CONSULTING AGREEMENT


         THIS CONSULTING AGREEMENT ("Agreement") is made effective as of the 1st
day of May, 1996 by and between The Fortress Group, Inc., a Delaware
corporation, (the "Company") and Commonwealth Homes, Inc., a Delaware
corporation (the "Consultant").

         WHEREAS, the Company's long-term strategy includes the strategic
acquisition of homebuilding companies and potentially other related businesses;

         WHEREAS, Consultant and its principals have extensive experience in
mergers and acquisitions ("M&A"), financing and strategic planning, particularly
in the homebuilding industry;

         WHEREAS, the Company desires to retain the services of Consultant and
the parties desire to enter into an Agreement to evidence the terms and
conditions of such an engagement;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Consulting Agreement, it is agreed as follows:

         Section 1. Consulting Terms and Duties.

         Upon the terms and conditions set forth herein, the Company hereby
retains and engages Consultant, and Consultant hereby accepts such retention and
engagement to render such M&A, financial advisory and strategic planning
services as shall be specified from time to time by the Company's President
and/or such other officer as the Company's Board of Directors shall designate.
Nothing in this Agreement shall prohibit the company from hiring any other third
party advisors to provide M&A, financial advisory, strategic planning or related
services and this Agreement does not create an exclusive right in favor of
Consultant to provide such services.

         Section 2. Term.

         Consultant's term of engagement under this Agreement shall be for a
period of three years commencing effective May 1, 1996 (the "Initial Engagement
Period"). This Agreement shall automatically renew for successive one-year
periods (each one-year period shall be referred to herein as a "Renewal Period")
unless either the Company or Consultant, as the case may be, provides written
notice within ninety (90) days prior to the termination of any such period,
stating its/his desire to terminate this Agreement. The Initial Engagement
Period and each successive Renewal Period shall be referred to herein together
as the "Engagement Period". Notwithstanding anything to the contrary contained
herein, the Engagement Period is subject to termination pursuant to Section 6
below.



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         Section 3. Compensation.

                  (a) Transaction Fees. During the Term, in consideration of the
         services rendered pursuant to this Agreement, the company will pay
         consultant a fee, contingent upon and to be paid upon consummation of
         any Transaction (as defined) by the Company for which Consultant has
         been engaged. The amount of any such fee will be (i) agreed upon by the
         Company and Consultant, (ii) approved as to fairness by a committee of
         disinterested members of the Board of Directors of the Company, and
         (iii) reasonable and customary in relation to the size and complexity
         of the Transaction and the fees customarily charged by other advisors
         for similar services. The parties anticipate that such fee will
         generally be based on a percentage of the Enterprise Value (as defined
         below)involved in the Transaction. As used herein, "Transaction" means
         (x) an acquisition, (y) joint venture, partnership, license arrangement
         or other arrangement sought by the Company ("Alliance"), or (z) a
         capital transaction whereby the Company seeks to raise funds form the
         capital markets either through a private placement or a public offering
         of securities.

                           Acquisition. With respect to an acquisition,
                  "Enterprise Value" will be determined by taking into
                  consideration, by way of example, any cash payments plus (i)
                  the face value or par value of any notes, bonds, evidences of
                  indebtedness, or preferred stock issued by the Company, (ii)
                  the higher of book or market value on the date of closing of
                  the Transaction of any shares of stock or other equity
                  securities issued by the Company, any subsidiary, or Affiliate
                  of the Company, (iii) the actual amount of any consideration
                  paid through "earn-outs" employment agreements, agreements not
                  to compete, royalties or similar arrangements as it is paid to
                  the acquired company, its shareholders, and/or top management
                  in consideration for the Transaction, (iv) any debt assumed in
                  the Transaction by the Company, and (v) the amount of any
                  additional contingent, deferred, or other form of
                  consideration paid, issued , or given by the Company, any
                  subsidiary, or Affiliate of the Company in consideration for
                  any Transaction.

                           Alliance. With respect to an Alliance, "Enterprise
                  Value" shall include the value of all assets committed by both
                  parties to the relationship.

                           Capital Transaction. With respect to a capital
                  transaction, "Enterprise Value" means the market value of the
                  securities issued by the Company.

                  (b) Reimbursement of Expenses. The Company shall reimburse
         Consultant for those reasonable and necessary out-of-pocket expenses,
         including professional, consulting, and similar acquired services,
         which are approved by the President of the Company and which have been
         incurred by Consultant in connection with the rendering of services
         hereunder. Any reimbursement to be made by the Company pursuant to this
         Section 3(b)

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         shall be made following submission to the Company by Consultant of
         reasonable documentation of the expenses incurred.

                  (c) Annual Fee. In consideration of the willingness of
         Consultant to make itself available during the term of their Agreement
         and of the anticipation that Consultant will provide substantial
         services in connection with potential Transactions that will not
         ultimately be consummated, the Company agrees to pay Consultant an
         annual fee of $350,000. The Annual Fee shall be taken into account when
         fees are determined pursuant to Section 3(a) in any year.

         Section 4. Nondisclosure.

         4.1 Nondisclosure of Confidential Information.

                  (a) Consultant recognizes and acknowledges that during the
         course of its engagement it will be exposed to data and information
         concerning the business and affairs of the Company, including but not
         limited to, information relative to the Company's pro forma financial
         statements, strategies, plans, contracts, pricing programs,
         profitability analyses, and profit margin information and other related
         matters and that all of such data and information (collectively the
         "Proprietary Information") are vital, sensitive, confidential and
         proprietary to the Company.

                  (b) Consultant acknowledges that the Proprietary Information
         constitutes a protectable business interest of the Company, and it
         covenants and agrees that during the term of this engagement and after
         its termination it shall not directly or indirectly, whether
         individually, as a director, stockholder, owner, partner, employee, or
         agent of any business, or in any other capacity, make known, disclose,
         furnish, make available, or utilize any of the Proprietary Information
         , other than in the proper performance of his duties during the term of
         his engagement hereunder; Provided, however, that Proprietary
         Information shall not include (a) information which is known to the
         public or is generally known within the industry of businesses
         comparable to the Company's planned business (other than as a result of
         Consultant's violation of this covenant) or (b) information which
         Consultant is required to disclose pursuant to law or order of a court
         having jurisdiction over Consultant (provided that Consultant offers
         the Company an opportunity to obtain an appropriate protective order or
         administrative relief against disclosure of such Proprietary
         Information).

                  (c) Property of the Business. All memoranda, notes, lists,
         records and other documents or papers (and all copies thereof),
         including such items stored in computer memories, or microfiche or by
         any other means, made or compiled by or on behalf of Consultant in
         connection with the rendering by Consultant of consulting services
         hereunder, or made available by the Company to Consultant relating to
         the business of the Company,

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         are and shall be the Company's property and shall be delivered to the
         Company promptly on the request of the Company.

         4.2 Rights and Remedies upon Breach. If Consultant breaches, or
threatens to commit a breach of, any of the provisions of Section 4.1 (the
"Nondisclosure Covenants"), the Company shall have the right and remedy to have
the Nondisclosure Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Nondisclosure Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company. The Company
shall also have any other rights and remedies available to it under law or in
equity.

         4.3 Severability of Covenants. Consultant acknowledges and agrees that
the Nondisclosure Covenants are reasonable and valid in scope and in all other
respects. If any court determines that any of the Nondisclosure Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the
Nondisclosure Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.

         Section 5. Equitable Remedies

                (a) Consultant acknowledges and agrees that the covenants set
         forth in Section 4 inclusive hereof are reasonable and necessary for
         the protection of the Company's business interests, that irreparable
         injury will result to Company if Consultant breaches any of the terms
         of said covenants, and that in the event of Consultant's actual or
         threatened breach of any such covenants, the Company will have no
         adequate remedy at law. Consultant accordingly agrees that in the event
         of any actual or threatened breach by it of any of said covenants, the
         Company shall be entitled to immediate injunctive and other equitable
         relief, without bond and without the necessity of showing actual
         monetary damages. Nothing contained herein shall be construed as
         prohibiting the Company from pursuing any other remedies available to
         it for such breach or threatened breach, including the recovery of any
         damages which it is able to prove.

                  (b) Each of the covenants in Section 4 inclusive hereof shall
         be construed as independent of any other covenants or other provisions
         of this Agreement.

                  (c) In the event of any judicial determination that any of the
         covenants set forth in Section 4 inclusive hereof are not fully
         enforceable, it is the intention and desire of the parties that the
         court treat said covenants as having been modified to the extent deemed
         necessary by the court to render them reasonable and enforceable, and
         that the court enforce them to such extent.

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         Section 6. Termination

         This Agreement shall be terminate as provided in Section 2; provided,
that (a) this Agreement shall be earlier terminated in the event of Consultant's
dissolution and (b) the provisions of Sections 3(a), 3(b), 4, 5 and 8(f) shall
survive the termination of this Agreement.

         Section 7. Representations and Warranties.

         7.1 Representations and Warranties of Consultant. Consultant represents
and warrants to the Company as follows:

                  (a) Consultant is a limited liability company duly organized
         and validly existing under the laws of the State of Delaware with full
         corporate power and authority to execute and deliver this Agreement.
         Consultant has the full legal right, power and capacity, and all
         authority and approval required to execute and deliver this Agreement
         and to perform its obligations hereunder.

                  (b) This Agreement has been duly authorized, executed and
         delivered by Consultant and constitutes a valid and legally binding
         agreement of Consultant, enforceable against Consultant in accordance
         with its terms, subject to applicable bankruptcy,, insolvency and
         similar laws affecting creditors' rights generally and subject as to
         enforceability to general principles of equity 9regardless of whether
         enforcement is sought in a proceeding at law or in equity).

                  (c) The execution and delivery by Consultant of this Agreement
         and the performance of its obligations hereunder will not (i) require
         the consent, waiver, order, registration, qualification, authorization
         or approval of, from or with any governmental or regulatory authority,
         domestic or foreign, or of any other individual, partnership,
         corporation, trust or other entity (collectively, "Person"), (ii)
         conflict with or result in any breach or violation of any of the terms
         of conditions or provisions of, or constitute (or, with notice or lapse
         of time or both, constitute) a default under (1) the Articles of
         Incorporation or By-Laws of Consultant; (2) any federal, state, local
         or foreign, statute, regulation, order judgment or decree of any court,
         arbitrator or governmental or regulatory instrumentality applicable to
         Consultant or (3) any instrument, contract or other agreement to which
         Consultant is a party or by or to which Consultant is bound or subject.

         7.2 Representations and Warranties of the Company. The Company
represents and warrants to Consultant as follows:

                  (a) The Company is a corporation duly organized and validly
         existing under the laws of the State of Delaware, with full power and
         authority to execute and deliver this

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         Agreement. The Company has full legal right, power and capacity, and
         all authority and approval required to execute and deliver this
         Agreement and to perform all its obligations hereunder.

                  (b) This Agreement has been duly authorized, executed and
         delivered by the Company and constitutes a valid and legally binding
         agreement of the Company enforceable against the Company in accordance
         with its terms, subject to applicable bankruptcy, insolvency and
         similar laws affecting creditors rights generally and subject as to
         enforceability to general principles of equity (regardless of whether
         enforcement is sought in a proceeding at law or in equity).

                  (c) The execution and delivery by the Company of this
         Agreement and the performance of its obligations hereunder will not (i)
         require the consent, waiver, order, registration, qualification,
         authorization or approval of, from or with any governmental or
         regulatory authority, domestic or foreign, or of any other person, (ii)
         conflict with or result in any breach or violation of the terms or
         conditions or provisions of, or constitute (or, with notice or lapse of
         time or both constitute) a default under (1) the Articles of
         Incorporation or By-laws of the Company, 92) any federal, state, local
         or foreign statute, regulation, order, judgment or decree of any court,
         arbitrator or governmental or regulatory instrumentality applicable to
         the Company, or (3) any instrument, contract or other agreement to
         which the Company is a party or by or to which the Company is bound or
         subject.

         Section 8. Miscellaneous.

                  (a) Notices. Any notice or other communication required or
         permitted hereunder shall be in writing and shall be delivered
         personally, sent by facsimile transmission (with a copy also sent by
         another means herein provided for), sent by certified, registered or
         express mail, postage prepaid or sent by reputable air courier. Any
         such notice shall be deemed given when so delivered personally or sent
         by facsimile transmission 9with issuance by the transmitting machine of
         a confirmation of successful transmission) or, if mailed, five days
         after the date of deposit in the United States mail or, if sent by
         courier, two days after the date of deposit with such courier,
         addressed as follows:

                           (i)      if to the Company to:

                                    The Fortress Group, Inc.
                                    1921 Gallows Road
                                    Vienna, VA 22182

                                    Attention: James J. Martell, Jr.


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                           (ii)     if to Consultant, to:

                                    Commonwealth Home, Inc.
                                    8000 Towers Crescent Drive
                                    Vienna, VA  22182

                                    Attention:  J. Marshall Coleman


         Any party may change its address for notice hereunder by notice to the
other party hereto given in accordance herewith.

                  (b) Assignability. This Agreement shall not be assignable by
         either party hereto without the prior written consent of the other
         party, which consent, if requested of the Company by Consultant, shall
         not be unreasonably withheld, and any such purported assignment shall
         be void ab initio.

                  (c) Governing Law. The parties agree that this Agreement shall
         be construed and governed in accordance with the internal laws of the
         State of Virginia, without giving effect to principles of conflicts of
         laws.

                  (d) Binding Effect. This Agreement shall be binding upon and
         inure to the benefit of the parties hereto and their respective heirs,
         legal representatives, executors, administrators, successors and
         permitted assigns.

                  (e) Counterparts. This Agreement may be executed
         simultaneously in one or more counterparts, each of which shall be
         deemed an original but all of which together shall constitute one and
         the same instrument.

                  (f) Indemnification. The Company agrees to indemnify and hold
         harmless Consultant, the directors, officers, agents, employees, legal
         representatives and affiliates of Consultant, and each Person, if any,
         controlling Consultant or any of its affiliates within the meaning of
         Section 15 of the Securities Act of 1933 9as "Indemnified Party"), from
         and against any and all losses, claims, damages and liabilities, joint
         or several, caused by, related to or arising out of Consultant acting
         for or providing services to the Company pursuant to this Agreement,
         and to reimburse any Indemnified Party for all reasonable expenses
         (including Attorneys' fees) incurred by the Indemnified Party in
         connection with the investigation, preparation or defense of any such
         action or claim, whether or not in connection with any pending or
         threatened litigation, to which such Indemnified Party is subject;
         provided, however, that the Company shall not have any obligation for
         any losses, claims, damages, liabilities or expenses that are found, in
         a final judgment by a court of competent jurisdiction from which no
         appeal can be or has been taken, to have resulted

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         principally from the Indemnified Party's gad faith, gross negligence or
         willful misconduct. The Indemnified Party agrees to notify the Company
         promptly of the assertion of any claim or the commencement of any
         action or proceeding relating to this indemnity, but the Indemnified
         Party's failure to so notify the company shall not relieve the company
         from any obligation or liability which the company may have pursuant to
         this Agreement to the extent that the Company has not been prejudiced
         in any material respect by such failure. The Indemnified Party shall
         have the right to retain counsel of its own choice to represent it and
         such counsel shall, to the fullest extent consistent with its
         professional responsibilities, cooperate with the Company and any
         counsel designated by the Company. The Company shall not be liable
         under this Agreement for any settlement of any claim against the
         Indemnified Party made without the company's written consent, which
         consent will not be unreasonably withheld. The foregoing rights are in
         addition to any rights that the Indemnified Party may have at common
         law or otherwise.

                  (g) Entire Agreement; Modification. This Agreement sets forth
         the entire understanding of the parties with respect to Consultant's
         rendering of the services which are the subject hereof. Neither this
         Agreement nor any provision hereof may be modified, waived, terminated
         or amended other than by the express written agreement of Consultant
         and the Company.

                  (h) Waivers. No delay on the part of any party in exercising
         any right, power or privilege hereunder shall operate as a waiver
         thereof. Nor shall any waiver on the part of any party of any such
         right, power or privilege hereunder, nor any single or partial exercise
         of only and are not to be considered in the interpretation or
         construction of the provisions hereof any right, power or privilege
         hereunder, preclude any other or further exercise thereof or the
         exercise of any other right, power or privilege hereunder.

                  (i) Headings. The headings in this Agreement are inserted for
         convenience.

                  (j) Definitions of "Person". As used herein, the term "Person"
         shall mean any individual, corporation, partnership, firm, joint
         venture, association, joint-stock company, trust, unincorporated
         organization, governmental or regulatory body or any political
         subdivision thereof.

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         IN WITNESS WHEREOF, the Company and Consultant have signed this
Agreement as of the day and year written above.


THE  COMPANY                                     CONSULTANT

The Fortress Group, Inc.                         Commonwealth Homes, Inc.

By:  _________________________                   By:  __________________________
Its: _________________________                   Its: __________________________