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Employment Agreement - Kaufman and Broad Home Corp. and Bruce Karatz

Mr. David Maxwell
5335 Wisconsin Avenue, NW
Suite 440
Washington, D.C. 20015

February 16, 1995

Mr. Bruce Karatz
1212 La Mesa
Santa Monica, California 90402

RE: Amendments to Employment Agreement

Dear Bruce:

This letter is to confirm our understanding with regard to amending your
existing employment agreement dated January 4, 1988 (the 'Agreement') with
Kaufman and Broad Home Corporation (the 'Company') to comply with the
requirements of Section 162(m) of the Internal Revenue Code ('Section 162(m)').

This year the Company is submitting for stockholder approval an incentive
compensation plan entitled the 'Performance-Based Incentive Compensation Plan
for Senior Management' (the 'Plan') in an effort to qualify the compensation 
paid to you, as well as certain other executives of the Company, for tax
deductibility in accord with Section 162(m). The Compensation Committee has
selected you to participate in the Plan, which specifies certain performance
criteria, including the Company's pre-tax income, that the Compensation
Committee will consider in making incentive compensation awards to you and other
Plan participants. The Plan further provides that the Company's Chief Executive
Officer may not earn annual incentive cash compensation in excess of $3 million
and no participant may receive an annual stock-based award in excess of 100,000

To qualify future compensation paid to you under the Agreement for tax
deductibility, it is also necessary, and we have agreed to, amend the Agreement
as of the date of this letter to provide that: (1) the Agreement will terminate
immediately on March 23, 1995 if the Plan is not approved by stockholders at
the Company's 1995 Annual Meeting of Stockholders and (2) if the Plan is
approved by stockholders, all future incentive compensation awards made to you
pursuant to the Agreement will be 

made under, and will comply with the limits and requirements set forth in, the
Plan, including the $3 million limit on annual incentive cash compensation and
the 100,000 share annual limit on stock-based awards. No other terms in the     
Agreement, including the incentive compensation formula set forth in Section
4(b) thereof, are being amended by this letter.


David O. Maxwell
Personnel, Compensation
and Stock Plan Committee

Agreed and acknowledged
this 23 day of February, 1995:

/s/ Bruce Karatz
- ----------------------------
Bruce Karatz

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