The Portuguese head coach emphasized the stance of the club as it continues to negotiate with last year's La Liga champions for the transfer of the Croatian playmaker.
The 26-year-old midfielder has long harbored a desire to leave Spurs, publicly declaring his interest in moving to Chelsea last season before opting to miss the club's U.S. tour this summer ahead of a proposed move to the Spanish capital.
However, Tottenham has set a 40 million pound asking price for the Croatia international, a figure the Spanish giant has refused to meet thus far, leading Villas-Boas to once again state the importance of the club's stubborn stance.
"There is still no deal between the two teams because Real Madrid don't get closer to what Daniel Levy asks for, but we understand what Modric wants and he understands our behavior as well," Villas-Boas told reporters.
"Modric is still training on his own. This is a 'pact' between the two of us and that's the way it will be until his future is decided.
But Villas-Boas, who saw his side lose its final preseason friendly of the summer 2-0 to Valencia in the Mestalla on Thursday night, suggested there could be a way back for Modric, adding: "We will try to recover him mentally in case he finally doesn't leave.
"Of course we respect Real Madrid and their claims, but they should also respect us."
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