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                                                                    EXHIBIT 10.2


                          PRICE DETERMINATION AGREEMENT






January 22, 1997





PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019

Ladies and Gentlemen:

                  Reference is made to the Underwriting Agreement dated January
22, 1997 (the "Underwriting Agreement"), by and between Bay Apartment
Communities, Inc., a Maryland corporation (the "Company") and PaineWebber
Incorporated (the "Underwriter"). The Underwriting Agreement provides for the
purchase by the Underwriter from the Company, subject to the terms and
conditions set forth therein, of an aggregate of 1,400,000 shares (the "Firm
Shares") of the Company's common stock, par value $.01 per share. This Agreement
is the Price Determination Agreement referred to in the Underwriting Agreement.

                  Pursuant to Section 3 of the Underwriting Agreement, the
undersigned agrees with the Underwriter as follows:

                  The public offering price per share for the Firm Shares shall
be $37.125.

                  The purchase price per share for the Firm Shares to be paid by
the Underwriter shall be $35.265 representing an amount equal to the public
offering price set forth above, less $1.86 per share.

                  The Company represents and warrants to the Underwriter that
the representations and warranties of the Company set forth in Section 2 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.

                  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.




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PAINEWEBBER INCORPORATED
January 22, 1997


                  If the foregoing is in accordance with your understanding of
the agreement between the Underwriter and the Company, please sign and return to
the Company a counterpart hereof, whereupon this instrument along with all
counterparts and together with the Underwriting Agreement shall be a binding
agreement between the Underwriter and the Company in accordance with its terms
and the terms of the Underwriting Agreement.


                                       Very truly yours,

                                       BAY APARTMENT COMMUNITIES, INC.



                                       By:    /s/ Gilbert M. Meyer
                                       Name:  Gilbert M. Meyer
                                       Title: President




ACCEPTED as of the date first above written.


PAINEWEBBER INCORPORATED

         By: /s/ Frederick T. Caven, Jr.
         Name: Frederick T. Caven, Jr.
         Title: Managing Director




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