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HomeMy WebLinkAboutCT 99-01; Carlsbad Beach Estates; Tentative Map (CT) (14)RECORDING REQUESTED BY ) AND ) AND WHEN RECORDED, MAIL TO: ) THE ORIGINAL OF THIS DOCUHENT UAS RECORDED ON OCT 09, 2000 DOOMNT NUMBER 2000-0559562 GUGQRY J. SHITH, CCUWY RECORDER SfiN DIEGO COUNTY RECORDER'S OFICE TIHE:8:00 AH BRIAN D. GREENBERG, ESQ. ONE AMERICA PLAZA SUITE 940 600 WEST BROADWAY SAN DIEGO, CA 92101-3362 (Space Above for Recorder's Use) DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR CARLSBAD BEACH ESTATES MMDS259029 CC4SS/C3E/ 10/5/2000 TABLE OF CONTENTS FOR DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR CARLSBAD BEACH ESTATES 1. Definitions 3 1.1. Architectural Committee or Committee 3 1.2. Articles 3 1.3. Assessment, Annual 3 1.4. Assessment, Capital Improvement 3 1.5. Assessment, Reconstruction 4 1.6. Assessment, Special 4 1.7. Association 4 1.8. Association Maintenance Funds 4 1.9. Association Property Module 5 1.10. Beneficiary 5 1.11. Board or Board of Directors 5 1.12. Budget 5 1.13. Bylaws 5 1.14. City 5 1.15. Close of Escrow 5 1.16. Common Expenses 6 1.17. Condominium 6 1.18. Condominium Common Area Module 7 1.19. Condominium Plan 7 1.20. Condominium Property 7 1.21. Declarant 8 1.22. Declaration 8 1.23. Deed of Trust 8 1.24. ORE 8 -i- CC&RS/CBE/ 10/5/2000 1.25. Family 8 1.26. FHA 8 1.27. FHLMC 8 1.28. Fiscal Year 8 1.29. FNMA 9 1.30. GNMA 9 1.31. Improvements 9 1.32. Manager 9 1.33. Member, Membership 9 1.34. Mortgage 9 1.35. Mortgagee, Mortgagor 10 1.36. Notice and Hearing 10 1.37 . Owner 10 1.38. Person 10 1.39. Property or Proj ect 10 1.40. Record, File, Recordation 10 1.41. Residence 10 1.42. Restrictions 11 1.43. Rules and Regulations 11 1.44. Separate Interest or Unit 11 1.45. Separate Interest or Lot 11 2. CARLSBAD BEACH ESTATES HOMEOWNERS ASSOCIATION 12 2.1. Organization of Association 12 2.2. Duties and Powers 12 2.3. Membership 13 2.4. Transfer 13 2.5. Classes of Membership 14 2.6. Voting Rights 14 2.7. Repair and Maintenance by the Association 16 2.8. Unsegregated Real Property Taxes 17 2.9. Repair and Maintenance by Owners 18 3. Rights in Condominium Common Area Module and Association Property Module 18 3.1. Association Easement 18 3.2. Partition 18 -11- CC&RS/CBE/ 10/5/2000 3.3. Members' Easements in Common Property 18 3.4. Extent of Members' Easements 19 3.5. Delegation of Use 20 3.6. Waiver of Use 20 3.7. Damage by Condominium Owner Member 21 3.8. Damage by Lot Owner Member 22 4. Architectural Review Committee 23 4.1. Members of Committee 23 4.2. Review of Plans and Specifications 24 4.3. Meetings of the Committee 26 4.4 No Waiver of Future Approvals 26 4.5. Compensation of Members 26 4.6. Inspection of Work 26 4.7. Scope of Review 28 4.8. Variances 28 4.9. Appeals 29 5. Maintenance Funds and Assessments 29 5.1. Personal Obligation of Assessments 29 5.2. Maintenance Funds of Association 30 5.3. Purpose of Assessments 30 5.4. Limitations on Annual Assessment Increases 31 5.5. Annual Assessments/Commencement-Collection 33 5.6. Capital Improvement Assessments ,34 5.7. Delinquency 35 5.8. Creation and Release of Lien 36 5.9. Enforcement of Liens 37 5.10. Priority of Assessment Lien 38 6. Property Easements and Rights of Entry 39 6.1. Easements 39 7. Declarant's Rights and Reservations 41 7.1. Declarant's General Rights and Reservations 41 -111- CC&RS/CBE/ 10/5/2000 8. Residence and Use Restrictions 42 8.1. Single Family Residences 43 8.2. Parking and Vehicular Restrictions 43 8.3. Nuisances 45 8.4. Signs 45 8.5. Antennas/Satellite Dishes 46 8.6. Animal Regulations 47 8.7. Business or Commercial Activity 48 8.8. Rubbish Removal 48 8.9. Further Subdivision 49 8.10. Drainage 49 9. Insurance 50 9.1. Duty to Obtain Insurance; Types 50 9.2. Waiver of Claims Against Insurance 51 9.3. Right and Duty of Owners to Insure 52 9.4. Notice of Expiration Requirements 52 9.5. Insurance Premiums 52 9.6. Trustee for Policies 53 9.7. Action as Trustee 54 9.8. Restoration of the Condominium Common Area Module/ Association Property Module 54 9.9. Sale of Property and Right to Partition 55 9.10. Repair Procedures 55 9.11. Procedures When Repairs are Not Made 56 9.12. Insurance Review 56 10. Eminent Domain-Association Property Module 57 10.1. Condemnation of Association Property Module 57 10.2. Notice to Owners and Mortgagees 57 10.3. Sale by Consent 57 10.4. Distribution of Proceeds 57 -iv- CC&RS/CBE/ 10/5/2000 11. Eminent Domain-Condominium Common Area Module 58 11.1. Condemnation of Condominium Common Area Module 58 11.2. Notice to Owners and Mortgagees 58 11.3. Sale by Consent 58 11.4. Distribution of Proceeds 58 12. Rights of Mortgagees 59 13. Duration and Amendment 64 13.1. Duration 64 13.2. Termination and Amendment 64 13.3. Protection of Declarant 68 14. Enforcement of Certain Bonded Obligations 69 14.1. Consideration by Board of Directors 69 14 . 2 . Consideration by the Members 69 15 . General Provisions 70 15.1. Enforcement of Restrictions 70 15.2. Severability 72 15.3. Interpretation 72 15.4. Mergers or Consolidations 72 15.5. Use of Recreational Facilities 73 15.6. No Public Right or Dedication 73 15.7. Nonliability and Indemnification 73 15.8. Notices 76 15.9. Priorities and Inconsistencies 76 15.10. Constructive Notice and Acceptance 77 15.11. Declarant's Right to Cure Alleged Defects 77 15.12 . Arbitration of Alleged Defect Claims 78 15.13. No Representations or Warranties 81 -v- CCtRS/CBE/ 10/5/2000 16. Annual Inspection 81 16.1. Duty to Inspect 81 16.2. Purpose of Inspection 81 16.3. Scope of Inspection 81 16.4. Experts and Consultants 81 16.5. Report to Owners 82 17. Alternative Dispute Resolution 83 17.1 Responsibilities of Owner(s) ; Association 83 17.2. Role of Board of Directors 83 18. Organizational Documentation 85 18.1. Role of Declarant 85 19. Causes of Action in Tort 87 19.1. Lawsuits Against the Association 87 20. Documentation to be provided Prospective Purchaser 88 20.1. Owner Requirements of Civil Code Section 1368 88 20.2. Association Requirements of Civil Code Section 1368 89 20.3. Failure to comply with Article XX 89 20.4. Validity of Transfer 89 20.5. Additional Owner Requirements 89 21. Civil Code Section 1375 90 21.1. Review of Civil Code Section 1375 90 22. Managing Agent 90 22.1. Written Disclosure of Prospective Managing Agent ...90 22.2. Definition of "managing agent" 91 22.3. Handling of Association Funds by Managing Agent ....92 -vi- CC&RS/CBE/ 10/5/2000 23. Requirements of the City of Carlsbad 94 23.1. Conditions of Approval of Carlsbad Beach Estates ...94 23.2. General Enforcement by the City 94 23.3. Notice and Amendment 94 23.4. Failure of Association to Maintain Common Area Lots and Easements 95 23.5. Special Assessments Levied by the City 95 23.6. Sight Distance Corridor Encroachment 96 23.7. National Pollutant Discharge Elimination System (NPDES) permit 96 23.8. Prohibition on Parking 97 23.9. Landscape Maintenance Responsibilities 97 23.10 . Balconies, trellies, and decks 97 23.11. Prohibition on additional decks, balconies or patios 97 23 .12 . Prohibition on room additions 97 23.13. Prohibition on Replacement or Remodeling of Structure 97 24 . Cost Center 98 24.1. Definition of Terms 98 24.2. Authorization 98 24.3. Amendment of Provisions 99 24.4. Prohibition on Commingling 99 24.5. Prohibition on use of Cost Center funds 99 24.6. Accounting/Annual Review and Disclosure 99 25. Maintenance of Condominium 100 25.1. Common Roof and Common Foundation System 100 25.2. Application of General Rules 100 25.3. Repair, Maintenance and Replacement of Common Structures 100 25.4. Allocation of Costs 101 25.5. Change to Exteriors 102 25.6. Damage and Destruction 103 25.7. Weatherproofing 104 25.8. Encroachment Easements 104 -vii- CC&RS/CBE/ 10/5/2000 25.9. Maintenance, Repair and Reconstruction Easements ..105 25.10. Roof Easement; Drainage 105 25.11. Owner's Insurance 106 25.12. Dispute Resolution 106 25.13. Mechanic's Liens 107 SUBORDINATION 110 SUBORDINATION 112 SUBORDINATION 114 SUBORDINATION 116 -Vlll- CC&RS/CBE/ 10/5/2000 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR CARLSBAD BEACH ESTATES THIS DECLARATION is made by CARLSBAD BEACH GROUP INVESTORS, L.L.C., A CALIFORNIA LIMITED LIABILITY COMPANY and by H. David Buckmaster, Owner and Patricia A. Buckmaster, Owner (collectively referred to herein as "Declarant") . PREAMBLE: A. Declarant is the owner of certain real property located in the City of Carlsbad, County of San Diego, State of California, described as follows: LOT 5 OF CARLSBAD BEACH ESTATES, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 14047, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, SEPTEMBER 29, 2000 ("Condominium Property"). LOT 1 TO LOT 4, INCLUSIVE, OF CARLSBAD BEACH ESTATES, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 14047, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, SEPTEMBER 29, 2000. B. It is the desire and intention of Declarant to create a "condominium project," as defined in Section 1351 (f) of the California Civil Code and a "planned development, as defined in Section 1351 (g) of the California Civil Code, to subdivide The Property (as hereinafter defined) as authorized by Section 66427 of the California Government Code into "condominiums" as defined in Section 783 of the California Civil Code and into "separate interests" as defined in Section 1351 (1)(2) and 1351 (1)(3) of the California Civil Code, and to impose mutually beneficial restrictions under a general plan of improvement for the benefit of all the condominiums and Lots created pursuant to the Davis- Stirling Common Interest Development Act. CC&RS/CBE/ 10/5/2000 C. Declarant hereby declares that all the Property is to be held, conveyed, hypothecated, encumbered, leased, rented, used, occupied and improved subject to the limitations, restrictions, reservations, rights, easements, conditions and covenants contained in this Declaration, all of which are declared and agreed to be in furtherance of a plan for the protection, subdivision, maintenance, improvement and sale of the Property for the purpose of enhancing the value, desirability and attractiveness of the Property. All provisions of this Declaration, including without limitation the easements, uses, obligations, covenants, conditions and restrictions hereof, are hereby imposed as equitable servitude upon the Property. All of the limitations, restrictions, reservations, rights, easements, conditions and covenants herein shall run with and burden the Property and shall be binding on and for the benefit of all of the Property and all Persons having or acquiring any right, title or interest in the Property, or any part the, and their successive owners and assigns. D. Declarant, its successors, assigns and grantees, covenant and agree that the undivided interest in the Condominium Common Area Module, the membership in the Association, any easements conveyed therewith and the fee title to each respective Unit conveyed therewith shall not be separated or separately conveyed and each such undivided interest, membership and easement shall be deemed to be conveyed or encumbered with its respective Unit or even though the description in the instrument of conveyance or encumbrance may refer only to the Unit; provided, however, that this restriction upon the severability of the component interests of the Condominiums shall not extend beyond the period for which the right to partition the Property is suspended in accordance with Section 1359 of the California Civil Code and the provisions of Article X hereof. Any conveyance by an Owner of a Condominium, or any portion the, shall be presumed to convey the entire Condominium, together with a membership in the Association. CC&RS/CBE/ 10/5/2000 ARTICLE I 1. Definitions. Unless otherwise expressly provided, the following words and phrases when used herein shall have the following specified meanings. 1.1. Architectural Committee or Committee. Architectural Committee or Committee shall mean the Architectural Review Committee created pursuant to Article IV hereof. 1.2. Articles. Articles shall mean the Articles of Incorporation of the Association filed or to be filed in the Office of the Secretary of State of the State of California, as such Articles may be amended from time to time. 1.3. Assessment, Annual. Annual Assessment shall mean a charge against a particular Owner and the Condominium and the Lot, which represents a portion of the Common Expenses which are to be levied among all of the Owners of the Condominiums and the Lots in the Project in the manner and proportions provided herein. 1.4. Assessment. Capital Improvement. Capital Improvement Assessment shall mean a charge which the Board may from time to time levy against each Owner of a Condominium or a Lot which represents a portion of the cost to the Association for installation or construction of any capital improvements on any of the Association Property Module. Such charge shall be levied among all the Owners in the Project in the same proportions as are Annual Assessments. CC&RS/CBE/ 10/5/2000 1.5. Assessment. Reconstruction. Reconstruction Assessment shall mean a charge which the Board may from time to time levy against a particular Owner and the Condominium, representing a portion of the cost to the Association for reconstruction of any Improvements to the Condominium Common Area Module. Such charge shall be levied among all of the Owners and their Condominiums in the Project in the same proportions as the relative interior square foot floor areas of the residential elements of the Units (as such areas are depicted in the Condominium Plan), expressed as percentages, and computed by dividing the interior square foot floor area of the element element of each Unit by the total interior square foot floor areas of the residential elements of all Units in the Project. 1.6. Assessment, Special. Special Assessment shall mean a charge against a particular Owner, directly attributable to, or reimbursable by, that Owner, equal to the cost incurred by the Association for corrective action performed pursuant to the provisions of this Declaration, or a reasonable fine or penalty assessed by the Board, plus interest and other charges on such Special Assessments as provided for herein. Special Assessments shall not include any late payment penalties, interest charges or costs (including attorneys' fees) incurred by the Association in the collection of Annual, Capital Improvement and Reconstruction Assessments. 1.7. Association. Association shall mean CARLSBAD BEACH ESTATES HOMEOWNERS ASSOCIATION, a California nonprofit corporation (formed pursuant to the Nonprofit Mutual Benefit Corporation Law of the State of California), its successors and assigns. The Association is an "association" as defined in Section 1351(a) of the California Civil Code. 1.8. Association Maintenance Funds. Association Maintenance Funds shall mean the accounts created for receipts and disbursements of the Association, pursuant to Article V hereof. CC&RS/CBE/ 10/5/2000 1.9. Association Property Module. The Association Property Module shall consist of the Condominium Property excepting Unit 1 to Unit 6, inclusive, and the Condominium Common Area Module. The lateral boundaries of which are the vertical planes at the limits of the horizontal dimensions as shown on the recorded Condominium Plan, the upper limit of which extends extends from the ground elevation to the heavens, and the lower limit for which extends from the ground elevation down to the center of the earth. 1.10. Beneficiary. Beneficiary shall mean a Mortgagee under a Mortgage or a Beneficiary under a Deed of Trust, as the case may be, and the assignees of such Mortgagee or Beneficiary. 1.11. Board or Board of Directors. Board or Board of Directors shall mean the Board of Directors of the Association. 1.12. Budget. Budget shall mean a written, itemized estimate of the income and Common Expenses of the Association in performing its functions under this Declaration, which Budget shall be prepared pursuant to the Bylaws. 1.13. Bylaws. Bylaws shall mean the Bylaws of the Association as adopted by the Board, as such Bylaws may be amended from time to time. 1.14. City. City shall mean the incorporated municipal City of Carlsbad, County of San Diego, State of California, and its various departments, divisions, employees and representatives. 1.15. Close of Escrow. Close of Escrow shall mean the date on which a deed is Recorded conveying either a Condominium or a Lot pursuant to a transaction requiring the issuance of a Final Subdivision Public Report by the ORE. CC&RS/CBE/ 10/5/2000 1.16. Common Expenses. Common Expenses shall mean those expenses for which the Association is responsible under this Declaration, including the actual and estimated costs of: maintenance, management, operation, repair and replacement of the Association Property Module and the Condominium Common Area Module; unpaid Special Assessments, Reconstruction Assessments and Capital Improvement Assessments; the costs of any and all utilities metered to more than one Unit and other commonly metered charges for the Property; the costs of trash collection and removal (as applicable); costs of management and administration of the Association including, but not limited to compensation paid by the Association to managers, accountants, attorneys and other employees; the costs of all gardening security, and other services benefiting the Association Property Module and the Condominium Common Area Module; the costs of fire, casualty and liability insurance, workers' compensation insurance errors and omissions and director, agent and other insurance covering the Property and the directors, officers and agents of the Association; the costs of bonding of the members of the Board; taxes paid by the Association, including any blanket tax assessed against the Property; amounts paid by the Association for discharge of any lien or encumbrance levied against the Property, or portions thereof; and the costs of any other item or items incurred by the Association, for any reason whatsoever in connection with the Property, for the common benefit of the Owners. 1.17. Condominium. Condominium shall mean an estate in real property as defined in California Civil Code Section 1351(f), and shall consist of an undivided fee simple ownership interest in the Condominium Common Area Module, together with a separate ownership interest in fee in a Unit and all easements appurtenant thereto. Subject to the provisions of Section 11.5 hereof, the fractional undivided fee simple interest appurtenant to each Unit shall be an undivided one- sixth (l/6th) interest in the Condominium Common Area Module to be held by the owners as tenants in common. CC&RS/CBE/ 10/5/2000 1.18. Condominium Common Area Module. Condominium Common Area Module shall consist of the Condominium Property excepting Unit 1 to Unit 6, inclusive, and the Association Property Module. The lateral boundaries of which the vertical planes at the limits of the horizontal dimensions as shown on the recorded Condominium Plan, the upper limit of which extends from the ground elevation to the heavens, and the lower limit for which extends from the ground elevation down to the center of the earth. 1.19. Condominium Plan. Condominium Plan shall mean the Recorded plan, as amended from time to time, consisting of (1) a description or survey map of the Project, which shall refer to or show monumentation on the ground, (2) a three-dimensional description of the Project, one or more dimensions of which may extend for an indefinite distance upwards or downwards in sufficient detail to identify the Condominium Common Area Module, each Separate Interest and the Association Property Module; and (3) a certificate consenting to the recordation the signed and acknowledged by the record owner of fee title to the Project and by either the trustee or the Beneficiary of each Recorded Deed of Trust, and the Mortgagee of each recorded Mortgage encumbering the Project. 1.20. Condominium Property. Condominium Property shall mean and refer to certain real property located in the City of Carlsbad, County of San Diego, State of California, described as follows: LOT 5 OF CARLSBAD BEACH ESTATES, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 14047, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, SEPTEMBER 29, 2000. CC&RS/CBE/ 10/5/2000 1.21. Declarant. Declarant shall mean CARLSBAD BEACH GROUP INVESTORS, L.L.C., A CALIFORNIA LIMITED LIABILITY COMPANY, its successors, and any Person to which it shall have assigned any of its rights hereunder by an express written assignment. Declarant shall also mean H. David Buckmaster, Owner and Patricia A. Buckmaster, Owner, their, its successors, and any Person to which each shall have have assigned any of their rights hereunder by an express written assignment. 1.22. Declaration. Declaration shall mean this instrument, as it may be amended from time to time. 1.23. Deed of Trust. Deed of Trust shall mean a Mortgage as further defined herein. 1.24 . DRE shall mean the California Department of Real Estate and any successors thereto. 1.25. Family. Family shall mean one or more natural persons related to each other by blood, marriage or adoption, or one or more natural persons not all so related, but who maintain a common household in a Residence. 1.26. FHA shall mean the Federal Housing Administration of the United States Department of Housing and Urban Development and any department or agency of the United States government which succeeds to the FHA's function of insuring notes secured by Mortgages on residential real estate. 1.27. FHLMC. FHLMC shall mean the Federal Home Loan Mortgage Corporation (also known as The Mortgage Corporation) created by Title II of The Emergency Home Finance Act of 1970, and any successors to such corporation. 1.28. Fiscal Year. Fiscal Year shall mean the fiscal accounting and reporting period of the Association selected by the Board from time to time. CC&RS/CBE/ 10/5/2000 FNMA shall mean the Federal National Mortgage Association, a government-sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, and any successors to such corporation. 1.30. GNMA. GNMA shall mean the Government National Mortgage Association administered by the United States Department of Housing and Urban Development, and any successor to such association. 1.31. Improvements. Improvements shall mean all structures and appurtenances thereto of every type and kind, including but not limited to, buildings, walkways, sprinkler pipes, recreational facilities, roads, driveways, parking areas, fences, screening walls, block walls retaining walls, landscaping, the exterior surfaces of any visible structure and the paint on such surfaces, planted trees and shrubs. 1.32. Manager. Manager shall mean the Person employed by the Association pursuant to and limited by the provisions of this Declaration, and delegated the duties, power or functions of the Association as limited by this Declaration, the Bylaws and the terms of the agreement between the Association and said Person. 1.33. Member, Membership. Member shall mean any Person holding a membership in the Association, as provided in this Declaration. Membership shall mean the property, voting and other rights and privileges of Members as provided herein, together with the correlative duties and obligations contained in the Restrictions. 1.34. Mortgage. Mortgage shall mean any Recorded mortgage or deed of trust or other conveyance of one or more Condominiums and/or Lots or other portion of the Property to secure the performance of an obligation, which conveyance will be reconveyed upon the completion of such performance. CC&RS/CBE/ 10/5/2000 1.35. Mortgagee, Mortgagor. Mortgagee shall mean a Person to whom a Mortgage is made and shall include the Beneficiary of a Deed of Trust. "Mortgagor" shall mean a Person who mortgages his or its property to another (i.e., the maker of a Mortgage), and shall include the Trustor of a Deed of Trust. The term "Trustor" shall be synonymous with the term "Mortgagor" and the term "Beneficiary" shall be synonymous with the term "Mortgagee." 1.36. Notice and Hearing. Notice and Hearing shall mean written notice and a hearing before the Board, at which the Owner concerned shall have an opportunity to be heard in person, or by counsel at the Owner's expense, in the manner further provided in the Bylaws. 1.37. Owner. Owner shall mean the Person or Persons, including holding fee simple interest to a Condominium or a Lot. The term "Owner" shall include a seller under an executory contract of sale but shall exclude Mortgagees. 1.38. Person. Person shall mean a natural individual or any other entity with the legal right to hold title to real property. 1.39. Property or Project. Property or Project shall mean all of the real property described in Paragraph A of The Preamble to this Declaration. The Property is a "common interest development", a "condominium project", and a "planned development" as defined in Section 1351(c), Section 1351 (f), and Section 1351 (k) of The California Civil Code. 1.40. Record, File, Recordation. Record, File, or Recordation shall mean, with respect to any document, the recordation or filing of such document in the Office of the San Diego County Recorder. 1.41. Residence. Residence shall mean a Unit, intended for use by a single Family. CC&RS/CBE/ 10/5/2000 10 1.42. Restrictions. Restrictions shall mean this Declaration, the Articles, Bylaws and the Rules and Regulations of the Association from time to time in effect. 1.43. Rules and Regulations. Rules and Regulations shall mean the rules and regulations adopted by the Board pursuant to this Declaration or the Bylaws, as such rules and regulations may be amended from time to time. 1.44. Separate Interest or Unit. Separate Interest or Unit shall mean a separate interest in space as defined in Section 1351 (f) of the California Civil Code. Each Separate Interest or Unit shall be a separate freehold estate, as separately shown, numbered and designated in the Condominium Plan. In interpreting deeds, declarations and plans, the existing physical boundaries of the Unit or a Unit constructed or reconstructed in substantial accordance with the Condominium Plan and the original plans thereof, if such plans are available, shall be conclusively presumed to be its boundaries, rather than the description expressed in the deed, Condominium Plan or Declaration, regardless of settling or lateral movement of the building and regardless of minor variances between boundaries, as shown on the Condominium Plan or defined in the deed and Declaration, and the boundaries of a building as constructed or reconstructed. 1.45. Separate Interest or Lot. Separate Interest or Lot shall mean a separate interest in space as defined in Section 1351(1) (3) of The California Civil Code. Each Separate Interest or Lot shall be a separate freehold estate, as separately shown, numbered and designated on the Map referred to in Preamble, paragraph A. CC&RS/CBE/ 10/5/2000 ARTICLE II 2. CARLSBAD BEACH ESTATES HOMEOWNERS ASSOCIATION. 2.1. Organization of Association. The Association is or shall be incorporated under the name of CARLSBAD BEACH ESTATES HOMEOWNERS ASSOCIATION, as a corporation not for profit under the Nonprofit Mutual Benefit Corporation Law of the State of California, as required by Section 1363 of the California Civil Code. 2.2. Duties and Powers. The duties and powers of the Association are those set forth in the Declaration, the Articles and Bylaws, together with its general and implied powers of a nonprofit mutual benefit corporation, generally to do any and all things that a corporation organized under the laws of the State of California may lawfully do which are necessary or proper, in operating for the peace, health, comfort, safety and general welfare of its Members, subject only to the limitations upon the exercise of such powers as are expressly set forth in the Articles, the Bylaws and in this Declaration. The Association shall further have the right to install or construct capital Improvements on either the Association Property Module or the Condominium Common Area Module. The Association may at any time, and from time to time reconstruct, replace or refinish any Improvement or portion thereof on the Association Property Module or the Condominium Common Area Module in accordance with the original finish or standard of construction of such Improvement; replace destroyed trees or other vegetation and plant trees, shrubs and ground cover upon any portion of the Association Property Module or the Condominium Common Area Module. The Association may employ personnel necessary for the effective operation and maintenance of the Project, including the employment of legal, management and accounting services. The Association shall additionally have the power but not the duty to enter into contracts with Owners or other persons to provide services or to maintain and repair Improvements within the Project and elsewhere which the Association is not otherwise required to provide or maintain pursuant to this Declaration; provided, however, that any such contract shall provide for the payment to the Association for the costs of providing such services or maintenance. Concurrently with the commencement of Annual Assessments, as provided in Section 5.5 of CC&RS/CBE/ 10/5/2000 12 this Declaration, the obligations thereunder are hereby deemed to have been assigned to and accepted by the Association as of the commencement of Annual Assessments. 2.3. Membership. Every Owner, upon becoming the Owner of a Condominium or a Lot, shall automatically become a Member of the Association, and shall remain a Member thereof until such time as his ownership ceases, at which time his Membership in the Association shall automatically cease. Ownership of a Condominium or of a Lot shall be the sole qualification for Membership in the Association. Membership in the Association shall not be assignable except to the Person to which title to the Unit has been transferred, and every Membership in the Association shall be appurtenant to and may not be separated from The fee ownership of such Unit. The rights, duties, privileges and obligations of all Members of the Association shall be as provided in the Restrictions. 2.4. Transfer. The Membership held by any Owner shall not be transferred, pledged or alienated in any way, except upon the sale or encumbrance of such Owner's Condominium, and then only to the purchaser or Mortgagee of such Condominium or Lot. A prohibited transfer is void and will not be reflected upon the books and records of the Association. A Class A Member who has sold the Condominium or Lot to a contract purchaser under an agreement to purchase shall be entitled to delegate to the contract purchaser the Membership rights in the Association. The delegation shall be in writing and shall be delivered to the Board before the contract purchaser may vote. However, the contract seller shall remain liable for all charges and assessments attributable to the Condominium or Lot until fee title to the Condominium or Lot sold is transferred. If the Owner of any Condominium or Lot fails or refuses to transfer the Membership to the purchaser of the Condominium or Lot upon transfer of fee title thereto, the Board of Directors shall have the right to record the transfer upon the books of the Association. Until satisfactory evidence of such transfer has been presented to the Board, the purchaser shall not be entitled to vote at meetings of the Association. The Association may levy a reasonable transfer fee against a new Owner and the Condominium or Lot (which fee shall be added to the Annual Assessment chargeable to such new Owner) to reimburse the Association for the administrative cost of CC&RS/CBE/10/5/2000 transferring the membership to the new Owner on the records of the Association provided such fee does not exceed the Association's actual cost involved in changing its records of ownership. 2.5. Classes of Membership. The Association shall have two (2) classes of voting Membership. (a) Class A. Class A Members shall originally be all Owners except Declarant for so long as there exists a Class Membership. Class A Members shall be entitled to one (I) vote for each Condominium or Lot owned by such Class A Members and subject to assessment. Declarant shall become a Class A Member with regard to Condominiums or Lots owned by Declarant upon conversion of Declarant's Class B Membership as provided below. When more than one (1) Person owns any Condominium or Lot, all such Persons shall be Members. The vote for such Condominium or Lot shall be exercised in accordance with Section 2.6, but in no event shall more than one (1) Class A vote be cast for any Condominium or Lot. (b) Class B. The Class B Member shall be Declarant. The Class B Member shall be entitled to three (3) votes for each Condominium or Lot owned by Declarant and subject to assessment. The Class B Membership shall cease and be converted to Class A Membership immediately upon the first to occur of the following events : (1) When the total votes outstanding in the Class A Membership equals the total votes outstanding in the Class B Membership; or (2) The second anniversary of the first Close of Escrow in the Property; 2.6. Voting Rights. (a) All voting rights shall be subject to the Restrictions. Except as provided in Section 14.2 of this Declaration and Section 4 . 8 of the Bylaws, as long as there exists a Class B Membership, any provision of this Declaration, the Articles or Bylaws which expressly requires the vote or written consent of a specified percentage (i.e., other than actions requiring merely the vote or written consent of a majority of a CC&RS/CBE/ 10/5/2000 quorum) of the voting power of the Association before action may be undertaken shall require the approval of such specified percentage of the voting power of each class of membership. Except as provided in Section 14.2 of this Declaration and Section 4.8 of the Bylaws, upon termination of the Class B Membership, any provision of this Declaration, the Articles or Bylaws which expressly requires the vote or written consent of Owners representing a specified percentage (i.e., other than actions requiring merely the vote or written consent of a majority of a quorum) of the voting power of the Association before action may be undertaken shall then require the vote or written consent of Owners representing such specified percentage of both the total voting power of the Association and the voting power of the Association residing in Owners other than Declarant. (b) Class A Members shall be entitled to one (1) vote for each Condominium or Lot in which they hold the interest required for Membership. When more than one (1) Person holds such interest or interests in any Condominium or Lot ("co-owners"), all of such co-owners shall be Members and may attend any meeting of the Association, but only one (1) such co-owner shall be entitled to exercise the single vote to which the Condominium or Lot is entitled. Co-owners owning the majority interests in a Condominium or Lot shall from time to time designate in writing one of their number to vote. Fractional votes shall not be allowed, and the vote for each Condominium or Lot shall be exercised, if at all, as a unit. Where no voting co-owner is designated or if the designation has been revoked, the vote for the Condominium or Lot shall be exercised as the co-owners owning the majority interests in the Condominium or Lot mutually agree. Unless The Board receives a written objection in advance from a co-owner, it shall conclusively presumed that the corresponding voting co-owner is acting with the consent of his co-owners. No vote shall be cast for any Condominium or Lot if the co-owners present in person or by proxy owning the majority interests in such Condominium or Lot cannot agree to said vote or other action. The nonvoting co-owner or co-owners shall be jointly and severally responsible for all of the obligations imposed upon the jointly-owned Condominium or Lot and shall be entitled to all other benefits of ownership. All CC&RS/CBE/ 10/5/2000 agreements and determinations lawfully made by the Association in accordance with the voting percentages established herein, or in the Bylaws of the Association, shall be deemed to be binding on all Owners, their successors and assigns. 2.7. Repair and Maintenance by the Association. (a) Maintenance Standards. Subject to Article X pertaining to destruction of Improvements and Article XI pertaining to eminent domain, the Association shall paint, maintain, and replace the Condominium Common Area Module and the Association Property Module and Improvements thereon or shall contract for such maintenance, repair and replacement to assure maintenance of the Condominium Common Area Module and the Association Property Module and Improvements thereon in a clean, sanitary and attractive condition reasonably consistent with the level of maintenance reflected in the most current Budget on file with and approved by the DRE. The Board shall determine the level and frequency of maintenance of the Condominium Common Area Module and the Association Property Module. (c) Charges to Owners. All such costs of maintenance, repairs and replacements for the Property shall be paid for"as Common Expenses out of the Maintenance Funds as provided in this Declaration. It shall further be the affirmative duty of the Board of Directors to require strict compliance with all provisions of this Declaration and to cause the Property to be inspected by the Architectural Committee for any violation thereof. The cost of any maintenance, repairs or replacement by the Association which is not the responsibility of the Association or which arises out of, or is caused by, the act of an Owner or such Owner's Family, tenants, guests, invitees, or agents shall, after Notice and Hearing, be levied by the Board as a Special Assessment against such Owner. CC&RS/CBE/ 10/5/2000 2.8. Unsegregated Real Property Taxes. To the extent not assessed to or paid by the Owners, the Association shall pay all real and personal property taxes and assessments levied upon any portion of the Property. In addition, if all of the Units in the Project are taxed under a blanket tax bill covering all of the Project each Owner shall pay the proportionate share of any installment due under the blanket tax bill to the Association at least ten (10) days prior to the delinquency date. The Association shall transmit the taxes to the appropriate tax collection agency on or before the delinquency date. Blanket taxes for the Project shall be allocated equally among the Owners and their Condominiums, based upon the total number of Units in the Project. The Association shall, at least forty-five (45) days prior to the delinquency date of any blanket tax installment, deliver to each Owner a copy of the tax bill along with a written notice setting forth the Owner's obligation to pay the proportionate share of the tax installment and the potential additional charges to the Owner for failure to comply. The Association shall pay the taxes on behalf of any Owner who does not pay his proportionate share. The Association shall add to the Annual Assessment of a delinquent Owner the amount of any sum advanced, plus interest at the rate of ten percent (10%) per annum and any amount necessary to reimburse the Association for any penalty or late charge actually assessed in connection with the blanket tax bill, which late charge results from the failure of the delinquent Owner to make timely payment of his proportionate share of the taxes. Until the Close of Escrow for the sale of ninety percent (90%) of the Condominiums in the Project, the foregoing provisions relating to the collection of taxes in connection with a blanket tax bill on all or any portion of the Project may not be amended without the express written consent of Declarant. CC&RS/CBE/ 10/5/2000 1 ' 2.9. Repair and Maintenance by Owners. Each Owner shall maintain, repair, replace, paint, paper, plaster, tile, finish and restore or cause to be so maintained, repaired replaced and restored, at his sole expense, all portions of the Condominium or the Lot. In the event a portion of a Condominium requires maintenance by more than one (1) Owner, each Owner of the Condominium requiring maintenance shall be equally responsible for the cost of the maintenance. ARTICLE III 3. Rights in Condominium Common Area Module and Association Property Module. 3.1. Association Easement. The Association shall have an easement over the Condominium Common Area Module and the Association Property Module for performing its duties and exercising its powers described in this Declaration. The Association's obligations to maintain the Condominium Common Area Module and the Association Property Module shall commence on the date Annual Assessments commence on Condominiums and Lots in The Project. Until commencement of Annual Assessments on Condominiums and Lots in the Project, the Condominium Common Area Module and the Association Property Module shall be maintained by Declarant. 3.2. Partition. Except as provided in this Declaration, there shall be no judicial partition of the Common Area, or any part thereof, for the term of the Project, nor shall Declarant/ any Owner or any other Person acquiring any interest in any Condominium or Lot in the Project seek any such judicial partition. 3.3. Members' Easements in Common Area Module/ Association Property Module Subject to the provisions of this Declaration, every Member of the Association shall have, for himself, his Family, his tenants and guests, a nonexclusive easement of access, ingress, egress, use and employment of, in, to and over the Condominium Common Area Module and the Association Property Module and such easement shall be appurtenant to and shall pass with title to every Condominium and Lot in The Project. CC&RS/CBE/ 10/5/2000 3.4. Extent of Members' Easements. The rights and easements of use and enjoyment of the Condominium Common Area Module and the Association Property Module created by this Declaration shall be subject to the Restrictions, which include, without limitation, The following: (a) The right of the Board to suspend the rights and easements of any Member, and the Persons deriving such rights and easements from any Member, for use and enjoyment of any recreation facilities located on the Association Property Module for any period during which the payment of any Annual, Special, Capital Improvement or Reconstruction Assessment against the Member and the Condominium or Lot remains delinquent, and, after Notice and Hearing as provided in the Bylaws, to suspend such rights and easements for the period set forth in the Bylaws for any violation of the Restrictions, it being understood that any suspension for either nonpayment of any Assessment or breach of the Restrictions shall not constitute a waiver or discharge of the Member's obligation to pay assessments as provided in this Declaration; (b) The right of the Association to consent to or otherwise cause the construction of additional Improvements on the Association Property Module and to consent to or otherwise cause the alteration or removal of any existing Improvements on the Association Property Module for the benefit of the Members of the Association; (c) The right of the Association to consent to or otherwise cause the construction of additional Improvements on the Condominium Common Area Module and to consent to or otherwise cause the alteration or removal of any existing Improvements on the Condominium Common Area Module for the benefit of the Unit Owner Members The Association; CC&RS/CBE/ 10/5/2000 (d) The right of The Association, acting through the Board, to grant, consent to or join in the grant or conveyance of easements, licenses or rights-of-way in, on or over the Condominium Common Area Module and/or the Association Property Module for purposes not inconsistent with the intended use of the Property as a residential condominium project and planned development; (e) The rights and reservations of Declarant as set forth in this Declaration; (f) The right of the Association to reasonably limit the number of guests and tenants of the Owners using the Association Property Module; and (g) The right of The Association, acting through the Board, to establish uniform Rules and Regulations for the use of the Condominium Common Area Module and the Association Property Module. 3.5. Delegation of Use. Any Owner entitled to the right and easement of use and enjoyment of the Association Property Module may delegate his right and easement to his tenants, contract purchasers or subtenants who reside in the Condominium or Lot, subject to reasonable regulation by the Board. An Owner who has so delegated the right and easement shall not be entitled to use or enjoyment of the recreational facilities or equipment of the Property for so long as such delegation remains in effect. 3.6. Waiver of Use. No Owner may exempt himself from personal liability for assessments duly levied by the Association, or effect the release of the Condominium or the Lot from the liens and charges thereof, by waiving the use and enjoyment of the Association Property Module or by abandoning the Condominium or Lot. CC&RS/CBE/ 10/5/2000 20 3.7. Damage by Condominium Owner Member. To the extent permitted by California law, each Condominium Owner Member shall liable to the Association for any damage to either the Condominium Common Area Module or the Association Property Module not fully reimbursed to the Association by insurance (including without limitation any deductible amounts under any insurance policies against which the Association files a claim for such damage) if the damage is sustained because of the negligence, willful misconduct or unauthorized or improper installation or maintenance of any Improvement by the Condominium Owner Member, his guests, tenants or invitees, or any other Person deriving their right and easement of use and enjoyment of the Condominium Common Area Module or the Association Property Module from the Member, or his or their respective family and guests, both minor and adult. However, the Association, acting through the Board, reserves the right to determine whether any claim shall be made upon the insurance maintained by the Association, and the Association further reserves the right, after Notice and Hearing as provided in the Bylaws, to levy a Special Assessment equal to the increase, if any, in insurance premiums directly attributable to the damage caused by the Condominium Owner Member or the Person for whom the Condominium Owner Member may be liable as described above. In the case of joint ownership of. a Condominium, the liability of the Owners shall be joint and several, except to the extent that the Association shall have previously contracted in writing with the joint owners to the contrary. After Notice and Hearing as provided in the Bylaws, the cost of correcting the damage to the extent not reimbursed to the Association by insurance shall be a Special Assessment against such Member's Condominium and may be enforced as provided herein. CC&RS/CBE/ 10/5/2000 3.8. Damage by Lot Owner Member. To the extent permitted by California law, each Lot Owner Member shall liable to the Association for any damage to the Association Property Module not fully reimbursed to the Association by insurance (including without limitation any deductible amounts under any insurance policies against which the Association files a claim for such damage) if the damage is sustained because of the negligence, willful misconduct or unauthorized or improper installation or maintenance of any Improvement by the Lot Owner Member, his guests, tenants or invitees, or any other Person deriving their right and easement of use and enjoyment of the Association Property Module from the Member, or his or their respective family and guests, both minor and adult. However, the Association, acting through the Board, reserves the right to determine whether any claim shall be made upon the insurance maintained by the Association, and the Association further reserves the right, after Notice and Hearing as provided in the Bylaws, to levy a Special Assessment equal to the increase, if any, in insurance premiums directly attributable to the damage caused by the Lot Owner Member or the Person for whom the Lot Owner Member may be liable as described above. In the case of joint ownership of a Lot, the liability of the Owners shall be joint and several, except to the extent that the Association shall have previously contracted in writing with the joint owners to the contrary. After Notice and Hearing as provided in the Bylaws, the cost of correcting the damage to the extent not reimbursed to the Association by insurance shall be a Special Assessment against such Member's Lot and may be enforced as provided herein. CC&RS/CBE/ 10/5/2000 22 ARTICLE IV 4. Architectural Review Committee. 4.1. Members of Committee. The Architectural Review Committee, sometimes referred to herein as the "Architectural Committee" or the "Committee," shall be comprised of three (3) members. The initial members of the Committee shall be representatives of Declarant until one (1) year after the original issuance of the first (or only) Final Subdivision Public Report ("Public Report") for the Property ("First Anniversary"). After the First Anniversary, the Board may appoint and remove one (1) member of the Committee, and Declarant shall have the right and power at all times to appoint or remove a majority of the members of the Committee or to fill any vacancy of such majority, until the earlier to occur of (i) Close of Escrow for the sale of ninety percent (90%) of the Condominiums and Lots subject to this Declaration, or (ii) expiration of five (5) years following the date of original issuance of the first (or only) Final Subdivision Public Report for the Property, after which the Board shall have the power to appoint and remove all of the members of the Committee. Committee members appointed by the Board shall be from the membership of the Association, but Committee members appointed by Declarant need not be Members of the Association. The Committee shall have the right and duty to promulgate reasonable standards against which to examine any request made pursuant to this Article, in order to ensure that the proposed plans conform harmoniously to the exterior design and existing materials of the buildings in the Property. Board members may also serve as Committee members. CC&RS/CBE/ 10/5/2000 23 4.2. Review of Plans and Specifications. The Committee shall consider and act upon any and all plans and specifications submitted for its approval under this Declaration and perform such other duties as from time to time shall be assigned to it by the Board, including the inspection of construction in progress to assure its conformance with plans approved by the Committee. No construction, alteration, removal relocation, demolition, repainting, addition, installation modification, decoration, redecoration or reconstruction of an Improvement, including landscaping, in the Property shall be commenced or maintained, until the plans and specifications therefor showing the nature, kind, shape, height, width, color materials and location of the same shall have been submitted to the Committee and approved in writing by the Committee; provided, however, that any Improvement may be repainted without Committee approval so long as the Improvement is repainted the identical color which it was last painted. Without limiting the generality of the foregoing, the provisions of this Article IV apply to the construction, installation, alteration and modification of solar energy systems, as defined in Section 801.5 of the California Civil Code, subject to the provisions of California Civil Code Section 714, the City Building Code, applicable zoning regulations, and associated City ordinances. The Owner submitting the plans and specifications ("Applicant") shall obtain a written, dated receipt therefor from an authorized agent of the Committee. Until changed by the Board, the address for the submission of plans and specifications shall be the principal office of the Association. The Committee shall approve plans and specifications submitted for its approval only if it deems that the installation, construction, alterations or additions contemplated thereby in the locations indicated will not be detrimental to the appearance of the surrounding area of the Property as a whole, that the appearance of any structure affected thereby will be in harmony with the surrounding structures, that the construction thereof will not detract from the beauty, wholesomeness and attractiveness of the Project or the enjoyment thereof by the Members, and that the upkeep and maintenance thereof will not become a burden on the Association. Declarant, and any Person to which Declarant may assign all or a portion of its exemption hereunder, need not seek or obtain Architectural Committee approval of any Improvements constructed on the Project by Declarant or such Person, as the case may be. CC&RS/CBE/ 10/5/2000 24 The Committee may condition its approval of proposals or plans and specifications for any Improvement (1) upon the Applicant's furnishing the Association with security acceptable to the Association against any mechanic's lien or other encumbrance which may be Recorded against the Property as a result of such work, (2) on such changes therein as it deems appropriate, (3) upon the Applicant's agreement to grant appropriate easements to the Association for the maintenance of the Improvements, (4) upon the Applicant's agreement to install (at its sole cost) water, gas, electrical or other utility meters to measure any increased consumption, (5) upon the Applicant's agreement to reimburse the Association for the cost of maintenance, (6) upon the Applicant's agreement to complete the proposed work within a stated period of time, or (7) all of the above, and may require submission of additional plans and specifications or other information prior to approving or disapproving material submitted. The Committee may also issue rules or guidelines setting forth procedures for the submission of plans for approval, requiring a fee to accompany each application for approval, or stating additional factors which it will take into consideration in reviewing submissions. The Committee may provide that the amount of the fee shall be uniform, or that it be determined in any other reasonable manner, such as by the reasonable cost of the construction, alterations or additions contemplated. The Committee may require such detail in plans and specifications submitted for its review as it deems proper including without limitation, floor plans, site plans, drainage plans, elevation drawings and description or samples of exterior material and colors. Until receipt by the Committee of any required plans and specifications, the Committee may postpone review of any plans submitted for approval. Decisions of the Committee and the reasons therefor shall be transmitted by the Committee to the Applicant at the address set forth in the application for approval within forty-five (45) days after receipt by the Committee of all materials required by the Committee. Any application submitted pursuant to this Section 4.2 shall be deemed approved unless written disapproval or a request for additional information or materials by the Committee shall have been transmitted to the Applicant within forty-five (45) days after the date of receipt by the Committee of all required materials. The Applicant shall meet any review or permit requirements of the City prior to making any alterations or Improvements permitted hereunder. CC&RS/CBE/ 10/5/2000 25 4.3. Meetings of the Committee. The Committee shall meet from time to time as necessary to perform its duties hereunder. The Committee may from time to time, by resolution unanimously adopted in writing, designate a Committee Representative (who may, but need not, be one of its members) to take any action or perform any duties for and on behalf of the Committee, except the granting of variances pursuant to Section 4.8. In the absence of such designation, the vote or written consent of a majority of the Committee shall constitute an act of the Committee. 4.4. No Waiver of Future Approvals. The approval of the Committee of any proposals or plans and specifications or drawings for any work done or proposed or in connection with any other matter requiring the approval and consent of the Committee, shall not be deemed to constitute a waiver of any right to withhold approval or consent to any similar proposals, plans and specifications, drawings or matters subsequently or additionally submitted for approval or consent. 4.5. Compensation of Members. The members of the Committee shall receive no compensation for services rendered, other than reimbursement for expenses incurred by them in the performance of their duties hereunder. 4.6. Inspection of Work. The Committee or its duly authorized representative may at any time inspect any work for which approval of plans is required under this Article IV ("Work"), which right to inspect shall include the right to require any Owner to take such action as may be necessary to remedy any noncompliance with the Committee-approved plans for the Work or with the requirements of this Declaration ("Noncompliance"). CC&RS/CBE/ 10/5/2000 2° (a) Time Limit. The Committee's right to inspect the Work and notify the responsible Owner of any Noncompliance shall terminate sixty (60) days after the latest to occur of the following events: (i) submittal of the plans for the Work to the Committee for its approval as provided in this Article IV; (ii) completion of the Work as provided in the Committee-approved plans; and (iii) written notice from the Owner to the Committee that the Work has been completed. This time limit for inspection and notification by the Committee shall be extended indefinitely if any of these conditions has not occurred. If the Committee fails to send a notice of Noncompliance to an Owner before this time limit expires, the Work shall be deemed to comply with the approved plans. (b) Remedy. If an Owner fails to remedy any Noncompliance within sixty (60) days from the date of notification from the Committee, the Committee shall notify the Board in writing of such failure. Upon Notice and Hearing, as provided in the Bylaws, the Board shall determine whether there is a Noncompliance and, if so, the nature the and the estimated cost of correcting or removing the same. If a Noncompliance exists, the Owner shall remedy or remove the same within a period of not more than forty-five (45) days from the date that notice of the Board ruling is given to the Owner. If the Owner does not comply with the Board ruling within that period, the Board, at its option, may Record a Notice of Noncompliance and commence a lawsuit for damages or injunctive relief, as appropriate, to remedy the Noncompliance. CC&RS/CBE/ 10/5/2000 ^ ' 4.7. Scope of Review. The Architectural Committee shall review and approve, conditionally approve or disapprove all plans submitted to it for any proposed Improvement, alteration or addition, solely on the basis of aesthetic considerations, consistency with this Declaration, and the overall benefit or detriment which would result to the immediate vicinity and the Property generally. The Committee shall take into consideration the aesthetic aspects of the architectural designs, placement of buildings, landscaping, color schemes, exterior finishes and materials and similar features. The Committee's approval or disapproval shall be based solely on the considerations set forth in this Article IV, and the Committee shall not be responsible for reviewing, nor shall its approval of any plan or design be deemed approval of, any plan or design from the standpoint of structural safety or conformance with building or other codes. 4.8. Variances. The Committee may authorize variances from compliance with any of the architectural provisions of this Declaration, including without limitation, restrictions upon height, size, floor area or placement of structures, or similar restrictions, when circumstances such as topography, natural obstructions, hardship, aesthetic or environmental consideration may require. Such variances must be evidenced in writing, must be signed by a majority of the Committee, and shall become effective upon Recordation. After Declarant has lost the right to appoint a majority of the members of the Committee, the Board must approve any variance recommended by the Committee before any such variance shall become effective. If such variances are granted, no violation of the covenants, conditions and restrictions contained in this Declaration shall be deemed to have occurred with respect to the matter for which the variance was granted. The granting of such a variance shall not operate to waive any of the terms and provisions of this Declaration for any purpose except as to the particular property and particular provision hereof covered by the variance, nor shall it affect in any way the Owner's obligation to comply with all governmental laws and regulations affecting the use of the Residence. CC&RS/CBE/ 10/5/2000 28 4.9. Appeals. For so long as Declarant has the right to appoint and remove a majority of the members of the Committee, decisions of the Committee shall be final, and there shall be no appeal to the Board of Directors. When Declarant is no longer entitled to appoint and remove a majority of the members of the Committee the Board may, at its discretion, adopt policies and procedures for the appeal of Committee decisions for reconsideration by the Board. The Board shall have no obligation to adopt or implement any such appeal procedures, and in the absence of Board adoption of appeal procedures, all decisions of the Committee shall be final. ARTICLE V 5. Maintenance Funds and Assessments. 5.1. Personal Obligation of Assessments. Declarant, for each Condominium owned by it, hereby covenants and agrees to pay, and each Owner, by acceptance of a deed to a Condominium or a Lot, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association (1) Annual Assessments for Common Expenses, (2) Special Assessments, (3) Reconstruction Assessments and (4) Capital Improvement Assessments; such assessments to be established and collected as provided herein. The Association shall not levy or collect any Annual Assessment, Capital Improvement Assessment Special Assessment or Reconstruction Assessment that exceeds the amount necessary for the purpose for which it is levied. Except as provided in this Section 5.1, all such assessments (other than Special Assessments), together with interest, costs, and reasonable attorneys' fees for the collection the, shall be a charge on the Condominium or Lot against which such assessment is made. Each such assessment (including Special Assessments), together with interest, costs and reasonable attorneys' fees, shall also be the personal obligation of the Person who was the Owner of the Condominium or Lot at the time when the assessment fell due. This personal obligation cannot be avoided by abandonment of Condominium or Lot or by an offer to waive use of the Condominium Common Area Module or the Association Property Module. The personal obligation for delinquent assessments shall not pass to any new Owner ("Purchaser") unless expressly assumed by the Purchaser. CCiRS/CBE/ 10/5/2000 29 5.2. Maintenance Funds of Association. The Board of Directors shall establish no fewer than two (2) separate Association Maintenance Fund accounts into which shall be deposited all monies paid to the Association, and from which disbursements shall be made, as provided herein, in the performance of functions by the Association under this Declaration. The Association Maintenance Funds may be established as trust accounts at a banking or savings institution and shall include: (1) an Operating Fund for current Common Expenses of the Association, (2) an adequate Reserve Fund for capital improvements, replacement, painting and repairs of the Condominium Common Area Module or the Association Property Module (which cannot normally be expected to occur on an annual or more frequent basis), and for payment of deductible amounts for policies of insurance which the Association obtains as provided in Section 9.1 hereof, and (3) any other funds which the Board of Directors may establish to the extent necessary under the provisions of this Declaration. Nothing contained herein shall limit, preclude or impair the establishment of additional Maintenance Funds by the Association, so long as the amounts assessed to, deposited into, and disbursed from any such Fund are earmarked for specified purposes authorized by this Declaration. 5.3. Purpose of Assessments. The assessments levied by the Association shall be used exclusively to promote the recreation, health, safety and welfare of the Owners and for the operation, replacement, improvement and maintenance of the Condominium Common Area Module and the Association Property Module and to discharge any other obligations of the Association under this Declaration. All amounts deposited into the Maintenance Funds must be used solely for the common benefit of all of the Owners for purposes authorized by this Declaration. Disbursements from the Operating Fund shall be made by the Board of Directors for such purposes as are necessary for the discharge of its responsibilities herein for the common benefit of all of the Owners, other than those purposes for which disbursements from the Reserve Fund are to be used. Disbursements from the Reserve Fund shall be made by the Board of Directors only for the purposes specified in this Article V and in Section 1365.5(c) of the California Civil Code, as it may be amended from time to time Nothing in this Declaration shall be construed in such a way as to prohibit the use of Association assessments or funds to abate any annoyance or nuisance emanating from outside the boundaries of the CC&RS/CBE/ 10/5/2000 30 Property. Annual Assessments shall be used to satisfy Common Expenses of the Association, as provided herein and in the Bylaws. 5.4. Limitations on Annual Assessment Increases. The Board shall levy Annual Assessments in accordance with the following provisions: (a) Maximum Authorized Annual Assessment for Initial Year of Operations. Until the first day of the Fiscal Year immediately following the Fiscal Year in which Annual Assessments commence, the Board may only levy an Annual Assessment per Condominium and per Lot in an amount which exceeds the Annual Assessment per Condominium and per Lot, as disclosed in the Final Subdivision Public Report issued by the California Department of Real Estate if the Board first obtains the approval of Members casting a majority of votes at a meeting or election of the Association in which more than fifty percent (50%) of the Members are represented ("Increase Election"). Notwithstanding the foregoing, this Section does not limit Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 5.4(d). (b) Maximum Authorized Annual Assessment for Subsequent Fiscal Years. Starting with the first Fiscal Year immediately following the Fiscal Year in which Annual Assessments commence, the Board may only levy Annual Assessments which exceed the Annual Assessments for the immediately preceding Fiscal Year as follows: (1) If the increase in Annual Assessments is less than or equal to twenty percent (20%) of the Annual Assessments for the immediately preceding Fiscal Year, then the Board must either (a) have distributed the Budget for the current Fiscal Year in accordance with Section 1365(a) of the California Civil Code, or (b) obtain the approval of Members casting a majority of votes in an Increase Election; (2) If the increase in Annual Assessments is greater than twenty percent (20%) of the Annual Assessments for the immediately preceding Fiscal Year, then the Board must obtain the approval of Members casting a majority of votes in an Increase Election. CC&RS/CBE/ 10/5/2000 Notwithstanding the foregoing, this Section does not limit Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 5.4(d). (c) Supplemental Annual Assessments. If the Board, by majority vote, determines that the important and essential functions of the Association may be properly funded by an Annual Assessment in an amount less than the maximum authorized Annual Assessment described above, it may levy such lesser Annual Assessment. If the Board determines that the estimate of the total charges for the current year is or will become inadequate to meet all Common Expenses for the Property for any reason, it shall immediately determine the approximate amount of the inadequacy Subject to the limitations described in Sections 5.4(a) and (b) above and (d) below, the Board shall have the authority to levy, at any time by a majority vote, a supplemental Annual Assessment reflecting a revision of the total charges to be assessed against each Condominium or Lot. (d) Emergency Situations. For purposes of Sections 5.4(a), 5.4(b) and 5.6, an "Emergency Situation" is any one of the following: (1) An extraordinary expense required by an order of a court; (2) An extraordinary expense necessary to repair or maintain the Property or any portion thereof for which the Association is responsible when a threat to personal safety on the Property is discovered; and (3) An extraordinary expense necessary to repair or maintain the Property or any portion thereof for which the Association is responsible that could not have been reasonably foreseen by the Board when preparing the Budget. Prior to the imposition or collection of an assessment pursuant to this subparagraph (3), the Board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. The resolution shall be distributed to the Members with the Notice of Assessment. CC&RS/CBE/ 10/5/2000 32 (4) An extraordinary expense in making the first payment of the earthquake insurance surcharge pursuant to Section 5003 of the Insurance Code. 5.5. Annual Assessments/Commencement-Collection. The Board of Directors shall authorize and levy the amount of the Annual Assessment upon each Condominium and each Lot, as provided herein, by majority vote of the Board. Any portion of the Annual Assesment directly related to the maintenance of the Condominium Common Area Module shall only be assessed to the Owners of the Condominium Units as shown and described on the recorded Condominium Plan. Any portion of the Annual Assesment directly related to the maintenance of the Association Property Module shall be assessed to the Owners of the Condominium Units as shown and described on the recorded Condominium Plan and to the Owners of the Lots as shown and described on the Final Map referred to in Preamble, paragraph A herein. Annual Assessment shall commence on all Condominiums and all Lots in the Project on the first day of the first calendar month following the first Close of Escrow for the sale of a Condominium or a Lot in the Project or on the first day of the first calendar month following the conveyance of Association Property Module to the Association, whichever shall first occur. All Annual Assessments shall be assessed equally against the Members, their Condominiums and their Lots, based upon the number of Condominiums or Lots owned by each Member. Annual Assessments for fractions of any month involved shall be prorated. Declarant shall pay its full pro rata share of the Annual Assessments on all unsold Condominiums and Lots for which Annual Assessments have commenced. The Board shall fix the amount of the Annual Assessment against each Condominium and each Lot at least thirty (30) days in advance of each Annual Assessment period. However, unless otherwise established by the Board, the initial Annual Assessments shall be assessed in accordance with the most recent Budget on file with and approved by the DRE. Written notice of any change in the amount of any Annual Assessment, Capital Improvement Assessment or Reconstruction Assessment shall be sent via first-class mail to every Owner subject thereto, not less than thirty (30) nor more than sixty (60) days prior to the increased assessment becoming due. From time to time the Board may determine that all excess funds in the Operating Fund be retained by the Association and used to reduce the following year's Annual Assessment. Upon dissolution of the Association incident to the CC&RS/CBE/ 10/5/2000 33 abandonment or termination of the Property, any amounts remaining in any of the Maintenance Funds shall be distributed to or for the benefit of the Members in the same proportions as such monies were collected from the Members. Each Member shall pay to the Association his Annual Assessment in installments at such frequency and in such amounts as established by the Board. Each installment of Annual Assessments may be paid by the Member to the Association in one (10 check or in separate checks as payments attributable to deposits into specified Association Maintenance Funds. If any installment of an Annual Assessment payment is less than the amount assessed and the payment does not specify the Association Maintenance Fund or Funds into which it should be deposited, the receipt by the Association from that Member shall be credited in order of priority first to the Operating Fund, until that portion of the Annual Assessment has been satisfied, and second to the Reserve Fund. 5.6. Capital Improvement Assessments. The Board of Directors of the Association may levy, in any Fiscal Year, a Capital Improvement Assessment or Reconstruction Assessment applicable to that Fiscal Year only for the purpose of defraying, in whole or in part, the cost of any construction, reconstruction, repair or replacement of a Capital Improvement or other such addition upon the Condominium Common Area Module or the Association Property Module, including fixtures and personal property related thereto; provided that any proposed Capital Improvement Assessments in any Fiscal Year which, if added to the Capital Improvement Assessments already levied during such Fiscal Year, exceeds five percent (5%) of the Budgeted gross expenses of the Association for such Fiscal Year, shall require the vote or written consent of Members casting a majority of votes at an Increase Election. Notwithstanding the foregoing, the Board may levy in any Fiscal Year, a Capital Improvement Assessment applicable to that Fiscal Year which exceeds five percent (5%) of the Budgeted gross expenses of the Association for such Fiscal Year if such increase is necessary for addressing an Emergency Situation as defined in CC&RS/CBE/ 10/5/2000 34 Section 5.4(d). Any portion of the Capital Improvement Assessment or any portion of the Reconstruction Assessment directly related to the maintenance of the Condominium Common Area Module shall only be assessed to the Owners of the Condominium Units as shown and described on the recorded Condominium Plan. Any portion of the Capital Improvement Assessment or any portion of the Reconstruction Assessment directly related to the maintenance of the Association Property Module shall be assessed to the Owners of the Condominium Units as shown and described on the recorded Condominium Plan and to the Owners of the Lots as shown and described on the Final Map referred to in Preamble, paragraph A herein. 5.7. Delinquency. Any installment of an assessment provided for in this Declaration shall be delinquent if not paid within fifteen (15) days of the due date as established by the Board of Directors of the Association. The Board shall be authorized to adopt a system pursuant to which any installment of Annual Assessments, Capital Improvement Assessments, Special Assessments, or Reconstruction Assessments not paid within thirty (30) days after the due date, plus all reasonable costs of collection (including attorneys' fees) and late charges as provided herein, shall bear interest commencing thirty (30) days from the due date until paid at the rate of up to twelve percent (12%) per annum, but in no event more than the maximum rate permitted by law. The Board may also require the delinquent owner to pay a late charge in accordance with California Civil Code Section 1366 (c) (2) . The Association need not accept any tender of a partial payment of an installment of an assessment and all costs and attorneys' fees attributable thereto, and any acceptance of any such tender shall not be deemed to be a waiver of the Association's right to demand and receive full payments thereafter. CC&RS/CBE/ 10/5/2000 35 5.8. Creation and Release of Lien. All sums other than Special Assessments assessed in accordance with the provisions of this Declaration shall constitute a lien on the respective Condominium and Lot prior and superior to (a) any declaration of homestead Recorded after the Recordation of this Declaration, and (b) all other liens, except (1) all taxes, bonds, assessments and other levies which, by law, would be superior thereto, and (2) the lien or charge of any first Mortgage of record (meaning any Recorded Mortgage or Deed of Trust with first priority or seniority over other Mortgages or Deeds of Trust) made in good faith and for value and Recorded prior to the date on which the "Notice of Lien" (described in this Section) against the respective Condominium or Lot was Recorded. The lien shall become effective Recordation by the Board or its authorized agent of a Notice of Assessment ("Notice of Lien") securing the payment of any Annual Capital Improvement or Reconstruction Assessment or installment thereof, levied by the Association against any Condominium Owner or Lot Owner as provided in Section 1367 of the California Civil Code. The Notice of Lien shall state (i) the amount of the assessment or installment, as the case may be, and other authorized charges and interest, including the cost of preparing and Recording the Notice of Lien, (ii) the expenses of collection in connection with any delinquent installments, including without limitation reasonable attorneys' fees, (iii) a sufficient description of the Condominium or Lot against which the same has been assessed, (iv) the name and address of the Association, (v) the name of the Owner thereof, and (vi) in order for the lien to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by the Association to enforce the lien by sale. The Notice of Lien shall be signed by any authorized officer or agent of the Association. The lien shall relate only to the individual Condominium or Lot against which the assessment was levied and not to Property as a whole. Upon payment to the Association of the full amount claimed in the Notice of Lien, or other satisfaction thereof, the Board of Directors shall cause to be Recorded a Notice of Satisfaction and Release of Lien ("Notice of Release") stating the satisfaction and release of the amount claimed. The Board of Directors may demand and receive from the applicable Owner a reasonable charge, to be determined by the Board, for the preparation and Recordation of the Notice of Release before Recording it. Any purchaser or encumbrancer who has acted in good faith and extended value may rely upon the Notice of Release as CC&RS/CBE/ 10/5/2000 36 conclusive evidence of the full satisfaction of the sums stated in the Notice of Lien. 5.9. Enforcement of Liens. It shall be the duty of the Board of Directors to enforce the collection of any amounts due under this Declaration by one or more of the alternative means of relief afforded by this Declaration. The lien on a Condominium or a Lot may be enforced by sale of the Condominium or Lot by the Association, the Association attorneys, any title insurance company authorized to do business in California, or other persons authorized to conduct the sale as a trustee, after failure of the Owner to pay any Annual, Capital Improvement or Reconstruction Assessment, or installment thereof as provided herein. The sale shall be conducted in accordance with the provisions of the California Civil Code, applicable to the exercise of powers of sale in mortgages and deeds of trust, or in any manner permitted by law. An action may be brought to foreclose the lien of the association by the Board, or by any Owner if the Board fails or refuses to act, after the expiration of at least thirty (30) days from the date on which the Notice of Lien was Recorded; provided that at least ten (10) days have expired since a copy of the Notice of Lien was mailed to the Owner affected thereby. The Association, through its agents, shall have the power to bid on the Condominium or the Lot at foreclosure sale, and to acquire and hold, lease, mortgage and convey the same. Upon completion of the foreclosure sale, an action may be brought by the Association or the purchaser at the sale in order to secure occupancy of the defaulting Owner's Unit, and the defaulting Owner shall be required to pay the reasonable rental value for such Unit or residence on a Lot during any period of continued occupancy by defaulting Owner or any persons claiming under the defaulting Owner. Suit to recover a money judgment for unpaid assessments shall be maintainable without foreclosing or waiving any lien securing the same, but this provision or any institution of suit to recover a money judgment shall not constitute an affirmation of the adequacy of money damages. Any recovery resulting from a suit in law or equity initiated pursuant to this Section may include reasonable attorneys' fees as fixed by the court. CC&RS/CBE/ 10/5/2000 37 5.10. Priority of Assessment Lien. The lien of the assessments provided for herein, including interest and costs (including attorneys' fees), shall be subordinate to the lien of any previously Recorded first Mortgage upon one or more Condominiums or Lots. Sale or transfer of any Condominium or Lot shall not affect the assessment lien. However, the sale or transfer of any Condominium or Lot pursuant to judicial or nonjudicial foreclosure of a first Mortgage shall extinguish the lien of such assessments as to payments which became due prior to such sale or transfer. No sale or transfer shall relieve such Condominium or Lot from liens for any assessments thereafter becoming due. When the Beneficiary of a first Mortgage of record or other purchaser of a Condominium or Lot obtains title pursuant to a judicial or nonjudicial foreclosure of the first Mortgage such Person, his successors and assigns, shall not be liable for the share of the Common Expenses or assessments by the Association chargeable to such Condominium or Lot which became due prior to the acquisition of title to such Condominium or Lot by such Person. Such unpaid share of Common Expenses or assessments shall be deemed to be Common Expenses collectible from all of the Owners of the Condominiums or Lots including such Person, the successors and assigns. CC&RS/CBE/ 10/5/2000 38 ARTICLE VI 6. Property Easements and Rights of Entry. 6.1. Easements. (a) Access. Declarant expressly reserves for the benefit of the Owners reciprocal, nonexclusive easements for access, ingress and egress over the Condominium Common Area Module and the Association Property Module. Subject to the provisions of this Declaration governing use and enjoyment thereof, the easements may be used by all Owners and their guests, tenants and invitees residing on or temporarily visiting the Property, for walkways, vehicular access and such other purposes reasonably necessary for use and enjoyment of a Condominium and a Lot in the Project. (b) Maintenance and Repair. Declarant expressly reserves for the benefit of the Board of Directors and all agents, officers and employees of the Association, nonexclusive easements over the Condominium Common Area Module and the Association Property Module as necessary to maintain and repair the Condominium Common Area Module and the Association Property Module and to perform all other tasks in accordance with the provisions of this Declaration. Such easements over the Condominium Common Area Module and the Association Property Module shall be appurtenant to and binding upon, and shall pass with the title to, every Condominium and Lot conveyed. (c) Utility Easements. Declarant expressly reserves for the benefit of the Association the right of Declarant to grant additional easements and rights-of-way over the Property to utility companies and public agencies, as necessary, for the proper development and disposal of the Property. Such right of Declarant shall expire upon Close of Escrow for the sale of all Condominiums and Lots in the Project or upon expiration of five (5) years from the date of original issuance by the ORE of the Final Subdivision Public Report for the Project, whichever comes first. CC&RS/CBE/ 10/5/2000 39 (d) Encroachments. Declarant, the Association and Owners of contiguous Residences shall have a reciprocal easement appurtenant to each of the Residences over the Residences and the Condominium Common Area Module for the purpose of (1) accommodating any existing encroachment of any wall of any Improvement, arsd (2) maintaining the same and accommodating authorized construction, reconstruction, repair, shifting, movement or natural settling of the Improvements. Easements and reciprocal negative easements for utility services and repairs, replacement and maintenance of the same over all of the Condominium Common Area Module are specifically reserved for the benefit of the Owners. Declarant expressly reserves for the benefit of the Condominium Common Area Module, the Association Property Module, and for the benefit of the Owners and the Association, reciprocal nonexclusive easements for drainage of water over, across and upon Condominium Common Area Module and the Association Property Module. The foregoing easements shall not unreasonably interfere with each Owner's use and enjoyment of adjoining Residences. No portion of the Condominium Common Area Module or the Association Property Module, including without limitation parking spaces and other amenities contemplated as a part of the Property, are proposed to be leased by Declarant to the Owners or to the Association. (e) Completion of Improvements. Declarant expressly reserves for its benefit the right and easement to enter the Property to complete any Improvement which Declarant deems desirable to implement Declarant's development plan. CCScRS/CBE/ 10/5/2000 40 ARTICLE VII 7 . Declarant's Rights and Reservations. 7.1. Declarant's General Rights and Reservations. Nothing in the Restrictions shall limit, and no Owner or the Association shall do anything to interfere with, the right of Declarant to subdivide or resubdivide any portion of the Property or to complete Improvements to and on the Condominium Common Area Module or the Association Property Module portion of the Property owned solely or partially by Declarant, or to alter the foregoing or its construction plans and designs, or to construct such additional Improvements as Declarant deems advisable in the course of development of the Property so long as any Condominium or Lot in the Project remains unsold. The rights of Declarant hereunder shall include, but shall not be limited to, the right to install and maintain such structures, displays, signs, billboards, flags and sales offices as may be reasonably necessary for the conduct of its business of completing the work and disposing of the Condominiums and Lots by sale, resale, lease or otherwise. Each Owner by accepting a deed to a Condominium and a Lot hereby acknowledges that the activities of Declarant may temporarily or permanently impair the view of such Owner and may constitute an inconvenience or nuisance to the Owners, and hereby consents to such impairment, inconvenience or nuisance. This Declaration shall not limit the right of Declarant at any time prior to acquisition of title to a Condominium or to a Lot in the Project by a purchaser from Declarant to establish on that Condominium or that Lot, additional licenses, easements, reservations and rights-of -way to itself, to utility companies, or to others as may from time to time be reasonably necessary to the proper development and disposal of the Property. Declarant may use any Condominiums or Lots owned by Declarant in the Project as model home complexes or real estate sales or leasing offices. Declarant need not seek or obtain Architectural Committee approval of any Improvement constructed or placed on any portion of the Property by Declarant. The rights of Declarant hereunder and elsewhere in these Restrictions may be assigned by Declarant to any successor-in-interest to any portion of Declarant ' s interest in any portion of the Property by a written assignment. Notwithstanding any other provision of this Declaration, the prior written approval of Declarant, as developer of the Property, will be required before any amendment to this CC&RS/CBE/ 10/5/2000 Article shall be effective. Each Owner hereby grants, upon acceptance of the deed to the Condominium or the Lot, an irrevocable, special power of attorney to Declarant to execute and Record all documents and maps necessary to allow Declarant to exercise its rights under this Article. Declarant and its prospective purchasers of Condominiums and Lots shall be entitled to the nonexclusive use of the Condominium Common Area Module and the Association Property Module and any recreational facilities thereon, without further cost for access, ingress, egress, use or enjoyment, in order to show the Property to its prospective purchasers and dispose of the Property as provided herein. Declarant, its successors and tenants, shall also be entitled to the nonexclusive use of any portions of the Property which comprise private streets, drives and walkways for the purpose of ingress, egress and accommodating vehicular and pedestrian traffic to and from the Property. The use of the Condominium Common Area Module and the Association Property Module by Declarant shall not unreasonably interfere with the use thereof by other Owners. The Association shall provide Declarant with all notices and other documents to which a Beneficiary is entitled pursuant to this Declaration, provided that Declarant shall be provided such notices and other documents without making written request therefor. The rights and reservations of Declarant set forth in this Article VII shall terminate on the fifth (5th) anniversary of the first Close Escrow for the sale of a Condominium or a Lot in the Project. ARTICLE VIII 8. Residence and Use Restrictions. All of the Property shall be held, used and enjoyed subject to the following limitations and restrictions and the exemptions of Declarant set forth in this Declaration. CC&RS/CBE/ 10/5/2000 42 8.1. Single Family Residences. Each Condominium and Lot shall be used as a residence for a single Family and for no other purpose. An Owner may rent the Condominium or the Lot to a single Family provided that the Condominium or the Lot is rented pursuant to a lease or rental agreement which is (a) in writing, (b) for a term of at least thirty (30) days, and (c) subject to all of the provisions of this Declaration. Because of the location of a "granny flat" on Lot 1, more fully described in Preamble, paragraph "A", the foregoing requirements shall not apply to the rental of said "granny flat" by the Owner of Lot. 8.2. Parking and Vehicular Restrictions. (a) Authorized Vehicles. The following vehicles are Authorized Vehicles: motorized land vehicles designed and used primarily for non-commercial passenger transport, such as automobiles, passenger vans designed to accommodate ten (10) or fewer people, two-wheel motorcycles, and pick-up trucks having a manufacturer's rating or payload capacity of one (1) ton or less. Authorized Vehicles may be parked in any portion of the Project intended for parking of motorized vehicles. (b) Prohibited Vehicles. The following vehicles are Prohibited Vehicles: recreational vehicles (e.g., motorhomes, travel trailers, camper vans, boats, etc.), commercial-type vehicles (e.g., stakebed trucks, tank trucks, dump trucks, step vans, concrete trucks, etc.), buses or vans designed to accommodate more than ten (10) people, vehicles having more than two (2) axles, trailers, inoperable vehicles or parts of vehicles, aircraft, other similar vehicles or any vehicle or vehicular equipment deemed a nuisance by the Board. Prohibited Vehicles shall not be parked, stored or kept on any portion of the Project unless specifically authorized by the Board. CC&RS/CBE/ 10/5/2000 43 (c) General Restrictions. Subject to the restriction on Prohibited Vehicles, all vehicles owned or operated by or within the control of an Owner or a resident of an Owner's Condominium or Lot and within the Property shall be parked in the Garage of that Owner to the extent of the space available; provided that each Owner shall ensure that any such garage accommodates at least the number of Authorized Vehicles for which it was originally constructed. No repair, maintenance or restoration of any vehicle shall be conducted on the Property except within an enclosed garage when the garage door is closed, provided such activity is not undertaken as a business, and provided that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. (d) Parking Regulations. The Board may establish additional regulations as it deems appropriate in its sole discretion with regard to any of the parking areas not assigned to the Owners of Condominiums or of Lots, including without limitation designating "parking," "guest parking," and "no parking" areas thereon; and shall have the power to enforce all parking vehicle use regulations applicable to the Property, including the power to remove violating vehicles from any portion of the Property pursuant to California Vehicle Code Section 22658.2 or other applicable statute. If the Board fails to enforce any of the parking or vehicle use regulations, the City may, but need not enforce such regulations in accordance with state and local laws and ordinances. CC&RS/CBE/ 10/5/2000 8.3. Nuisances. No noxious or offensive activities shall be carried on upon the Property or on any public street abutting or visible from the Property. No horns, whistles, bells or other sound devices, except security devices used exclusively to protect the security of a Residence and its contents, shall be placed or used in any such Residence. Noisy or smoky vehicles, large power equipment and large power tools, off-road motor vehicles or items which may unreasonably interfere with television or radio reception of any Owner in the Project and objects which create or emit loud noises or noxious odors, shall not be located, used or placed on any portion of the Property or exposed to the view of other Owners without the prior written approval of the Architectural Committee. The Board shall have the right to determine if any noise, odor, or activity producing such noise or odor constitutes a nuisance. Each Owner shall comply with all of the requirements of the local or state health authorities and with all other governmental authorities with respect to the occupancy and use of a Residence. Each Owner shall be accountable to the Association and other Owners for the conduct and behavior of children and other family members or persons residing in or visiting his Unit. Any damage to the the Condominium Common Area Module, the Association Property Module, the personal property of the Association, or property another Owner, caused by such children or other family members shall be repaired at the sole expense of the Owner of the Unit where such children or other family members or persons are residing or visiting. Use of skateboards and/or use of temporary basketball equipment on either the Condominium Common Area Module or the Association Property Module shall constitute a "nuisance" as provided herein. 8.4. Signs. No sign, poster, display, billboard or other advertising device of any kind shall be displayed to the public view on any portion of the Property or on any public street abutting or visible from the Property, or shown or displayed from any Residence, without the prior written consent of the Architectural Committee, provided, however, that the restrictions of this Section shall not apply to any sign or notice of customary and reasonable dimension which CC&RS/CBE/ 10/5/2000 45 states that the Residence is for rent or sale, so long as it is consistent with the standards promulgated by the Architectural Committee in accordance with Section 4.2 hereof. Such sign or notice may be placed within a Unit, and may also be placed upon the Association Property Module or the Condominium Common Area Module with the prior written approval of the Architectural Committee; provided that the location of such sign or notice on the Association Property Module or the Condominium Common Area Module shall be within an area specifically established by the Committee for such purpose. This Section shall not apply to any signs used by Declarant or its agents in connection with the sale of Condominiums or Lot or the construction or alteration of the Units, the Condominium Common Area Module, the Association Property Module, traffic and visitor parking signs installed by Declarant, and traffic and parking control signs installed with the consent of the Board. Notwithstanding the foregoing, nothing contained in this Section shall be construed in such manner as to permit the maintenance of any sign which is not in conformance with any ordinance of the City. 8.5. Antennas/Satellite Dishes. No television or radio poles, antennae, satellite dishes, other than those originally installed by the Original Declarant, shall be constructed, erected or maintained on or within the Project; provided however, the foregoing language shall not be construed to limit the installation or use of video or television antennas within the Project, including a satellite dish (hereafter referred to as "Antenna"), that is of a size and type consistent with Civil Code Section 1376, or any successor statute, provided the Owner submits an application to the Architectural Control Committee and obtains the approval thereof in accordance with the procedures set forth in Article IV herein. Notwithstanding the foregoing, neither the Architectural Committee nor the Board of Directors shall impose or enforce any restrictions on Antennas which are inconsistent with the requirements set forth in Section 207 of the Telecommunications Act of 1996 (47 U.S.C. Section 303 et. seq.), any regulations issued pursuant thereto, and/or any successor statute. CC&RS/CBE/ 10/5/2000 46 8.6. Animal Regulations. No livestock, reptiles, insects, poultry or other animals of any kind shall be raised, bred or kept in any Residence except that usual and ordinary domestic dogs, cats, fish, and birds inside bird cages may be kept as household pets within any Residence provided that they are not kept, bred or raised therein for commercial purposes or in unreasonable quantities or sizes. As used in this Declaration, "unreasonable quantities" shall ordinarily mean more than two (2) pets per Residence; provided, however, that the Board may determine that a reasonable number in any instance may be more or less. The Board shall have the right to limit the size of pets and may prohibit maintenance of any animal which constitutes, in the opinion of the Board, a nuisance to any other Owner. Animals belonging to Owners, occupants or their licensees, tenants or invitees within the Property, must be either kept within an enclosure, an enclosed patio or balcony or on a leash held by a person capable of controlling the animal. Furthermore, any Owner shall be liable to each and all remaining Owners, their families, guests and invitees, for any unreasonable noise or damage to person or property caused by any animals brought or kept upon the Property by such Owner or by members of his family, his tenants or his guests; and it shall be the duty and responsibility of each such Owner to clean up after such animals which have used any portion of the Property. CC&RS/CBE/ 10/5/2000 47 8.7. Business or Commercial Activity. No part of the Property shall ever be used for any business, commercial (including auctions or similar events), manufacturing, mercantile, storage, vending or other nonresidential purposes, including without limitation any activity for which the provider is compensated in any way or receives any form of consideration, regardless of whether the activity is engaged in full or part-time generates or does not generate a profit, or requires or does not require a license; except Declarant, its successors and assigns may use any portion of the Property for a model home site and display and sales offices in accordance with Article VII hereof. The provisions of this Section 8.7 shall not preclude any of the above- described activities without external evidence thereof, provided, that all of the following conditions are fulfilled: (a) such activities are conducted in conformance with all applicable governmental ordinances; (b) the patrons or clientele of such activities do not visit the Unit, Residence on the Lot or park automobiles or other vehicles within the Property; (c) the existence or operation of such activities is not apparent or detectable by sight, sound or smell from the outside of the boundaries of the Unit or the boundaries of the Lot; (d) no such activity increases the liability or casualty insurance obligation or premium of the Association; and (e) such activities are consistent with the residential character of the Property and conform with the provisions of this Declaration. 8.8. Rubbish Removal. Trash, garbage, or other waste shall be disposed of by residents of the Project only by depositing the same into trash containers. No portion of the Property shall be used for the storage of building materials, refuse or any other materials. No clothing, household fabrics or other unsightly articles shall be hung, dried, or aired on any portion of the Property, so as to be visible from other Residences or the street, nor shall any storage (other than temporary storage of building materials) be permitted. There shall be no exterior fires whatsoever except barbecue fires contained within receptacles therefor. All of the Lots and Units are subject to assessment for city rubbish collection. This assessment will appear on the tax bill for each Lot and each Unit. A trash bin will be included as an Improvement to the Condominium Common Area Module. The costs of rubbish collection from the trash bin located CC&RS/CBE/ 10/5/2000 on the Condominium Common Area Module will be included as part of the Annual Assessment to be paid by all of the Owners of Condominiums in the Project. The Owners of the Lot 1 to Lot 4, inclusive, more fully described in Preamble, paragraph A herein, shall not be responsible for the portion of the Annual Assessment, levied by the Board, for the collection of rubbish from the trash bin located on the Condominium Common Area Module. 8.9. Further Subdivision/Outbuildings. Except as otherwise provided herein, no Owner shall physically or legally further subdivide his Unit in any manner, including without limitation, the division of his Unit or his Condominium into time- share estates or time-share uses; provided, however, that this provision shall not be construed to limit the right of an Owner to (1) rent or lease all of his Unit by means of a written lease or rental agreement subject to the restrictions of this Declaration; (2) to sell his Condominium; or (3) to transfer or sell any Condominium to more than one Person to be held by them as tenants- in-common, joint tenants, tenants by the entirety or as community property. Any failure by the lessee of the Unit to comply with the terms of this Declaration, the Bylaws of the Association or the Rules and Regulations shall constitute a default under the lease or rental agreement. Notwithstanding the foregoing, no-Unit in the Project may be partitioned or subdivided without the prior written approval of the Beneficiary of any first Mortgage on that Unit. This Section may not be amended without the prior written approval of the Beneficiaries of at least seventy-five percent (75%) of the first Mortgages of Condominiums in the Project. No Owner of either a Lot and/or a Condominium shall install any additional physical structure (i.e. "outbuilding") on any portion of the Lot or within the airspace boundaries of the Unit. 8.10. Drainage. There shall be no interference with or alteration of the established drainage pattern over the Property, unless an adequate alternative provision is made for proper drainage with the prior written approval of the Architectural Committee. For the purpose hereof, "established" drainage is defined as the drainage which exists at the time of the first Close of Escrow for the sale of a Condominium or a Lot, or that which is shown on any plans approved by the Architectural Committee. CC&RS/CBE/ 10/5/2000 ARTICLE IX 9. Insurance. 9.1. Duty to Obtain Insurance: Types. (a) Public Liability. The Board shall cause to be obtained and maintained adequate blanket public liability insurance, including medical payments, with such limits as may be considered acceptable to FNMA (not less than $1 million covering all claims for personal injury and property damage arising out of a single occurrence), insuring against liability for bodily injury, death and property damage arising from the activities of the Association with respect to maintenance of the Condominium Common Area Module and the Association Property Module. The Board shall review the endorsements, such as "primary coverage", "agreed amount", inflation guard", "ordinance or law" and "replacement cost", recommended for the foregoing coverage and/or for additional types of insurance described hereafter. In addition, the Board shall review with the insurance agent the type of losses covered such as fire or customary coverage insurance language such as "special form" policy. The covered parties may include the Association, its officers, directors, members and may include other parties, such as the Declarant at the discretion of the applicant. (b) Fidelity Bond. Fidelity bond coverage which names the Association as an obligee must be obtained by or on behalf of the Association for any person or entity handling funds of the Association, including, but not limited to, officers, directors, trustees, employees and agents of the Association and employees of the Manager of the Association, whether or not such Persons are compensated for their services, in an amount not less than the estimated maximum of funds, including reserve funds, in the custody of the Association or the Manager, as the case may be, at any given time during the term of each bond. However, in no event may the aggregate amount of such bonds be less than the sum equal to one fourth (1/4) of the Annual Assessments on all Lots in the Property, plus reserve funds. CC&RS/CBE/ 10/5/2000 50 (c) Insurance Required by FNMA, GNMA and FHLMC. The Association shall continuously maintain in effect such casualty, flood and liability insurance and fidelity bond coverage meeting the insurance and fidelity bond requirements for condominium projects and planned unit developments established by FNMA, GNMA and FHLMC, so long as any of which is a Mortgagee or Owner of a Condominium or a Lot within the Property, except to the extent such coverage is not available or has been waived in writing by FNMA, GNMA and FHLMC, as applicable. (d) Other Insurance. The Board of Directors may purchase such other insurance, as necessary, respect to condominium project and planned developments similar in construction, location and use. (e) Beneficiaries. Such insurance shall be maintained for the benefit of the members of the Association. (f) Payment of Deductible. The Association is responsible for the payment of any deductible portion of any type of insurance maintained by the Association in accordance with this Article IX. The Board of Directors is hereby authorized to adopt policies with regard to the payment of deductibles. 9.2. Waiver of Claims Against Association. As to all policies of insurance maintained by or for the benefit of the Association and its members, the Association and its members hereby waive and release all claims against one another, the Board of Directors and Declarant, to the extent of the insurance proceeds available, whether or not the insurable damage or injury is caused by the negligence of or breach of any agreement by any of said Persons. CC&RS/CBE/ 10/5/2000 9.3. Right and Duty of Owners to Insure/Repair and Replace. It is the responsibility of each Owner to provide insurance for the Owner's Condominium or the Residence on the Owner's Lot. It is the responsibility of each Owner to pay the deductible amount of any insurance on the Owner's Condominium or the Residence on the Owner's Lot. It is the responsibility of each Owner to repair and replace the any damage to the Owner's Condominium or the Residence on the Owner's Lot in a timely manner. 9.4. Notice of Expiration Requirements. If available, each of the policies of insurance maintained by the Association shall contain a provision that said policy shall not be canceled, terminated, materially modified or allowed to expire by its terms, without ten (10) days' prior written notice to the Board and Declarant, and to each Owner and Beneficiary, insurer and guarantor of a first Mortgage who has filed a written request with the carrier for such notice, and every other Person in interest who requests such notice of the insurer. In addition, fidelity bonds shall provide that they may not be canceled or substantially modified without ten (10) days prior written notice to any insurance trustee named pursuant to Section 9.6 and to each FNMA servicer who has filed a written request with the carrier for such notice. 9.5. Insurance Premiums. Insurance premiums for any insurance coverage obtained by the Association and deemed necessary by the Board of Directors shall be a Common Expense to be included in the Annual Assessments levied by the Association and collected from the Owners. That portion of the Annual Assessments necessary for the required insurance premiums shall be separately accounted for by the Association in the Reserve Fund, to be used solely for the payment of premiums of required insurance as such premiums become due. CCiRS/CBE/ 10/5/2000 52 9.6. Trustee for Policies. The Association, acting through its Board of Directors, is hereby appointed and shall be deemed trustee of the interests of all named insureds under policies of insurance purchased and maintained by the Association. Unless the applicable insurance policy provides for a different procedure for the filing of claims, all claims made under such policy shall be sent to the insurance carrier or agent, as applicable, by certified mail and be clearly identified as a claim. A record of all claims made shall be kept by the Association. All insurance proceeds under any such policies as provided for in Section 9.1 of this Article shall be paid to the Board of Directors as trustees. The Board shall have full power to receive and to receipt for the proceeds and to deal therewith as provided herein. Insurance proceeds shall be used by the Association for the repair or replacement of the property for which the insurance was carried or otherwise disposed of as provided in this Declaration. The Board is hereby granted the authority to negotiate loss settlements with the appropriate insurance carriers, with participation, to the extent they desire, of first Mortgagees who have filed written requests within ten (10) days of receipt of notice of any damage or destruction as provided in this Declaration. Any two (2) officers of the Association may sign a loss claim form and release form in connection with the settlement of a loss claim, and such signatures shall be binding on all the named insureds. A representative chosen by the Board may be named as an insured, including a trustee with whom the Association may enter into an insurance trust agreement or any successor to such trustee, who shall have exclusive authority to negotiate losses under any policy providing property or liability insurance and to perform such other functions necessary to accomplish this purpose. CC&RS/CBE/ 10/5/2000 53 9.7. Actions as Trustee. Except as otherwise specifically provided in this Declaration, the Board, acting on behalf of the Association and all Owners, shall have the exclusive right to bind such parties in respect to all matters affecting insurance carried by the Association, the settlement of a loss claim, and the surrender, cancellation, and modification of all such insurance, in a manner satisfactory to Beneficiaries of seventy-five percent (75%) of the first Mortgages held by first Mortgagees who have filed requests under Section 9.4. Duplicate originals or certificates of all policies of fire and casualty insurance maintained by the Association and of all renewals thereof, together with proof of payment of premiums, shall be delivered by the Association to all Owners and Mortgagees who have requested the same in writing. 9.8. Restoration of the Condominium Common Area Module/ Association Property Module. Except as otherwise provided in this Declaration, in the event of any destruction of any portion of the Improvements to the Condominium Common Area Module and/or the Association Property Module, the repair or replacement of which are the responsibility of the Association, it shall be the duty of the Association to restore and repair the Improvements to their former condition, as promptly as practical. The proceeds of any insurance and reserve funds maintained pursuant to Article IX hereof for reconstruction or repair of the Improvements to the Condominium Common Area Module and/or the Association Property Module shall be used for such purpose, unless otherwise provided herein. The Board shall have authorized to have prepared the necessary documents to effect such reconstruction as promptly as practical. The Improvements to the Condominium Common Area Module and/or the Association Property Module shall be reconstructed or rebuilt substantially in accordance with the original construction plans if they are available, unless changes recommended by the Architectural Committee have been approved in writing by sixty-seven percent (67%) of the Owners and by the Beneficiaries of fifty-one percent (51%) of first Mortgages upon the Lots. If the amount available from the proceeds of such insurance policies for such restoration and repair is at least eighty-five percent (85%) of the estimated cost of restoration and repair, a Reconstruction Assessment shall be levied by the Board of Directors to provide the necessary funds for such reconstruction, over and above the amount of any insurance CC&RS/CBE/ 10/5/2000 54 proceeds available for such purpose. If the amount available from the proceeds of such insurance policies for such restoration and repair is less than eighty-five percent (85%) of the estimated cost of restoration and repair, the Board may levy a Reconstruction Assessment and proceed with the restoration and repair only if both of the following conditions ("Conditions to Reconstruction") have first been satisfied: (a) the levy of a Reconstruction Assessment to pay the costs of restoration and repair of the Property is approved by the affirmative vote of written consent of sixty-seven percent (67%) of the Owners and by the written consent of the Beneficiaries of fifty-one percent (51%) of the first Mortgages on the Lots in which Project; and (b) within six (6) months after the date on which the destruction occurred, the Board Records a certificate of the resolution authorizing the restoration and repair ("Reconstruction Certificate"). If either of the Conditions to Reconstruction does not occur following a destruction for which insurance proceeds available for restoration and repair are less than eighty-five percent (85%) of the estimated cost of restoration and repair, it shall be conclusively presumed that the Owners have determined not to proceed with restoration and repair and not to allow the Board to levy a Reconstruction Assessment, in which case the Owners may proceed as provided in Section 9.9 below. 9.9. Sale of Property and Right to Partition. No Owner shall have the right to partition of his interest in the Condominium or the Lot and there shall be no judicial partition of the Project, or any part thereof, except as provided in Section 1359(b) of the California Civil Code as amended or in any successor statute. 9.10. Repair Procedures. The Board of Directors shall establish a reasonable time schedule for commencement and completion of the repairs to the Improvements to the Condominium Common Area Module and/or the Association Property Module described in this Article IX. In addition, the Board of Directors shall establish procedures for the control and distribution of the repair funds, and contract and bid requirements. The procedures may provide that the insurance proceeds may be used to reimburse the Association for its costs in assessing the damage, determining the repair requirements, securing repair funds and supervising the repairs. CC&RS/CBE/ 10/5/2000 9.11. Procedures When Repairs are Not Made. If the repairs described in this Article IX are not made, the Board of Directors may adopt procedures which include the following: (i) the elimination or protection against hazardous conditions; (ii) the sale and removal of the damaged improvements (including the sale of the entire project when warranted) (iii) distribution of sale and insurance proceeds reconfiguration of the project if necessary. (iv) the dissolution of the Association and the distribution of its assets if warranted. (v) resolution of disputes; and (vi) the preservation of Owners rights under Civil Code Section 1359 when applicable. 9.12. Insurance Review. The Board shall review the insurance carried by or on behalf of the Association at least annually, for the purpose of determining the amount of the casualty and fire insurance referred to in Section 9.1 above. If economically feasible, the Board shall obtain a current appraisal of the full replacement value of the Improvements on the Association Property except for foundations and footings, without deduction for depreciation, from a qualified independent insurance appraiser, prior to each such annual review. CC&RS/CBE/ 10/5/2000 56 ARTICLE X 10. Eminent Domain-Association Property Module. The term "taking" as used in this Article shall mean condemnation by exercise of the power of eminent domain or by sale under threat of the exercise of the power of eminent domain. The Board shall represent the Owners, in any proceedings, negotiations, settlements, or agreements regarding takings. All takings proceeds shall be payable to the Association for the benefit of the Lot Owners and their Mortgagees, and shall be distributed to such Owners and Mortgagees as provided in this Article X. 10.1. Condemnation of Association Property Module. If there is a taking of all or any portion of the Association Property Module, then the award in condemnation shall be paid to the Association and shall be deposited in the Operating Fund. 10.2. Notice to Owners and Mortgagees. The Board, upon learning of any taking affecting a material portion of the Association Property Module, or any threat thereof, shall promptly notify all Owners and those Beneficiaries, insurers and guarantors of Mortgages on Condominiums and/or Lots in the Project who have filed a written request for such notice with the Association. 10.3. Sale by Consent. The Board of Directors is hereby authorized to approve a sale of the condemned property to the condemning authority in lieu of actual condemnation proceedings once the sale has been approved in writing by sixty-seven percent (67%) of the Owners in the Project. 10.4. Distribution of Proceeds. The proceeds of a sale or condemnation, as described in the Article X, shall be distributed in the following order of priority: (1) to the Association, to reimburse the Association for expenses related to a sale or condemnation, and (2) to all Owners and to their mortgagees. Proceeds from the sale or condemnation of the Association Property shall be distributed based upon assessment allocations. CC&RS/CBE/ 10/5/2000 57 ARTICLE XI 11. Eminent Domain-Condominium Common Area Module. The term "taking" as used in this Article shall mean condemnation by exercise of the power of eminent domain or by sale under threat of the exercise of the power of eminent domain. The Board shall represent the Owners, in any proceedings, negotiations, settlements or agreements regarding takings. All takings proceeds shall be payable to the Association for the benefit of the Owners of the Condominiums. 11.1. Condemnation of Condominium Common Area Module. If there is a taking of all or any portion of the Condominium Common Area Module, then the award in condemnation shall be paid to the Association and shall be deposited in the Operating Fund. 11.2. Notice to Owners and Mortgagees. The Board, upon learning of any taking affecting a material portion of the Condominium Common Area Module, or any threat thereof, shall promptly notify all Condominium Owners and those Beneficiaries, insurers and guarantors of Mortgages on Condominiums in the Project who have filed a written request for such notice with the Association. 11.4. Distribution of Proceeds. The proceeds of a sale or condemnation, as described in the Article XI, shall be distributed in the following order of priority: (1) to the Association, to reimburse the Association for expenses related to a sale or condemnation, and (2) to all Condominium Owners and to their mortgagees. Proceeds from the sale or condemnation of the Condominium Common Area Module shall be distributed based upon assessment allocations. CC&RS/CBE/ 10/5/2000 58 ARTICLE XII 12. Rights of Mortgagees. Notwithstanding any other provisions of this Declaration, no amendment or violation of this Declaration shall operate to defeat or render invalid the rights of the Beneficiary under any Deed of Trust upon one (1) or more Condominiums or Lots made in good faith and for value, provided that after the foreclosure of any such Deed of Trust, such Condominium(s) or Lots shall remain subject to this Declaration, as amended. For purposes of this Declaration, "first Mortgage" shall mean a Mortgage with first priority over other Mortgages or Deeds of Trust on a Condominium or a Lot, and "first Mortgagee" shall mean the Beneficiary of a first Mortgage. For purposes of any provision of this Declaration or the other Restrictions which require the vote or approval of a specified percentage of first Mortgagees, such vote or approval shall be determined based upon one (1) vote for each Condominium or Lot encumbered by each such first Mortgagee. In order to induce FHLMC, GNMA and FNMA to participate in the financing of the sale of Condominiums and Lots within the Project, the following provisions are added hereto (and to the extent these added provisions conflict with any other provisions of the Restrictions, these added provisions shall control): (a) Each Beneficiary, insurer and guarantor of a first Mortgage encumbering one (1) or more Condominiums or Lots, upon filing a written request for notification with the Board, is entitled to written notification from the Association of: (1) any condemnation or casualty loss which affects either a material portion of the Project, the Unit(s), or the Residence on the Lot, securing the respective first Mortgage,- and (2) any delinquency of sixty (60) days or more in the performance of any obligation under the Restrictions, including without limitation the payment of assessments or charges owed by the Owner(s) of the Unit(s) or the Owner(s) of the Residences on the Lots securing the respective first Mortgage, which notice each Owner hereby consents to and authorizes; and CC&RS/CBE/ 10/5/2000 59 (3) a lapse, cancellation, or material modification of any policy of insurance or fidelity bond maintained by the Association; and (4) any proposed action of the Association which requires consent by a specified percentage of first Mortgagees. (b) Each Owner, including each first Mortgagee of a Mortgage encumbering any Condominium or Lot who obtains title to such Condominium or to such Lot, pursuant to the remedies provided in such Mortgage, or by foreclosure of the Mortgage, or by deed or assignment in lieu of foreclosure, shall be exempt from any "right of first refusal" created or purported to be created by the Restrictions. (c) Each first Mortgagee of a Mortgage encumbering any Condominium or Lot which obtains title to such Condominium or Lot pursuant to the remedies provided in such Mortgage or by foreclosure of such Mortgage, shall take title to such Condominium or Lot free and clear of any claims for unpaid assessments or charges against such Condominium or Lot which accrued prior to the time such Mortgagee acquires title to such Condominium or Lot in accordance with Section 5.10. (d) Unless at least sixty-seven percent (67%) of the first Mortgagees or sixty-seven percent (67%) of the Owners (other than Declarant) have given their prior written approval, neither the Association nor the Owners shall: (1) by act or omission seek to abandon or terminate the Property; or (2) change the pro rata interest or obligations of any Condominium or Lot in order to levy assessments or charges, allocate distributions of hazard insurance proceeds or condemnation awards or determine the pro rata share of ownership of each Condominium in the Condominium Common Area Module and each Condominium and each Lot in the Association Property Module; or CC&RS/CBE/ 10/5/2000 60 (3) partition or subdivide any Condominium Unit; or (4) by act or omission, seek to abandon, partition, subdivide, encumber, sell or transfer the Condominium Common Area Module or the Association Property Module; or (The granting easements for public utilities or for purposes consistent with the intended use of the Condominium Common Area Module or the Association Property Module under this Declaration, and the granting of exclusive easements to Owners over portions of the Condominium Common Area Module or the Association Property Module to conform the boundaries of the Condominium Common Area Module or Association Property Module to the as-built location of Improvements installed or constructed by Declarant shall not be deemed a transfer within the meaning of this clause); or (5) by act or omission change, waive or abandon any scheme of regulations, or enforcement thereof, pertaining to the architectural design, the exterior appearance or the maintenance of the Units, the Condominium Common Area Module or the Association Property Module; or (6) fail to maintain or cause to be maintained Fire and Extended Coverage insurance on insurable Condominium Common Area Module or the Association Property Module as provided in Article IX of this Declaration; or (7) use hazard insurance proceeds for losses to the Condominium Common Area Module or the Association Property Module for other than the repair, replacement or reconstruction of the Condominium Common Area Module or the Association Property Module; or (8) change the method of determining the obligations, assessments, other charges which may be levied any Owner. CC&RS/CBE/ 10/5/2000 (e) All Beneficiaries, insurers, and guarantors of first Mortgages, upon written request to the Association, shall have the right to: (1) examine current copies of the Association's books, records and financial statements and the Restrictions during normal business hours; and (2) require the Association submit an annual audited financial statement without expense to the entity requesting the statement; and (3) receive written notice of all meetings of Owners; and (4) designate in writing a representative who shall be authorized to attend all meetings of Owners. (f) All Beneficiaries, insurers and guarantors of first Mortgages, upon written request, shall be given thirty (30) days written notice prior to the effective date of (1) any proposed material amendment to the Restrictions or Condominium Plans,- (2) any termination of an agreement for professional management of the Property following any decision of the Owners to assume self- management of the Project; and (3) any proposed termination of the Property as a condominium project and planned development. (g) The Reserve Fund described in Article V of this Declaration must be funded by regular scheduled monthly, quarterly, semiannual or annual payments rather than by large special assessments. (h) The Board shall secure and cause to be maintained in force at all times a fidelity bond for any Person handling funds of the Association, including, but not limited to, employees of the professional Manager. CC&RS/CBE/ 10/5/2000 (i) The Board may enter into such contracts or agreements on behalf of the Association as are required in order to satisfy the guidelines of the FHLMC, FNMA or GNMA or any similar entity, so as to allow for the purchase, guaranty or insurance, as the case may be by such entities of first Mortgages encumbering Condominiums and Lots. Each Owner hereby agrees that it will benefit the Association and the membership of the Association, as a class of potential Mortgage borrowers and potential sellers of their residential Condominiums and Lots, if such agencies approve the Property as a qualifying subdivision under their respective policies, rules and regulations, as adopted from time to time. Each Owner hereby authorizes his Mortgagees to furnish information to the Board concerning the status of any Mortgage encumbering a Condominium or Lot. (j) When professional management has been previously required by a Beneficiary, insurer or guarantor of a first Mortgage, any decision to establish self-management by the Association shall require the approval of sixty-seven percent (67%) of the voting power of the Association and the Beneficiaries of fifty-one percent (51%) of the first Mortgages of Condominiums and Lots in the Project. (k) First Mortgagees may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against the Condominium Common Area Module or the Association Property Module and may pay any overdue premiums hazard insurance policies, or secure new hazard insurance coverage on the lapse of a policy, for the Condominium Common Area Module or the Association Property Module and First Mortgagees making such payments shall be owed immediate reimbursement therefor from the Association. CC&RS/CBE/10/5/2000 ARTICLE XIII 13. Duration and Amendment. 13.1. Duration. This Declaration shall continue in full force for a term of fifty (50) years from the date of Recordation hereof, after which the term shall be automatically extended for successive periods of ten (10) years, unless a Declaration of Termination satisfying the requirements of an amendment to this Declaration as set forth in Section 13.2 is Recorded. There shall be no severance by sale conveyance, encumbrance or hypothecation of an interest in any Unit or Lot from the concomitant Membership in the Association, as long as this Declaration shall continue in full force and effect. 13.2. Termination and Amendment. (a) Notice of the subject matter of a proposed amendment to this Declaration in reasonably detailed form shall be included in the notice of any meeting or election of the Association at which a proposed amendment is to be considered. The resolution shall be adopted by the vote, in person or by proxy, or written consent of Members representing not less than (i) sixty-seven percent (67%) of the voting power of each Class of Members of the Association, and (ii) sixty-seven percent (67%) of the voting power of the Association residing in Members other than Declarant; provided that the specified percentage of the voting power of the Association necessary to amend a specified Section or provision of this Declaration shall not be less than the percentage of affirmative votes prescribed for action to be taken under that Section or provision. (b) Members and Declarant provided above, the Beneficiaries of fifty-one percent (51%) of the first Mortgages on all the Condominiums and Lots in the Project who have requested the Association to notify them of proposed action requiring the consent of a specified percentage of first Mortgagees must approve any amendment to this Declaration which is of a material nature, as follows: CC&RS/CBE/ 10/5/2000 64 (1) Any amendment which expressly benefits, affects or purports to affect the validity or priority of Mortgages or the rights or protection granted to Beneficiaries, insurers or guarantors of first Mortgages as provided in Articles V, IX, X, XI, XII and XIII hereof. (2) Any amendment which would necessitate a Mortgagee after it has acquired a Condominium or Lot through foreclosure, to pay more than its proportionate share of any unpaid assessment or assessments accruing after such foreclosure. (3) Any amendment which would or could result in a Mortgage being canceled by forfeiture, or in a Condominium or Lot not being separately assessed for tax purposes. (4) Any amendment relating to the insurance provisions as set out in Article IX hereof, or to the application of insurance proceeds as set out in Article X hereof, or to the disposition of any money received in any taking under condemnation proceedings. (5) Any amendment which would or could result in partition or subdivision of a Condominium Unit or Lot in any manner inconsistent with the provisions of this Declaration. (6) Any amendment which would subject any Owner to a right of first refusal or other such restriction, if such Condominium or Lot is proposed to be sold, transferred, or otherwise conveyed. (7) Any amendment concerning: (A) Voting rights; (B) Rights to use the Condominium Common Area Module or the Association Property Module. CC&RS/CBE/ 10/5/2000 65 (C) Reduction in Reserves for maintenance, repair and replacement of the Condominium Common Area Module or the Association Property Module; (D) Redefinition of any Unit or Lot boundaries; (F) Convertibility of the Condominium Common Area Module or the Association Property Module into Units or Lots or Units and Lots into Condominium Common Area Module or the Association Property Module; (G) Imposition of any restriction on leasing of Units or Lots; (H) A decision by the Association, if the project consist of fifty (50) or more Units and Lots, to establish self-management if professional management had been required previously by the Restrictions or by an eligible mortgage holder; (I) Annexation or deannexation of real property to or from the Property; or (J) Increases in assessments that raise the previously assessed amount by more than twenty-five percent (25%), assessment liens, or the priority of assessment liens. (K) Responsibility for maintenance and repairs. (L) Imposition of any restrictions on a Unit or Lot Owner's right to sell or transfer his or her Unit or Lot. (M) Restoration or repair of the Project (after damage or partial condemnation) in a manner other than specified in the Restrictions; CC&RS/CBE/ 10/5/2000 66 (c) Termination of this Declaration shall require approval by the Members as provided in subsection (a) of this Section 13.2. No such termination shall be effective unless it is also approved in advance either by fifty-one percent (51%) of the Beneficiaries of the first Mortgages on all of the Condominiums and Lots in the Project (if said termination is proposed by reason of the substantial destruction or condemnation of the Project) or by sixty-seven percent (67%) of such Beneficiaries (if said termination is for reasons other than such substantial destruction or condemnation) . (d) Each Beneficiary of a first Mortgage on a Condominium or Lot in the Project which receives proper written notice of a proposed amendment or termination of this Declaration by certified or registered mail with a return receipt requested shall be deemed to have approved the amendment or termination if the Beneficiary fails to submit a response to the notice within thirty (30) days after the Beneficiary receives the notice. (e) A copy of each amendment shall be certified by at least two (2) officers of the Association, and the amendment shall be effective when a Certificate of Amendment is Recorded. The Certificate, signed and sworn to by two (2) officers of the Association that the requisite number of Owners and mortgagees have either voted for or consented in writing to any amendment adopted as provided above, when Recorded, shall be conclusive evidence of that fact. The Association shall maintain in its files the record of all such votes or written consents for a period of at least four (4) years. The certificate reflecting any termination or amendment which requires the written consent of any of the Beneficiaries of first Mortgages shall include a certification that the requisite approval of such first Mortgagees has been obtained. (f) Notwithstanding any other provisions of this Section 13.2, at any time prior to the first Close of Escrow for the sale of a Condominium or Lot within the Project, Declarant may unilaterally amend or terminate this Declaration by Recording a written instrument which effects the amendment or termination and is signed and acknowledged by Declarant. CC&RS/CBE/ 10/5/2000 (g) Notwithstanding any other provisions of this Section 13.2, for so long as Declarant owns any portion of the Property, Declarant may unilaterally amend this Declaration by Recording a written instrument signed by Declaration in order to conform this Declaration to the requirements of VA, FHA, DRE, FNMA, GNMA or FHLMC then in effect. 13.3. Protection of Declarant. Until the fifth (5th) anniversary of the first Close of Escrow for the sale of a Condominium or Lot in the Project, the prior written approval of Declarant, as developer of the Property, will be required before any amendment which would impair or diminish the rights of Declarant to complete the Property or sell or lease Condominiums or Lots therein in accordance with this Declaration shall become effective. Notwithstanding any other provisions of the Restrictions, until such time as Declarant no longer owns any Condominiums or Lots in the Property, the following actions, before being undertaken by the Association, shall first be approved in writing by Declarant: (a) Any amendment or action requiring the approval of first Mortgagees pursuant to this Declaration, including without limitation all amendments and action specified in Sections 13.2; (b) The levy of a Capital Improvement Assessment for the construction of new facilities not constructed on the Condominium Common Area Module or the Association Property Module by Declarant; or (c) Subject to Section 5.4 regarding limitations on Annual Assessment increases, any significant reduction of Association maintenance or other services. CC&RS/CBE/ 10/5/2000 ARTICLE XIV 14. Enforcement of Certain Bonded Obligations. 14.1. Consideration by Board of Directors. If (1) the Condominium Common Area Module and Association Property Module Improvements are not completed prior to the issuance of a Final Subdivision Public Report by the DRE for the sale of Condominiums and Lots in the Project, and (2) the Association is obligee under a bond or other arrangement ("Bond") required by the DRE to secure performance of the commitment of Declarant to complete such Improvements, the Board shall consider and vote on the question of action by the Association to enforce the obligations under the Bond, with respect to any such Improvement for which a Notice of Completion has not been filed within sixty (60) days after the completion date specified for that Improvement in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writing for the completion of any Condominium Common Area Module and Association Property Module Improvement, the Board shall be directed to consider and vote on the aforesaid question if a Notice of Completion has not been filed, within thirty (30) days after the expiration of the extension. 14.2. Consideration by the Members. A special meeting of Members, for the purpose of voting to override a decision by the Board not to initiate action to enforce the obligations under the Bond or on the failure of the Board to consider and vote on the question, shall be held no fewer than thirty-five (35) days nor more than forty-five (45) days after receipt by the Board of a petition for such a meeting signed by Members representing five percent (5%) of the total voting power of the Association. A vote of a majority of the voting power of the Association residing in Members other than Declarant to take action to enforce the obligations under the Bond shall be deemed to be the decision of the Association, and the Board shall thereafter implement this decision by initiating and pursuing appropriate action in the name of the Association. CC&RS/CBE/ 10/5/2000 ARTICLE XV 15. General Provisions. 15.1. Enforcement of Restrictions. (a) Violations Identified by the Association. If the Board determines that there is a violation of any provision of the Restrictions, or the Architectural Committee determines that an Improvement which is the maintenance responsibility of an Owner is in need of installation, maintenance, repair, restoration or painting, then the Board shall give written notice to the responsible Owner identifying (i) the condition or violation complained of, and (ii) the length of time the Owner has to remedy the violation including, if applicable, the length of time the Owner has to submit plans to the Architectural Committee and the length of time the Owner has to complete the work proposed in the plans submitted to the Architectural Committee. If an Owner does not perform such corrective action as is required by the Board and the Architectural Committee within the allotted time, the Board, after Notice and Hearing, may undertake to remedy such condition or violation complained of, and the cost thereof shall be charged to the Owner as a Special Assessment. Such Special Assessment shall be subject to enforcement and collection by the Board in accordance with the procedures provided for in this Declaration. If the violation involves nonpayment of any type of Assessment, then the Board shall be entitled to collect such delinquent Assessment pursuant to the procedures set forth in Article V. (b) Violations Identified by an Owner. In the event that an Owner alleges that another Owner, his family, guests or tenants, is violating the Restrictions (other than nonpayment of any type of Assessment), the Owner must first submit the matter to the Board pursuant to the Notice and Hearing procedure established in the Bylaws before the complaining Owner may resort to a court of law for relief with respect to the alleged violation. CC&RS/CBE/ 10/5/2000 (c) Legal Proceedings. Failure to comply with any of the terms of the Restrictions by an Owner, his family, guests, employees, invitees or tenants, shall be grounds for relief which may include, without limitation, an action to recover sums due for damages, injunctive relief, foreclosure of any lien, or any combination thereof; provided, however, that the procedures established in Sections 15.1(a) and (b) above must first be followed, if they are applicable. (d) Limitation on Expenditures. The Association shall not incur litigation expenses, including without limitation attorneys' fees, where the Association initiates legal proceedings or is joined as a plaintiff in legal proceedings without the approval of a majority of the voting power of the Association, excluding the voting power of any Owner who would be a defendant in such proceedings. Such approval shall not be necessary if the legal proceedings are initiated to (i) enforce the use restrictions contained in Article VIII hereof, (ii) enforce the architectural control provisions contained in Article IV hereof, or (iii) collect any unpaid assessments levied pursuant to this Declaration. (e) Schedule of Fines. The Board may adopt a schedule of reasonable fines or penalties which, in its reasonable discretion, it may assess against an Owner for the failure of such Owner, or of a resident of or visitor to such Owner's Unit or Residence on a Lot to comply with any provisions of the Restrictions. Such fines or penalties may only be assessed by the Board after Notice and Hearing. (f) No Waiver. Failure to enforce any provision hereof shall not constitute a waiver of the right to enforce that provision, or any other provision hereof. (g) Right to Enforce. The Board, any Owner (not at the time in default hereunder), or Declarant (so long as Declarant is an Owner) shall be entitled to enforce the Restrictions as described in this Article. Each Owner shall have a right of action against the Association for the Association's failure to comply with the Restrictions. Each remedy provided for in this Declaration shall be cumulative and not exclusive or exhaustive. CC&RS/CBE/ 10/5/2000 (h) Attorneys Fees. Any judgment rendered in any action or proceeding pursuant to this Declaration shall include a sum for attorneys' fees in such amount as the court may deem reasonable, in favor of the prevailing party, as well as the amount of any delinquent payment, interest thereon, costs of collection and costs of court. 15.2. Severability. The provisions hereof shall be deemed independent and severable, and a determination of invalidity or partial invalidity or unenforceability of any one provision or portion hereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof. 15.3. Interpretation. The provisions of this Declaration shall be liberally construed to effectuate its purpose of creating a uniform plan for the creation and operation of a residential condominium development and planned development and for maintenance of the Condominium Common Area Module and the Association Property Module and any violation of this Declaration shall be deemed to be a nuisance. The Article and Section headings have been inserted for convenience only, and shall not be considered or referred to in resolving questions of interpretation or construction. As used herein, the singular shall include the plural and the plural the singular; and the masculine, feminine and neuter shall each include the other, unless the context dictates otherwise. 15.4. Mergers or Consolidations. Upon a merger or consolidation of the Association with another association, its properties, rights and obligations may, by operation of law, be transferred to another surviving or consolidated association or, alternatively, the properties, rights and obligations of another association may, by operation of law, be added to the properties, rights and obligations of the Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer and enforce the covenants, conditions and restrictions established by this Declaration governing the Property, together with the covenants and restrictions established upon any other property, as one plan. CC&RS/CBE/ 10/5/2000 '2 15.5. Use of Recreational Facilities. The Board of Directors shall have the right to limit the number of guests that an Owner or such Owner's tenant may permit to use the open parking and recreational facilities on the Condominium Common Area Module and the Association Property Module. The Board shall have the right to set further reasonable restrictions on the time and manner of use of said parking areas and recreational facilities, in accordance with the Rules and Regulations, including, without limitation, Rules and Regulations restricting or prohibiting the use of all or designated portions of the Property recreational facilities by minors, guests of an Owner or his tenants. 15.6. No Public Right or Dedication. Nothing contained in this Declaration shall be deemed to be a gift or dedication of all or any part of the Property to the public, or for any public use. 15.7. Nonliability and Indemnification. (a) General Limitation. Except as specifically provided in the Restrictions or as required by law, no right, power, or responsibility conferred on the Board or the Architectural Committee by this Declaration, the Articles or the Bylaws shall be construed as a duty, obligation or disability charged upon the Board, the Architectural Committee, any member of the Board or of the Architectural Committee, or any other officer, employee or agent of the Association. No such Person shall be liable to any party (other than the Association or a party claiming in the name of the Association) for injuries or damage resulting from such Person's acts or omissions within what such Person reasonably believed to be the scope of his Association duties ("Official Acts"), except to the extent that such injuries or damage result from such Person's willful or malicious misconduct. No such Person shall be liable to the Association (or to any party claiming in the name of the Association) for injuries or damage resulting from such Person's Official Acts, except to the extent that such injuries or damage result from such Person's negligence or willful or malicious misconduct. CC&RS/CBE/ 10/5/2000 '3 (b) Damages Limitation. In accordance with Civil Code Section 1365.7, a volunteer Board member or volunteer Association officer, as defined in subdivision (a) of Civil Code Section 1351, who is a tenant of a separate interest in the common interest development or is an Owner of no more than two (2) separate interests in the common interest development and which manages a common interest development which is exclusively residential, shall not be personally liable in excess of the coverage of insurance specified below to any person who suffers injury, including without limitation bodily injury, emotional distress, wrongful death or property damage or loss as a result of the tortious act or omission of the volunteer officer or Board member if all of the following conditions are satisfied: (1) The Board member or officer is a tenant of a Unit, a Residence on a Lot or an Owner of no more than two (2) Units or Lots; (2) The act or omission was performed within the scope of the Board member's or officer's Association duties; (3) The act or omission was performed in good faith; (4) The act or omission was not willful, wanton or grossly negligent; and (5) The Association maintained and had in effect at the time the act or omission occurred and at the time a claim was made one (1) or more policies of insurance which shall include coverage for (A) general liability of the Association and (B) individual liability of officers and Board members for negligent acts or omissions in that capacity; provided, that both types of coverage are in the amount of at least five hundred thousand dollars ($500,000.00) if the common interest development consists of 100 or fewer separate interests or at least one million dollars ($1,000,000.00) if the common interest development consists of more than 100 separate interests. CC&RS/CBE/ 10/5/2000 A Board member or Association officer who at the time of the act or omission was the Declarant or received direct or indirect compensation as an employee from Declarant or from a financial institution that purchased a Condominium or a Lot at a judicial or nonjudicial foreclosure of a Mortgage is not a volunteer for purposes of this Section 15. 7 (b) . The payment of actual expenses incurred by a Board member or Association officer does not affect the member's or officer's status as a volunteer for purposes of this Section 15. 7 (b). (c) Indemnification. The Association shall pay all expenses incurred by, and satisfy any judgment or fine levied against, any person as a result of any action or threatened action against such person to impose liability on such person for his Official Acts, provided that: (1) The Board determines that such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the Association; (2) In the case of a criminal proceeding, the Board determines that such person had no reasonable cause to believe his conduct was unlawful; and (3) In the case of an action or threatened action by or in the right of the Association, the Board determines that such person acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. Any determination of the Board required under this Section 15. 7 (c) must be approved by a majority vote of a quorum consisting of Directors who are not parties to the action or threatened action giving rise to the indemnification. If the Board fails or refuses to make any such determination, such determination may be made by the vote or written consent of a majority of a quorum of the Members of the Association voting at a meeting of the Association called for such purpose, provided that the person to be indemnified shall not be entitled to vote. Payments made hereunder shall include amounts paid and expenses incurred in settling any such action or threatened action. This Section 15. 7 (c) shall be construed to authorize payments and indemnification to the fullest CC&RS/CBE/ 10/5/2000 extent now or hereafter permitted by applicable law. The entitlement to indemnification hereunder shall inure to the benefit of the estate, executor, administrator, heirs, legatees, or devisees of any person entitled to such indemnification. 15.8. Notices. Except as otherwise provided in this Declaration, notice to be given to an Owner shall be in writing and may be delivered personally to the Owner. Personal delivery of such notice to one or more co-owners of a Condominium or a Lot or to any general partner of a partnership owning a Condominium or a Lot shall be deemed delivery to all co-owners or to the partnership, as the case may be. Personal delivery of such notice to any officer or agent for the service of process on a corporation shall be deemed delivery to the corporation. In lieu of the foregoing, such notice may be delivered by regular United States mail, postage prepaid, addressed to the Owner at the most recent address furnished by such Owner to the Association or, if no such address shall have been furnished, to the street address of such Owner's Unit. Such notice shall be deemed delivered three (3) business days after the time of such mailing, except for notice of a meeting of Members or of the Board of Directors in which case the notice provisions of the Bylaws shall control. Any notice to be given to the Association may be delivered personally to any member of the Board, or sent by United States mail, postage prepaid, addressed to the Association at such address as shall be fixed from time to time and circulated to all Owners. 15.9. Priorities and Inconsistencies. If there are conflicts or inconsistencies between this Declaration and either the Articles of Incorporation or the Bylaws of the Association, the terms and provisions of this Declaration shall prevail. CC&RS/CBE/ 10/5/2000 '° 15.10. Constructive Notice and Acceptance. Every person who owns, occupies or acquires any right, title estate or interest in or to any Condominium or other portion of -the Property does hereby consent and agree, and shall be conclusively deemed to have consented and agreed, to every limitation, restriction, easement, reservation, condition and contained contained herein, whether or not any reference to these restrictions is contained in the instrument by which such person acquired an interest in the Property, or any portion thereof. 15.11. Declarant's Right to Cure Alleged Defects. It is Declarant's intent that the Condominium Common Area Module, the Association Property Module, the Residences on the Lots, the Units, and the Improvements be built in compliance with all applicable building codes and ordinances and that they be of a quality that is consistent with good construction practices for production housing of this type. Nevertheless, due to the complex nature of construction and the subjectivity involved in evaluating such quality, disputes may arise as to whether a defect in construction exists and Declarant's responsibility therefor. It is Declarant's intent to resolve all disputes and claims regarding "Alleged Defects" (as defined below) in any portion of the Condominium Common Area Module, the Association Property Module, the Residences on the Lots, the Units, and the Improvements, amicably, and without the necessity of time consuming and costly litigation. Accordingly, the Association, and all Owners shall be bound by the following claim resolution procedure: (a) Declarant's Right to Cure. If the Association or any Owner or Owners (collectively "Claimant") claim, contend or allege that any portion of the Condominium Common Area Module, the Association Property Module, the Residences on the Lots, the Units, and/or any Improvements are defective or that Declarant or its agents consultants, contractors or subcontractors were negligent in the planning, design, engineering, grading, or construction thereof (collectively, an "Alleged Defect"), Declarant is hereby granted the irrevocable right to inspect, repair, and/or replace such Alleged Defect as set forth herein. CC&RS/CBE/ 10/5/2000 77 (b) Notice to Declarant. In the event that a Claimant discovers any Alleged Defect, Claimant shall, within a reasonable time after discovery, notify Declarant, in writing, at 2171 El Camino Real, Suite 202, Carlsbad, CA 92054 or such other address at which Declarant maintains its principal place of business, of the specific nature of such Alleged Defects ("Notice of Alleged Defect"). (c) Right to Enter, Inspect. Repair, and/or Replace. Within a reasonable time after the receipt by Declarant of a Notice of Alleged Defect or the independent discovery of any Alleged Defect by Declarant, Declarant shall have the irrevocable right upon reasonable notice to Claimant and during normal business hours, to enter onto or into, as applicable, the Condominium Common Area Module, the Association Property Module, the Residences on the Lots, the Units, and/or any Improvements for the purposes of inspecting and, if deemed necessary by Declarant, repairing and/or replacing such Alleged Defect. In conducting such inspection, repairs and/or replacement Declarant shall be entitled to take any actions as it shall deem reasonable and necessary under the circumstances. (d) No Additional Obligations. Nothing set forth in Section 15.11 shall be construed to impose any obligation on Declarant to inspect, repair or replace any items or Alleged Defect for which Declarant is not otherwise obligated under applicable state and federal law or any limited warranty provided by Declarant in connection with the sale of the Units and/or Residences on Lots. Notwithstanding any other provision of this Declaration, this Section 15.11 shall not be amended without the prior written approval of Declarant. 15.12. Arbitration of Alleged Defect Claims. (a) In the event the Claimant, as defined in Section 15.11, and the Declarant are unable to reach an agreement with regard to the repair and/or replacement of an Alleged Defect, the Claimant must agree to submit the matter to arbitration. (b) In accordance with the requirements of the California Department of Real Estate, the arbitration will be conducted in accordance with the following rules and procedures: CC&RS/CBE/ 10/5/2000 78 (1) The Declarant shall advance the fees necessary to initiate the arbitration, with the costs and fees, including ongoing costs and fees to be paid as agreed by the parties. (2) For administration of the arbitration by a neutral and impartial person(s); (3) For the appointment of a neutral and impartial individual(s) to serve as arbitrator(s), with the arbitrator(s) to be appointed within a specified period of time, which in no event shall be more than sixty (60) days from the administrator's receipt of a written request from a party to arbitrate the claim or dispute. In selecting the arbitrator, the provisions of Section 1297.121 of the Code of Civil Procedure shall apply. An arbitrator may be challenged for any of the grounds listed therein; (4) For the venue of the arbitration to be in the county where the subdivision is located unless the parties agree to some other location; (5) For the prompt and timely commencement of the arbitration in accordance with (i) the rules of the arbitration, or if the rules do not specify a date by which the arbitration must commence, then (ii) a date as agreed to by the parties, and if they cannot agree, (iii) a date determined by the arbitrator(s); (6) For the arbitration to be conducted in accordance with the rules and procedures which are reasonable and fair to the parties; (7) For the prompt and timely conclusion of the arbitration; (8) For the arbitrators to be authorized to provide all recognized remedies available in law or equity, other than punitive damages, for any cause of action that is the basis of the arbitration. CC&RS/CBE/ 10/5/2000 (c) In the event the Claimant and the Declarant select an arbitrator who elects to conduct the arbitration in accordance with the rules and procedures that are equivalent in substance to the commercial arbitration rules of the American Arbitration Association, or other similarly recognized regional or statewide entity which regularly provides arbitration services, such as JAMS/ENDISPUTE, the Claimant and Declarant shall be deemed in compliance with the requirements set forth in paragraph (b) of this Section 15.12, provided the agreed rules and procedures for the arbitration contain provisions substantially complying with paragraph (b), subparagraphs (1)-(8), inclusive, of this Section 15.12. (d) Since the Declarant has not submitted a copy of the rules to be applicable to an arbitration subject to the requirements of paragraph (b) herein as part of Declarant's application for a public report, in accordance with the requirements of the California Department of Real Estate, Claimant and the Declarant shall therefore select an arbitrator who elects to conduct the arbitration in accordance with the rules and procedures that are equivalent in substance to the commercial arbitration rules of the American Arbitration Association, or other similarly recognized regional or statewide entity which regularly provides arbitration services, such as JAMS/ENDISPUTE. (e) An arbitration conducted pursuant to this Section 15.12 shall be subject to the reference requirements set forth in Code of Civil Procedure Sections 638 through 645.1, inclusive. (f) In the event of any conflict between the foregoing requirements and the California Civil Code and/or the Code of Civil Procedure, the Civil Code and/or the Code of Civil Procedure shall apply. CC&RS/CBE/ 10/5/2000 °° 15.13. No Representations or Warranties. No representations or warranties of any kind, express or implied, have been given or made by Declarant, or its agents or employees in connection with the Property, or any portion thereof, its physical condition, zoning, compliance with applicable laws, fitness for intended use, or in connection with the subdivision, sale operation, maintenance, cost of maintenance, taxes or regulation thereof as a condominium project and planned development, except as specifically and expressly set forth in this Declaration and except as may be filed by Declarant from time to time with the ORE. ARTICLE XVI 16. Annual Inspection. 16.1. Duty to Inspect. It shall be the duty of the Board to have the Condominium Common Area Module and the Association Property Module inspected at least once each year. 16.2. Purpose of Inspection. The purpose of the inspection shall be to (i) determine whether the Condominium Common Area Module and the Association Property Module are being maintained adequately in accordance with the standards of maintenance established in Section 2.7 hereof, (ii) identify the condition of the Condominium Common Area Module and the Association Property Module and any Improvements thereon including the existence of any hazards or defects, and the need for performing additional maintenance, refurbishment, replacement, or repair, and (iii) recommend preventive actions which may be taken to reduce potential maintenance costs to be incurred in the future. 16.3. Scope of Inspection. All of the Condominium Common Area Module and the Association Property Module and Improvements thereon shall be inspected. 16.4. Experts and Consultants. The Board may employ such experts and consultants as are necessary to perform the inspection and make the report required by this Article. CC&RS/CBE/ 10/5/2000 16.5. Report to Owners. The Board shall have a report of the results of the inspection of the Condominium Common Area Module and the Association Property Module required by this Article prepared. The report shall be furnished to Owners within the time set forth for furnishing Owners with the Budget. The report shall include at least the following: (a) a description of the condition of the Condominium Common Area Module and the Association Property Module, including a list of items inspected, and the status of maintenance, repair and need for replacement of all such items; (b) a description of all maintenance, repair and replacement planned for the ensuing fiscal year included in the Budget; (c) if any maintenance, repair or replacement is to be deferred, the reason for such deferral; (d) a summary of all reports of inspections performed by any expert or consultant employed by the Board to perform inspections ,- (e) a report of the status of compliance with the maintenance, replacement and repair needs set forth in the inspection report for preceding years; and (f) such other matters as the Board deems appropriate. CC&RS/CBE/ 10/5/2000 ARTICLE XVII 17 . Alternative Dispute Resolution. 17.1. Responsibilities of Owner(s); Association. Each Owner of a Condominium, a Lot, and the Association shall comply with the Alternative Dispute Resolution requirements set forth in Civil Code Section 1354 prior to filing of a civil action. In accordance with Civil Code Section 1354 (i) members shall be provided, either at the time the pro forma budget required by Civil Code Section 1365 is distributed or in the manner specified in Section 5016 of the Corporations Code, with a summary of the provisions of Civil Code Section 1354 which includes the following language: "Failure by any member of the Association to comply with the prefiling requirements of Section 1354 of the Civil Code may result in the loss of your rights to sue the Association or another member of the Association regarding enforcement of the governing documents." 17.2. Role of Board of Directors. The Board of Directors of the Association is hereby authorized, but not required, to perform any act reasonably necessary to resolve any civil claim or action through alternative dispute resolution proceedings such as mediation, binding arbitration, or non-binding arbitration proceedings. The Board of Directors of the Association is further hereby authorized, but not required to, perform the following acts: (a) Providing, or in good faith attempting to provide, one hundred twenty (120) days advance notice of the Board of Director's intent to initiate the prosecution of any civil action and of the nature and basis of the claim to every member of the Association and every entity or person who is a prospective party to the civil action, provided that notice can be given (i) more than one hundred twenty (120) days prior to the expiration of any pertinent statute of limitations, and (b) without prejudice to the Association's right to enforce the governing documents, and further provided that no such notice need be given prior to filing of an action in small claims court or an action solely to enforce assessment obligations. CC&RS/CBE/ 10/5/2000 83 (b) Prior to initiating the prosecution of a civil action solely for declaratory relief or injunctive relief to enforce the governing documents, or for declaratory relief or injunctive relief to enforce the governing documents in conjunction with a claim for monetary damages not in excess of five thousand dollars ($5,000.00), to endeavor to submit the matter to alternative dispute resolution in compliance with the provisions of Section 1354 (b) of the Civil Code. (c) Immediately after initiating the prosecution or defense of any civil action, making a reasonable effort, in good faith, to meet and confer with every person who is a party concerning appropriate processes for resolving the civil action, including available alternative dispute resolution proceedings; concerning appropriate processes for avoiding or reducing costs or losses to the parties associated with the action; providing the opportunity to cure any alleged defect in common areas or facilities which is the basis for the action; and providing the scope of discovery, if any, to be conducted prior to the inception of any alternative dispute resolution procedure. (d) Considering diversion of the prosecution or defense of any civil action to alternative dispute resolution proceedings such as mediation, non-binding arbitration, or binding arbitration. (e) Agreeing to participate and participating fully and in good faith in the resolution of any civil action through any alternative dispute resolution proceedings, including but not limited to mediation, non-binding arbitration, and binding arbitration, and paying costs reasonably incurred by the Association on account of those alternative dispute resolution proceedings. In accordance with Section 2792.21 (d) of Title 10, California Code of Regulations, no portion of the governing instruments shall require the Board of Directors to do any of the following: CCScRS/CBE/ 10/5/2000 (a) As a prerequisite to initiating any civil action, to conduct inspections, maintain inspection records, exhaust applicable casualty insurance coverage maintained by the Association, provide an opportunity to cure, meet with members, or obtain the consent of the members. (b) Except in compliance with the provisions of Section 1354 (b) of the Civil Code, to submit civil claims of any kind to binding or non-binding alternative dispute resolution procedures. ARTICLE XVIII 18. Organizational Documentation. 18.1. Role of Declarant. In accordance with Section 2792.23 of Title 10, California Code of Regulations, the Declarant will, not later than ninety (90) days after the first Close of Escrow, deliver a copy of the following documents to the Board of Directors of the Association at the office of the Association or at such other place as the Board of Directors shall prescribe. The obligation to deliver the following documents shall apply to any document obtained by the Declarant no matter when obtained, provided however, such obligation shall terminate upon the earlier of: (1) conveyance of the last Unit or Lot covered by a subdivision public report or (2) three (3) years after the expiration of the most recent public report on the Project. The following documents are: (a) The recorded subdivision map or maps for the Project. (b) The recorded Condominium Plan, if any, and all amendments thereto. (c) The deeds and easements executed by the Declarant conveying the Association Property Module, or other interest to the Association, to the extent applicable. (d) The recorded Declaration of Covenants, Conditions, and Restrictions for the Project, including all amendments and annexations thereto. CC&RS/CBE/ 10/5/2000 85 (e) The Association's filed Articles of Incorporation, if any, and all amendments thereto. (f) The Association's Bylaws and all amendments thereto. (g) All architectural guidelines and all other rules regulating the use of the Owner's interest in the Project or of the Condominium Common Area Module or the Association Property Module which have been promulgated by the Association. (h) The plans approved by the local agency or city where the project is located for the construction or improvement of facilities that the Association is obligated to maintain or repair; provided, however, that the plans need not be as-built plans and that the plans may bear appropriate restrictions on their commercial exploitation or use and may contain appropriate disclaimers regarding their accuracy. (i) All Notice of Completion Certificates issued Condominium Common Area Module and Association Property Module improvements (other than residential structures). (j) Any bond or security device in which the Association is the beneficiary. (k) Any written warranty being transferred to the Association for Condominium Common Area Module and Association Property Module equipment, fixtures, or improvements. (1) Any insurance policy procured for the benefit of the Association, its governing board or the Condominium Common Area Module and/or the Association Property Module. (m) Any lease or contract to which the Association is a party. (n) The membership register, including mailing addresses and telephone numbers, books of account and minutes of meetings of the members, of the Board of Directors and of committees of the Board of Directors. CC&RS/CBE/ 10/5/2000 (0) Any instrument referred to in Business and Professions Code Section 11018.6 (d) but not described above which establishes or defines the common, mutual or reciprocal rights or responsibilities of members of the Association. ARTICLE XIX 19. Causes of Action in Tort. 19.1. Lawsuits Against the Association. In accordance with Civil Code Section 1365.9, any cause of action in tort against any owner of a separate interest arising solely by reason of an ownership interest as tenant in common in the Common Area of a Common Interest Development shall be brought only against the Association and not against the individual owners of the Separate Interests, as defined in Civil Code Section 1351 (1), if both of the insurance requirements in paragraphs (1) and (2) are met: (1) The Association maintained and has in effect for this cause of action one or more policies of insurance which include coverage for general liability of the Association and (2) the coverage described in paragraph (1) is in the following minimum amounts: (i) At least two million dollars ($2,000.000.00) if the Common Interest Development consists of one hundred (100) or fewer Separate Interests; or (ii) At least three million dollars ($3,000,000.00) if the Common Interest Development consists of more than one hundred (100) Separate Interests. CC&RS/CBE/ 10/5/2000 87 ARTICLE XX 20. Documentation to be provided Prospective Purchaser. 20.1. Owner Requirements of Civil Code Section 1368. In accordance with Civil Code Section 1368, the Owner of a Separate Interest, other than an Owner subject to the requirements of Section 11018.6 of the Business and Professions Code, shall, as soon as practicable before transfer of title to the Separate Interest or execution of a real property sales contract therefor, as defined in Civil Code Section 2985, provide the following to the prospective purchaser: (1) a copy of the governing documents of the common interest development. (2) If there is a restriction in the Restrictions limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Civil Code Section 51.3, a statement that the restriction is only enforceable to the extent permitted by Civil Code Section 51.3 and a statement specifying the applicable provision of Civil Code Section 51.3. (3) A copy of the most recent documents distributed pursuant to Civil Code Section 1365. (4) A true statement in writing from an authorized representative of the Association as to the amount of the Association's current regular and special assessments and fees, as well as any assessments levied upon an Owner's interest in the common interest development which are unpaid on the date of the statement. The statement shall also include true information on late charges, interest, and costs of collection which, as of the statement, are or may be made a lien upon the Owner's interest in a common interest development pursuant to Civil Code Section 1367. (5) Any change in the Association's current regular and special assessments and fees which have been approved by the Association's Board of Directors, but have not become due and payable as of the date disclosure is provided pursuant to this Article. CC&RS/CBE/ 10/5/2000 88 20.2 Association Requirements of Civil Code Section 1368. In accordance with Civil Code Section 1368, upon written request, the Association shall, within ten (10) days of the mailing or delivery of the request, provide the Owner of a Separate Interest with a copy of the requested items specified in paragraphs 20.1 (1), (2) , (3), and (4) . The Association may charge a fee for this service, which shall not exceed the Association's reasonable cost to prepare and reproduce the requested items. The Association shall not impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except the Association's actual costs to change its records and that authorized by this Section 20.2. 20.3. Failure to comply with Article XX. Any person or entity who willfully violates this Article XX, in accordance with Civil Code Section 1368, shall be liable to the purchaser of a separate interest which is subject to Civil Code Section 1368, for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred ($500.00). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorney's fees. 20.4 Validity of Transfer. Nothing in this Article XX affects the validity of title to real property transferred in violation of this Article XX. 20.5. Additional Owner Requirements. In addition to this requirements of this section, an Owner transferring title to a separate interest shall comply with applicable requirements of Civil Code Sections 1133 and 1134. CCiRS/CBE/ 10/5/2000 89 ARTICLE XXI 21. Civil Code Section 1375. 21.1. Review of Civil Code Section 1375. Before the Association commences an action for damages against the Declarant of the project, based upon a claim for defects in the design or construction of the Project, the Board of Directors shall review, with counsel, the procedure set forth in Civil Code Section 1375. ARTICLE XXII 22. Managing Agent. 22.1. Written Disclosures of Prospective Managing Agent. In accordance with Civil Code Section 1363.1, a prospective management agent of a common interest development shall provide a written statement to the Board of Directors of the Association of a common interest development as soon as practicable, but in no event more than ninety (90) days, before entering into a management agreement which shall contain all of the following information concerning the managing agent: (1) The names and business addresses of the owners or general partners of the managing agent. If the managing agent is a corporation, the written statement shall include the names and business addresses of the directors and officers and shareholders holding greater than ten percent (10%) of the shares of the corporation. (2) Whether or not any relevant licenses such as architectural design, construction, engineering, real estate, or accounting have been issued by the State of California and are currently held by the persons specified in paragraph (1). If, a license is currently held by any of those persons, the statement shall contain the following information: (A) What license is held. (B) The status of that license. CC&RS/CBE/ 10/5/2000 90 (C) The name of the licensee appearing on that license. (3) Whether or not any relevant professional certifications or designations such as architectural design, construction, engineering, real property management, or accounting are currently held by any of the persons specified in paragraph (1), including, but not limited to, certified property manager or professional association manager. If any certification or designation is held, the statement shall include the following information; (A) What the certification or designation is and what entity issued it. (B) The status of that certification or designation. (C) The names in which the certification or designation is held. 22.2. Definition of "managing agent". As used in Civil Code Section 1363.1, a "managing agent" is a person or entity, who for compensation or, in expectation of compensation, exercises control over the assets of a common interest development. A "managing agent" does not include any of the following: (1) A full-time employee of the Association. (2) Any regulated financial institution operating within the normal course of its regulated business. CC&RS/CBE/ 10/5/2000 22.3. Handling of Association Funds by Managing Agent. A managing agent of a common interest development who accepts or receives funds belonging to the Association shall deposit all such funds that are not placed into an escrow account with a bank, savings association, or credit union or into an account under the control of the Association, into a trust fund account maintained by the managing agent in a bank, savings association, or credit union in California. All funds deposited by the managing agent in the trust fund account shall be kept in California in a financial institution, as defined in Section 31041 of the Financial Code which is issued by the federal government, and shall be maintained there until disbursed in accordance with written instructions from the Association entitled to the funds. (a) At the written request of the Board of Directors of the Association, the funds the managing agent accepts or receives on behalf of the Association shall be deposited into an interest- bearing account in a bank, savings association, or credit union in California, provided all of the following requirements are met: (1) The account is in the name of the managing agent as trustee for the Association or in the name of the Association. (2) All of the funds in the account are covered by insurance provided by an agency of the federal government. (3) The funds in the account are kept separate, distinct, and apart from the funds belonging to the managing agent or to any other person or entity for whom the managing agent holds funds in trust except that the funds of various Associations may be commingled as pursuant to paragraph (c) hereafter. (4) The managing agent discloses to the Board of Directors of the Association the nature of the account, how interest will be calculated and paid, whether service charges will be paid to the depository and by whom, and any notice requirements or penalties for withdrawal of funds from the account. (5) No interest earned on funds in the account shall inure directly or indirectly to the benefit of the managing agent or his or her employees. CC&RS/CBE/ 10/5/2000 (b) The managing agent shall maintain a separate record of the receipt and disposition of all funds described in this section, including any interest earned on the funds. (c) The managing agent shall not commingle the funds of the Association with his or her own money or with the money of others that he or she receives or accepts, unless all of the following requirements are met: (1) The managing agent commingled the funds of various Associations on or before February 26, 1990, and has obtained a written agreement with the Board of Directors of each Association that he or she will maintain a fidelity and surety bond in an amount that provides adequate protection to the Associations as agreed upon by the managing agent and the Board of Directors of each Association. (2) The managing agent discloses in the written agreement whether he or she is deriving benefits from the commingled account or the bank, credit union, or savings institution where the moneys will be on deposit. (3) The written agreement provided for pursuant to this Article includes, but is not limited to, the name and address of the bonding companies, the amounts of the bonds, and the expiration dates of the bonds. (4) If there are any changes in the bond coverage or the companies providing the coverage, the managing agent discloses the fact to the Board of Directors of each affected Association as soon as practical, but in no event more than ten (10) days after the change. (5) The bonds assure the protection of the Association and provide the Association at least ten (10) days notice prior to cancellation. (6) Completed payments on behalf of the Association are deposited within twenty-four (24) hours or the next business day and do not remain commingled for more than ten (10) calendar days. CC&RS/CBE/ 10/5/2000 (d) The prevailing party in an action to enforce this Article shall be entitled to recover reasonable legal fees and court costs. (e) As used in this Article, a "managing agent" is a person or entity, who for compensation or, in expectation of compensation, exercises control over the assets of the Association. However, a "managing agent" does not include a full-time employees of the Association or a regulated financial institution operating within the normal course of business, or an attorney at law acting within the scope of his or her license. (f) As used in this Article, "completed payment" means funds received which clearly identify the account to which the funds are to be credited. ARTICLE XXIII 23. Requirements of the City of Carlsbad. 23.1. Conditions of Approval of Carlsbad Beach Estates. In accordance with the conditions of approval of the Project the City of Carlsbad ("City") has required that the following language be included in this Declaration. For the purposes of this Article 23, Condominium Common Area Module and Association Property Module shall be referred to as "Common Area". 23.2. General Enforcement by the City. The City shall have the right, but not the obligation, to enforce those Protective Covenants set forth in this Declaration in favor of, or in which the City has an interest. 23.3. Notice and Amendment. A copy of any proposed amendment shall be provided to the City in advance. If the proposed amendment affects the City, City shall have the right to disapprove. A copy of the final approved amendment shall be transmitted to City within 30 days for the official record. CCScRS/CBE/ 10/5/2000 23.4. Failure of Association to Maintain Common Area Lots and Easements. In the event that the Association fails to maintain the "Common Area Lots and/or the Association Easements" as provided in Article III, Section 3.1, the City shall have the right, but not the duty, to perform the necessary maintenance. If the City elects to perform such maintenance, the City shall give written notice to the Association, with a copy thereof to the Owners in the Project, setting forth with particularity the maintenance the City finds to be required and requesting the same be carried out by the Association by the Association within a period of thirty (30) days from the giving of such notice. In the event that the Association fails to carry out such maintenance of the Common Area Lots and/or Association/s easements within the period specified by the City's notice, the City shall be entitled to cause such work to be completed and shall be entitled to reimbursement with respect thereto from the Owners as provided herein. 23.5. Special Assessments Levied by the City. In the event the City has performed the necessary maintenance to either the Common Area Lots and/or Association's Easements, the City shall submit a written invoice to the Association for all costs incurred by the City to perform such maintenance of the Common Area Lots or Association Easements. The City shall provide a copy of such invoice to each Owner in the Project, together with a statement that if the Association fails to pay such invoice in full within the time specified, the City will pursue collection against the Owners in the Project pursuant to the provisions of this Section. Said invoice shall be due and payable by the Association within twenty (20) days of receipt by the Association. If the Association shall fail to pay such invoice in full within the period specified, payment shall be deemed delinquent and shall be subject to a late charge in an amount equal to six percent (6%) of the amount of the invoice. Thereafter the City may pursue collection from the Association by means of any remedies available at law or in equity. Without limiting the generality of the foregoing, in addition to all other rights and remedies available to the City, the CCS.RS/CBE/ 10/5/2000 City may levy a special assessment against the Owners of each Lot in the Project for an equal prorata shall of the invoice, plus the late charge. Such special assessment shall constitute a constitute a charge on the land and shall be a continuing lien upon each Lot against which the special assessment is levied. Each Owner in the Project hereby vests the City with the right and power to levy such special assessment, to impose a lien upon their respective Lot and to bring all legal actions and/or to pursue lien foreclosure procedures against any Owner and his/her respective Lot for purposes of collecting such special assessment in accordance with the procedures set forth in Article V, Section 5.7 of this Declaration. 23.6. Sight Distance Corridor Encroachment. No structure, fence, wall, tree, shrub, sign, or other object over 30 inches above the street level may be placed or permitted to encroach within the area identified as a sight distance corridor in accordance with City Standard Public Street-Design Criteria, Section 8.B.3. The underlying property owner shall maintain this condition. Due to project constraints, the installation of a fire hydrant will be permitted in this area only. 23.7. National Pollutant Discharge Elimination System (NPDES) permit. The Declarant hereby notifies prospective owners and tenants of the following: A. All owners and tenants shall coordinate efforts to establish or work with established disposal programs to remove and properly dispose of toxic and hazardous waste disposal products. B. Toxic chemicals or hydrocarbons such as gasoline, motor oil, antifreeze, solvents, paints, paint thinners, wood preservatives, and other such fluids shall not be discharged into any street, public or private, or into storm drain or storm water conveyance systems. Use and disposal of pesticides, fungicides, herbicides, insecticides, fertilizers, and other such chemical treatments shall meet Federal, State, County and City requirements as prescribed in their respective containers. CC&RS/CBE/ 10/5/2000 C. Best Management Practices shall be used to eliminate or reduce surface pollutants when planning any changes to the landscaping and surface improvements. 23.8 Prohibition on Parking. The Association shall prohibit, at all times, parking on the private drive, as shown and described on the recorded Condominium Plan as the Condominium Area Module, which serves the project. 23.9. Landscape Maintenance Responsibilities. The Owners of the Condominiums, subject to this Declaration, shall maintain the landscaped portion of the Condominium Common Area Module. The Owners of Lots and the Owners of Condominiums, subject to this Declaration, shall maintain the landscaped portion of the Association Property Module. The Owners of the Lots subject to this Declaration, shall be responsible for the maintenance of the landscaping on each Lot. 23.10. Balconies, trellises and decks. Each Owner of a Condominium shall be responsible for the maintenance of any balcony, trellis, and/or deck which is part of the Residence. Each Owner of a Lot shall be responsible for the maintenance of any balcony, trellis, and/or deck which is part of the Residence. 23.11. Prohibition on additional decks, balconies or patios. No decks, balconies, or patios other than those shown on the approved plans are allowed in this project without the prior approval of a PUD/CP Amendment. 23.12. Prohibition on room additions. No room additions are allowed in this project without the prior approval of a PUD/CP Amendment. 23.13. Prohibition on Replacement or Remodeling of Structure. No replacement or remodeling of the existing single-family structure (currently addressed as 265 Chinquapin Avenue) being retained on the project site are allowed without the prior approval of a PUD/CP Amendment, and any new or remodeled structure must comply with all applicable PUD/CP standards in place at the time of such replacement or remodeling. CC&RS/CBE/ 10/5/2000 97 ARTICLE XXIV 24. Cost Center. 24.1. Definition of Terms. The term "cost center" for the purpose of this Article XXIV refers to common facilities or services provided by the Association which directly confer a special benefit on some but not all the units within a common interest development, and which-are to be wholly or primarily financed through the use of regular assessments on the benefited units. The term "cost center budget" for the purpose of this Article XXIV refers to the elements of an association budget which are associated with cost center facilities and services to be assessed against benefited units. The term "based budget" for the purpose of this Article XXIV refers to the elements of the Association budget which itemize the cost components to be shared by all the members of the Association. 24.2. Authorization. The Association is hereby authorized to establish a cost center for collection of refuse from the Condominiums and for the maintenance of the asphalt in the front of the Condominiums. In addition, the Association is hereby authorized to assess the costs of the common facilities or services on a special area or district (i.e. "cost center") and include the costs as a part of the annual assessment to be paid by the Condominiums in the Project. CC&RS/CBE/ 10/5/2000 24.3. Amendment of Provisions. The Association may amend this Article XXIV with the approval of the Owners of the Condominiums in the Project, through the use of a cost center budget, and with the approval of the Owners of Lots in the Project where required by law. 24.4. Prohibition on Commingling. Based on acceptable accounting practices, commingling of cost center funds with the general fund of the Association is hereby prohibited, except where specifically authorized by law. 24.5. Prohibition on use of Cost Center funds. The Association is hereby prohibited from the use of cost center funds for "general association purposes". In the event the Association uses cost center funds for any other purpose than as provided in this Article XXIV, the Association shall provide each of the Owners in the project with documentation and disclosure of such uses. The Association shall, within a reasonable time period, replenish cost center funds used for any other purpose that as provided in this Article XXIV. 24.6. Accounting/Annual Review and Disclosure. The Association shall conduct a separate accounting for the funds that are collected and expended on behalf of the cost center. The Association shall also conduct an annual review and disclosure of the cost center reserves and reserve study. CC&RS/CBE/ 10/5/2000 ARTICLE XXV 25. Maintenance of Condominiums. 25.1. Common Roof and Common Foundation Systems. Each of the Condominiums in Carlsbad Beach Estates have "common roof systems" and "common foundation systems" (hereafter referred to as a "Common Structure" and collectively referred to as "Common Structures"). A common roof is a roof which is built as a common part of the original construction of two Condominiums, if the portion of the roof covering each Condominium is joined at the boundaries of the two Condominiums. A common foundation is a foundation which is built as a common part of the original construction of the Condominiums, if the portion of the foundation underlying each Condominium is joined at the boundaries of the two Condominiums. 25.2. Application of General Rules. To the extent not inconsistent with the provisions of this Section 25, the general rules of law shall apply regarding Common Structures and liability for damage due to negligence or willful acts or omissions. 25.3. Repair, Maintenance and Replacement of Common Structures. Each Owner shall have the right to effect the repair, maintenance, or replacement of the portions of the Common Structures affecting his/her Condominium. The cost of reasonable repair, maintenance and replacement of the Common Structures shall be shared by the Owners who have the use of such Common Structures in accordance with Section 25.4 herein, provided, however, each Owner shall be solely responsible to maintain, repair, and replace.- (1) the interior surfaces of the Common Structures within such Owners Condominium, (2) any plumbing or other utilities which service only the Owner's Condominium regardless of whether the plumbing or utilities are located within Common Structures, (3) any damage caused to the Common Structures by such Owner or the occupants, guests or invitees of his/her Condominium, (4) any damage to Common Structures which clearly affect only one (1) Condominium as determined by a licensed roofer or contractor, as appropriate for repair or replacement of the roof, foundation, or wall ("Licensed Contractor"), and (5) any damage to any portion of any improvement which was added to the Common Structure CC&RS/CBE/ 10/5/2000 100 as originally constructed by the Declarant (e.g. room and/or patio additions which increase the total square footage of either the roof and/or the foundation, referred to as "Additions"). If the cost for repair, maintenance or replacements is to be shared by both Owners of Condominiums, in accordance with Section 25.4 herein, the Owner initiating the repair, maintenance, or replacement of a Common Structure shall: (1) provide at least fifteen (15) days written notice to the other Owner of such intended maintenance, repair, and replacement, which shall include the estimated cost thereof as set forth in a bid for the work and (2) provide the other Owner with an opportunity to obtain separate bids for the work to be completed. Unless the Owners of both Condominiums agree, the Licensed Contractor with the lowest bind shall be used for the work. A Common Structure shall be repair, rather than replaced, if determined by the Licensed Contractor, as the most feasible alternative. In the event of an emergency situation, an Owner may effect the repair and/or maintenance (but not a replacement) of a Common Structure without the notice and bid requirements set forth in this Section 25.3. For purposes of this Section 25.3, an "emergency situation" is defined as a situation when a repair or maintenance is immediately necessary to protect either Condominium from immediate further damage. 25.4. Allocation of Costs. Except as specifically otherwise set forth herein, the cost of maintenance, repair, replacement or reconstruction of a Common Structure shall be allocated as follows: CC&RS/CBE/ 10/5/2000 " 101 (1) Entire Common Structures. In the event the entire Common Structure needs to be maintained, repaired, replaced or reconstructed, the cost thereof shall be allocated between both Owners of the attached Condominiums on the basis of the ratio of the square footage of the portion of the Common Structure (i.e. roof or foundation) which covers a Condominium to the total square footage of the aggregate of the Common Structure covering both Condominiums. For purposes of allocating costs for maintenance, repair, replacement or reconstruction of a Common Structure, the total square footage of the aggregate of the Common Structure shall exclude the square footage of any Additions. For example, the common roof system and common foundation system shall include only the original square footage of the roof and foundation, as each was originally constructed by the Declarant. (2) Portions of Common Structure. In the event a portion of the Common Structure needs to be maintained, repaired, replaced or reconstructed, the cost thereof shall be allocated between both Owners of the attached Condominiums upon the basis of the ratio of the square footage of the portion of the Common Structure covering both Condominiums which needs to be maintained, repaired, replaced or reconstructed. 25.5. Change to Exteriors. (1) Painting. An Owner shall not repaint those portions of the exterior of his/her Condominium which are visible from a public street to other than the original color unless: (i) the ARC approves the change in color and (ii) all portions of the exterior of the attached Condominiums which are visible from a public street are repainted at the same time and in the same color. An Owner shall be required to repaint only if the exterior of his/ her Condominium is in disrepair and painting is necessary to maintain his/her Condominium in good condition. Each Owner shall bear the costs of repainting his/her respective Condominium. CC&RS/CBE/ 10/5/2000 (2) Replacement of Roof. An Owner shall not replace any portion of the roof of his/her Condominium with other than the original roof materials unless: (i) the ARC approves the change in roof material and (ii) the entire common roof system is replaced at the same time and with the same materials. An Owner shall not be required to replace the common roof system unless repairing the roof is not a feasible alternative as determined by a Licensed Contractor. The costs of replacing the common roof system shall be allocated in accordance with Section 25.4 herein. 25.6. Damage and Destruction. (1) Common Structures. If a Common Structure is destroyed or damaged by fire or other casualty, the Owners who have used the Common Structure shall contribute to the costs to restore the Common Structure in accordance with Section 25.4 herein; subject to, however, the foregoing does not prevent an Owner from requiring a larger contribution from the other Owner pursuant to a rule of law which requires liability for negligent or willful acts or omissions as provided in this Article XXV. (2) Reconstruction of Condominium(s). In the event one or both Condominium(s) is/are damaged or destroyed, such Condominium(s) shall be reconstructed, and the Owner(s) of such Condominium(s) shall cause the reconstruction to be performed diligently from the commencement thereof, and the reconstruction shall be completed within a reasonable time. In the event one of the attached Condominiums is destroyed and reconstruction of such Condominium does not commence within sixty (60) days ("Destroyed Condominium"), the Owner of such Condominium shall immediately undertake the following steps to: (i) abate any unsightly or dangerous conditions; (ii) restore the Condominium to a clean and attractive condition, and (iii) pay for the restoration of the remaining portions of the Common Structures to ensure that they are functional and in conformance with the architectural standards and guidelines for this Project (in which event, such structures shall no longer be deemed "Common Structures"). In such event, subject to the right of the Owner of the Destroyed Condominium to rebuild at a later date as described in the following paragraph, the ARC shall grant a variance to the Owner of the remaining Condominium to permit a detached Condominium with an independent roof system and foundation, provided the roof of the remaining CC&RS/CBE/ 10/5/2000 103 Condominium is modified to prevent water intrusion, maintain support and the foundation is "saw-cut" (if necessary). If, at a later date, the Destroyed Condominium is to be rebuilt, the Owner reconstructing the Destroyed Condominium may, subject to the prior approval of the ARC, reattach the roof on his/her Condominium to the roof of the adjoining Condominium, provided the Owner makes all necessary modifications to the roof of the adjoining Condominium to prevent any damage to such Condominium and the reconstruction is in accordance with all applicable local and governmental codes and regulations. Upon reattachment, the roof shall be deemed a Common Structure. Any restoration and/or repair of any damage to portions of a Condominium (other than Common Structures as provided herein) shall be made by and at the individual expense of the Owner of such Condominium, provided, however, the foregoing does not prevent an Owner from requiring contribution from the other Owner of the attached Condominium pursuant to any rule of law regarding liability for negligent or willful acts or omissions as provided herein. 25.7. Weatherproofing. An Owner, who by his or her act, causes a Common Structure to be exposed to the elements shall bear the costs of furnishing the necessary protection against such elements. 25.8. Encroachment Easements. The Declarant hereby reserves on behalf of the Owner of a Condominium sharing Common Structures, an easement over, under, upon and across the adjoining Condominium for the purpose of accommodating any encroachment due to engineering errors, errors in original construction, settlement, or shifting of any building, or for any other cause. There shall be valid easements for the maintenance of such encroachments as long as they shall exist. The rights and obligations of the Owners shall not be altered in any way by such encroachments, settlements or shifting; provided, however, an easement is not reserved hereby for any encroachment which may occur due to the willful misconduct of the other Owner. Each Owner of Common Structures agrees that in the event any portion of a Condominium sharing Common Structures is partially or totally destroyed and then repaired or rebuilt, unintentional minor encroachments affecting the adjoining Condominium shall be permitted. There shall be a valid easement for the maintenance of such encroachments so long as they shall exist. CC&RS/CBE/ 10/5/2000 104 25.9. Maintenance. Repair and Reconstruction Easements. The Declarant hereby reserves to the Owner of each Condominium sharing Common Structures, easements, appurtenant to each such Condominium, over, under, upon and across the adjoining Condominium for purposes of providing: (1) access, only to the extent necessary, for maintenance, repair, and reconstruction of the Owners Condominium, including Common Structure; and (2) support for the Common Structures. 25.10. Roof Easement; Drainage. The Declarant reserves to the Owner of each Condominium sharing a common roof system, an easement appurtenant to each Condominium, over the portion of the roof of the adjoining Condominium for the flow of water across and along such roof area. The Declarant also reserves to the Owner of each Condominium sharing a common roof system, an easement, appurtenant to each such Condominium, over, upon, and across the adjoining Condominium for roof overhangs, if any, and for flow of water resulting from modifications of a common roof system to an independent roof system (i.e. one of the attached Condominiums is not reconstructed and the portion of the roof is modified as provided herein). This easement shall become effective only when one of the attached Condominiums is destroyed, the Condominium is not to be reconstructed and the ARC grants a variance to the Owner of the remaining Condominium to allow for a detached Condominium with an independent roof and foundation system. This easement shall cease upon the reconstruction of the Destroyed Condominium. Each Owner shall, at all times, keep and maintain any roof drainage systems serving his or her Condominium, including but not limited to downspouts and rain gutters, in good condition and free from all debris. No Owner may remove or modify such drainage in such manner which increases the flow of water to the adjoining attached Condominium. CC&RS/CBE/ 10/5/2000 105 25.11. Owner's Insurance. Each Owner shall procure and maintain a "special form fire hazard" insurance policy with an endorsement for "replacement cost" and with a reasonable deductible. A certificate of insurance evidencing the insurance policy with the endorsements required by this Section shall be delivered by each Owner to the Owner of the adjoining Condominium on an annual basis. Each Owner shall provide to the Owner of the adjoining Condominium written notice of cancellation or reduction of coverage amount of the insurance policy required by this Section 25.11, not less than thirty (30) days prior to the effective date of cancellation or reduction of coverage amount of the policy. •• > 25.12. Dispute Resolution. In the event of dispute between Owners of attached Condominiums arising in connection wit the Common Structure or the provisions of this Declaration, each Owner shall have the right to enforce, by any proceeding at law or in equity, against the Owner of the adjoining attached Condominium, all covenants imposed by this Declaration. In connection with any such action, each Owner shall be entitled to recover such Owner's attorney's fees and costs as so ordered by the court. Prior to commencement of any such action, written notice of the violation shall be given to the defaulting Owner. Failure of any Owner to enforce any covenant contained herein shall in no event be deemed a waiver of the right to do so at any time thereafter. Notwithstanding the foregoing, the Owners shall consider, as a forum for resolving their dispute, the use of such alternative dispute resolution procedures, such as arbitration or mediation. If the Owners are unable to agree on such alternative forum, the Owners shall pursue their legal or equitable remedies through the court system. CC&RS/CBE/ 10/5/2000 25.13. Mechanic's Liens. An Owner of an attached Condominium shall not permit to be placed against the adjoining Owner's Condominium, any mechanics', materialmens', contractors', or subcontractors' liens arising out of the work of any maintenance, repair, replacement, restoration of Common Structures, or any other claim or demand. Each Owner shall pay or cause to be paid all said liens, claims or demands before any action is brought to enforce the same against the Owner of the adjoining Condominium. Each Owner agrees to indemnify, protect, defend and hold the other Owner and the Owner's Condominium free and harmless from all liability for any and all such liens, claims, and demands together with reasonable attorneys' fees and all reasonably incurred costs and expenses. This Declaration is dated October 5, 2000 for identification purposes. CARLSBAD BEACH GROUP INVESTORS, L.L.C., A CALIFORNIA LIMITED LIABILITY COMPANY BY: ITS MANAGING MEMBER MERIT GROUP INC., A CALIFORNIA CORPORATION BY: ITS PRESIDENT H. DAVID BUCKMASTER By:. H. DAVID BUCKMASTER PRESIDENT By:. H. DAVID By:.__ PATRICIA A. BUCKMASTER OWNER Declarant CC&RS/CBE/ 10/5/2000 107 STATE OF CALIFORNIA ) ) S3 . COUNTY OF On _ Q cJCo-W-o^ Xj _ / 2000, before me, the undersigned, a Notary Public in and for said State, personally appeared \^ . vSu^j^ji ,^Ajo<J^r^-»-^X-<-x^ ^ - - ----- """"-• and personally known to me (or proved to me on the basis of satisfactory evidence) to be the person C#1 whose name (-sO (is) (are) subscribed to the within instrument and acknowledged to me that (he) (she) (they) executed the same in (his) (her-) (their) authorized capacity (i-es") , and that by (his) (hei) (their-)- signature^) on the instrument the personCsT, or the entity upon behalf of which the person (erf acted, executed the instrument. ^nmfaAmnfkariakit+nf DEMISE SCIARRA k Commission #1190300 \, WITNESS my hand and official seal. $B?Slgi9 Notary PubGc- California I Son Diego Count/ r My Comni Espies AugU.20D2 f . *• Notary Public in and for said State STATE OF CALIFORNIA ) ) ss. COUNTY OF JlX^Vxju^ ) 6 On OcAVv^ov_ W , 2000, before me, the undersigned, a Notary Public in and for said State, personally appeared \?CJXA.I-^.<, (X • ^jL/J^^vN-v^aXX^ "~ •- and, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person (-si whose name (-S-) (is) (are)- subscribed to the within instrument and acknowledged to me that (he-) (she) (tiiey) executed the same in (hisj (her) (tkeanr) authorized capacity (irca)-, and that by (hisJL (her) (fehoi-r) signature (-3-) on the instrument the person^) , or the entity upon behalf of which the person (s-)- acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for said State lift ffti cciRs/CBE/ , n 1 .^^ DENISE SCIARRA 10/5/2000 108 I ^^\ Commission#1190300 Notary PubDc- California f San Diego County MyComm.ExptesAugU.2CC2 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated July 6r 2000 and recorded on ^-/ T-QQ as File No. 2000 " 031*5260 in the the Official Records (the "Deed of Trust"), which Deed of Trust is by and between H. OAVin BllEKMASTFR and PATRTCTA A. BUCKMASTER. as Trustor, FTHFI TTY NATTDNAI TTTI F as Trustee, n K'FIVT MnpTEflKF rriMPflNY Hha NDVFI i F as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Carlsbad Beach Estates ("Declaration") and to all maintenance and other easements to be conveyed to the Association in accordance with the Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Property by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Declaration any amendments thereto, which shall remain in full force and effect. OLD KE« MORTGAGE-SflMPANY "dba" NOVELLE M1chigan Its By: It's CC5.RS/C3E/ S/15/2000 STATE OF CALIFORNIA COUNTY On undersigned, | a Notary Public? in personally appeared f/Oi ( 1 l£tm P- , 2000, before me, the d for said County and State, el amid frarV M personally known to me (or proved to me on the basis of satisfactory evidence) to be the person (s) whose name (s) subscribed to Che within instrument and acknowledged to me that he/oho/j^jaeY) executed the same in hi.s/her/-^Hez^ authorized capacity (ies) , and that by hio/hor^g&eX^ signature (s) on the instrument the person (s) , or the enTTty upon behalf of which the person (s) acted, executed the instrument. WITNESS my hand and official seal. 7 MARIA SARDINACOMM. #1180801 SAN OtEQO COUNTY OMy CommMan ExptrM 7APFUL 23,2002 \ CC1RS/CBE/ fi/15/ZOOO 104 P.03 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and. under that certain Deed of Trust dated May 1 .? } iggg and recorded on Mav 21 r 1999 _ as File No. l q q q - n 3 4 q i 5 ? _ in the the Official Records (the "Deed of Trust") , which Deed of Trust is by and between MERTT GROUP, TNC. a California Corporation _ as Xrustor, F •? r g •f* Am^rjcstn TitTfl Insur^ncg C o m p 3. n '/ . 3. C^TIfornl^ Corn as Trustee, Billy .7oe Burlce _ as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Carlsbad Beach Estates ("Declaration") and to all maintenance and other easements to be conveyed to the Association in accordance with the Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Property by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Declaration any amendments thereto, which shall remain in full force and effect. Dated • t^t / <3<=s , 2000. BILLY JOE BURKE By: Its: CCS.RS/C3E/ 6/15/2030 6- ] la- STATE OF CALIFORNIA ) COUNTY On this \<p^ day of undersigned, a Notarv_ Publi personally appeared Q / //\/ , 2000, before me, the and for said County and State, pcroonally kuuwli L.J m» (or proved to me on the basis of satisfactory evidence) to be the person (^5 whose name (si subscribed to the within instrument and acknowledged to me that (jog/sha/ttiey-executed the same in (Hijg/bar/their authorized capacity(i»») , and that by <JIIJ/li«.L/lheit signature^ on the instrument the person (^) , or the entity upon behalf of which the person^) acted, executed the instrument. SS my hand and official seal. MARY H. MAGGAY Comm./1241642 NOTARY PUJllC-atlTOHN SM Ditgo County "" My Comm. Expiies Dee. 10,2003 *t 0 CC&HS/C3S/ 6/is/:oca JUN-15-2Q0Q QQ:30 104 619 5311120 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated j^nnary ?^ ?pnp and recorded on February 2. 2000 as File No. __2000-0055840 in the the Official Records (the "Deed of Trust"), which Deed of Trust is by and between CARI.SRAR RFAT.H RROLIP TNVFSTHRS, LLC a California JJmitec as Trustor, LIFE BANK Liabi 11 ty as Trustee, i TFF RANK as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Carlsbad Beach Estates ("Declaration") and to all maintenance and other easements to be conveyed to the Association in accordance with the Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Property by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Declaration any amendments thereto, which shall remain in full force and effect. Dated: V - O/ — 2000. LIFEBAN^" • By:_Z_ lts= * I S/1S/2G30 103 6- 1 5-r KUC1 STATE OF CALIFORNIA ) COUNTY OF On this day of W 2000, before me, the undersigned, a Notary Public in and for said County and State, personally appeared T. M ichd^l W/mum *- TTdlcL CO. Crgj m." proved to on the baoia o€-personally known to me satisf actory evidence^ to be the person (s) whose name(s) subscribed to the within instrument and acknowledged to me that ho/cho;^h^y) executed the same in fcig/hggT^heljr authorized capacity (ies) , and that by h-ia/her^hei^ signature (s) on the instrument the person (s), or the entity upon behalf of which the per son (s) acted, executed the instrument. WITNESS my hand and official seal. - 0 fcvLH 1EUZA3E"H A. SEYE3 Commission * 1170726 Notary Puolic - California Orange CountyOrange County f My Comm. Expires Jan 24,2002 f CC5JIS/C3E/ 6/15/2000 JUN-15-2000 00=30 104 619 5311120 P.0" SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated .lamjary ?7^?nnn and recorded on JLebruarv 2, 2000 as File No. ,2000-0055844 in the the Official Records (the "Deed of Trust"), which Deed of Trust is by and between CARLSBAD RFACH GROUP INVESTORS. LLC a Calif. Limited as Trustor, ASSFT MANAGERS TNC. a Ha "M form'a. Corpora 11 on Liability C as Trustee, p $ Q MORTGAGE1 FUND ni L, P^ * California I Imitpd Partner; as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Carlsbad Beach Estates ("Declaration") and to all maintenance and other easements to be conveyed to the Association in accordance with the Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Property by foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject: to the provisions of the Declaration any amendments thereto, which shall remain in full force and effect. Dated: /LOW , 2000. Q & A MORTGAGE FUNO m, L.P a California Limited Partnership its: I-Vs General CCS«RS;CBE/ , -.., S/1S/2COO 1Uj STATE OF CALIFORNIA ) COUNTY OF On this day of 2000, before me, the_ ___^ undersigned, a Notary Public in*--4nd for said County and State, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person^ whose name-fs) \ij subscribed to the within instrument and acknowledged to me that he^sBg^t-feey executed the same in his X5s£$t heir authorized capacity (ies) , and that by h4&^er2!Xhoir signature (-&}- on the instrument the persan-f») / or the entity upon behalf of which the person-fs-) acted, executed the instrument. WITNESS nd /and official seal.j ... oRIERI K ilfl/74fl t CARLAINDRIE5J1 Commission # Notary Public-Cafifomia | San Diego County f My Comm. Expires Jun 7,2002 f CC1HS/C3E/ 6/15/2000 JUN-15-2000 0Q: 30 104 619 5311120 P.07