The Portuguese head coach emphasised the stance of the club as they continue to negotiate with last year's La Liga champions for the transfer of the Croatian playmaker
The 26-year-old midfielder has long harboured a desire to leave Spurs, publicly declaring his interest in moving to Chelsea last season before opting to miss the club's US tour this summer ahead of a proposed move to the Spanish capital.
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However, Tottenham have set a £40 million asking price for the Croatia international, a figure the Spanish giants have 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 behaviour 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 their final pre-season 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."