**Exhibit 10.5**

**FIFTHEXTENSION AND MODIFICATIONOFEMPLOYMENT AGREEMENT**

THIS FIFTH EXTENSION AND MODIFICATION OF EMPLOYMENT AGREEMENT (the “Extension”)is entered into as of April 30, 2007 by and between Hearthside Homes, Inc., aCalifornia corporation (“Employer”), which is an indirect wholly-ownedsubsidiary of California Coastal Communities, Inc., a Delaware corporation (“Parent”),and ED MOUNTFORD (“Executive”).

W I T N E S S E TH:

WHEREAS, Executive and Employer have entered into an EmploymentAgreement dated as of May 1, 1998, an Extension and Modification ofEmployment Agreement dated December 7, 1999, a Second Extension andModification of Employment Agreement dated April 30, 2001, a ThirdExtension and Modification of Employment Agreement dated March 18, 2003, aModification of Employment Agreement dated November 12, 2003 and a FourthExtension and Modification of Employment Agreement dated July 20, 2005(collectively, the “Employment Agreement”), through which Executive hasprovided various executive capacities to Employer and Employer has obtainedvarious executive services by Executive; and

WHEREAS, Employer desires to obtain the benefit of continued servicefrom Executive by extending the Employment Agreement, and Executive desires torender continued services to Employer by extending the Employment Agreementpursuant to the terms and conditions of this Extension;

NOW, THEREFORE, in consideration of the foregoing recitals and themutual promises and covenants herein contained, the parties agree as follows:

# SECTION 1.           CONTINUING EFFECTIVENESS OFEMPLOYMENT AGREEMENT.  Except to theextent of any modification made pursuant to the terms of this Extension, theEmployment Agreement shall continue to remain in full force and effectfollowing the date hereof.

# SECTION 2.           EXTENSION OF TERM.  Employer and Executive hereby agree to extendthe term of the Employment Agreement until April 30, 2009.

# SECTION 3.           BASE SALARY.  Effective January 1, 2007 and until theexpiration of the term set forth in Section 2 above, Employer agrees topay Executive a base salary of at least One Hundred and Ninety Thousand FiveHundred Dollars ($190,500) per year in semi-monthly installments on thesame dates the other senior officers of Employer are paid.

### (i)               PaidTime Off.  Executive shall beentitled to five (5) weeks of paid time off (“PTO”) each twelve-month period,in accordance with the terms and provisions set forth in

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### that certain Hearthside Homes/California Coastal Communities EmployeeHandbook Addendum dated December 4, 2006 (the “Addendum”) a copy of which hasbeen delivered to Executive; and Executive hereby represents and warrants that(i) the Addendum has been fully read and understood, and (ii) Executive agreesto be bound by the Addendum with respect to all matters of PTO.

# SECTION 4.           BONUS.  From the date hereof and until the expirationof the term set forth above, Employer agrees to provide Executive with theopportunity to earn the following incentive bonuses: (i) a discretionary bonus,to be determined on an annual basis in the sole and absolute discretion ofParent’s Compensation Committee, related to such Committee’s assessment ofExecutive’s relative contribution towards the success of Signal Landmark’sBrightwater project; (ii) an incentive bonus in the amount of Fifty ThousandDollars ($50,000) upon the recording by the County of Orange of all Final Mapsnecessary for development of 349 homes at Brightwater; and (iii) the “Oxnard Project Bonus” thatmay be earned by Executive in connection with Hearthside Homes Oxnard LLC’sdevelopment project in Oxnard, California (the “Oxnard Project”) under theterms set forth in the Modification of Employment Agreement dated November 12,2003.

# INWITNESS WHEREOF, the parties have executed this Extension as of the date firstabove written.

|   | “EMPLOYER”    |
|--------|-------------------------|
|   |                    |
|   | HEARTHSIDE  HOMES, INC. |
|   |                    |
|   | By:                     | /s/ RAYMOND J. PACINI |   |
|   |                    | Raymond J.  Pacini |   |
|   |                    | Chief Executive  Officer |   |
|   |                    |   |   |
|   | “EXECUTIVE”   |
|   |                    |   |   |
|   |                    | /s/ ED MOUNTFORD |   |
|   |                    | Ed Mountford |   |

 

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