shall preclude any subsequent  action, and Indemnitors
hereby  waive and  covenant not to assert any defense in the nature of splitting
of causes of action or merger of judgments.

         (r) Reliance.  Lender would not make the Loan to Borrower  without this
Agreement. Accordingly, Indemnitors intentionally and unconditionally enter into
the covenants and agreements as set forth above and understand that, in reliance
upon and in  consideration  of such covenants and agreements,  the Loan shall be
made and, as part and parcel thereof,  specific  monetary and other  obligations
have  been,  are being  and shall be  entered  into  which  would not be made or
entered into but for such reliance.

         (s)  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an  original,  and all of which shall be taken to be one and the
same  instrument,  for the same effect as if all  parties  hereto had signed the
same  signature  page. Any signature page of this Agreement may be detached from
any  counterpart  of this  Agreement  without  impairing the legal effect of any
signatures thereon and may be attached to another  counterpart of this Agreement
identical  in form  hereto  but  having  attached  to it one or more  additional
signature pages.

         (t) SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

         (1) INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
(A)  SUBMIT TO  PERSONAL  JURISDICTION  IN THE STATE IN WHICH  THE  PROPERTY  IS
LOCATED  OVER ANY SUIT,  ACTION OR  PROCEEDING  BY ANY  PERSON  ARISING  FROM OR
RELATING TO THIS AGREEMENT,  (B) AGREE THAT ANY SUCH ACTION,  SUIT OR PROCEEDING
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT  JURISDICTION  SITTING
IN THE COUNTY AND STATE,  IN WHICH THE  PROPERTY IS  LOCATED,  (C) SUBMIT TO THE
JURISDICTION  OF SUCH COURTS,  AND (D) TO THE FULLEST

                                       12

<PAGE>


EXTENT PERMITTED BY LAW, AGREE THAT NEITHER OF THEM WILL BRING ANY ACTION,  SUIT
OR PROCEEDING  IN ANY OTHER FORUM (BUT NOTHING  HEREIN SHALL AFFECT THE RIGHT OF
LENDER TO BRING ANY ACTION, SUIT OR PROCEEDING IN ANY OTHER FORUM).

         (2) INDEMNITORS, TO THE FULL EXTENT PERMITTED BY LAW, HEREBY KNOWINGLY,
INTENTIONALLY  AND VOLUNTARILY,  WITH AND UPON THE ADVICE OF COMPETENT  COUNSEL,
WAIVE,  RELINQUISH  AND FOREVER FORGO THE RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR  PROCEEDING  BASED  UPON,  ARISING  OUT OF,  OR IN ANY WAY  RELATING  TO THIS
AGREEMENT OR ANY CONDUCT,  ACT OR OMISSION OF LENDER OR  INDEMNITORS,  OR ANY OF
THEIR DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, AGENTS OR ATTORNEYS, OR
ANY  OTHER  PERSONS  AFFILIATED  WITH  LENDER  OR  INDEMNITORS,  IN  EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.

         (u) Waiver by  Indemnitors.  Borrower and Principal  covenant and agree
that upon the commencement of a voluntary or involuntary  bankruptcy  proceeding
by or against Borrower, neither Borrower nor Principal shall seek a supplemental
stay or otherwise seek,  pursuant to 11 U.S.C.  ss.105 or any other provision of
the  Bankruptcy  Reform Act of 1978, as amended,  or any other debtor relief law
(whether  statutory,  common law, case law, or  otherwise)  of any  jurisdiction
whatsoever,  now or hereafter in effect,  which may be or become applicable,  to
stay, interdict,  condition,  reduce or inhibit the ability of Lender to enforce
any rights of Lender against Principal by virtue of this Agreement or otherwise.

         (v) Secondary  Market.  Lender may sell,  transfer and deliver the Loan
Documents  to  one or  more  investors  in the  secondary  mortgage  market.  In
connection  with such  sale,  Lender  may  retain or assign  responsibility  for
servicing  the Loan or may delegate  some or all of such  responsibility  and/or
obligations  to a servicer,  including,  but not limited to, any  subservicer or
master servicer, on behalf of the investors.

         (w)  Dissemination of Information.  If Lender determines at any time to
sell,  transfer or assign the Note,  the Security  Instrument and the other Loan
Documents including, but not limited to this Agreement, and any or all servicing
rights  with  respect  thereto,   or  to  grant   participations   therein  (the
"Participations")   or  issue  mortgage   pass-through   certificates  or  other
securities  evidencing  a  beneficial  interest  in a rated  or  unrated  public
offering or private  placement  (the  "Securities"),  Lender may forward to each
purchaser,  transferee,  assignee,  servicer,  participant,  investor,  or their
respective  successors in such Participations  and/or Securities  (collectively,
the  "Investor")  or any Rating  Agency (as defined in the Deed of Trust) rating
such  Securities,   each  prospective  Investor  and  each  of  the  foregoing's
respective  counsel,  all documents and information  which Lender now has or may
hereafter  acquire  relating to the debt evidenced by this Note and to Borrower,
any guarantor,  any indemnitor and the Property, which shall have been furnished
by Borrower,  any guarantor or any indemnitor as Lender determines  necessary or
desirable.


                                       13

<PAGE>


         IN WITNESS WHEREOF,  Indemnitors have executed this Agreement as of the
day and year first written above.

                                          BORROWER:

                                          CRIT-VA, INC.,
                                          a Virginia corporation

                                          By: /s/ Stanley J. Olander, Jr.
                                              ---------------------------
                                              Name:  Stanley J. Olander, Jr.
                                              Title: Vice President

                                          PRINCIPAL:

                                          CORNERSTONE REALTY INCOME TRUST, INC.,
                                          a Virginia corporation

                                          By: /s/ Stanley J. Olander, Jr.
                                              ---------------------------
                                              Name:  Stanley J. Olander, Jr.
                                              Title: Executive Vice President




<PAGE>




                                    EXHIBIT A

                                Legal Description

                                    [OMITED]