<PAGE>


                                                                    EXHIBIT 10.7


                            RECOURSE PROMISSORY NOTE


$800,000.00                                                       April 11, 2001


         FOR VALUE RECEIVED, Scott C. Verges, who resides at Berkeley,
California (hereinafter referred to as "Borrower"), hereby promises to pay to
the order of Burnham Pacific Properties, Inc., a Maryland corporation with its
principal place of business in San Diego, California (hereinafter referred to as
the "Company"), the principal amount of Eight Hundred Thousand Dollars
($800,000.00) subject to the terms and conditions set forth herein.

         1.       PURPOSE AND AUTHORITY. This Promissory Note (the "Note") is
entered into pursuant to the terms of that certain Executive Retention Agreement
entered into between the Company and Borrower as of April 11, 2001 (the
"Retention Agreement") in order to encourage Borrower to continue his employment
with the Company and to exert his best efforts toward the completion of the
liquidation of the Company. Capitalized terms used but not defined herein shall
have the meanings given to them in the Retention Agreement.

         2.       PAYMENT.

                  (a)      The entire principal balance and other charges as may
         be due hereunder shall be due and payable within five (5) days
         following the Borrower's termination of employment with the Company and
         its subsidiaries if such employment terminates prior to the Termination
         Date pursuant to a Voluntary Termination (the "Maturity Date")

                  (b)      Notwithstanding the foregoing, the full amount of
         this Note will be automatically forgiven (i) upon the Termination Date
         if Borrower remains in employment with the Company and its subsidiaries
         until the Termination Date or (ii) upon Borrower's termination of
         employment with the Company and its subsidiaries if the Borrower's
         employment is terminated prior to the Termination Date pursuant to an
         Involuntary Termination.

         3.       INTEREST. The Note will bear no interest, subject to Section 5
below.

         4.       PREPAYMENT. Borrower may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.

         5.       DEFAULT. The failure by Borrower to pay the entire outstanding
balance of this Note on or before the Maturity Date shall constitute a default
under this Note (a "Default"). Upon the occurrence of a Default interest will
accrue on the unpaid principal balance at the rate of one and one-half percent
(1 1/2 %) per month compounded monthly. Following a Default the outstanding
balance hereof and all accrued and unpaid interest, together with all reasonable
costs of collection and/or enforcement of the Note, including reasonable
attorney's fees, shall at the option of the Company become immediately due and
payable.


<PAGE>


         6.       RECOURSE. The Company and Borrower agree that Borrower shall
have personal liability for the Note.

         7.       MODIFICATION. Neither this Note nor any provision hereof may
be modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and Borrower,
which writing shall make specific reference hereto.

         8.       SEVERABILITY. If for any reason any provision or provisions
hereof are determined to be invalid, unenforceable or contrary to any existing
or future law, such invalidity or unenforceability shall not impair the
operation or affect those portions of this Note which are valid.

         9.       USURY, ETC. All agreements between Borrower and the Company
are hereby expressly limited so that in no contingency or event whatsoever,
whether by reason of Maturity of the indebtedness or otherwise, shall the amount
paid or agreed to be paid to the holder for the use, forbearance or detention of
the indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; PROVIDED, HOWEVER, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.

         10.      GOVERNING LAW. The execution, delivery and performance of this
Note shall be governed by, construed, and enforced in accordance with the laws
of the State of California.

         11.      WAIVERS. The failure of the Company at any time to exercise
any option or right hereunder shall not constitute a waiver of the Company's
right to exercise such option or right at any other time.

         IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.

                                                  /s/ Scott C. Verges
                                                  -------------------------
                                                  Scott C. Verges

Executed, sealed and delivered in the presence of:


/s/ Penny Evans
-------------------
Name of Witness:


                                       2