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CT 99-09; Rancho Carrillo Village N; Tentative Map (CT) (34)
DRHOHIDN CUSTOM HOMES February 2, 2001 Anne Hysong City of Carlsbad Planning Department 1635 Faraday Ave Carlsbad, CA 92009-1576 RE: Rancho Carrillo's Village N - "Portico" Recorded CC&R's Dear Anne, It has taken awhile, but I have enclosed a copy of the recorded version of the CC&R's for Portico along with your original set CC&R's. I have tagged the pages addressing your comments. If you have any questions please call. Thank you for all your help on this project. Sincerely, Stefan LaCasse Vice President Project Manager encl. cc Ray Martin - Hunsaker & Associates (w/o encl.) 1010 S. Coast Hwy. 101 Suite 101 Encinitas, California 92024 (760) 634-6700 Fax (760) 634-6770 I . CHICAGO TITLE COMPANY RECORDING REQUESTED BY: WHEN RECORDED MAIL TO: D.R.Horton San Diego Holding Company, Inc. 101 South Coast Highway, Suite 101 Encinitas, CA 92024 Attn: John D. Kerr, Jr. ) ) ) ) ) ")' ) ) S 2QQ1-QQ43578 JAN 2OG1 1 = • OFFICIAL RECORDS SAN DIEGO COUNTY RECORDER'S OFFICE . SHM COUNTY RECORDER Above Space DECLARATION OF COVENANTS, CONDITIONS AMD RESTRICTIONS OF PORTICO AT RANCHO CARRILLO Horton/PoiticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1585022.3 5754 TABLE OF CONTENTS ARTICLE 1 RECITALS 1 1.1 PROPERTY OWNED BYDECLARANT 1 1.2 RIGHTTO ANNEX I 1.3 NATURE OF PROJECT I 1.4 DESCRIPTION OF PROJECT 1 ARTICLE2 DEFINITIONS 2 2.1 ADDITIONAL CHARGES 3 2.2 ADDITIONAL PROPERTY 3 2.3 ANNEXATION ... , „ 3 2.4 ARCHITECTURAL COMMITTEE .... , 3 2.5 ARCHITECTURAL GUIDELINES * < 3 2.6 ARTICLES \ ! 3 2.7 ASSOCIATION -. 3 2.8 ASSOCIATION PROPERTY 3 • 2.9 ASSOCIATION RULES 3 2.10 BOARD ....... 3 2.11 BRUSH AREAS 3 2.12 BUILDING ENVELOPES 4 2.13 BYLAWS. 4 2.14 CAPITAL IMPROVEMENT ASSESSMENTS 4 2.15 CITY 4 2.16 COMMON AREA 4 2.17. CONDOMINIUM 4 2.18 CONDOMINIUM BUILDING 4 2.19 CONDOMINIUM PLAN 4 2.20 COUNTY ' 4 2.21 DECLARANT 4 2.22 DECLARATION 5 2.23 ELIGIBLE HOLDER 5 2.24 ENFORCEMENT ASSESSMENTS 5 2.25 EXCLUSIVE USE DECK COMMON AREAS 5 2.26 EXCLUSIVE USE YARD COMMON AREAS 5 2.27 EXCLUSIVE USE COMMON AREA OR EXCLUSIVE USEEASEMENT 5 2.28 FINAL SUBDIVISION MAP 6 2.29 FIRSTMORTGAGE 6 2.30 FIRST MORTGAGEE 6 2.31 GARAGE 6 Hofton^octicoDeclaration of Covenants, Conditions & Restrictions20244-87-1585022.3 **r\ TABLE OF CCfrrft (continued) Page 2.32 GOVERNING DOCUMENTS 6 2.33 IMPROVEMENTS 6 2.34 INSTITUTIONAL MORTGAGEE 6 .2.35 INVITEE 6 2.36 MASTER ARCHITECTURAL COMMITTEE 7 2.37 MASTER ASSOCIATION 7 2.38 MASTER DECLARATION 7 2.39 MEMBER 7 , " 2.40 MODULE 7 ' 2.41 ^MORTGAGE ;... .t... 7 2.42 MORTGAGEE ; 7 2.43 NOTICE AND HEARING 7 2.44 OWNER 7 2.45 PERIMETER FENCE 8 2.46 PHASE 8 2.47 PRIVATE STREETS 8 2.48 PROJECT 8 2.49 PROPERTY 8 2.50 PUBLICREPORT 8 2.51 REGULAR ASSESSMENTS 8 2.52 RESIDENTIAL UNIT 8 2.53 SPECIAL ASSESSMENTS 9 2.54 SUPPLEMENTARY DECLARATION 9 ARTICLES OWNERSHIP AND EASEMENTS 9 3.1 OWNERSHIP OF CONDOMINIUM 9 3.2 NO SEPARATE CONVEYANCE 9 3.3 DELEGATION OF USE 10 3.4 RIGHTS IN COMMON AREA AND ASSOCIATION PROPERTY .. 10 3.4.1 Partition 10 3.4.2 Declaration Subject to Easements 10 3.4.3 Utilities 10 3.4.4 Encroachment 10 3.4.5 • Support, Maintenance and Repair 11 3.4.6 Declarant's Non-Exclusive Easements 11 3.5 EASEMENTS 11 3.5.1 Association Easement 11 Hoiton/Portico Declaration of Covenants, Condittons& Restrictions •• 20244-87-15850223 " TABLE OF CONSENJJ) (continued) Page 3.5.2 Easements on Condominium Plan and Final Subdivision Map 11 3.5.3 Easements for Association Property 11 (a) Suspend Rights of Members . 12 (b) Dedicate or Grant Easements 12 (c) Right of Access 12 (d) Control Parking 12 (e) Entry by Association 12 (f) Limit Guests ; 12 (g) AdopJ and Enforce Association Rules 12 3.5A Easement for Drainage and Runoff. 12 3.5.5 Perform Association Functions . • ^ 13 3.5.6 Easement To Declarant For Additional Property 13 ARTICLE4 THE ASSOCIATION 13 4.1 THE ORGANIZATION : 13 4.2 ASSOCIATION ACTION; BOARD OF DIRECTORS AND OFFICERS; MEMBERS' APPROVAL 13 4.3 POWERS OF THE ASSOCIATION 13 4.3.1 Assessments 14 4.3.2 Right of Enforcement and Notice and Hearing .14 (a) Enforcement Actions 14 (b) Notice Requirements 14 4.3.3 Delegation of Powers, Professional Management 14 4.3.4 Association Rules 15 4.3.5 Right of Entry and Enforcement 15 4.3.6 Easements andRights of Way 15 4.3.7 Dedication 15 4.3.8 Capital Improvements 15 4.3.9 Other Property 16 4.3.10 Enter Into Maintenance Agreements 16 4.3.11 Contract for Goods and Services 16 4.3.12 Architectural Committee 16 4.3.13 Borrow Funds 16 4.4 DUTIES OF THE ASSOCIATION: 16 4.4.1 Taxes and Assessments 16 4.4.2 Water and Other Utilities 16 4.4.3 Utilities Suppliers 16 Morton/PorticoDeclaration of Covenants, Conditions & Restrictions • • •20244-87 -1S85022J 111 5757 TABLE OF CONTENTS (continued) Page 4.4.4 - Maintenance of Project 17 4.4.5 Insurance 17 4.4.6 Notice Prior to Litigation 17 4.4.7 Use of Proceeds to Repair .. 17 4.5 LIMITATIONS ON AUTHORITY OF BOARD 17 4.5.1 Limit on Capital Improvements 17 4.5.2 Limit on Sales of Association Property 17 4.5.3 Limit on Compensation , 18 t 4,5.4 Limitations on Third Person Contracts 18 4.6 TERMINATION OF CONTRACTS AND AGREEMENTS .. .* ..... 18, 4.6.1 •• Contracts or Leases .' ..'... 18 4.6.2 Professional Management Contracts 18 4.7 PERSONAL LIABILITY 19 ARTICLES MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION 19 5.1 MEMBERSHIP 19 5.1.1 Qualifications 19 5.1.2 Members'Rights and Duties 19 5.1.3 Transfer of Membership 20 5.1.4 Commencement of Voting Rights 20 5.2 NUMBEROFVOTES 20 5.2.1 ClassAMembers 20 5.2.2 Class B Members 20 5.2.3 Joint Owner Votes 20 5.2.4 Accrual of Voting Rights 21 ARTICLE 6 ASSESSMENTS AND DUES 21 6.1 CREATION OF LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS 21 6.2 FUNDS HELD IN TRUST 21 6.3 PURPOSE OF ASSESSMENTS 21 6.4 REGULAR ASSESSMENTS 22 6.4.1 Payment of Regular Assessments 22 6.4.2 Budgeting '.* 22 6.4.3 Restrictions for Tax Exemption 22 6.4.4 Assessments After Annexation 22 (a) Reallocation of Assessments 22 Morton/PorticoDeclaration of Covenants, Conditions & Restrictions • 20244-87-1585022.3 1V 5758 TABLE OF CONTENTS (continued) (b) Revision of Budget 22 6.4.5 Non-Waiver of Assessments 23 6.5 SPECIAL ASSESSMENTS 2.3 6.6 CAPITAL IMPROVEMENT ASSESSMENT 23 6.7 ENFORCEMENT ASSESSMENTS 23 6.8 CHANGES TO ASSESSMENTS 24 6.8.1 Limitation on Assessments 24 6.82 _ Automatic Assessment Increases 25 6.|.3 Notice to Owners .25 6.9 UNIFORM RATEPF ASSESSMENT 25 6.10 DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS; DUE DATES 25 6.11 NOTICE AND ASSESSMENT INSTALLMENT DUE DATES 26 6.12 ESTOPPEL CERTIFICATE .... . 26 6.13 COLLECTION OF ASSESSMENTS, LIENS 26 6.13.1 Right to Enforce 26 6.132 Creation of Lien 26 6.13.3 Notice of Defeult; Foreclosure 27 6.13.4 Payments Under Protest 27 6.14 ADDITIONAL CHARGES 27 6.14.1 Attorneys' Fees 28 6.14.2 Late Charges 28 6.14.3 Costs of Suit 28 6.14.4 Interest 28 6.14.5 Other 28 6.15 WAIVER OF EXEMPTIONS 28 6.16 SUBORDINATION OF LIEN TO FIRST MORTGAGES 28 6.17 NO OFFSETS , 28 6.18 PERSONAL LIABILITY OF OWNER 29 6.19 TRANSFER OF PROPERTY 29 6.20 FAILURE TO FDC ASSESSMENTS ....29 6.21 PROPERTY EXEMPT FROM ASSESSMENTS 29 6.22 INITIAL CAPITAL CONTRIBUTIONS 29 ARTICLE7 USE RESTRICTIONS 29 7.1 RESTRICTIONS OF MASTER DECLARATION 29 7.2 RESIDENTIAL USE 30 Hofton^ortico Declaration of Covenants, Conditions & Restrictions 20244-87-1585022.3 V 5759 TABLE OF CONTENTS (continued) Page 7.3 RENTAL OF CONDOMINIUMS 30 7.4 ANIMALS .31 7.5 INSIDE AND OUTSIDE INSTALLATIONS 31 7.6 NO DECKS FOR RESIDENTIAL UNITS 1 through 6 32 7.7 USE OF ASSOCIATION PROPERTY 32 7.8 DECORATING BY OWNER 32 7.9 YARD AND DECK AREAS 32 7.10 FENCES,ETC 32 7.11 PARKING RESTRICTIONS .32 7.12 BASKETBALL STANDARDS.... :....*, 33 7.13 NO STORAGE ". .33 7.14 OIL DRILLING 33 7.15 MINERAL EXPLORATION 33 • 7.16 OFFENSIVE CONDUCT, NUISANCES 33 7.17 RESTRICTED USE OF RECREATION VEHICLES, ETC 33 7.18 COMPLIANCE WITH LAWS, ETC 34 7.19 AIR CONDITIONING UNITS 34 7.20 WINDOW COVERINGS 34 7.21 EXTERIOR LIGHTING 34 7.22 DRAINAGE 34 7.23 ENTRY GATES 35 7.24 POST TENSION SLABS 35 7.25 LANDSCAPING 36 7.26 INDEMNIFICATION 36 ARTICLE 8 IMPROVEMENTS .... 36 8.1 MAINTENANCE OBLIGATIONS OF OWNERS 36 8.1.1 Owners' Responsibilities 36 8.1.2 Permitted Alterations 37 8.1.3 Maintenance and Alterations of Common Area 38 8.2 MAINTENANCE OF FENCES 38 8.2.1 Perimeter Fence 38 8.2.2 Interior Fencing Between Two Residential Units 38 8.2.3 Fencing Between Residential Units and Recreation Area 39 8.2.4 Application of Sealant 39 8.2.5 Liability for Damage 39 8.2.6 Maintenance of Glass 39 Honon/PorticoDeclaration of Covenants, Conditions & Restrictions . •20244-87-1585022.3 • V1 TABLE OF CONTENTS (continued) Page 8.3 OWNER'S FAILURE TO MAINTAIN 39 8.4 DAMAGE OR DESTRUCTION 39 8.5 MAINTENANCE OBLIGATIONS OF ASSOCIATION 40 8.5.1 Maintenance of Common Area and Association Property 40 8.5.2 Wood-Destroying Pests 40 8.5.3 Water Meters 41 (a) Allocation of Water and Sewer Bills 41 (b) Deposits A1 8.5.4 Maintenance ofBrush Areas ,*... 428.6 'FUTURECONSTRUCTION \... 428.7 LANDSCAPING/IRRIGATION AND DRAINAGEMAINTENANCE AND INSPECTIONS 428.8 FAILURE OF ASSOCIATION TO MAINTAIN COMMONAREA AND ASSOCIATION PROPERTY 438.9 SPECIAL ASSESSMENTS LEVIED BY THE CITY 43 ARTICLE9 ARCHITECTURAL REVIEW " 44 9.1 SCOPE 44 92 MASTER ARCHITECTURAL APPROVAL 44 9J ARCHTrECTURAL GUIDELINES 44 9.4 APPROVAL OF PLANS AND SPECIFICATIONS 44 9.4.1 Preliminary Approval i 44 (a) Time Periods for Review 45 (b). Effectiveness of Approval 45 9.4.2 Final Approval 45 (a) Time Periods For Review 45 9.4.3 Approval of Solar Energy Systems 46 9.5 INSPECTION AND CORRECTION OF WORK 46 9.5.1 Right of Inspection During Course of Construction 46 9.5.2 Notice of Completion 46 9.5.3 Inspection 46 9.5.4 Non-Compliance 47 9.5.5 Failure to Notify 47 9.5.6 Government Regulations 47 9.6 APPOINTMENT OF ARCHITECTURAL COMMITTEE 47 9.7 DILIGENCE IN CONSTRUCTION 47 9.8 FEEFORREVffiW 48 Horton/PotticoDeclaration of Covenants, Conditions & Restrictions • •20244-87-158S022J VU 5761TABLE OF CONTENTS (continued) 9.9 COMPENSATION 48 9.10 INTERPRETATION AND APPEAL 48 9.11 WAIVER 48 9.12 ESTOPPEL CERTIFICATE 48 9.13 LIABILITY : 49 9.14 NON-APPLICABILITY TO DECLARANT 49 9.15 AMENDMENTS 49 9.16 VARIANCES 49 9.17 CITY REQUIREMENTS 49 9.18 OPTIONAL EXCLUSIVE USE DECK AREAS, 50.< ARTICLE 10 DEVELOPMENT RIGHTS". 50 10.1 LIMITATIONS OF RESTRICTIONS 50 102 RIGHTS OF ACCESS AND COMPLETION OF CONSTRUCTION .50 10.2.1 Access........... : 50 10.2.2 Construct Improvements 51 10.2.3 Grant Easements 51 10.3 SIZE AND APPEARANCE OF PROJECT 51 10.4 MARKETING RIGHTS 52 10.4.1 GeneralRights 52 10.4.2 Agreement for Extended Use 52 10.4.3 Security Gates 52 10.5 ALTERATIONS TO MAP 52 10.6 RIGHTS TO MAINTAIN COMMON AREA AND ASSOCIATION PROPERTY ; 53 10.7 TITLE RIGHTS 53 10.8 AMENDMENT .53 ARTICLE 11 INSURANCE • 53 U.I LIABILITY INSURANCE 53 11.2 PROPERTY INSURANCE 53 11.2.1 Description of Policy Coverages 54 (a) Common Area and Association Property 54 (b) Residential Units 54 (c) Landscaping 54 11,2.2 Covered Cause of Loss 54 11.2.3 Primary 54 Horton/PottieoDeclaration of Covenants, Conditions & Restrictions 2024447-1S85022J 5762TABLE OF CONTENTS (continued) Pat 11.2.4 Endorsements 54 11.2.5 Waiver of Subrogation 54 11.2.6 Additional Insureds 55 11.3 INDIVIDUAL INSURANCE 55 11.4 FIDELITYBOND 55 11.5 WORKER'S COMPENSATION INSURANCE 55 11.6 OTHER INSURANCE 56 11.7 COPIES OF POLICIES 56 t 11.8 REVIEW OF INSURANCE .".,...,.,...56 1 h9 . BOARD'S AUTHORITY TO REVISE INSURANCE COVERAGE .. 56 11.10 TRUSTEE ;. : 56 11.11 ADJUSTMENT OF LOSSES 57 11.12 DISTRIBUTION TO MORTGAGEES 57 11.13 COMPLIANCE WITH FEDERAL REGULATIONS 57 ARTICLE 12 DESTRUCTION OF IMPROVEMENTS. AND CONDEMNATION 57 12.1 RESTORATION DEFINED 57 12.2 INSURED CASUALTY .57 12.3 RESTORATION PROCEEDS 57 12.3.1 Sufficient Proceeds 57 12.3.2 Insufficient Proceeds 58 (a) Additional Special Assessment 58 (b) Alternative Reconstruction 58 (c) Sale of Condominium Building 58 (d) Distribution of Proceeds 59 12.4 REBUILDING CONTRACT 60 12.5 INSURANCE TRUSTEE 60 12.6 PRIVATE STREETS 60 12.7 AUTHORITY TO EFFECT CHANGES 60 12.8 MINORREPAIR AND RECONSTRUCTION 61 12.9 DAMAGE OR DESTRUCTION TO A RESIDENTIAL UNIT 61 12.10 CONDEMNATION OF COMMON AREA OR ASSOCIATION PROPERTY 62 12.11 CONDEMNATION OF A RESIDENTIAL UNIT 62 ARTICLE 13 PARTITION AND SEVERABILITY OF INTERESTS 62 13.1 SUSPENSION 62 Horton/PorticoDeclaration of Covenants, Conditions & Restrictions • 20244-«7 -158502Z3 IX TABLE OF CONTENTS (continued) Page 13.2 PARTITION 62 13.2.1 No Partition 62 13.3 DISTRIBUTION OF PROCEEDS 63 13.4 POWER OF ATTORNEY 63 13.5 PROHIBITION AGAINST SEVERANCE 64 13.6 CONVEYANCES 64 ARTICLE 14 RIGHTS OF MORTGAGEES 64 14.1 CONFLICT .. 64 14.2 LIABILITY FOR UNPAID ASSESSMENTS 64 • 14,3 PAYMENT OF TAXES AND INSURANCE 64 14.4 NOTICE TO ELIGIBLE HOLDERS ~ 65 14.5 RESERVEFUND 65 14.6 INSPECTION OF BOOKS AND RECORDS 65 14.7 FINANCIAL STATEMENTS. 66 14.8 VOTING RIGHTS OFMORTGAGEES 66 14.9 ACTIONS REQUIRING ELIGIBLE HOLDER APPROVAL .66 14.10 VOTES FOR TERMINATION OF PROJECT 66 14.11 CONDEMNATION OR DESTRUCTION 67 14.12 SELF-MANAGEMENT 67 14.13 MORTGAGEE PROTECTION 67 14.14 SUBORDINATION 67 14.15 DISTRIBUTION OF INSURANCE AND CONDEMNATION PROCEEDS 67 14.16 VOTINGRIGHTSONDEFAULT 68 14.17 FORECLOSURE 68 14.18 NON-CURABLE BREACH 68 14.19 LOAN TO FACILITATE ; 68 14.20 APPEARANCE AT MEETINGS 68 14.21 RIGHT TO FURNISH INFORMATION 68 14.22 INAPPLICABILITY OF RIGHT OF FIRST REFUSAL TO MORTGAGEE 68 ARTICLE 15 AMENDMENTS 69 15.1 AMENDMENT BEFORE THE CLOSE OF FIRST SALE 69 15.2 AMENDMENT AFTER THE CLOSE OF FIRST SALE 69 Horton/PoiticoDeclaration of Covenants. Conditions & Restrictions20244-87-1585022.3 TABLE OF CONTENTS 4 (continued) Page 15.3 CONFLICT WITH ARTICLE 14 OR OTHER PROVISIONS OF THIS DECLARATION 71 15.4 APPROVAL BY CITY 71 15.5 BUSINESS AND PROFESSIONS CODE SECTION 11018 71 15.6 RELIANCE ON AMENDMENTS ..71 ARTICLE 16 ANNEXATION OF ADDITIONAL PROPERTY 71 16.1 ANNEXATION _ 71 16.2 ANNEXATION WITHOUT APPROVAL; 72 163 COVENANTS RUNNING WITH THE LAND .*.., , .72 16.4 SUPPLEMENTARY DECLARATION ! .' 72 16.5- ASSOCIATION PROPERTY 73 16.6 RIGHTS AND OBLIGATIONS OF OWNERS 73 - 16.7 MERGERS OR CONSOLE) ATIONS 73 16.8 DE-ANNEXATION .....73 ARTICLE 17 ENFORCEMENT .. 74 17.1 TERM 74 172 ENFORCEMENT AND NONWAIVER 74 172.1 Rights of Enforcement of Governing Documents 74 17.2.2 Procedure for Enforcement 74 17.3 ENFORCEMENT BY CITY ..75 17.4 NOTICE OF ACTIONS AGAINST DECLARANT 75 17.5 DISPUTE NOTIFICATION AND RESOLUTION PROCEDURE (DECLARANT DISPUTES); WAIVERS 75 17.5.1 Notice ..75 17.5.2 Right to Inspect and Right to Corrective Action 75 17.53 Civil Code Sections 1368.4 and 1375 76 17.5.4 Mediation 76 17.5.5 Judicial Reference 77 (a) Participation by Declarant Parties 78 (b) Place 78 (c) Referee 78 (d) Commencement and Timing of Proceeding 79 (e) Pre-hearing Conferences 79 (f) Discovery 79 Horton/PoiticoDeclaration of Covenants, Condition* & Restrictions . 20244-87 -1S8S022.3 xl TABLE OF CONTENTS (continued) 5765 Page (g) Limitation on Remedies; Prohibition on the Award of Punitive Damages 79 (h) Motions 79 (i) Rules of Law s 79 (j) Record 80 (k) Statement of Decision 80 (1) Post-hearing Motions 80 (m) Appeals 80 , (n) Expenses 80 "17.5.6 AGREEMENT TO DISPUTE RESOLUTION; - < WAIVERS OF JURY TRIAL AND AWARD'OF PUNITIVE DAMAGES 80 17.5.7 Application of Award 80 17.5.8 Exceptions to Mediation and Reference; Statutes of Limitation 80 ARTICLE 18 GENERAL PROVISIONS .' 81 18.1 HEADINGS 81 18.2 SEVERABILITY 81 18.3 CUMULATIVE REMEDIES 81 18.4 VIOLATIONS AS NUISANCE 81 18.5 NO RACIAL RESTRICTION 81 18.6 ACCESS TO BOOKS 81 18.7 LIBERAL CONSTRUCTION 81 18.8 NOTIFICATION OF SALE OF CONDOMINIUM 81 18.9 NUMBER, GENDER 82 18.10 EXHIBITS 82 18.11 BINDING EFFECT ?.... 82 18.12 EASEMENTS RESERVED AND GRANTED 82 Horton/PorticoDeclaration of Covenants. Conditions & Restrictions .. 20244-87 -1585022.3 Xll 5766 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS OF PORTICO AT RANCHO CARRILLO This DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS OF PORTICO AT RANCHO CARRILLO ("Declaration") is made this day of , . 2001 by D.R. HORTON SAN DIEGO HOLDING COMPANY, INC., a California corporation ("Declarant"), with reference to the facts set forth in the Article hereof entitled "Recitals." ARTICLE 1 RECITALS 4 •- 1.1 PROPERTY OWNED BY DECLARANT. Declarant is the owner in fee simple of that certain real property (the "Property") situated in the City of Carlsbad, County of San Diego, State of California, more particularly described on Exhibit "A" attached hereto and incorporated herein. 1.2 RIGHT TO ANNEX. Declarant may add all or any of the real property described in Exhibit "B" attached hereto and incorporated herein ("Additional Property") and record additional Condominium Plans with respect thereto, and said Additional Property so annexed will thereupon be subject to this Declaration and become a part of the Property. 1.3 NATURE OF PROJECT. Declarant intends to establish a plan of condominium ownership and to develop the Property, including any Additional Property which may hereafter be annexed thereto, as a condominium project within the meaning of California Business and Professions Code Section 11004.5(c), California Civil Code Section 1351(f), to conform with the provisions of the California Subdivided Lands Law (California Business and Professions Code Section 11000, et seq.) and to subject the Property to certain limitations, restrictions, conditions and covenants as hereinafter set forth, in accordance with the provisions of California Civil Code Sections 1350 et seq., or any successor statutes or laws. To that objective, Declarant desires and intends to impose on the Property mutually beneficial restrictions, limitations, easements, assessments and liens under a comprehensive plan of improvement and development for the benefit of all of the Owners, the Condominiums, Common Area and Association Property and the future Owners of said Condominiums, Common Area and Association Property, as defined and described herein. 1.4 DESCRIPTION OF PROJECT. The Project is part of a master planned community situated in the City of Carlsbad and commonly known as Rancho Carrillo, to be governed by the Rancho Carrillo Master Association ("Master Association"). The Project will be a subassociation of the Master Association. Declarant intends to develop the Project in six (6) phases. The first Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87 -1585022.3 5767 Phase is planned to consist of 18 Residential Units. If developed as planned, the Project (as hereinafter defined) will ultimately contain 105 Residential Units but Declarant makes no guarantee that the Project will be constructed as presently proposed. Owners of a Condominium in each Phase will receive title to a Residential Unit plus an undivided fractional interest as tenant in common to the Common Area located within the Building Envelope (as hereinafter defined) within which the Residential Unit is located. In addition, certain Owners of a Condominium will receive the exclusive right of use and occupancy of a portion of the Common Area within that Building Envelope or Association Property designated as appurtenant Exclusive Use Common Area, all as shown on the Condominium Plan (as hereinafter defined) covering that Phase or another Phase of the Project Each Owner of a Condominium will also receive an easement for ingress, egress and recreational use over portions of the Association Property of the Module (as hereinafter defined) and Phase in which the Condominium is situated and within each other Module and Phase, effective upon annexation and conveyance of the first Condominium in each such Module and Phase. Each Residential Unit shall have appurtenant to it a membership in the Portico at Ranchp Carrillo Homeowners Association, a California nonprofit mutual benefit corporation ("Associatidn"). Each Residential Unit shall also have appurtenant to it a membership in the Rancho Carrillo Master Association, a California non-profit mutual benefit corporation ("Master Association"). DECLARATION Declarant declares that the Property is, and shall be, held, conveyed, hypothecated, encumbered, leased, rented, used, occupied and improved subject to the following limitations, restrictions, easements, covenants, conditions, Hens and charges, all of which are declared and agreed to be in furtherance of a plan of Condominium ownership as described in California Civil Code Section 1350 et seq. or any successor statutes or laws for the subdivision, improvement, protection, maintenance, and sale of Condominiums within the Property, and all of which are declared and agreed to be for the purpose of enhancing, maintaining and protecting the value and attractiveness of the Property. All of the limitations, restrictions, easements, covenants, conditions, liens and charges shall run'with the land, shall be binding on and mure to the benefit of all parties having or acquiring any right, title or interest in the Property, shall be enforceable equitable servitudes and shall be binding on and inure to the benefit of the successors-in-interest of such parties. Declarant further declares that it is the express intent that this Declaration satisfy the requirements of California Civil Code Section 1354, or any successor statutes or laws. ARTICLE 2 DEFINITIONS Unless the context otherwise specifies or requires, the terms defined in this Article shall, for all purposes of this Declaration, have the meanings herein specified. Morton/PorticoDeclination of Covenants, Conditions & Restrictions 20244-87-I58S022.3 5768 2.1 ADDITIONAL CHARGES. The term "Additional Charges" means costs, fees, charges and expenditures, including without limitation, attorneys' fees, late charges, interest and recording and riling fees actually incurred by the Association in collecting and/or enforcing payment of assessments, fines and/or penalties. 2.2 ADDITIONAL PROPERTY. The term "Additional Property" means all of the real property described on Exhibit "B" attached hereto and incorporated herein. 2.3 ANNEXATION. The term "Annexation" means the process by which the additional real property described in Exhibit "Blf attached hereto and any other real property may be made subject to this Declaration as set forth in the Article hereof entitled "Annexation of Additional Property." 2.4 ARCHITECTURAL COMMITTEE. The term "Architectural Committee" means the committee, if any, created pursuant to Article.9 hereof..< ! 2.5 ARCHITECTURAL GUIDELINES. The term" Architectural Guidelines" means the design criteria adopted by the Board pursuant to the provisions of Section 93 of this Declaration. 2.6 ARTICLES, The term "Articles" means the Articles of Incorporation of me Association as they may from time to time be amended which are or shall be filed in the Office of the Secretary of State for the State of California. 2.7 ASSOCIATION, The term "Association" means the Portico at Rancho Carrillo Homeowners Association, a California nonprofit mutual benefit corporation, incorporated under the laws of the State of California, or any successor entity charged with the duties, obligations and powers of said Association. 2.8 ASSOCIATION PROPERTY. The term "Association Property" means all real property owned, from time-to-time, in fee title by the Association. The Association Property in the first Phase of the Project shall consist of the real property identified as Association Property on Exhibit "A" and in the Condominium Plan and the Improvements located thereon. The Association Property shall be held by me Association for the benefit of the Owners. 2.9 ASSOCIATION RULES. The term "Association Rules" means the rules and regulations adopted by the Board from time to time. 2.10 BOARD. The term "Board" means the Board of Directors of the Association. 2.11 BRUSH AREAS. The term "Brush Areas" means certain areas within the Association Property designated as brush management zones by the City, which shall be maintained by the Association pursuant to Section 8.5.4 of this Declaration. Horton/PorticoDeclaration of Covenants, Conditions & Restrictions -\20244-87 -1585022J 3 5769 2. 1 2 BUILDING ENVELOPES. The term "Building Envelopes" means each Building Envelope designated on the Condominium Plan. Each Building Envelope is a three-dimensional portion of certain lots created pursuant to California Government Code Section 66427 as shown on the Condominium Plan. The lower and upper boundaries of each Building Envelope are set forth in the Condominium Plan. The lateral boundaries of each Building Envelope are vertical planes which are also described and depicted in the Condominium Plan. The Building Envelope includes all land and improvements (whether now or hereafter associated within its boundaries). 2.13 BYLAWS. The term "Bylaws" means the Bylaws of the Association, as they may from time to time be amended, which are or shall be adopted by the Board. 2.14 CAPITAL IMPROVEMENT ASSESSMENTS. The term "Capital Improvement r Assessments" means the assessments which are levied pursuant to the provisions of Section 6.6 of this Declaration. i 2.15 CITY. The term "City" refers to the City of Carlsbad, California. 2.16 • COMMON AREA. The term "Common Area" refers to fee portions of the Condominium Buildings in a Phase, excluding the Residential Units, which are owned in undivided interest by the Owners of the Residential Units within the Condominium Buildings, as shown on the Condominium Plan. 2.17 CONDOMINIUM. The term "Condominium" means an estate in real property as defined in California Civil Code Section 1351(f), or any successor statutes or laws, consisting of an undivided interest as a tenant-in-common in all or any portion of the Common Area, together with a separate fee interest in a Residential Unit and any other separate interests in the Property as are described in this Declaration, the Condominium Plan or in the deed conveying the Condominium. 2.18 CONDOMINIUM BUILDING. The term "Condominium Building" refers to each building within a Building Envelope as shown on the Condominium Plan. 2.19 CONDQMINmM PLAN. The term "Condominium Plan" means (i) condominium plan recorded pursuant to California Civil Code Section 135 1, and any amendments to the plan, and (u) any recorded Condominium Plan or Plans, including any amendments thereto affecting any Phases which have been annexed pursuant to the provisions of this Declaration. 2.20 COUNTY. The term "County" means the County of San Diego, California. 2.21 DECLARANT. The term "Declarant" means D.R. Horton San Diego Holding Company, Inc., a California corporation, and its successors and assigns, if such successors and assigns acquire any or all of Declarant's interest in the Property for the purpose of purchase or sale, Horton/PorticoDeclaration of Covenants, Conditions & Restrictions „20244-87 - 1585022.3 - 4 5770 and Declarant has expressly transferred or assigned to such successors or assigns its rights and duties as Declarant to a portion or all of the Project. For any successor or assignee of "Declarant" to be deemed a Declarant under the terms of this Declaration, Declarant shall record in the County a certificate so designating said successor or assignee as Declarant. A successor Declarant shall also be deemed to include the beneficiary under any deed of trust securing an obligation from a then existing Declarant encumbering all or any portion of the Property, which beneficiary has acquired any such property by foreclosure, power of sale or deed in lieu of such foreclosure or sale. 2.22 DECLARATION. The term "Declaration" means this enabling Declaration of Covenants, Conditions and Restrictions of Portico at Rancho Carrillo as said Declaration may from time to time be amended, modified or supplemented. 2.23 ELIGIBLE HOLDER. The term "Eligible Holder" means any First Mortgagee who has given written notice to the Association specifying its name, address and the Residential Unit number or address of the Condominium encumbered by the Mortgage and requesting written notice of any or all of the events specified in this Declaration. - 2.24 ENFORCEMENT ASSESSMENTS. The term "Enforcement Assessments" means the assessments which ate levied pursuant to the provisions of Section 6.7 of this Declaration. 2.25 EXCLUSIVE USE DECK COMMON AREAS. The term "Exclusive Use Deck Common Areas" means those portions of the Common Area over which easements have been reserved for the benefit of certain Owners for deck purposes as designated on the Condominium Plan. The Condominium Plan also shows certain areas as "Optional Exclusive Use Deck Areas." If Declarant, prior to the conveyance of a Condominium to an Owner constructs a deck within the area designated as Optional Exclusive Use Deck Areas or an Owner, upon obtaining approval of the Board pursuant to the provisions of Article 9 of this Declaration, constructs a deck within the Owner's Optional Exclusive Use Deck Area, then all references to the Exclusive Use Deck Common Areas shall include such Owner's Optional Exclusive Use Deck Area. 2.26 EXCLUSIVE USE YARD COMMON AREAS. The term "Exclusive Use Yard Common Areas" means those portions of the Association Property and the Common Area over which easements have been reserved for the benefit of certain Owners for yard purposes as designated on the Condominium Plan. 2.27 EXCLUSIVE USE COMMON AREA OR EXCLUSIVE USE EASEMENT. The term "Exclusive Use Common Area" or "Exclusive Use Easement" means those portions of the Association Property and the Common Area over which exclusive easements are reserved for the benefit of certain Owners in accordance with California Civil Code Section 1351(0, including the Exclusive Use Deck Common Areas, and Exclusive Use Yard Common Areas as shown on the Condominium Plan for each Phase or described in this Declaration or in a grant deed conveying a Condominium from Declarant to an Owner, with respect to which an exclusive use easement is Horton/PorticoDeclaration of Covenants, Conditions* Restrictions , 20244-87-1585022.3 5 5771 granted to an Owner and is appurtenant to such Owner's Residential Unit Except as specifically provided in this Declaration and the Condominium Plan no other portion of the Common Area shall be an Exclusive Use Common Area. 2.28 FINAL SUBDIVISION MAP. The term "Final Subdivision Map" means the final subdivision map covering the Project. 2.29 FIRST MORTGAGE. The term "First Mortgage" means a Mortgage which has priority under the recording statutes of the State of California over all other Mortgages encumbering a specific Condominium in the Project. 2.30 FIRST MORTGAGEE. The term "First Mortgagee" means the Mortgagee of a First Mortgage. *2.31 GARAGE. Theterm"Garage"referstothegarageslocatedwithinaResidentialUnit. 2.32 GOVERNING DOCUMENTS. The term "Governing Documents" collectively means this Declaration and the Articles, Bylaws, Architectural Guidelines and the Association Rules. 2.33 IMPROVEMENTS. The term "Improvements" means: (i) all buildings and structures and appurtenances thereto of every type and kind, including, but not limited to, residences and other buildings, walkways, trails, swimming pools and other recreational facilities, garages, sidewalks, walkways, fences, screening walls, block walls, retaining walls, awnings, patio and balcony covers, stairs, decks, balconies, trellises, landscaping irrigation systems, the exterior surfaces of any visible structure, paintings, antennae, poles, signs, solar or wind powered energy systems or equipment and water softener, heater or air conditioning and heating fixtures or equipment; (ii) the grading, excavation, filling or similar disturbance to the surface of the land; and (iii) any change or alteration of any previously installed Improvement, including any change of exterior appearance, color or texture. 2.34 INSTITUTIONAL MORTGAGEE. The term "Institutional Mortgagee" means a First Mortgagee which is (i) a bank, savings and loan association, insurance or mortgage company or other entity or institution chartered under federal and/or state law; (ii) an insurer or governmental guarantor of a Fust Mortgage; (iii) any Federal or State Agency; (iv) tide State of California as the vendor under an installment land sales contract covering a Condominium; or (v) any other institution specified by the Board in a recorded instrument, who is the Mortgagee of a Mortgage or the beneficiary of a Deed of Trust encumbering .a Condominium. 2.35 INVITEE. The term "Invitee" means any person whose presence within the Project is approved by or is at the request of a particular Owner, including, but not limited to, lessees, tenants and the family, guests, employees, licensees or invitees of Owners, tenants or lessees. Horton/PorticoDeclaration of Covenants, Conditions & Restrictions ,-20244-87 -1585022.3 O 5772 2.36 MASTER ARCHITECTURAL COMMITTEE. The term "Master Architectural Committee" means the Architectural Committee established under the Master Declaration. 2.37 MASTER ASSOCIATION. The term "Master Association" means the Rancho Carrillo Master Association, a California non-profit mutual benefit corporation, which was formed pursuant to the Master Declaration. 2.38 MASTER DECLARATION. The term "Master Declaration" refers to that certain Master Declaration of Restrictions for Rancho Carrillo Master Association recorded hi the Office of the County Recorder of San Diego County on June 17,1998 as Document No. 1998-0369115, as the same may now or hereafter be amended. 2.39 MEMBER. The term "Member" means every person or entity who holds a membership in the Association. Membership shall be appurtenant to and may not be separated from ownership of a Condominium. 2.40 MODULE. The term "Module" means each module designated on the Condominium Plan. Each Module is athree-dimensional portion oftheparcels described on Exhibit "A" or in any subsequently recorded Supplementary Declaration and has been created pursuant to California Government Code Section 66*427. The lower and upper boundaries of each Module are set forth in the Condominium Plan. The lateral boundaries of each Module are vertical planes which are also described and depicted in the Condominium Plan. The Module includes all land and Improvements (whether now or hereafter associated within its boundaries). Each Module shall be conveyed to the Association, excepting therefrom the Residential Units and Common Area situated within the Module and subject to the easements in this Declaration. 2.41 MORTGAGE. The term "Mortgage" means any duly recorded mortgage or deed of trust encumbering a Condominium in the Project. 2.42 MORTGAGEE. Theterm "Mortgagee" meansamortgageeunderaMortgageaswell as a beneficiary under a deed of trust 2.43 NOTICE AND HEARING. The term'"Notice and Hearing1'means the procedure which gives an Owner notice of an alleged violation of the Governing Documents and the opportunity for a hearing before the Board. 2.44 OWNER. The term "Owner" means the record owner, whether one or more persons or entities, including Declarant, of any Condominium excluding those having such interest merely as security for the performance of an obligation. A contract purchaser under a recorded installment land sales contract shall be included as an Owner but those merely having an interest as security for the performance of an obligation shall not be Owners. Honon/PorticoDeclaration of Covenant*. Conditions & Restrictions n20244-87-15850223 ' 5773 2.45 PERIMETER FENCE. The term "Perimeter Fence" refers to the outermost exterior wall or fence surrounding and enclosing the Project. 2.46 PHASE. Thetenn"Phase"meanseachModidethatisthesubjectofaseparatePublic Report issued by the California Department of Real Estate and which has been made subject hereto (i.e., by annexation with respect to Phases subsequent to Phase 1). 2.47 PRIVATE STREETS. The term "Private Streets" means those streets, roads and drives and adjacent sidewalks within the Association Property, and related lighting and other utility installations therein that are not maintained by a public agency or franchised utility. 2.48 PROJECT. The term "Project" means all of the real property described on Exhibit "A" together with all Improvements situated thereon and any Additional Property which is hereafter annexed pursuant to a Supplementary Declaration. 2.49 PROPERTY. The term "Property" means all of the real property described in Exhibit "A" of this Declaration, and such Additional Property as may hereafter be brought within the jurisdiction of the Association together with all Improvements situated thereon pursuant to a Supplementary Declaration. 2.50 PUBLIC REPORT. The term "Public Report" means the Final Subdivision Public Report issued by the California Department of Real Estate for a Phase in the Project 2.51 REGULAR ASSESSMENTS. The term "Regular Assessments" means the assessments which are levied pursuant to the provisions of Section 6.4 of this Declaration. 2.52 RESIDENTIAL UNIT. The term "Residential Unit" means the elements of a Condominium which are not owned hi common with the other Owners of Condominiums in the Building Envelope in which the Residential Unit is located, such Residential Units and their respective elements and boundaries being shown and particularly described in the Condominium Plan, the deeds conveying Condominiums and this Declaration. Each Residential Unit shall be a separate freehold estate, as separately shown, numbered and designated in the Condominium Plan; provided, however, that the following are not part of any Residential Unit: bearing walls, columns, floors, roofs, foundations, central heating and other central services, pipes, ducts, flues, chutes, conduits, wires and other utility installations, wherever located, except the outlets thereof when located in the Residential Unit. Each Residential Unit shall include the interior of the doors and windows within the perimeter walls, the interior undercoated surfaces ofbearing walls and perimeter walls, floors and ceilings, die outlets of all utility installations in the Residential Unit, including the fire box of any fireplace located in the Residential Unit In interpreting deeds and plans, the then existing physical boundaries of a Residential Unit, whether in its original state or reconstructed in substantial conformance with the original plans thereof, shall be conclusively presumed to be its Morton/PorticoDeclaration of Covenants, Conditions & Restrictions o20244-87-1585022.3 ° 5774 boundaries rather than the boundaries expressed in the deed or plan, regardless of settling or lateral movement of the building and regardless of minor variance between boundaries shown on the Condominium Plan or deed and those of the building. 2.53 SPECIAL ASSESSMENTS. The term "Special Assessments" means the assessments which are levied pursuant to the provisions of Section 6.5 of this Declaration. 2.54 SUPPLEMENTARY DECLARATION. The term "Supplementary Declaration" means any instrument recorded in the Office of the County Recorder which annexes all or a portion of the Additional Property described hi Exhibit MBH and/or (a) further describes or delineates other elements of any of the Common Area or Association Property (b) prior to the conveyance of a Residential Unit imposes or supplements restrictions applicable to certain Residential Units or allocations relating to Assessments (c) supplements any of the provisions regarding the obligations of the Association, or (d) makes technical corrections to any of the provisions of the (joverning Documents or the Condominium Plan. .4 -ARTICLES OWNERSHIP AND EASEMENTS 3.1 OWNERSHIP OF CONDOMINIUM. Title to each Condominium in the Project shall be conveyed in fee to an Owner. Ownership of each Condominium within the Project shall include (a) a Residential Unit, (b) an undivided interest in the Common Area for the Building Envelopes within the Phase in which the Residential Unit is situated as designated on the Condominium Plan, (c) a membership in the Association, (d) a membership in the Master Association, and (e) any exclusive or non-exclusive easement or easements appurtenant to such Condominium over the Common Area and/or Association Property as described in this Declaration, the Condominium Plan, and the deed to the Condominium. The undivided interest hi the Common Area described above may not be altered or changed as long as the prohibition against severability of component interests in a Condominium remains in effect as provided in this Declaration. of the Common Area shall be appurtenant to the Residential Unit owned by the Owner. No Residential Unit shall be conveyed by the Owner separately from the interest in the Common Area or the right to use the Association Property. Any conveyance of any Residential Unit shall automatically transfer the interest in the Common Area and the right to use the Association Property without the necessity of express reference in the instrument of conveyance. Anything in the Article hereof entitled "Amendments," to the contrary notwithstanding, this Article shall not be amended, modified or rescinded until Declarant has conveyed the last Condominium within the Project, including any Phase which may be annexed to and made a part of the Project pursuant to the Article hereof entitled "Annexation of Additional Property" without (i) the prior written consent of Declarant and (ii) the recording of said written consent in the Office of the County Recorder. Horton/PorticoDeclaration of Covenants, Conditions & Restrictions n20244-87-158S022.3 * 5775 3.3 DELEGATION OF USE. Any Owner entitled to the right and easement of use and enjoyment of the Association Property may delegate, in accordance with the Bylaws, such Owner's right to use and enjoyment of the Association Property to his or her other tenants, contract purchasers or subtenants who reside in such Owner's Condominium, subject to reasonable regulation by the Board. An Owner who has made such a delegation of rights shall not be entitled to use or enjoyment of the recreational facilities or equipment of the Association Property for so long as such delegation remains in effect; other than access rights necessary for the Owner to exercise its rights and duties as landlord. 3.4 RIGHTS IN COMMON AREA AND ASSOCIATION PROPERTY. 3.4.1 Partition. Except as provided in tin's Declaration, there shall be no judicial partition of the Common Area, or any part thereof, for the term of the Project, nor shall Declarant, any Owner or any other person acquiring any interest in anyOondominium in the Project seek any such judicial partition. 3.42 Declaration Subject to Easements. Notwithstanding anything herein expressly or impliedly to the contrary, this Declaration shall be subject to all easements heretofore or hereafter granted by Declarant for the installation and maintenance of utilities and drainage facilities that are necessary for the Project. 3.4.3 Utilities. There are reserved and granted for the benefit of each Residential Unit, as dominant tenement, over, under, across and through the Project (including the Common Area, Association Property and each other Residential Unit), as the servient tenement and for the benefit of the Association Property, as dominant tenement, over, under and across the Common Area and each Residential Unit, as servient tenement, non-exclusive easements for utility services. 3.4.4 Encroachment. There are hereby reserved and granted for the benefit of each Residential Unit, as dominant tenement, over, under and across each other Residential Unit, Common Area and Association Property, as servient tenements, and for the benefit of the Common Area and Association Property, as dominant tenement, over, under and across each Residential Unit, Common Area and Association Property as servient tenement, non-exclusive easements for encroachment, support, occupancy and use of such portions of Residential Units, Association Property and/or Common Area as areencroached upon, used and occupied by the dominant tenement as a result of any original construction design, accretion, erosion, addition, deterioration, decay, errors in original construction, movement, settlement, shifting or subsidence of any building, structure, or other improvements or any portion thereof, or any other cause. In the event any portion of the Project is partially or totally destroyed, the encroachment easement shall exist for any replacement structure which is rebuilt pursuant to the original construction design. The easement for the maintenance of the encroaching improvement shall exist for as long as the encroachment exists; provided, however, that no valid easement of encroachment shall be created due to the willful HoTton/Portko Declaration of Covenants, Conditions & Restrictions ir, 20244-87-1585022.3 W 5776 misconduct of the Association or any Owner. Any easement of encroachment may, but need not be, cured by repair and restoration of the structure. 3.4.5 Support. Maintenance and Repair. There is hereby reserved and granted a non-exclusive easement appurtenant to the Common Area and Association Property and to all other Residential Units, as dominant tenements, through each Residential Unit and the Common Area and Association Property, as servient tenements, for the support, maintenance and repair of the Common Area and Association Property and all Residential Units. 3.4.6 Declarant's Non-Exclusive Easements. Subject to a concomitant obligation to restore, Declarant and its agents, employees and independent contractors shall have the easements described in the Article hereof entitled "Development Rights." i 3.5 EASEMENTS. The ownership interests in the Common Area. Association Property and Residential-Units described in this Article are subject to the easements granted and reserved in this Declaration and to the Exclusive Use Easements. Each of the easements reserved or granted herein shall be deemed to. be established upon the recordation of this Declaration and shall henceforth be deemed to be covenants running with the land for the use and benefit of the Owners, the Residential Units, the Association, the Association Property, the Common Area and the Declarant, superior to all other encumbrances applied against or in favor of any portion of the Project Individual grant deeds to Residential Units may, but shall not be required to, set forth the easements specified in this Article. 3.5.1 Association Easement. The Association shall have an easement over the Common Area and Association Property in each Building Envelope for performing its duties and exercising its powers described in this Declaration. The Association's obligations to maintain the Common Area and Association Property in any Phase shall commence on the date Regular Assessments commence on Residential Units in that Phase. Until commencement of Regular Assessments on Residences in any Phase the Common Area and Association Property hi that Phase shall be maintained by Declarant. 3.5.2 Easements on Condominium Plan and Final Subdivision Map. The Common Area, Association Property and Residential Units are subject to the easements and rights- of-way shown on the Condominium Plan and any Final Subdivision Map (or entered into pursuant to any Final Subdivision Map), including, without limitation, the Exclusive Use Common Areas and subject further to any limitations on development or modifications to any portions of the Project encumbered by such easements. 3.5.3 Easements for Association Property. Subject to the provisions of this Declaration, every Member of the Association shall have, for himself, or herself and such Owner's Invitees, a nonexclusive easement of access, ingress, egress, use and enjoyment of, in, to and over Horton/Poitico Declaration of Covenants, Conditions & Restrictions 2024447-1585022.3 5777 the Association Property. Each such non-exclusive easement shall be appurtenant to and shall pass with title to every Condominium, subject to the following rights and restrictions: (a) Suspend Rights of Members. The Board shall have the right, after Notice and Hearing, to temporarily suspend an Owner's rights as a Member pursuant to the terms of this Declaration. (b) Dedicate or Grant Easements. The Association shall have the right to dedicate and/or grant easements over all or any portion of the Association Property. (c) Right of Access. Every Owner shall have the right to enjoy free and unobstructed passage between every such Owner's Condominium, through the Private Streets to all publicly dedicated streets bordering the Project, subject to any restrictions imposed by any city, county or state. , * (d) Control Parking. The Association Shall have the right to assign, license or otherwise designate and control parking within the Private Streets and to promulgate rules and regulations to control parking in a manner consistent with this Declaration and the requirements of the City of Carlsbad. (e) Entrvby Association. The Association and the'Association's agents or employees shall have the right to enter (i) upon the Residential Unit (other than the interior of the residence situated thereon) only to the extent necessary afterNotice andHearing (except in the event of an emergency in which case no prior notice need be given) to enforce the provisions of this Declaration, (ii) upon the Common Area and/or Association Property to perform maintenance obligations, (iii) upon any portion of the Project to repair or replace any fencing required to be repaired and/or replaced by the Association pursuant to Article 8 of this Declaration, (iv) upon any portion of the Project to inspect the established system of drainage to ensure water is draining properly throughout the Project and/or (v) upon any portion of the Project to perform its obligations under this Declaration. (i) .Limit Guests. The Association shall have the right to limit, on a reasonable basis, the number of Invitees of the Owners using the recreational facilities situated within the Association Property. (g) Adopt and Enforce Association Rules. The Association shall have the right to adopt and enforce the Association Rules as provided in this Declaration. 3.5.4 Easement for Drainage and Runoff. Each Residential Unit shall have an easement for drainage through the established drainage pipes and facilities and an easement for runoff of water on, over, through and across the other Residential Units. Such easements shall be Hofton/PotticoDeclaration of I20244-87 -15*5022.3Declaration of Covenants, Conditions & Restrictions » 5778 subject to the restrictions set forth in Section 10.8 of the Master Declaration entitled "Drainage," prohibiting interference with established drainage patterns. 3.5.5 Perform Association Functions. There is hereby reserved by Declarant for the benefit of Declarant and its duly authorized agents and representatives and granted to the Association and its duly authorized agents and representatives such easements hi the Project as are necessary to perform the duties and obligations of the Association as are set forth in this Declaration or in the Bylaws, Articles, Association Rules, or Architectural Guidelines or for performing repairs or maintenance not performed by the Owner pursuant to the terms of this Declaration, including, but not limited to, easements over the Common Areas together with a right to enter the Exclusive Use Yard Common Areas for such purposes. 3.5.6 Easement To Declarant For Additional Property. Declarant shall have and hereby expressly reserves a non-exclusive easement over and across the Private Streets to the Additional Property until all of said Additional Property is annexed to the Project and the Condominiums are constructed thereon. ARTICLE 4 THE ASSOCIATION 4.1 THE ORGANIZATION. The Association is a nonprofit mutual benefit corporation formed under the Nonprofit Mutual Benefit Law of the State of California. On the close and recording of the first Condominium sale to an Owner, the Association shall he charged with the duties and invested with the powers set forth in this Declaration and the Governing Documents. 4.2 ASSOCIATION ACTION: BOARD OF DIRECTORS AND OFFICERS: MEMBERS' APPROVAL. Except as to matters requiring the approval of Members as set forth in this Declaration, the Articles, or the Bylaws, the affairs of the Association shall be conducted by the Board and such officers as the Board may elect or appoint Such election or appointment shall be in accordance with this Declaration and the Bylaws. Except as otherwise provided in this Declaration, the Articles and the Bylaws, all matters requiring the approval of Members shall be deemed approved if Members holding a majority of the total voting rights assent to mem by written consent as provided hi the Bylaws or if approved by a majority vote of a quorum of Members at any regular or special meeting held in accordance with the Bylaws or, in certain situations set forth in Section 4.5 of this Declaration, by written ballot without a meeting pursuant to Corporations Code Section 7513, of a simple majority of the Members, other man Declarant, constituting a quorum consisting of more than fifty percent (50%) of the voting power of the Association residing in Members other than the Declarant. 4.3 POWERS OF THE ASSOCIATION. The Association shall have all the powers of anonprofit corporation organized under the Nonprofit Mutual Benefit Corporation Law of California Horton/PorticoDeclaration of Covenants, Conditions & Restrictions .-20244-87-WS5022J 13 5779 subject only to such limitations on the exercise of such powers as are set forth in the Articles, the Bylaws and this Declaration. It shall have the power to do any lawful thing that may be authorized, required, or permitted to be done by the Association under this Declaration, the Articles and the Bylaws, and to do and perform any act that may be necessary or proper for or incidental to, the exercise of any of the express powers of the Association, including, without limitation, the powers set forth below. Unless otherwise provided, the Association's action shall be undertaken by and through the Board. 4.3.1 Assessments. The Association shall nave the power to establish, fix, and levy assessments against the Owners and to enforce payment of such assessments, in accordance with the provisions of this Declaration. However, the approval of Members shall be required as to the amounts of all Regular Assessments and Special Assessments, subject to the limitations set forth in Section 6.8 of thisJDeclaration. 4.3.2 Right of Enforcement and Notice and Hearing. A ' . (a) Enforcement Actions. The Association in its own name and on its own behalf can commence and maintain actions for damages or to restrain and enjoin any actual or threatened breach of any provision of the Project Documents or any resolutions of the Board, and to enforce by mandatory injunction, or otherwise, all of these provisions. In addition, the Association can temporarily suspend the membership rights and privileges or can assess monetary penalties against any Owner or other person entitled to exercise such rights or privileges for any violation of the Governing Documents or Board resolutions. (b) Notice Requirements. Before a decision to impose such a suspension or monetary penalties is reached by the Board, at least fifteen (15) days written notice of suspension or imposition of monetary penalties and the reasons therefor must be given to the Owner of such suspension or imposition of a penalty or any such longer period as may be required under California Corporations Code Section 7341, or any successor statute or law. Additionally, before the Board decides to impose a suspension of privileges or impose a monetary penalty, the aggrieved Owner shall be provided with an opportunity to be heard by the Board, orally or in writing, not less than five (5) days before the date of the suspension of privileges or imposition of monetary penalty is to take effect For the purposes of this Section, notice shall be given by any method reasonably calculated to provide actual notice. Notice may be hand-delivered to the Owner or sent by first class registered or certified mail, return receipt requested or overnight courier delivery and addressed to the Owner at the last address of the Owner shown on the Association's records, or any other method deemed reasonable by the Board for delivering notices. 4.3.3 Delegation of Powers. Professional Management. The Association acting by and through the Board can delegate its •powers, duties, and responsibilities to committees or employees, including a professional managing agent ("Manager"), subj ect to the requirements of the Section 4.5.4(b) entitled "Limitations On Third Person Contracts." Hotton/PorticoDeclaration of Covenants, Conditions & Restrictions 1 ..20244-87 -158S022J • l* 5780 4.3.4 Association Rules. The Board shall have the power to adopt, amend and repeal the Association Rules as it deems reasonable. The Association Rules shall govern the use of the Common Area and Association Property by all Owners and their Invitees. However, the Association Rules shall not be inconsistent with or materially alter any provisions of the Governing Documents. A copy of the Association Rules as adopted, amended or repealed, shall be mailed or otherwise delivered to each Owner. In case of any conflict between any of the Association Rules and any other provisions of this Declaration, the Articles, or Bylaws, the conflicting Association Rule shall be deemed to be superseded by the provisions of this Declaration, the Articles and the Bylaws. 4.3.5 Right of Entry and Enforcement. Except in the case of emergencies in which case no prior notice need be given, the Board or any authorized representative thereof shall have the right, upon forty-eight (48) hours prior notice and,during reasonable hours, to enter upon the exterior of any Residential Unit and the Improvements thereon for the purpose of construction, maintenance or emergency repair for the benefit of the Owners or for the purpose of maintaining and repairing the Improvements located within said Residential Unit as provided in mis Declaration. Such persons shall not be deemed guilty of trespass by reason of such entry. The cost of such maintenance or repair shall be assessed against said Owner as an Enforcement Assessment hi accordance with the provisions of the Article hereof entitled "Assessments and Dues." Subject to the provisions of Article 6 hereof entitled "Assessments and Dues," the Association shall also have the power and authority from time to time in its own name, on its own behalf or on behalf of any Owner or Owners who consent thereto, to commence and maintain actions and suits to restrain and enjoin any breach or threatened breach of mis Declaration and to enforce, by mandatory injunction or otherwise, all of the provisions of said Declaration. The costs of any such action or suit, including reasonable attorneys' fees, shall be paid to the prevailing party. 4.3.6 Easements and Rights of Way. Subject to any existing easements, the Association, acting by and through the Board, may grant and convey to or vacate any third party easements and licenses for use and rights of way in, on, over or under any Common Area and Association Property conveyed or otherwise transferred to said Association or under its jurisdiction in accordance with the provisions of this Declaration. 4.3.7 Dedication. The Association, acting by and through the Board, may dedicate any of the Association Property to an appropriate public authority for public use as provided for in this Declaration. 4.3.8 rapital Improvements. The Board may, on its own motion or acting on a petition signed by a majority of the Owners, approve the construction, installation or acquisition of a particular capital improvement to the Association Property. Hoiton/PorticoDeclaration of <20244-87- 13JI5022.3D«l»anon of Covenants, Conditions & Restrictions ,c 5781 4.3.9 Other Property. The Association, acting by and through the Board, may acquire and hold, as trustee for the benefit of its Members, tangible and intangible personal property and to dispose of the same by sale or otherwise,, subject to the limitations set forth in Section 4.5.2. 4.3.10 Enter Into Maintenance Agreements. The Association shall have the power to enter into maintenance or subsidy agreements with Declarant. 4.3.11 Contract for Goods and Services. The Association shall have the power to contract for goods and services for the benefit of the Association Property and/or the Project necessary for the Association to perform its duties and obligations hereunder, subject to the limitations set forth in Section 4.5 below. 4.3.12 Architectural Committee. Subject to the provisions of Article 9, the Association* through the Board, shall have the right to appoint and remove Members of the Architectural Committee..\ 4.3.13 Borrow Funds. The Association shall have the right to borrow money to improve, repair or maintain the Association Property and to hypothecate any or all real or personal property owned by the Association, provided that, the borrowing of any money or hypothecation of any real or personal property in excess of five percent (5%) of the budgeted gross expenses of the Association shall require the consent of fifty-one percent (51%) of each class of Members. 4.4 DUTIES OF THE ASSOCIATION. In addition to the powers delegated to it by its Articles or the Bylaws, and without limiting their generality, the Association, acting by and through the Board, has the obligation to perform each of the duties set form below. 4.4.1 Taxes and Assessments. The Association shall have the duty to pay all real and personal property taxes and assessments and all other taxes levied against the Association Property, personal property owned by the Association or against the Association, if any. Such taxes and assessments may be contested or compromised by the Association; provided, that they are paid or that a bond insuring payment is posted before the sale or the disposition of any property to satisfy the payment of such taxes. 4.4.2 Water and Other Utilities. The Association shall have the duty and exclusive right on behalf of the Owners to acquire, provide and pay for water, sewer, garbage disposal, refuse and rubbish collection, electrical, telephone, gas and other necessary utility services for the Association Property and for water, sewer and other services to the Residential Units, as provided in Section 8.5.3, to the extent necessary. 4.4.3 Utilities Suppliers. The Association shall have the duty to permit utility suppliers to use portions of the Association Property reasonably necessary to the ongoing development and operation of the Project Horton/PorticoDeclaration of Covenants. Conditions & Restrictions t s 20244-87-1585022.3 lO 5782 4.4.4 Maintenance of Project. Except as otherwise provided for in this Declaration, the Association shall have the duty to landscape, maintain and/or replace and repair the Association Property, the Common Area and any other portions of the Project required to be maintained by the Association pursuant to the provisions of this Declaration. The Association's obligations to perform such maintenance in any Phase shall commence on the date Regular Assessments commence on Condominiums in such Phase. Until commencement of Regular Assessments on Condominiums in any Phase, the Common Area and Association Property in such Phase shall be maintained by Declarant. 4.4.5 Insurance. The Association shall have the duty to obtain, from reputable insurance companies and maintain the insurance described in the Article hereof entitled "Insurance." 4.4.6 Notice Prior ft> Litigation. The Board shall use its good faith efforts to notify all Owners of any litigation filed for or on behalf af the Association pursuant to the provisions of Section 17.4 of this Declaration. 1 4.4.7 Use of Proceeds to Repair. If the Association receives, on its own behalf or for the benefit of the Owners, any proceeds as a result of any construction defect or other claims brought by the Association, men the Association shall apply such proceeds first for the purpose of repairing such defects or replacing reserve funds previously utilized by the Association to cause such repairs and then to the costs of such litigation. Any excess proceeds shall be applied as determined by the Board, subject to any requirements established by the non-profit mutual benefit laws of the State of California and any other applicable laws. 4.5 LIMITATIONS ON AUTHORITY OF BOARD. The Board shall not take any of the actions listed below except with the vote or written consent of (a) a majority of the Members of each of Class A and Class B during the time the two-class voting structure set forth in Section 5.2 of this Declaration is in effect; or (b) except with the vote at a meeting of the Association or by written ballot without a meeting pursuant to Corporations Code Section 7513 of a majority of the Members of the Association including at least fifty-one percent (51 %) of Association Members other man Declarant after conversion to a single Class A voting membership. 4.5.1 Limit on Capital Improvements. The Board shall not, without obtaining the consent of the Members as set forth above, incur aggregate expenditures for capital improvements to the Common Area or Association Property in any fiscal year in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year. 4.5.2 Limit on Sales of Association Property. The Board shall not, without obtaining the consent of the Members as set forth above, sell 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. Honon/Portico Declaration of Covenants, Conditions & Restrictions ,•- 20244-87 -1585022.3 17 5783 4.5.3 Limit on Compensation. The Board shall not, without obtaining the consent of the Members as set forth above, pay compensation to members of the Board for services performed in the conduct of the Association's business. However, the Board may cause a member of the Board to be reimbursed for expenses incurred in carrying on the business of the Association. 4.5.4 Limitations on Third Person Contracts. The Board shall not, without obtaining the consent of the Members as set forth above, enter into a contract with a third person wherein the third person will furnish goods or services for the Common Area or Association Property or the Association for a term longer than one year with the following exceptions: (a) 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 late; (b) A prepaid casualty and/or liability insurance policy not to exceed three (3) years duration; provided that the policy permits for short-rate cancellation by the insured; (c) An agreement for cable television services and equipment or satellite television services or equipment of not to exceed (5) five years duration; provided that the supplier is not an entity in which the subdivider has a direct or indirect ownership interest often percent (10%) or more; or (d) A contract for a term not to exceed three (3) years that is terminable by the Association after no longer than one year without cause, penalty or other obligations upon ninety (90) days written notice of termination to the other party. 4.6 TERMINATION OF CONTRACTS AND AGREEMENTS. 4.6.1 Contracts or Leases. Any contract or lease, including any contractprovidmg for the services of Declarant, entered into by the Association while Declarant controls the Association shall not exceed three (3) years and shall provide that the Association has the right to terminate such contract or lease without cause upon thirty (30) days prior written notice and without penalty or the payment of a termination fee at anytime after the transfer of control of the Association from Declarant upon not more than ninety (90) days notice to the other party. For purposes of this Section, the term "control" shall mean the right of Declarant to exercise unilateral control over the Association, the Board, the Project or the Owners in any manner other than by Declarant's exercise of votes allocated to Declarant on the same basis as votes are allocated to other Owners. 4.6.2 Professional Management Contracts. Any agreement for professional management of the Project or any agreement providing for services of the Declarant shall be for a Hortcm/PoiticoDeclaration of Covenants, Conditions & Restrictions 1 o20244-87-1S85022J lo 5784 term not to exceed one (1) year without the consent of fifty-one percent (51%) of each class of Members; provided, however, that in no event shall such an agreement exceed a term of three (3) years. Any such agreement shall provide that the agreement may be terminated by either party without cause and without payment of a termination fee upon not more than ninety (90) days written notice. 4.7 PERSONAL LIABILITY. No member of the Board, or of any committee of the Association, or any officer of the Association, or any manager, or Declarant, or any agent of Declarant, shall be personally liable to any Owner, or to any otherparty, including the Association, for any error or omission of the Association, the Board, its authorized agents or employees or the Architectural Committee, if such person or entity has, on the basis of such information as may be possessed by him or her, acted in good faith without wilful or intentional misconduct. In addition to the foregoing, as more particularly specified in California Civil Code Section 1365.7, and any successor statutes or laws, any person who suffers bodily injury, including, but not limited to, emotional distress or wrongful death as a result of the tortious act or omission of a member of the Board who resides in the Project either as a tenant or as. an Owner of no more than two (2) Residential Units, and who, at the time of the act or omission, was a "volunteer" as defined in California Civil Code Section 1365.7, and any successor statutes or laws, shall not recover damages from such Board member, if such Board member committed the act or omission within the scope of his or her Association duties, while acting in good faith and without acting in a willful, wanton or grossly negligent manner, provided that all of the requirements of California Civil Code Section 1365.7, or any successor statute or law, have been satisfied. ARTICLES MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION 5.1 MEMBERSHIP. 5.1.1 Qualifications. Each Owner of a Condominium which is subject to assessment, including Declarant, shall be a Member of the Association. Ownership of a Condominium or interest hi it shall be the sole qualification for membership hi the Association. Each Owner shall remain a Member of the Association until his or her ownership or ownership interest in all Condominiums in the Project ceases at which time his or her membership hi the Association shall automatically cease. Persons or entities who hold an interest hi a Condominium merely as security for performance of an obligation are not to be regarded as Members. 5.1.2 Members' Rights and Duties. Each Member shall have the rights, duties, and obligations set forth in the Governing Documents, as the same may from time to time be amended. Helton/PorticoDeclaration of .Covenants, Conditions & Restrictions 20244-87-1585022.3 5785 5.1.3 Transfer of Membership. The Association membership of each person or entity who owns, or owns an interest in, one or more Condominiums shall be appurtenant to each such Condominium, and shall not be assigned, transferred, pledged, hypothecated, conveyed or alienated in any way except on a transfer of title to each such Condominium or interest in it and then only to the transferee. Any attempt to make a prohibited transfer shall be void. Any transfer of title to a Condominium or interest in it shall operate automatically to transfer the appurtenant membership right in the Association to the new Owner. 5.1.4 Commencement of Voting Rights. An Owner's right to vote, including Declarant, shall not vest until Regular Assessments have, been levied upon such Owner's Condominium as provided in this Declaration. All voting rights shall be subject to the restrictions and limitations provided for herein and in the other Governing Documents. 5.2 NUMBER OF VOTES. The Association shall have two (2) classes of voting membership: " „ . 5.2.1 Class A Members. Class A Members shall be all Owners, with the exception of Declarant, and shall be entitled to one (1) vote for each Condominium owned. When more than one (1) person holds an interest in any Condominium, all such persons shall be Members. The vote for such Condominium shall be exercised as they among themselves determine, but in no event shall more than one (1) vote be cast with respect to any Condominium. 5.2.2 Class B Members. Class B Members) shall be Declarant who shall be entitled to three (3) votes for each Condominium owned. The Class B membership shall cease and be converted to Class A membership on the happening of the earliest of the following to occur: (a) On the second anniversary of the first close of escrow of a Condominium in a Phase covered by the most recently issued Public Report for any Phase of the Project; or (b) The fourth anniversary of the first close of escrow of a Condominium covered by the original Public Report for the first Phase of the Project. As long as two (2) classes of Members in the Association exist, no action by the Association that must have the prior approval of the Association Members shall be deemed approved by the Members unless approved by the appropriate percentage of both classes of Members. Upon conversion to a single class A voting membership, any action by the Association that must have the prior approval of the Members will require approval by at least a majority of the Members of the Association including at least a majority of Members other than Declarant 5.2.3 Joint Owner Votes. The voting rights for each Condominium may not be cast on a fractional basis. If the joint Owners of a Condominium are unable to agree among Horton/PorticoDeclaration of Covenants, Conditions & Restrictions OA 20244-87 -1585022.3 •"•> 5786 themselves as to how their voting rights shall be cast, they shall forfeit the vote on the matter in question. If any Owner exercises the voting rights of a particular Condominium, it will be conclusively presumed for all purposes that such Owner was acting with the authority and consent of all other Owners of the same Condominium. If more than one (1) person or entity exercises the voting rights for a particular Condominium, their votes shall not be counted and shall be deemed void. 5.2.4 Accrual of Voting Rights. No voting rights shall accrue to any Owner until Regular Assessments have first commenced for such Owner's Condominium. ARTICLE 6 ASSESSMENTS AND DUES 6.1 CREATION ©F LIEN AND PERSONAL OBLIGATION FOR ASSESSMENTS. Declarant, 'for each Condominium owned within the Property, hereby covenants, and each Owner of a Condominium by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agrees to pay to the Association all assessments levied pursuant to the provisions of mis Declaration. All assessments levied hereunder, together with interest, costs and reasonable attorneys' fees assessed hereunder, shall be a charge on the land and shall be a continuing lien upon the Condominium against which each such assessment is made, the lien to be effective upon recordation of a notice of delinquent assessments. Each such assessment, together with interest, costs and reasonable attorneys' fees, shall also be the personal obligation of the person who was the Owner of such Condominium at the time when the assessment fell due and shall bind his heirs, devisees, personal representatives and assigns. Unlike the lien for non-delinquent assessments, the personal obligation for delinquent assessments shall not pass to successive Owners, unless expressly assumed by such successive Owner. No such assumption of personal liability by a successive Owner (including a contract purchaser under an installment land contract) shall relieve any Owner against whose Condominium the lien was levied from personal liability for delinquent assessments. If more than one person or entity was the Owner of a Condominium, the personal obligation to pay such assessment or installment respecting such Condominium shall be both joint and several. 62 FUNDS HELD IN TRUST. The assessments collected by the Association shall be held by the Association for and on behalf of each Owner and shall be used solely for the operation, care and maintenance of the Project as provided in this Declaration. Upon the sale or transfer of any Condominium, the Owner's interest in the funds shall be deemed automatically transferred to the successor in interest of such Owner, 6.3 PURPOSE OF ASSESSMENTS. The assessments levied by the Association shall be used exclusively to perform the obligations and duties of the Association, including, but not limited to, the improvement and maintenance of the Common Area, Association Property and for Morton/PorticoDeclaration of Covenants, Conditions & Restrictions «1 20244-87-1383022.3 ** 5787 any other maintenance responsibilities of the Association, and to reimburse the Association for the costs incurred in bringing an Owner into compliance with the Governing Documents. The Association shall not impose or collect any assessment, penalty or fee that exceeds the amount necessary for the purpose or purposes for which it is levied. 6.4 REGULAR ASSESSMENTS. 6.4.1 Payment ofRegular Assessments. Regular Assessments for each fiscal year shall be established when the Board approves the budget for that fiscal year, which budget shall be prepared in accordance with the provisions of this Declaration. Regular Assessments shall be levied on a fiscal year basis. Unless otherwise specified by the Board, Regular Assessments shall be due and payable in monthly installments on the first day of each month during the term of this Declaration. • 4 6.4.2 Budgeting, Regardless of the number of Members or the amount of assets of the Association, each'year the Board shall prepare, approve and make available-to each Member a budget as described in the Article of the Bylaws entitled "Budget and Financial Statements." Increases in Regular Assessments shall be subject to the limitations set forth in Section 6.8 below. For the first fiscal year, the budget upon which Regular Assessments shall be based shall be the budget accepted by the Department of Real Estate of the State of California. Thereafter, fee Board shall annually prepare and approve the budget and distribute a copy thereof to each Member (or a summary thereof as provided in the Article of the Bylaws referenced above), together with written notice of the amount of the Regular Assessment to be levied against the Owner's Condominium, not less than forty-five (45) days nor more than sixty (60) days prior to the beginning of the fiscal year. 6.4.3 Restrictions for Tax Exemption. As long as the Association seeks to qualify andbe considered as an organization exempt from federal and state income taxes pursuant to Internal Revenue Code Section 528 and California Revenue and Taxation Code Section 2370U and any amendments thereto, then the Board shall prepare its annual budget and otherwise conduct the business of the Association in such a manner consistent with federal and state requirements to qualify for such status. 6.4.4 Assessments After Annexation. (a) Reallocation of Assessments. After annexation of a Phase, the assessments in the budget shall be reallocated among all Condominiums hi the Project, including those in the annexed Additional Property, in the same manner as described above. (b) Revision of Budget. Declarant shall give notice to the Association of the recordation of a Supplementary Declaration for the Phase and shall give the Association a copy of the budget submitted to the Department of Real Estate in connection with the Public Report for that Phase. Notice of the new Regular Assessment to be levied against each Condominium in Morton/Portico Declaration of Covenants, Conditions & Restrictions /,->20244-87-15850213 22 5788 the Project shall be delivered by the Association to the Owners and Declarant within sixty (60) days after the close of escrow for the first Condominium sold in the new Phase. 6.4.5 Non-Waiver of Assessments. If before the expiration of any fiscal year the Association fails to fix Regular Assessments for the next fiscal year, the Regular Assessment established for the preceding year shall continue until a new Regular Assessment is fixed. 6.5 SPECIAL ASSESSMENTS. If the Board determines that the estimated total amount of funds necessary to defray the common expenses of the Association for a given fiscal year is or will become inadequate to meet expenses for any reason, including, but not limited to, unanticipated delinquencies, costs of construction, unexpected repairs or replacements of capital improvements on, damage and destruction or condemnation of, the Common Area or the Association Property, the Board shall determine the approximate amount necessary to defray such expenses, and if the amount is approved by a majority vote of the Board and does not exceed five percent (5%) of the budgeted gross expenses of the Association, it shall become a Special Assessment; provided, however, that. such limitation shall not apply to Special Assessments levied by the Board to replenish the Association's reserve account as provided in Section 9.3 of the Bylaws. Except for Special Assessments levied pursuant to Section 9.3 of the Bylaws, any Special Assessment in excess of five percent (5%) of the budgeted gross expenses of the Association shall be subject to the limitations set forth in Section 6.8 below. The Board may, in its discretion, pro-rate such Special Assessment over the remaining months of the fiscal year or levy the assessment immediately against each Condominium. Unless exempt from federal or state income taxation, all proceeds from any Special Assessment shall be segregated and deposited into a special account and shall be used solely for the purpose or purposes for which it was levied or it shall be otherwise handled and used in a manner authorized by law or regulations of the Internal Revenue Service or the California Franchise Tax Board in order to avoid, if possible, its taxation as income of the Association. 6.6 CAPITAL IMPROVEMENT ASSESSMENT. In addition to any other assessments provided for hereunder, the Association may levy a Capital Improvement Assessment for the purpose of defraying, in whole or in part, the cost of any construction or replacement of a capital improvement in accordance with the provisions of Section 4,3.8. Capital Improvement Assessments shall be due and payable by all Owners in such installments and during such period or periods as the Board shall designate. Increases in Capital Improvement Assessments shall be.subject to the limitations set forth hi Section 6.8 below. 6.7 ENFORCEMENT ASSESSMENTS. The Association may levy an Enforcement Assessment against any Owner who causes damage to the Association Property or for bringing an Owner or his or her Condominium into compliance with the provisions of the Project Documents and/or any other charge designated an Enforcement Assessment in the Project Documents, together with attorneys' fees, interest and other charges related thereto as provided in this Declaration. In the event the Association undertakes to provide materials or services which benefit individual Owners, then such Owners in accepting such materials or services agree that the costs thereof shall be an Horton/PoiticoDeclaration of Covenants, Conditions & Restrictions ~ -,2024447- 158S02Z3 23 5f89 Enforcement Assessment The Board shall have the authority to adopt a reasonable schedule of Enforcement Assessments for any violation of the Project Documents. If, after Notice and Hearing as required by this Declaration and which satisfies Section 7341 of the California Corporations Code, the Owner fails to cure or continues such violation, the Association may impose an additional fine each time the violation is repeated, and may assess such Owner and enforce the Enforcement Assessment as herein provided for nonpayment of an assessment A hearing committee may be established by the Board to administer the foregoing. Notwithstanding any other provision in this Declaration to the contrary, except as provided in Section 6.13.1 of this Declaration, Enforcement Assessments are assessments but they may not become a lien against the Owner's Condominium that is enforceable by a power of sale under Civil Code Sections 2924,2924b and 2924c or any successor statute or laws. This restriction on enforcement is not applicable to late payment penalties for delinquent assessments or charges imposed to reimburse the Association for loss of interest or for collection costs, including reasonable-attorneys1 fees, for delinquent assessments. 6.8 CHANGES TO ASSESSMENTS. * 6.8.1 Limitation on Assessments. From and after January 1st of the year immediately following the conveyance of the first Condominium to an Owner, other than Declarant, the maximum annual Regular Assessment may not, except in the case of an Emergency (as hereinafter defined), be increased by an amount greater than twenty percent (20%) of the Regular Assessments for the preceding fiscal year and Special Assessments and Capital Improvement Assessments shall not be imposed that the aggregate exceed five percent (5%) of the budgeted gross expenses of the Association for that fiscal year, without the consent of fifty-one percent (51%) of the Owners, constituting a quorum and casting a majority of the votes at a meeting or election of the Association conducted hi accordance with the provisions of Section 7613 of the California Corporations Code, or any successor statute. The Board may not increase the Regular Assessments for any fiscal year unless it has complied with California Civil Code Section 1365.5 and any successor statutes. For the purpose of this Section, a quorum shall mean more than fifty percent (50%) of the Owners of the Association and an Emergency shall mean any one of the following: (a) an extraordinary expense required by an order of a court; (b) an extraordinary expense necessary to repair or maintain the Common Area, Association Property or any part of the Project which is the responsibility of the Association to maintain where a threat to personal safety on the Project is discovered; or (c) an extraordinary expense necessary to repair or maintain the Common Area, Association Property or any part of the Project for which the Association is responsible that could not have been reasonably foreseen by the Board in preparing and distributing the Budget required under this Declaration and the Bylaws and California Code Section 1365 and any successor statutes; provided, however, that prior to the imposition or collection of a Regular Assessment under this Section, the Board shall pass a resolution containing written findings as to Horton/PorticoDeclaration of Covenants, Conditions & Restrictions ~A20244-87-1585022.3 • 24 5790 the necessity of the extraordinary expense which is involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the Members with the notice of Regular Assessment. 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 Condominium by the Association as a Regular Assessment plus any amount paid by the Declarant as a subsidy pursuant to any subsidy agreements, to the extent such subsidy payments offset any amount that would otherwise be paid by Owners as Regular Assessments. 6.8.2 Automatic Assessment Increases. Notwithstanding any otherprovisions of this Section 6.8, upon Declarant's annexation of any portion of the Property pursuant to the Declaration, the Regular Assessment shall be automatically increased by the additional amount, if any, necessary to maintain the Common Area or Association Property to perform the Association's obligations hereunder in accordance with the standards prescribed by the then current California Department of Real Estate ("DRE") Operating Cost Manual, or if the Operating Cost Manual is no longer maintained by the DRE, pursuant to standards prescribed by comparable maintenance cost guidelines prepared in accordance with prudent property management practices. However, such. increase shall occur only if (i) the annexation of such Additional Property is permitted by the DRE, and (ii) the amount of such increase does not result in the levy of a Regular Assessment that is greater than the maximum potential Regular Assessment disclosed hi all Public Reports for the Property previously issued by the DRE. 6.83 Notice to Owners. The Association shall provide notice by first class mail to the Owners of any increase in the Regular Assessments or Special Assessments of the Association, not less than thirty (30) days and not more than sixty (60) days prior to the increased assessment becoming due and payable. 6.9 UNIFORM RATE OF ASSESSMENT. Regular and Special Assessments and Capital Improvements Assessments shall be fixed at a uniform rate for all Condominiums and may be collected on a monthly basis and shall be determined by dividing the amount of the assessment by the total number of Condominiums then within the Project and subject to assessment Enforcement Assessments shall be levied directly to the individual Condominiums. 6.10 DATE OF COMMENCEMENT OF REGULAR ASSESSMENTS: DUE DATES. The Regular Assessments provided for herein shall commence as to all Condominiums in a Phase subject to this Declaration on the first day of the month following the conveyance of the first Condominium to an Owner under authority of a Public Report. As to any Additional Property which is thereafter annexed into the Project pursuant to a Supplementary Declaration, the Regular Assessments shall commence as to all of the Condominiums within such Phase upon the first day of the first month following the closing of the sale of the first Condominium in such Phase or such earlier date as may be selected by Declarant for the commencement of assessments in such Phase. Morton/PorticoDeclaration of i 20244-87 -1585022.3 Declaration of Covenants, Conditions & Restrictions « ~ 6.11 NOTICE AND ASSESSMENT INSTALLMENT ffTES. A single ten (10) day prior written notice of each Special Assessment and Capital Improvement Assessment shall be given to each Owner. The due dates for the payment of installments normally shall be the first day of each month unless some other due date is established by the Board. Each installment of Regular Assessments, Special Assessments and Capital Improvement Assessments shall become delinquent if not paid within thirty (30) days after its due date. There shall accrue with each delinquent installment a late charge, interest charge to be set by the Board and reasonable costs of collection, including attorneys' fees, but which shall not, in any event, exceed the maximum rates permitted under California Civil Code Section 1366, or any successor statute or law. 6.12 ESTOPPEL CERTIFICATE. The Board on not less than ten (10) days prior written request shall execute, acknowledge and deliver to the party making such request a statement in writing stating whether or not to the knowledge of the Association, a particular Owner is in default as to such Owner's Condominium under the provisions of this Declaration and further stating the, dates to which installments4 of assessments, regular or special, have been paid as to such 'Condominium. Any such statement may be relied on by. any prospective purchaser or Mortgagee of the Condominium, but reliance on such statement may not extend to any default not involving the payment of assessments of which the signer had no actual knowledge. 6.13 COLLECTION OF ASSESSMENTS. LIENS. 6.13.1 Right to Enforce. The right to collect and enforce assessments is vested in the Board acting for and on behalf of the Association. The Board or its authorized representative, can enforce the obligations of the Owners to pay assessments provided for in this Declaration by commencement and maintenance of a suit at law or in equity, or the Board may foreclose by judicial proceedings or through the exercise of the power of sale pursuant to Section 6.13 J enforce the lien rights created. Suit to recover a money judgment for unpaid assessments together with all other Additional Charges described in Section 6.14 shall be maintainable without foreclosing or waiving the lien rights. Notwithstanding anything else to the contrary herein, except for monetary penalties imposed by the Association as a disciplinary measure for failure of a Member to comply with the Governing Documents or as a means of reimbursing the Association for costs incurred by the Association in the repair of damage to the Common Area or Association Property and facilities, for which the Member was allegedly responsible, or in bringing the Member and his or her Residential Unit into compliance with the Governing Documents may not be characterized nor treated as an assessment which may become a lien against the Member's Residential Unit enforceable by a sale of the interest hereunder. The limitation in the preceding sentence however, does not apply to any Additional Charges. 6.13.2 Creation of Lien. If there is a delinquency in the payment of any assessment, or installment on a Condominium, any amounts that are delinquent, together with the late charge described in California Civil Code Section 1366 or any successor statute or law, interest at the rate permitted hi such Section, and all costs that are incurred by the Board or its authorized Hotton/PorticoDeclaration of Covenants, Conditions & Restrictions o/-20244-87-1585022.3 •"> 5792 representative in the collection of the amounts, including reasonable attorneys' fees, shall be a lien against such Condominium upon the recordation in the Office of the County Recorder of a notice of delinquent assessment ("Notice of Delinquent Assessment") as provided in California Civil Code Section 1367 or any successor statute or law. After its recordation, the Notice of Delinquent Assessment shall be mailed to all Owners of record as provided in California Civil Code Section 1367 or any successor statute or law. The Notice of Delinquent Assessment may not be recorded unless and until the Board or its authorized representative has sent to the delinquent Owner or Owners, not less than fifteen (15) days before the recordation of the Notice of Delinquent Assessment, a written notice of default and a demand for payment which notice shall contain all of the information specified in California Civil Code Section 1367, or any successor statute or law, and unless such delinquency has not been cured within said fifteen (15) day period. - 6.13.3 Notice of Default; Foreclosure. The Board or its authorized representative can record a notice of default and can cause the Condominium with respect to which a notice of default has been recorded to be sold in the same manner as a sale is conducted under California Civil Code Sections 2924,2924b and 2924c, or through jtdicial foreclosure, and as provided in California Civil Code Section 1367 or any successor statute or law. However, as a condition precedent to the holding of any such sale under Section 2924c appropriate publication shall be made. In connection with any sale under Section 2924c the Board is authorized to appoint its attorney, any officer or director, or any title insurance company authorized to do business in California as trustee for purposes of conducting the sale. If a delinquency is cured before sale, or before completing a judicial foreclosure, the Board or its authorized representative, shall cause to be recorded in the office of the County Recorder a certificate setting forth the satisfaction of such claim and release of such lien upon payment of actual expenses incurred, including reasonable attorneys' fees by any delinquent Owner. Any payments made on delinquent assessments shall be applied hi accordance with California Civil Code Section 1367 or any successor statute or law. On becoming delinquent in the payment of any assessments, or installments each delinquent Owner shall be deemed to have absolutely assigned all rent, issues and profits of Owner's Condominium to the Association and shall further be deemed to have consented to the appointment of a receiver (which appointment may, at the election of the Association, be enforced by the Association through specific performance). The Association, acting on behalf of the Owners, shall have the power to bid upon the Condominium at foreclosure sale and to acquire, hold, lease, mortgage and convey the Residential Unit and vote as an Owner of the Condominium. 6.13.4 Payments Under Protest. Notwithstanding any other provisions set forth in this Section 6.13, the Owners shall have the right to make certain payments under protest and be entitled to alternative dispute resolution as provided in California Civil Code Sections 1354 and 1366.3, or any successor statutes or laws, as provided in Section 17.2 hereof. 6.14 ADDITIONAL CHARGES. In addition to any other amounts due or any other relief or remedy obtained against an Owner who is delinquent in the payment of any assessments, each Owner agrees to pay Additional Charges incurred or levied by the Board including such additional Horton/PorticoDeclaration of Covenants, Conditions & Restrictions -—2024W-1585022.3 27 5793 costs, fees, charges and expenditures as the Association may incur or levy in the process of collecting from that Owner monies due and delinquent Additional Charges shall include, but not be limited to, the following: 6.14.1 Attorneys' Fees. Reasonable attorneys'fees and costs incurred in the event an attorneys) is employed to collect any assessment or sum due, whether by suit or otherwise; 6.14.2 Late Charges. A late charge in an amount to be fixed by the Board in accordance with Civil Code Section 1366, or any successor statute or law, to compensate the Association for additional collection costs incurred in the event any assessment or other sum is not paid when due or within any "grace" period established by law; 6.14.3 Costs of Suit. Costs of suit and court costs incurred as are allowed by the court; -\ 4 '•*1 6.14.4 Interest. Interest to the extent permitted by law, and 6.14.5 Other. Any such other additional costs that the Association may incur in the process of collecting delinquent assessments or sums. 6.15 WAIVER OF EXEMPTIONS. Each Owner, to the extent permitted by law, waives, 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, becomes delinquent or any lien is imposed. 6.16 SUBORDINATION OF LIEN TO FIRST MORTGAGES. The lien of assessment herein shall be subordinate to the lien of any First Mortgage now or hereafter placed upon any Condominium subject to assessment, and the sale or transfer of any Condominium pursuant to judicial or nonjudicial foreclosure (excluding a transfer by a deed in lieu of foreclosure) of a First Mortgage shall extinguish the lien of such assessments as to payments which became due prior to such sale or transfer. No sale or transfer shall relieve such Condominium from any assessments thereafter becoming due or from the lien of any subsequent assessment Where the Mortgagee of a First Mortgage or other purchaser of a Condominium obtains title to the same, as a result of foreclosure (excluding a transfer by a deed hi lieu of foreclosure), such acquirer of title, his or her successors and assigns, shall not be liable for the share of the common expenses or assessments by the Association chargeable to such Condominium that became due prior to the acquisition of title to such Condominium by such acquirer, except for a share of such charges or assessments resulting from a reallocation of such charges or assessments which are made against all Condominiums. 6.17 NO OFFSETS. All assessments shall be payable in the amounts specified by the particular assessment and no offsets against such amount shall be permitted for any reasons, Horton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1585022.3 5794 including, without limitation, a claim that the Association is not properly exercising its duties of maintenance, operation or enforcement. 6.18 PERSONAL LIABILITY OF OWNER. No Owner may exempt himself or herself from personal liability for assessments, nor any part thereof, levied by the Association, nor release the Condominium owned by him or her from the liens and charges hereof by waiver of the use and enjoyment of the Common Area or the Association Property and facilities thereof, or by abandonment of such Owner's Condominium. 6.19 TRANSFER OF PROPERTY. After transfer or sale of property within the Project, the selling Owner or Owners shall not be liable for any assessment levied on such Owner or Owner's Condominium after the date of such transfer of ownership and written notice of such transfer is delivered to the Association. The selling Owner shall still be responsible for all assessments and charges levied on his or her Condominium to any such transfer. 6.20 FAILURE TO FIX ASSESSMENTS. The omission by the Board to fix the assessments hereunder before the expiration of any year, for that or the next year, shall not be deemed either a waiver or modification in any respect of the provisions of this Declaration or a release of the Owner from the obligation to pay the assessments or any installment thereof for that or any subsequent year, but the assessment fixed for the preceding year shall continue until a new assessment is fixed. 6.21 PROPERTY EXEMPT FROM ASSESSMENTS. The Association Property shall be exempt from the assessments, charges and liens created herein. 6.22 INITIAL CAPITAL CONTRIBUTIONS. Upon acquisition of record title to a Residential Lot from Declarant, each Owner shall contribute to the capital of the Association an amount equal to one-sixth (l/6th) the amount of the then annual Regular Assessment for the Residential Lot as determined by the Board. This amount shall be deposited by the Owner into the purchase and sale escrow for his or her Residential Lot and disbursed therefrom to the Association. ARTICLE 7 USE RESTRICTIONS 7.1 RESTRICTIONS OF MASTER DECLARATION. Each Owner shall comply with all of the restrictions set forth in the Master Declaration, including, without limitation, the following restrictions relating to the use of the Property set forth in Article 10 of the Master Declaration, all of which are incorporated by reference into and made a part of this Declaration: Section 10.2 (Residential Use), Section 10.3 (Solar Panels, Antennae, Satellite dishes), Section 10.4 (No Time Share Projects), Section 10.5 (Signs), Section 10.6 (Animals), Section 10.7 (Nuisances), Section 10.8 (Drainage), Section 10.9 (No Hazardous Activities), Section 10.10 (Unsightly Articles), Horton/PorticoDeclaration of Covenants, Conditions & Restrictions ,, n20244-87-1585022 J • 29 5795 Section 10.11 (No Temporary Structures), Section 10.12 (Garages; Vehicular Restrictions), Section 10.14 (Outdoor Lighting), Section 10.15 (Basketball Hoops), Section 10.16 (Back Yards; No Sheds), Section 10.17 (Compliance With City Requirements), Section 10.18 (Owners Responsible for Damage), Section 10.19 (Construction and Sales Activities), Section 10.20 (Owners May Not Change Master Association Property), Section 10.21 (Burning), Section 10.22 (Sight Distance Corridors), Section 10.23 (Open Space and Fire Suppression Zones), and Section 10.24 (Reduction of Surface Pollutants). To the extent that any restriction in the Master Declaration requires the approval of the "Declarant", the "Master Architectural Committee11 and/or the "Board", then, for purpose of compliance with this Declaration, then Owner shall, in addition to obtaining the necessary approvals under the Master Declaration also obtain approval from the Declarant, the Board and/or the Architectural Committee under this Declaration. The provisions set forth hi this Article 7 are in addition to the restrictions set forth in the Master Declaration and each Owner shall, ha addition to complying with the restrictions set forth in the Declaration, comply with the restrictions set forth hi the Master Declaration. In the event of any conflict between this Declaration and the Master Declaration, the. more restrictive provision shall apply. * = 7.2 RESIDENTIAL USE. In addition to the use restrictions set forth in Section 10.2 of the Master Declaration, Residential Units may be used incidentally for the purpose of operating a home based small business if, and only if, (a) the business is operated solely within the Residential Unit, (b) the business is limited to arts arid crafts, the rendition of professional services or other similar activities, (c) the business is operated by the Owner of the Residential Unit whose principal residence is the Residential Unit, by a tenant whose principal residence is the Residential Unit or by a member of such Owner's or tenant's family whose principal residence is the Residential Unit, (d) the operation of the business is permitted by, and is at all times in compliance with, all applicable laws, and (e) the operation of the business does not result hi (i) the violation of any of the other provisions of this Declaration, (ii) any unreasonable increase in the flow of traffic within tile Property, or (iii) any odor, noise, or vibration outside of the Residential Unit, or create parking problems within the Project. No other use shall be allowed except as specifically permitted by local ordinance; provided, however, Declarant may use any of the Condominiums owned by Declarant as model homes and sales offices for the Project. 7.3 RENTAL OF CONDOMINIUMS. An Owner shall be entitled to rent the Owner's entire Condominium (but not a portion thereof) subject to the restrictions contained in this Declaration. Any rental or leasing agreement shall be in writing, shall provide that the lease orrental is subject to this Declaration, the Bylaws, Articles and the Association Rules and shall provide that any failure to comply with any provision of this Declaration, the Bylaws, Articles or Association Rules shall be a default under tile terms of the rental or lease agreement. A copy of this Declaration and all of the Governing Documents shall be made available to each tenant or lessee by the Owner so renting or leasing. The Owners shall, at all times, be responsible for their tenant's or lessee's compliance with all of the provisions of this Declaration pursuant to the occupancy and use of the Condominium. A lessee shall have no obligation to the Association to pay assessments imposed by the Association nor shall any lessee have any voting rights in the Association. No Owner may lease Morton/PorticoDeclaration of i 20244-87-1585022.3 Declaration of Covenants, Conditions & Restrictions ~~ 5796 a Condominium situated thereon for hotel, motel or transient purposes or any other purpose inconsistent with the provisions of this Declaration. Any lease which is either for a period of fewer than thirty (30) days or pursuant to which the lessor provides any services normally associated with a hotel, shall be deemed to be for transient or hotel purposes. 7-4 ANIMALS. In addition to the restrictions set forth in Section 10.6 of the Master Declaration regarding animals, the restrictions set forth in this Section 7.4, pertaining to the number of allowable domestic dogs and/or cats are more restrictive than those set forth in the Master Declaration and are the governing restrictions. No animals, reptiles, rodents, birds, fish, livestock or poultry shall be kept, maintained, or bred in any Residential Unit or elsewhere within the Proj ect, except for fish in an aquarium and birds in cages maintained in the interior of a Residential Unit and not more than a total of two (2) domestic dogs (other than pit bull dogs or other dogs which in the reasonable determination of the Board are determined to be a threat to the safety of the occupants of the Project, which shall not be allowed under any circumstances in the Project) or two (2) domestic cats, so long as such animals are. kept as household pets and are not kept, bred or raised for commercial purposes.'Notwithstanding the foregoing, the Board may adopt Association Rules which further limit or restrict the keeping of such pets. The Board shall specifically have the power to prohibit the keeping or maintenance of any animal, which, in the opinion of the Board, after Notice and Hearing, is deemed by the Board to constitute a nuisance to any other Owner in the sole and exclusive opinion of the Board. 7.5 INSIDE AND OUTSIDE INSTALLATIONS. No exterior addition, change or alteration to the exterior of any Residential Unit or any other portion of a Condominium or any other Improvements, other than as may be constructed by Declarant as part of the initial construction of the Project, shall be commenced without the prior written approvals required under Article 9 of this Declaration. No balcony, patio or deck covers, wiring, or installation of air conditioning, water softeners, or other machines shall be installed on the exterior of the Condominiums or within any other portion of the Residential Unit or be allowed to protrude through the walls or roofs of the buildings (with the exception of those items installed during the original construction of the Project), unless the prior written approvals required under Article 9 of this Declaration or as may be required by the City have been obtained. Nothing shall be done in or to any Condominium which will or may tend to impair the structural integrity of any other attached Condominium or other improvement in the Property or which would structurally alter any such building except as otherwise expressly provided herein. No Owner shall cause or permit any mechanic's lien to be filed against any portion of the Project for labor or materials alleged to have been furnished or delivered to the Project or any for such Owner, and any Owner who does so shall immediately cause the lien to be discharged within five (5) days after notice to the Owner from the Board. If any Owner fails to remove such mechanic's lien, the Board may discharge the lien and charge the Owner an Enforcement Assessment for such cost of discharge. Nothing in this Section shall be deemed to prohibit the installation or use of a solar energy system. The approval of the installation of such a system shall be governed by Article 9 of this Declaration. In addition to the foregoing, all Improvements installed or constructed Morton/Portico Declaration of Covenants, Conditions & Restrictions ~ -, 20244-87-1585022.3 31 5797 by an Owner within the Project must be completed in accordance with applicable law, including, but not limited to, the laws, regulations and ordinances of the City and County. 7.6 NO DECKS FOR RESIDENTIAL UNTTS 1 through 6. Notwithstanding the provisions of Section 7.5, due to set back of the Residential Units 1 through 6, no decks or patio covers may be installed or constructed on the exterior of these Residential Units. 7.7 USE OF ASSOCIATION PROPERTY. Except as otherwise provided herein, the Association Property shall be improved and used only for the following purposes: (a) affording vehicular passage and pedestrian movement within the Property, including access to the Condominiums; (b) recreational use by the Owners and their Invitees, subject to Association Rules which may be established by the Board; (c) beautification of the Association Property and providing privacy to the residents of the Property through landscaping and such other means as the Board shall deem appropriate; and (d) parking of automotive passenger vehicles in areas provided therefor as jnay be designated and approved by the Board upon such terms and conditions as may from time to time be determined by the Board. * .. 7.8 DECORATING BY OWNER. Each Owner shall have the right, at his or her sole cost and expense, to maintain, repair, paint, paper, panel plaster, tile and finish the interior surfaces of the ceilings, floors, window frames, door frames, trim and perimeter walls of the Residential Unit, and the surfaces of the bearing walls and partitions located within the Residential Unit Such Owner shall have the right to substitute new finished surfaces in place of those existing on the ceiling, floors, walls and doors ofhis or her Residential Unit Each Owner shall have the obligation to keep in good repair all items mentioned in this Section. 7.9 YARD AND DECK AREAS. Each Owner shall have the right to use the yard or balcony within the Exclusive Use Yard Common Area or Exclusive Use Deck Common Area if any, which such Owner has the exclusive right to use for residential yard purposes or deck purposes; provided, however, no improvements shall be made within such areas without the prior approvals required under Article 9 of this Declaration. 7.10 FENCES. ETC. No fences, awnings, ornamental screens, screen doors, dogruns. low patio walls, sunshades or walls of any nature shall be erected or maintained on or around any portion of any structure or elsewhere within the Project except those mat are installed in accordance with the original construction of the Project or as are authorized and approved under Article 9 of this Declaration. 7.11 PARKING RESTRICTIONS. InadditiontotherequirementsofSectionl0.12ofthe Master Declaration, the Association shall have the right to establish rules and regulations regarding vehicles at the Project No Owner shall leave his or her automobile parked or left within the Project other than within such Owner's Garage. Doors to Garages shall be kept closed except during the removal or entry of vehicles therefrom or thereto. There shall be no parking by an Owner's Invitees Horon/PorticoDeclaration of Covenants, Conditions & Restrictions -0 20244-87-1585022.3 **• 5798 of any vehicle in any courtyard or on any street in the Project, except in spaces initially designated in the Project for parking purposes, which spaces shall not be converted for living, recreational activities, business or storage that would prevent the ability of an Owner, tenant or lessee to park the number of vehicles in the garage that the garage was designed for. Each Owner shall be responsible to ensure such Owner's Invitees comply with the restriction of this Declaration. 7.12 BASKETBALL STANDARDS. In addition to the restrictions set forth in Section 10.15 of the Master Declaration, no basketball standards or fixed sports apparatus, shall be attached to any portion of a condominium. Also, no portable basketball apparatus are permitted. 7.13 NO STORAGE. No Owner shall use any Exclusive Use Deck Common Area for storage purposes and no items (including potted plants) may be placed over or upon any railing of any deck or fence within an Exclusive Use Deck Common Area. .. . * ' " i7.14 OIL DRILLING. No oil drilling, oil operations, oil refining, quarrying, or mining operations, of any kind shall be permitted on or in the Project, and no oil wells, tanks, tunnels or mineral excavations or shafts shall be permitted on the surface of the Project or within five hundred (500) feet below the surface of the Project No derrick or other structure designed for use in boring for water, oil or natural gas shall be erected, maintained or permitted within the Project 7.15 MINERAL EXPLORATION. No Property within the Project shall be used in any manner to explore for or to remove any water, oil or other hydrocarbons, minerals of any kind, gravel, earth or any earth substance or other mineral of any kind. No well for the production of, or from which there is produced, water, oil or gas shall be operated within the Project, nor shall any machinery, appliance or structure be placed, operated or maintained thereon for use in connection with any trading, manufacturing or repairing business. No slant drilling shall be permitted. 7.16 OFFENSIVE CONDUCT. NUISANCES. In addition to the restrictions set forth in Section 10.7 of the Master Declaration, no noxious or offensive activities, including but not limited to, repair of automobiles or other motorized vehicles, shall be conducted within the Project Unless otherwise permitted by the Association Rules, no Owner shall serve food or beverages, cook, barbecue, or engage in similar activities, except within such Owner's Residential Unit and except within the Exclusive Use Common Area appurtenant to such Owner's Condominium.designated for such purpose by the Association, if any, subject to the provisions of the Association Rules. 7.17 RESTRICTED USE OF RECREATION VEHICLES. ETC. No boat, truck, trailer, camper, motor home, recreational vehicle or tent shall be used as a living area while located within the Project. However, trailers or temporary structures for use incidental to the initial construction of the Project or the initial sales of Condominiums may be maintained by Declarant within the Project, but shall be promptly removed on completion of all construction and all sales. Morton/Portico Declaration of Covenants, Conditions & Restrictions 2024W7 -1585022.3 7.18 COMPLIANCE WITH LAWS. ETC. Nothing shall be done or kept in any Residential Unit or in the Common Area or the Association Property that might increase the rate of, or cause the cancellation of, insurance for the Project, or any portion of the Project. No Owner shall permit anything to be done or kept in his or her Condominium that violates any law, ordinance, statute, rule or regulation of any local, county, state or federal body, including any laws, ordinances or statutes pertaining to the use or storage of any hazardous, contaminated or toxic materials. No Owner shall allow furniture, furnishings, or other personalty belonging to such Owner to remain within any portion of the Common Area, except portions subject to exclusive easements over Common Area appurtenant to such Owner's Condominium and except as may otherwise be permitted by the Board or the Association Rules. 7.19 AIR CONDITIQNINGUNITS. No window, wall, orroofairconditioning units shall be permitted if such units are visible from any portion of the Property or any other property in the vicinity of the Project r * -12Q WINDOW COVERINGS. Temporary window coverings ("Temporary Window Coverings") in a design and color that does not conflict with the surrounding Improvements (but excluding aluminum foil, newspapers, or any other contrasting material) shall be permitted for a maximum period of sixty (60) days from the date that a Condominium is conveyed to an Owner by Declarant Except as specifically provided above, no Temporary Window Coverings shall be used to cover any door or window of any Condominium. All window coverings (including Temporary Window Coverings) shall be of a neutral color harmonious with and not conflict with the color scheme of the exterior wall surface of the Condominium. 7.21 EXTERIOR LIGHTING. Any exterior electrical, gas or other artificial lighting installed on any Residential Unit shall be positioned, screened, or otherwise directed or situated and of such controlled focus and intensity so as not to unreasonably disturb the residents of any other Residential Unit(s). Further rules regarding exterior lighting may be promulgated by the Board. 7.22 DRAINAGE. Each Owner shall have the duty and obligation to maintain the surface drainage situated within any Residential Unit (including Association area drains) free of debris and any other material which may impede the flow of water. If such Owner fails to maintain such drainage and, as a result, imminent danger to person or property may result to the other Owners, then the Association shall have the right of access onto the Exclusive Use Yard Common Area for the purpose of clearing debris and other material so as to not impede the flow of water or repairing such drainage facilities. This right of.access shall be exercised only for the purpose of preventing damage to persons and property and the entering party ("Entering Party") shall use reasonable care so as to not cause any damage to the Residential Unit The Owner shall reimburse the Association for any costs and expenses incurred in clearing such debris pursuant to Section 4.3.5 of this Declaration. This Declaration provides notice to each Owner to devote great care and attention to grading and to establish or maintain positive drainage away from the entire foundation line of the Owner's Residence. Positive drainage is achieved by shaping Lot grades, establishing drainage "swales" or Morton/PorticoDeclaration of Covenants, Conditions & Restrictions * *20244-87-1585022J . 34 5800 installing underground area drains. The swales and drains provide a receptacle and conduit to drain water away from the foundation, and the rear, side and front of the Residence to offsite drainage disposal Swales also prevent drainage water from moving from one area of the Project to another. This Declaration also provides notice to each Owner that if the existing drainage swales established within your Exclusive Use Yard Area and around your residence are interrupted, blocked, filled, or otherwise altered serious damage can result. Drainage must not be allowed to pond in a yard or run against or under a Residence, foundation, garage floor, driveway or other improvements. Serious damage may result even during a short period of time. If a Residence constructed by Declarant has a roof gutter system and downspouts which are directly connected to the Project's storm drainage system, the Residence shall at all tunes remain so connected to the Project storm drainage system; the Owner of such a Residence may not alter the Residence in any manner which results in additional roof waters draining anywhere other than directly into the Project's storm drainage system. r 7.23 ENTRY GATES. Declarant .shall have control over the entry gates which may be situated within the Association,Property and shall be responsible for the maintenance and repair of the entry gates until all sales of all Residential Units in the Project have been completed or until Declarant, hi its sole discretion, determines that the Association should take responsibility for control, maintenance and repair of some or all of the entry gates. The Association's obligation shall commence immediately upon receipt of written notice from the Declarant identifying the entry gates to be thereafter controlled and maintained by the Association. Notwithstanding who has responsibility for the entry gates, Declarant shall be entitled to have the entry gates remain open during regular business hours in order to conduct sales. The presence of entry gates on the Project is not a warranty or representation by Declarant that any security is being provided to any Owner or to any Owner's Condominium or personal property. Notwithstanding anything to the contrary set forth in this Declaration, in no event may this provision be modified or amended without the consent ofDeclarant. 7.24 POST TENSION SLABS. The concrete slabs for the Condominium Buildings in the Project may be reinforced with a grid of steel cables which were installed in the concrete and then tightened to create very high tension. This type of slab is commonly known as a "Post Tension Slab." Cutting into a Post Tension Slab for any reason (e.g., to install a floor safe, to remodel plumbing, etc.) is very hazardous and may result in serious damage to the Condominium Building and/or personal injury. By accepting a grant deed to a Residential Unit in the Project on which a Post Tension Slab has been installed, each Owner thereof specifically covenants and agrees that: (a) such Owner shall not cut into or otherwise tamper with any Post Tension Slab; (b) such Owner shall not knowingly permit or allow any person to cut into or tamper with the Post Tension Slab so long as such Owner owns any interest in the Residential Unit, (c) such Owner shall disclose the existence of the Post Tension Slab to any tenant, lessee or subsequent purchaser of the Residential Unit; and (d) such Owner shall indemnify, protect, defend and hold Declarant and its respective officers, employees, contractors and agents, free and harmless from and against any and all claims, damages, losses, or other liability (including, without limitation, attorneys' fees) arising from any breach of this Section. Horton/PorticoOeclaradon of Covenants, Conditions & Restrictions ~r 20244-87-1585022.3 •*•> 5801 7.25 LANDSCAPING. In addition to the requirements of Section 10.13 of the Master Declaration, each Owner shall have landscaping plans for the Exclusive Use Yard Common Area appurtenant to his or her Residential Unit within three (3) months after the conveyance of the Condominium to the Owner, and shall have all of landscape improvements completed within six (6) months after the conveyance of the Condominium to the Owner pursuant to landscaping plans approved pursuant to Article 9 of this Declaration. 7.26 INDEMNIFICATION. Each Owner shall be liable to the remaining Owners for any damage to the Common Area or the Association Property that may be sustained by reason of the negligence or wilful misconduct of that Owner, or the Owner's Invitees, but only to the extent that any such damage is not covered by insurance proceeds received by the Association. Each Owner, by acceptance of his or her deed, agrees for such Owner and for the Owner's Invitees, to indemnify each and every other Owner, and to hold each Owner harmless from, and to defend such Owner against, any claim, of any person for personal injury or property, damage caused by the negligence or wilful misconduct of such Owner, unless the injury or damage occurred by reason of the negligence or willful misconduct of any other Owner for the Association or is fully covered by insurance proceeds received by the Association. Upon demand by the Association, each Owner shall be responsible for the payment of any deductible amount payable under the Association's insurance poh'cy as a result of any claims arising as a result of the negligent or willful misconduct of such Owner or the Owner's Invitees. ARTICLES IMPROVEMENTS 8.1 MAINTENANCE OBLIGATIONS OF OWNERS. 8.1.1 Owners' Responsibilities. Subject to any provisions of the Governing Documents, each Owner shall maintain, repair and otherwise care for the maintenance, repair and replacement of (i) all portions of such Owner's Residential Unit, (ii) the interior of the Residential Unit and all appliances, whether built-in or free standing, within the Residential Unit, (iii) the interior surfaces of the Residential Unit, (iv) the utility systems and equipment, including without limitation, gas, plumbing, electrical, air conditioning, heating, telephone, any solar and/or other water heating equipment, and cable television servicing such Owner's Residential Unit and located either within or without the outside perimeter of the exterior walls, floors and ceilings thereof, so long as those systems are used exclusively by such Owner and not hi common and (v) windows and the ulterior surfaces of doors enclosing an Owner's Residential Unit, including the metal frames, tracks and exterior screens of glass doors and windows, (vi) the landscaping within the Exclusive Use Yard Common Areas in accordance with the final landscape plan approved by the City and the Architectural Committee, (vii) the garage door and garage door opener of its Garage (except for exterior painting of the door to be performed by the Association) (viii) all appliances, whether built Horton/PorttcoDeclaration of Covenants, Conditions & Restrictions ., ,20244-87-1585022.3 36 5802 in or free standing within the Residential Unit and (ix) any Exclusive Use Common Area appurtenant to such Residential Unit, including, but not limited to, the decking and interior surfaces of any Exclusive Use Deck Common Area. Each Owner shall also be responsible for the maintenance of the ulterior of any Exclusive Use Easement or other area which he or she has the exclusive right to use, and shall make repairs and perform such maintenance in such a manner as shall be deemed necessary in the judgment of the Board to preserve the attractive appearance thereof, protect the value thereof and to maintain the established system of drainage. Any such maintenance, repair or replacement of any of the foregoing which is visible from outside of a Residential Unit shall be consistent with the existing design, aesthetics and architecture of the Project and shall be approved by the Board or by the Architectural Committee if the Board has delegated such power and authority to the Architectural Committee. Maintenance of any Exclusive Use Common Areas by an Owner shall be conducted in such manner as shall be deemed necessary in the judgment of the Board to preserve the attractive appearance thereof, protect the value thereof and to maintain the ^established system of drainage (as described below). The Board and its agents shall, after giving reasonable notice, have the right to enter any Exclusive Use Common Area to inspect the established system of drainage located thereon, provided that the Association repairs any damage which might result from such inspection. No Owner shall hi any way interfere with his or her patio or deck's established system of drainage and each Owner shall, at all times, keep the deck areas free from any obstructions which might interfere with the established system of drainage. The "established system of drainage" refers to any drainage systems or facilities or drainage patterns originally installed by Declarant. 8.1.2 Permitted Alterations. Notwithstanding the foregoing, subject to the Governing Documents (including review and approval hi accordance with the requirements of Article 9 of this Declaration^and other applicable provisions oflaw, an Owner may do the following: (a) Make any improvements or alterations within the boundaries of his or her Residential Unit that do not impair the structural integrity or mechanical systems or lessen the support of any portions of the Project; and (b) Modify a Residential Unit, at the Owner's expense, to facilitate access for persons who are blind, visually handicapped, deaf, or physically disabled, or to alter conditions which could be hazardous to these persons. These modifications may also include modifications of the route from the public way to the door of the Residential Unit for the purposes of this Section if the Residential Unit is on the ground floor or already accessible by an existing ramp or elevator. The right granted by this Section is subject to the following conditions: (i) Modifications shall be consistent with applicable building code requirements; (ii) Modificationsshallbeconsistent withtheintent of otherwise applicable provisions of the Governing Documents pertaining to safety or aesthetics; Morton/PorticoDeclaration of Covenants, Conditions & Restrictions ~ ~20244-87 -1385022.3 3/ 5803 (iii) Modifications external to the Residential Unit shall not prevent reasonable passage by other Owners, and shall be removed by the Owner when the Residential Unit is no longer occupied by persons requiring those modifications who are blind, visually handicapped, deaf, or physically disabled; and (iv) Any Owner who intends to modify a Residential Unit pursuant to this Section shall submit his or her plans and specifications to the Board as provided in Article 9 hereof for review to determine whether the modifications will comply with the provisions of this Section. The Board or, if appointed, the Architectural Committee shall not deny approval of the proposed modifications under this Section without good cause. 8.1.3 Maintenance and Alterations of Common Area. No structural alterations to the interior of, Common Area or Exclusive Use Deck Area or optional Exclusive Use Deck Area surrounding any Residential Unit shall be made and no plumbing or electrical work within any bearing or commonValls within Residential Units or Common Area or shall b'e performed by any Ownerwithout the prior written consent ofthe Board pursuant to Article 9 hereof. No Owner shall at his expense or otherwise make any alterations or modifications to the exteriors ofthe buildings, fences, railings or walls situated within the Project without the prior consent ofthe Board pursuant to Article 9 hereof and if such walls or fences are situated adjacent to any open space or other real property owned by the City, the walls or fence shall not encroach onto such areas. The Exclusive Use Deck Common Area surrounding any Residential Unit shall not be resurfaced without the prior written consent ofthe Board pursuant to Article 9 hereof. 8.2 MAINTENANCE OF FENCES. 8.2.1 Perimeter Fence. As used hi this Declaration, the term "Perimeter Fence" shall mean any fencing or walls bordering the boundaries ofthe Residential Unit that separates the Residential Unit from (a) Association Property or (b) any areas bordering the Project. Each Owner whose Residential Unit is enclosed by the Perimeter Fence shall maintain, repair and replace such fencing. The Owner of any Residential Unit surrounded by fencing adjacent to Association Property shall have a non-exclusive easement to the Association Property for the purpose of maintaining, repairing and replacing such fencing. 8.2.2 Interior Fencing Between Two Residential Units. For any fencing which separates two (2) Residential Units, each Owner shall maintain the interior of the fence and the Owners shall share, on an equitable basis, the cost of replacing such fencing. The Owner of each affected portion ofthe Property upon which a party wall or fence is located shall have a reciprocal non-exclusive easement to the Property immediately adjacent to the interior fence for the limited purpose of maintaining the party wall or fence. Horton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1585022.3 5804 8.2.3 Fencing Between Residential Units and Recreation Area. As used in this Declaration, the term "Recreation Area" shall refer to the swimming pool, spa and related facilities situated within the Association Property. For any fencing which separates a Residential Unit from the Recreation Area, the Owner and the Association shall each maintain the portion of the fencing facing the Owner's Residential Unit and Recreation Area respectively. The Association shall have the obligation to repair and replace the fencing. 8.2.4 Application of Sealant Within sixty (60) days from the date that a Condominium is conveyed to an Owner by Declarant, each Owner shall apply a wood sealant approved by the Architectural Committee pursuant to the provisions of Article 9 of this Declaration, to any wood fencing surrounding the Owner's Residential Unit. 8.2.5 Liability for Damage. Notwithstanding any other provision of this Section 8.2, an Owner who by his or her negligent or willful act causes a wall or fence within the Project to be damaged shall bear the whole cost of repairing such damage. 8.2.6 Maintenance of Glass. The glass portion of any wall surrounding a Residential Unit shall be cleaned, maintained, repaired and replaced by the Owner of such Residential Unit. 8.3 OWNER'S FAILURE TO MAINTAIN. In the event an Owner fails to maintain the areas and items as provided above or make repairs thereto in such manner as shall be deemed necessary in the judgment of the Board to preserve the attractive appearance thereof and protect the value thereof, the Board shall give written notice to such Owner, stating with particularity the work of maintenance or repair which the Board finds to be required and requesting that the same be carried out within a period of thirty (30) days from the giving of such notice. In the event the Owner fails to carry out such maintenance or repair within the period specified by the notice, the Board shall cause such work to be completed and shall assess the cost thereof to such Owner as an Enforcement Assessment in accordance with the procedures set forth in this Declaration. 8.4 DAMAGE OR DESTRUCTION. The Owner of a Residential Unit damaged or destroyed by fire or other calamity shall cause the interior of such Residential Unit to be repaired or restored at the expense of the Owner. This obligation shall not extend to the installation of furniture and the like, but is for the purpose of preventing unsightliness with respect to such damaged Residential Unit and any resultant health or safety problems to other Owners or the public. Nothing herein shall be construed, in any manner whatsoever, to alter or modify the obligation of the Association to repair or restore the Project as provided in the Article hereof entitled "Destruction of Improvements and Condemnation." Horton/PorticoDeclaration of < 20244-87 -1585022.3 Declaration of Covenants, Conditions & Restrictions - g 5805 8.5 MAINTENANCE OBLIGATIONS OF ASSOCIATION. 8.5.1 Maintenance of Common Area and Association Property. Except for the maintenance responsibilities of Owners with respect to Exclusive Use Common Areas, the Association shall be responsible for maintaining, repairing, replacing and otherwise caring for all Common Area and Association Property, including, without limitation, Improvements, Private Streets, lighting, landscaping, driveways, cluster mailboxes, benches, drainage and utility systems situated within the Association Property. The landscaping located within the Common Area and Association Property shall be maintained, repaired or replaced in accordance with the final landscaping plan found as DWG 386-8L sheets 1 through 36 on file with the City as approved by the City. The Association shall keep such Common Area and Association Property in good condition and repair, provide for all necessary services and cause all acts to be done which may be necessary of proper to assure the maintenance of such Common Area and Association Property in first-class condition, including, without limitation the repair andmaintenance of the roofs of the Condominium Buildings, the exterior surface o fall Residential Units, the exterior surface of all Exclusive Use Deck Areas, swimming pool, spa, and all equipment servicing such recreational facilities, any monument signage for the Project situated within the Association Property, Brush Areas and landscaping within the Association Property (excluding landscaping within any Exclusive Use Yard Common Areas) Jn addition to the foregoing, the Association shall comply with the maintenance standards applicable to the Project set forth in the Master Declaration. 8.5.2 Wood-Destroying Pests. The Association shall be responsible for the repair and maintenance of the Common Area and Association Property occasioned by the presence of wood-destroying pests or organisms. The Association may cause the temporary, summary removal of any occupant of the Project for such periods and at such times as may be necessary for prompt, effective treatment ofwood-destroyingpests or organisms. The costs of temporary relocation during the repair and maintenance by the Association shall be borne by the affected Owners and not the Association. The Association shall give notice of flic need to temporarily vacate a Residential Unit to the occupants and to the Owner, not less than fifteen (15) days nor more than thirty (30) days prior to the date of the temporary relocation, the date and time of the beginning of treatment, the anticipated date and time of termination of treatment, and that the occupants will be responsible for their own accommodations during the temporary relocation. Notice by the Association shall be deemed complete upon either (a) Personal delivery of a copy of the notice to the occupants, and sending a copy of the notice to the Owner, if different than the occupants, by first-class mail, postage pre-paid at the most current address shown on the books of the Association, or (b) By sending a copy of the notice to the occupants at the Residential Unit address and a copy of the notice to 1ne Owner, if different than the occupants, by first-class mail, postage prepaid at the most current address shown on the books of the Association. Hotton/PorticoDeclaration of Covenants, Conditions & Restrictions20244-87-1585022.3 5806 8.5.3 Water Meters. Each Owner, by acceptance of a deed, acknowledges that the City provides water and sewer service to the Project In connection with the development of the Project, Declarant has installed several public water meters for the Project Some of the meters will meter the water used for irrigation purposes associated with the irrigation of the Association Property and certain other portions of the Project which the Association is obligated to maintain. The other public water meters will be used to measure water usage of all the individual Condominium Buildings situated within the Project. The City will then prepare a bill based upon overall water usage of all the Condominium Buildings within the Project. Individual submeters will be installed on each Condominium Building that measure water usage for each of the individual Residential Units within a Condominium Building. The Association will be responsible for the payment of this bill to the City and each Owner will be responsible for paying its share of such water bill to the Association in accordance with the procedures set forth below. (a) Allocation of Water and Sewer Bills. In order to calculate the share attributable to each Residential Unit, for water, sewer andtrther charges imposed by the City, the Association shall have the right to enter into a contract with a water metering service company • ("Metering Company"). The Metering Company will be responsible for reading the individual submeters, allocating the water, sewer and other charges imposed by the City for each Condominium Building to the individual Residential Units and preparing the individual bills for delivery to each Owner. Additionally, the Metering Company will impose a service charge for their services which will be charged to each Owner. Each Owner will be responsible forpaying directly to the Metering Company such Owner's share of water, sewer and other charges imposed by the City and the service charge to the Metering Company. The Metering Company will provide to the Association a statement of all amounts received from the Owners on a regular basis. If an Owner fails to pay any amounts when due, such Owner will be responsible for any penalties or delinquent amounts levied by the City and the Metering Company. Additionally, the Association shall have the right to cure any failure by an Owner ("Defaulting Owner") to pay the amounts due to the City and may elect to apply deposit then held by the Association to make such payment as provided in Section 8.5 J(b) below. If the Association elects to cure such default, then the defaulting Owner will be responsible for reimbursing the Association. If the Defaulting Owner fails to reimburse the Association, the Association will be entitled to impose an Enforcement Assessment as provided under this Declaration, may enter the Garage of a Residential Unit to shut off water service to the Defaulting Owner's Residential Unit or may pursue any other remedies as provided under this Declaration. Each Owner shall also have the obligation to maintain, repair and replace the submeter providing service to such Owner's Residential Unit If an Owner fails to maintain such water meters, the Association shall be entitled to maintain, repair and replace the water meter and charge the cost thereof to the Owner as an Enforcement Assessment or pursue any other remedies as provided under this Declaration. If, in the future, there are no companies which can provide the water metering service, then it will be the responsibility and obligation of the Association to allocate costs for water and sewer usage and the other charges levied by the City to the Owners in the Project. Horton^PorticoDeclaration of Covenants, Conditions & Restrictions20244-87-1585022.3 5807 (b) Deposits. Upon the initial sale of a Residential Unit to an Owner from Declarant under authority of a Public Report, such Owner shall be obligated to pay to the Association a deposit in an amount equal to One Hundred Fifty Dollars ($150.00) as security for such Owner's obligation to pay such Owner's water and sewer bill when due. As provided above, the Association may apply such deposit in payment of a Defaulting Owner's water and sewer bill and such Owner shall replace the full amount of such deposit promptly upon written notice from the Association. The Association shall, within twelve (12) months after the Close of Escrow of all the Residential Units in the Phase in which such Owner's Residential Unit is located, credit to the Owners in such Phase any amounts not expended by the Association from such Owner's deposit. 8.5.4 Maintenance of Brush Areas. The Association shall maintain the Brush Areas hi a good condition of maintenance and repair in accordance with such guidelines, regulations and requirements as may be adopted by the City or other governmental agency from time to time, including any guidelines for habitat maintenance. * 8.6 FUTURE CONSTRUCTION. Nothing in this Declaration shall limit the right of Declarant to complete construction of Improvements to the Common Area or the Association Property and to Condominiums owned by Declarant or to alter mem or to construct additional Improvements as Declarant deems advisable before completion and sale of the entire Project 8.7 LANDSCAPING. IRRIGATION AND DRAINAGE MAINTENANCE AND INSPECTIONS. The Association shall regularly inspect, maintain and repair the landscaping, drainage and irrigation systems serving or within the Common Area and Association Property. The Association shall also inspect for any misaligned sprinklers orblocked drainage systems which could cause water damage to the Project In the event the Declarant provides any maintenance manuals to the Association, the Association shall comply with the requirements of any such maintenance manuals. The Association shall employ the services., of a professional landscape architect, maintenance contractor or other such professional person to assist the Association in performing its duties hereunder and shall obtain maintenance manuals covering the maintenance obligations of the Association and follow any recommendations contained therein. The Board shall, from time to time, make appropriate revisions to any maintenance manuals, based upon the Board's review thereof on at least an annual basis and the Declarant shall be limited to accompany the inspector. The inspections required to be conducted by the Board under this Section 8.7 shall take place at least annually. The inspectors shall provide written reports of their inspections to the Association and, if requested by the Declarant, to the Declarant promptly following completion thereof. The written reports shall identify any items of maintenance or repair which either require current action by the Association or will need further review and analysis. Such written reports shall specifically include a review of all irrigation and drainage systems on the Project. The Board shall report the contents of such written reports to Declarant (if not already provided by the inspector directly) so requested by Declarant and to the Members of the Association at the next meeting of the Members following receipt of such written reports or as soon thereafter as reasonably practicable and shall include such written reports in the minutes of the Association. The Board shall promptly cause all matters Hoiton/Portico Declaration of Covenants, Conditions & Restrictions A~20244-87-1585022.3 42 5808 identified as requiring attention to be maintained, repaired, or otherwise pursued in accordance with prudent business practices and the recommendations of the inspectors and shall keep a record of all such matters in the Board's minutes. Should such inspection require the inspection of any Residential Unit, there is hereby created a nonexclusive easement in favor of the Association, and its officers, agents, employees and independent contractors, to conduct such inspections and to provide such maintenance, repair and replacement, provided that entrance is made at reasonable hours and with at least three (3) days advance notice to the Owner, except in case of emergency. Any damage to any structure, landscaping or other improvements caused by the Association, or any of its officers, agents, employees or independent contractors, while performing such maintenance, repair or replacement work shall be repaired by the Association at its sole cost and expense. 8.8 FAILURE OF ASSOCIATION TO MAINTAIN COMMON AREA AND ASSOCIATION PROPERTY. In the event that the Association fails to maintain the Common Area or Association Property as provided in Seption 8.5.1 and 8.5.2, the City shall have the right, butnot the duty, to perform the necessary maintenance. If the City elects to perform such maintenance, the City shall -give written notice to the Association, with a copy thereof to the Owners, setting forth with particularity the maintenance which the City finds to be required 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 carry out such maintenance of the Common Area and/or Association Property within the period specified by the City's notice, the City shall be entitled to cause such work to be completed and shall be entitled to reimbursement with respect thereto from the Owners as provided herein. 8.9 SPECIAL ASSESSMENTS LEVIED BY THE CITY. In the event the City has performed the necessary maintenance to either Common Area and/or Association Property, the City shall submit a written invoice to the Association for all costs incurred by the City to perform such maintenance of the Common Area and/or Association Property. 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. 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 hi 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 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 eachResidential Unit against which the special assessment is levied. Each Owner hereby vests the City with the right and power to levy such special assessment, to impose a lien upon their respective Residential Unit and to bring all legal actions and/or to pursue lien foreclosure procedures against any Owner and his/her respective Residential Unit for purposes of colleting such special assessment in accordance with the procedures set forth in Article 6 of this Declaration. Morton/PorticoDeclaration of Covenants, Conditions & Restrictions A *20244-87-1585022.3 4-* 5809 ARTICLE 9. ARCHITECTURAL REVIEW 9.1 SCOPE. No Improvements of any kind whatsoever upon or around any Residential Unit or Exclusive Use Yard Common Area or Exclusive Use Deck Common Area or Optional Exclusive Use Deck Common Area shall be commenced, erected, placed or altered until the location and the complete plans and specifications showing the nature, kind, shape, height and materials, including the color ("Plans and Specifications"), have been submitted to and approved in writing as to harmony of external design and location to surrounding structures and topography by the Board. In addition, the grade, level or drainage characteristics of the Residential Unit or any portion thereof shall not be altered without the prior written consent of the Board. 92 MASTER ARCHITECTURAL APPROVAL. The approvals required to be obtained under this Declaration are in addition to the approvals required to be obtame4from the Master Architectural Committee.. Upon approval by the Board of the Plans and Specifications for any Improvements in accordance with the provisions set forth in this Article 9, an Owner shall submit such Plans and Specifications to the Master Architectural Committee for approval by the Master Architectural-Committee in accordance with the provisions and procedures set forth in the Master Declaration. In the event the Master Architectural Committee disapproves the Plans and Specifications, and requires any changes thereto, then the revised Plans and Specifications shall be resubmitted to the Board for approval. In the event of a conflict between the Plans and Specifications approved by the Board and the Plans and Specifications approved by the Master Architectural Committee, the Plans and Specifications approved by the Master Architectural Committee shall control The Board shall have the right to condition approval under this Article 9 upon receipt of evidence that an Owner has received fee necessary preliminary and final approvals required under the Master Declaration. 9.3 ARCHITECTURAL GUIDELINES. The Board or, if appointed, Architectural Committee may, from time to time and hi its sole discretion, adopt, amend and repeal, by unanimous vote, rules and regulations to be known as "Architectural Guidelines." The Architectural Guidelines shall interpret and implement the provisions hereof by setting forth the standards and procedures for architectural review and guidelines for architectural design of Improvements, placement of Improvements, color schemes, exterior finishes and materials and similar features which are recommended for use in the Project, provided, however, that said rules shall not be in derogation of the standards required by this Declaration. 9.4 APPROVAL OF PLANS AND SPECIFICATIONS. 9.4.1 Preliminary Approval. Any Owner proposing to construct Improvements or take other actions requiring the prior approval of the Board pursuant to this Declaration shall first apply to the Board for preliminary approval by submission of preliminary Plans and Specifications Morton/PorticoDeclaration of Covenants, Conditions & Restrictions ,, A20244-87-1585022.3 - 44 5810 in accordance with the Architectural Guidelines, if any. The purpose of the preliminary approval procedure is to allow an Owner proposing to construct Improvements an opportunity to obtain guidance concerning design considerations before expending substantial sums for plans and other exhibits required to apply for final approval. Applications for preliminary approval shall be considered and disposed of as set forth below. (a) Time PeriQ.dsj.for_Reyiew. Within thirty (30) days after proper application for preliminary approval, the Board shall consider and act upon such request. The Board shall grant such approval only if the proposed Improvements, to the extent its nature and characteristics are shown by the application, would be entitled to a final approval on the basis of a full and complete application. In the event the Board fails to approve or disapprove any such preliminary Plans and Specifications within thirty (30) days after all documents and information requested by the Board have been received by it, the Owner requesting said approval may submit a written notice to$he Board advising the same of its failure to act. If the Board fails to approve or disapprove any such preliminary Plans, and Specifications within fifteen (15) days after the receipt of said notice from such Owner, said preliminary Plans and Specifications shall be deemed approved, provided that any Improvements conform to all conditions and restrictions contained in this Article and are in harmony with similar structures erected within the Project. In granting or denying approval, the Board may give the Owner such directions concerning the form and substance of the final application for approval as it may deem proper or desirable for the guidance of the Owner. The giving of any preliminary approval shall not affect the right of the Board to deny approval of any final Plans and Specifications which are in substantial conformance with the approved preliminary Plans and Specifications. (b) Effectiveness of Approval. Any preliminary approval granted by the Board as provided above shall be effective for a period of ninety (90) days from the date of the issuance thereof. In no event shall any preliminary approval be deemed to be an approval authorizing construction of the proposed Improvements. 9.4.2 Final Approval. During the ninety (90) day preliminary approval period described above, any application for final approval which consists of proposed Improvements in accordance with the provisions of the preliminary approval, and is otherwise acceptable under the terms of this Declaration and the Architectural Guidelines, shall be approved by the Board as set forth below. (a) Time Periods For Review. Within thirty (30) days after proper application for final approval, the Board shall consider and act upon such application. In the event the Board fails to approve or disapprove any such final Plans and Specifications within thirty (30) days after all documents and information requested by the Board have been received by it, the Owner requesting said approval may submit a written notice to the Board advising the same of its failure to act. If the Board fails to approve or disapprove any such final Plans and Specifications within thirty (30) days after the receipt of said notice from such Owner, the final Plans and Specifications Morton/PorticoDeclaration of Covenants, Conditions & Restrictions A <-20244-87-1585022.3 45 5811 shall be deemed approved, provided that the proposed Improvements conform to all conditions and restrictions contained in this Article and are in harmony with similar structures erected within the Project 9.4.3 Approval of Solar Energy Systems. Any Owner proposing to install or use a solar energy system, as defined in California Civil Code Section 801.5, shall be subject to the same review and approval process as any owner proposing to construct any Improvements or other actions requiring the approval of the Board pursuant to this Declaration. However, only reasonable restrictions on the installation and use of a solar energy system shall be permitted. Reasonable restrictions on a solar energy system are those restrictions that do not significantly increase the cost of the system or significantly its sufficiency or specified performance, or which allow for an alternative system of comparable costs, efficiency, and energy conservation benefits. 9.5 INSPECTION AND CORRECTION OF WORK. Inspection of work and correction of defects therein shall proceed as follows: 9.5.1 Right of Inspection'During Course of^Construction. The Board or its duly authorized representative may enter into any Residential Unit, from time to time, as provided below during the course of construction or installation of any Improvements for the purpose of inspecting such construction and/or installation. If the Board determines that such construction and/or installation is not being done in substantial compliance with the approved Plans and Specifications, it shall notify the Owner of the Residential Unit of such noncompliance. The Board may not enter into a Residential Unit without obtaining the prior permission of the Owner or occupant of such Residential Unit; provided, however, that such approval shall not be unreasonably withheld and shall be given for entry by the Board during the daylight hours within forty-eight (48) hours of the request for entry. 9.5.2 Notice of Completion. Upon the completion of any construction or reconstruction or the alteration or refinishing of any Improvements, or upon the completion of any other work for which approved Plans and Specifications are required under this Article, the Owner shall give written notice of completion thereof to the Board. 9.5.3 Inspection. Within thirty (30) days thereafter, the Board, or its duly authorized representative, shall have the right to enter into a Residential Unit, as provided in Section 9.5.1 above, to inspect such Improvement to determine whether it was constructed, reconstructed, altered or reflnished to substantial compliance with the approved Plans and Specifications. If the Board finds mat such construction, reconstruction, alteration or refinishmg was not done in substantial compliance with the approved Plans and Specifications, it shall notify the Owner in writing of such non-compliance within such thirty (30) day period, specifying particulars of non-compliance, and shall require the Owner to remedy such non-compliance. Horton/PoiticoDeclaration of Covenants, Conditions & Restrictions . s 20244-87-1585022.3 40 5812 9.5.4 Non-Compliance. If, upon the expiration of thirty (30) days from the date of such notification, the Owner shall have failed to remedy such non-compliance, the Board shall notify the Board in writing of such failure. After affording such Owner Notice and Hearing, the Board shall determine whether there is a non-compliance, and if so, the nature thereof and the estimated cost of correcting or removing the same. If non-compliance exists, the Board shall require the Owner to remedy or remove the same within a period of not more than thirty (30) days from the date of the Board ruling. If the Owner does not comply with the Board ruling within such period or within any extension of such period as the Board, in its discretion, may grant, the Board, at its option, may either remove the non-complying Improvement or remedy the non-compliance and the Owner shall reimburse the Association for all expenses incurred in connection therewith upon demand. If such expenses are not promptly repaid by the Owner to the Association, the Board shall levy an Enforcement Assessment against such Owner for reimbursement. 9.5.5 Failure to Notify. If for any reason the Board fails to notify the Owner of any non-compliance within sixty (60) days after receipt of said notice of completion from the Owner, the Improvement shall be deemed to be innccordance with said approved Plans and Specifications. 9.5.6 Government Regulations. In the event there is any conflict between the requirements or actions of the Board and the mandatory regulations or ordinances of any governmental entity relating to the Property, the government regulation or ordinance, to the extent mat such regulations and ordinances are more restrictive, shall control and the Board shall modify its requirements or actions to conform to the government regulation or ordinance; provided, however, that if the governmental rules or regulations are less restrictive, the provisions of this Declaration shall nonetheless apply. The application by an Owner for review and approval by the Board of any Plans and Specifications or other submittals by such Owner shall in no way be deemed to be satisfaction of compliance with any applicable statute or law, or governmental rule or regulation or public utility requirement (hereinafter collectively referred to as "Additional Requirements"); provided, however, if the additional requirements are less restrictive than the provisions of this Declaration, the provisions of this Declaration shall nonetheless apply. 9.6 APPOINTMENT OF ARCHTmCTURAL(X>MMnTEE. The Board shall have the right to delegate its review and approval rights to an Architectural Committee. If the Board so elects, the Architectural Committee shall consist of three (3) members. One (1) alternate member may be designated by the Board to act as a substitute on the Architectural Committee in the event of absence or disability of any member. In the event the Board appoints an Architectural Committee, all rights hereunder shall apply to the Architectural Committee and all references to the Board shall be deemed to refer to the Architectural Committee. 9.7 DILIGENCE IN CONSTRUCTION. Upon approval by the Board of any Plans and Specifications, the Owner shall promptly commence construction and diligently pursue the same to completion. Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1583022.3 5813 9.8 FEE FOR REVIEW. The Board shall have the right to establish a fee for the review and approval of Plans and Specifications which must be submitted to the Board pursuant to the provisions of this Article. The Board shall have the right to hire any engineer or other consultant, the opinion of which the Board deems necessary in connection with its review of any plans submitted by any Owner and such Owner shall be liable for payment of such engineer's and/or consultant's fee. 9.9 COMPENSATION. The members of any Architectural Committee approved by the Board shall receive no compensation for services rendered, other than reimbursement by the Association for expenses incurred by them in the performance of their duties hereunder, unless the Association retains a professional architect, engineer or designer as a member of the Architectural Committee for the purpose of providing professional services, in which event reasonable compensation for such member may be approved by the Board. 9.10 INTERPRETATION AND APPEAL. All questions of interpretation or construction of any of the terms or conditions herein shall be resolved by the Board, and its decision shall be final, binding and conclusive on all of the parties affected. Notwithstanding the foregoing, in the event an Architectural Committee is appointed and the Architectural Committee disapproves any Plans and Specifications submitted by an Owner pursuant to this Article, the party or parties making such submission may appeal in writing to the Board. The Board must receive the written request not more than thirty (30) days following the final decision of the Architectural Committee. Within thirty (30) days following receipt of the written request for appeal, the Board shall render its written decision. The failure of the Board to render a decision within the thirty (30) day period shall be deemed a decision against the appellant. 9.11 WAIVER. The approval by the Board of any plans, drawings or specifications for any work done or proposed, or for any other matter requiring the approval of the Board under this Declaration, shall not be deemed to constitute a waiver of any right to withhold approval of any similar plan, drawing, specification or matter subsequently submitted for approval. 9.12 ESTOPPEL CERTIFICATE. Within thirty (30) days after written demand is delivered to the Board by any Owner, and upon payment to the Association of a reasonable fee (as fixed from time to time by the Association), the Board shall record an estoppel certificate, executed by any two (2) of its members, certifying (with respect to any Residential Unit of said Owner) that as of the date thereof, either (a) all Improvements made and other work completed by said Owner comply with this Declaration, or (b) such Improvements or work do not so comply, hi which event the certificate shall also identify the non-complying Improvements or work and set forth with particularity the basis of such non-compliance. Any purchaser from the Owner, or from anyone deriving any interest in said Residential Unit through him, shall be entitled to rely on said certificate with respect to the matters therein set forth, such matters being conclusive as between the Association, Declarant and all Owners and such persons deriving any interest through them. Horton/PotticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1585022.3 5814 9.13 LIABILITY. Neither the Board, any Architectural Committee.nor any member thereof shall be liable to the Association or to any Owner for any damage, loss or prejudice suffered or claimed on account of (a) the approval or disapproval of any Plans and Specifications, whether or not defective; (b) the construction or performance of any work, whether or not pursuant to approved Plans and Specifications; (c) the Project; or (d) the execution and filing of an estoppel certificate pursuant to Section 9.12, whether or not the facts therein are correct, provided, however, that such Board or Architectural Committee member has acted in good faith on the basis of such information as may be possessed by him. Without in any way limiting the generality of the foregoing, the Board or Architectural Committee, as the case may be, or any member thereof, may, but is not required to, consult with or hear the views of the Association or any Owner with respect to any Plans and Specifications or any other proposal submitted to the Board or Architectural Committee, as the case may be. 9.14 NON-APPLICABILITY TO DECLARANT. The provisions of this Article shallnot apply to any Improvements installed by the Declarant and the Board shall not have any rights of review or approval with respect thereto. 9.15 AMENDMENTS. Notwithstanding the Article hereof entitled "Amendments," no amendment, verification or rescission of this Article may be had, nor shall Declarant, or any successor thereof, be prohibited from completing the construction of the Project prior to the conveyance by Declarant, or its successor, of the last Residential Unit without the (i) written consent of Declarant, and the (ii) recording of such consent in the Office of the County Recorder. Such written consent shall not be required after the conveyance by Declarant (or its successors) of all the Residential Units. 9.16 VARIANCES. The Board may authorize variances from compliance with any of the architectural provisions of this Declaration, including, without limitation, restrictions upon height, size, floor area or placement of Improvements or other similar restrictions, when circumstances such as topography, natural obstructions, aesthetic or environmental considerations may require. Such variances may be evidenced in writing, must be signed by at least two (2) members of the Board and shall become effective upon rccordation hi the Office of the County Recorder. If such variances are granted, no violation of the covenants, conditions and restrictions contained in this Declaration shall be deemed to have occurred with respect to the matter for which the variance was granted. The granting of such a variance shall not operate to waive any of the terms and provisions of mis Declaration for any purpose except as to the particular Residential Unit 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 its use of the Residential Unit, including, but not limited to, zoning ordinances and lot setback lines or requirements imposed by the City or any other governmental authority. 9.17 CITY REQUIREMENTS. Notwithstanding anything to the contrary set forth above, any decks installed by an Owner after the conveyance of aResidence to a Owner by Declarant shall, Horton/PorticoDeclaration of i 20244-87 -1S85022J Declaration of Covenants, Conditions 8C Restrictions *n 5815 unless approved by the City, be constructed in conformance with the decks approved by the City for the Project as shown on the architectural plans on file with the City for the Project. Any patio covers and trellises which an Owner elects to install shall be in conformance with the trellises and patio covers shown on the landscaping plans approved by the City as drawing numbers 386-3L Sheets 1-36, unless the City approves in writing a modification to such plans. 9.18 . OPTIONAL EXCLUSIVE USE DECK AREAS. After the conveyance of a Residence to an Owner by Declarant, an Owner shall not- be permitted to construct any Improvements within the Optional Exclusive Use Deck Area without obtaining the consent of the Board. Any decks installed by an Owner within an Optional Exclusive Use Deck Area shall be architecturally harmonious with the other decks installed by the Declarant. The construction of any deck shall be performed only by a contractor licensed in the State of California with experience in the construction of similar structures and approved by the Board. Any Owner who installs a deck within an Optional Exclusive Use Deck Area shall be responsible for any damage such Ownercauses to any portion of the Common Area, Without limiting the other obligations of an Owner under this Declaration, any Owner who causes damage to anyportion of the Common Area, including the building structures, shall indemnify, protect, defend and hold the other Owners and the Association entirely free and harmless from and against any and all costs, expenses, actions, damages and liabilities, including, without limitation attorneys' fees and costs arising from or attributable to any work performed by such Owner or such Owner's contractors or agents to the Optional Exclusive Use Deck Area. The contractor installing the deck shall satisfy all insurance requirements as may be established by (he Board. ARTICLE 10 DEVELOPMENT RIGHTS 10.1 LIMITATIONS OF RESTRICTIONS. Declarant is undertaking the work of developing Condominiums and other Improvements within the Project. The completion of the development work and the marketing and sale, rental and other disposition of the Condominiums is essential to the establishment and welfare of the Property and the Additional Property as a first- class condominium community. In order that the work may be completed and the Project be established as a fully occupied condominium community as rapidly as possible, nothing in this Declaration shall be interpreted to deny Declarant the rights set forth in this Article. 10.2 RIGHTS OF ACCESS AND COMPLETION OF CONSTRUCTION. Until the fifth (5th) anniversary of the original issuance of a Public Report for the most recent Phase, Declarant, its contractors and subcontractors shall have the rights set forth below. 10.2.1 Access. Declarant, its contractors and subcontractors shall have the right to obtain reasonable access over and across the Association Property of the Project or do within any Residential Unit owned by it whatever is reasonably necessary or advisable in connection with the Horton/Portico Declaration of i 20244-87-1585022.3 Declaration of Covenants. Conditions & Restrictions * ^ 5816 completion of the Project and the marketing and maintenance thereof. Declarant shall have the right to keep any gate to the Project open during business hours during the construction, sale and marketing of the Project. 10.2.2 Construct Improvements. Declarant, its contractors and subcontractors shall have the right to erect, construct and maintain on the Common Area and Association Property of the Project or within any Residential Unit owned by it such structures or Improvements, including, but not limited to, sales offices and signs, as may be reasonably necessary for the conduct of its business to complete the work, establish the Project as a residential community and dispose of the Project in parcels by sale, lease or otherwise, as determined by Declarant in its sole discretion. 10.23 Grant Easements. Declarant, its contractors and subcontractors shall have the right to establish, dedicate, and/or grant over and across the Project such easements and rights of way on, over, under or across all or any part thereof to or^or the benefit of the State of California, the City or County or any other political subdivision or public organization, or any public utility entity, cable television provider, for the purpose of constructing, erecting, operating and maintaining facilities and-Improvements thereon, therein or thereunder at that time or at any time in the future, including, but not limited to, (i) roads, streets, walks, driveways, parkways and park areas; (ii) poles, wires and conduits for transmission of electricity, providing telephone service and cable television service to the Project and for the necessary attachments in connection therewith; and (iii) public and private sewers, sewage disposal systems, storm water drains, land drains and pipes, water systems, sprinkling systems, water, heating and gas lines or pipes and any and all equipment in connection therewith. The Common Area and Association Property shall be subject to any dedication stated in the Final Map of an easement for public use for installation, maintenance and operation of facilities for public utilities over all of the Common Area and Association Property. Said public utilities easement shall inure and run to all franchised utility companies and to the City or County and shall include the right of ingress and egress over the Common Area and Association Property by vehicles of the City or County and such utility companies to properly install, maintain, repair, replace and otherwise service such utility facilities. The grant of said public utility easement shall not be interpreted to imply any obligation or responsibility of any such utility company or the City or County for maintenance or operation of any of the Common Area and Association Property or the facilities located thereon or the repair, replacement or reconstruction thereof except as occasioned by such utility companies or City or County of the utility facilities for which they are responsible. Except for lawful and proper fences, structures and facilities placed upon the Common Area and Association Property by utility companies, the Common Area and Association Property subject to the public utility easement shall be kept open and free from buildings and structures. The City and County furthermore are granted an easement across the Common Area and Association Property and any Private Streets for ingress and egress for use by emergency vehicles of the City or County and for law enforcement purposes. 10.3 SIZE AND APPEARANCE OF PROJECT. Declarant shall not be prevented from increasing or decreasing the number of Residential Units that may be annexed to the Project or from Morton/PorticoDeclaration of Covenants, Conditions & Restrictions c 120244-87-1585022.3 M 5817 changing the exterior appearance of any structures, the landscaping or any other matter directly or indirectly connected with the Project hi any manner deemed desirable by Declarant, if Declarant obtains governmental consents required by law. 10.4 MARKETING RIGHTS. 10.4.1 General Rights. Subject to the limitations of this Declaration, Declarant shall have the right to: (i) maintain model homes, sales offices, storage areas and related facilities in any unsold portions of the Project as are necessary or reasonable, in the opinion of Declarant, for the sale or disposition of the Residential Units; (ii) make reasonable use of the Common Area and Association Property and facilities for the sale of Condominiums; and (iii) post signs, flags and banners and conduct such marketing activities as may be deemed necessary by Declarant for the marketing of the Condominiums and (iv) conduct its business of disposing of Condominiums by .sale, lease or otherwise. "•* \ 4 10.4.2 Agreement for Extended Use. If following the fifth (5th) anniversary of the original issuance of a Public Report for the most recent Phase, Declarant requires exclusive use of any portion of the Common Area and Association Property in that Phase for marketing purposes, Declarant may use the Common Area and Association Property only if an agreement is entered into between Declarant and the Association. The agreement must specifically provide for a limited duration for such use and must provide for a specific reasonable rate of compensation to the Association by Declarant. Compensation shall be commensurate with the nature, extent and duration of the use proposed by Declarant. In no event, however, shall Declarant be denied the rights to use any Condominiums owned by Declarant as an Owner. 10.4.3 Security Gates. So long as Declarant owns any Residential Unit within the Project, Declarant shall have the right to control and keep open the security gate(s) during any hours when Declarant is constructing the Project and marketing Residential Units for sale to prospective purchasers. 10.5 ALTERATIONS TO MAP. At anytime within five (5) years from the date that the first Residential Unit hi a Phase is conveyed to an Owner other than Declarant, the boundaries of any Lot or Common Area in that Phase may be altered by a lot line adjustment or other change reflected on a subsequently recorded Record of Survey, parcel map, final map or amended final map, provided that the altered boundaries are approved by Declarant and all owners of the Property involved in the boundary adjustment (which shall mean the Board, with respect to property owned by the Association). Any alteration approved by Declarant may make minor changes to the number of Lots in the Project. An alteration shall be effective upon recordation of the Record of Survey or map and, upon such recordation, the boundaries of the altered Lot or Common Area shall be altered for purposes of this Declaration to conform to the boundaries as shown on the Record of Survey or map Morton/PorticoDeclaration of Covenants, Conditions & Restrictions co20244-87 -1585022.3 52 5818 10.6 RIGHTS TO MAINTAIN COMMON AREA AND ASSOCIATION PROPERTY. In the event the Association fails to maintain any portion of the Common Area or Association Property in accordance with the requirements of this Declaration, after notice thereof by Declarant, the Declarant shall have the right, so long as Declarant still owns any of the Property or Additional Property, to enter upon such Common Area or Association Property and perform such maintenance obligations and charge the cost thereof to the Association. 10.7 TITLE RIGHTS. This Declaration shall not be construed to constitute a limitation on Declarant's title rights to the Additional Property prior to its Annexation, nor shall it impose any obligation on Declarant or any other person or entity to improve, develop or annex any portion of the Additional Property. The rights of Declarant under this Declaration may be assigned to any successor(s) by an express assignment in a recorded instrument, including without limitation, a deed, option or lease. This Declaration shall not be construed to limit the right of Declarant at any time prior to such an assignment to establish additional licenses, reservations and rights-of-way to itself, to utility companies or to others as may be reasonably necessary to the proper development and disposal of property owned by Declarant.; .. 10.8 AMENDMENT. The provisions of this Article may not be amended without the consent of Declarant until all of the Additional Property has been annexed to the Project and all of the Residential Units in the Project owned by Declarant have been conveyed. ARTICLE 11 INSURANCE 11.1 LIABILITY INSURANCE. The Association shall obtain and maintain comprehensive public liability insurance insuring the Association, any manager, the Declarant and the Owners and occupants of Condominiums, and their Invitees against any liability incident to the ownership or use of the Common Area and the Association Property and the performance by the Association if its duties under this Declaration. Such policy shall include, if obtainable, a cross- liability or severability of interest endorsement insuring each insured against liability to each other insured.. The limits of such insurance shall not be less than Three Million Dollars ($3,000,000) covering all claims for death, personal injury and property damage arising out of a single occurrence. Such insurance shall include coverage against water damage liability, property of others and any other liability or risk customarily covered with respect to projects similar in construction, location, and use. 11.2 PROPERTY INSURANCE. The Association shall keep any Improvements in the Common Area, Association Property to be maintained by the Association insured against loss by fire and the risks covered by a "Standard All-Risk of Loss or Perils" insurance policy under an extended coverage casualty policy in the amount of the maximum insurable replacement value thereof (except that there may be lower dollar limits for specified items as is customarily provided hi property Morton/PorticoDeclaration of i20244-87-15850224Declaration of Covenants, Conditions & Restrictions c-i 5819 insurance policies) and (ii) all personalty owned by the Association insured with coverage in the maximum insurable fair market value of such personalty as determined annually by an insurance carrier selected by the Association. In the event of any loss, damage or destruction to the Common Area or Association Property, the Association shall cause the same to be replaced, repaired or rebuilt in accordance with the provisions of this Declaration. 11.2.1 Description of Policy Coverages. The policy shall cover the following real and personal property: (a) Common Area and Association Property. All Improvements within the Common Area and all Improvements within the Association Property, including buildings and any additions or extensions thereto, all fixtures, machinery and equipment permanently affixed to the Condominium Building and not located within a Residential Unit; fences; monuments; lighting fixtures; exterior signs; and personal property owned or maintained by .-the Association; and recreational facilities; but excluding land; foundations, excavations, and other items typically excluded from property insurance coverage; ' (b) Residential Units. Interior walls and doors; ceiling, utility fixtures (including gas, electrical and plumbing); cabinets; built-in appliances; heating and air-conditioning systems; water heaters, but excluding any personal property located in the Residential Unit or Exclusive Use Common Area; and excluding any improvements or upgrades to any of the foregoing installed by the Owner to the extent of any such improvement or upgrade; and (c) Landscaping. Lawn, trees, shrubs and plants located in the Common Area or the Association Property, but not within the Exclusive Use Yard Common Areas. 11.2.2 Covered Cause of Loss. The policy shall provide coverage against losses caused by fire and all other hazards normally covered by a "special form" policy or its equivalent. 1123 Primary. The policy shall be primary and noncontributing with any other insurance policy covering the same loss. 11.2.4 Endorsements. The policy shall contain the following endorsements or their equivalents: agreed amount, boiler and machinery (to the extent applicable) inflation guard, ordinance or law, and replacement costs, and such other endorsements as the Board in its discretion shall elect. 11.2.5 Waiver of Subrogation. Except as provided in Section 7.26, all rights of subrogation between the Association and the Owners and their Invitees and First Mortgagees are waived. All insurance policies obtained by the Associations shall include a waiver of subrogation rights against any Owner and their Invitees and First Mortgagees; provided that a failure or inability of the Association to obtain such a waiver shall not defeat or impair the waiver of subrogation rights Hotton/PorticoDeclaration of Covenants, Conditions & Restrictions c ..20244-87.1585022.3 • 54 5820 * between the Association and the Owners and their Invitees and First Mortgagees as set forth herein. Insurance proceeds for Improvements in the Association Property and personalty owned by the Association shall be payable to the Association. 11.2.6 Additional msureds. The policy shall name as insured the Association, the Owners and Declarant, as long as Declarant is the Owner of any Condominium, and all Mortgagees as their respective interests may appear, and may contain a loss payable endorsement hi favor of the Trustee (as defined below). 11.3 INDIVIDUAL INSURANCE. Each Owner shall maintain property insurance against losses to personal property located within the Residential Unit or Exclusive Use Common Areas and to any floor and wall surface materials (e.g. paint, wallpaper, mirrors, carpets, tile and hardwood floors), upgrades to the Improvements or Improvements installed by an Owner located within the Residential Unit or Exclusive Use Common Areas (including landscaping Improvements) and liability insurance against any liability resulting from any injury or damage occurring within the Residential Unit or Exclusive tJse Common Areas. In addition, an Owner may carry whatever personal liability and property damage liability insurance with respect to his Condominium that he desires. The Association's insurance policies will not provide coverage against any of the foregoing. By accepting a deed to a Residential Unit, all Owners hereby waive all rights of subrogation against the Association and any insurance maintained by an Owner must contain a waiver of subrogation rights by the insurer as to the Association and any first Mortgagee of a First Mortgage on the Owner's Condominium, provided, however, that a failure or inability of an Owner to obtain such a waiver shall not defeat or impair the waiver of subrogation rights between the Owners and the Association set forth herein. No Owner shall separately insure any property covered by the Association's property insurance policy as described above. If any Owner violates this provision and, as a result, (here is a diminution in insurance proceeds otherwise payable to the Association, the Owner will be liable to the Association to the extent of the diminution. The Association may levy a reimbursement assessment against the Owner's Condominium to collect the amount of the diminution. 11.4 FIDELITY BOND. The Association shall maintain a fidelity bond in an amount equal to at least the estimated maximum of funds, including reserves, hi the custody of the Association or a management agent at any given time during the term of the fidelity bond; provided, however, that the bond shall not be less than a sum equal to three (3) months aggregate of the Regular Assessments on all Residential Units plus reserve funds of the annual assessments naming the Association as obligee and insuring against loss by reason of the acts of the Board, officers and employees of the Association, and any management agent and its employees, whether or not such persons are compensated for their services. 11.5 WORKER'S COMPENSATION INSURANCE. The Association shall maintain worker's compensation insurance to the extent necessary to comply with all applicable laws of the Hoiton/rortxcoDeclaration of Covenant*, Conditions & Restrictions f e20244-87-1585022.3 55 5821 State of California or the regulations of any governmental body or authority having jurisdiction over the Project. 11.6 OTHER INSURANCE. The Association shall maintain other types of insurance as the Board determines to be necessary to fully protect the interests of the Owners. 11.7 COPIES OF POLICIES. Copies of all such insurance policies (or certificates thereof showing the premiums thereon to have been paid) shall be retained by the Association and open for inspection by Owners at any reasonable time(s). All such insurance policies shall (i) provide that they shall not be cancelable or substantially modified by the insurer without first giving at least ten (10) days' prior notice in writing to the Association, and (ii) contain a waiver of subrogation by the insurers) against the Association and First Mortgagees, Board and Owners. In addition to the foregoing, the Association shall provide such information regarding the insurance of the Association as may be required by applicable law or under the Bylaws. 4 * 11.8 REVIEW OF INSURANCE. -The Board shall, review the adequacy of all insurance at least once every year. The review shall include a replacement cost appraisal of all insurable • improvements to be insured by the Association hereunder without respect to depreciation. The Board shall adjust and modify the policies to provide coverage and protection that is customarily carried by and reasonably available to prudent owners of similar property in the area in which the Project is situated. 11.9 BOARD'S AUTHORITY TO REVISE INSURANCE COVERAGE. Subjecttothe provisions of Section 11.13 and the requirements regarding insurance set forth in the Bylaws, the Board shall have the power and right to deviate from the insurance requirements contained in this Article 11 in any manner that the Board, in its reasonable business discretion, considers to be in the best interests of the Association. If the Board elects to materially reduce the coverage from the coverage required in this Article 11, the Board shall make all reasonable efforts to notify the Members of the reduction in coverage and the reasons therefor at least thirty (30) days prior to the effective date of the reduction. The Association, and its directors and officers, shall have no liability to any Owner or Mortgagee if, after a good faith effort, the Association is unable to obtain any insurance required hereunder because the insurance is no longer available; or, if available, the insurance can be obtained only at a cost that the Board, in its sole discretion, determines is unreasonable under the circumstances; or the Members fail to approve any assessment increase needed to fund the insurance premiums. 11.10 TRUSTEE. All insurance proceeds payable under Sections 11.1 and 11.2, subject to the rights of Mortgagees under Section 14.14, may be paid to a trustee (the "Trustee"), to be held and expended for the benefit of the Owners, Mortgagees and others, as their respective interests shall appear. The Trustee shall be a commercial bank in the County that agrees in writing to accept such trust. If repair or reconstruction is authorized, the Board shall have the duty to contract for such work as provided for in this Declaration. Horton/PorticoDeclaration of <20244-87-1585022.3Declaration of Covenants, Conditions & Restrictions .., 5822 11.11 ADJUSTMENT OF LOSSES. The Board is appointed attomey-in-fact by each Owner to negotiate and agree on the value and extent of any loss under any policy carried by the Association pursuant to Sections 11.1 and 11.2. The Board is granted full right and authority to compromise and settle any claim or enforce any claim by legal action or otherwise and to execute releases in favor of any insurer. 11.12 DISTRIBUTION TO MORTGAGEES. Any Mortgagee has the option to apply insurance proceeds payable directly to an Owner on account of a Condominium as provided in this Declaration in reduction of the obligation secured by the Mortgage of such Mortgagee. 11.13 COMPLIANCE WITH FEDERAL REGULATIONS. Notwithstanding any other provisions contained herein, the Association shall continuously maintain in effect such casualty, flood and liability insurance and a fidelity bond meeting the insurance and fidelity bondj Acquirements for condominium projects established by the Federal National Mortgage Association '("FNMA"), the. Government National Mortgage Association ("GNMA"), and the Federal Home Loan Mortgage Corporation ("FHLMC"), so long as-any of the above is a Mortgagee or an Owner of a Condominium, except to the extent such coverage is not available or has been waived in writing by the FNMA, FRDMC, GNMA, andFHLMC as applicable. If the FNMA or FHLMC requirements conflict, the more stringent requirements shall be met ARTICLE 12 DESTRUCTION OF IMPROVEMENTS AND CONDEMNATION 12.1 RESTORATION DEFINED. As used in this Article 12, the term "restore" shall mean repairing, rebuilding or reconstructing damaged Improvements to substantially the same condition and appearance in which it existed prior to fire or other casualty damage. 12.2 INSURED CASUALTY. If any Improvement required to be maintained by the Association is damaged or destroyed from a risk covered by the insurance required to be maintained by the Association, then the Association shall, to the extent permitted under existing laws, restore the Improvement to the same condition as it was in immediately prior to the damage or destruction. The Association shall proceed with me filing and adjustment of all claims arising under the existing insurance policies. The insurance proceeds shall be paid to and held by the Association or an insurance trustee selected under the provisions of Section 12,5. 12.3 RESTORATION PROCEEDS. 12.3.1 Sufficient Proceeds. The costs of restoration of the damaged Improvement shall be paid first from any insurance proceeds paid to the Association under existing insurance policies. If the insurance proceeds exceed the costs of restoration, the excess proceeds shall be paid Horton/PoiticoDeclaration of Covenants, Conditions & Restrictions c-r 20244-87-1585022.3 S/ 5823 into reserves and held for the benefit of the Association. If the insurance proceeds are insufficient to restore the damaged Improvement, the Board shall then add to the insurance proceeds all reserve account funds designated for the repair or replacement of the damaged Improvement. If the total funds then available are sufficient to restore the damaged Improvement, the Improvement shall be restored. If the aggregate amount of insurance proceeds and such reserve account funds are insufficient to pay the total costs of restoration, a Special Assessment against all Owners shall be levied by the Board up to the maximum amount permitted without the approval of the Members in accordance with the limitations set forth hi this Declaration and by law. If the total funds then available are sufficient to restore the damaged Improvement, the Improvement shall be restored. 12.3.2 Insufficient Proceeds. If the total funds available to the Association are still insufficient to restore the damaged Improvement, then the Board first shall attempt to impose an additional Special Assessment pursuant to Section (a) below; and second to use a plan of alternative reconstruction pursuant to Section (b) below. If the Members do not approve such actions, then the entire building of which the damaged Improvement is a part shall be sold pursuant to Section (c) below. ' (a) Additional Special Assessment. If the total funds available to restore the damaged Improvement as provided in Section 12.3.1 are insufficient, then a meeting of the Members shall be called for the purpose of approving a Special Assessment to make up all or a part of the deficiency ("Additional Special Assessment"). If the amount of the Additional Special Assessment approved by the Members, and the amounts available pursuant to Section 12 J.I above, are insufficient to restore the damaged Improvement, or if no Additional Special Assessment is approved, the Association shall consider a plan of alternative reconstruction in accordance with Section (b). (b) Alternative Reconstruction. The Board shall consider and propose plans to reconstruct the damaged Improvement making use of whatever funds are available to it pursuant to Section 12.3.1 and Section (a) above ("Alternative Reconstruction"). All proposals shall be presented to the Owners. If two-thirds of the voting power of the Owners whose Residential Units were materially damaged, as determined by the Association ("Affected Owners") and a majority of the voting power of the Members, including the Affected Owners, agree to any plan of Alternative Reconstruction, then the Board shall contract for the reconstruction of the damaged Improvement in accordance with the plan of Alternative Reconstruction making use of whatever funds are then available to it. If no plan of Alternative Reconstruction is agreed to, then the provisions of Section (c) shall apply. (c) Sale of Condominium Building. If the damaged Improvement is part of a Condominium Building ("Damaged Building"), the damage renders one or more of the Condominiums uninhabitable, and the Improvements will not be'restored in accordance with the provisions of Sections (a) and (b) above, the Board, as the attorney-in-fact for each Owner of a Condommium in the Damaged Building, shall be empowered to sell the Damaged Building, Horton/Portico Declaration of Covenants, Conditions & Restrictions c o20244-87-1585022.3 58 5824 including all Residential Units therein, in their then present condition, on terms to be determined by the Board, provided that the Board receives adequate assurances that the purchaser shall, and has the financial capability to: (1) restore the Damaged Building (either by renovation or removal and rebuilding), (ii) remove the Damaged Building (including foundations), grade the area, and appropriately landscape or otherwise improve the area, or (iii) perform any combination of the foregoing. Any work to bevperformed by the purchaser with respect to any of the foregoing shall be subject to the provisions of Article 12 and the provisions of the Declaration. In lieu of selling the Damaged Building to a third Person, the Association may purchase the Condominium Building on satisfaction of the following conditions: (i) Members holding sixty-seven percent (67%) of the total voting power (including the votes allocated to the Condominiums within the Damaged Building) approve of the purchase; r i 4(ii) •, the purchase price is the fair market value of the Damaged Building as of the date of sale as determined by an appraisal made by a qualified and independent real estate appraiser; (iii) any special assessment needed to fund the purchase price shall be levied against all Condominiums, including the Condominiums within the Damaged Building; (iv) the Association has an adequate source of funds to repair, renovate or rebuild all or a portion of the Damaged Building and/or to remove and appropriately landscape the remaining area. For this purpose, no Condominium that is being purchased shall be subject to any assessment intended to be used as a source of such funds. . (d) Distribution of Proceeds. The proceeds from the sale, together with the insurance proceeds received and any reserve funds allocated to the Damaged Building, after deducting therefrom the Association's sale expenses, including commissions, title and recording fees, and legal costs, shall be distributed among the Owners of Condominiums in the Damaged Building and their respective Mortgagees, in proportion to the respective fair market values of these Condominiums immediately prior to the date of the event causing the damage as determined by an independent appraisal made by a qualified real estate appraiser selected by the Board. If a Damaged Building is removed and not restored so that the new building contains the same number of Condominiums as the removed building, the Board shall take appropriate steps to adjust the property interests of the remaining Condominium Owners arid to effect such amendments as may be necessary to the Declaration, the Condominium Plan and the Map to reflect the revised property interests and other related changes. Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87-15850223 5825 12.4 REBUILDING CONTRACT. If there is a determination to restore, the Board or its authorized representative shall obtain bids from at least two (2) licensed and reputable contractors and shall accept the repair and reconstruction work from whomever the Board determines to be in the best interests of the Members. The Board shall have the authority to enter into a written contract with the contractor for such repair and reconstruction, and the insurance proceeds shall be disbursed to the contractor according to the terms of the contract. The Board shall take all steps necessary to assure the commencement and completion of authorized repair and reconstruction at the earliest possible date. Such construction shall be commenced no later than one hundred eighty (180) days after the event requiring reconstruction and shall thereafter be diligently prosecuted to completion. Such construction shall return the Development to substantially the same condition and appearance in which it existed prior to the damage or destruction. 12.5 INSURANCE TRUSTEE. All property insurance proceeds payable to the Association under the policy described hi Section 11.?, subject to the Rights of Mortgagees under Article 14, may be paid to a trustee as designated by the Board to be held and expended for the benefit of the Owners and Mortgagees, as their respective interests shall appear. -The trustee shall . be a commercial bank or other financial institution with trust powers in the country in which the project is located that agrees in writing to accept such trust. If repair or reconstruction is authorized, the Association will have the duty to contract for such work as provided for in this Declaration. 12.6 PRIVATE STREETS. The Board shall have the duty to restore all Private Streets within the Project. In the event the proceeds of insurance are not sufficient to cause such restoration, the Board shall levy a Reconstruction Assessment to provide the necessary funds for such restoration. 12.7 AUTHORITY TO EFFECT CHANGES. If any Condominium Building or portion thereof containing Condominiums is damaged or destroyed or in need of renovation or rehabilitation and the Condominium Building is repaired or reconstructed, the Condominium Building may be repaired or reconstructed in a manner mat alters the boundaries of the Residential Units or Common Area provided the following conditions are satisfied. (i) the alteration has been approved by the Board, by Members holding a majority of the total voting power of the Association, and by the holders of any first Mortgages to the extent required herein; (ii) the Board has determined that the alteration is necessary hi order to comply with current building code requirements, to meet current building construction standards and procedures, or to improve the conditions and quality of the Condominium Building; (iii) the alteration does not materially change the location of any Residential Unit or materially reduce the size of any Residential Unit without the consent of the Residential Unit Owner and the holders of any first Mortgages thereon. Forpurposes herein, a material reduction in HortorvTorticoDeclaration of' 20244-87-1585022.3 Declaration of Covenants, Conditions & Restrictions /-« 5826 the size of the Residential Unit shall mean any alteration that increases or decreases the square footage of the interior floor space of the Residential Unit by more than 10% from the square footage as shown on the Condominium Plan; (iv) the Board has determined that any alteration that will relocate or reduce the Common Area will not unreasonably interfere with the rights of the Owners and occupants to use and enjoy the Phased Common Area. (v) the Condominium Plan is amended to reflect the alteration to the Residential Units or Common Area. Each Owner irrevocably appoints the Association as that Owner's attomey-in-fact and irrevocably grants to the Association the fiill power in the name of the Owner to effect any alteration to any Residential Unit or Common Area as authorized above, including, but not limited to, the execution, delivery and recordation of any Condominium Plan amendments, deeds or other instruments. ~ •' 12.8 MINOR REPAIR AND RECONSTRUCTION. The Board shall have the duty to repair and reconstruct Improvements, without the consent of Members and irrespective of the amount of available insurance proceeds, in all cases of partial destruction when the estimated cost of repair and reconstruction does not exceed Ten Thousand Dollars ($10,000.00). The Board is expressly empowered to levy a Reconstruction Assessment for the cost of repairing and reconstructing improvements to the extent insurance proceeds are unavailable, such assessment to be levied as described above (but without the consent or approval of Members, despite any contrary provisions hi this Declaration). 12.9 DAMAGE OR DESTRUCTION TO A RESIDENTIAL UNIT. In the event of damage or destruction to any Residential Unit, the Owner thereof shall (unless the Association is not required to repair surrounding damaged Common Area pursuant to the terms set forth above) reconstruct the same as soon as reasonably practicable and substantially in accordance with the original plans and specifications therefor; provided, however, that any such Owner may, with the written consent of the Board, reconstruct or repair the same pursuant to new or changed plans and specifications. In the event the Board fails to approve or disapprove such changed plans and specifications within sixty (60) days of the' receipt thereof; they shall be deemed to have been approved. The Owner shall be entitled to the benefit of any master policy of casualty insurance maintained by the Association to the extent it covers the damage or destruction of elements of the Condominium which are within the Residential Unit and which are the obligation of the Owner to repair as provided in this Declaration. With the exception of any casualty or damage insured against by the Association pursuant to Section 11.2ofthis Declaration, restoration and repair ofany damage to the interior ofany individual Residential Unit, including without limitation all fixtures, cabinets and improvements therein, together with restoration and repair of all interior paint, wall coverings and floor coverings, shall be made by and at the individual expense of the Owner of the Residential Horton/PorticoDeclaration of Covenants, Conditions & Restrictions --« 20244-87-1585022.3 Ol 5827 Unit so damaged. In the event of a determination to rebuild the Property after partial or total destruction, as provided in this Article 12, such interior repair and restoration shall be completed as promptly as practical and in a lawful and workmanlike manner, in accordance with plans approved by the Board as provided in Article 9 herein. 12.10 CONDEMNATION OF COMMON AREA OR ASSOCIATION PROPERTY. If any portion of the Common Area or Association Property is taken by condemnation, eminent domain or any proceeding in lieu thereof, then the Owners of the Common Area or Association Property, and their Mortgagees as their respective interests then appear, shall be entitled to receive a distribution from the award for such taking in the same proportion as insurance proceeds would be distributed pursuant to the provisions above; provided, however, that should it be determined to repair or rebuild any portion of the Common Area or Association Property, such proceeds shall be paid to the Association for that purpose in the same manner and subj ect to the same terms, conditions and limitations as are set forth above in this Article for repairing damaged or destroyed portions of the Common Area or Association Property. A decision to repair or rebuild shall be made in the same manner and subject to the sarde conditions and limitations as provided above in this Article for determining whether to rebuild or repair following damage or destruction. 12.11 CONDEMNATION OF A RESIDENTIAL UNIT. In the event of any taking of a Condominium, the Owner (and such Owner's Mortgagees as their interests may appear) of the Condominium shall be entitled to receive the award for such taking and after acceptance thereof such Owner and such Owner's Mortgagee shall be divested of all further interest in the Condominium Property and membership in the Association if such Owner shall vacate such Owner's Residential Unit as a result of such taking. In such event said Owner shall grant his remaining interest in the Common Area appurtenant to the Residential Unit so taken, if any, to the other Owners owning a fractional interest in the same Common Area, such grant to be in proportion to the fractional interest in the Common Area then owned by each. ARTICLE 13 PARTITION AND SEVERABILITY OF INTERESTS 13.1 SUSPENSION. Therightofpartitionis suspended pursuantto California Civil Code Section 1359 as to the Project. Nothing in this Declaration shall prevent partition or division of interest between joint or common owners of any Condominium. 13.2 PARTITION. Notwithstanding the foregoing, judicial partition shall be permitted as set forth below. 13.2.1 No Partition. There shall be no termination of the Project and the Common Area of the Project shall remain undivided with no judicial partition thereof except: Morton/PorticoDeclaration of Covenants, Condition* & Restrictions20244-87-1585022.3 5828 (a) With the approval, after substantial destruction or condemnation of the Project occurs, of at least sixty-seven percent (67%) of the total voting power of the Association and approval by Eligible Holders who represent at least fifty-one percent (51%) of the Condominiums that are subject to Mortgages held by Eligible Holders; or (b) With the approval, for reasons other than substantial destruction or condemnation of the Project, of at least sixty-seven percent (67%) of the total voting power of the Association and approval by Eligible Holders who represent at least sixty-seven percent (67%) of the Condominiums that are subject to Mortgages held by Eligible Holders; or (c) As allowed by California law, including Civil Code Section 1359, as the same may be amended from time to time. An Eligible Holder who receives a written request to give such approvals who does not deliver or mail the requesting party a negative response within thirty (30) days shall be deemed to have given such approval provided such written request was delivered by certified mail or registered mail with "return receipt" requested. Nothing in this Section shall be deemed to prohibit partition of a cotenancy in a Condominium. 13.3 DISTRIBUTION OF PROCEEDS. Proceeds or property resulting from a partition shall be distributed to and .among the respective Owners and their Mortgagees as specified or apportioned in the judgment of partition, or if not so specified, as their interests appear in proportion to the fair market value of the Residential Units at the date of the sale as determined by an independent appraisal conducted by a member of the American Institute of Real Estate Appraisers with the designation of a Member Appraisal Institute (M.A.I.) or if such institute no longer exists, an appraiser of comparable experience. 13.4 POWER OF ATTORNEY. Each of the Owners irrevocably appoints me Association as attomey:in-fact and irrevocably grants to the Association full power in the name and stead of such Owner to sell the entire Project, and to execute deeds and conveyances to it, in one or more transactions, for the benefit of all Owners when partition of the Project may be had under California Civil Code Section 1359 or any successor statute or law. The power of attorney shall: 13.4.1 Be binding on all Owners, whether they assume the obligations under this Declaration or not; 13.4.2 Be exercisable by a majority of the Board acting on behalf of the Association,-subject to obtaining the prior approval by vote or written consent of seventy-five percent (75%) of the Owners and seventy-five percent (75%) of all Institutional Mortgagees; and Morton/PorticoDeclaration of i20244-87-1585022.3Declaration of Covenants, Conditions & Restrictions • /•<, 5829 13.4,3 Be exercisable only after recordation with the County Recorder of a certificate executed by those who have power to exercise the power of attorney that the power of attorney is properly exercisable under the authority of this Declaration. This certificate shall be conclusive evidence of proper exercise in favor of any person relying on it in good faith. 13.5 PROHIBITION AGAINST SEVERANCE. An Owner shall not be entitled to sever such Owner's Residential Unit from such Owner's membership in the Association, and shall not be entitled to sever such Owner's Residential Unit and such Owner's membership from such Owner's undivided interest in the Common Area for any purpose. None of the component interests in a Condominium can be severally sold, conveyed, encumbered, hypothecated or otherwise dealt with, and any violation or attempted violation of this provision shall be void. Similarly, no Owner can sever any exclusive easement appurtenant to such Owner's Residential Unit over the Common Area from such Owner's Condominium, and any attempt to do so shall be void. It is intended hereby to restrict severability pursuant to California Civil Code Section 1358 or any successor statute or law. Notwithstanding the foregoing, the suspension of such right of severability contained herein shall not extend beyond the period set forth in Section 13.1 in which the right to partition the Project1 is suspended thereunder. 13.6 • CONVEYANCES. After the initial sales of the Condominiums, any conveyance of a Condominium by an Owner shall be presumed to convey the entire Condominium. However, nothing contained in this Section shall preclude the Owner of any Condominium from creating an estate for life or years, cotenancy or joint tenancy in the ownership of the Condominium with any other person or persons. ARTICLE 14 RIGHTS OF MORTGAGEES 14.1 CONFLICT. Notwithstanding any contrary provision contained elsewhere in the Project Documents, the provisions of this Article shall control with respect to the rights and obligations of Mortgagees as specified herein. 14.2 LIABILITY FOR UNPAID ASSESSMENTS. Any Institutional Mortgagee who obtains title to a Condominium pursuant to the remedies provided in the First Mortgage (except upon a voluntary conveyance to the Institutional Mortgagee) or by foreclosure of the First Mortgage shall take the property free of any claims for unpaid assessments or charges against the Condominium which accrue prior to the acquisition of title to the Condominium by the Institutional Mortgagee. 14.3 PAYMENT OF TAXES AND INSURANCE. All taxes, assessments and charges that may become a lien prior to the lien of any First Mortgagee shall be levied only to the individual condominium and not the Project as a whole. Institutional Mortgagees may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against any Horton/PortkoDeclaration of Covenants, Conditions & Restrictions >. A20244-87-1585022.3 . 64 5830 Common Area or Improvements situated thereon and may pay overdue premiums on hazard insurance policies or secure new hazard insurance coverage on the lapse of a policy for such Common Area. Institutional Mortgagees making such payments shall be owed immediate reimbursement for such expenditures from the Association and, on demand, the Association shall execute an agreement in favor of all Institutional Mortgagees reflecting entitlement to reimbursement. 14.4 NOTICE TO ELIGIB LE HOLDERS. An Eligible Holder is entitled to timely written notice of the following events: / 14.4.1 Any condemnation loss or casualty loss that affects either a material portion of the Project or the Residential Unit on which the Eligible Holder holds a First Mortgage; 14.4.2 Any delinquency in the payment of assessments or charges owed by the Owner of a Condominium that is subject to a First Mortgage held*by the Eligible Holder if the delinquency is not cured within sixty (60) days after its due date; 14.4.3 Any lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association; 14.4.4 Any proposal to take any action specified in this Article or in the Article hereof entitled "Destruction of Improvements and Condemnation;" 14.4.5 Any default by the Owner-Mortgagor of a Condominium that is subject to a First Mortgage held by the Eligible Holder in the performance of his or her obligations under this Declaration or the Bylaws which is not cured within sixty (60) days; or 14.4.6 Any proposed action that requires the consent of a specified percentage of the Eligible Holders. 14.5 RESERVE FUND. The Association shall maintain as a reserve fund a reserve account fund sufficient to pay for maintenance, repair and periodic replacement of the Common Area and Association Property Improvements which the Association is obligated to maintain. This reserve fund shall be funded by Regular Assessments of Owners which are payable in installments rather than by Special Assessment; provided, however, that this provision shall not be deemed to limit the power of the Association to levy any other type of assessment or charge authorized by this Declaration. 14.6 INSPECTION OF BOOKS AND RECORDS. Upon request, any Owner or First Mortgagee shall be entitled to inspect the books, records and financial statements of the Association, the Governing Documents and any amendments thereto during normal business hours or under other reasonable circumstances. Horton/PortieoDeclaration of Covenants, Conditions & Restrictions , e20244-87 -1585022.3 65 5831 14.7 FINANCIAL STATEMENTS. The Association, at its expense, shall prepare an audited financial statement for the immediately preceding fiscal year and furnish the same within one hundred twenty (120) days after written request from any Institutional Mortgagee. 14.8 VOTING RIGHTS OF MORTGAGEES. For purpose of this Section a Mortgagee shall be entitled to one (1) vote for each First Mortgage owned. 14.9 ACTIONS REQUIRING ELIGIBLE HOLDER APPROVAL. Unless at least sixty- seven percent (67%) of the Eligible Holders or sixty-seven percent (67%) of the Owners other than Declarant have given their prior written approval, the Association shall not be entitled to: (a) By act or omission, seek to abandon or terminate the Project; 'i. 4-(b) By act or omission abandon, partition, subdivide, encumber, sell or transfer any property or improvements owned, directly or indirectly, by the Association for the benefit of the Condominiums and the Owners. (The granting of easements for public utilities or for other public purposes consistent with the intended use of the Project by the Association and Owners shall not be deemed a transfer within die meaning of this Section); (c) By act or omission change, waive or abandon any scheme of regulations, or enforcement thereof, pertaining to architectural design or exterior appearance of Residential Units, the exterior maintenance of Residential Units, or the upkeep of lawns, plantings or other landscaping in the Project; (d) By act or omission change the method of determining the obligations, assessments, dues or other charges which may be levied against an Owner, (e) Partition or subdivide a Condominium; (1) -Fail to maintain fire and extended coverage insurance on insurable portions of the Common Area and Association Property on a current replacement cost basis in an amount not less than one hundred percent (100%) of the insurable value based on current replacement cost; and (g) Use hazard insurance proceeds for losses to any property or Improvements owned by the Association other than for the repair, replacement or reconstruction of such property and Improvements. 14.10 VOTES FOR TERMINATION OF PROJECT. Any election to terminate the legal status of the Project as a Condominium project shall require: HoTton/PotticoDeclaration of Covenants, Conditions & Restrictions20244-87 -1585022.3 5832 14.10.1 The approval of at least fifty-one percent (51 %)of the Eligible Holders and sixty-seven percent (67%) of the total voting power of the Association if the election to terminate the legal status is a result of substantial destruction or a substantial taking in condemnation of the property within the Project; or 14.10.2 The approval of sixty-seven percent (67%) of the total voting power of the Association and sixty-seven percent (67%) of the Eligible Holders, if Section 14.10.1 is not applicable. 14.11 CONDEMNATION OR DESTRUCTION. In the event a portion of the Project is either condemned or destroyed or damaged by a hazard that is insured against, restoration or repair shall be performed substantially in accordance with the provisions of the Declaration and the original plans and specifications for die Project unless fifty-one percent (51%) of the Eligible Holders approve the taking of other action by the Association. 14.12 SELF-MANAGEMENT. The vote or approval by written ballot of sixty-seven percent (67%) of the total voting power of the Association and fifty-one percent (51%) of the Eligible Holders shall be required to assume self-management of the Project if professional management of the Project has been required by an Eligible Holder at any time. 14.13 MORTGAGEE PROTECTION. A breach of any of the conditions contained in this Declaration shall not defeat nor render invalid the lien of any First Mortgage made in good faith and for value as to any Condominium in the Project; provided, however, that the conditions contained in this Declaration shall be binding upon and effective against any Owner of a Condominium if the Condominium is acquired by foreclosure, trustee's sale or otherwise. 14.14 SUBORDINATION. The lien of the assessments, including interest, costs (including attorneys' fees), and late charges subject to the limitations of California Civil Code § 1367, or any successor statute or law, provided for herein shall be subordinate to the Hen of any First Mortgage with respect to any Condominiums. Sale or transfer of any Condominium shall not effect the assessment lien. 14.15 DISTRIBUTION OF INSURANCE AND CONDEMNATION PROCEEDS. No Owner, or any other party, shall have priority over any right of Institutional Mortgagees of Condominiums pursuant to then- Mortgages in case of a distribution to Owners of insurance proceeds or condemnation awards for losses to or ataking of Condominiums or Common Area or Association Property. Any provision to the contrary in this Declaration or in the Bylaws or other documents relating to the Project is to such extent void. All applicable fire and all physical loss or extended coverage insurance policies shall contain loss payable clauses acceptable to the affected Institutional Mortgagees naming the Mortgagees, as their interests may appear. Horton/PcrtieoDeclaration of Covenants, Conditions & Restrictions sn20244-87-1585022.3 O7 5833 14.16 VOTING RIGHTS ON DEFAULT. In case of default by any Owner in any payment due under the terms of any Institutional Mortgage encumbering such Owner's Condominium, or the promisspry note secured by the Mortgage, the Mortgagee or his representative, on giving written notice to such defaulting Owner or Owners, and placing of record a notice of default, is hereby granted a proxy and can exercise the voting rights of such defaulting Owner attributable to such Condominium at any regular or special meeting of the Members held during such time as such default may continue. 14.17 FORECLOSURE. If any Condominium is encumbered by a First Mortgage made in good faith and for value, the foreclosure of any lien created by any provision set forth in this Declaration for assessments, or installments of assessments, shall not operate to affect or impair the lien of the Mortgage. On foreclosure of the First Mortgage, the lien for assessments, or installments, that has accrued up to the time of foreclosure shall be subordinate to the lienpf the Mortgage, with the^ foreclosure-purchaser taking title to the Condominium free of the lien for assessments, or installments, that has accrued up to the time of the foreclosure sale. On taking title to the Condominium the foreclosure^purchaser shall only be obligated to pay assessments or other charges levied or assessed by the Association after the foreclosure-purchaser acquired title to the Condominium. The subsequently accrued assessments or other charges may include previously unpaid assessments provided all Owners, including the foreclosure-purchaser, and his successors and assigns are required to pay their proportionate share as provided in this Section. 14.18 NON-CURABLE BREACH. Any Mortgagee who acquires title to a Condominium by foreclosure or by deed in lieu of foreclosure or assignment-in-lieu of foreclosure shall not be obligated to cure any breach of this Declaration that is non-curable or of a type that is not practical or feasible to cure. 14.19 LOAN TO FACILITATE. Any Mortgage given to secure a loan to facilitate the resale of a Condominium after acquisition by foreclosure or by a deed-in-lieu of foreclosure or by an assignment-in-lieu of foreclosure shall be deemed to be a loan made in good faith and for value and entitled to all of the rights and protections of this Article. 14.20 APPEARANCE AT MEETINGS. BecauseofitsfinancialinterestintheProject,any Mortgagee may appear (but cannot vote except as may be provided for herein) at meetings of the Members and the Board to draw attention to violations of this Declaration that have not been corrected or made the subject of remedial proceedings or assessments. 14.21 RIGHT TO FURNISH INFORMATION. Any Mortgagee can furjush information to the Board concerning the status of any Mortgage. 1422 INAPPLICABILITY OF RIGHT OF FIRST REFUSAL TO MORTGAGEE. No right of first refusal or similar restriction on the right of an Owner to sell, transfer or otherwise convey the Owner's Condominium shall be granted to the Association without the written consent Horton/PonicoDeclaration of Covenants, Conditions & Restrictions £o20244-87-1585022.3 °8 5834 of any Mortgagee of the Condominium. Any right of first refusal or option to purchase a unit that may be granted to the Association (or other person, firm or entity) shall not apply to any conveyance or transfer of title to such Condominium, whether voluntary or involuntary, to a Mortgagee which acquires title to or Ownership of the Condominium pursuant to the remedies provided in its Mortgage or by reason of foreclosure of the Mortgage or deed or assignment in lieu of foreclosure. ARTICLE 15 AMENDMENTS 15.1 AMENDMENT BEFORE THE CLOSE OF FIRST SALE. Before the close of the first sale of a Residential Unit to a purchaser other than Declarant, this Declaration and any amendments to it may be amended in any respect or revoked by the execution by Declarant and any Mortgagee of record of ai| instrument amending or revoking the Declaration. The amending or revoking instrument shall make appropriate reference to this Declaration and its amendments and shall be acknowledged arid recorded in the office of the County Recorder. 152 AMENDMENT AFTER THE CLOSE OF FIRST SALE. Except as may otherwise be stated in this Declaration, after the close of the first sale of a Residential Unit in the Project to an Owner other than Declarant and during the period of time prior to conversion of the Class B membership in the Association to Class A membership, this Declaration may be amended at any time and from time to time provided that the vote or written consent of at least fifty-one percent (51%) of the voting power of each class of Members of the Association has been obtained. After conversion of the Class B membership in the Association to Class A membership, the Declaration may be amended at any time and from time to time, provided that the vote or written consent of at least (a) fifty-one percent (51%) of the total voting power of the Association and (b) at least fifty- one percent (5 1 %) of the voting power of the Members of the Association, other than Declarant, has been obtained. Such amendment shall become effective upon the recording of a Certificate of Amendment signed and acknowledged by the President or Vice President of the Association and the Secretary or Assistant Secretary of the Association certifying mat such Votes or written consent have been obtained. For the purposes of recording such instrument, the President or Vice-President and Secretary or Assistant Secretary of the Association are hereby granted an irrevocable power of attorney to act for and on behalf of each and every Owner in certifying and executing and recording said amendment with the Office of the County Recorder. In addition to the foregoing, in the case of any material amendment, the vote of fifty-one percent (51%) of the Eligible Holders (based on one vote for each Mortgage owned) and sixty-seven percent (67%) of the voting power of each class of Members (or sixty-seven percent (67%) of the Owners) shall also be required. "Material amendment" shall mean, for the purposes of mis Section 15.2, any amendments to provisions of this Declaration governing any of the following subjects: The fundamental purpose for which the Project was created (such as a change from residential use to a different use); Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87-1585022 3 thereof; 5835 15.2.2 Assessments, collection of assessments, assessment liens and subordination 15.2.3 The reserve for maintenance, repair and replacement of the Common Area and Association Property; 15.2.4 Property maintenance obligations; 15.2.5 Casualty and liability insurance or fidelity bond requirements; 15.2.6 Reconstruction in the event of damage or destruction or any action to terminate the legal status of the Project after substantial destruction or condemnation occurs; 4 15.2.7 Rights to use the Common Area and Association Property; 15.2.8 Reallocation of any interests in the Common Area; 15.2.9 Voting; 15.2.10 Any provision that, by its terms, is specifically for the benefit of Eligible Holders, or specifically confers rights on Eligible Holders; 15.2.11 Expansion or contraction of the Project or the addition, annexation or withdrawal of property to or from the Project other than the Additional Property described hi Exhibit "B," the redefinition ofResidential Unit boundaries or the conversion of aResidential Unit or Residential Units into Common Area; and 15.2.12 Imposition of any restriction on any Owner's right to lease, sell or transfer his Residential Unit. Anything herein stated to the contrary notwithstanding, no amendment to provisions contained in Sections 15.2.1,15.2.6,15.2.10,15.2.11, and 15.2.12 may be made to this Declaration without the prior written consent of sixty-seven percent (67%) or more of the Eligible Holders (based upon (1) vote for each such Eligible Holder). Any Eligible Holder who receives written request to consent to additions or amendments requiring consent under this provision who does not deliver to the requesting party a negative response within thirty (30) days after receipt of a notice delivered by certified or registered mail, return receipt requested, shall be deemed to have consented to such request If any provision of this Declaration requires a greater or lesser percentage of the voting rights of any class of Members hi order to take affirmative or negative action under such provision, the same percentage of such class or classes of Members shall be required to amend or revoke such provision. Also, if the consent or approval of any governmental authority, Mortgagee or other Morton/PorticoDeclaration of < .20244-87- 1585022.3Declaration of Covenants, Conditions & Restrictions «/s 5836 person, firm, agency or entity is required under this Declaration with respect to any amendment or revocation of any provision of this Declaration, no such amendment or revocation shall become effective unless such consent or approval is obtained. Any amendment or revocation subsequent to the close of such first sale shall be evidenced by an instrument certified by the Secretary or other duly authorized officer of the Association and shall make appropriate reference to this Declaration and its amendments and shall be acknowledged and recorded in the office of the County Recorder. '15.3 CONFLICT WITH ARTICLE 14 OR OTHER PROVISIONS OF THIS DECLARATION. To the extent any provisions of this Article conflict with the provisions of Article 14 or any other provision of this Declaration except those contained in Section 15.2, the provisions of Article 14 or the other provisions shall control. 15.4 APPROVAL BY CITY. Notwithstanding anything to the contrary set forth in this Declaration, including without limitation, the amendment provisions set forth in this Article 15 and the provisions of Sections 8.1 and 8.5 and 9.17, the consent of the City shall be required for any amendment to Article 8 of this Declaration or Section 9.17 or any other provision of this Declaration which gives to the City any approval rights or enforcement rights under this Declaration. Any approval by the City hereunder shall be submitted to the Planning Director whose decision shall be binding on the City. The City shall approve or disapprove any such proposed amendment in a timely manner. Such amendment shall be delivered to the City within thirty (30) days after recordation in the official record of the County Recorder, to the City's then current office. 15.5 BUSINESS AND PROFESSIONS CODE SECTION 11018.7. All amendments or revocations of this Declaration shall comply with the provisions of California Business and Professions Code, Section 11018.7 or any successor statutes or laws, to the extent said Section is applicable. 15.6 RELIANCE ON AMENDMENTS. Any amendments made in accordance with the terms of this Declaration shall be presumed valid by anyone relying on them in good faith. ARTICLE 16 ANNEXATION OF ADDITIONAL PROPERTY 16.1 ANNEXATION. Any of the Additional Property described in Exhibit "B" may be annexed to and become subject to this Declaration by any of the methods set forth hereinafter in this Article. Declarant intends to sequentially develop the Additional Property on a phased basis. However, Declarant may elect not to develop all or any part of such real property, to annex such real property to this Declaration in increments of any size whatsoever, or to develop more than one such increment at any given time and in any given order or develop such real property as a separate project. Although Declarant shall have the ability to annex the Additional Property as provided in this Article, Declarant shall not be obligated to annex all or any portion of such property, and such Horton/PorticoDeclaration of Covenants, Conditions & Restrictions ~, •, 20244-87-1585022.3 'I 5837 property shall not become subject to this Declaration unless and until a Supplementary Declaration covering it has been recorded. 16.2 ANNEXATION WITHOUT APPROVAL. All or any part of the Additional Property may be annexed to and become subject to this Declaration'and subject to the jurisdiction of the Association without the approval, assent or vote of the Association or its Members, provided that: 16.2.1 The proposed Annexation will not result in a substantial and material overburdening of the common interests of the then existing Owners; 16.2.2 The proposed Annexation will not cause a substantial increase in assessments against existing Owners that was not disclosed in the Public Reports under which pre- existing Owners purchased their interests; . 16.2.3 For each Residential Unit in the Project to be annexed for which a rental program has been in effect by the Owner for a period of at least one (1) year as of the date of closing of the escrow for the first sale of a Residential Unit hi the annexed Phase, the Owner shall pay to the Association, before or concurrently with the first close of escrow for the sale of a Residential Unit within the annexed Phase an amount for each month or portion thereof during which such Residential Unit was occupied under such rental program that shall be established by the Board for reserves for replacement or deferred maintenance of Association Property Improvements necessitated by or arising out of the use and occupancy of the Residential Units under the rental program; 16.2.4 Each Declaration effecting the Annexation contemplated under this Section must be executed by Declarant. For purposes of this Section, the issuance of a Public Report by the DRE shall conclusively be deemed to be satisfaction of the criteria set forth above. 16.3 COVENANTS RUNNING WITH THE LAND. Declarant may transfer all or any portion of the Property or the Additional Property to a builder under a grant deed wherein Declarant reserves the right to annex such property and subject it to this Declaration. The restriction on the Additional Property described in Exhibit "B" wherein it may be made subject to this Declaration upon the recordation of a Supplementary Declaration is hereby declared to be an equitable servitude upon the Additional Property in favor of the subject Property and any other real property owned by Declarant in the vicinity of the Project and shall run with the land and be binding on and inure to the benefit of ail parties having or acquiring any right, title or interest, hi such real property. 16.4 SUPPLEMENTARY DECLARATION. The Annexation authorized under the foregoing Sections shall be made by filing of record by or with the consent of Declarant, a Supplementary Declaration, or similar instrument, with respect to the Additional Property which Horton/PorticoDeclaration of Covenants, Conditions & Restrictions ~~ 20244-87-1585022.3 72 5838 shall extend the plan of this Declaration to such property. Such Supplemental Declarations contemplated above may contain such complementary additions and modifications of the covenants, conditions and restrictions contained in this Declaration as may be necessary to reflect the different character, if any, of the Additional Property and as are not inconsistent with the plan of this Declaration. In no event, however, shall any such Supplementary Declaration or any merger or consolidation revoke, modify or add to the covenants established by this Declaration, discriminate between some Owners o f such Additional Property and other Owners of any Residential Units within the Project except as provided herein, change the general common plan created by this Declaration, or affect the provisions hereof or thereof as covenants running with the land or equitable servitudes. The express desired intention of Declarant is to establish a cohesive plan of such covenants and servitudes to be uniformly applicable to the Project, including those portions added thereto by annexation. ( 16,5 ASSOCIATION PROPERTY. Any portion of the property being annexed that is intended or required to be. Association Property shall be conveyed to the Association prior to the close of the first sale of any Residential Unit in the annexed property to an Owner, other than the Declarant 16.6 RIGHTS AND OBLIGATIONS OF OWNERS. After the required annexation procedures are fulfilled, all Owners in the Project shall be entitled to the use of any Association Property in such Additional Property, subject to the provisions of this Declaration, and Owners of such Property shall thereupon be subject to this Declaration. After each Annexation, the Assessments shall be assessed in accordance with the provisions set forth in Section 6.4.4 with the Additional Property being assessed for a proportionate share of total common expenses on the same basis as the other property in the Project. 16.7 MERGERS OR CONSOLIDATIONS. Upon a merger or consolidation of the Association with another association, the Association's properties, rights and obligations may, by operation of law, be transferred to the surviving or consolidated association, or, alternatively, the properties, right 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 the covenants, conditions and restrictions established by this Declaration within the Project, together with the covenants and restrictions established upon any other property as one plan. 16.8 DE-ANNEXATION. Declarant may delete all or any portion of the annexed land from the coverage of this Declaration and rescind any Supplementary Declaration, provided that (a) Declarant is the sole Owner of all of the real property described in the Supplementary Declaration to be rescinded or obtains the consent of the fee title Owner of the real property to be de-annexed (b) Declarant has not exercised any association vote as an Owner of any portion of the real property to be de-annexed and (c) Assessments have not commenced with respect to any portion of the real property to be de-annexed. Such deletion shall be effective upon the recordation of a "Notice of Horton/PofticoDeclaration of Covenants, Conditions & Restrictions -7-% 20244-87-1585022.3 '3 5839 Deletion of Territory," signed by Declarant, in the same manner as the Supplementary Declaration to be rescinded was recorded. ARTICLE 17 ENFORCEMENT 17.1 TERM. The covenants, conditions and restrictions of this Declaration shall run with and bind the Property and shall inure to the benefit of and be enforceable by the Association or any Member, their respective legal representatives, heirs, successors and assigns, for a term of sixty (60) years from the date this Declaration is recorded, after which time said covenants, conditions and restrictions shall be automatically extended for successive periods often (10) years each, unless an instrument, signed by sixty-seven percent (67%) of the then Members has been recorded, at least one (1) year prior to the end of any such period in the manner required for a conveyance of real property, in which it is agreed that this Declaration shall terminate at the end of the then applicable term. 17.2 ENFORCEMENT AND NONWAIVER. • 17.2.1 Rights of Enforcement of Governing Documents. The Association or any Owner shall have a right of action against any Owner, and any Owner shall have a right of action against the Association, to enforce by proceedings at law or in equity, all restrictions, conditions, covenants and reservations, now or hereafter imposed by the provisions of the Governing Documents or any amendment thereto, including the right to prevent the violation of such restrictions, conditions, covenants, or reservations and the right to recover damages or other dues for such violation except that Owners shall not have any right of enforcement concerning Assessment liens. The Association shall have the exclusive right to the enforcement of provisions relating to architectural control and the Association Rules, unless the Association refuses or is unable to effectuate such enforcement, in which case any Owner who otherwise has standing shall have the right to undertake such enforcement Failure of the Association, Declarant or any Owner to enforce any covenants or restrictions herein contained shall in no event be deemed a waiver of the right to do so thereafter. 17.2.2 Procedure for Enforcement. Notwithstanding anything to the contrary set forth in Section 17.2.1 in enforcing any action under the Project Documents for monetary damages, the parties shall comply with the provisions of California Civil Code Section 1354, or any successor statute or law which shall include the language required and shall be delivered in the mariner provided in Civil Code Section 1365. The exception for disputes related to Association assessments set forth in Section 1354 shall not apply to disputes between a Member and the Association regarding assessments imposed by the Association, if the Member chooses to pay in full the Association all of the assessments as specified in California Civil Code Section 1366.3 or any successor statute or law. Hotton/PorticoDeclaration of i20244-87 -1585022.3 Declaration of Covenants, Conditions & Restrictions ~ A .5840 17.3 ENFORCEMENT BY CITY. The City shall have the right, but not the obligation, to enforce those provisions set forth in this Declaration which are in favor of the City or which the City has an interest in, including, but not limited to, the maintenance obligations set forth in Article 8 of the Declaration. 17.4 NOTICE OF ACTIONS AGAINST DECLARANT. The Association shall comply with the provisions of Section 1368.4 of the Civil Code or any successor statute or law, prior to the filing of any civil action by the Association against the Declarant or other developer of the Project for either alleged damage to the Association Property or other property within the Project that the Association is obligated to maintain or repair, or alleged damage to any other portion of the Property that arises out of, or is integrally related to, such damage to the Association Property or other property within the Project that the Association is obligated to maintain or repair. Such notice shall specify all of the matters set forth in Section 1368.4 or any successor statute or law. * " ? 17.5 DISPUTE NOTIFICATION AND RESOLUTION PROCEDURE (DECEARANT DISPUTES): WAIVERS. Notwithstanding any provision of this Declaration to the contrary^ any action or claim by, betwee'n or among the Declarant as the builder of any portion of the Project or any director, officer, partner, member, employee, agent or predecessors-in-interest of the Declarant, or any contractor, subcontractor, design professional, engineer or supplier who provided labor, services or materials to the Project and who is bound or has agreed to be bound to the following dispute notification and resolution procedure (collectively, the "Declarant Parties") and either the Association or any Owner relating to or arising out of the Project, this Declaration orother governing documents for the Association, or any other agreements between the Declarant Parties and an Owner or the Association (unless any such agreement specifies another form of dispute resolution), the sale of any portion of the Property, the use or condition of the Property or the design or construction of or any condition on or affecting the Project, including, but not limited to construction defects, surveys, soils conditions, grading, specifications, installation of improvements or disputes which allege fraud, misrepresentation or breach of implied or express warranties as to the condition of Property or the Project where the amount in controversy is greater than $25,000 or in which non-monetary relief is sought that cannot be granted by a Municipal Court in the State of California as of January 1,1998 (collectively, "Dispute(s)"), shall be subject to the provisions set forth below. 17.5.1 Notice. Any person with a claim defined as a Dispute, above ("Claimant"), shall notify each applicable Declarant Party in writing of the claim, which writing shall describe the nature of such claim and any proposed remedy (the "Claim Notice"). 17.5.2 Right to Inspect and Right to Corrective Action. Within a reasonable period after receipt of the Claim Notice, which period shall not exceed sixty (60) days, the applicable Declarant Parties and the Claimants) shall meet at a mutually-acceptable place within or near the Project to discuss the Dispute. At such meeting or at such other mutually-agreeable time, the applicable Declarant Parties and their respective representatives shall have full access to theproperty that is subject to the Dispute claim and shall have the right to conduct inspections, testing and/or Morton/Portico Declaration of < 20244-87 -1585022.3 Declaration of Covenants, Conditions & Restrictions *,r 5841 destructive or invasive testing the same in a manner deemed appropriate by the Declarant Parties which rights shall continue until such time as the Dispute is resolved as provided in this Section 17.5. The parties to the Dispute shall negotiate in good faith in an attempt to resolve the claim. If any applicable Declarant Party elects to take any corrective action, the applicable Declarant Parties and their respective representatives and agents shall be provided full access to the Project that is subject to the Dispute to take and complete corrective action. 17.5.3 Civil Code Sections 1368.4 and 1375. Nothing contained herein shall be deemed a waiver or limitation of the provisions of California Civil Code Section 1368.4, referenced in Section 17.3 of the Declaration. If the claim is subject to the provisions of Civil Code Section 1375 as it may be amended from time to time, compliance with the procedures of Civil Code Sections 1375 (b), (d) and (e) shall satisfy the requirements of Sections 17.5.1 and 17.5.2. 17.5.4 Mediation. If the parties to the Dispute cannot resolve the claim pursuant to the procedures described in Section 17.5.-2 above (including, if applicable, Civil Code Section 1375 procedures), the matter shall be submitted to mediation pursuant to the mediation procedures adopted by the American Arbitration Association (except as such procedures are modified by the provisions of this Section 17.5.4) or any successor thereto or to any other entity offering mediation services that is acceptable to such parties. No person shall serve as a mediator in any Dispute in which the person has any financial or personal interest in the result of the mediation, except by the written consent of all parties to the Dispute participating in the mediation. Prior to accepting any appointment, the prospective mediator shall disclose any circumstances likely to create a presumption of bias or to prevent a prompt commencement of the mediation process. Except as provided in Section 17.5.8 below, the Association and each Owner covenants that each shall not commence any litigation against the Declarant Parties without complying with the procedures described in this Section 17.5.4. (a) Position Memoranda: Pre-Mediation Conference. Within ten (10) days of the selection of the mediator, each party to the Dispute participating in the mediation shall submit a brief memorandum setting forth its position with regard to the issues that need to be resolved. The mediator shall have the right to schedule a pre-mediation conference and all parties to die Dispute participating in the mediation shall attend unless otherwise agreed. The mediation shall be commenced within ten (10) days following the submittal of the memoranda and shall be concluded within fifteen (15) days from the commencement of the mediation unless the parties to the Dispute participating in the mediation mutually agree to extend the mediation period. The mediation shall be held in the county in which the Project is located or such other place as is mutually acceptable to the parties to the Dispute participating in the mediation. (b) Conduct of Mediation. The mediator has discretion to conduct the mediation in the manner hi which the mediator believes is most appropriate for reaching a settlement of the Dispute. The mediator is authorized to conduct joint and separate meetings with the parties to the Dispute participating in the mediation and to make oral and written recommendations for Morton/Portico Declaration of Covenants, Conditions & Restrictions n,20244-87-15850223 70 5842 settlement Whenever necessary, the mediator may also obtain expert advice concerning technical aspects of the Dispute, provided the parties to the Dispute participating in the mediation agree and assume the expenses of obtaining such advice. The mediator does not have the authority to impose a settlement on the parties to the Dispute participating in the mediation. (c) Exclusion Agreement. Prior to the commencement of the mediation session, the mediator and all parties to the Dispute participating in the mediation shall execute an agreement pursuant to California Evidence Code Section 1115 et seq. and any successor statutes or laws in order to exclude the use of any testimony or evidence produced at the mediation in any subsequent dispute resolution forum, including, but not limited to, court proceedings, reference proceedings or arbitration hearings. Pursuant to California Evidence Code Section 1115 et seq., the agreement shall specifically state that evidence of anything said or of any admission made in the course of the mediation is not admissible evidence, and disclosure of any such evidence shall not be compelled in any civil action in which, pursuant to law, testimony can be compelled to be given. -Unless the document provides otherwise, no document prepared for the purpose of, or in the course of, or pursuant to, the mediation, or copy thereof, is admissible in evidence; and disclosure of any such document shall not be compelled in any civil action in which, pursuant to law, testimony can be compelled to be given. The provisions of California Evidence Code Sections 1115 through 1128 shall also be applicable to such mediation process. (d) Persons Permitted at Sessions. Persons other than the parties to the Dispute participating in the mediation, their representatives and the mediator may attend mediation sessions only with the permission of the parties to the Dispute participating in the mediation and the consent of the mediator; provided, however, that such permission and consent shall not be required to allow participation of such parties' insurer in the mediation to the extent required under such parties' liability insurance policy. Confidential information disclosed to a mediator by such parties or by witnesses in the course of the mediation while serving in such capacity shall be confidential. There shall be no stenographic record of the mediation process. (e) Expenses. The expenses of witnesses for either side shall be paid\ J IIIBH £Trvm . _ — — • f A by the party producing such witnesses. All other expenses of the mediation, including, but not limited to, the fees and costs charged by the mediator and the expenses of any witnesses or the cost of any proof or expert advice produced at the direct request of the mediator, shall be borne equally by the parties to the Dispute participating in the mediation unless they agree otherwise. Each party to the Dispute participating in the mediation shall bear its own attorneys' fees and costs in connection with such mediation. 17.5.5 Judicial Reference. Should mediation pursuant to Section 17.5.4 above not be successful in resolving any Dispute, such Dispute shall be resolved by general judicial reference pursuant to California CodeofCivil Procedure Sections638 and 641 through 645.1 or any successor statutes thereto, as modified or as otherwise provided hi (his Section 17.5.5 Subject to the limitations set forth in this Section 17.5.5, the judicial referee shall have the authority to try all Horton/PorticoDeclaration of Covenants, Conditions & Restrictions -- 20244-87 - 1585022.3 ' > 5843 issues, whether of fact or law, and to report a statement of decision to the court. The judicial referee shall be the only trier of fact or law in the reference proceeding, and shall have no authority to further refer any issues of fact or law to any other party, without the mutual consent of all parties to the judicial reference proceeding. (a) Participation by Declarant Parties. The parties to the Dispute shaH cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding. Any of Declarant, the Association, or an Owner, as applicable in a particular judicial reference proceeding (individually, "Party" or collectively, the "Parties"), shall not be required to participate in the judicial reference proceeding if (i) all parties against whom the applicable Party would have cross-claims or counterclaims necessary to afford complete relief to such Party cannot be joined in the judicial reference proceeding, including, but not limited to, any Declarant Party (collectively, a "Necessary Party"), or (ii) the enforcement of the provisions of this. Section 17.5 would impajtf the insurance coverage of a Party or a Declarant Party for any claim arising out of the Dispute that would otherwise provide coverage for such claim. If a Party determines that it cannot join all Necessary Parties octhat its insurance coverage would be impaired with respect to the Dispute, or if Declarant is advised by a Declarant Party that it contends its insurance coverage will be impaired by enforcement of this Section 17.5, such Party may elect not to participate in the judicial reference proceeding. If a Party so elects not to participate in the judicial reference proceeding, such Party will provide notice to Claimants) and the other Parties to the judicial reference proceeding that the Dispute will not be resolved by judicial reference. In such circumstances, the other Parties may seek determination of the Party's right not to participate by way of a motion under California Code of Civil Procedure Sections 638, 641 through 645.1, or any successor statutes thereto. If a determination is made as a result of such a motion that a Party is not required to participate in the judicial reference proceeding, unless the remaining Parties agree otherwise, the Dispute shall not be resolved by judicial reference and the Claimants) may commence an action with respect to the subject Dispute in an appropriate court of law. In the event that Claimants) are permitted to commence legal proceedings as provided herein, subsections (b) through (f) and (h) through (n) of this Section 17.5.5 will not apply in such legal proceeding, provided that the legal proceeding shall be tried by a judge and not a jury and Claimants) and all parties shall waive their rights to a jury (unless all parties to such proceeding mutually consent otherwise) and agree that the waiver of punitive damages set forth in Section 17.5.5(g) below shall be applicable in such proceeding. (b) Place. The proceedings shall be heard in the county in which the Project is located. (c) Referee. The referee shall be an attorney or retired judge with experience in relevant real estate matters. The referee shall not have any relationship to the parties to the Dispute or interest .in the Project. The parties to the Dispute participating in the judicial reference proceeding shall meet to select the referee within ten (10) days after service of the initial complaint on all defendants named therein. Any dispute regarding the selection of the referee shall Horton/PortieoDeclaration of Covenants, Conditions & Restrictions ~D20244-87-1585022.3 '» 5844be promptly resolved by the judge to whom the matter is assigned, or if there is none, to the presiding judge of the Superior Court of the County in which the Project is located, who shall select the referee. (d) Commencement and Timing of Proceeding. The referee shall promptly commence the proceeding at the earliest convenient date in light of all of the facts and circumstances and shall conduct the proceeding without undue delay. (e) Pre-hearing Conferences. The referee may require one or more pre-hearing conferences. (i) Discovery. The parties to the judicial reference proceeding shall be entitled only to limited discovery, consisting of the exchange between such parties of only the following matters: (i) witness lists; {ii) expert witness designations; (iii) expert witness reports; (iv) exhibits; (v) reports of testing or inspections of the property subject to the Dispute, including butnot limited to, destructive or invasive testing; and (vi) trial briefs. Such parties shall also be entitled to conduct further tests and inspections as provided in Section 17.5.2 above. Any other discovery provided for in the California Code of Civil Procedure shall be permitted by the referee upon a showing of good cause or based on the mutual agreement of the parties to the judicial reference proceeding. The referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge. (g) Limitation on Remedies; Prohibition on the Award of Punitive Damages. The referee shall not have the power to award punitive damages. In addition, as further provided below, the right to punitive damages is waived. The referee shall have the power to grant all other legal and equitable remedies and award compensatory damages in the judicial reference proceeding. (h) Motions. The referee shall have the power to hear and dispose of motions, including motions relating to provisional remedies, demurrers, motions to dismiss, motions for judgment on the pleadings and summary adjudication motions, in the same manner as a trial court judge, except the referee shall also have the power to adjudicate summarily issues of fact or law including the availability of remedies, whether or not the issue adjudicated could dispose of an entire cause of action or defense. Notwithstanding the foregoing, if prior to the selection of the referee as provided herein, any provisional remedies are sought by the parties to the Dispute, such relief may be sought in the Superior Court of the County in which the Project is located. (i) Rules of Law. The referee shall apply the laws of the State of California except as expressly provided herein, including the California Evidence Code, unless expressly waived by all parties to the judicial reference proceeding. Horton/PorticoDeclaration of Covenants, Conditions & Restrictions20244-87-1585022.3 5845 (j) Record. A stenographic record of the hearing shall be made, provided that the record shall remain confidential except as may be necessary for post-hearing motions and any appeals. (k) Statement of Decision. The referee's statement of decision shall contain findings of fact and conclusions of law to the extent required by law if the case were tried to a judge. The decision of the referee shall stand as the decision of the court, and upon filing of the statement of decision with the clerk of the court, judgment may be entered thereon in the same manner as if the Dispute had been tried by the court. (1) Post-hearing Motions. The referee shall have the authority to rule on all post-hearing motions in the same manner as a trial judge. j (m) Appeals. The decision of the referee shall be subject to appeal in the same manner as if the Dispute had been tried by the court. "• ' ** : = (n) Expenses. The fees and costs of any judicial reference proceeding hereunder shall be equally shared by the parties to the judicial reference proceeding. Each party to the judicial reference proceeding shall bear its own attorneys' fees and costs in connection with such proceeding. 17.5.6 AGREEMENT TO DISPUTE RESOLUTION: WAIVERS OF JURY TRIAL AND AWARD OF PUNITIVE DAMAGES. DECLARANT AND BY ACCEPTING A DEED FOR THE ASSOCIATION PROPERTY OR A CONDOMINIUM, AS THE CASE MAY BE, THE ASSOCIATION AND EACH OWNER AGREETO HAVE ANYDISPUTE RESOLVED ACCORDING TO THE PROVISIONS OF THIS SECTION AND WAIVE THEIR RESPECTIVE RIGHTS TO PURSUE ANY DISPUTE IN ANY MANNER OTHER THAN AS PROVIDED IN THIS SECTION. SUCH PARTIES ACKNOWLEDGE THAT BY AGREEING TO RESOLVE ALL DISPUTES AS PROVIDED IN THIS SECTION, THEY WILL NOT HAVE ANY RIGHT TO HAVE SUCH DISPUTES TRIED BEFORE A JURY. THE PARTIES FURTHER WAIVE THEIR RESPECTIVE RIGHTS TO AN AWARD OF PUNITIVE DAMAGES RELATING TO SUCHDISPUTES THEREBY GIVING UP ANY RIGHTS SUCH PARTIES MAY POSSESS TO SUCH REMEDIES. THIS SECTION SHALL NOT BE AMENDED WITHOUT DECLARANT'S PRIOR WRITTEN CONSENT. 17.5.7 Application of Award. Any proceeds awarded to the Association arising from any Dispute by settlement, award or otherwise shall be applied in accordance with the provisions of Section 4.4.7 of this Declaration. 17.5.8 Exceptions to Mediation and Reference: Statutes of Limitation. The procedures set forth in this Section 17.5 shall apply only to Disputes and shall not apply to any action taken by the Association against Declarant, or any Owner for delinquent assessments, which Honon/PorticoDeclaration of'20244-87 -15850223Declaration of Covenants, Conditions & Restrictions nn 5846 shall be covered by Article 6, or in any action involving any bond covered by the provisions of Article 11 of the Bylaws. Furthermore, nothing in this Section 17.5 shall be considered to toll, stay, reduce or extend any applicable statutes of limitation; provided, however, that the Declarant Parties, Association or any Owner shall be entitled to commence a legal action which in the good faith determination of the such Party(ies) is necessary to preserve their rights under any applicable statute of limitations, provided that such Party shall take no further steps in prosecuting the action until it has complied with the procedures described in Sections 17.5.4 and 17.5.5. ARTICLE 18 GENERAL PROVISIONS 18.1 HEADINGS. The headings used in this Declaration are for convenience only and are not to be used to interpret the meaning of any of the provisions of this Declaration. 18.2 SEVERABILITY. The provisions of this Declaration shallbe deemed independent and severable, and the invalidity or partial invalidity or unenforceability of any provision or provisions of it shall not invalidate any other provisions. 18.3 CUMULATIVE REMEDIES. Each remedy provided for in this Declaration shall be cumulative and not exclusive. Failure to exercise any remedy provided for in this Declaration shall not, under any circumstances, be construed as a waiver. 18.4 VIOLATIONS AS NUISANCE. Every act or omission in violation of the provisions of this Declaration shall constitute a nuisance and, in addition to all other remedies herein set forth, may be abated or enjoined by any Owner, any Member of the Board, the manager, or the Association. 18.5 NO RACIAL RESTRICTION. No Owner shall execute or cause to be recorded any instrument which imposes a restriction upon the sale, leasing or occupancy of his Residential Unit on the basis of race, sex, color or creed. 18.6 ACCESS TO BOOKS. Declarant may, at any reasonable time and upon reasonable notice to the Board or manager, cause an audit or inspection to be made of the books and financial records of the Association. 18.7 LIBERAL CONSTRUCTION. The provisions of this Declaration shall be liberally construed to effectuate its purpose. Failure to enforce any provision hereof shall not constitute a waiver of the right to enforce said provision thereafter. 18.8 NOTIFICATION OF SALE OF CONDOMINIUM. Concurrently with the consummation of the sale of any Condominium under circumstances whereby the transferee Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 0120244-87-1585022.3 ol 5Lbecomes an Owner thereof, or within five (5) business days thereafter, (he transferee shall notify the Board in writing of such sale. Such notification shall set forth the name of the transferee and his Mortgagee and transferor, the common address of the Condominium purchased by the transferee, the transferee's and the Mortgagee's mailing address, and the date of sale. Prior to the receipt of such notification, any and all communications required or permitted to be given by the Association, the board or the manager shall be deemed to be duly made and given to the transferee if duly and timely made and given to said transferee's transferor. Mailing addresses may be changed at any time upon written notification to the Board. Notices shall be deemed received forty-eight (48) hours after mailing if mailed to the transferee, or to his transferor if the Board has received no notice of transfer as above provided, by certified mail return receipt requested, at the mailing address above specified. Notices shall also be deemed received twenty-four (24) hours after being sent by overnight courier or upon delivery if delivered personally to any occupant of a Condominium over the age of twelve (12) years. . 18.9 NUMBER. GENDER. The singular shall include the'plural and the plural the. singular unless the context requires the contrary, and the masculine, feminine and neuter shaft each include the masculine, feminine or neuter, as the context requires. 18.10 EXHIBITS,. All exhibits referred to are attached to this Declaration and incorporated by reference. 18.11 BINDING EFFECT. This Declaration shall inure to the benefit of and be binding on the successors and assigns of the Declarant, and the heirs, personal representatives, grantees, tenants, successors and assigns of the Owners. 18.12 EASEMENTS RESERVED AND GRANTED. Any easements referred to in this Declaration shall be deemed reserved or granted, or both reserved and granted, by reference to this Declaration hi the first deed by Declarant to any Condominium. IN WITNESS WHEREOF, Declarant has executed this instrument as of the day and year first above written. DECLARANT: D.R. HORTON SAN DIEGO HOLDING COMPANY, INC., a California corporation Name: Title: jX '^i->—- \^ y^ . s^y <rn— Horton/PoitieoDeclaration of Covenants, Conditions & Restrictions20244-87 -1585022.3 5848 STATE OF CALIFORNIA COUNTY OF SAN DIEGO On \-~ \~D-Q \ before Me. Stacie Donahue, Notary Public personally appeared John D. Kerr, Jr.. Vice President, PR Morton San Diego Holding Company, Inc. ' personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose natne(s) are/is subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity, and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which-the person (s) acted, executed the instrument. WITNESS my hand and of ^seal. (SEAL) >OFFICIALSEAL I ^ DIEGO COUNTY i MYCOMM-EXPTSEPT. 14.2002 \ 5849EXHIBITS Exhibit "A" Legal Description of the Property Exhibit "B" Legal Description of Additional Property Morton/PorticoDeclaration of Covenants, Conditions & Restrictions 20244-87 -1585022.3 EXHBrr'A" ••.:/_ Legal Description of the Property Property: MODULE A OF LOT 1 OF CITY OF CARLSBAD TRACT 99-09 RANCHO CARRILLO VILLAGE "N" IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO.14125 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 28, 2000, AS SHOWN ON THAT CERTAIN CONDOMINIUM PLAN OF PORTICO AT RANCHO CARRILLO, PHASE 1 RECORDED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON CftW . 2. S~ .2001ASDOCUMENTNQ. •**>/ - &° V3S~?7("CONDOMINIUMPLANJ. .< Association Property: MODULE A LOT 1 OF CITY OF CARLSBAD TRACT 99-09 RANCHO CARRILLO VILLAGE "N" IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO.14125 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 28, 2000, EXCEPTING THEREFROM BUILDING ENVELOPE NOS. 1, 2, 3, 4, 34 AND 35 WITHIN MODULE A AS SHOWN ON THE CONDOMINIUM PLAN. Horton/Portico Declaration of Covenants, Conditions & Restrictions _______ „ . „ 20244-87 -1585022.3 EXHIBIT "A" 5851 EXHIBIT "B" Legal Description of Additional Property MODULEBASSHOWNONTHECONDOMINIUMPLANFORPORTICOATRANCHO CARRILLO PHASE 1, IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON 3A«>. 2^.2QQIAS DOCUMENT NO. ^O l-Oo^^S. 77 . Horton/Portico Declaration of Covenants, Conditions & Restrictions _______ „_.„ 20244-87 - 1S85022J EXHB1T "B"