Senior Executive Severance Agreement - The Ryland Group Inc. and Thomas J. Gancsos



SENIOR EXECUTIVE SEVERANCE AGREEMENT


AGREEMENT dated as of the 28th day of January 1997 between The Ryland Group, 
Inc., a Maryland corporation (the "Corporation"), and Thomas J. Gancsos (the 
"Executive").

In consideration of the services provided by the Executive and the covenants 
and agreements contained herein, and for other good and valuable consideration 
the sufficiency of which is acknowledged, the Corporation and the Executive 
agree as follows:

1.    Termination After Change of Control.  The following payments and 
benefits will be provided to the Executive by the Corporation in the 
event of a Termination of Employment (as hereinafter defined) of the 
Executive within three (3) years after a Change of Control (as 
hereinafter defined) of the Corporation:

1.1   Lump Sum Cash Payment.  On or before the Executive's last day of 
employment with the Corporation, the Corporation will pay to the 
Executive a lump sum cash amount equal to two (2) times the 
highest Annual Compensation (as hereinafter defined) paid to the 
Executive by the Corporation for any of the three (3) calendar 
years immediately preceding the date of Termination of Employment.

1.2   Accelerated Vesting and Supplemental Payments.  All rights, awards 
and benefits of the Executive in the TRG Incentive Plan, the 
deferred compensation plans (including the Retirement and Stock 
Ownership Plan, Executive and Director Deferred Compensation Plan 
and any successor or replacements plans) and any incentive, bonus 
or benefit plans of the Corporation in which the Executive 
participates shall immediately vest in full and the Executive 
shall be paid in a lump sum within thirty (30) days of the date of 
Termination of Employment.  To the extent that any of the plans of 
the Corporation would not under applicable law permit accelerated 
vesting, the Executive will be paid supplementally by the 
Corporation the amount of additional benefits that would be 
payable if full vesting had taken place as of the date of 
Termination of Employment.  All supplemental payments are provided 
on an unfunded basis, are not intended to meet the qualification 
requirements of Section 401 of the Internal Revenue Code, and 
shall be payable solely from the general assets of the 
Corporation.

1.3   Insurance and Other Special Benefits.  The Executive's 
participation in the life, accident and health insurance, employee 
welfare benefit plans (as defined in the Employee Retirement 
Income Security Act of 1974) and other fringe benefits (the 
"Benefits") provided to the Executive prior to the Change of 
Control or the Termination of Employment shall be continued or 
equivalent benefits provided by the Corporation, at no cost to the 
Executive, for a period of two (2) years from the date of the 
Executive's Termination of Employment.  If for any reason the 
Corporation is unable to continue the Benefits, as required by the 
preceding sentence, the Corporation shall pay to the Executive a 
lump sum cash payment equal to the value of the Benefits which the 
Corporation is unable to provide.

1.4   Relocation Assistance.  Should the Executive move his residence in 
order to pursue other business opportunities within two (2) years 
after the date of the Termination of Employment, he will be 
reimbursed for any expenses incurred in that relocation, including 
taxes payable on the reimbursement, which are not reimbursed by 
another employer.  Benefits under this paragraph will include 
assistance in selling the Executive's home and all other 
assistance and benefits which are provided by the Corporation 
under its relocation plan as in effect immediately prior to the 
Change of Control or the Termination of Employment.

1.5   Stock Rights.  All stock options, stock appreciation rights, stock 
purchase rights, restricted stock rights and any similar rights 
which the Executive holds shall become fully vested and be 
exercisable on the Executive's last day of employment with the 
Corporation.

1.6   Outplacement Assistant.  The Executive shall be reimbursed by the 
Corporation for the costs of all outplacement services obtained by 
the Executive within the two (2) year period after the date of the 
Executive's Termination of Employment provided the total 
reimbursement shall be limited to an amount equal to twenty-five 
percent (25%) of the Executive's Annual Compensation for the 
calendar year immediately preceding the date of the Executive's 
Termination of Employment.

1.7   Definitions.

(i)   A "Change of Control" shall take place on the date of the 
earlier to occur of any of the following events:

(a)   The acquisition by any person, other than the 
Corporation or any employee benefit plan of the 
Corporation, of beneficial ownership of 20% or more of 
the combined voting power of the Corporation's then 
outstanding voting securities;

(b)   The first purchase under a tender offer or exchange 
offer, other than an offer by the Corporation or any 
employee benefit plans of the Corporation, pursuant to 
which shares of common stock have been purchased;

(c)   During any period of two consecutive years, 
individuals who at the beginning of such period 
constitute the Board of Directors of the Corporation 
cease for any reason to constitute at least a majority 
thereof, unless the election or the nomination for the 
election by stockholders of the Corporation of each 
new director was approved by a vote of at least two-
thirds of the directors then still in office who were 
directors at the beginning of the period; or

(d)   Approval by stockholders of the Corporation of a 
merger, consolidation, liquidation or dissolution of 
the Corporation, or the sale of all or substantially 
all of the assets of the Corporation.

(ii)  "Annual Compensation" shall mean the sum of the base salary 
and annual bonus paid to the Executive and all vested 
amounts credited to the Executive under any incentive 
compensation or other benefit plans of the Corporation in 
which the Executive participates during the applicable 
calendar year.  In the event the Executive has not been 
employed by the Corporation or received a base salary and 
annual bonus for a complete calendar year, the determination 
of Annual Compensation shall involve a pro forma projection 
of base salary, annual bonus and vested amounts credited 
under incentive compensation or other benefit plans for a 
complete calendar year based upon the amounts that were paid 
or credited during the partial year of employment or partial 
year of receipt of compensation and any other information 
deemed appropriate.

(iii) A "Termination of Employment" shall take place in the event 
that (a) the Executive's employment is terminated for any 
reason other than as a consequence of death, disability or 
normal retirement, (b) the Executive is assigned any duties 
or responsibilities that are inconsistent in any respect 
with his position, duties, responsibilities or status prior 
to the Change of Control, (c) the Corporation requires the 
Executive to be based at a location which is more than fifty 
(50) miles from the Executive's then current primary 
residence, (d) the Executive's base salary is reduced, or 
(e) the Executive experiences in any year a reduction in the 
ratio of his incentive compensation, bonus or other such 
payments to his base compensation which is greater than the 
average reduction in the ratio of incentive compensation, 
bonus or other such payments to base compensation 
experienced by all of the Corporation's or the successor 
corporation's executive officers.

1.8   Subsequent Imposition of Excise Tax.  If it is ultimately 
determined by a court or pursuant to a final determination by the 
Internal Revenue Service that any portion of the payments to the 
Executive is considered to be an "excess parachute payment," 
subject to the excise tax under Section 4999 of the Code, which 
was not contemplated to be an "excess parachute payment" at the 
time of payment, the Executive shall be entitled to receive a lump 
sum cash payment sufficient to place the Executive in the same net 
after-tax position, computed by using the "Special Tax Rate" as 
such term is defined below, that the Executive would have been in 
had such payment not been subject to such excise tax, and had the 
Executive not incurred any interest charges or penalties with 
respect to the imposition of such excise tax.  For purposes of 
this Agreement, the "Special Tax Rate" shall be the highest 
effective Federal and state marginal tax rates applicable to the 
Executive in the year in which the payment contemplated under this 
Section 1.8 is made.

2.    General.

2.1   Indemnification.  If litigation shall be brought to enforce or 
interpret any provision contained herein, the Corporation, to the 
extent permitted by applicable law and the Corporation's Charter 
and By-laws, indemnifies the Executive for his reasonable 
attorneys' fees and disbursements incurred in such litigation.

2.2   Dispute Resolution.  Either the Executive or the Corporation may 
elect to have any good faith dispute or controversy arising under 
or in connection with this Agreement settled by arbitration, by 
providing written notice of such election to the other party, 
specifying the nature of the dispute to be arbitrated.  If 
arbitration is selected, such proceeding shall be conducted before 
a panel of three (3) arbitrators sitting in a location agreed to 
by the Corporation and the Executive within fifty (50) miles from 
the location of the Executive's principal place of employment in 
accordance with the rules of the American Arbitration Association.  
Judgment may be entered on the award of the arbitrators in any 
court having competent jurisdiction.

      If the Executive prevails in any litigation or arbitration seeking 
to enforce the provisions of this Agreement, the Executive shall 
be entitled to reimbursement by the Corporation of all expenses, 
including reasonable legal fees and expenses, and costs and 
disbursements incurred as a result of such dispute or legal 
proceeding.

2.3   Payment of Obligations Absolute.  The Corporation's obligation to 
pay the compensation and to make the arrangements provided in this 
Agreement shall be absolute and unconditional and shall not be 
affected by any circumstances, including any offset, counterclaim, 
recoupment, defense or other right which the Corporation may have 
against the Executive or anyone else.  All amounts payable by the 
Corporation shall be paid without notice or demand.  Each and 
every payment made by the Corporation shall be final and the 
Corporation will not seek to recover all or any part of such 
payment.  The Executive shall not be obligated to seek other 
employment in mitigation of the amounts payable or arrangements 
made under this Agreement, and the obtaining of any other 
employment shall not result in a reduction of the Corporation's 
obligations to make the payments, benefits and arrangements 
required to be made under this Agreement.  

2.4   Continuing Obligations.  The Executive shall retain in confidence 
any confidential information known to him concerning the 
Corporation, its subsidiaries and their respective businesses so 
long as such information is not publicly disclosed.

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