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HomeMy WebLinkAboutCT 99-10; Buerger; Tentative Map (CT) (19)Recorded at Request of Chicago Title Company Order No. 23071483-U52 When Recorded, Return to: AVIARA POINTE, LLC c/o Christopher Stearns Attorney at Law 1901 First Avenue, Suite 112 San Diego, CA 92101-0300 DECLARATION OF COVENANTS. CONDITIONS AND RESTRICTIONS FOR AVIARA POINTE PLANNED RESIDENTIAL DEVELOPMENT Aviara.ccr TABLE OF CONTENTS Article/Section Page I DEFINITIONS 2 II DESCRIPTION OF PROJECT, DIVISION OF PROPERTY, AND CREATION OF PROPERTY RIGHTS 4 .... — 2.01 Description of Project . ; . / . . V . . . . . . . . 4 2.02 Conveyance of Common Area to Association 4 2.03 Easements; Dedication.of Common Area .5 2.04 Easements to Accompany Conveyance of Lot 5 2.05 Delegation of Use 5 2.06 Owners' Rights and Easements for Utilities 6 2.07 Encroachment Easements 6 2.08 Maintenance Easement 7 2.09 Open Space/Non-Building Areas 7 2.10 Drainage Easements 7 - 2.11 Other Easements- .-.-..-. -. . . •-. .- . . .- . . .- 7 2.12 Rights of Entry and Use 7 2.13 Partition of Common Area 7 2.14 Party Walls 8 A. General Rules of LawTo Apply 8 B. Sharing of Repair and Maintenance 8 C. Destruction by Fire or Other Casualty 8 D. Right to Contribution Runs with Land 8 E. .. Arbitration 8 2.15 Zero Lot Line Walls and Easements 9 A. Easements 9 ... , . B. -...Arbitration . .• 9 III ASSOCIATION, ADMINISTRATION, MEMBERSHIP AND VOTING RIGHTS 9 3.01 Association to Own and Manage Common Areas 9 3.02 Membership 9 3.03 Transfer of Membership 9 3.04 Membership Classes and Voting Rights 10 Class A 10 Class B 10 IV MAINTENANCE AND ASSESSMENTS 11 4.01 Creation of the Lien and Personal Obligation of Assessments 11 4.02 Purpose of Assessments 11 4.03 Types of Assessment 11 A. Annual Assessments 11 B. Special Assessments 12 4.04 Limitations on Annual and Special Assessments ... 12 4.05 Notice for Any Action Authorized Under Section 4.04 13 4.06 Division of Assessments 13 (i) 4.07 Date of Commencement of Annual Assessment; Due Dates 14 4.08 Effect on Nonpayment of Assessments 14 4.09 Transfer of Lot By Sale or Foreclosure 14 4.10 Priorities; Notice Requirements; Enforcement; Remedies 15 4.11 Unallocated Taxes 16 4.12 Initial Capitalization of the Association 16 V DUTIES AND POWERS OF THE ASSOCIATION 17 5.01 Duties 17 A. Maintenance 17 B. Insurance . . .... ..'.'. 17 C. Discharge of Liens 19 D. Assessments 19 E. Payment of Expenses 19 F. Enforcement 19 .5.02 Powers. . 1 .. ... 19 A. Utility Service 19 B. Easements 19 C. Manager 19 D. Adoption of Rules .- 19 E. Access 19 F. Assessments, Liens, and Fines ........ 20 G. Enforcement 20 H. Acquisition and Disposition of-Property ... 20 I. Loans 20 J. Dedication 20 K. Contracts 20 • ' " L. Delegation 21 M. Use of Recreational Facilities 21 N. Water and Garbage Service 21 O. Appointment of Trustee 21 P. Other Powers 21 5.03 Commencement of Association's Duties and Powers . . 22 VI ARCHITECTURAL AND OPEN SPACE CONTROL 22 6.01 Approval of Plans 22 6.02 Architectural Control and Open Space Committees . . 22 6.03 Landscaping 23 6.04 Governmental Approval 23 VII USE RESTRICTIONS 23 7.01 Use of Lot 23 7.02 Nuisances 23 7.03 Vehicle Restrictions 24 7.04 Parking 24 7.05 Commercial Activity 24 7.06 Storage in Common Area 25 7.07 Signs 25 (ii) Page 7.08 Animals 25 7.09 Garbage and Refuse Disposal 25 7.10 Radio and Television Antennas; Lighting Fixtures . 25 7.11 Basketball Standards . .-. 26 - 7.12 Drapes ............ 26 7.13 Clothes Lines 26 7.14 Power Equipment and Car Maintenance 26 7.15 Liability of Owners for Damage to Common Area ... 26 7.16 Leasing of Lots 27 VIII GENERAL PROVISION' . . . : ' . . ' '. . 27 8.01 Enforcement .................... 27 8.02 Invalidity of Any Provisions 28 8.03 Term 29 8.04 Amendments . 29 8.05 Rights of First Lenders 30 A. Copies of Project Documents . . 30 -• - • B.' • Audited Statement" . ... .".".". . . . . . . 30 C. Notice of Action 30 D. Material Amendments 30 E. Consent to Action ^ 31 F. Right of First Refusal 32 G. Contracts 32 H. Reserves 32 I. Priority of Liens . 32 J. Distribution of Insurance or Condemnation Proceeds 33 K. Payment of Taxes or Insurance by Lenders ... 33 , • v/ L...-VA Approval . .- 33 M. • Termination of Professional Management .... 33 N. Restoration or Repair 33 0. Project Termination 33 P. Reallocation of Interests 34 8.06 Owner's Right and Obligations to Maintain and Repair 34 8.07 Damage or Destruction 34 8.08 Condemnation . 36 8.09 Limitation of Restrictions on Declarant 36 8.10 Termination of Any Responsibility of Declarant . . 37 8.11 Owner's Compliance 37 8.12 Notices 38 8.13 Special Provisions Relating to Enforcement of Declarant's Obligation to Complete Common Area Improvements 38 8.14 Fair Housing 39 8.15 Documents Provided to Prospective Purchaser .... 39 8.16 ALTERNATIVE DISPUTE RESOLUTION (Enforcement of Governing Documents 39 A. Summary of Civil Code Section 1354 39 B. Text of Civil Code Section 1366.3 40 (iii) Page 8.17 ARBITRATION OF DISPUTES (Action For Damages Against Declarant For Defect in Design or Construction of the Project) 41 8.18 Special Provisions Required by City of Carlsbad . . 41 EXHIBIT "A" LEGAL DESCRIPTION EXHIBIT "B" PARTIAL BUDGET (iv) COVENANTS. CONDITIONS AND RESTRICTIONS FOR AVIARA POINTS PLANNED RESIDENTIAL DEVELOPMENT THIS DECLARATION, made on the date hereinafter set forth, and made by the person(s) and/or entity or entities hereinafter identified as the "Declarant", is made with reference to the following facts and circumstances. RECITALS A. The Declarant is the owner of that certain real property located in the City of Carlsbad, (hereinafter the "City"), County of San Diego, State of California, more particularly described as set forth in Exhibit "A" to this Declaration, which is attached hereto and incorporated herein by reference and made part hereof as though set forth in full, which property, together with all improvements and structures now or hereafter constructed thereon and all appurtenances thereto, is hereinafter defined and referred to as the "Project". B. The Declarant has improved or intends to improve said property by constructing thereon a planned residential development. C. The Declarant hereby establishes by this Declaration a plan for the development, improvement, protection and maintenance of the Project in a single phase as a planned residential development under the provisions of the Common Interest Development Act of the State of California (Civil Code, Section 1350, et seq.). The development of the Project will be consistent with any overall development plans submitted by Declarant to, and approved by, the City. D. The Declarant intends by this document to impose upon the Project mutually beneficial restrictions under a general plan of improvement for the benefit of all lots within the Project and the owners thereof. E. The owner of a lot within the Project shall receive fee title to his lot together with an appurtenant membership in the Association, a California nonprofit mutual benefit corporation, which shall own, operate and maintain the common area and which shall enforce the provisions of this Declaration. F. NOTICE: THIS DECLARATION CONTAINS PROVISIONS FOR BINDING ARBITRATION OF DISPUTES IN CERTAIN SITUATIONS. SEE PAGES 8-9 AND 39-42 FOR DETAILS. NOW, THEREFORE, the Declarant hereby declares that the Project, and every part thereof, shall be held, sold, leased, mortgaged, encumbered, rented, used, occupied, improved and conveyed subject to the following declarations, limitations, easements, restrictions, covenants and conditions, which are imposed as equitable servitudes pursuant to a general plan for the development of the Project for the purpose of enhancing and protecting the attractiveness, value and desirability of the Project and every part thereof, and which shall run with the land and be binding on the Declarant and its successors and assigns, and on all parties having or acquiring any right, title or interest in or to the Project or any part thereof, their heirs, successors and assigns, and shall inure to the benefit of each owner thereof. ARTICLE I DEFINITIONS 1.01 "Articles" and "Articles of Incorporation" shall mean and refer to the Articles of Incorporation of the Association, as may be amended from time to time. 1.02 "Assessment" shall mean that portion of the cost of maintaining, improving, repairing and managing the Common Area which is to be paid by each lot owner as determined by the Association. 1.03 "Association" shall mean and refer to the AVIARA POINTE OWNERS ASSOCIATION, a California nonprofit mutual benefit corporation, the members of which shall be the owners of lots in the Project. 1.04 "Board" and "Board of Directors" shall mean and refer to the governing body of the Association. 1.05 "Bylaws" shall mean and refer to the Bylaws of the Association, as may be amended from time to time. 1.06 "Common Area" shall mean and refer to the portions of the Project, and all improvements thereon, owned by the Association for the common use and enjoyment of the owners, including initially, upon recordation of the Map and conveyance by deed to the Association, the certain lot(s) identified by number or letter on Exhibit "A" to the Declaration as being Common Area Lots contained in the Project. 1.07 "Common expenses" means and includes the actual and estimated expenses of operating the Common Area, and any reasonable reserve for such purposes as found and determined by the Board, and all sums designated common expenses by or pursuant to the Project Documents. - 2 - 1.08 "Declarant" shall mean and refer to the person(s) and/or entity or entities identified in Exhibit "A", to the Declaration as the record holder(s) of title to the real property identified and legally described in said Exhibit as being within and a part of the Project, and shall also mean and refer to any and all successors and assigns of such persons and/or entities. 1.09 "Declaration" shall mean and refer to this Declaration of Covenants, Conditions and Restrictions, as may be amended or supplemented from time to time. 1.10 "Director" shall mean and refer to a person who is a member of the Board .of Directors (the. governing body) of the Association. 1.11 "Eligible holder mortgages" shall mean mortgages held by "eligible mortgage holders". 1.12 "Eligible mortgage holder" shall mean a first lender who has requested notice of certain matters from the Association in accordance with the Project Documents. - . - •*.- 1.13 "Eligible insurer or guarantor" shall mean an insurer or governmental guarantor of a first mortgage who has requested notice of certain matters from the Association in accordance with the Project Documents. 1.14 "First lender" shall mean any bank, savings and loan association, insurance company, or other financial institution holding, insuring or-guaranteeing a recorded first mortgage on any lot. 1 1". 15' "First "mortgage" shall'mean and refer to a mortgage or deed'of trust: which is recorded, which has first priority over all other mortgages and deeds of trust, and which was made in good faith and for value. 1.16 "Lot" shall mean and refer to those separate fee interests of land within the Project, together with any improvements thereon, which are identified by number on Exhibit "A" to the Declaration as being Residential Lots contained within the Project. 1.17 "Map" shall mean and refer to the final subdivision map approved by the City of Carlsbad California in connection with the Project which is recorded in the County in which the Project is located. 1.18 "Member" shall mean and refer to a person entitled to membership in the Association as set forth in the Project Documents; provided, that whenever "member" or "membership" is used for the purpose of determining quorums, percentages, or minimum or maximum numbers for voting, all persons who are members because of their joint ownership of a particular lot shall be counted as one (1). - 3 - 1.19 "Mortgage" shall include a deed of trust as well as a mortgage. - - - - 1.20 "Mortgagee" shall include a beneficiary or a holder of a deed of trust as well as a mortgagee. .1.21 "Mortgagor" shall include the trustor of a deed of trust as well as a mortgagor. 1.22 "Owner" and "owners" shall mean and refer to the record holder, whether one (1) or more persons or entities, of a fee simple title to any lot which is a part of the Project, including contract sellers, but excluding those persons or entities having an interest merely as security for the performance of an obligation; provided, that whenever "owner" or "owners" is used.for the purpose of determining quorums, percentages, or minimum or maximum numbers for voting, all persons who are owners because of their joint ownership of a particular lot shall be counted as one (1). 1.23 "Person" means a natural person, a corporation, a partnership,- a trustee/- or other legal- entity. - - - 1.24 "Project" shall mean and refer • to the real property contained in Exhibit "A", and all improvements erected or to be erected thereon, and all appurtenances thereto, and all property, real, personal or mixed, intended for use in connection therewith. 1.25 "Project Documents" shall mean and refer to the Declaration, together with the other basic documents used to create and govern the Project, including the Map, the Articles, and the Bylaws, and any unrecorded rules and regulations adopted by the Board.or the Association, as.all.of these documents may be amended from time to time. 1.26 "Number and Gender". The singular and plural number and masculine, feminine and neuter gender, respectively, shall each include the other where the context requires. ARTICLE II DESCRIPTION OF PROJECT. DIVISION OF PROPERTY. AND CREATION OF PROPERTY RIGHTS 2.01 Description of Project; The Project is a planned residential developmental which consists of the property described in Exhibit "A", attached hereto and incorporated herein by reference, and all improvements thereon and appurtenances thereto, and is subject to the terms of this Declaration upon recordation hereof. 2.02 Conveyance of Common Area to Association: On or before conveyance of title to the first lot, Declarant shall deed the Common Area to the Association to be held for the benefit of the members of the Association. - 4 - 2.03 Easements; Dedication of Common Area; Each of the lots shown on Exhibit "A" shall have appurtenant to it (as the dominant tenement) an easement over the Common Area(s) (as the servient tenement), now or hereafter owned by the Association/ for ingress and egress, and for use, occupancy and enjoyment, and where applicable, for the construction, maintenance and operation of utilities.- All' of 'the easements are subject to the following provisions: A. The right of the Association to discipline members, and to suspend the voting rights of a member and his right to use of any recreational facilities, for any period during which any assessment against his lot remains unpaid, and for any infraction of the rules contained in the Declaration, Bylaws, Articles or written rules and regulations, in accordance with the provisions of the Project Documents; B. The right of the Association to dedicate, transfer or mortgage all or any part of the common area to any public agency, .authority, or utility for such purposes and subject to,such conditions as may be agreed to by the members, provided, that in the case of the borrowing of money and the mortgaging of its property as security therefor, the rights of.such mortgagee shall be subordinate to the rights of the members of the Association. . No such dedication, transfer or mortgage shall be effective unless as an instrument signed or approved three-fourths (3/4) of each class of members agreeing to such dedication, transfer or mortgage has been recorded; C. The right of the Association to grant easements under, in, upon,.across, over, above or through any portion of the common" area" for"'purposes"';" including," by way of example and not by way of limitation, access, utilities, and parking, which are beneficial to the development of the properties in accordance with the general plan established by this Declaration; D. Easements for work necessary to complete development and construction of the Project. The foregoing easements are granted and reserved subject to the condition that their use and enjoyment shall not unreasonably interfere with the use, occupancy or enjoyment of all or any part of the lot servient to them or to which they are appurtenant. 2.04 Easements to Accompany Conveyance of Lot; Easement that benefit or burden any lot shall be appurtenant to that lot and shall automatically accompany the conveyance of the lot, even though the description in the instrument of conveyance may refer only to the fee title to the lot. 2.05 Delegation of Use; Any owner may delegate, in accordance with the Bylaws, his right of enjoyment to the common area and facilities to the members of his family, his tenants, or contract purchasers, who reside on the property. Nonresident members, their families, guests and relatives, are not permitted to use the - 5 - recreational facilities during periods when their lot is leased to and/or occupied by others (nonfamily members). 2.06 Owners/ Rights and Easements for Utilities; The rights and duties of the owners of lots within the project with respect to sanitary sewer, drainage, water, electric, gas, television receiving, telephone equipment, cables and lines (hereinafter referred to, collectively, as "utility facilities") shall be as follows: A. Whenever utility facilities are installed within the project, which utility facilities or any portion thereof lie in or upon a lot or lots owned by other than the owner of a lot served by said utility facilities, the owners of any lots served by said utility facilities shall have the right of.reasonable access for themselves or for utility. companies or the City or County to repair, to replace and generally maintain said utility facilities as and when the same may be necessary, due to failure or inability of the Board to take timely action to make such repairs or perform such maintenance. . .......... -. B. Whenever utility facilities are installed within the project which utility facilities serve more.than one (1) lot, the owner of each lot served by the- utility facilities shall be entitled to the full use and enjoyment of such portions of the utility facilities as service his lot. C. In the event of a dispute between .owners with respect to the repair or rebuilding of the.utility'facilities, or with respect to the sharing of the cost thereof, then, upon written .request of one (1) of such owners addressed to the other Owner(s), the" matter"shall be"submitted to binding arbitration within sixty (60) "days pursuant to the rules of the American Arbitration Association, and the decision of the Arbitrator(s) shall be final and conclusive on the parties, and judgment may be entered thereon in any court having jurisdiction. 2.07 Encroachment Easements; Each lot (as the dominant tenement) shall have an easement over adjoining lots and common area (as the servient tenements) for the purpose of accommodating any encroachment due to foundations, exterior walls, windows, roof overhang and fences or walls which are built in accordance with the original design, plans and specifications of Declarant, or due to engineering errors, errors or adjustments in original construction, settlement or shifting of the building, or similar causes. There shall be valid easements for the maintenance of said encroachments as long as they shall exist, and the rights and obligations of owners shall not be altered in any way by said encroachment, settlement or shifting, provided, however, that in no event shall a valid easement for encroachment be created in favor of an owner or owners if said encroachment occurred due to the intentional conduct of said owner or owners other than adjustments by Declarant in the original construction. In the event a structure is partially or totally destroyed, and then repaired or rebuilt, the owners of each adjoining lot agree that minor encroachments over - 6 - adjoining lots and common area shall be permitted and that there shall be valid easements for the maintenance of said encroachments so long as they shall exist. 2.08 Maintenance Easement; An easement over each lot {as the servient tenement) is reserved by Declarant in favor of each other lot (as the dominant tenement), and is hereby granted to the Association, for the purpose of allowing the Association's agents to enter the lot to perform such maintenance, if any, as the Association elects or is required to do in accordance with the provisions of sections 5.01.A and 8.18 of this Declaration. 2.09 Open Space/Non-Building Areas; Any .portions of the common area Lot(s) in the project that are.designated "Open Space Easement Area" or "Not a Building Site" on the Map are for preserving open 'space for the benefit of . all .members of the Association and no building shall be constructed within these areas. 2.10 Drainage Easements: Reciprocal appurtenant easements between each lot and the .common area.and between adjoining lots are hereby created for the flow of surface water. 2.11 Other Easements: The common area and each lot are subject to all easements, dedications, and rights of way granted or reserved in, on, over and under the property as shown on the Map. 2.12 Rights of Entry and Use; The lots and common area shall be subject to .the following rights of entry and use: A. The right of the Association agents to enter any lot to .cure any. violation of this Declaration or the Bylaws, provided that "thV owner'has received notice and a hearing as required by the Bylaws (except in the case of an emergency) and the owner has failed to cure the violation or take steps necessary to cure the violation within thirty (30) days after the finding of a violation by the Association; B. The access rights of the Association to maintain, repair or replace improvements or property located in the common area as described in section 5.02E; C. The easements described in this Article II; D. The right of the Association's agent to enter any lot to perform maintenance as described in section 8.06; E. The rights of the Declarant during the construction period as described in section 8.09. 2.13 Partition of Common Area; There shall be no subdivision or partition of the common area, nor shall any owner seek any partition or subdivision thereof, except as hereinbelow provided. - 7 - Notwithstanding any provisions to the contrary contained in this Declaration and in order to provide for a means of terminating the project if this should become necessary or desirable, on occurrence of any of the conditions allowing an owner of a lot to maintain an action for partition (as such conditions are presently set forth in California Civil Code Section 1359 or as such conditions in the future.may be set forth in any amendment thereto or comparable provisions of law), two-thirds (2/3) of the owners of lots shall have the right to petition the Superior'Court having jurisdiction to alter or vacate the recorded Subdivision Map of the property under California Government Code Sections 66499.21 et seq., or any comparable provisions of law, and to vest title to the property in owners . as . tenants in common and. order • an . equitable partition of the property in accordance with .the laws of the State of California. Nothing herein shall be construed to prohibit partition of a joint tenancy or cotenancy in any lot. 2.14 Party Walls: A. General Rules of Law To Apply: Any wall or fence that is built as part of the original construction, of.the Project, is located on the boundary line with an adjacent lot, and either is used in common with the residence on the adjacent lot or abuts against a similar wall or fence on the adjacent lot between two (2) lots shall constitute a party wall, and, to the -extent not inconsistent with the provisions of this Article, .the.general rules of law regarding party walls and liability for property damage due to negligence or willful acts or omissions shall apply thereto. -:_ _•_ •-. , B..,. Sharing, of Repair and Maintenance; The cost of reasonable'repair"and maintenance of a party wall shall be shared by the owners who make use of the wall in proportion to such use. C. Destruction by Fire or Other Casualty; If a party wall is destroyed or damaged by fire or other casualty, any owner who has used the wall may restore it, and if the other owners thereafter make use of the wall, they shall contribute to the cost of restoration thereof in proportion to such use; provided, however, that the owner or owners whose negligent act or omission proximately caused the damage or destruction, shall bear the full cost of restoration that is not covered by insurance. D. Right to Contribution Runs with Land; The right of any owner to contribution from any other owner under this Article shall be appurtenant to the land and shall pass to such owner's successors in title. E. ARBITRATION; IN THE EVENT OF ANY DISPUTE ARISING CONCERNING A PARTY WALL, OR UNDER THE PROVISIONS OF THIS SECTION, UPON WRITTEN REQUEST OF ONE OWNER ADDRESSED TO THE OTHER OWNER(S), THE MATTER SHALL BE SUBMITTED TO BINDING ARBITRATION WITHIN SIXTY (60) DAYS PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION - 8 - ASSOCIATION, OR ANY SUCCESSOR THERETO, AND JUDGMENT MAY BE ENTERED THEREON IN ANY COURT HAVING JURISDICTION. 2.15 Zero Lot Line Walls and Easements; A. Easements; In any and all cases where' a structural wall of a residence that was built as part of the original construction is located on the boundary line between adjacent lots, the owner of the residence shall have a nonexclusive easement over the adjacent lot for access to and maintenance of the wall, the reconstruction of the wall in the event of the partial or total destruction of the same, drainage associated with the wall or the residence of which the wall is a part, and an easement to accommodate the foundation and/or roof or eave encroachment as per the original design, plans and specifications which were the basis for the original construction of the residence or residences on the lot or lots. The owner of a lot having a structural wall situated in the boundary line between his lot and the adjoining lot shall not attach anything to the outside of the wall which shall protrude across the boundary line into the adjoining lot, and the owner of the adjoining lot upon which such a wall is situated shall not attach anything to the outside of the wall without (in each case) the consent and permission of the owner of the adjoining lot upon which the residence of which the wall is a part is situated. B. ARBITRATION; IN THE EVENT OF ANY DISPUTE ARISING CONCERNING THE PROVISIONS OF THIS SECTION, UPON WRITTEN REQUEST OF ONE OWNER ADDRESSED TO THE OTHER OWNER(S), THE MATTER SHALL BE SUBMITTED TO BINDING ARBITRATION WITHIN SIXTY (60) DAYS PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, OR ANY SUCCESSOR THERETO, AND JUDGMENT MAY BE ENTERED THEREON IN ANY COURT HAVING JURISDICTION. ARTICLE III ASSOCIATION. ADMINISTRATION. MEMBERSHIP AND VOTING RIGHTS 3.01 Association to Own and Manage Common Areas: The Association shall own and manage the common area in accordance with the provisions of this Declaration, the Articles and the Bylaws of the Association. 3.02 Membership: The owner of a lot shall automatically, upon becoming the owner of same, be a member of the Association, and shall remain a member thereof until such time as his ownership ceases for any reason. Membership shall be appurtenant to and may not be separated from ownership of a lot. Membership shall be held in accordance with the Articles and Bylaws of the Association. 3.03 Transfer of Membership; Membership in the Association shall not be transferred, encumbered, pledged or alienated in any way, except upon the sale or encumbrance of the lot to which it is appurtenant, and then only to the purchaser, in the case of a sale, or mortgagee, in the case of an encumbrance of such lot. On any - 9 - transfer of title to an owner's lot, including a transfer on the death of"an owner, membership passes automatically with title to the transferee. A mortgagee does not have membership rights until it obtains title to the lot through foreclosure or deed in lieu thereof. Any attempt to make a prohibited transfer is void. No member may resign his membership. On notice of transfer, the Association shall record the transfer on its books. 3.04 Membership Classes and Voting Rights: The Association shall have two (2) classes of voting membership: Class A. Class A members shall be all owners with the exception of the Declarant and shall be entitled to one (1) vote for each lot owned. When more than one (1) person holds an interest in any lot, all such persons shall be members. The vote for such lot shall be exercised as they among themselves determine, but in no event shall more than one (l) vote be cast with respect to any lot. Class B. The Class B members shall be the Declarant and shall be entitled to vote as follows: Voting shall be the same as for Class A membership, except that the Class B members may triple their votes for each lot owned. The Class B membership :shall cease and be converted -to Class A membership on the happening of either of the following events, whichever occurs earlier: (a) On the second anniversary date of .the first conveyance of a Lot " in the original issuance of the final subdivision report for the Project; or (b) when the total votes outstanding in the Class A membership equal the total votes (tripled as stated above) outstanding in the Class B membership. Any action by the Association which must have the approval of the members before being undertaken shall require the vote or written assent of a majority of each class of membership during the time that there are two (2) outstanding classes of membership. Where the vote or written assent of each class of membership is required, any requirement that the vote of Declarant be excluded is not applicable, except as provided in sections 8.12 or 8.13 hereof. After the conversion of Class B membership to Class A membership, any provisions herein requiring the approval of members other than Declarant, except as'provided in the sections 3.12 or 8.13, shall mean the vote or written assent of a majority of the total voting power of the Association (including Declarant's vote) and the vote or written assent of a majority of the total voting power of members other than the Declarant. Voting rights attributable to lots shall not vest until assessments have been levied against those lots by the Association. Owners of all lots shall have the same voting rights. A "majority vote" means a majority of votes in the project as a whole. - 10 - ARTICLE IV MAINTENANCE AND ASSESSMENTS 4.01 Creation of the Lien and Personal Obligation of Assessments: The Declarant, for each lot owned within the project, hereby covenants, and each owner of any lot by acceptance of a deed therefor, whether or not it shall be so expressed in -such deed, hereby covenants and agrees: (1) to pay to the Association annual assessments or charges and special assessments for purposes permitted herein, such assessments to be established and collected as hereinafter provided; and (2) to allow the .Association to enforce an assessment lien established hereunder by nonjudicial proceeding under a power of sale or by any other means.authorized by law. The annual and special assessments, .together .with interest, late charges, collection costs and reasonable attorneys' fees, shall be a charge on the land and shall be a continuing lien upon the property against which each such assessment is made, the lien to become effective upon recordation of a notice of delinquent assessment. Each such assessment, together with interest, late charges, collection costs, and reasonable attorneys' fees, 'shall also be the personal joint and several obligation of the .person who was the owner of such property at the time when the assessment fell due. The personal obligation for delinquent,assessments shall not pass to his successors in title unless expressly assumed by them. No owner of a lot may exempt himself from liability for his contribution towards the common expenses by waiver of the use or enjoyment of any of the common areas or by the.abandonment of his lot. 4.02 Purpose of Assessments: The assessments levied by the Association shall be used exclusively to promote the economic interests, recreation, .health, safety, and welfare of all the residents in the project and to enable the Association to perform its obligations hereunder. The Association shall not impose or collect an assessment, penalty or fee that exceeds the amount necessary to defray the costs for which it is levied. 4.03 Types of Assessment: A. Annual Assessments: The Board shall establish and levy annual assessments in an amount that the Board estimates will be sufficient to raise the funds needed to perform the duties of the Association during each fiscal year. Failure by the Board to set assessments for any given year shall not be deemed a waiver of the assessments for that year, but rather the prior year's assessments shall continue. The annual assessment shall include a portion for reserves in such amounts as the Board in its discretion considers appropriate to meet the costs of the future repair, replacement or additions to the major improvements and fixtures that the Association is obligated to maintain and repair. Reserve funds shall be deposited in a separate account. Reserve funds may not be expended for any purpose other than repairing, replacing or adding - 11 - to the major improvements or fixtures that the Association is obligated to maintain, without the consent of Owners holding a majority of the voting power, either at a duly held meeting or by written ballot. B. Special Assessments; The Board, at any time, may levy a special assessment in order to raise funds for unexpected -operating or other costs, insufficient operating or reserve funds, to cover the cost of any construction, reconstruction, repair or replacement of any capital improvement upon the Common Area, or for such other purposes as the Board in its discretion considers appropriate. Special assessments shall be allocated among the Lots in the same manner as regular assessments. - - 4.04 Limitations on Annual and Special Assessments: . A. The Board may not impose an annual assessment that is more than twenty percent (20%) greater than the annual assessment for the Association's preceding fiscal year or impose special assessments which in the aggregate exceed five percent (5%) of the budgeted gross expenses-of the-Association for.that fiscal year without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the Association conducted in accordance with Chapter 5 (commencing with section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and section 7613 of the Corporations Code. For the purposes of this paragraph, quorum means more than fifty percent (50%) of the Owners of the Association. This paragraph does not limit assessment increases necessary for emergency situations. For purposes of this paragraph, an emergency situation is any one of the following: (1) an extraordinary expense required by an order of_a court, (2). an^extraordinary expense.necessary to repair or .maintain the ..Project .or any.part of it for which the Association is responsible, where a threat to personal safety on the property is discovered, (3) an extraordinary expense necessary to repair or maintain the Project, or any part of it for which the Association is responsible, that could not have been reasonably foreseen by the Board in preparing and distributing- the proforma operating budget under Civil Code Section 1365; provided that, prior to the imposition or collection of an assessment under this Subparagraph 3, the Board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the Members with the notice of assessment. The Association shall provide notice by first-class mail to the Owners of the lots of any increase in the annual or special assessments of the Association, not less than thirty (30) nor more than sixty (60) days prior to the increased assessment becoming due. Increases in annual assessments for any fiscal year, as authorized hereinabove, shall not be imposed unless the Board has complied with subdivision (a) of Civil Code Section 1365 with respect to that fiscal year, or has obtained the approval of Owners, constituting a quorum, casting a majority of the votes at a meeting or election of the Association conducted in accordance with Chapter 5 (commencing with Section - 12 - 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this paragraph, "quorum" means more than fifty (50%) percent of the Owners of the Association. B. The annual assessment may not be decreased, either by the Board or by the Members, by more than ten percent (10%) without the approval of a majority of the voting power of the .Association residing in members other than the Declarant. C. Until the first (1st) day of January of the year immediately following the issuance of the public report for the Project, the maximum annual assessment shall be sufficient to cover the maintenance, utility, insurance, and other reasonable and necessary operating expenses for the common good of the Project during this period of time, and shall be in accordance with and shall not exceed the amount set forth in the budget submitted to the Department of Real Estate (a copy of which, in pertinent part, is attached hereto for reference and is labeled as Exhibit "B" to this Declaration). •*i-' D. If at any time during the course of any year the Board shall deem the amount of the annual assessment to be inadequate or excessive, the Board shall have the power, at a regular or special meeting, to revise the assessment for the balance of the assessment year, effective on the first day of the month next following the date of the revision, subject to the limitations on the maximum and minimum amount of assessments herein provided. 4.05 Notice for Any Action Authorized Under Section 4.04 : Any action authorized under Section 4.04, which requires a vote of the membership, shall be taken at a meeting called for that purpose, written notice of which shall be sent to all members not less than ten (10) nor more than ninety (90) days in advance of the meeting, specifying the place, day and hour of the meeting and, in the case of a special meeting, the nature of the business to be undertaken. The action may also be taken without a meeting pursuant to the provisions of California Corporations Code section 7513 . 4.06 Division of Assessments: Annual assessments shall be charged to and divided among the Lot Owners equally (pro rata according to the total number of Lots in the Project) / provided that, if the original budget of the Association which is first duly approved by the Department of Real Estate (a partial copy of which, in pertinent part, is attached hereto for reference as Exhibit "B" and incorporated herein by reference) provides for variable assessments, then, notwithstanding the equal division set forth hereinabove, the annual assessments shall be charged to and divided among the Lot Owners according to the same formula or schedule under which said budget was calculated so that the assessments against the various Lot Owners bear a relationship which is equitably proportionate to the value of common services furnished to the respective Lots. Special assessments shall be levied on the same basis as annual assessments, except where the special - 13 - assessment against a Member is a remedy utilized by the Board to reimburse the Association for costs incurred in bringing the Member and his Lot into compliance with the provisions of the Project Documents. 4.07 Date of Commencement of Annual Assessment; Due Dates; The annual assessments provided for herein shall commence as to all lots on the first day of the month following the first conveyance of a lot to the owner under the authority of a public report. The first annual assessment shall be adjusted according to the number of months remaining in the calendar year. Subject to the provisions of section 4.04 hereof, the Board of Directors shall fix the amount of the annual.assessment against each lot and send written notice thereof to every .owner at least thirty (30) days but not more than sixty (60) days in advance of each annual assessment period. The due date shall be established by the Board of Directors. The Association shall, upon demand, and for a reasonable charge, furnish a certificate signed by an officer of the Association setting forth whether the assessments on a -specified lot .have- been paid. - Such- a certificate shall- be conclusive evidence of such payment. 4.08 Effect on Nonpayment of Assessments; Any assessment not paid within fifteen (15) days after the due date shall be delinquent, shall bear interest at the rate of twelve percent (12%) per annum commencing thirty (30) days after the due date until paid, and shall incur a late payment penalty in an amount to be set by the Board from time to time, not to exceed the maximum permitted by applicable law or in the amount of Ten Dollars ($10.00) or ten percent (10%) of the delinquent assessment, whichever is greater. .". 4.09 Transfer of Lot By Sale or Foreclosure: Sale or transfer 'of any lot shall not affect the assessment lien. However, the sale of any lot,pursuant to power of sale or judicial foreclosure of a first mortgage shall extinguish the lien of such assessments (including attorney's fees, late charges, or interest levied in connection therewith) as to payments which became due prior to such sale or transfer, if the mortgage was recorded before the assessment was due. No sale or transfer shall relieve such lot from liability for any assessments thereafter becoming due or from the lien thereof. Where the mortgagee of a first mortgage of record or other purchaser of a lot obtains title to the same as a result of a power of sale or judicial foreclosure of any such first mortgage, such acquirer of title, his successor and assigns, shall not be liable for the share of the common expenses or assessment by the Association chargeable to such lot which became due prior to the acquisition of .title to such lot by such acquirer, if the mortgage was recorded before the assessment was due. No amendment of the preceding sentence may be made without the consent of owners of lots to which at least sixty-seven percent (67%) of the votes in the Association are allocated, and the consent of the eligible mortgage holders holding first mortgages on lots comprising - 14 - fifty-one percent (51%) of the lots subject to first mortgages. Such unpaid share of common expenses or assessments shall be deemed to be common expenses collectible from owners of all of the lots including such acquirer, his successors or assigns. 4.10 Priorities; Notice Requirements; Enforcement; Remedies; If an assessment is delinquent, the Association may record a notice of delinquent assessment and establish a lien against the lot of the delinquent owner prior and superior to all other liens except (1) all taxes, bonds, assessments, and other levies which, by law, would be superior thereto, and (2) the lien or charge of any first mortgage of record (meaning any recorded mortgage or.deed of trust with first priority over other mortgages or deeds of trust) made in good faith and for value. The notice of delinquent assessment shall state the amount of the assessment, collection costs, attorney's fees, late charges and interest, a legal description of the separate interest against which the assessment and other sums are levied, the name of the record owner, and the name and address of the trustee authorized by .the Association to enforce .the lien by sale.. The notice shall be signed by any officer of the Association or by any management agent retained by the Association, and shall be mailed in the manner;set forth in Civil Code Section 2924b to all record Owners of the separate interest against which ther assessment and other sums are levied no later than ten (10) calendar days after 'recordation. Before the Association may place a lien upon the separate interest of an Owner to collect a debt which is past due under this Article, the Association shall notify the Owner in writing by certified mail of the fee and penalty procedures of the Association, provide an itemized statement of the charges owed by the Owner, including items on the statement which indicate the principal owed, any late "jcttargesfand^th"e'metho^"ofrc"a:lculation, any attorney's fees, and the collection practices used by the Association, including the right of the Association to the reasonable costs of collection. Any payments toward such a debt shall first be applied to the principal owed, and only after the principal owed is paid in full shall such payments be applied to interest or collection expenses. Upon payment of the sums specified in the notice of delinquent assessment, the Association shall cause to be recorded a further notice stating the satisfaction and release of the lien thereof. After the expiration of thirty (30) days following the recording of an assessment lien, it may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Civil Code section 2934 (a). Any sale shall be conducted in accordance with the provisions of sections 2924, 2924b, 2924c, 2924f, 2924g, and 2924h of the California Civil Code, or any successor statutes thereto, applicable to the exercise of powers of sale in mortgages and deed of trust, or in any other manner permitted by law. The Association, acting on behalf of the owners, shall have the power to bid for the lot at foreclosure sale, and to acquire - 15 - and hold, lease, mortgage, and convey same. Where the purchase of a foreclosure lot will result in a five (5%) percent or greater increase in assessments, the purchase shall require the vote or written consent of a majority of the total voting power of the Association, including a majority of members other than Declarant. During the period a lot is owned by the Association, following foreclosure: (1) No right to vote shall be exercised on behalf of the lot; (2) no assessment shall be assessed or levied on the lot; and (3) each other lot shall be charged, in addition to its usual assessment, its share of the assessment that would have been charged to such lot had it not been acquired by the Association as a result of foreclosure. After acquiring title to the lot at foreclosure sale following .notice .and publication, .the Association may execute, acknowledge, and record a deed conveying title to the lot, which deed shall be binding upon the owners, successors, and all other parties. Fines and penalties for violation of non-monetary restrictions . are not "assessments", and are not enforceable by assessment lien. Nothing herein shall preclude the Association from bringing an - action directly against the Owner for breaching the personal obligation to pay assessments. Suit to recover a money judgment for unpaid common expenses and attorney's fees shall be maintainable .without .foreclosing or waiving the lien securing the same. The Board may temporarily suspend the voting rights and rights to use recreational .facilities of a member who is in default in .payment, of .any.-assessment, .'after notice and hearing, as provided in.the Project Documents. 4.11 Unallocated Taxes: In the event that any taxes are assessed "against".the common, area,..or the personal property of the. . Association, rather than being assessed to the lots, said taxes shall be included in the assessments made under the provisions of Section 4.01 and, if necessary, a special assessment may be levied against the lots in an amount equal to said taxes, to be paid in two (2) installments, thirty (30) days prior to the due date of each tax installment. 4.12 Initial Capitalization of the Association; Upon acquisition of record title to a lot from Declarant, each Owner shall contribute to the capital of the Association an amount equal to one-sixth (1/6) the amount of the then annual assessment for the lot as determined by the Board. This amount shall be deposited by the buyer into the purchase and sale escrow and disbursed therefrom to the Association. Within six (6) months after the close of the first escrow, Declarant shall deposit into an escrow an amount equal to one-sixth (l/6th) of the then annual assessment for any and all lots which are not yet sold and on which assessments have commenced. Escrow shall remit these funds to the Association. Upon close of escrow of any lot for which this capital contribution was prepaid by Declarant, escrow shall remit to Declarant the capitalization fee collected from the buyer. - 16 - ARTICLE V DUTIES AND POWERS OF THE ASSOCIATION 5.01 Duties: In addition to the duties enumerated in its Articles of Incorporation and Bylaws, or elsewhere provided for in this Declaration, and without limiting the generality thereof, the Association shall'perform the following duties: A. Maintenance; The Association shall maintain and repair the common area, all improvements, and landscaping thereon, and all property owned by the Association, ..including, without limitation, any recreational facilities, any private streets, any irrigation systems, and any utility, sewer or drainage systems not maintained by a public entity, utility company, or. improvement district. If the Association incurs any maintenance or repair costs because of the willful or negligent act or omission of any owner or the owner's agents, occupants, or invitees, and such cost was not covered by insurance maintained by the Association, .the Association shalL charge the responsible owner, who immediately shall.pay the charge to the Association together with interest thereon at the rate of twelve (12%) percent per annum (but not in excess of the maximum interest rate authorized by-law) from the date the cost was incurred by the Association until the date the charge is .paid by the owner. If the owner disputes the charge, the owner, shall be entitled to a notice and a hearing as provided in. the Project Documents before the charge may be collected. B. Insurance: The Association shall obtain and maintain.the following insurance: " " " ~''~~ (i)"*7 A.casualty policy insuring all improvements and fixtures owned by the Association, unless the Board in its sole discretion determines that such insurance is not necessary; (2) A comprehensive general liability policy insuring the Association against any liability incident to the ownership or use of the common area or any other Association owned or maintained real or personal property, with minimum limits of at least Two Million Dollars ($2,000,000.00) if the Project consists of 100 or fewer separate interests (Lots) , and Three Million Dollars ($3,000,000.00) if the Project consists of more than 100 separate interests (Lots). (3) Workers compensation insurance to the extent required by law; (4) Fidelity bonds or insurance covering officers, directors, and employees that have access to any Association funds; (5) Flood insurance on common area improvements if the project is located in an area designated by an appropriate governmental agency as a special flood hazard area; (6) Officers and directors liability insurance; and (7) Such other insurance as the Board in its discretion considers necessary or advisable. The amount, term, and coverage of any policy required hereunder (including the type of endorsements, the amount of the "deductible, the named insured, the loss payees, standard-"mortgage clauses, and notices of changes or cancellations) shall satisfy the minimum requirements imposed for this type of project by the Federal National Mortgage Association (FNMA) and.the.Federal Home Loan Mortgage Corporation (FHLMC), or any successors thereto. If FNMA or FHLMC does, not impose requirements on any. policy, required hereunder, the term, amount and coverage of such policy shall be no less than that which is customary for similar policies on similar projects in the area. Each owner appoints . the Association or any insurance trustee designated by the Association to act on behalf of the owners in connection with all insurance matters arising, from any insurance policy.maintained by the-Association, including, without limitation, representing the owners in any proceeding, negotiation, settlement, or agreement. Any insurance maintained by the Association shall contain "waiver of subrogation" as to the Association and .its officers, directors, and members, the owners and occupants of the lots (including Declarant) and mortgagees, and, if .obtainable, a cross-liability or severability of interest.endorsement insuring each insured against liability to each other insured. The Association shall periodically (and not less than once every three [3] years) .review all insurance policies maintained by the 'Association' to "determine the adequacy of the coverage and to adjust the policies accordingly. Each owner shall obtain and maintain, at the owner's sole expense, fire and casualty coverage as may be required by any mortgagee of the owner's lot and in no event less than the amount and type of fire and casualty insurance required to be obtained and maintained as determined by the Board. All such individually carried insurance shall contain a waiver of subrogation by the carrier as to the other owners, the Association, declarant, and the mortgagees of such lot. The Association, and its directors and officers, shall have no liability to any owner or mortgagee if, after a good faith effort, it is unable to obtain the liability insurance required hereunder, because the insurance is no longer available or, if available, 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. In such event, the Board immediately shall notify each member and any mortgagee entitled to notice that the liability insurance will not be obtained or renewed. - 18 - C. Discharge of Liens; The Association shall discharge by payment, if necessary, any lien against the common area and charge the cost thereof to the member or members responsible for the existence of the lien after notice and hearing as provided in the Bylaws. D. Assessments; The Association shall fix, levy, collect, and enforce assessments as set forth in'Article IV hereof. E. Payment of Expenses: The Association shall.pay all expenses and obligations incurred by the Association in .the conduct of its business including, without limitation, all licenses, taxes or governmental charges levied or imposed against the-property of the Association. F. Enforcement; The Association shall enforce this Declaration. 5.02 Powers: In addition to the powers enumerated in its Articles of Incorporation and Bylaws, or elsewhere provided for herein, ..and. without .limiting the generality .thereof,, the Association shall have the following powers: A. Utility Service; The Association shall have the authority (but not the obligation)- to obtain, for the benefit of all the owners, all water, gas, and electric service and refuse collection. B. . Easements: The Association shall have.authority (by majority, vote) to grant easements in addition to those shown on the Subdivision Map, if necessary, for utility and sewer facilities over the common area to serve the common areas and lots. ' C."' MahaaerV The Association 'may employ a manager or other persons and contract with independent contractors or managing agents to perform all or any part of the duties and responsibili- ties of the Association, except for the responsibility to levy fines, impose discipline, hold hearings, file suit, record or foreclosure liens, or make capital expenditures, provided that any contract with a firm or person appointed as a manager or managing agent shall not exceed a one year term, shall provide for the right of the Association to terminate the same at the first annual meeting of the members of the Association, and to terminate the same without cause or payment of a termination fee on ninety (90) days' written notice, or for cause on thirty (30) days' written notice. D. Adoption of Rules; The Association or the Board may adopt reasonable rules not inconsistent with this Declaration relating to the use of the common area and all facilities thereon, and the conduct of the owners and their tenants and guests with respect to the property and other owners. E. Access; The Board or its agents may enter any lot or common area as necessary in connection with any maintenance or - 19 - emergency repairs for which the Association is responsible. Such entry shall be made with as little inconvenience to the owners as practicable, and any damage caused thereby shall be repaired by the Association at the expense of the common fund. Except in case of emergency, twenty-four (24) hour advance notice shall be given to the owner or occupant. F. Assessments. Liens, and Fines; The Association shall have the power to levy and collect assessments in accordance with the provisions of Article IV hereof. .The Association may impose fines or take disciplinary action against any owner for failure to pay assessments or for violation of any provision of the Project Documents. Penalties may include, but are not limited to, fines, "temporary suspension of voting rights, rights . to use of recreational facilities, or other appropriate discipline, provided the member is given notice and a hearing as provided in :the Bylaws before the imposition of any fine or disciplinary action. G. Enforcement: The Association shall have the authority to enforce this declaration. H. Acquisition and Disposition of Property: The Association shall have the power to acquire (by gift,.purchase, or otherwise), own, hold, improve, build upon, operate, maintain, convey, sell, lease, transfer, or_ otherwise dispose of real or personal property in connection with the affairs of the Association. Any transfer of property.shall be by document signed or approved by two-thirds (2/3) of the members other than Declarant, or where the two (2) class voting .structure is.still in effect, two-thirds (2/3) of the voting .power of each class of members. ..-...-.,,.•. -•-- -...- i-.— •*-• Loans; - - The Association shall have the power to "borrow" money: vand""only with "the assent (by vote or written consent) of three-fourths (3/4) of the members other than Declarant, or where the two (2) class voting structure is still in effect, three-fourths (3/4) of the voting power of each class of members, to mortgage, pledge, deed in trust, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred. J. Dedication; The Association shall have the power to dedicate, sell, or transfer all or any part of the common area to any public agency, authority, or utility for such purposes and subject to such conditions as may be agreed to by the members. No such dedication shall be effective unless an instrument has been signed or approved by three-fourths (3/4) of the members other than Declarant, or where the two (2) class voting structure is still in effect, three-fourths (3/4) of the voting power of each class of members, agreeing to such dedication, sale, or transfer. K. Contracts; The Association shall have the power to contract for goods and/or services for the common areas, facilities, and interest or for the Association, subject to - 20 - limitations of the Bylaws, or elsewhere set forth in the project documents. L. Delegation; The Association, the Board, and the officers of the Association shall have the power to delegate their authority and powers to committees, officers, or employees of the Association, or to a manager employed by the Association, provided that the Board shall not delegate its responsibility: (1) To make expenditures for capital additions or improvements chargeable against the reserve funds; (2) To conduct.hearings concerning compliance by an owner or his tenant, lessee, guest, or invitee with the Declaration, Bylaws, or rules and regulations promulgated by the Board; (3) To make a decision to levy monetary fines, impose special assessments against individual lots, temporarily suspend an owner's rights as a member of the Association or otherwise impose discipline;. ... . . .. . ,-_.-. (4) To make a decision to levy annual or special assessments; or (5) To make a decision to bring suit, record a claim of lien or institute foreclosure proceedings. for default in payment of assessments. M. . Use of Recreational Facilities: The Association shall have the power to limit the number of an owner's tenants or guests who may use the recreational facilities, provided that all 'limitations' apply "equally "to all " owners, unless imposed for disciplinary reasons, after notice and hearing. N. Water and Garbage Service: The Association shall have the authority to acquire and pay for water service and trash and garbage service for all homes situated on the property in the event that these services are not directly provided and billed to each separate residence lot by the appropriate city and/or county departments, in which case all funds collected from lot owners for water service or trash and garbage service shall be segregated from all other funds and shall be used for no purpose other than providing water service, and trash and garbage service. O. Appointment of Trustee: The Association, or the Board acting on behalf of the Association, has the power to appoint or designate a trustee to enforce assessment liens by sale as provided in section 4.10 and as provided in Civil Code Section 1367(b). P. Other Powers: In addition to the powers contained herein, the Association may exercise the powers granted to a nonprofit mutual benefit corporation under California Corporations Code Section 7140. - 21 - 5.03 Commencement of Association's Duties and Powers; From and after the date of incorporation of the Association, the Association shall assume all duties and powers, described herein, upon close of escrow on sale of the first lot. ARTICLE VI ARCHITECTURAL AND OPEN SPACE CONTROL 6.01 Approval of Plans; No building, fence, wall, pool, spa, obstruction, outside or exterior wiring, balcony, screen, patio, patio cover, tent, awning, carport, carport cover, trellis, improvement or structure of any kind shall be commenced, installed,, erected, painted, or maintained upon the property, nor shall any alteration or improvement of any kind be made thereto, or to the exterior of any residence, until the same has been approved in writing by the Board, or by an Architectural Control Committee appointed by the Board. Plans and specifications showing the nature, kind, shape, color, size, materials, and location of such improvements, alterations, etc., shall be submitted to the Board or the Architectural Control Committee for approval .as.to.quality of workmanship and design and harmony of external design with existing structures, and as to location in relation to surrounding structures, topography, and finish grade elevation. No fence or wall shall be erected, placed or aitered on any lot nearer to any street than the minimum building set back line. .No.permission or approval shall be required to repaint in accordance with Declarant's original color scheme previously approved by the Committee or the Board, or to rebuild in accordance with plans and specifications previously approved by the Committee or by the Board. Nothing contained herein shall be construed to limit the right of an.owner to remodel the interior of his residence, or to •paint'"the" interior" of """his" residence any"color desired. 6.02 Architectural Control and Open Space Committees; The Architectural Control Committee and the Open Space Committee shall each consist of three (3) members. Declarant may appoint all of the original members of the Committees and all replacements until the first anniversary of the issuance of the original final public report for the project. The Declarant reserves to itself the power to appoint a majority of the members of the Committees until ninety (90%) percent of all the lots in the project have been sold or until the fifth anniversary of the issuance of the final public report for the project whichever first occurs. After one (1) year from the date of the issuance of the original public report for the project, the Board need not have the power to appoint one (1) member to each Committee until ninety (90%) percent of all the lots in the overall development have been sold or until the fifth anniversary date of the issuance of the final public report for the project, whichever first occurs. Thereafter, the Board shall have the power to appoint all of each Committee. Members appointed to the Committees by the Board need not be from the membership of the Association. Members appointed to the Committees by the Declarant need not be members of the Association. A majority of each Committee may designate a representative to act for it. In the - 22 - event of death or resignation of any member of either Committee, the successor shall be appointed by the person, entity, or group which appointed such member until Declarant no longer has the right to appoint any members to that Committee, and thereafter the Board shall appoint such a successor. Neither the members of the Committee nor its designated representative shall be entitled to any compensation for services performed pursuant hereto. In the event the Architectural Control Committee fails to approve and disapprove plans and specifications within thirty (30) days after the same have been submitted to it, approval will, not .be required and the related covenants shall be deemed to have been fully complied with. 6.03 Landscaping; No landscaping of patios .or yards or portions of lots visible from the street or from any common area shall be undertaken by any owner until plans and specifications showing the nature, kind, shape, and location of the materials shall have been submitted to and approved in writing by the Architectural Control Committee, or the Board. All landscaping shall be adequately watered and well maintained at all times. The Board,, and.its Open Space Committee, shall be responsible for the maintenance of the landscaping on any Common Area Lots. 6.04 Governmental Approval; Before commencement of any alteration or improvements approved by the Architectural Control committee, the owner shall comply with appropriate governmental laws and regulations. Approval by the Committee does not satisfy the appropriate approvals that may be required by any governmental entity with appropriate jurisdiction. ARTICLE VII SE RESTRICTIONS ' - ~ ' In addition to all of the covenants contained herein, the use of the property and each lot is subject to the following: 7.01 Use of Lot; No lot shall be occupied and used except for residential purposes by the owners, their tenants, and social guests, except that Declarant, its successors or assigns, may use the property for a model homesite or sites, and display and sales office during construction until the last lot is sold by Declarant, or, where Declarant elects to retain one (1) or more lots as an investment, until three (3) years from the date of closing of the first sale in the project, whichever occurs first. No tent, shack, trailer, basement, garage, outbuilding, or structure of a temporary character shall be used on any lot at any time as a residence, either temporarily or permanently. 7.02 Nuisances; No noxious, illegal, or seriously offensive activities shall be carried on upon any lot, or any part of the property, nor shall anything be done thereon which may be or may become a serious annoyance or a nuisance to or which may in any way interfere with the quiet enjoyment of each of the owners of his respective lot. - 23 - 7.03 Vehicle Restrictions; No trailer, camper, mobile home, commercial vehicle, truck (other than standard size pickup truck or standard size van), boat, inoperable automobile, or similar equipment shall be permitted to remain upon any area within the property, other than temporarily or unless placed or maintained within an enclosed garage or carport. Commercial vehicles shall not include sedans or standard size vans or pickup trucks which are used both for business and personal use, "provided that any signs or markings of a commercial nature on such vehicles .shall be unobstructive and inoffensive as determined by the Board. No noisy or smoky vehicles shall be operated on the property. No unlicensed motor vehicles shall be operated on the property. Twenty-four (24) hours after notice has been personally delivered-.to the vehicle- owner by an agent of the Association or placed on the windshield of a vehicle, or seventy-two (72) hours after notice has been mailed to the address of the registered owner of a vehicle parked, stored, or maintained on the premises, in violation of the provisions of this . Declaration, the vehicle owner shall be deemed to have consented to the removal of said vehicle from the project, and the Association or its agent or employees shall have the authority to tow away and store any such vehicle, . whether said vehicle shall belong to a lot owner, or his tenant, a member of his family, or his guest or invitee. Charges for such towing and storage shall be paid by the lot owner responsible for the presence of such vehicle. 7.04 Parking; Any and all unassigned street/guest parking spaces shall remain permanently available for visitor parking. Garage or carport space may not be converted into any use (such as recreational room or for storage) • that would prevent its use as a -parking space for the number of vehicles that the garage or carport was designed to contain. ' Owners are to use their garages or carp_orts_for. parking r.of_ their vehicles ...so... that any common area parkTng"~wiii be available for guest parking. The Association may establish rules and regulations from time to time for the parking of vehicles in any unassigned parking spaces in the common areas. Use by owners of any unallocated parking spaces must be established by the Association, and such use must be set forth in written notice from the Association. This permission will create only a license to use such parking spaces, revocable at any time by the Association with five (5) days' written notice. Parking in the common area shall be regulated by the Board. 7.05 Commercial Activity; No business, professional, or commercial activity of any kind shall be conducted on any lot, except, that any owner or tenant actually residing on the lot may use part of his dwelling as an office, with a desk, business telephone, and with the lot as a business address, provided that, considering the residential nature of the project rather than the nature of any given business, such use does not involve an unreasonable number of clients, customers or other persons coming to the lot for business purposes, nor an unreasonable amount of business deliveries to the lot, and further provided that such use does not interfere with any other owner's or tenant's quiet enjoyment of his lot or otherwise violate any covenant or restriction of this Declaration regarding nuisances. - 24 - 7.06 Storage in Common Area; Nothing shall be stored in the common area without the prior consent of the Board. 7.07 Signs; No signs shall be displayed to the public view on any lot or on any portion of the property except such signs as are approved by the Board or committee appointed by the Board. "For Sale" or "For Rent" signs shall be allowed, provided .they do not exceed five (5) square feet in size. Only one (1) such sign shall be permitted on any lot. The sign shall not be. attached to the outside of the house or fence. It may be displayed in the window, or staked in the yard. . 7.08 Animals; No animals of any kind shall be raised, bred, or kept on any lot or in the common area except two (2) usual and ordinary household pets such as a dog or cat, provided they are not kept, bred, or maintained for any commercial purposes, and are kept under control at all times. Notwithstanding the foregoing, no animals may be kept on the property which result in an annoyance or are obnoxious to other owners. No animals shall be allowed in the common area except as may be permitted by rules of the Board. No owner shall allow his or. her .animals, to enter the .-common-. area except on a leash, or otherwise under the owner's control. .After making a reasonable attempt to notify the owner, the Association or any owner may cause any unattended animal found within the common area to be removed by the Association (or any owner) to a pound or animal shelter under the jurisdiction of the County of where the project is located, by calling the appropriate authorities, whereupon the owner may, upon payment of all expenses connected .therewith, .repossess, the animal. Owners .shall be. fully responsible -for any damages caused by their animals, and shall promptly clean up any mess left by their pets in the common area. "'''"'" 7.09' Garbage "arid "Re fuse Disposal; All rubbish", trash and' garbage "shall be regularly removed from lots, and shall not be allowed to accumulate thereon. Trash, garbage and other waste shall not be kept except in sanitary containers. All equipment for the storage or disposal of such materials shall be kept in a clean and sanitary condition, and shall be screened from view of neighboring lots, common areas and streets. 7.10 Radio and Television Antennas; Lighting Fixtures; (a) No alteration to or modification of any central radio and/or television antenna system or cable television system installed and/or maintained by the Declarant, the Association, or a cable television company shall be permitted, and no Owner shall be permitted to construct and/or use and operate his own external radio and/or television antenna or satellite dish or related equipment, without the advance written consent of the Board. Applications for approval shall be processed in the same manner as for an architectural modification to the Project, and the issuance of a decision shall not be willfully delayed. (b) The Board shall have the power to impose reasonable restrictions on the installation and use of a video or television - 25 - antenna, including a satellite dish, that has a diameter or diagonal measurement of thirty-six (36) inches or less, as long as such restrictions do not significantly increase the cost of the antenna system or significantly decrease its performance. Such restrictions may include provisions for the maintenance, repair, or replacement of roofs or other building components that are affected, and requirements for installers to indemnify or reimburse the Association, or its Members for any loss or damage caused by the installation, maintenance or use of such antenna. (c) All fees for the use of any cable or satellite television system shall be borne by the respective lot owners, and not by the Association. (d) All light fixtures shall be designed and adjusted to reflect light downward, and all such fixtures other than street lights shall be adjusted to reflect light away from any road or street or adjoining premises. 7.11 Basketball Standards; No basketball standard or fixed sports apparatus shall be attached to the exterior.surface of any residence or garage or carport or affixed 'to any portion of the common area. 7.12 Drapes: No portion of any drapes, blinds or curtains which are installed on the interior of any residence which may be seen from outside such residence shall be of a color, texture or material which, in the reasonable opinion of. .the Board or Architectural Control Committee, is.inharmonious with the exterior appearance _of all residences. . .. . . 7.13 Clothes Lines; No exterior clothes lines shall be -erected'or~mainta:ined and there shall be no" outside launderirig'or drying of clothes'." 'No draping of towels, carpets, or laundry over railings shall be allowed. 7.14 Power Equipment and Car Maintenance: No power equipment, hobby shops, or car maintenance or boat maintenance (other than emergency work) shall be permitted on the property except with prior written approval of the Board. Approval shall not be unreasonably withheld and in deciding whether to grant approval the Board shall consider the effects of noise, air pollution, dirt or grease, fire hazard, interference with radio or television reception, and similar objections. 7.15 Liability of Owners for Damage to Common Area: The owner of each lot shall be liable to the Association for all damage to the common area improvements (including landscaping) caused by such owner or the owner's agents, occupants, invitees, or pets, except for that portion of damage covered by insurance carried by the Association. The responsible owner shall be charged with the cost of repairing such damage (including interest thereon) as described in section 5.01A. - 26 - 7.16 Leasing of Lots; No owner shall be permitted to lease his lot for any period of less than thirty (30) days, except a pre-closing rental to a purchaser of such lot. Any lease agreement shall be required to provide that the term of the lease shall be subject in all respects to the provisions of the Declaration, Articles and Bylaws and to all house rules and regulations adopted by the Board and that any failure of the lessee to comply with the terms of such documents shall be a default under the lease. A'" leases shall be required to be in writing. Other than the foregoing, there is no restriction in the right of any owner to lease his lot. All owners leasing or renting their lots shall promptly notify the Secretary of the Association in writing of the names of all tenants and members of tenant's family occupying such lot and of the address and telephone number where such owner can be reached. . . ARTICLE VIII GENERAL PROVISION - - - 8-.01 Enforcement: - • - - - ............ (a) The Association, or any owner, shall have the .right but not the obligation to enforce, by a proceeding at law or in equity (subject to the provisions df Section 8.16 hereof, whenever .applicable), all restrictions, conditions, covenants, reservations, liens, and charges now or hereafter imposed by the provisions of this Declaration, the Articles and Bylaws and in such action shall be entitled to recover reasonable attorneys' fees as are ordered by Court. Failure by the Association or by any owner to enforce any covenant or restrictions herein contained shall in no event be .deemed._a__waiver.-.of.;_the. right, to..do .so... thereafter.. No judicial.. /proceedings- shallv.be-.commenced.by the Board against an Owner for any nonmonetary breach of this Declaration and/or the Project Documents unless and until there has been a hearing with respect to such breach in accordance with this Declaration and the other Project Documents. It is hereby agreed that damages at law for such nonmonetary breach are inadequate. The remedies provided for in the project documents for breach of the covenants contained therein shall be cumulative, and none of such remedies shall be exclusive. (b) The Association shall have no power to cause a forfeiture or abridgement of an Owner's rights to the full use and enjoyment of his individually-owned Lot on account of a failure by such Owner to comply with the provisions of the Project Documents or any duly-enacted rules of operation for any Common Areas and facilities except where the loss or forfeiture is the result of the judgment of a court or a decision arising out of arbitration or on account of a foreclosure or sale under a power of sale for failure of such Owner to pay assessments levied by the Association. (c) A monetary penalty imposed by the Association as a disciplinary measure for failure of a Member to comply with the Project Documents, or as a means of reimbursing the Association for - 27 - costs incurred by the Association in the repair of damage to the Common Area and facilities for which the Member was allegedly responsible, or in bringing the Member and his Lot into compliance with the Project Documents shall not be characterized nor treated as an assessment which may become a lien against the Member's Lot enforceable by a sale of the Lot in accordance with the provisions of Sections 2924, 2924(b) and 2924(c) of the California Civil Code; provided that this provision shall not apply to charges imposed against an Owner consisting of reasonable interest on delinquent assessments and/or charges to reimburse the Association for attorney's fees and/or costs reasonably incurred in its efforts to collect delinquent assessments, as more particularly set forth in this Declaration. (d) If the Association adopts or has adopted a policy of imposing any monetary penalty, including any fee, on any Association Member for a violation of the Project Documents or rules of the Association, including any monetary penalty relating to the activities of a guest or invitee of a Member, the Board of Directors shall adopt and distribute to each Member, by personal delivery or first-class mail, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for Member discipline contained in the Project Documents. The Board of Directors shall not be required to distribute any additional schedules of monetary penalties unless there are changes from the schedule that was previously adopted and distributed to the Members. (e) If any Owner, or other occupant of the Lot owned by him, shall fail to observe any of the provisions of this Declaration, the other Project Documents, or any of the rules or regulations adopted by the Board, the Board shall give written notice of such fact to the Owner. When the Board is to meet to consider or impose discipline upon a Member, the Board shall notify the Member in writing, by either personal delivery or first-class mail, at least ten (10) days prior to the meeting. The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a Member may be disciplined, and a statement that the Member has a right to attend and may address the Board at the meeting. The Board shall meet in executive session if requested by the Member being disciplined. At such meeting, the Board shall accept such evidence and take such testimony as is required by Corporations Code Section 7341, and any additional evidence and testimony as may be reasonable under the circumstances, reach a decision with respect thereto, and if the Board concludes that the alleged violation did in fact occur, the Board may impose monetary penalties, temporarily suspend voting and Common Area privileges for a period not to exceed thirty (30) days, or take any other disciplinary action permitted by the Project Documents. If the Board imposes discipline on a Member, the Board shall provide the Member a written notification of the disciplinary action, by either personal delivery or first-class mail, within fifteen (15) days following the action. A disciplinary action shall not be effective against a Member unless the Board fulfills the requirements of this Section. The notice and hearing provided for by this Paragraph shall not be a prerequisite to enforcement by the Board of an Owner's obligation to pay annual and special assessments, only for disciplinary/compliance assessments. - 28 - 8.02 Invalidity of Any Provisions; Should any provision or portion hereof be declared invalid or in conflict with any law of the jurisdiction where this project is situated, the validity of all other provisions and portions hereof shall remain unaffected and in full force and effect. 8.03 Term; The covenants and restrictions of this Declaration shall run with the property, and shall inure to the benefit of and shall be enforceable by the Association or the owner of any property subject to this Declaration, their respective legal representatives, heirs, successors and assigns, for a term of thirty (30) years from the date this Declaration is recorded, after which time they shall be automatically extended for successive periods of ten (10) years, unless an instrument in writing, signed by a majority of the then owners of the lots, has been recorded within the year preceding the beginning of each successive period of ten (10) years, agreeing to change said covenants and restrictions in whole or in part, or to terminate the same. 8.04 Amendments; Prior to close of escrow on the sale of the first lot, Declarant may amend this Declaration with the consent of the Department of Real Estate of the State of California. After the sale of the first lot, this Declaration may be amended only by the affirmative vote (in person or by proxy) or written consent of members representing a majority of the total voting power of the Association, and a majority of the affirmative votes or written consent of members other than the Declarant, or where the two (2) class voting structure is still in effect, a majority of each class of membership. However, the percentage of voting power necessary to amend a specific clause shall not be less than the prescribed percentage of affirmative votes required for action to be taken under that clause. After the Declarant has completed its construction and marketing activities with respect to the Project, or a particular phase thereof, the Board of Directors of the Association may adopt an amendment, in accordance with the provisions of Civil Code Section 1355.5, deleting from this Declaration any provision which is unequivocally designed and intended to facilitate access by the Declarant over and across the Common Area of the Project, or a particular phase thereof, for the completion of such activities. Any amendment must be certified in a writing executed and acknowledged by the President and recorded in the Recorder's Office of the County where the project is located. No amendment shall adversely affect the rights of the holder of any mortgage of record prior to the recordation of such amendment. The Association or any Owner may petition the Superior Court for an order reducing the voting percentages required to amend this Declaration, pursuant to Civil Code Section 1356. In the event that any loan on any Lot in the Project has been submitted to and accepted by the Department of Veterans Affairs (VA) or the Federal Housing Administration (FHA) or the Department of Housing And Urban Development (HUD), any amendment to this Declaration shall require the prior written approval of this agency as long as the two-class voting structure is still in effect for the Association, in which case a draft of any amendment should be submitted to this agency for approval prior to its approval by the membership of the Association. - 29 - 8.05 Rights of First Lenders; No breach of any of the covenants, conditions and restrictions herein contained, nor the enforcement of any lien provisions herein, shall render invalid the lien of any first mortgage (meaning a mortgage with first priority over any other mortgage) on any lot made in good faith and for value, but all of said covenants, conditions and restrictions shall be binding upon, and effective against any owner whose title is derived through foreclosure or trustee's sale", or ^otherwise. Notwithstanding any provision in this Declaration to the contrary, first lenders shall have the following rights: A. Copies of Project Documents; The Association shall make available to lot owners and first lendersr and to. holders, insurers or guarantors of any first mortgage, .current copies of the Declaration, Bylaws, Articles or other rules concerning the project and the books, records and financial statements of the Association. "Available" means available for inspection, upon request, during normal business hours or under other reasonable circumstances. The Board may impose a fee for providing the foregoing, which may not exceed the reasonable cost to prepare and reproduce the -requested documents. --• . . -- . - - .- - - - B. Audited Statement: Any holder/ insurer or guarantor of a first mortgage shall be entitled, upon written request, to an audited financial statement for the immediately preceding fiscal year, free of charge to the party so requesting. Such statement shall be furnished within a reasonable time following such request. - •• -—- -C. -• -Notice- of- Action; -- Upon -written request to the Association,-identifying the name - and- address of the .eligible mortgage holder or eligible insurer or guarantor, and the lot . number..., or _address,.. _^ such .eligible, mortgage holder or eligible_ .insurer or guarantor.will be entitled to timely written notice of: (1) any condemnation loss or any casualty loss which affects a material portion of the Project or any lot on which there is a first mortgage held, insured, or guaranteed by such eligible mortgage holder or eligible insurer or guarantor, as applicable; (2) any default in performance of obligations under the project documents or delinquency in the payment of assessments or charges owed by an owner of a lot subject to a first mortgage held, insured or guaranteed by such eligible mortgage holder or eligible insurer or guarantor, which remains uncured for a period of sixty (60) days; (3) any lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association; (4) any proposed action which would require the consent of a specified percentage of eligible mortgage holders as specified in section 8.5D. The Association shall discharge its obligation to notify eligible holders or eligible insurers or guarantors by sending written notices required herein to such parties, at the address given on the current request for notice, in the manner prescribed by section 8.13. D. Material Amendments; Except as provided by statute or by other provision of the Project Documents, in case of substantial destruction or condemnation of the Project, and further - 30 - excepting any reallocation of interests in the Common Area(s) which might occur pursuant to any plan of expansion or phased development contained in the original Project Documents, the consent of Owners of lots to which at least sixty-seven percent (67%) of the votes in the Association are allocated and the approval of eligible mortgage holders holding mortgages on lots which have at least fifty-one percent (51%) of the votes of the lots subject to eligible holder mortgages, shall be required to add or .amend .any material provisions of the Project Documents which establish, provide for, govern, or regulate any of the following: (i) voting; (ii) assessments, assessment liens or the priority of such liens; (iii) reserves for maintenance, repair and replacement of the Common Area(s) ; (iv) insurance or fidelity bonds;, (v). .rights to use of Common Area(s) and Exclusive Use . Common Areas; (vi) responsibility for maintenance and repair .of ..the Project; (vii) expansion or contraction of the Project or the addition, annexation, or withdrawal of property to or from the Project (except as provided in the original Project Documents); (viii) redefinition of boundaries of any lot; (ix) reallocation of the interests in the Common Areas and Exclusive Use Common Area(s) ; ,(x) convertibility of lots into Common Area(s).or of Common Area(s) into lots; (xi) leasing of lots; (xii) .imposition of any right of first refusal or similar restriction on the right of a.lot Owner to sell, transfer, or otherwise convey his or her lot; (xiii) any provisions which are for the express benefit of mortgage holders, eligible mortgage holders, or eligible insurers or guarantors of first mortgages on lots; and (xiv). restoration or repair of.the Project (after a hazard damage or partial condemnation), in a manner other, .than specified .herein.. ...An addition .or amendment to such -documents shall not be considered material-if it is for the purpose of correcting technical errors or for clarification only. An eligible mortgage holder who. receives a .written request to approve. "Jaddit'ioris '"or ^amendments'.'."and "whp does, not deliver or post to the requesting party a negative response within thirty (30) days shall be deemed to have approved such request, provided the notice was delivered by certified or registered mail with a return receipt requested. E. Consent to Action; Unless the holder (s) of at least two-thirds (2/3) of the first mortgages (based upon one (1) vote for each mortgage or deed of trust owned), or two-thirds (2/3) of the owners (other than Declarant) of the individual lots in the project have given their prior written approval, the Association and/or the owners shall not be entitled to: (a) By act or omission, seek to abandon or terminate the project, or abandon, partition, subdivide, encumber, sell or transfer the common area or property owned directly or indirectly by the Association (the granting of easements for public utilities or for other public purposes consistent with the intended use of such property shall not be deemed a transfer within the meaning of this clause), except for abandonment or termination provided by law in the case of substantial destruction by fire or other casualty or in the case of a taking by condemnation or eminent domain; or - 31 - (b) Change the method of determining the obligations, assessments or dues or other charges which may be levied against as owner; or (c) By act or omission, change, waiver or abandon any scheme of regulation, or enforcement thereof, pertaining to the architectural design or the exterior appearance of lots, the exterior maintenance of lots, the maintenance of the common area walks or fences and driveways, or the upkeep of .landscaping in the common area; or (d) Fail to maintain fire and extended coverage on insurable Association common area improvements . on a current replacement cost basis in an amount not less than one hundred percent (100%) of the insurable value (based on.current replacement costs); or (e) Use Hazard insurance proceeds for losses to any Association common property for other than the repair, replacement or reconstruction of such common area property. F. Right of First Refusal; The Declaration contains no provisions creating a "right of first refusal," but should-any such rights be created in the future, such rights shall.not impair the rights of any first lender to: (1-) foreclose or take title to a lot pursuant to the remedies provided in the mortgage, or (2) accept a deed (or assignment) in lieu of foreclosure in the event of a default by a mortgagor, or (3) sell or lease a lot acquired by the mortgagee. .__. G. Contracts: Any agreement for professional management of the project, or lease or any other contract providing for' services'pf;' the'Jdeveloper;" sponsor," or builder, may not exceed" one':' "(1)'"year".x"' Any" agreement/ contract, or lease, including a management contract entered into prior to passage of control of the Board of Directors of the Association to lot purchasers, must provide for termination by either party for cause on thirty (30) days' written notice, or without cause and without payment of a termination fee or penalty on ninety (90) days' or less written notice. H. Reserves; Association dues or charges shall include an adequate reserve fund for maintenance, repairs, and replacement of those improvements which the Association is obligated to maintain that must be replaced on a periodic basis, and the assessments therefor shall be payable in regular installments rather than by special assessments. I. Priority of Liens; Any first lender who obtains title to a lot pursuant to the remedies provided in the mortgage or foreclosure of the mortgage will not be liable for such lot's unpaid assessments and fees, late charges, fines or interest levied in connection therewith which accrue prior to the acquisition of title to such lot by the mortgagee, if the mortgage was recorded before the assessment was due (except for claims for a pro rata - 32 - share of such assessments or charges to all project lots including the mortgaged lot). J. Distribution of Insurance or Condemnation Proceeds; No owner, or any other party shall have priority over any rights of first lenders pursuant to their mortgages in the case of a distribution to lot owners of insurance proceeds or condemnation awards for losses to or taking of common area property or individual lots. K. Payment of Taxes or Insurance by Lenders; First lenders may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against the common area property, 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 property, and first lenders making such payments shall be owed immediate reimbursement therefor from the Board, provided that said lender(s) have given notice to the Association prior to the making of such payment (s) and the Association has failed to pay the same. L. FHA/HUD/VA Approval; In the event that any loan on any Lot in the Project has been submitted to and accepted by the FHA or HUD or the VA, the following actions will require the prior approval of this agency as long as there is a Class B membership: Annexation of additional properties, mergers and consolidations, dedication or mortgaging of the Common Area, Special Assessments, and amendments of this Declaration. M. Termination of Professional Management: When professional management has been previously required by the Project's documents or by any eligible mortgage holder, insurer or guarantor, whether such entity became an eligible mortgage holder, insurer or guarantor at that time or later, any decision to establish self-management by the Association shall require the prior consent of Owners of lots to which at least sixty-seven percent (67%) of the votes in the Association are allocated and the approval of eligible mortgage holders holding mortgages on lots which have at least fifty-one percent (51%) of the votes of lots subject to eligible holder mortgages. N. Restoration or Repair; Any restoration or repair of the Project, after a partial condemnation or damage due to an insurable hazard, shall be performed substantially in accordance with the Declaration and the original plans and specifications, unless other action is approved by eligible mortgage holders holding mortgages on lots which have at least fifty-one percent (51%) of the votes of lots subject to eligible holder mortgages. 0. Project Termination; Any action to terminate the legal status of the Project after substantial destruction or a substantial taking in condemnation of the Project property requires the approval of eligible mortgage holders holding mortgages on lots which have at least fifty-one percent (51%) of the votes of lots subject to eligible holder mortgages, and the consent of Owners of - 33 - lots to which at least sixty-seven percent (67%) of the votes in the Association are allocated. P. Reallocation of Interests; No reallocation of interests in the Common Area(s) resulting from a partial condemnation or partial destruction of the Project may be effected without the prior approval of eligible.mortgage holders holding mortgages on all'remaining lots, whether existing in .whole or in part, and which have at least fifty-one percent .(51%) of .the votes of such remaining lots subject to eligible holder mortgages. 8.06 Owner's Riaht and Obligations to Maintain and Repair: Except for.those portions of the-project which the'Association is required to maintain and repair, each lot owner.shall, at his sole cost and expense, maintain and repair his lot and all improvements thereon, and all landscaping thereon, keeping 'the same in good condition. In the event an owner of any lot shall fail to. maintain his lot and the improvements thereon as required herein, the Association'.s agents may, after-notice and a. hearing, as-provided in the Bylaws, enter the lot and.,perform the necessary maintenance. The cost of such maintenance shall immediately, be paid to . the Association by the owner of such lot, together with interest at the rate of fifteen percent (15%) per' annum (but not to exceed the maximum interest rate authorized by law) from the date the cost was incurred by the Association until the date the cost is paid by the owner. 8.07 Damage or -Destruction: If an improvement on any lot- other than a common area lot is damaged or destroyed by fire or .pther_ casualty., „.the.Downer...of such. lot. shall, repair or reconstruct. -the.rimprpvement-in- .accordance with-, the original as-built plans-and specification, modified as may be required by applicable building codes and regulations in force at the time of such repair or reconstruction or as authorized by the Architectural Control Committee. The repair or reconstruction shall commence no later than ninety (90) days after the date of such damage or destruction, and shall be completed no later than one hundred eighty (180) days after such date, subject to delays that are beyond the control of the owner. Notwithstanding the foregoing, the owner immediately shall take such steps as may be reasonably required to secure any hazardous conditions resulting from the damage or destruction. If any common area improvement is damaged or destroyed by fire or casualty, the improvement shall be repaired or reconstructed substantially in accordance with the original as-built plans and specifications, modified as may be required by applicable building codes and regulations in force at the time of such repair or reconstruction and subject to such alterations or upgrades as may be approved by the Architectural Control Committee, unless either of the following occurs: (1) The cost of repair or reconstruction is more than fifty percent (50V) of the current replacement costs of all common area project improvements, available insurance proceeds are not sufficient to pay for at least eighty-five percent - 34 - (85%) of the cost of such repairs or reconstruction, and three-fourths (3/4) of the total voting power of the Association residing members and their first lenders vote against such repair and reconstruction; or (2) available insurance proceeds are not sufficient to substantially repair or reconstruct the improvement within a reasonable time as determined by the Board, a special assessment levied to supplement the insurance fails to receive the requisite approval (if such approval is required) as provided in section 4.4 and the Board, without the requirement of approval by the owners, is unable to supplement the insurance by .borrowing on behalf of the Association sufficient monies to enable the improvements to be substantially repaired or-reconstructed within a reasonable time. . . . If the common area improvement is to be repaired or reconstructed and the cost for repair or reconstruction is in excess of twenty-five percent (25%) of the current replacement cost of all common area improvements, the Board shall designate a construction consultant, a general contractor, and an architect for the repair or reconstruction. All insurance proceeds, Association ..monies . allocated for .the repair .or ..reconstruction,, and- any borrowings by the Association for the repair or reconstruction shall be deposited with a commercial -lending .institution experienced in the disbursement of construction loan funds (the "depository") as selected by the Beard. Funds shall be disbursed in accordance with the normal construction loan practices of the depository that require as a minimum that the . construction consultant, general contractor and architect certify within ten .. (10)...days prior .to any. disbursement, substantially, the following: A. That all of the work completed as of the date of such request for disbursement has been done in compliance with the "appr'oved"plans^and specifications;... .'._"." " .".!".." B. That such disbursement request represents monies which either have been paid by or on behalf of the construction consultant, the general contractor or the architect and/or are justly due to contractors, subcontractors, materialmen, engineers, or other persons (whose name and address shall be stated) who have rendered or furnished certain services or materials for the work and giving a brief description of such services and materials and the principle subdivisions or categories thereof and the respective amounts paid or due to each of said persons in respect thereof and stating the progress of the work up to the date of said certificate; C. That the sum then requested to be disbursed plus all sums previously disbursed does not exceed the cost of the work insofar as actually accomplished up to the date of such certificate; D. That no part of the cost of the services and materials described in the foregoing paragraph A has been or is being made the basis for the disbursement of any funds in any previous or then pending application; and - 35 - E. That the amount held by the depository, after payment of the amount requested in the pending disbursement request, will be sufficient to pay in full the costs necessary to complete the repair or reconstruction. If the cost of repair or reconstruction is less than twenty- five percent (25%) of the current replacement cost of all common area improvements, the Board shall disburse/the available .funds for the repair and reconstruction under such procedures as the Board deems appropriate under the circumstances. If the common area improvement is not repaired or reconstructed in accordance with the foregoing, .all available insurance proceeds shall be disbursed among all owners and their respective mortgagees in the same proportion that the owners are assessed, subject to the rights of the owner's mortgagees. 8.08 Condemnation; If all or any part of a lot (except the common area) is taken by eminent domain, the award shall be disbursed to the owner of the lot subject to the rights of the owner's mortgagees.. If the taking .renders the .lot uninhabitable, the owner shall be divested of any further interest in the project, including membership in the Association, and .the .-interests-, of the remaining owners shall be adjusted accordingly. If.all or any part of the common area is taken by eminent domain, the proceeds • of condemnation shall be used to restore or replace the portion of the common area affected'by condemnation, if restoration or replacement is possible, and any remaining funds, after payment of .any and all fees and expenses incurred by the Association -relating to such _. condemnation, shall. be..distributed :.among.. the ..owners .in .the .same proportion as such owners are assessed, subject to the rights of mortgagees..If necessary, the remaining portion of the project sJiall^be'~'Te^u^ '"-"pa~ft'i~cipate~ "in the"negotiations, "and shall propose"" the method of division of the proceeds of condemnation, where lots are not valued separately by the condemning authority or by the court. The Association shall represent the lot owners in any condemnation proceedings or in negotiations, settlement and agreements with the condemning authority for acquisition of the common area, or part thereof. 8.09 Limitation of Restrictions on Declarant; Declarant is undertaking the work of construction of a planned unit development subdivision and incidental improvements upon the property. The completion of that work and the sale, rental, and other disposal of lots is essential to the establishment and welfare of said property as a residential community. In order that said work be completed and said property be established as a fully occupied residential community as rapidly as possible, nothing in this Declaration shall be understood or construed to: A. Prevent Declarant, its contractors, or subcontractors from doing on the property or any lot, whatever is reasonably necessary or advisable in connection with the completion of said work; or - 36 - B. Prevent Declarant or its representatives from erecting, constructing and maintaining on the property (except upon lots owned by others) , such structures as may be reasonable and necessary for developing said property as a residential community and disposing of the same by sale, lease or otherwise; or C. Prevent Declarant from conducting on the property (except upon lots owned by others) its business of completing said work and of establishing a plan of residential- ownership and-of disposing of said property in lots by sale, lease or otherwise; D. Prevent Declarant from maintaining such .sign or signs on the property, (except .upon lots owned by others) as may be necessary for the sale, lease or disposition thereof. E. Subject Declarant to the architectural control provisions of this Declaration for construction of any residence or other improvements on the property. The foregoing rights of Declarant shall, terminate .upon sale of Declarant's .entire interest .in the project>- or, three (3) years.- after the date of recordation of the deed of the first lot to be sold in the project, whichever occurs first. So long as Declarant, its successors and assigns, owns one (1) or more of the lots described herein, Declarant,, its successors and assigns, shall be subject to the provisions of this ..Declaration. Declarant shall make reasonable efforts to avoid.disturbing the use and enjoyment of lots and the common area by. .their-owners, while completing any.work necessary to said lots or common areas. • 8.10 Termination of Anv Responsibility of Declarant; In the Teyeh'tf'Declara^ fights, -title and interest "in and'" to "the "property to any partnership, individual or individuals, corporation or corporations, then and in such event, Declarant shall be relieved of the performance of any further duty or obligations hereunder, and such partnership, individual or individuals, corporation or corporations, shall be obligated to perform all such duties and obligations of the Declarant. 8.11 Owner's Compliance; Each owner, tenant or occupant of a lot shall comply with the provisions of this Declaration, and (to the extent they are not in conflict with the Declaration) the Articles and Bylaws, and the decisions and resolutions of the Association or the Board, as lawfully amended from time to time. Failure to comply with any such provision, decision, or resolution, shall be grounds for an action (1) to recover sums due, (2) for damages, (3) for injunctive relief, or (4) for costs and attorneys fees, or (5) for any combination of the foregoing. All agreements and determinations lawfully made by the Association in accordance with the voting percentages established in this Declaration or the Articles or Bylaws, shall be deemed to be binding on all lot owners, their successors and assigns. - 37 - 8.12 Notices: Any notice permitted or required by the Declaration, Articles or Bylaws may be delivered either personally or by mail. If delivery is by mail, it shall be deemed to have been delivered seventy-two (72) hours after a copy of the same has been deposited in the United States mail, first class or registered, postage prepaid, addressed to the person to be notified at the current address given by such person to the Secretary of the Board or addressed to,the residence of such .person if no address has been given to the Secretary. 8.13 Special Provisions Relating to Enforcement of Declarants Obligation to Complete Common Area Improvements: When the project includes common area improvements which have not .been completed prior to the close of escrow and the sale of the first lot and where the Association is obligee under a bond or .other arrangement (hereafter "bond") to secure performance of -thecommitment of Declarant to complete said improvements, the Board shall consider and. vote on the question of action by the Association to enforce the obligations under the bond with respect to any improvement for which a notice of completion has not been filed within sixty (60) days after.the completion date specified-for .that improvement in - the planned construction statement appended to the bond. .If the Association has given an extension in writing for the completion of any common area improvement, the Board shall- consider .and vote on the aforesaid question if a notice of completion has not been filed within thirty (30) days after the expiration of the.extension. A special meeting of'members of the Association for the purpose of voting to override a decision by the Board not to initiate action to enforce.the obligations under the bond or. on the .failure of the .Board-to~ consider-and vote-on the question shall be held not-less than thirty-five (35) days nor more than forty-five (45) days after receipt-by. the__Board of a petit ion for. such .a meeting signed by.... "m¥tffiers^r.epres,e."^ing!f iye'.percent.. (5%). or .mbfe of the total .voting...... power of the "Association. At such" special meeting a vote of a majority of members of the Association other than the Declarant shall be required to take action to enforce the obligations under the bond and a vote of a majority of the voting power of the Association, excluding Declarant, shall be deemed to be the decision of the Association, and the Board shall thereafter implement this decision by initiating and pursuing appropriate action in the name of the Association. On satisfaction of Declarant's obligation to complete the Common Area improvements, the Association shall acknowledge in writing that it approves the release of the bond and shall execute any other documents as may be necessary to effect the release of the bond. The Association shall not condition its approval of the release of the bond on the satisfaction of any condition other than the completion of the Common Area improvements as described on the planned construction statement. Any dispute between Declarant and the Association regarding the completion of the Common Areas shall be submitted to binding arbitration under the commercial rules of the American Arbitration Association and the prevailing party shall be entitled to recover costs, including reasonable attorneys' fees. - 38 - 8.14 Fair Housing; No owner shall, either directly or indirectly, forbid or restrict the conveyance, encumbrance, leasing, or mortgaging, or occupancy of his lot to any person of a specified race, sex, adulthood, marital status, color, religion, ancestry, physical handicap, or national origin. 8.15 Documents Provided to Prospective Purchaser; The Owner of a lot shall, as soon as practicable before the transfer of title or execution of a real property sales contract thereof, provide the following to the prospective purchaser: (a) A copy of the Governing Documents of the Project. (b) A copy of the most recent documents .distributed pursuant to Civil Code Section 1365. (c) A true statement in writing from an authorized representative of the Association as to the amount of the Association's current annual and special assessments and fees, as well as any assessments levied upon the Owner's lot in the Project which are-unpaid on the date of the statement; The-statement shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the Owner's lot in the Project pursuant to Civil Code Section 1367. (d) Any change in the Association's -current .annual and special assessments and fees which have been approved by the Association'.s.. Board of -Directors, but have not :.become due and -payable-as- of--the-date-disclosure--is provided pursuant to this Section. ;7^.3$^ypbnj.^^ shall, within ten- (10) days of" th'e"maiiing"or delivery of the request, provide the owner of a lot with a copy of the required items specified in paragraphs (a), (b) , (c) and (d) above. The Association may charge a fee for this service, which shall not exceed the Association's reasonable cost to prepare and reproduce the requested items; otherwise, the Association shall not impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except the Association's actual costs to change its records. 8.16 ALTERNATIVE DISPUTE RESOLUTION: (THIS SECTION OF THE DECLARATION ONLY APPLIES TO DISPUTES THAT INVOLVE ENFORCEMENT OF THE GOVERNING DOCUMENTS.) A. Summary of Civil Code Section 1354. UNLESS THE APPLICABLE TIME LIMITATION FOR COMMENCING THE ACTION WOULD RUN WITHIN ONE HUNDRED TWENTY (120) DAYS, PRIOR TO THE FILING OF A CIVIL ACTION BY EITHER THE ASSOCIATION OR AN OWNER SOLELY FOR DECLARATORY RELIEF OR INJUNCTIVE RELIEF, OR FOR DECLARATORY RELIEF OR INJUNCTIVE RELIEF IN CONJUNCTION WITH A CLAIM FOR MONETARY DAMAGES, OTHER THAN ASSOCIATION ASSESSMENTS, NOT IN EXCESS OF FIVE THOUSAND DOLLARS ($5,000.00), RELATED TO THE ENFORCEMENT OF THE GOVERNING DOCUMENTS, THE PARTIES SHALL ENDEAVOR, AS PROVIDED IN - 39 - CIVIL CODE SECTION 1354, OR ANY SUCCESSOR STATUTE, TO SUBMIT THEIR DISPUTE TO A FORM OF ALTERNATIVE DISPUTE RESOLUTION SUCH AS MEDIATION OR ARBITRATION. THE FORM OF ALTERNATIVE DISPUTE RESOLUTION CHOSEN MAY BE BINDING OR NONBINDING AT THE OPTION OF THE PARTIES. ANY PARTY TO SUCH A DISPUTE MAY INITIATE THIS PROCESS BY SERVING ON ANOTHER PARTY.TO THE DISPUTE A REQUEST FOR RESOLUTION, WHICH SHALL INCLUDE: (1) A BRIEF DESCRIPTION OF .THE DISPUTE BETWEEN THE PARTIES; (2)' A REQUEST FOR ALTERNATIVE DISPUTE RESOLUTION; (3) A NOTICE THAT THE PARTY RECEIVING THE REQUEST FOR RESOLUTION IS REQUIRED TO RESPOND THERETO WITHIN THIRTY (30) DAYS OF RECEIPT OR IT WILL BE DEEMED REJECTED; AND (4) A COPY OF CIVIL CODE SECTION 1354, OR ANY SUCCESSOR STATUTE. SERVICE OF THE REQUEST FOR RESOLUTION SHALL BE IN THE .SAME MANNER .AS 'PRESCRIBED. FOR SERVICE IN A SMALL CLAIMS ACTION AS PROVIDED IN.SECTION 116.340 OF THE CODE OF CIVIL PROCEDURE, OR ANY SUCCESSOR STATUTE. PARTIES RECEIVING A REQUEST FOR RESOLUTION SHALL HAVE THIRTY (30) DAYS FOLLOWING SERVICE OF THE REQUEST FOR RESOLUTION TO ACCEPT OR REJECT ALTERNATIVE DISPUTE RESOLUTION AND, IF NOT ACCEPTED WITHIN THE 30- DAY PERIOD BY A PARTY, SHALL BE DEEMED REJECTED BY THAT PARTY. IF ALTERNATIVE DISPUTE RESOLUTION IS ACCEPTED BY THE PARTY UPON WHOM THE REQUEST FOR RESOLUTION IS SERVED, . THE .ALTERNATIVE, ..DISPUTE RESOLUTION SHALL BE COMPLETED WITHIN NINETY (90) DAYS .OF^RECEIPT OF THE ACCEPTANCE BY THE PARTY INITIATING THE REQUEST FOR RESOLUTION, UNLESS EXTENDED BY WRITTEN STIPULATION SIGNED BY'BOTH PARTIES. ..THE COSTS OF THE ALTERNATIVE DISPUTE RESOLUTION SHALL BE BORNE :BY THE PARTIES. MEMBERS OF THE ASSOCIATION SHALL ANNUALLY. BE PROVIDED A SUMMARY OF THE PROVISIONS OF CIVIL CODE SECTION 1354, .TOGETHER WITH A NOTICE STATING THE FOLLOWING: "FAILURE. BY. ANY MEMBER .OF THE ASSOCIATION TO COMPLY WITH THE PRE-FILING REQUIREMENTS OF..SECTION. '.13 54' OF. THE CIVIL CODE..MAY RESULT IN THE LOSS OF. YOUR "RIGHTS TO SUE THE ASSOCIATION OR ANOTHER MEMBER OF THE ASSOCIATION REGARDING ENFORCEMENT OF THE GOVERNING DOCUMENTS. " THE SUMMARY SHALL BE ' FORMA BUDGET REQUIRED BY CIVIL ORVIN~~THE" "MANNER" SPECIFIED : IN" SECTION 5016 OF THE CORPORATIONS CODE. B. Text of Civil Code Section 1366.3. (a) The exception for disputes related to Association assessments in subdivision (b) of Civil Code Section 1354 shall not apply if, in a dispute between the Owner of a separate interest and the Association regarding the assessments imposed by the Association, the Owner of the separate interest chooses to pay in full to the Association all of the charges listed below in paragraphs (1) to (4) , inclusive, and states by written notice that the amount is paid under protest, and the written notice is mailed by certified mail not more than 30 days from the recording of a notice of delinquent assessment in accordance with Civil Code Section 1367; and in those instances, the Association shall inform the Owner that the Owner may resolve the dispute through alternative dispute resolution as set forth in Section 1354, civil action, and any other procedures to resolve the dispute that may be available through the Association. (1) The amount of the assessment in dispute. - 40 - (2) Late charges. (3) Interest. (4) All fees and costs associated with the preparation and filing of a notice of delinquent" assessment, including all mailing costs, and including attorney's fees not to exceed four hundred twenty-five dollars ($425) . (b) The right of any Owner of a separate interest to utilize alternative dispute resolution under this section may not be exercised more than two times in any single calendar year, and not more than three times within any five calendar years. Nothing within this section shall preclude any Owner of a separate interest and the Association, upon mutual agreement, from entering into alternative dispute resolution for a number of times in excess of the limits set forth in this section. The Owner of a separate interest may request and be awarded through alternative dispute resolution reasonable interest to be paid by the Association on the total amount paid under paragraphs (1) to (4) , inclusive, of subdivision (a) above, if it is determined through alternative dispute resolution that the assessment levied by the Assssociation was not correctly levied. 8.17 ARBITRATION OF DISPUTES; (ACTION FOR DAMAGES AGAINST DECLARANT FOR DEFECT IN DESIGN OR CONSTRUCTION OF THE PROJECT): ANY AND ALL CLAIMS AND DISPUTES BETWEEN AN OWNER OR THE ASSOCIATION AND THE DECLARANT OR ANY OF ITS PARTNERS, AGENTS, EMPLOYEES OR OTHER REPRESENTATIVES CONCERNING THE DESIGN, CONSTRUCTION OR DEVELOPMENT OF THE PROJECT SHALL BE RESOLVED THROUGH BINDING ARBITRATION PURSUANT TO THE ACTUAL COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION OR THE ACTUAL STREAMLINED OR COMPREHENSIVE RULES AND REGULATIONS OF JAMS/ENDISPUTE, SUBJECT TO THE FOLLOWING MODIFICATIONS THEREOF: (1) THE DECLARANT (SUBDIVIDER) SHALL ADVANCE THE FEES NECESSARY TO INITIATE THE ARBITRATION, WITH THE COSTS AND FEES, INCLUDING ONGOING COSTS AND FEES, TO BE PAID AS AGREED BY THE PARTIES AND IF THEY CANNOT AGREE AS DETERMINED BY THE ARBITRATOR(S) WITH THE COSTS AND FEES OF THE ARBITRATION TO ULTIMATELY BE BORNE AS DETERMINED BY THE ARBITRATOR(S) ; (2) ADMINISTRATION OF THE ARBITRATION SHALL BE BY A NEUTRAL AND IMPARTIAL PERSON(S); (3) A NEUTRAL AND IMPARTIAL INDIVIDUAL (S) SHALL BE APPOINTED TO SERVE AS ARBITRATOR (S) , WITH THE ARBITRATOR (S) TO BE APPOINTED WITHIN A SPECIFIED PERIOD OF TIME, WHICH IN NO EVENT SHALL BE MORE THAN SIXTY DAYS FROM THE ADMINISTRATOR'S RECEIPT OF A WRITTEN REQUEST FROM A PARTY TO ARBITRATE THE CLAIM OR DISPUTE. IN SELECTING THE ARBITRATOR, THE PROVISIONS OF SECTION 1297.121 OF THE CODE OF CIVIL PROCEDURE SHALL APPLY. AN ARBITRATOR MAY BE CHALLENGED FOR ANY OF THE GROUNDS LISTED THEREIN OR IN SECTION 1297.124 OF THE CODE OF CIVIL PROCEDURE. - 41 - (4) THE VENUE OF THE ARBITRATION SHALL BE IN THE COUNTY WHERE THE PROJECT IS LOCATED UNLESS THE PARTIES AGREE TO SOME OTHER LOCATION. (5) THE ARBITRATION SHALL BE COMMENCED IN A PROMPT AND TIMELY MANNER IN ACCORDANCE WITH: (I) THE RULES OF THE ARBITRATION, OR IF THE RULES DO NOT SPECIFY A DATE BY WHICH THE ARBITRATION MUST COMMENCE, THEN (II) A DATE AS AGREED TO BY THE PARTIES, AND IF THEY CANNOT AGREE, (III) A DATE DETERMINED BY THE ARBITRATOR(S); (6) THE ARBITRATION SHALL BE CONDUCTED IN ACCORDANCE WITH RULES AND PROCEDURES WHICH ARE REASONABLE AND FAIR TO THE PARTIES. (7) THE ARBITRATION SHALL BE CONCLUDED IN A PROMPT AND TIMELY MANNER; (8) THE ARBITRATORS SHALL BE AUTHORIZED TO PROVIDE ALL RECOGNIZED REMEDIES AVAILABLE IN LAW OR EQUITY FOR ANY CAUSE OF ACTION THAT IS THE BASIS OF THE ARBITRATION. THE PARTIES MAY AUTHORIZE THE LIMITATION OR PROHIBITION OF PUNITIVE DAMAGES. (9) AFTER AN AWARD OR DECISION HAS BEEN MADE, ANY PARTY MAY PETITION THE APPROPRIATE COURT TO CONFIRM, CORRECT OR VACATE THE AWARD OR DECISION, PURSUANT TO SECTION 1285 ET. SEQ. OF THE CODE OF CIVIL PROCEDURE. 8.18 Special Provisions Required by City of Carlsbad: A. General Enforcement by the City. The City shall have the right, but not the obligation, to enforce those Protective Covenants set forth in this Declaration in favor of the City or in which the City has an interest. B. Notice and Amendment. A copy of any proposed amendments to this Declaration shall be provided to the City in advance. If the proposed amendment affects the City, the City shall have the right to disapprove it. A copy of the final^m^nlment shall be transmitted to the City within thirty (30) days for the official record. C. Failure of Association to Maintain Common Area Lots and Easements. In the event that the Association fails to maintain the Common Area Lots and/or the Association's Easements as provided in Article V, Section 5.01, the City shall have the right, but not the duty, to perform the necessary maintenance. If the City elects to perform such maintenance, the City shall give written notice to the Association, with a copy thereof to the Owners in the Project, setting forth with particularity the maintenance which the City finds to be required and requesting the same be carried out by the Association within a - 42 - period of thirty (30) days from the giving of such notice. In the event that the Association fails to carry out such maintenance of the Common Area Lots and/or Association's Easements within the period specified by the City's notice, the City shall be entitled to cause such work to be completed and shall be entitled to reimbursement with respect thereto from the Owners as provided herein. D. Special Assessments Levied by the City. In the event the City has performed the necessary maintenance to either Common Area Lots and/or Association's Easements, the City shall submit a written invoice to the Association for all costs incurred by the City to perform such maintenance of the Common Area Lots and or Association's Easements. The City shall provide a copy of such invoice to each Owner in the Project, together with a statement that if the Association fails to pay such invoice in full within the time specified, the City will pursue collection against the Owners in the Project pursuant to the provisions of this Section. Said invoice shall be due and payable by the Association within twenty (20) days of receipt by the Association. If the Association shall fail to pay such invoice in full within the period specified, payment shall be deemed delinquent and shall be subject to a late charge in an amount equal to six percent (6%) of the amount of the invoice. Thereafter the City may pursue collection from the Association by means of any remedies available at law or in equity. Without limiting the generality of the foregoing, in addition to all other rights and remedies available to the City, the City may levy a special assessment against the Owners of each Lot in the Project for an equal prorata share of the invoice, plus the late charge. Such special assessment shall constitute a charge on the land and shall be a continuing lien upon each Lot against which the special assessment is levied. Each Owner in the Project hereby vests the City with the right and power to levy such special assessment, to impose a lien upon their respective Lot and to bring all legal actions and/or to pursue lien foreclosure procedures against any Owner and his/her respective Lot for purposes of collecting such special assessment in accordance with the procedures set forth in Article VIII, Section 8.01 of this Declaration. E. Common Ownership Land or Improvements. Provisions are herein established for: 1) maintenance of all Common Areas, payment of taxes and all other privileges and responsibilities of the common - 43 - ownership; 2) prohibiting the Homeowners' Association from quitclaiming land in Association easement to private property owners thus allowing the homeowners to privatize a common area for his/her own use. F. Landscape Maintenance Responsibilities. The Homeowners Association's and individual lot or unit owner landscape maintenance responsibilities shall be as set forth in Exhibits "F" through "I," inclusive, of the Landscape Maintenance Plan on file at the City of Carlsbad Planning Department. The common maintenance responsibility includes open space (Lot 13) and all perimeter manufactured slopes as shown on the Landscape Maintenance Plan, Exhibit "G, " on file at the City of Carlsbad Planning Department. Relinquishing maintenance responsibility of Homeowners Association maintained lots and/or slope to individual property owners shall be prohibited. The following restriction shall apply for Lots 7 through 10, inclusive. The landscape design shall incorporate fire protective landscaping for defensible space purposes at the rear of Lots 7 through 10, inclusive, for fire protection purposes in accordance with the final Landscape Plan on file at the City of Carlsbad Planning Department. Fire protective landscaping shall exist in an easement dedicated to the Homeowners Association, which shall extend from the rear property line to a point no closer than twenty (20) feet from proposed structures. Landscaping in this defensible space zone shall consist of ornamental ground cover plans which will not contribute to fire spread. Landscaping shall be irrigated and maintained free of hazard by the Homeowners Association. No structures shall be placed in the defensible space/Homeowners Association maintenance easement, and no encroachment of any kind shall be permitted on Homeowners Association maintained slopes. G. Balconies, trellis and decks. The individual lot or unit owner allowances and prohibitions regarding balconies, trellis and decks shall be as set forth in Exhibit "G" of the Landscape Maintenance Plan on file at the City of Carlsbad Planning Department. Balconies, trellises, and decks proposed on Lots 7 through 10, inclusive, in the 20' rear yard landscape setback between the main structure and top of slope shall conform to the Class 1 Ignition Resistant requirements of Sections 504 and 602 of the Urban Wildland Interface Code. H. Height Restrictions. No structure, fence, wall, tree, shrub, sign, or other object over thirty (30) - 44 - inches above the street level may be placed or permitted to encroach within the area(s) identified on the Map as sight distance corridors. I. Transportat ion Informat ion. The Homeowners Association shall obtain and distribute to Owners and tenants annual information from Caltrans and North County Transit regarding the availability of public transportation, ride-sharing, and transportation pooling services in the area. J. Cross-Lot Drainage. Each Owner of a Lot within the Project covenants for himself, his heirs, successors and assigns, that he will not restrict, impede, divert or otherwise alter cross-lot drainage flows as shown on the Map or as originally established by Declarant in any manner that will result in damage to the underlying and adjacent properties or result in the creation of a public nuisance. IN WITNESS WHEREOF, the Declarant has executed this Declaration, as indicated by its acknowledgment hereinbelow. AVIARA POINTE, LLC a California Limited Liability Company By: RAJEEV BHATIA, Managing Member - 45 - CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT X j 2 .£ { 5 \^ $ X )• \ 5 1£ £ 1 J •!><*; <-' ^ X/ J- *: X J State of • ....... County of 1 | §On before me. . ^ Dai* personally appeared Nam* and Till* of Olficar (*.g.. Mine Do*. Nota-y Public") ^? ^Nam*(t) ol Sigrwns) X C personally known to me - OR - ~ proved to me on the basis of satisfactory evidence to be the person(s) £ whose name(s) is/are subscribed to the within instrument $ and acknowledged to me that he/she/they executed the & same in his/her/their authorized capacity( es), and that by X 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. 3 XWITNESS my hand and official seal. £ L ........ . •- - . - - - -•- £ c Signature ol Notary Pualic v> n-ri^»»f A i 0 Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent o fraudulent removal and reattachment of this form to another document. $ Description of Attached Document % "" Title 'or Type of Document: ' ' " ' "" _.£ Document Date: .'•; -.: Signer(s)r Other Thari NamedAbbveT"" Sf~ " " Capacity(ies) Claimed by Signer(s) Sianer's Name: L] Individual D Corporate Officer Title(s): L_ Partner — _ Limited _ General L! Attorney-in-Fact ~ Trustee _ Guardian or Conservator lUtfii-^SgS ~~ Other: ~°P °' tfiams t*$ Signer Is Representing: Number of Pages: 4...,..."' . - . • O X Signer's Name: f. 5u Individual £ D Corporate Officer ^ Titters): 0 Z Partner — IJ Limited G General .^ ~j Attorney-in-Fact !>$ ~ Trustee , & JB _: Guardian or Conservator IliEEElIiiiii! ^ •« ~ Other: TOP o» inumc -*•* ^ !t Signer Is Representing: x 8 1— x Legal Description of Real Property; Lots 1 through 13, inclusive, of CARLSBAD TRACT NO. CT 99-10, in the City of Carlsbad, County of San Diego, State of California, according to Map thereof No. , filed in the Office of the County Recorder of San Diego County on Record Holder(s) of Title: AVIARA POINTE, LLC, a California Limited Liability Company Type of Lot; Residential Lots: 1 through 12, inclusive Common Area Lot(s): 13 EXHIBIT "A" (Partial copy of initial/proposed BUDGET) EXHIBIT "B" SUBORDINATION AGREEMENT NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. (THIS NOTICE IS REQUIRED BY CALIFORNIA CIVIL CODE SECTION 2953.3) RANCHO BERNARDO COMMUNITY BANK, beneficiary under that certain Deed of Trust recorded on May 15, 2002 as File/Document Number 2002- 0411940 of Official Records of San Diego County, California, hereby agrees that the lien and charge of said Deed of Trust is and shall be subordinate to the within Declaration of Covenants, Conditions and Restrictions. Dated: RANCHO BERNARDO COMMUNITY BANK By: By: