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HomeMy WebLinkAboutCT 97-08; Marvista at La Costa; Tentative Map (CT) (6)Recording requested by: FIRST AMERICAN TITLE INSURANCE COMPANY 411 Ivy Street Post Office Box 808 San Diego, CA 92112 When recorded return to: FREDERICK C. MOORE, ESQ. Gallagher & Moore 2 Park1 Plaza Suite 30,0 Irvine, CA 92614 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR MARVISTA A Residential Planned Development 50051.003-2433.FCM 100797 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR MARVISTA THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRIC- TIONS, AND RESERVATION OF EASEMENTS is made this day of , 1997, by LA COSTA 21, LLC, a California limited liability company ("Declarant"). WITNESSETH: A. Declarant is the owner of that certain real property located in the City of Carlsbad, County of San Diego, State of California, more particularly described as follows: Lots 1 through 17, inclusive, of Marvista at La Costa 2, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. 97-08, filed in the Office of the County Recorder of San Diego County on , 1997; and Lots 1 through 4, inclusive, of Marvista at La Costa 1, in the City of Carlsbad, County of San Diego, State of California, according to Parcel Map thereof No. 97-05, filed in the Office of the County Recorder of San Diego County on , 1997 (hereinafter referred to as the "Lots"). B. Declarant is also the owner of that certain real property located in the City of Carlsbad, County of San Diego, State of California, more particularly described as follows: Lots A, B, C and D of , in the City of Carlsbad, County of San Diego, State of Cali- fornia, according to Map thereof No. 97-08, filed in the Office of the County Recorder of San Diego County on , 1997, to- gether with those certain nonexclusive ease- ments for ingress, egress, access, maintenance and repair for landscaping and irrigation purposes in, on, over, across, under and through those portions of the Lots generally depicted on Exhibit "A" attached hereto 50051.003-2433.FCM 100797 (hereinafter referred to as the "Common Area"). The Lots and the Common Area are hereinafter sometimes collectively referred to as the "Property." C. Declarant desires to develop the Property as a single phase common interest development, more particularly described in Section 1351(k) of the California Civil Code as a "planned development" (hereinafter referred to as the "Project"), consisting of single-family detached homes, landscaped areas and other improvements, as more fully described below. D. Declarant deems it desirable to impose a general plan for the development, maintenance, improvement, protection, use, occupancy and enjoyment of the Project, and to establish, adopt and impose covenants, conditions and restrictions upon the Project for the purpose of enforcing, protecting and preserving the value, desirability and attractiveness of the Project. E. Declarant deems it desirable for the efficient en- forcement, protection and preservation of the value, desirability and attractiveness of the Project to create a corporation which shall be delegated and assigned the powers of administering and enforcing said covenants, conditions and restrictions. F. "Marvista Maintenance Corporation," a California nonprofit, mutual benefit corporation, has been incorporated under the laws of the State of California for the purpose of exercising the aforesaid powers. G. Declarant intends to convey the Property subject to the covenants, conditions and restrictions set forth hereinbelow, and shall include a reference to this Declaration in any deed or other document which conveys or hypothecates the Property. NOW, THEREFORE, Declarant agrees and declares that it has established, and does hereby establish, a plan for the development, maintenance, protection, improvement, use, occupancy and enjoyment of the Project, and has fixed, and does hereby fix, the covenants, conditions, restrictions, easements, reservations, equitable servitudes, liens and charges (hereinafter collectively referred to as the "Protective Covenants") upon the Project. Each and all of the Protective Covenants shall run with the land and shall inure to the benefit of and be binding upon Declarant, its successors and assigns, all subsequent owners of all or any portion of the Proj- ect, together with their grantees, successors, heirs, executors, administrators, devisees and assigns, and may be enforced by any Owner or the Association. - 9 -50051.003-2433.FCM 100797 ^ ARTICLE I DEFINITIONS Section 1. "Architectural Control Committee" shall mean and refer to the architectural committee created pursuant to the Article herein entitled "Architectural Control - Approval." Section 2 . "Articles" shall mean and refer to the Ar- ticles of Incorporation of Marvista Maintenance Corporation, as filed in the Office of the Secretary of State of the State of California, as such Articles may be amended, from time to time. Section 3. "Assessments" shall be used as a generic term which shall mean and refer to the following: (a) "Regular Assessment" shall mean and refer to an annual charge against each Owner and his respective Lot rep- resenting a portion of the Common Expenses of the Association; (b) "Compliance Assessment" shall mean and refer to the charge against an Owner representing the costs incurred by the Association in the repair of any damage to the Common Area for which such Owner (or any member of his/her family, or his/her guests, invitees, tenants or lessees) was responsible, the costs incurred by the Association in bringing such Owner and his Lot into compliance with this Declaration, any amount due the Association based upon disciplinary proceedings against an Owner in accordance with this Declaration, and/or any amount due the Association to reimburse the Association for administrative costs attributable to an Owner as provided herein; (c) "Special Assessment" shall mean and refer to the charge against an Owner and his respective Lot repre- senting a portion of the cost of reconstructing any damaged or destroyed portion or portions of the Common Area, of con- structing or installing any capital improvements to the Common Area, or of taking any extraordinary action for the benefit of the Common Area or the membership of the Association pursuant to the provisions of this Declaration; and (d) "Special Benefit Assessment" shall mean and refer to a charge levied by the Association against an Owner and his respective Lot to cover the expenses incurred by the Association in the operation, maintenance, repair and/or funding of reserves for a portion of the Project designated by Declarant or the Association as a "Special Benefit Area," which expenses are allocable only to the Owners and their Lots within such an Area. 50051.003-2433.FCM 100797 3 Section 4. "Association" shall mean and refer to Marvista Maintenance Corporation, a California nonprofit, mutual benefit corporation, in which all Owners shall have a membership interest as more particularly described hereinbelow, provided that membership shall be limited to Owners. Section 5. "Board" shall mean and refer to the Board of Directors of the Association, elected in accordance with the By- Laws of the Association and this Declaration. Section 6 . "By-Laws" shall mean and refer to the By- Laws of the Association which have been, or will be, adopted by the Board, as such By-Laws may be amended, from time to time. Section 7. "City" shall mean and refer to the City of Carlsbad, California, a municipal corporation and its various departments, divisions, employees and representatives. Section 8. "Common Area" is used herein as a generic term to mean and refer to: (a) all real and personal property, and to all Improvements thereon, which are owned by the Association; and (b) all real property, and Improvements thereon, over which the Association has an easement (e.g., storm water detention and desiltation and drainage easements, utility, drainage, fuel modification, maintenance, landscape, irrigation, and ingress) , lease and/or which the Association is otherwise responsible pursuant to this Declaration to manage, control and/or maintain for the common use, benefit and enjoyment of all Owners in the Project. The Common Area shall also include, without limitation, any private streets, street lights, private storm drains, private utilities, if any, slopes, greenbelts, perimeter walls and such other Improve- ments. The Common Area in the Project generally consists of that certain real property more particularly described in Paragraph B of the recitals. Section 9. "Common Expenses" shall mean and refer to the actual and estimated costs to be paid by the Association for the following: (a) owning, maintaining, managing, operating, painting, repairing and replacing the Common Area; (b) managing and administering the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and any Association employees; (c) providing utilities and other services to the Common Area; (d) providing insurance as provided for herein; (e) paying that portion of any Assessment attributable to Common Expenses not paid by the Owner responsible for payment; (f) paying taxes for the Association; and (h) paying for all other goods and services designated by, or in accordance with, other expenses incurred by the Association for the benefit of all Owners, and reasonably required for the Association to perform its powers and duties as set forth in this Declaration. Additional- ly, the Common Expenses shall include adequate reserves, as the Board shall determine to be appropriate, for the repair and 50051. 003-2433.FCM 100797 ~4~ replacement of those elements of the Common Area which must be repaired or replaced on a periodic basis, rather than a regular annual basis. Section 10. "County" shall mean and refer to the Coun- ty of San Diego, California, and its various departments, divi- sions, employees and representatives. Section 11. "Declarant" shall mean and refer to La Costa 21, a California limited liability company, and to any person or entity acquiring all of Declarant's interest in the Project (including all of Declarant's rights and obligations as created and established herein) pursuant to a written assignment from Declarant which is recorded in the Office of the County Re- corder. Any such assignment may include only certain specific rights of the Declarant and may be subject to such conditions as Declarant may impose, in its sole discretion. Section 12. "Declaration" shall mean and refer to this Declaration of Covenants, Conditions and Restrictions, and Reser- vation of Easements, and to all amendments to this Declaration as may be recorded, from time to time, in the Office of the County Recorder, in accordance with Section 1351(h) and Section 1353 of the California Civil Code. Section 13. "ORE" shall mean and refer to the Depart- ment of Real Estate of the State of California, which administers the sale of subdivided lands pursuant to Sections 11000, et seq. , of the California Business and Professions Code, or any similar California statute hereinafter enacted. Section 14. " FHLMC" shall mean and refer to the Federal Home Loan Mortgage Corporation (The Mortgage Corporation) created by Title III of the Emergency Home Finance Act of 1970, as amended, from time to time, including any successors thereto. Section 15. "FNMA" shall mean and refer to the Federal National Mortgage Association, a government-sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, as amended, from time to time, including any successors thereto. Section 16. "GNMA" shall mean and refer to the Govern- ment National Mortgage Association administered by the United States Department of Housing and Urban Development, including any successors thereto. Section 17. "Improvements" shall mean and refer to all structures and appurtenances thereto of every kind, including, but not limited to, Residences, open parking areas, swimming pools, spas, cabanas, private streets, street lights, pavement, sidewalks, driveways, walls, side and rear yard fences, decorative or _ c _ 50051. 003-2433.FCM 100797 -> informative signs, drainage swales, retaining walls, grading of a Lot or disturbing the existing grade in any manner, irrigation equipment and all related facilities, mail kiosks, trellises, television and radio antennas, common trash receptacles, if any, screens, private utility line connections, poles, signs, all Common Area landscaping and irrigation systems. Improvements shall also mean and refer to all additions and/or modifications to the exterior of any Residence, including, but not limited to, (a) painting the exterior of any Residence or other structure, (b) changing the roofing material on any Residence, and/or (c) building, constructing, installing, altering or planting, as the case may be, any spas, patio covers, patio slabs, balcony covers, decks, gazebos, stairs, screening walls or fences, shades, awnings, screen doors, exterior doors, skylights, solar heating panels, air conditioning and/or water softening or refining fixtures or systems, and all landscaping which left in its natural condition will grow to a height in excess of twenty feet (20'). Section 18. "Lot" shall mean and refer to a plot of land as shown upon the recorded subdivision map of the Project, and to all Improvements, including the Residence, constructed thereon. Only those plots of land which are designed and intended for the construction of a Residence and ownership by an individual Owner shall be deemed "Lots." "Lot" shall not mean or refer to any plot of land owned in fee by the Association as Common Area. Section 19. "Member" shall mean and refer to every person or entity who holds membership in the Association, as more particularly set forth in the Article herein entitled "The Asso- ciation, " and shall be synonymous with the term "Owner." Section 20. "Mortgage" shall mean and include any mortgage or deed of trust, or other conveyance of a Lot to secure the performance of an obligation, which conveyance will be recon- veyed upon the completion of such performance, including an in- stallment land sales contract (as defined in Sections 2985 through 2985.6 of the California Civil Code, as same may be amended, from time to time) . The term "Deed of Trust, " when used herein, shall be synonymous with the term "Mortgage." Section 21. "Mortgagee" shall mean and refer to a per- son or entity to whom a Mortgage is made, and shall include the beneficiary of a Deed of Trust or the vendor under an installment land sales contract, as the case may be, and the assignor of a Mortgagee, beneficiary, or vendor. Section 22. "Mortgagor" shall mean and refer to a per- 'son or entity 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 and the vendee under an installment land sales contract. 50051.003-2433.FCM 100797 °~ Section 23. "Notice and Hearing" shall mean and refer to written notice and a hearing before the Board or the Architec- tural Control Committee of the Association, or other tribunal created by the Board in the manner provided in the By-Laws, at which the affected Owner shall have an opportunity to be heard in the manner provided herein and in the By-Laws. Section 24. "Owner" shall mean and refer to one or more persons or entities who alone or collectively are the record owner, or owners, of fee simple title to a Lot, excluding those persons or entities having any such interest merely as security for the performance of an obligation. If a Lot has been sold under a land sales contract (as described in Sections 2985 et seq. of the California Civil Code, as same may be amended, from time to time) , in which the State of California is the vendor, then the vendee shall be deemed to be the Owner of such Lot. If a Lot is leased by Declarant for a term of ten (10) or more years,' including renewal periods, and the lease or memorandum thereof is recorded, the lessee or transferee of the leasehold interest and not the Declarant shall be deemed the Owner. If fee title to a Lot is owned other than by Declarant, the Owner of the fee title and not the lessee of such Lot shall be deemed the Owner regardless of the term of the lease. Section 25. "Project" shall mean and refer to the Property and to all Improvements, including the Residences, con- structed thereon and the Common Area. Section 26. "Property" shall mean and refer to all of that certain real property described in Paragraphs A and B of the recitals hereinabove. Section 27. "Residence" shall mean and refer to the individual dwelling and the related Improvements which are con- structed upon a separate Lot and which are designed and intended for use and occupancy as a residential residence. Section 28. "Rules and Regulations" shall mean and re- fer to the Rules and Regulations adopted by the Board pursuant to the By-Laws and this Declaration, as they may be amended, from time to time. Section 29. Application of Definitions. The aforesaid definitions shall be applicable to this Declaration and to any supplements or amendments hereto, filed or recorded pursuant to the provisions of this Declaration, unless the context shall prohibit such application. 50051.003-2433.FCM 100797 ARTICLE II GENERAL PLAN OF DEVELOPMENT Section 1. Introduction. The Declarant has designed Marvista as a single phase planned residential community, which, if completed as proposed, will consist of approximately twenty-one (21) Residences, together with various Common Area improvements and related amenities. The Project will be developed in accordance with the general plan of development submitted to and approved by the City and the ORE. The Association will maintain the Common Area and will be the management body for the Project, as provided herein. Section 2. Rights and Obligations of Owners. Each Owner of a Lot in the Project shall automatically become a Member of the Association and shall be obligated for the payment of Assessments to the Association. Subject to the provisions of this Declaration which reserve rights in favor of the Declarant, each Owner, his family members, tenants and invitees will be entitled to the use and enjoyment of the Common Area of the Project. Section 3. Description of Common Area. The Common Area within the Project is planned to consist generally of the private streets, perimeter walls, slope landscaping, passive open space landscaping and parkway landscaping. Each Owner of a Lot in the Project shall have a nonexclusive easement appurtenant to his Lot for use and enjoyment of all Common Area within the Project (except for access rights over any utility easements), in accord- ance with the terms and provisions of this Declaration. The Asso- ciation shall be responsible for the ownership, if applicable, maintenance and operation of all Common Area within the Project (except for the surface maintenance of any easement areas for private sewer, water, drainage or storm drain utilities). Section 4. Membership in the Association. As more particularly set forth in this Declaration, each Owner of a Lot in the Project shall automatically become a member of the Association, and shall be obligated for the payment of assessments to the Association. In addition, each Owner, his family, members, lessees, tenants, guests and invitees, will be entitled to the use and enjoyment of the Common Area within the Project, in accordance with this Declaration, the By-Laws and Rules and Regulations adopted by the Board. Section 5. Declarant's Use of Streets and Utilities. Until such time as all Lots in the Project are sold (and escrows closed) , or for a period of three (3) years from the date of recordation of this Declaration, whichever occurs first, Declarant hereby reserves unto itself, together with the right to grant and transfer all or a portion of the same, easement rights to use the private street system and any private utilities within the Project _ q _ 50051.003-2433.FCM 100797 ° for, including, but not limited to, construction, access and connection of utilities by Declarant for purposes of developing the Project. Section 6. Declarant's Control of Development. In order that the Project be completed and established as a planned residential community, Declarant shall have the sole discretion and control over all aspects of construction of Residences and Im- provements owned by itself, and over the selling and marketing of Lots in the Project. Further, Declarant shall have the sole discretion and control to: (a) Install, construct, modify, alter or remove any Improvements in the Project; (b) Redesign or otherwise alter the style (e.g. architectural), size (e.g., adding additional square footage or reducing the square footage of the Residences) , color or appearance of any Improvements in any portion of the Project owned by Declarant; (c) The right to determine, so long as Declarant owns an interest in the Project, the hours of operation, if any, of the Project entry gates; (d) Construct such additional Improvements on any portion of the Project owned by Declarant; (e) Subdivide, re-subdivide, grade or regrade any portion of the Property owned by Declarant; and/or (f) Otherwise control all aspects of designing and constructing the Improvements in the Project, and of regulat- ing the marketing of Lots in the Project. In furtherance thereof, Declarant hereby reserves unto itself, and its successors and assigns, together with the right to grant and transfer all or a portion of same, a nonexclusive easement for in- gress and egress on, over and across the Project as necessary to construct Improvements, and further reserves for itself the right, until all Lots in the Project are sold (and escrows have closed), to maintain an information office, to carry on normal sales activity, including the operation of model complexes and sales offices, and to display reasonable signs on any portion of the Project, and a nonexclusive right to utilize the Common Area in connection with the sale or leasing of Lots in the Project. Section 7 . Non-Liability of Declarant. The purpose of this Article is merely to describe the proposed general plan of development for the Project. Without limiting the generality of the foregoing, nothing in this Section or elsewhere in this Declaration shall limit the right of Declarant to complete construction of the _ q_50051. 003-2433.FCM 100797 -' Project, to alter same or to construct such additional Improvements as Declarant shall deem advisable prior to the completion and sale of all Lots in the Project. Declarant may assign any or all of its rights under this Declaration to any successor to all or any part of Declarant's interest in the Project by an express written as- signment recorded in the Office of the County Recorder. ARTICLE III RESERVATION OF EASEMENTS AND OTHER PROPERTY RIGHTS IN THE COMMON AREA Section 1. Owners' Easements. Every Owner shall have a nonexclusive right and easement of access and use in and to the Common Area. Said right and easement shall be appurtenant to and shall pass with title to every Lot, subject to the limitations set forth in Section 2 below. Section 2. Limitations on Owners' Easement Rights. The rights and easements of access, use and enjoyment set forth in Section 1 hereinabove shall be subject to the provisions of this Declaration, including, but not limited to, the following: (a) The right of the Association to reasonably limit the number of guests of Owners; (b) The right of the Association to establish and enforce reasonable Rules and Regulations pertaining to the use of the Common Area, including all facilities located thereon, i f any; (c) The right of the Association, in accordance with its Articles, By-Laws and this Declaration, to borrow money with the assent of sixty-seven percent (67%) of the voting power of the Association, excluding Declarant, and/or to mortgage, pledge, deed in trust or otherwise hypothecate any or all of its real or personal property as security for money borrowed or debts incurred, for the purpose of improving or repairing the Common Area and related facilities; (d) The right of the Association to suspend the voting rights and rights and easements of use and enjoyment of the Common Area of any Member, and the persons deriving such rights and easements from any Member for any period during which any Assessment against such Member's Lot remains unpaid and delinquent (except such rights as are reasonably required to access said Member's Residence) ; and after Notice and Hearing, to impose monetary penalties or suspend such use rights and easements for a period not to exceed thirty (30) days for any violation of this Declaration or Rules and Regulations, it being understood that any suspension for 50051. 003-2433. FCM 100797 -10- either nonpayment of any Assessments or breach of such re- strictions shall not constitute a waiver or discharge of the Member's obligations to pay Assessments as provided herein; (e) Subject to the terms and provisions of the Article herein entitled "Mortgagee Protection, " the right of the Association to dedicate or transfer easements over all or any part of the Common Area to any public agency, authority, entity or utility for such purposes and subject to such conditions as may be agreed to by the Owners. No such dedica- tion or transfer shall be effective unless: (1) an instrument approving said dedication or transfer is signed by Owners representing sixty-seven percent (67%) of the voting power of the Association, excluding Declarant, and recorded in the Office of the County Recorder, and (2) a written notice of the proposed dedication or transfer is sent to every Owner not less than fifteen (15) days nor more than thirty (30) days in advance; provided, however, that the dedication or transfer of easements over the Lots or Common Area for utilities or for other public purposes consistent with the intended use of the Project as a residential development shall not require the prior approval of the Members of the Association; (f) The right of Declarant (and its sales agents, representatives, customers and prospective purchasers) to the nonexclusive use of the Common Area without charge for sales, display access and exhibit purposes related to selling, marketing, showing and otherwise disposing of Lots in the Project, which rights Declarant hereby reserves; provided, however, such right of use shall cease upon the date that Declarant no longer owns any Lot in the Project or three (3) years from the date of recordation of this Declaration, whichever occurs first. In addition, such use shall not unreasonably interfere with the rights of enjoyment of other Owners as provided herein; (g) The right of the Association, acting by and through its Architectural Control Committee, to enact uniform and reasonable architectural standards; (h) The right of the Association to perform and exercise its duties and powers as set forth herein; (i) Other rights of the Association, the Architec- tural Control Committee, the Board, the Owners and Declarant with respect to the Common Area as may be provided for in this Declaration; (j) The right of Declarant to grant and transfer easements on, over and across the Project for the development, installation, construction and maintenance of electric, telephone, cable television, water, gas, sanitary sewer lines 50051. 003-2433. FCM 100797 --L 1 - and drainage facilities, as shown on any recorded subdivision map covering the Project, and as may be reasonably necessary for the proper maintenance, development and conveyance of Lots and/or Common Area; and (k) Any limitations, restrictions or conditions affecting the use, enjoyment or maintenance of the Common Area imposed by Declarant or by the City, or other governmental agency having jurisdiction to impose any such limitations, restrictions or conditions, including, but not limited to, the rights of the City or such other governmental agency having jurisdiction to use their vehicles or appropriate equipment over those portions of the Common Area designed for vehicular movement to perform municipal functions or emergency or essential public services. Section 3. Easements for Common Fences. There is hereby created, established and granted an easement appurtenant to the real property in the Project for the placement of all common fences, where such fences were originally installed by Declarant, regardless of whether such fences are located precisely upon the boundary separating two (2) residential Lots or a residential Lot and Common Area. Those Owners who have a common fence which adjoins their Lots and effectively creates the boundary line between such Lots (including the Association and its Common Area) shall equally have the right to use such fence and each shall have the exclusive right to the use of the interior surface of the fence facing his Residence or Common Area. Neither Owner shall drive nails, screws, bolts or other objects more than half way through any common fence, interfere with the adjacent Owner's use and enjoyment of the common fence, or impair, in any way, the structural integrity of the common fence. In the event that any portion of such fence, except the interior surface of one (1) side, is damaged or injured from any cause, other than the act or negligence of either party, it shall be repaired or rebuilt at their joint expense. Section 4. Delegation of Common Area Use Rights. Any Owner who resides within the Project may delegate, in accordance with the By-Laws, his rights of use and enjoyment to the Common Area to the members of his immediate family and any other persons residing within his Residence. In the event an Owner has rented or leased his Residence, his rights of use and enjoyment to the Common Area shall be automatically delegated to his tenants or lessees for the duration of their tenancy, and the Owner shall forfeit any rights of use and enjoyment to the Common Area for the duration of such tenancy, except those rights of ingress and egress which are reasonably necessary to carry out the appropriate duties of a landlord. In the event of a conditional sales contract, the seller under the contract shall be deemed to delegate his rights of use and enjoyment to the Common Area to the purchaser under the contract. -19-50051. 003-2433. FCM 100797 x^ Section 5. Easements for Public Services. In addition to the foregoing easements over the Common Area, there is hereby created, established and granted easements for public services, including, but not limited to, the right of police, fire, ambulance and other public services to enter upon any part of the Project for purposes of serving the health and welfare of all Owners in the Project. Section 6 . Easements for Unintentional Encroachments. There is hereby created, established and granted a nonexclusive easement appurtenant to each Lot on, over and across those portions of any adjacent Lot (whether a residential Lot or a Common Area Lot) , not to exceed one foot (I')/ for the encroachment by any foundations and footings, and not to exceed three feet (3') for eaves or other overhangs, wing walls and/or chimneys existing as of the date that escrow is initially closed for the sale of said Lot from Declarant to an Owner. Additionally, there is hereby created, established and granted nonexclusive easements appurtenant to any Lot on, over and across those portions of any such adjacent Lot (whether a residential Lot or a Common Area Lot) , not to exceed one foot (!')/ for the encroachment by any Improvement resulting from any subsequent settling or shifting of any Improvements. All of the aforesaid encroachments shall be measured at the point of en- croachment along a line which is perpendicular to the common property line between the affected Lots. Section 7. Easements for Utilities. The rights and duties of the Owners of Lots within the Project with respect to sanitary sewer, water, electricity, gas, television cable (or CATV service) and telephone lines, and other facilities, shall be governed by the following: (a) Each respective utility company shall maintain all utility facilities and connections on the Project owned by such utility company; provided, however, that if any company shall fail to do so, it shall be the obligation of each Owner to maintain those facilities and connections located upon such Owner's Lot and it shall be the obligation of the Association to maintain those facilities and connections located upon and which provide service to the Common Area; (b) Wherever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project and it becomes necessary to gain access to said connections, cables and/or lines through a Lot owned by someone other than the Owner of the Lot served by said connections, cables and/or lines, the Owner of the Lot served by said connections, cables and/or lines shall have the right, and is hereby granted an easement to the full extent necessary therefor, to enter upon such other Lot or to have the utility companies enter upon such other Lot to repair, replace and generally maintain said connections, cables and/or _ -1 O _ 50051. 003-2433.FCM 100797 J-J lines. In the event that any damage shall be proximately caused by such entry, said Owner or utility company shall repair the same at its respective expense; (c) Whenever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project, and said connections, cables and/or lines serve more than one (1) Lot, the Owner of each Lot served by said connections, cables and/or lines shall be entitled to the full use and enjoyment of such portions of same as service his Lot; (d) In the event of a dispute between Owners re- specting the repair or rebuilding of the aforesaid connec- tions, cables and/or lines, or the sharing of the cost thereof, upon written request of one (1) of such Owners ad- dressed to the Association, the matter shall be submitted to the Board who shall decide the dispute, and the decision of the Board shall be final and conclusive on the Owners; (e) Easements over the Project for the installation and maintenance of electric and telephone lines, water, gas, drainage and sanitary sewer connections and facilities, and television antenna cables and facilities, all as shown on the recorded map of the Project and as may be hereafter required or needed to service the Project, are hereby reserved by Declarant, together with the right to grant and transfer the same; and (f) Each Lot granted to an Owner is subject to all easements for utility installation and maintenance, storm drains and other purposes, as more particularly shown on the recorded subdivision map(s) for the Project. Any installation or construction of landscaping or structures within said easement areas may be done only in accordance with the terms, conditions and provisions of said easements. Section 8. Easements for Maintenance of the Common Area. There is hereby created, established and granted a nonexclu- sive easement in favor of the Association for ingress, egress and access on, over and across those portions of the Lots in the Project as reasonably required by the Association to perform its maintenance obligations for the Project and Common Area, as more particularly set forth in the Article herein entitled "Powers and Duties of the Association." In the event it becomes necessary for the Association to enter upon any Lot for purposes of: (a) main- taining the Common Area; or (b) bringing an Owner and/or his Lot into compliance with this Declaration in accordance with the provi- sions set forth herein, the Association, and its duly authorized agents and employees, shall have the right, after reasonable notice to the Owner and at a reasonable hour of the day, to enter upon such Owner's Lot for the performance of such work. Such entry shall 50051.003-2433.FCM 100797 -14- be made with as little inconvenience to the Owner as is practica- ble, and in the event that any damage shall be proximately caused by such entry, the Association shall repair the same at its expense. Notwithstanding the foregoing, no notice of entry is required in the event of an emergency. Section 9. Easements for Clustered Mailboxes. In or- der to comply with the various requirements of the City and the United States Postal Service, kiosk mailboxes may be installed on certain Lots within the Project. Easements are hereby created, granted and established on and over the affected Lots, if any, in favor of all Owners and the United States Postal Service for de- livery and deposit of mail. Section 10. Easements Over Sidewalks . Declarant hereby covenants for itself, its successors and assigns, that each and every Owner, his tenants and invitees shall have appurtenant nonex- clusive reciprocal easements on, over and across all sidewalks lo- cated on portions of Lots, if any, immediately adjacent to the pri- vate streets within the Project for pedestrian access, use and enj oyment. Section 11. Easements for Drainage. There are hereby created, established, granted and reserved over each Lot in the Project easements for drainage according to the patterns for drainage created by the grading plans for the Project approved by the City, as well as according to the actual, natural and existing patterns for drainage (including, but not limited to, easements to accommodate any "cross-lot drainage, " whereby water runoff from one [1] or more contiguous Lots [or Common Area] drains across another Owner's Lot) . Each Owner covenants and agrees that he shall not obstruct or otherwise interfere with said drainage patterns of waters from adjacent Lots in the Project over his Lot, or, in the alternative, that in the event it is necessary and essential to alter said drainage pattern for the protection and use of his Lot, he will make adequate provisions for proper drainage and obtain all appropriate approvals from the respective governmental authorities and/or Architectural Control Committee. Each Owner shall be responsible for cleaning, maintaining, and repairing any open concrete drainage swales constructed by Declarant on such Owner's Lot (other than those devices located within the Common Area) and keeping such swales free of debris and any other obstructions to ensure proper drainage in, on, over, under, across and through such swales in a manner consistent with the established drainage patterns created by the precise grading plans for the Project or as otherwise approved by the Architectural Control Committee. Section 12 . Easement for Area Drains . Declarant here- by creates, establishes, grants and reserves nonexclusive recipro- cal easements over the Lots and Common Area for drainage purposes to accommodate the drainage system, including, but not limited to area drains and pipes, originally installed by Declarant pursuant — 1 R —50051. 003-2433.FCM 100797 -*- -1 to the precise grading and construction plans. The Lot Owner served by said drainage system shall be responsible to maintain and preserve said system in an operating condition to ensure proper drainage in, on, over, under, across and through the yard area of his Lot in accordance with the established drainage patterns created by the precise grading plans for the Project, and shall bear the cost of the maintenance, repair or replacement associated with the drainage system which affects his Lot. No Owner shall alter or remove the drainage system or modify the grade of the yard area in his Lot without the express written consent of the Architectural Control Committee. In the event any portion of the drainage system is damaged, destroyed or not properly maintained, any Lot Owner affected by such drainage system may cause said repair, restoration or maintenance work to be completed and shall be entitled to recover the appropriate expenses from the Lot Owner responsible for such repair, restoration or maintenance. Notwith- standing the foregoing, if any portion of the drainage system is damaged or destroyed as a proximate result of any act or omission of any Owner, or any member of his family, guests, tenants, lessees and/or invitees (without regard to fault), such Owner shall immediately repair and/or rebuild such drainage system, and shall bear all of the costs thereof, including any cost and/or expense related to personal injury or property damage to any person, Lot, or Residence in the Project. Section 13. Easements for Construction and Sales. De- clarant hereby expressly reserves for itself, for the benefit of its agents, employees and contractors, and for the benefit of its successors and assigns, until all Lots in the Project are sold (and escrows closed), or for a period of three (3) years from the date of recordation of this Declaration, whichever occurs first, nonexclusive easements for access, ingress and egress in, on, over, and across the Project as necessary to construct the Improvements, and further reserves the exclusive right to carry on normal sales activity, including the operation of a models complex and sales office, and the display of promotional signs and exhibits in connection with the sale or lease of Lots in the Project. Section 14. Reservation of Construction Rights by De- clarant . In order that the Project be completed and established as a planned residential community, nothing in this Declaration shall limit the right of Declarant to: (a) complete construction of any Improvements in the Project; (b) redesign or otherwise modify the Improvements owned by Declarant; (c) construct such additional Improvements on any portion of the Project owned by Declarant; or (d) otherwise control all aspects of constructing the Project or selling or leasing of Lots in the Project. Furthermore, nothing in this Declaration shall limit the right of Declarant to establish additional licenses, easements and rights-of-way in favor of Declarant, utility companies or others as may, from time to time, be reasonably necessary for the development of the Project. The foregoing rights established and reserved by Declarant shall be 50051. 003-2433.FCM 100797 ~Xb- subject only to the applicable regulations and requirements of the City and the DRE. The foregoing rights of Declarant may be assigned to any successor to all or part of Declarant's interest in the Project by an express assignment recorded with the County Recorder. Section 15. Title to the Common Area. (a) Transfer of Title to Common Area. Declarant hereby covenants, for itself and its successors and assigns, that it will convey to the Association fee simple title to, or a nonexclusive easement in, as appropriate, the Common Area, free and clear of all liens and encumbrances (i.e., if the Common Area title being conveyed is fee simple), subject to the Protective Covenants set forth in this Declaration or which are of record at the time of the conveyance. (b) Completion of Common Area. In the event that Improvements proposed to be constructed on any portion of the Common Area in the Project have not been completed, as evidenced by a "Notice of Completion" recorded in the Office of the County Recorder, then the completion of such Improve- ments shall be assured in accordance with Section 11018.5 of the California Business and Professions Code, or any similar statute hereafter enacted. (c) Commencement of Association Responsibilities. The Association's responsibility to maintain the Common Area conveyed to the Association shall commence with the recorda- tion of the grant deed conveying the Common Area and the commencement of Regular Assessments pertaining to same. The Association shall not interfere with the performance of any warranty or other contractual maintenance obligations which the contractor or subcontractors of Declarant may be bound to perform. Notwithstanding the foregoing, maintenance performed by such contractors and subcontractors of Declarant shall not serve to postpone the commencement of Regular Assessments pursuant to this Declaration, nor entitle an Owner to claim any offset or reduction in the amount of such Regular Assess- ments . (d) Character of Improvements to Common Area. The nature, design, quality and quantity of all Improvements to the Common Area shall be determined by Declarant, in its sole discretion. The Association shall be obligated to accept title to the Common Area, as appropriate, and undertake all mainte- nance responsibilities for the Common Area upon the first to occur of conveying title and/or tendering maintenance respon- sibilities by Declarant to the Association, pursuant to Subparagraphs (a) and (c) above. -17-50051. 003-2433 . FCM 100797 -1- ' (e) Formation of Landscape Maintenance District. Notwithstanding any provision contained herein to the con- trary, the Board shall have the power and authority to convey the Common Area, or any portion thereof, to the City upon request of the City to include the Common Area, or any such portion, in a landscape maintenance district and/or delegate its maintenance obligations to the City or to such landscape maintenance district. Each Owner of a Lot shall pay all assessments, special taxes and other charges levied against such Lot in connection with any such landscape maintenance district. Each Owner of a Lot in the Project, by acceptance of a deed from Declarant for such Lot, agrees to refrain from taking any action which would in any way interfere with the formation of or annexation into a landscape maintenance district, or other special district or community facilities district, the operation of either district, or decisions made or actions taken by the City with respect to such districts, including, without limitation, the timing of commencement, amount, spreading or use of the assessments, special taxes or other charges collected by such districts. ARTICLE IV THE ASSOCIATION Section 1. Membership. Every person or entity who or which is an Owner as defined hereinabove shall be a Member of the Association. The foregoing, however, is not intended to include persons or entities who hold an interest in a Lot in the Project merely as security for the performance of an obligation. All memberships in the Association shall be appurtenant to the Lot owned by each Member, and memberships in the Association shall not be assignable, except to the person or entity to whom the title to the Lot has been transferred, as provided in Section 5 hereinbelow. Ownership of such Lot shall be the sole qualification for member- ship in the Association. The memberships in the Association shall not be transferred, pledged or alienated in any way, except upon the transfer of title to said Lot, and then only to the purchaser or Mortgagee of such Lot. Any attempt to make a prohibited member- ship transfer shall be void and will not be reflected in the books of the Association. Section 2. Voting Rights. The Association shall have two (2) classes of voting membership, as follows: (a) Class A. Class A Members shall be all Owners, with the exception of the Declarant, until such time as the Class B voting terminates, and shall be entitled to one (1) vote for each Lot owned. When more than one (1) person holds an interest in any Lot, all such persons shall be Members. The vote for such Lot shall be exercised as they determine among _ -1 Q _ 50051.003-2433.FCM 100797 -1-° themselves, but in no event shall more than one (1) vote be cast with respect to any Lot. (b) Class B. The Class B Member shall be the Declarant and shall be entitled to three (3) votes for each Lot owned in the Project upon which Declarant is then paying the appropriate monthly Assessments provided for hereinbelow. The Class B membership shall cease and be converted to Class A membership upon the happening of either of the following events, whichever occurs earlier: (1) When the total votes outstanding in the Class A membership equal the total votes outstanding in the Class B membership; or (2) The second anniversary of the first close of escrow for the sale of a Lot in the Project. Any action by the Association which must have the ap- proval of the membership of the Association before being under- taken, shall require the vote or written assent of both a majority of the Class B membership as well as a majority of the Class A membership, so long as there are two (2) outstanding classes of membership, unless a specific provision of this Declaration or the By-Laws or Articles of the Association requires the approval of a greater percentage of the voting membership. Notwithstanding the foregoing, any action by the Association pursuant to the Article contained herein entitled "Enforcement of Bonded Obligations" shall only require a majority of the voting power of the Owners, other than Declarant. Section 3. Vesting of Voting Rights. The voting rights attributable to any given Lot in the Project as provided for herein shall not vest until the Assessments provided for herein- below have been levied by the Association against said Lot. Section 4. Suspension of Voting Rights. The Board shall have the authority to suspend the voting rights of any Member to vote at any meeting of the Members for any period during which such Owner is delinquent in the payment of any Assessment, regardless of type, it being understood that any suspension for nonpayment of any Assessment shall not constitute a waiver or discharge of the Member's obligation to pay the Assessments pro- vided for in this Declaration. Section 5. Transfer. The Association membership held by any Owner of a Lot shall not be transferred, pledged or alien- ated in any way, except as incidental to the sale of such Lot, and the membership shall be automatically transferred upon the sale of such Lot. In the event of such sale, the Association membership may only be transferred, pledged or alienated to the bona fide purchaser or purchasers of the Lot, or to the Mortgagee (or third -19-50051. 003-2433.FCM 100797 ^-1 party purchaser) of such Lot upon a foreclosure sale, deed in lieu or other remedy set forth in the mortgage. Any attempt to make a prohibited transfer is void and will not be reflected upon the books and records of the Association. The Association may levy a reasonable transfer fee against new Owners and their Lots (which fee shall be a Compliance Assessment chargeable to such new Owner) to reimburse the Association for the actual administrative cost of transferring the memberships to the new Owners on the records of the Association. Section 6. Proxies. Votes may be cast in person or by proxy. Proxies must be filed with the Secretary before the ap- pointed time for each meeting. Every proxy shall be revocable and shall automatically terminate upon the earliest of the following: (a) the conveyance by the Owner of his Lot; (b) the date of auto- matic termination,.if any, specified in the proxy, but not to ex- ceed three (3) years from the date of issuance of the proxy; or (c) eleven (11) months from the date of issuance of the proxy, if no automatic termination date is specified in the proxy. Any form of proxy or written ballot distributed to the membership of the Association shall afford an Owner the opportunity to specify a choice between approval and disapproval of each matter or group of matters to be acted upon at the meeting for which said proxy was distributed, except it shall not be mandatory that a candidate for election to the Board be named in the proxy or written ballot. The proxy or written ballot shall provide that, where the Owner specifies a choice, the vote shall be cast in accordance with that choice. In addition, the proxy shall also identify the person or persons authorized to exercise the proxy and the length of time it shall be valid. Section 7. Record Dates. For the purposes of determining Members entitled to notice of any meeting, to vote or to exercise any other rights with respect to any lawful action, the Board may fix in advance record dates as provided in the By-Laws. ARTICLE V POWERS AND DUTIES OF THE ASSOCIATION Section ,1. Management Body. The Association is hereby designated as the management body of the Project. The Members of the Association shall be the Owners in the Project, as provided herein, and the affairs of the Association shall be managed by a Board of Directors, as more particularly set forth in the By-Laws. The initial Directors shall be appointed as set forth in the Articles. Thereafter, the Board shall be elected as provided in said By-Laws. Section 2. Powers. The Board, for and on behalf of the Association, shall have the right and power to do all things 50051.003-2433.FCM 100797 -20~ necessary to conduct, manage and control the affairs and business of the Association. Subject to the provisions of the Articles, the By-Laws and this Declaration, the Board shall have all general powers authorized under the California Corporations Code for non- profit, mutual benefit corporations, and shall have the following specific powers: (a) Enforce the provisions of this Declaration (including, but not limited to, the ability to record a notice of noncompliance or violation), and all contracts or any agreements to which the Association is a party; (b) Acquire title, manage, maintain, repair and replace all Common Area and Improvements located thereon, including all personal property, in a neat, clean, safe and attractive condition at all times, and to pay all utilities, gardening and other necessary services for the Common Area, all as more specifically set forth in the Article herein entitled "Repair and Maintenance"; (c) Maintain fire, casualty, liability and worker's compensation coverage, fidelity bond coverage and other insurance coverage pursuant to the terms of that Article herein entitled "Insurance"; (d) Obtain, for the benefit of the Common Area, all commonly metered water, gas and electric services, and may provide for refuse collection and cable (or CATV) television service; (e) Grant easements or licenses, where necessary, for utilities and sewer facilities on, over, under and across the Common Area to serve the Project; (f) Pay all taxes and special assessments which would be a lien upon the entire Project or the Common Area, and to discharge any lien or encumbrance levied against the entire Project or the Common Area; (g) Levy and collect Assessments on the Owners of all Lots in the Project in which Assessments have commenced, and enforce payment of such Assessments in accordance with the terms and provisions set forth in the Article herein entitled "Effect of Nonpayment of Assessments: Remedies of the Associa- tion" ; (h) Pay for reconstruction of any portion of the Common Area damaged or destroyed; (i) Employ and retain a professional manager and/or management company to perform all or any portion of the duties and responsibilities of the Board and engage such other - 91 -50051.003-2433.FCM 100797 *• ± personnel (including attorneys, budget preparers, and accoun- tants) as necessary for the operation of the Project and administration of the Association; (j) Enter into any Lot when necessary in connection with maintenance or construction for which the Association is responsible; (k) Subject to notification to the DRE, contract with Declarant, its successors or assigns, for the purpose of entry into a maintenance and/or subsidy agreement, made by and between Declarant and the Association, for the purpose of temporarily reducing and/or abating the financial obligations of Owners in the Project; (1) Purchase such other labor, services, materials, supplies and the like, as needed for the proper maintenance of the Common Area and/or proper operation of the Association; (m) Adopt reasonable Rules and Regulations con- cerning the maintenance, improvement, use and/or occupancy of any portion of the Project; (n) Grant exclusive easements to Owners over por- tions of the Common Area; (o) Grant easements or licenses to any public agency, governmental entity or utility, where necessary, for utilities and sewer facilities on, over, under and across the Common Area to serve the Project for purposes consistent with the use and enjoyment of the Common Area; (p) Execute lot line adjustments (and corresponding deeds), enter into a maintenance and/or other agreement with Declarant or a third party, grant fee title to or easements over the Common Area to Declarant or a third party, and/or receive fee title to or an easement over real property owned by Declarant or a third party as reasonably necessary due to those conditions in the field where it is not readily apparent where Lot lines are located and the respective party's maintenance responsibilities commence and end, and such adjustments, deeds and/or agreements will promote a clearly defined and uniform maintenance plan by the respective parties; (q) Subject to compliance with Section 1354 of the California Civil Code, as same may be amended from time to time, to institute, defend, settle or intervene on behalf of the Association in litigation, arbitration, mediation, or administrative proceedings in matters pertaining to (i) enforcement of the Declaration, Rules and Regulations and By- Laws; (ii) damage to the Common Area; (iii) damage to the _ 90 _50051. 003-2433.FCM 100797 ^ •=-• Residences which arises out of, or is integrally related to, damage to the Common Area that the Association is obligated to maintain or repair; and (r) Perform any and all other acts and things that a nonprofit, mutual benefit corporation organized under the laws of the State of California is empowered to do, which may be necessary, convenient or appropriate in the administration of its affairs for the specific purposes of meeting its duties as set forth in this Declaration. Section 3 . Duties . Notwithstanding the Association's obligations, as more specifically set forth in the Article herein entitled "Repair and Maintenance, " the Board shall perform and execute the following duties for and on behalf of the Association: (a) Own, maintain and operate the Common Area, for the common use and benefit of all Owners in the Project; (b) Provide, water, sewer, gas, electricity, gar- bage and trash collection, and other necessary utility ser- vices for the Common Area; (c) Provide insurance for the Association and its Members in accordance with the provisions of the Article hereinbelow entitled "Insurance," and distribute annual notices thereof required by law, as same may be amended from time to time; (d) Accept, as part of the Project, all property included in the Project, in accordance with the terms and provisions of this Declaration, and to accept all Owners as Members of the Association. In addition, the Association shall accept all Common Area, conveyed, leased or otherwise transferred to it, if any, by Declarant, its successors or assigns, or appropriate governmental agency; (e) Maintain and repair all portions of the Common Area in a neat, clean, safe, attractive, sanitary and orderly condition at all times and paint, maintain, repair and replace all of the Common Area Improvements so as to keep same in a neat, clean, safe, attractive, sanitary and orderly condition at all times. Without limiting the generality of the forego- ing, the Association shall be responsible for maintaining the private streets and related systems in a condition comparable to the condition initially approved by the City. In the event any maintenance or repairs to the Common Area are required due to the willful or negligent acts or omissions of an Owner or Owners, the Association shall levy the cost of such mainte- nance and repair as a Compliance Assessment against the responsible Owner (s); 50051. 003-2433. PCM 100797 (f) In addition to all other provisions set forth herein respecting the maintenance of the Common Area, maintain the private streets until such time, if ever, that the City accepts the public dedications thereof, private sewers, driveways, storm drains, sidewalks, if any, and Common Area lighting facilities, to the extent any such improvements are private, in a condition comparable to the condition initially approved by the City; (g) Pay all real and personal property taxes and Assessments which the Association is required to pay for pursuant to the terms and provisions of this Declaration or by law, unless separately assessed to Owners; provided, however, that it shall be the obligation of each Owner to pay his respective share of the tax assessment levied on the Project prior to separate assessments by the Tax Assessor pursuant to the applicable provisions of the California Revenue and Taxation Code; (h) Contract for any other material, supplies, furniture, labor, services, maintenance, repairs, structural alterations and insurance which the Association is required to pay for pursuant to the terms and provisions of this Dec- laration or by law; (i) Cause financial statements for the Association to be regularly prepared and copies distributed to each Member of the Association, regardless of the number of Members or the amount of assets of the Association: (1) A pro forma operating statement (budget) for each fiscal year shall be distributed not less than forty-five (45) days nor more than sixty (60) days prior to the beginning of the fiscal year, and shall contain the following information: i) An itemized estimate of the Associa- tion's revenue and expenses, determined on an accrual basis; ii) A summary, printed in bold type, of the current status of the Association's reserves, based upon the most recent review or study conduct- ed pursuant to California Civil Code Section 1365.5 ("Study"), as may be amended, from time to time, setting forth the following: a) The current estimated replace- ment costs, estimated remaining life and the estimated useful life of the Common Area, together with an explanation of the methods of funding being utilized by the Association to - 94 -50051.003-2433.FCM 100797 -^^ defray the costs of future repairs, replace- ments or additions to the Common Area; b) As of the end of the fiscal year for which the Study was prepared, the current estimate of the amount of cash re- serves necessary to repair, replace, restore or maintain the major Improvements to the Common Area; c) As of the end of the fiscal year for which the Study was prepared, the accumulated cash reserves actually set aside to repair, replace, restore or maintain such major Improvements to the Common Area; and d) The percentage that the current amount of accumulated cash reserves which have been set aside is of the current estimated amount of cash reserves which will be neces- sary. iii) A general statement setting forth the procedures utilized by the Association to cal- culate and establish reserves to defray the costs of future repairs, replacements or additions to the Common Area Improvements; and iv) A statement as to whether the Board has determined or anticipates that the levy of one (1) of more Special Assessments will be required to repair, replace or restore any major Improvements to the Common Area, or to provide adequate reserves therefor. Notwithstanding the foregoing, in lieu of distributing the pro forma budget required hereinabove, the Board may elect to distribute a summary of the pro forma budget to all Members with a written notice, in at least 10 -point bold type on the front page, that the pro forma budget is available at the business office of the Association, or at another suitable location within the Project, and that copies will be provided upon request and at the expense of the Association. If any Member requests that a copy of the pro forma budget required herein be mailed to said Member, the Association shall provide the copy to the Member by first-class mail at the expense of the Association, and mailed within five (5) days of the receipt of said request; (2) A balance sheet as of an accounting date which is the last day of the month closest in time to six 50051. 003-2433. FCM 100797 (6) months from the date of closing for the first sale of a Lot, and an operating statement for the period from the date of the first closing to the said accounting date, shall be distributed within sixty (60) days after the accounting date. This operating statement shall include a schedule of Assessments received, and receivable, identified by the number of the Lot and the name of the person or entity assessed; (3) An annual report consisting of the fol- lowing shall be distributed within one hundred twenty (120) days after the close of the fiscal year: i) A balance sheet as of the last day of the Association's fiscal year; ii) An operating (income) statement for the fiscal year; iii) A statement of changes in financial position for the fiscal year; and iv) Information, if any, required to be reported pursuant to Sections 8322 and 1365 of the California Corporations and Civil Code, respective- ly, as amended from time to time. This annual report shall ordinarily be prepared by a licensee of the California Board of Accountancy, in accordance with generally accepted accounting principles, for any fiscal year in which the gross income of the Association exceeds Seventy-Five Thousand Dollars ($75,000.00). However, if for any reason the report is not prepared by a licensee of the California Board of Accountancy, said report shall be accompanied by a certificate from an authorized officer of the Association that the statements were prepared without audit from the books and records of the Association; (4) A statement of the Association's policies and practices in enforcing its remedies against Members for nonpayment of Assessments, as set forth in the Article herein entitled "Effect of Nonpayment of Assess- ments: Remedies of the Association," which shall be dis- tributed within sixty (60) days prior to the beginning of the fiscal year; and (5) A summary of the Association's general liability insurance policy, earthquake and flood insur- ance policy, if one has been issued, and liability coverage policy for the Board, which includes statements and information required under California Civil Code 50051.003-2433.FCM 100797 - 2b - Section 1365 (e) , as same may be amended from time to time. Currently, such items of disclosure include the following: i) general liability, earthquake and flood insurance policies: (1) the name of the insurer; (2) the type of insurance; (3) the policy limits of the insurance; and (4) the insurance deductibles. The Association shall, as soon as reasonably practical, notify its Members by first-class mail if any of the policies described in Subparagraph (i) above have lapsed, been canceled, and are not immediately renewed, restored or replaced, or if there is a significant change, such as a reduction in coverage or limits, or an increase in the deductible for any of those policies. If the Association receives any notice of nonrenewal of a policy described in the subparagraph above, the Association shall immedi- ately notify its Members if replacement coverage will not be in effect by the date the existing coverage will lapse. To the extent the information noted above is described within the respective insurance policies, the Association may distribute such information to the Members and be in compliance with the disclosure require- ments of the referenced Civil Code Section. Notification regarding cancellation or policy renewals must comply with Civil Code Section 1365 (e) (2), as same may be amended from time to time. Currently, the summary distributed pursuant to Subparagraph (i) shall contain, in at least 10-point boldface type, the following statement: "This summary of the Association's policies of insurance provides only certain information, as required by Subdivision (e) of Section 1365 of the California Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any Association Member may, upon request and provision of reasonable notice, review the Association's insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the Association maintains the policies of insurance specified in this summary, the Association's policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association Members should consult with their individual insurance broker or agent for appropriate additional coverage." -97-50051.003-2433.FCM 100797 ^ ' (j) The Board shall review on a quarterly basis, the following: i) A current reconciliation of the Association's operating accounts; ii) A current reconciliation of amounts collected as reserves; iii) The current year's actual amounts collected as reserves and expenses compared to the current year's budget; iv) An income and expense statement for the Association's operating and reserve accounts; and v) The most current account statements prepared by the financial institutions where the Association maintains its operating and reserve accounts. Withdrawal of funds from the Association's reserve account shall require the signature of either: (i) two (2) members of the Board; or (ii) one (1) member of the Board and an officer of the Association who is not also a member of its Board. As used in this Section, "reserve account" means monies that the Board has identified from its annual budget for use to defray the future repair or replacement of, or additions to, those major components of the Common Area which the Association is obligated to repair or replace on a periodic basis, rather than on a regular annual basis. Except as may otherwise be allowed pursuant to Civil Code Section 1365.5(c), the Board shall not use any funds collected and budgeted as "reserve" moneys for any costs and/or expenses that are not related to repair and/or replacement costs for those elements of the Common Area that must be repaired and/or replaced on a periodic basis. Notwithstanding the foregoing, tempo- rary transfer of funds may occur in compliance with Civil Code Section 1365.5, as same may be amended from time to time. In the event reserve funds are temporarily transferred to pay for litigation, the Board shall comply with the disclosure and notification requirements of Civil Code Section 1365.5 (d) , as same may be amended from time to time. (k) At least once every three (3) years, cause a study of the reserve account requirements of the Project to be conducted if the current replacement value of the major components which the Association is obligated to repair, replace, restore or maintain is equal to or greater than one- _ •"> o _ 50051.003-2433.FCM 100797 ^ ° half (1/2) of the gross Association budget for any fiscal year of the Association. In connection with such study, the Board shall cause to be conducted, if required by law, a visual inspection of the accessible areas of the major components of the Common Area which the Association is obligated to repair, replace, restore, or maintain. The Board shall consider and implement the necessary adjustments to the Board's analysis of the reserve account requirements as a result of such review. The reserve study shall consider and include, at a minimum, the requirements set forth in Section 1365.5 (e) of the California Civil Code, as the same shall be amended, from time to time; (1) Assume and pay out of the Assessments provided for hereinbelow all costs and expenses incurred by the Association in connection with the performance and execution of all of the aforesaid powers and duties, and any other powers and duties the Association may assume as provided for in Section 4 hereinbelow; (m) Formulate, adopt and enforce such Rules and Regulations as it may deem proper for the operation of the Common Area, as more particularly described in Section 13 below; (n) Enforce all applicable provisions of this Declaration, the Articles, By-Laws and such Rules and Regu- lations of the Association and Architectural Control Commit- tee, and of all other documents pertaining to the ownership, use, management and control of the Project; (o) Give notices in writing to FHLMC, FNMA and GNMA, and other lenders and investors participating in the financing of the sale of Lots in the Project, as required herein; (p) Within ten (10) days of the mailing or delivery of a written request from an Owner, provide said Owner with a copy of this Declaration and the By-Laws and the Articles for the Association, together with the pro forma budget, an insurance policy summary, a true statement in writing as to the amount of any delinquent Assessments, penalties, attor- neys' fees and other charges therein as provided by this Declaration or other management documents of the Board as of the date of such request, the most recent financial statement, the Association's current Regular and Special Assessments, and any change in the Association's current Assessments and fees which have been approved by the Board but have not become due and payable as of the date the disclosure is provided pursuant to this Section. The Board may impose a fee for providing the foregoing, but in no event shall the fee exceed the actual cost to prepare and reproduce the requested documents. In 50051.003-2433.FCM 100797 ~29- addition, the Board shall make available, as required by law, during normal working business hours, upon request under reasonable circumstance, to any prospective purchaser of a Lot, any Owner of a Lot, any first Mortgagee and the hold- er (s), insurer(s) and guarantor(s) of a first Mortgage of any Lot, current copies of this Declaration, the Articles, the By- Laws, the Rules and Regulations governing the Lot, and all of the books, the membership register, including mailing ad- dresses and telephone numbers, records and financing state- ments of the Association; and (q) Elect the officers of the Association and fill any vacancies on the Board, except if such vacancy is created by the removal of a Director. Section 4. Discretionary Powers. The Board, at its option, may assume, perform and execute the following powers and duties for and on behalf of the Association: (a) Retain the services of a manager for the Project and provide such other personnel as the Association deems necessary and proper to assist in the operation of the Association and/or management of the Common Area regardless of whether such other personnel are employed directly by the Association or otherwise; (b) Remove or replace any Improvement that extends into the Common Area under authority of an easement when access to a utility line underneath such Improvement is requested by any utility company; provided, however, that the cost shall be assessed against the Owner of the Lot involved as a Compliance Assessment if said Owner caused the Improve- ment to be so placed in the Common Area without legal right to do so ; (c) Incur any liability or pay any costs or ex- penses for a single Lot or Owner thereof; provided, however, that in the event the Association does incur any such lia- bility or pay any such costs or expenses, the amount thereof shall be specially assessed to the Owner of such Lot as a Compliance Assessment; provided further, however, that nothing herein shall permit the Association to assess the Owners for any new Improvements to the Common Area, except as otherwise provided in this Declaration; and (d) Subject to the limitations set forth in this Article, contract for any other material, furniture, labor, services, maintenance, repairs, structural alterations or insurance, or pay any taxes or Assessments which, in the opinion of the Board, shall be necessary or proper for the operation of the Common Area, for the benefit of the Owners or for the enforcement of this Declaration. 50051.003-2433.FCM 100797 -30- Section 5 . Declarant's Right to Cure Alleged Defects. Declarant intends the Common Area, Lots and the Improvements to 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. Declarant intends to resolve all disputes and claims regarding "Alleged Defects" (as defined below) in any portion of the Common Area, any Lot and any Improvements amicably and without the necessity of time consuming and costly litigation. Accordingly, the Association and all Owners shall comply, to the extent not inconsistent with Civil Code Section 1375, as same may be amended from time to time, with the following claim resolution procedure: (a) Declarant's Right to Cure. If the Association or any Owner or Owners (collectively "Claimant") claims, contends or alleges that any portion of the Common Area, any Lot 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 may inspect, repair and/or replace such Alleged Defect as set forth herein. (b) Notice to Declarant. If a Claimant discovers any Alleged Defect, Claimant shall, within a reasonable time after discovery, notify Declarant, in writing, at such address at which Declarant maintains its principal place of business, of the specific nature of such Alleged Defect ("Notice of Alleged Defect"). (c) Right to Enter, Inspect, Repair and/or Replace. Within a reasonable time after Declarant receives a Notice of Alleged Defect or Declarant's independent discovery of any Alleged Defect, Declarant may, upon reasonable notice to Claimant and during normal business hours, enter onto or into, as applicable, the Common Area, any Lot and/or any Improve- ments to inspect and, if Declarant deems necessary, repair and/or replace such Alleged Defect. In conducting such inspection, repairs and/or replacement Declarant may take any actions it deems reasonable and necessary under the circum- stances . (d) Legal Actions. No Claimant may initiate any legal action, cause of action, proceeding or arbitration against Declarant,- alleging damages (1) for the costs of repairing or the replacement of any Alleged Defect, or (2) for the diminution in value resulting from such Alleged Defect, unless and until Claimant has (i) delivered to Declarant a _"J1 _ 500S1. 003-2433 . FCM 100797 ~>-1- Notice of Alleged Defect and (ii) complied with Civil Code Sections 1368.4 and 1375, as same may be amended from time to time. (e) No Additional Obligations. Nothing set forth in this Section imposes 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 Lots. Section 6. Repair of Willful Damage to Common Area. Notwithstanding the Association's duty to maintain the Common Area, in the event that the maintenance, repair or replacement of any element of such Areas becomes necessary due to the willful or negligent acts or omissions of any Owner, his family, guests or invitees, after prior Notice and Hearing, the Board shall assess the cost of such maintenance, repair and/or replacement as a Compliance Assessment against the Lot owned by such Owner. Section 7. Delegations of Duties. In the event that the Association shall delegate any or all of its duties, powers or functions to any person, corporation or firm to act as manager, neither the Association nor the members of its Board shall be liable for any omission or improper exercise by the manager of any such duty, power or function so delegated. Section 8. Right of Entry for Emergency. The Board, any person authorized by the Board, Declarant (so long as it owns an interest in the Project), or any Owner may enter any Lot in the event of any emergency involving illness or potential danger to life or property. Such entry shall be made with as little inconve- nience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association and/or Owner shall repair the same at its expense. Section 9. Right of Entry for Repairs. Except as otherwise provided herein, the Board, or any person authorized by the Board, shall have the right to enter, upon reasonable notice, any Lot to effect necessary repairs which the Owner has failed to perform or which are necessary in connection with the repairs to the Common Area or an adjoining Lot. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association shall repair the same at its expense. Section 10. Limitations on Board Action. The Board shall be prohibited from taking any of the following actions, except with the vote or written assent of a majority of the voting power of the Association and a majority of the votes residing in Members, other than the Declarant: 50051.003-2433.FCM 100797 -32 (a) Entering into a contract with a third person, wherein the third person will furnish goods or services for the Common Area or the Association for a term longer than one (1) year, with the following exceptions: (1) A management contract, the terms of which have been approved by the Department of Veterans Affairs and the Federal Housing Administration; (2) A contract with a public utility company if the rates charged for the materials or services are regulated by the Public Utilities Commission; provided, however, that the term of the contract shall not exceed the shortest term for which the supplier will contract at the regulated rate; (3) Prepaid casualty and/or liability insur- ance policies of not to exceed three (3) years duration, provided that the policy permits for short-rate cancella- tion by the insured; (4) Agreements for cable television services and equipment or satellite dish equipment and services of not to exceed five (5) years duration, provided that the lessor under the agreement is not an entity in which Declarant has a direct or indirect interest of ten percent (10%) or more; and (5) Agreements for sale or lease of burglar alarm and fire alarm equipment, installation and services of not to exceed five (5) years duration provided that the supplier or suppliers are not entities in which the Declarant has a direct or indirect ownership interest of ten percent (10%) or more. (b) Incurring aggregate expenditures for capital improvements to the Common Area in any fiscal year in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (c) Selling during any fiscal year property of the Association having an aggregate fair market value greater than five percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (d) Paying compensation to Directors or to officers of the Association for services performed in the conduct of the Association's business; provided, however, that the Board may cause a Director or officer to be reimbursed for expenses incurred in carrying on the business of the Association; 50051. 003-2433.FCM 100797 (e) Filling a vacancy on the Board created by the removal of a Director; or (f) Except as otherwise allowed under Section 1375 of the California Civil Code, as same may be amended from time to time, incurring litigation expenses, including without limitation attorneys' fees, where the Association initiates legal proceedings or is joined as a plaintiff in legal proceedings. Such approval shall not be necessary if the legal proceedings are initiated to (i) enforce the use restrictions contained herein, (ii) enforce the architectural control provisions contained herein; or (iii) collect any unpaid assessments levied pursuant to this Declaration. Section 11. Licenses, Easements and Rights-of-Way. The Board, for and on behalf of the Association, is authorized and empowered to grant such licenses, easements and rights-of-way for sewer lines, water lines, underground conduits, storm drains and other public utility purposes over those portions of the Common Area upon which no building or other structure has been erected as may be necessary and appropriate for the orderly maintenance, preservation and enjoyment of the Common Area or for the preser- vation of the health, safety, convenience and welfare of the Own- ers. Such licenses, easements and rights-of-way may be granted at any time prior to twenty-one (21) years after the death of the individuals who have signed this Declaration and their issue who are in being as of the date hereof, and the right to grant such licenses, easements and rights-of-way is hereby expressly reserved. In addition, the Board, for and on behalf of the Association, may grant exclusive easements to Owners for use and enjoyment over portions of the Common Area, as the Board determines is reasonable. Section 12. New Improvements. Except as otherwise pro- vided in this Declaration, and subject to the Article herein entitled "Architectural Control - Approval," the Association may construct new Improvements or additions to the Common Area or de- molish existing Improvements, provided that in the case of any Improvement, addition or demolition involving a total expenditure in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year, the written consent or vote of the Owners in the Project as to the maximum total cost therefor shall first be obtained in accordance with the appropriate provisions herein, and provided that no Lot shall be altered or damaged by any such demolition or construction without the consent of the Owner thereof. The Board shall levy a Special Assessment on all Owners in the Project for the cost of such work. Section 13. Association Rules and Regulations. The Board shall also have the power to adopt, amend and repeal Rules and Regulations, as it deems reasonable, which may include the establishment of a system of fines and penalties enforceable as Compliance Assessments. The Rules and Regulations shall govern such -34-50051.003-2433.FCM 100797 °^ matters in furtherance of the purposes of the Association, including, without limitation, the use of the Common Area, signs, parking restrictions and enforcement, trash collection, minimum standards for maintenance of Lots consistent with such standards as may be set forth in this Declaration or adopted by the Archi- tectural Control Committee, and any other matter which is within the jurisdiction of the Association; provided, however, that the Rules and Regulations may not discriminate among Owners and shall not be inconsistent with this Declaration, the Articles or By-Laws. A copy of the Rules and Regulations as they may, from time to time, be adopted, amended or repealed, or a notice setting forth the adoption, amendment or repeal of specific portions of the Rules and Regulations, shall be delivered to each Owner. The Rules and Regulations shall have the same force and effect as if they were set forth in and were part of this Declaration, and shall be binding on the Owners and their successors in interest, whether or not actually received thereby. The Rules and Regulations, as adopted, amended or repealed, shall be available at the principal office of the Association to each Owner upon request. In the event of any conflict between any such Rules and Regulations and any other provisions of this Declaration, or the Articles or By-Laws, the provisions of the Rules and Regulations shall be deemed to be superseded. Section 14. Nonliability and Indemnification. (a) General Limitation. Except as specifically provided in this Declaration, or as required by law, no right, power or responsibility conferred on•the Board or the Archi- tectural Control Committee by this Declaration, the Articles or the By-Laws, shall be construed as a duty or obligation charged upon the Board, the Architectural Control Committee, any member of the Board or the Architectural Control Commit- tee, or any other officer, employee or agent of the Associati- on. 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; (b) Personal Liability Limitation. No person who suffers injury, including, but not limited to, bodily injury (including, without limitation, emotional distress or wrongful death) or property damage or loss as a result of the tortious act or omission of a volunteer Board member or volunteer 50051. 003-2433. FCM 100797 -JD- Association officer shall recover damages from such Board member or officer if all the following conditions are satis- fied: (1) At the time the act or omission occurred, the Board member or officer resided in the Project as either a tenant or an Owner of two (2) or fewer 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 included coverage for general liability for the Association and individual liability of officers and Directors of the Association for negligent acts or omissions in such capacity, and both types of coverage were in the amount of at least Five Hundred Thousand Dollars ($500,000.00). (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 the manner such person reasonably believed to be in the best interests of the Association; and (2) 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 ordinary prudent person in a like position would use under similar circumstances. Any determination of the Board required under this Section 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 50051.003-2433.FCM 100797 -JO- majority of a quorum of the Members of the Association, provided that the person to be indemnified shall not be entitled to vote. The entitlement to indemnification hereun- der shall inure to the benefit of the estate, executor, administrator, heirs or devisees of any person entitled to such indemnification. ARTICLE VI ASSESSMENTS Section 1. Creation of the Lien and Personal Obliga- tion of Assessments. The Declarant, for each Lot owned within the Project, hereby covenants, and each Owner of any Lot, by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association: (a) Regular Assessments; (b) Special Assessments for capital im- provements and such other purposes set forth herein; (c) Compliance Assessments, including, but not limited to, costs incurred by the Association in the repair of damage to the Common Area for which such Owner was responsible and costs incurred by the Association in bringing such Owner and his Lot into compliance with this Declara- tion; (d) Special Benefit Assessments; and (e) such other assess- ments as the Association may periodically establish. The Regular, Special and Special Benefit Assessments, together with interest, costs and reasonable attorneys' fees for the collection thereof, shall be a charge on the land and shall be a continuing lien upon the Lot against which each such Assessment is made. Each Regular Assessment, Special Assessment and Special Benefit Assessment, together with interest, costs and reasonable attorneys' fees for the collection thereof, shall also be the personal obligation of the Owner of such property at the time when the Assessment fell due. Each Compliance Assessment levied against an Owner, together with interest, costs and reasonable attorneys' fees for the collec- tion thereof, shall be the personal obligation of the Owner of the property at the time of the Assessment. The personal obligation for delinquent Assessments shall not pass to an Owner's successors in title unless expressly assumed by them. Section 2. Purpose of Regular Assessments: Levy and Collection. The Regular Assessments levied by the Association shall be used exclusively to promote the health, safety and welfare of all Owners in the Project, and, except as otherwise provided in this Declaration, to maintain, repair, replace and improve the Common Area, and any other Improvements or areas which the Association is obligated to maintain, as provided herein. The Association, by and through the Board, shall levy and collect Assessments from the Owner of each Lot in the Project in an amount sufficient to cover all of the Common Expenses incurred by the Association in connection with the performance and execution of its powers and duties set forth in this Declaration, the By-Laws and _o 7_50051.O03-2433.FCM 100797 ° ' the Articles. In connection therewith, the Association shall not impose or collect Assessments, penalties or fees that exceed the amount reasonably necessary for the purpose or purposes for which they were levied. Regular Assessments may be collected on a monthly installment basis. Section 3. Regular Assessments - Basis. Regular Assessments payable to the Association shall be assessed equally against all Owners of Lots. Each Owner's proportionate share of the Common Expenses of the Association for any fiscal year shall be a fraction, the numerator of which shall be the number of Lots owned by such Owner, and the denominator of which shall be the total num- ber of Lots in the Project which are subject to assessment. Until the first day of the fiscal year immediately following the close of escrow for the sale of the first Lot in the Project to an Owner, the maximum Regular Assessment shall be as set forth in the budget reviewed and approved by the DRE. Notwithstanding the commencement for payment of Regular Assessments, or any other provisions of this Declaration, Declarant and any other Owner of a Lot which does not include a structural Improvement for human occupancy shall be exempt from the payment of that portion of any Assessment (e.g., Regular Assessment) which is for the purpose of defraying operating expenses and reserves directly attributable to the existence and/or use of such structural Improvements. This exemption shall include, but shall not necessarily be limited to, that portion of any Assessment attributable to roof replacement, exterior maintenance, exterior walkway and carport lighting, refuse disposal, cable television and domestic water supplied to Residences. This exemption shall be in effect only until the earliest to occur of: (a) the recordation of a notice of completion for the structural Improvements; (b) the occupation or use of the Residence; or (c) the completion of all elements of the Lot which the Association is obligated to maintain, if any. Declarant and any Owner shall also be exempted from the payment of that portion of any Assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and use of any Common Area facilities that are not complete at the time Assessments commence. This latter exemption shall only be in effect as to a particular Common Area facility until the earlier of: (a) the recordation of a notice of completion for such Common Area facility; or (b) the placement into use of the particular Common Area facility. Subject to the limitations of California Civil Code Section 1366, as same may be amended, from time to time, from and after the first day of the fiscal year immediately following the conveyance of the first Lot to an Owner, the maximum Regular Assessment may be increased subject to the following limitations: (a) Increases in Regular Assessments for any fiscal year which are less than or equal to twenty percent (20%) above the maximum Regular Assessment for the immediately preceding fiscal year may be approved by the Board, provided that the Board shall: (1) comply with the provisions set forth 50051. 003-2433. FCM 100797 -JO" in Section 1365(a) of the California Civil Code with respect to the distribution of the pro forma operating budget of the Association for the forthcoming fiscal year; or (2) obtain the approval of Members, constituting a quorum, casting a majority of affirmative votes at a meeting or an election of the Association conducted in accordance with California Corpora- tions Code Sections 7510, et seq., and Sections 7613, et seq. For purposes of this entire Section 3, a quorum means more than fifty percent (50%) of the Members of the Association; (b) Increases in Regular Assessments for any fiscal year which are greater than twenty percent (20%) above Regular Assessments for the immediately preceding fiscal year may be approved by the Board only after the Board obtains the approval of Members, constituting a quorum, casting a majority of affirmative votes at a meeting or election of the Associ- ation, conducted in accordance with Sections 7510, et seq. , and Section 7613 of the Corporations Code; and (c) The Assessment increases limitation set forth in Subsection (b) above does not apply to increases in Assessments related to emergency situations, which shall be deemed to include the following: (1) Extraordinary expenses required by an order by a court of competent jurisdiction; (2) Extraordinary expenses for the maintenance or repair of Common Area that is necessary to remedy any dangerous condition in the Project that represents a threat of damage or injury to any person or property; and (3) Extraordinary expenses necessary to repair or maintain the Common Area that could not have been reasonably anticipated by the Board at the time the most recent Association budget was prepared. Notwithstanding the foregoing, in the event that the Board increases the Regular Assessment above twenty percent (20%) pursuant to this Subparagraph (3) , the Board shall distribute written notice concerning such increase to all Owners and a copy of a resolution adopted by the Board setting forth: (i) the necessity of the extraordinary expenses; and (ii) the justification why said expenses were not reasonably foreseeable at the time the most recent budget was prepared. For the purpose of calculating whether an increase to Regular Assessments exceeds twenty percent (20%), the term "Regular Assessments" shall be deemed to include the amount assessed against each Lot by the Association as a Regular Assessment, plus any amount paid by the Declarant as a subsidy or pursuant to any subsidy or maintenance agreements, to the extent such subsidy _T q_50051.003-2433.FCM 100797 °-* payments offset an amount which would otherwise be paid by Owners as Regular Assessments. The Board may fix the Regular Assessment at an amount not in excess of the maximum Regular Assessment. So long as Declarant is offering Lots for sale pursuant to a Final Subdivision Public Report, the Regular Assessment may not be decreased by ten percent (10%) or more without the express prior written consent of the Declarant and the DRE. The Association may, upon ratification by a majority of the Board, enter into an agreement with Declarant, its successors or assigns, to reduce or abate Assessments, upon such terms and conditions as may be agreed to by the parties. Section 4. Special Assessments for Capital Improve- ments,. In addition to the Regular Assessments authorized above, the Board may not, subject to the limitations of California Civil Code Section 1366, without the vote or written approval of Members constituting a quorum (which shall mean more than fifty percent [50%] of Owners of the Association) casting a majority of affirma- tive votes at a meeting or election of the Association, conducted in accordance with Sections 7510, et seq. , and 7613 of the Corporations Code, levy Special Assessments to defray the costs of any action or undertaking on behalf of the Association which in the aggregate exceed five percent (5%) of the budgeted gross expenses of the Association for that fiscal year. The five percent (5%) limitation shall not apply to increases in Special Assessments related to an emergency situation which shall be deemed to include the following: (a) Extraordinary expenses required by an order by a court of competent jurisdiction; (b) Extraordinary expenses for the maintenance or repair of Common Area that is necessary to remedy any danger- ous condition in the Project that represents a threat of damage or injury to any person or property; and (c) Extraordinary expenses necessary to repair or maintain the Common Area that could not have been reasonably anticipated by the Board at the time the most recent Associ- ation budget was prepared. Notwithstanding the foregoing, in the event the Board levies any Special Assessment that exceeds the five percent (5%) limitation pursuant to this Section, the Board shall distribute written notice concerning said Special Assessment to all Owners and a copy of a resolution adopted by the Board setting forth: (1) the necessity of said Special Assessment; and (2) the justification why said Special Assessment was not reasonably foreseeable at the time the most recent budget was prepared. Every Special Assessment shall be levied upon the same basis as that prescribed for the levying of Regular Assessments. 50051. 003-2433.FCM 100797 ~40~ Section 5. Compliance Assessments. A Compliance Assessment may not be characterized nor treated as an assessment which may become a lien against the Owner's Lot enforceable by a sale in accordance with the provisions of Sections 2924, 2924(b) and 2924(c) of the Civil Code; provided, however, the foregoing shall not apply to any Compliance Assessment imposed against an Owner consisting of a reasonable late payment penalty for delin- quent Assessments and/or charges to reimburse the Association for the loss of interest and for costs reasonably incurred (including attorneys' fees) in its efforts to collect delinquent Assessments or imposed for costs incurred by the Association in the repair of damage to Common Area and facilities for which the Member or the Member's guests or tenants were responsible. Section 6. Special Benefit Assessments . Special Bene- fit Assessments shall mean and refer to a charge levied by the Association against an Owner and his respective Lot to cover the expenses incurred by the Association in the operation, maintenance, repair, and/or funding of reserves as to a portion of the Project designated herein as a "Special Benefit Area" or which is identi- fied or referred to as an area or facility benefitting the Association which expenses are allocable only to Owners within such an Area. These expenses chargeable to Owners in a Special Benefit Area may include, without limitation, the following: (a) Maintenance, management, operation, repair and replacement of particular Improvements within the Special Benefit Area; (b) Utilities or services for the benefit of Owners within the Special Benefit Area; (c) Reasonable reserves, as deemed appropriate by the Board, for repair and replacement of any Improvements maintained by the Association within a Special Benefit Area; and (d) Unpaid Special Benefit Assessments. The Association shall distribute to Owners within any Special Benefit Area a pro forma operating statement and budget for the upcoming fiscal year which shall estimate the expenses attributable to the Special Benefit Area, the allocation of such expenses among the affected Owners, and shall set forth the amount and payment schedule of the Special Benefit Assessments. Increases in Special Benefit Area Assessments for any fiscal year which are less than or equal to twenty percent (20%) above the maximum Special Benefit Area Assessment for the immediately preceding fiscal year may be approved by the Board, provided that the Board shall obtain the approval of Members affected by such Assessment, constituting a quorum, casting a majority of affirmative votes. For purposes of this Section, a quorum means more than fifty percent (50%) of the 50051.003-2433.PCM 100797 -41- Members of the Association affected by the Special Benefit Area Assessment. The Assessment increase limitation set forth herein- above does not apply to increases in Special Benefit Area Assess- ments related to emergency situations that could not have been reasonably anticipated by the Board at the time the most recent Association budget was prepared which determined the amount of the Special Benefit Area Assessments. Section 7. Date of Commencement of Regular Assess- ments: Due Dates. Subject to the terms of any maintenance and/or subsidy agreement entered into by the Association and Declarant, the Regular Assessments provided for herein shall commence as to all Lots within the Project on the first day of the month following the first conveyance of any Lot to a bona fide purchaser. Except as otherwise provided in this Article, the first Regular Assessments shall be adjusted according to the number of months remaining in the fiscal year as set forth in the By-Laws. The Board shall fix the amount of the Regular Assessment against each Lot at least thirty (30) days in advance of each Regular Assessment period. Written notice of the Regular Assessment shall be sent to every Owner subject thereto at least thirty (30) days in advance of each Assessment period. The due dates shall be established by the Board. Notwithstanding any other provisions of this Declaration, until the earlier to occur of: (a) the recordation of a Notice of Completion of an Improvement to the Common Area; or (b) the placement into use of the Common Area, each Owner (including Declarant) may be declared by the Board to be exempt from paying that portion of the Regular Assessment which is directly attributable to expenses and reserves to be incurred by the Association in the maintenance, operation and repair of such Common Area. Section 8. Notice of Increase in Assessments. The Board shall provide to the Owners, by first class mail to the address on file with the Association, notice of any increase in Regular, Special, and/or Special Benefit Assessments not less than thirty (30) nor more than sixty (60) days prior to such increase becoming due. Section 9. Certification of Payment. The Association shall, upon demand and for a reasonable charge, furnish a cer- tificate signed by an officer or agent of the Association, setting forth whether the Assessments on a specified Lot have been paid. If a certificate states that Assessments have been paid, such certif- icate shall be conclusive evidence of such payment. Section 10. Reserves. The Regular Assessments shall include reasonable amounts, as determined by the Board, collected as reserves for the future periodic maintenance, repair and re- placement of all or a portion of the Common Area or any such other purpose determined by the Board. All amounts collected as reserves shall be deposited by the Board in a separate bank account for the -49 -50051.003-2433.PCM 100797 ^ *• purposes for which they were collected, and are to be segregated from and not commingled with any other funds of the Association. Section 11. Offsets and Waiver Prohibited. No Owner may waive or otherwise avoid liability for the Assessments provided for herein for any reason whatsoever, including, but not limited to, non-use of the Common Area or abandonment of his Lot, nor shall any Owner be entitled to any offset against any Assessment provided for herein for any reason whatsoever, including, but not limited to, any expenditure made by such Owner for or on behalf of the Association. Section 12. Collection of Assessments. Except as oth- erwise provided above, Regular and Special Assessments shall be levied at a uniform rate for all Lots and may be collected on a monthly basis. Compliance Assessments and Special Benefit Assess- ments shall be due thirty (30) days after such Assessment has been levied. Section 13. Exempt Property. The following property subject to this Declaration shall be exempt from the Assessments herein: (a) All property dedicated to and accepted by any public authority; (b) All property owned by a charitable or nonprofit organization exempt from taxation by the laws of the State of California. However, no land or Improvements devoted to dwelling use shall be exempt from said Assessment; and (c) All Common Area owned in fee by the Associa- tion . ARTICLE VII EFFECT OF NONPAYMENT OF ASSESSMENTS: REMEDIES OF THE ASSOCIATION Section 1. Effect of Nonpayment of Assessments: Reme- dies of the Association. Any installment of a Regular, Special, Special Benefit, or Compliance Assessment not paid within fifteen (15) days after it is due and payable, shall be deemed delinquent and the Owner shall be required to pay: (a) reasonable costs of collection, including reasonable attorneys' fees; (b) a reasonable late charge not exceeding ten percent (10%) of the delinquent Assessment or Ten Dollars ($10.00), whichever is greater, or as may, from time to time, be established by the Board in accordance with California law; and (c) interest on all sums imposed under this Section at an annual percentage rate not to exceed twelve per- cent (12%), commencing thirty (30) days after the Assessment was due. The Association need not accept any tender of a partial SOOSl. 003-2433. FCM 100797 ~43~ payment of an assessment installment and all costs and attorneys' fees attributable thereto, and any acceptance of any such tender does not waive the Association's right to demand and receive full payments thereafter. Payments for Assessments shall first be applied to the principal owed for the Assessments and only after such principal amount is paid in full, shall such payments be applied to interest or collection expenses for such Assessments. The Board, for and on behalf of the Association, may commence legal action against the Owner personally obligated to pay the same, or, in the case of a Regular, Special or Special Benefit Assessment, may foreclose the lien against his Lot. Such lien may also be foreclosed by a power of sale or other nonjudicial procedure pro- vided for by the laws of the State of California. In furtherance thereof, each Owner hereby vests in the Association, its successors or assigns, the right and power to bring all actions at law or to pursue lien foreclosure against any Owner for purposes of col- lecting such Delinquent Assessments. To the extent permitted by law, each owner waives, with respect to the extent of any liens created pursuant to this Article, the benefit of any homestead or exemption laws of California in effect at the time any Assessment, or installment thereof becomes delinquent or any lien is imposed. Section 2. Notice of Delinquent Assessments. No ac- tion shall be brought to foreclose a lien for delinquent Assess- ments, or to proceed under the power of sale herein, unless (1) the Association notifies the Owner in writing by certified mail of the fee and penalty procedures of the Association, provides an itemized statement of the charges owed by the Owner, including items on the statement which indicate the principal owed, any late charges and the method of calculation, any attorney's fees, and the collection practices used by the Association, including the right of the Association to the reasonable costs of collection; and (2) at least thirty (30) days has expired following the date a "Notice of Delinquent Assessments" is deposited in the United States mail, certified or registered, postage prepaid, to the Owner of said Lot, and a copy thereof is recorded by the Association in the Office of the County Recorder. Said Notice of Delinquent Assessments must recite the name and street address of the record Owner, a good and sufficient legal description of any such Lot, the amount claimed (which may, at the Association's option, include reasonable late charges as may, from time to time, be established by the Board in accordance with California law, interest on the unpaid Assessment, plus reasonable attorneys' fees and expenses of collection incurred in connection with the debt secured by said lien) , and the name and address of the principal office of the Association, and, in the event of a nonjudicial foreclosure, as provided in Section 3 below, the name and address of the trustee authorized by the Association to enforce the lien by sale. The Notice shall be signed and acknowledged by the President, or Vice President, and the Secre- tary, or assistant Secretary, of the Association and mailed in the manner set forth in Section 2924(b) , to all record Owners of the Owner's interest in the Project no later than ten (10) calendar 50051.003-2433.FCM 100797 ~44~ days after recordation. The lien shall continue until fully paid or otherwise satisfied. Section 3. Foreclosure Sale. Any foreclosure sale provided for above is to be conducted by the Board, its attorney or other persons authorized by the Board in accordance with the provisions of Sections 2924, 2924a, 2924b and 2924c of the Cali- fornia Civil Code, as same may be amended, from time to time, applicable to the exercise of powers of sale in Mortgages and deeds of trust, or in any other manner permitted by law. The Association, through duly authorized agents, shall have the power to bid on the Lot at a foreclosure sale, and to acquire, hold, lease, mortgage and convey the same. Any Owner, by acceptance of a deed for his Lot, hereby expressly waives any objection to the enforcement and foreclosure of the lien in this manner. Section 4. Curing of Default. Upon the timely curing of any default for which a Notice of Delinquent Assessments or lien was filed by the Association, the officers thereof are hereby authorized to file or record, as the case may be, an appropriate release of such Notice upon payment by the defaulting Owner of a reasonable fee to be determined by the Association to cover the costs of preparing and filing or recording such release. Section 5. Cumulative Remedies. The Association's remedies for nonpayment of Assessments, including, but not limited to, an action to recover a money judgment, Assessment lien and right of foreclosure and sale, are cumulative and in addition to and not in substitution of any other rights and remedies which the Association and its assigns may have hereunder or at law. Section 6. Mortgagee Protection. Notwithstanding all other provisions hereof, no lien created hereunder, nor any breach of the terms and provisions of this Declaration, nor the en- forcement of any term or provision hereof, shall defeat or render invalid the rights of any Mortgagee under any recorded Mortgage or deed of trust upon a Lot made in good faith and for value; provided, that after such Mortgagee or other person or entity obtains title to such Lot by judicial or nonjudicial foreclosure, such Lot shall remain subject to this Declaration and the payment of Assessments which fall due subsequent to the date of taking title. ARTICLE VIII USE RESTRICTIONS The Lots and Common Area shall be occupied and used only as follows: -4.R-50051.003-2433.FCM 100797 ^-> Section 1. Private Residential Dwelling. Each Lot shall be used as a private residential dwelling and for no other purpose, except such temporary uses as shall be permitted by Declarant while the Project is being developed and Lots are being sold by Declarant; provided, however, that Declarant reserves the right, until all Lots in the Project are sold (and escrows closed), to carry on normal sales activity on the Project, including the operation of models and sales offices, provided Declarant shall not unreasonably interfere with any other Owner's use of the Common Area. Section 2. Common Area Use. Use of the Common Area shall be subject to the provisions of this Declaration, the Rules and Regulations and to any additional limitations imposed by the Association or other Association management documents. Section 3 . Conduct Affecting Insurance . Nothing shall be done or kept in any Lot or in the Common Area which will in- crease the rate of insurance on the Common Area without the ap- proval of the Association. No Owner shall permit anything to be done or kept in his Lot or in the Common Area which will result in the cancellation of insurance on the Common Area or which would be in violation of any law. If, by reason of the occupancy or use of said premises by the Owner, the rate of insurance to the Common Area shall be increased, the Owner shall become personally liable for the additional insurance premiums. Section 4. Liability for Damage. Each Owner shall be liable to the Association, pursuant to the laws of the State of California, for any and all costs and expenses which may be in- curred by the Association to repair any damage to the Common Area which be sustained by reason of the negligence or willful miscon- duct of said Owner or of his family, tenants, lessees or contract purchasers, or their respective guests or invitees, whether minor or adult. After approval by a majority of the Board, any such costs and expenses shall be levied by the Board as a Compliance Assess- ment against such Owner's Lot. Section 5. Signs. Subject to the provisions of Cali- fornia Civil Code, Sections 712 and 713, as same may be amended from time to time, no sign of any kind shall be displayed to the public view on or from any Lot or the Common Area without the approval of the Association, except such signs as may be used by Declarant until such time as all Lots in the Project are sold (and escrows closed), or for a period of three (3) years from the date of recordation of this Declaration, whichever occurs first, in connection with the development of the Project and sale of Lots, and except one (1) "for sale," "for lease" or "for exchange" sign of reasonable size (but not exceeding six [6] square feet) on any Lot. The foregoing restrictions shall not apply to any sign of customary and reasonable dimensions displayed on the Owner's Lot (or another Owner's Lot with consent) which states that the -4.fi-50051.003-2433.FCM 100797 ^ ° Residence is for sale, lease or exchange, or advertising directions to the Residence by the Owner or his or her agent, and which is reasonably located in plain view of the public, so long as it is consistent with any standards promulgated by the Architectural Control Committee. All signs permitted under this Section shall conform with the City's sign ordinance, if any, and with all applicable governmental regulations. Section 6. Maintenance of Animals. No animals of any kind shall be raised, bred or kept in any Lot or in the Common Area, except that common household pets, including dogs, cats or birds, may be kept in each Lot; provided, however, that no animal shall be kept, bred or maintained for any commercial purpose or in unreasonable numbers. As used herein, "unreasonable numbers" shall ordinarily mean more than two (2) animals per Lot. Each Owner shall be responsible for cleaning up any excrement or other unclean or unsanitary condition caused by said animal in the Project. When walking or exercising an animal in the Project, the Owner thereof shall, at all times, have readily available means to clean up any excrement or other unclean or unsanitary condition created by said animal. The Association, upon the approval of a majority of the Board, shall have the right to prohibit maintenance of any animal within the Project which constitutes a private nuisance to any other person. Every person bringing an animal upon or keeping an animal in the Project shall be liable pursuant to the laws of the State of California to each and all persons for any injury or damage to persons or property caused by such animal. All animals maintained in a Lot must be kept either within an enclosure, yard or patio, or on a leash being held by a person capable of con- trolling the animal. Section 7. Quiet Enjoyment. No Owner shall permit or suffer anything to be done or kept upon such Owner's Lot which will obstruct or interfere with the rights of quiet enjoyment of the other occupants, or annoy them by unreasonable noises or otherwise, nor will any Owner commit or permit any nuisance on the premises or commit or suffer any immoral or illegal act to be committed thereon. Notwithstanding the foregoing, for as long as Declarant owns an interest in the Project, the Declarant's efforts in selling the Lots may interfere with the Owners' quiet enjoyment of the Lots, however, each Owner acknowledges this and waives any claims against the Declarant for nuisance due to any activity related to constructing, selling or marketing the Lots. Each Owner shall comply with all of the requirements of the Board of Health and of all other governmental authorities with respect to said premises, and shall remove all rubbish, trash and garbage from his Lot. All clotheslines, refuse containers, woodpiles, storage boxes, tools and equipment shall be prohibited from any Lot unless obscured from view by a fence or appropriate screen approved by the Architectural Control Committee provided for hereinbelow. No Owner shall permit any thing or condition to exist upon his or her Lot which shall 50051.003-2433.FCM 100797 - 4 / ~ induce, breed, or harbor infectious plant diseases, or noxious or nuisance insects. Section 8. Structural/Landscaping Changes. There shall be no structural alteration, construction or removal of any Residence, fence or other structure whatsoever in the Project, or any removal, alteration, modification or interference with any landscaping materials or irrigation systems installed by Declarant or the Association, without the prior written approval of the Board or its designated Architectural Control Committee, as required herein, except such works of construction by Declarant during the development of the Project. No Owner shall install any improve- ments, including, but not limited to, fences, walls, decks, storage buildings, pools, spas, stairways and landscaping on that portion of his Lot subject to an easement dedicated to the Association as Common Area which is generally depicted on Exhibit "A", attached hereto. Section 9. Improvements. There shall be no construc- tion, alteration or removal of any Improvement in the Project (other than those repairs or rebuilding permitted under the Article entitled "Damage or Destruction to the Common Area") without the approval of the Architectural Control Committee, as set forth hereinbelow. No Improvement shall be constructed upon any portion of any Common Area, other than such Improvements as shall be con- structed: (a) by the Declarant (or a person or entity to whom Declarant assigns its rights as developer), or (b) by the Associ- ation as provided herein, as may be permitted by the Architectural Control Committee in accordance with the Article herein entitled "Architectural Control - Approval." Each Owner assumes all risks which may result from improvements he/she makes to his/her Lot, and each Owner indemnifies and holds harmless the Association, Declarant and each other Owner from any claim, demand, liability, judgment, attorneys' fees and other obligations which arise out of or are incurred in connection with the installation, existence or removal of such improvements. Section 10. Windows. No window in any Residence shall be covered in whole or in part, inside or outside, with aluminum foil, newspaper, paint, tint or any other material reasonably deemed inappropriate for such use by the Association; provided, however, an Owner may use plain white sheets to cover windows for a period not to exceed three (3) months after the close of escrow for his or her Lot pending the installation of drapes, curtains, shutters or other appropriate interior window coverings. Subject to review and approval by the Association, an extension of three (3) months may be provided. Section 11. Commercial Activity. No business, commer- cial, manufacturing, mercantile, storage, vending or industrial operations of any kind shall be conducted in or upon any Lot or the Common Area, except such temporary uses as shall be permitted by _AQ _S0051.003-2433.FCM 100797 ^° Declarant. Notwithstanding the foregoing, this Section shall not preclude an Owner from maintaining a home-office and conducting business activities therefrom on the following conditions: (a) there is no external evidence of such activity; (b) such activities are conducted in conformance with all applicable government ordinances; (c) the patrons or clientele of such activities do not visit the Residence or park automobiles or other vehicles within the Project; (d) the existence or operation of such activities is not apparent or detectable by sight, sound or smell from outside of the boundaries of the Residence or Lot; (e) no such activity increases the liability or casualty insurance obligation or premium of the Association; and (f) such activities are consistent with the residential character of the Project and conform with the provi- sions of this Declaration. In no event, however, shall any Owner or the Association use a Residence as an office for the rental, resale or leasing of Lots without the prior written consent of Declarant. Section 12. Parking. All vehicles in the Project shall be parked in accordance with the following: (a) Restrictions Regarding-the Private Streets. The streets within the Project are private and are subject to all applicable laws, ordinances and regulations of all govern- mental agencies having jurisdiction over the Project. Except in designated parking stalls or on the portion of a street adjacent to a sidewalk, if any, no on-street parking is permitted. (b) Vehicles. No Owner shall park, store or keep any large commercial type vehicle or any recreational vehicle (including, but not limited to, campers, motorhomes, trailers, boat trailers, boats, aircraft, mobile homes or other similar vehicles) on his Lot, the streets within the Pjroject or any portion of the Common Area. ; the -an '*exa^leT="the- "-Association" may determine it appropriate'' to allow use of such space on a first come first serve basis for a specified period of time in accordance with the lease provisions attached hereto as Exhibit " B . " ^ ? ^st anidar.d^pas.stsaag-e a? - a*i tomob i ;gfei;Gi©'@««iap to - a^jas^^ wt'i^e-g-a'3?age-or • on1 his 'd^i-vs-wayf v*p^6^±cfeS*'<*s4il>cft n.Qt^^ Cs»iJ * (c) Repairs . No Owner shall conduct major repairs to any motor vehicle of any kind whatsoever in his garage or upon the Common Area, except for emergency repairs thereto and 50051.003-2433.FCM 100797 -49- then only to the extent necessary to enable the vehicle to be moved to a proper repair facility. (d) Storage of Goods in Garages. Each Owner shall keep his garage readily available for parking his respective vehicle(s) therein, and shall not store any goods or materials therein, nor use any portion of the garage for a workshop or other use if such storage or use would prevent said Owner from parking, at any given time, the number of vehicles therein for which said garage was originally designed and constructed by Declarant to accommodate. (e) Garage Doors. All garage doors shall remain closed at all times, except as reasonably required for entry to and exit from the garage. Each Owner shall ensure that his garage door opener is in proper working order at all times. Section 13. Regulation of Parking. Subject to the rights of the Association, through its officers, committees and agents, the Board is hereby empowered to establish "parking" and "no parking" areas within the Common Area, in accordance with Section 22658.2 of the California Vehicle Code, or any similar statute hereafter enacted, as well as to enforce these parking limitations by all means lawful for such enforcement, including, but not limited to, the levying of fines and the citing and towing of vehicles. Parking is limited to only one side of the street in accordance with signs installed by Declarant or authorized by the City. The Board shall have the authority to tow away and store any vehicle or similar equipment parked in violation of the above limitations whether the same shall belong to any Owner or a member of his/her family or to any tenant, lessee, guest or invitee of any Owner. Charges for such towing and storing shall be assessed against the Owner of the Residence which is responsible for the violation of such restrictions, and such assessment may be enforced as a Compliance Assessment. Section 14. Compliance With Management Documents. All Owners shall be Members of the Association and shall comply with the terms and conditions as set forth herein and in the Articles and the By-Laws, and all Rules and Regulations of the Association and Architectural Control Committee. No Owner shall transfer any membership or interest in the Association, except upon the transfer of the Lot to which it is appurtenant. Section 15. Declarant's Improvements. Nothing in this Article or elsewhere in this Declaration shall limit the right of Declarant to complete construction of any Improvements to the Common Area and/or to any Lot owned by Declarant, or to alter the foregoing or to construct such additional Improvements as Declarant deems advisable prior to completion and sale of the entire Project. The rights of Declarant under this Declaration may be assigned by Declarant to any successor to all or any part of Declarant's 50051.003-2433.FCM 100797 - D 0 ~ interest in the Project, as developer, by an express assignment incorporated in a recorded deed transferring such interest to such successor. Section 16. Solar Heating. No solar heating panels or other solar energy collection equipment shall be installed on any portion of any Lot or Common Area, or any Improvement thereon, un- less such equipment is installed in such location and in such manner as to be obscured from the view of other persons in the Project to the greatest degree practicable without significantly decreasing its efficiency. No person shall install any such panels or equipment without the prior written consent of the Architectural Control Committee, which shall have the right to reasonably restrict and determine the size, shape, color, style, materials or location of any such panels or equipment within the Project, subject to the provisions of California Civil Code Section 714, as same may be amended, from time to time. At a minimum, any solar panels are to be integrated with the roof design with the panels and frame colored to match the roof or bronze anodized. Section 17. Antennas. No radio station or shortwave operators of any kind shall operate from any Lot. No Owner shall install, or cause to be installed, or maintain any television, radio, "Citizens Band" (C.B.) antenna, satellite dish or other similar electronic receiving or broadcasting device (including those devices having a diameter or diagonal measurement of one meter or less) in the Project in such a manner as to be visible from the Common Area, unless (1) approved by the Architectural Control Committee (which approval for a video or television antenna, including a satellite dish, shall not be unreasonably withheld or delayed but may include restrictions which do not significantly increase the cost of the installation, maintenance or use of the device or significantly decrease its efficiency or performance or preclude reception of an acceptable quality signal) and (2) in compliance with all applicable ordinances of the City, California Statutes (e.g., Civil Code Section 1376), and Federal Regulations, as each may be amended or revised. Section 18. Leasing. No Owner shall be permitted to rent or lease his Lot for transient or hotel purposes or for a period of less than thirty (30) days. All rental and lease agree- ments shall be in writing and shall provide that the terms of such agreement shall be subject in all respects to the provisions of this Declaration, By-Laws and Articles, and that any failure by the tenant or lessee to comply with the terms of such documents shall constitute a default under such agreement. Other than the fore- going, there are no restrictions on the right of an Owner to rent or lease his Lot. Section 19. Drilling. No oil drilling, oil development operations, oil refining, quarrying or mining operations of any kind shall be permitted upon or in any Lot or the Common Area, nor 50051.003-2433.FCM 100797 ~bl- shall oil wells, tanks, tunnels or mineral excavations be permitted upon or in any Lot or the Common Area. No derrick or other structure designed for use in boring for oil, water or natural gas shall be erected, maintained or permitted upon any Lot. Section 20. Trash. No rubbish, trash, garbage or other waste material shall be kept or permitted upon any portion of the Project, except in covered sanitary containers approved by the City located in appropriate areas screened and concealed from view by a fence, wall or other screen approved by the Architectural Control Committee, or in such portions of the Project, if any, improved with trash receptacles provided for the use of all Owners, and no odor shall be permitted to arise therefrom so as to render the Project, or any portion thereof, unsanitary, unsightly, offensive or detrimental to any other property in the vicinity thereof or to its occupants. All such refuse which is put out for pickup, shall be in conformance with all appropriate standards established by the City or governing agency. In the event trash is collected from each individual Lot, any approved trash containers shall be exposed to the view of neighboring Lots only when set out for a reasonable period of time (not to exceed twelve [12] hours before and after scheduled trash collection hours). Section 21. Drainage. There shall be no interference with the established drainage pattern over any Lot within the Project as to affect any other Lot or the Common Area, unless adequate alternative provision is made for proper drainage and is approved in writing by the Architectural Control Committee. For purposes hereof, "established" drainage is defined as the drainage which exists at the time such Lot is conveyed to a purchaser from Declarant, or later grading changes or architectural plans that are shown on plans approved by the Architectural Control Committee. Each Owner further agrees not to obstruct, retard or otherwise interfere with, in any manner whatsoever, any drainage swales, or to perform any grading or construction on his Lot which may result in creating an excessive amount of surface water runoff (i.e., an amount of water beyond the flow originally intended and provided for by the approved grading plan) to flow into said drainage swales. Except as may be otherwise maintained by the Association, each Owner of a Lot shall, at his sole cost and expense, maintain that portion of any drainage swale or other drainage devices located on his respective Lot. Section 22. Prohibition Against Further Subdivision. No Owner shall make any conveyance, execute any document or map, or enter into any contract which shall purport to further subdivide any Lot in any manner whatsoever, including, without limitation, subdividing such Lot into additional lots, condominiums, stock cooperatives or timeshare uses, whether by map, deed or contract. Any such conveyance, document, map or contract shall be void and of no force or effect whatsoever. 50051.003-2433.FCM 100797 52" Section 23. Patios and Balconies. Patios and bal- conies, and all furniture, plants and other improvements situated therein, shall be kept at all times in a neat, clean, safe and attractive condition. Clothes, towels, blankets, laundry, or clotheslines shall not be placed on or hung from any patio or balcony, or any portion of the Common Area, where doing so would be visible from any other Lot, the Common Area or the public. Patios and balconies shall not be used for storage of any items deemed inappropriate by the Architectural Control Committee. Section 24. Exemption of Declarant . Nothing in this Article or elsewhere in this Declaration shall limit, restrict, abridge or control, in any manner whatsoever, the rights of De- clarant to complete the planning, development, grading, construc- tion, advertising, marketing, leasing and sales of the Lots, and all other property within the Project, including, without limita- tion, the following specific rights, which may be exercised by Declarant, or by its agents and employees, in conjunction with such development and marketing, until all Lots in the Project are sold (and escrows closed) , or five years from recordation of this Declaration, whichever occurs first: (a) The right to maintain and operate one (1) or more advertising, sales or leasing off ice (s) located upon any Lot(s) owned by Declarant or upon any Common Area without payment of rent or approval of the Association; (b) The right to post and display from any Lot (s) owned by Declarant or from any Common Area any sign, flag, banner, billboard or other advertising which Declarant may, in its sole discretion, deem appropriate, irrespective of size, color, shape or materials of such items; (c) The right to install, place, replace, con- struct, reconstruct, modify or remove any Improvement from any Lot owned by Declarant or from any Common Area, as Declarant may, in its sold discretion, deem appropriate; provided that in the event Declarant removes any Association owned Improve- ment from any Common Area without the express prior written consent of the Board, Declarant shall replace such Improvement with an Improvement of substantially similar value, appearance and utility within a reasonable period following completion of any work necessitating the removal of the Improvement; (d) The right to conduct any commercial activity upon any Lot owned by Declarant or upon any Common Area which reasonably relates to the development, marketing, leasing or sales of the Lots in the Project; and (e) The right to park vehicles upon any Lot owned by Declarant or upon any Common Area. 50051. 003-2433. FCM 100797 All or any portion of the rights of Declarant herein and elsewhere in this Declaration may be assigned by Declarant to any successor-in-interest in the Project, by an express written assignment recorded in the Office of the County Recorder. Section 25. No Easements for View Purposes; Dis- claimer. The Article herein entitled "Architectural Control Approval," sets forth procedures for the approval of Improvements which may be constructed upon Lots in the Project which are con- sistent with the architectural standards adopted, from time to time, pursuant to said Article. The architectural standards may have some effect on views and the passage of light and air to individual Lots. However, by promulgation and enforcement of the architectural standards, or otherwise, neither Declarant, the Board nor the Architectural Control Committee, or the members, employees or consultants of any of the foregoing, have made any representa- tions whatsoever concerning the view, if any, that a particular Lot or other Improvement thereon will enjoy. There are no express or implied easements or rights whatsoever appurtenant to any Lot for view purposes, or for the passage of light and air. Each Owner, by accepting a deed to a Lot, hereby expressly acknowledges and agrees that further construction within the Project may impair the view from such Owner's Lot, and each Owner hereby expressly consents to any such impairment. Section 26. Weed Abatement. Each Owner shall be obligated to perform, at a minimum, any weed abatement as required by the City and/or County. In the event an Owner fails to perform such required weed abatement, which is the responsibility of the Owner as provided herein, then the Association shall have the right, but not the obligation to provide such weed abatement and the cost thereof shall be payable to the Association by the Owner of such Lot in accordance with the Assessment provisions set forth herein. Section 27. No Warranty of Enforceability. While Declarant has no reason to believe that any of the Protective Covenants contained in this Article or elsewhere in this Declara- tion are or may be invalid or unenforceable for any reason or to any extent, Declarant makes no warranty or representation as to the present or future validity or enforceability of any such Protective Covenants. Any Owner acquiring a Lot in the Project in reliance on one or more of such Protective Covenants shall assume all risks of the validity and enforceability thereof and, by acquiring the Lot, agrees to hold Declarant harmless therefrom. - R4-50051.003-2433.FCM 100797 -^ ARTICLE IX ARCHITECTURAL CONTROL - APPROVAL Section 1. Exemptions From Architectural Control. Ex- cept as otherwise provided herein, all Improvements to Lots shall be subject to architectural approval by the Association in accor- dance with the provisions of this Declaration. Notwithstanding the foregoing, Declarant shall be exempt from compliance with any of the provisions of this Article as they may relate to the original construction and development of the Project by Declarant in accordance with the plans approved by the City; provided, however, if Declarant shall desire to construct any Improvements to the exterior of a Residence after such Residence has been completed and approved by the City, Declarant shall obtain approval for such Improvements from the City; and, provided further, if Declarant shall retain a Residence for personal use, any Improvements to the exterior of such Residence shall be subject to architectural ap- proval pursuant to this Article. Section 2 . Architectural Control. Except for the pur- poses of proper maintenance and repair, and except as otherwise permitted hereunder, no person shall install any Improvement, in- cluding, without limitation, solar heating panels, lighting, shades, screens, awnings, patio covers, decorations, fences, screen doors, aerials, antennas, radio or television broadcasting or receiving devices, air conditioning units, or change or otherwise alter the exterior of any Residence or appurtenant Improvement. For the purposes of this Section, the term "exterior" shall mean any outside wall, outside surface, roof, outside door, patio, balcony, deck, garage or other outside structure of said Residence which is visible to others in the Project and/or to the public. Section 3. Architectural Control Committee. The Architectural Control Committee is hereby authorized with the rights and powers set forth in this Article. Said Committee shall consist of not less than three (3) members, nor more than five (5) members, and each initial member shall serve until the first election of the Board. In the event of the failure or inability of any member of the Architectural Control Committee to act, the remaining members shall designate a successor who shall serve for the remainder of the term of the member he replaces. The Declarant shall appoint all of the original members of the Architectural Control Committee, and replacements thereto. Further, Declarant re- serves the power to appoint a majority of the members of the Ar- chitectural Control Committee until ninety percent (90%) of the Lots in the Project have been sold and escrows closed, or until the fifth (5th) anniversary of the issuance of the Final Subdivision Public Report for the Project, whichever occurs first. After one (1) year from the date of the issuance of the Final Subdivision Public Report for the Project, the Board shall have the power to appoint one (1) member to the Architectural Control Committee until - RR -50051. 003-2433. FCM 100797 -1-1 ninety percent (90%) of the Lots in the Project have been sold, or until the fifth anniversary date of the first close of escrow for the sale of a Lot pursuant to the Final Subdivision Public Report for the Project, whichever first occurs. Thereafter, the Board shall have the power to appoint all of the members of the Archi- tectural Control Committee. Members of the Architectural Control Committee are not required to be Members of the Association. No member of the Architectural Control Committee shall be liable to any person for his decisions or failure to act in making decisions as a member of the Architectural Control Committee. Declarant may, in its discretion and at any time, assign to the Association by written assignment its powers of removal and appointment with respect to the Architectural Control Committee, subject to such terms and conditions regarding the exercise thereof as Declarant may impose. Section 4 . Meetings of the Architectural Control Com- mittee . The Architectural Control Committee shall meet, from time to time, as necessary to perform its duties hereunder. The Archi- tectural Control Committee may, by a majority vote of the members thereof, delegate any of its rights and responsibilities hereunder to one (1) or more duly licensed architects, who shall have full authority to act on behalf of the Architectural Control Committee on all matters so delegated. Section 5. Architectural Standards. The Board may, from time to time, adopt architectural standards to be administered through the Architectural Control Committee. The architectural standards may include, without limitation, those guidelines, procedures, limitations and restrictions upon Owners set forth below: (a) The placement, reconstruction, addition, change or alteration to a Lot or the exterior of a Residence, including the nature, kind, shape, materials, exterior color and location of any Improvement, and the height of any Improvement, including landscaping; (b) A description of the type of such construction, additions, changes or alterations which, if completed in conformity with the architectural standards, do not require approval of the Architectural Control Committee; (c) Conformity of completed Improvements to plans and specifications approved by the Architectural Control Committee; (d) Time limitations for the completion of the Improvements for which approval is required pursuant to the architectural standards; (e) Procedures for submission of plans and speci- fications submitted for Architectural Control Committee re- _ cr/r 50051. 003-2433. FCM 100797 -" u view, including, without limitation, floor plans, site plans, drainage plans, elevation drawings, landscape plans and a description.or samples of exterior colors and materials; (f) Restrictions controlling the species and place- ment of any trees, plants, shrubbery, ground cover, etc., to be placed, planted, irrigated and maintained in the Project; and (g) A reasonable schedule of fees for submission of plans and specifications or bonds to ensure proper completion of the anticipated work and compliance with the approved plans. The architectural standards may be periodically updated or revised by the Board, as the Board, in its reasonable discretion, may deem appropriate. The Architectural Control Committee shall maintain a copy of the then current architectural standards on file at all times, and shall provide each Owner with a copy of the architectur- al standards upon written request. The Board shall establish a reasonable fee for copies of the architectural standards, and other related materials, to cover costs of reproduction, administration and handling. Section 6. Architectural Approval - Review of Plans and Specifications. The Architectural Control 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 are in conformance with and are harmonious to the exterior design and existing materials of the buildings in the Project. The Architectural Control 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 and progress to ensure its conformance with the plans approved by the Architectural Control Committee. No construction, alteration, grading, addition, excavation, demolition, modification, decoration, redecoration or reconstruction of an Improvement shall be commenced or maintained by any Owner 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 Architectural Control Committee and approved in writing by the Architectural Control Committee. The initial address for submission of such plans and specifications, until changed by the Architectural Control Committee, shall be: Marvista Architectural Control Committee c/o TRC Development Corporation 26440 La Alameda, Suite 370 Mission Viejo, California 92691 Attention: Marketing Department - <z,7 -50051.003-2433.FCM 100797 ~> ' The Architectural Control Committee shall approve the plans and specifications submitted for its approval only if it deems that: (a) the construction, alterations or additions contemplated thereby and the locations indicated will not be detrimental to the appearance of the surrounding area of the Project as a whole; (b) the appearance of any structure affected thereby will be in harmony with surrounding structures; (c) the construction thereof will not detract from the beauty, wholesomeness and attractiveness of the Common Area, or the enjoyment thereof by the Owners; and (d) the upkeep and maintenance thereof will not become a burden on the Association. The Architectural Control Committee may condition its approval of proposals or plans and specifications for any Improve- ment: (a) on such changes therein as it deems appropriate, (b) upon the agreement by the person submitting the same to grant appropri- ate easements to the Association for the maintenance of the Improvement, or (c) upon the agreement of the person submitting the same to reimburse the Association for the cost of such maintenance, or all of the above, and may require submission of additional plans and specifications or other information prior to approving or disapproving the submission. The Architectural Control Committee may also issue rules or guidelines setting forth procedures for submission of plans for approval, requiring a payment of a fee to the Association to accompany each submission of plans and specifications, or ad- ditional factors which it will take into consideration in reviewing submissions. The Architectural Control 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, landscape plans and description or samples of exterior material and colors. Section 7. Decisions of the Architectural Control Committee. Until receipt by the Architectural Control Committee of any required plans and specifications, and such other information as may be required in Section 6 above, the Architectural Control Committee may postpone review of any plans submitted for approval. Decisions of the Architectural Control Committee and the reasons therefor should be transmitted by the Architectural Control Committee to the applicant, at the address set forth in the ap- plication for approval, within forty-five (45) days after receipt by the Architectural Control Committee of all plans, specifications and materials required. Any application submitted pursuant to the provisions of Section 6 above shall be deemed approved, unless written disapproval or a request for additional information or materials by the Architectural Control Committee shall have been transmitted to the applicant within forty-five (45) days after the receipt by the Architectural Control Committee of all required materials*. 50051.003-2433.FCM 100797 -DO Section 8. Submittal to City - Right of Architectural Control Committee to Review. Upon obtaining the written approval of the Architectural Control Committee, the Owner shall thereafter submit plans and specifications to the City. In the event that all necessary approvals of the City for the issuance of a building permit or other permits required to commence the work contemplated in the plans and specifications are not obtained within six (6) months from the date of approval by the Architectural Control Committee, the Architectural Control Committee shall have the right, but not the obligation, to re-review all previously approved plans and specifications. In addition, in the event that the City requires modifications to the plans and specifications previously approved by the Architectural Control Committee, the Owner shall submit to the Architectural Control Committee all modifications to the plans and specifications previously approved by the Architec- tural Control Committee. In the event the Owner is obligated to resubmit plans and specifications to the Architectural Control Committee to reflect the modifications required by the City, said Committee shall have the right to review and to impose further conditions on any such modifications. Section 9. Approval of City. Approval of any proposed or existing Improvement, or completion of an Improvement, by the Architectural Control Committee or the Board shall not be construed to warrant or represent in any way that the Improvement was approved by or complies with the minimum standards of the City. Similarly, approval of any proposed or existing Improvement by the City shall not be construed to constitute approval of such Improvement by the Architectural Control Committee or the Board. Section 10. Conflicts Between City and Architectural Control Committee. In the event of any conflict in the conditions of approval of any proposed Improvements imposed by the City and the Architectural Control Committee, the more restrictive of such conditions shall be controlling. Further, nothing herein shall limit the Architectural Control Committee from imposing conditions of approval of any proposed Improvements which are more restrictive than conditions as may be imposed by the City. Section 11. No Waiver of Future Approvals. The approv- al of the Architectural Control Committee to any submissions for any work done, or proposed to be done, or in connection with any other matter requiring the approval or consent of the Architectural Control Committee, shall not be deemed to constitute a waiver of any right to withhold approval or consent of any similar proposals, plans and specifications, drawings or other matters subsequently or additionally submitted for approval. Section 12. Compensation of Members. The members of the Architectural Control Committee shall receive no compensation for services rendered, other than reimbursement by the Association _ tr Q_50051. 003-2433. FCM 100797 ~> ^ for expenses incurred in the performance of such members' duties hereunder. Section 13. Variances. Where circumstances such as to- pography, location of buildings, location of landscaping or other matters require, the Architectural Control Committee, by the vote or written assent of a majority of the members thereof, may allow reasonable variances as to any of the Protective Covenants con- tained in this Declaration or provisions under the rules and regulations promulgated by the Architectural Control Committee, on such terms and conditions as it shall require. 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 Lot 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 Owner's use of his Lot, including, but not limited to, zoning ordinances, Lot setback lines or requirements imposed by the City or other governmental authority. Section 14. Inspection of Work. Upon consent of the Owner, which consent shall not be unreasonably withheld, any member or authorized representative of the Architectural Control Committee may, at any reasonable hour and upon reasonable notice, enter and inspect any Lot which has been the subject matter of an approval of a submission for an Improvement to his Lot. Such entry shall be made with as little inconvenience to the Owner as reasonably possible, and any damage caused thereby shall be repaired by the Association. If the Architectural Control Committee finds that such work was not done in substantial compliance with the approved plans and specifications, it shall notify the Owner in writing of such noncompliance, specifying the particulars of noncompliance and shall require the Owner to remedy the same within thirty (30) days from the date of notification of such noncompliance. If a noncom- pliance exists, the Board, after Notice and Hearing, may levy a Compliance Assessment against such Owner for the costs of removing or remedying such noncompliance. Section 15. Non-Liability of Architectural Control Committee Members. Neither Declarant, the Association, the Board or the Architectural Control Committee, or the members or designated representatives thereof, shall be liable for damages to any Owner submitting plans or specifications to them for approval, or to any Owner in the Project affected by this Declaration by reason of mistake in judgment, negligence or nonfeasance, unless due to willful misconduct or bad faith of the Architectural Control Com- mittee. The Architectural Control Committee's approval or disap- proval of a submission shall be based solely on the considerations set forth in this Article, and in such rules and regulations as may be promulgated by the Architectural Control Committee, and the Architectural Control Committee shall not be responsible for reviewing, nor shall its approval of any plan or design be deemed 50051.003-2433.FCM 100797 -60- approval of, any plans or design from the standpoint of structural safety and conformance with building or other codes. Section 16. Appeal. In the event plans and specifica- tions submitted to the Architectural Control Committee are disap- proved, the party making such submission may appeal in writing to the Board. The written request must be received by the Board not more than thirty (30) days following the final decision of the Architectural Control Committee. The Board shall submit such re- quest to the Architectural Control Committee for review, and the written recommendations of the Architectural Control Committee will be submitted to the Board. Within forty-five (45) days following receipt of the request for appeal, the Board shall render its written decision. The failure by the Board to render a decision within said forty-five (45) day period shall be deemed a decision in favor of the party making such submission. Section 17. Color Limitations. Notwithstanding any other provision of this Declaration to the contrary, the Archi- tectural Control Committee shall establish and strictly enforce standards of acceptable colors for the exterior surfaces of the Residences and appurtenant structures. - Section 18. Grading/Irrigation. No Owner shall permit any act to be performed on such Owner's Lot which would result in erosion of the Common Area or an adjoining Lot, including, but not limited to, changing the grading of his Lot or over-irrigating same. If the Owner permits any such act resulting in erosion of or other damage to the Common Area or adjoining Lot, said Lot Owner will be personally liable to the Association or adjoining Lot Owner for such damage and a Special Assessment shall be levied against such Lot Owner's Lot to recover all costs and expenses incurred to repair or reconstruct that portion of the Common Area or adjoining Lot damaged by such Lot Owner. Section 19. Public Right-of-Way. If applicable, no Owner shall construct any Improvement in the public right-of-way (e.g., six feet [6'] behind the street curb) unless the Owner obtains all necessary permits from the City and approval from the Board. 50051.003-2433.FCM 100T97 ARTICLE X REPAIR AND MAINTENANCE Section 1. Repair and Maintenance by Association. Without limiting the generality of the Article herein entitled "Powers and Duties of the Association," the Association shall have the duty to maintain, in a neat, clean, safe, sanitary, attractive and orderly condition at all times, the Common Area designated in this Declaration as generally indicated hereinbelow: (a) The Common Area (and all Improvements thereon) to be maintained, landscaped, repaired, improved, restored and replaced in a neat, clean, safe, attractive and orderly condition at all times shall include, but not be limited to, the following: (1) Trimming, fertilizing and cutting all landscaped areas to keep such areas free of weeds, dead vegetation and debris. Notwithstanding the foregoing, removal of native vegetation form the Common Area is prohibited, except pursuant development plans for the Project by the Declarant, written order of the Carlsbad Fire Department for fire prevention purposes, or upon written approval of the City Planning Director based on a request by the Association accompanied by a report from a qualified arborist/botanist indicating the need to remove such vegetation because of disease or impending danger to adjacent Residences. (2) Cleaning any debris from Common Area drainage swales or devices, and conducting regular ' inspections of all Common Area drainage devices; (3) Pruning trees as appropriate to avoid impeding pedestrian traffic along walkways and/or side- walks, if any; (4) Repairing significant cracks, potholes or other hazards in the private streets; (5) The Project private streets and adjacent streetscape and parkways in a condition comparable to the condition initially approved by the City, and all common amenities, open space, parkway landscaping, medians, greenbelts and other common landscaped areas, located within or adjoining those certain streets, including those areas depicted on Exhibit "A" (e.g., front yard areas and slope areas) ; (6) All private walkways or other pedestrian paths in the Common Area; — f\ 9 —50051. 003-2433.FCM 100797 oz (7) Any private water, sewer, drainage and irrigation facilities, easements, and improvements in the Common Area; (8) All Common Area lighting facilities, if any, required by the City; (9) Entry area within the Project, if any, and monumentation and related Improvements in a condition comparable to that condition initially approved by the City; (10) Unless otherwise maintained, parkways, structural integrity, and exterior surfaces (defined to mean the top and side fronting any public right-of-way or the Common Area) of all Project perimeter walls (wrought iron and block) as originally constructed by Declarant and approved by the City, and depicted on Exhibit "A" attached hereto and incorporated herein by reference; (11) All other areas, facilities, equipment, services, aesthetic components or other Improvements of whatever nature as may, from time to time, be designated by the Board; and (12) Performing all necessary tasks required to conform with applicable City, County and/or State regula- tions . (b) Maintain all other areas, facilities, furni- ture, equipment, services or aesthetic components of whatso- ever nature as may, from time to time, be requested by the vote or written consent of three-fourths (3/4) of the voting power of the Members,- and (c) Except as otherwise herein specified as being paid by individual Owners, the costs of maintenance, repair, restoration and replacement as provided in this Article shall be Common Expenses and shall be paid out of the general fund of the Association. - Section 2. Repair and Maintenance by Owner. Except as the Association shall be obligated to maintain and repair as may be provided in this Declaration, every Owner shall: (a) Maintain his Lot (which includes the Residence located thereon), including, without limitation, all side yard and rear yard walls and fences (but excepting therefrom the exterior surfaces and structural integrity of any Project perimeter wall, which are maintained by the Association or front yard tfr natural slope area depicted on Exhibit "A"), roofs, patios, patio covers, decks, deck covers, balconies, 50051.003-2433.FCM 100797 -63~ windows, window frames, screens, locks and doors of his Residence, landscaping and irrigation improvements, irrigation lines, sewer laterals, and all other Improvements located on or providing service to such Owner's Lot in a neat, clean, safe and attractive condition at all times, and make all repairs as they may be required; and (b) Install, within a reasonable period of time after conveyance of title to a Lot to an Owner, but in no event later than six (6) months after the close of escrow for the sale of a Lot to Owner from Declarant, the landscaping of that portion of Owner's Lot which was not installed by Declarant, if any, in a neat and attractive condition, in- cluding all necessary landscaping and gardening, to properly maintain and periodically replace, when necessary, the trees, plants, grass and other vegetation originally placed on such Lot by Declarant, if any. The Board may adopt Rules and Regulations proposed by the Architectural Control Committee to regulate landscaping permitted within the Project. In the event that any Owner shall fail to ' install and maintain landscaping, including all slope areas within the Lot, in conformance with the Rules and Regulations, or shall allow his landscaping to deteriorate to a dangerous, unsafe, unsightly or unattractive condition, the Board, after Notice and Hearing, may enter such Owner's property for the purpose of remedying the condition, and such Owner shall promptly reimburse the Association for the cost thereof. Such cost may be levied by the Board as a Compliance Assessment. Section 3. Maintenance of Public Utilities. Nothing contained herein shall require or obligate the Association to maintain, replace or restore the underground facilities or public utilities which are located within easements in the Common Area owned by such public utilities. However, the Association shall take such steps as are necessary or convenient to ensure that such facilities are properly maintained, replaced or restored by such public utilities. Section 4. Maintenance Manual. The Declarant may deliver to the Board a "Maintenance Manual" which sets forth the Declarant's and its consultants' recommended frequency of inspec- tions and maintenance of various components of the Common Area. The Board shall, during its meetings, determine whether the recommended inspections and maintenance activities have been followed, and, if any such recommendations have not been followed, what corrective steps need to be taken to assure proper inspection and maintenance of the Common Area. The Board shall keep a record of such determi- nations -in the Board's minutes. The Board shall, from time to time, make appropriate revisions to the Maintenance Manual. The Board shall review the Maintenance Manual for appropriate revisions at least on an annual basis after the Board has prepared the annual pro forma budget and reserve study required by the By-Laws. 50051.003-2433.FCM 100797 -64- In the absence of a Maintenance Manual, the Board may have the Common Area inspected at least once every three (3) years to (a) determine whether the Common Area is being maintained adequately in accordance with the standards of maintenance established herein, (b) identify the condition of the Common Area and any Improvements thereon, including the existence of any hazards or defects, and the need for performing additional maintenance, refurbishment, replacement or repair, and (c) recommend preventative actions which may be taken to reduce potential maintenance costs to be incurred in the future. The Board may employ such experts and consultants as are necessary to perform such inspection. The Board shall have a report of the results of the inspection prepared. The report shall include at least the following: (a) A description of the condition of the Common Area, 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 and 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 appropri- ate . Section 5. Damage and Destruction Affecting a Resi- dence - Duty to Rebuild. In the event any Residence is damaged or destroyed by fire or other casualty, it shall be the duty of the Owner of such Residence to repair or reconstruct said Residence in a manner which will restore it to its condition and appearance immediately prior in time to such damage or destruction, or as otherwise approved by the Architectural Control Committee. The Architectural Control Committee shall not approve such variance if the finished Residence would be inharmonious or out of keeping with the overall architectural theme of the Project, or with the exterior design of any adjacent Residences. The affected Owner shall be obligated to proceed, with all due diligence hereunder, and shall be responsible for commencing reconstruction within five 50051. 003-2433. FCM 100797 " -1 (5) months after the damage occurs, and completing such reconstruc- tion as soon as reasonably possible thereafter. Section 6. Owners' Cooperation for Maintenance. The Owners of Residences which are located on adjoining Lots shall cooperate with each other as is reasonably necessary to enable each Owner to properly maintain and repair his respective Residence and/or to mitigate any damage to his Residence. Section 7. Lew of Compliance Assessments. In the event the Association shall incur any costs or expenses due to the failure of any Owner to perform his maintenance obligations as set forth herein, or in order to repair any damage to the Common Area due to any negligent acts or omissions or willful misconduct on the part of an Owner, or any member of his family, his guests, invitees, tenants or lessees, or their guests or invitees, the Association shall have the right, but not the duty, to cause such maintenance or repairs to be performed. If the Board elects to cause such maintenance or repair work to be performed, after Notice and Hearing as provided in the By-Laws, the cost thereof shall be assessed against said Owner as a Compliance Assessment. ARTICLE XI DAMAGE OR DESTRUCTION TO THE COMMON AREA Section 1. Restoration of Damaged Common Area. Except as otherwise provided in Section 2 hereinbelow, damage to or de- struction of all or any portion of the Common Area owned in fee by the Association shall be handled in the following manner: (a) In the event of damage to or destruction of the Common Area, and the insurance proceeds are sufficient to effect total restoration, the Association shall, as promptly as is practical, cause the Common Area to be repaired and reconstructed in a good workmanlike manner to its condition prior to such damage or destruction. (b) If the insurance proceeds available are at least ninety percent (90%) of the estimated cost of total repair and reconstruction to the Common Area, the Association shall, as promptly as practical, cause such Common Area to be repaired and reconstructed in a good workmanlike manner to its condition prior to the damage or destruction, and the differ- ence between the insurance proceeds and the actual cost shall be levied by the Association as a Special Assessment against each of the Lots on an equal basis. (c) If the insurance proceeds available are less than ninety percent (90%) of the estimated cost of total 50051.O03-2433.FCM 100797 -DO- repair and reconstruction to the Common Area, the Owners shall, by the written consent or vote of a majority of the Owners, determine whether: (1) To restore the Common Area as promptly as practical to its condition prior to the damage or destruction, and to raise the necessary funds over and above the- insurance proceeds available by levying Assess- ments against each of the Lots on an equal basis; or (2) To restore the Common Area in a way which utilizes all available proceeds and an additional amount not in excess of ten percent (10%) of the estimated cost of total reconstruction and repair to the Common Area, and which is assessable as provided above to all Lots, but which is less expensive than restoring the Common Area to its condition prior to the damage or destruction. Section 2. Election by Owners Not to Restore Damaged Common Area. (a) Notwithstanding the provisions set forth in Section 1 hereinabove, in the event sixty-seven percent (67%) of the Owners, other than Declarant, and sixty-seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage ownedLhave_aiven their prior written _-, approval, the Owners may/fiotjelect^to rebuild or restore the Common Area and to disburseche available insurance proceeds to the general fund of the Association. (b) In the event the Owners shall have so voted not to rebuild the Common Area, the Common Area shall be cleared and landscaped and the cost thereof shall be paid for out of the available insurance proceeds prior to their distribution to the general fund of the Association. (c) In the event the Owners shall have so voted not to rebuild the Common Area, unless the City shall agree to the contrary, it shall be the obligation of the Association and each of the Owners to rebuild the private streets, utilities and open spaces, at least to the extent said streets, utili- ties and open spaces were accepted initially by the City in lieu of payment of fees due pursuant to law. Section 3. Retention of Excess Insurance Proceeds in General Fund. In the event any excess insurance proceeds remain after restoring the destroyed Common Area pursuant to this Article, the Board shall retain such sums in the general fund of the Associat-ion. 50051.003-2433.FCM 100797 "' ARTICLE XII CONDEMNATION Section 1. Distribution of Awards - Common Area. A condemnation award affecting all or any portion of the Common Area shall be remitted to the general fund of the Association. Section 2. Board of Directors as Attorney-in-Fact. All Owners hereby appoint the Board as their special attorney-in- fact to handle the negotiations, settlements and agreements per- taining to any condemnation affecting only the Common Area. ARTICLE XIII COVENANT AGAINST PARTITION Section 1. Covenant Against Partition. By acceptance of his deed, each Owner shall be deemed to covenant for himself, and for his heirs, representatives, successors and assigns, that he will not institute legal proceedings to effect judicial partition of his interest in the Project, unless the Project: (a) has been in existence in excess of fifty (50) years, (b) is obsolete and uneconomical, and (c) the Owners of fifty percent (50%) of the total of all Lots in the Project join in such action for partition. ARTICLE XIV INSURANCE Section 1. Required Insurance Coverage. The Associa- tion, acting by and through the Board, shall obtain for the Asso- ciation .and shall maintain and pay the premiums for the following insurance coverage: (a) Casualty and Fire Insurance. A policy or policies of casualty and fire insurance with extended coverage endorsement in an amount equal to one hundred percent (100%) of the current replacement cost (without deduction for depreciation or co-insurance) of the Common Area, together with all Improvements located thereon. Said policies shall be maintained for the benefit of the Owners. The coverage does not need to include land, foundations, excavations or other items normally excluded from such coverage. Such policy or policies must contain, if required and if obtainable: (1) An Agreed Amount and Inflation Guard Endorsement; 50051.003-2433.FCM 100797 (2) Construction Code Endorsements (such as Demolition Cost Endorsement); (3) A Contingent Liability from Operation of Building Laws Endorsement; and (4) An Increased Cost of Construction En- dorsement, if there is a construction code provision which would become operative and require changes to undamaged portions of any Improvements or the Common Area. (b) Public Liability Insurance. A policy or pol- icies of full coverage public liability insurance (with cross- liability endorsement, if obtainable) insuring the Associ- ation, the Board, the Owners, the Declarant, and the agents and employees of each of the foregoing against any liability to the public or to any Owner, his family, invitees and/or tenants, arising from or incident to the ownership, occupa- tion, use, maintenance and/or repair of the Common Area. The limits of liability under this Section shall be set by the Board and shall be reviewed at least annually by the Board and increased or decreased at the discretion of the Board; provided, however, that said limits shall not be less than Two Million Dollars ($2,000,000.00) for bodily injury, including deaths of persons and property damage arising out of a single occurrence; and, provided further, that if FHLMC and/or FNMA participate in the financing of Lots in the Project, said lim- its shall not be less than the minimum limits required under the then current FHLMC and/or FNMA regulations. (c) Fidelity Bonds . Officers' and Directors ' errors and omissions insurance, and fidelity bonds naming all persons signing checks or otherwise possessing fiscal responsibilities on behalf of the Association, including, but not limited to, officers, Directors, trustees and employees of the Associa- tion, and officers, employees and agents of any management company employed by the Association who handle or are respon- sible for the administration of Association funds. Such coverage shall be in an amount deemed reasonably appropriate by the Association, but shall not be less than the estimated maximum funds, in the custody of the Association, or twenty- five percent (25%) of the estimated annual, operating expenses of the Project, plus reserves, whichever is greater. Section 2. Optional Insurance Coverage. The Associa- tion, acting at its option and by and through the Board, may pur- chase such additional coverage or other insurance as it may deem necessary or appropriate, or otherwise financially beneficial for the Owners, including, but not limited to, earthquake insurance, flood insurance, Workers' Compensation Insurance and plate glass insurance. 50051.003-2433.FCM 100797 -69- Section 3. Notice of Cancellation of Insurance. All policies of insurance maintained by the Association pursuant to this Article shall contain a provision that coverage under said policies may not be canceled, terminated, allowed to expire by their own terms, or be substantially modified by any party without at least thirty (30) days' prior written notice to the Board, to each Owner and to such first Mortgagees who have filed written requests with the Association for such notice. A list of the Owners and such first Mortgagees shall be made available by the As- sociation to the insurance carrier upon request. Section 4. Review of Coverage. The Board shall annu- ally determine whether the amounts and types of insurance coverage that it has obtained pursuant to this Article shall provide adequate coverage for the Project, based upon the then current construction costs, insurance practices in the area in which the Project is located and all other factors which may indicate that either additional insurance coverage or increased coverage under the existing policies is necessary or desirable to protect the interests of the Association, the Owners and their respective Mortgagees. If the Board determines that increased coverage or additional insurance is appropriate, it shall obtain same. Section 5. Waiver by Owners. As to all policies of insurance maintained by the Association which will not be voided or impaired thereby, each Owner hereby waives and releases all claims against the Association, the Board, the Declarant and the agents and employees of each of the foregoing, and all other Owners, with respect to any loss covered by such insurance, whether or not caused by the negligence of, or breach of, any agreement by said persons, but only to the extent of the insurance proceeds received in compensation for such loss. Section 6. Premiums, Proceeds and Settlement. Insur- ance premiums for all blanket insurance coverage and any other insurance coverage which the Board has determined is necessary to protect the interests of the Association, the Owners and their respective Mortgagees, shall be a Common Expense to be included in the Regular Assessments levied by the Association. All insurance proceeds paid to the Association shall be disbursed as follows: (a) in the event of any damage or destruction to the Common Area, such proceeds shall be disbursed in accordance with the provisions of the Article herein entitled "Damage or Destruction to the Common Area"; and (b) in the event of any other loss, the proceeds shall be disbursed as the Board shall deem appropriate, subject to the limitations set forth in the Article herein entitled "Mortgagee Protection." The Association is hereby granted the authority to negotiate loss settlements with the appropriate insurance carriers. Any two (2) Directors 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 the Association and its Members. -70-50051.003-2433.FCM 100797 /u Section 7. Rights and Duties of Owners to Insure. Nothing herein shall preclude any Owner from carrying any casualty and fire insurance for his Residence and all personal property within his Residence, and/or public liability insurance as he may deem desirable to cover his individual liability for damage to person or property occurring inside his individual Lot or elsewhere upon the Project. If obtainable, such liability insurance coverage carried "by an Owner shall contain a waiver of subrogation of claims against the Declarant, the Association, the Board, their agents and employees, and all other Owners. Such other policies shall not adversely affect or diminish any liability under insurance obtained by the Association. If any loss intended to be covered by insurance carried by the Association shall occur and the proceeds payable thereunder shall be reduced by reason of insurance carried by any Owner, such Owner shall assign the proceeds of such insurance carried by him to the Association to the extent of such reduction for application by the Board to the same purposes as the reduced proceeds are to be applied. Section 8. Trustee for Policies. The Association is hereby appointed and shall be deemed trustee for the interests of all insureds under the policies of insurance maintained by the Association. All insurance proceeds under such policies shall be paid to the Board, as trustees, and the Board shall have full power to receive such funds on behalf of the Association, the Owners and their respective Mortgagees, and to deal therewith as provided for in this Declaration. Section 9. Compliance With Requirements of FHLMC and FNMA. Notwithstanding the provisions of this Article, the Associa- tion shall obtain and maintain in effect such policies of insurance meeting all requirements of FHLMC and FNMA established by those entities for planned development projects for so long as any of such agencies continue to be a Mortgagee, Owner, insurer or guarantor of a Mortgage in the Project, except to the extent such coverage is not available or has been waived, in writing, by such agencies. Section 10. Required Waiver. All policies of hazard and physical damage insurance may provide, only if available at a reasonable cost to the Association as determined by the Board, in its sole discretion, for waiver of the following rights, to the extent that the respective insurers would have the rights without such waivers: (a) Any defense based on co-insurance; (b) Any right of set-off, counterclaim, apportion- ment, proration or contribution by reason of other insurance not carried by the Association; -71 -50051. 003-2433. FCM 100797 ' -*- (c) Any invalidity, other adverse effect or defense on account of any breach of warranty or condition caused by the Association, any Owner or any tenant of any Owner, or arising from any act, neglect or omission of any named insured, or the respective agents, contractors and employees of any insured; (d) Any right of the insurer to repair, rebuild or replace, and, in the event the Residence is not repaired, rebuilt or replaced following loss, any right to pay under the insurance an amount less than the replacement value of the improvements insured or the fair market value thereof; (e) Notice of the assignment of any Owner of its interest in the insurance by virtue of a conveyance of any Lot; and (f) Any right to require any assignment of any Mortgage to the insurer. Section 11. Annual Notification of Insurance. The Association shall, upon issuance or renewal of insurance, but no less than annually, notify its Members as to the amount and type of insurance carried by the Association, and it shall accompany this notification with statements to the effect that the Association is or is not insured to the levels specified by this Article, and that if not so insured. Owners may be individually liable for the entire amount of a judgment, and if the Association is insured to the levels specified in Section 1 above, then Owners may be individual- ly liable only for their proportional share of Assessments levied to pay the amount of any judgment which exceeds the limits of the Association's insurance. The Association shall further prepare and distribute to all its Members a summary of the Association's insurance coverage pursuant to Section 1365 of the California Civil Code. ARTICLE XV MORTGAGEE PROTECTION Section 1. Mortgagee Protection Provisions. Notwith- standing any other provisions in this Declaration to the contrary, in order to induce FHLMC and FNMA, and other lenders and investors, to participate in the financing of the sale of Lots in the Project, the following provisions contained within this Article are added hereto, and to the extent these added provisions conflict with any other provisions in this Declaration, these added provisions shall control. This Declaration, the Articles and the By-Laws for the Association are hereinafter collectively referred to in this Article as the "constituent documents." -79 -50051.003-2433.FCM 100797 '^ (a) The right of an Owner to sell, transfer or otherwise convey his Lot shall not be subject to any right of first refusal or any similar restriction in favor of the Association; (b) The lien of the Assessments provided for herein shall be subordinate to the lien of any first Mortgage now or hereafter recorded upon any Lot. The sale or transfer of any Lot shall not affect the Assessment lien; however, the sale or transfer of any Lot pursuant to judicial or nonjudicial foreclosure of a first Mortgage or pursuant to any remedies provided for in the Mortgage shall extinguish the lien of such Assessments as to payments which became due prior thereto. No sale or transfer shall relieve such Lot from liability for Assessments due thereafter. Any first Mortgagee who obtains title to a Lot pursuant to the remedies provided in the Mortgage, or foreclosure of the Mortgage, or any purchaser at a foreclosure sale of a first Mortgage will not be liable for unpaid Assessments or charges which accrue prior to the ac- quisition of title to such Lot by the Mortgagee (except for claims for a share of such Assessments or charges resulting from a reallocation of such Assessments or charges to all Lots, including the mortgaged Lot); (c) Except as provided by statute in case of con- demnation or substantial loss to the Lots and/or Common Area, unless sixty-seven percent (67%) of the Owners other than Declarant, and sixty-seven percent (67%) of the first Mortgag- ees (based upon one [1] vote for each Lot encumbered by said Mortgagee's first Mortgage) have given their prior written approval, neither the Association nor the Owners shall be entitled to: (1) Change the method of determining the obligations, Assessments, dues or other charges which may be levied against an Owner's Lot; (2) By act or omission seek to abandon, parti- tion, subdivide, encumber, sell or transfer all or any portion of the Common Area. The granting of easements for public utilities or for other public purposes consistent with the intended uses of the Common Area shall not be deemed a transfer within the meaning of this clause; (3) Use hazard insurance proceeds for losses to the Common Area for other than repair, replacement or reconstruction; (4) Effect any decision of the Association to terminate professional management and assume self- management of the Project, where such professional man- 50051.003-2433.FCM 100797 agement was previously a requirement by a holder, insurer or guarantor of any first Mortgage; (5) By act or omission, change, waive or abandon any provisions of this Declaration, or enforce- ment thereof, pertaining to architectural design of the Residences situated on a Lot or the maintenance and operation of the Common Area within the Project, in- cluding, without limitation, fences and landscaping within the Project; (6) Fail to maintain fire and extended cov- erage on the insurable Common Area on a current re- placement cost basis in an amount not less than one hundred percent (100%) of the insurable value thereof; and (7) Abandon or terminate the Association, except for abandonment, partition or termination as may be provided by law. (d) All taxes, Assessments and charges which may become liens prior to the first Mortgage under local law shall relate only to individual Lots, and not to the Project as a whole; (e) No provision of the constituent documents shall be interpreted to give any Owner or any other party priority over any rights of the first Mortgagee in the case of a distribution to such Owner of insurance proceeds or condemna- tion awards for losses to or a taking of all or any portion of the Common Area or such Owner's Lot; (f) The Assessments provided for in the constituent documents shall include an adequate reserve fund for mainte- nance, repairs and replacement of those elements of the Common Area that must be replaced on a periodic basis, and shall be payable in regular installments, rather than by Special Assessments; (g) Each holder, insurer or guarantor of a first Mortgage who has filed with the Association a written request for notice shall be entitled to timely written notice of: (1) Any condemnation or eminent domain pro- ceeding, and any loss or taking resulting from such proceeding which affects the Project, or any portion thereof; (2) Any substantial damage or destruction to the Project, or any portion thereof, when such loss exceeds Ten Thousand Dollars ($10,000.00); 50051. 003-2433.FCM 100797 - 74 - (3) Any default in the performance by an indi- vidual Owner of any obligation under the constituent documents which is not cured within sixty (60) days after the Association learns of such default, which notice shall state the length of time which such Owner has been delinquent; (4) Any lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association; (5) Any abandonment or termination of the Project; and (6) Any proposed action that requires the consent of a specified percentage of eligible Mortgagees. (h) Any agreement for professional management of the Project, or any contract providing for services of the Deqlarant, may not exceed one (1) year, renewable by agreement of the parties for successive one (1) year periods. Any such agreement must provide for termination by either party with or without cause and without payment of a termination fee on thirty (30) days' or ninety (90) days' or less, respectively, prior written notice; (i) First Mortgagees of Lots may, jointly or singly, pay taxes or other charges which are in default and which may have become a lien on the Common Area, and may pay overdue premiums on hazard insurance policies or secure new hazard insurance coverage on the lapse of a policy for the Common Area, and first Mortgagees making such payments shall be owed immediate reimbursement therefor from the Association. Upon demand by any first Mortgagee, the Board shall execute, on behalf of the Association, an agreement establishing the right of all first Mortgagees to such reimbursement; (j) A first Mortgagee of a Lot in the Project will, upon request, be entitled to: (1) Examine the books and records of the Association during normal business hours; (2) An audited financial statement from the Association for the previous fiscal year (without expense to the holder, insurer or guarantor requesting said statement), however, if an audited financial statement is not available and until such time as the Project contains fifty (50) Lots, if ever, any Mortgage holder may be allowed to have an audited financial statement prepared, at its own expense; and 50051. 003-2433.FCM 100797 ' -> (3) Receive written notice of all meetings of the Association and be permitted to designate a rep- resentative to attend all such meetings. (k) Each Owner shall notify the Association in writing within ten (10) days after the close of escrow for the purchase of his Lot of the name and address of his first Mortgagee, and thereafter, each Owner shall promptly notify the Association of any changes of name or address for his first Mortgagee; (1) If any Lot (or portion thereof) or the Common Area (or portion thereof) is made the subject matter of any condemnation or eminent domain proceeding, or is otherwise sought to be acquired by a condemning authority, then the institutional holder of any first Mortgage on such Lot will be entitled to timely written notice of any such proceeding or proposed acquisition; and (m) In the event any portion of the Common Area encroaches upon any Lot or any Lot encroaches upon the Common Area as a result of the construction, reconstruction, repair, shifting, settlement or movement of any portion of the Project, a valid easement for the encroachment and for the maintenance of the same shall exist so long as the encroach- ment exists. Section 2. Violation of Mortgagee Protection Provi- sions . No breach of any of the foregoing Protective Covenants shall cause any forfeiture of title or reversion or bestow any right of re-entry whatsoever, but in the event that any one or more of these Protective Covenants shall be violated, the Declarant, its successors and assigns, the Association, or any Owner in the Project may commence a legal action in any court of competent jurisdiction to enjoin or abate said violation and/or to recover damages; provided, however, that any such violation shall not defeat or render invalid the lien of any Mortgage or deed of trust made in good faith and for value. Said Protective Covenants shall be binding upon and effective against any Owner whose title is acquired by foreclosure, trustee sale or otherwise. Section 3. Amendments to Conform With Mortgagee Re- quirements . It is the intent of Declarant that this Declaration and the Articles and By-Laws of the Association, and the Project in general, meet all requirements necessary to purchase, guarantee, insure or subsidize any Mortgage of a Lot in the Project by the FHLMC and the FNMA. In furtherance of said intent, Declarant may amend this Declaration without the consent of the Members at any time after the close of escrow for the first sale of a Lot in the Project "by recording a written instrument setting forth the amendment, provided that the amendment is necessary to cause this Declaration to comply with the requirements of the ORE, FHLMC, FNMA - 7fi -50051. 003-2433.FCM 100797 /o and/or GNMA; provided, however, that any such amendment shall be effective only if Declarant mails a copy of the amendment to all of the foregoing entities which are, or have agreed to be, a holder, insurer or guarantor of a first Mortgage, and does not, within thirty (30) days thereafter, receive a notice of disapproval from any such entity. Said amendments shall not be recorded by Declarant until after the expiration of such thirty (30) day period. ARTICLE XVI ENFORCEMENT OF BONDED OBLIGATIONS Section 1. Enforcement of Bonded Obligations. In the event that the improvements of the Common Area have not been com- pleted prior to the issuance of a Final Subdivision Public Report by the ORE, and the Association is obligee under a bond or other arrangement (hereinafter referred to as the "Bond") to secure a performance of the commitment of Declarant to complete such im- provements, the following provisions shall apply: (a) The Board shall consider and vote on the question of action by the Association to enforce the obliga- tions under the Bond with respect to any improvements for which a Notice of Completion has not been filed within sixty (60) days after the completion date specified for such im- provements in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writing for the completion of any Common Area improvement, the Board shall consider and vote on the aforesaid question if a Notice of Completion has not been filed within thirty (30) days after the expiration of such extension. (b) In the event that the Board determines not to initiate action to enforce the obligations under the Bond, or in the event the Board fails to consider and vote on such question as provided above, the Board shall call a special meeting of the Members for the purpose of voting to override such decision or such failure to act by the Board. Such meeting shall be called according to the provisions of the By- Laws dealing with meetings of the Members, but in any event, such meeting shall be held not less than thirty-five (35) days nor more than forty-five (45) days after receipt by the Board of a petition for such meeting signed by Members representing five percent (5%) of the total voting power of the Associa- tion. (c) The only Members entitled to vote at such meeting of Members shall be the Owners, other than Declarant. A vote at such meeting of a majority of the voting power of such Members, other than the Declarant, to take action to enforce the obligations under the Bond shall be deemed to be 50051.003-2433.FCM 100797 -77- the decision of the Association, and the Board shall thereaf- ter implement such decision by initiating and pursuing appropriate action in the name of the Association. ARTICLE XVII GENERAL PROVISIONS Section 1. Enforcement. (a) The Association or the Owner of any Lot in the Project, including the Declarant, shall have the right to enforce, by proceedings at law or in equity, all of the Protective Covenants now or hereafter imposed by this Declara- tion and the By-Laws, respectively (and the Rules and Regula- tions duly adopted by the Association), including, without limitation, the right to record a notice of noncompliance or violation, to prosecute a proceeding at law or in equity against the person or persons who have violated, or are attempting to violate, any of said Protective Covenants, to enjoin or prevent them from doing so, to cause said violation to be remedied and/or to recover damages for said violation; provided, however, that with respect to Assessment liens, the Association shall have the exclusive right to the enforcement thereof. (b) The result of every act or omission whereby any of the Protective Covenants contained in this Declaration or the provisions of the By-Laws are violated, in whole or in part, is hereby declared to be and constitutes a nuisance, and every remedy allowed by law or equity against a nuisance shall be applicable against every such result and may be exercised by any Owner, by the Association, or by its successors in interest. (c) The remedies herein provided for breach of the Protective Covenants contained in this Declaration or the provisions of the By-Laws shall be deemed cumulative, and none of such remedies shall be deemed exclusive. (d) The failure of the Association or any Owner to enforce any of the Protective Covenants contained in this Declaration or the provisions of the By-Laws shall not constitute a waiver of the right to enforce the same thereaf- ter. (e) Prior to filing a civil action by either the Association or by an Owner solely for declaratory relief or injunctive relief, or for declaratory relief or injunctive relief in conjunction with a claim for monetary damages other than Association Assessments, related to the enforcement of 50051.003-2433.FCM 100797 -78~ the Association governing documents, the parties may be required to comply with Civil Code Section 1354, if applica- ble. Failure to comply with the prefiling requirements of Section 1354 of the Civil Code may result in the loss of the right to sue regarding enforcement of the Association govern- ing documents. Upon motion by any party for attorneys' fees and costs as the prevailing party, the court, in determining the amount of the award, may consider a party's refusal to participate in alternative dispute resolution prior to the filing of the action. (f) A breach of the Protective Covenants contained in this Declaration or of the provisions of the By-Laws shall not affect or impair the lien or charge of any bona fide Mort- gage or deed of trust made in good faith and for value on any Lot; provided, however, that any subsequent Owner of such property shall be bound by said Protective Covenants, whether or not such Owner's title was acquired by foreclosure, a trus- tee's sale or otherwise. (g) The Board, for and on behalf of the Associa- tion, may assess monetary penalties against an Owner as a Compliance Assessment and/or temporarily suspend said Owner's voting rights for the period during which any Assessment against said Owner's Lot remains unpaid; provided, however, the requirements for Notice and Hearing set forth in the By- Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (h) The Board, for and on behalf of the Associa- tion, may, after Notice and Hearing, temporarily suspend an Owner's voting rights for a period not to exceed thirty (30) days for any infraction of the Association's published Rules and Regulations; provided, however, the requirements for Notice and Hearing set forth in the By-Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (i) In addition to the above general rights of enforcement, the City and any other governmental entity with appropriate jurisdiction shall have the right, through its agents and employees, to enter upon any part of the Project for the purpose of enforcing all applicable codes and/or local ordinances, including, but not limited to, the California Vehicle Code, and is hereby granted an easement over the Project for such purpose. (j) The rights of City to compel performance shall include the following: (1) Failure of Association to Maintain Common / • Area. In the event that the Association fails to 50051. 003-2433. FCM 100797 '"~ maintain the Common Area (including, but not limited to, |i the easements shown on Exhibit "A"), as required in this , |' Declaration, the City shall have the right, but not the |' duty, to perform the necessary maintenance. If the City fej elects to perform such maintenance, the City shall give :f written notice to the Association, with a copy thereof to S the Owners in the Project, setting forth with particular- "' ity the maintenance which the City finds to be required F/; and requesting the same be carried out by the Association }; within a period of thirty (30) days from the giving of !-|| such notice. In the event that the Association fails to J: carry out such maintenance of the Common Area with the $ period specified by the City's notice, the City shall be f/l entitled to cause such work to be completed and shall be ! entitled to reimbursement with respect thereto from the :' Owners as provided herein. : | ', i (2) Special Assessments Levied by the City. In the event the City has performed the necessary 'Vi maintenance to the Common Area, the City shall submit a u written invoice to the Association for all costs incurred ,*•, by the City to perform such maintenance of the Common ,' Area (including the easements shown on Exhibit "A") . 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 City may levy a special assessment against the Owners of each Lot in the Project for an equal prorata share of the invoice, plus the late charge. Such Special Assessment shall 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 VII of this Declaration. _ o o _ 50051. 003-2433. FCM 100797 ou Section 2. Severability. Invalidation of any one of these Protective Covenants by judgment or court order shall in no way affect any other provisions hereof, which shall remain in full force and effect. Section 3. Term. The Protective Covenants set forth in this Declaration shall run with and bind the Project, and shall inure to the benefit of the Association and be enforceable by the Board or the Owner of any land subject to this Declaration, their respective legal representatives, heirs, successors and assigns, for a term of fifty (50) years from the date this Declaration is recorded, after which time said Protective Covenants shall be automatically extended for successive periods of ten (10) years, unless an. instrument, signed by a majority of the then Owners agreeing to terminate said Protective Covenants, in whole or in part, has been recorded within one (1) year prior to the termina- tion of the initial fifty (50) year term, or within one (1) year prior to the termination of any successive ten (10) year period. Section 4. Construction. The provisions of this Dec- laration shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and maintenance of the Project. 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. Section 5. Singular Includes Plural. Whenever the context of this Declaration may so require, the singular shall in- clude the plural, and the masculine shall include the feminine and neuter. Section 6. Amendments. (a) Amendments by Declarant. Prior to the sale of a Lot to a member of the public, in accordance with a Final Subdivision Public Report issued by the DRE, this Declaration may be amended, restated or terminated by an instrument executed by Declarant. (b) Amendments by Association. This Declaration may be amended only by an affirmative vote of Owners representing not less than sixty-seven percent (67%) of the Class A voting power and the Class B voting power of the Association. At such time when the Class B membership shall cease and be converted to Class A membership, any and all amendments to this Declara- tion shall be enacted by requiring the vote or written assent of Owners representing both: (a) sixty-seven percent (67%) of the total voting power of the Association, and (b) sixty-seven percent (67%) of the votes of Members, other than the Declar- ant; provided, however, that the percentage of the voting power necessary to amend a specific provision shall not be less than the percentage of affirmative votes prescribed for 50051. 003-2433.FCM 100797 ~ol- action to be taken under said provision. Any Owner or the Association may petition the Superior Court of the County for an order reducing the necessary percentage required under this Section to amend this Declaration. The procedure for effecting this petition is set forth in Section 1356 of the California Civil Code, as the same may be amended, from time to time. (c) Approval of Mortgagees. In addition to the rights of first Mortgagees, as set forth in the Article herein entitled "Mortgagee Protection, " in the event that FNMA participates in the financing of Lots in the Project, the written consent of not less than fifty-one percent (51%) of the first Mortgagees shall be required for any amendment of a "material" nature. An amendment which affects or purports to affect any of the following is considered material: (1) The legal status of the Project as a planned development; (2) Voting rights; (3) Increase in assessments that raise the previously assessed amount by more than twenty-five percent (25%), assessment liens or the priority of assessment liens, including the levy and collection thereof, enforcement provisions for nonpayment and subordination of liens for nonpayment; (4) Reduction in reserves for maintenance, repair and replacement of Common Area; (5) Responsibility for Common Area maintenance and repair; (6) Reallocation of interests in the Common Area or rights to use the Common Area; (7) Boundaries of any Lot; (8) Convertibility of Common Area into Lots or Lots into Common Area; (9) Expansion or contraction of the Project, or addition, annexation or de-annexation of additional property to or from the Project; (10) Insurance or fidelity bonds; (11) Restrictions on leasing of Lots; (12) Imposition of restrictions on alienation, including, but not limited to, rights of first refusal; _ o O _50051.003-2433.FCM 100797 °^ (13) Any decision by the Association to es- tablish self-management, if professional management was previously required by an eligible first Mortgagee or legal documents governing the Project; (14) Restoration or repair of the Project in a manner other than as specified in this Declaration; (15) Any action to terminate the legal status of the Project after substantial destruction or condem- nation occurs; and (16) Mortgagee protection provisions as set forth in that Article hereinabove entitled "Mortgagee Protection," and such other provisions in this Declara- tion for which the consent of Mortgagees shall be re- quired or which are expressly for the benefit of Mort- gagees, insurers or guarantors of Mortgages. An addition or amendment to this Declaration shall not be considered material if it is for the purpose of correcting technical errors or for clarification only. In the event the Association is considering termination of the legal status of the Project for reasons other than the substantial destruction or condemnation of the Project, then sixty-seven percent (67%) of the first Mortgagees must agree to said termination. Notwithstanding the foregoing, in the event any first Mort- gagee receives a written request, delivered by certified or registered mail with return receipt requested, from the Board to approve any amendment to this Declaration, and such first Mortgagee does not deliver a negative response in writing to the Board within thirty (30) days of the mailing of such request by the Board, such first Mortgagee shall be deemed to have approved such proposed amendment. (d) Approval by City. Notwithstanding any other provisions of this Article, prior to effectuating any amend- ment or supplement hereto, termination, or changes to the rights and obligations herein within any article or section of this Declaration, the City must have approved same. The Declarant or the Association shall forward, or cause to be forwarded, to the City a written notice of any such amendment or termination. If no notice of disapproval is received by the Association within thirty (30) days following the mailing of such notice, such amendment or termination shall be deemed to be approved by the City. (e) Recordation of Amendments. An amendment made in accordance with the provisions set forth hereinabove shall be effective when executed by the President and Secretary of the Association, who shall certify that the amendment has been approved by the membership and, where appropriate, by the 50051. 003-2433.FCM 100797 -83- first Mortgages, in the percentages set forth hereinabove, and recorded in the Office of the County Recorder. Upon such recordation, the amendment shall be effective and binding upon all Owners and all Mortgagees, regardless of whether such Owner or such Mortgagee consented to such amendment. Section 7. Encroachments. None of the rights and ob- ligations of the Owners created herein 'or by the deed shall be al- tered in -any way by encroachments due to settlement or shifting of structures or any other cause. There shall be valid easements for the maintenance of said encroachments so long as they shall exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of an Owner if said encroachment occurred due to the willful conduct of said Owner. Section 8. Notices. Any notice permitted or required to be delivered as provided herein shall be in writing and may be delivered either personally or by mail. If delivery is made by regular, registered or certified mail, it shall be deemed to have been delivered forty-eight (48) hours after a copy of the same has been deposited in the United States mail, postage prepaid, ad- dressed to any person at the address given by such person to the Association for the purpose of service of such notice, or to the Lot of such person if no address has been given to the Association. If such notice is not sent by regular, registered or certified mail, it shall be deemed to have been delivered when received. Such address may be changed, from time to time, by notice in writing to the Association. Section 9. Attorneys' Fees. If any Owner defaults in making a payment of Assessments or in the performance or observance of any provision of this Declaration, and the Association and/or an Owner has obtained the services of an attorney in connection there- with, the Owner covenants and agrees to pay any costs or fees incurred, including reasonable attorneys' fees, regardless of whether legal proceedings are instituted. In case a suit, arbitra- tion, or alternative dispute resolution is instituted, the prevailing party shall recover the cost of the suit, arbitration, or alternative dispute resolution, in addition to the aforesaid costs and fees. Section 10. Mergers or Consolidations. Upon a merger or consolidation of the Association with another association, the Association's properties (e.g., Common Area), rights and obliga- tions 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 Protective Covenants established by this Declaration governing 50051. 003-2433.PCM 100797 the Project, together with the covenants and restrictions estab- lished upon any other property as one plan. Section 11. 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 Project, 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 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 DRE. Section 12. Arbitration of Disputes. Notwithstanding any other provision of this Declaration, and except as may otherwise be required or allowed by California Civil Code Section 1368.4 and/or 1375, as same may be amended from time to time, in the event of an arbitrable dispute between or among (a) Declarant, or general contractors, or brokers, or their agents or employees, and any Owner(s) or the Association, or (b) any Owner, and another Owner, or (c) the Association, and any Owner, the matter may be submitted to binding arbitration following Notice and Hearing. Arbitrable disputes include any controversy or claim, including any claim based on contract, tort, or statute, arising out of or relating to the rights or duties of the parties under the Declara- tion, but do not include any construction defect claims. Any controversy regarding whether a dispute is an arbitrable dispute shall be determined by the arbitrator. The arbitration shall be conducted by the Judicial Arbitration and Mediation Services, or its successor ("JAMS"). If JAMS is unavailable, arbitration will be conducted by and in accordance with the rules of the American Arbitration Association ("AAA"). In either case, there shall be only one arbitrator who shall be selected by mutual agreement of the parties, failing such selection, the arbitrator shall be selected by JAMS or its substitute. Section 13. Conflicts in Management Documents For the Project. In the event of any conflict between and/or among the provisions of any of the management documents for the Project, the Declaration shall be deemed to supersede the provisions of any conflicting management documents, including, without limitation, 50051.003-2433.FCM 100797 °-> the By-Laws, architectural standards, if any, and the Rules and Regulations, if any. IN WITNESS WHEREOF, Declarant has executed this instru- ment on the day and year first above written. "DECLARANT" LA COSTA 21, LLC, a California limited liability company BY: TRC DEVELOPMENT CORPORATION, a California corporation Managing Member By: Its: STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , 1997, before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the persons or the entities upon behalf of which the person acted executed the instrument. WITNESS my hand and official seal. Signature of Notary Public (SEAL) 50051. 003-2433. FCM 100797 CONSENT OF LIENHOLDER AND SUBORDINATION OF LIEN The undersigned beneficiary under that certain Deed of Trust recorded on , as Instrument No. , in the Official Records of San Diego County, California, agrees that the lien of the Deed of Trust shall be junior and subordinate and subject to the attached "Declaration of Covenants, Conditions and Restrictions, and Reservation of Easements For Marvista" ("Declara- tion") and to any easements to be conveyed to the Marvista Maintenance Corporation in accordance with the terms of the Declaration. DATED: "LIENHOLDER" BY: Its BY: ItS: 50051. 003-2433.FCM 100797 STATE OF CALIFORNIA ) ) ss. COUNTY OF ) On , 1997, before me, the undersigned, a Notary Public in and for said State, personally appeared and , personally known to me (or proved to me on the basis of satisfacto- ry evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity, and that by their signatures on the instrument the persons or the entities upon behalf of which the persons acted executed the instrument. WITNESS my hand and official seal. Signature of Notary Public (SEAL) 50051.003-2433.FCM 100797 EXHIBIT'A' FENCE, WALL AND MAINTENANCE PLAN • \1 \ . 1 j i.j f 1 itt7 i I tf J j i -f , f : j ' | •f : I j ( i 1 : UNICORN I- 0 <D STREET MAINTAINED BY HOMEOWNER'S ASSOCIATION HOMEOWNER MAINTAINED AREAS COMMON AREA MAINTAINED BY HOMEOWNER'S ASSOCIATION PERIMETER FENCING MAINTAINED BY HOMEOWNER'S ASSOCIATION PAGE 1 OF 4 EXHIBIT 'A3 FENCE, WALL AND MAINTENANCE PLAN UNICORNIO STREET MAINTAINED BY HOMEOWNER'S ASSOCIATION HOMEOWNER MAINTAINED AREAS COMMON AREA MAINTAINED BY HOMEOWNER'S ASSOCIATION AVENUE (T) PERIMETER FENCING MAINTAINED BY HOMEOWNER'S ASSOCIATION PAGE 2 OF 4 EXHIBIT 'A' FENCE, WALL AND MAINTENANCE PLAN STREET MAINTAINED BY 22 HOMEOWNER'S ASSOCIATION HOMEOWNER MAINTAINED AREAS COMMON AREA. MAINTAINED BY HOMEOWNER'S ASSOCIATION PERIMETER FENCING MAINTAINED BY HOMEOWNER'S ASSOCIATION PAGE 3 OF 4 EXHIBIT 'A' FENCE, WALL AND MAINTENANCE PLAN STREET MAINTAINED 3Y HOMEOWNER'S ASSOCIATION HOMEOWNER MAINTAINED AREAS { 1 COMMON ARE ! i HOMEOWNER1 AREA MAINTAINED BY S ASSOCIATION CQ PERIMETER FENCING MAINTAINED BY HOMEOWNER'S ASSOCIATION @ RETAINING WALL MAINTAINED 3Y HOMEOWNER'S ASSOCIATION PAGE 4 OF 4 EXHIBIT "B" TEMPORARY RECREATIONAL VEHICLE PARKING LEASE THIS TEMPORARY RECREATIONAL VEHICLE PARKING LEASE ("Lease") is entered into this day of , 19 , by and between, Marvista Maintenance Corporation, a California nonprofit, mutual benefit corporation, ("Lessor"), and - ("Lessee"). RECITALS A. Lessee is a member of the Marvista Maintenance Corpora- tion, and as a member thereof, desires to lease a Parking Space (defined below) from Lessor for the storage of a recreational vehicle, and Lessor is willing to lease a Parking Space to Lessee subject to the terms and provisions set forth hereinbelow. NOW, THEREFORE, for and in consideration of the mutual cove- nants and conditions set forth hereinbelow, the parties do hereby agree as follows: 1. LEASE OF PARKING SPACE. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, that certain parking area designated as space number ("Parking Space"), more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference. THE PARTIES ACKNOWLEDGE THAT ONLY A LEASE OF THE PARKING SPACE IS CREATED HEREBY AND NO BAILMENT IS CREATED NOR SHALL BE IMPLIED HEREBY. 2. LEASE TERM. 2.1 Initial Term. The(term of this Lease shall commence immediately upon: (a) payment by Lessee to Lessor of the Annual Rental Fee (defined below); (b) delivery by Lessee to Lessor evidence of insurance, as provided in Paragraph 5.2(b); (c) delivery by Lessee to Lessor evidence that the Vehicle (defined below) is registered in the name of the Lessee; and (d) the execution of this Lease by both parties ("Commencement Date"), and, unless terminated earlier as provided in Paragraph 2.3 hereinbelow, shall terminate six months from the Commencement Date ("Initial 50051.003-2433.FCM 100797 Term") . The Initial Term may be extended as provided for in Paragraph 2.2 hereinbelow. 2.2 Extended Term. Subject to the provisions of this Paragraph and so long as Lessee is not in default under this Lease, Lessee shall have the option to extend the Initial Term of this Lease for an additional six months ("Extended Term"), subject to the same terms, covenants, and conditions set forth herein; provided, however, the Annual Rental Fee may be increased as provided for in Paragraph 3.2 hereinbelow. Lessee may exercise the option to extend the Initial Term of this Lease by providing written notice to Lessor (as provided in Paragraph 8.2 hereinbe- low) , within thirty (30) days prior to the expiration of the Initial Term, indicating Lessee's election to extend the Initial Term and paying to Lessor the then applicable Annual Rental Fee. 2.3 Early Termination. (1) Lessor. This Lease may be terminated at any time by Lessor, for any reason as determined by Lessor, in its sole discretion, upon five (5) business days prior written notice to Lessee. In the event of such early termination, Lessee shall be entitled to a pro rata refund of a portion of the Annual Rental Fee as determined by Lessor. (2) Lessee. Lessee may terminate this Lease at any time with twenty-four (24) hours prior written notice to Lessor; provided, however, in the event of such early termi- nation, Lessee shall not be entitled to any pro rata refund of any portion of the Annual Rental Fee. 2.3 Holding Over. This Lease shall terminate without further notice at the expiration of the Initial Term unless otherwise extended pursuant to Paragraph 2.2 of this Lease. Any holding over by Lessee after the expiration of the Initial Term or Extended Term, if applicable, shall not constitute a renewal of this Lease or extension of such Term, or otherwise create any rights in Lessee in or to the Parking Space. Any holding over after the expiration of such Term with the consent of Lessor shall be deemed a tenancy from month-to-month on the same terms and conditions set forth in this Lease at a rental rate fee of One Hundred Dollars ($100.00) per month. * i- 3. RENT. 3.1 Annual Rental Fee. Lessee agrees to pay, in advance and concurrently with the execution of this Lease, One Hundred Fifty Dollars ($150.00) as the annual (i.e., six month) rental fee ("Annual Rental Fee") for the Parking Space during the Initial Term. 50051.003-2433.FCM 100797 3 .2 Adjustments: Increases. The Annual Rental Fee may be increased by Lessor, from time to time, at Lessor's sole and absolute discretion. 4. USE OF THE PARKING SPACE. 4.1 Vehicle Identification. Lessee shall only use the Parking Space for the storage of that certain vehicle identified herein ("Vehicle"). Lessee shall not allow the Vehicle to be occu- pied overnight, nor allow any waste to be committed within the Parking Space, nor allow any nuisance to be maintained thereon. Lessee shall not conduct any major repairs to the Vehicle in the Parking Space, except for emergency repairs to said Vehicle and then only to the extent necessary to enable the Vehicle to be moved to a proper repair facility. 4.2 Unauthorized Storage. STORAGE, FOR ANY PERIOD OF TIME IN EXCESS OF SEVENTY-TWO (72) HOURS, OF ANY VEHICLE OTHER THAN THE VEHICLE IDENTIFIED IN THIS LEASE IN THE PARKING SPACE WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR MAY BE SUBJECT TO TOWING AS DETERMINED BY LESSOR, IN ITS SOLE AND ABSOLUTE DISCRETION. 4.3 Hours of Operation. Lessor shall establish, at his sole and absolute discretion, hours of operation during which Lessee may move the Vehicle in and out of the Parking Space. Lessor shall either post said hours of operation in a conspicuous location in the storage area or provide Lessee with notice of said hours pursuant to Paragraph 8.2 hereinbelow. 5. INDEMNITY AND INSURANCE. 5.1 Indemnity. Lessee agrees to indemnify and hold Lessor free and harmless from any and all claims, damages, losses, costs, expenses and other liability (including, without limitation, reasonable attorneys' fees and costs and expenses of litigation) for: (a) injury to or death of any person and/or any damage to property arising from the use of the Parking Space by Lessee, or from any acts or omissions of any person or persons, including Lessee, in or about the Parking Space with the express or implied consent of Lessee; or (b) any other liability whatsoever arising out of the use of the Parking Space by Lessee. 5.2 Insurance. < (1) No Insurance Coverage by Lessor. Lessee hereby acknowledges that: (i) Lessor shall not be responsible to carry any liability or property insurance for the Parking Space, or the Vehicle stored thereon; and (ii) Lessor does not carry any public liability or property damage insurance to compensate Lessee or any other person from any claims, damages, losses, costs, injuries and other liability, except 50051.003-2433.PCM 100797 t « * any such claims, damages, losses, costs, injuries or other liability resulting from Lessor's gross negligence. (2) Lessee's Insurance. Lessee shall furnish evi- dence to Lessor that Lessee has secured, for the entire term of this Lease, public liability insurance and property damage insurance in amounts acceptable to Lessor. 6. UTILITIES. Lessee acknowledges that no utilities or other services of any kind, including but not limited to, electrical outlets, security patrol or disposal stations, are provided by Lessor. 7. DEFAULT. Failure by Lessee to comply with or perform the terms and provisions of this Lease shall constitute a default and breach of this Lease. In the event of any such default or breach by Lessee, Lessor may, at any time thereafter upon seventy-two (72) hours prior written notice and demand: (a) terminate this Lease and Lessee's right to use the Parking Space by any lawful means; and (b) cause the Vehicle to be towed or otherwise removed to the nearest secured storage facility. In the event of such default, Lessor shall be entitled to recover from Lessee all damages, costs and expenses incurred by Lessor by reason of Lessee's default. 8. MISCELLANEOUS PROVISIONS. 8.1 Entire Agreement. This Lease constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and supersedes all prior or contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, between the parties in connection with the subject matter hereof, except as specifically set forth herein. No supplements or modifications or waivers of this Lease shall be binding unless executed in writing by the parties to be bound thereby. No waiver of any provision of this Lease shall be deemed or shall constitute a waiver of any other provision herein (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 8.2 Notices. Any notice, demand or other communication to be given under this Lease shall be in writing, served either personally or by mail, and shall be deemed given when served per- sonally or by mail two (2) days after the date of deposit in the United States mail, certified or registered, postage prepaid, addressed to the party to be served at the address shown herein or at the last address given by that party to the other under the provisions of this Lease. 50051.003-2433.FCM 100797 8.3 Attorneys' Fees. If either party to this Lease shall institute an action or other proceeding to enforce the terms or conditions of this Lease, then the prevailing party in such action shall be entitled to recover from the other party all reasonable costs and expenses of such litigation, including, without limita- tion, reasonable attorneys' fees. Arbitration is an action or proceeding for purposes of this Paragraph. 8.4 Interpretation. All pronouns and any variation thereof shall be deemed to refer to the masculine, feminine or neuter, and to the singular or plural, as the identity of the person or persons may require for proper interpretation of this Lease. 8.5 Temporary Storage. The real property (including the Parking Space) designated to accommodate the parking of rec- reational vehicles within the Marvista community ("Storage Area") may be only temporary. Lessor hereby expressly reserves the right to eliminate said Storage Area at any time upon five (5) business days prior written notice to Lessee. The decision to terminate the Storage Area shall be made by Lessor, in its sole discretion. In the event of said termination, Lessee shall be entitled to a pro rata refund of the Annual Rental Fee as set forth in Section 2.3(a) hereinabove. 8.6 Governing Law. This Lease shall be interpreted in accordance with the laws of the State of California. "LESSOR" MARVISTA MAINTENANCE CORPORATION, a California non-profit, mutual benefit corporation Address: BY: Its: "LESSEE" "Vehicle" '• Vehicle Type: State of Address: Registration: • Make/Model: Model Year: CA ID No. : Telephone: ( ) - License No. : S0051.003-2433.FCM 100797