Document:

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                                                                    EXHIBIT 10.2

LAW OFFICES OF GEORGE DONALDSON                          [STAMP]
GEORGE DONALDSON (79971)
DANIEL B. HARRIS (117230)
456 Montgomery Street, Suite 1250
San Francisco, CA 94104
Telephone:  415/394-8500

Settlement Counsel and
Attorneys for Plaintiffs

                          UNITED STATES DISTRICT COURT

                    FOR THE NORTHERN DISTRICT OF CALIFORNIA

JACK OLIVE, JONATHAN NOBLE,                  )   Case No. C 89 4331 MHP
M.D., JOHN P. PEDJOE AND                     )   DERIVATIVE ACTION
ALLSOP, INC. PROFIT SHARING                  )
PLAN & TRUST, on behalf of                   )
themselves and all                           )   AMENDMENT TO THE SECOND
others similarly situated and                )   AMENDMENT TO THE MODIFICATION
derivatively on behalf of                    )   OF STIPULATION OF SETTLEMENT
NATIONAL INCOME REALTY TRUST,                )
a California business trust,                 )
CONTINENTAL MORTGAGE AND EQUITY              )
TRUST, a California business                 )
trust, TRANSCONTINENTAL REALTY               )
INVESTORS, a California                      )
business trust, and INCOME                   )
OPPORTUNITY REALTY TRUST, a                  )
California                                   )
business trust,                              )
                                             )
                                Plaintiffs,  )
                                             )
         vs.                                 )
                                             )
GENE E. PHILLIPS; WILLIAM S.                 )
FRIEDMAN; RICHARD N. LAPP;                   )
MICHAEL E. SMITH; WILLIE K.                  )
DAVIS; RAYMOND V. J. SCHRAG;                 )
RANDALL K. GONZALEZ; JAMES W.                )
HAMMOND JR.; NATIONAL REALTY                 )
ADVISORS, INC., a Texas                      )
corporation; NATIONAL REALTY,                )
L.P.,                                        )
                                             )
                                             )
           -- caption continues --           )
---------------------------------------------

AMENDMENT TO THE SECOND AMENDMENT TO THE MODIFICATION OF STIPULATION OF
SETTLEMENT
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a Delaware limited partnership;         )
AMERICAN REALTY TRUST, INC., a          )
Georgia corporation; NATIONAL           )
OPERATING L.P., a Delaware              )
limited partnership;                    )
                                        )
                      Defendants,       )
                                        )
          -and-                         )
                                        )
                                        )
NATIONAL INCOME REALTY TRUST, a         )
California business trust;              )
CONTINENTAL MORTGAGE AND EQUITY         )
TRUST, a California business            )
trust; TRANSCONTINENTAL REALTY          )
INVESTORS, a California                 )
business trust; and INCOME              )
OPPORTUNITY REALTY TRUST, a             )
California business trust;              )
                                        )
        Nominal Defendants.             )
                                        )
--------------------------------------

     This amendment to the Second Amendment to the Modification of Stipulation
of Settlement is made and entered into as of February 4, 2002, by and among (i)
Settlement Counsel; (ii) Transcontinental Realty Investors, Inc. ("TRI") and
Income Opportunity Realty Investors, Inc. ("IORI")(collectively referred to as
the "Dallas Trusts"); and (iii) Gene E. Phillips ("Phillips"), Basic Capital
Management, Inc. ("BCM"), American Realty Investors, Inc. ("ARI"), the parent
corporation of American Realty Trust, Inc. ("ART").

     The above parties, by and through their respective counsel of record,
hereby amend Exhibits B and C of the Second Amendment to the Modification of
Stipulation of Settlement, made and entered into as October 5, 2001, in the
following respects only. In the case of both Exhibits B and C, the first
sentence of

                                       1

AMENDMENT TO THE SECOND AMENDMENT TO THE MODIFICATION OF STIPULATION OF
SETTLEMENT
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the section entitled Conversion Rights shall be deleted and replaced with the
following sentence: "For a 75-day period commencing on the 15th day after the
public issuance of ARI's Form 10-Q to the public following the close date of the
Freeze-Out Merger, the preferred shares herein described may be converted into
shares of ARI common stock."

     In the case of both Exhibits B and C, the second sentence of the section
entitled Redemption Rights shall be deleted and replaced with the following
sentence:  "Redeemable by ARI no earlier than 90 days after the public issuance
of ARI's Form 10-Q to the public following the close date of the Freeze-Out
Merger at the liquidation preference plus any accrued and unpaid dividends
thereon."

                                        2

AMENDMENT TO THE SECOND AMENDMENT TO THE MODIFICATION OF STIPULATION OF
SETTLEMENT
<PAGE>

         In all other respects, the Second Amendment remains unchanged.

                                           LAW OFFICES OF GEORGE DONALDSON
                                           456 Montgomery Street, Suite 1250
                                           San Francisco, CA 94104
                                           Telephone:  (415) 394-8500

                                           By /s/ GEORGE DONALDSON
                                             -----------------------------------
                                              George Donaldson
                                           Settlement Counsel and Attorneys for
                                           the Plaintiffs

                                           COOLEY GODWARD LLP
                                           One Maritime Plaza, Suite 2000
                                           San Francisco, CA 94111
                                           Telephone: (415) 693-2000

                                           SIMON, WARNER & DOBY, L.L.P.
                                           1700 City Center Tower II
                                           301 Commerce Street
                                           Fort Worth, TX 76102
                                           Telephone:  (817) 810-5250

                                           By /s/ HENRY W. SIMON, JR.
                                             -----------------------------------
                                             Henry W. Simon, Jr.

                                           Attorneys for Gene E. Phillips and
                                           Basic Capital Management, Inc.
                                           American Realty Trust, Inc. and
                                           American Realty Investors, Inc.

                                           HELLER EHRMAN WHITE & MCAULIFFE
                                           333 Bush Street, Suite 3000
                                           San Francisco, CA 94104-2878

                                           By /s/ JESSICA S. PERS
                                             -----------------------------------
                                             Jessica S. Pers
                                           Attorneys for the Dallas Trusts

                                       3

AMENDMENT TO THE SECOND AMENDMENT TO THE MODIFICATION OF STIPULATION OF
SETTLEMENT<PAGE>

                                                                    EXHIBIT 10.3

                                                                      [STAMP]

                          UNITED STATES DISTRICT COURT
                    For the Northern District of California

                          UNITED STATES DISTRICT COURT

                        NORTHERN DISTRICT OF CALIFORNIA

JACK OLIVE, et al.                                          No. C89-4331 MHP
                                                            ORDER
                    Plaintiff(s),
  vs.

GENE E. PHILLIPS, et al.

                    Defendant(s),

         This matter came before the Court on the motion of Settlement Counsel,
on behalf of the Dallas Trusts, as those terms are defined in the Second
Amendment to the Modification of Stipulation of Settlement, dated as of October
5, 2001 as amended on February 4, 2002 (the "Second Amendment"), for approval of
a settlement in this action, as embodied in the Second Amendment. The Court,
having considered all papers filed in connection with said motion and good cause
appearing therefor, hereby ORDERS, ADJUDGES AND DECREES as follows:

1. This Court has jurisdiction over the subject matter and parties to these
actions and over all parties to the Second Amendment. By acknowledging the
Court's jurisdiction over the subject matter of the Second Amendment, the
Settling Defendants and the Dallas Trusts do not waive any objections to the
Court's exercise of jurisdiction over the Settling Defendants or the Dallas
Trusts arising from any of the previous settlement agreements in this action.

2. This Court hereby finally approves the settlement embodied in the Second
Amendment and finds that said settlement is fair, reasonable and adequate to the
Dallas Trusts, as defined in the Second
<PAGE>
                          UNITED STATES DISTRICT COURT
                    For the Northern District of California

Amendment, and their shareholders.

3. The Court hereby dismisses, with prejudice and without costs to any party as
against any other, except as provided in the Second Amendment, this action and
any and all claims, actions, or causes of action alleged by the plaintiffs, on
behalf of the Dallas Trusts, in the above-captioned action against Gene E.
Phillips, Basic Capital Management, Inc., American Realty Investors, Inc.,
American Realty Trust, Inc., Ted P. Stokely, Edward G. Zampa, R. Douglas
Leonhard, Martin L. White, Larry E. Harley, Murray Shaw and Richard W. Douglas
(collectively referred to herein as the "Released Defendants").

4. The Dallas Trusts and all persons claiming to represent such Trusts in any
derivative capacity shall be deemed conclusively to have released and are hereby
permanently barred and enjoined from prosecuting against the Released
Defendants, including, without limitation, his or its respective predecessors
and successors, parents, subsidiaries, affiliates and all their present and
former partners, principals, officers, directors, employees, agents, attorneys,
assigns, representatives, heirs, executors and administrators, any and all
claims, actions, or causes of action of whatever nature, character or
description, whether known, unknown, suspected or unsuspected, that could or do
arise out of or are or could be in any way based on, connected with or related
to any alleged breach of the Stipulation, the Modification, or the Amendment, as
those terms are defined in the Second Amendment, or to any of the matters raised
in Settlement Counsel's requests that the District Court exercise its retained
jurisdiction, including, as described in the Second Amendment, the alleged
failure by certain of the defendants to obtain a compensation consultant's
report and the defendants' conduct respecting the Loans.

5. Notwithstanding the foregoing, nothing herein shall relieve any party to the
Second Amendment from liability for failing to abide by the terms and
obligations imposed by the Second Amendment.

6. The notice given to the shareholders of the Dallas Trusts of the settlement
set forth in the Second Amendment, as required by this Court's Order
Preliminarily Approving Proposed Derivative Action Settlement, entered on
December 18, 2001, was the best notice practicable under the
<PAGE>
                          UNITED STATES DISTRICT COURT
                    For the Northern District of California

circumstances, including individual notice to all shareholders of the Dallas
Trusts who could be identified through reasonable effort. Said notice provided
due and sufficient notice of the proceedings regarding final approval of the
settlement, including the terms of the proposed settlement set forth in the
Second Amendment, to all persons entitled to such notice, and said notice fully
satisfies the requirements of due process and Federal Rule 23.1.

         7. Without affecting the finality of this judgment, the Court hereby
reserves jurisdiction over only (a) enforcement and administration of the Second
Amendment; (b) any hearing on and determination of the applications for
attorneys' fees, costs, interest and expenses in this action; and (c) any claim
that this Second Amendment is without legal effect, including any claim that it
was wrongfully procured or induced.

     IT IS SO ORDERED.

Dated:   2/12/02

                                        /s/ MARILYN HALL PATEL
                                        ---------------------------------
                                        Marilyn Hall Patel
                                        Chief Judge
                                        United States District Court
                                        Northern District of California

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