PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
         SAFE HARBOR COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS

     In  passing  the  Private  Securities  Litigation  Reform  Act of 1995 (the
"PSLRA"),   Congress  encouraged  public  companies  to  make   "forward-looking
statements" by creating a safe-harbor to protect  companies from  securities law
liability  in  connection  with  forward-looking   statements.   Forward-looking
statements can be identified by the use of words such as  "estimate,"  "expect,"
"believe," "project," "forecast," "anticipate," "plan," and similar expressions.
Meritage intends to qualify both its written and oral forward-looking statements
for protection under the PSLRA.

     To qualify oral forward-looking  statements for protection under the PSLRA,
a readily available written document must identify  important factors that could
cause  actual  results to differ  materially  from those in the  forward-looking
statements.  Meritage provides the following  information in connection with its
continuing  effort to qualify  forward-looking  statements  for the safe  harbor
protection of the PSLRA.

     Important  factors  currently  known to management  that could cause actual
results to differ materially from those in forward-looking  statements  include,
but are not  limited  to,  the  following:  (i)  changes in  national  and local
economic  and other  conditions,  such as  employment  levels,  availability  of
mortgage financing,  interest rates,  consumer  confidence,  and housing demand;
(ii) risks inherent in homebuilding activities, including delays in construction
schedules,  cost overruns,  changes in government regulation,  increases in real
estate taxes and other local fees;  (iii)  changes in costs or  availability  of
land,  materials,  and labor; (iv)  fluctuations in real estate values;  (v) the
timing of home closings and land sales;  (vi) Meritage's  ability to continue to
acquire  additional  land or options to acquire  additional  land on  acceptable
terms;  (vii)  a  relative  lack of  geographic  diversification  of  Meritage's
operations,  especially  when real estate  analysts are predicting that new home
sales in certain markets may slow during 2000;  (viii)  Meritage's  inability to
obtain  sufficient  capital on terms  acceptable to Meritage to fund its planned
capital and other  expenditures;  (ix) changes in local, state and federal rules
and regulations  governing real estate  development and homebuilding  activities
and environmental  matters,  including "no growth" or "slow growth" initiatives,
building permit allocation ordinances and building moratoriums; (x) expansion by
Meritage into new geographic or product  markets in which Meritage has little or
no operating  experience,  such as Northern  California;  (xi) the  inability of
Meritage  to identify  acquisition  candidates  that will  result in  successful
combinations;  (xii) the  failure  of  Meritage  to make  acquisitions  on terms
acceptable to Meritage, or to successfully  integrate acquired operations,  such
as Northern California,  into Meritage;  and (xiii) the loss of key employees of
the Company, including Steven J. Hilton and John R. Landon.

     Forward-looking  statements  express  expectations  of future  events.  All
forward-looking statements are inherently uncertain as they are based on various
expectations  and assumptions  concerning  future events and they are subject to
numerous  known and unknown  risks and  uncertainties,  which could cause actual
events or  results  to differ  materially  from  those  projected.  Due to these
inherent  uncertainties,  the  investment  community is urged not to place undue
reliance on  forward-looking  statements.  In addition,  Meritage  undertakes no
obligation to update or revise  forward-looking  statements  to reflect  changed
assumptions, the occurrence of anticipated events or changes to projections over
time.