EXHIBIT 5

                        Venable, Baetjer and Howard, LLP
                      1800 Mercantile Bank & Trust Building
                                 2 Hopkins Plaza
                            Baltimore, Maryland 21201

                                 March 31, 1999



Meritage Corporation
6613 North Scottsdale Road, Suite 200
Scottsdale, Arizona 85250

         Re:    Registration Statement on Form S-8 of Meritage Corporation
                (Formerly Monterey Homes Corporation)

Ladies and Gentlemen:

         We have  acted as special  Maryland  counsel  to  Meritage  Corporation
(formerly   Monterey   Homes   Corporation),   a   Maryland   corporation   (the
"Registrant"),  in  connection  with a  Registration  Statement on Form S-8 (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"Commission")   pursuant  to  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act").   Pursuant  to  General  Instruction  E  to  Form  S-8,  the
Registration  Statement  incorporates by reference the information  contained in
the  Registrant's  Registration  Statement  on Form S-8 which was filed with the
Commission  and became  effective  on October 14, 1997 (the "Prior  Registration
Statement"). A total of Two Hundred Twenty-Five Thousand (225,000) shares of the
Registrant's  common  stock,  par value  $0.01 per share  ("Common  Stock")  was
registered pursuant to the Prior Registration Statement.

         The Registration  Statement (A) reflects amendments to the Registrant's
stock  option plan (the "Plan") that (i) effect a change in the name of the Plan
from the  "Monterey  Homes  Corporation  Stock  Option  Plan"  to the  "Meritage
Corporation Amended Stock Option Plan," consistent with the recent change in the
Registrant's  corporate  name from  "Monterey  Homes  Corporation"  to "Meritage
Corporation"  and (ii)  authorize  an  additional  Two  Hundred  Fifty  Thousand
(250,000) shares of the

Meritage Corporation
March 31, 1999
Page 2


Registrant's  Common  Stock (the  "Additional  Shares")  for  issuance  and sale
pursuant to the Plan,  as amended (the  "Amended  Plan") and (B)  registers  the
Additional Shares for issuance and sale pursuant to the Amended Plan.

         In connection  with this opinion,  we have considered such questions of
law as we have deemed necessary as a basis for the opinions set forth below, and
we have examined or otherwise are familiar with  originals or copies,  certified
or otherwise identified to our satisfaction,  of the following:  (i) the Amended
Plan; (ii) the Registration  Statement;  (iii) the Prior Registration Statement;
(iv) the Amended and  Restated  Articles of  Incorporation,  as amended,  of the
Registrant  as certified by the Maryland  State  Department of  Assessments  and
Taxation as of March 3, 1999;  (v) the Bylaws of the  Registrant as certified by
the Secretary of the Registrant on March 30, 1999;  (vi) certain  resolutions of
the Board of Directors and the  stockholders  of the Registrant  relating to the
Additional  Shares and the Amended Plan; (vii) a Certificate of the Secretary of
the  Registrant  relating to such  resolutions  and certain other  matters;  and
(viii) such other  documents  as we have deemed  necessary or  appropriate  as a
basis for the opinion set forth below. In our  examination,  we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified or photostatic  copies and the  authenticity of the originals of
such  copies.  As to any  facts  material  to  this  opinion  that  we  did  not
independently   establish  or  verify,   we  have  relied  upon  statements  and
representations  of officers and other  representatives  of the  Registrant  and
others.

         Based upon the  foregoing,  we are of the opinion  that the  Additional
Shares have been duly  authorized for issuance and that when issued,  sold, paid
for and delivered as  contemplated  by the Amended Plan, the  Additional  Shares
will be validly issued, fully paid and nonassessable.

         This letter is  strictly  limited to the  matters  expressly  set forth
herein and no  statements  or opinions  should be inferred  beyond such matters.
This opinion is limited to the laws of the State of Maryland  (without regard to
the  principles  of conflicts of laws  thereof) and is based upon and limited to
such laws as in effect as of the date hereof.  We assume no obligation to update
the opinion set forth herein.

Meritage Corporation
March 31, 1999
Page 3


         We hereby  consent to the filing of this opinion with the Commission as
Exhibit 5 to the  Registration  Statement.  In giving  this  consent,  we do not
thereby  admit that we are  within the  category  of  persons  whose  consent is
required under Section 7 of the Securities  Act, or the Rules and Regulations of
the Commission thereunder.

                                           Very truly yours,

                                           /s/ VENABLE, BAETJER AND HOWARD, LLP