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                                                                   EXHIBIT 10.26


               SEPARATION/RETIREMENT AGREEMENT AND GENERAL RELEASE

In consideration of the undersigned parties' mutual promises and agreements
described below, Howard B. Nelson, Jr. ("Employee") and Colonial Properties
Trust ("Colonial") agree as follows:

1.       Colonial agrees to:

         a.       pay Employee two (2) years of annual base salary, in the
                  amount of Five hundred, Thirty thousand Dollars ($530,000),
                  grossed up for applicable state and federal taxes to include
                  but not limited to income tax withholding, FICA, FUTA State
                  Unemployment, local taxes and the like; plus $185,964 to cover
                  other anticipated future tax obligations and expenses; and

         b.       offer retiree medical benefits through group plan offered by
                  Colonial to current employees at employee's expense, pending
                  approval of retiree benefits by the Compensation Committee;
                  and

         c.       a three (3) year consulting retainer to be paid at $90,000.00
                  per year plus $10,000.00 per year for expenses. All consulting
                  shall be with reasonable notice and reasonable in duration.
                  All expenses shall be consistent with past pattern and
                  practices employed by the Employee while an employee of
                  Colonial (i.e. travel, lodging and meal accommodations); and

         d.       pay Employee for any unused vacation balance.

2.       (A)      employee voluntarily retires of his own free will and accord
                  effective March 1, 2004 and agrees:

                  i.       to give or return to Colonial all Colonial property,
                           including without limitation keys, equipment,
                           originals and all copies of documents and stored or
                           downloaded information, and to not retain such
                           property in Employee's possession, custody or
                           control;

                  ii.      except for information that is disclosed in any
                           filing with the SEC or other governmental agency, to
                           not disclose the terms of this agreement, the
                           circumstances surrounding its execution or the fact
                           that Colonial will provide any payment pursuant to
                           this agreement, to any person or entity with the
                           exception of Employee's legal counsel(s), tax
                           advisor(s), financial planner(s), accountant(s),
                           spouse and or unless required by law or any
                           administrative body; and in good faith attempt to
                           first obtain the agreement of his spouse, financial
                           planner(s), tax advisor(s) and legal counsel(s) to
                           comply with the same non-disclosure obligation
                           described above before any such disclosure is made to
                           them; if asked, Employee may disclose that his
                           employment relationship and the financial terms of
                           the employment were "concluded" or "resolved".

                  iii.     to make himself available, assist and cooperate fully
                           and truthfully, at Colonial's request, with
                           Colonial's or its attorneys' investigation of any
                           matter of their participation in any proceeding,
                           judicial or otherwise, growing out of or involving
                           Colonial during Employee's employment with Colonial;
                           provided however that such participation shall be
                           reasonable in time and duration and any expenses
                           incurred by the Employee shall be reimbursed to the
                           Employee. All expenses shall be consistent with past
                           pattern and practices employed by the Employee while
                           an employee of Colonial (i.e. travel, lodging and
                           meal accommodations); and

                  iv.      to refrain from making any negative or disparaging
                           comments regarding Colonial or its officers, agents
                           or employees; Notwithstanding the foregoing, nothing
                           contained herein shall be construed to limit
                           Employee's ability to testify truthfully in any
                           proceeding that in the future may require such
                           testimony.

         (B)      Colonial agrees:

                  i.       except for information that is disclosed in any
                           filing with the SEC or other governmental agency, to
                           not disclose the terms of this agreement, the
                           circumstances surrounding its execution or the fact
                           that Colonial will provide any payment pursuant to
                           this agreement, to any person or entity with the




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                           exception of Colonial's legal counsel(s), tax
                           advisor(s), financial planner(s), officers, directors
                           and executive officers on a need to know basis only
                           and/or unless required by law or any administrative
                           body; and in good faith attempt to first obtain the
                           agreement of its financial planner(s), officers,
                           directors and executive officers on a need to know
                           basis only and/or unless required by law or any
                           administrative body; and in good faith attempt to
                           first obtain the agreement of its financial
                           planner(s), accountant(s), tax advisor(s) and legal
                           counsel(s) to comply with the same non-disclosure
                           obligation described above before any such disclosure
                           is made to them. If asked, Colonial may disclose that
                           Employee's employment relationship and the financial
                           terms were "concluded" or "resolved". Colonial shall
                           instruct all applicable parties of the
                           confidentiality of this provision and encourage each
                           not to breach this confidentiality provision;

                  ii.      Upon request, Colonial will provide potential
                           employers positive references with no negative
                           connotation.

3.       (A)      i.       Employee does hereby release, acquit and discharge
                           Colonial Properties Trust, its subsidiaries or
                           affiliated companies, and all of their directors,
                           officers, employees, servants, agents and attorneys,
                           from any and all claims or causes of action
                           whatsoever of any kind or nature, whether known or
                           unknown, including claims and causes of actions
                           arising out of or in any way related to Employee's
                           employment or the termination of his employment with
                           Colonial, or which were, might or could have been
                           asserted in any court or before any administrative
                           agency under the Civil Rights Act of 1991, Title VII
                           of the Civil Rights Act of 1964, the Civil Rights Act
                           of 1866, the Americans with Disabilities Act, the
                           Rehabilitation Act of 1973, the Age Discrimination in
                           Employment Act, the Older Workers Benefit Protection
                           Act, the Family and Medical Leave Act, the Employee
                           Retirement Income Security Act of 1974, the Equal Pay
                           Act, the Fair Labor Standards Act, the Vietnam Era
                           Veteran's Readjustment Assistance Act, the Uniform
                           Service Employment and Reemployment Rights Act of
                           1994, the Fair Credit Reporting Act, ALABAMA: Alabama
                           Code Sections 25-1-20 et seq. (the Alabama Age
                           Discrimination in Employment Act); Alabama Code
                           Section 25-1-10 (the Alabama Affirmative Action
                           Programs for Minorities law); Alabama Code Section
                           13A-11-123 (anti-blacklisting statute); Alabama Code
                           Section 12-16-8 (employer shall pay usual
                           compensation to employee during employee's jury
                           service); Alabama Code Section 12-16-8.1 (employer
                           not to discharge employee fro jury service); Alabama
                           Code Section 25-5-11.1 (prohibition of discharge of
                           employee for filing workers' compensation claim or
                           for safety complaints); Alabama Code Sections
                           25-5-330 et seq. (drug-free workplace program);
                           Alabama Code Sections 25-7-30 et seq. (right to work
                           laws), all as amended, or any other statute of the
                           United States of America or the state of Alabama, the
                           laws of the state of Alabama including tort and
                           contract claims) or the Constitution of either the
                           state of Alabama or the United States, to the fullest
                           extent that such a release is allowed by law.

                  ii.      Employee acknowledges and agrees that he is aware of
                           his rights under the laws specifically and generally
                           described above and that he waives those rights to
                           the full extent that waiver is allowed by law.

                  iii.     Employee also acknowledges and agrees that the
                           payment described above shall not be considered an
                           admission of liability or guilt in any manner
                           whatsoever but is solely for purposes of providing
                           severance pay to Employee and for resolving any legal
                           claims that have not been asserted and that would be
                           doubtful and undisputed if asserted, and that the
                           payment also represents payment in full satisfaction
                           of all claims for costs, expenses and attorneys' fees
                           arising under or related to the laws described
                           specifically and generally above.

                  iv.      Employee further agrees to not institute or
                           voluntarily participate as a class member in any
                           civil action against Colonial that concerns any
                           employment matter encompassed by this release.

         (B)      i.       Colonial for itself and on behalf of its subsidiaries
                           or affiliated companies, and all of their directors,
                           officers, employees, servants, agents and attorneys
                           and their heirs, personal representatives, successors
                           and assigns does hereby release, acquit and discharge
                           Employee from any and all claims or causes of action
                           whatsoever of any kind or nature, whether known or
                           unknown, including claims and causes of action
                           arising out of or in any way related to Employee's
                           employment or the termination of his employment with
                           Colonial, except for acts of fraud on the part of the
                           Employee.



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                  ii.      Colonial also acknowledges and agrees that the
                           payment described above shall not be considered an
                           admission of liability or guilt in any manner
                           whatsoever but is solely for purposes of providing
                           severance pay to Employee and for resolving any legal
                           claims that have not been asserted and that would be
                           doubtful and undisputed if asserted, and that the
                           payment also represents payment in full satisfaction
                           of all claims for costs, expenses and attorney's fees
                           arising under or related to the laws described
                           specifically and generally above as pertaining to a
                           law suit that may arise as a result of Employee
                           carrying out his duties as pursuant to his course of
                           business.

4.       A failure on the part of either party to insist on strict performance
         of any term of this agreement in one or more instances shall not be
         construed as a waiver or relinquishment of that party's right to insist
         on strict performance in the future.

5.       Employee agrees that his breach of this agreement could result in
         irreparable harm and injury to Colonial and would cause damage to
         Colonial in such a way that it would be impossible to calculate actual
         damages. Any such breach may entitle Colonial to injunctive relief
         restraining Employee from continued violations, to recover all
         compensation provided by Colonial as consideration for this agreement
         except Twenty-Five Dollars ($25.00), to additional remedies provided in
         the following paragraphs, and to any other remedies available to
         Colonial.

6.       Employee agrees that he shall not compete with the business of
         Colonial, without written consent from Colonial, for a period of two
         years. The term "not compete" as used in this agreement means that
         Employee shall not directly or indirectly, as an owner, officer,
         director, employee, consultant or stockholder, engage in another REIT
         business or engage in a business substantially similar or competitive
         to the retail, commercial and multifamily residential business of
         Colonial.

7.       In the event that either party hereto commences legal action to enforce
         the terms of this severance agreement and general release and prevails
         to any extent in the action, the non prevailing party may be liable for
         expenses, costs and reasonable attorneys' fees the prevailing party
         incurs in the action within the sole and absolute discretion of the
         court of competent jurisdiction.

8.       Should a court deem any provision of this agreement to be unenforceable
         in whole or in part, it shall not affect the legality or enforceability
         of the remainder of such provision or any other provision of this
         agreement, which shall survive and remain enforceable.

9.       This severance agreement and general release constitutes the entire
         agreement between the parties. Neither party shall be bound by any
         terms, conditions, statements or representations, oral or written not
         herein contained. Each party hereto hereby acknowledges and agrees that
         in executing this agreement neither has relied upon or been induced,
         persuaded or motivated by any promise or representation made by the
         other unless expressly set forth herein and that neither has made any
         promise or representation except those expressly set forth herein. All
         previous negotiations, statements and any preliminary instruments
         prepared by the parties or their representatives are merged in this
         agreement.

10.      This severance agreement and general release shall be governed by and
         interpreted in accordance with the laws of the state of Alabama.

11.      Each party to this Agreement irrevocably and unconditionally: (1)
         SUBMITS for Employee and/or his heirs, personal representatives and/ or
         assigns, and for Colonial and for and on behalf of all of their
         directors, officers, employees, servants, agents, attorneys, and their
         heirs personal representatives, successors and assigns as the case may
         be) in any legal action or proceeding relating to this Agreement, or
         for recognition and enforcement of any judgment in respect thereof, to
         the exclusive and concurrent general jurisdiction of the courts of the
         State of Alabama in Jefferson County Alabama, the courts of the United
         States of America for the Northern District of Alabama, and/or the
         appellate courts from any thereof; (2) consents that any such action or
         proceeding must be brought in such courts, and waives any objection
         that any party hereto may now or hereafter have to the jurisdiction and
         venue of any such action or proceeding in any such court or that such
         action or proceeding was brought in an inconvenient court and agrees
         not to plead or claim the same; and (3) agrees that nothing herein
         shall affect the right to effect service of process in any other manner
         permitted by law.



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12.      The language of all parts of this Agreement shall in all cases be
         construed as a whole, according to its fair meaning. This Agreement is
         the product of a negotiated settlement and has been reviewed by
         attorneys for all parties. As such, in the event that a term or
         provision herein shall be deemed to be ambiguous, that term or
         provision shall not be strictly and arbitrarily construed in favor of
         or against any one of the parties.

13.      Notwithstanding anything contained herein to the contrary, nothing
         contained herein will modify or impair the Employee's rights under any
         retirement plan(s), restricted stock option plans, incentive stock
         option plans and the like, it being understood and agreed to by the
         parties that all of those rights shall be governed by the terms and
         provisions of those plans.

14.      This Agreement shall be binding on the parties hereto and their
         respective heirs, personal representatives, successors and assigns

EACH HAS READ THE FOREGOING SETTLEMENT AGREEMENT AND GENERAL RELEASES, AND EACH
FULLY UNDERSTANDS ITS TERMS, HAVE CONSULTED THEIR RESPECTIVE ATTORNEY ABOUT IT
OR BEEN GIVEN MORE THAN AMPLE TIME TO CONSULT WITH THEIR ATTORNEY ABOUT IT, AND
HAVE SIGNED IT VOLUNTARILY THIS 30TH DAY OF DECEMBER, 2003.

                                        COLONIAL PROPERTIES TRUST


                                                /s/       John P. Rirgish
                                        ---------------------------------------
                                        By:      John P. Rigrish
                                        Its:     Chief Administrative Officer


                                        HOWARD B. NELSON, JR


                                               /s/ Howard B. Nelson, Jr.
                                        ---------------------------------------
                                        Its:     Employee


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