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HomeMy WebLinkAboutCP 94-01A; Poinsettia Shores PA B-1; Condo Permit (CP) (31)RECORDING REQUESTED BY: CHICAGO TITLE COMPANY WHEN RECORDED, MAIL TO: JACKSON, DeMARCO & PECKENPAUGH (FSJ) 4 Park Plaza, 16th Floor Post Office Box 19704 Irvine, CA 92623-9704 (Space Above for Recorder's Use) DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR VISTAMAR AT SAN PACIFICO RECEIVED OCT 30 1397 ENGINEERING DEPARTMENT C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 mp.c.96 TABLE OF CONTENTS FOR DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR VTSTAMAR AT SAN PACIFTCO DESCRIPTION PAGE 1. Definitions 2 1.1. Annexable Territory 2 1.2. Architectural Committee or Committee 2 1.3. Articles 2 1.4. Assessment, Annual 2 1.5. Assessment, Capital Improvement 2 1.6. Assessment, Reconstruction 3 1.7. Assessment, Special 3 1.8. Association 3 1.9. Association Maintenance Funds 3 1.10. Association Property 3 1.11. Beneficiary 3 1.12. Board or Board of Directors 3 1.13. Budget 4 1.14. Bylaws 4 1.15. City 4 1.16. Close of Escrow 4 1.17. Common Area 4 1.18. Common Expenses 4 1.19. Common Property 4 1.20. Condominium 5 1.21. Condominium Plan 5 1.22. Cost Center 5 1.23. County 5 1.24. Declarant 5 1.25. Declaration 6 1.26. Deed of Trust 6 1.27. DRE 6 1.28. Dwelling Unit 6 -i- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/2X97 DESCRIPTION PAGE 1.29. Family 6 1.30. FHA 6 1.31. FHLMC 6 1.32. Fiscal Year 6 1.33. FNMA 6 1.34. GNMA 6 1.35. Improvements 6 1.36. Manager 7 1.37. Master Association 7 1.38. Master Declaration 7 1.39. Member, Membership 7 1.40. Module 7 1.41. Mortgage 7 1.42. Mortgagee, Mortgagor 7 1.43. Notice and Hearing 7 1.44. Notice of Addition 8 1.45. Owner 8 1.46. Person 8 1.47. Phase 1 8 1.48. Phase of Development 8 1.49. Project 8 1.50. Property 8 1.51. Record, File, Recordation 8 1.52. Residence 8 1.53. Restrictions 8 1.54. Rules and Regulations 9 1.55. Unit 9 1.56. VA 9 2. Vistamar at San Pacifico Association 9 2.1. Organization of Association 9 2.2. Duties and Powers 9 2.3. Membership 10 2.4. Transfer 10 2.5. Classes of Membership 10 2.6. Voting Rights 11 2.7. Repair and Maintenance by the Association 12 2.8. Unsegregated Real Property Taxes 13 2.9. Repair and Maintenance by Owners 14 2.10. Use of Agent ! 14 -n- C:\DOCS\FSJ037\25973\000\CCRS\02425S7.05 9/22/97 DESCRIPTION PAGE 3. Rights in Common Property 15 3.1. Association Easement and Common Property Transfers 15 3.2. Partition 15 3.3. Members' Easements in Common Property 15 3.4. Extent of Members' Easements 15 3.5. Right to Grant Easements 16 3.6. Delegation of Use 16 3.7. Waiver of Use 16 3.8. Damage by Member 16 4. Architectural Review Committee 17 4.1. Members of Committee 17 4.2. Review of Plans and Specifications 17 4.3. Meetings of the Committee 18 4.4. No Waiver of Future Approvals 19 4.5. Compensation of Members 19 4.6. Inspection of Work 19 4.7. Scope of Review 19 4.8. Variances 20 4.9. Appeals 20 5. Association Maintenance Funds and Assessments 20 5.1. Personal Obligation of Assessments 20 5.2. Maintenance Funds of Association 21 5.3. Purpose of Assessments 21 5.4. Limitations on Annual Assessment Increases 22 5.5. Annual Assessments/Commencement-Collection 24 5.6. Capital Improvement Assessments 25 5.7. Delinquency 25 5.8. Creation and Release of Lien 25 5.9. Enforcement of Liens 26 5.10. Priority of Assessment Liens 27 5.11. Receivers 27 5.12. Capital Contribution 27 6. Project Easements and Rights of Entry 28 6.1. Easements 28 6.2. Rights of Entry 29 -111- C:\DOCS\FSJ037\25973\000\CCRS\0242557.0S 9/22/97 DESCRIPTION PAGE 7. Declarant's Rights and Reservations 30 8. Residence and Use Restrictions 31 8.1. Single Family Residences 31 8.2. Parking and Vehicular Restrictions 31 8.3. Nuisances 32 8.4. Signs 33 8.5. Antennae 33 8.6. Inside and Outside Installations 34 8.7. Animal Regulations 34 8.8. Business or Commercial Activity 35 8.9. Rubbish Removal 35 8.10. Further Subdivision 35 8.11. Drainage 36 8.12. Water Supply System 36 8.13. View Obstructions 36 8.14. Rights of Disabled 37 8.15. Post-Tension Slabs 37 9. Insurance 38 9.1. Duty to Obtain Insurance; Types 38 9.2. Waiver of Claim Against Association 39 9.3. Right and Duty of Owners to Insure 39 9.4. Notice of Expiration Requirements 39 9.5. Insurance Premiums 40 9.6. Trustee for Policies 40 9.7. Actions as Trustee 40 9.8. Annual Insurance Review 40 9.9. Required Waiver 41 10. Damage and Condemnation of Association Property 41 11. Eminent Domain 43 11.1. Condemnation of Condominiums 43 11.2. Portions of Awards in Condemnation Not Compensatory for Value of Real Property 43 11.3. Notice to Owners and Mortgagees 43 -iv- • C:\DOCS\FSJ037\25973\000\CCRS\0242557.0S 9122m DESCRIPTION PAGE 12. Rights of Mortgagees 43 13. Duration and Amendment 47 13.1. Duration 47 13.2. Termination and Amendment 47 13.3. Protection of Declarant 50 14. Enforcement of Certain Bonded Obligation 51 14.1. Consideration by Board .. 51 14.2. Consideration by the Members 51 15. General Provisions 51 15.1. Enforcement of Restrictions 51 15.2. Severability 53 15.3. Interpretation 53 15.4. Mergers or Consolidations 54 15.5. No Public Right or Dedication 54 15.6. Nonliability and Indemnification 54 15.7. Notices 57 15.8. Priorities and Inconsistencies 57 15.9. Constructive Notice and Acceptance 57 15.10. Dispute Notification and Resolution Procedure (Declarant Disputes) 57 15.11. Additional Provisions 61 15.12. Marketing Name 61 16. Annexation of Additional Property 61 16.1. Additions by Declarant 61 16.2. Other Additions 62 16.3. Rights and Obligations-Added Territory 62 16.4. Notice of Addition 62 16.5. Power of Attorney 63 16.6. Deannexation and Amendment 63 17. Party Fences 63 17.1. General Rules of Law to Apply 63 17.2. Sharing of Repair and Maintenance 64 17.3. Destruction by Fire or Other Casualty 64 -v- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 DESCRIPTION 1 8. 17.4. Right to Contribution Runs With Land ................................. 64 City Required Provisions ................................................. 64 18.1. Private Development ............................................... 64 1 8.2. Landscaping ..................................................... 64 18.3. City's Right to Enforce ............................................. 64 18.4. Amendments ..................................................... 64 18.5. Rental of Condominiums ........................................... 65 1 8.6. Private Driveways ................................................. 65 18.7. Concrete Terrace Drains ................. . .......................... 65 18.8. Patio Covers and Decks .................................... ........ 65 18.9. Sight Distance Corridor ............................................ 65 18.10. Exterior Colors ................................................... 65 18.11. Garages ........................................................ 65 18.12. Public Transportation ........................................... -. . . 65 18.13. Failure of Association to Maintain ................................... 65 18.14. Assessments Levied by City .............................. .......... 66 18.15. Pollutant Runoff ........ '. ......................................... 66 18.16. Fire Lanes ....................................................... 66 SUBORDINATION ................................................................. 68 EXHIBIT "A" EXHIBIT "B" EXHIBIT "C" EXHIBIT "D" EXHIBIT "E" EXHIBIT "F" ARTICLES OF INCORPORATION OF THE ASSOCIATION BYLAWS OF THE ASSOCIATION LEGAL DESCRIPTION OF ANNEXABLE TERRITORY DRAWING SHOWING LOCATION OF RETAINING WALLS AND FENCES ON ASSOCIATION PROPERTY IN PHASE 1 BEST MANAGEMENT PRACTICES FOR CONTROL OF POLLUTANT RUN-OFF DRAWING SHOWING LOCATION OF FIRE LANES -VI- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR VISTAMAR AT SAN PACIFICO THIS DECLARATION is made by WATT RESIDENTIAL PARTNERS, a California general partnership, dba Watt Homes Southern California ("Declarant"). EREAMBLE: A. Declarant is the owner of real property ("Phase 1") located in the City of Carlsbad, County of San Diego, State of California, described as follows: Units 1 to 16, inclusive, the Common Area and Association Property, as shown in the Phase 1 Condominium Plan, recorded on , 1997, as File No. , in Official Records of San Diego County, California, which condominium Plan encumbers a portion of Lot 79 of Carlsbad Tract 85-14, as shown on a Subdivision Map Filed on September 12,1986, as Map No. 11616, in the Office of the San Diego County Recorder. B. It is the desire and intention of Declarant to create a "condominium project." as defined in Section 1351(f) of the California Civil Code, to subdivide the Property as authorized by Section 66427 of the California Government Code into "condominiums" as defined in Section 783 of the California Civil Code, and to impose mutually beneficial restrictions under a general plan of improvement for the benefit of all the condominiums created pursuant to the Davis-Stirling Common Interest Development Act. C. Declarant hereby declares that the Property is to be held, conveyed, hypothecated, encumbered, leased, rented, used, occupied and improved subject to the limitations, restrictions, reservations, rights, easements, conditions and covenants contained in this Declaration, all of which are declared and agreed to be in furtherance of a plan for the subdivision, maintenance, improvement and sale of the Property for the purpose of enhancing the value, desirability and attractiveness of the Property. All provisions of this Declaration, including without limitation the easements, uses, obligations, covenants, conditions and restrictions hereof, are hereby imposed as equitable servitudes upon the Property. All of the limitations, restrictions, reservations, rights, easements, conditions and covenants herein shall run with and burden the Property and shall be binding on and for the benefit of all of the Property and all Persons having or acquiring any interest in the Property or any part thereof, and their successive owners and assigns. -1- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 D. Declarant, its successors, assigns and grantees, covenant that each undivided interest in the Common Area, the appurtenant membership in the Association, all easements conveyed therewith and fee title to the respective Unit conveyed therewith shall not be separated or separately conveyed, and each such undivided interest, membership and easement shall be deemed to be conveyed or encumbered with its respective Unit even though the description in the instrument of conveyance or encumbrance may refer only to the Unit; provided, however, that this restriction upon the severability of the component interests of the Condominiums shall not extend beyond the period for which the right to partition the Property is suspended in accordance with Section 1359 of the California Civil Code and the provisions of Article X hereof. Any conveyance by an Owner of a Condominium, or any portion thereof, shall be presumed to convey the entire Condominium, together with a membership in the Association. ARTICLE I 1. Definitions. Unless otherwise expressly provided, the following words and phrases when used herein have the following specified meanings. 1.1. Annexable Territory. Annexable Territory means the real property described in Exhibit "C" attached hereto and incorporated herein by this reference, all or any portion of which may be made subject to this Declaration pursuant to Article XVI hereof. The maximum number of Units that may be added to the Project pursuant to Section 16.1 of Article XVI is two hundred two (202). 1.2. Architectural Committee or Committee. Architectural Committee or Committee means the Architectural Review Committee created pursuant to Article IV hereof. 1.3. Articles. Articles means the Articles of Incorporation of the Association as amended. A copy of the Articles is attached hereto as Exhibit "A" and incorporated herein by this reference. 1.4. Assessment. Annual. Annual Assessment means a charge against the Owners and their Condominiums, representing a portion of the Common Expenses, which are to be levied as provided herein. 1.5. Assessment. Capital Improvement. Capital Improvement Assessment means a charge which the Board may levy against the Owners and their Condominiums, representing a portion of the cost to the Association for installation or construction of any capital Improvements on any of the Common Property. Such charge shall be levied in the same proportions as Annual Assessments. -2- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 1.6. Assessment. Reconstruction. Reconstruction Assessment means a charge which the Board may levy against the Owners and their Condominiums, representing a portion of the Association's cost to reconstruct any Improvements on the Common Property. Such charge shall be levied among all of the Owners and their Condominiums in the same proportions as are Annual Assessments. 1.7. Assessment. Special. Special Assessment means either (a) a charge against a particular Owner directly attributable to, or reimbursable by, that Owner, equal to the cost incurred by the Association for corrective action performed pursuant to the Restrictions, or (b) a reasonable fine or penalty assessed by the Board, plus interest and other charges on such Special Assessments as provided for herein. Special Assessments shall not include any late payment penalties, interest charges or costs (including attorneys' fees) incurred by the Association in the collection of Annual, Capital Improvement or Reconstruction Assessments. 1.8. Association. Association means VISTAMAR AT SAN PACIFICO ASSOCIATION, a California nonprofit corporation (formed pursuant to the California Nonprofit Mutual Benefit Corporation Law), its successors and assigns. The Association is an "association" as defined in Section 1351 (a) of the California Civil Code, and the Association is a "Project Association" as defined in the Master Declaration. 1.9. Association Maintenance Funds. Association Maintenance Funds means the accounts created for Association receipts and disbursements pursuant to Article V hereof. 1.10. Association Property. Association Property means all the real and personal property and Improvements to which the Association holds fee title or over which the Association holds an easement for the common use and enjoyment of the Members including streets, driveways, landscaping, clustered mailboxes, sidewalks, curbs, street lights, street signs, certain fences and walls, an entry gate and monumentation. The boundaries of the Association Property in Phase 1 are depicted on the Phase 1 Condominium Plan. The location of retaining walls and fences on the Association Property in Phase 1 are shown on Exhibit "D" attached hereto. Additional Association Property may be annexed to the Property pursuant to Article XVI hereof. 1.11. Beneficiary. Beneficiary means a Mortgagee under a Mortgage or a Beneficiary under a Deed of Trust and the assignees of such Mortgagee or Beneficiary. 1.12. Board or Board of Directors. Board or Board of Directors means the Association's Board of Directors. -3- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22191 1.13. Budget. Budget means a written, itemized estimate of the Association's income and Common Expenses prepared pursuant to the Bylaws. 1.14. Bylaws. Bylaws means the Bylaws of the Association as adopted by the Board initially in the form of Exhibit "B" attached hereto and incorporated herein by this reference, as amended. 1.15. Citv. City means the City of Carlsbad, in the County of San Diego, State of California, and its various departments, divisions, employees and representatives. 1.16. Close of Escrow. Close of Escrow means the date on which a deed is Recorded conveying a Condominium pursuant to a transaction requiring the issuance of a Final Subdivision Public Report by the DRE. 1.17. Common Area. Common Area means those certain volumes (modules) of airspace described in the Condominium Plans, which shall be owned by groups of Owners in each Phase as tenants in common. The Common Area in Phase 1 is shown on the Phase 1 Condominium Plan. Each Owner of a Condominium in Phase 1 shall own an undivided one-sixteenth (1/16) fee simple interest of the Common Area as a tenant in common with the other Owners of Condominiums in Phase 1. 1.18. Common Expenses. Common Expenses means those expenses for which the Association is responsible under this Declaration, including the actual and estimated costs of: maintaining, managing, operating, repairing and replacing the Common Property; unpaid Special Assessments, Reconstruction Assessments and Capital Improvement Assessments; maintaining the recreational facilities on the Common Property; all utilities metered to more than one Unit and other commonly metered charges for the Property; trash collection and removal (as applicable); maintaining clustered mailboxes and address identification signs; managing and administering the Association including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and other employees; gardening, security and other services benefiting the Common Property; fire, casualty, liability, workers' compensation, errors and omissions and director, officer and agent liability insurance, and other insurance covering the Property and the Directors, officers and agents of the Association: bonding the members of the Board; taxes paid by the Association, including any blanket tax assessed against the Property; amounts paid by the Association for discharge of any lien or encumbrance levied against the Property, or portions thereof; and all other items incurred by the Association, for any reason whatsoever in connection with the Property, for the common benefit of the Owners. 1.19. Common Property. Common Property means the Common Area and the Association Property. -4- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 1.20. Condominium. Condominium means an estate in real property as defined in California Civil Code Section 1351(f). A Condominium consists of an undivided fee simple ownership interest in the Common Area in a Phase, together with a separate ownership interest in fee in a Unit and all easements appurtenant thereto. Subject to the provisions of Section 11.1 hereof, the undivided fee simple interest in the Common Area in a Phase is appurtenant to each Unit in such Phase and is a fraction having one (1) as its numerator and the number of Units in that Phase as its denominator; and shall be held by the Owners of Condominiums in that Phase as tenants in common. 1.21. Condominium Plan. Condominium Plan means the Recorded plan, as amended, for all or a portion of a Phase consisting of (a) a description or survey map of the Phase or portion thereof, which shall refer to or show monumentation on the ground, (b) a three-dimensional description of the Phase or portion thereof, one or more dimensions of which may extend for an indefinite distance upwards or downwards in sufficient detail to identify the Association Property, Common Area and each Unit, and (c) a certificate consenting to the Recordation thereof signed and acknowledged by the record owner of fee title to the Phase or portion thereof and by either the trustee or the Beneficiary of each Recorded Deed of Trust, and the Mortgagee of each recorded Mortgage encumbering the Phase or portion thereof. 1.22. Cost Center. Cost Center shall mean one (1) or more "special benefit" Improvements located on a portion or portions of the Association Property, the maintenance or use of which Improvements is fully or partially restricted to Owners of certain Condominiums as specified in this Declaration or in one (1) or more Notices of Addition of Territory, and where the expenses of operating, maintaining and replacing such Improvements or maintenance areas are borne solely or disproportionately by such specified Owners. The gates controlling access to the Project will all constitute the "Gate Cost Center." and all of the Owners who must use a gate to gain vehicular access to their Condominiums shall equally and uniformly share in the expenses of the gate as set forth in the Budget based upon the number of such Condominiums owned. Additional Cost Centers may be designated in connection with future Phases of Development annexed to the Project. 1.23. County. County means the County of San Diego in the State of California, and its various departments, divisions, employees and representatives. 1.24. Declarant. Declarant means WATT RESIDENTIAL PARTNERS, a California general partnership, dba Watt Homes of Southern California, its successors, and any Person to which it shall have assigned any of its rights hereunder by an express written assignment. As used in this Section, "successor" means a Person who acquires Declarant or substantially all of its assets, or who merges with Declarant, by sale, merger, reverse merger, consolidation, sale of stock or assets, operation of law or otherwise. -5- C:\DOCS\FSJ037\25973\000\CCRS\02425S7.05 9/22/97 1.25. Declaration. Declaration means this instrument as amended. 1.26. Deed of Trust. Deed of Trust means a Mortgage as defined herein. 1.27. ORE. DRE means the California Department of Real Estate and its successors. 1.28. Dwelling Unit. Dwelling Unit means the structural housing Improvement constructed within a Unit. 1.29. Family. Family means one or more natural persons (a) related to each other by blood, marriage or adoption, or (b) a group of natural persons not all so related, but who maintain a common household in a Dwelling Unit. 1.30. FHA. FHA means the Federal Housing Administration of the United States Department of Housing and Urban Development and any department or agency of the United States government which succeeds to FHA's function of insuring notes secured by Mortgages on residential real estate. 1.31. FHLMC. FHLMC means the Federal Home Loan Mortgage Corporation created by Title II of the Emergency Home Finance Act of 1970, and its successors. 1.32. Fiscal Year. Fiscal Year means the fiscal accounting and reporting period of the Association selected by the Board. 1.33. FNMA. FNMA means the Federal National Mortgage Association, a government-sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, and its successors. GNMA means the Government National Mortgage Association administered by the United States Department of Housing and Urban Development, and its successors. 1.35. Improvements. Improvements means all structures and appurtenances thereto, including but not limited to, buildings, walkways, sprinkler pipes, roads, driveways, parking areas, fences, screening walls, block walls, retaining walls, awnings, stairs, decks, landscaping, antennae, hedges, windbreaks, -6- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 the exterior surfaces of any visible structure and the paint on such surfaces, planted trees and shrubs, poles, signs, exterior air conditioning and water softener fixtures or equipment. 1.36. Manager. Manager means the Person employed by the Association as an employee, an agent or an independent contractor to perform functions of the Association as limited by the Restrictions and the terms of the agreement between the Association and said Person. 1.37. Master Association. Master Association means San Pacifico Master Association, a California nonprofit mutual benefit corporation, its successors and assigns, as described in the Master Declaration. 1.38. Master Declaration. Master Declaration means the Master Declaration of Covenants. Conditions, Restrictions and Reservation of Easements for San Pacifico, which was Recorded on , 1997, as Instrument No. , of Official Records. 1.39. Member. Membership. Member means any Person holding a Membership. Membership means the voting and other rights and privileges of Members as provided in the Restrictions, together with the correlative duties and obligations contained therein. 1.40. Module. Module means a separate, three-dimensional airspace volume shown and designated as a "Module" on a Condominium Plan. A Module may include Units within it, but the Units do not constitute Modules in and of themselves. 1.41. Mortgage. Mortgage means any Recorded mortgage or deed of trust or other conveyance of one or more Condominiums or other portion of the Property to secure the performance of an obligation, which conveyance will be reconveyed upon the completion of such performance. 1.42. Mortgagee. Mortgagor. Mortgagee means a Person to whom a Mortgage is made and includes the Beneficiary of a Deed of Trust. Mortgagor means a Person who mortgages his or its property to another (i.e., the maker of a Mortgage), and includes the Trustor of a Deed of Trust. The term "Trustor" is synonymous with the term "Mortgagor" and the term "Beneficiary" is synonymous with the term "Mortgagee." 1.43. Notice and Hearing. Notice and Hearing means written notice and a hearing before the Board, as further provided in the Bylaws. -7- C:\DOCSVFSJ037\25973\000\CCRS\0242557.05 W22/97 1.44. Notice of Addition. Notice of Addition means an instrument Recorded pursuant to Article XVI hereof to annex additional real property to the Property. 1.45. Owner. Owner means the Person or Persons, including Declarant, holding fee simple interest to a Condominium. The term "Owner" includes a seller under an executory contract of sale but excludes Mortgagees. 1.46. Person. Person means a natural individual or any other entity with the legal right to hold title to real property. 1.47. Phase 1. Phase 1 means all of the real property described in Paragraph A of the Preamble of this Declaration. 1.48. Phase of Development. Phase of Development or Phase means each of the following: (a) Phase 1 and (b) all the real property covered by a Notice of Addition, for which a Final Subdivision Public Report has been or will be issued by DRE, unless otherwise defined in such Notice of Addition. 1.49. Project. Project means that portion of the Property which is divided into Condominiums, including the Common Area, Association Property and the Units therein. The Project is a "condominium project" as defined in Section 1351(f) of the California Civil Code. 1.50. Property. Property means (a) Phase 1, and (b) each Phase of Development described in a Notice of Addition. The Property is a "common interest development" as defined in Section 1351(c) of the California Civil Code. 1.51. Record. File. Recordation. Record, File, or Recordation means, with respect to any document, the recordation or filing of such document in the Office of the San Diego County Recorder. 1.52. Residence. Residence means the Dwelling Unit and the Unit on which it is constructed. 1.53. Restrictions. Restrictions means this Declaration, the Articles, Bylaws and the Rules and Regulations of the Association. -8- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 1.54. Rules and Regulations. Rules and Regulations means the rules and regulations adopted by the Board pursuant to this Declaration or the Bylaws, as amended. 1.55. Unit. Unit means a separate interest in space as defined in Section 1351(f) of the California Civil Code. Each Unit is a separate freehold estate, as separately shown, numbered and designated in the Condominium Plan. Each Unit consists of two (2) three-dimensional volumes of real property, containing earth or airspace, or both, any and all Improvements located within each such volume of real property, as such Unit is shown on a Condominium Plan. 1.56. VA. VA means the Department of Veterans Affairs of the United States of America and any department or agency of the United States government which succeeds to VA's function of issuing guarantees of notes secured by Mortgages on residential real estate. ARTICLE II 2. Vistamar at San Pacifico Association. 2.1. Organization of Association. The Association is or shall be incorporated under the name of VISTAMAR AT SAN PACIFICO ASSOCIATION, as a nonprofit mutual benefit corporation organized under the California Nonprofit Mutual Benefit Corporation Law, as required by Section 1363 of the California Civil Code. 2.2. Duties and Powers. The Association has the duties and powers set forth in the Restrictions and also has the general and implied powers of a nonprofit mutual benefit corporation, generally to do all things that a corporation organized under the laws of the State of California may lawfully do which are necessary or proper in operating for the peace, health, comfort, safety and general welfare of its Members, subject only to the limitations upon the exercise of such powers set forth in Restrictions. The Association may install or construct capital Improvements on the Common Property. The Association may (a) reconstruct, replace or refinish any Improvement or portion thereof upon the Common Property; (b) replace destroyed trees or other vegetation and plant trees, shrubs and ground cover upon any portion of the Common Property; (c) employ personnel necessary for the effective operation and maintenance of the Common Property, including the employment of legal, management and accounting services; and (d) enter into contracts with Owners or other persons to provide services or to maintain and repair Improvements within the Project and elsewhere which the Association is not otherwise required to provide or maintain pursuant to this Declaration so long as such contracts provide for reimbursement of the Association for the costs of providing such services or maintenance. -9- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 901191 2.3. Membership. Every Owner shall automatically be a Member and shall remain a Member until such Owner's Condominium ownership ceases, at which time such Owner's Membership shall automatically cease. Ownership of a Condominium is the sole qualification for Membership. Memberships are not assignable except to the Person to whom title to the Unit has been transferred, and every Membership is appurtenant to and may not be separated from the fee ownership of such Unit. The rights, duties, privileges and obligations of all Members are as provided in the Restrictions. 2.4. Transfer. The Membership of any Owner may not be transferred, pledged or alienated in any way, except upon the transfer or encumbrance of such Owner's Condominium, and then only to the transferee or Mortgagee of such Condominium. A prohibited transfer is void and will not be reflected upon the books and records of the Association. A Class A Member who has sold his Condominium to a contract purchaser under an agreement to purchase may delegate his Membership rights to the contract purchaser. The delegation must be in writing and must be delivered to the Board before the contract purchaser may vote. The contract seller shall remain liable for all charges and assessments attributable to the contract seller's Condominium which accrue before fee title to the Condominium is transferred. If an Owner fails or refuses to transfer his Membership to the purchaser of such Owner's Condominium upon transfer of fee title thereto, the Board may record the transfer upon the Association's books. Until satisfactory evidence of such transfer has been presented to the Board, the purchaser will not be entitled to vote at Association meetings. The Association may levy a reasonable transfer fee against a new Owner and such Owner's Condominium (which fee shall be paid through escrow or added to the Annual Assessment chargeable to such new Owner) to reimburse the Association for the administrative cost of transferring the Membership to the new Owner on the Association's records. Such fee may not exceed the Association's actual cost involved in changing its records. 2.5. Classes of Membership. The Association classes of voting Membership are as follows: Class A. Class A Members are all Owners except Declarant for so long as there exists a Class B Membership. Class A Members are entitled to one (1) vote for each Condominium owned by such Class A Members which is subject to assessment. Declarant shall become a Class A Member upon conversion of Declarant's Class B Membership as provided below. When more than one (1) Person owns any Condominium, all such Persons are Members. The vote for such Condominium shall be exercised in accordance with Section 2.6, but no more than one (1) Class A vote may be cast for any Condominium. Class B. The Class B Member is Declarant. The Class B Member is entitled to three (3) votes for each Condominium owned by Declarant which is subject to assessment. The Class B Membership shall be converted to Class A Membership upon the first to occur of the following events: -10- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (1) The second anniversary of the first Close of Escrow in the most recent Phase; or (2) The fourth anniversary of the first Close of Escrow in Phase 1. 2.6. Voting Rights. (a) All voting rights are subject to the Restrictions. Except as provided in Section 14.2 hereof and Section 4.8 of the Bylaws, as long as there exists a Class B Membership, any provision of the Restrictions which expressly requires the vote or written consent of a specified percentage (i.e., other than actions requiring merely the vote or written consent of a majority of a quorum) of the Association's voting power before action may be undertaken shall require the approval of such specified percentage of the voting power of each class of Membership. Except as provided in Section 14.2 hereof and Section 4.8 of the Bylaws, upon termination of the Class B Membership, any provision of the Restrictions which expressly requires the vote or written consent of Owners representing a specified percentage (i.e., other than actions requiring merely the vote or written consent of a majority of a quorum) of the Association's voting power before action may be undertaken shall then require the vote or written consent of Members representing such specified percentage of both (1) the Association's total voting power and (2) the Association's voting power residing in Members other than Declarant. (b) Class A Members are entitled to one (1) vote for each Condominium in which they hold the interest required for Membership. When more than one (1) Person holds such interest in any Condominium ("co-owners"), all such co-owners are Members and may attend any Association meeting, but only one (1) such co-owner shall be entitled to exercise the single vote to which the Condominium is entitled. Co-owners owning the majority interests in a Condominium may designate in writing one (1) of their number to vote. Fractional votes shall not be allowed, and the vote for each Condominium shall be exercised, if at all, as a unit. Where no voting co-owner is designated or if the designation has been revoked, the vote for the Condominium shall be exercised as the co-owners owning the majority interests in the Condominium agree. Unless the Board receives a written objection in advance from a co-owner, it shall be conclusively presumed that the corresponding voting co-owner is acting with his co-owners'consent. No vote may be cast for any Condominium if the co-owners present in person or by proxy owning the majority interests in such Condominium cannot agree to said vote or other action. The nonvoting co-owner or co-owners are jointly and severally responsible for all of the obligations imposed upon the jointly-owned Condominium and are entitled to all other benefits of ownership. All agreements and determinations lawfully made by the Association in -11- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 accordance with the voting percentages established in the Restrictions are binding on all Owners and their successors in interest. 2.7. Repair and Maintenance by the Association. (a) Maintenance Standards. Subject to Articles X and XI, the Association shall paint, maintain, repair and replace the Common Property and Improvements thereon or shall contract for such maintenance, repair and replacement to assure the Common Property and Improvements thereon are maintained in a clean, sanitary and attractive condition reasonably consistent with the level of maintenance reflected in the most current Budget on file with and approved by DRE. However, the Association is not responsible for performing those items of maintenance, repair or Improvement of the Units, the maintenance of which is the responsibility of the Owners pursuant to Section 2.9. The Board shall determine, in its sole discretion, the level and frequency of maintenance of the Common Property. (b) Maintenance Items. The Association shall repair and pay for all centrally metered utilities, water charges, and mechanical and electrical equipment serving the Common Property and repair and maintain all Common Property. The Association shall repair, maintain and replace any fence or wall separating a Unit from Association Property, including the structure, cap and exterior surface facing Association Property, but excluding the interior surface of a fence or wall facing a Unit. (c) Charges to Owners. All costs of maintenance, repairs and replacements for the Property shall be paid for as Common Expenses out of the Association Maintenance Funds as provided herein. The Board shall require strict compliance with all provisions of this Declaration and cause the Property to be inspected by the Architectural Committee for any violation thereof. The Board, after Notice and Hearing, shall levy the cost of any maintenance, repairs or replacement performed by the Association which is not the responsibility of the Association or which arises out of, or is caused by, the act of an Owner or such Owner's Family, tenants, guests, invitees, or agents as a Special Assessment against such Owner. (d) Inspection. The Board shall have the Common Property and all Improvements thereon inspected at least once every three (3) years in order to (i) determine whether the Common Property is being maintained adequately in accordance with the standards of maintenance established in this Section 2.7, (ii) identify the condition of the Common Property and any Improvements thereon, including the existence of any hazards or defects, and the need for performing additional maintenance, refurbishment, replacement, or repair, and (iii) recommend preventive actions which may be taken to reduce potential maintenance costs to be incurred in the future. The Board may employ such -12- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 experts and consultants as are necessary to perform the inspection and make the report required by this Section. The Board shall prepare a report of the results of the inspection required by this Section. The report shall be furnished to Owners within the time set forth for furnishing Owners with the Budget. The report must include at least the following: (i) a description of the condition of the Common Property, including a list of items inspected, and the status of maintenance, repair and need for replacement of all such items; (ii) a description of all maintenance, repair and replacement planned for the ensuing Fiscal Year and included in the Budget; (iii) if any maintenance, repair or replacement is to be deferred, the reason for such deferral; (iv) a summary of all reports of inspections performed by any expert or consultant employed by the Board to perform inspections; (v) a report of the status of compliance with the maintenance, replacement and repair needs set forth in the inspection report for preceding years; and (vi) such other matters as the Board deems appropriate. 2.8. Unsegregated Real Property Taxes. To the extent not assessed to or paid by the Owners, the Association shall pay all real and personal property taxes and assessments levied upon any portion of the Property. If multiple Units are taxed under a blanket tax bill, then each Owner shall pay his proportionate share of any installment due under the blanket tax bill to the Association at least ten (10) days prior to the delinquency date. The Association shall transmit the taxes to the appropriate tax collection agency on or before the delinquency date. The Association shall allocate blanket taxes equally among the Owners and their Condominiums covered by such blanket tax bill, based upon the total number of Units covered by such blanket tax bill. The Association shall, at least forty-five (45) days prior to the delinquency date of any blanket tax installment, deliver to each Owner of a Unit covered by the blanket tax bill in such Phase a copy of the tax bill, along with a written notice setting forth the Owner's obligation to pay his proportionate share of the tax installment and the potential additional charges to the Owner for failure to comply. The Association shall pay the taxes on behalf of any Owner who does not pay his proportionate share. The Association shall add to the Annual Assessment of a delinquent Owner the amount of any sum advanced, -13- C:\DOCS\FSJ037\2S973\000\CCRS\0242557.05 9/22/97 plus interest at the rate often percent (10%) per annum and any amount necessary to reimburse the Association for any penalty or late charge actually assessed in connection with the blanket tax bill, which late charge results from the failure of the delinquent Owner to make timely payment of his proportionate share of the taxes. Until Close of Escrow for the sale of ninety percent (90%) of the Condominiums in the Project has occurred, this Section may not be amended without the express written consent of Declarant. 2.9. Repair and Maintenance by Owners. Each Owner shall maintain, repair and replace, or cause to be so maintained, repaired and replaced, at his sole expense, all portions of his Unit, including the Dwelling Unit and all other Improvements therein, in a clean, sanitary and attractive condition, in accordance with the Condominium Plan and the original construction design of the Improvements in the Project. Each Owner shall also maintain and repair any internal or external telephone wiring wherever located which is designed to serve only his Unit, and is entitled to reasonable access over the Common Property for such purposes, subject to reasonable limitations imposed by the Association. Each Owner shall pay when due all charges for any utility service which is separately metered to his Unit. Each Owner shall maintain and repair, subject to the provisions of Article XVII hereof, the fencing originally installed by Declarant which separates that Owner's Unit from an adjoining Unit ("Party Fence"), and, subject to the provisions of Section 2.7 herein, the inside surface of a fence or wall (e.g., masonry or tubular steel) separating the Owner's Unit from Association Property or other land adjoining the Project. Each Owner shall maintain the landscaping located within his or her Unit which is adjacent to or visible from Association Property in accordance with such "Landscape Standards" as may be promulgated by the Board. Minor discrepancies between the as-built location of any such wall or fence and the legal boundary of any Unit shall not affect the Unit Owner's maintenance duties with respect to such wall or fence. If any Owner shall otherwise permit any Improvement or landscaping, the maintenance of which is the responsibility of such Owner, to fall into disrepair or to become unsafe, unsightly or unattractive, or to otherwise violate this Declaration, the Board shall have the right to seek any remedies at law or in equity which it may have. In addition, the Board shall have the right, but not the duty, after Notice and Hearing as provided in the Bylaws, to enter upon such Owner's yard area to make such repairs or to perform such maintenance and to charge the cost thereof to the Owner. Said cost shall be a Special Assessment enforceable as set forth in this Declaration. 2.10. Use of Agent. The Board may contract with a Manager for the performance of maintenance and repair and for conducting other activities on behalf of the Association. The maximum term of any such contract ("Management Contract") shall be one (1) year, unless a longer term is approved either by vote or written assent of a majority of the Association's voting power, in which case the Management Contract's maximum term shall be three (3) years. The maximum term of any contract providing for Declarant's services to the Association or the Project shall also be three (3) years. Each contract for Declarant's services and each Management Contract must provide for its termination by either party thereto without cause and without payment of a termination fee upon no more than ninety (90) days' written notice to the other party. -14- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 ARTICLE III 3. Rights in Common Property. 3.1. Association Easement and Common Property Transfers. Declarant hereby reserves an easement over the Common Area for the benefit of the Association to enable it to perform its duties and exercise its powers described in this Declaration. The Association's obligation to maintain the Common Property in any Phase in which a Condominium is located commences on the date Annual Assessments commence on Condominiums in such Phase. Until (i) completion of the Improvements thereon in accordance with plans approved by the City and (ii) commencement of Annual Assessments on Condominiums in any Phase in which a Condominium is located, Declarant shall maintain the Common Property in such Phase. The Association's obligation to maintain the Association Property in a Phase comprised solely of Association Property shall commence upon conveyance of such Association Property to the Association. However, the Association must accept title to each and every delivery and conveyance by Declarant of real property as Association Property, and the Association shall execute each such deed and any accompanying escrow instructions if and when requested to do so by Declarant. 3.2. Partition. Except as provided in this Declaration, there shall be no judicial partition of the Common Area, or any part thereof, for the term of the Project, nor may Declarant, any Owner or any other Person acquiring any interest in any Condominium in the Project seek any such judicial partition. 3.3. Members' Easements in Common Property. Subject to this Declaration, every Member has, for himself, his Family, his tenants and guests, a nonexclusive easement of access, ingress, egress, use and enjoyment of, in and to the Common Property. Such easement is appurtenant to and passes with title to every Condominium in the Project. 3.4. Extent of Members' Easements. The rights and easements of use and enjoyment of the Common Property created by this Declaration are subject to the Restrictions, which include, without limitation, the following: (a) The Association's right to consent to or otherwise cause the construction of additional Improvements on the Common Property and to consent to or otherwise cause the alteration or removal of any existing Improvements on the Common Property for the benefit of the Members. (b) The Association's right to grant, consent to or join in the grant or conveyance of easements, licenses or rights-of-way in, on or over the Common Property for purposes consistent with the intended use of the Property as a residential Condominium project. -15- C:\DOCS\FSJ037\25973\000\CCRS\02425S7.05 9/22197 (c) The rights and reservations of Declarant set forth in this Declaration. (d) The Association's right to reasonably restrict access to maintenance and landscaped areas and similar areas of the Property. (e) The Association's right to establish Rules and Regulations for the use of the Common Property. 3.5. Right to Grant Easements. Declarant hereby reserves, together with the right to grant and transfer the same, easements over the Common Property, or any portion thereof, for the exclusive use by an Owner or Owners of contiguous property as a yard, gardening, and/or landscaping area. Any such easement may be conveyed by the Declarant prior to the last Close of Escrow for sale of a Condominium in the Property. Such conveyance must be approved in advance by the Board of Directors of the Association. The purpose of the easement, the portion of the Common Property affected, the Unit to which the easement is appurtenant, and any restrictions on use of the easement area shall be identified in the Recorded grant of easement. 3.6. Delegation of Use. Any Owner entitled to the right and easement of use and enjoyment of the Common Property may delegate those rights and easements in writing to his tenants, contract purchasers or subtenants who reside in such Owner's Condominium, subject to reasonable notification and regulation by the Board. 3.7. Waiver of Use. No Owner may exempt himself from personal liability for assessments duly levied by the Association, nor release such Owner's Condominium from the liens and charges thereof, by waiving use and enjoyment of the Common Property or by abandoning such Owner's Condominium. 3.8. Damage bv Member. To the extent permitted by California law, each Owner is liable to the Association for any damage to the Common Property not fully reimbursed to the Association by insurance (including without limitation any deductible amounts under any insurance policies against which the Association files a claim for such damage) if the damage is sustained due to the negligence, willful misconduct or unauthorized or improper installation or maintenance of any Improvement by the Owner, his guests, tenants or invitees, or any other persons deriving their right and easement of use and enjoyment of the Common Property from the Owner, or such Owner's respective family and guests. The Association may, after Notice and Hearing, (a) determine whether any claim shall be made upon the insurance maintained by the Association, and (b) levy a Special Assessment equal to any deductible paid and the increase, if any, in insurance premiums directly attributable to the damage caused by such Owner or the person for whom such Owner may be liable as described herein. If a Condominium is jointly owned, the liability of its -16- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Owners is joint and several, except to the extent that the Association has previously contracted in writing with the joint owners to the contrary. After Notice and Hearing, the cost of correcting the damage to the extent not reimbursed to the Association by insurance shall be a Special Assessment against such Owner. ARTICLE IV 4. Architectural Review Committee. 4.1. Members of Committee. The Architectural Review Committee, sometimes referred to herein as the "Architectural Committee" or the "Committee," shall be comprised of three (3) members. The initial members of the Committee shall be representatives of Declarant until one (1) year after the original issuance of the Final Subdivision Public Report ("Public Report") for Phase 1 ("First Anniversary"). After the First Anniversary the Board may appoint and remove one (1) member of the Committee, and Declarant may appoint and remove a majority of the members of the Committee and fill any vacancy of such majority, until the earlier to occur of (a) Close of Escrow for the sale of ninety percent (90%) of all the Condominiums in the Property and the Annexable Territory, or (b) the fifth anniversary of the original issuance of the Public Report for Phase 1, after which the Board may appoint and remove all of the members of the Committee. Committee members appointed by the Board must be Members, but Committee members appointed by Declarant need not be Members. The Committee has the right and duty to promulgate reasonable standards against which to examine any request made pursuant to this Article in order to ensure that the proposed plans conform harmoniously to the exterior design and existing materials of the buildings in the Property. Board members may also serve as Committee members. 4.2. Review of Plans and Specifications. The Committee shall consider and act upon all plans and specifications submitted for its approval under this Declaration and perform such other duties as the Board assigns to it, including inspection of construction in progress to assure conformance with plans approved by the Committee. No construction, installation or alteration of an Improvement, including landscaping, in the Property may be commenced or maintained until the plans and specifications therefor showing the nature, kind, shape, height, width, color, materials and location thereof have been submitted to and approved in writing by the Committee; provided, however, that any Improvement may be repainted without Committee approval so long as the Improvement is repainted the identical color which it was last painted. Without limiting the generality of the foregoing, the provisions of this Article IV apply to the construction, installation and alteration of solar energy systems, as defined in Section 801.5 of the California Civil Code, subject to the provisions of California Civil Code Section 714, the City Building Code, applicable zoning regulations, and associated City ordinances. The Owner submitting the plans and specifications ("Applicant") shall obtain a written, dated receipt therefor from an authorized agent of the Committee. Until changed by the Board, the address for the submission of such plans and specifications is the Association's principal office. The Committee shall approve plans and specifications submitted for its approval only if it determines that (a) the installation, -17- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 construction or alterations contemplated thereby in the locations indicated will not be detrimental to the appearance of the surrounding area of the Property as a whole, (b) the appearance of any structure affected thereby will be in harmony with the surrounding structures, (c) the installation, construction or alteration thereof will not detract from the beauty, wholesomeness and attractiveness of the Common Property or the enjoyment thereof by the Members, and (d) the maintenance thereof will not become a burden on the Association. Declarant and any Person to whom Declarant may assign all or a portion of its exemption hereunder need not seek or obtain Architectural Committee approval of any Improvements constructed on the Property by Declarant or such Person. The Committee may condition its approval of proposals or plans and specifications for any Improvement upon any of the following: (1) the Applicant's furnishing the Association with security acceptable to the Association against any mechanic's lien or other encumbrance which may be Recorded against the Property as a result of such work, (2) such changes therein as it deems appropriate. (3) the Applicant's agreement to grant appropriate easements to the Association for the maintenance of the Improvements, (4) the Applicant's agreement to install (at its sole cost) water, gas, electrical or other utility meters to measure any increased consumption, (5) the Applicant's agreement to reimburse the Association for the cost of such maintenance, or (6) the Applicant's agreement to complete the proposed work within a stated period of time, and may require submission of additional plans and specifications or other information prior to approving or disapproving material submitted. The Committee may also issue rules or guidelines setting forth procedures for the submission of plans for approval, requiring a fee to accompany each application for approval, or stating additional factors which it will consider in reviewing submissions. The Committee may provide that the amount of the fee be uniform, or that it be determined in any other reasonable manner, such as by the reasonable cost of the construction, alterations or installations contemplated. The Committee may require such detail in plans and specifications submitted for its review as it deems proper, including without limitation, floor plans, site plans, drainage plans, elevation drawings and descriptions or samples of exterior material and colors. Until receipt by the Committee of any required plans and specifications, the Committee may postpone review of any plans submitted for approval. The Committee shall transmit its decision and the reasons therefor to the Applicant at the address set forth in the application for approval within forty-five (45) days after the Committee receives all required materials. Any application submitted pursuant to this Section 4.2 shall be deemed approved unless the Committee transmits written disapproval or a request for additional information or materials to the Applicant within forty-five (45) days after the date the Committee receives all required materials. The Applicant shall meet any review or permit requirements of the City prior to making any construction, installation or alterations permitted hereunder. 4.3. Meetings of the Committee. The Committee shall meet as necessary to perform its duties. The Committee may, by resolution unanimously adopted in writing, designate a Committee Representative (who may, but need not, be one of its members) to take any action or perform any duties for and on behalf of the Committee except the granting of variances pursuant to Section 4.8. In the absence of such -18- C:\DOCS\FSJ037\25973\000\CCRS\0242537.05 9/22/97 designation, the vote or written consent of a majority of the Committee constitutes an act of the Committee. 4.4. No Waiver of Future Approvals. The Committee's approval of any proposals or plans and specifications or drawings for any work done or proposed or in connection with any other matter requiring the Committee's approval does not waive any right to withhold approval of any similar proposals, plans and specifications, drawings or matters subsequently or additionally submitted for approval. 4.5. Compensation of Members. The Committee's members shall receive no compensation for services rendered, other than reimbursement for expenses incurred by them in performing their duties. 4.6. Inspection of Work. The Committee or its duly authorized representative may inspect any work for which approval of plans is required under this Article IV ("Work"). The right to inspect includes the right to require any Owner to take such action as may be necessary to remedy any noncompliance with the Committee-approved plans for the Work or with the requirements of this Declaration ("Noncompliance"). (a) Time Limit. The Committee's right to inspect the Work and notify the responsible Owner of any Noncompliance shall terminate sixty (60) days after the Work has been completed and the Committee has received written notice from the Owner that the Work has been completed. If the Committee fails to send a notice of Noncompliance to an Owner before this time limit expires, the Work shall be deemed to comply with the approved plans. (b) Remedy. If an Owner fails to remedy any Noncompliance within sixty (60) days from the date of notification from the Committee, the Committee shall notify the Board in writing of such failure. Upon Notice and Hearing, the Board shall determine whether there is a Noncompliance and, if so, the nature thereof and the estimated cost of correcting or removing the same. If a Noncompliance exists, the Owner shall remedy or remove the same within a period of not more than forty-five (45) days from the date that notice of the Board ruling is given to the Owner. If the Owner does not comply with the Board ruling within that period, the Board may Record a Notice of Noncompliance and commence a lawsuit for damages or injunctive relief, as appropriate, to remedy the Noncompliance. 4.7. Scope of Review. The Architectural Committee shall review and approve, conditionally approve or disapprove all plans submitted to it for any proposed construction, installation or alteration solely on the basis of aesthetic considerations, consistency with this Declaration, and the overall benefit or detriment which would result to the immediate vicinity and the Property generally. The Committee shall -19- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 consider the aesthetic aspects of the architectural designs, placement of buildings, landscaping, color schemes, exterior finishes and materials and similar features. The Committee's approval or disapproval shall be based solely on the considerations set forth in this Article IV. The Committee is not responsible for reviewing, nor may its approval of any plan or design be deemed approval of, any plan or design from the standpoint of structural safety or conformance with building or other codes. The Architectural Committee may consider the impact of views from other Dwelling Units and reasonable privacy right claims as factors in reviewing, approving or disapproving any proposed landscaping, construction or other Improvement. However, Declarant does not warrant any protected views within the Property and no Dwelling Unit is guaranteed the existence or unobstructed continuation of any particular view. 4.8. Variances. The Committee may authorize variances from compliance with any of the architectural provisions of this Declaration, including without limitation, restrictions upon height, size, floor area or placement of structures, or similar restrictions, when circumstances such as topography, natural obstructions, hardship, aesthetic or environmental consideration may require. Such variances must be evidenced in writing, must be signed by a majority of the Committee, and become effective upon Recordation. After Declarant has lost the right to appoint a majority of the Committee's members, the Board must approve any variance recommended by the Committee before any such variance becomes effective. If such variances are granted, no violation of the covenants, conditions and restrictions contained in this Declaration shall be deemed to have occurred with respect to the matter for which the variance was granted. The granting of such a variance does not waive any of the terms and provisions of this Declaration for any purpose except as to the particular property and particular provision hereof covered by the variance, nor does it affect the Owner's obligation to comply with all applicable governmental ordinances affecting the use of his Residence. 4.9. Appeals. For so long as Declarant has the right to appoint and remove a majority of the Committee's members, the Committee's decisions are final, and there is no appeal to the Board. When Declarant is no longer entitled to appoint and remove a majority of the Committee's members, the Board may adopt policies and procedures for the appeal of Committee decisions to the Board. The Board has no obligation to adopt or implement any appeal procedures, and in the absence of Board adoption of appeal procedures, all Committee decisions are final. ARTICLE V 5. Association Maintenance Funds and Assessments. 5.1. Personal Obligation of Assessments. Declarant, for each Condominium owned by it, hereby covenants to pay, and each Owner, by acceptance of a deed to a Condominium, whether or not it shall be so expressed in such deed, is deemed to covenant to pay to the Association (a) Annual Assessments, (b) Special Assessments, (c) Reconstruction Assessments and (d) Capital Improvement Assessments; such assessments to -20- C:\DOCS\FSJ037\25973\000\CCRS\0242S57.05 9/22/97 be established and collected as provided herein. The Association may not levy or collect any Annual Assessment, Capital Improvement Assessment. Special Assessment or Reconstruction Assessment that exceeds the amount necessary for the purpose for which it is levied. Except as provided in this Section 5.1, all such assessments (other than Special Assessments), together with interest, costs, and reasonable attorneys' fees for the collection thereof, are a charge and a continuing lien on the Condominium against which such assessment is made. Each such assessment (including Special Assessments), together with interest, costs and reasonable attorneys' fees, is also the personal obligation of the Person who was the Owner of the Condominium at the time when the assessment fell due. The personal obligation for delinquent assessments may not pass to any new Owner ("Purchaser") unless expressly assumed by the Purchaser. 5.2. Maintenance Funds of Association. The Board shall establish no fewer than two (2) separate Association Maintenance Fund accounts into which shall be deposited all monies paid to the Association and from which disbursements shall be made, as provided herein, in the Association's performance of functions under this Declaration. The Association Maintenance Funds may be established as trust accounts at a banking or savings institution and shall include: (a) an Operating Fund for current Common Expenses, (b) an adequate Reserve Fund for the deposit of Reserves attributable to Improvements within the Common Property (which would not reasonably be expected to occur on an annual or more frequent basis), and for payment of deductible amounts for insurance policies which the Association obtains as provided in Section 9.1 hereof, and (c) any other funds which the Board may establish to the extent necessary under the Declaration's provisions. Nothing contained herein precludes the establishment of additional Maintenance Funds by the Association, so long as the amounts assessed, deposited into, and disbursed from any such Fund are designated for purposes authorized by this Declaration. 5.3. Purpose of Assessments. The assessments shall be used exclusively to (a) promote the Owners' recreation, health, safety and welfare, (b) operate, replace, improve and maintain the Common Property, and (c) discharge any other Association obligations under the Declaration. All amounts deposited into the Maintenance Funds must be used solely for the common benefit of all of the Owners for purposes authorized by this Declaration. Disbursements from the Operating Fund shall be made by the Board for such purposes as are necessary for the discharge of its responsibilities herein for the common benefit of all of the Owners, other than those purposes for which disbursements from the Reserve Fund are to be used. Disbursements from the Reserve Fund shall be made by the Board only for the purposes specified in this Article V and in Section 1365.5(c) of the California Civil Code, as amended. If the Association decides to use or transfer reserve funds to pay for litigation, the Association must notify its Members of the decision the next available mailing. Such notice shall provide an explanation of why the litigation is being initiated or defended, why operating funds cannot be used, how and when the reserve funds will be replaced, and a proposed budget for the litigation. The notice must state that the Members have a right to review an accounting for the litigation which will be available at the Association's office. The accounting shall be updated monthly. Association assessments or funds may not be used to abate -21- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 any annoyance or nuisance emanating from outside the boundaries of the Property or in support of Federal. State or local political activities intended to influence governmental action affecting areas outside the boundaries of the Property (e.g., endorsement or support of political candidates, legislative or administrative actions by any governmental agency). Annual Assessments shall only be used to satisfy Common Expenses as provided herein and in the Bylaws. 5.4. Limitations on Annual Assessment Increases. The Board shall levy Annual Assessments as follows: (a) Maximum Authorized Annual Assessment for Initial Year of Operations. Until the first day of the Fiscal Year immediately following the Fiscal Year in which Annual Assessments commence, the Board may levy an Annual Assessment per Condominium in an amount which exceeds one hundred twenty percent (120%) of the amount of Annual Assessments disclosed for the Property in the most current Budget filed with and approved by DRE at the time Annual Assessments commence only if the Board first obtains the approval of Members casting a majority of votes at a meeting or election of the Association in which more than fifty percent (50%) of the Members are represented ("Increase Election"). Notwithstanding the foregoing, this Section does not limit Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 5.4(e). (b) Maximum Authorized Annual Assessment for Subsequent Fiscal Years. Starting with the first Fiscal Year immediately following the Fiscal Year in which Annual Assessments commence, the Board may levy Annual Assessments which exceed the Annual Assessments for the immediately preceding Fiscal Year only as follows: (i) If the increase in Annual Assessments is less than or equal to twenty percent (20%) of the Annual Assessments for the immediately preceding Fiscal Year, then the Board must either (a) have distributed the Budget for the current Fiscal Year in accordance with Section 1365(a) of the California Civil Code, or (b) obtain the approval of Members casting a majority of votes in an Increase Election; (ii) If the increase in Annual Assessments is greater than twenty percent (20%) of the Annual Assessments for the immediately preceding Fiscal Year, then the Board must obtain the approval of Members casting a majority of votes in an Increase Election. -22- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Notwithstanding the foregoing, this Section does not limit Annual Assessment increases necessary for addressing an "Emergency Situation" as defined in Section 5.4(e). (c) Supplemental Annual Assessments. If the Board determines that the Association's important and essential functions may be properly funded by an Annual Assessment in an amount less than the maximum authorized Annual Assessment described above, it may levy such lesser Annual Assessment. If the Board determines that the estimate of total charges for the current year is or will become inadequate to meet all Common Expenses, it shall immediately determine the approximate amount of the inadequacy. Subject to the limitations described in Sections 5.4(a) and (b) above and (e) below, the Board may levy a supplemental Annual Assessment reflecting a revision of the total charges to be assessed against each Condominium. (d) Automatic Assessment Increases. Notwithstanding any other provisions of this Section 5.4, upon Declarant's annexation of any portion of the Annexable Territory pursuant to Article XVI, the Annual Assessment shall be automatically increased by the additional amount, if any, necessary to maintain the Common Property in or abutting such Annexable Territory in accordance with the standards prescribed by the then current DRE Operating Cost Manual, or if the Operating Cost Manual is no longer maintained by DRE, pursuant to standards prescribed by comparable maintenance cost guidelines prepared in accordance with prudent property management practices. However, such increase shall occur only if (i) the annexation of such Annexable Territory is permitted by DRE, and (ii) the amount of such increase does not result in the levy of an Annual Assessment which is greater than the maximum potential Annual Assessment disclosed in all Final Subdivision Public Reports for the Property previously issued by DRE. (e) Emergency Situations. For purposes of Sections 5.4(a), 5.4(b) and 5.6, an "Emergency Situation" is any one of the following: (i) An extraordinary expense required by an order of a court; (ii) An extraordinary expense necessary to repair or maintain the Property or any portion thereof for which the Association is responsible where a threat to personal safety on the Property is discovered; and (iii) An extraordinary expense necessary to repair or maintain the Property or any portion thereof for which the Association is responsible that could not have been reasonably -23- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9172191 foreseen by the Board when preparing the Budget. Prior to the imposition or collection of an assessment pursuant to this Subparagraph (iii), the Board shall adopt a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. The resolution shall be distributed to the Members with the Notice of Assessment. 5.5. Annual Assessments/Cornmencement-Collection. Annual Assessments shall commence on all Condominiums in a Phase on the first day of the first calendar month following the first Close of Escrow in such Phase. All Annual Assessments shall be assessed uniformly and equally against the Owners and their Condominiums based upon the number of Condominiums owned by each Owner, except as may be otherwise provided in a Notice of Addition, and except for that portion of the Budget which constitutes a Cost Center which shall be apportioned as provided in Section 1.22 of this Declaration. Annual Assessments for fractions of any month involved shall be prorated. Declarant shall pay its full pro rata share of the Annual Assessments on all unsold Condominiums for which Annual Assessments have commenced. The Board shall fix the amount of the Annual Assessment against each Condominium at least thirty (30) days in advance of each Annual Assessment period. However, unless otherwise established by the Board, the initial Annual Assessments shall be assessed in accordance with the most recent Budget on file with and approved by DRE. Written notice of any change in the amount of any Annual Assessment, Capital Improvement Assessment or Reconstruction Assessment shall be sent via first-class mail to every Owner subject thereto not less than thirty (30) nor more than sixty (60) days prior to the increased assessment becoming due. The Board may determine that funds in the Operating Fund at the end of the Fiscal Year be retained and used to reduce the following Fiscal Year's Annual Assessments. Upon dissolution of the Association incident to the abandonment or termination of the Property as a Condominium project, any amounts remaining in any of the Maintenance Funds shall be distributed to or for the benefit of the Members in the same proportions as such monies were collected from the Members. Notwithstanding any other provisions of this Declaration, until the earlier to occur of (a) the Recordation of a notice of completion of an Improvement on the Association Property, or (b) the placement of such Improvement into use. each Owner (including Declarant) shall be exempt from paying that portion of any Annual Assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and use of such Improvement. Each Member shall pay to the Association his Annual Assessment in installments at such frequency and in such amounts as established by the Board. Each installment of Annual Assessments may be paid by the Member to the Association in one check or in separate checks as payments attributable to specified Association Maintenance Funds. If any payment of an Annual Assessment installment (a) is less than the amount assessed and (b) does not specify the -24- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Association Maintenance Fund or Funds into which it should be deposited, then the amount received shall be credited in order of priority first to the Operating Fund, until that portion of the Annual Assessment has been satisfied, and second to the Reserve Fund. Notwithstanding any other provisions of this Declaration or the Bylaws regarding the term and termination of contracts with Declarant for providing services to the Association, Declarant may enter into a written maintenance agreement with the Association under which Declarant shall pay all or any portion of the operating Common Expenses and perform all or any portion of the Association's maintenance responsibilities in exchange for a temporary suspension of Annual Assessments. Such maintenance agreement shall extend for a term and shall be on such conditions as are approved by DRE, and may require Owners to reimburse Declarant, through the Association, for a portion of the costs expended in satisfaction of Common Expenses. 5.6. Capital Improvement Assessments. The Board may levy, in any Fiscal Year, a Capital Improvement Assessment or Reconstruction Assessment applicable to that Fiscal Year only to defray, hi whole or in part, the cost of any construction, reconstruction, repair or replacement of a capital Improvement or other such addition upon the Common Property including fixtures and personal property related thereto. No Capital Improvement Assessments in any Fiscal Year which, if added to the Capital Improvement Assessments already levied during such Fiscal Year, exceed five percent (5%) of the Association's Budgeted gross expenses for such Fiscal Year, may be levied without the vote or written consent of Members casting a majority of votes at an Increase Election. Notwithstanding the foregoing, the Board may levy in any Fiscal Year, a Capital Improvement Assessment applicable to that Fiscal Year which exceeds five percent (5%) of the Association's Budgeted gross expenses for such Fiscal Year if such increase is necessary for addressing an Emergency Situation as defined in Section 5.4(e). 5.7. Delinquency. Any installment of an assessment is delinquent if not paid within fifteen (15) days of the due date established by the Board. Any installment of Annual Assessments, Capital Improvement Assessments. Special Assessments, or Reconstruction Assessments not paid within thirty (30) days after the due date, plus all reasonable costs of collection (including attorneys' fees) and late charges as provided herein bears interest at the maximum rate permitted by law commencing thirty (30) days from the due date until paid. The Board may also require the delinquent Owner to pay a late charge in accordance with California Civil Code Section 1366(d)(2). The Association need not accept any tender of a partial payment of an assessment installment and all costs and attorneys' fees attributable thereto, and any acceptance of any such tender does not waive the Association's right to demand and receive full payments thereafter. 5.8. Creation and Release of Lien. All sums other than Special Assessments assessed in accordance with this Declaration constitute a lien on the respective Condominium prior and superior to (a) any declaration of homestead Recorded after the Recordation of this Declaration, and (b) all other liens, except (i) all taxes, -25- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 bonds, assessments and other levies which, by law, would be superior thereto, and (ii) the lien or charge of any first Mortgage of record (meaning any Recorded Mortgage or Deed of Trust with first priority or seniority over other Mortgages or Deeds of Trust) made in good faith and for value and Recorded prior to the date on which the "Notice of Lien" (described in this Section) against the respective Condominium was Recorded. The lien becomes effective upon Recordation by the Board or its authorized agent of a Notice of Assessment ("Notice of Lien") securing the payment of any Annual, Capital Improvement or Reconstruction Assessment or installment thereof levied by the Association against any Condominium Owner, as provided in Section 1367 of the California Civil Code. The Notice of Lien must recite (i) the amount of the assessment or installment, as the case may be, and other authorized charges and interest, including the cost of preparing and Recording the Notice of Lien, (ii) the expenses of collection in connection with any delinquent installments, including without limitation reasonable attorneys' fees, (iii) a sufficient description of the Condominium against which the same has been assessed, (iv) the Association's name and address, (v) the name of the Owner thereof, and (vi) in order for the lien to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by the Association to enforce the lien by sale. The Notice of Lien must be signed by an authorized Association officer or agent. The lien relates only to the individual Condominium against which the assessment was levied and not to the Property as a whole. Upon payment of the full amount claimed in the Notice of Lien, or other satisfaction thereof, the Board shall cause to be Recorded a Notice of Satisfaction and Release of Lien ("Notice of Release") stating the satisfaction and release of the amount claimed. The Board may require the applicable Owner to pay a reasonable charge, to be determined by the Board, for the preparation and Recordation of the Notice of Release before Recording it. Any purchaser or encumbrancer who has acted in good faith and extended value may rely upon the Notice of Release as conclusive evidence of the full satisfaction of the sums stated in the Notice of Lien. 5.9. Enforcement of Liens. The Board shall enforce the collection of amounts due under this Declaration by one (1) or more of the alternative means of relief afforded by this Declaration. The lien on a Condominium may be enforced by sale of the Condominium by the Association, the Association's attorneys, any title insurance company authorized to do business in California, or other persons authorized to conduct the sale as a trustee, after failure of the Owner to pay any Annual, Capital Improvement or Reconstruction Assessment, or installment thereof, as provided herein. The sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers of sale in Mortgages, or in any manner permitted by law. The Association (or any Owner if the Association refuses to act) may sue to foreclose the lien if (a) at least thirty (30) days have elapsed since the date on which the Notice of Lien was Recorded and (b) at least ten (10) days have elapsed since a copy of the Notice of Lien was mailed to the Owner affected thereby. The Association may bid on the Condominium at foreclosure sale, and acquire and hold, lease, mortgage and convey the same. Upon completion of the foreclosure sale, the Association or the purchaser at the sale may file suit to secure occupancy of the defaulting Owner's Unit, and the defaulting Owner shall be required to pay the reasonable rental value for the Unit during any period of continued occupancy by the defaulting Owner or any persons claiming under the defaulting Owner. Suit to recover a money judgment for unpaid assessments -26- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 shall be maintainable without foreclosing or waiving any lien securing the same, but this provision or any suit to recover a money judgment does not affirm the adequacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section may include reasonable attorneys' fees as fixed by the court. 5.10. Priority of Assessment Liens. Mortgages Recorded before a Notice of Lien and Master Association assessment liens have lien priority over the Notice of Lien. Sale or transfer of any Condominium does not affect the assessment lien, except that the sale or transfer of any Condominium pursuant to judicial or nonjudicial foreclosure of a first Mortgage or a Master Association assessment lien extinguishes the lien of such assessments as to payments which became due prior to such sale or transfer. No sale or transfer relieves such Condominium from liens for any assessments thereafter becoming due. No Person who obtains title to a Condominium pursuant to a judicial or nonjudicial foreclosure of the first Mortgage or a Master Association assessment lien is liable for the share of the Common Expenses or assessments chargeable to such Condominium which became due prior to the acquisition of title to the Condominium by such Person. Such unpaid share of Common Expenses or assessments is a Common Expense collectible from all of the Owners including such Person. 5.11. Receivers. In addition to the foreclosure and other remedies granted the Association herein, each Owner, by acceptance of a deed to such Owner's Unit, hereby conveys to the Association all of such Owner's right, title and interest in all rents, issues and profits derived from and appurtenant to such Unit, subject to the right, power and authority of the Association to collect and apply such rents, issues and profits to any delinquent Assessments owed by such Owner, reserving to the Owner the right, prior to any default by the Owner in the payment of Assessments, to collect and retain such rents, issues and profits as they may become due and payable. Upon any such default the Association may, upon the expiration of thirty (30) days following delivery to the Owner of the "Notice of Assessment" described herein, either in person, by agent or by receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness secured by the lien described herein, (a) enter in or upon and take possession of the Unit or any part thereof, (b) in the Association's name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and (c) apply the same, less allowable expenses of operation, to any delinquencies of the Owner hereunder, and in such order as the Association may determine. The entering upon and taking possession of the Unit, the collection of rents, issues and profits and the application thereof, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 5.12. Capital Contribution. Upon acquisition of record title to a Condominium from Declarant, each Owner of a Condominium shall make a capital contribution to the Association in an amount equal to one- twelfth (l/12th) of the Annual Assessment attributable to the Lot as determined by the Board, taking into account any subsidy provided by Declarant. The capital contribution shall be deposited by the Owner into the purchase and sale escrow and disbursed therefrom to the -27- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Association. The Board shall have the power to suspend or terminate the obligation of an Owner to make a capital contribution hereunder in its discretion. ARTICLE VI 6. Project Easements and Rights of Entry. 6.1. Easements. (a) Access. Declarant reserves for the benefit of the Owners reciprocal, nonexclusive easements for access, ingress and egress over all of the Common Property, including any private streets or driveways currently existing in the Property or subsequently added to it. which easements may be conveyed by Declarant to Owners for so long as Declarant owns any interest in the Property. Subject to the provisions of this Declaration governing use and enjoyment thereof, the easements may be used by all Owners and their guests, tenants and invitees residing on or temporarily visiting the Property, for walkways, vehicular access and such other purposes reasonably necessary for use and enjoyment of a Condominium in the Project. (b) Maintenance and Repair. Declarant reserves for the benefit of the Board and all Association agents, officers and employees, nonexclusive easements over the Common Property as necessary to perform maintenance, repairs and all other duties of the Association in accordance with the provisions of this Declaration. Declarant also reserves for the benefit of each Owner a nonexclusive easement over the Unit adjacent to such Owner's Unit as may be necessary to perform maintenance and repairs of such Owner's Dwelling Unit which abuts the property line of the adjacent Unit; provided that any Owner utilizing the easement reserved hereunder shall indemnify, defend and hold harmless the adjacent Owner for any claims arising from such Owner's entry onto the adjacent Unit to maintain such Owner's Dwelling Unit. Any Owner utilizing the easement reserved hereunder shall also be responsible for repairing any damage to the adjacent unit caused by such Owner's entry onto the adjacent Unit. (c) Utility Easements. Declarant reserves the right to grant additional easements and rights-of-way over the Property to utility companies and public agencies, as necessary, for the proper development and disposal of the Property. Such right of Declarant shall expire with respect to (i) any Phase upon Close of Escrow for the sale of all Condominiums in such Phase, or (ii) all Phases on the seventh anniversary of original issuance by DRE of the Final Subdivision Public Report for Phase 1. (d) Encroachments. Declarant reserves for its benefit and the benefit of the Owners a reciprocal easement appurtenant to each Unit over the Units and -28- C:\DOCS\FSJ037\25973\000\CCRSV0242557.05 9/22/97 the Common Property for the purpose of (i) accommodating any existing encroachment of any wall or any other authorized Improvement, (ii) maintaining the same and accommodating authorized construction, reconstruction, repair, shifting, movement or natural settling of the Dwelling Units or other Improvements, and (iii) accommodating any eaves, overhangs or roofline of a Dwelling Unit which may extend into an adjacent Unit. Declarant further reserves easements and reciprocal negative easements for utility services and repairs, replacement and maintenance of the same over all of the Common Property for the benefit of the Owners. Declarant reserves for the benefit of the Property, the Owners and the Association, reciprocal nonexclusive easements for drainage of water over, across and upon the Property. Use of the foregoing easements may not unreasonably interfere with each Owner's use and enjoyment of adjoining Units. No portion of the Common Property, including without limitation parking spaces and other amenities contemplated as a part of the Property, is proposed to be leased by Declarant to the Owners or the Association. (e) Completion of Improvements. Declarant reserves for its benefit the right and easement to enter the Property to complete any Improvement which Declarant deems desirable to implement Declarant's development plan. 6.2. Rights of Entry. The Board has a limited right of entry in and upon the interior of all Units (excepting the interiors of the Dwelling Units) to inspect the Project, and take whatever corrective action it determines to be necessary or proper, consistent with this Declaration which may be exercised if authorized by two-thirds (2/3) of the Board. Entry upon the interior of a Unit by the Board under this right of entry or by the Board, Declarant, or their representatives pursuant to Civil Code Section 1375(d) may only be made (except in an emergency) after three (3) days prior written notice to the Owner of the Unit. The Association has no duty to maintain or repair any property or Improvements required to be maintained or repaired by the Owners. Nothing in this Article VI limits the right of an Owner to exclusive occupancy and control over the interior of his Unit. However, an Owner shall permit a right of entry to the Board or any person authorized by the Board to be exercised in case of any emergency originating in or threatening his Unit, whether the Owner is present or not. Any damage to a Unit caused by such entry shall be repaired by the Association as a Common Expense. Furthermore, each Owner shall permit other Owners, or their representatives, to enter his Residence to perform required installations, alterations or repairs to the mechanical or electrical services to a Residence if (a) requests for entry are made in advance; (b) entry is made at a time reasonably convenient to the Owner whose Unit is to be entered; and (c) the entered Unit is left in substantially the same condition as existed immediately preceding such entry. In case of an emergency, such right of entry is immediate. Any damage caused to a Unit by such entry by an Owner or its representatives shall be repaired by such Owner. -29- C:\DOCS\FSJ037\25973\000\CCRS\0242557.0S 9/22/97 ARTICLE VII 7. Declarant's Rights and Reservations. Nothing in the Restrictions limits, and no Owner or the Association may do anything to interfere with, the right of Declarant to (a) subdivide or resubdivide any portion of the Property, (b) complete or modify Improvements to and on the Common Property or any portion of the Property owned solely or partially by Declarant, (c) alter the foregoing or its construction plans and designs, (d) modify its development plan for the Property and the Annexable Territory, including without limitation designating and redesignating Phases and constructing Residences of larger or smaller sizes, values, or of different types, or (e) construct such additional Improvements as Declarant deems advisable in the course of development of the Property so long as any Condominium in the Project remains unsold. Declarant's rights hereunder include, but are not limited to, the right to install and maintain such structures, displays, signs, billboards, flags and sales offices as may be reasonably necessary to conduct Declarant's business of completing the work and disposing of the Condominiums by sale, resale, lease or otherwise. Each Owner, by accepting a deed to a Condominium, hereby acknowledges that Declarant's activities may temporarily or permanently impair the view of such Owner and may constitute an inconvenience or nuisance to the Owners, and hereby consents to such impairment, inconvenience or nuisance. This Declaration does not limit Declarant's right, at any time prior to acquisition of title to a Condominium in the Project by a purchaser from Declarant, to establish on that Condominium additional licenses, easements, reservations and rights-of-way to itself, to utility companies, or to others as may be reasonably necessary to the Property's proper development and disposal. Declarant may use any Condominiums owned by Declarant in the Project as model home complexes or real estate sales or leasing offices. Declarant need not seek or obtain Architectural Committee approval of any Improvement Declarant constructs or places on any portion of the Property. Declarant may assign its rights under the Restrictions to any successor in interest to any portion of Declarant's interest in any portion of the Property by a written assignment. Notwithstanding any other provision of this Declaration, no amendment may be made to this Article without the prior written approval of Declarant. Each Owner hereby grants, upon acceptance of his deed to his Unit, an irrevocable, special power of attorney to Declarant to execute and Record all documents and maps necessary to allow Declarant to exercise its rights under this Article. Declarant and its prospective purchasers of Condominiums are entitled to the nonexclusive use of the Common Property, without further cost, for access, ingress, egress, use or enjoyment, in order to (a) show the Property to prospective purchasers, (b) dispose of the Property as provided herein, and (c) develop and sell the Annexable Territory. Declarant, its successors and tenants, are also entitled to the nonexclusive use of any portions of the Property which comprise private streets, drives and walkways for the purpose of ingress, egress and accommodating vehicular and pedestrian traffic to and from the Property and the Annexable Territory. The use of the Common Property by Declarant may not unreasonably interfere with the use thereof by the other Owners. The Association shall provide Declarant with all notices and other documents to which a Beneficiary is entitled pursuant to this Declaration, provided that Declarant shall be provided such notices and other documents without making written request therefor. Commencing on the date on which Declarant no longer has an elected representative on the Board, and continuing until the later to occur of the date on which -30- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Declarant (i) no longer owns a Unit in the Property or (ii) cannot unilaterally annex property to the Property, the Association shall provide Declarant with written notice of all meetings of the Board as if Declarant were an Owner and Declarant shall be entitled to have a representative present at all such Board meetings ("Declarant's Representative"). The Declarant's Representative shall be present in an advisory capacity only and shall not be a Board member or have any right to vote on matters coming before the Board. ARTICLE VIII 8. Residence and Use Restrictions. The Property shall be held, used and enjoyed subject to the following restrictions and the exemptions of Declarant set forth in this Declaration. 8.1. Single Family Residences. That portion of the Unit comprising the Residence shall be used as a dwelling for a single Family and for no other purpose. An Owner may rent his Unit to a single Family provided that the Unit is rented pursuant to a lease or rental agreement which is (a) in writing and (b) subject to all of the provisions of this Declaration. 8.2. Parking and Vehicular Restrictions. (a) Authorized Vehicles. Subject to Subparagraph (b) below, the following vehicles are Authorized Vehicles: standard passenger vehicles, including without limitation automobiles, passenger vans designed to accommodate ten (10) or fewer people, motorcycles and pickup trucks having a manufacturer's rating or payload capacity of one (1) ton or less. Authorized Vehicles may be parked in any portion of the Property intended for parking of motorized vehicles. (b) Prohibited Vehicles. The following vehicles are Prohibited Vehicles: (i) recreational vehicles (e.g., motorhomes, travel trailers, camper vans, boats, etc.), (ii) commercial-type vehicles (e.g., stakebed trucks, tank trucks, dump trucks, step vans, concrete trucks, etc.), (iii) buses or vans designed to accommodate more than ten (10) people, (iv) vehicles having more than two (2) axles, (v) trailers, inoperable vehicles or parts of vehicles, (vi) aircraft, other similar vehicles or any vehicle or vehicular equipment deemed a nuisance by the Board. Prohibited Vehicles may not be parked, stored or kept on any public or private street within, adjacent to or visible from the Property or any other Common Property parking area except for brief periods for loading, unloading, making deliveries or emergency repairs. Prohibited Vehicles may only be parked within an Owner's fully enclosed garage with the door closed so long as their presence on the Property does not otherwise violate the provisions of this Declaration. -31- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (c) General Restrictions. Subject to the restriction on Prohibited Vehicles, all vehicles owned or operated by or within the control of an Owner or a resident of an Owner's Unit and kept within the Property must be parked in the assigned garage of that Owner to the extent of the space available; provided that each Owner shall ensure that any such garage accommodates at least one (1) Authorized Vehicle having four (4) or more wheels. No repair, maintenance or restoration of any vehicle may be conducted on the Property except within an enclosed garage when the garage door is closed, provided such activity is not undertaken as a business, and provided that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. (d) Parking Regulations. The Board may establish additional regulations regarding parking areas not assigned to individual Units, including without limitation designating "parking," "guest parking," and "no parking" areas thereon; and may enforce all parking and vehicle use regulations applicable to the Property, including removing violating vehicles from the Property pursuant to California Vehicle Code Section 22658.2 or other applicable ordinances or statutes. If the Board fails to enforce any of the parking or vehicle use regulations, the City may enforce such regulations in accordance with applicable laws and ordinances. 8.3. Nuisances. No noxious or offensive activities may be carried on upon the Property or on any public street abutting or visible from the Property. No horns, whistles, bells or other sound devices, except security devices used exclusively to protect the security of a Residence and its contents, may be placed or used in any such Residence. Noisy, unsightly, unusually painted or smoky vehicles, large power equipment and large power tools (excluding lawn mowers and other equipment utilized in connection with ordinary landscape maintenance), off-road motor vehicles or items which may unreasonably interfere with television or radio reception to any Unit and objects which create or emit loud noises or noxious odors may not be located, used or placed in the Property or on any public street abutting or visible from the Property, or exposed to the view of other Owners without the Board's prior written approval. The Board is entitled to determine if any noise, odor, or activity producing such noise or odor constitutes a nuisance. No Owner may (a) permit or cause anything to be done or kept upon the Property or on any public street abutting or visible from the Property which may (i) increase the rate of insurance on Units or on the Property, (ii) result in the cancellation of such insurance, or (iii) obstruct or interfere with the rights of other Owners, or (b) commit or permit any nuisance thereon or violate any law. Each Owner shall comply with all requirements of the local or state health authorities and with all other applicable governmental ordinances regarding occupancy and use of a Residence. Each Owner is accountable to the Association and other Owners for the conduct and behavior of persons residing in or visiting his Unit. Any damage to the Common Property, personal property of the Association, or property of another Owner caused by such persons shall be repaired at the sole expense of the Owner of the Unit where such persons are residing or visiting. -32- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 8.4. Signs. Subject to the provisions of California Civil Code Sections 712 and 713, no sign, poster, display, billboard or other advertising device may be displayed on any portion of the Property or on any public street abutting or visible from the Property, or shown or displayed from any Unit, without the Architectural Committee's prior written consent, except one (1) sign or notice, not larger than eighteen (18) inches by twenty-four (24) inches, which states that the Residence is for rent or sale, so long as it is consistent with the standards promulgated by the Architectural Committee in accordance with Section 4.2 hereof. Such sign or notice may be placed within a Unit, and may also be placed upon the Common Property within an area specifically established by the Committee for such purpose with the Architectural Committee's prior written approval. This Section does not apply to (a) any signs used by Declarant or its agents in connection with the sale of Condominiums or the construction or alteration of the Units or Common Property, (b) traffic and visitor parking signs installed by Declarant, and (c) traffic and parking control signs installed with the Board's consent. Notwithstanding the foregoing, this Section does not permit the maintenance of any sign which does not conform with applicable City ordinances. 8.5. Antennae. Owners are prohibited from installing any antennae on the exterior of a Residence for any purpose, except for an "Authorized Antenna," which may be installed so long as the proposed location for such installation is reviewed by the Architectural Committee prior to installation in order to ensure that the visibility of the Authorized Antenna is minimized with respect to other Owners. The Architectural Committee may require that the location of the Authorized Antenna be moved so long as such review by the Architectural Committee does not (1) unreasonably delay or prevent installation, maintenance or use of an Authorized Antenna, (2) unreasonably increase the cost of installation, maintenance or use of an Authorized Antenna, or (3) preclude reception of an acceptable quality signal. An "Authorized Antenna" means (i) an antenna that is designed to receive direct broadcast satellite service, including direct-to-home satellite service, that is one meter or less in diameter, (ii) an antenna that is designed to receive video programming service, including multichannel multipoint distribution service, instructional television fixed service, and local multipoint distribution service, that is one meter or less in diameter or diagonal measurement, or (iii) an antenna that is designed to receive television broadcast signals. The Board may adopt additional restrictions on installation or use of an Authorized Antenna on an Owner's Residence as a part of the Association's Rules and Regulations so long as such restrictions do not (1) unreasonably delay or prevent installation, maintenance or use of an Authorized Antenna, (2) unreasonably increase the cost of installation maintenance or use of an Authorized Antenna, or (3) preclude reception of an acceptable quality signal. The Board may prohibit the installation of an Authorized Antenna if the installation, location or maintenance of such Authorized Antenna unreasonably affects the safety of managers, agents or employees of the Association and other Owners, or for any other safety related reason established by the Board. -33- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 The Board also has the power to (i) prohibit an Owner from installing an Authorized Antenna on property which such Owner does not own or is not entitled to exclusively use under the Restrictions, or (ii) allow an Owner to install an antenna other than an Authorized Antenna subject to applicable architectural standards and review by the Architectural Committee. 8.6. Inside and Outside Installations. No outside installation, including but not limited to clotheslines, may be constructed, installed or maintained in any Unit, excepting antennae installed by Declarant as a part of the initial construction of the Property and except as may be installed by or with the prior consent of the Architectural Committee. No balcony, patio or deck covers, wiring, or installation of air conditioning, water softeners, or other machines may be installed on the exterior of the buildings of the Project or be allowed to protrude through the walls or roofs of the Dwelling Units (with the exception of those items installed during the original construction of the Project) unless the Architectural Committee's prior written approval is obtained. Outdoor patio or lounge furniture, plants and barbecue equipment may be maintained pursuant to rules and procedures of the Architectural Committee. The type and color of all exposed window coverings is subject to the Architectural Committee's prior written approval. Notwithstanding the specificity of the foregoing, no exterior addition, change or alteration to any Residence may be commenced without the prior written approval of the Architectural Committee. No Owner may cause or permit any mechanic's lien to be filed against any portion of the Project for labor or materials alleged to have been furnished or delivered to the Project or any Condominium Unit for such Owner, and any Owner who does so shall immediately cause the lien to be discharged within five (5) days after notice to the Owner from the Board. If any Owner fails to remove such mechanic's lien, the Board may discharge the lien and charge the Owner a Special Assessment for such cost of discharge. 8.7. Animal Regulations. No animals may be raised, bred or kept in any Residence except dogs, cats, fish, and birds inside bird cages may be kept as household pets within any Residence provided that they are not kept, bred or raised for commercial purposes, in unreasonable quantities or sizes or in violation of the Restrictions. As used in the Declaration, "unreasonable quantities" ordinarily means more than two (2) pets per Residence: provided, however, that the Board may determine that a reasonable number in any instance may be more or less. The Board may limit the size of pets and may prohibit maintenance of any animal which, in the Board's opinion, constitutes a nuisance to any other Owner. Animals belonging to Owners, occupants or their licensees, tenants or invitees within the Property must be either kept within an enclosure or on a leash held by a person capable of controlling the animal. Any Owner shall be liable to each and all remaining Owners, their families, tenants, guests and invitees, for any unreasonable noise or damage to person or property caused by any animals brought or kept upon the Project by such Owner or by such Owner's family, tenants or guests. Each Owner shall clean up after such Owner's animals which have used any portion of the Property or public street abutting or visible from the Property. Any Owner who maintains any animal, insect or reptile within the Properties, whether in compliance with or in violation of the Restrictions, shall indemnify, defend and hold harmless the Association, its officers, directors, contractors, agents and employees from any claim brought by -34- C:\TXX:S\FSJ037\25973\000\CCRS\0242557.05 9/22/97 any person against the Association, its officers, directors, agents and employees for personal injuries or property damage caused by such animal, insect or reptile. 8.8. Business or Commercial Activity. No part of the Property may ever be used for any business, commercial (including auctions or similar events), manufacturing, mercantile, storage, vending or other nonresidential purposes, including without limitation any activity for which the provider is compensated or receives any consideration, regardless of whether the activity is engaged in full or part-time, generates or does not generate a profit, or requires or does not require a license; except Declarant may use any portion of the Property for a model home site and display and sales offices in accordance with Article VII hereof. This Section 8.8 does not preclude any of the above-described activities without external evidence thereof, provided that: (a) such activities are conducted in conformance with all applicable governmental ordinances; (b) the patrons or clientele of such activities do not visit the Unit or park automobiles or other vehicles within the Property; (c) the existence or operation of such activities is not apparent or detectable by sight, sound or smell from outside the boundaries of the Unit; (d) no such activity increases the Association's liability or casualty insurance obligation or premium; and (e) such activities are consistent with the residential character of the Property and conform with the provisions of this Declaration. 8.9. Rubbish Removal. No trash may be kept or permitted upon the Property or on any public street abutting or visible from the Property, except in sanitary containers located in appropriate areas screened from view, and no odor may be permitted to arise therefrom so as to render the Property or any portion thereof unsanitary, unsightly, offensive or detrimental to any other property in the vicinity thereof or to its occupants. Such containers may be exposed to the view of neighboring Units only when set out for a reasonable period of time (not to exceed twelve (12) hours before and after scheduled trash collection hours). No exterior fires are permitted, except barbecue fires contained within receptacles therefor and fire pits in enclosed areas and designed in such a manner that they do not create a fire hazard. No clothing, household fabrics or other unsightly articles may be hung, dried or aired on or over any Unit. No plants or seeds infected with noxious insects or plant diseases may be brought upon, grown or maintained upon the Property. 8.10. Further Subdivision. Except as otherwise provided herein, no Owner may physically or legally subdivide his Unit in any manner, including without limitation any division of such Owner's Unit or Condominium into time-share estates or tune-share uses. This provision does not limit the right of an Owner to (a) rent or lease such Owner's Condominium by means of a written lease or rental agreement subject to this Declaration; (b) sell such Owner's Condominium; or (c) transfer or sell any Condominium to more than one Person to be held by them as tenants-in-common, joint tenants, tenants by the entirety or as community property. Any failure by the lessee of the Unit to comply with the Restrictions constitutes a default under the lease or rental agreement. Notwithstanding the foregoing, no Unit in the Project may be partitioned or subdivided without the prior written approval of the Beneficiary of any first Mortgage on that Unit. This Section may not be -35- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 amended without the prior written approval of the Beneficiaries of at least seventy-five percent (75%) of the first Mortgages of Condominiums in the Project. 8.11. Drainage. No one may interfere with or alter the established drainage pattern over the Property unless an adequate alternative provision is made for proper drainage with the Architectural Committee's prior written approval. For the purpose hereof, "established" drainage in any Phase means the drainage which (a) exists at the time of the first Close of Escrow in such Phase, or (b) is shown on any plans approved by the Architectural Committee. Each Owner, by accepting a grant deed to his Condominium, acknowledges and understands that in connection with the development of the Property, Declarant may have installed one or more "sub-drains" beneath the surface of such Owner's Residence. The sub-drains and all appurtenant improvements constructed or installed by Declarant ("Drainage Improvements"), if any, provide for subterranean drainage of water from and to various portions of the Property. To ensure adequate drainage within the Property, it is essential that the Drainage Improvements, if any, not be modified, removed or blocked without having first made alternative drainage arrangements. Therefore, no Owner may alter, modify, remove or replace any Drainage Improvements located within such Owner's Residence without receiving prior written approval from the Architectural Committee in accordance with Article IV hereof. In connection with obtaining such approval, the Owner must submit a plan to the Architectural Committee for alternative drainage acceptable to the Committee. Each Owner of a residential Lot whose side or rear property line is adjacent to and below an Association Property slope acknowledges that, from time to time, storm or irrigation water may pass from the adjacent slope onto said Owner's Lot. Furthermore, said Owner will not construct any barrier which would inhibit such flow and will maintain in good working order all area drains installed on said lots for the purpose of intercepting, to the extent possible, that runoff. Each Owner of a Lot shall continuously maintain, clean and repair any area drain located on his or her Lot and shall accept sheet drainage flowing over the Lot. 8.12. Water Supply System. No individual water supply, sewage disposal or water softener system is permitted in any Unit unless such system is designed, located, constructed and equipped in accordance with the requirements, standards, and recommendations of any applicable water district, the City, the Architectural Committee and all other applicable governmental authorities. 8.13. View Obstructions. No vegetation or other obstruction may be planted or maintained in such location or of such height as to unreasonably obstruct the view from any other Residence in the vicinity thereof. If there is a dispute between Owners concerning the obstruction of a view from a Residence, the dispute shall be submitted to the Architectural Committee, whose decision in such matters shall be binding. Any such obstruction shall, upon request of the Architectural Committee, be removed or otherwise altered to the satisfaction of the Architectural Committee, by the Owner of -36- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 the Residence upon which the obstruction is located. Any item or vegetation maintained in any Unit, which item or vegetation is exposed to the view of any Owner, shall be removed or otherwise altered to the satisfaction of the Architectural Committee, if it determines that the maintenance of such item or vegetation in its then existing state is contrary to the purposes or provisions of this Declaration. If an Owner fails to perform necessary pruning, trimming, or thinning, the Association may, after Notice and Hearing, enter upon such Residence to perform such work. The Architectural Committee shall ensure that the vegetation on the Common Property maintained by the Association is cut frequently, so that the view of any Owner is not unreasonably obstructed. Each Owner acknowledges that (a) there are no guaranteed views within the Property, and no Residence is assured the existence or unobstructed continuation of any particular view, and (b) any construction, landscaping or other installation of Improvements by Declarant may partially or wholly impair the view from any Residence, and the Owners hereby consent to such view impairment. 8.14. Rights of Disabled. Subject to the provisions of Article IV hereof, each Owner may modify his Residence and the route over the Common Property leading to the front door of his Residence, at his sole expense, in order to facilitate access to his Residence by persons who are blind, visually impaired, deaf or physically disabled, or to alter conditions which could be hazardous to such persons in accordance with California Civil Code Section 1360 or any other applicable law or ordinance. 8.15. Post-Tension Slabs. Each Owner hereby acknowledges that the concrete slab for some or all of the Dwelling Units constructed on the Property may have been reinforced with a grid of steel cable which was installed in the concrete and then tightened to create a very high tension. This type of slab is commonly known as a "post-tension slab." Each Owner further acknowledges that cutting into a post-tension slab for any reason (e.g., to install a floor safe, to remodel plumbing, etc.) is very hazardous and may result in serious damage to the Residence and/or personal injury. By accepting a grant deed to a Condominium, each Owner hereby specifically covenants and agrees that: (a) Owner shall not cut into or otherwise tamper with a post-tension slab; (b) Owner shall not knowingly permit or allow any other person to cut into or tamper with a post-tension slab, other than a licensed contractor who has been informed that the slab is post-tensioned and who has identified the location of the cables running within the slab; (c) Owner shall disclose the existence of the post-tension slab (if any) to any tenant, subsequent purchaser or lessee of the Condominium, and (d) Owner shall indemnify and hold Declarant, and its respective officers, employees, contractors and agents, free and harmless from and against -37- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 any and all claims, damages, losses or other liability (including attorneys fees) arising from any breach of this Section. ARTICLE IX 9. Insurance. 9.1. Duty to Obtain Insurance: Types. (a) Public Liability. The Board shall obtain and maintain adequate blanket public liability insurance (including medical payments), with such limits as may be considered acceptable to FNMA and as set forth in Section 1365.9 of the California Civil Code, insuring against liability for bodily injury, death and property damage arising from the activities of the Association and its Members, with respect to the Common Property. (b) Fire and Casualty Insurance. The Board shall also obtain and maintain fire and casualty insurance with extended coverage, without deduction for depreciation, in an amount as near as possible to the full replacement value of the Common Property. (c) Fidelity Bonds. Fidelity bond coverage which names the Association as an obligee must be obtained by or on behalf of the Association for any person or entity handling funds of the Association, including, but not limited to. Association officers, directors, trustees, employees and agents, and employees of the Manager, whether or not such persons are compensated for their services, in an amount not less than the estimated maximum of funds, including reserve funds, in the custody of the Association or the Manager at any given time during the term of each bond. The aggregate amount of such bonds may not be less than the sum equal to one fourth (1/4) of the Annual Assessments on all Condominiums in the Project, plus reserve funds. (d) Insurance Required by FNMA. GNMA and FHLMC. The Association shall continuously maintain in effect such casualty, flood and liability insurance and fidelity bond coverage meeting the insurance and fidelity bond requirements for condominium projects established by FNMA, GNMA and FHLMC, so long as any of which is a Mortgagee or Owner of a Condominium within the Project, except to the extent such coverage is not reasonably available or has been waived in writing by FNMA, GNMA and FHLMC, as applicable. (e) Other Insurance. The Board shall purchase such other insurance, as necessary, including but not limited to, errors and omissions, directors, officers and agents liability insurance, plate glass insurance, medical payments, malicious mischief, liquor liability and vandalism insurance, fidelity bonds and worker's -38- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 compensation, and such other risks as shall customarily be covered with respect to condominium projects similar in construction, location and use. Such additional insurance shall include general liability insurance and director's and officer's errors and omissions insurance in the minimum amounts set forth in Section 1365.9 of the California Civil Code. (f) Beneficiaries. Such insurance shall be maintained for the benefit of the Association, the Owners, and the Mortgagees, as their interests may appear as named insured, subject, however, to loss payment requirements as set forth herein. 9.2. Waiver of Claim Against Association. As to all policies of insurance maintained by or for the benefit of the Association and the Owners, the Association and the Owners hereby waive and release all claims against one another, the Board and Declarant, to the extent of the insurance proceeds available, whether or not the insurable damage or injury is caused by the negligence of or breach of any agreement by any of said Persons. 9.3. Right and Duty of Owners to Insure. Each Owner is responsible for insuring his personal property and all other property and Improvements within his Unit for which the Association has not purchased insurance in accordance with Section 9.1 hereof. Nothing herein precludes any Owner from carrying any public liability insurance as he deems desirable to cover his individual liability for damage to person or property occurring inside his Unit or elsewhere upon the Property. Such policies may not adversely affect or diminish any liability under any insurance obtained by or on behalf of the Association, and duplicate copies of such other policies shall be deposited with the Board upon request. If any loss intended to be covered by insurance carried by or on behalf of the Association occurs and the proceeds payable thereunder are reduced due to insurance carried by any Owner, such Owner shall assign the proceeds of such insurance 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. 9.4. Notice of Expiration Requirements. If available, each insurance policy the Association maintains must contain a provision that said policy may not be cancelled, terminated, materially modified or allowed to expire by its terms, without ten (10) days' prior written notice to the Board and Declarant, and to each Owner and Beneficiary, insurer and guarantor of a first Mortgage who has filed a written request with the carrier for such notice and every other Person in interest who requests such notice of the insurer. In addition, fidelity bonds shall provide that they may not be cancelled or substantially modified without ten (10) days prior written notice to any insurance trustee named pursuant to Section 9.6 and to each FNMA servicer who has filed a written request with the carrier for such notice. -39- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 9.5. Insurance Premiums. Insurance premiums for any blanket insurance coverage obtained by the Association and any other insurance deemed necessary by the Board are a Common Expense. 9.6. Trustee for Policies. The Association is trustee of the interests of all named insureds under policies of insurance purchased and maintained by the Association. Unless the applicable insurance policy provides for a different procedure for the filing of claims, all claims made under such policy must be sent to the insurance carrier or agent, as applicable, by certified mail and be clearly identified as a claim. The Association shall maintain a record of all claims made. All insurance proceeds under any such policies provided for in Section 9.1 must be paid to the Board as trustees. The Board shall receive and receipt for the proceeds and deal therewith as provided herein. The Association shall use insurance proceeds to repair or replace the property for which the insurance was carried, or otherwise dispose of such proceeds as provided in Article X hereof. The Board has the authority to negotiate loss settlements with the appropriate insurance carriers, with participation, to the extent they desire, of first Mortgagees who have filed written requests within ten (10) days of receipt of notice of any damage or destruction as provided in Section 10.4 of this Declaration. Any two (2) officers of the Association may sign a loss claim form and release form in connection with the settlement of a loss claim, and such signatures are binding on all the named insureds. A representative chosen by the Board may be named as an insured, including a trustee with whom the Association may enter into an insurance trust agreement or any successor to such trustee, who shall have exclusive authority to negotiate losses under any policy providing property or liability insurance and to perform such other functions necessary to accomplish this purpose. 9.7. Actions as Trustee. Except as otherwise specifically provided in this Declaration, the Board has the exclusive right to bind the Association and the Owners in respect to all matters affecting insurance carried by the Association, the settlement of a loss claim, and the surrender, cancellation, and modification of all such insurance, in a manner satisfactory to Beneficiaries of seventy-five percent (75%) of the first Mortgages held by first Mortgagees who have filed requests under Section 9.4. Duplicate originals or certificates of all policies of fire and casualty insurance maintained by the Association and of all renewals thereof, together with proof of payment of premiums, shall be delivered by the Association to all Owners and Mortgagees who have requested the same in writing. 9.8. Annual Insurance Review. The Board shall review the insurance carried by or on behalf of the Association at least annually to determine the amount of the casualty and fire insurance referred to in Section 9.1 above. If economically feasible, the Board shall obtain a current appraisal of the full replacement value of the Improvements on the Property except for foundations and footings, without deduction for depreciation, from a qualified independent insurance appraiser, prior to each such annual review. The Association shall, upon issuance or renewal of insurance, but no less than annually, provide -40- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 the Owners with any applicable notice required by Section 1365.9(c) of the California Civil Code. 9.9. Required Waiver. All policies of physical damage insurance the Association maintains must provide, if reasonably possible, for waiver of: (a) subrogation of claims against the Owners and tenants of the Owners; (b) any defense based upon coinsurance; (c) any right of setoff. counterclaim, apportionment, proration or contribution due to other insurance not carried by the Association; (d) any invalidity, other adverse effect or defense due to any breach of warranty or condition caused by the Association, any Owner or any tenant of any Owner, or arising from any act or omission of any named insured or the respective agents, contractors and employees of any insured; (e) any right of the insurer to repair, rebuild or replace, and, if the Improvement is not repaired, rebuilt or replaced following loss, any right to pay under the insurance an amount less than the replacement value of the Improvements insured; (f) notice of the assignment of any Owner of his interest in the insurance by virtue of a conveyance of any Condominium; (g) any right to require any assignment of any Mortgage to the insurer; (h) any denial of an Owner's claim because of negligent acts by the Association or other Owners: and (i) prejudice of the insurance by any acts or omissions of Owners that are not under the Association's control. ARTICLE X 10. Damage and Condemnation of Association Property. Damage to or destruction of all or any portion of the Association Property, and condemnation of all or any portion of the Association Property shall be handled in the following manner: -41- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (a) If the Association Property is damaged or destroyed, the Association shall cause the Association Property to be repaired and reconstructed substantially as it previously existed. (b) If the cost of effecting total restoration of the Association Property exceeds the amount of insurance proceeds, the Association shall cause the Association Property to be repaired and reconstructed substantially as it previously existed, and the difference between the insurance proceeds and the actual cost shall be levied as a Reconstruction Assessment against each Unit and its respective Owner. (c) To the extent of funds available for restoration, any restoration or repair of the Association Property shall be performed substantially in accordance with the original plans and specifications unless other action is approved by Beneficiaries of fifty-one percent (51%) of the first Mortgages on Units in the Project (subject to the procedures specified in subsection (d) of Section 13.2 hereof) and by sixty-seven percent (67%) of the voting power of the Association (subject to the procedures specified in Section 2.6 hereof). (d) Each Member shall be liable to the Association for any damage to the Association Property not fully reimbursed to the Association by insurance proceeds which may be sustained by reason of the negligence or willful misconduct of said Member or the Persons deriving their right and easement of use and enjoyment of the Association Property from said Member, or of his respective Family and guests, both minor and adult. The Association reserves the right, acting through the Board, after Notice and Hearing, to (1) determine whether any claim shall be made upon the insurance maintained by the Association and (2) levy against such Member a Special Assessment equal to any deductible paid and the increase, if any. in the insurance premium directly attributable to the damage caused by such Member or the Persons for whom such Member may be liable as described herein. In the case of joint ownership of a Unit, the liability of the owners thereof shall be joint and several, except to the extent that the Association has previously contracted in writing with such joint owners to the contrary. After Notice and Hearing, the cost of correcting such damage, to the extent not reimbursed to the Association by insurance, shall be a Special Assessment against such Member. (e) If at any time all or any portion of the Association Property and/or the Common Area, or any interest therein, is taken for any public or quasi-public use. under any statute, by right of eminent domain or by private purchase in lieu of eminent domain, the award in condemnation shall be paid to the Association. Any such award payable to the Association shall be deposited in the Operating Fund. No Member shall be entitled to participate as a party, or otherwise, in any proceedings relating to such condemnation. The Association shall have the -42- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 exclusive right to participate in such proceedings and shall, in its name alone, represent the interests of all Members. ARTICLE XI 11. Eminent Domain. The term "taking" as used in this Article shall mean condemnation by exercise of the power of eminent domain or by sale under threat of the exercise of the power of eminent domain. All takings proceeds shall be distributed to such Owners and Mortgagees as provided in this Article XI. 11.1. Condemnation of Condominiums. If there is a taking all or any portion of a Unit, the award in condemnation shall be paid to the Owner of the Unit; provided, however, that such award shall first be applied to the balance then due on any Mortgages encumbering such Owner's Condominium, in order of priority. The Owner of a totally taken Unit, by acceptance of the award allotted to him in taking proceedings, hereby relinquishes to the other Owners, on the basis of their relative ownership of the Common Area therein, such Owner's undivided interest in the Common Area. Each Owner relinquishing his interest in the Common Area pursuant to this Section shall, at the request of the Board and at the expense of the Association, execute and acknowledge such deeds and other instruments which the Board deems necessary or convenient to evidence such relinquishment. Each Owner of a taken Unit shall not be liable for assessments under this Declaration which accrue on or after the date such Owner accepts his condemnation award. 11.2. Portions of Awards in Condemnation Not Compensatory for Value of Real Property. Those portions of awards in condemnation which do not directly compensate Owners for takings of real property (e.g., awards for takings of personal property, relocation expenses, moving expenses, or other allowances of a similar nature intended to facilitate relocation) shall be paid to the Owners whose personal property is taken, or whose relocation is intended to be facilitated. 11.3. Notice to Owners and Mortgagees. The Board, upon learning of any taking affecting a material portion of the Property, or any threat thereof, shall promptly notify all Owners and those Beneficiaries, insurers and guarantors of Mortgages on Condominiums in the Project who have filed a written request for such notice with the Association. The Board, upon learning of any taking affecting a Unit, or any threat thereof, shall promptly notify any Beneficiary, insurer or guarantor of a Mortgage encumbering such Unit who has filed a written request for such notice with the Association. ARTICLE XII 12. Rights of Mortgagees. Notwithstanding any other provision of this Declaration, no amendment or violation of this Declaration defeats or renders invalid the rights of the Beneficiary under any Deed of Trust upon -43- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 one (1) or more Condominiums made in good faith and for value, provided that after the foreclosure of any such Deed of Trust such Condominium(s) will remain subject to this Declaration. For purposes of this Declaration, "first Mortgage" means a Mortgage with first priority over other Mortgages or Deeds of Trust on a Condominium, and "first Mortgagee" means the Beneficiary of a first Mortgage. For purposes of any provisions of the Restrictions which require the vote or approval of a specified percentage of first Mortgagees, such vote or approval is determined based upon one (1) vote for each Condominium encumbered by each such first Mortgage. In order to induce FHLMC, GNMA and FNMA to participate in the financing of the sale of Condominiums, the following provisions are added hereto (and to the extent these added provisions conflict with any other provisions of this Declaration or any other of the Restrictions, these added provisions control): (a) Each Beneficiary, insurer and guarantor of a Mortgage encumbering one (1) or more Condominiums, upon filing a written request for notification with the Board, is entitled to written notification from the Association of: (i) any condemnation or casualty loss which affects either a material portion of the Project or the Unit(s) securing the Mortgage; (ii) any delinquency of sixty (60) days or more in the performance of any obligation under the Restrictions, including without limitation the payment of assessments or charges owed by the Owner(s) of the Unit(s) securing the Mortgage, which notice each Owner hereby consents to and authorizes; (iii) a lapse, cancellation, or material modification of any insurance policy or fidelity bond maintained by the Association; and (iv) any proposed action of the Association which requires consent by a specified percentage of first Mortgagees who have submitted a written request to the Association that they be notified of such proposed action. (b) Each Owner, including each first Mortgagee of a Mortgage encumbering any Condominium who obtains title to such Condominium pursuant to (i) the remedies provided in such Mortgage, (ii) foreclosure of the Mortgage, or (iii) deed or assignment in lieu of foreclosure, is exempt from any "right of first refusal" created or purported to be created by the Restrictions. (c) Each first Mortgagee of a Mortgage encumbering any Condominium who obtains title to such Condominium pursuant to the remedies provided in such Mortgage or by foreclosure of such Mortgage shall take title to such Condominium free of any claims for unpaid assessments or charges against such Condominium which accrued prior to the time such Mortgagee acquires title to such Condominium in accordance with Section 5.10. (d) Unless at least sixty-seven percent (67%) of the first Mortgagees or sixty-seven percent (67%) of the Owners (other than Declarant) have given their prior written approval, the Association may not: -44- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (i) by act or omission seek to abandon or terminate the Property; or (ii) change the method of determining the obligations, assessments, dues or other charges which may be levied against any Owner; or (iii) partition or subdivide any Unit; or (iv) by act or omission, seek to abandon, partition, subdivide, encumber, sell or transfer the Common Property. (The granting of easements for public utilities or for other purposes consistent with the intended use of the Common Property under this Declaration, and the granting of exclusive easements to Owners over portions of the Common Property to conform the boundaries of the Common Property to the as-built location of authorized Improvements is not a transfer within the meaning of this clause); or (v) by act or omission change, waive or abandon any scheme of regulations, or enforcement thereof, pertaining to the architectural design, the exterior appearance or the maintenance of the Units or the Common Property; or (vi) fail to maintain or cause to be maintained Fire and Extended Coverage insurance on insurable Common Property as provided in Article IX of this Declaration; or (vii) use hazard insurance proceeds for losses to any Common Property for other than the repair, replacement or reconstruction of such Common Property, subject to the provisions of Article X of this Declaration; or (viii) change the pro rata interest or obligations of any Condominium in order to levy assessments or charges, allocate distributions of hazard insurance proceeds or condemnation awards or determine the pro rata share of ownership of each Condominium in the Common Area. (e) All Beneficiaries, insurers and guarantors of first Mortgages, upon written request to the Association may: -45- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (i) examine current copies of the Association's books, records and financial statements and the Restrictions during normal business hours; (ii) require the Association to submit an annual audited financial statement for the preceding Fiscal Year provided that, upon annexation of additional Units to the Project such that fifty (50) or more Units are subject to this Declaration, the Association may be required to submit such a statement without expense to the requesting entity within one hundred twenty (120) days of the end of the Fiscal Year; (iii) receive written notice of all meetings of Owners; and (iv) designate in writing a representative authorized to attend all meetings of Owners. (i) All Beneficiaries, insurers and guarantors of first Mortgages, upon written request, shall be given thirty (30) days' written notice prior to the effective date of (i) any proposed material amendment to the Restrictions or Condominium Plans; (ii) any termination of an agreement for professional management of the Property following any decision of the Owners to assume self-management of the Project; and (iii) any proposed termination of the Property as a condominium project. (g) The Reserve Fund described in Article V of this Declaration must be funded by regular scheduled monthly, quarterly, semiannual or annual payments rather than by large special assessments. (h) The Board shall secure and cause to be maintained in force at all times a fidelity bond for any person handling Association funds, including, but not limited to, employees of the professional Manager. (i) The Board may enter into such contracts or agreements on behalf of the Association as are required in order to satisfy the guidelines of FHLMC. FNMA or GNMA or any similar entity, so as to allow for the purchase, guaranty or insurance, as the case may be, by such entities of first Mortgages encumbering Condominiums. Each Owner hereby agrees that it will benefit the Association and the Members, as a class of potential Mortgage borrowers and potential sellers of their residential Condominiums, if such agencies approve the Property as a qualifying subdivision under their respective policies, rules and regulations. Each Owner hereby authorizes his Mortgagees to furnish information to the Board concerning the status of any Mortgage encumbering a Condominium. -46- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (j) When professional management has been previously required by a Beneficiary, insurer, or guarantor of a first Mortgage, any decision to establish self-management by the Association shall require the approval of sixty-seven percent (67%) of the voting power of the Association and the Beneficiaries of fifty-one percent (51%) of the first Mortgages of Condominiums in the Project. (k) All intended Improvements in any Phase other than Phase 1 must be substantially completed or the completion of such Improvements must be secured by a bond or other arrangement acceptable to DRE prior to the first Close of Escrow in such Phase. All such Improvements shall be substantially consistent with the Improvements in Phase 1 in structure type and quality of construction. The requirements of the immediately preceding sentence are for the benefit only of and may be enforced only by FNMA. (1) First Mortgagees may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against any Common Property and may pay any overdue premiums on hazard insurance policies, or secure new hazard insurance coverage on the lapse of a policy, for Common Property, and the Association shall immediately reimburse first Mortgagees making such payments. ARTICLE XIII 13. Duration and Amendment. 13.1. Duration. This Declaration shall continue in full force unless a Declaration of Termination satisfying the requirements of an amendment to this Declaration as set forth in Section 13.2 is Recorded. No severance by sale, conveyance, encumbrance or hypothecation of an interest in any Unit from the concomitant Membership in the Association may occur as long as this Declaration continues in full force. The provisions of this Article are subject to the provisions of Sections 10.2 and 11.5 of this Declaration. 13.2. Termination and Amendment. (a) Notice of the subject matter of a proposed amendment to this Declaration in reasonably detailed form must be included in the notice of any Association meeting or election at which a proposed amendment is to be considered. To be effective, a proposed amendment must be adopted by the vote, in person or by proxy, or written consent of Members representing not less than (i) sixty-seven percent (67%) of the voting power of each Class of Members and (ii) sixty-seven percent (67%) of the Association's voting power residing in Members other than Declarant, provided that the specified percentage of the -47- C:\DOCS\FSJ037\25973\000\CCRS\0242557.0S 9/22/97 Association's voting power necessary to amend a specified Section or provision of this Declaration may not be less than the percentage of affirmative votes prescribed for action to be taken under that Section or provision. (b) In addition to the required notice and consent of Members and Declarant provided above, the Beneficiaries of fifty-one percent (51%) of the first Mortgages on all the Condominiums in the Project who have requested the Association to notify them of proposed action requiring the consent of a specified percentage of first Mortgagees must approve any amendment to this Declaration which is of a material nature, as follows: (i) Any amendment which affects or purports to affect the validity or priority of Mortgages or the rights or protection granted to Beneficiaries, insurers or guarantors of first Mortgages as provided in Articles V, IX, X, XI, XII and XIII hereof. (ii) Any amendment which would require a Mortgagee after it has acquired a Condominium through foreclosure to pay more than its proportionate share of any unpaid assessment or assessments accruing before such foreclosure. (iii) Any amendment which would or could result in a Mortgage being cancelled by forfeiture, or in a Condominium not being separately assessed for tax purposes. (iv) Any amendment relating to (A) the insurance provisions in Article IX hereof, (B) the application of insurance proceeds in Article X hereof, or (C) the disposition of any money received in any taking under condemnation proceedings. (v) Any amendment which would or could result in partition or subdivision of a Condominium Unit in any manner inconsistent with this Declaration. (vi) Any amendment which would subject any Owner to a right of first refusal or other such restriction, if such Condominium is proposed to be transferred. (vii) Any amendment concerning: (A) Voting rights; (B) Rights to use the Common Property; -48- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (C) Reductions in reserves for maintenance, repair and replacement of the Common Property; (D) Responsibility for maintenance and repairs; (E) Redefinition of boundaries of any Unit; (F) Reallocation of interests in the Common Area or rights to its use; (G) Convertibility of Common Property into Units or Units into Common Property; (H) Imposition of restrictions on leasing of Units; (I) Establishment of self-management by the Association if professional management has been required by the Restrictions or any Beneficiary of a first Mortgage; (J) Expansion or contraction of the Project or addition, annexation or deannexation of real property to or from the Property; (K) Increases in assessments that raise the previously assessed amount by more than twenty-five percent (25%), assessment liens, or the priority of such liens; or (L) Restoration or repair of the Project (after damage or partial condemnation) in a manner other than that specified in this Declaration. (c) Termination of this Declaration requires approval of the Members as provided in subsection (a) of this Section 13.2. No such termination is effective unless it is also approved in advance either by fifty-one percent (51%) of the Beneficiaries of the first Mortgages on all of the Condominiums in the Project who have submitted a written request to the Association that they be notified of proposed actions requiring the consent of a specified percentage of such Beneficiaries (if termination is proposed due to substantial destruction or condemnation of the Project) or by sixty-seven percent (67%) of such Beneficiaries (if termination is for reasons other than such substantial destruction or condemnation). (d) Each Beneficiary of a first Mortgage on a Condominium in the Project which receives proper written notice of a proposed amendment or -49- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 termination of this Declaration by certified or registered mail with a return receipt requested is deemed to have approved the amendment or termination if the Beneficiary fails to submit a response to the notice within thirty (30) days after the Beneficiary receives the notice. (e) A copy of each amendment must be certified by at least two (2) Association officers. The amendment becomes effective when a Certificate of Amendment is Recorded. The Certificate, signed and sworn to by two (2) Association officers that the requisite number of Owners and Mortgagees have either voted for or consented in writing to any amendment adopted as provided above, when Recorded, is conclusive evidence of that fact. The Association shall maintain in its files the record of all such votes or written consents for at least four (4) years. The certificate reflecting any termination or amendment which requires the written consent of any of the Beneficiaries of first Mortgages must include a certification that the requisite approval of such first Mortgagees has been obtained. (f) Notwithstanding any other provisions of this Section 13.2, at any time prior to the first Close of Escrow in Phase 1, Declarant may unilaterally amend or terminate this Declaration by Recording a written instrument which effects the amendment or termination and is signed and acknowledged by Declarant. (g) Notwithstanding any other provisions of this Section 13.2, for so long as Declarant owns any portion of the Property or the Annexable Territory, Declarant may unilaterally amend this Declaration by Recording a written instrument signed by Declarant in order to conform this Declaration to the requirements of VA, FHA, DRE, FNMA. GNMA or FHLMC. 13.3. Protection of Declarant. Declarant's prior written approval is required for any amendment to the Restrictions which would impair or diminish Declarant's rights to complete the Property or sell or lease Condominiums therein in accordance with this Declaration. Notwithstanding any other provisions of the Restrictions, until such time as (i) Declarant is no longer entitled to add Annexable Territory to the Property without the consent of the Association pursuant to Section 16.1, or (ii) Declarant no longer owns any Condominiums in the Property, whichever occurs last, the following actions, before being undertaken by the Association, must first be approved in writing by Declarant: (a) Any amendment or action requiring the approval of first Mortgagees pursuant to this Declaration, including without limitation all amendments and actions specified in Sections 13.2; (b) The annexation to the Property of real property other than the Annexable Territory pursuant to Section 16.2; -50- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (c) The levy of a Capital Improvement Assessment for the construction of new facilities not constructed on the Common Property by Declarant; or (d) Subject to Section 5.4 regarding limitations on Annual Assessment increases, any significant reduction of Association maintenance or other services. ARTICLE XIV 14. Enforcement of Certain Bonded Obligation. 14.1. Consideration by Board. If (a) the Common Property Improvements in any Phase are not completed prior to the issuance of a Final Subdivision Public Report for such Phase by ORE. and (b) the Association is obligee under a bond or other arrangement ("Bond") required by ORE to secure performance of Declarant's commitment to complete such Improvements, then the Board shall consider and vote on the question of action by the Association to enforce the obligations under the Bond with respect to any such Improvement for which a Notice of Completion has not been filed within sixty (60) days after the completion date specified for that Improvement in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writing for the completion of any Common Property Improvement, then the Board shall be directed to consider and vote on the aforesaid question if a Notice of Completion has not been filed within thirty (30) days after the expiration of the extension. 14.2. Consideration by the Members. A special meeting of Members for the purpose of voting to override a decision by the Board not to initiate action to enforce the obligations under the Bond or the Board's failure to consider and vote on the question shall be held no fewer than thirty-five (35) nor more than forty-five (45) days after the Board receives a petition for such a meeting signed by Members representing five percent (5%) of the Association's total voting power. A vote of a majority of the Association's voting power residing in Members other than Declarant to take action to enforce the obligations under the Bond shall be deemed to be the decision of the Association, and the Board shall thereafter implement such decision by initiating and pursuing appropriate action in the Association's name. ARTICLE XV 15. General Provisions. 15.1. Enforcement of Restrictions. All disputes arising under the Restrictions, other than those described in Section 15.11 or regulated by Civil Code Section 1375, shall be resolved as follows: -51- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 (a) Violations Identified by the Association. If the Board determines that there is a violation of the Restrictions, or the Architectural Committee determines that an Improvement which is the maintenance responsibility of an Owner needs installation, maintenance, repair, restoration or painting, then the Board shall give written notice to the responsible Owner identifying (i) the condition or violation complained of, and (ii) the length of time the Owner has to remedy the violation including, if applicable, the length of time the Owner has to submit plans to the Architectural Committee and the length of time the Owner has to complete the work proposed in the plans submitted to the Architectural Committee. If an Owner does not perform such corrective action as is required by the Board and the Architectural Committee within the allotted time, the Board, after Notice and Hearing, may remedy such condition or violation complained of, and the cost thereof shall be charged to the Owner as a Special Assessment. If the violation involves nonpayment of any type of Assessment, then the Board may collect such delinquent Assessment pursuant to the procedures set forth in Article V. (b) Violations Identified bv an Owner. If an Owner alleges that another Owner, his family, guests or tenants, is violating the Restrictions (other than nonpayment of any type of Assessment), the complaining Owner must first submit the matter to the Board for Notice and Hearing before the complaining Owner may resort to alternative dispute resolution, as required by Section 1354 of the California Civil Code, or litigation for relief. (c) Alternative Dispute Resolution. If a dispute exists between or among (i) Declarant, its builders, general contractors or brokers, or their agents or employees, and any Owner(s) or the Association, or (ii) any Owner, and another Owner, or (iii) the Association, and any Owner, including any claim based on contract, tort, or statute, arising out of or relating to the rights or duties of the parties under the Restrictions or the design or construction of the Project (excluding disputes relating to the payment of any type of Assessments), if the disputing parties agree and subject to Section 1354 of the California Civil Code, the matter will be submitted to alternative dispute resolution so long as the requirements of Sections 15.1 (a) and (b) above have been met, if they are applicable. (d) Legal Proceedings. Failure to comply with any of the terms of the Restrictions by an Owner, his family, guests, employees, invitees or tenants, is grounds for relief which may include, without limitation, an action to recover sums due for damages, injunctive relief, foreclosure of any lien, or any combination thereof; provided, however, that the procedures established in -52- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Section 1354 of the California Civil Code and in Sections 15.1 (a), (b) and (c) above must first be followed, if they are applicable. (e) Additional Remedies. The Board may adopt a schedule of reasonable fines or penalties which, in its reasonable discretion, it may assess against an Owner for the failure of such Owner, or of a resident of or visitor to such Owner's Unit, to comply with the Restrictions. Such fines or penalties may only be assessed after Notice and Hearing. After notice and hearing, the Board may direct the officers of the Association to record a notice of noncompliance against Unit owned by any Member of the Association who has violated any provision of this Declaration. The notice shall include a legal description of the Unit and shall specify the provision of the Declaration that was violated, the violation committed, and the steps required to remedy the noncompliance. Once the noncompliance is remedied or the noncomplying Owner has taken such other steps as reasonably required by the Board, the Board shall direct the officers of the Association to record a notice that the noncompliance has been remedied. (f) No Waiver. Failure to enforce any provision hereof does not waive the right to enforce that provision, or any other provision hereof. (g) Right to Enforce. The Board and any Owner may enforce the Restrictions as described in this Article, subject to Section 1354 of the California Civil Code. Each Owner has a right of action against the Association for the Association's failure to comply with the Restrictions. Each remedy provided for in this Declaration is cumulative and not exclusive or exhaustive. (h) Attorneys' Fees. Any judgment rendered in any action or proceeding pursuant to this Declaration shall include a sum for attorneys' fees in such amount as the court or arbitrator, as applicable, may deem reasonable, in favor of the prevailing parry, as well as the amount of any delinquent payment, interest thereon, costs of collection and costs of court or alternative dispute resolution, as applicable. 15.2. Severabilirv. The provisions hereof are independent and severable, and a determination of invalidity or partial invalidity or unenforceability of any one provision or portion hereof by a court of competent jurisdiction does not affect the validity or enforceability of any other provisions hereof. 15.3. Interpretation. This Declaration shall be liberally construed to effectuate its purpose of creating a uniform plan for the creation and operation of a residential condominium development and for the maintenance of Common Property, and any violation of this Declaration is a nuisance. The Article and Section headings have been inserted for convenience only, and may not be considered or referred to in resolving questions of interpretation or construction. As used herein, -53- C:\DOCS\FSJ037\25973\000\CCRS\0242557.0S 9/22/97 the singular includes the plural and the plural the singular; and the masculine, feminine and neuter each includes the other, unless the context dictates otherwise. 15.4. Mergers or Consolidations. Upon a merger or consolidation of the Association with another association, its properties, rights and obligations may, by operation of law, be transferred to another surviving or consolidated association or. alternatively, the properties, rights and obligations of another association may, by operation of law, be added to the properties, rights and obligations of the Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer and enforce the covenants, conditions and restrictions established by this Declaration governing the Property, together with the covenants and restrictions established upon any other property, as one (1) plan. 15.5. No Public Right or Dedication. Nothing in this Declaration is a gift or dedication of all or any part of the Property to the public, or for any public use. 15.6. Nonliability and Indemnification. (a) Nonliability and Indemnification of Board, Officers or Committee members. (i) General Limitation. Except as specifically provided in the Restrictions or as required by law. no right, power, or responsibility conferred on the Board or the Architectural Committee by the Restrictions may be construed as a duty, obligation or disability charged upon the Board, the Architectural Committee, any member of the Board or of the Architectural Committee, or any other Association officer, employee or agent. No such person is liable to any pan>' (other than the Association or a party claiming in the name of the Association) for injuries or damage resulting from such person's acts or omissions within what such person reasonably believed to be the scope of such person's Association duties ("Official Acts"), except to the extent that such injuries or damage result from such person's willful or malicious misconduct. No such person is liable to the Association (or to any party claiming in the name of the Association) for injuries or damage resulting from such person's Official Acts, except to the extent that such injuries or damage result from such person's negligence or willful or malicious misconduct. The Association is not liable for damage to property in the Property unless caused by the negligence of the Association, the Board, the Association's officers, the Manager or the Manager's staff. -54- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22197 (ii) Damages Limitation. A volunteer Board member or volunteer Association officer shall not be personally liable in excess of the coverage of insurance specified below to any person who suffers injury, including without limitation bodily injury, emotional distress, wrongful death or property damage or loss as a result of the tortious act or omission of the volunteer officer or Board member if all of the following conditions are satisfied: (1) The Board member or officer is a tenant of a Unit or an Owner of no more than two (2) Units; (2) The act or omission was performed within the scope of the Board member's or officer's Association duties; (3) The act or omission was performed in good faith; (4) The act or omission was not willful, wanton or grossly negligent; and (5) The Association maintained and had in effect at the time the act or omission occurred and at the time a claim was made one (1) or more policies of insurance which include coverage for (A) general liability of the Association and (B) individual liability of officers and Board members for negligent acts or omissions in that capacity; provided, that both types of coverage are in the minimum amount specified in Section 1365.7(a)(4) of the California Civil Code. A Board member or Association officer who at the time of the act or omission was the Declarant or received direct or indirect compensation as an employee from Declarant or from a financial institution that purchased a Condominium at a judicial or nonjudicial foreclosure of a Mortgage is not a volunteer for purposes of this Section 15.6(a)(ii). The payment of actual expenses incurred by a Board member or Association officer does not affect the member's or officer's status as a volunteer for purposes of this Section 15.6(a)(ii). (iii) Indemnification. The Association shall pay all expenses incurred by, and satisfy any judgment or fine levied against, any person as a result of any action or threatened action -55- C:\DOCS\FSJ037\25973\000\CCRS\0242S57.05 9/22/97 against such person to impose liability on such person for his Official Acts, provided that: (1) The Board determines that such person acted in good faith and in a manner such person reasonably believed to be in the Association's best interests: (2) In the case of a criminal proceeding, the Board determines that such person had no reasonable cause to believe his conduct was unlawful; and (3) In the case of an action or threatened action by or in the right of the Association, the Board determines that such person acted with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. Any determination of the Board required under this Section 15.6(a)(iii) must be approved by a majority vote of a quorum consisting of Directors who are not parties to the action or threatened action giving rise to the indemnification. If the Board fails or refuses to make any such determination, such determination may be made by the vote or written consent of a majority of a quorum of the Members voting at a meeting called for such purpose, provided that the person to be indemnified may not vote. Payments made hereunder include amounts paid and expenses incurred in settling any such action or threatened action. This Section 15.6(a)(iii) is intended to authorize payments and indemnification to the fullest extent permitted by applicable law. The entitlement to indemnification hereunder inures to the benefit of the estate, executor, administrator, heirs, legatees, or devisees of any person entitled to such indemnification. (b) Nonliability of Owners. Pursuant to California Civil Code Section 1365.9, as amended or restated from time to time, no Owner shall be liable for any cause of action in tort which can be brought against the Owner solely because of the Owner's undivided interest in the Common Area so long as the Association maintains one or more policies of insurance which include coverage for general liability of the Association in an amount of at least two million dollars ($2,000,000) so long as the Project is composed of no more than 100 Condominiums, and at least three million dollars ($3,000,000) if the Project is composed of more than 100 Condominiums and that insurance is in effect for the cause of action being brought. -56- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 15.7. Notices. Except as otherwise provided herein, notice to be given to an Owner must be in writing and may be delivered personally to the Owner. Personal delivery of such notice to one (1) or more co-owners of a Condominium or to any general partner of a partnership owning a Condominium constitutes delivery to all co-owners or to the partnership, as the case may be. Personal delivery of such notice to any officer or agent for the service of process on a corporation constitutes delivery to the corporation. In lieu of the foregoing, such notice may be delivered by regular United States mail, postage prepaid, addressed to the Owner at the most recent address furnished by such Owner to the Association or, if no such address has been furnished, to the street address of such Owner's Unit. Such notice is deemed delivered three (3) business days after the time of such mailing, except for notice of a meeting of Members or of the Board, in which case the notice provisions of the Bylaws control. Any notice to be given to the Association may be delivered personally to any member of the Board, or sent by United States mail, postage prepaid, addressed to the Association at such address as may be fixed from time to time and circulated to all Owners. 15.8. Priorities and Inconsistencies. If there are conflicts or inconsistencies between this Declaration and either the Articles or the Bylaws, then the provisions of this Declaration shall prevail. 15.9. Constructive Notice and Acceptance. Every person who owns, occupies or acquires any right, title, estate or interest in or to any Condominium or other portion of the Property does hereby consent and agree, and shall be conclusively deemed to have consented and agreed, to every limitation, restriction, easement, reservation, condition and covenant contained herein, whether or not any reference to these restrictions is contained in the instrument by which such person acquired an interest in the Property or any portion thereof. 15.10. Dispute Notification and Resolution Procedure (Declarant Disputes'). Any disputes between the Association (or any Owners) and the Declarant or any director, officer, partner, employer, subcontractor or agent of the Declarant relating to this Declaration, the use or condition of the Property, and/or the construction and installation of any Improvements located thereon not otherwise regulated by Civil Code Section 1375 shall be subject to the following provisions: (a) Notice. Any person with a claim against the Declarant or any director, officer, partner, employer, subcontractor or agent thereof (collectively the "Declarant" for purposes of this Section) shall notify the Declarant in writing of the claim, which shall describe the nature of the claim and the proposed remedy (the "Claim Notice"). (b) Right to Inspect and Right to Corrective Action. Within a reasonable period after receipt of the Claim Notice, which period shall not exceed sixty (60) days, the Declarant and the Claimant shall meet at a mutually -57- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/220/7 acceptable place within the Property to discuss the claim. At such meeting or at such other mutually agreeable time. Declarant and Declarant's representatives shall have full access to the property that is subject to the claim for the purposes of inspecting the property. The parties shall negotiate in good faith in an attempt to resolve the claim. If the Declarant elects to take any corrective action, Declarant and Declarant's representatives and agents shall be provided full access to the Property to take and complete corrective action. (c) Non-Binding Mediation. If the parties agree, the matter may be submitted to non-binding mediation pursuant to the mediation procedures adopted by the American Arbitration Association or any successor thereto or to any other entity offering mediation services that is acceptable to the parties. No person shall serve as a mediator in any dispute in which the person has any financial or personal interest in the result of the mediation, except by the written consent of all parties. Prior to accepting any appointment, the prospective mediator shall disclose any circumstances likely to create a presumption of bias or prevent a prompt commencement of the mediation process. If the matter is submitted to mediation, then the following shall apply: Within ten (10) days of the selection of the mediator, each party shall submit a brief memorandum setting forth its position with regard to the issues that need to be resolved. A party's pre-mediation memorandum may not be disclosed by the mediator to the other party without the consent of the party submitting the same. The mediator shall have the right to schedule a pre-mediation conference and all parties shall attend unless otherwise agreed. The mediation shall be commenced within ten (10) days following the submittal of the memorandum and shall be concluded within fifteen (15) days from the commencement of the mediation unless the parties mutually agree to extend the mediation period. The mediation shall be held in San Diego County. California, or such other place as is mutually acceptable to the parties. The mediator shall have discretion to conduct the mediation in the manner in which the mediator believes is most appropriate for reaching a settlement of the dispute. The mediator is authorized to conduct joint and separate meetings with the parties and to make oral and written recommendations for settlement. Whenever necessary, the mediator may also obtain expert advice concerning technical aspects of the dispute, providing the parties agree and assume the expenses of obtaining such advice. The mediator does not have the authority to impose a settlement on the parties. Prior to the commencement of the mediation session, the mediator and all parties to the mediation shall execute an agreement pursuant to California Evidence Code Section 1152.5(c) or successor statute in order to exclude the use of any information, testimony, admission or evidence produced or made at or in -58- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 902191 connection with the mediation and any subsequent dispute resolution forum, including, but not limited to. court proceedings or arbitration hearings. Pursuant to California Evidence Code Section 1152.5(a), the agreement shall specifically state: (1) Except as otherwise provided in this section, evidence of anything said or of any admission made in the course of the mediation is not admissible evidence or subject to discovery, and disclosure of this evidence shall not be compelled in any civil action or proceeding in which, pursuant to law, testimony can be compelled to be given. (2) Except as otherwise provided in this section, unless the document otherwise provides, no document prepared for the purpose of, or in the course of, or pursuant to, the mediation, or copy thereof, is admissible in evidence or subject to discovery, and disclosure of such a document shall not be compelled, in any civil action or proceeding in which, pursuant to law, testimony can be compelled to be given. Persons other than the parties, their representatives and the mediator may attend mediation sessions only with the permission of the parties and the consent of the mediator. Confidential information disclosed to a mediator by the parties or by witnesses in the course of the mediation shall not be divulged by the mediator, without the consent of the disclosing party. All records, reports, or other documents received by the mediator while serving in such capacity shall be confidential. There shall be no stenographic record of the mediation process. The expenses of witnesses for either party shall be paid by the party producing such witnesses. All other expenses of the mediation, including required traveling and other expenses of the mediator, and the expenses of any witnesses, or the cost of any proofs or expert advice produced at the direct request of the mediator, shall be borne equally by the parties unless they agree otherwise. (d) Judicial Reference. If the parties cannot resolve the claim pursuant to the procedures described in subparagraph (c) above, then, if the parties agree, the parties may submit the claim to general judicial reference pursuant to California Code of Civil Procedure Sections 638(1) and 641-645 or any successor statutes thereto. The parties shall cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding. Declarant shall not be required to participate in the judicial reference proceeding unless it is satisfied that all necessary and appropriate parties will participate. -59- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 The general referee shall have the authority to try all issues, whether of fact or law, and to report a statement of decision. The parties shall use the procedures adopted by the American Arbitration Association for judicial reference (or any other entity offering judicial reference dispute resolution procedures as may be mutually acceptable to the parties), provided that the following rules and procedures shall apply in all cases unless the parties agree otherwise: (i) The proceedings shall be heard in the county in which the Property is located; (ii) The referee must be a retired judge or an attorney with substantial experience in relevant real estate matters; (iii) Any dispute regarding the selection of the referee shall be resolved by the entity providing the reference services or, if no entity is involved, by the court with appropriate jurisdiction; (iv) The referee may require one or more pre-hearing conferences; (v) The parties shall be entitled to discovery, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge; (vi) A stenographic record of the hearing shall be made, provided that the record shall remain confidential except as may be necessary for post-hearing motions and any appeals: (vii) The referee's statement of decision shall contain findings of fact and conclusions of law to the extent applicable; and (viii) The referee shall have the authority to rule on all post-hearing motions in the same manner as a trial judge. (e) Delinquent Assessments. The procedures set forth in subparagraphs (a), (b), (c) and (d) above shall not apply to any action taken by the Association against Declarant for delinquent assessments, which shall be governed by Article V, or in any action involving any Common Property completion bonds, which shall be governed by the provisions of Article XIV. (f) Miscellaneous. Notwithstanding any other provision herein to the contrary, in any dispute between the Association and/or any Owner and the Declarant, each party shall bear its own attorneys fees. -60- C:\DOCS\FSJ037\25973\000\CCRS\0242S57.05 9/22/97 Any and all communications by and between the parties, whether written or oral, which are delivered by the parties or their attorneys or other representatives in an effort to settle the matter shall be considered communications undertaken in the course of effecting a settlement or compromise as such shall not be admissible as an admission on the part of any party or any representative or agent of that parry to be utilized for any such purpose in any action or proceeding. Nothing herein shall be considered to reduce or extend any applicable statute of limitation. If at any time an action would be barred by a statute of limitation if not filed within sixty (60) days, then such action may be filed notwithstanding any other provision of this Section. 15.11. Additional Provisions. Notwithstanding the provisions contained in the Restrictions, the Association and the Owners should be aware that there may be provisions of various laws, including without limitation the Davis-Stirling Common Interest Development Act codified at Sections 1350 et geg. of the California Civil Code and the federal Fair Housing Act codified at Title 42 United States Code, Section 3601 et seq.. which may supplement or override the Restrictions. Declarant makes no representations or warranties regarding the future enforceability of any portion of the Restrictions. 15.12. Marketing Name. The Project shall be marketed under the name "Vistamar at San Pacifico," unless and until changed from time to time by Declarant in its sole and absolute discretion. Declarant shall notify the DRE of any change in the name of the Project under which it is marketed by Declarant. ARTICLE XVI 16. Annexation of Additional Property. Additional real property may be annexed to Phase 1 and such additional real property may become subject to this Declaration by any of the following methods: 16.1. Additions by Declarant. Declarant or its successors or assigns may add the Annexable Territory, or any portion or portions thereof (including any recreation facilities located thereon) to the Property and bring such added territory within the general plan of this Declaration without the approval of the Association, the Board or Members. As each Phase is developed, Declarant may, with respect thereto, Record a supplemental declaration ("Supplemental Declaration") which may supplement this Declaration with such additional covenants, conditions, restrictions, reservations and easements as Declarant may deem appropriate for that Phase. -61- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 16.2. Other Additions. In addition to the provision for annexation specified in Section 16.1 above, additional real property may be annexed to the Property and brought within the general plan of this Declaration upon the approval by vote or written consent of Members entitled to exercise no less than two-thirds (2 3rds) of the Association's voting power. Notwithstanding the foregoing, any additional real property annexed to the Property after the seventh (7th) anniversary of the Recordation of this Declaration shall not effect a change in the percentage interests of Owners in the Common Area which existed prior to the date of annexation. 16.3. Rights and Obligations-Added Territory. Subject to the provisions of Section 16.4, upon the Recording of a Notice of Addition containing the provisions as set forth in this Section, all provisions contained in this Declaration will apply to the real property described in such Notice of Addition (the "added territory") in the same manner as if it were originally covered by this Declaration. Thereafter, the rights, powers and responsibilities of the parties to this Declaration with respect to the added territory will be the same as with respect to the property originally covered hereby, and the rights, powers and responsibilities of the Owners, lessees and occupants of Units within the added territory, as well as within the property originally subject to this Declaration, will be the same as if the added territory were originally covered by this Declaration. From and after the first day of the month following the first Close of Escrow in the added territory, the Owner of Condominiums located in the added territory shall share in the payment of assessments to the Association to meet Common Expenses of the entire Property as provided in Section 5.5 hereof. Voting rights attributable to the Condominiums in the added territory do not vest until Annual Assessments have commenced as to such Condominiums. 16.4. Notice of Addition. The additions authorized under Sections 16.1 and 16.2 must be made by Recording a Notice of Addition, or other similar instrument (which notice or instrument may contain the Supplemental Declaration, if any, affecting each such Phase), with respect to the added territory ("Notice of Addition") which will extend the general plan of this Declaration to such added territory. The Notice of Addition for any addition under Section 16.1 must be signed by Declarant. The Notice of Addition for any addition under Section 16.2 must be signed by at least two (2) officers of the Association to certify that the requisite Member approval under Section 16.2 was obtained. The Recordation of said Notice of Addition effectuates the annexation of the added territory described therein, and thereupon said added territory will constitute a part of the Property, become subject to this Declaration and encompassed within the general plan of covenants, conditions, restrictions, reservation of easements and equitable servitudes contained herein, and become subject to the Association's functions, powers and jurisdiction; and the Owners of Condominiums in said added territory will automatically become Members. Such Notice of Addition may contain a Supplemental Declaration with such additions and modifications of the covenants, conditions, restrictions, reservation of easements and equitable servitudes contained in this Declaration as may be necessary to reflect the different character, if any, of the added territory, or as Declarant deems appropriate in the development of the added territory, and as are not inconsistent with the general plan of this Declaration. In no event, however, may such -62- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 Notice of Addition or Supplemental Declaration revoke, modify or add to the covenants, conditions, restrictions, reservation of easements, or equitable servitudes established by this Declaration as the same pertain to the real property originally covered by this Declaration. 16.5. Power of Attorney. Each Owner of a Condominium in the Project, by accepting a deed to a Condominium, shall be deemed to have (a) agreed and acknowledged that the Owners own no interest in the Annexable Territory which may be developed, if at all, by Declarant in its sole and absolute discretion and (b) constituted and irrevocably appointed Declarant, for so long as Declarant owns all or any portion of the Annexable Territory, 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 thereby to have conveyed a Power of Attorney coupled with an interest to Declarant as his Attorney in Fact to prepare, execute, acknowledge and Record any Condominium Plan or amendment to the Condominium Plans for all or any portion of the Annexable Territory. However, nothing set forth herein shall be deemed or construed as an agreement by Declarant that any Owner shall be entitled to any participation in or discretion over the preparation and Recordation of a Condominium Plan or Plans for all or any portion of the Annexable Territory. 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 this Section. 16.6. Deannexation and Amendment. Declarant may amend a Notice of Addition or delete all or a portion of a Phase from coverage of this Declaration and the Association's jurisdiction, so long as Declarant is the owner of all of such Phase, and provided that (a) an amending instrument or a Notice of Deletion of Territory, as applicable, is Recorded in the same manner as the applicable Notice of Addition was Recorded, (b) Declarant has not exercised any Association vote with respect to any portion of such Phase, (c) assessments have not yet commenced with respect to any portion of such Phase, (d) Close of Escrow has not occurred for the sale of any Condominium in such Phase, and (e) the Association has not made any expenditures or incurred any obligations with respect to any portion of such Phase. ARTICLE XVII 17. Party Fences. 17.1. General Rules of Law to Apply. Each fence or wall which is built as a part of the original construction of the Improvements in the Units and placed on the dividing line between the Units shall be treated in the same manner as a "Party Fence", and, to the extent not inconsistent with the provisions of this Article, the general rules of law regarding Party Fences and liability for property damage due to negligence or willful acts or omissions shall apply thereto. -63- C:\DOCS\FSJ037\25973\000\CCRS\0242557.65 9/22/97 17.2. Sharing of Repair and Maintenance. Unless otherwise provided in this Declaration, the cost of reasonable repair and maintenance of a common fence shall be shared equally by the Owners of the Units connected by such party fence. However, each Owner shall be solely responsible for repainting the side of any fence facing his Unit. 17.3. Destruction by Fire or Other Casualty. Unless otherwise provided in this Declaration, if a party fence is destroyed or damaged by fire or other casualty, any Owner whose Unit is affected thereby may restore it, and the Owner of the other Unit which is affected thereby shall contribute equally to the cost of restoration thereof without prejudice, however, to the right of any such Owner to call for a larger contribution from the other under any rule of law regarding liability for negligent or willful acts or omissions. 17.4. Right to Contribution Runs With Land. The right of any Owner to contribution from any other Owner under this Article shall be appurtenant to the land and shall pass to such Owner's successors in title. ARTICLE XVIII 18. City Required Provisions. The following City required provisions shall supersede any other provisions in this Declaration to the extent that they conflict. 18.1. Private Development. No private development shall be permitted within open space areas, easement areas or any recreation areas. 18.2. Landscaping. All open space and landscaped areas shall be maintained in a healthy and thriving condition, free from weeds, trash and debris. 18.3. City's Right to Enforce. The City has the right, but not the obligation, to enforce any provisions of this Declaration in favor of the City or in which the City has an interest. 18.4. Amendments. Any amendment to this Declaration which affects a provision in favor of the City or in which the City has an interest which shall be subject to the review and approval of the City Planning Director and the City Attorney. If the City has not disapproved any proposed amendment by written notice to the Association given no later than thirty (30) days after receipt of a copy of the proposed amendment by the City Planning Director, such amendment shall be deemed approved by the City and a certification by an authorized officer of the Association as to such fact shall be conclusive evidence of such deemed approval. -64- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 18.5. Rental of Condominiums. Owners may not rent or lease their Condominiums for a time period of less than twenty-six (26) days. 18.6. Private Driveways. All private driveways on the Association Property shall be kept clear of parked vehicles at all times and shall have posted "No Parking/Fire Lane" pursuant to Section 17.04.020 of the Carlsbad Municipal Code. 18.7. Concrete Terrace Drains. All concrete terrace drains shall be maintained by (a) the Association if the drain is located on Association Property, or (b) an Owner if the drain is located in a Unit. 18.8. Patio Covers and Decks. All patio covers and decks that require a building permit shall confirm to the set back and coverage requirements of the underlying zone (RDM) and the accessory structure standards of Title 21 of the Carlsbad Municipal Code. 18.9. Sight Distance Corridor. No structure, fence, wall, tree, shrub, sign, or other object over thirty (30) inches above the street level may be placed or permitted to encroach within the area identified as a "Sight Distance Corridor" in accordance with City Standard Public Street-Design Criteria, Section 8.B.3. The underlying property owner shall maintain this condition. 18.10. Exterior Colors. All structures and roofs within the Project shall be earth tone in color to reduce visual impacts, according to the color boards approved by the City and enforced by the Architectural Committee. 18.11. Garages. Any and all Dwelling Units with a five (5) foot setback from the private street shall have garages installed with an automatic garage door opener and parking is prohibited on the driveway leading to the garage. 18.12. Public Transportation. The Association shall obtain and distribute to Owners annual information from Caltrans and North County Transit regarding the availability of public transportation, ride-sharing and transportation pooling services in the area. 18.13. Failure of Association to Maintain. If the Association fails to maintain the Association Property as provided in Section 2.7 of this Declaration, the City shall be entitled to give written notice to the Association, setting forth with particularity the work of maintenance or repair which the City finds to be required and requesting the same be carried out by the Association within a period of thirty (30) days from the giving of such notice. If the Association fails to carry out such maintenance or repair within the period specified by the City's notice, the City shall be entitled to cause such work to be completed and -65- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 shall be entitled to reimbursement from the Owners, as provided in Section 8.14 of this Declaration. 18.14. Assessments Levied by City. In the event the City has performed the necessary maintenance to the Association Property as provided in Section 8.13, the City shall submit a written invoice to the Association for all costs incurred by the City to perform such maintenance of the Association Property. The City shall provide a copy of such invoice to each Owner in the Project, together with a statement that if the Association fails to pay such invoice in full within the time specified, the City will pursue collection against the Owners in the Project pursuant to the provisions of this Section. Said invoice shall be due and payable by the Association within twenty (20) days of receipt by the Association. If the Association shall fail to pay such invoice in full within the period specified, payment shall be deemed delinquent and shall be subject to a late charge in an amount equal to six percent (6%) of the amount of the invoice. Thereafter the City may pursue collection from the Association by means of any remedies available at law or in equity. Without limiting the generality of the foregoing, in addition to all other rights and remedies available to the City, the City may levy a special assessment against the Owners of each Lot in the Project for an equal prorata share of the invoice, plus the late charge. Such special assessment shall constitute a charge and shall be a continuing lien upon each Lot against which the special assessment is levied. Each Owner in the Project hereby vests the City with the right and power to levy such special assessment, to impose a lien upon their respective Lot and to bring all legal actions and/or to pursue lien foreclosure procedures against any Owner and his/her respective lot for purposes of collecting such special assessment in accordance with the procedures set forth in Article V of this Declaration. 18.15. Pollutant Runoff. The Association and the Owners shall comply with plans for the regulation and control of pollutant run-off by using "Best Management Practices" as specified on Exhibit "E" attached hereto. 18.16. Fire Lanes. No vehicles may be parked in the "Fire lanes" within the Project, as shown on Exhibit "F" attached hereto. -66- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 This Declaration is dated for identification purposes _., 199^ WATT RESIDENTIAL PARTNERS, a California general partnership, dba Watt Homes Southern California By: By: Its: Its: "Declarant" STATE OF CALIFORNIA COUNTY o?Siy\ &tmntino ) ) ss. ) On 1993-before me, personally appeared personally known to me (ot piuvul lu mi uu llie basib and evidence) to be the>f ~ "person($ whose name(Jis) (is) (are) subscribed to the within instrument and acknowledged to me that (he) (ahe) (they) executed the same in (his) (her) (their) authorized capacity(ks), and that by (his) (hoi) (Unir) signature^} on the instrument the person(«5U or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS mv hand and official seal. *••»••*«•»»»••**«*»•»•••*••»••»->••EILEEN A. BROWN COMMISSION #1019453 NOTARY PUBLIC-CALIFORNIA SAN BERNARDINO COUNTY My CwiniltWWl tiWM Miff! 3 1998 c Xo33 Notary Public in and for said State •••••••••••••*•••••••••*•»•*«•*• (SEAL) -67- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated September 11,1996, and recorded on September 12,1996, as File No. 1996- 0464982, in the Official Records of San Diego County, California (the "Deed of Trust"), which Deed of Trust is by and between WATT RESIDENTIAL PARTNERS, a California general partnership, as Trustor, and CHICAGO TITLE COMPANY, a California corporation, as Trustee, and RESIDENTIAL FUNDING CORPORATION, a Delaware corporation, as Beneficiary, hereby expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Vistamar at San Pacifico ("Declaration"), to any Notice of Addition of Territory recorded pursuant to the provisions of Article XVI of the Declaration ("Notice"), and to all maintenance and other easements to be conveyed to the Association in accordance with the Declaration or any Notice. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Property by foreclosure (whether judicial or nonjudicial), deed-in-lieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Declaration and any applicable Notice, which shall remain in full force and effect. Dated: Kn^ 3 (a RESIDENTIAL FUNDING CORPORATION, a Delaware corporation By: its: By: Its: -70- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 STATE OF -IV-feVy 11 *< COUNTY OF i r: ) ss. On '• personally appeared , 199_. before mer '< ' <''-> ~ '. .".!• , ». .'•. i and personally known to me (approved to me en the basis of oatiafaetory evidence) to be the person($ whose name(s) (is) (are-) subscribed to the within instrument and acknowledged to me that (he) (slit;) (they) executed the same in (his) (her)-ftheir) authorized capacity(ie&), and that by (his) (hor) (their) signature^) on the instrument the person^ or the entity upon behalf of which the person(a) acted, executed the instrument. WITNESS my hand and official seal. •*•••••••••••••••**•••••*»•»»,,, EILEEN A. BROWN I COMMISSION #1019453 NOTARY PUBLIC-CALIFORNIA S SAN BERNARDINO COUNTY 2 * My COfflDIHMOA CXWM Mtrcn 3. 1998 I*•••••••••••••••««•••••««*„,«,; Notary Public in and for said State (SEAL) -71- C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 EXHIBIT "A" ARTICLES OF INCORPORATION OF THE ASSOCIATION C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 SECRETARY OF STATE I, BILL JONES, Secretary of State of the State of California, hereby certify: That the attached transcript has been compared with the record on file in this office, of which it purports to be a copy, and that it is full, true and correct. IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this •t •!• : •'J I I2 3 1997 Secretary of State SCC/ST«Tt FORM CE-107 C«tv. (7 35085 2014393 ENDORSED FILED In the office of the Secretary of State of trie State of California ARTICLES OF INCORPORATION OF JUN 2 3 1997 VISTAMAR AT SAN PACIFICO ASSOCIATION _ ONE: The name of this corporation ("Corporation" herein) fiftl JONES, Seitfuy of Slate VISTAMAR AT SAN PACIFICO ASSOCIATION. TWO: This corporation is a nonprofit mutual benefit corporation organized under the Nonprofit Mutual Benefit Corporation Law. The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under such law. THREE: The Corporation's initial agent for service of process is Steve Kabel, whose business address is 27720 Jefferson Avenue, Suite 200, Temecula, CA 92590. FOUR: The Corporation shall have and exercise any and all powers, rights and privileges which a corporation organized under the Nonprofit Mutual Benefit Corporation Law may now or hereafter have or exercise, provided that the Corporation shall not, except to an insubstantial degree, engage in any activities or exercise any powers that are not in furtherance of the specific purpose of the Corporation, which is to operate a homeowners association within the meaning of Section 23 70 It of the California Revenue and Taxation Code and Section 528 of the Internal Revenue Code and to manage a common interest development under the Davis-Stirling Common Interest Development Act. The Corporation does not have a corporate office. The common interest development is near the intersection of Avenida Encinas and Windrose Circle, Carlsbad, California 92009-0000. FIVE: The classes of Membership and the voting and other rights and privileges of Members shall be as set forth in the Bylaws. So long as there are two classes of Membership, amendment of these Articles of Incorporation shall require the assent (by vote or written consent) of (i) a bare majority of the Board of Directors of the Corporation, and (ii) Members representing a bare majority of the voting power of each class of Members. After conversion of the Class B Membership to Class A Membership, amendment of these Articles of Incorporation shall require the assent (by vote or written consent) of (i) a bare majority of the Board of Directors of the Corporation, (ii) a bare majority of the total voting power of the Members, and (iii) Members representing a bare majority of the voting power of the Members other than the Subdivider of the Project ("Declarant"). SIX: The Corporation has no managing agent. The undersigned, who is the incorporator of the Corporation, has executed these Articles of Incorporation on June 4 , 1997. STEVE KABEL C:U)OCS\FSJ037U5973\000\ARTINCRnn425M.OItnam CM*>95 EXHIBIT "B" BYLAWS OF THE ASSOCIATION C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 BYLAWS OF VISTAMAR AT SAN PACIFICO ASSOCIATION I:\DOCS\FSJ03TttJ973\OOOVBYLAWS\0242566.0l V3W97 TABLE OF CONTENTS FOR BYLAWS OF VISTAMAR AT SAN PACIFICO ASSOCIATION DESCRIPTION PAGE 1. Plan of Condominium Ownership 1 1.1. Name 1 1.2. Application 1 1.3. Definitions 1 2. Voting by Association Membership 1 2.1. Voting Rights 1 2.2. Majority of Quorum 2 2.3. Quorum 2 2.4. Proxies 2 3. Administration 3 3.1. Association Responsibilities 3 3.2. Place of Meetings of Members 3 3.3. .Annual Meetings of Members 3 3.4. Special Meetings of Members 3 3.5. Notice 4 3.6. Record Dates 4 3.7. Adjourned Meetings 4 3.8. Order of Business 5 3.9. Action Without Meeting 5 3.10. Consent of Absentees 5 3.11. Minutes, Presumption of Notice 5 4. Board of Directors 6 4.1. Number and Qualification 6 4.2. Powers and Duties 6 4.3. Special Powers and Duties 6 -i- I \DOCS\FSJ037\25973\000\BYLAWSVD24254iOI VXK97 DESCRIPTION PAGE 4.4. Management Agent 9 4.5. Election and Term of Office 9 4.6. Books, Audit 11 4.7. Vacancies 14 4.8. Removal of Directors 14 4.9. Organization Meeting of Board 15 4.10. Regular Meetings of Board 15 4.11. Special Meetings of Board 15 4.12. Other Meetings of the Board 15 4.13. Waiver of Notice 16 4.14. Action Without Meeting 16 4.15. Quorum and Adjournment 16 4.16. Committees ..17 5. Officers 17 5.1. Designation 17 5.2. Election of Officers 17 5.3. Removal of Officers 17 5.4. Compensation 17 5.5. President 18 5.6. Vice President 18 5.7. Secretary 18 5.8. Treasurer 18 6. Obligation of Members 19 6.1. Assessments 19 6.2. Maintenance and Repair 19 7. Amendments to Bylaws 19 8. Mortgagees 20 8.1. Notice to Association 20 8.2. Notice of Unpaid Assessments 20 9. Conflicting Provisions 20 10. Indemnification of Directors and Officers 20 -11- CMX)CS\FSJ037ttS97J\000\BYl.AWSM>2425«4 01 DESCRIPTION PAGE 11. Miscellaneous 21 11.1. Checks, Drafts and Documents 21 11.2. Execution of Documents 21 11.3. Availability of Association Documents 21 11.4. Fiscal Year 22 12. Notice and Hearing Procedure 22 12.1. Suspension of Privileges 22 12.2. Written Complaint 23 12.3. Notice of Hearing 23 12.4. Hearing 24 CERTIFICATE OF SECRETARY 25 -111- C \DOCS\F SJ037\2S973\(XXHBYLAWSV(B4:S«6 01 II.-3WM BYLAWS OF VISTAMAR AT SAN PACIFICO ASSOCIATION ARTICLE I 1. Plan of Condominium Ownership. 1.1. Name. The name of the corporation is Vistamar at San Pacifico Association, hereinafter referred to as the "Association." The principal office of the Association shall be located in San Diego County, California. 1.2. Application. The provisions of these Bylaws are applicable to the residential condominium project known as Vistamar at San Pacifico, located in the County of San Diego, California (the "Property"). All present and future Owners and their tenants, future tenants, employees, and any other person who might use the facilities of the Property in any manner, are subject to the regulations set forth in these Bylaws and in the Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Vistamar at San Pacifico (the "Declaration" herein) Recorded or to be Recorded in the Official Records of San Diego County and applicable to the Property. The mere acquisition or rental of any Condominium in the Property or the mere act of occupancy of any Condominium will signify that these Bylaws are accepted, ratified, and will be complied with. 1.3. Definitions. Unless otherwise provided herein, the capitalized terms in these Bylaws have the same meanings as are given to such terms in the Declaration. ARTICLE II 2. Voting by Association Membership. 2.1. Voting Rights. The Association has two (2) classes of voting Membership, as follows: Class A. Class A Members are those Owners with the exception of Declarant for so long as there exists a Class B Membership. Class A Members are entitled to one (1) vote for each Condominium owned which is subject to assessment, as further provided in the Declaration. -1- I:\DOCS\FSJ037\25973\000\BYLAWSV0242M6.0I 5/JOW7 Class B. The Class B Member is Declarant. The Class B Member is entitled to three (3) votes for each Condominium owned by Declarant and subject to assessment, provided that the Class B Membership shall cease and be converted to Class A Membership immediately upon the first to occur of the following events: (1) The second anniversary of the first Close of Escrow in the most recent Phase; or (2) The fourth anniversary of the first Close of Escrow in Phase 1. All voting rights are subject to the Restrictions. Except as provided in Article XIV of the Declaration and Section 4.8 of these Bylaws, any provision of the Restrictions which requires the vote or written consent of a specified percentage of the Association's voting power before action may be undertaken (i.e., other than actions requiring merely the vote or written consent of a majority of a quorum) requires the approval of such specified percentage of (a) each class of Membership so long as a Class B Membership exists, and (b) both the Association's total voting power and the Association's voting power residing in Members other than Declarant. 2.2. Majority of Quorum. Unless otherwise provided in the Restrictions, any action which may be taken by the Association may be taken by a majority of a quorum of the Members. 2.3. Quorum. Except as otherwise provided in these Bylaws, the presence in person or by proxy of at least twenty-five percent (25%) of the Association's voting power constitutes a quorum of the Membership. Members present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the Members required to constitute a quorum. If a meeting is actually attended, in person or by proxy, by Members having less than one-third (l/3rd) of the Association's voting power, then no matter may be voted upon except such matters notice of the general nature of which was given pursuant to Section 3.5 hereof. No action by the Members on any such matter is effective if the votes cast in favor are fewer than the minimum number of votes required by the Restrictions to approve such an action. 2.4. Proxies. Votes may be cast in person or by proxy. Proxies must be in writing and filed with the Secretary in advance of each meeting. Every proxy is revocable and automatically ceases after completion of the meeting for which the proxy was filed. Any form of proxy or written ballot distributed by any person to the Members must afford the opportunity to specify a choice between approval and disapproval of each matter or group of matters to be acted upon, except it is not mandatory that a -2- C \DOCS\FSJ037\2J973VXXKBYLAWS\0242M6 01 II.3W6 candidate for election to the Board be named in the proxy or written ballot. The proxy or written ballot must provide that, when the Member specifies a choice, the vote shall be cast in accordance with that choice. The proxy must also identify the person or persons authorized to exercise the proxy and the length of time it will be valid. No proxy is valid with respect to a vote on any matter described in Section 7613(g) of the California Corporations Code unless the general nature of the proposal was set forth in the proxy. ARTICLE III 3. Administration. 3.1. Association Responsibilities. In accordance with the Declaration, the Association is responsible for administering the Property, maintaining and repairing the Common Property, approving the Budget, establishing and collecting all assessments authorized under the Declaration, and arranging for overall architectural control of the Property. 3.2. Place of Meetings of Members. Meetings of the Members shall be held on the Property, or such other suitable place as proximate thereto as practical and convenient to the Members, as designated by the Board. 3.3. Annual Meetings of Members. The first annual meeting of Members shall be held within forty-five (45) days after Close of Escrow for the sale of fifty-one percent (51%) of the Condominiums in Phase 1 or within six (6) months after the Close of Escrow for the sale of the first Condominium in Phase 1, whichever occurs first. Thereafter, the annual meetings shall be held on or about the anniversary date of the first annual meeting. Each first Mortgagee may designate a representative to attend all annual meetings. 3.4. Special Meetings of Members. The Board shall call a special meeting of the Members (a) as directed by resolution of a majority of a quorum of the Board, (b) by request of the President of the Association, or (c) upon receipt of a petition signed by Members representing at least five percent (5%) of the Association's total voting power. The Secretary shall give notice of any special meeting within twenty (20) days after adoption of such resolution or receipt of such request or petition. The notice must state the date, time and place of such meeting and the general nature of the business to be transacted. The special meeting must be held not less than thirty-five (35) nor more than ninety (90) days after adoption of such resolution or receipt of such request or petition. No business may be transacted at a special meeting except as stated in the notice. Each first Mortgagee may designate a representative to attend all special meetings. -3- C \DOCS\FSJ037UJ97JWOO\BYLAWS\0242S66 01 I1.3W6 3.5. Notice. The Secretary shall send a notice of each annual or special meeting by first-class mail, at least ten (10) but not more than thirty (30) days prior to such meeting, stating the purpose thereof as well as the day, hour and place where it is to be held, to each Member of record, and to each first Mortgagee who has filed a written request for notice with the Secretary. The notice may set forth time limits for speakers and nominating procedures for the meeting. The notice must specify those matters the Board intends to present for action by the Members, but. except as otherwise provided by law, any proper matter may be presented at the meeting for action. The notice of any meeting at which Directors are to be elected must include the names of all nominees at the time the notice is given to the Members. The mailing of a notice, postage prepaid, in the manner provided in this Section, shall be considered notice served, forty-eight (48) hours after said notice has been deposited in a regular depository of the United States mail. Such notice must be posted in a conspicuous place on the Common Property and is deemed served upon a Member upon posting if no address for such Member has been then furnished the Secretary. Notwithstanding any other provision of these Bylaws, approval by the Members of any of the following proposals, other than by unanimous approval of those Members entitled to vote, is not valid unless the general nature of the proposal was stated in the notice or in any written waiver of the notice: (a) removing a Director without cause; (b) filling vacancies on the Board; (c) approving a contract or transaction between the Association and one or more Directors, or between the Association and any entity in which a Director has a material financial interest; (d) amendment of the Articles; or (e) electing to wind up and dissolve the Association. 3.6. Record Dates. The Board may fix a date in the future as a record date for the determination of the Members entitled to notice of any meeting of Members. The record date so fixed must be not less than ten (10) nor more than sixty (60) days prior to the date of the meeting. If the Board does not fix a record date for notice to Members, the record date for notice is the close of business on the business day preceding the day on which notice is given. In addition, the Board may fix a date in the future as a record date for the determination of the Members entitled to vote at any meeting of Members. The record date so fixed must be not less than ten (10) nor more than sixty (60) days prior to the date of the meeting. If the Board does not fix a record date for determining Members entitled to vote, Members on the day of the meeting who are otherwise eligible to vote are entitled to vote at the meeting. 3.7. Adjourned Meetings. If any meeting of Members cannot be organized because a quorum is not present, a majority of the Members who are present, either in person or by proxy, may adjourn the meeting to a time not less than five (5) nor more than thirty (30) days from the original meeting date, at which meeting the quorum requirement is the presence in person or by proxy of Members holding at least twenty-five percent (25%) of the Association's voting power. Such an adjourned meeting may be held without the notice required by Section 3.5 if notice thereof is given by announcement at the meeting at which such adjournment is taken. -4- C.\DOCS\FSJOJW59W<XXMYLAWS«B«J66 01 I !•»<>» 3.8. Order of Business. Meetings of Members must be conducted in accordance with a recognized system of parliamentary procedure or such parliamentary procedures as the Association may adopt. The order of business at all meetings of the Members is as follows: (a) roll call to determine the voting power represented at the meeting; (b) proof of notice of meeting or waiver of notice: (c) reading of minutes of preceding meeting; (d) reports of officers; (e) reports of committees; (f) election of inspector of election (at annual meetings or special meetings held for such purpose); (g) election of Directors (at annual meetings or special meetings held for such purpose); (h) unfinished business; and (i) new business. 3.9. Action Without Meeting. Any action which may be taken at a meeting of the Members (except for the election of Directors) may be taken without a meeting by written ballot of the Members. Ballots must be solicited in the same manner as provided in Section 3.5 for the giving of notice of meetings of Members. Such solicitations must specify (a) the number of responses needed to meet the quorum requirements, (b) the percentage of approvals necessary to approve the action, and (c) the time by which ballots must be received in order to be counted. The form of written ballot must afford an opportunity to specify a choice between approval and disapproval of each matter and must provide that, where the Member specifies a choice, the vote shall be cast in accordance therewith. Receipt within the time period specified in the solicitation of (i) a number of ballots which equals or exceeds the quorum which would be required if the action were taken at a meeting, and (ii) a number of approvals which equals or exceeds the number of votes which would be required for approval if the action were taken at a meeting at which the total number of votes cast was the same as the total number of ballots cast, constitutes approval by written ballot. 3.10. Consent of Absentees. The transactions of any meeting of Members, either annual or special, however called and noticed, are as valid as though had at a meeting duly held after regular call and notice, if (a) a quorum is present either in person or by proxy, and (b) either before or after the meeting, each of the Members not present in person or by proxy signs (i) a written waiver of notice, (ii) a consent to the holding of such meeting, or (iii) an approval of the minutes thereof. The Secretary shall file all such waivers, consents or approvals with the corporate records or make them a part of the minutes of the meeting. 3.11. Minutes. Presumption of Notice. Minutes or a similar record of the proceedings of meetings of Members, when signed by the President or Secretary, shall be presumed truthfully to evidence the matters set forth therein. A recitation in the Minutes executed by the Secretary that notice of the meeting was properly given constitutes prima facie evidence that such notice was given. C.\DOCS\I:SJ037\2S973\OCK)\BYLAWSM>:4:J66 01 ARTICLE IV 4. Board of Directors. 4.1. Number and Qualification. Until the first annual meeting of the Members, the Association's property, business and affairs shall be governed and managed by a Board of Directors composed of three (3) Persons. Commencing with the first annual meeting of the Members. The property, business and affairs of the Association shall be governed and managed by a Board of Directors composed of five (5) Persons, each of whom, except for those appointed and serving as first Directors, must be either (a) an Owner or (b) an agent of Declarant for so long as Declarant owns a Condominium or is entitled to unilaterally add any of the Annexable Territory to the Property pursuant to the Declaration. The authorized number of Directors may be changed by a duly adopted amendment to the Bylaws. Directors may not receive any salary or compensation for their services as Directors unless such compensation is first approved by the vote or written consent of Members representing at least a majority of the Association's voting power; provided, however, that (i) nothing in these Bylaws precludes any Director from serving the Association in some other capacity and receiving compensation therefor, and (ii) any Director may be reimbursed for actual expenses incurred in performance of Association duties. 4.2. Powers and Duties. The Board has the powers and duties necessary to administer the Association's affairs and may do all acts and things not by law or by these Bylaws directed to be exercised and done exclusively by the Members. The Board may not enter into any contract with a third person wherein the third person will furnish goods or services for the Common Property or the Association for a term in excess of one (1) year, without the vote or written consent of Members representing at least a majority of the Association's voting power, except for (a) a contract with a public utility company for a term that does not exceed the shortest term for which the public utility company will contract at the regulated rate if the rates charged for the materials or services are regulated by the California Public Utilities Commission, (b) a management contract the terms of which conform to Section 4.4 hereof, (c) prepaid casualty or liability insurance policies of not to exceed three (3) years' duration, provided that the policies permit short term cancellation by the Association, (d) agreements for cable television services and equipment or satellite dish television services and equipment with terms not in excess of five (5) years, provided that Declarant does not have a direct or indirect ownership interest in the supplier of such services or equipment equal to or greater than ten percent (10%), and (e) agreements for sale or lease of burglar alarm and fire alarm equipment, installation and services with terms not in excess of five (5) years, provided that Declarant does not have a direct or indirect ownership interest in the supplier of such services or equipment equal to or greater than ten percent (10%). 4.3. Special Powers and Duties. Without prejudice to such foregoing general powers and duties and such powers and duties as are set forth in the Declaration, the Board has the following powers and duties: •6- C \DOCSVFSJOI7U5973VOOO\BYLAWS\02425660I (a) The power and duty to select, appoint and remove all Association officers, agents and employees, to prescribe such powers and duties for them as may be consistent with law and with the Restrictions; to fix their compensation and to require from them security for faithful service when the Board deems advisable. (b) The power and duty to conduct, manage and control the Association's affairs, and to make and enforce such rules and regulations therefor consistent with law and with the Restrictions as the Board deems necessary or advisable. (c) The power but not the duty to change the principal office for the transaction of the Association's business from one location to another within the County in which the Property is located, as provided in Article I hereof; to designate any place within said County for the holding of any annual or special meeting or meetings of Members consistent with the provisions of Section 3.2 hereof; and to adopt and use a corporate seal and to alter the form of such seal from time to time, as the Board, in its sole judgment, deems best, provided that such seal must at all times comply with the provisions of law. (d) With the approval of Members representing at least two-thirds (2/3 rds) of the Association's voting power, the power but not the duty to borrow money and incur indebtedness for the Association's purposes, and to cause to be executed and delivered therefor, in the Association's name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. (e) The power and duty to fix and levy Annual Assessments, Special Assessments and Reconstruction Assessments, as provided in the Declaration; to fix and levy in any Fiscal Year Capital Improvement Assessments applicable to that year only for capital improvements; to determine and fix the due date for the payment of such assessments; provided, however, that such assessments must be fixed and levied only to provide for the payment of Common Expenses and taxes and assessments upon real or personal property owned, leased, controlled or occupied by the Association, or for the payment of expenses for labor rendered or materials or supplies used, or equipment and appliances furnished for the maintenance, improvement or development of such property or for the payment of any and all obligations in relation thereto, or in performing or causing to be performed any of the purposes of the Association for the general benefit and welfare of its Members, in accordance with the Declaration. Subject to any limitations imposed by the Declaration and these Bylaws, the Board may incur any and all such expenditures for any of the foregoing purposes and provide, or cause to be provided, adequate reserves for replacements as it deems to be -7- C \DOCS\FSJ037\2597JWO\B YLAWS02425«6 01 necessary or advisable in the Association's interest or its Members' welfare. The funds collected by the Board from the Members for replacement reserves, maintenance recurring less frequently than annually, and capital improvements, is at all times held in trust for the Members. Disbursements from such trust reserve fund may only be made in accordance with the Declaration. The Board shall fix such Annual Assessments. Reconstruction Assessments, Special Assessments and Capital Improvement Assessments in accordance with the Declaration. If a Member fails to pay such assessments before delinquency, the Board may enforce the payment of such delinquent assessments as provided in the Declaration. (f) The power and duty to enforce the Restrictions or any Association agreements. (g) The power and duty to contract and pay for insurance in accordance with the Declaration, covering and protecting against such damages or injuries as the Board deems advisable (which may include without limitation, medical expenses of persons injured on the Common Property). The Board shall review, not less frequently than annually, all insurance policies and bonds obtained by the Board on the Association's behalf. (h) The power and duty to contract and pay for maintenance, gardening, and common utilities services, materials, supplies and other Common Expenses relating to the Common Property, and relating to the Units only to the extent not separately metered or charged, and to employ personnel necessary to operate the Property, including legal and accounting services, and to contract and pay for Improvements on the Common Property. (i) The power but not the duty to delegate its powers according to law and to adopt these Bylaws. (j) The power but not the duty to grant or quitclaim easements, licenses or rights of way in, on, or over the Common Property for purposes consistent with the intended use of the Property as a residential condominium project. (k) The power and duty to adopt such Rules and Regulations as the Board deems necessary for managing the Property, which Rules and Regulations will become effective and binding after (i) they are adopted by a majority of the Board at a meeting called for that purpose, or by the written consent of the Board in accordance with Section 4.13, and (ii) they are either (A) posted in a conspicuous place in the Common Property or (B) sent to the Members via first class U.S. mail. Such Rules and Regulations may concern, without limitation, use of the Common Property; signs; parking restrictions; collection and disposal of -8- C \DOCS\FSJOJT\25973MXWBYLAWSWZ4J566 01i i/am refuse: minimum standards of property maintenance consistent with the Declaration and the procedures of the Architectural Committee; and any other matter within the Association's jurisdiction as provided in the Declaration; provided, however, that such Rules and Regulations are enforceable only to the extent they are consistent with the Restrictions. (1) The power and duty to keep, or cause to be kept, a complete record of all Association acts and corporate affairs and to present a statement thereof to the Members at the annual meeting of the Members and at any other time that such statement is requested by at least ten percent (10%) of the Members who are entitled to vote. (m) The power but not the duty to appoint a Membership Committee composed of at least one (1) Director and at least one (1) Member at large. The Membership Committee would be responsible for contacting all purchasers of Condominiums as soon as any transfer of title to a Condominium is discovered. The Membership Committee would further attempt to establish initial contact with all Members who are delinquent in the payment of any assessments or other charges due the Association. (n) The power but not the duty to sell property of the Association; provided, however, that the prior vote or written approval of the Members representing at least a majority of the Association's voting power must be obtained to sell during any Fiscal Year any property of the Association having an aggregate fair market value greater than five percent (5%) of the Association's budgeted gross expenses for that Fiscal Year. 4.4. Management Agent. The Board may engage a professional Manager for the Association at a compensation established by the Board to perform such duties and services as the Board authorizes, including, but not limited to, the duties listed in Section 4.3. The maximum term of any such contract ("Management Contract") is one (1) year, unless a longer term is approved either by vote or written assent of a majority of the Association's voting power, in which case the maximum term of the Management Contract is three (3) years. The maximum term of any contract providing for Declarant's services to the Association or the Project is also three (3) years. Each such contract for Declarant's services and each Management Contract must provide for its termination by either party thereto without cause and without payment of a termination fee upon no more than ninety (90) days' written notice to the other party. 4.5. Election and Term of Office. (a) At the first annual meeting of the Members, and thereafter at each annual meeting of the Members coinciding with the expiration of a Director's term -9- C:\DOCS\FSJ037\2S97MXXHBYLAWSVOMZ546 01 of office or at which a vacancy on the Board exists, the Members shall elect new Directors by secret written ballot as provided in these Bylaws. All positions on the Board shall be filled at the first annual meeting. If an annual meeting is not held, or the Board is not elected thereat, the Board may be elected at any special meeting of the Members held for that purpose. Each Director shall hold office until his successor has been elected or until his death, resignation, removal or judicial adjudication of mental incompetence. The term of office of the three (3) Directors receiving the highest number of votes at the first annual meeting shall be three (3) years and the term of office of the two (2) Directors receiving the next highest number of votes at the first annual meeting shall be two (2) years. At each annual meeting thereafter, new Directors shall be elected to fill vacancies created by the death, resignation, removal, judicial adjudication of mental incompetence or expiration of the terms of past Directors. The term of office of each Director elected to fill a vacancy created by the expiration of the term of office of the respective past Director shall be two (2) years. The term of office of each Director elected or appointed to fill a vacancy created by the resignation, death or removal of his predecessor shall be the balance of the unserved term of his predecessor. Any person serving as a Director may be reelected, and there is no limit on the number of terms which he may serve. Cumulative voting must be used in the election of Directors for any election in which more than two (2) Directors are to be selected, subject only to the following procedural requirements: A Member may cumulate his votes for any candidate for the Board if the candidate's name has been placed in nomination prior to the voting and if such Member, or any other Member, has given notice at the meeting prior to the voting of such Member's intention to cumulate votes. If a Member cumulates his votes, such Member may cast a number of votes equal to the Member's share of the voting power as set forth in the Declaration, multiplied by the number of Directors to be elected. (b) Notwithstanding the foregoing, whenever (i) notice is given for an election of Directors, (ii) upon which date Declarant is either (A) entitled to exercise a Class B vote, or (B) entitled to exercise a majority of the Association's voting power, and (iii) upon such date the Members other than Declarant do not have a sufficient percentage of the Association's voting power to elect at least twenty percent (20%) (though not less than one (1)) of the entire Board through the foregoing cumulative voting procedure, such notice must also provide for the following special election procedure. Election of Directors will be first apportioned to the Members other than Declarant until the aggregate number of Directors elected by Members other than Declarant represents at least twenty percent (20%) (though not less than one (1)) of the entire Board. Any person is an eligible candidate for the special election upon receipt by the Secretary of a Declaration of Candidacy, signed by the candidate, at any time prior to the election. Such election will be by secret written ballot. The person or persons -10- C:\DOCS\FSJ03TaS9MVXXKB YLAWSW2«tt* 01 MOO** receiving the greatest number of votes cast by the Members other than Declarant is elected a Member of the Board in a coequal capacity with all other Directors. The remaining Directors will be elected through the customary cumulative voting procedure outlined above. 4.6. Books. Audit. The Board shall distribute the following financial information to all Members (and any Beneficiary, insurer and guarantor of a first Mortgage upon request), regardless of the number of Members or the amount of assets of the Association: (a) A pro forma operating budget for each Fiscal Year consisting of at least the following information must be distributed not less than forty-five (45) nor more than sixty (60) days prior to the beginning of the Fiscal Year: (i) The estimated revenue and Common Expenses computed on an accrual basis. (ii) A summary of the Association's reserves based upon the most recent review or study conducted pursuant to Section 1365.5 of the California Civil Code or any other applicable statute, as amended, which must be printed in bold type and include all of the following: (A) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component for which the Association is responsible. (B) As of the end of the Fiscal Year for which the study is prepared: (1) The current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components for which the Association is responsible ("Estimated Reserves"). (2) The current amount of accumulated cash reserves actually set aside to repair, replace, restore or maintain the major components for -11- C \DOCS\FSJOJ7\25973WXABYLAWSVH42566 01 II/3M6 which the Association is responsible ("Actual Reserves"). (C) The percentage that the Actual Reserves is of the Estimated Reserves. (iii) A statement as to whether the Board has determined or anticipated that the levy of one or more Capital Improvement or Reconstruction Assessments will be required to repair, replace, or restore any major component for which the Association is responsible or to provide adequate reserves therefor. (iv) A general statement setting forth the procedures used by the Board in the calculation and establishment of reserves to defray the costs of repair and replacement of, or additions to, major components of the Common Property and facilities for which the Association is responsible. The Board may distribute a summary of the Budget in lieu of the Budget itself, so long as the Board complies with the provisions of Section 1365(c) of the California Civil Code as it may be amended. (b) 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 the first Close of Escrow for the sale of a Condominium and an operating statement for the period from the date of the first Close of Escrow to the said accounting date, must be distributed within sixty (60) days after the accounting date. Such operating statement must include a schedule of assessments received and receivable identified by the number of the Unit and the name of the Owner assessed. (c) A report consisting of the following must be distributed within one hundred twenty (120) days after the close of the Fiscal Year. (i) A balance sheet as of the end of the Fiscal Year. (ii) An operating (income) statement for the Fiscal Year. (iii) A statement of changes in financial position for the Fiscal Year. (iv) Any information required to be reported under Section 8322 of the California Corporations Code. -12- C.\DOCS\FSWJ7\2597J\00«BYLAWSVI»42»6 01\\rtot* (v) For any Fiscal Year in which the Association's gross income exceeds $75,000, a copy of a review of the annual report prepared in accordance with generally accepted accounting principles by a licensee of the California State Board of Accountancy. (vi) A statement of the place where the names and addresses of the current Members is located. If the report referred to in Section 4.6(c) is not prepared by an independent accountant, it must be accompanied by the certificate of an authorized Association officer stating that the statement was prepared from the Association's books and records without independent audit or review. (d) The Association shall distribute to all of its Members a summary of the Association's general liability policy that states all of the information required by Civil Code Section 1365(e), as amended, a summary of the Association's earthquake and flood insurance policy, if one has been issued, that states all of the information required by Civil Code Section 1365(f), as amended, and a summary of the liability coverage policy for the directors and officers of the Association that lists all of the information required by Civil Code Section 1365(g). If any of these policies have been canceled and not immediately replaced, the Association shall notify its Members by first-class mail as soon as reasonably practical. If the Association renews any of the policies or a new policy is issued to replace any insurance policy of the Association, where there is no lapse in coverage, the Association shall notify its Members of that fact in the next available mailing to all Members. If any information required to be disclosed by this subsection is specified in the insurance policy declaration page, the Association may meet the requirements of this subsection by distributing copies of the declaration page. In addition to financial statements, the Board shall annually distribute within sixty (60) days prior to the beginning of the Fiscal Year a statement of the Association's policies and practices in enforcing its remedies against Members for defaults in the payment of Annual, Capital Improvement, Reconstruction and Special Assessments, including the recording and foreclosing of liens against Condominiums. The Board shall do the following on at least a quarterly basis: (1) cause to be completed and review a current reconciliation of the Association's operating and reserve accounts, (2) review the current Fiscal Year's actual reserve revenues and expenses compared to the Budget for the then current Fiscal Year, (3) review the income and expense statement for the Association's operating and reserve accounts, and (4) review the most current account statements prepared by the financial institutions where the Association maintains its operating and reserve accounts. The -13- C\DOCS\FSJ037VWW>OWBYUAWSM4JJ»6 01 11:20*6 signatures of either (i) two (2) Directors, or (ii) one (1) Director and one (1) Association officer (who is not also a Director) are required for the withdrawal of money from the Association's reserve accounts. As used in this paragraph, the term "reserve accounts" means monies that the Board has identified from its Budget for use to defray the future repair and replacement of, or additions to, those major components which the Association is obligated to maintain. The Board shall cause a study of the reserve account requirements of the Property to be conducted in accordance with Section 1365.5(d) of the California Civil Code. As used in this paragraph, "reserve account requirements" means the estimated funds which the Board has determined are required to be available at a specified point in time to repair, replace or restore those major components which the Association is obligated to maintain. 4.7. Vacancies. Vacancies on the Board caused by any reason other than the removal of a Director by a vote of the Members shall be filled by vote of a majority of the remaining Directors, even though they may constitute less than a quorum. Any vacancy caused by the removal of a Director shall be filled by a vote of the Members. A Director may resign at any time by giving notice to the President, the Secretary or the Board. Any Director who ceases to be an Owner or an agent of Declarant is deemed to have resigned from the Board. A vacancy is deemed to exist in case of death, resignation, removal or judicial adjudication of mental incompetence of any Director, or in case the Members fail to elect the full number of authorized Directors at any meeting at which such election is to take place. Any vacancy not filled by the Directors may be filled by vote of the Members at the next annual meeting of the Members or at a special meeting of the Members called for such purpose. 4.8. Removal of Directors. At any regular or special meeting of the Members duly called, any one individual Director or the entire Board may be removed prior to the expiration of their terms of office with or without cause as follows: (i) for so long as fewer than fifty (50) Condominiums are included within the Project, by the vote of Members representing a majority of the Association's total voting power (including votes attributable to Declarant), and (ii) once fifty (50) or more Condominiums are included within the Project, by the vote of Members representing a majority of a quorum of Members. Notwithstanding the foregoing, if the entire Board is not removed as a group pursuant to a single vote, no individual Director may be removed if the number of votes cast against his removal would be sufficient to elect such Director if voted cumulatively at an election at which the same total number of votes were cast and the entire number of Directors authorized at the time of the Director's most recent election were then being elected. Any Director whose removal has been proposed by the Members must be given an opportunity to be heard at the meeting. If any or all of the Directors are so removed at a meeting, new Directors may be elected at the same meeting. Notwithstanding the foregoing, any Director who has been elected to office solely by the votes of Members other than Declarant pursuant to Section 4.5(b) may be removed from office prior to -14- C\DOCS\FSJ037U5rovoOO\BVLAWSMZ42366<>l the expiration of his term of office only by the vote of at least a simple majority of the Association's voting power residing in Members other than Declarant. 4.9. Organization Meeting of Board. The first regular ("organization") meeting of a newly elected Board must be held within ten (10) days of election of the Board, at such place as is fixed and announced by the Directors at the meeting at which such Directors were elected, for the purpose of organization, election of officers and the transaction of other business. No notice is necessary to the newly elected Directors in order legally to constitute such meeting; provided that (a) a majority of the whole Board is present when the time and place are announced at the annual meeting and (b) the meeting is held on the same day and at the same place as the annual meeting of the Members at which the newly constituted Board was elected. 4.10. Regular Meetings of Board. Regular meetings may be held at such time and place within the Project as is determined, from time to time, by a resolution adopted by a majority of a quorum of the Directors; provided, however, that such meetings must be held no less frequently than quarterly. Notice of the time and place of regular meetings of the Board shall be given to each Director at least four (4) days prior to the date named for such meeting, personally or by mail, telephone or telegraph, or posted at a prominent place or places within the Common Property. 4.11. Special Meetings of Board. Special meetings may be called by the President or by any two (2) Directors by posting notice at least four (4) days prior to such meeting at a prominent place or places within the Common Property or upon four (4) days' notice by first-class mail or forty-eight (48) hours' notice delivered personally or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail, or other electronic means. The notice must state the time, place and the purpose of the meeting. 4.12. Other Meetings of the Board. Any congregation of a majority of the members of the Board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the Board, except those matters that may be discussed in executive session, shall constitute a meeting of the Board. All Members shall have the right to attend any regular, special or other meeting of the Board (except an executive session), provided that Members who are not Directors may not participate in any deliberation or discussion at such meetings unless authorized by a vote of a majority of a quorum of the Board. Generally, if a meeting of the Board is not a regular or special meeting, then Members shall be given notice of the time and place of the meeting at least four (4) days prior to the meeting. Notice required by this Section may be given by posting the notice in a prominent place or places within the Common Property, by mail or delivery of the of the notice to each Unit in the Project, or by newsletter or other similar means of communication. If there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the Board and which of necessity make it impracticable to provide notice -15- C •DOCS\F«OJ7U5973\000\BYLAWS\024256» 01 to the Members, then an emergency meeting of the Board may be called by the President or any two other members of the Board without providing notice to the Members. 4.13. Waiver of Notice. Before or at any meeting of the Board, any Director may, in writing, waive personal notice of such meeting and such waiver is equivalent to the giving of notice to such Director. Attendance by a Director at any Board meeting waives personal notice by him of the time and place thereof. If all the Directors are present at any Board meeting, no notice to Directors is required and any business may be transacted at such meeting. The transactions of any Board meeting, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice, if (a) a quorum is present, (b) notice to the Members of such meeting was posted as provided in Sections 4.10 and 4.11, and (c) either before or after the meeting, each of the Directors not present signs a written waiver of notice, a consent to holding such meeting, or an approval of the Minutes thereof. The Secretary shall file all such waivers, consents and approvals with the Association's records or make them a part of the Minutes of the meeting. 4.14. Action Without Meeting. The Board may act without a meeting if all Directors consent in writing to such action. Such written consent or consents must be filed with the minutes of the proceedings of the Board. Such action by written consent has the same effect as a unanimous vote of such Directors. Within three (3) days after the written consents of all Directors have been obtained, an explanation of any action taken by unanimous written consent without a meeting must be either (a) posted by the Board in a prominent place or places in the Common Property, or (b) communicated to the Members by another means the Board determines to be appropriate. 4.15. Quorum and Adjournment. Except as otherwise expressly provided herein, at all meetings of the Board, a majority of the Directors constitutes a quorum for the transaction of business, and the acts of a majority of the Directors present at a meeting at which a quorum is present are the acts of the Board. If at any meeting of the Board there is less than a quorum present, the majority of those present may adjourn the meeting to another time. At any such reconvened meeting, any business which might have been transacted at the meeting as originally called may be transacted without further notice if a quorum is present. The Board may, with the approval of a majority of the Directors present at a meeting at which a quorum has been established, adjourn a meeting and reconvene in executive session to discuss and vote upon personnel matters, litigation matters relating to the formation of contracts with third parties, or Member discipline. The nature of any and all business to be considered in executive session must first be announced in open session and must be generally noted in the minutes of the Board. In any matter relating to the discipline of a Member, the Board shall meet in executive session if requested by that Member, and the Member may attend the executive session. -16- C.\DOCS\FSW37\25973\(X»BYLAWS<»K3«» 01 II/3W* 4.16. Committees. The Board may by resolution designate such advisory and other committees as it desires, and may establish the purposes and powers of each such committee created. The resolution designating and establishing the committee must (a) provide for the appointment of its members and a chairman, (b) state the purposes of the committee, and (c) provide for reports, termination and other administrative matters as the Board deems appropriate. ARTICLE V 5. Officers. 5.1. Designation. The Association's principal officers are a President, a Vice President, a Secretary, and a Treasurer, all elected by the Board. The Board may appoint an Assistant Treasurer, an Assistant Secretary and such other officers as it determines to be necessary. Officers other than the President need not be Directors. Any Person may hold more than one office. 5.2. Election of Officers. The Board shall annually elect the Association's officers at the new Board's organization meeting. Each officer shall hold his office at the pleasure of the Board, until he resigns or is removed or otherwise disqualified to serve or his successor is elected and qualified to serve. 5.3. Removal of Officers. Upon an affirmative vote of a majority of the entire Board, any officer may be removed, either with or without cause, and his successor elected at any regular meeting of the Board, or at any special meeting of the Board called for such purpose. Any officer may resign at any time by giving written notice to the Board or to the President or Secretary. Any such resignation is effective on the date of receipt of such notice or at any later time specified therein. Unless specified in the notice, acceptance of the resignation by the Board is not necessary to make it effective. 5.4. Compensation. Officers, agents, and employees shall receive such reasonable compensation for their services as is authorized or ratified by the Board; provided, however, that no officer may receive any compensation for services performed in the conduct of the Association's business unless such compensation is approved by the vote or written consent of Members representing at least a majority of the Association's voting power; and provided further, that (a) nothing in these Bylaws precludes any officer from serving the Association in some other capacity and receiving compensation therefor, and (b) any officer may be reimbursed for actual expenses incurred in the performance of Association duties. Appointment of any officer, agent, or employee does not of itself create contractual rights of compensation for services performed by such officer, agent, or employee. Notwithstanding the foregoing, no officer, employee or director of Declarant or any affiliate of Declarant may receive any compensation. -17- C \DOCSfSJOJT3M73VOOONB YIAWSVBJ«M660I II/3M6 5.5. President. The President is the chief executive officer of the Association and shall (a) preside at all Association and Board meetings, (b) have all of the general powers and duties which are usually vested in the office of the President of a corporation, including but not limited to the power, subject to the provisions of Section 4.15, to appoint committees from among the Members as he decides is appropriate to assist in the conduct of the Association's affairs, and (c) subject to the control of the Board, have general supervision, direction and control of the Association's business. The President is ex officio a member of all standing committees and has such other powers and duties as may be prescribed by the Board or these Bylaws. 5.6. Vice President. The Vice President shall take the President's place and perform the President's duties whenever the President is absent, disabled, refuses or is unable to act. If neither the President nor the Vice President is able to act. the Board shall appoint some other member of the Board to do so on an interim basis. The Vice President shall also perform such other duties as imposed by the Board or these Bylaws. 5.7. Secretary. The Secretary shall (a) keep the Minutes of all meetings of the Board and the Minutes of all meetings of the Association at the Association's principal office or at such other place as the Board may order, (b) keep the Association's seal in safe custody, (c) have charge of such books and papers as the Board may direct, (d) in general, perform all of the duties incident to the office of Secretary, (e) give, or cause to be given, notices of meetings of the Members and of the Board required by these Bylaws or by law to be given, (f) maintain a record book of Members, listing the names, mailing addresses and telephone numbers of Members, as furnished to the Association ("Membership Register"), (g) record the termination or transfer of ownership by any Member in the Membership Register, together with the date of the transfer, in accordance with the Declaration, and (h) perform such other duties as prescribed by the Board or these Bylaws. 5.8. Treasurer. The Treasurer is the Association's chief financial officer and is responsible for Association funds and securities. The Treasurer shall (a) keep, or cause to be kept, full and accurate accounts, tax records and business transactions of the Association, including accounts of all assets, liabilities, receipts and disbursements in books belonging to the Association, (b) be responsible for the deposit of all monies and other valuable effects in the name and to the credit of the Association in such depositories as the Board designates, (c) disburse the Association's funds as ordered by the Board, in accordance with the Declaration, (d) render to the President and Directors, upon request, an account of all transactions as Treasurer and of the Association's financial condition, and (e) have such other powers and perform such other duties prescribed by the Board or these Bylaws. -18- C:\KX3\FSJ037\2597J\OOKBYLAWS024IW6 01 ARTICLE VI 6. Obligation of Members. 6.1. Assessments. (a) All Members shall pay, in accordance with the Declaration, all assessments imposed by the Association, to meet Common Expenses. (b) All delinquent assessments shall be enforced, collected or foreclosed in the manner provided in the Declaration. 6.2. Maintenance and Repair. (a) Every Member must perform promptly, at his sole cost, such maintenance and repair work within his own Residence as the Declaration requires. All plans for alteration and repair of structural or utility bearing portions of the buildings housing the Units must receive the Architectural Committee's prior written consent. The Architectural Committee shall establish reasonable procedures for the granting of such approval, in accordance with the Declaration. (b) Each Member shall reimburse the Association for any expenditures incurred in repairing or replacing any portion of the Common Property, which is damaged through the fault of such Member or his family, guests, tenants or invitees. Such expenditures include all court costs and reasonable attorneys' fees incurred in enforcing any provision of the Restrictions. ARTICLE VII 7. Amendments to Bylaws. These Bylaws may be amended by the vote or written consent of Members representing at least (a) a majority of the voting power of each class of the Members, and (b) a majority of the Association's voting power residing in members other than Declarant; provided that the specified percentage of each class of Members necessary to amend a specific Section or provision of these Bylaws may not be less than the percentage of affirmative votes prescribed for action to be taken under that Section or provision. Notwithstanding the foregoing, these Bylaws may be amended by a majority of the entire Board, (i) at any time prior to the Close of Escrow for the sale of the first Condominium, or (ii) if the proposed amendment is required to conform the Bylaws to the requirements of VA, FHA, DRE, FNMA, GNMA or FHLMC and is within the Board's power to adopt without Member approval pursuant to the California Corporations Code. In addition to the foregoing, any amendment to these Bylaws which materially affects matters delineated in Article XII or Section 13.2 of the Declaration must be approved by the -19- C:\DOCS\FSJO}7U»TJ\000*YLA WSV024JS66 01 II/3V46 Beneficiaries of that percentage of first Mortgages on the Condominiums which is specified in the affected provision of Article XII or Section 13.2 of the Declaration, respectively; provided that, if an amendment to these Bylaws materially affects matters delineated in both Article XII and Section 13.2 of the Declaration or purports to amend this sentence, the amendment must be approved pursuant to the requirements of both said Article XII and Section 13.2. ARTICLE VIII 8. Mortgagees. 8.1. Notice to Association. Upon the Association's request, a Member who mortgages his Condominium shall notify the Association through the Manager, or through the Secretary in the event there is no Manager, of the name and address of his Mortgagee. The Association shall maintain such information in a book entitled "Mortgagees of Condominiums." Upon request, any such Member shall notify the Association of the release or discharge of any such Mortgage. 8.2. Notice of Unpaid Assessments. The Board shall, at the request of a Mortgagee, report any unpaid assessments due from the Unit Owner of such Condominium, in accordance with the Declaration. ARTICLE IX 9. Conflicting Provisions. If any of these Bylaws conflict with any laws of the State of California, such conflicting Bylaws shall be void upon final court determination to such effect, but all other Bylaws shall remain in full force. In case of any conflict between the Articles of Incorporation and these Bylaws, the Articles of Incorporation shall control; and in case of any conflict between the Declaration and these Bylaws, the Declaration shall control. ARTICLE X 10. Indemnification of Directors and Officers. The Board may authorize the Association to pay expenses incurred by, or to satisfy a judgment or fine levied against, any present or former Association Director, officer, employee or agent as provided in the Declaration. -20- C:\DOCSFSJOJTU597J\flOO\BYLAWSWJ4M46 01 IIOW6 ARTICLE XI 11. Miscellaneous. 11.1. Checks. Drafts and Documents. All checks, drafts, orders for payment of money, notes and other evidences of indebtedness issued in the name of or payable to the Association must be signed or endorsed in the manner and by the person or persons the Board designates by resolution, subject to the requirements of Section 4.6 hereof for withdrawing money from the Association's reserve accounts. 11.2. Execution of Documents. The Board may authorize any officer or officers, agent or agents to enter into any contract or execute any instrument in the name and on behalf of the Association, and such authority may be general or confined to specific instances. Unless so authorized by the Board, no officer, agent, committee member or employee may bind the Association by any contract or engagement or pledge its credit or render it liable for any purpose or in any amount. 11.3. Availability of Association Documents. In addition to the rights afforded by the Declaration to Beneficiaries, insurers and guarantors of first Mortgages with regard to inspection of the Association's management documents, the Association shall maintain at its principal office (or at such other place within the Property as the Board may prescribe) the Restrictions and the Association's books of account; minutes of meetings of Members, the Board and Board committees; and the Membership Register (collectively, the "Association Documents"), each of which shall be made available for inspection and copying by any Member or the Member's duly appointed representative for a purpose reasonably related to the Member's interest as a Member. The Board shall establish reasonable rules regarding (a) notice to be given to the custodian of the Association Documents by the Member desiring to make the inspection, (b) hours and days of the week when such an inspection may be made, and (c) payment of the cost of copying any of the Association Documents requested by a Member; provided that every Director may at any reasonable time inspect all Association Documents and the physical properties owned or controlled by the Association, and make extracts and copies of documents. The minutes, minutes that are proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any meeting of the Board (other than an executive session) must be available to Members within thirty (30) days of the meeting. The minutes, proposed minutes or summary minutes must be distributed to any Member upon request and upon reimbursement of the Association's cost in making that distribution. Members must be notified in writing at the time that the budget required in Section 4.6(a) hereof is distributed or at the time of any general mailing to the entire Association membership of their right to have copies of the minutes of meetings of the Board and how and where those minutes may be obtained. No later than ten (10) days after the Association receives written request from any Member, the Association shall provide to that Member a copy of any one or more of the following documents requested by the Member for purposes of providing the documents to a prospective purchaser of the Member's Condominium: -21- C \DOCS\FSJ037V25»7JWXABYLAWSL.OM:5« 01 11.30*6 .Articles; Bylaws; Declaration: Rules and Regulations; a copy of the most recent documents distributed pursuant to Section 4.6 hereof: a true written statement from an authorized Association representative showing the amount of the Association's current assessments and fees, as well as any assessment upon that Member's Condominium which is due and unpaid as of the statement date, as well as any late charges, interest or costs of collection which have been or may be enforced by a lien upon the Member's Condominium as of the statement date; and any change in the Association's current assessments and fees which have been approved by the Board but have not become due and payable as of the date disclosure is provided pursuant to this Section. The Association may charge a fee for this service not exceeding the Association's reasonable cost to prepare and reproduce the requested documents. 11.4. Fiscal Year. The Board shall determine the Association's Fiscal Year. The Fiscal Year is subject to change as the Board determines. ARTICLE XII 12. Notice and Hearing Procedure. 12.1. Suspension of Privileges. If an alleged violation of the Restrictions occurs, and after written notice of such alleged violation is delivered personally or mailed to the Member or any agent of the Member ("respondent") alleged to have committed the violation in the manner herein provided, by first-class mail or by certified mail return receipt requested, or both, the Board may, after affording the respondent an opportunity for an appropriate hearing as hereinafter provided, and upon an affirmative vote of a majority of all Directors on the Board, take any one (1) or more of the following actions: (a) levy a Special Assessment as provided in the Declaration; (b) suspend the respondent's voting privileges as a Member, as provided in the Declaration; (c) enter upon a Residence to make necessary repairs, or perform maintenance which, according to the Declaration, is the responsibility of the respondent; or (d) record a notice of noncompliance encumbering the respondent's Condominium. Any such suspension may not be for a period of more than thirty (30) days for any noncontinuing infraction, but in the case of a continuing infraction (including nonpayment of any assessment after the same becomes delinquent) may be imposed for so long as the violation continues. The Board's failure to enforce the Restrictions does not waive the right to enforce the same thereafter. The remedies set forth above and otherwise provided by these Bylaws are cumulative and not exclusive. However, any individual Member must exhaust all available internal Association remedies prescribed by the Restrictions before that Member may resort to a court of law for relief with respect to any alleged violation of the Restrictions by another Member. The foregoing limitation pertaining to exhausting internal remedies does not apply to the Board or to any Member where the complaint alleges nonpayment of Annual Assessments, Special Assessments, Capital Improvement Assessments or Reconstruction Assessments. -22- C \DOCS\FSW37\25973\OaKB YIAWSV0242566 01 U.3W6 12.2. Written Complaint. A hearing to determine whether a right or privilege of the respondent under the Declaration or these Bylaws should be suspended or conditioned, or whether a Special Assessment should be levied, shall be initiated by the filing of a written Complaint by any Member or by any officer or member of the Board with the President or other presiding member of the Board. The Complaint shall constitute a written statement of charges which shall set forth in ordinary and concise language the acts or omissions with which the respondent is charged and a reference to the specific provisions of the Restrictions which the respondent is alleged to have violated. A copy of the Complaint must be delivered to the respondent in accordance with the notice procedures set forth in the Declaration, together with a statement substantially in the following form: "Unless a written request for a hearing signed by or on behalf of the person named as respondent in the accompanying Complaint is delivered or mailed to the Board of Directors within fifteen (15) days after the Complaint, the Board of Directors may proceed upon the Complaint without a hearing, and you will have thus waived your right to a hearing. The request for a hearing may be made by delivering or mailing the enclosed form entitled "Notice of Defense' to the Board of Directors at the following address: You may, but need not, be represented by counsel at any or all stages of these proceedings. If you desire the names and addresses of witnesses or an opportunity to inspect any relevant writings or items on file in connection with this matter in the possession, custody or control of the Board of Directors, you may contact The respondent is entitled to a hearing on the merits of the matter if the Notice of Defense is timely filed with the Board. The respondent may file a separate statement by way of mitigation even if he does not file a Notice of Defense. 12.3. Notice of Hearing. The Board shall serve a notice of hearing, as provided herein, on all panics at least ten (10) days prior to the hearing, if such hearing is requested by the respondent. The Board shall conduct the hearing no sooner than thirty (30) days after the Complaint is mailed or delivered to the respondent as provided in Section 12.2. The notice to the respondent must be substantially in the following form but may include other information: "You are hereby notified that a hearing will be held before the Board of Directors of the Vistamar at San Pacifico Association at -23- HDOCS\FS;037\23973\000\BY1.AWS\02<K5«.OI 5/JOW on the day of . 199_. at the hour of upon the charges made in the Complaint served upon you. You may be present at the hearing, may but need not be represented by counsel, may present any relevant evidence, and will be given full opportunity to cross-examine all witnesses testifying against you. You are entitled to request the attendance of witnesses and the production of books, documents or other items by applying to the Board of Directors of the Association." 12.4. Hearing. The Board shall conduct the hearing in executive session pursuant to this notice affording the Member a reasonable opportunity to be heard. Prior to the effectiveness of any sanction hereunder. proof of notice and the invitation to be heard must be placed in the minutes of the meeting. Such proof is adequate if a copy of the notice together with a statement of the date and manner of delivery is entered by the officer or Director who mailed or delivered such notice. The notice requirement is satisfied if the respondent appears at the meeting. The minutes of the meeting must contain a written statement of the results of the hearing and the sanction, if any, imposed. No action against the respondent arising from the alleged violation may take effect prior to five (5) days after the hearing. -24- C \DOCS\FSJ037\-5973\000\flYl.AWSMm2546 01 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify that: 1. I am the duly elected and acting Secretary of VISTAMAR AT SAN PACIFICO ASSOCIATION, a California nonprofit corporation ("Association"); and 2. The foregoing Bylaws comprising 25 pages including this page constitute the Bylaws of the Association duly adopted by Consent of Directors in Lieu of First Meeting dated , 1997. IN WITNESS WHEREOF, I have hereunto subscribed my hand and affixed the seal of the Association this ^>^ day of fotf&MMj'S 1997. Secretary (SEAL) -25- IADOCSVFSJOJ7\25973\OOOVBYLAWS\««J66.0I S/MOT EXHIBIT "C" LEGAL DESCRIPTION OF ANNEXABLE TERRITORY PARCELS A AND C OF PARCEL MAP NO. 17825, IN THE CITY OF CARLSBAD, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY ON FEBRUARY 18,1997, AS DOCUMENT NO. 97-072174, OF OFFICIAL RECORDS. C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 EXHIBIT "D" DRAWING SHOWING LOCATION OF RETAINING WALLS AND FENCES ON ASSOCIATION PROPERTY IN PHASE 1 C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 LEGEND: RETAINING WALL PERIMETER FENCE EXISTING FENCE ©1997 O'Dov Consuitcnts. 'nc. (S&4*2^ CONSULT 7220 Avenria Enemas Suit* 204 Carlsbad. California 920C9 819-931-7700 Fax:619-931 -8680 A/'N T S Civil Enqin««nna. Proctmna Sur»«ying. VISTAMAR PHASE 1 EXHIBIT 'D' 5-19-97 SHT.10F 1 SHTS.^ Xrefs: 9619FGRD, SIR. MAP. Z32PL PSD: ZB2-2 F:\JGBS\961019\ZB2-3 6-4-97 ia<54'41 pn EXHIBIT "E" BEST MANAGEMENT PRACTICES FOR CONTROL OF POLLUTANT RUN-OFF The following guidelines have been prepared in accordance with the residential provisions of the Best Management Practices Appendix to the Orange County NPDES Storm Water Program - Drainage Area Management Plan, dated April 1993: 1. The Association shall periodically provide to its members environmental awareness education materials made available by the local municipalities. These materials will describe the use of chemicals (including household types) that should be limited to the Properties with no discharge of specified wastes via hosing or other direct discharge to gutters, catch basins, settling basins and storm drains. 2. The Association shall maintain Association Property landscaping in a manner consistent with the County Water Conservation Resolution, or the City equivalent, plus fertilizer and pesticide usage consistent with the County Management Guidelines for Use of Fertilizers and Pesticides, or the City equivalent. 3. In conjunction with its regularly scheduled maintenance obligations, the Association shall (i) remove any litter or trash from the Association Property; ensure the periodic emptying of trash receptacles hi the Association Property, if any; and (iii) enforcing the restrictions in Section 8.9 of the Declaration concerning the proper storage and disposal of trash by Owners. 4. The Association shall have privately maintained drainage systems and privately owned catch basins inspected and cleaned, and privately owned streets and parking areas swept prior to the storm season (no later than October 15th each year). Storm Drain Facilities shall be inspected regularly as follows: (a) Open channels and catch basins inspected annually before storm season and removal of debris as necessary. (b) Underground drainage facilities thirty-nine inches (39") and larger in diameter shall be inspected every two years. (c) All facilities shall have debris and sediment removed either manually or by mechanical methods. Flushing shall be used in emergency situations only. 5. The Association and its Members shall ensure that surface run-off in the Property be directed to landscaped areas wherever practicable, and shall not alter existing drainage improvements or patterns as originally installed by Declarant. 6. The Association shall implement irrigation and landscaping practices consistent with the County Water Conservation Resolution, or the City equivalent, which may include provision of water sensors, programmable irrigation times, grouping of plants with similar water requirements in order to reduce excess irrigation runoff and to promote surface filtration. C:\DOCS\FSJ037\25973\000\CCRS\0242S57.05 9/22/97 EXHIBIT "F" DRAWING SHOWING LOCATION OF FIRE LANES C:\DOCS\FSJ037\25973\000\CCRS\0242557.05 9/22/97 LEGEND: FIRE LANES !©1997 O'Doy Consultants. Inc. O^&A*?^ CONSULT 7220 AnniM Enema* Suit* 20* CotHbod. CoSfomia 92009 JI9-9JI-7700 A^N T S Civil Cngnw*nnq Harming Proecninq VISTAMAR PHASE 1 EXHIBIT F 5-19-97 SHT.1 OF 1 SHTS.^ Xrefs: 9619FGRO. STR, MAP. ZB2PL PSD: ZB2-2 r=\jnBS\961019\ZB2-a 6-4-97 10.52'4a an