LOAN NO.: 26-5950380                                    THE MAYFLOWER APARTMENTS

                                                        VIRGINIA BEACH, VIRGINIA



                        ENVIRONMENTAL INDEMNITY AGREEMENT



         THIS ENVIRONMENTAL  INDEMNITY AGREEMENT (this "Agreement"),  made as of

December 12, 2000 jointly and severally by CRIT-VA, INC., a Virginia corporation

("Borrower"),  whose address is 306 East Main Street, Richmond,  Virginia 23219,

and  by  CORNERSTONE   REALTY  INCOME  TRUST,   INC.,  a  Virginia   corporation

("Principal") whose address is 306 East Main Street,  Richmond,  Virginia 23219,

Attention:  Glade M. Knight  (Borrower  and Principal  being  referred to herein

collectively as  "Indemnitors"  and individually as  "Indemnitor"),  in favor of

FIRST UNION  NATIONAL BANK, a national  banking  association  ("Lender"),  whose

address is One First Union Center,  301 South College Street,  Mailcode NC 0166,

Charlotte, North Carolina 28288, Attention: Contract Finance.



                              W I T N E S S E T H :

                              - - - - - - - - - -



         WHEREAS,  Lender has  extended to  Borrower a loan (the  "Loan") in the

principal  amount of Ten  Million  Five  Hundred  Thousand  and  No/100  Dollars

($10,500,000.00); and



         WHEREAS,  the Loan is evidenced by a Promissory Note (the "Note") dated

of even date herewith,  executed by Borrower and payable to the order of Lender,

in the stated  principal  amount of Ten Million Five Hundred Thousand and No/100

Dollars  ($10,500,000.00),  and is  secured  by a Deed  of  Trust  and  Security

Agreement (the "Deed of Trust") dated of even date  herewith,  from Borrower for

the benefit of Lender,  encumbering  that certain real property  situated in the

Virginia Beach,  Commonwealth of Virginia, as is more particularly  described on

Exhibit A attached hereto and  incorporated  herein by this reference,  together

with the buildings,  structures and other  improvements now or hereafter located

thereon (said real property, buildings,  structures and other improvements being

hereinafter  collectively referred to as the "Property"),  and by the other Loan

Documents (as defined in the Deed of Trust); and



         WHEREAS,  as a condition to making the Loan,  Lender has required  that

Indemnitors  indemnify  Lender  with  respect  to any  past,  present  or future

environmental  conditions or liabilities on, in, under,  affecting or in any way

associated with the Property as herein set forth.



         NOW, THEREFORE,  to induce Lender to extend the Loan to Borrower and in

consideration  of the  foregoing  premises  and  for  other  good  and  valuable

consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,

Indemnitors hereby covenant and agree for the benefit of Lender, as follows:



         1.  Indemnity.  Indemnitors  hereby agree to pay,  protect,  defend (at

trial  and  appellate  levels  and  with  attorneys,   consultants  and  experts

reasonably acceptable to Lender),



<PAGE>



and save Lender harmless from and against,  and hereby indemnify Lender from and

against any and all liens, damages (including,  without limitation,  punitive or

exemplary damages), losses, liabilities (including,  without limitation,  strict

liability),  obligations,  settlement payments,  penalties,  fines, assessments,

citations,  directives, claims, litigation, demands, defenses, judgments, suits,

proceedings,  costs,  disbursements  and  expenses  of any kind or of any nature

whatsoever (including, without limitation,  reasonable attorneys',  consultants'

and  experts'  fees  and  disbursements   actually  incurred  in  investigating,

defending,   settling  or  prosecuting  any  claim,  litigation  or  proceeding)

(collectively  "Costs")  which may at any time be imposed  upon,  incurred by or

asserted or awarded  against  Lender,  Indemnitors or the Property,  and arising

from  or out  of,  whether  now,  hereafter  or  heretofore  occurring:  (i) any

violation or alleged  violation of, or liability or alleged liability under, any

local, state or federal law, rule or regulation or common law duty pertaining to

human  health  as  affected  by  the  environment,   natural  resources  or  the

environment,  including,  without  limitation,  the Comprehensive  Environmental

Response,  Compensation  and  Liability Act of 1980 (42  U.S.C.ss.9601  et seq.)

("CERCLA"), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.ss.6901

et seq.),  the Federal Water Pollution  Control Act (33  U.S.C.ss.1251 et seq.),

the Clean  Air Act (42  U.S.C.ss.  7401 et seq.),  the  Emergency  Planning  and

Community-Right-to-Know Act (42 U.S.C.ss. 11001 et seq.), the Endangered Species

Act (16 U.S.C. ss. 1531 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.

2601 et seq.), the Occupational Safety and Health Act (29 U.S.C.ss. 651 et seq.)

and the Hazardous  Materials  Transportation Act (49 U.S.C.ss.1801 et seq.), and

those relating to Lead Based Paint (as hereinafter  defined) and the regulations

promulgated   pursuant  to  said  laws,  all  as  amended  from  time  to  time,

(collectively,  "Environmental  Laws"),  relating to or affecting  the Property,

whether  or not  caused  by or  within  the  control  of  Indemnitors;  (ii) the

presence, release or threat of release of or exposure to any hazardous, toxic or

harmful  substances,   wastes,  materials  containing  more  than  1%  asbestos,

pollutants  or  contaminants  (including,  without  limitation,  polychlorinated

biphenyls, petroleum or petroleum products or byproducts,  flammable explosives,

radioactive materials, paint containing more than .05% lead by dry weight ("Lead

Based Paint"),  infectious  substances or raw materials which include  hazardous

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