According to Real Estate Associates Ltd. II’s FORM 10-KSB for the fiscal year ended December 31, 2003, on December 30, 2003, the Stipulation of Settlement with the plaintiff class (the "Plaintiffs") and their counsel relating to the settlement of litigation against the Registrant, National Partnership Investments Corp. ("NAPICO") and certain other defendants became effective in accordance with its terms. In addition, on December 30, 2003, the Settlement Agreement with the prior shareholders of Casden Properties, Inc., NAPICO and Apartment Investment and Management Company ("AIMCO") also closed in accordance with its terms.

As disclosed by the same SEC filing, on April 29, 2003, the court entered judgment against NAPICO and certain other defendants in the amount of approximately $25.2 million for violations of securities laws and against NAPICO for approximately $67.3 million for breaches of fiduciary duty, both amounts plus interest of approximately $25.6 million, and for punitive damages against NAPICO in the amount of $2.6 million. On August 11, 2003, Apartment Investment and Management Company ("AIMCO") and NAPICO entered into a Stipulation of Settlement (the "Stipulation of Settlement") with the plaintiff class (the "Plaintiffs") and their counsel relating to the settlement of the litigation. The principal terms of the Stipulation of Settlement include, among other things (1) payments in both cash ($29 million) and stock ($19 million) by Alan I. Casden, on behalf of himself, NAPICO and other defendants, to the Plaintiffs, (2) guaranteed payments in an aggregate amount of $35 million ($7 million per year for 5 years), plus interest, by NAPICO to the Plaintiffs, (3) a release of claims of all parties associated with the litigation and (4) joint agreement by the parties to request that a new judgment be entered in the litigation to, among other things, expunge the judgment originally entered against NAPICO and the other defendants. In connection with the Stipulation of Settlement, on August 12, 2003, NAPICO and AIMCO executed a Settlement Agreement (the "Settlement Agreement") with the prior shareholders of Casden Properties, Inc. The principal terms of the Settlement Agreement include, among other things, that (1) NAPICO will voluntarily discontinue the action it commenced on May 13, 2003 against the former shareholders of Casden Properties, Inc. and other indemnitors in the Casden Merger, (2) Alan I. Casden and certain related entities will resolve certain pending claims for indemnification made by NAPICO, AIMCO and their affiliates, (3) AIMCO or an affiliate will provide $25 million of the $29 million in cash that Alan I. Casden is obligated to provide under the Stipulaton of Settlement in exchange for 531,915 shares of AIMCO Class A Common Stock owned by The Casden Company, and (4) The Casden Company will promise to pay to NAPICO an aggregate amount of $35 million ($7 million per year for 5 years), plus interest, on a secured, nonrecourse basis. The Casden Company can prepay its obligation set forth in item (4) above in shares of AIMCO Class A Common Stock having a value based on the greater of $47 per share or the market value of such shares at the time of payment.

According to a press release dated April 5, 2003, a jury verdict in favor of former investors in a series of limited partnerships operated by Los Angeles apartment tycoon Alan Casden was upheld by a federal judge, but damages were reduced by $64 million to about $120 million. U.S. District Judge Dean Pregerson in Los Angeles late Thursday reduced the jury's award of $92.5 million in punitive damages to $2.6 million. But he upheld the $92.5 million in compensatory damages and awarded $25 million in prejudgment interest, said Nicholas Chimicles, senior partner at Chimicles & Tikellis, a Haversford, Pa., law firm that represents the investors.

In a press release dated November 20, 2002, lead trial counsel Nicholas E. Chimicles, a senior partner of Chimicles & Tikellis LLP, Haverford, PA, and co-lead counsel Lawrence A. Sucharow, a senior partner of Goodkind Labaton Rudoff & Sucharow LLP (GLRS), New York City, have announced that on November 15, 2002, a federal court jury in Los Angeles rendered a unanimous verdict of more than $92 million, in favor of a class of 18,000 investors, for violations of federal securities laws and breach of fiduciary duties, in the lawsuit captioned In re Real Estate Associates Limited Partnership Litigation. This landmark case is the first Section 14 – proxy law – securities class action to be tried and won, before a jury, anywhere in the United States since the enactment of the Private Securities Litigation Reform Act (PSLRA) of 1995. The jury also determined, on November 19, after a second phase of the trial, that the Investor Class was entitled to punitive damages in the amount of $92 million against defendant NAPICO, which the jury found by clear and convincing evidence had acted with malice, oppression or fraud in breaching its fiduciary duties to the investors.

The two counts of the case that the jury considered included a federal securities claim against all defendants under Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder, and a breach of fiduciary duty claim against NAPICO. The jury awarded more than $25 million of damages on the Section 14(a) claim against all defendants and more than $67 million of consequential damages and $92 million of punitive damages against NAPICO on the breach of fiduciary duty claim. In rendering its verdict on the Section 14(a) claim, the jury also determined that each defendant knowingly violated the federal securities laws, thereby triggering the application of joint and several liability against each defendant under the federal securities laws. The five week trial saw more than 25 witnesses appear before an 11 member jury, which deliberated for six days before reaching its unanimous verdict on liability and consequential damages.

The original complaint alleged that Defendants violated Section 14(a) of the Securities Exchange Act of 1934 ('Exchange Act') and Rule 14a-9 promulgated thereunder and breached their common law fiduciary duties to Plaintiffs by circulating consent solicitations, proxy statements within the meaning of the Exchange Act, Section 14(a) and Rule 14a-1, which were materially false and misleading. The original class action lawsuit names as defendants National Partnership Investments Corp. ("NAPICO"), and certain officers and directors of NAPICO, Alan I. Casden, Charles H. Boxenbaum, Bruce E. Nelson, Henry C. Casden and National Partnership Investment Associates I and II, Housing Programs Ltd. (“HPL”), and Real Estate Associates Limited I through VII.

NOTE: The class consists on all persons and entities who held units or limited partnership interests in one or more of Real Estate Associates Limited, Real Estate Associates Limited II, III, IV, V, VI and VII or Housing Programs Limited and were entitled to vote on one or more of the consent solicitation statements disseminated in August 1998 In regard to those limited partnerships.