Castle Village

IRS CASUALTY LOSS AUDIT

MONTHLY UPDATE September 12, 2008

Dear Shareholders,

We have requested monthly updates from Poe and Freireich which will contain a status report of the overall case, any new or major developments, and information regarding individual unit owners, including what steps they have taken for each individual case. The information regarding individual unit owners has been redacted from this memo for reasons of confidentiality.

Please note that this is a “group action”. As such, our fee arrangement with Poe and Freireich does not include discussions with individual shareholders.

Therefore, all questions and concerns should be directed to the Castle Village Management office. Similar questions will be grouped and answered in the monthly update. Likewise, Poe and Freireich has been directed to refer all calls to CVOC.

“The current status of the case is as follows:

We have hired James Levy of Appraisers and Planners Inc. as an expert witness. Mr. Levy will be assessing the property value of Castle Village to ascertain the deductible loss, which is the difference between the fair market value immediately before the retaining wall collapse and the fair market value immediately after the collapse. This office is also working with Alan Ross, Esq. and Mark Canizio, Esq. to coordinate a list of expert witnesses to be involved with both legal actions. In order to be consistent in our determinations and not jeopardize the outcome of either action, we are in the process of contacting those witnesses for their involvement in our tax lawsuits as well.

With regard to the Summons to appear before the Internal Revenue Service (the “Service”) on September 12, 2008, we have requested and received a thirty (30) day extension to appear and produce the requested information.

Finally, we have spoken with Alexander Toibman, the Service representative assigned to this matter. He indicated that more claims have been disallowed and notices will be issued shortly. We are currently waiting for Claim Disallowances from the unit owners who have filed for refunds, and Statutory Notices of Deficiency for the unit owners who originally took the casualty loss deduction.

For those unit owners who have already received these notices, and forwarded them to this office, please see the enclosure for more detailed information regarding the status of each case.” [REDACTED]

The redacted material is in the Castle Village Management Office. Shareholders wishing to know their individual status should please contact Frank Nadal.

If you have not already signed up to be represented by Poe and Freireich, we urge you to do so as soon as possible.

Your Castle Village Board of Directors