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                                                                   EXHIBIT 10.42

                      FIRST AMENDMENT TO CONTRACT OF SALE


         THIS FIRST AMENDMENT TO CONTRACT OF SALE (this "Amendment") is made
and entered into effective as of the 25th day of July, 1997, by and between
THOUSAND TRAILS, INC., a Delaware corporation ("Seller"), and SILVERLEAF
RESORTS, INC., a Texas corporation ("Purchaser").


                              W I T N E S S E T H:

         WHEREAS, effective May 2, 1997, Seller and Purchaser entered into that
certain Contract of Sale pursuant to which Seller agreed to sell and Purchaser
agreed to purchase and pay for three resorts more particularly described
therein (herein the contract is referred to as the "Contract"); and

         WHEREAS, Seller and Purchaser desire to amend the Contract;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and other good and valuable consideration, the receipt,
accuracy and sufficiency of which is hereby acknowledged, Seller and Purchaser
hereby agree as follows:

         1.      Notwithstanding anything to the contrary contained in the
Contract, Seller and Purchaser hereby agree that Purchaser shall have no
obligation to purchase the "Cherokee Landing Resort" pursuant to the Contract
and that all references to the "Cherokee Landing Resort" are hereby deleted
from the Contract.  Accordingly, Article I of the Contract is hereby deleted
and replaced with the following new Article I:


                                   ARTICLE I

                                    PROPERTY

                 The conveyance by Seller, or Seller's subsidiary corporation
         that holds title, to Purchaser shall include the following described
         tracts or parcels of land, together with all and singular the rights
         and appurtenances pertaining to such land including any right, title
         and interest of Seller in and to adjacent strips or gores, streets,
         alleys, or rights-of-way and all rights of ingress and egress thereto:

                          Parcel 1:  Those certain tracts of land located in
                 LaSalle County, Illinois, commonly known as the "Fox River
                 Resort," in the aggregate amount of approximately 178 acres,
                 including (i) five (5) tracts of land more particularly
                 described in Exhibit "A" attached hereto and made a part
                 hereof for all purposes, which aggregate approximately 138
                 acres, and (ii) a sixth tract of



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                 approximately 40 acres which will be surveyed and described
                 prior to closing; and

                          Parcel 2:  Those certain tracts of land located in
                 Jefferson County, Missouri, commonly known as the "Jefferson
                 Resort," and being more particularly described in Exhibit "B"
                 attached hereto and made a part hereof for all purposes.


         Hereafter the aforesaid real property is referred to collectively as
the "Land."

                 The conveyance by Seller to Purchaser shall also include all
         buildings and other improvements on the Land, including specifically,
         without limitation, all campsites, recreational and community
         facilities, comfort centers, lakes and parks located thereon (the
         foregoing property is herein referred to collectively as the
         "Improvements").

                 The conveyance by Seller to Purchaser shall also include all
         fixtures and personal property, tangible or intangible, of any kind
         whatsoever owned by Seller and used in connection with the Land and/or
         Improvements, including but not limited to, the following items:

                          a.      All machinery, equipment, fixtures, furniture
                 and other personal property of every kind and character owned
                 by Seller and located on or used in connection with the
                 operation of the Land and Improvements;

                          b.      The names "Fox River Resort" and "Jefferson
                 Resort" as used in the ownership or operation of the Land and
                 Improvements;

                          c.      All outstanding membership contracts which
                 have been generated from the sale of memberships at the
                 campsites being operated by Seller on the Land (except for
                 Gold Card memberships), together with certain receivables,
                 hereinafter mentioned, which are payable to Seller and which
                 represent the unpaid portion of the purchase price for such
                 memberships;

                          d.      All licenses, franchises and permits used in
                 or relating to the ownership, occupancy or operation of the
                 resorts being operated by Seller on the Land including, in
                 particular, any water permits or other utility permits; and





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                          e.      Any developer's, declarant's, or owner's
                 interests under any operating agreements or reciprocal
                 easement agreements or other similar agreements affecting
                 and/or benefiting the Land.

         The foregoing items are hereinafter collectively referred to as the
"Resort Assets."

                 Hereinafter all property being conveyed to Purchaser by Seller
         pursuant to this Contract including the Land, the Improvements and the
         Resort Assets are sometimes referred to collectively as the "Subject
         Property."

         2.      Seller and Purchaser further agree that Article II of the
Contract is hereby deleted and replaced with the following new Article II:


                                   ARTICLE II

                                 PURCHASE PRICE

                 The purchase price to be paid by Purchaser to Seller for the
         Subject Property (less the receivables described in Article  I, c.)
         shall be as follows:

<TABLE>
                          <S>                                <C>
                          Fox River Resort                   $1,655,000.00
                          Jefferson Resort                   $1,242,500.00
                                                             -------------
                                                             
                          Total Purchase Price               $2,897,500.00
</TABLE>                                                     

         The purchase price shall be payable all in cash at the closing.

         3.      All references to "Cherokee Landing Resort" in Articles VII
and XXVIII of the Contract are hereby deleted.

         4.      Except as specifically set forth above, all terms and
conditions of the Contract shall remain in full force and effect.  All
capitalized terms not otherwise defined herein shall have the meaning given to
such terms in the Contract.





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         IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first above written.

                                       SELLER:
                                       ------ 
                                       
                                       THOUSAND TRAILS, INC., a Delaware 
                                       corporation
                                       
                                       
                                       By: /s/ KENNETH E. HENDRYCY  
                                          -------------------------------------
                                       Name:   Kenneth E. Hendrycy
                                            -----------------------------------
                                       Its:    Vice President
                                           ------------------------------------
                                       
                                       
                                       PURCHASER:
                                       --------- 
                                       
                                       SILVERLEAF RESORTS, INC., a Texas 
                                       corporation
                                       
                                       
                                       
                                       By: /s/ ROBERT E. MEAD  
                                          -------------------------------------
                                       Name:   Robert E. Mead
                                            -----------------------------------
                                       Its:    Chief Executive Officer
                                           ------------------------------------
                                       




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