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HomeMy WebLinkAboutSP 31A; Papagayo Development; Specific Plan (SP) (6)Recording requestbd by and when recorded return to: HOLZWARTH, POWELL & STEIN 18400 Von Karman Avenue Suite 600 Irvine, California 92715 Attn: Thomas L. Powell, Esq. DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR 4200 HARBOR DRIVE (A Multi-Phase Condominium Project) TABLE OF CONTENTS ARTICLE I DEFINITIONS 2 1. Access Easements 2 2. Annexation Property 2 3. Articles 2 4. Assessments 2 5. Association 3 6. Association Property 3 7. Board 3 8. By-Laws 3 9. City 3 10. Common Area 4 11. Common Expenses 4 12. Common Property 4 13. Condominium 4 14. Condominium Building 5 15. Condominium Plan 5 16. Condominium Unit 5 17. County .5 18. Declarant 5 19. Declaration 5 20. Declaration of Annexation..., 5 21. ORE 5 22. Exclusive Use Common Area 6 23. Improvements 6 24. Increment .6 25. Lot 6 26. Member 6 27. Mortgage 6 28. Mortgagee 7 29. Mortgagor 7 30. Notice and Hearing 7 31. Owner 7 32. Project 7 33. Property 7 34. Rules and Regulations 7 35. Application of Definitions 8 ARTICLE II INTRODUCTION TO 4200 HARBOR DRIVE 8 1. General Plan of Development 8 2. Membership in Association 9 3. Development Control 9 4. Non-Liability of Declarant 10 ARTICLE III DESCRIPTION OF THE CONDOMINIUMS 10 1. "Stacked" Condominium Unit 10 2. Presumption of Boundaries of Condominium Units 11 3. Common Area 11 4. Exclusive Use Common Area 11 5. Undivided Fractional Fee Interest in Common Area 13 6. Easements Over Common Property 13 7. Easements Over Access Easements 13 8. Components of Condominium Ownership 13 9. Condominium Numbering 13 10. Guest Parking Areas .13 11. Reservation of Easements Over Common Property for Subsequent Increments 13 ARTICLE IV RESERVATION OF EASEMENTS AND OTHER PROPERTY RIGHTS IN THE COMMON PROPERTY 14 1. Owners ' Easements 14 2. Limitations on Owners' Easement Rights 14 3. Delegation of Common Property Use Rights...16 4. Easements for Vehicular Traffic 16 5. Easements for Utilities 16 6. Easements for Maintenance of the Common Property 17 7 . Easements for Drainage 18 8. Easements for Construction and Sales 18 9. Easements for Air Conditioning Compressors.18 10. Easement for Public Service Uses 19 11. Owner Cooperation for Fumigation 19 12. Control and/or Transfer of Title of Common Property. . 20 ARTICLE V DECLARANT'S RESERVATION OF RIGHTS REGARDING SUBSEQUENT INCREMENTS 20 1. Introduction 20 2. Right of Declarant to Modify Increments.... 20 3. Amendment to Condominium Plan 21 4. Irrevocable Limited Power of Attorney 22 5. Indemnification of Owners on Exercise of Power of Attorney 25 6. Mortgage Interests and Other Encumbrances to Take Subject to Power of Attorney 25 7. Effect on Assessment Liens 25 8. Exclusive Control By Declarant of Subsequent Increments During Construction 25 9. Term of Rights and Powers of Declarant 26 ARTICLE VI THE ASSOCIATION 27 1. Membership 27 2. Classes of Membership 27 3. Special Voting Procedures for Election of the Board 28 4. Record Dates 28 5. Limited Voting Rights for Certain Purposes.28 6. Vesting of Voting Rights 29 7. Suspension of Voting Rights 29 8. Transfer 29 9. Proxies 29 ARTICLE VII POWERS AND DUTIES OF THE ASSOCIATION 30 1. Management Body 30 2. Powers 30 3. Duties 31 4. Discretionary Powers 36 5. Notification by Association of Defects 37 6. Limitations on Contracts 37 7. Delegations of Duties 37 8. Right of Entry for Emergency 38 9. Right of Entry for Repairs 38 10. Limitations on Board Action 38 11. Licenses, Easements and Rights of Way 39 12. New Improvements 39 13. Association Rules and Regulations 40 ARTICLE VIII ASSESSMENTS 41 1. Creation of the Lien and Personal Obligation of Assessment 41 2. Purpose of Regular Assessments: Levy and Collection 41 -11- 3.' Regular Assessments - Basis 42 4. Special Assessments 43 5. Compliance Assessments 44 6. Date of Commencement of Regular Assessments: Due Dates 45 7. Collection of Assessments 45 8. Certification of Payment 45 9. Delivery by Owner 45 10. Delivery of Statement 46 11. Reserves 46 12. Offsets and Waiver Prohibited 46 13. Exempt Property 46 ARTICLE IX EFFECT OF NON-PAYMENT OF ASSESSMENTS: REMEDIES OF THE ASSOCIATION 47 1. Effect of Non-Payment of Assessments: Remedies of the Association 47 2. Notice of Delinquent Assessments 47 3. Foreclosure Sale 48 4. Curing of Default 48 5. Cumulative Remedies 48 6. Mortgagee Protection 48 ARTICLE X USE RESTRICTIONS 49 1. Private Dwelling 49 2. Common Property Use 49 3. Conduct Affecting Insurance 49 4. Liability for Damage to the Common Property 49 5. Signs 50 6. Maintenance of Animals 50 7 . Quiet Enjoyment 50 8. Structural Changes 51 9. Improvements 51 10. Window Coverings 51 11. Hard Surface Flooring 51 12. Commercial Activity 51 13. Parking 52 14. Regulation of Parking 53 15. Vehicle Usage in Association Property 53 16. Compliance With Management Documents 53 17. Solar Heating 53 18. Antennas 54 19. Water Softeners 54 20. Leasing 54 21. Drilling 54 22. Trash 54 23. Special Restrictions Regarding Exclusive Use Areas 54 24. Declarant's Exemption From Use Restrictions 55 ARTICLE XI REPAIR AND MAINTENANCE 55 1. Repair and Maintenance by Association 55 2. Repair and Maintenance by Owner 56 3. Maintenance of Public Facilities 57 4. Maintenance of Public Utilities 57 5. Maintenance of Access Easements 57 6 . Maintenance by Declarant 58 ARTICLE XII ARCHITECTURAL CONTROL - APPROVAL 58 1. Exemptions From Architectural Control, 58 : 2. Architectural Control 58 3. Architectural Control Committee 58 4. Meetings of the Architectural Control Committee 59 -111- sJ Architectural Approval - Review of Plans and Specifications 59 6., Decisions of the Architectural Control Committee 61 7. No Waiver of Future Approvals 61 8. Compensation of Members 61 9 . Variances 61 10. Inspection of Work 62 11. Non-Liability of Architectural Control Committee Members 62 12. Appeal 62 ARTICLE XIII DAMAGE OR DESTRUCTION TO THE COMMON AREA 63 1. Restoration of Damaged Common Area 63 2. Election by Owners Not to Restore Damaged Common Area 63 3. Restoration of Damaged Condominium Units...64 4. Architectural Approval of Restoration Plans; Design and Variance..... 64 5. Distribution of Excess Insurance Proceeds..65 6. Special Assessments for Restoration Purposes 65 ARTICLE XIV DAMAGE OR DESTRUCTION TO THE ASSOCIATION PROPERTY 65 1. Election to Restore Association Property... 65 2. Election Not to Restore Association Property 66 3. Excess Insurance Proceeds..... 66 ARTICLE XV CONDEMNATION 67 1. Distribution of Awards 67 2. Distribution of Awards - Association Property 67 3. Board of Directors as Attorney-in-Fact 67 ARTICLE XVI COVENANT AGAINST PARTITION 67 1. General Covenant Against Partition 67 2. Judicial Partition of the Project 67 3. Board of Directors' Power of Sale in Event of Judicial Partition 68 ARTICLE XVII INSURANCE 68 1. Required Insurance Coverage 68 2. Optional Insurance Coverage ...70 3. Notice of Cancellation of Insurance 70 4. Review of Coverage 70 5. Waiver by Owners 70 6. Premiums, Proceeds and Settlement 70 7. Rights and Duties of Owners to Insure 71 8. Trustee for Policies 71 9. Mortgage Clause 71 10. Compliance With Requirements of FHLMC, FNMA and VA/FHA ... 7 2 ARTICLE XVIII MORTGAGEE PROTECTION 72 1. Mortgagee Protection Provisions 72 2. Violation of Mortgagee Protection Provisions 76 3. Effect of Amendments 76 : 4. Amendments to Conform With Mortgagee Requirements. 76 -iv- ARTICLE XIX ENFORCEMENT OF BONDED OBLIGATIONS 77 1., Enforcement of Bonded Obligations 77 ARTICLE XX ANNEXATION OF ADDITIONAL PROPERTY 78 1. Incremental Development of the Project 78 2. Annexation Pursuant to General Plan 78 3. Annexation Pursuant to Approval 78 4. Declaration of Annexation...... 78 5. Effective Date of Annexation 79 6. Right of De-Annexation.... 79 7. Amendments to Declarations of Annexation...79 ARTICLE XXI GENERAL PROVISIONS 80 1. Enforcement 80 2. Severability 81 3. Term 81 4 . Construction 81 5. Singular Includes Plural 81 6. Amendments 82 7 . Encroachments 83 8. Notices 84 9. Attorneys ' Fees 84 EXHIBITS EXHIBIT "A" EXHIBIT "B" EXHIBIT "C" EXHIBIT "D" Description of the Property Description of the Annexation Property Description and Depiction of the Access Easements Depiction of the Open Space Easement Area -v- CCR897 10725.004 091790 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR 4200 HARBOR DRIVE THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRIC- TIONS, AND RESERVATION OF EASEMENTS is made this day of , 1990, by MARLBOROUGH DEVELOPMENT CORPORATION, a California corporation (hereinafter referred to as the "Declarant"). WI.TNESSETH: A. Declarant owns that certain real property located in the City of Carlsbad, County of San Diego, State of Cali- fornia, more particularly described on Exhibit "A" attached hereto (hereinafter referred to as the "Property"). B. Declarant desires to develop the Property and any of the "Annexation Property," as hereinafter defined, which is subsequently annexed to the Property pursuant to the Article herein entitled "Annexation of Additional Property" as a common interest development, more particularly described in Section 1351(f) of the California Civil Code as a "condominium project" (hereinafter referred to as the "Project"), as more particularly described below. C. Declarant deems it desirable to impose a general plan for the development, maintenance, improvement, protection, use, occupancy and enjoyment of the Project, and to establish, adopt and impose covenants, conditions, restrictions, easements, equitable servitudes, liens and charges (hereinafter referred to as the "Protective Covenants") upon the Project for the purpose of enforcing, protecting and preserving the value, desirability and attractiveness of the Project. D. Declarant deems it desirable for the efficient enforcement, protection and preservation of the value, desira- bility and attractiveness of the Project to create a corporation which shall be delegated and assigned the powers of administering and enforcing the Protective Covenants. E. 4200 HARBOR DRIVE HOMEOWNERS ASSOCIATION, a Cali- fornia nonprofit, mutual benefit corporation, has been or will be incorporated under the laws of the State of California for the purpose of exercising the aforesaid powers. F. Declarant intends to convey the Property, and any and all real property annexed thereto, subject to the Protective Covenants set forth hereinbelow. f NOW, THEREFORE, pursuant to Sections 1350, et seq., of the California Civil Code, Declarant declares that it does hereby establish a general plan for the development, maintenance, care, improvement, protection, use, occupancy, management and enjoyment of the Project, and that all or any portion of the Project shall be held, sold, conveyed, encumbered, hypothecated, leased, used, occupied and improved, subject to the Protective Covenants set forth herein, all of which are for the purpose of uniformly en- hancing and protecting the value, attractiveness and desirability of the Project, in furtherance of said general plan for the Pro- ject. Each and all of the Protective Covenants shall run with the Project, and shall be binding upon all persons having any right, title or interest in the Project, or any portion thereof, their heirs, successors and assigns, and shall inure to the benefit of and be binding upon Declarant, its successors and assigns, all subsequent owners of all or any portion of the Project, together with their grantees, heirs, executors, administrators, devisees, successors and assigns. ARTICLE I DEFINITIONS Section 1. "Access Easements" shall mean and refer to those certain non-exclusive easements for ingress, egress and access. The Access Easements are depicted and described on Exhibit "C" attached hereto. Section 2. "Annexation Property" shall mean and refer to that certain real property described in Exhibit "B" attached hereto, including all Improvements (as defined below) constructed thereon, all or any portion of which may be annexed to the Prop- erty as set forth in the Article herein entitled "Annexation of Additional Property." Section 3. "Articles" shall mean and refer to the Ar- ticles of Incorporation of 4200 Harbor Drive Homeowners Association, as filed in the Office of the Secretary of State of the State of California, as such Articles may be amended, from time to time. Section 4. "Assessments" shall be used as a generic term which shall mean and refer tc the following: (a) "Regular Assessment" shall mean and refer to the annual charge against each Owner and his respective Condominium representing a portion of the Common Expenses of the Association; -2- (tf) "Compliance Assessment" shall mean and refer to the personal charge against an Owner representing the costs incurred by the Association in the repair of any dam- age to the Common Property for which such Owner was respon- sible, the costs incurred by the Association in bringing such Owner and his Condominium into compliance with this Declaration, any amount due the Association based upon dis- ciplinary proceedings against an Owner in accordance with this Declaration, or any amount due the Association to reim- burse the Association for administrative costs attributable to an Owner as provided herein; and (c) "Special Assessment" shall mean and refer to the charge against an Owner and his respective Condominium representing a portion of the cost of reconstructing any damaged or destroyed portion or portions of the Common Prop- erty, of constructing or installing any capital improvements to the Common Property, or of taking any extraordinary ac- tion for the benefit of the Common Property or the member- ship of the Association, pursuant to the provisions of this Declaration. Section 5. "Association" shall mean and refer to 4200 Harbor Drive Homeowners Association, a California nonprofit, mu- tual benefit corporation, in which all Owners shall have a mem- bership interest as more particularly described hereinbelow, pro- vided that membership shall be limited to Owners. Section 6. "Association Property" shall mean and refer to all personal property now or hereafter owned by the Association, and to any real property (and to all Improvements constructed thereon) hereafter acquired in fee or by easement by the Association for the benefit, common use and enjoyment of all Members, but excepting therefrom the Common Area. Portions of the Annexation Property may be annexed as additional Association Property in any Declaration of Annexation recorded in the Official Records of San Diego County, California, in accordance with the provisions of the Article herein entitled "Annexation of Additional Property." Section 7. "Board" shall mean and refer to the Board of Directors of the Association, elected in accordance with the By-Laws of the Association and this Declaration. Section. 9. "By-Laws" shall mean and refer to the By- Laws of the Association which have been, or will be, adopted by the Board, as such By-Laws may be amended, from time to time. Section 9. "City" shall mean and refer to the City of Carlsbad. -3- SectioJi 10. "Common Area" shall mean and refer to real property and to all Improvements constructed on such real prop- erty from time to time, but excepting therefrom all of the Condo- minium Units, as defined in Section 1351(b) of the California Civil Code and in Article III described hereinbelow, which may now or hereafter be constructed on such real property. The Common Area in the Property includes all of the real property described in Paragraph A of the Recitals (and all of the Improvements con- structed thereon from time to time) excepting all Condominium Units. Portions of the Annexation Property may be designated as additional Common Area in a Declaration of Annexation recorded in the Official Records of San Diego County, California, in accord- ance with the Article herein entitled "Annexation of Additional Property." Section 11. "Common Expenses" shall mean and refer to the actual and estimated costs to be paid by the Association for the following: (a) owning, maintaining, managing, operating, repairing and replacing the Common Property; (b) managing and administering the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and any Association employees; (c) providing utilities and other services to the Common Property, and, if not separately metered, to the Condominium Units; (d) providing insurance as provided for herein; (e) paying that portion of any Assessment attributable to Common Expenses not paid by the Owner responsible for payment; (f) paying taxes for the Association; and (g) paying for all other goods and services incurred by the Association for the benefit of the Owners pursuant to the provisions of this Declaration. Additionally, the Common Expenses shall include adequate reserves, as the Board shall determine to be appro- priate, for the repair and replacement of those elements of the Common Property which must be repaired or replaced on a periodic basis, rather on a regular annual basis. Section 12. "Common Property" as used herein shall mean and refer collectively to the Common Area and to the Asso- ciation Property. The Common Property shall also mean and refer to any additional Association Property and/or additional Common Area so designated and described in any Declaration of Annexation recorded in the Official Records of San Diego County, California, in accordance with the Article herein ^nMtled "Annexation of Additional Property." Section 13. "Condominium" shall mean an estate in real property, as defined in California Civil Code Section 1351(f), consisting of a separate interest in a Condominium Unit, together wdth an undivided fractional fee interest in the Common Area on the Lot upon which the Condominium Unit is located. -4- Section 14. "Condominium Building" shall mean and re- fer to a separate building containing one (1) or more Condominium Units. Section 15. "Condominium Plan" shall mean and refer to an instrument entitled "Condominium Plan," prepared in accordance with Section 1351(e) of the California Civil Code, as the same may be amended, from time to time, and recorded in the Official Records of San Diego, California, affecting one (1) or more Increments of the Project. Section 16. "Condominium Unit" shall mean and refer to the elements of a Condominium which are not owned in common with the Owners of other Condominiums in the Project. The Condominium Units located in the first Increment of the Project are more particularly described in the Article herein entitled "Description of the Condominiums" and in the Condominium Plan. For purposes of this Declaration, the term "Condominium Unit" is deemed to be a "separate interest," as defined in Section 1351(f) of the California Civil Code. Section 17. "County" shall mean and refer to the County of San Diego, California. Section 18. "Declarant" shall mean and refer to Marlborough Development Corporation, a California corporation, and to any person or entity acquiring all of Declarant's interest in the Project (including all of Declarant's rights and obligations as created and established herein) pursuant to a written assignment, deed or other instrument from Declarant which is recorded in the Office of the County Recorder for San Diego County.. Any such instrument may include only certain specific rights and/or obligations of the Declarant and may be subject to such conditions as Declarant may impose in its sole discretion. Section 19. "Declaration" shall mean and refer to this Declaration of Covenants, Conditions and Restrictions, and Reser- vation of Easements, and to all amendments to this Declaration as may be recorded, from time to time, in the Office of the County Recorder for San Diego County, in accordance with Section 1351(h) and Section 1353 of the California Civil Code. Section 20. "Declaration of Annexation" shall mean and refer to that certain instrument recorded for the purpose of annexing all or a portion of the Annexation Property, in accordance with the previsions cf this Declaration, thereby subjecting such Property to the Protective Covenants set forth in this Declaration and to the jurisdiction of the Association. Section 21. "DRE" shall mean and refer to the Depart- ment of Real Estate of the State of California, which administers the sale of subdivided lands pursuant to Sections 11000, et seq./ of the California Business and Professions Code, or any similar California statute hereinafter enacted. -5- Section 22. "Exclusive Use Common Area" shall mean and refer to those portions of the Common Area over which exclusive easements are reserved for the use and benefit of Owners of par- ticular Condominium Units. Exclusive Use Common Area is more specifically described in the Article herein entitled "Descrip- tion of Condominium," and is shown and described in the Condo- minium Plan. Section 23. "Improvements" shall mean and refer to all structures and appurtenances thereto of every kind, including, but not limited to, Condominium Buildings, parking structure, open parking areas, swimming pools, spas, cabanas, street lights, entry gates, pavement, sidewalks, driveways, walls, fences, deco- rative or informative signs, retaining walls, mail kiosks, common trash receptacles, if any, screens, private utility connections, poles, signs, all Common Area landscaping and related irrigation systems. Improvements shall also mean and refer to all additions and/or modifications to the exterior of any Condominium Unit, including, but not limited to, (a) painting the exterior of any Condominium or other structure, (b) changing the roofing material on any Condominium, and/or (c) building, constructing, install- ing, altering or planting, as the case may be, any spas, patio covers, deck covers, decks, gazebos, stairs, screening walls or fences, shades, awnings, screen doors, exterior doors, skylights, solar heating panels, air conditioning and/or' water softening or refining fixtures or systems, and all landscaping which left in its natural condition will grow to a height in excess of ten feet (101). Section 24. "Increment" shall mean and refer to a Lot, or portion thereof, together with any Condominium Units and any other Improvements located thereon which are subject to a Final Subdivision Public Report issued by the DRE. Increments 1 and 2 are generally depicted on the Condominium Plan recorded on the Property. Section 25. "Lot" shall mean and refer to a plot of land which is separately described and numbered or lettered on a recorded subdivision map. Section 26. "Member" shall mean and refer to every person or entity who holds membership in the Association, as more particularly set forth in the Article herein entitled "The Asso- ciation." and shall be synonymous with the terrr. "Owner." Section 27. "Mortgage" shall mean and include any mortgage or deed of trust, or other conveyance of a Condominium (or other portion of the Project) to secure the performance of an obligation, which conveyance will be reconveyed upon the comple- tion of such performance, including an installment land sales contract (as described in Sections 2985 through 2985.6 of the -6- California Civil'Code, as same may be amended from time to time). The term "Deed of Trust," when used herein, shall be synonymous with the term "Mortgage." Section 28. "Mortgagee" shall mean and refer to a per- son or entity to whom a Mortgage is made, and shall include the beneficiary of a Deed of Trust or the vendor under an installment land sales contract, as the case may be, and the assignees of a Mortgagee, beneficiary or vendor. Section 29. "Mortgagor" shall mean and refer to a per- son or entity who mortgages his or its Condominium to another, i.e., the maker of a Mortgage, and shall include a trustor of a Deed of Trust and the vendee under an installment land sales contract. Section 30. "Notice and Hearing" shall mean and refer to written notice and the opportunity for a hearing before the Board or the Architectural Control Committee of the Association, as applicable, or other tribunal appointed by the Board in the manner provided in the By-Laws, at which the affected Owner shall have an opportunity to be heard in the manner provided herein and in the By-Laws. Section 31. "Owner" shall mean and refer to the record Owner, or Owners if more than one (l)f or the purchaser under an installment land sales contract of fee title to, or an undivided interest in, any Condominium in the Project. The term "Owner" shall include Declarant, the vendee under an installment land sales contract (as described in Sections 2985 through 2985.6 of the California Civil Code, as same may be amended, from time to time),.and the holder of a leasehold estate having a term of ten (10) or more years, including renewal periods. The foregoing does not include persons or entities who hold an interest in a Condo- minium merely as security for the performance of an obligation. Section 32. "Project" shall mean and refer collec- tively to the Property, all Condominium Units now or hereafter constructed on the Property, any Association Property and to any portion(s) of the Annexation Property which is/are annexed in ac- cordance with the applicable provisions of this Declaration. Section 33. "Property" shall mean and refer to all of that certain real property described in Paragraph A of the Reci- tals hereinabove, together with all Improvements constructed thereon. Section 34. "Rules and Regulations" shall mean and re- fer to the Rules and Regulations adopted by the Board pursuant to the By-Laws or this Declaration, as they may be amended, from time to time. -7- Section 35. Application of Definitions. The aforesaid definitions shall be applicable throughout this Declaration, and to any supplements, restatements and/or amendments hereto filed or recorded pursuant to the provisions of this Declaration, and to any Declaration of Annexation for a subsequent Increment, unless otherwise indicated or the context shall prohibit such application. ARTICLE II INTRODUCTION TO 4200 HARBOR DRIVE Section 1. General Plan of Development. 4200 Harbor Drive will be developed as a condominium project, as defined in Section 1351(f) of the California Civil Code. If completed as planned, the Project will be developed in three (3) Increments and will consist of approximately one hundred thirty (130) Condo- miniums and various recreational amenities. The recreational amenities may include a swimming pool, cabanas with restrooms, spas and open space landscaping. The Project will be developed in accordance with California Civil Code, Sections 1350, et seq., and in substantial conformance with the development plans submitted to and approved by the City and/or DRE. The Association will maintain the Common Property and will be the management body for the Project, as provided herein. (a) Description of Increment 1. As presently planned, the first Increment of the Project will consist of approximately forty-three (43) Condominiums and appurtenant Common Area Improvements. The Condominium Units will be com- pleted prior to the first close of an escrow for the sale of a Condominium in the first Increment. The Condominiums are more particularly described in the Article herein entitled "Description of the Condominiums" and are "stacked" Condominium Units (i.e. one Condominium Unit above another). The Owners in the first Increment will receive title to their respective Condominium Units, various easements (ex- clusive and nonexclusive, as set forth in this Declaration), an undivided interest in the Common Area portions of the Property (as more particularly defined in Article III below) and a membership in the Association. (b) Description of Subsequent Increments. As presently planned, the subsequent Increments cf 4200 Harbor Drive and the Condominium Buildings and Condominium Units in such Increments will be of similar construction and appearance as the Condominium Units in the first Increment. The Owners in subsequent Increments will receive title to : their respective Condominium Units, various easements (ex- clusive and nonexclusive, as set forth in this Declaration or a Declaration of Annexation recorded on said Increment), -8- an undivided interest in their respective Common Area, and a membership (in the Association. There is no assurance that Increments 2 and 3 will be completed as proposed. (c) Commencement of Rights and Obligations Regarding Subsequent Increments. Each and all of the powers and duties of the Association (e.g., the maintenance of Common Area) and each and all of the rights and obligations of an Owner created by this Declaration (e.g., the obliga- tion to pay assessments, and the right to vote) shall commence as to any subsequent Increment and all Condominium Units located therein upon the first day of the month following: (a) the first close of an escrow for the sale of a Condominium in such Increment to a bona fide purchaser; or (b) the occupancy of a Condominium in such Increment pursuant to a rental or lease agreement with Declarant or its authorized agent. Notwithstanding the foregoing, the rights and powers reserved by Declarant regarding subsequent Increments as set forth in Article V hereinbelow shall remain in full force and effect for the term specified in said Article V. Section 2. Membership in Association. As more par- ticularly set forth in this Declaration, each Owner of a Condo- minium in the Project shall automatically become a Member of the Association, and shall be obligated for the payment of Assess- ments to the Association. In addition, each Owner, his family members, lessees, tenants, guests and invitees, will be entitled to the use and enjoyment of th.e Common Property within the Proj- ect, in accordance with this Declaration, the By-Laws and Rules and Regulations adopted by the Board. Section 3. Development Control. Nothing in this Arti- cle or elsewhere in this Declaration shall limit the right of Declarant (a) to complete construction of any Improvements in the Project, (b) to redesign or otherwise alter the style, size, color or appearance of any Improvements in any portion of the Project owned or controlled by Declarant, (c) to construct additional Improvements on any portion of the Project owned or controlled by Declarant, and/or (d) to otherwise control all as- pects of constructing the Improvements in the Project, and of marketing and conveying Condominiums in the Project. In further- ance thereof, Declarant hereby reserves, unto itself and its successors and assigns for a period of time not to exceed seven (7) years from the first close of escrow for the sale of a Condominium in the Project to a retail purchaser pursuant to a Final Subdivision Public Report issued by the ORE: (a) a non- exclusive easement for ingress and egress on, over and across the Project as necessary to construct the Condominium Units and all other Improvements, (b) the exclusive right to maintain a sales -9- office, model complex, interior design and decorator center and parking area for employees, agents and prospective buyers, (c) the exclusive right to place reasonable signs, flags, banners, billboards or other forms of advertising on any portion of the Project owned or controlled by Declarant, and (d) a nonexclusive right to utilize the Common Property and any unassigned open parking spaces in connection with its program for the sale or leasing of Condominiums in the Project. Without limiting the generality of the foregoing, Declarant hereby expressly reserves a nonexclusive right to use the Access Easements so long as Declarant owns any interest in the Property and/or the Annexation Property. Section 4. Non-Liability of Declarant. Nothing in this Article or elsewhere in this Declaration shall be understood or construed to compel Declarant to construct any subsequent Increment of the Project. The purpose of this Article is merely to describe the legal relationship between the first and any subsequent Increments of the Project in the event all or any of such Increments shall be constructed. ARTICLE III DESCRIPTION OF THE CONDOMINIUMS Declarant, in order to establish a plan of Condominium ownership for the Property, does hereby declare that it has di- vided, and does hereby divide, Increment 1 into the following freehold estates: Section 1. "Stacked" Condominium Unit. Each "Stacked" Condominium Unit shall be a separate interest, as defined in Sec- tion 1351{f) of the California Civil Code, consisting of the fol- lowing element in accordance with the plans and specifications for each "Stacked" Condominium Unit as more particularly shown and described on the Condominium Plan. (a) The Residential Airspace Element. The resi- dential airspace element is bounded by and contained within the interior unfinished surfaces of the perimeter walls, floors, ceilings, windows and doors of said element, identi- fied on the Condominium Plan by the letter "LA" followed by its respective Condominium Unit number. The lower and upper boundaries of each residential airspace element are hori- zontal or sloped plar.es, the elevations of which are indi- cated in the Schedule of Elevations set forth in the Condo- minium Plan. The lateral boundaries of each residential air- space element are vertical planes at the limits of the hori- zontal dimensions shown in the Condominium Plan for each : residential airspace element. Each "Stacked" Condominium Unit includes both the por- tion of the Condominium Building so described and the airspace so -10- encompassed, alltwindows and doors in said Condominium Unit (in- cluding all locks, handles, latches, screens and weather- stripping), the forced air heating unit, the air conditioning compressor, if any, all built-in appliances and fixtures and the firebox portion of the fireplace in or servicing the Condominium Unit, if any, but does not include any portions described as Common Area in Section 3 below. Section 2. Presumption of Boundaries of Condominium Units. In interpreting this Declaration, the Condominium Plan and all instruments of conveyance, the existing physical boundaries of the Condominium Unit, or of a Condominium Unit reconstructed in substantial accordance with the Condominium Plan thereof, shall be conclusively presumed to be its boundaries, rather than the metes and bounds (or other description) expressed in this Declaration, the Condominium Plan or instrument of conveyance, regardless of settling or lateral movement of the Condominium Building and regardless of minor variances between the boundaries shown in the Condominium Plan, in the deed and/or in this Declar- ation, and the actual boundaries of the Condominium Building. Section 3. Common Area. A freehold estate consisting of an undivided fractional fee interest in the Property is described and referred to herein as the "Common Area." The Common Area includes all of the real property described in Paragraph A of the Recitals, and all Improvements constructed thereon from time co time, including, but not limited to, the subterranean parking structure, the Condominium Buildings (excepting therefrom the Condominium Units in Increment 1 and any Condominium Units constructed in Increment 2), together with all bearing walls, columns/ beams, floors, roofs, slabs, foundations, chimneys, fences, exterior stairs and landings, elevators, reservoirs, tanks, pumps, central water heaters, private on-site sewer later- als and lines, common mailbox structures, irrigation equipment and other central services,' pipes, ducts, flues, chutes, con- duits, wires, exterior lighting and other utility installations wherever located (except all utility installations and/or outlets thereof when located within the Condominium Units including the internal and external telephone wiring designed to exclusively serve a Condominium Unit), sidewalks, retaining walls, poles, signs, Project monument sign, any recreational amenities and all landscaping located en such Common Area. Section 4. Exclusive Use Common Areas. Exclusive Use Common Areas shall mean and refer to those portions of the Common Area which are reserved for the exclusive use of the Owners of particular Condominium Units. Each Exclusive Use Common Area con- stitutes an exclusive easement appurtenant to its assigned Condo- minium Unit, subject to the exclusive uses and purposes set forth herein. The Exclusive Use Common Areas and the Condominium Units -11- to which such Arfeas are appurtenant are identified in the Condo- minium Plan. The various types of Exclusive Use Common Areas are described as follows: (a) Deck Area. The deck area bounded by and contained within the exterior finished surfaces of the deck perimeter walls, the deck railings, walls, and doors, identified on the Condominium Plan by the letter "D" followed by its respective Condominium Unit number is hereby assigned to such Condominium Unit as shown in the Condomin- ium Plan. (b) Patio Area. The patio area bounded by and contained within the exterior finished surfaces of the patio perimeter walls and/or fences and doors, identified on the Condominium Plan by the letter "P" followed by its respec- tive Condominium Unit number is hereby assigned to such Condominium Unit as shown in the Condominium Plan. (c) Parking Area. The parking space identified on the Condominium Plan by the letters "PS" followed by its respective Condominium Unit number is hereby assigned to such Condominium Unit as shown in the Condominium Plan. (d) Storage Area. The storage area identified on the Condominium Plan by the letter "S" followed by its respective Condominium Unit number is hereby assigned to such Condominium Unit as shown in the Condominium Plan. (e) Air Conditioning Condensor Unit. The unit for the air conditioning condenser identified on the Condominium Plan by the letters "A/C" followed by its respective Condominium Unit number is hereby assigned to such Condo- minium Unit as shown in the Condominium Plan. It shall be the obligation of each and every Owner to keep his respective Exclusive Use Common Area in a neat, clean, safe and attractive condition at all times. Without limiting the general- ity of the foregoing, each Owner shall, at his sole cost and expense, be responsible for resurfacing his deck area (if applicable), with a seal coat approved by the Architectural Con- trol Committee. In no event shall any Owner install any arti- ficial turf on any exterior staircase or on his deck area. The Association shall be responsible for painting and performing all routine maintenance of all structural components of the Exclusive Use Common Area and for making all structural repairs to the Exclusive Use Common Area; provided, however, if any maintenance or repairs are required due to the willful or negligent acts or omissions of any Owner, his family, lessees, tenants, guests or invitees, the Association shall levy a Compliance Assessment against the Owner for such costs. -12- Section* 5. Undivided Fractional Fee Interest in Com- mon Area. The interest in the Common Area which shall be conveyed with each respective Condominium Unit in Increment 1 is a one/eighty-sixth (l/86th) undivided fractional fee interest. The above respective undivided fractional fee interest established and to be conveyed with the respective Condominium Units, as in- dicated above, cannot be diminished. Declarant, for and on behalf of itself, and its successors, assigns and grantees, covenants and agrees that neither the Condominium Unit nor the respective undivided fractional fee interest in the Common Area shall be separately conveyed or encumbered. An otherwise valid conveyance or encumbrance referring only to the Condominium Unit shall also convey or encumber the respective undivided fractional fee inter- est in the Common Area. Any attempt to convey or encumber the undivided fractional fee interest in the Common Area without the respective Condominium Unit shall be null and void. Section 6. Easements Over Common Property. Each Owner shall have a nonexclusive easement appurtenant to his Condominium for ingress, egress, use and enjoyment on and over the Common Property, save and except those portions of the Common Area set aside as Exclusive Use Common Area as provided for .in this Declaration, and subject to the rights reserved in favor of Declarant as set forth in this Declaration. Section 7. Easements Over Access Easements. Each Owner shall have a nonexclusive easement appurtenant to his Condominium for pedestrian and vehicular ingress, egress and access on, over and across the Access Easements. Section 8. Components of Condominium Ownership. Each Condominium includes: (a) a separate interest in a Condominium Unit, as defined in Section 1 hereinabove; (b) all easements, ex- clusive and nonexclusive, appurtenant to the respective Condomin- ium Unit; (c) a one/eighty-sixth (l/86th) undivided fractional fee interest in the Common Area; and (d) a membership in the Association. Section 9. Condominium Numbering. The forty-three (43) individual Condominium Units which are hereby established and which shall be individually conveyed are described and num- bered on the Condominium Plan. Section 10. Guest Parking Areas. Except as otherwise provided in this Declaration, any parking spaces, shown and designated on the Condominium Plan by the letters "GP", shall be used for guest parking. All other parking spaces shown on the Condominium Plan may be assigned by Declarant to Condominums located in a subsequent Increment. Section 11. Reservation of Easements Over Common Pro- perty for Subsequent Increments. Declarant hereby reserves the right to grant easements over the Common Property in this first -13- increment of the^Project (except any portions of the Common Area set aside as Exclusive Use Common Area and except for any por- tions subject to the rights reserved by Declarant as set forth in this Declaration) in favor of each Owner of a Condominium in a subsequent Increment at such time as the rights and obligations regarding such Increment commences pursuant to Article II, Section l(c) hereinabove, and the Owners of the Condominiums de- scribed in this Declaration shall automatically obtain nonexclu- sive easements over all Common Property which is a part of such subsequent Increment, except any portions of the Common Area set aside as Exclusive Use Common Area or subject to rights reserved by Declarant. ARTICLE IV RESERVATION OF EASEMENTS AND OTHER PROPERTY RIGHTS IN THE COMMON PROPERTY Section 1. Owners' Easements. Subject to the rights reserved by Declarant as provided in this Declaration, and further subject to the limitations set forth in Section 2 below, every Owner shall have a nonexclusive right and easement of access, use and enjoyment in and to the Common Property, except those portions of the Common Area set aside as Exclusive Use Common Area. Said right and easement shall be appurtenant to and shall pass with title to every Condominium. Section 2. Limitations on Owners' Easement Rights. The rights and easements of access, use and enjoyment set forth in Section 1 hereinabove shall be subject to the provisions of this Declaration, including, but not limited to, the following: (a) The right of Declarant to designate addition- al Common Area and Association Property by recordation of one (1) or more Declarations of Annexation, pursuant to the provisions of the Article herein entitled "Annexation of Additional Property;" (b) The right of the Association to reasonably limit the number of guests of Owners; (c) The right of the Association to establish and enforce reasonable Rules and Regulations pertaining to the use of the Common Property and Exclusive Use Common Area; (d) The right of the Association, in accordance with its Articles, By-Laws and this Declaration, 'to borrow money with the assent of sixty-seven percent (67%) of the voting power of the Association, excluding Declarant, and/or to Mortgage, pledge, deed in trust or otherwise hypothecate any or all of its real or personal property as security for ; money borrowed or debts incurred, for the purpose of im- proving or repairing the Common Property and related facili- ties; -14- (e) The right of the Association to suspend the voting rights and rights and easements of any Member, (and the persons depriving such rights and easements from any Member) to use and enjoy any recreational amenities on the Common Property for the period during which any Assessment against such Member's Condominium remains unpaid and delin- quent; and after Notice and Hearing, to impose monetary penalties or suspend such use rights and easements for a period not to exceed thirty (30) days for any noncontinuing violation of this Declaration or Rules and Regulations, it being understood that any suspension for either nonpayment of any Assessments or breach of such Rules shall not consti- tute a waiver or discharge of the Member's obligations to pay Assessments as provided herein; (f) Subject to the terms and provisions of the Article herein entitled "Mortgagee Protection," the right of the Association to dedicate or transfer all or any part of the Common Property to any public agency, authority or util- ity for such purposes and subject to such conditions as may be agreed to by the Owners. No such dedication or transfer shall be effective unless: (1) an instrument approving said dedication or transfer is signed by two authorized officers of the Association attesting that Owners representing at least sixty-seven percent (67%) of the voting power of the Association, excluding Declarant, approved such action and is recorded in the Office of the County Recorder for San Diego County, and (2) a written notice of the proposed dedication or transfer is sent to every Owner not less than fifteen (15) days nor more than thirty (30) days in advance; provided, however, that the dedication or transfer of easements for utilities or for other public purposes consistent with the intended use of the Common Property shall not require the prior approval of the Members of the Association; (g) The right of the Association to perform and exercise its duties and powers as set forth herein; (h) The right of the Association to approve, which approval shall not be unreasonably withheld, and im- pose various conditions on the reasonable access to the Commcn Property for the purpose of allowing an Ownei to maintain the internal and external telephone wiring designed to serve his particular Condominium Unit; (i) Other rights of the Association, the Archi- tectural Control Committee, the Board, the Owners and De- clarant with respect to the Common Property as may be pro- vided for in this Declaration; and -15- (J) Any limitations, restrictions or conditions affecting the use, enjoyment or maintenance of the Common Property imposed by Declarant or by the City, or other governmental agency having jurisdiction to impose any such limitations, restrictions or conditions, including, but not limited to, the rights of the City or such other govern- mental agency having jurisdiction to use their vehicles or appropriate equipment over those portions of the Common Property designed for vehicular movement to perform munici- pal functions or emergency or essential public services. Section 3. Delegation of Common Property Use Rights. Any Owner who resides within the Project may delegate his rights of use and enjoyment to the Common Property to the members of his immediate family and their guests and invitees. In the event an Owner has rented or leased his Condominium, his rights of use and enjoyment to the Common Property shall be automatically delegated to his tenants or lessees for the duration of their tenancy, and the Owner shall forfeit any rights of use and enjoyment to the Common Property (except those portions reasonably necessary to access said Owner's Condominium to perform normal functions of a landlord) for the duration of such tenancy. With respect to an installment land sales contract, the seller under the contract shall be deemed to have delegated his rights of use and enjoyment to the Common Property to the purchaser under the contract. Section 4. Easements for Vehicular Traffic. In addi- tion to the general right and easements for access, use and en- joyment granted herein, there shall be, and Declarant hereby grants,to each and every Owner a nonexclusive easement appurte- nant to his Condominium over the Access Easements and over any driveways within the Project. Section 5. Easements for Utilities. The rights and duties of the Owners of Condominiums within the Project with re- spect to sanitary sewer, water, electricity, gas, television ca- ble and telephone lines, and other facilities, shall be governed by the following: (a) Each respective utility company shall main- tain all utility facilities and connections on the Project owned by such utility company; provided, however, that if any company shall fail to do so, it shall be the obligation of each Owner to maintain those facilities and connections located upon or within such Owner's Condominium and it shall be the obligation of the Association to maintain those fa- cilities and connections located upon the Common Property. Notwithstanding the foregoing, internal and external tele- : phone wiring designed to serve a single Condominium Unit, but located outside the boundaries of the Condominium Unit, shall be maintained by the Owner of said Condominium Unit. -16- Wherever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project and it becomes necessary to gain access to said connections, cables and/or lines through a Condominium Unit owned by someone other than the Owner of the Condominium Unit served by said connections, cables and/or lines, the Owner of the Condominium Unit served by said connections, cables and/or lines shall have the right, and is hereby granted an easement to the full extent neces- sary therefor, to enter upon such other Condominium Unit or to have the utility companies enter upon such other Condo- minium Unit to repair, replace and generally maintain said connections, cables and/or lines. (c) Whenever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project, and said connections, cables and/or lines serve more than one (1) Condominium Unit, the Owner of each Condominium Unit served by said connections, cables and/or lines shall be entitled to the full use and enjoyment of such portions of same as service his Condomini- um Unit. (d) In the event of a dispute between Owners re- specting the repair or rebuilding of the aforesaid connec- tions, cables and/or lines, or the sharing of the cost thereof, upon written request of one (1) of such Owners ad- dressed to the Association, the matter shall be submitted to the Board who shall decide the dispute, and the decision of the Board shall be final and conclusive on the Owners. (e) Easements over the Project for the installa- tion and maintenance of electric and telephone lines, water, gas, drainage and sanitary sewer connections and facilities, and television antenna cables and facilities, all as shown on the recorded map of the Project and as may be hereafter required or needed to service the Project, are hereby re- served by Declarant, together with the right to grant and transfer the same. Section 6. Easements for Maintenance of the Common Property. Subject to the rights reserved by Declarant as set forth in this Declaration, there is hereby created, granted and reserved a nonexclusive casement in favor of the Association £or ingress, egress and access on, over and across all portions of the Project as reasonably required by the Association to perform its maintenance obligations set forth in this Declaration. In the event it becomes necessary for the Association to enter upon any Condominium Unit or Exclusive Use Common Area for purposes of: (a) maintaining the Common Property; or (b) bringing an Owner and/or his Condominium into compliance with this Declaration, in -17- accordance with tfhe provisions set forth herein, the Association, and its duly authorized agents and employees, shall have the right, after reasonable notice to the Owner and at a reasonable hour of the day, to enter upon or within such Owner's Condominium Unit for the performance of such work. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by such entry, the Association shall repair the same at its expense. Not- withstanding the foregoing, in the event of an emergency, such right of entry shall be immediate. Section 7. Easements for Drainage. There are hereby created, granted and reserved over the Common Property (including the Exclusive Use Common Areas) easements for drainage according to the established patterns for drainage created by the approved grading plans for the Project, as well as according to the actual, natural and existing patterns for drainage. Each Owner covenants and agrees that he shall not obstruct or otherwise interfere with said drainage patterns of waters, or in the alter- native, that in the event it is necessary and essential to alter said drainage patterns, he will make adequate provisions for proper drainage and submit such plans for approval by the Archi- tectural Control Committee. In conjunction therewith, each Owner covenants and agrees that he shall not alter, in any manner what- soever, the surface of his patio area or deck area, or obstruct any drainage spouts in said areas. Section 8. Easements for Construction and Sales. De- clarant hereby reserves, for a period of seven (7) years from the first .close of an escrow for the sale of a Condominium in the Project to a retail purchaser pursuant to a Final Subdivision Public Report issued by the DRE, until all Condominiums in the Project are sold (and escrows closed), whichever occurs first, nonexclusive easements for access, ingress and egress on and over the Project to carry on normal sales activity, including the op- eration of a models complex, sales office and parking area, and the display of promotional signs and exhibits in connection with the sale or lease of Condominiums in the Project. Nothing in this Declaration shall be interpreted or construed to limit or restrict Declarant's rights to use the Access Easements so long as Declarant shall own any interest in the Property and/or the Annexation Property. Section 9. Easements for Air Conditioning Com- pressors. As to any air conditioning compressor which is located on a portion of the Common Area (including, but not limited to, the roofs of the Condominium Buildings), there is hereby created, established and granted an exclusive easement on, over and across said portion of the Common Area for the permanent placement of such compressor. Additionally, each Owner is granted an easement -18- for ingress/ egress and access on and over the Common Area to maintain, repair and replace his respective air conditioning compressor. Section 10. Easement for Public Service Uses. In addi- tion to the foregoing easements over the Common Property, there are hereby created, established and granted easements for public services, including, but not limited to, the right of police, fire, ambulance and other public services to enter upon any part of the Common Property for purposes of serving the health and welfare of all Owners in the Project. Section 11. Owner Cooperation for Fumigation. In the event that it shall become reasonably necessary for the Associ- ation to fumigate a Condominium Building to control termites, in- sects, wood-destroying pests, organisms or for other similar pur- poses, the Owners of all Condominium Units in said Condominium Building shall cooperate with the Association so as to enable such work to be promptly and effectively completed (including, but not limited to, agreeing on the dates the Owners will vacate their respective Condominium Units to enable the fumigation work to be performed). The cost of such fumigation may be included in the Regular Assessments or reviewed by the Board as a Special Assessment in accordance with the Article hereinbelow entitled "Assessments," as the Board deems appropriate. In any case, each Owner shall be responsible for his respective costs for food and lodging during the period the Condominium Building is required to be vacated. In the event it is necessary to temporarily vacate a Condominium Unit to accommodate, the control of termites, insects, wood-destroying pests or organisms, the Association shall give notice to the affected Condominium Unit Owners not less than fifteen (15) days nor more than thirty (30) days prior to the date that said Owners must temporarily vacate their Condominium Unit. The notice shall state the reason for the temporary relocation, the date and time of the beginning of the fumigation or treatment, the anticipated date and time of termination of treatment, and the fact that each Owner shall be responsible for his respective costs for food and lodging during the temporary relocation. In order for the above-mentioned notice by the Association to be deemed complete, the Association must comply with either of the following: (%\ P«?rsoP-sl delivery of 3 ccpy of the notice to the occupants of the affected Condominium Units and the mailing of said notice to the Owners, if different than the occupants, by first class mail, postage prepaid, at the most current address indicated on the books of the Association; : and -19- (b') Mailing a copy of the notice to the occupants of the affected Condominium Units at the address of said Condominium Units and a copy of the notice to the Owners, if different than the occupants, by first class mail, postage prepaid, at the most current address shown on the books of the Association. Section 12. Control and/or Transfer of Title of Common Property. Control of the Common Property (excluding those por- tions of the Common Property which are subject to the various rights reserved by Declarant as set forth in this Declaration) shall be turned over by Declarant to the Association prior to or simultaneously with the first close of escrow for the sale of a Condominium in the Project. Without limiting the generality of the foregoing, the Association Property, if any, shall be con- veyed to the Association free and clear of all encumbrances and liens, except property rights in and to the Association Property which are of record or created herein, and any current real property taxes, which shall be prorated to the date of transfer. Said conveyance shall be made to the Association prior to or con- currently with the first conveyance of a Condominium in the respective Increment of the Project in which such Association Property is located. ARTICLE V DECLARANT'S RESERVATION OF RIGHTS REGARDING SUBSEQUENT INCREMENTS Section 1. Introduction. As indicated in Article II above,.Declarant presently plans to develop the Project in three (3) Increments, and to develop the Property as the first and second Increments. In furtherance of said proposed development plan, Declarant hereby creates and reserves for itself and its successors and assigns, the various rights and powers pertaining to the design, development, construction, marketing and sale or leasing of Condominiums or other Improvements in any subsequent Increment of the Project. Notwithstanding the foregoing, nothing in this Article or otherwise in this Declaration shall be interpreted or construed to require Declarant to construct any subsequent Increment whatsoever. Furthermore, nothing in this Article shall be interpreted or construed to restrict or otherwise limit the generality of ar.y other rights or powers created and reserved by Declarant elsewhere in this Declaration. Section 2. Right of Declarant to Modify Increments. (a) Modifications. Subject to the restrictions and limitations set forth in Subparagraph (b) below, Declar- : ant hereby reserves the right, in its sole discretion, to -20- redesign, reconfigure and/or otherwise modify any subsequent Increment, or portion thereof, including, but not limited to, the following: (i) Alter the vertical and/or horizontal boundaries of any Improvement; (ii) Adjust the location and/or configuration of any Common Property, the Condominium Units and/or the Exclusive Use Common Area; or (iii) Effectuate nominal deviations to a Condominium Plan which result during the course of construction of the Improvements. (b) General Restrictions on Modifications. The rights of Declarant to modify an Increment shall be subject to the following restrictions: (i) In no event shall the number of Condominum Units be changed from that shown on a Condominium Plan; (ii) In no event shall the modification of an Increment have the effect of causing a proration of Regular Assessments, as it is Declarant's express intent that Regular Assessments be levied on an equal basis against all Condominiums subject to the levy of Assessments; (iii) The modification of any portion of the Project shall in no event physically modify or change any Condominium Units which, as of the date of such modification, are the subject of an agreement of sale or are not owned by Declarant, unless the purchaser or Owner of such a Condominium Unit shall consent to such modification in writing; and (iv) In no event shall the modification of the Project cause any Condominium Unit to be decreased in size so as to be smaller than ninety percent (90%) of the smallest Condominium Unit located in Incre- ment 1. Section 3. Amendment to Condominium Plan. Each Owner of a Condominium in the Project hereby acknowledges and agrees that if the modification of any subsequent Increment makes it necessary to amend or re-record a Condominium Plan (including, but not limited to, • any ar.cnd~.ant necessary to cause such Condominium Plan to be consistent with the Improvements actually constructed), or in the event that any subsequent Increment is not completed as proposed, Declarant is hereby authorized to prepare, execute and record on behalf of the Owners such an amendment to the respective Condominium Plan. All costs and expenses associated with the preparation and recordation of the Condominium Plan shall be borne by Declarant, at Declarant's sole -21- cost and expense) Each Owner of a Condominium in the Project, by accepting a deed to a Condominium, shall be deemed to have irrevocably appointed Declarant as such Owner's attorney-in-fact to effect the recordation of the Condominium Plan, as more specifically set forth in Section 4 hereinbelow. An amendment of the Condominium Plan by Declarant pursuant to this Section shall, when recorded, have the effect of: (a) relocating the Common Area and any Exclusive Use Common Area therein and each Unit to the extent set forth on the amendment, (b) vesting in each Owner (including Declarant with respect to any unsold Units) an undivided interest (to the extent of each Owner's prorata interest in Common Area) in Common Area as depicted on the amendment, (c) divesting each Owner (except Declarant) of all right, title and interest to any Unit, other than such Owner's Unit as depicted on the amendment, (d) vesting in each Mortgagee an undivided interest (to the extent of the interest in the Common Area of the Owner of the Unit which is the subject of such Mortgage) in the Common Area as depicted on the amendment, and (e) divesting each Mortgagee of all right, title and interest to each Condominium (other than the Owner's Condominium which is the subject of such Mortgage or other encumbrance) as depicted on the amendment. The adjustment of any Mortgage in accordance with the provisions of this Section shall not affect the priority of any such Mortgage with respect to any other matters affecting title to the Unit which is the subject of such Mortgage. Section 4. Irrevocable Limited Power of Attorney. Each Owner of a Condominium in the Project, by accepting a deed to a Condominium hereby irrevocably appoints Declarant as his attorney-in-fact, for himself and each of his Mortgagees, optionees, grantees, licensees, trustees, receivers, lessees, tenants, judgment creditors, heirs, legatees, devisees, administrators, executors, legal representatives, successors and assigns, whether voluntary or involuntary, and hereby grants to Declarant an irrevocable limited power of attorney coupled with an interest for Declarant to act as his attorney-in-fact in connection with any modification to all or any portion of a subsequent Increment. Each Owner hereby acknowledges and agrees that this irrevocable limited power of attorney is: (1) retained for the benefit of the Declarant and not the Owner; (2) created to secure the Owner's performance cf a duty to the Declarant pursuant to this Article V; and (3) created by Owner's acceptance of a deed to a Condominium and as part of the consideration for the purchase and sale of a Condominium. Based on the foregoing, each Owner further acknowledges and agrees that this irrevocable limited power of attorney is "coupled with an interest" and, pursuant to Section 2356 of the California Civil Code, as same may be amended from time to time, may not be terminated by: (1) -22- the Owner's revocation of such limited power of attorney; (2) the Owner's death; or (3) the Owner's incapacity to contract. In furtherance thereof and subject to the limitations and restric- tions set forth in this Article, Declarant shall have the right and power as a duly authorized attorney-in-fact to perform any of the following actions: (a) To prepare, execute, acknowledge and record any map or record of survey required or permitted by the provisions of the Subdivision Map Act of the State of California in effect on the date of the recording of this Declaration, and as thereafter amended, and any ordinances, rules and regulations of the City, and any other governmental entities and authorities having jurisdiction over the Project in effect on the date of the recording of this Declaration, and as thereafter enacted or amended, or which may be required or permitted by any title insurer, and, in connection therewith, to perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any federal, State and local governmental entities and authorities; to appear before any such governmental entities and authorities; and to execute, acknowledge and deliver any improvement agree- ments and bonds, and post deposits securing the performance of any such conditions and obligations; (b) As referenced in Section 3 above, to prepare, execute, acknowledge and record any amendment to a Condo- minium Plan, including, without limitation, any amendments necessary to cause such Condominium Plan to conform with the Improvements as actually built, which may be required or permitted by the laws of the State of California as in effect on the date of the recording of this Declaration, as thereafter enacted or amended, and any ordinances, rules and regulations of the City, and any other governmental entities and authorities having jurisdiction over the Project as in effect on the date of the recording of this Declaration, and as thereafter enacted or amended, or which may be required or permitted by any title insurer, and, in connection there- with, to perform all conditions* undertake any obligations and execute all agreements and documentation required or permitted by any federal, Stats and local governmental entities and authorities; to appear before any such govern- mental entities and authorities; and to execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; -23- (c) To prepare, execute, acknowledge and file for approval any application for zoning or set back changes or variance or conditional use permits, or any other permits or reports required or permitted by the laws of the State of California as in effect on the date of the recording of this Declaration, as thereafter enacted or amended, and any ordinances, rules and regulations of the City, and any other governmental entities and authorities having jurisdiction over the Project as in effect on the date of the recording of this Declaration, and as thereafter enacted or amended, or which may be required or permitted by any title insurer, and, in connection therewith, to perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any federal, State and local governmental entities and authorities; and to execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; (d) To make applications for any property reports or public reports or amendments thereto, or exemption from the requirements therefor required or permitted by federal and State statutes, rules and regulations relating to the sale, lease, transfer or other disposition of subdivided lands, and, in connection therewith, to perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by any feeral, State and local governmental entities and authorities; to appear before any such governmental entities and authorities; and to execute, acknowledge and deliver any improvement agreements and bonds, and post deposits securing the performance of any such conditions and obligations; (e) To deliver any public reports or property reports, or amendments thereto, obtain receipts and offer and administer rescission rights required by law; (f) To prepare, execute, acknowledge and file for approval any registration or application for any permit, approval, exemption, ruling or entitlement, which registration or application is required or permitted pursuant to any law or regulation in effect as of the date of the recording of this Declaration, and as, hereafter enacted or amended by any federal, State and local governmental entities and authorities, and, in connection therewith, to perform all conditions, undertake any obligations and execute all agreements and documentation required or permitted by such governmental body and by any such laws and regulations; to appear before any such govern- mental bodies, and to execute and deliver any improvement -24- agreements And bonds, and post deposits securing the per- formance of any such conditions and obligations; and do all other things now or thereafter permitted or required by any such governmental body and any such laws and regulations; (g) To prepare, execute, acknowledge and record any deeds, waivers, releases, reconveyances or other documentation which may be permitted or required to clear title to any constructed or unconstructed Condominium Units in the Project; and (h) To do any and all things necessary or desirable under the circumstances to effect and accomplish the purposes of this Article. Section 5. Indemnification of Owners on Exercise of Power of Attorney. Declarant shall indemnify and hold each Owner free and harmless from any liability, including attorneys' fees, which are incurred in connection with the exercise by Declarant of the power of attorney set forth in Section 4 above. Section 6. Mortgage Interests and other Encumbrances to Take Subject to Power of Attorney. The acceptance or creation of any Mortgage or other encumbrance, whether or not voluntary, created in good faith or given for value, shall be deemed to be accepted or created subject to each of the terms and conditions of the power of attorney described in Section 4 hereof. Section 7. Effect on Assessment Liens. Any lien recorded against a Condominium to enforce the collection of assessments which were levied prior to the recording of an amendment to any Condominium Plan pursuant to this Article shall be reqonveyed and released with respect to each Condominium depicted on such amendment other than the Condominium against which the lien was recorded. In the event the Condominium against which the lien was recorded was effected by the amendment, the lien shall be interpreted and construed to affect the Condominium as effected by such amendment. Section 8. Exclusive Control by Declarant of Subsequent Increments During Construction. Until the first close of an escrow for the sale of a Condominium in a subsequent Increment, if ever, Declarant shall have each and all of the exclusive rights and powers set forth below relative to such Increment. Declarant, in its sole discretion, may transfer or assign for such period of time and, subject to such ccrrditicns as Declarant may deem appropriate, any or all of such rights and powers to its successors, assigns, contractors and/or agents. Such rights and powers include the following: (a) To construct any and all Improvements on such : Increment as Declarant in its sole discretion deems appropriate; -25- (b)< To alter or otherwise modify the style, size, color or appearance of any Improvements constructed by Declarant; (c) To construct such screens, walls, fences or other barriers as may be necessary to prevent trespassing into the subsequent Increment prior to the commencement of the rights and obligations of such Increment pursuant to Article II, Section l(c) hereinabove; (d) To utilize ingress, egress and access on and over any portion of the Project (and over the Access Ease- ments) to exercise any of its rights hereunder; (e) To perform routine maintenance and/or to repair or replace any improvements located on such Incre- ment; (f) To establish, grant and/or reserve additional licenses, easements and rights-of-way in favor of Declarant and/or any public or private utility companies as may be reasonably necessary for the development, maintenance and/or proper operation of the Project; and (g) To otherwise control all aspects of constructing, maintaining, marketing and selling or leasing the Condominiums constructed on such Increment. Each Owner hereby acknowledges and agrees that Declarant shall have each and all of said rights and powers, together with all other rights and powers set forth in this Article and in this Declaration, and covenants and agrees not to obstruct or in any way interfere with the exercise of such rights and powers by Declarant, its successors, assigns, employees, contractors and/or agents. Section 9. Term of Rights and Powers of Declarant. The rights and powers created, established and/or reserved by Declarant as set forth in this Article shall remain in full force and effect as to any subsequent Increment until the earlier of: (a) such time as Declarant no longer owns any Condominium Units in such Increment; or (b) seven (7) years from the date of the first close of an escrow for the sale of a Condominium in the Project to a retail purchaser pursuant to a Final Subdivision Public Report issued by the DRE. Thereafter, all of the rights and powers set forth in only this Article shall cease and terminate ar.d be of no further force or effect. Notwithstanding the foregoing, if a subsequent Increment is a portion of a Lot (e.g. Increment 2), and if Declarant shall abandon the Project by giving written notice thereof to the Association or if there is a cessation of labor by Declarant for at least one (1) year after commencement of construction on such Increment (save and except for reasons beyond Declarants' reasonable control, i.e., strikes, Acts of God, material shortages, etc.), then Declarants' rights -26- and powers relatfive to such Increment shall cease and terminate and the Owners of Condominiums in the Project may make such use of such Increment as reasonably determined by the vote of a majority of the Owners other than Declarant. All costs incurred to convert such Increment to the use approved by the Owners shall be levied as a Special Assessment against all Condominiums in the Project as provided hereinbelow. Thereafter, such Increment shall be maintained by the Association on the same basis as other similar Common Areas in the Project. ARTICLE VI THE ASSOCIATION Section 1. Membership. Every person or entity who or which is an Owner, as defined hereinabove, shall be a Member of the Association. The foregoing is not intended to include persons or entities who hold an interest in a Condominium in the Project merely as security for the performance of an obligation. Section 2. Classes of Membership. The Association shall have two (2) classes of voting membership, as follows: 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 Condominium owned. When more than one (1) person holds an interest in any Condominium, all such per- sons shall be Members. The vote for such Condominium shall be exercised as they among themselves determine, but in no event shall more than one (1) vote be cast with respect to any Condominium. The Association shall recognize the vote cast by a co-Owner, unless another co-Owner shall cast a conflicting vote in which case both votes shall be null and void. Class B. The Class B Member shall be the Declarant and shall be entitled to three (3) votes for each Condomini- um owned in the Project upon which Declarant is then paying the appropriate monthly Assessments provided for hereinbe- low. The Class B membership shall cease and be converted to Class A membership upon the happening of either of the fol- lowing events, whichever occurs earliest: (1) The second anniversary of the first close of an escrow for the sale of a Condominium to a retail purchaser pursuant to a Final Subdivision Public Report issued by the ORE; (2) The fourth anniversary of the first close of an escrow for the sale of a Condominium to a retail purchaser pursuant to a Final Subdivision Public : Report for Increment 1; or (3) December 31, 1996. -27- Any action taken by the Association which must have the approval of the membership of the Association before being undertaken shall require the vote or written assent of both a majority of the Class 3 membership as well as a majority of the Class A membership, BO long as there are two (2) outstanding classes of membership, unless a specific provision of this Declaration or the By-Laws or Articles of the Association requires the approval of a greater percentage of the voting membership. Notwithstanding the foregoing, any action by the Association pursuant to the Article contained herein entitled "Enforcement of Bonded Obligations," shall only require a majority of the voting power of the Owners other than Declarant. Section 3. Special Voting Procedures for Election of the Board. The Board shall be entitled to solely elect a majority of the members of the Board until the first to occur of the following events: (a) The election of the Board immediately following the sale, rental or lease by Declarant of at least one hundred (100) Condominiums in the Project; or (b) December 31, 1992. In the event Declarant shall not have sold, rented and/or leased at least one hundred (100) Condominiums by December 31, 1992, Declarant's right to elect a majority of the members of the Board shall be automatically extended until the aforesaid number of Condominiums have been sold, rented and/or leased, but in no event later than December 31, 1994. Notwithstanding the foregoing, the Class A Members shall be entitled to elect at least forty percent (40%) of the members of the Board, so long as there are two (2) classes of membership outstanding in the Association. Section 4. Record Dates. For the purpose of determining Members entitled to notice of any meeting, to vote, or to exercise any other rights in respect of any lawful action, the Board may fix, in advance, record dates as provided in the By-Laws. Section 5. Limiting Voting Rights for Certain Purposes. Declarant shall be entitled to the limited voting rights set forth in this Section for -all Condominiums which: (i) are located in an Increment which is only a portion of a Lot; (ii) are shewn or. the Condominium Plan recorded on such Lot; and (iii) have not been completed so as to be available for sale or occupancy. Such voting rights shall be limited solely to the following matters: (i) any decisions regarding condemnation or eminent domain proceedings regarding the Project as referenced in Article XV hereinbelow; and (ii) any decisions regarding Damage or Destruction to the Common Area and/or Damage or Destruction to the Association Property as referenced in Articles XIII and XIV -28- hereinbelow. Declarant shall be entitled to one (1) vote for three (3) unbuilt and/or incomplete Condominium Units which satisfies all of the aforesaid conditions. If the number of unbuilt and/or incomplete Condominium Units is not equally divisible by three (3), the number of votes which may be cast by Declarant under this Section shall be rounded down to the nearest whole number. Upon the completion of the Condominium Units, the voting rights attributable to such Condominiums shall be as set forth in Section 2 above. Section 6. Vesting of Voting Rights. Except as otherwise provided in Section 5 above, the voting rights attrib- utable to any given Condominium in the Project shall not vest until the Assessments provided for hereinbelow have been levied by the Association against said Condominium in accordance with this Declaration. Section 7. Suspension of Voting Rights. The Board shall have the authority to suspend the voting rights of any Mem- ber to vote at any meeting of the Members for any period during which such Owner is delinquent in the payment of any Assessment, regardless of type, it being understood that any suspension for nonpayment of any Assessment shall not constitute a waiver or discharge of the Member's obligation to pay the Assessments provided for in this Declaration. Section 8. Transfer. The Association membership held by any Owner of a Condominium shall not be transferred, pledged or alienated in any way, except as incidental to the sale of such Condominium. In the event of such sale, the Association member- ship may only be transferred, pledged or alienated to the bona fide purchaser or purchasers of the Condominium, or to the Mort- gagee (or third party purchaser) of such Condominium upon a fore- closure sale. Any attempt to make a prohibited transfer is void and will not be reflected upon the books and records of the Asso- ciation. The Association may levy a reasonable transfer fee against new Owners and their Condominiums (which fee shall' be a Compliance Assessment chargeable to such new Owner) to reimburse the Association for the actual administrative cost of transferr- ing the memberships to the new Owners on the records of the Asso- ciation. Section 9. Proxies. Votes may be cast in person or by proxy. Proxies must bs filed with the Secretary before the ap- pointed time for each meeting. Every proxy shall be revocable and shall automatically terminate upon the earliest of the following: (a) the conveyance by the Owner of his Condominium; (b) the date of automatic termination, if any, specified in the proxy, but not to: exceed three (3) years from the date of issuance of the proxy; or (c) eleven (11) months from the date of issuance of the proxy, if no automatic termination date is specified in the proxy. Any -29- form of proxy or 'written ballot distributed to the membership of the Association shall afford an Owner the opportunity to specify a choice between approval and disapproval of each matter or group of matters to be acted upon at the meeting for which said proxy was distributed, except it shall not be mandatory that a candi- date for election to the Board be named in the proxy or written ballot. The proxy or written ballot shall provide that, where the Owner specifies a choice, the vote shall be cast in accordance with that choice. In addition, the proxy shall also identify the person or persons authorized to exercise the proxy and the length of time it shall be valid. ARTICLE VII POWERS AND DUTIES OF THE ASSOCIATION Section 1. Management Body. The Association is hereby designated as the management body of the Project. The Members of the Association shall be the Owners in the Project as provided herein, and the affairs of the Association shall be managed by a Board of Directors, as more particularly set forth in the By- Laws. The initial Board shall be appointed by the incorporator(s) or its/their successor(s). Thereafter, the Directors shall be elected as provided in the By-Laws. Section 2. Powers. The Board, for and on behalf of the Association, shall have the right and power to do all things necessary to conduct, manage and control the affairs and business of the Association. Subject to the provisions of the Articles, the By-Laws and this Declaration, the Board shall have all gen- eral powers authorized under the California Corporations Code for nonprofit, mutual benefit corporations, and shall have the fol- lowing specific powers: (a) Enforce the provisions of this Declaration and all contracts or any agreements to which the Association is a party; (b) Acquire, manage, maintain, repair and replace all Common Property and Improvements located thereon, in- cluding all personal property, in a neat, clean, safe and attractive condition at all times, and to pay all utilities, gardening and other necessary services for the Common Prop- erty, all as more specifically set forth in the Article herein entitled "Repair and Maintenance"; (c) Maintain fire, casualty, liability and fidel- ity bond coverage, and other insurance coverage pursuant to the terms of that Article herein entitled "Insurance"; (d) Grant easements or licenses, where necessary, for utilities and sewer facilities over, on and across the Common Property to serve the Project to any public agency, -30- governmental! entity or utility for purposes consistent with the use and enjoyment of the Common Property. (e) Obtain, for the benefit of the Common Proper- ty, all commonly metered water, gas and electric services, refuse collection and cable (or master antenna) television service; (f) Enter into an agreement with any other home- owners association whose members, owners and/or residents use all or any portion of the Access Easements regarding the joint use, operation and maintenance of the Access Easements and any related Improvements (e.g., entry gates), and in the absence of any such agreement enforce the rights of all Owners, the members of their families, their tenants, lessees, guests and invitees to use the Access Easements; (g) Enter into a subsidy or maintenance agreement with Declarant whereby the Regular Assessments are tempor- arily reduced; (h) Employ and retain a professional manager and/or management company to perform all or any portion of the duties and responsibilities of the Board and engage such other personnel (including attorneys and accountants) as necessary for the operation of the Project and administra- tion of the Association; (i) Pay all taxes and special assessments which would be a lien upon the entire Project or the Common Prop- erty, and to discharge any lien or encumbrance levied against the entire Project or the Common Property; (j) Pay for reconstruction of any portion of the Common Property damaged or destroyed; (k) Delegate its powers; (1) Adopt reasonable Rules and Regulations con- cerning the maintenance, improvement, use and/or occupancy of the Project; (m) Enter into any Condominium when necessary in connection with maintenance or construction for which the Association is responsible; and (n) Perform any and all other acts and things that a nonprofit, mutual benefit corporation organized under the laws of the State of California is empowered to do, which may bo necessary, convenient or appropriate in the administration of its affairs for the specific purposes of meeting its duties as set forth in this Declaration. Section 3. Duties. The Board shall perform and exe- cute the following duties for and on behalf of the Association: : (a) Provide, water, sewer, gas, electricity, gar- bage and trash collection, periodic drainage device clearing and other necessary utility services for the Common Proper- -31- ty, and, if hot separately metered or provided, for the Con- dominium Units; (b) Provide insurance for the Association and its Members in accordance with the provisions of the Article hereinbelow entitled "Insurance." (c) Own, maintain and repair all portions of the Common Property (and any Common Property which is annexed into the Project) in a neat, clean, safe, attractive, sanitary and orderly condition at all times. Without limiting the generality of the foregoing, the Association shall be responsible for the following: (i) maintaining the private streets and drives within the Project, if any, sidewalks, private on-site sewer lines and laterals, storm drains, drainage channels, debris basins and/or other similar drainage facilities, if any, in a condition comparable to the condition initially approved by the City; (ii) Contributing to or sharing in the cost of the maintenance of the Access Easements in accordance with the terms of any agreement which may be entered into with an adjacent homeowners association which also uses all or any portion of such Easements; (iii) maintaining all natural slopes, (in- cluding performing appropriate brush and weed abatement) in accordance with the requirements of the Fire Marshal so that such slopes do not become a fire menace as defined in the California Health and Safety Code, and maintaining all landscaping and related water conservation irrigation systems on all manufactured slopes (or other planted slopes) with appropriate plant material in a condition comparable to the condition initially approved by the City; (iv) Cause a yearly inspection to be made, by a licensed engineer, of all drainage devices located within the Project; and (v) Maintain all Open Space Easement Areas and public access easement as shown on Exhibit "D" attached hereto, in a neat and clean condition and good repair and working order, as applicable; (d) Contract for any other material, supplies, furniture, labor, services, maintenance, repairs, structural alterations and insurance which the Association is required to pay for pursuant to the terms and provisions of this Dec- laration or by law; (e) Pay all real and personal property taxes and Assessments which the Association is required to pay pursuant to the terms and provisions of this Declaration or -32- by law, unless separately assessed to Owners; provided, however, that it shall be the obligation of each Owner to pay his respective share of the tax assessment levied on the Project prior to separate assessments by the Tax Assessor, pursuant to the applicable provisions of the California Revenue and Taxation Code; (f) Cause financial statements for the Associa- tion to be regularly prepared and copies distributed to each Member of the Association, regardless of the number of Mem- bers or the amount of assets of the Association: (1) A pro forma operating statement (budget) for each fiscal year shall be distributed not less than forty-five (45) days nor more than sixty (60) days prior to the beginning of the fiscal year, and shall contain the following information: (i) An itemized estimate of the Asso- ciation's revenue and expenses, determined on an accrual basis; (ii) The amount of the total cash re- serves of the Association which are then currently available for the major repair or replacement of Common Property Improvements and for other con- tingencies; (iii) An itemized estimate of the current replacement costs of the remaining useful life of the Common Property Improvements, together with an explanation of the methods of funding being utilized by the Association to defray the costs of future repairs, replacements or additions to the Common Property Improvements; and (iv) A general statement setting forth the procedures utilized by the Association to cal- culate and establish reserves to defray the costs of future repairs, replacements or additions to the Common Property Improvements. (2) A balance sheet as of an accounting date which is the last day of the month closest in time to six (6) months from the date of closing for the first sale of a Condominium, and an operating statement for the period frcrr. the date of the first closing to the said accounting date, shall be distributed within sixty (60) days after the accounting date. This operating statement shall include a schedule of Assessments re- ceived, and receivable, identified by the number of the Condominium and the name of the person or entity as- sessed; -33- " (3) An annual report consisting of the fol- lowing shall be distributed within one hundred twenty (120) days after the close of the fiscal year: (i) A balance sheet as of the last day of the Association's fiscal year; (ii) An operating (income) statement for the fiscal year; (iii) A statement of changes in finan- cial position for the fiscal year; and (iv) Any information required to be reported pursuant to Section 8322 of the Cali- fornia Corporations Code. This annual report shall ordinarily be prepared by a licensee of the California Board of Accountancy, in accordance with generally accepted accounting prin- ciples, for any fiscal year in which the gross income of the Association exceeds Seventy-Five Thousand Dollars ($75,000.00). However, if, for any reason, the report is not prepared by a licensee of the California Board of Accountancy, said report shall be accompanied by a certificate from an authorized officer of the Association that the statements were prepared without audit from the books and records of the Association. Notwithstanding the foregoing, in lieu of distributing the financial statement required hereinabove, the Board may elect to distribute a summary of the statement to all Members with a written notice, in1at least 10-point bold type on the front page, that the statement is available at the business office of the Association, or at another suitable location within the Project, and that copies will be provided upon request and at the expense of the Association. If any Member requests that a copy of the financial statement required herein be mailed to said Member, the Association shall provide the copy to the Member by first-class mail at the expense of the Association, and mailed within five (5) days of the receipt of said request; (4) A statement of the Association's poli- cies and practices in enforcing its remedies against Members for nonpayment cf Assessments, as set forth in the Article herein entitled "Effect of Non-Payment of Assessments: Remedies of the Association," which shall be distributed within sixty (60) days prior to the be- ginning of the fiscal year; and -34- ' (5) The Board shall review on a quarterly basis, the following: (i) A current reconciliation of the Association's operating accounts; (ii) A current reconciliation of amounts collected as reserves; (iii) The current year's actual amounts collected as reserves and expenses compared to the current year's budget; (iv) An income and expense statement for the Association's operating and reserve ac- counts; and (v) The most current account state- ments prepared by the financial institutions where the Association maintains its operating and re- serve accounts. Withdrawal of funds from the Association's reserve account shall require the signature of either: (i) two (2) members of the Board; or (ii) one (1) member of the Board and an officer of the Association who is not also a member of its Board. As used in this Section, "reserve account" means moneys that the Board has identified from its annual budget for use to defray the future repair or replacement of, or additions to, those major components of the Common Property which the Association is obli- gated to repair or replace on a periodic basis, rather than on a regular annual basis. (g) Assume and pay out of the Assessments pro- vided for hereinbelow all costs and expenses incurred by the Association in connection with the performance and execution of all of the aforesaid powers and duties, and any other powers and duties the Association may assume as provided for in Section 4 hereinbelow; (h) Formulate, adopt and enforce such Rules and Regulations as it may deem proper for the operation of the Common Property, as more particularly described below. No- tice of adoption of any such Rules and Regulations and of any change, amendment or repeal thereof, shall be given in writing to each Member and shall be on file in the principal offics of the Association. In the event of any conflict be- tween such Rules and Regulations and this Declaration, this Declaration shall prevail; (i) Enforce all applicable provisions of this Declaration, the Articles, By-Laws and such Rules and Regu- lations of the Association, and of all other documents per- taining to the ownership, use, management and control of the Project; -35- (jt) Give notices in writing to the Federal Home Loan Mortgage Corporation (FHLMC), the Federal National Mortgage Association (FNMA) and the Government National Mortgage Association (GNMA), and other lenders and investors participating in the financing of the sale of Condominiums in the Project, as required herein; and (k) Within ten (10) days of the mailing or de- livery of a written request from an Owner, provide said Own- er with a copy of this Declaration and the By-Laws and Arti- cles for the Association, together with a true statement in writing as to the amount of any delinquent Assessments, pen- alties, attorneys' fees and other charges therein as pro- vided by this Declaration or other management documents of the Board as of the date of such request. The Board may im- pose a fee for providing the foregoing, but in no event shall the fee exceed the reasonable cost to prepare and re- produce the requested documents. In addition, make available during normal working business hours or upon request under reasonable circumstances to any prospective purchaser of a Condominium, any Owner of a Condominium, any first Mortgagee and the holder(s), insurer(s) and guarantor(s) of the first Mortgage on any Condominium, current copies of the Declara- tion, the Articles of Incorporation, the By-Laws, the Rules and Regulations, the membership register, including mailing addresses and telephone numbers, and all other books, records and financial statements of the Association. Section 4. Discretionary Powers. The Board, at its option, may assume, perform and execute the following powers and duties for and on behalf of the Association: (a) Retain the services of a manager for the Project and provide such other personnel as the Association deems necessary and proper to assist in the operation of the Association and/or management of the Common Property, re- gardless of whether such other personnel are employed di- rectly by the Association or otherwise; (b) Remove or replace any Improvement that ex- tends into the Common Property under authority of an ease- ment when access to a utility line underneath such Improve- ment is requested by any utility company; provided, however, that the cost shall be assessed against the Owner of the Condominium involved as a Compliance Assessment if said Owner caused the Improvement to be so placed in the Common Property without legal right to do so; -36- (d) Incur any liability or pay any costs or ex- penses for a single Condominium or Owner thereof; provided, however, that in the event the Association does incur any such liability or pay any such costs or expenses, the amount thereof shall be specially assessed against the Owner of such Condominium as a Compliance Assessment; provided fur- ther, however, that nothing herein shall permit the Associa- tion to assess the Owners for any new Improvements to the Common Property except as otherwise provided in this Decla- ration; (d) Subject to the limitations set forth in this Article, contract for any other material, furniture, labor, services, maintenance, repairs, structural alterations or insurance, or pay any taxes or Assessments which, in the opinion of the Board, shall be necessary or proper for the operation of the Common Property for the benefit of the Own- ers or for the enforcement of this Declaration; and (e) Enter into a maintenance or subsidy agreement with Declarant, at Declarant's sole discretion, to reduce the financial obligations of Owners in the Project for Assessment. Section 5. Notification by Association of Defects. The Board agrees that in the event of any alleged defect in any improved Common Property which the Association believes the Declarant may be responsible, the Board will provide Declarant with written notice of such defect. Declarant shall have a rea- sonable opportunity to inspect such alleged defect, and if Declarant agrees with the Board (or otherwise elects to perform the work) to repair, replace or otherwise cure any defect in workmanship and/or material. The Association acknowledges and agrees that Declarant, (or its authorized agents), shall be en- titled at its sole discretion to determine the material and methods to be used in affecting such repair, replacement or cure. Section 6. Limitations on Contracts. Except as other- wise provided herein, no contract entered into by the Associa- tion, or the Board acting for and on behalf of the Association, may run for a term longer than one (1) year, except with the vote or written assent of a majority of the voting power of the Asso- ciation and a majority of the votes residing in Members, other than the Declarant. Section 7. Delegations of Duties. In the event that the Association shall delegate any or all of its duties, powers or functions to any person, corporation or firm to act as man- ager, neither the Association nor the members of its Board shall be liable for any omission or improper exercise by the manager of any such duty, power or function so delegated. -37- Section 8. Right of Entry for Emergency. The Board, any person authorized by the Board or any Owner may enter any Condominium in the event of any emergency involving illness or potential danger to life or property. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association shall repair the same at its expense. Section 9. Right of Entry for Repairs. The Board, or any person authorized by the Board, shall have the right to en- ter, upon reasonable notice, any Condominium to effect necessary repairs which the Owner has failed to perform or which are neces- sary in connection with the repairs to the Common Property or an adjoining Condominium. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association shall repair the same at its expense. Section 10. Limitations on Board Action. The Board shall be prohibited from taking any of the following actions, except with the vote or written assent of a majority of the vot- ing power of the Association and a majority of the votes residing in Members, other than the Declarant: (a) Entering into a contract with a third person, wherein the third person will furnish goods or services for the Common Property or the Association for a term longer than one (1) year, with the following exceptions: (1) A contract with a public utility company if the rates charged for the materials or services are regulated by the Public Utilities Commission; provided, however, that the term of the contract shall not exceed the shortest term for which the supplier will contract at the regulated rate; (2) Prepaid casualty and/or liability insur- ance policies of not to exceed three (3) years duration, provided that the policy permits for short-rate can- cellation by the insured; (3) Lease agreements for laundry room fix- tures and equipment of not- to exceed five (5) years duration, provided that the lessor under the agreement is not an entity in which Declarant has a direct or indirect interest of ten percent (10%) or more; (4) Agreements for cable television services and equipment or satellite dish television services and equipment of not to exceed five (5) years duration, : provided that the lessor under the agreement is not an entity in which Declarant has a direct or indirect in- terest of ten percent (10%) or more; and -38- (5) Agreements for sale or lease of burglar alarm and fire alarm equipment installation and services of not to exceed five (5) years duration, provided that the supplier or suppliers are not entities in which the Declarant has a direct or indirect ownership interest of ten percent (10%) or more. (b) Incurring aggregate expenditures for capital improvements to the Common Property in any fiscal year in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (c) Selling during any fiscal year property of the Association having an aggregate fair market value great- er than five percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (d) Paying compensation to Directors or to of- ficers of the Association for services performed in the con- duct of the Association's business; provided, however, that the Board may cause a Director or officer to be reimbursed for expenses incurred in carrying on the business of the Association; or (e) Filling a vacancy on the Board created by the removal of a Director. Section 11. Licenses, Easements and Rights of Way. The Board, for and on behalf of the Association, is authorized and empowered to grant such licenses, easements and rights-of-way for sewer lines, water lines, underground conduits, storm drains, roadways, and other public utility purposes over those portions of the Common Property upon which no building or other structure has been erected as may be necessary and appropriate for the orderly maintenance, preservation and enjoyment of the Common Property or for the preservation of the health, safety, conve- nience and welfare of the Owners. Such licenses, easements and rights-of-way may be granted at any time prior to twenty-one (21) years after the death of the individuals who have signed this Declaration and their issue who are in being as of the date here- of, and the right to grant such licenses, easements and rights- of-way is hereby expressly reserved. Section 12. New Improvements. Except as otherwise pro- vided in this Declaration, the Association may construct new Im- provements cr additions to the Common Property, or demolish ex- isting Improvements, provided that in the case of any Improve- ment, addition or demolition involving a total expenditure in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year, the written consent or'vote of a: majority of the Owners (other than the Declarant) in the Proj- ect as to the maximum total cost therefor shall first be obtain- ed, and provided that no Condominium shall be altered or damaged -39- by any such demolition or construction without the consent of the Owner thereof. The Board shall levy a Special Assessment against all Owners in the Project for the cost of such work. Section 13. Association Rules and Regulations. The Board shall also have the power to adopt, amend and repeal Rules and Regulations, as it deems reasonable, which may include the establishment of a system of fines and penalties enforceable as Compliance Assessments. The Rules and Regulations shall govern such matters in furtherance of the purposes of the Association, including, without limitation, the use of the Common Property, the Exclusive Use Common Area, signs, parking restrictions and enforcement, trash collection, minimum standards for maintenance of Condominiums consistent with such standards as may be set forth in this Declaration or adopted by the Architectural Control Committee, and any other matter which is within the jurisdiction of the Association; provided, however, that the Rules and Regula- tions may not discriminate among Owners and shall not be incon- sistent with this Declaration, the Articles or By-Laws. A copy of the Rules and Regulations as they may, from time to time, be adopted, amended or repealed, or a notice setting forth the adop- tion, amendment or repeal of specific portions of the Rules and Regulations, shall be delivered to each Owner. The Rules and Regulations shall have the same force and effect as if they were set forth in and were part of this Declaration, and shall be binding on the Owners and their successors in interest, whether or not actually received thereby. The Rules and Regulations, as adopted, amended or repealed, shall be available at the principal office, of the Association to each Owner upon request. In the event of any conflict between any such Rules and Regulations and any other provisions of this Declaration, or the Articles or By- Laws, the provisions of the Rules and Regulations shall be deemed to be superseded. -40- I ARTICLE VIII ASSESSMENTS Section 1. Creation of the Lien and Personal Obliga- tion of Assessment. The Declarant, for each Condominium owned within the Project, hereby covenants, and each Owner of any Con- dominium, by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association: (a) Regular Assessments; (b) Special Assessments; (c) Compliance Assessments; and (d) such other assessments as the Association may periodically establish. The Regular and Special Assessments, together with a reasonable late charge as may, from time to time, be established by the Board in accordance with California law, interest, costs and rea- sonable attorneys' fees for the collection thereof, shall be a charge against and a continuing lien upon the Condominium against which each such Assessment is levied, and shall also be the per- sonal obligation of the Owner of such property at the time when the Assessment came due. Each Compliance Assessment levied against a Condominium, together with interest, costs, reasonable late charges and reasonable attorneys' fees for the collection thereof, shall be the personal obligation of the Owner of the property at the time of the Assessment. The personal obligation for delinquent Assessments shall not pass to the successors in title unless expressly assumed by them. Section 2. Purpose of Regular Assessments; Levy and Collection. The Regular Assessments levied by the Association shall be used exclusively to promote the health, safety and wel- fare of the residents in the Project and to maintain, repair, replace and improve the Common Property, and any other Improve- ments or areas which the Association is obligated to maintain, as provided herein. The Association, by and through its Board, shall levy and collect Assessments from the Owner of each Condominium in the Project in an amount sufficient to cover all of the Common Expenses incurred by the Association in connection with the per- formance and execution of the powers and duties set forth in this Declaration, the By-Laws and Articles. In connection therewith, the Association shall not impose or collect assessments, penal- ties or fees that exceed the amount reasonably necessary for the purpose or purposes for which they were levied. The percentage rate for the Assessments levied by the Association shall be ad- justed at such time as the rights and obligations regarding a subsequent Increment commences pursuant to Article II, Section l(c) hereinabove. Notwithstanding any other provisions of this Declaration, until the earliest to occur of: (a) the recordation of a Notice of Completion for the Condominium or Condominium Building; (b) the occupation or use of the Condominium Unit; or (c) the completion of all elements of the Condominium which the -41- Association is 'obligated to maintain, any Owner, including Declarant, shall be exempt from paying that portion of the Regular Assessment which is directly attributable to operating expenses and reserves which would be incurred by the Association due to the existence and/or the use of the Condominiums. The exemption shall include, but is not limited to: roof replacement; exterior maintenance; exterior walkway lighting; refuse disposal; cable television and domestic water supplied to the Condominium Units. Further, Declarant shall also be exempt from paying that portion of the Regular Assessment which is for the purpose of defraying operating expenses and reserves directly attributable to the existence and use of any Common Property that is not complete at the time Regular Assessments commence. This exemption shall continue only until the earlier of: (a) the recordation of a Notice of Completion on such Common Property; or (b) the placement into use of such Common Property. Section 3. Regular Assessments - Basis. Except as otherwise provided in this Article, Regular Assessments payable to the Association shall be assessed equally against all Owners of Condominiums. Each Owner's proportionate share of the Common Expenses for any fiscal year of the Association shall be a frac- tion, the numerator of which shall be the number of Condominiums owned by such Owner, and the denominator of which shall be the total number of Condominiums in the Project which are subject to Assessment. Until the first day of the fiscal year of the Association immediately following the first close of an escrow for the sale of a Condominium in the Project to an Owner, the maximum Regular Assessment shall be as set forth in the Budget reviewed and approved by the ORE. Regular Assessments may be increased as follows: (a) Subject to the limitations of California Civil Code Section 1366, as same may be amended, from time to time, from and after the first day of the fiscal year immediately following the conveyance of the first Condomin- ium to an Owner, the maximum Regular Assessment may not be increased each fiscal year by more than twenty percent (20%) above the maximum Regular Assessment for the previous year without the vote or written assent of Owners constituting a quorum (which shall mean more than fifty percent [50%] of Owners of the Association) casting a majority of affirmative votes at a meeting or election of the Association, conducted in accordance with Sections 7510, et seq., and 7613 of the Corporations Code. -42- (b) The limitation set forth above does not apply to increases in Assessments related to emergency situations which shall be deemed to include the following: (1) Extraordinary expenses required by an order by a court of competent jurisdiction; (2) Extraordinary expenses for the mainte- nance or repair of Common Property that is necessary to remedy any dangerous condition in the Project that rep- resents a threat of damage or injury to any person or property; and (3) Extraordinary expenses necessary to re- pair or maintain the Common Property that could not have been reasonably anticipated by the Board at the time the most recent Association budget was prepared. Notwithstanding the foregoing, in the event that the Board increases the Regular Assessment above twenty per- cent (20%) pursuant to this Section, the Board shall dis- tribute written notice concerning said increase to all Owners and a copy of a resolution adopted by the Board set- ting forth: (1) the necessity of the extraordinary expenses; and (2) the justification why said expenses were not reason- ably foreseeable at the time the most recent budget was prepared. The Board may fix the Regular Assessment at an amount not in excess of the maximum Regular Assessment. So long as Declarant is offering Condominiums for sale pursuant to a Final Subdivision Public Report, the Regular Assessment may not be decreased by ten percent (10%) or more without the express written consent of the Declarant and the ORE. Notwithstanding the foregoing, following the commencement of rights and obligations regarding a subsequent Increment pur- suant to the provisions set forth in Article II, Section l(c) of this Declaration, the maximum Regular Assessment may be automatically increased (or decreased) for all Condominiums in the Project on the first day of the month following the first close of an escrow for the sale of a Condominium in said Increment without any approval of the Members of the Association to the amount recommended by the DRE in connection with its review and processing of the Association budget for such Increment. Section 4. Special Assessments. (a) In any fiscal year the Board may not, subject to the limitations of California Civil Code Section 1366, without the vote or written assent of Owners constituting a quorum (which shall mean more than fifty percent [50%] of Owners of the Association) casting a majority of the votes at a meeting or election of the Association, conducted in -43- accordance with Sections 7510, et seq., and 7613 of the Corporations Code, levy Special Assessments to defray the costs of any action or undertaking on behalf of the Associa- tion which in the aggregate exceed five percent (5%) of the budgeted gross expenses of the Association for that fiscal year. The five percent (5%) limitation shall not apply to increases in Special Assessments related to an emergency situation which shall be deemed to include the following: (1) Extraordinary expenses required by an order by a court of competent jurisdiction; (2) Extraordinary expenses for the mainte- nance or repair of Common Property that is necessary to remedy any dangerous condition in the Project that rep- resents a threat of damage or injury to any person or property; and (3) Extraordinary expenses necessary to re- pair or maintain the Common Property that could not have been reasonably anticipated by the Board at the time the most recent Association budget was prepared. Notwithstanding the foregoing, in the event the Board levies any Special Assessment that exceeds the five percent (5%) limitation pursuant to this Section, the Board shall distribute written notice concerning said Special Assessment to all Owners and a copy of a resolution adopted by the Board setting forth: (1) the necessity of said Spe- cial Assessment; and (2) the justification why said Special Assessment was not reasonably foreseeable at the time the most recent budget was prepared. Except as provided in sub- section (b) below, every Special Assessment shall be levied upon the same basis as that prescribed for the levying of Regular Assessments. (b) A Special Assessment levied against Owners to raise funds for the reconstruction or major repair of the Condominium Buildings in the Project shall be levied on the basis of the ratio of the square footage of the floor area of the Condominium Unit to be assessed, to the square foot- age of the floor area of all Condominium Units to be assessed. Section 5. Compliance Assessments. A Compliance Assessment may not be characterized nor treated as an assessment which may become a lien against the Owner's Condominium enforce- able by a sale in accordance with the provisions of Sections 2924, 2924(b) and 2924(c) of the Civil Code; provided, however, the foregoing shall not apply to any Compliance Assessment im- posed against an Owner consisting of a reasonable late payment -44- penalty for delinquent Assessments and/or charges to reimburse the Association for the loss of interest and for costs reasonably incurred (including attorneys' fees) in its efforts to collect delinquent Assessments. Section 6. Date of Commencement of Regular Assess- ments; Due Dates. The Regular Assessments shall commence as to all Condominiums within an Increment of the Project on the first day of the month following: (a) the first close of an escrow for the sale of a Condominium in such Increment to a bona fide retail purchaser pursuant to a Final Subdivision Public Report issued by the DRE; or (b) the occupancy of a Condominium in such Increment pursuant to a rental or lease agreement with Declarant or its authorized agent. The first Regular Assessments shall be adjusted according to the number of months remaining in the fiscal year, as set forth in the By-Laws. The Board shall fix the amount of the Regular Assessment against each Condominium at least thirty (30) days in advance of each Regular Assessment period. Written notice of the Regular Assessment shall be sent to every Owner subject thereto at least thirty (30) days in advance of each Assessment period. The due dates shall be established by the Board. Regular Assessments may be reduced or abated pursuant to any maintenance and/or subsidy agreement which may be entered into by the Association. Section 7. Collection of Assessments. Except as oth- erwise provided above, Regular and Special Assessments shall be levied at a uniform rate for all Condominiums and may be collected on a monthly basis. Compliance Assessments shall be due thirty,(30) days after such Assessment has been levied. Section 8. Certification of Payment. The Association shall, upon demand and for a reasonable charge, furnish a cer- tificate signed by an officer or agent of the Association setting forth whether the Assessments on a specified Condominium have been paid. If a certificate states that Assessments have been paid, such certificate shall be conclusive evidence of such pay- ment. Section 9. Delivery by Owner. Each Owner of a Condo- minium shall, as soon as practicable prior to the transfer of title to the Condominium or the execution of a real property sales contract, as defined in California Civil Code, Section 2985, cr as may be amended, from time tc time, give to the pro- spective purchaser a copy of this Declaration and copies of the By-Laws and Articles of the Association, and a true statement, in writing, from the Board as to the amount of any delinquent Assessments and information relating to penalties, attorneys' fees and other charges authorized by this Declaration on the Condominium as of the date the statement is issued. -45- Section! 10. Delivery of Statement. Upon written re- quest, the Board shall, within ten (10) days of the mailing or delivery of such request, respectively, provide the Owner of a Condominium with a copy of this Declaration, and copies of the By-Laws and Articles of the Association, together with a true statement in writing as to the amount of any delinquent Assess- ments, penalties, attorneys' fees and other charges authorized by this Declaration on the Condominium as of the date of the re- quest. The Board may impose a fee for providing such documents and statements, but in no event shall the fee exceed the reason- able cost to prepare and reproduce the requested documents. Section 11. Reserves. The Regular Assessments shall include reasonable amounts, as determined by the Board, collected as reserves for the future periodic maintenance, repair and re- placement of all or a portion of the Common Property, the deductible amounts for all insurance policies required pursuant to the Article herein entitled "Insurance," or any such other purpose determined by the Board. All amounts collected as re- serves shall be deposited by the Board in a separate bank account for the purposes for which they were collected, and are to be segregated from and not commingled with any other funds of the Association. Section 12. Offsets and Waiver Prohibited. No Owner may waive or otherwise avoid liability for the Assessments pro- vided for herein for any reason whatsoever, including, but not limited to, non-use of the Common Property or abandonment of his Condominium, nor shall any Owner be entitled to any offset against any Assessment provided for herein for any reason whatso- ever, including, but not limited to, any expenditure made by such Owner for or on behalf of the Association. Section 13. Exempt Property. The following property subject to this Declaration shall be exempt from the Assessments herein: (a) All property dedicated to and accepted by a local public authority; (b) All property owned by a charitable or non- profit organization exempt from taxation by the laws of the State of California, however, no Land or Improvements de- voted to dwelling use shall be exempt from said Assessment; and (c) All Association Property owned by the Association. Section 14. Capitalization of the Association. Each purchaser of a Condominium in Increment 1 shall contribute to the working capital of the Association an amount equal to two (2) months' installments of the then Regular Assessment for his respective Condominium. Said amount shall be deposited by each -46- purchaser into l4is respective escrow for the purchase of his Condominium from Declarant, and shall be disbursed by the escrow holder to the Association at the close of escrow for the sale of the Condominium. Prior to the expiration of six (6) months after the first close of an escrow for the sale of a Condominium in the Project, Declarant shall deposit with a neutral escrow holder an amount equal to two (2) months' installments of the Regular Assessment for any and all Condominiums in the Project which are not yet sold or otherwise in escrow for the sale thereof. Escrow holder shall promptly remit these funds to the Association. Thereafter, upon the close of each escrow for the sale of a Condominium for which the working capital contribution was pre- paid by Declarant, escrow holder shall remit to Declarant, and not to the Association, the capitalization fee collected from the buyer-Owner of said Condominium at the close of each escrow. This capital contribution shall in no way be deemed to be a prepayment of any portion of the Regular Assessment obligation of said Owners. ARTICLE IX EFFECT OF NON-PAYMENT OF ASSESSMENTS;. REMEDIES OF THE ASSOCIATION Section 1. Effect of Non-Payment of Assessments; Rem- edies of the Association. Any Regular, Special or Compliance As- sessment not paid within fifteen (15) days after the due date shall be deemed delinquent and the Owner shall be required to pay (a) reasonable costs of collection, including reasonable attor- neys' fees; (b) a reasonable late charge not exceeding ten per- cent (10%) of the delinquent Assessment or Ten Dollars ($10.00), whichever is greater, or as may, from time to time, be estab- lished by the Board in accordance with California law; and (c) interest on all sums imposed under this Section at an annual per- centage rate not to exceed twelve percent (12%) commencing thirty (30) days after the Assessment was due. The Board, for and on behalf of the Association, may commence legal action against the Owner personally obligated to pay the same, or, in the case of a Regular or Special Assessment, may foreclose the lien against his Condominium. Such lien may also be foreclosed by a power of sale or other nonjudicial procedure provided for by the laws of the State of California. Ir. furtherance thereof, each Owner hereby vests in the Association, its successors or assigns, the right and power to bring all actions at law or to pursue lien foreclo- sure against any Owner for purposes of collecting such delinquent Assessments. Section 2. Notice of Delinquent Assessments. No ac- tion shall be brought to foreclose a lien for delinquent Assess- ments or to proceed under the power of sale herein, unless at -47- least thirty (30)fdays has expired following the date a Notice of Delinquent Assessments is deposited in the United States mail, certified or registered, postage prepaid, to the Owner of said Condominium, and a copy thereof is recorded by the Association in the Office of the County Recorder of the County in which the Project is located. Said Notice of Delinquent Assessments must recite a good and sufficient legal description of any such Condo- minium, the record Owner or reputed Owner thereof, the total amount due and payable as provided herein, and the name and ad- dress of the principle office of the Association, and, in the event of a nonjudicial foreclosure, as provided in Section 3 below, the name and address of the trustee authorized by the Association to enforce the lien by sale. The Notice shall be signed and acknowledged by the President, or Vice President, and the Secretary, or assistant Secretary, of the Association. The lien shall continue until fully paid or otherwise satisfied. Section 3. Foreclosure Sale. Any foreclosure sale provided for above is to be conducted by the Board, its attorney or other persons authorized by the Board, in accordance with the provisions of Sections 2924, 2924a, 2924b and 2924c of the Cali- fornia Civil Code applicable to the exercise of powers of sale in Mortgages and deeds of trust, as same may be amended from time to time, or in any other manner permitted by law. The Association, through duly authorized agents, shall have the power to bid on the Condominium at a foreclosure sale and to acquire, hold, lease, mortgage and convey the same. Section 4. Curing of Default. Upon the timely curing of any, default for which a Notice of Delinquent Assessments or lien was filed by the Association, the officers thereof are here- by authorized to file or record, as the case may be, an appropri- ate release of such Notice upon receipt of payment from the defaulting Owner of a reasonable fee to be determined by the Association to cover the costs of preparing and filing or re- cording such release. Section 5. Cumulative Remedies. The Association's remedies for non-payment of Assessments, including, but not lim- ited to, an action to recover a money judgment, Assessment lien and right of foreclosure and sale, are cumulative and in addition to and not in substitution of any other rights and remedies which the Association and its assigns may have hereunder or at law. Section 6. Mortgagee Protection. Notwithstanding all other provisions hereof, no lien created hereunder nor any breach of the terms and provisions of this -Declaration, nor the enforce- ment of any term or provision hereof, shall defeat or render in- valid the rights of any Mortgagee under any recorded first Mort- gage or deed of trust upon a Condominium made in good faith and for value; provided, that after such Mortgagee or other person or -48- entity obtains title to such Condominium by judicial or nonjudi- cial foreclosure, such Condominium shall remain subject to this Declaration and the payment of Assessments which fall due subse- quent to the date of taking title. ARTICLE X USE RESTRICTIONS The Condominium Units and Common Property shall be oc- cupied and used only as follows: Section 1. Private Dwelling. Each Condominium Unit shall be used as a private dwelling and for no other purpose, except such temporary uses as shall be permitted by Declarant while the Project is being developed and Condominiums are being sold by Declarant; provided, however, that Declarant reserves the right, for a period of seven (7) years from the first close of an escrow for the sale of a Condominium in the Project to a retail purchaser pursuant to a Final Subdivision Public Report issued by the ORE or until all Condominiums in the Project are sold (and escrows closed), whichever shall first occur, to carry on normal sales activity on the Project, including the operation of models, sales office, design center and parking area. Section 2. Common Property Use. Use of the Common Property shall be subject to the provisions of this Declaration, the Rules and Regulations and to any additional limitations im- posed by the Association. Section 3. Conduct Affecting Insurance. Nothing shall be done or kept in any Condominium Unit or in the Common Property which will increase the rate of insurance on the Common Property without the approval of the Association. No Owner shall permit anything to be done or kept in his Condominium Unit or in the Common Property which will result in the cancellation of insur- ance on the Common Property or which would be in violation of any law. If, by reason of the occupancy or use of said premises by the Owner, the rate of insurance to the Common Property shall be increased, the Owner shall become personally liable for the addi- tional insurance premiums. Section 4. Liability for Damage to the Common Prop- erty. Each Owner shall be liable to the Association, pursuant to the laws of the State of California, for any and all costs and expenses which may be incurred by the Association to repair any damage to the Common Property which may be sustained by reason of the negligence or willful misconduct of said Owner or of his family, tenants, lessees, or their respective guests or invitees, whether minor or adult. After approval by a majority of the Board, any such costs and expenses shall be levied by the Board as a Compliance Assessment against such Owner. -49- Section- 5. Signs. Subject to the provisions of Cali- fornia Civil Code, Sections 712 and 713, as same may be amended from time to time, no sign of any kind shall be displayed to the public view on or from any Condominium Unit or the Common Prop- erty without the approval of the Association, except such signs as may be used by Declarant for a period of time not to exceed seven (7) years from the first close of escrow for the sale of a Condominium in the Project to a retail purchaser pursuant to a Final Subdivision Public Report issued by the ORE in connection with the development of the Project and sale of Condominiums, and except one (1) "for sale," "for lease" or "for exchange" sign of reasonable size on any Condominium Unit. All signs permitted under this Section shall conform with the City's sign ordinance, if any, and with all applicable governmental regulations. Section 6. Maintenance of Animals. No animals of any kind shall be raised, bred or kept in any Condominium Unit, Ex- clusive Use Common Area or in the Common Property, except that two (2) common domesticated household pets, (e.g. dogs and/or cats) may be kept in each Condominium Unit; provided, however, that no animal shall be kept, bred or maintained for any commer- cial purpose and shall comply with all reasonable Rules and Regulations established by the Board. Each Owner shall be responsible for cleaning up any excrement or other unclean or unsanitary condition caused by said animal in the Project. All permissible pets belonging to Owners, tenants, lessees or guests must be kept within an enclosed area, or on a leash being held by a person capable of controlling the animal. The Association, upon the approval of two-thirds (2/3) of the Board, shall have the right to prohibit maintenance of any animal within the Project which constitutes a private nuisance to any other person. Every person bringing an animal upon or keeping an animal in the Project shall be liable pursuant to the laws of the State of California to each and all persons for any injury or damage to persons or property caused by such animal. Section 7. Quiet Enjoyment. No Owner shall permit or suffer anything to be done or kept upon such Owner's Condominium which will obstruct or interfere with the rights of quiet enjoy- ment of the other occupants, or annoy them by unreasonable noises or otherwise, nor will any Owner commit or permit any nuisance on the premises or commit cr suffer any immcral or illegal act to be committed thereon. Each Owner shall comply with all of the re- quirements of the Board of Health and of all other governmental authorities with respect to said premises, and shall remove all rubbish, trash and garbage from his Condominium Unit. All clotheslines, refuse containers, woodpiles, storage boxes, tools -50- and equipment shall be prohibited from any Condominium unless obscured from view by a fence or appropriate screen approved by the Architectural Control Committee provided for hereinbelow. Section 8. Structural Changes. There shall be no structural alteration, modification or construction to the ex- terior of a Condominium Building, fence or other structure what- soever in the Project without the prior written approval of the Board or its designated Architectural Control Committee, as re- quired herein, except such works of construction by Declarant during the development of the Project. Section 9. Improvements. There shall be no construc- tion, alteration or removal of any Improvement in the Project (other than those repairs or rebuilding permitted under the Arti- cle entitled "Damage or Destruction to the Common Area") without the approval of the Architectural Control Committee, as set forth hereinbelow. No Improvement shall be constructed upon any portion of any Common Property, other than such Improvements as shall be constructed: (a) by the Declarant (or a person or entity to whom Declarant assigns its rights as developer), (b) by the Associ- ation as provided herein, or (c) by an Owner, involving nonstruc- tural Improvements to his Exclusive Use Common Area, as may be permitted by the Architectural Control Committee in accordance with the Article herein entitled "Architectural Control - Approval." Section 10.Window Coverings. No window in any Condominium Unit shall be covered in whole or in part, inside or outside, with aluminum foil, newspaper, paint, tint or any other material reasonably deemed inappropriate for such use by the Architectural Control Committee; provided, however, an Owner may use plain white sheets to cover windows for a period not to exceed six (6) months after the close of escrow pending the installation of drapes, curtains, shutters or other appropriate interior window coverings. Section 11. Hard Surface Flooring. In order to help mitigate the transmission of sound between Condominium Units, no Owner of a Condominium Unit located on the second or third level in the Project shall install any hard surface flooring material of any kind (i.e., hard wood floors, tile, linoleum, etc.) in any portion of Condominium Unit other than the kitchen (and nook area, if applicable), bathrooms and front door entry area. Section 12. Commercial Activity. No business, commer- cial, manufacturing, mercantile, storage, vending or industrial operations of any kind shall be conducted in or upon any Condo- minium Unit or the Common Property, except such temporary uses as shall be permitted by Declarant while the Project is being con- structed and Condominiums are being sold by the Declarant. Not- withstanding the foregoing, this Section shall not preclude pro- -51- fessional administrative occupations without external evidence thereof, for so long as such occupations are conducted in confor- mance with all applicable governmental ordinances and merely incidental to the use of the Condominium Unit as a residence. In no event, however, shall any Owner or the Association use a Con- dominium Unit as an office for the rental, resale or leasing of Condominiums without the prior written consent of Declarant. Section 13. Parking. All vehicles in the Project shall be parked in accordance with the following: (a) Save and except Access Easements which are located outside of, but are appurtenant to the Property and Annexation Property, any private drives within the Project are subject to the Protective Covenants of this Declaration, as well as all applicable laws, ordinances and regulations of all governmental agencies having jurisdiction over the Project. Any unassigned open parking spaces shall be available on a first-come, first-served basis to all guests and visitors. (b) Except as may be otherwise expressly per- mitted by the Association pursuant to duly adopted Rules and Regulations, parking along the streets in the Project is prohibited. Notwithstanding the foregoing, temporary on- street parking for service and delivery vehicles is per- mitted. (c) Except as otherwise permitted by the Associa- tion, as set forth herein, no Owner shall park any vehicle on any portion of the Project, except wholly within his assigned parking area in the subterranean parking structure identified on the Condominium Plan. No parking space may be sold or assigned to, or retained in the ownership of, any person not an Owner, and no parking space may be rented or leased to a non Owner except in connection with the rental or lease of a Condominium. Without limiting the generality of the foregoing/ no Owner shall park any large commercial type vehicle or any recreational vehicle (including, but not limited to, campers, motorhomes, trailers, boat trailers, mobile homes or other similar vehicles) in his parking area, nor on any portion of the Project; provided, however, camper trucks and similar vehicles, up to and including three- quarter (3/4) ton, may be allowed when used for everyday transportation, subject to approval by the Board. (d) Each Owner shall keep his assigned parking area readily available for parking of his respective vehicle, and shall not store any goods or materials except within such assigned storage areas identified on the Condominium Plan, nor use any portion thereof for a workshop or other use, if such storage or use would prevent said -52- Owner from parking the number of vehicles therein for which said parking area was originally designed and constructed by Declarant to accommodate. (e) No Owner shall conduct major repairs to any motor vehicle of any kind whatsoever in the subterranean parking structure or upon any portion of the Common Property, except for emergency repairs thereto and then only to the extent necessary to enable the vehicle to be moved to a proper repair facility. (f) Any Owner having three (3) or more vehicles registered to such Owner, or to the members of his family, may apply to the Association for special parking permits to park vehicles in any unassigned parking areas, subject to such reasonable Rules and Regulations as may be adopted by the Board. Section 14. Regulation of Parking. Subject to the rights of the Association, through its officers, committees and agents, the Board is hereby empowered to establish "parking" and "no parking" areas within the Common Property, in accordance with Section 22658.2 of the California Vehicle Code, or any similar statute hereafter enacted, as well as to enforce these parking limitations by all means lawful for such enforcement, including, but not limited to, the levying of fines and the citing and tow- ing of vehicles. The Board shall have the authority to tow away and store any vehicle or similar equipment parked in violation of the above limitations whether the same shall belong to any Owner or a member of his family or to any tenant, lessee, guest or invitee of any Owner. Charges for such towing and storing shall be assessed against the Owner of the Condominium which is respon- sible for the violation of such restrictions, and such assessment may be enforced as a Compliance Assessment. Section 15. Vehicle Usage in Association Property. Except where expressly authorized and regulated by the Associa- tion, no vehicles of any kind shall be operated, maintained, repaired or otherwise used on, over or across the Association Property. Section 16. Compliance With Management Documents. All Owners shall comply with all of the Protective Covenants as set forth herein, with the provisions of the Articles and the By- Laws, and with all Rules and Regulations of the Association. Section 17. Solar Heating. All Owners shall have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar heating sys- tems. The installation and maintenance of any solar system by an individual Owner shall be subject to all applicable zoning regu- lations, the Uniform Building Code and City associated ordi- nances, and reasonable review by the Architectural Control Com- -53- mittee for complifance with the architectural standards adopted by the Association. Section 18. Antennas. No Owner shall install, or cause to be installed, any television, radio, "Citizens Band" (C.B.) antenna, satellite dish or other similar electronic receiving or broadcasting device on the exterior of any Condominium Building or elsewhere within the Common Property. Section 19. Water Softeners. No Owner shall install any on-site regenerative water softener within any portion of the Project. Section 20. Leasing. No Owner shall be permitted to rent or lease his Condominium for transient or hotel purposes or for a period of less than thirty (30) days. No Owner may rent or lease less than the entire Condominium. All rental and lease agreements shall be in writing and shall provide that the terms of such agreement shall be subject in all respects to the provi- sions of this Declaration, By-Laws, Articles, and Rules and Regu- lations, and that any failure by the tenant or lessee to comply with the terms of such documents shall constitute a default under such agreement. Other than the foregoing, there are no restric- tions on the right of an Owner to rent or lease his Condominium. Section 21. Drilling. No oil drilling, oil development operations, oil refining, quarrying or mining operations of any kind shall be permitted upon the Common Property or Exclusive Use Common Area, nor shall oil wells, tanks, tunnels or mineral exca- vations be permitted upon the Common Property or Exclusive Use Common Area. No derrick or other structure designed for use in boring,for oil, water or natural gas shall be erected, maintained or permitted within the Project. Section 22. Trash. No rubbish, trash, garbage or other waste material shall be kept or permitted upon any portion of the Project, except in sanitary containers located in appropriate areas improved with trash receptacles, if any, provided for the use of all Owners. If such common trash receptacles are not pro- vided, each Owner shall place all rubbish, trash, garbage or other waste material in garbage cans, garbage bags or other closed containers approved by the City or other appropriate agency. All such garbage cans and other containers shall be stored in an area which is obscured from view from the Common Property and each Owner, shall use his best efforts to assure that no odor shall arise therefrom so as to be unreasonably offensive to any adjacent Condominium or other portion of the Project, or to otherwise be unsanitary, unsightly, offensive or detrimental to any other residents in the Project. : ; Section 23. Special Restrictions Regarding Exclusive Use Common Areas. No patio or deck area including, without limitation, the fences, walls or railings enclosing said areas may be painted, remodeled, or otherwise altered without the prior -54- written consent' of the Architectural Control Committee. Each Owner shall have the right to furnish such areas with appropriate outdoor furniture. All furniture, landscaping, potted plants and Improvements situated therein shall be kept, at all times, in a neat, clean, safe and attractive condition. Clothes, towels, blankets, laundry, similar items or clotheslines shall not be placed on or hung from any patio, deck or any other portion of the Common Area or Exclusive Use Common Area, where doing so would be visible from any other Condominium Unit or the Common Property. Section 24. Declarant's Exemption From Use Restric- tions . Nothing in this Article or elsewhere in this Declaration shall restrict, abridge or limit in any manner whatsoever, Declarant's rights and powers set forth in this Declaration to complete the planning, development, construction, advertising, marketing, leasing and sales of the Condominiums, and all other property within the Project (including any property which may be annexed into the Project). ARTICLE XI REPAIR AND MAINTENANCE Section 1. Repair and Maintenance by Association. Without limiting the generality of the Article herein entitled "Powers and Duties of the Association," and except as otherwise provided in this Declaration, the Association shall have the duty to maintain the Common Property in a neat, clean, safe, sanitary, attractive and orderly condition at all times. Without limiting the generality, such maintenance shall include, but not be limited to, painting, maintaining, repairing, restoring, replac- ing and landscaping (as the case may be) the following: (a) The exterior surfaces of all Condominium Buildings in the Project, including the walls, roofs, doors, the walls, fences and/or railings enclosing the patio, deck areas, the exterior stairways, chimneys, (excepting the firebox portion of the fireplace located within the residential element of the Condominium Unit), any air condi- tioner or forced air heating unit pads located outside the Condominium Unit; (b) If the Access Easements (and any related Improvements [e.g., entry gates]) dire subjecc to an agree- ment with an adjacent homeowners association, the Access Easements (and any such related Improvements) shall be maintained in accordance with the terms of such agreement as provided in Section 4 below; ; (c) Open parking areas and sidewalks; (d) Private on-site sewer and drainage fa- cilities and devices; -55- (e) All recreational amenities, and all furnishings,, equipment and other personal property owned by the Association; (f) The Open Space Easement Areas (and public access easements) as depicted on Exhibit "D" attached hereto; (g) All Common Property lighting facilities; (h) Monument signs, if any, located on the Common Property; (i) All landscaping located on the Common Area (other than Exclusive Use Common Areas) shall be maintained in a healthy condition free from weeds, trash and debris; and (j) All other areas, facilities, furnishings and Improvements of whatever nature as may, from time to time, be requested by the vote or written consent of three- fourths (3/4) of the voting power of the Members; and Except as otherwise provided herein, all costs and expenses for such maintenance above shall be a Common Expense, and shall be paid out of the general operating fund of the Association. Section 2. Repair and Maintenance by Owner. Except as otherwise provided in Section 1 above regarding the Association's maintenance obligations, every Owner shall have the duty to per- form the following so as to keep his respective Condominium Unit and Exclusive Use Common Area in a neat, clean, safe, sanitary, attractive and orderly condition at all times: (a) Paint, maintain, repair, replace, restore, decorate and/or landscape (as the case may be) the fol- lowing : (1) The interior surfaces of the walls, ceilings and floors of his Condominium Unit; (2) All window glass, screens, if any, and doors (including locks, latches, weatherstripping and thresholds); (3) All interior lighting fixtures, all exterior light bulbs controlled by a switch inside the Unit and all interior plumbing fixtures, including bathtubs, shower stalls, toilets and sinks; (4) All internal and external telephone wiring designed to serve his Condominium Unit;' (5) All kitchen appliances, the air conditioning condenser, and the firebox portion of the fireplace within his Condominium Unit; and (6) The respective patio and/or deck, : excluding those portions maintained by the Association. (b) Each Owner shall, at his sole cost and expense, be responsible for resurfacing the floor of his deck with a seal coat material approved by the Architectural -56- Control Committee. In no event shall any Owner install, nor shall the Architectural Control Committee approve the installation of artificial turf on any exterior staircase, landing or on any deck. (c) In the event any Owner shall fail to perform his maintenance obligations as set forth herein, the Associ- ation shall have the right, but not the duty, to cause such maintenance to be performed. If the Board elects to cause such maintenance work to be performed, the cost thereof shall be assessed against said Owner as a Compliance Assess- ment. Section 3. Maintenance of Public Facilities. The Association shall maintain in good repair and working order all public recreational and public access facilities, including, but not limited to, the public access walkway lying southerly of the cul-de-sac on Harbor Drive and all public access walkways extend- ing easterly and westerly of said walkway. All costs associated with the maintenance and repair of the above-referenced public recreational and public access facilities will be included as a Common Expense and paid for by the Association from the Assess- ments levied by the Association. The public recreational and public access facilities referenced above are defined more spec- ifically in the staff Recommendations and Findings as specified in Application No. 6-83-613 approved by the California Coastal Commission and recording against the title of the Property. Section 4. Maintenance of Public Utilities. Nothing contained herein shall require or obligate the Association to maintain, replace or restore the underground facilities or public utilities which are located within easements in the Common Prop- erty owned by such public utilities. However, the Association shall take such steps as are necessary or convenient to ensure that such facilities are properly maintained, replaced or re- stored by such public utilities. Section 5. Maintenance of Access Easements. If the Association has entered into an agreement with an adjacent home- owners association whose members, owners and/or residents use all or any portion of the Access Easements (and any related Improve- ments), the cost of maintaining and repairing the Access Ease- ments subject to such Agreement shall be borne by the parties to such agreement as set forth therein. The portion ailocable to this Association shall be included as a Common Expense. If no such agreement has been entered into or has lapsed, nothing herein shall be interpreted or construed as a waiver by any Owner nor by the Association to seek contribution for the cost of main- taining and repairing the Access Easements or to seek any other remedy available at law or in equity from any other persons and/or entities who use all or any portion of the Access Ease- ments. -57- Section *6. Maintenance by Declarant. In the event any Improvements in the Project shall be damaged by Declarant or its employees, contractors or agents during the course of construc- ting any subsequent Increment, the Association shall promptly advise Declarant in writing of such damage. Thereafter, Declarant shall promptly repair such damage at its sole cost and expense. ARTICLE XII ARCHITECTURAL CONTROL - APPROVAL Section 1. Exemptions From Architectural Control. Ex- cept as otherwise provided herein, all Improvements shall be sub- ject to architectural approval by the Association in accordance with .the provisions of this Declaration. Notwithstanding the foregoing, Declarant shall be exempt from compliance with any of the provisions of this Article as they may relate to the original construction and development of the Project by Declarant in ac- cordance with the plans approved by the City; provided, however, if Declarant shall desire to construct any Improvements to the exterior of a Condominium Building after such Condominium Build- ing has been completed and approved by the City, Declarant shall obtain approval for such Improvements from the City and, provided further, if Declarant shall retain a Condominium for personal use, any Improvements to such Condominium shall be subject to architectural approval pursuant to this Article. Section 2. Architectural Control. Except for the pur- poses of proper maintenance and repair, and except as otherwise permitted hereunder, no person shall build, construct, erect or install- any Improvement, or modify the exterior appearance of any Condominium Unit or Exclusive Use Common Area, until all condi- tions which may be imposed by the City have been satisfied and until any and all plans and specifications required pursuant to this Article shall have been submitted to and approved in writing by the Architectural Control Committee. For the purposes of this Section, the term "exterior" shall mean any outside wall, outside surface, roof, outside door, balcony or other outside structure which is visible to others in the Project and/or to the public. Section 3. Architectural Control Committee. The Architectural Control Committee is hereby authorized with the rights and powers set forth in this Article. Said Committee shall consist of three (3) members, and each initial member shall serve until the first election of the Board. The Declarant shall ap- point all of the original members of the Architectural Control Committee, and replacements thereto. After one (1) year from the date of the issuance of the Final Subdivision Public Report for the Project, the Board shall have the power to appoint one (1) member to the Architectural Control Committee until ninety per- cent (90%) of the Condominiums in the Project have been sold, or until the fifth anniversary date of the original issuance of the -58- Final Subdivision 'Public Report for the Project, whichever first occurs. Thereafter, the Board shall have the power to appoint all of the members of the Architectural Control Committee. All mem- bers appointed to the Architectural Control Committee by the Board shall be from the membership of the Association. Members appointed to the Architectural Control Committee by the Declar- ant, however, need not be members of the Association. In the event of the failure or inability of any member of the Architec- tural Control Committee to act, the remaining members shall des- ignate a successor who shall" serve for the remainder of the term of the member he replaces. No member of the Architectural Control Committee shall be liable to any person for his decisions or failure to act in making decisions as a member of the Architec- tural Control Committee. Declarant may, in its discretion and at any time, assign to the Association by written assignment its powers of removal and appointment with respect to the Architec- tural Control Committee, subject to such terms and conditions regarding the exercise thereof as Declarant may impose. Section 4. Meetings of the Architectural Control Com- mittee. The Architectural Control Committee shall meet, from time to time, as necessary to perform its duties hereunder. The Archi- tectural Control Committee may, by a majority vote of the members thereof and the Board, delegate any of the Committee's rights and responsibilities hereunder to one (1) or more duly licensed architects, who shall have full authority to act on behalf of the Architectural Control Committee on all matters so delegated. Section 5. Architectural Approval - Review of Plans and Specifications. The Architectural Control Committee shall have the right and duty to promulgate reasonable standards against which to examine any request made pursuant to this Arti- cle, in order to ensure that the proposed plans are in confor- mance with and are harmonious to the exterior design and existing materials of the Condominium Buildings in the Project. The Archi- tectural Control Committee shall consider and act upon any and all plans and specifications submitted for its approval under this Declaration, and perform such other duties as, from time to time, shall be assigned to it by the Board, including the inspec- tion of construction and progress to ensure its conformance with the plans approved by the Architectural Control Committee. No construction, alteration, grading, addition, excavation, modifi- cation, decoration, redecoration or reconstruction of an Improve- ment shall be commenced or maintained by any Owner until the plans and specifications therefor showing the nature, kind, shape, height, width, color, materials and location of the same shall have been submitted to the Architectural Control Committee and approved in writing by the Architectural Control Committee. -59- The initial address for submission of such plans and specifica- tions, until changed by the Architectural Control Committee, shall be: Architectural Control Committee c/o Marlborough Development Corporation 28751 Rancho California Road - Suite 208 Rancho California, CA 92390 Attn: Mr. Marc Simmons The Architectural Control Committee shall approve the plans and specifications submitted for its approval only if it deems that: (a) the construction, alterations or additions contemplated thereby and the locations indicated will not be detrimental to the appearance of the surrounding area of the Project as a whole; (b) the appearance of any structure affected thereby will be in harmony with surrounding structures; (c) the construction thereof will not detract from the beauty, wholesomeness and attractive- ness of the Common Property, or the enjoyment thereof by the Own- ers; and (d) the upkeep and maintenance thereof will not become a burden on the Association. The Architectural Control Committee may condition its approval of proposals or plans and specifica- tions for any Improvement: (a) on such changes therein as it deems appropriate, (b) upon the agreement by the person submit- ting the same to grant appropriate easements to the Association for the maintenance of the Improvement, and/or (c) upon the agreement of the person submitting the same to reimburse the Association for the cost of such maintenance. The Committee may require submission of additional plans and specifications or oth- er information prior to approving or disapproving the submission. The Architectural Control Committee may also issue rules or guidelines setting forth procedures for submission of plans for approval, requiring a payment of a fee to the Associa- tion to accompany each submission of plans and specifications, or additional factors which it will take into consideration in re- viewing submissions. The Architectural Control Committee may require such detail in plans and specifications submitted for its review as it deems proper, including, without limitation, floor plans, site plans, drainage plans, elevation drawings, landscape plans and description or samples of exterior material and colors. -60- Section'6. Decisions of the Architectural Control Committee. Until .receipt by the Architectural Control Committee of any required plans and specifications, and such other informa- tion as may be required in Section 5 above, the Architectural Control Committee may postpone review of any plans submitted for approval. Decisions of the Architectural Control Committee and the reasons therefor should be transmitted by the Architectural Control Committee to the applicant, at the address set forth in the application for approval, within forty-five (45) days after receipt by the Architectural Control Committee of all plans, spe- cifications and materials required. Any application submitted pursuant to the provisions of Section 5 above shall be deemed approved, unless written disapproval or a request for additional information or materials by the Architectural Control Committee shall have been transmitted to the applicant within forty-five (45) days after the receipt by the Architectural Control Commit- tee of all required materials. Section 7. No Waiver of Future Approvals. The approv- al of the Architectural Control Committee to any submissions for any work done, or proposed to be done, or in connection with any other matter requiring the approval or consent of the Architec- tural Control Committee, shall not be deemed to constitute a waiver of any right to withhold approval or consent of any simi- lar proposals, plans and specifications, drawings or other mat- ters subsequently or additionally submitted for approval. Section 8. Compensation of Members. The members of the Architectural Control Committee shall receive no compensation for services rendered, other than reimbursement by the Associ- ation, pursuant to Board approval, for expenses incurred in the performance of such members' duties hereunder. Section 9. Variances. Where circumstances such as to- pography, location of buildings, location of landscaping or other matters require, the Architectural Control Committee, by the vote or written assent of a majority of the members thereof and the Board, may allow reasonable variances as to any of the Covenants contained in this Declaration or provisions under the rules and regulations promulgated by the Architectural Control Committee, on such terms and conditions as it shall require. The granting of such a variance shall not operate to waive any of the terms and provisions of this Declaration for any purpose, except as to the particular Condominium and particular provision hereof covered by the variance, nor shall it affect in any way the Owner's obliga- tion to comply with all governmental laws and regulations affect- ing the Owner's use of his Condominium, including, but not lim- ited to, zoning ordinances, lot setback lines or requirements imposed by the City or other governmental authority. -61- Section 10. Inspection of Work. Upon consent of the Owner, which consent shall not be unreasonably withheld, any mem- ber or authorized representative of the Architectural Control Committee may, at any reasonable hour and upon reasonable notice, enter and inspect any Condominium which has been the subject mat- ter of an approval of a submission for an Improvement to his Con- dominium. Such entry shall be made with as little inconvenience to the Owner as reasonably possible, and any damage caused there- by shall be repaired by the Association. If the Architectural Control Committee finds that such work was not done in substan- tial compliance with the approved plans and specifications, it shall notify the Owner in writing of such noncompliance, specify- ing the particulars of noncompliance and shall require the Owner to remedy the same within thirty (30) days from the date of noti- fication of such noncompliance. If a noncompliance exists, the Board, after Notice and Hearing, may levy a Compliance Assessment against such Owner for the costs of removing or remedying such noncompliance. Section 11. Non-Liability of Architectural Control Commi11ee Members. Neither Declarant, the Association, the Board or the Architectural Control Committee, or the members or desig- nated representatives thereof, shall be liable for damages to any Owner submitting plans or specifications to them for approval, or to any Owner in the Project affected by this Declaration by rea- son of mistake in judgment, negligence or nonfeasance, unless due to willful misconduct or bad faith of the Architectural Control Committee. The Architectural Control Committee's approval or dis- approval of a submission shall be based solely on the considera- tions set forth in this Article, and in such rules and regula- tions as may be promulgated by the Architectural Control Commit- tee, and the Architectural Control Committee shall not be respon- sible for reviewing, nor shall its approval of any plan or design be deemed approval of, any plans or design from the standpoint of structural safety and conformance with building or other codes. Section 12. Appeal. In the event plans and specifica- tions submitted to the Architectural Control Committee are disap- proved, the party making such submission may appeal in writing to the Board. The written request must be received by the Board not more than thirty (30) days following the final decision of the Architectural Control Committee. The Board shall submit sucn re- quest to the Architectural Control Committee for review, and the written recommendations of the Architectural Control Committee will be submitted to the Board. Within forty-five (45) days fol- lowing receipt of the request for appeal, the Board shall render it's written decision. The failure by the Board to render a deci- sion within said forty-five (45) day period shall be deemed a decision in favor of the party making such submission. -62- ' ARTICLE XIII DAMAGE OR DESTRUCTION TO THE COMMON AREA Section 1. Restoration of Damaged Common Area. Except as otherwise provided in Section 2 hereinbelow, damage to or de- struction of all or any portion of the Common Area shall be han- dled in the following manner: (a) In the event of damage to or destruction of the Common Area, and the insurance proceeds are sufficient to effect total restoration, the Association shall, as promptly as is practical, cause the Common Area to be re- paired and reconstructed in a good workmanlike manner to its qondition prior to such damage or destruction. (b) If the insurance proceeds available are at least ninety percent (90%) of the estimated cost of total repair and reconstruction to the Common Area, the Associa- tion shall, as promptly as practical, cause such Common Area to be repaired and reconstructed in a good workmanlike man- ner to its condition prior to the damage or destruction, and the difference between the insurance proceeds and the actual cost shall be levied by the Association as a Special Assess- ment against each of the Owners and their Condominiums, based on the ratio of the square footage of the floor areas of all Condominiums in the Project to be assessed. (c) If the insurance proceeds available are less than ninety percent (90%) of the estimated cost of total repair and reconstruction to the Common Area, the Owners shall, by the written consent or vote of a majority of the Owners, determine whether: (1) to restore the Common Area as promptly as practical to its condition prior to the damage or destruction, and to raise the necessary funds over and above the insurance proceeds available by levying Assess- ments against each Condominium in the Project on an equal basis; or (2) to restore the Common Area in a way which utilizes all available proceeds and an additional amount not in excess of ten percent (10%) of the estimated cost of total reconstruction and repair to the Common Area, and which is assessable as provided above to all Condominiums in the Project, but which is less expensive than restoring the Common Aiea to its condition prior to the damage or destruction. Section 2. Election by Owners Not to Restore Damaged Common Area. (a) Notwithstanding the provisions set forth in ' Section 1 hereinabove, in the event sixty-seven percent (67%) of the Owners, other than Declarant, and sixty-seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage owned) have given their prior -63- written approval, the Owners may elect not to rebuild or restore the Common Area and to disburse the available insur- ance proceeds to the general fund of the Association. (b) In the event the Owners shall have so voted not to rebuild the Common Area, the Common Area shall be cleared and landscaped and the cost thereof shall be paid for out of the available insurance proceeds prior to their distribution to the general fund of the Association. (c) In the event the Owners shall have so voted not to rebuild the Common Area, unless the City shall agree to the contrary, it shall be the obligation of the Associa- tion and each of the Owners to rebuild any private streets, utilities and open spaces within the Project, at least to the extent said streets, utilities and open spaces were accepted initially by the City, if at all, in lieu of payment of fees due pursuant to law. Section 3. Restoration of Damaged Condominium Units. Restoration and repair of any damage to the interior of any indi- vidual Condominium Unit, including, without limitation, all inte- rior walls, lighting fixtures, plumbing fixtures, cabinets, fur- niture and improvements therein, together with restoration and repair of all interior paint, wall coverings and floor coverings, shall be made by and at the individual expense of the Owner of the Condominium Unit so damaged. In the event of a determination to rebuild the adjoining portion of the Common Area also damaged or destroyed, such interior repair and restoration shall be com- pleted as promptly as practicable in a lawful and workmanlike manner,1 and in accordance with the plans approved by the Board or its designated Architectural Control Committee, as provided for in this Declaration. Section 4. Architectural Approval of Restoration Plans; Design and Variance. In connection with the restoration and repair of any damage to the interior of any individual Condo- minium Unit, the Owner thereof may apply for approval to the Architectural Control Committee for reconstruction, rebuilding or repair of his Condominium Unit in a manner which will provide for an exterior appearance and design different from that which ex- isted prior to the date of the casualty. Application for such approval shall be made in writing, together with full and com- plete plans and specifications, working drawings and elevations showing the proposed reconstructions and the end result thereof. The Architectural Control Committee shall grant such approval only if the design proposed by the Owner would result in a fin- ished Condominium Unit in harmony of exterior design with the other Condominium Units in the Project. Failure of the Architec- tural Control Committee to act within thirty (30) days after re- ceipt of such a request in writing, coupled with the drawings and plot plans showing full and complete nature of the proposed -64- change, shall constitute approval thereof; provided, however, that no such approval described herein shall be granted without the prior written consent of all Owners of Condominium Units within the particular Condominium Building wherein the subject Condominium Unit is located. Section 5. Distribution of Excess Insurance Proceeds. In the event any excess insurance proceeds remain after the re- construction or clearance of the damaged or destroyed Common Area by the Association, pursuant to this Article, the Board, in its sole discretion, may retain such sums in the general fund of the Association or distribute such excess insurance proceeds to all Owners, subject to the prior rights of Mortgagees whose interests may be protected by the insurance policies carried by the Associ- ation. In the absence of any such rights, the rights of an Owner and the Mortgagee of his Condominium Unit as to each such distri- bution shall be governed by the provisions of the Mortgage encum- bering said Condominium Unit. Section 6. Special Assessments for Restoration Pur- poses. All amounts collected pursuant to Special Assessments, as provided for herein, shall only be used for the purposes set forth in this Article, and shall be deposited by the Board in a separate bank account to be held in trust for such purposes. ARTICLE XIV DAMAGE OR DESTRUCTION TO THE ASSOCIATION PROPERTY Section 1. Election to Restore Association Property. Except -as otherwise provided in Sections 2 and 3 hereinbelow, damage to or destruction of any Association Property shall be handled in the following manner: (a) In the event of damage to or destruction of any Association Property and the insurance proceeds are sufficient to effect total restoration, the Association shall, as promptly as is practical, cause the Association Property to be repaired and reconstructed in a good workman- like manner to its condition prior to such damage or de- struction. (b) If the insurance proceeds available are at least ninety percent (90%) of the estimated cost of total repair and reconstruction to such Association Property, the Association shall, as promptly as practical, cause such Association Property to be repaired and reconstructed in a good workmanlike manner to its condition prior to the damage or destruction, and the difference between the insurance : proceeds and the actual cost shall be levied by the Associa- tion as a Special Assessment against each Condominium in the Project on an equal basis. -65- (c) If the insurance proceeds available are less than ninety ( percent (90%) of the estimated cost of total repair and reconstruction to the Association Property, the Owners shall, by the written consent or vote of a majority of the Owners, determine whether (1) to restore the Associa- tion Property as promptly as practical to its condition prior to the damage or destruction, and to raise the neces- sary funds over and above the insurance proceeds available by levying assessments against each Condominium in the Project on an equal basis; or (2) to restore the Association Property in a way which utilizes all available proceeds and an additional amount not in excess of ten percent (10%) of the estimated cost of total reconstruction and repair to the Association Property, and which is assessable as provided above to the Condominiums in the Project, but which is less expensive than restoring the Association Property to" its condition prior to the damage or destruction. Section 2. Election Not to Restore Association Property. (a) Notwithstanding the provisions set forth in Section 1 hereinabove, in the event sixty-seven percent (67%) of the Owners, other than the Declarant, and sixty- seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage owned) have given their prior written approval, the Owners may elect to not rebuild or restore the Association Property and to disburse the available insurance proceeds to the general fund to the A&sociation. (b) In the event the owners shall have so voted to not rebuild the Association Property, the Association Property shall be cleared and landscaped and the cost there- of shall be paid for out of the available insurance proceeds prior to their distribution to the general fund of the As- sociation. (c) In the event the Owners shall have so voted to not rebuild the Association Property, unless the City shall agree to the contrary, it shall be the obligation of the Association and each of the Owners to rebuild any pri- vate streets and utilities within the Project and which have been designated as Association Property, at least to the extent said streets and utilities were accepted initially by the City. Section 3. Excess Insurance Proceeds. In the event any excess insurance proceeds remain after restoring the de- stroyed Association Property pursuant to this Article, the Board of Directors shall retain such sums in the general fund of the Association. -66- ARTICLE XV CONDEMNATION Section 1. Distribution of Awards. Subject to the limitations set forth in the Article herein entitled "Mortgagee Protection," a condemnation award affecting all or any portion of the Common Property of the Project which is not apportioned among the Owners (including Declarant) by court judgment, or by agreement between the condemning authority and each of the affected Owners in the Project, shall be distributed among the affected Owners (and their respective Mortgagees) based upon the relative fair market values of all Condominiums prior to the award, as determined by an independent, qualified, professional real estate appraiser. All first Mortgagees shall have the right to participate in any condemnation proceedings. Section 2. Distribution of Awards - Association Prop- erty. A condemnation award affecting all or any portion of the Association Property shall be remitted to the general fund of the Association. Section 3. Board of Directors as Attorney-in-Fact. All Owners hereby appoint the Board of the Association as their special attorney-in-fact to handle the negotiations, settlements and agreements pertaining to any condemnation affecting only the Common Property. The special power of attorney shall not apply to the Secretary of the Department of Veterans Affairs, an Officer of the United States of America. ARTICLE XVI COVENANT AGAINST PARTITION Section 1. General Covenant Against Partition. Except as otherwise provided in this Section, the Common Area shall re- main undivided and there shall be no judicial partitions thereof. Nothing herein shall be deemed to prevent partition of a co- tenancy in a Condominium. Section 2. Judicial Partition of the Project. Declarant or the Owner of a Condominium in the Project may maintain a partition action as to the entire Project as if the Owners of all the Condominiums in the Project (including Declarant, if applicable) were tenants-in-common in the entire Project in the same proportion as their interests in the Common Area. The court shall order partition under this Article only by sale of the entire Project and only upon the showing of one (1) of the following: (a) More than three (3) years before the filing of the action, the Project was damaged or destroyed so that : a material part was rendered unfit for its prior use, and the Project has not been rebuilt or repaired substantially to its state prior to the damage or destruction; -67- (b) Three-fourths (3/4) or more of the Project is destroyed or, substantially damaged, and at least sixty-seven percent (67%) of the Owners (other than Declarant) and sixty-seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage owned) oppose re- pair or restoration of the Project; or (c) The Project has been in existence more than fifty (50) years, is obsolete and uneconomical, and at least sixty-seven percent (67%) of the Owners (other than Declar- ant) and sixty-seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage owned) op- pose repair or restoration of the Project. Section 3. Board of Directors' Power of Sale in Event of Judicial Partition. Declarant, for itself and on behalf of each and every present and subsequent Owner of one (1) or more Condominiums within the Project, hereby appoints the Board as its and their attorney-in-fact to sell the entire Project for the benefit of all of the Owners thereof when partition of the Pro- ject may be had pursuant to this Declaration, which power shall: (a) be binding upon all of the Owners, whether they assume the obligations of these restrictions or not; (b) be exercisable by a vote of at least seventy-five percent (75%) of the voting power of the Board; and (c) be exercisable only after recordation of a certificate by the Board, which shall provide that said power is properly exercisable hereunder, and which certificate shall be conclusive evidence thereof in favor of any person relying there- on in good faith; provided, however, said power of attorney shall not apply to the Secretary of the Department of Veterans Affairs, an Officer of the United States of America. ARTICLE XVII INSURANCE Section 1. Required Insurance Coverage. The Associa- tion, acting by and through the Board, shall obtain for the Asso- ciation, and shall maintain and pay the premiums for the follow- ing insurance coverages: (a) Casualty and Fire Insurance. A policy or pol- icies of casualty and fire insurance, with extended coverage endorsement in an amount equal to one hundred percent (100%) of the current replacement cost (without deduction for de- preciation or co-insurance) of the entire Project, together with all Improvements located therein. Said policies shall be maintained for the benefit of the Association, the Owners and the Mortgagees, as their interests shall appear. The coverage does not need to include land, foundations, excava- tions or other items normally excluded from such coverage. Such policy or policies must contain, if required and if ob- tainable: (1) an Agreed Amount and Inflation Guard Endorse- ment; (2) Construction Code Endorsements (such as Demolition Cost Endorsement); (3) a Contingent Liability From Operation of Building Laws Endorsement; (4) an Increased Cost of Con- struction Endorsement, if there is a construction code pro- vision which would become operative and require changes to undamaged portions of the buildings within the Common Area; and (5) any other Special Condominium Endorsements that may be available or required. (b) Public Liability Insurance. A policy or poli- cies of full coverage public liability insurance (with cross-liability endorsement, if obtainable) insuring the Association, the Board, the Owners, the City and the Declar- ant, and the agents and employees of each of the foregoing, against any liability to the public or to any Owner, his family, invitees and/or tenants, arising from or incident to the ownership, occupation, use, maintenance and/or repair of the Common Property and Condominium Units, and from lawsuits related to employment contracts in which the Association is a party. The limits of liability under this Section shall be set by the Board and shall be reviewed at least annually by the Board, and increased or decreased at the discretion of the Board; provided, however, that said limits shall not be less than One Million Dollars ($1,000,000.00) for bodily injury, including deaths of persons and property damage arising out of a single occurrence; provided further, if the Federal Home Loan Mortgage Corporation (FHLMC) and/or the Federal National Mortgage Association (FNMA) participate in the financing of Condominiums in the Project, said limits shall not be less than the minimum limits required under the then current FHLMC and/or FNMA regulations. (c) Worker's Compensation Insurance. Worker's compensation insurance to the extent necessary to comply with any applicable laws. (d) Fidelity Bonds. Officers' and Directors' er- rors and omissions insurance, and fidelity bonds naming all persons signing checks or otherwise possessing fiscal re- sponsibilities on behalf of the Association, including, but not limited to, officers, Directors, trustees and employees of the Association, and officers, employees and agents of any management company employed by the Association who nan- die or are responsible for the Association funds. Such cov- erage shall be in an amount deemed reasonably appropriate by the Association, but shall not be less than the estimated maximum funds in custody of the Association, or twenty-five percent (25%) of the estimated annual operating expenses of the Project, whichever is greater. In addition, if the Asso- ciation enters into an agreement for professional management of the Project, the Association shall require such firm to -69- submit evidence of such firm's fidelity bond coverage to the same extent as the Association's coverage. Section 2. Optional Insurance Coverage. The Associa- tion, acting at its option and by and through the Board, may pur- chase such other insurance as it may deem necessary or appropri- ate, including, but not limited to, earthquake insurance, flood insurance and plate glass insurance. Section 3. Notice of Cancellation of Insurance. All policies of insurance (including fidelity bonds) maintained by the Association, pursuant to this Article, shall contain a provi- sion that coverage under said policies may not be cancelled, ter- minated, allowed to expire by their own terms or be substantially modified by any party without at least thirty (30) days prior written notice to the Board and to such Owners and such first Mortgagees who have filed written requests with the Association for such notice. A list of such Owners and such first Mortgagees shall be made available by the Association to the insurance car- rier upon request. Section 4. Review of Coverage. The Board shall an- nually determine whether the amounts and types of insurance cov- erage that it has obtained pursuant to this Article shall provide adequate coverage for the Project, based upon the then current construction costs, insurance practices in the area in which the Project is located, and all other factors which may indicate that either additional insurance coverage or increased coverage under existing policies is necessary or desirable to protect the inter- ests of the Association, the Owners and their respective Mortga- gees. If the Board determines that increased coverage or addi- tional insurance is appropriate, it shall obtain same. Section 5. Waiver by Owners. As to all policies of insurance maintained by the Association which will not be voided or impaired thereby, each Owner hereby waives and releases all claims against the Association, the Board and the Declarant, and the agents and employees of each of the foregoing, and all other Owners with respect to any loss covered by such insurance, whe- ther or not caused by the negligence of, or breach of, any agree- ment by said persons, but only to the extent of the insurance, proceeds received in compensation for such loss. Section 6. Premiums, Proceeds and Settlement. Insur- ance premiums for all blanket insurance coverage and any other insurance coverage which the Board has determined is necessary to protect the interests of the Association, the Owners and their respective Mortgagees, shall be a Common Expense to be included in the Regular Assessments levied by the Association. All insur- ance proceeds paid to the Association shall be disbursed as fol- lows: (a) in the event of any damage or destruction to the Common Area, such proceeds shall be disbursed in accordance with the provisions of the Article herein entitled "Damage or Destruction -70- to the Common Area"; (b) in the event of any damage or destruc- tion to the Association Property, such proceeds shall be dis- bursed in accordance with the provisions of the Article herein entitled "Damage or Destruction to the Association Property"; and (c) in the event of any other loss, the proceeds shall be dis- bursed as the Board shall deem appropriate, subject to the limi- tations set forth in the Article herein entitled "Mortgagee Pro- tection." The Association is hereby granted the authority to ne- gotiate loss settlements with the appropriate insurance carriers. A majority of the Board must sign a loss claim form and release form in connection with the settlement of a loss claim, and such signatures shall be binding on the Association and its Members. Section 7. Rights and Duties of Owners to Insure. Each Owner may obtain insurance on his personal property and on all other property and improvements within his Condominium Unit. Nothing herein shall preclude any Owner from carrying any public liability insurance as he may deem desirable to cover his indi- vidual liability for damage to person or property occurring in- side his individual Condominium Unit or elsewhere upon the Proj- ect. If obtainable, such liability insurance coverage carried by an Owner shall contain a waiver of subrogation of claims against the Declarant, the Association and the Board, and their agents and employees, and all other Owners. Such other policies shall not adversely affect or diminish any liability under insurance obtained by the Association. If any loss intended to be covered by insurance carried by the Association shall occur and the pro- ceeds payable thereunder shall be reduced by reason of insurance carried' by any Owner, such Owner shall assign the proceeds of such insurance carried by him to the Association to the extent of such reduction for application by the Board to the same purposes as the reduced proceeds are to be applied. Section 8. Trustee for Policies. The Association is hereby appointed and shall be deemed trustee for the interests of all insureds under the policies of insurance maintained by the Association. All insurance proceeds under such policies shall be paid to the Board, as trustees, and the Board shall have full power to receive such funds on behalf of the Association, the Owners and their respective Mortgagees, and to deal therewith as provided for in this Declaration. Section 9. Mortgage Clause. All insurance policies should have the "standard mortgage clause," or equivalent en- dorsement, providing that coverage of a Mortgagee under the in- surance policy will not be adversely affected or diminished by an act or neglect of the Mortgagor, which is commonly accepted by private institutional mortgage investors in the area in which the Project is located, unless such coverage is prohibited by ap- plicable law. Mortgages owned by FNMA must name as a Mortgagee either FNMA or the servicers for the Mortgages held by FNMA en- -71- cumbering the Condominiums. When a servicer is named as the Mort- gagee, its name should be followed by the phrase "its successors and assigns." If the Mortgage is owned in whole by FHLMC, the name of the servicer of the Mortgage followed by the phrase "its successors and assigns, beneficiary" should be named as Mortgagee instead of FHLMC. The mortgage clause should be endorsed to fully protect FHLMC's interests or the interest of FHLMC and the ser- vicer where applicable. If FHLMC must be named as Mortgagee, the endorsement should show the servicer's address in lieu of FHLMC's address. A mortgage clause in favor of Mortgagees holding Mort- gages on Condominiums is not required on a policy insuring the Association Property. Section 10. Compliance With Requirements of FHLMC and FNMA. Notwithstanding the provisions of this Article, the Association shall obtain and maintain in effect such policies of insurance meeting all requirements of FHLMC and FNMA established by those entities for condominium projects for so long as any of such agencies continue to be a Mortgagee, Owner, insurer or guarantor of a Mortgage in the Project, except to the extent such coverage is not available or has been waived, in writing, by such agencies. ARTICLE XVIII MORTGAGEE PROTECTION Section 1. Mortgagee Protection Provisions. Notwith- standing any other provisions in this Declaration to the con- trary, in order to induce the Federal Home Loan Mortgage Corpora- tion (FHLMC) and the Federal National Mortgage Association (FNMA), and other lenders and investors, to participate in the financing of the sale of Condominiums in the Project, the follow- ing provisions contained within this Article are added hereto, and to the extent these added provisions conflict with any other provisions in this Declaration, these added provisions shall con- trol. The Declaration, the Articles and the By-Laws for the Asso- ciation are hereinafter collectively referred to in this Article as the "constituent documents." (a) The right of an Owner to sell, transfer or otherwise convey his Condominium shall not be subject to any right of first refusal or any similar restriction in favor of the Association. (b) The lien of the Assessments provided for herein shall be subordinate to the lien of any first Mort- gage now or hereafter recorded upon any Condominium. The sale or transfer of any Condominium shall not affect the : Assessment lien; however, the sale or transfer of any Condo- minium pursuant to judicial or nonjudicial foreclosure of a first Mortgage or pursuant to any remedies provided for in the Mortgage shall extinguish the lien of such Assessments -72- as to payments which became due prior thereto. No sale or transfer shall relieve such Condominium from liability for Assessments due thereafter. Any first Mortgagee who obtains title to a Condominium pursuant to the remedies provided in the Mortgage, or foreclosure of the Mortgage, or any pur- chaser at a foreclosure sale of a first Mortgage will not be liable for any unpaid Assessments or charges which occurred prior to the acquisition of title to such Condominium by the Mortgagee (except for claims for a share of such Assessments or charges resulting from a reallocation of such Assessments or charges to all Condominiums, including the mortgaged Condominium). (c) Except as provided by statute in case of con- demnation or substantial loss to the Condominium Units and/or Common Property, unless sixty-seven percent (67%) of the, Owners other than Declarant, and sixty-seven percent (67%) of the first Mortgagees (based upon one [I] vote for each first Mortgage owned) have given their prior written approval, neither the Association nor the Owners shall be entitled to: (1) By act or omission, seek to abandon or terminate the Condominium Project; (2) Record or file any amendment which would change the pro rata interest or obligations of any Con- dominium for purposes of: (i) levying Assessments or charges, or allocating distributions of hazard insurance proceeds or condemnation awards, or (ii) determining the • pro rata share of ownership of each Condominium Unit in the Common Area; (3) Partition or subdivide any Condominium, except as provided in the Article herein entitled "Cove- nant Against Partition"; provided, however, that no Condominium may be partitioned or subdivided without the prior written approval of the first Mortgagee for such Condominium; (4) By act or omission seek to abandon, par- tition, subdivide, encumber, sell or transfer any or all of the Common Property. The granting of easements for public utilities or for other public purposes consistent with the intended uses of the Common Property by the Project shall not be deemed a transfer within the mean- ing of this clause; (5) Use hazard insurance proceeds for losses to the Project (whether to Condominium Units or to Com- mon Property) for other than repair, replacement or reconstruction; -73- f (6) Effect any decision of the Association to terminate professional management and assume self- management of the Project, where such professional man- agement was previously a requirement by a holder, in- surer or guarantor of any first Mortgage; (7) By act or omission, change, waive or abandon any provisions of this Declaration, or enforce- ment thereof, pertaining to architectural design of the Condominiums or the maintenance and operation of the Common Property within the Project, including, without limitation, sidewalks, fences, driveways and landscaping within the Project; and (8) Fail to maintain fire and extended cov- erage on the insurable Common Property on a current re- placement cost basis in an amount not less than one hundred percent (100%) of the insurable value thereof. (d) All taxes, Assessments and charges which may become liens prior to the first Mortgage under local law shall relate only to individual Condominiums, and not to the Project as a whole. (e) No provision of the constituent documents shall be interpreted to give the Owner of a Condominium, or any other party, priority over any rights of the first Mort- gagee of the Condominium pursuant to its Mortgage in the case of a distribution to such Owner of insurance proceeds or condemnation awards for losses to or a taking of the Con- dominium Units and/or the Common Property. (f) The Assessments provided for in the constitu- ent documents shall include an adequate reserve fund for maintenance, repairs and replacement of those elements of the Common Property that must be replaced on a periodic basis, and shall be payable in regular installments, rather than by Special Assessments. (g) Each holder, insurer or guarantor of a first Mortgage who has filed with the Association a written re- quest for notice shall be entitled to timely written notice of: (1) any condemnation or eminent domain proceeding, and any loss or taking resulting from such proceeding which af- fects the Project, or any portion thereof; (2) any substan- tial damage or destruction to the Project, or any portion thereof, when such loss exceeds Ten Thousand Dollars ($10,000.00); (3) any default in the performance by an indi- vidual Owner of any obligation under the constituent docu- ments which is not cured within sixty (60) days after the Association learns of such default; (4) any lapse, cancella- tion or material modification of any insurance policy or fidelity bond maintained by the Association; (5) any aban- donment or termination of the Project; and (6) any proposed -74- action that 'requires the consent of a specified percentage of eligible Mortgagees. (h) Any agreement for professional management of the Project or any contract providing for services of the Declarant may not exceed one (1) year, renewable by agree- ment of the parties for successive one (1) year periods. Any such agreement must provide for termination by either party without cause and without payment of a termination fee on maximum of ninety (90) days' written notice. (i) In the event of substantial damage to or des- truction of any Condominium Unit or any part of the Common Property, the first Mortgagee for such Condominium will be entitled to timely written notice of any such damage or de- struction. (j) A first Mortgagee of a Condominium in the Project will, upon request, be entitled to: (1) examine the books and records of the Association during normal business hours; (2) require from the Association an annual audited financial statement of the Project for the previous fiscal year (without expense to the holder, insurer or guarantor requesting said statement), however, if an audited financial statement is not available, any Mortgage holder may be allowed to have an audited financial statement prepared, at its own expense; and (3) receive written notice of all meet- ings of the Association and be permitted to designate a rep- resentative to attend all such meetings. (k) Each Owner shall notify the Association, in writing, within ten (10) days after the close of escrow for the purchase of his Condominium of the name and address of his first Mortgagee, and thereafter, each Owner shall promp- tly notify the Association of any changes of name or address for his first Mortgagee. (1) Each Owner hereby authorizes a first Mort- gagee on a Condominium to furnish information to the Board concerning the status of any such first Mortgage. (m) In the event any portion of the Common Prop- erty encroaches upon any Condominium Unit or any Condominium Unit encroaches upon the Common Property as a result of the construction, reconstruction, repair, shifting, settlement or • movement of any portion of the Project, a valid easement for the encroachment and for the maintenance of the same shall exist so long as the encroachment exists. (n) First Mortgagees of Condominium Units may, jointly or singularly, pay taxes or other charges which are in default and which may have become a lien on the Common Property, and may pay overdue premiums on hazard insurance policies or secured new hazard insurance coverage on the lapse of a policy for the Common Property, and first Mort- -75- gagees paying such payments shall be owed immediate reim- bursement therefor from the Association. Upon demand by any first Mortgagee, the Board shall execute, on behalf of the Association, an agreement establishing the right of all first Mortgagees to such reimbursement. Section 2. Violation of Mortgagee Protection Provi- sions. No breach of any of the foregoing covenants shall cause any forfeiture of title or reversion, or bestow any right of re- entry whatsoever, but in the event that any one (1) or more of these covenants shall be violated, the Declarant, its successors and assigns, or the Association, or any Owner of a Condominium in the Project, may commence a legal action in any court of compe- tent jurisdiction to enjoin or abate said violation and/or to recover damages; provided, however, that any such violation shall not defeat or render invalid the lien of any Mortgage made in good faith and for value as to said Condominium. Said covenants shall be binding upon and effective against any Owner of said Condominium, or a portion thereof, whose title thereto is ac- quired by foreclosure, a trustee sale or otherwise. Section 3. Effect of Amendments. Except as may other- wise be provided herein, no amendment of this Declaration or the Articles or the By-Laws of the Association shall affect the rights of any Mortgagee whose lien was created prior to recorda- tion of such amendment. Section 4. Amendments to Conform With Mortgagee Re- quirements. It is the intent of Declarant that this Declaration and the Articles and By-Laws of the Association, and the Project in general, meet all requirements necessary to purchase, guaran- tee, insure and subsidize any Mortgage of a Condominium in the Project by the FHLMC and the FNMA. In furtherance of said intent, Declarant may amend this Declaration without the consent of the Members at any time after the close of escrow for the first sale of a Condominium in the Project by recording a written instrument setting forth the amendment, provided that the amendment is necessary to cause this Declaration to comply with the require- ments of the DRE, FHLMC, FNMA and/or the Government National Mortgage Association; provided, however, that any such amendment shall be effective only if Declarant mails a copy of the amend- ment to all of the foregoing entities which are, or have agreed to be, a holder, insurer or guarantor of a first Mortgage, and does not, within thirty (30) days thereafter, receive a notice of disapproval from any such entity. Said amendments shall not be recorded by Declarant until after the expiration of such thirty (30) day period. -76- ARTICLE XIX ENFORCEMENT OF BONDED OBLIGATIONS Section 1. Enforcement of Bonded Obligations. In the event that the improvements of the Common Property have not been completed prior to the issuance of a Final Subdivision Public Report by the ORE, and the Association is obligee under a bond or other arrangement (hereinafter referred to as the "Bond") to se- cure a performance of the commitment of Declarant to complete such improvements, the following provisions shall apply: (a) The Board shall consider and vote on the question of action by the Association to enforce the obliga- tions under the Bond with respect to any improvements for which a Notice of Completion has not been filed within sixty (60) days after the completion date specified for such im- provements in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writ- ing for the completion of any Common Property improvement, the Board shall consider and vote on the aforesaid question if a Notice of Completion has not been filed within thirty (30) days after the expiration of such extension. (b) In the event that the Board determines not to initiate action to enforce the obligations under the Bond, or in the event the Board fails to consider and vote on such question as provided above, the Board shall call a special meeting of the Members for the purpose of voting to override such decision or such failure to act by the Board. Such meeting shall be called according to the provisions of the By-Laws dealing with meetings of the Members, but in any event, such meeting shall be held not less than thirty-five (35) days nor more than forty-five (45) days after receipt by the Board of a petition for such meeting signed by Mem- bers representing five percent (5%) of the total voting pow- er of the Association. (c) The only Members entitled to vote at such meeting of Members shall be the Owners, other than Declar- ant. A vote at such meeting of a majority of the voting pow- er of such Members, other than the Declarant, to take action to enforce the obligations under the Bond shall be deemed to be the decision of the Association, and the Board shall thereafter implement such decision by initiating and pur- suing appropriate action in the name of the Association. -77- ARTICLE XX ANNEXATION OF ADDITIONAL PROPERTY Additional property may be annexed to and become sub- ject to this Declaration as set forth in this Article. Section 1. Incremental Development of the Project. As set forth in Article II herein entitled "Introduction to 4200 Harbor Drive," Declarant intends to develop the Project in a series of Increments. However, Declarant is under no obligation to continue development of the Project. Section 2. Annexation Pursuant to General Plan. All or any part of the real property described as Annexation Property herein, may be annexed to the Property and added to the scheme of this Declaration, and subjected to the jurisdiction of the Asso- ciation without the assent of the Association or its Members, provided and on condition that: (a) Any annexation pursuant to this Section shall be made prior to three (3) years from the date of the first close of escrow for the sale of a Condominium in the Project to a retail purchaser, pursuant to a Final Subdivision Public Report issued by the ORE for the immediately pre- ceding Increment of the Project; (b) The development of the Annexation Property shall be in substantial conformance with the overall general plan of development for the Project approved by the City and the ORE; and (c) A Declaration of Annexation, as described in Section 4 of this Article, shall be recorded covering the applicable portion(s) of the Annexation Property. Section 3. Annexation Pursuant to Approval. Upon ob- taining the approval in writing of the Association pursuant to the vote or written assent of two-thirds (2/3) of the total votes residing in the Association Members, other than the Declarant, the owner of any property who desires to annex said property to the scheme of this Declaration and to subject it to the jurisdic- tion of the Association may file of record a Declaration of An- nexation, as described in Section 4 of this Article. Section 4. Declaration of Annexation. The annexation of additional property authorized under this Article shall be made by filing of record a Declaration of Annexation, or similar instrument, covering said additional property, and the Declaration of Annexation shall expressly provide that the scheme of this Declaration shall extend to such additional property. The Declaration of Annexation may contain such complementary addi- tions to and modifications of the covenants set forth in this Declaration which are necessary to reflect the different charac- ter, if any, of the annexed property and which are not inconsis- tent with the general scheme of this Declaration. Except as set forth in this Section, no Declaration of Annexation shall add, -78- delete, revoke, modify or otherwise alter the covenants set forth in this Declaratipn. Section 5. Effective Date of Annexation. Any Declaration of Annexation recorded on an Increment of the Project shall become effective immediately upon the first close of an escrow for the sale of a Condominium in such Increment, as evi- denced by the recordation of the first instrument of conveyance for said Condominium. Section 6. Right of De-Annexation. Declarant hereby reserves the right to de-annex any property which may be annexed to the Property pursuant to this Declaration, and to delete said property from the scheme of this Declaration and from the juris- diction of the Association, provided and on condition that the de-annexation shall be made prior to the first close of an escrow for the sale of a Condominium in the property to be de-annexed. Section 7. Amendments to Declarations of Annexation. Notwithstanding any other provisions in this Declaration to the contrary, a Declaration of Annexation may be amended by the requisite affirmative vote of Members (and first Mortgagees, if applicable), as set forth in the Article herein entitled "General Provisions," in only the annexed property described in said Declaration of Annexation, rather than all Members (and first Mortgagees, if applicable) in the Project, on the following conditions: (a) Such amendment applies only to the annexed property described in said Declaration of Annexation; and (b) Such amendment shall in no way contradict, revoke or otherwise alter any of the Protective Covenants set forth in this Declaration. -79- ARTICLE XXI GENERAL PROVISIONS Section 1. Enforcement. (a) The Association or the Owner of any Condomin- ium in the Project, including the Declarant, shall have the right to enforce, by proceedings at law or in equity, all of the Protective Covenants now or hereafter imposed by this Declaration and the By-Laws, respectively (and the Rules and Regulations duly adopted by the Association), including, without limitation, the right to prosecute a proceeding at law or in equity against the person or persons who have vio- lated, or are attempting to violate, any of said Protective Covenants, to enjoin or prevent them from doing so, to cause said violation to be remedied and/or to recover damages for said violation. Additionally, the City shall have the right, but not the obligation, to enforce those Protective Covenants which implement any conditions of approval or otherwise effect any rights or interests of the City. (b) The result of every act or omission whereby any of the Protective Covenants contained in this Declara- tion or the provisions of the By-Laws are violated, in whole or in part, is hereby declared to be and constitutes a nuis- ance, and every remedy allowed by law or equity against a nuisance shall be applicable against every such result and may be exercised by any Owner, by the Association, or by its successors in interest. (c) The remedies herein provided for breach of the Protective Covenants contained in this Declaration or the provisions of the By-Laws shall be deemed cumulative, and none of such remedies shall be deemed exclusive. (d) The failure of the Association or any Owner to enforce any of the Protective Covenants contained in this Declaration, the provisions of the By-Laws or any Rules or Regulations shall not constitute a waiver of the right to enforce the same thereafter. (e) A breach of the Protective Covenants con- tained in this Declaration or of the provisions of the By- Laws shall not affect or impair the lien or charge of any bona fide Mortgage or deed of trust made in good faith and for value en any Condominium; provided, however, that any subsequent Owner of such property shall be bound by said Protective Covenants and the provisions of the By-Laws, whether or not such Owner's title was acquired by foreclo- sure, a trustee's sale or otherwise. (f) The Board, for and on behalf of the Associa- tion, may assess monetary penalties against an Owner as a Compliance Assessment and/or temporarily suspend said Own- er's voting rights and right to use any recreational facili- -80- ties, for the period during which any Assessment against said Owner's Condominium remains unpaid; provided, however, the requirements for Notice and Hearing set forth in the By- Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (g) The Board, for and on behalf of the Associa- tion, may temporarily suspend an Owner's voting rights and right to use any recreational facilities for a period not to exceed thirty (30) days for any infraction of the Associ- ation's Rules and Regulations; provided, however, the re- quirements for Notice and Hearing set forth in the By-Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (h) In addition to the above general rights of enforcement, the City shall have the right, through its agents and employees, to enter upon any part of the Project for the purpose of enforcing the California Vehicle Code and its local ordinances, and is hereby granted an easement over the Project for that purpose. Section 2. Severability. Invalidation of any one of these Protective Covenants by judgment or court order shall in no way affect any other provisions hereof, which shall remain in full force and effect. Section 3. Term. The Protective Covenants set forth in this Declaration shall run with and bind the Project, and shall inure -ta the benefit of the Association and be enforceable by the Board or the Owner of any land subject to this Declara- tion, their respective legal representatives, heirs, successors and assigns, for a-'term of fifty (50) years from the date this Declaration is regarded, after which time said Protective Cove- nants shall be automatically extended for successive periods of ten (10) years, unless an instrument, signed by a majority of the then Owners agreeing to terminate said Protective Covenants, in whole or in part, has been recorded within one (1) year prior to the termination of" the initial fifty (50) year term, or within one (1) year prior ta the termination of any successive ten (10) year period. Section 4. Construction. The provisions of this Dec- laration shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and maintenance of the Project. The Article and Section headings have been inserted for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction. Section 5. Singular Includes Plural. Whenever the context of this Declaration may so require, the singular saall include the plural, and the masculine shall include the feminine and neuter. -81- Section -6. Amendments. This Declaration may be amend- ed only by an affirmative vote of not less than sixty-seven per- cent (67%) of each class of Members. So long as there is both a Class A and Class B membership, any amendments to this Declara- tion shall require the prior approval of the ORE. At such time when the Class B membership shall cease and be converted to Class A membership/ any and all amendments to this Declaration shall be enacted by requiring the vote or written assent of Members repre- senting both: (a) sixty-seven percent (67%) of the total voting power of the Association, and (b) sixty-seven percent (67%) of the votes of Members, other than the Declarant; provided, how- ever, that the percentage of the voting power necessary to amend a specific provision shall not be less than the percentage of af- firmative votes prescribed for action to be taken under said pro- vision. In addition, in the event that FNMA participates in the financing of Condominiums in the Project, the written consent not less than fifty-one percent (51%) of the first Mortgagees shall be required for any amendment of a "material" nature. An amendment which affects or purports to affect any of the following is considered material: (a) The legal status of the Project as a common interest development; (b) Voting rights; (c) Assessments, assessment liens or the priority of assessment liens, including the levy and collection thereof, enforcement provisions for nonpayment and subordi- nation of liens for nonpayment; (d) Reserves for maintenance, repair and replace- ment of Common Property; (e) Responsibility for Common Property mainte- nance and repair; (f) Reallocation of interests in the Common Area or rights to use the Common Property; (g) Boundaries of any Condominium; (h) Encroachment by Improvements into Common Property; (i) Expansion or contraction of the Project, or addition, annexation or de-annexation of additional property to or from the Project; (j) Insurance or fidelity bonds; (k) Leasing of Condominiums; (1) Restrictions on alienation, including, but not limited to, rights of first refusal; (m) Any decision by the Association to establish self-management, if professional management was previously required by an eligible first Mortgagee or legal documents governing the Project; -82- (n^ Restoration or repair of the Project in a manner other than as specified in this Declaration? (o) Any action to terminate the legal status of the Project after substantial destruction or condemnation occurs; and; (p) Mortgagee protection provisions as set forth in that Article hereinabove entitled "Mortgagee Protection," and such other provisions in this Declaration for which the consent of Mortgagees shall be required or which are ex- pressly for the benefit of Mortgagees, insurers or guaran- tors of Mortgages. In the event the Association is considering termination of the legal status of the Project for reasons other than the substan- tial destruction or condemnation of the Project, then sixty-seven percent (67%) of the first Mortgagees must agree to said termi- nation. Notwithstanding the foregoing, in the event any first Mortgagee receives a written request, delivered by certified or registered mail with return receipt requested, from the Board to approve any amendment to this Declaration, and such first Mort- gagee does not deliver a negative response in writing to the Board .within thirty (30) days of the mailing of such request by the Board, such first Mortgagee shall be deemed to have approved such proposed amendment. This amendment provision shall not be amended to allow amendments by less than the percentages set forth hereinabove. Notwithstanding the foregoing, any Owner or the Association may petition the Superior Court of the County of San Diego for an order reducing the necessary percentage required under this Section to amend this Declaration. The procedure for effecting this petition is set forth in Section 1356 of the California Civil Code, as the same may be amended, from time to time. An amendment made in accordance with the provisions set forth hereinabove shall be effective when executed by the President and Secretary of the Association, who shall certify that the amendment has been approved by the membership and, where appropriate, by the first Mortgagees in the percentages set forth hereinabove, recorded in the Office of the County Recorder for the County of San Diego. Upon such recordation, the amendment shall be effective and binding upon all Owners and all Mortgagees, regardless of whether such Owner or such Mortgagees consented to such amendment. Section 7. Encroachments. None of the rights and ob- ligations of the Owners created herein or by the deed shall be altered in any way by encroachments due to settlement or shifting of structures or any other cause. There shall be valid easements for the maintenance of said encroachments so long as they shall -83- exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of an Owner if said en- croachment occurred due to the willful conduct of said Owner. Section 8. Notices. Any notice permitted or required to be delivered as provided herein shall be in writing and may be delivered either personally or by mail. If delivery is made by registered or certified mail, it shall be deemed to have been de- livered forty-eight (48) hours after a copy of the same has been deposited in the United States mail, postage prepaid, addressed to any person at the address given by such person to the Associa- tion for the purpose of service of such notice, or to the Condo- minium Unit of such person if no address has been given to the Association. If such notice is not sent by regular or certified mail, it shall be deemed to have been delivered when received. Such address may be changed, from time to time, by notice in writing to the Association. Section 9. Attorneys' Fees. If any Owner defaults in making a payment of Assessments or in the performance or obser- vance of any provision of this Declaration, and the Association has obtained the services of an attorney in connection therewith, the Owner covenants and agrees to pay to the Association any costs or fees incurred, including reasonable attorneys' fees, re- gardless of whether legal proceedings are instituted. In case a suit is instituted, the prevailing party shall recover the cost of the suit, in addition to the aforesaid costs and fees. IN WITNESS WHEREOF, Declarant has executed this instru- ment on the day and year first above written. "DECLARANT" MARLBOROUGH DEVELOPMENT CORPORATION, a California corporation BY: ^><LA Its: BY: i _ Its: -84- STATE OF CALIFORNIA COUNTY OF ) ss. On 7 <^?7 /, before me, the undersigned, a Notary Public in and for said State, personally appeared _ A /V/fe, _ and f Mf/£ 2X BuZtieV > personally-u. -r-r — -^ - known to me (or proved to me on the basis of satisfactory evi- dence) to be the persons who executed the within instrument as /^££" e/gS>/3#/7^ and /^S577~ Sf<. , on behalf of MARLBOROUGH DEVELOPMENT CORPORATION, the corporation therein named, and acknowledged to me that said corporation executed the within instrument pursuant to its By-Laws or a resolution of its Board of Directors. WITNESS my hand and official seal. Signature of Notary Public OFFICIAL- :;:.:AI DEBRA If ViTiM NOTARY PUEL!;: ',-:.'. ORNiA ORANGGCC'J^TV MyComm. Expires Jen 26, 1991 ( SEAL ) CONSENT OF LIENHOLDER AND SUBORDINATION OF LIEN The undersigned beneficiary under that certain Deed of Trust recorded on E^bruav-M 3 i 19 %*7 , as Instrument No. T^?- D5"79g7 / in the Official Records of San Diego County, Cali- fornia, agrees that the lien of the Deed of Trust shall be junior and subordinate and subject to the attached Declaration of Covenants, Conditions and Restrictions, and Reservation of Easements for 4200 Harbor Drive ("Declaration"), to any Declaration of Annexation recorded pursuant to the Article herein entitled "Annexation of Additional Property" ("Declaration of Annexation"), to any easements to be conveyed to the 4200 Harbor Drive Homeowners Association in accordance with the terms of the Declaration and any Declaration of Annexation, and to any amend- ments to such documents that may be required for the purpose of complying with any law, ordinance, regulation or other require- ment of any governmental or other public agency (including, but not limited to, the County, City, ORE, FNMA, FHLMC and/or GNMA) . DATED tStT^ko ^k 19^0 "LIENHOLDER" cAY\oy BY: Its: BY: Its: STATE OF CALIFORNIA ) ) ss. COUNTY OF -ORANGE- ) On oe/?/.e/y? her 3 4 r 19_£f, before me, the undersigned, a Notary Public in and for said State, personally appeared _ t: hn?U H tf<u r)cur*cfc« /PS and -- • --------- _ , personally known to me for proved to me on the basis of satisfactory evi- dence) to be the persons who executed the within instrument as I iLe. ,re±t c/e./> f~ and — ..... , on_ _ _ _ behalf of 5ecur.fy Pc^,£<c /U^e,?.-./ &a*t. _ / the association therein named, and acknowledged to me that said association executed the within instrument pursuant to its By-Laws or a resolution of its Board of Directors. WITNESS my hand and official seal. L - Signature pf Notary Public 1 1 s-stf '•-/'! ' LOS ANGELES COUNTY' My Commission fjpues Dec. 13, 199) (SEAL) EXHIBIT "A1 DESCRIPTION OF THE PROPERTY The Property shall mean and refer to that certain real property (and to all Improvements constructed thereon) located in the City of Carlsbad, County of San Diego, State of California, more particularly described as follows: Lot 1 of Carlsbad Tract No. 83-4 according to the map thereof No. 11484 filed in the Office of the County Recorder of San Diego County on April 10, 1986, excepting therefrom that portion of said land, if any, heretofore or now lying below the mean high tide line of the Pacific Ocean. Page 1 of 1 Page EXHIBIT "B1 DESCRIPTION OF THE ANNEXATION PROPERTY The Annexation Property shall mean and refer to that certain real property located in the City of Carlsbad, County of San Diego, State of California, more particularly described as: Lot 2 of Carlsbad Tract No. 83-4 according to the map thereof No. 11484 filed in the Office of the County Recorder of San Diego County on April 10, 1986, excepting there- from that portion of said land, if any, heretofore or now lying below the mean high tide line of the Pacific Ocean. Page 1 of 1 Page EXHIBIT DESCRIPTION AND DEPICTION OF THE ACCESS EASEMENTS The Access Easements shall mean and refer to all of those certain nonexclusive easements as described in a Deed to Marlborough Development Corporation, a California corporation, which was recorded in the Office of the County Recorder of San Diego County on July 18, 1988 as File/Page No. 88-346620 of the Official Records. The Access Easements are generally depicted for illustrative purposes on Page 2 of this Exhibit "C." Page 1 of 2 Pages EXHIBIT "C1 DESCRIPTION AND DEPICTION OF THE ACCESS EASEMENTS 4200 HARBOR DRIVE XNN>^ ^ Page 2 of 2 Pages EXHIBIT "D" DEPICTION OF THE OPEN SPACE EASEMENT AREAS (see attached) EXHIBITED* p <\ ,1 /\ r~^ ,--, "~^~I v /I / V l_ J -•< l\ I iV!/"\i ^'h_/ N ^e/« -^9.:fUBUC. ACCESS EASEMENTTO THE POBLIC OKJ HAP ^ 114-84- POBLIC UTILITIESTUE crry OF BV f^P 74-Z9ZOS3, RBC II-4--74 (TO V\ EASEMEMT OFFERED ^COSTAL, COMMISSION ~BV ---'- -573112, EASEMENT 1(4-84- > *3.<v* I LCTI , TRACT OF , 92086" SSODS" t>i ^ AND WHEN RECORDED MAIL THIS DEED AND, UNLESS OTHERWISE SHOWN BELOW. MAIL TAX STATEMENTS TO: NAME I 1 STREET t ADDRESS CITY. STATE ZIP L J •SPACE ABOVE THIS LINE FOR RECORDER'S USE ALL PTN Title Order No. SAMPLE E«'ow or Loan No. CORPORATION GRANT DEED THE UNDERSIGNED GRANTOR(s) DECLARE(s) DOCUMENTARY TRANSFER TAX is $ CITY TAX $ D computed on full value of property conveyed, or D computed on full value less value of liens or encumbrances remaining at time of sale. D Unincorporated area: D City of Carlsbad , .and FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged. MARLBOROUGH DEVELOPMENT CORPORATION, a corporation organized under the laws of the State of California hereby GRANTS to JOHN DOE and MARY DOE, husband and wife/ as joint tenants, the following described real property in the County of 'an Diego,State of California: See Exhibit "A" attached hereto and incorporated herein by this reference. Dated. MARLBOROUGH DEVELOPMENT CORPORATI a California corporation , o Corporation STATE OF CALIFORNIA ss _doy ol.On this before me. the undersigned, a Notary Public in and tor said County and State. personally appeared and _^ .- personally known to me (or proved to me on the basis ol satisfactory evidence) to be the persons who executed the within instrument as ______^_ Presideo1. and ™___^_ Secretary on behalf of the corporation therein named, and acknowledged to me that such corporation executed the sanne. pursuant to its laws, or a resolution ot its Board of Directors WITNESS my hood and official seal . Secretary Sio.nature - Nome (Typed or Printed)(This area for official notarial seal) TT-102 (Rev. 1/88)MAIL TAX STATEMENTS AS DIRECTED ABOVE. 10725.004 CCR897S 091890 EXHIBIT "A" The Condominium Estate consists of the following: Parcel 1. An Undivided Interest in the Common Area; A one/eighty-sixth (l/86th) undivided fractional fee interest in and to all of the real property described as Lot 1 of Carlsbad Tract No. 83-4, located in the City of Carlsbad, County of San Diego, State of California, according to the Map thereof No. 11484 filed in the Office of the County Recorder of San Diego County on April 10, 1986, together with all improvements thereon, ("Lot 1"), excepting therefrom that portion of said land, if any, heretofore or now lying below the Mean High Tide Line of the Pacific Ocean, and further excepting and reserving therefrom the following: (a) All Condominium Units now or hereafter constructed thereon; (b) The right which is hereby expressly reserved by Grantor to grant to owners of Condominiums now or hereafter constructed on Lot 1, pursuant to that Article contained in that certain "Declaration of Covenants, Conditions and Restrictions, and Reservation of Easements for 4200 Harbor Drive" recorded on , 19 , as Instrument No. , in the Official Records in the Office of the County Recorder for the County of San Diego ("Declaration"), nonexclusive ease- ments appurtenant to said owner's Condominium Unit on, over and across the Common Area of Lot 1, except over any Exclu- sive Use Common Area as defined in Subsection (c) herein- below and in the Declaration; (c) All of the exclusive easements for Exclusive Use Common Area, as described in the Declaration and shown in the Con- dominium Plan (defined in Parcel 2 below); (d) Nonexclusive easements for ingress, egress, access, mainte- nance, repair, drainage, encroachment and other purposes, all as described in the Declaration; (e) All minerals, including without limitation, all oil, gas, hydrocarbon and similar substances, and all water, water rights, geothermal steam and steam power, within or under- lying such real property, together with the perpetual right of development thereof; provided, however, that such right does not include the right to enter upon the surface of said real property or at any point within five hundred (500) feet below the surface of said real property; and (f) All other matters described in the Declaration or otherwise of record. Parcel 2. The Condominium Unit; Unit , as shown on that certain Condominium Plan recorded on , 19 , as Instrument No. , in the Official Records in the Office of the County Recorder for the County of San Diego ("Condominium Plan"), as defined in the Declaration. Parcel 3. An Easement For Exclusive Use Common Area; An exclusive easement appurtenant to the afore-described Condo- minium Unit for deck, patio, parking, storage and/or air con- ditioning condensor unit purposes, as more particularly described in the Declaration and as shown in the Condominium Plan ("Exclu- sive Use Common Area"). Page 1 of 3 Pages Parcel 4. A Nonexclusive Easement for Access; A nonexclusive easement appurtenant to the afore-described Condominium Unit (Parcel 2 above) for pedestrian and vehicular ingress, egress and access and such other purposes as set forth in a Deed to Marlborough Development Corporation, a California corporation, recorded in the Office of the County Recorder of San Diego County on July 18, 1988 as File/Page No. 88-346620 of the Official Records of said County. Parcel 5. Nonexclusive Easements Over Common Area; Subject to all of the rights, easements and other privileges reserved by the Grantor pursuant to the Declaration, a nonex- clusive easement appurtenant to the afore-described Condominium Unit for ingress, egress, use and enjoyment on, over and across all portions of the Common Area of Lot 1, except any portions thereof set aside in the Declaration and shown in the Condominium Plan as Exclusive . Use Common Area, and on, over and across all portions of any additional Common Area annexed into the Project except any portions thereof set aside as Exclusive Use Common Area and/or except any portions subject to any rights, easements or privileges reserved by Grantor. Parcel 6. A Nonexclusive Easement Over the Association Property; A nonexclusive easement appurtenant to the afore-described Condo- minium Unit for ingress, egress, use and enjoyment on, over and across any "Association Property" (as defined in the Declaration) presently included or subsequently- annexed into the Project. (Parcels 1 through 6, inclusive, are hereinafter collectively re- ferred to as the "Condominium Estate.") THIS DEED is made and accepted and the Condominium Estate is hereby granted subject to the covenants, conditions, restric- tions, easements, reservations, rights, uses, limitations, equit- able servitudes, liens, charges and all other terms and provi- sions (collectively referred to as the "Protective Covenants") set forth in the Declaration, and in the Articles of Incorpora- tion and the By-Laws of 4200 Harbor Drive Homeowners Association ("Association"), each and all of which are hereby made a part hereof and expressly imposed on the Condominium Estate by this reference with the same effect as though fully set forth herein. GRANTEES, on behalf of themselves and their successors, heirs, executors, administrators, devisees, assigns and grantees, in accepting this deed and conveyance thereunder, do hereby covenant and agree, jointly and severally, for the benefit of Grantor and its successors and assigns, the Association, and/or each and every owner bound by the Declaration, that Grantees; (1) shall fully and faithfully comply with all of th-e Protective Covenants set forth in the Declaration, including, but not limited to, the timely payment in full of all assessments levied in accordance with the Protective Covenants against the Condominium Estate conveyed hereby; and (2) pursuant to the Declaration, irrevocably appoint Grantor and its successors and assigns (i.e., the "Declarant" as such term is defined in the Declaration) as their attorney-in-fact, and grant Declarant an irrevocable Page 2 of 3 Pages power of attorney coupled with an interest for the purposes set forth in Article V of the Declaration. "GRANTEES" I/(We) hereby accept this Deed and the terms, covenants, conditions and restrictions contained herein and irrevocably appoint Declarant as my/{our) attorney-in-fact for the purposes specified in the Declaration. Page 3 of 3 Pages STATE OF CALIFORNIA ) ) SS. COUNTY OF , ) On , 19 , before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that executed the same. WITNESS my hand and official seal. Signature of Notary Public SEAL' STATE OF CALIFORNIA ) ) SS. COUNTY OF ; ) On / 19 , before me, the undersigned, a Notary Public in and for said State, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that executed the same. WITNESS my hand and official seal. Signature of Notary Public (SEAL) AND WHEN RECORDED MAH. TVttS Dffi) AND. UNLESS OTHER^SE SHOW BaOW, MAIL TAX STATB^ENTS TO. **** [T200 HARBOR DRIVE HOMEOWNERsl ASSOCIATION f c/o MARLBOROUGH DEVELOPMENT CC 28751 Rancho California Road .Suite 208 LRancho California, CA 9239Q_J OTY. STATt •SPACE ABOVE THIS LINE FOR RECOffDWS USE AU PTN Title Order No Escrow or Loon No. CORPORATION GRANT DEED THE UNDERSIGNED GRANTOR(s) DECLARE(s) DOCUMENTARY TRANSFER TAX is S CITY TAX $ D computed on full value of property conveyed, or D computed on full value less value of liens or encumbrances remaining at time of sate, D Unincorporated area: D City of Carlsbad . .and FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged. MARLBOROUGH DEVELOPMENT CORPORATION, a corporation organized under the laws of the State of California/ hereby GRANTS to 4200 HARBOR DRIVE HOMEOWNERS ASSOCIATION, a California nonprofit, mutual benefit corporation, the following described real property in the County of San Diego State of California: See Exhibit "A" attached hereto and incorporated herein by this reference. Dated. MARLBOROUGH DEVELOPMENT CORPORATION a California corporation __________________________ o Corporation STATE Of CALIFORNIA COUNTY Of On this ss .doy of.19. before me. the undersigned, o Notary Public in and lot said County and State. personally appeared _ and ____________________________________ personalty known to me (or proved to me on the basis ol sot isloctory evidence) to be the persons who executed tne within instrument as _________ President, and Secretory on behalf of the corporation therein named, and acknowledged to me that such corporation executed the same, pursuant to Us lows, or o resolution of its Board Of Directors WITNESS my hand and official seal . Secretary Signature . Name (Typed or Printed)(This area for olficff notarial seal) TT-102(Rev. 1/88)MAIL TAX STATEMENTS AS DIRECTED ABOVE. 10725.004 CCR897H 022390 EXHIBIT "A Grant Deed of Association Property to the 4200 Harbor Drive Homeowners Association Parcel 1: All those certain nonexclusive easements, as described in that certain deed to Marlborough Development Corporation, a California corporation, recorded on July 18, 1988 as Pile/Page No. 88-346620 in the Office of the County-Recorder of San Diego County. Parcel 2; Nonexclusive easements for ingress, egress, access, maintenance, repair, drainage, encroachment, support and other purposes, all as described in the Declaration defined below. [Parcels 1 & 2 are hereinafter collectively referred to as the "Realty"] THIS DEED is made and accepted and the Realty is hereby granted subject to the following: (a) The covenants, conditions, restrictions, easements, reserva- tions, rights, uses, limitations, liens, charges and all other terms and provisions {hereinafter collectively refer- red to as the "Protective Covenants") set forth in the "Dec- laration of Covenants, Conditions and Restrictions, and Reservation of Easements for 4200 Harbor Drive" recorded on , 19 , as Instrument No. , in the Of- ficial Records of San Diego County, California (referred to herein as the "Declaration"). (b) All other matters set forth in the Declaration or otherwise of record. The Association Property described above is for the use and benefit of those owners of Condominiums located in that certain residential community known as "4200 Harbor Drive," together with the members of their families, their tenants, guests and in- vitees, subject to the terms and provisions of the Declaration. Such Association Property is not for use by the general public. Parcel 1 may also be used by the owners, the members of their families, their tenants, guests and invitees in the adjacent homeowners association commonly known as M ." Page 1 of 1 Page •IRREVOCABLE ESCROW INSTRUCTIONS 4200 HARBOR DRIVE TO: ( ESCROW COMPANY Attention: FROM: MARLBOROUGH DEVELOPMEKT CORPORATION Upon execution of these Instructions, MARLBOROUGH DEVELOP- MENT CORPORATION, a California corporation (hereinafter referred to as "Grantor"), will hand to ESCROW COMPANY, a ("Escrow Holder"), a Corporation Grant Deed (hereinafter referred to as the "Deed") conveying title to the following described real property to the 4200 HARBOR DRIVE HOMEOWNERS ASSOCIATION, a California nonprofit, mutual benefit corpor- ation (hereinafter referred to as the "Association"): Parcel 1; All those certain nonexclusive ease- ments, as described in that certain deed to Marlborough Development Corp- oration, a California corporation, recorded on July 18, 1988 as File/Page No. 88-346620 in the Office of the County Recorder of. San Diego County, California. (Parcel 1 is hereinafter referred to as the "Association Property.") No Documentary Transfer Tax is to be placed on the Deed, as there is none, as said conveyance is for consideration of less than $100.00. You are instructed to insert verbiage on the Deed to record. The Deed, is to be held, unrecorded, by you, as Escrow Holder, until such time as all of the fol- lowing conditions have been satisfied: (a) You are to record the Deed as handed to you prior to or concurrently with: (a) the first close of an escrow for the sale of a Condominium in Increment 1 to a bona fide purchaser; or (b) the occupancy of a Condominium in such Increment pursuant to a rental or lease agreement with Grantor or its agent, after all Improvements, if any, to the Association Property have been completed, as evidenced by the recordation of a valid Notice of Completion, as defined in California Civil Code Section 3093, and the statutory period for all mechanics' liens has expired, or if such lien period has not expired, you have received written advice from a title insurance company authorized to do business in the State of California that Grantor will cause such company to issue a policy of title insurance to the Association with an endorsement insuring against any unrecorded mechanics' liens. In the event the Improvements to the Association Property have not been completed prior to the first close of an escrow or prior to the occupancy of a Condominium pursuant to a rental or lease agree- ment, Grantor shall deposit with you: (i) the original bond, letter of credit or other security satisfactory to the California Department of Real Estate ("DRE") assuring that all such Improvements will be completed free of all liens and encumbrances in accordance with a construction schedule acceptable to the DRE, and (ii) supplemental instructions consistent with DRE form "RE Page 1 of 2 Pages Form 62fl-A" executed by Grantor and countersigned by a ORE Real Estate Specialist or Manager, pursuant to California Business and Professions Code Section 11018.5'. (b) You are to record the Deed, subject to the following conditions: (1) All general and special taxes for the current fis- cal year and supplemental assessments, if any; and (2) Covenants, conditions, restrictions, reservations, rights of way and easements of record, if any. (c) You are to cause all tax bills to be sent to the Asso- ciation at the address set forth on the Deed. 2. Grantor will assume payment of costs and fees incurred as instructed herein. 3. In the event of a dispute between Grantor and the Associ- ation with respect to the question of the conveyance of the Association Property to the the Association, the issue shall, at the request of either party, be submitted to arbi- tration in accordance with the Commercial Arbitration Rules ("Rules") of the American Arbitration Association ("AAA") before an arbitrator selected from the panels of arbitrators of the AAA. In the event of referral to arbitration, Grantor shall remit the fee to initiate the arbitration. Grantor and the Association agree, however, that the costs of arbitra- tion shall ultimately be borne as determined by the arbitra- tor under the Rules. MARLBOROUGH DEVELOPMENT CORPORATION, a California corporation BY: Its: Escrow Holder acknowledges receipt of an executed copy of the above Instructions, and agrees to carry out the terms hereof. Dated: , 19 ESCROW COMPANY, BY: Escrow Officer Page 2 of 2 Pages