1

                         LINDAL CEDAR HOMES, INC. LOGO

                               December 20, 2000

Dear Stockholders:

     Lindal Cedar Homes, Inc. (the "Company") is offering to purchase any and
all of the outstanding shares of its common stock (the "Shares") from existing
stockholders for a purchase price of $4.55 per Share, net to the Seller in cash.
The offer is not conditioned upon any minimum number of shares being tendered.
Although the offer is being made to all holders of the shares, the following
stockholders have advised the company that they do not intend to tender any
shares pursuant to this offer: Robert W. Lindal; Sir Walter Lindal; Martin J.
Lindal; and Douglas F. Lindal (the "Lindal Family Members"), all of whom are
also officers or directors of the Company.

     The offer represents the first step in taking us private. After completion
of the offer, the Lindal Family Members intend to propose a second-step merger
of the Company with an entity they will form, in which all of the remaining
public stockholders will receive cash for their shares at the same price as is
contemplated in the offer. This offer and the second-step merger will enable the
Lindal Family Members to succeed to the entire equity interest in the Company.

     The Company believes that the public market for the Shares has been and
will continue to be characterized by low prices and low trading volumes. This
offer provides the Stockholders other than the Lindal Family Members with an
opportunity to sell their shares at a price higher than those recently available
in the public market and without the liquidity limitations characterized by that
market.

     The offer is explained in detail in the enclosed Offer to Purchase and
Letter of Transmittal. We encourage you to read these materials carefully before
making any decision with respect to the offer. The instructions on how to tender
Shares are also explained in detail in the accompanying materials.

     On December 13, 2000, the last day the Shares were traded prior to the
printing of this letter, the last reported sales price per Share for the
Company's common stock on the Nasdaq SmallCap Market was $2.50. Any stockholder
tendering Shares directly to the Depositary, whose Shares are purchased in the
offer, will receive the net purchase price in cash and will not generally incur
the usual transaction costs associated with open-market sales.

     A special committee of the Board of Directors (the "Special Committee"),
consisting of three directors who are not Lindal Family Members or involved in
the business of the Company, by unanimous vote has determined that a price of
$4.55 per Share is fair from a financial point of view and moreover has received
an opinion from its financial advisor, First Security Van Kasper, Inc., that a
price of $4.55 per Share is fair from a financial point of view. The Special
Committee recommends that the Stockholders other than the Lindal Family Members
accept the offer and tender their shares pursuant to the offer.

     The offer will expire at midnight, New York City time, on January 19, 2001,
unless extended by the Company. If you have any questions or requests for
assistance or for additional copies of the Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery, you may call the Information
Agent for the offer, MacKenzie Partners, Inc., at (800) 322-2885.

                                             Sincerely,

                                             LINDAL CEDAR HOMES, INC.

Enclosures