Loading...
MUP 2007-964ANAMCB RWAMOCOds City of La Quinta unity Development Department 5 Calle Tampico �La inta, California 92253 -7125 FAX: (760) 777-1233 CITY OF LA OFFICE USE ONLY Case No. IMIJP 07 —9 Date Recvd. 9 If /0-7 Fee: t. z Related Apps.: Logged in by: � APPLICATION FOR MINOR USE PERMIT APPROVAL MINOR USE PERMIT applications are reviewed and approved by the Community Development Director pursuant to Section 9.2I 0.020, of the Zoning Code. The purpose of the review is to ensure that land uses requiring the permit do not have an adverse impact on surrounding properties, residents, or businesses. APPLICANT I,y L CAjn j4w,, c�c,c �1 %� S L L L_ C_ `j (Print) MAILING ADDRESS 7�bu- _ 26p Phone No. CITY, STATE, ZIP: r (&Lg=jn 4!�A 1?2cGQFaxNo. / $(j 2G z PROPERTY OWNER (If different):_ (Print) MAILING ADDRESS: Phone No. CITY, STATE, ZIP: Fax No. PROJECT LOCATION: --( ( - rn PROPOSED ^USE AND/OR �CC�ONSTRUCTION (Including operational information): n o aV_ UrS+ (attach sheets if needed) LEGAL DESCRIPTION (LOT & TRACTOR A.P.N.): AFA-) -S -azo - 624 A 18\Minor Use Permit P.O. Box 1504 LA QUINTA, CALIFORNIA 92247-1504 78-495 CALLE TAMPICO LA QUINTA, CALIFORNIA 92253 January 30, 2009 Ms. Penny Waidell JLH Realty &Construction 19520 Jamboree Rd. Suite 400 Irvine, CA 92612 SUBJECT: MINOR USE PERMIT 2007-964 Ms. Waidell: (760) 777-7000 FAX (760) 777-7101 k On October 30, 2008 our office requested additional information needed to process the subject application. If we fail to receive either a formal letter of withdrawal or the requested items within 30 days of this letter, our office will close the file. A refund can be requested by submitting a request to our office. Please note, per Section 9.260.010 of the La Quinta Zoning Code you are entitled to fifty percent of the original fee. If you have any questions concerning this matter, please contact me immediately at (760) 777-7131. )NNE FItRANCO istant Planner C: File P.O. Box 1504 LA QUINTA, CALIFORNIA 92247-1504 78-495 CALLS TAMPICO (760) 777-7000 LA QUINTA, CALIFORNIA 92253 FAX (760) 777-7101 October 20, 2008 Ms. Penny Waidell JLH Realty & Construction 19520 Jamboree Rd. Suite 400 Irvine, CA 92612 SUBJECT: MINOR USE PERMIT 2007-964 GUESTHOUSES FOR TTM 35060 Dear Ms. Waidell: The subject file is an outstanding item that was submitted for approval by the former project manager for The Estate. In order to further process the application the following items need to be submitted: 1. A site plan that shows the overall project and which lots will have the guesthouses with full kitchen facilities. Also include a floor plan of the guesthouse with kitchen,- 2. itchen; 2. A check for the correct amount. The amount submitted to the Planning Department of $75 only covers the fee for the guesthouse or guesthouses for one unit. 3. A completed second page of the MUP application; the file is missing this part of the application. The second page is included as an attachment. I have attached a copy of the application and check that were submitted. If you have any questions, please feel free to call me at (760) 777-7131. gncer ly, 90E FRANCO Assistant Planner C� Recording requested by: When recorded return to: GALLAGHER & MOORE Frederick C. Moore, Esq. 2 Park Plaza, Suite 300 Irvine, California 92614 CJ DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR THE ESTATES AT LA QUINTA A Residential Planned Development NOTE: AS MORE FULLY DESCRIBED IN THIS DECLARATION (e.g., EXHIBIT "D") OR OTHERWISE PROVIDED BY DECLARANT, IN THE EVENT OF ANY DISPUTE(S) ARISING HEREUNDER, OR RELATING TO THE DESIGN AND/OR CONSTRUCTION OF THE PROJECT, SUCH DISPUTES) SHALL BE SUBMITTED TO A NONADVERSARIAL PROCEDURE AND IF NOT RESOLVED, SUBMITTED THEREAF- TER TO AN ALTERNATIVE DISPUTE RESOLUTION PROCEDURE (BINDING ARBITRATION OR JUDICIAL REFERENCE), AND AS A RESULT THEREOF, SUCH DISPUTES) WILL NOT BE LITIGATED IN A COURT OR BEFORE A JURY. ANY PERSON PURCHASING IN THIS DEVELOPMENT KNOWINGLY AND VOLUNTARILY AGREES TO BE BOUND BY A PROCEDURE WHICH DOES NOT INCLUDE A RIGHT TO A JURY. IF THIS PROCEDURE IS UNACCEPTABLE, AN INDIVIDUAL OR ENTITY SHOULD NOT PURCHASE IN THIS PROJECT. 1 TABLE OF CONTENTS ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . 3 1. Annexation Property . . . . . . . . . . . . 3 2. Architectural Review Committee . . . . . . 3 3. Architectural Guidelines . . . . . . . . . 3 4. Articles . . . . . . . . . . . . . . . . . 3 5. Assessments . . . . . . . . . . . . . . . . 3 6. Association 4 7. Association Walls . . . 4 8. Best Management Practices or BMPs . . . . . 5 9. Board . . . . . . . . . . . . . . . . . . . 6 10. By -Laws . . . . . . . . . . . . . . . . . . 6 11. City . . . . . . . . . . . . . . . . . . . 6 12. Common Area . . . . . . . . . . . . . . . . 6 13. Common Expenses . . . . . . . . . . . . . . 7 14. County . . . . . . . . . . . . . . . . . . 7 15. Declarant . . . . . . . . . . . . . . . . . 7 16. Declaration . . . . . . . . . . . . . . . . 7 17. Dispute . . . . . . . . . . . . . . . . . . 8 18. DRE 8 19. Entitlements From City . . . . . . . . . . 8 20. Express Limited Warranty . . . . . . . . . 8 21. FHLMC . . . . . . . . . . . . . . . . . . . 8 22. FNMA . . . . . . . . . . . . . . . . . . . 8 23. GNMA . . . . . . . . . . . . . . . . . . . 8 24. Improvements . . . . . . . . . . . . . . . 8 25. Include, Including . . . . . . . . . . . . 9 26. Local Government Agency . . . . . . . . . . 9 27. Lot . . . . . . . . 9 28. Maintain, Maintenance . . . . . . . 9 29. Maintenance Guidelines; Maintenance Manual; Maintenance Recommendations . . . . 9 30. Member . . . . . . . . . . . . . . . . . . 10 31. Mortgage . . . . . . . . . . . . . . . . . 10 32. Mortgagee . . . . . . . . . . . . . . . . . 10 33. Mortgagor . . . . . . . . . . . . . . . . . 10 34. Notice and Hearing . . . . . . . . . . . . 10 35. Notice of Annexation . . . . . . . . . . . 10 36. Owner . . . . . . . . . . . . . . . . . . . 11 37. Phase . . . . . . . . . . . . . . . . . 11 38. Project . . . . . . . . . . . . . . . . . . 11 39. Property . . . . . . . . . . . . . 11 40. Residence . . . . . . . . . 11 41. Rules and Regulations . . . . . . . . . . . 11 42. Special Benefit Area . . . . . . . . . . . 11 43. VA/FHA . . . . . . . . . . . . . . . . 11 44. Water Quality Management Plans 12 45. Interpretation . . . . . . . 12 46. Application of Definitions . . . . . . . . 13 ARTICLE II GENERAL PLAN OF DEVELOPMENT . . . . . . . . . . 13 1. Introduction . . . . . . . . . . . . . . . 13 18324.283-14780.FCM 091307 i AN 2. Rights and Obligations of Owners . . . . . 13 3.. Description of Common Area . . . . . . . . 13 4. Membership in the Association . . . . . . . 14 5. Annexation of Subsequent Phases . . . . . . 14 6. Declarant's Use of Utilities . . . . . . . 14 7. Development Control . . . . . . . . . . . . 14 8. Non -Liability of Declarant . . . . . . . . 16 ARTICLE III RESERVATION OF EASEMENTS AND OTHER PROPERTY RIGHTS IN THE COMMON AREA . . . . . . . 17 1. Owners' Easements . . . 17 2. Limitations on Owners' Easement Rights 17 3. Easements for Common Walls . . . 19 4. Delegation of Common Area Use Rights . . . 19 5. Easements for Community Cable Television, Telecommunication Systems and Alarm System Cabling . . . . . . . . . . . 20 6. Easements for Unintentional Encroachments 20 7. Easements for Utilities 21 8. Easements for Maintenance of the Common Area . . 22 9. Easements for Clustered Mailboxes . . . . . 23 10. Easements Over Sidewalks and Parkways . . . 23 11. Easements for Drainage . . . . . . . . . . 23 12. Easement for Area Drains . . . . . . . . . 23 13. Easement for Driveways . . . . . . . . . . 24 14. Easements for Construction and Sales . . . 24 15. Easements to the City . . . . . . . . . . . 25 16. Reservation of Construction Rights by Declarant . . . . . . . . . . . . . . . 25 17. Title to the Common Area . . . . . . . . . 25 18. Reservation of Common Area Easements . . . 27 19. Easements for the Architectural Review Committee . . . . . . . . . . . . . . . . . 27 20. Easement for Access to and from Washington Street . . . . . . . . . . . . . 28 21. Easements Set Forth on Final Map and in Official Records of County . . . . . . . 28 ARTICLE IV THE ASSOCIATION . . . . . . . . . . . . . . . . 28 1. Membership . . . . . . . . . . . . . . . . 28 2. Voting Rights . . . . . . . . . . . . . . . 28 3. Special Procedures For Appointment of Members to the Board . . . . . . . . . . . 29 4. Vesting of Voting Rights . . . . . . . . . 30 5. Adjustment of Voting Rights . . . . . . . . 30 6. Suspension of Voting Rights . . . . . . . . 30 7. Transfer . . . . . . . . . . . . . . . . . 30 8. Record Date . . . . . . . . . . . . . . . . 31 ARTICLE V POWERS AND DUTIES OF THE ASSOCIATION . . . . . . 31 1. Management Body . . . . . . . . . . . . . . 31 2. Powers . . . . . . . . . . . . . . . . . . 31 18324.283-14780.FCM 091307 ii 18324.283-14780.FCM 091307 ii i A 3. Duties 35 4. Discretionary Powers . . . . . . . . . . 45 5. Notification by Association of Defects 46 6. Awards Rendered in Construction Defects Disputes . . . . . . . . . . . . . . . . . 46 7. Special Meeting of the Association for Construction Defect Disputes . . . . . . . 46 8. Dispute Notification and Resolution Procedure . . 47 9. Repair of Willful Damage to Common Area 47 10. Delegations of Duties . . . . . . . . . . . 47 11. Right of Entry for Emergency . . . . . . . 47 12. Right of Entry for Repairs . . . . . . . . 47 13. Limitations on Board Action . . . . . . . . 48 14. Licenses, Easements and Rights -of -Way . . . 49 15. New Improvements . . . . . . . . . . . . . 50 16. Association Rules and Regulations . . . . . 50 17. Nonliability and Indemnification . . . . . 51 ARTICLE VI ASSESSMENTS . . . . 52 1. Creation of the Lien and Personal Obligation of Assessments . . . . . . 52 2. Purpose of Regular Assessments: Levy and Collection 53 3. Regular Assessments - Basis 53 4. Special Assessments for Capital Improvements . . . . . . . . . 56 5. Compliance Assessments . . . . . . . . . . 57 6. Special Benefit Assessments . . . . . . . . 57 7. Date of Commencement of Regular Assessments: Due Dates . . . . . . . . . . 58 8. Model Homes . . . . . . . . . . . . . . . . 58 9. Collection of Assessments . . . . . . . . . 59 10. Notice of Increase in Assessments . . . . . 59 11. Certification of Payment . . . . . . . . . 59 12. Delivery by Owner . . . . . . . . . . . . . 59 13. Delivery by Declarant . . . . . . . . . . . 60 14. Reserves . . 60 15. Offsets and Waiver Prohibited . . . . . . . 60 16. Exempt Property . . . . . . . . . . . . . . 61 ARTICLE VII EFFECT OF NONPAYMENT OF ASSESSMENTS: REMEDIES OF THE ASSOCIATION . . . . . . . . . . 61 1. Effect of Nonpayment of Assessments: Remedies of the Association . . . . . . . . 61 2. Notice of Delinquent Assessments . . . . . 62 3. Foreclosure Sale . . . . . . . . . . . . . 62 4. Curing of Default . . . . . . . . . . . 62 5. Cumulative Remedies . . . . . . . . . . . . 62 6. Mortgagee Protection . . . . . . . . . . . 62 ARTICLE VIII USE RESTRICTIONS . . . . . . . . . . . . . . . . 63 1. Private Residential Dwelling . . . . . . . 63 18324.283-14780.FCM 091307 ii i • 2. Common Area Use . . . . . . . . . . . . . . 63 3. Conduct Affecting Insurance . . . . . . . . 63 4. Liability for Damage . . . . . . . . . . . 63 5. Signs . . . . . . . . . . . . . . . . . . . 64 6. Maintenance of Animals . . . . . . . . . . 64 7. Quiet Enjoyment . . . . . . . . . . . . . . 65 8. Grading/Irrigation . . . . . . . . . . . . 65 9. Structural Changes . . . . . . . . . . . . 66 10. Improvements . . . . . . . . . . . . . . . 66 11. Windows . . . 67 12. Commercial Activity . . . . . . . . . . . 67 13. Parking . . . . . . . . . . . . . . . . . . 68 14. Regulation of Parking . . . . . . . . . . . 69 15. Compliance With Management Documents . . . 69 16. Declarant's Improvements . . . . . . . . . 69 17. Solar Heating . . . . . . . . . . . . . . . 69 18. Antennas . . . . . . . . . . . . . . . . . 70 19. Leasing . . . . . . . . . . . . . . . . . . 70 20. Drilling . . . . . . . . . . . . . . . . . 70 21. Trash . . . . . . . . . . . . . . . . . . . 71 22. Drainage . . . . . . . . . . . . . . . . . 71 23. Prohibition Against Further Subdivision . . 71 24. Patios and Balconies . . . . . . . . . . . 72 25. Exemption of Declarant . . . . . . . . . . 72 26. No Easements for View Purposes; Disclaimer . . 73 27. Post Tension Slabs . . . . . . . . . . . . 73 28. Public Right -of -Way . . . . . . . . . . . . 74 29. Pollutant Control . . . 74 30. Water Quality Maintenance Obligations . . . 75 31. Rights of Disabled . . . . . . . . . . . . 76 32. Reclaimed Water . . . . . . . . . . . . . . 76 33. Guest Suites . . . . . . . . . . . . . . . 76 34. Sight Triangles . . . . . . . . . . . . . . 76 35. Bighorn Sheet - Exterior Lighting and Landscaping and Hillside Restrictions . . . 76 36. Zero Lot Line Restrictions . . . . . . . . 76 37. No Warranty of Enforceability . . . . . . . 83 ARTICLE IX ARCHITECTURAL REVIEW - APPROVAL . . . . . . . . 83 1. Exemptions From Architectural Review . . . 83 2. Architectural Review . . . 83 3. Architectural Review Committee . . . . . . 84 4. Meetings of the Architectural Review Committee 84 5. Architectural Standards/Guidelines . . . . 85 6. Architectural Approval - Review of Plans and Specifications . 7. Decisions of the Architectural Review Committee . . . . . . . . . . . . . . . . . 87 8. Submittal to City - Right of Architectural Review Committee to Review 87 9. Approval of City . . . . . . . . . . . . . 88 10. Conflicts Between City and Architectural Review Committee . . . . . . . . . . . . . 88 18324.283-14780.FCM 091307 iv 18324.283-14780.FCM 091307 v a 11. No Waiver of Future Approvals . . . . . . . 88 12. Compensation of Members . . . . . . . . . . 88 13. Variances . . . . . . . . . . . . . . . . . 89 14. Inspection of Work . . . . . . . . . . . . 89 15. Non -Liability of Architectural Review Committee Members . . . . . . . . . . . . . 89 16. Appeal . . . . . . . . . . . . . . . . . . 90 ARTICLE X REPAIR AND MAINTENANCE . . . . . . . . . . . . . 90 1. Repair and Maintenance by Association . . . 90 2. Maintenance Manual 92 3. Maintenance of Phases Subject to Construction Easement . . . . . . . . . . . 93 4. Repair and Maintenance by Owner . . . . . . 93 5. Maintenance of Public Utilities . . . . . . 94 6. Damage and Destruction Affecting a Residence - Duty to Rebuild . . . . . . . . 94 7. Owners' Cooperation for Maintenance . . . . 94 ARTICLE XI ENVIRONMENTAL AND OTHER DISCLOSURES AND REQUIREMENTS . . . . . . . . . . . . . . . . 95 1. Environmental Requirements . . . . . . . . 95 ARTICLE XII DAMAGE OR DESTRUCTION TO THE COMMON AREA . . . . . . . . . . . . . . . . 96 1. Restoration of Damaged Common Area . . . . 96 2. Election by Owners Not to Restore Damaged Common Area . . . . . . . . . . . . 97 3. Retention of Excess Insurance Proceeds in General Fund . . . . . . . . . . . . . . 97 ARTICLE XIII CONDEMNATION . . . . . . . . . . . . . . . . . . 98 1. Distribution of Awards - Common Area . . . 98 2. Board of Directors as Attorney -in -Fact . . 98 ARTICLE XIV COVENANT AGAINST PARTITION . . . . . . . . . . . 98 1. Covenant Against Partition . . . . . . . . 98 ARTICLE XV INSURANCE . . . . . . . . . . . . . . . . . . . 98 1. Required Insurance Coverage . . . . . . . . 98 2. Optional Insurance Coverage . . . . . . . . 99 3. Notice of Cancellation of Insurance . . . . 100 4. Review of Coverage . . . . . . . . . . . . 100 5. Waiver by Owners . . . . . . . . . . . . . 100 6. Premiums, Proceeds and Settlement . . . . . 100 7. Rights and Duties of Owners to Insure . . . 101 8. Trustee for Policies . . . . . . . . . . . 101 9. Mortgage Clause . . . . . . . . . . . . . . 101 10. Compliance With Requirements of FHLMC and FNMA . . . . . . . . . . . . . . 102 18324.283-14780.FCM 091307 v 18324.283-14780.FCM 091307 v 1 I 11. Required Waiver . . . . . . . . . . . . . . 102 12. Annual Notification of Insurance . . . . . 102 ARTICLE XVI MORTGAGEE PROTECTION . . . . . . . . . . . . . . 103 1. Mortgagee Protection Provisions . . . . . . 103 2. Violation of Mortgagee Protection Provisions . . . . . . . . . . . . . . . . 107 3. Amendments to Conform With Mortgagee Requirements . . . . . . . . . . . . . . . 107 ARTICLE XVII ENFORCEMENT OF BONDED OBLIGATIONS . . . . . . . 107 1. Enforcement of Bonded Obligations . . . . . 107 ARTICLE XVIII ANNEXATION OF ADDITIONAL PROPERTY . . . . . . . 108 1. Development of the Project . . . . . . . . 108 2. Annexation Pursuant to Approval . . . . . . 109 3. Annexation Pursuant to General Plan of Development . . . . . . . . . . . . . . 109 4. Notice of Annexation . . . . . . . . . . . 109 5. Effective Date of Annexation 110 6. Amendments to Notice of Annexation . . . . 110 7. Right of De -Annexation . . . . . . . . . . 110 8. Parties to Notice of Annexation . . . . . . 110 ARTICLE XIX GENERAL PROVISIONS . . . . . . . . . . . . . . . 111 1. Enforcement . . . . . . . . . . . . . . . . 111 2. Severability . . . . . . . . . . . . . . . 113 3. Term . . . . . . . . . . . . . . . . . . 113 4. Construction 114 5. Singular Includes Plural . . . . . . . . . 114 6. Covenants Running With the Land . . . . . . 114 7. Amendments . . . . . . . . . . . . . . . . 114 8. Encroachments . . . . . . . . . . . . . . . 117 9. Notices . . . . . . . . . . . . . . . . . . 117 10. Attorneys' Fees . . . . . . . . . . . . . . 117 11. Mergers or Consolidations . . . . . . . . . 118 12. No Representations or Warranties . . . . . 118 13. Project Disclosures . . . 118 14. Conflicts in Management Documents For the Project 120 15. Davis -Stirling Act . . . . . . . . . . . . 120 16. Notices Provided Pursuant to Right to Repair Law . . . . . . . . . . . . . . . . 121 17. Declarant's Representative . . . . . . . . 121 18. Exhibits . . . . . . . . . . . . . . . . . 121 18324.283-14780.FCM 091307 v 1 18324.283-14780.FCM 091307 v i i EXHIBITS: Exhibit A Parkways, Medians, and Other Landscaped Areas to be Maintained by Association Exhibit B Shared Driveways Exhibit C Annexation Property Exhibit D Walls Exhibit E Dispute Notification and Resolution Procedure Exhibit F Landscape Height Restrictions (line of sight) Exhibit G Prohibited Plants Exhibit H Sideyard Easements Exhibit I Church Easement Exhibit J Notices Provided By Declarant Pursuant to Right to Repair Law 18324.283-14780.FCM 091307 v i i 0 • DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS, AND RESERVATION OF EASEMENTS FOR THE ESTATES AT LA QUINTA THIS DECLARATION OF COVENANTS, CONDITIONS AND RESTRIC- TIONS, AND RESERVATION OF EASEMENTS FOR THE ESTATES AT LA QUINTA is made this day of 1 2007, by WL CANYON RIDGE ASSOCIATES, LLC, a Delaware limited liability company ("Declarant"). W I T N E S S E T H: A. Declarant owns that certain real property located in the City of La Quinta, County of Riverside, State of California, more particularly described as follows: Lots —through , inclusive, of Tract No. 35060, as per Map recorded in Book , Pages _ to _, inclusive, of Maps filed in the Office of the County Recorder of Riverside County, State of Cali- fornia (hereinafter referred to as the "Lots"). The Lots and the "Common Area" (defined below) are hereinafter sometimes collectively referred to as the "Property". B. Declarant also owns that certain real property located in the City of La Quinta, County of Riverside, State of California, more particularly described as follows: Lots _ through inclusive, of Tract No. 35060, as per Map recorded in Book , Pages _ to _, inclusive, of Maps filed in the Office of the County Recorder of Riverside County, State of Cali- fornia; Nonexclusive easements in, on, over, under, across and through those portions of the real property described on Exhibit "A" attached hereto and incorporated by reference for the landscaping, irrigation, drainage, and slope maintenance; and Nonexclusive easements in, on, over, under, across and through those portions of the Lots described and/or depicted on Exhibit "B" attached hereto and incorporated by reference for purposes of pedestrian and vehicular ingress, egress, access, utilities, drainage, and general street usage purposes. 18324.283-14780.FCM 091307 (hereinafter referred to as the "Common Area"). The Lots and the "Common Area" (defined below) are hereinafter sometimes collectively referred to as "Phase 1" or the "Property". C. Declarant also owns that certain real property located in the City of La Quinta, County of Riverside, State of California, more particularly described in Exhibit "C" attached hereto ("Annexation Property"), which may, from time to time, be annexed to and become part of the Project (as hereinafter defined), in accordance with the Article herein entitled "Annexation of Additional Property." D. Declarant desires to develop the Property and all portions of the Annexation Property, which are annexed thereto pursuant to this Declaration, as a common interest development, more particularly described in Section 1351(k) of the California Civil Code as a "planned development" (hereinafter referred to as the "Project"), consisting of single-family detached homes, landscaped areas and other improvements, as more fully described below. E. Declarant deems it desirable to impose a general plan for the development, maintenance, improvement, protection, use, occupancy, and enjoyment of the Project, and to establish, adopt, and impose covenants, conditions, and restrictions upon the Project for the purpose of enforcing, protecting, and preserving the value, desirability, and attractiveness of the Project. F. Declarant deems it desirable for the efficient en- forcement, protection and preservation of the value, desirability and attractiveness of the Project to create a corporation which shall be delegated and assigned the powers of administering and enforcing said covenants, conditions and restrictions. G. The Estates at La Quinta Community Association, a California nonprofit, mutual benefit corporation, has been or will be incorporated under the laws of the State of California for the purpose of exercising the aforesaid powers. H. Declarant intends to convey the Property subject to the covenants, conditions, and restrictions set forth hereinbelow. NOW, THEREFORE, Declarant agrees and declares that it has established, and does hereby establish, a plan for the development, maintenance, protection, improvement, use, occupancy, and enjoyment of the Project, and has fixed, and does hereby fix, the covenants, conditions, restrictions, easements, reservations, equitable servitudes, liens, and charges (hereinafter collectively referred to as the "Protective Covenants") upon the Project. Each and all 18324.283-14780.FCM 091307 - 2 • of the Protective Covenants shall run with the land, shall be enforceable, and shall inure to the benefit of and be binding upon Declarant, its successors and assigns, all subsequent owners of all or any portion of the Project, together with their grantees, successors, heirs, executors, administrators, devisees, and assigns, and may be enforced by any Owner or the Association. ARTICLE I DEFINITIONS Section 1. "Annexation Property" shall mean and refer to that certain real property described in Exhibit "C" attached hereto (hereinafter referred to as "Annexation Property"), includ- ing all Improvements (as defined below) constructed thereon, all or any portion of which may be annexed into the Project by Declarant, as set forth in the Article herein entitled "Annexation of Addi- tional Property." Section 2. "Architectural Review Committee" shall mean and refer to the architectural committee created pursuant to the Article herein entitled "Architectural Review - Approval." Section 3. "Architectural Guidelines" shall, if used herein, mean and refer to those certain architectural standards, landscape standards and other general policies, procedures and criteria which may be adopted by the Board pursuant to this Declaration for use by the Architectural Review Committee in reviewing plans and specifications for proposed Improvements to an Owner's Lot. The Architectural Guidelines are general guidelines and may be amended from time to time by a majority of the Board. A copy of the Architectural Guidelines may be obtained from the Architectural Review Committee. Section 4. "Articles" shall mean and refer to the Ar- ticles of Incorporation of The Estates at La Quinta Community Association, as filed in the Office of the Secretary of State of the State of California, as such Articles may be amended, from time to time. Section 5. "Assessments" shall be used as a generic term which shall mean and refer to the following: (a) "Regular Assessment" shall mean and refer to an annual charge against each Owner and his respective Lot rep- resenting a portion of the Common Expenses of the Association; (b) "Compliance Assessment" shall mean and refer to the charge against an Owner representing the costs incurred by 18324.283-14780.FCM 091307 - 3 - the Association in the repair of any damage to the Common Area or any Improvements which are maintained by the Association as part of a Special Benefit Area for which such Owner (or any member of his/her family, or his/her guests, invitees, tenants or lessees) was responsible, the costs incurred by the Association in bringing such Owner and his Lot into compliance with this Declaration, or any amount due the Association based upon disciplinary proceedings against an Owner in accordance with this Declaration, and/or any amount due the Association to reimburse the Association for administrative costs attrib- utable to an Owner as provided herein; (c) "Special Assessment" shall mean and refer to the charge against an Owner and his respective Lot repre- senting a portion of the cost of reconstructing any damaged or destroyed portion or portions of the Common Area, of con- structing or installing any capital improvements to the Common Area, or of taking any extraordinary action for the benefit of the Common Area (e.g., including but not limited to funding the reserve accounts) or the membership of the Association pursuant to the provisions of this Declaration; and (d) "Special Benefit Assessment" shall mean and refer to a charge levied by the Association against an Owner and his respective Lot to cover the expenses incurred by the Association in the operation, maintenance, repair and/or funding of reserves for a portion of the Project designated by Declarant or the Association as a "Special Benefit Area," which expenses are allocable only to the Owners and their Lots within such an Area. As of the recordation of this Declaration, no Special Benefit Areas have been designated by Declarant. Section 6. "Association" shall mean and refer to The Estates at La Quinta Community Association, a California nonprofit, mutual benefit corporation, in which all Owners shall have a mem- bership interest as more particularly described hereinbelow, pro- vided that membership shall be limited to Owners. Section 7. "Association Walls" shall mean and refer to those certain walls and pilasters which were originally constructed by Declarant on the Common Area and/or a Lot which are designated herein, by the Declarant, by the Board, or in a Notice of Annexation by Declarant to constitute Association Walls, and which will be maintained in whole or in part by the Association as provided herein. The Association Walls included in Phase 1 of the Project are generally depicted on Exhibit "D" attached hereto. The Association Walls applicable to a specific later Phase may be depicted on an Exhibit attached to the Notice of Annexation recorded on such Phase. All depictions of the Association Walls 18324.283-14780.FCM 091307 - 4 are for illustrative purposes only, and the "as -built" condition shall be controlling. Maintenance of walls in the Project, unless identified as an Association Wall on an exhibit to this Declaration or a Notice of Annexation, or by the Board, shall be maintained as a party wall in accordance with applicable standards under California law; however the structural integrity thereof shall be that of the Owner, not the Association, unless otherwise agreed to by a majority vote of the members of the Board. Section 8. "Best Management Practices or BMPs" shall mean and refer to those certain structural, treatment control, and non-structural water quality management practices set forth in, or otherwise required pursuant to, the Water Quality Management Plans ("WQMP") approved for or applicable to the Project. The structural and treatment control Best Management Practices may include, without limitation, landscape planting, hillside landscaping, roof runoff controls, efficient irrigation technology, slope and channel protection measures, storm drain signage, trash storage areas, litter control requirements, in -flow based treatment control BMPs (e.g., vegetated buffer strips, vegetated swales, multiple systems, bioretentions, and hydrodynamic separation systems), volume based treatment control BMPs (e.g., wet ponds, constructed wetlands, extended detention basins, water quality inlets, reten- tion/irrigation, infiltration basins, infiltration trenches, media filters, and manufactured proprietary devices), detention basins, retention basins, debris basins, "V" ditches, bench drains, catch basins, catch basin media filters, fossil filters, inlet trash racks, drainpacs and other storm drain filtration devices, energy dissipaters, culverts, pipes, and related storm drain and water quality facilities constructed in the Project. The non-structural Best Management Practices generally require the Association and the Owners and other residents within the Project to be aware of the sensitive natural environment surrounding the Project and to take appropriate actions to control runoff from the Project. With respect to the Association, the non-structural Best Management Practices may include: (i) providing informational materials to the Owners and other residents within the Project regarding general good housekeeping practices for protection of storm water quality; (ii) restricting certain activities addressed in the informational materials to protect the quality of water entering the storm drain system; (iii) managing the landscaping on the Common Area, including, without limitation, using fertilizers and pesticides in accordance with the "Management Guidelines for Use of Fertilizers and Pesticides" which is included, if applicable, in the appendix to the Water Quality Management Plans; (iv) performing on a regularly scheduled basis maintenance consisting, at a minimum, of litter control, emptying of common trash receptacles and sweeping of dumpster enclosures; (v) inspecting and cleaning the catch basins located on the Common Area; and (vi) sweeping any on-site private paved areas on a regular basis and prior to the rainy 18324.283-14780.FCM 091307 - 5- season (i.e., prior to October 15th of each year). With respect to the Owners and other residents within the Project, the non- structural Best Management Practices may include, among other things, restricting certain activities to protect the quality of water entering the storm drain system (e.g., prohibiting the disposal of motor oil, paint products, car detergents and other pollutants into the storm drains in the Project). The Best Manage- ment Practices are designed and intended to control runoff and must be implemented by the Association, and the Owners and other residents within the Project. The Best Management Practices may be modified from time to time by the Declarant or any public agency having jurisdiction regarding water quality for runoff waters from the Project in order to control runoff as the Project develops and runoff conditions change. Compliance by the Association and the Owners with the Best Management Practices, as they may be modified from time to time, may be monitored and enforced by any public agency having jurisdiction regarding water quality for runoff waters from the Project, including, without limitation, the City, County, Regional Water Quality Control Board, and State Water Resources Board. Section 9. "Board" shall mean and refer to the Board of Directors of the Association, elected in accordance with the By - Laws of the Association and this Declaration. Section 10. "By -Laws" shall mean and refer to the By - Laws of the Association which have been, or will be, adopted by the Board, as such By -Laws may be amended, from time to time. Section 11. "City" shall mean and refer to the City of La Quinta, California, and its various departments, divisions, employees, and representatives. Section 12. "Common Area" is used herein as a generic term to mean and refer to: (a) all real and personal property, and all Improvements thereon, which are owned by the Association; and (b) all real property, and Improvements thereon, over which the Association has an easement (e.g., easements for the landscaping, irrigation, and maintenance of front'yard areas and parkways and medians along certain streets [see Exhibit "A"]), lease and/or which the Association is otherwise responsible pursuant to this Declaration to manage, control and/or maintain for the common use, benefit and enjoyment of all Owners in the Project. If the Project is completed as currently planned, the Common Area shall include, without limitation, easements for the landscaping, irrigation, and maintenance of front yard areas, parkways, medians, and other landscaped areas along certain streets within the Project, easements for the maintenance and repair of Association Walls (e.g., for Phase 1, see Exhibit "D" attached hereto), recreational facilities, Project entry monumentation, private streets, guard 18324.283-14780.FCM 091307 - 6 house, tower, and entry gates, storm water retention basins (e.g., Lots H and I of Tract 30560), once same have been annexed into the Project), and such other Improvements as may be designated, from time to time, in this Declaration (as same may be amended), by the Board, and/or set forth in one (1) or more Notices of Annexation recorded in the Office of the County Recorder, pursuant to the Article herein entitled "Annexation of Additional Property." Generally, the Common Area in Phase 1 of the Project consists of that certain real property described in Paragraph B of the recitals and in applicable Exhibits attached hereto, together with the Improvements (as that term is defined herein) and easements refer- enced herein. Section 13. "Common Expenses" shall mean and refer to the actual and estimated costs to be paid by the Association for the following: (a) owning, maintaining, managing, operating, painting, repairing, and replacing the Common Area; (b) managing and administering the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and any Association employees; (c) providing utilities and other services to the Common Area; (d) providing insurance as provided for herein; (e) paying that portion of any Assessment attributable to Common Expenses not paid by the Owner responsible for payment; (f) paying taxes for the Association; (g) water supply costs and costs and expenses for the emergency pumping reserve associated with the Lake Management Plan applicable to the Project and/or required by the Entitlements from City; and (h) paying for all other goods and services designated by, or in accordance with, other expenses incurred by the Association for the benefit of all Owners, and reasonably required for the Association to perform its powers and duties as set forth in this Declaration. Additionally, the Common Expenses shall include adequate reserves, as the Board shall determine to be appropriate, for the repair and replacement of those elements of the Common Area which must be repaired or re- placed on a periodic basis, rather than on a regular annual basis. Section 14. "County" shall mean and refer to the Coun- ty of Riverside, California, and its various departments, divisions, employees, and representatives. Section 15. "Declarant" shall mean and refer to WL CANYON RIDGE ASSOCIATES, LLC, a Delaware limited liability company, and its successors, and to any person or entity acquiring all of Declarant's interest in the Project (including all of Declarant's rights and obligations as created and established herein) pursuant to a written assignment from Declarant which is recorded in the Office of the County Recorder. Section 16. "Declaration" shall mean and refer to this Declaration of Covenants, Conditions and Restrictions, and Reser- 18324.283-14780.FCM 091307 - 7- vation of Easements, and to all amendments to this Declaration as may be recorded, from time to time, in the Office of the County Recorder, in accordance with Section 1351(h) and Section 1353 of the California Civil Code. Section 17. "Dispute" shall have the meaning set forth in Exhibit "E" attached hereto and incorporated by reference. Section 18. "DRE" shall mean and refer to the Depart- ment of Real Estate of the State of California, which administers the sale of subdivided lands pursuant to Sections 11000, et sec., of the California Business and Professions Code, or any similar California statute hereinafter enacted. Section 19. "Entitlements From City" shall mean any and all agreements, building permits and related permits, condi- tions of approval, and other documents, instruments or similar writings involving the City which regulate or relate to utilization of real property in the Project. Section 20. "Express Limited Warranty" shall mean and refer to the express written limited warranty, if any, that may be provided to an initial Owner at the time of such Owner's acquisition of a Lot (e.g., Homebuilder's Limited Warranty). Section 21. "FHLMC" shall mean and refer to the Federal Home Loan Mortgage Corporation (The Mortgage Corporation) created by Title III of the Emergency Home Finance Act of 1970, as amended, from time to time, including any successors thereto. Section 22. "FNMA" shall mean and refer to the Federal National Mortgage Association, a government-sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, as amended, from time to time, including any successors thereto. Section 23. "GNMA" shall mean and refer to the Govern- ment National Mortgage Association administered by the United States Department of Housing and Urban Development, including any successors thereto. Section 24. "Improvements" shall mean and refer to all structures and appurtenances thereto of every kind, including, but not limited to, Residences, street lights, buildings, awnings, shades, screens, screen doors, skylights, side yard and rear yard walls (wood fences are prohibited in the Project), mail kiosks, swimming pools, spas, garages, pavement, driveways, walkways, parking areas, perimeter walls, retaining walls, street trees, private storm drains, flood walls, flag poles, monument signs, patios, grading of a Lot or disturbing the existing grade in any 18324.283-14780.FCM 091307 - 8 manner, irrigation equipment and all related facilities, exterior air conditioning units, solar panels and related facilities, greenbelts, drainage swales, streetscapes, antennas and related fa- cilities, exterior lighting and any landscaping which, if left in its natural state, would grow to a height in excess of twenty-five feet (25' ) . Improvements shall also mean and refer to all additions and/or modifications to the exterior of any Residence, including, but not limited to, (a) painting the exterior of any Residence or other structure, (b) changing the roofing material on any Residence, and/or (c) building, constructing, installing, altering or planting, as the case may be, any spas, patio covers, patio slabs, balcony covers, decks, gazebos, stairs, screening walls, shades, awnings, screen doors, exterior doors, skylights, solar heating panels, air conditioning, and/or water softening or refining fixtures or systems. Section 25. "Include, Including" (whether capitalized or not) shall mean "includes without limitation" and "including without limitation," respectively. Section 26. "Local Government Agency." Local Govern- ment Agency means the City, the County, a public school district, and any other local or municipal government entity or agency, including, without limitation, any community service area, special assessment district, maintenance district or community facilities district. Section 27. "Lot" shall mean and refer to a plot of land within the Project as depicted and/or described on a recorded subdivision map, tract map or parcel map (as such plot of land may be modified by a recorded lot line adjustment) , and to all Improve- ments, including the Residence, constructed thereon. Only those plots of land which are designed and intended for the construction of a Residence and ownership by an individual Owner shall be deemed "Lots." "Lot" shall not mean or refer to any plot of land owned in fee by the Association as Common Area. Section 28. "Maintain, Maintenance" (whether capital- ized or not) shall mean "inspect, maintain, repair and replace" and "maintenance, repair and replacement," respectively; provided, however, that "maintain" or "maintenance" shall not include inspection, repair and replace(ment) where the context or specific language of this Declaration provides another meaning. Section 29. "Maintenance Guidelines; Maintenance Manual; Maintenance Recommendations" Maintenance Guidelines means any current written guidelines (e.g., First Year Customer Care Program Performance Standards, Maintenance of Your House Recommen- dations, Natural Occurrences, Suggested Maintenance Schedules, etc.) setting forth procedures and standards for the maintenance 18324.283-14780.FCM 091307 - 9- • and operation of a Lot/Residence and/or Common Area Improvements that may be provided to an Owner and/or the Association by Declarant, or by any governmental agency or for the maintenance of a Lot/Residence and/or other Improvements Declarant has constructed on or in the Project. Maintenance Guidelines include any Mainte- nance Manual and Maintenance Recommendations prepared at Declarant's direction, and all recommended inspections, schedules and maintenance activities for components of the Common Area and/or a Lot/Residence. Section 30. "Member" shall mean and refer to every person or entity who holds membership in the Association, as more particularly set forth in the Article herein entitled "The Asso- ciation," and shall be synonymous with the term "Owner." Section 31. "Mortgage" shall mean and include any mortgage or deed of trust, or other conveyance of a Lot to secure the performance of an obligation, which conveyance will be recon- veyed upon the completion -of such performance, including an in- stallment land sales contract (as defined in Sections 2985 through 2985.6 of the California Civil Code, as same may be amended, from time to time). The term "Deed of Trust," when used herein, shall be synonymous with the term "Mortgage." Section 32. "Mortgagee" shall mean and refer to a per- son or entity to whom a Mortgage is made, and shall include the beneficiary of a Deed of Trust or the vendor under an installment land sales contract, as the case may be, and the assignor of a Mortgagee, beneficiary or vendor. Section 33. "Mortgagor" shall mean and refer to a per- son or entity who mortgages his or its property to another, i.e., the maker of a Mortgage, and shall include the trustor of a Deed of Trust and the vendee under an installment land sales contract. Section 34. "Notice and Hearing" shall mean and refer to written notice and a hearing before the Board or the Architec- tural Review Committee of the Association, or other tribunal created by the Board in the manner provided in the By -Laws, at which the affected Owner shall have an opportunity to be heard in the manner provided herein and in the By -Laws. Section 35. "Notice of Annexation" shall mean and refer to that certain instrument recorded by Declarant utilized to annex all or any portion of the Annexation Property into the Project, in accordance with the provisions of this Declaration, thereby subjecting said subsequent Phase to the provisions of this Declaration and to the jurisdiction of the Association. 18324.283-14780.FCM 091307 _10- Section 36. "Owner" shall mean and refer to the record Owner, or Owners if more than one (1), or the purchaser under a conditional sales contract of fee title to, or an undivided in- terest in, any Lot in the Project. The term "Owner" shall include the Declarant, the vendee under an installment land sales contract (as described in Sections 2985 through 2985.6 of the California Civil Code, as same may be amended, from time to time) and the holder of a leasehold estate having a term of twenty (20) or more years, including renewal periods. The foregoing is not intended to include persons or entities who hold an interest in a Lot merely as security for the performance of an obligation. Section 37. "Phase" shall mean and refer to: (a) the Lots and the Common Area; and (b) one (1) or more Lots within the Annexation Property and/or Common Area which are annexed to the Project by the recordation of a Notice of Annexation in the Office of the County Recorder and for which a Final Subdivision Public Report has been issued by the DRE. Section 38. "Project" shall mean and refer to the Property and to all Improvements, including the Residences, con- structed thereon and the Common Area and all Annexation Property which is annexed and made subject to this Declaration in accordance with the applicable provisions of this Declaration. Section 39. "Property" shall mean and refer to all of that certain real property described in Paragraphs A and B of the recitals hereinabove. Section 40. "Residence" shall mean and refer to the individual dwelling and the related Improvements which are con- structed upon a separate Lot and which are designed and intended for use and occupancy as a residence. Section 41. "Rules and Regulations" shall mean and re- fer to the Rules and Regulations adopted by the Board pursuant to the By -Laws and this Declaration, as they may be amended, from time to time. Section 42. "Special Benefit Area" shall mean and refer to any portion of the Project designated herein, by the Board, or in a Notice of Annexation as a "Special Benefit Area" or which is identified or referred to as an area or facility benefit- ting primarily the Owners within such an area. Section 43. "VA FHA" shall mean and refer to the United States Veterans Administration and/or Federal Housing Ad- ministration, including the department or agency of the United States government as shall succeed to the VA and/or FHA. 18324.283-14780.FCM 091307 - 11 - Section 44. "Water Quality Management Plans" shall mean and refer to all applicable plans and requirements for the management of storm water at the Project, including, without limitation, any applicable National Pollutant Discharge Elimination System ("NPDES") permit requirements, Standard Urban Storm Water Mitigation Plan ("SUSMP"), Storm Water Pollution Prevention Plan ("SWPPP"), Water Quality Management Plan ("WQMP"), Drainage Area Management Plan ("DAMP"), Local Implementation Plan ("LIP"), and other storm water quality management plans that may be prepared for the Project in compliance with applicable federal, state and local laws and approved by the applicable Public Agencies. The Water Quality Management Plans address water runoff generated by the residential areas and other development Improvements within the Project and will be monitored by various Public Agencies (e.g., the Regional Water Quality Control Board and the City). The Water Quality Management Plans contain, among other things, certain Best Management Practices that must be followed by the Association, the owners and/or other residents within the Project. The Water Quality Management Plans and the related Best Management Practices may be modified at any time by the Declarant and/or the Public Agencies having jurisdiction over such matters. Section 45. Interpretation. (a) General Rules. This Declaration shall be liberally construed to effectuate its purpose of creating a uniform plan for subdividing, maintaining, improving and selling the Lots. As used in this Declaration, the singular includes the plural and the plural the singular. The mascu- line, feminine and neuter each includes the other, unless the context dictates otherwise. (b) Articles. Sections and Exhibits. The Article and Section headings are inserted for convenience only and may not be considered in resolving questions of interpretation or construction. Unless otherwise indicated, any references in this Declaration to articles, sections or exhibits are to Articles, Sections and Exhibits of this Declaration. Except as may otherwise be provided herein, all exhibits attached to this Declaration are incorporated in this Declaration by this reference. The locations and dimensions of any Improvements depicted on the Exhibits attached hereto and to any Notice of Annexation are approximate only, and the as -built location and dimension of any such Improvements shall control. (c) Priorities and Inconsistencies. If there are conflicts or inconsistencies between this Declaration and the Articles, Bylaws, or Rules and Regulations, then the provi- sions of this Declaration shall prevail. 18324.283-14780.FCM 091307 -12- (d) Severability. The provisions of this Declaration are independent and severable. A determination of invalidity, partial invalidity or unenforceability of any one (1) provision of this Declaration by a court of competent jurisdiction does not affect the validity or enforceability of any other provisions of this Declaration. (e) Statutory References. All references made in this Declaration to statutes are to those statutes as currently in effect or to subsequently enacted replacement statutes. Section 46. Application of Definitions. The aforesaid definitions shall be applicable to this Declaration and to any supplements or amendments hereto, including, but not limited to, any Notices of Annexation filed or recorded pursuant to the pro- visions of this Declaration, unless the context shall prohibit such application. ARTICLE II GENERAL PLAN OF DEVELOPMENT Section 1. Introduction. The Declarant has designed the Project as a multi -phase planned residential community, which, if completed as proposed, may consist of seventy-four (74) Resi- dences, together with various Common Area improvements and related amenities. The Project will be developed in a series of phases in accordance with the general plan of development submitted to and approved by the City and the DRE. The Association will maintain the Common Area and will be the management body for the Project, as provided herein. Section 2. Rights and Obligations of Owners. Each Owner of a Lot in the Project shall automatically become a Member of the Association and shall be obligated for the payment of Assessments to the Association. Subject to the provisions of this Declaration which reserve rights in favor of the Declarant, each Owner, his family members, tenants and invitees will be entitled to the use and enjoyment of the Common Area of the Project. Section 3. Description of Common Area. The Common Area in Phase 1 is planned to initially consist generally of the Property, easements, and improvements described in Recital B and/or depicted on applicable Exhibits attached hereto. As future phases are annexed to the Property, if ever, the Common Area will expand as identified in the Notices of Annexation recorded in accordance with the requirements herein. Each Owner of a Lot in the Project shall have a nonexclusive easement appurtenant to his/her Lot for 18324.283-14780.FCM 091307 -13- use and enjoyment of all Common Area within the Project, in accord- ance with the terms and provisions of this Declaration. Subject to applicable restrictions set forth herein and in any Notice of Annexation, the Association shall be responsible for the ownership, if applicable, maintenance, and operation of all Common Area within the Project. Section 4. Membership in the Association. As more particularly set forth in this Declaration, each Owner of a Lot in the Project shall automatically become a member of the Association, and shall be obligated for the payment of Assessments to the Association. In addition, each Owner, his family, members, lessees, tenants, guests and invitees, will be entitled to the use and enjoyment of the Common Area within the Project, in accordance with this Declaration, the By -Laws and Rules and Regulations adopted by the Board. Section 5. Annexation of Subsequent Phases. At such time as subsequent Phases are developed, if ever, Declarant shall annex such Phases to the Project in accordance with the provisions herein, including the Article entitled "Annexation of Additional Property." Section 6. Declarant's Use of Utilities. For as long as Declarant owns a Lot in Tract No. 35060 and/or the Annexation Property, Declarant hereby reserves unto itself, and its successors and assigns, together with the right to grant and transfer all or a portion of the same, easement rights to use any private utilities within the Project for, including, but not limited to, construc- tion, access and connection of utilities by Declarant for purposes of developing the real property comprising the Project, including the Annexation Property. Section 7. Development Control. In order that the Project be completed and established as a planned residential community, Declarant shall have the sole discretion and control over all aspects of construction of Residences and Improvements owned by itself, and over the selling and marketing of Lots in the Project. Further, Declarant shall have the sole discretion and control to: (a) Install, construct, modify, alter or remove any Improvements in the Project owned or controlled by Declarant; (b) Redesign or otherwise alter the style (e.g., architectural), size (e.g., adding additional square footage or reducing the square footage of the Residences), color or appearance of any Improvements in any portion of the Project owned or controlled by Declarant; 18324.283-14780.FCM 091307 -14- (c) Construct such additional Improvements on any portion of the Project owned or controlled by Declarant; (d) Subdivide, re -subdivide, grade or regrade any portion of the Property and/or Annexation Property owned or controlled by Declarant; and/or (e) Otherwise control all aspects of designing and constructing the Improvements in the Project, and regulating the marketing of Lots in the Project and/or Annexation Property subject to approval by the Declarant. Declarant hereby reserves unto itself, and its successors and assigns, together with the right to grant and transfer all or a portion of the same, a nonexclusive easement for ingress and egress on, over and across the Project as necessary to construct Improvements, and further reserves for itself the right, (a) until all Lots in Tract No. 35060 and the Annexation Property are initially sold (and escrows have closed), or (b) twenty-five (25) years from the recordation of this Declaration, whichever occurs first: (i) A nonexclusive easement for ingress and egress on, over and across the Project as necessary to construct the Lots, Residences, and all other Improvements; (ii) The exclusive right to maintain one (1) or more sales office(s), construction trailer(s), model complex(es), interior design and decorator center(s), construction parking areas, temporary utility facilities and/or lines, and parking area for employees, agents and prospective buyers; (iii) The exclusive right to place reasonable signs, flags, banners, billboards or other forms of advertising on any portion of the Project owned or controlled by Declarant and/or Common Area (specifically including the Project entry area), as Declarant deems necessary, irrespective of size, color, shape or materials of such items, except to the extent that the exercise of said exclusive right conflicts with any provision of the City's Municipal Code or other applicable governmental regulations; (iv) A nonexclusive right to utilize the Common Area and any unassigned open parking spaces in connection with its program for the sale or leasing of Lots in the Project; (v) The right to determine, so long as Declarant owns an interest in the Project or any portion of the Annex- ation Property, the hours of operation of the Project entry gates, if any, except to the extent that the exercise of said 18324.283-14780.FCM 091307 _15- right unreasonably interferes with any Owner's ingress, egress rights in connection with the Project; (vi) The right to install, place, replace, con- struct, reconstruct, modify or remove any Improvement from any Lot owned by Declarant, as Declarant may, in its sole discre- tion, deem appropriate; (vii) The right to conduct any commercial activity upon any Lot owned or controlled by Declarant which reasonably relates to the development, marketing, leasing or sale of the Lots or other property in the Project; and (viii) The right to utilize the Common Area in the Project and exclude Owners and their guests so long as such exclusion is not unreasonable, for marketing, sales and promotional activities which relate to the leasing or sale of the Lots or other property in the Project. The Declarant agrees to pay any and all maintenance or repair costs associ- ated with the use of the Common Area for marketing purposes and to obtain a reasonable amount of liability insurance naming the Association as an additional insured during such use of the Common Area. Each Owner hereby grants, upon acceptance of his or her deed to his or her Lot, 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 Declaration. Section B. Non -Liability of Declarant. The purpose of this Article is merely to describe the proposed general plan of development for the Project. Without limiting the generality of the foregoing, nothing in this Section or elsewhere in this Declaration shall limit the right of Declarant to complete construction of the Project, to alter same or to construct such additional Improvements as Declarant shall deem advisable prior to the completion and sale of all Lots in the Project. Declarant may assign any or all of its rights under this Declaration to any successor to all or any part of Declarant's interest in the Project by an express written as- signment recorded in the Office of the County Recorder. 18324.283-14780.FCM 091307 -16- ARTICLE III RESERVATION OF EASEMENTS AND OTHER PROPERTY RIGHTS IN THE COMMON AREA Section 1. Owners' Easements. Every Owner shall have a nonexclusive right and easement of access and use in and to the Common Area, subject to the limitations and restrictions set forth in this Declaration or in any recorded Notice of Annexation (e.g., access to certain slopes, etc.). Said right and easement shall be appurtenant to and shall pass with title to every Lot, subject to the limitations set forth herein, including in Section 2 below. Section 2. Limitations on Owners' Easement Rights. The rights and easements of access, use and enjoyment set forth in Section 1 hereinabove shall be subject to the provisions of this Declaration, including, but not limited to, the following: (a) The right of the Association to reasonably limit the number of guests of Owners using the Common Area; (b) The right of the Association to establish and enforce reasonable Rules and Regulations pertaining to the use of the Common Area; (c) The right of the Association, in accordance with its Articles, By -Laws and this Declaration, to borrow money with the assent of sixty-seven percent (67%) of the voting power of the Association, excluding Declarant, and/or to mortgage, pledge, deed in trust or otherwise hypothecate any or all of its real or personal property as security for money borrowed or debts incurred, for the purpose of improving or repairing the Common Area and related facilities; (d) The right of the Association to suspend the voting rights and rights and easements of use and enjoyment of the Common Area of any Member, and the persons deriving such rights and easements from any Member for any period during which any Assessment against such Member's Lot remains unpaid and delinquent (except such rights as are reasonably required to access said Member's Residence); and after Notice and Hearing, to impose monetary penalties or suspend such use rights and easements for a period not to exceed thirty (30) days for any violation of this Declaration or Rules and Regulations, it being understood that any suspension for either nonpayment of any Assessments or breach of such re- strictions shall not constitute a waiver or discharge of the Member's obligations to pay Assessments as provided herein; 18324.283-14780.FCM 091307 -17- (e) Subject to the terms and provisions of the Article herein entitled "Mortgagee Protection," the right of the Association to dedicate or transfer easements over all or any part of the Common Area to any public agency, authority, entity, or utility for such purposes and subject to such conditions as may be agreed to by the Owners. No such dedica- tion or transfer shall be effective unless: (1) an instrument approving said dedication or transfer is signed by Owners representing sixty-seven percent (670) of the voting power of the Association, excluding Declarant, and recorded in the Office of the County Recorder, and (2) a written notice of the proposed dedication or transfer is sent to every Owner not less than fifteen (15) days nor more than thirty (30) days in advance; provided, however, that the dedication or transfer of easements for utilities or for other public purposes consis- tent with the intended use of the Common Area shall not require the prior approval of the Members of the Association; (f) The right of Declarant (and its sales agents, representatives, customers and prospective purchasers) to the nonexclusive use of the Common Area without charge for sales, display access and exhibit purposes related to selling, marketing, showing and otherwise disposing of Lots in the Project, which rights Declarant hereby reserves; provided, however, such use shall cease with respect to only the applicable party upon the date that Declarant no longer owns any Lot in the Project, including the Annexation Property. In addition, such use shall not unreasonably interfere with the rights of enjoyment of other Owners as provided herein; (g) The right of the Association, acting by and through its Architectural Review Committee, to enact uniform and reasonable architectural standards; (h) The right of Declarant to designate additional Common Area, pursuant to terms of the Article herein entitled "Annexation of Additional Property"; (i) The right of the Association to perform and exercise its duties and powers as set forth herein; (j) Other rights of the Association, the Architec- tural Review Committee, the Board, the Owners, and Declarant with respect to the Common Area as may be provided for in this Declaration or recorded Notice of Annexation; (k) The right of Declarant to grant and transfer easements on, over and across the Project, including the Annexation Property, for the development, installation, construction and maintenance of electric, telephone, cable 18324.283-14780.FCM 091307 -18- television, water, gas, sanitary sewer lines and drainage facilities, as shown on any recorded subdivision map covering the Project and as may be reasonably necessary for the proper maintenance and/or development of the Project, or conveyance of Lots and/or Common Area; (1) Any limitations, restrictions or conditions affecting the use, enjoyment or maintenance of the Common Area imposed by Declarant, or by the City, or other governmental agency having jurisdiction to impose any such limitations, restrictions or conditions, including, but not limited to, the rights of the City or such other governmental agency having jurisdiction to use their vehicles or appropriate equipment over those portions of the Common Area designed for vehicular movement to perform municipal functions or emergency or essential public services; and (m) Any limitations or restrictions on an Owner's right to use his/her Lot so as not to interfere with any and all street light standards, mailboxes, improvement locations, and sidewalk, parkway, and utility easements affecting such Owner's Lot. Section 3. Easements for Common Walls. There is hereby created, established and granted an easement appurtenant to the real property in the Project for the placement of all common walls, where such walls were originally installed by Declarant, regardless of whether such walls are located precisely upon the boundary separating two (2) residential Lots or a residential Lot and Common Area. Those Owners who have a common wall which adjoins their Lots and effectively creates the boundary line between such Lots (including the Association and its Common Area) shall equally have the right to use such wall and each shall have the exclusive right to the use of the interior surface of the wall facing his Residence or Common Area. Neither Owner shall drive nails, screws, bolts or other objects more than halfway through any common wall, interfere with the adjacent Owner's use and enjoyment of the common wall, or impair, in any way, the structural integrity of the common wall. In the event that any portion of such wall, except the interior surface of one (1) side, is damaged or injured from any cause, other than the act or negligence of either party, it shall be repaired or rebuilt at their joint expense. Wood fences are prohibited within the Project. Section 4. Delegation of Common Area Use Rights. Any Owner who resides within the Project may delegate, in accordance with the By -Laws, his rights of use and enjoyment to the Common Area to the members of his immediate family and any other persons residing within his Residence. In the event an Owner has rented or leased his Residence, his rights of use and enjoyment to the Common 18324.283-14780.FCM 091307 _19- Area shall be automatically delegated to his tenants or lessees for the duration of their tenancy, and the Owner shall forfeit any rights of use and enjoyment to the Common Area for the duration of such tenancy, except those rights of ingress and egress which are reasonably necessary to carry out the appropriate duties of a landlord. In the event of a conditional sales contract, the seller under the contract shall be deemed to delegate his rights of use and enjoyment to the Common Area to the purchaser under the contract. Section 5. Easements for Community Cable Television, Telecommunication Systems and Alarm System Cabling. There are hereby reserved for the benefit of Declarant and its successors and assigns with respect to property.owned by Declarant, nonexclusive easements for ingress, egress and access on, over, under and across the Project for purposes of installation, operation, maintenance, repair, inspection, replacement and removal of transmission lines and other facilities and equipment for (a) a community antenna television system, (b) telecommunications and fiber optics systems, and (c) alarm system cabling. Such easements shall be freely transferable to any other person(s) or entity(ies) for the purpose of providing any or all of such services. The exercise of all rights reserved hereunder shall not unreasonably interfere with the Owners' use and enjoyment of the Project. Section 6. Easements for Unintentional Encroachments. Declarant reserves for its benefit, and the benefit of the Owners, and hereby create, establish and grant a nonexclusive easement appurtenant to each Lot on, over and across those portions of any adjacent Lot (whether a residential Lot or a Common Area Lot), not to exceed one foot (1'), for the encroachment by any foundations and footings, and not to exceed three feet (31) for eaves or other overhangs, wing walls and/or chimneys existing as of the date that escrow is initially closed for the sale of said Lot from Declarant to an Owner. Additionally, there is hereby created, established and granted nonexclusive easements appurtenant to any Lot on, over and across those portions of any such adjacent Lot (whether a residential Lot or a Common Area Lot), not to exceed one foot (1'), for the encroachment by any Improvement resulting from any subsequent settling or shifting of any Improvements. All of the aforesaid encroachments shall be measured at the point of en- croachment along a line which is perpendicular to the common property line between the affected Lots. Declarant further reserves reciprocal easements for utility services and repairs, replacement, and maintenance of the same over the Lots for the benefit of the Owners. Use of the foregoing easements may not unreasonably interfere with each Owner's use and enjoyment of the Owner's respective Lot. 18324.283-14780.FCM 091307 - 2 Section 7. Easements for Utilities. The rights and duties of the Owners of Lots within the Project with respect to sanitary sewer, storm drain, water, electricity, gas, television cable (or CATV service) and telephone lines, and other facilities, shall be governed by the following: (a) Each respective utility company shall maintain all utility facilities and connections on the Project owned by such utility company; provided, however, that if any company shall fail to do so, it shall be the obligation of each Owner to maintain those facilities and connections located upon such Owner's Lot or provide service to only such Owner's Lot, and it shall be the obligation of the Association to maintain those facilities and connections located upon and which provide service to only the Common Area; (b) Wherever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project and it becomes necessary to gain access to said connections, cables and/or lines through a Lot owned by someone other than the Owner of the Lot served by said connections, cables and/or lines, the Owner of the Lot served by said connections, cables and/or lines shall have the right, and is hereby granted an easement to the full extent necessary therefor, to enter upon such other Lot or to have the utility companies enter upon such other Lot to repair, replace and generally maintain said connections, cables and/or lines. In the event that any damage shall be proximately caused by such entry, said Owner or utility company shall repair the same at its respective expense; (c) Whenever sanitary sewer, water or gas connec- tions, television cables, electricity or telephone lines are installed within the Project, and said connections, cables and/or lines serve more than one (1) Lot, the Owner of each Lot served by said connections, cables and/or lines shall be entitled to the full use and enjoyment of such portions of same as service his Lot; (d) In the event of a dispute between Owners re- specting the repair or rebuilding of the aforesaid connec- tions, cables and/or lines, or the sharing of the cost thereof, said Owner shall first contact the appropriate utility company or applicable private purveyor in an effort to resolve the dispute; provided, however, if the dispute remains unresolved, upon the written request of one (1) of such Owners addressed to the Association, the matter shall be submitted to the Board who, after Notice and Hearing in which the Owner shall have an opportunity to be heard, shall decide the 18324.283-14780.FCM 091307 -21- • dispute, and the decision of the Board shall be final and conclusive on the Owners; (e) Easements over the Project for the installation and maintenance of electric and telephone lines, water, gas, drainage and sanitary sewer connections and facilities, and television antenna cables and facilities, all as shown on the recorded map of the Project, or otherwise of record, and/or as may be hereafter required or needed to service the Project, are hereby reserved by Declarant, together with the right to grant and transfer the same. (f) Each Lot granted to an Owner is subject to all easements for utility installation and maintenance, storm drains and other purposes, as more particularly shown on the recorded subdivision map(s) for the Project or otherwise of record or apparent. Any installation or construction of landscaping or structures within said easement areas may be done only in accordance with the terms, conditions and provisions of said easements. Notwithstanding that an Owner may install Improvements (including landscaping) within a utility easement area with the approval of the Architectural Review Committee, each Owner acknowledges that such Improve- ments (including landscaping) may, unless otherwise prohibit- ed, be removed by the respective utility company, private purveyor, or public agency to maintain, repair or replace any of the foregoing facilities without any liability to the Owner to repair or restore any Improvements (including landscaping); and (g) Utility services shall be installed and maintained underground, to the extent required by the City. As required by the City, any ground -mounted equipment located in view from any street or Common Area shall be screened by dense landscaping, of a sufficient height to fully screen such equipment above its horizontal plane. Section S. Easements for Maintenance of the Common Area. There is hereby created, established and granted a nonexclu- sive easement in favor of the Association for ingress, egress and access on, over and across those portions of the Lots in the Project as reasonably required by the Association to perform its maintenance obligations for the Project and Common Area, as more particularly set forth herein, including, but not limited to, the Articles entitled "Powers and Duties of the Association" and "Repair and Maintenance." In the event it becomes necessary for the Association to enter upon any Lot for purposes of: (a) main- taining the Project or the Common Area; or (b) bringing an Owner and/or his Lot into compliance with this Declaration in accordance with the provisions set forth herein, the Association, and its duly 18324.283-14780.FCM 091307 -22- authorized agents and employees, shall have the right, after reasonable notice to the Owner and at a reasonable hour of the day, to enter upon such Owner's Lot for the performance of such work. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by such entry, the Association shall repair the same at its expense. Notwithstanding the foregoing, no advance notice of entry is required in the event of an emergency or any regularly scheduled maintenance by the Association. Section 9. Easements for Clustered Mailboxes. In or- der to comply with the various requirements of the City and the United States Postal Service, kiosk mailboxes may be installed on certain Lots within the Project. Easements are hereby created, granted and established on and over the affected Lots, if any, in favor of all Owners in the Project and the United States Postal Service for delivery and deposit and retrieval of mail. Section 10. Easements Over Sidewalks and Parkways. Declarant hereby reserves, establishes, grants, and covenants for itself, its successors and assigns, that each and every Owner, his tenants and invitees shall have, appurtenant nonexclusive reciprocal easements on, over and across all sidewalks, if any, lo- cated on portions of Lots immediately adjacent to the streets within the Project for pedestrian access, use and enjoyment. Section 11. Easements for Drainage. There are hereby created, granted and reserved over each Lot in the Project ease- ments for drainage according to the patterns for drainage created by the as -built condition of the Project by Declarant, as well as according to the actual, natural and existing patterns for drainage (including, but not limited to, easements to accommodate any "cross -lot drainage," whereby water runoff from one [1] or more contiguous Lots [or Common Area] drains across another Owner's Lot, subject to the approval of any applicable governmental agencies that may be required). Each Owner covenants and agrees that he shall not obstruct or otherwise interfere with said drainage patterns of waters from adjacent Lots in the Project over his Lot, or, in the alternative, that in the event it is necessary and essential to alter said drainage pattern for the protection and use of his Lot, he will make adequate provisions for proper drainage and obtain all appropriate approvals from the respective governmental authorities, as applicable, and the Architectural Review Committee. Section 12. Easement for Area Drains. Declarant here- by establishes, grants, and reserves nonexclusive reciprocal easements over the Lots and Common Area for drainage purposes to accommodate the drainage system, including, but not limited to area drains and pipes, originally installed by Declarant. The Lot Owner 18324.283-14780.FCM 091307 -23- served by said drainage system shall be responsible to maintain and preserve said system in an operating condition to ensure proper drainage on, over, under, across and through the yard area of his or her Lot in accordance with the established drainage patterns created by the precise grading plans for the Project, and shall bear the cost of the maintenance, repair or replacement associated with the drainage system which affects his or her Lot. No Owner shall alter or remove the drainage system or modify the grade of the yard area in his or her Lot without the express written consent of the Architectural Review Committee and City, as applicable. In the event any portion of the drainage system is damaged, destroyed or not properly maintained, any Lot Owner affected by such drainage system may cause said repair, restoration or maintenance work to be completed and shall be entitled to recover the appropriate expenses from the Lot Owner responsible for such damage, destruction or need for maintenance. Notwithstanding the foregoing, if any portion of the drainage system is damaged or destroyed as a proximate result of any act or omission of any Owner, or any member of his family, guests, tenants, lessees and/or invitees (without regard to fault), such Owner shall immediately repair and/or rebuild such drainage system, and shall bear all of the costs thereof, including any cost and/or expense related to personal injury or property damage to any person, Residence, or Lot in the Project. Section 13. Easement for Driveways. Declarant hereby establishes, grants, and reserves nonexclusive reciprocal easements over portions of those Lots described and/or depicted on Exhibit "B" attached hereto and incorporated herein by reference, nonexclusive reciprocal easements for use, ingress, egress, access, repair, drainage or other purposes associated with a shared driveway as necessary to accommodate the shared driveway situation as originally constructed by Declarant (e.g., for vehicular and pedestrian ingress, egress and access, and for the installation, maintenance and repair of utilities [including, but not limited to, underground sewer laterals, water services, irrigation lines, storm laterals, and gas, electric, telephone and cable television services]), and, as incidental thereto, reasonable rights for the drainage of surface waters. Section 14. Easements for Construction and Sales. De- clarant hereby expressly reserve for itself, for the benefit of its agents, employees and contractors, and for the benefit of their successors and assigns, for a period of twenty-five (25) years from the recordation of this Declaration, or until all Lots in Tract No. 35060 and the Annexation Property are initially sold (and escrows closed), whichever occurs first, nonexclusive easements for access, ingress and egress in, on, over, and across the Project as necessary to construct the Improvements, and further reserves the exclusive right to carry on normal sales activity, including the operation of a models complex and sales office, and the display of 18324.283-14780.FCM 091307 -24- 0 • promotional signs and exhibits in connection with the sale or lease of Lots in the Project. Furthermore, nothing in this Declaration shall limit the right of the Declarant to establish additional licenses, easements, and rights-of-way in favor of Declarant, utility companies or others as may, from time to time, be reason- ably necessary for the development of the Project. The foregoing rights established and reserved by Declarant shall be subject only to the applicable regulations and requirements of the City. The foregoing rights of Declarant may be assigned to any successor to all or part of Declarant's interest in the Project by an express assignment recorded in the Office of the County Recorder. Section 15. Easements to the City. There is hereby created, reserved, and granted to Declarant, together with the right to grant and transfer same to the City, easements for ingress and egress over the Project for the purpose of permitting the City to perform various obligations and responsibilities within or adjacent to the Project. Section 16. Reservation of Construction Rights by De- clarant. In order that the Project be completed and established as a planned residential community, nothing in this Declaration shall limit the right of Declarant to: (a) complete construction of any Improvements in the Project; (b) redesign or otherwise modify the Improvements owned by Declarant; (c) construct such additional Improvements on any portion of the Project owned by Declarant; or (d) otherwise control all aspects of constructing the Project or selling or leasing of Lots in the Project. Furthermore, nothing in this Declaration shall limit the right of Declarant to establish additional licenses, easements and rights-of-way in favor of Declarant, utility companies or others as may, from time to time, be reasonably necessary for the development of the Project. The foregoing rights established and reserved by Declarant shall be subject only to the applicable regulations and requirements of the City and the DRE. The foregoing rights of Declarant may be assigned to any successor to all or part of Declarant's interest in the Property and Annexation Property by an express assignment re- corded with the County Recorder. Section 17. Title to the Common Area. (a) Transfer of Title to Common Area. Declarant hereby covenants, for itself and its successors and assigns, to convey to the Association fee simple title to, or a nonexclusive easement in, as appropriate, the Common Area, free and clear of all liens and encumbrances (i.e., if the Common Area title being conveyed is fee simple), in a particu- lar phase of the Project, if any, prior to or concurrent with a first close of escrow for the sale of a Lot in such Phase, subject to the Protective Covenants set forth in this Declara- 18324.283-14780.FCM 091307 -25- • 0 tion or which are of record at the time of the conveyance. If a "Phase" consists of only "Common Area", then Declarant shall, within thirty (30) days after recordation of the annexation document, convey to the Association such Common Area in fee simple or by easement. (b) Completion of Common Area. In the event that Improvements proposed to be constructed on any portion of the Common Area so annexed to the Project have not been completed prior to the first close of escrow for a Lot in the property being annexed, as evidenced by a "Notice of Completion" recorded in the Office of the County Recorder, then the completion of such Improvements shall be assured in accordance with Section 11018.5 of the California Business and Profes- sions Code, or any similar statute hereafter enacted. (c) Commencement of Association Responsibilities. Except as otherwise provided herein and/or in the grant deed conveying Common Area, the Association's responsibility to maintain the Common Area conveyed to the Association shall commence concurrently with the levy of assessments by the Association for maintenance of such Common Area. The Associa- tion shall not interfere with the performance of any warranty or other contractual maintenance obligations which the contractor or subcontractors of Declarant may be bound to perform. Notwithstanding the foregoing, maintenance performed by such contractors and subcontractors of Declarant shall not serve to postpone the commencement of Regular Assessments pursuant to this Declaration, nor entitle an Owner to claim any offset or reduction in the amount of such Regular Assess- ments. Prior to the time that the Common Area is conveyed to the Association, the Declarant shall be responsible for maintaining the Common Area in a manner commensurate with its status as the owner thereof; to the extent that the Declarant has made any Improvements to the Common Area pursuant to the City's conditions of approval for the Project, Declarant shall maintain the Improvements in the same manner as required of the Association by this Declaration. (d) Character of Improvements to Common Area. The nature, design, quality and quantity of all Improvements to the Common Area shall be determined by Declarant, in its sole discretion. The Association shall be obligated to accept title to all Common Area in the Project, whether identified herein or in a Notice of Annexation, conveyed by Declarant, and undertake all maintenance responsibilities for the Common Area as provided herein. (e) Disputes. In the event that a dispute arises between Declarant and the Association with respect to the 18324.283-14780.FCM 091307 -26- nature, design, quality or quantity of the Improvements, or the acceptance of maintenance responsibilities therefor, resolution of the dispute shall be submitted to arbitration in accordance with the applicable provisions below. (f) Formation of Landscape Maintenance District Community Facilities District, or Other Special District. Notwithstanding any provision contained herein to the con- trary, the Board shall have the power and authority to convey the Common Area, or any portion thereof, to the City upon request of the City to include the Common Area, or any such portion, in a landscape maintenance district, community facilities district or other special district and/or delegate its maintenance obligations to the City or to such landscape maintenance district, community facilities district or other special district. Each Owner of a Lot shall pay all assess- ments, special taxes and other charges levied against such Lot in connection with any such landscape maintenance district, community facilities district or other special district. Each Owner of a Lot in the Project, by acceptance of a deed from Declarant for such Lot, agrees to refrain from taking any action which would in any way interfere with the formation of or annexation into a landscape maintenance district, community facilities district, or other special district, the operation of such districts, or decisions made or actions taken by the City with respect to such districts, including, without limitation, the timing of commencement, amount, spreading or use of the assessments, special taxes or other charges collected by such districts. Section 18. Reservation of Common Area Easements. Declarant does hereby reserve the right to grant nonexclusive ease- ments over the Common Area in favor of Owners of any Annexation Property which is annexed to the Project pursuant to this Declara- tion, and, upon the recordation of a Notice of Annexation affecting the Annexation Property, the Owners described in this Declaration shall automatically obtain nonexclusive easements over all Common Area which is a part of said Annexation Property subject to all applicable restrictions set forth herein and in the Notice of Annexation. Section 19. Easements for the Architectural Review Committee. There is hereby created, reserved and granted to Declar- ant, together with the right to grant and transfer same to the members of the Architectural Review Committee, easements for ingress and egress over the Project for the purpose of permitting the Architectural Review Committee to perform its various powers and responsibilities as more particularly described in this Dec- laration. 18324.283-14780.FCM 091307 -27- • Section 20. Easement for Access to and from Washington Street. The owner of the adjacent property to the north of the Project has granted a non-exclusive easement to the Association and all Lot Owners and residents of the Project and their tenants, guests, and invitees for pedestrian and vehicular access, ingress and egress over such adjacent property to Washington Street, on the terms and conditions set forth in that certain Easement Agreement between Declarant and Saint Francis of Assisi Catholic Church recorded in the Official Records in the Office of the County Recorder for San Bernardino County, California. Section 21. Easements Set Forth on Final Map and in Official Records of County. In addition to the foregoing easements, the Project is subject to any and all easements set forth on the recorded Tract Map for the Project and/or recorded against the Project (or any portion thereof) in the Official Records of the County. ARTICLE IV THE ASSOCIATION Section 1. Membership. Every person or entity who or which is an Owner as defined hereinabove shall be a Member of the Association. The foregoing, however, is not intended to include persons or entities who hold an interest in a Lot in the Project merely as security for the performance of an obligation. All memberships in the Association shall be appurtenant to the Lot owned by each Member, and memberships in the Association shall not be assignable, except to the person or entity to whom the title to the Lot has been transferred, as provided in Section 8 hereinbelow. Ownership of such Lot shall be the sole qualification for member- ship in the Association. The memberships in the Association shall not be transferred, pledged or alienated in any way, except upon the transfer of title to said Lot, and then only to the purchaser or Mortgagee of such Lot. Any attempt to make a prohibited member- ship transfer shall be void and will not be reflected in the books of the Association. Section 2. Voting Rights. The Association shall have two (2) classes of voting membership, as follows: (a) Class A. Class A Members shall be all Owners, with the exception of the Declarant until such time as the Class B Membership terminates, and shall be entitled to one (1) vote for each Lot owned. When more than one (1) person holds an interest in any Lot, all such persons shall be Mem- bers. The vote for such Lot shall be exercised as they de- termine among themselves, but in no event shall more than one 18324.283-14780.FCM 091307 -28- (1) vote be cast with respect to any Lot. The Association shall recognize the vote cast by a Co -Owner, unless another Co -Owner shall cast a conflicting vote, in which case, both votes shall be null and void, and not recognized by the Association. The non-voting Co -Owner or Co -Owners shall be jointly and severally responsible for all of the obligations imposed upon the jointly owned Lot. (b) Class B. The Class B Member shall be the Declarant and shall be entitled to three (3) votes for each Lot owned in the Project upon which Declarant is then paying the appropriate monthly Assessments provided for hereinbelow. The Class B membership shall cease and be converted to Class A membership upon the happening of either of the following events, whichever occurs earliest: (1) The second anniversary of the first close of escrow for the sale of a Lot pursuant to the original issuance by the DRE of the most recently issued Final Subdivision Public Report for a Phase of the Project; or (2) The fourth anniversary of the first close of an escrow for the sale of a Lot pursuant to the original issuance by the DRE of a Final Subdivision Public Report for the initial Phase of the Project; or (c) December 31, 2011. Any action by the Association which must have the ap- proval of the membership of the Association before being under- taken, shall require the vote or written assent of both a majority of the Class B membership as well as a majority of the Class A membership, so long as there are two (2) outstanding classes of membership, unless a specific provision of this Declaration or the By -Laws or Articles of the Association requires (i) the approval of a greater percentage of the voting membership, or (ii) a vote by Members other than Declarant, or (iii) a specific approval percentage of all the Members. Notwithstanding the foregoing, any action by the Association pursuant to the Article contained herein entitled "Enforcement of Bonded Obligations" shall only require a majority of the voting power of the Owners, other than Declarant. Section 3. Special Procedures For Appointment of Members to the Board. The Declarant shall be entitled to solely appoint a majority of the members of the Board until the first to occur of the following events: 18329.283-19780.FCM 091307 -29- (a) The election of the Board immediately following the close of escrow by Declarant of at least fifty-five (55) Lots in the Project; or (b) December 31, 2011. In the event Declarant shall not have sold and closed escrows for at least fifty-five (55) Lots by December 31, 2011, Declarant's right to elect a majority of the members of the Board shall be automatically extended until the aforesaid number of Lots have been sold, but in no event later than December 31, 2012. Notwithstanding the foregoing, the Class A Members shall be entitled to elect at least one of the members of the Board, so long as there are two (2) classes of membership outstanding in the Corporation. Section 4. Vesting of Voting Rights. The voting rights attributable to any given Lot in the Project as provided for herein shall not vest until the Assessments provided for hereinbe- low have been levied by the Association against said Lot. Section 5. Adjustment of Voting Rights. The voting rights in the Association shall be adjusted on the first day of the first month immediately following the first close of an escrow for the sale of a Lot in a subsequent Phase of the Project. Section 6. Suspension of Voting Rights. The Board shall have the authority to suspend the voting rights of any Member to vote at any meeting of the Members for any period during which such Owner is delinquent in the payment of any Assessment, regardless of type, it being understood that any suspension for nonpayment of any Assessment shall not constitute a waiver or discharge of the Member's obligation to pay the Assessments pro- vided for in this Declaration. Section 7. Transfer. The Association membership held by any Owner of a Lot shall not be transferred, pledged or alien- ated in any way, except as incidental to the sale of such Lot, and the membership shall be automatically transferred upon the sale of such Lot. In the event of such sale, the Association membership may only be transferred, pledged or alienated to the bona fide purchaser or purchasers of the Lot, or to the Mortgagee (or third party purchaser) of such Lot upon a foreclosure sale, deed in lieu or other remedy set forth in the mortgage. Any attempt to make a prohibited transfer is void and will not be reflected upon the books and records of the Association. The Association may levy a reasonable transfer fee against new Owners and their Lots (which fee shall be a Compliance Assessment chargeable to such new Owner) to reimburse the Association for the actual administrative cost of 18324.283-14780.FCM 091307 - 3 transferring the memberships to the new Owners on the records of the Association. Section 8. Record Date. The Board of Directors may fix a date as a record date for the determination of the Class A Members (other than Declarant) entitled to notice of any meeting of the Members. Any record date fixed by the Board shall ensure reasonable time to comply with all notice requirements set forth in this Declaration. If the Board does not fix a record date for notice to Members, the record date for notice shall be the close of business on the tenth (10th) business day preceding the day on which notice is to be 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. The record date so f ixed shall be not be more than sixty (60) days prior to the date of the meeting of the Members. 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. ARTICLE V POWERS AND DUTIES OF THE ASSOCIATION Section 1. Management Body. The Association is hereby designated as the management body of the Project. The Members of the Association shall be the Owners in the Project, as provided herein, and the affairs of the Association shall be managed by a Board of Directors, as more particularly set forth in the By -Laws. The initial Directors shall be appointed solely by the Declarant. Thereafter, the Board shall be elected or appointed as provided in said By -Laws. Section 2. Powers. The Board, for and on behalf of the Association, shall have the right and power to do all things necessary to conduct, manage and control the affairs and business of the Association. Subject to the provisions of the Articles, the By -Laws and this Declaration, the Board shall have all general powers authorized under the California Corporations Code for non- profit, mutual benefit corporations, and shall have, but not be limited to, the following specific powers: (a) Enforce the provisions of this Declaration (including but not limited to the ability to record a notice of noncompliance or violation, if allowed), including any amendments thereto, and all contracts or any agreements to which the Association is a party; (b) Acquire title, manage, maintain, repair and replace all Common Area and Improvements located thereon, 18324.283-14780.FCM 091307 - 3 1- • 0 including all personal property, in a neat, clean, safe and attractive condition at all times, and pay all utilities, gardening and other necessary services for the Common Area, all as more specifically set forth in this Declaration, including the Article herein entitled "Repair and Mainte- nance"; (c) Maintain fire, casualty, liability and worker's compensation coverage, fidelity bond coverage and other insurance coverage pursuant to the terms of that Article herein entitled "Insurance"; (d) Obtain, for the benefit of the Common Area, all commonly metered water, gas and electric services, and provide (if appropriate, as determined by the Board in its sole and absolute discretion) for refuse collection and cable (or CATV) television service; (e) Grant easements or licenses, where necessary, for utilities and sewer facilities over, on and across the Common Area to serve the Project; (f) Pay all taxes and special assessments which would be a lien upon the entire Project or the Common Area, and discharge any lien or encumbrance levied against the entire Project or the Common Area; (g) Delegate its powers in accordance with and subject to all limitations imposed by law; (h) Levy and collect Assessments on the Owners of all Lots in the Project in which Assessments have commenced, and enforce payment of such Assessments in accordance with the terms and provisions set forth in the Article herein entitled "Effect of Nonpayment of Assessments: Remedies of the Associa- tion"; (i) Pay for reconstruction of any portion of the Common Area damaged or destroyed; (j) Employ and retain a professional manager and/or management company to perform all or any portion of the duties and responsibilities of the Board and engage such other personnel (including attorneys, budget preparers, and accoun- tants) as necessary for the operation of the Project and administration of the Association; (k) Enter into any Lot when necessary in connection with maintenance or construction for which the Association is responsible; 18324.283-14780.FCM 091307 -32- (1) Subject to notification to the DRE, contract with Declarant, its successors or assigns, for the purpose of entry into a maintenance and/or subsidy agreement, made by and between Declarant and the Association, for the purpose of temporarily reducing and/or abating the financial obligations of Owners in the Project; (m) Purchase such other labor, services, materials, supplies and the like, as needed for the proper maintenance of the Common Area and/or proper operation of the Association; (n) Adopt reasonable Rules and Regulations con- cerning the maintenance, improvement, use and/or occupancy of any portion of the Project (including, without limitation, rules and regulations for the use, inspection, and maintenance and use of the recreational facilities within the Project) and election procedures in compliance with California Civil Code Section 1363.03; (o) Grant exclusive easements to Owners over por- tions of the Common Area in accordance with California Civil Code Section 1363.07, as same may be amended from time to time, and with the assent of sixty-seven percent (670) of the voting power of the Association; (p) Execute lot line adjustments (and corresponding deeds), enter into a maintenance and/or other agreement with Declarant or a third party, subject to Civil Code Section 1363.07, if applicable, grant fee title to or easements over the Common Area to Declarant or a third party, and/or receive fee title to or an easement over real property owned by Declarant or a third party as reasonably necessary due to those conditions in the field where it is not readily apparent where Lot lines are located and the respective party's maintenance responsibilities commence and end, and such adjustments, deeds and/or agreements will promote a clearly defined and uniform maintenance plan by the respective parties; (q) Grant easements or licenses to any public agency, governmental entity or utility, where necessary, for utilities and sewer facilities on, over and across the Common Area to serve the Project for purposes consistent with the use and enjoyment of the Common Area or the Project for residen- tial purposes; (r) Subject to compliance with Section 1369.510 et seg. of the California Civil Code, as same may be amended from time to time, institute, defend, settle or intervene on behalf of the Association any dispute resolution proceeding in 18329.283-19780.FCM 091307 -33- matters pertaining to (i) enforcement of the Declaration, Rules and Regulations and/or By -Laws; (ii) damage to the Common Area; (iii) damage to the Lots which arises out of, or is integrally related to, damage to the Common Area that the Association is obligated to maintain or repair; (s) Execute all necessary documents in order to effectuate the Express Limited Warranty, including, without limitation, the "Limited Warranty Validation Form," if applicable. (t) Negotiate and enter into agreements for Telecommunication Services, with terms not in excess of ten (10) 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%); (u) Negotiate and enter into agreements with any nonprofit corporations (e.g., governing portions of the Project and/or Annexation Property, including the amenities located thereon) or Local Government Agencies; (v) Negotiate and enter into contracts in which the Association enters into litigation or any alternative dispute resolution procedure when the Association's obligation to pay for services is set in whole or in part on a contingency basis except (i) contracts for collection of assessment or other accounts receivable; (ii) contracts involving evaluation of services; or (iii) contracts with a total amount to be paid by the Corporation not in excess of Forty Thousand Dollars ($40,000.00); (w) Authorize an agent, management company representative, or bookkeeper to appear and participate in a small claims court action on behalf of the Association in accordance with California Code of Civil Procedure Section 116.540; (x) Without any limitation of the foregoing powers, (i) operate, maintain, and inspect the Common Area and its various components in conformance with any Maintenance Guidelines and any Maintenance Manual, and (ii) review any Maintenance Manual for necessary or appropriate revisions as deemed necessary by the Board (Declarant recommends at least an annual review); (y) As applicable, comply with terms and provisions of California Civil Code Section 1375, as amended, in connec- tion with any potential litigation based upon a claim for defects in the design or construction of the Common Area; 18324.283-14780.FCM 091307 -34- (z) As required by the City, monitor the Project (using a list of indicators provided by the California Department of Fish and Game) for any signs that bighorn sheet are entering the Project and report any observations of bighorn sheep on or near the Project site to the California Department of Fish and Game and City immediately. If information suggests that bighorn sheep are entering the Project, within three (3) months after receipt of such information, the Association shall construct, at the Association's sole cost and expense, an eight (8) foot high permanent fence between the Project and the hillside, which fence shall not contain gaps of greater than eleven (11) centimeters (4.3 inches). If requested to do so by the California Department of Fish and Game, the Association shall (at its sole cost and expense) construct temporary fencing to the specifications of the California Department of Fish and Game to prevent bighorn sheep from entering the Project site pending the construction of the permanent fence. Any and all fencing constructed shall be subject to the City's Hillside Conservation Overlay District. The Association shall also have the power to post signs within the Project discouraging people from entering the hillside from any portion of the Project; and (aa) Perform any and all other acts and things that a nonprofit, mutual benefit corporation organized under the laws of the State of California is empowered to do, which may be necessary, convenient or appropriate in the administration of its affairs for the specific purposes of meeting its duties as set forth in this Declaration. Section 3. Duties. Notwithstanding the Association's obligations, as more specifically set forth herein, including in the Article entitled "Repair and Maintenance," the Board shall perform and execute the following duties for and on behalf of the Association: (a) Own, maintain and operate the Common Area, for the common use and benefit of all Owners in the Project; (b) Provide, water, sewer, gas, electricity, gar- bage and trash collection, and other necessary utility ser- vices for the Common Area and, if not separately metered or provided, for the Lots; (c) Provide insurance for the Association and its Members in accordance with the provisions herein, including the Article hereinbelow entitled "Insurance" and distribute any notices thereof required by law, as same may be amended, from time to time; 18324.283-14780.FCM 091307 -35- (d) Accept, as part of the Project, all property included in or annexed to the Project, in accordance with the terms and provisions of this Declaration, and accept all Owners as Members of the Association. In addition, the Association shall accept all Common Area, conveyed, leased or otherwise transferred to it, if any, by Declarant, its successors or assigns, or appropriate governmental agency; (e) Maintain and repair all portions of the Common Area in a neat, clean, safe, attractive, sanitary and orderly condition at all times and paint, maintain, repair and replace all of the Common Area Improvements so as to keep same in a neat, clean, safe, attractive, sanitary and orderly condition at all times. Without limiting the generality of the forego- ing, if the Project is completed as currently planned, the Association shall be responsible for landscaping, irrigating, maintaining, repairing, and/or replacing (as appropriate), the front yard areas, and the parkways, medians, and other areas along certain streets, Association Walls (for Phase 1, see Exhibit "D"), recreational facilities, Project entry monumentation, private streets, guard house, tower, and entry gates, storm water retention basins (e.g. , Lots H and I of Tract 30560, and all related systems in a condition comparable to the condition initially approved by the City. In the event any maintenance or repairs to the Common Area are required due to the willful or negligent acts or omissions of an Owner or Owners, the Association shall levy the cost of such mainte- nance and repair as a Compliance Assessment against the responsible Owner(s); (f) In addition to all other provisions set forth herein respecting the maintenance of the Common Area, maintain private sewers (unless public), storm drains (unless public), and Common Area lighting facilities, in a condition comparable to the condition initially approved by the City; (g) Maintain the structural and treatment control Best Management Practices located within the Common Area and perform non-structural Best Management Practices applicable to the Common Area, as set forth in the Water Quality Management Plans approved for the Project; (h) Pay all real and personal property taxes and Assessments which the Association is required to pay pursuant to the terms and provisions of this Declaration or by law, unless separately assessed to Owners; provided, however, that it shall be the obligation of each Owner to pay his respective share of the tax assessment levied on the Project prior to separate assessments by the Tax Assessor pursuant to the 18324.283-14780.FCM 091307 -36- i 0 applicable provisions of the California Revenue and Taxation Code; (i) Contract for any other material, supplies, furniture, labor, services, maintenance, repairs, structural alterations and insurance which the Association is required to pay for pursuant to the terms and provisions of this Dec- laration or by law; (j) Unless otherwise provided in the By -Laws for the Association, cause financial statements for the Associa- tion to be regularly prepared and copies distributed to each Member of the Association, regardless of the number of Members or the amount of assets of the Association, as follows: (1) A pro forma operating statement (budget) for each fiscal year shall be distributed within the time period specified by statute prior to the beginning of the fiscal year (e.g., not less than 30 days nor more than 90 days prior to the beginning of the fiscal year), and shall contain the following information: i) An itemized estimate of the Associa- tion's revenue and expenses, determined on an accrual basis; ii) A summary, printed in bold type, of the current status of the Association's reserves, based upon the most recent review or study conduct- ed pursuant to California Civil Code Section 1365.5 ("Study"), as may be amended, from time to time, and prepared in accordance with all requirements of law (e.g., Civil Code Section 1365, 1365.2.5); iii) A statement prepared in accordance with all requirements of law (e.g., Civil Code Section 1365, 1365.2) as to both of the following: a) Whether the Board has deter- mined or anticipates that the levy of one (1) or more Special Assessments will be required to repair, replace or restore any major compo- nent (e.g., Improvement to the Common Area) or to provide adequate reserves therefor; and b) The mechanism or mechanisms by which the Board will fund reserves to repair or replace major components, including assess- ments, borrowing, use of other assets, defer- 18324.283-14780.FCM 091307 -37- ral of selected replacement of repairs, or alternative mechanisms. iv) A general statement prepared in accordance with all requirements of law (e.g., Civil Code Section 1365, 1365.2) setting forth the procedures utilized by the Association to calculate and establish reserves to defray the costs of future repairs, replacements or additions to the Common Area Improvements. Notwithstanding the foregoing, in lieu of distributing the pro forma budget required hereinabove, the Board may elect to distribute a summary of the pro forma budget to all Members with a written notice, in at least 10 -point bold type on the front page, that the pro forma budget is available at the business office of the Association, or at another suitable location within the Project, and that copies will be provided upon request and at the expense of the Association. If any Member requests that a copy of the pro forma budget required herein be mailed to said Member, the Association shall provide the copy to the Member by first-class mail at the expense of the Association, and mailed within five (5) days of the receipt of said request; (2) A balance sheet as of an accounting date which is the last day of the month closest in time to six (6) months from the date of closing for the first sale of a Lot, and an operating statement for the period from the date of the first closing to the said accounting date, shall be distributed within sixty (60) days after the accounting date. This operating statement shall include a schedule of Assessments received, and receivable, and the number of Lots which paid the Assessments; (3) An annual report consisting of the fol- lowing shall be distributed within one hundred twenty (120) days after the close of the fiscal year: i) A balance sheet as of the last day of the Association's fiscal year; ii) An operating (income) statement for the fiscal year; iii) A statement of changes in financial position for the fiscal year; and 18324.283-14780.FCM 091307 -38- • • iv) Information, if any, required to be reported pursuant to Sections 8322 and 1365 of the California Corporations and Civil Codes, respec- tively, as same may be amended from time to time. This annual report shall ordinarily be prepared by a licensee of the California Board of Accountancy, in accordance with generally accepted accounting principles, for any fiscal year in which the gross income of the Association exceeds Seventy -Five Thousand Dollars ($75,000.00). However, if for any reason the report is not prepared by a licensee of the California Board of Accountancy, said report shall be accompanied by a certificate from an authorized officer of the Association that the statements were prepared without audit from the books and records of the Association; (4) A statement of the Association's policies and practices in enforcing its remedies against Members for nonpayment of Assessments, as set forth in the Article herein entitled "Effect of Nonpayment of Assess- ments: Remedies of the Association," which shall be dis- tributed within the time period required by statute prior to the beginning of the fiscal year (e.g., not less than 30 days nor more than 90 days prior to the beginning of the fiscal year); and (5) A summary of the Association's general liability insurance policy, earthquake and flood insur- ance policy, to the extent they have been issued, and liability coverage policy for the Board, which includes statements and information required under California Civil Code Section 1365(e), as same may be amended from time to time. Currently, such items of disclosure include the following: (1) the name of the insurer; (2) the type of insurance; (3) the policy limits of the insurance; and (4) the insurance deductibles. The Association shall, as soon as reasonably practical, notify its Members by first-class mail if any of the policies described in Subparagraph (i) above have lapsed, been canceled, and are not immediately renewed, restored or replaced, or if there is a significant change, such as a reduction in coverage or limits, or an increase in the deductible for any of those policies. If the Association receives any notice of nonrenewal of a policy described in the subparagraph above, the Association shall immediately notify its Members if replacement coverage will not be in effect by the date the existing coverage will lapse. To the extent 18324.283-14780.FCM 091307 -39- the information noted above is described within the respective insurance policies, the Association may distribute such information to the Members and be in compliance with the disclosure requirements of the referenced Civil Code Section. Notification regarding cancellation or policy renewals must comply with Civil Code Section 1365(e) (2) , as same may be amended from time to time. Currently, the summary distributed pursuant to Subparagraph (i) shall contain, in at least 10 -point boldface type, the following statement: "This summary of the Association's policies of insurance provides only certain information, as required by Subdivision (e) of Section 1365 of the California Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any Association Member may, upon request and provision of reasonable notice, review the Association's insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the Association maintains the policies of insurance specified in this summary, the Association's policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association Members should consult with their individual insurance broker or agent for appropriate additional coverage." (k) The Board shall review on a quarterly basis, the following: i) A current reconciliation of the Association's operating accounts; ii) A current reconciliation of amounts collected as reserves; iii) The current year's actual amounts collected as reserves and expenses compared to the current year's budget; iv) An income and expense statement for the Association's operating and reserve accounts; and V) The most current account statements prepared by the financial institutions where the 18324.283-14780.FCM 091307 - 4 0- • Association maintains its operating and reserve accounts. Withdrawal of funds from the Association's reserve account shall require the signature of either: (i) two (2) members of the Board; or (ii) one (1) member of the Board and an officer of the Association who is not also a member of its Board. As used in this Section, "reserve account" means moneys that the Board has identified from its annual budget for use to defray the future repair or replacement of, or additions to, those major components of the Common Area which the Association is obligated to repair or replace on a periodic basis, rather than on a regular annual basis. Except as may otherwise be allowed pursuant to Civil Code Section 1365.5(c), the Board shall not use any funds collected and budgeted as "reserve" moneys for any costs and/or expenses that are not related to repair and/or replacement costs for those elements of the Common Area that must be repaired and/or replaced on a periodic basis. The Board may transfer any interest earned in all reserve accounts into the Association's general operating account in order to satisfy all or a portion of the income tax liability based on such interest income. Notwithstanding the foregoing, temporary transfer of funds may occur in compliance with Civil Code Section 1365.5, as same may be amended from time to time. In the event reserve funds are temporarily transferred to pay for dispute resolution proceedings, the Board shall comply with the disclosure and notification requirements of Civil Code Section 1365.5(d), as same may be amended from time to time. (1) At least once every three (3) years, cause a study of the reserve account requirements of the Project to be conducted if the current replacement value of the major components which the Association is obligated to repair, replace, restore or maintain is equal to or greater than one- half (1/2) of the gross Association budget for any fiscal year of the Association. In connection with such study, the Board shall cause to be conducted, if required by law, a visual inspection of the accessible areas of the major components of the Common Area which the Association is obligated to repair, replace, restore, or maintain. The Board shall consider and implement, as the Board determines appropriate, any necessary adjustments to the Board's analysis of the reserve account requirements as a result of such review. The reserve study shall consider and include, at a minimum, the requirements set forth in Section 1365.5(e) of the California Civil Code, as the same shall be amended, from time to time; 18324.283-14780.FCM 091307 - 4 1- (m) Assume and pay out of the Assessments provided for hereinbelow all costs and expenses incurred by the Association in connection with the performance and execution of all of the aforesaid powers and duties, and any other powers and duties the Association may assume as provided for in Section 4 hereinbelow; (n) Formulate, adopt and enforce such Rules and Regulations as it may deem proper for the operation of the Common Area (including, without limitation, rules and regula- tions relating to the use, inspection, and maintenance of recreational facilities within the Project) and as necessary to establish election procedures in compliance with California Civil Code Section 1363.03, as more particularly described herein. Notice of adoption of any such Rules and Regulations and of any change, amendment or repeal thereof, shall be given in writing to each Member and shall be on file in the princi- pal office of the Association. In the event of any conflict between such Rules and Regulations and this Declaration, this Declaration shall prevail; (o) Enforce and abide by all applicable provisions of this Declaration, the Articles, the By -Laws, any applicable Express Limited Warranty, all Rules and Regulations of the Association and Architectural Review Committee, and of all other documents pertaining to the ownership, use, management and control of the Project; (p) Give notices in writing to FHLMC, FNMA and GNMA, and other lenders and investors participating in the financing of the sale of Lots in the Project, as required herein; (q) Within ten (10) days of the mailing or delivery of a written request from an Owner, provide said Owner with a copy of this Declaration and the By -Laws and the Articles for the Association, together with the pro forma budget, an insurance policy summary, a true statement in writing as to the amount of any delinquent Assessments, penalties, attor- neys' fees and other charges therein as provided by this Declaration or other management documents of the Board as of the date of such request, the most recent financial statement, the Association's current Regular and Special Assessments, and any change in the Association's current Assessments and fees which have been approved by the Board but have not become due and payable as of the date the disclosure is provided pursuant to this Section. The Board may impose a fee for providing the foregoing, but in no event shall the fee exceed the actual cost to prepare and reproduce the requested documents. In addition, the Board shall make available, as required by law, 18324.283-14780.FCM 091307 -42- during normal working business hours, upon request under reasonable circumstance, to any prospective purchaser of a Lot, any Owner of a Lot, any first Mortgagee and the hold- er(s), insurer(s) and guarantor(s) of a first Mortgage of any Lot, current copies of this Declaration, the Articles, the By - Laws, the Rules and Regulations governing the Lot, a true statement, in writing, setting forth the amount of the Association's current regular and special assessments and fees, any assessments, monetary fines and/or penalties levied upon the Member's interest in the Project that are unpaid on the date of the statement, and information on late charges, interest and costs of collection which, as of the date of the statement, are or may be made a lien upon the Member's interest in the Project, and all of the books, the membership register, including mailing addresses and telephone numbers, records and financing statements of the Association; (r) Elect the officers of the Association and fill any vacancies on the Board, except if such vacancy is created by the removal of a Director; (s) Appoint the Members to the various Committees formed by the Board (e.g., the Nominating Committee, the Architectural Review Committee, etc.) as more particularly set forth herein or in the By -Laws; (t) Cause a summary of the provisions of Section 1369.590 of the California Civil Code, as same may be amended from time to time, regarding alternative dispute resolution prefiling requirements and which specifically reference Section 1369.510 et seg. of the Civil Code, to be prepared and annually distributed to each Member of the Association. The summary shall be provided either at the time the pro forma operating budget is distributed herein or in the manner specified in Section 5016 of the California Corporations Code, as same may be amended from time to time. The summary shall include a description of the Association's internal dispute resolution process, as required by Section 1363.850 of the Civil Code; (u) Periodically review and revise the Maintenance Guidelines, if any, as the Board may deem reasonable and prudent to adjust to the changing needs of the Project; (v) Except as otherwise allowed under Section 1375 of the California Civil Code, as same may be amended from time to time, obtain approval from a majority of Members prior to incurring dispute resolution expenses, including without limitation attorneys' fees, where the Association initiates dispute resolution proceedings or is joined as a plaintiff in 18324.283-14780.FCM 091307 -43- dispute resolution proceedings. Such approval shall not be necessary if the legal proceedings are initiated to (i) enforce use restrictions contained herein, (ii) enforce architectural control provisions contained herein; or (iii) collect any unpaid assessments levied pursuant to this Declaration; (w) Comply with the provisions of California Civil Code Section 1375, as same may be amended from time to time, as provided hereinbelow; (x) Cause a notice regarding "Assessments And Foreclosure" to be prepared and annually distributed to each Member of the Association in accordance with California Civil Code Section 1365.1, as the same may be amended from time to time. Except as otherwise provided in California Civil Code Section 1365.1, as the same may be amended from time to time, the notice shall be printed in 12 -point type and shall be distributed during the sixty (60) day period immediately preceding the beginning of the Association's fiscal year; (y) Adopt and provide a fair, reasonable and expeditious procedure for resolving disputes between the Association and Members that complies with applicable law (e.g_, Civil Code Section 1363.810 et se .) which, if the Board so decides, may be the procedure set forth in Civil Code Section 1363.840; (z) As required by applicable law [e.g., California Civil Code Section 1378(c), as the same may be amended from time to time, or any successor statute], cause a notice of any requirements for Association approval of physical changes to Lots or Common Area to be prepared and annually distributed to Members. The notice shall describe the types of changes that require Association approval and shall include a copy of the procedure used to review and approve or disapprove a proposed change; (aa) Without any limitation of the foregoing duties, (1) operate, maintain, and inspect the Common Area and its various components in conformance with any Maintenance Guide- lines and any Maintenance Manual, and (2) review any Mainte- nance Manual for necessary or appropriate revisions as deemed necessary by the Board (e.g., at least an annual review); and (ab) As required by the City, monitor the Project (using a list of indicators provided by the California Department of Fish and Game) for any signs that bighorn sheet are entering the Project and report any observations of bighorn sheep on or near the Project site to the California 18329.283-19780.FCM 091307 -44- Department of Fish and Game and City immediately. If information suggests that bighorn sheep are entering the Project, within three (3) months after receipt of such information, the Association shall construct, at the Association's sole cost and expense, an eight (8) foot high permanent fence between the Project and the hillside, which fence shall not contain gaps of greater than eleven (11) centimeters (4.3 inches). If requested to do so by the California Department of Fish and Game, the Association shall (at its sole cost and expense) construct temporary fencing to the specifications of the California Department of Fish and Game to prevent bighorn sheep from entering the Project site pending the construction of the permanent fence. Any and all fencing constructed shall be subject to the City's Hillside Conservation Overlay District. To the extent that any portion of the Project site begins to be used by persons entering the hillside from the Project site, the Association shall post signs within the Project discouraging people from entering the hillside from any portion of the Project. Section 4. Discretionary Powers. The Board, at its option, may assume, perform and execute the following powers and duties for and on behalf of the Association: (a) Retain the services of a manager for the Project and provide such other personnel as the Association deems necessary and proper to assist in the operation of the Association and/or management of the Common Area regardless of whether such other personnel are employed directly by the Association or otherwise, and enforce the Entitlements From City relating directly or indirectly to the development of the Project; (b) Remove or replace any Improvement that extends into the Common Area under authority of an easement when access to a utility line underneath such Improvement is requested by any utility company; provided, however, that the cost shall be assessed against the Owner of the Lot involved as a Compliance Assessment if said Owner caused the Improve- ment to be so placed in the Common Area without legal right to do so; (c) Incur any liability or pay any costs or ex- penses for a single Lot or Owner thereof to keep such Lot and/or Owner in compliance with this Declaration and/or any Notice of Annexation; provided, however, that in the event the Association does incur any such liability or pay any such costs or expenses, the amount thereof shall be specially assessed to the Owner of such Lot as a Compliance Assessment; provided further, however, that nothing herein shall permit 18324.283-14780.FCM 091307 -45- the Association to assess the Owners for any new Improvements to the Common Area, except as otherwise provided in this Declaration; (d) Subject to the limitations set forth in this Article, contract for any other material, furniture, labor, services, maintenance, repairs, structural alterations or insurance, or pay any taxes or Assessments which, in the opinion of the Board, shall be necessary or proper for the operation of the Common Area, for the benefit of the Owners or for the enforcement of this Declaration; and (e) Enter into a maintenance or subsidy agreement with Declarant, at DeclarantIssole discretion, to temporarily reduce the financial obligations of the Owners (or certain Owners) for Assessment. Section 5. Notification by Association of Defects. The Board agrees that in the event of any alleged defect in any improved Common Area for which the Association believes the Declarant may be responsible, the Board will provide Declarant with written notice of such defect in accordance with Civil Code Section 1375, as the same may be amended and/or comply with the nonadversa- rial procedure provided to the Association by Declarant. Declarant shall have a reasonable opportunity to inspect such alleged defect, and if Declarant agrees with the Board (or otherwise elects to perform the work) to repair, replace or otherwise cure any defect in workmanship and/or material. The Association acknowledges and agrees that Declarant (or its authorized agents) shall be entitled at its sole discretion to determine the material and methods to be used in effecting such repair, replacement or cure. Section 6. Awards Rendered in Construction Defects Disputes. Any recovery by the Association or any Owner for any damage, to or defect in, the Common Area shall be utilized solely for the purpose of correcting such damage or defect. Section 7. Special Meeting of the Association for Construction Defect Disputes. In the event the Board decides to commence binding arbitration proceedings under the Express Limited Warranty or decides to commence any other legal proceedings against any of the "Declarant Parties" (e.g., as defined in Exhibit "E" attached to this Declaration) relating to construction defect Disputes, the Secretary shall call a special meeting of the Association. In addition to the information required by Section 1375 to be specified in the notice of such meeting, the notice shall also specify the following: (a) the estimated costs to repair the defects; (b) how the necessary repairs will be funded; (c) the name of the attorney whom the Association is contemplating retaining and an estimate of the attorney's fees, consultant's fees 18324.283-14780.FCM 091307 -46- and any other costs to be incurred to prosecute such proceedings; (d) how such fees and costs will be funded; (e) each Member's duty to disclose to prospective purchasers the alleged defects; and (f) the potential impact the proceedings may have on the marketability and availability of financing for Lots in the Project. Such notice shall be sent to all Members of the Association. The decision of the Board to commence any other legal proceedings against the Declarant, or other Declarant Parties relating to a construction defect Dispute must be approved by not less than fifty-one percent (51%) of the voting power of the Association residing in Members other than the Declarant. Section 8. Dispute Notification and Resolution Procedure. Except as expressly provided in this Declaration and/or required by any applicable Express Limited Warranty (i.e., with respect to claims covered thereby), any and all disputes involving, arising out of, and/or relating to Declarant, the Association, or the Common Area shall be resolved according to the provisions and procedures set forth in Exhibit "E" attached hereto and incorporat- ed by reference. Section 9. Repair of Willful Damage to Common Area. Notwithstanding the Association's duty to maintain the Common Area, in the event that the maintenance, repair or replacement of any element of such Areas becomes necessary due to the willful or negligent acts or omissions of any Owner, his family, guests or invitees, after prior Notice and Hearing, the Board shall assess the cost of such maintenance, repair and/or replacement as a Compliance Assessment against the Lot owned by such Owner. Section 10. Delegations of Duties. In the event that the Association shall delegate any or all of its duties, powers or functions to any person, corporation or firm to act as manager, neither the Association nor the members of its Board shall be liable for any omission or improper exercise by the manager of any such duty, power or function so delegated. Section 11. Right of Entry for Emergency. The Board, any person authorized by the Board, Declarant (so long as it owns an interest in the Project), or any Owner may enter any Lot in the event of any emergency involving illness or potential danger to life or property. Such entry shall be made with as little inconve- nience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association and/or Owner shall repair the same at its expense. Section 12. Right of Entry for Repairs. Except as otherwise provided herein, the Board, or any person authorized by the Board, shall have the right to enter, upon reasonable notice, any Lot to effect necessary repairs which the Owner has failed to 18324.283-14780.FCM 091307 - 4 7 perform or which are necessary in connection with the repairs to the Common Area or an adjoining Lot. Such entry shall be made with as little inconvenience to the Owner as is practicable, and in the event that any damage shall be proximately caused by or result from said entry, the Association shall repair the same at its expense. Section 13. Limitations on Board Action. The Board shall be prohibited from taking any of the following actions, except with the vote or written assent of a majority of the voting power of the Association and a majority of the votes residing in Members, other than the Declarant: (a) Entering into a contract with a third person, wherein the third person will furnish goods or services for the Common Area or the Association for a term longer than one (1) year, with the following exceptions: (1) A management contract, the terms of which have been approved by the VA/FHA and are consistent with provisions herein; (2) A contract with a public utility company if the rates charged for the materials or services are regulated by the Public Utilities Commission; provided, however, that the term of the contract shall not exceed the shortest term for which the supplier will contract at the regulated rate; (3) Prepaid casualty and/or liability insur- ance policies of not to exceed three (3) years duration, provided that the policy permits for short -rate cancella- tion by the insured; (4) Agreements for cable television services and equipment or satellite dish equipment and services of not to exceed five (5) years duration, provided that the lessor under the agreement is not an entity in which Declarant has a direct or indirect interest of ten percent (10%) or more; and (5) Agreements for sale or lease of burglar alarm and fire alarm,equipment, installation and services of not to exceed five (5) years duration provided that the supplier or suppliers are not entities in which the Declarant has a direct or indirect ownership interest of ten percent (10%) or more. (b) Incurring aggregate expenditures for capital improvements to the Common Area in any fiscal year in excess 18324.283-14780.FCM 091307 -48- of f ive percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (c) Selling during any fiscal year property of the Association having an aggregate fair market value greater than five percent (5%) of the budgeted gross expenses of the Association for that fiscal year; (d) Paying compensation to Directors or to officers of the Association for services performed in the conduct of the Association's business; provided, however, that the Board may cause a Director or officer to be reimbursed for expenses incurred in carrying on the business of the Association; (e) Filling a vacancy on the Board created by the removal of a Director; (f) Except as otherwise allowed under Section 1375 of the California Civil Code, as same may be amended from time to time, incurring dispute resolution expenses, including without limitation attorneys' fees, where the Association initiates dispute resolution proceedings or is joined as a plaintiff in dispute resolution proceedings. Such approval shall not be necessary if the legal proceedings are initiated to (i) enforce the use restrictions contained herein, (ii) enforce the architectural control provisions contained herein; or (iii) collect any unpaid assessments levied pursuant to this Declaration. (g) Amending or limiting the Association's duties and obligations (and benefits) with respect to the Express Limited Warranty, if applicable. Section 14. Licenses, Easements and Rights -of -Way. The Board, for and on behalf of the Association, is authorized and empowered to grant such licenses, easements and rights-of-way for sewer lines, water lines, underground conduits, storm drains and other public utility purposes over those portions of the Common Area upon which no building or other structure has been erected as may be necessary and appropriate for the orderly maintenance, preservation and enjoyment of the Common Area or for the preser- vation of the health, safety, convenience and welfare of the Own- ers. Such licenses, easements and rights-of-way may be granted at any time prior to twenty-one (21) years after the death of the individuals who have signed this Declaration and their issue who are in being as of the date hereof, and the right to grant such licenses, easements and rights-of-way is hereby expressly reserved. In addition, the Board, for and on behalf of the Association, may grant exclusive easements to Owners for use and enjoyment over portions of the Common Area, as the Board determines is reasonable. 18324.283-14780.FCM 091307 -49- • Section 15. New Improvements. Except as otherwise pro- vided in this Declaration, and subject to the Article herein entitled "Architectural Review - Approval," the Association may construct new Improvements or additions to the Common Area or de- molish existing Improvements, provided that in the case of any Improvement, addition or demolition involving a total expenditure in excess of five percent (5%) of the budgeted gross expenses of the Association for that fiscal year, the written consent or vote of the Owners in the Project as to the maximum total cost therefor shall first be obtained in accordance with the appropriate provisions herein, and provided that no Lot shall be altered or damaged by any such demolition or construction without the consent of the Owner thereof. The Board shall levy a Special Assessment on all Owners in the Project for the cost of such work. Notwithstand- ing the foregoing, if the new Improvements or the demolition of existing Improvements relates to Special Benefit Improvements, only the vote or written consent of Owners representing a majority of Lots within such Special Benefit Area need to be obtained, and the Board shall levy a Special Assessment solely on the Owners in the respective Special Benefit Area for the cost of such work. Section 16. Association Rules and Regulations. The Board shall also have the power to adopt, amend and repeal Rules and Regulations, as it deems reasonable, which may include the establishment of a system of fines and penalties enforceable as Compliance Assessments. The Rules and Regulations shall govern such matters in furtherance of the purposes of the Association, including, without limitation, the use of the Common Area, signs, trash collection, minimum standards for maintenance of Lots consistent with such standards as may be set forth in this Declaration or adopted by the Architectural Review Committee, election procedures in compliance with California Civil Code Section 1363.03, and any other matter which is within the jur- isdiction of the Association; provided, however, that the Rules and Regulations may not discriminate among Owners and shall not be inconsistent with this Declaration, the Articles or By -Laws. A copy of the Rules and Regulations as they may, from time to time, be adopted, amended or repealed, or a notice setting forth the adoption, amendment or repeal of specific portions of the Rules and Regulations, shall be delivered to each Owner. The Rules and Regulations shall have the same force and effect as if they were set forth in and were part of this Declaration, and shall be binding on the Owners and their successors in interest, whether or not actually received thereby. The Rules and Regulations, as adopted, amended or repealed, shall be available at the principal office of the Association to each Owner upon request. In the event of any conflict between any such Rules and Regulations and any other provisions of this Declaration, or the Articles or By -Laws, the provisions of the Rules and Regulations shall be deemed to be superseded. 18324.283-14780.FCM 091307 -50- Section 17. Nonliability and Indemnification. (a) General Limitation. Except as specifically provided in this Declaration, or as required by law, no right, power or responsibility conferred on the Board or the Archi- tectural Review Committee by this Declaration, the Articles or the By -Laws, shall be construed as a duty or obligation charged upon the Board, the Architectural Review Committee, any member of the Board or the Architectural Review Committee, or any other officer, employee or agent of the Association. No such person shall be liable to any party (other than the Association or a party claiming in the name of the Associa- tion) for injuries or damage resulting from such person's acts or omissions within what such person reasonably believed to be the scope of his Association duties ("Official Acts"), except to the extent that such injuries or damage result from such person's willful or malicious misconduct. No such person shall be liable to the Association (or to any party claiming in the name of the Association) for injuries or damage resulting from such person's Official Acts, except to the extent that such injuries or damage result from such person's negligence or willful or malicious misconduct; (b) Personal Liability Limitation. No person who suffers injury, including, but not limited to, bodily injury (including, without limitation, emotional distress or wrongful death) or property damage or loss as a result of the tortious act or omission of a volunteer Board member or volunteer Association officer shall recover damages from such Board member or officer if all the following conditions are satis- fied: (1) At the time the act or omission occurred, the Board member or officer resided in the Project as either a tenant or an Owner of two (2) or fewer Lots; (2) The act or omission was performed within the scope of the Board member's or officer's Association duties; (3) The act or omission was performed in good faith; (4) The act or omission was not willful, wanton or grossly negligent; and (5) The Association maintained and had in effect at the time the act or omission occurred, and at the time a claim was made, one (1) or more policies of insurance which included coverage for general liability 18324.283-14780.FCM 091307 - 5 1- for the Association and individual liability of officers and Directors of the Association for negligent acts or omissions in such capacity, and both types of coverage were in the amount of at least Five Hundred Thousand Dollars ($500,000.00). (c) Indemnification. The Association shall pay all expenses incurred by, and satisfy any judgment or fine levied against, any person as a result of any action or threatened action against such person to impose liability on such person for his Official Acts, provided that: (1) The Board determines that such person acted in good faith and in the manner such person reasonably believed to be in the best interests of the Association; and (2) In the case of an action or threatened action by or in the name of the Association, the Board determines that such person acted with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. Any determination of the Board required under this Section must be approved by a majority vote of a quorum consisting of Directors who are not parties to the action or threatened action giving rise to the indemnification. If the Board fails or refuses to make any such determination, such determination may be made by the vote or written consent of a majority of a quorum of the Members of the Association, provided that the person to be indemnified shall not be entitled to vote. The entitlement to indemnification hereun- der shall inure to the benefit of the estate, executor, administrator, heirs or devisees of any person entitled to such indemnification. ARTICLE VI ASSESSMENTS Section 1. Creation of the Lien and Personal obliga- tion of Assessments. The Declarant, for each Lot owned within the Project, hereby covenants, and each Owner of any Lot, by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agree to pay to the Association: (a) Regular Assessments; (b) Special Assessments for capital im- provements and such other purposes set forth herein; (c) Compliance Assessments, including, but not limited to, costs incurred by the 18324.283-14780.FCM 091307 - 52 0 • Association in the repair of damage to the Common Area for which such Owner was responsible and costs incurred by the Association in bringing such Owner and his Lot into compliance with this Declara- tion; (d) Special Benefit Assessments; and (e) such other assess- ments as the Association may periodically establish. Except as otherwise provided by law, the Regular, Special and Special Benefit Assessments, together with interest, costs and reasonable attor- neys' fees for the collection thereof, shall be a charge on the land and shall be a continuing lien upon the Lot against which each such Assessment is made. Each Regular Assessment, Special Assess- ment and Special Benefit Assessment, together with interest, costs and reasonable attorneys' fees for the collection thereof, shall also be the personal obligation of the Owner of such property at the time when the Assessment fell due. Each Compliance Assessment levied against an Owner, together with interest, costs and reasonable attorneys' fees for the collection thereof, shall be the personal obligation of the Owner of the property at the time of the Assessment. The personal obligation for delinquent Assessments shall not pass to an Owner's successors in title unless expressly assumed by them. Section 2. Purpose of Regular Assessments: Levy and Collection. The Regular Assessments levied by the Association shall be used exclusively to promote the health, safety and welfare of all Owners in the Project, and to maintain and improve the Common Area. The Association, by and through the Board, shall levy and collect Assessments from the Owner of each Lot in the Project in an amount sufficient to cover all of the Common Expenses incurred by the Association in connection with the performance and execution of its powers and duties set forth in this Declaration, the By -Laws and the Articles. In connection therewith, the Association shall not impose or collect Assessments, penalties or fees that exceed the amount reasonably necessary for the purpose or purposes for which they were levied. Regular Assessments may be collected on a monthly installment basis. Section 3. Regular Assessments - Basis. Regular Assessments payable to the Association shall be assessed equally against all Owners of Lots. Each Owner's proportionate share of the Common Expenses of the Association for any fiscal year shall be a fraction, the numerator of which shall be the number of Lots owned by such Owner, and the denominator of which shall be the total num- ber of Lots in the Project which are subject to assessment. During the period the Project is being built out, Declarant may annex one or more Phases into the Project in accordance with the provisions of this Declaration. Until the first day of the fiscal year immediately following the close of escrow for the sale of the first Lot in the Project to an Owner, the maximum Regular Assessment shall be as set forth in the budget reviewed and approved by the DRE. Notwithstanding the commencement for payment of Regular 18324.283-14780.FCM 091307 -53- • 0 Assessments, or any other provisions of this Declaration, Declarant and any other Owner of a Lot which does not include a structural Improvement for human occupancy shall be exempt from the payment of that portion of any Assessment (e.g., Regular Assessment) which is for the purpose of defraying operating expenses and reserves directly attributable to the existence and/or use of such struc- tural Improvements. This exemption shall include, but shall not necessarily be limited to, that portion of any Assessment at- tributable to roof replacement, exterior maintenance, exterior walkway and carport lighting, refuse disposal, cable television and domestic water supplied to Residences. This exemption shall be in effect only until the earliest to occur of: (i) the recordation of a notice of completion for the structural Improvements; (ii) the occupation or use of the Residence; or (iii) the completion of all elements of the Lot which the Association is obligated to maintain, if any. Declarant and any Owner shall also be exempted from the payment of that portion of any Assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and use of any Common Area facilities that are not complete at the time Assessments commence. This latter exemption shall only be in effect as to a particular Common Area facility until the earlier of: (x) the recordation of a notice of completion for such Common Area facility; or (y) the placement into use of the particular Common Area facility. Subject to the limitations of California Civil Code Section 1366, as same may be amended, from time to time, from and after the first day of the fiscal year imme- diately following the conveyance of the first Lot to an Owner, the maximum Regular Assessment may be increased subject to the following limitations: (a) Increases in Regular Assessments for any fiscal year which are less than or equal to twenty percent (20%) above the maximum Regular Assessment for the immediately preceding fiscal year may be approved by DRE and/or the Board, provided that the Board shall: (1) comply with the provisions set forth in Section 1365(a) of the California Civil Code with respect to the distribution of the pro forma operating budget of the Association for the forthcoming fiscal year; or (2) obtain the approval of Owners, constituting a quorum and casting a majority of affirmative votes at a meeting or an election of the Association conducted in accordance with California Corporations Code Sections 7510, et sec., and Sections 7613, et seq. For purposes of this entire Section 3, a quorum means Owners representing more than fifty percent (50%) of the of the total voting power of the Association; (b) Increases in Regular Assessments for any fiscal year which are greater than twenty percent (20%) above Regular Assessments for the immediately preceding fiscal year may be approved by the Board only after the Board obtains the 18324.283-14780.FCM 091307 -54- approval of Owners, constituting a quorum and casting a majority of affirmative votes at a meeting or election of the Association, conducted in accordance with Sections 7510, et seg., and Section 7613 of the Corporations Code; and (c) The Assessment increases limitation set forth in Subsection (b) above does not apply to increases in Assessments related to emergency situations, which shall be deemed to include the following: (1) Extraordinary expenses required by an order by a court of competent jurisdiction; (2) Extraordinary expenses for the maintenance or repair of Common Area that is necessary to remedy any dangerous condition in the Project that represents a threat of damage or injury to any person or property; and (3) Extraordinary expenses necessary to repair or maintain the Common Area that could not have been reasonably anticipated by the Board at the time the most recent Association budget was prepared. Notwithstanding the foregoing, in the event that the Board increases the Regular Assessment above twenty percent (20%) pursuant to this Subparagraph (3), the Board shall distribute written notice concerning such increase to all Owners and a copy of a resolution adopted by the Board setting forth: (i) the necessity of the extraordinary expenses; and (ii) the justification why said expenses were not reasonably foreseeable at the time the most recent budget was prepared. For the purpose of calculating whether an increase to Regular Assessments exceeds twenty percent (20%), the term "Regular Assessments" shall be deemed to include the amount assessed against each Lot by the Association as a Regular Assessment, plus any amount paid by the Declarant as a subsidy or pursuant to any subsidy or maintenance agreements, to the extent such subsidy payments offset an amount which would otherwise be paid by Owners as Regular Assessments. The Board may fix the Regular Assessment at an amount not in excess of the maximum Regular Assessment. So long as Declarant is offering Lots for sale pursuant to a Final Subdivision Public Report, the Regular Assessment may not be decreased by ten percent (100) or more without the express prior written consent of the Declarant and the DRE. Notwithstanding the foregoing, following the annexation of a subsequent Phase of the Project, pursuant to the provisions set forth in this Declaration, the maximum Regular Assessment may be automatically increased (or decreased) for all Lots in the Project on the first day of the month following the 18329.283-19780.FCM 091307 - 5 5 - F� • 0 first close of an escrow for the sale of a Lot in said Phase without any approval of the Members of the Association to the amount recommended by the DRE in connection with its review and processing of the Association budget for such Phase. The Associa- tion may, upon ratification by a majority of the Board, enter into an agreement with Declarant, its successors or assigns, to reduce or abate Assessments, upon such terms and conditions as may be agreed to by the parties. Section 4. Special Assessments for Capital Improve- ments. In addition to the Regular Assessments authorized above, the Board may not, subject to the limitations of California Civil Code Section 1366, without the vote or written approval of Members constituting a quorum (which shall mean more than fifty percent [50%] of Owners of the Association) casting a majority of affirma- tive votes at a meeting or election of the Association, conducted in accordance with Sections 7510, et sea., and 7613 of the Corporations Code, levy Special Assessments to defray the costs of any action or undertaking on behalf of the Association which in the aggregate exceed five percent (5%) of the budgeted gross expenses of the Association for that fiscal year. The five percent (5%) limitation shall not apply to increases in Special Assessments related to an emergency situation which shall be deemed to include the following: (a) Extraordinary expenses required by an order by a court of competent jurisdiction; (b) Extraordinary expenses for the maintenance or repair of Common Area that is necessary to remedy any danger- ous condition in the Project that represents a threat of damage or injury to any person or property; and (c) Extraordinary expenses necessary to repair or maintain the Common Area that could not have been reasonably anticipated by the Board at the time the most recent Associ- ation budget was prepared. Notwithstanding the foregoing, in the event the Board levies any Special Assessment that exceeds the five percent (5%) limitation pursuant to this Section, the Board shall distribute written notice concerning said Special Assessment to all Owners and a copy of a resolution adopted by the Board setting forth: (1) the necessity of said Special Assessment; and (2) the justification why said Special Assessment was not reasonably foreseeable at the time the most recent budget was prepared. Every Special Assessment shall be levied upon the same basis as that prescribed for the levying of Regular Assessments. 18329.283-19780.FCM 091307 -56- Section 5. Compliance Assessments. A Compliance Assessment may not be characterized nor treated as an assessment which may become a lien against the Owner's Lot enforceable by a sale in accordance with the provisions of Sections 2924, 2924(b) and 2924(c) of the Civil Code; provided, however, at such time as sales of Lots in the Project are no longer governed by regulations adopted by the DRE, the foregoing shall not apply to any Compliance Assessment imposed against an Owner consisting of a reasonable late payment penalty for delinquent Assessments and/or charges to re- imburse the Association for the loss of interest and for costs reasonably incurred (including attorneys' fees) in its efforts to collect delinquent Assessments or imposed for costs incurred by the Association in the repair of damage to Common Area and facilities for which the Member or the Member's guests or tenants were responsible. Section 6. Special Benefit Assessments. Special Bene- fit Assessments shall mean and refer to a charge levied by the Association against an Owner and his respective Lot to cover the expenses incurred by the Association in the operation, maintenance, repair, and/or funding of reserves as to a portion of the Project designated herein, by the Board, or in a Notice of Annexation as a "Special Benefit Area" or which is identified or referred to as an area or facility benefitting primarily the Owners within such an Area. As of the recordation of this Declaration, no Special Benefit Areas are contemplated for the Project. These expenses shall be chargeable only to Owners in a Special Benefit Area, and may in- clude, without limitation, the following: (a) Maintenance, management, operation, repair and replacement of particular Improvements within the Special Benefit Area; (b) Utilities or services for the benefit of Owners within the Special Benefit Area; (c) Reasonable reserves, as deemed appropriate by the Board, for repair and replacement of any Improvements maintained by the Association within a Special Benefit Area; and (d) Unpaid Special Benefit Assessments. The Association shall distribute to Owners within any Special Benefit Area a pro forma operating statement and budget for the upcoming fiscal year which shall estimate the expenses attributable to the Special Benefit Area, and shall set forth the amount and payment schedule of the Special Benefit Assessments. Increases in Special Benefit Area Assessments for any fiscal year which are less than or equal to twenty percent (20%) above the maximum Special 18329.283-14780.FCM 091307 -57- Benefit Area Assessment for the immediately preceding fiscal year may be approved by the Board, provided that the Board shall obtain the approval of Owners constituting a quorum and casting a majority of affirmative votes at a meeting or election conducted in accordance with Section 7510 et seq., and 7613 of the Corporations Code. For purposes of this Section, a quorum means Owners repre- senting more than fifty percent (50%) of the voting power of the Members of Lots affected by the Special Benefit Area Assessment. The Assessment increase limitation set forth hereinabove does not apply to increases in Special Benefit Area Assessments related to emergency situations that could not have been reasonably anticipat- ed by the Board at the time the most recent Association budget was prepared which determined the amount of the Special Benefit Area Assessments. Section 7. Date of Commencement of Regular Assess- ments: Due Dates. Subject to the terms of any maintenance and/or subsidy agreement entered into by the Association and Declarant, the Regular Assessments provided for herein shall commence as to all Lots in each Phase on the first day of the first month following the first close of escrow for the sale of a Lot in such Phase, or on the first day of the first month following the first occupancy of a Lot in such Phase pursuant to a rental or lease agreement (except as such lease may apply to a model Lot or Lot used as a sales office, design center or construction office by the Declarant) with the Declarant, or its authorized agent, whichever occurs first. Except as otherwise provided in this Article, the first Regular Assessments shall be adjusted according to the number of months remaining in the fiscal year as set forth in the By -Laws. The Board shall fix the amount of the Regular Assessment against each Lot at least thirty (30) days in advance of each Regular Assessment period. Written notice of the Regular Assessment shall be sent to every Owner subject thereto at least thirty (30) days in advance of each Assessment period. The due dates shall be es- tablished by the Board. Notwithstanding any other provisions of this Declaration, until the earlier to occur of: (a) the recordation of a Notice of Completion of an Improvement to the Common Area; or (b) the placement into use of the Common Area, each Owner (including Declarant) may be declared by the Board to be exempt from paying that portion of the Regular Assessment which is directly attributable to expenses and reserves to be incurred by the Association in the maintenance, operation and repair of such Common Area. Section 8. Model Homes. Conveyance of a Lot which is being used by Declarant for model home, sales office, design center, construction office or similar purposes (any of which uses are referred to in this Section as "Model Home") shall not commence the Regular Assessments against such Lots or other Lots within the Phase until the earlier to occur of: 18324.283-14780.FCM 091307 -58- i C� (a) discontinuance of use of such Lot as a Model Home; or (b) conveyance of any non -Model Home Lots in the Phase. During the period of time commencing on after conveyance of a Lot being used by and ending on the date Regular Assessments Lot, Declarant shall be solely responsible t of the Phase in which a Lot is being used as shall have the right to inspect the area Declarant pursuant to this Section to determ nance meets reasonable standards. the first Declarant day of the month as a Model Home commence against such o maintain all portions Model Home. The Board s being maintained by ine that such mainte- Section 9. Collection of Assessments. Except as oth- erwise provided above or in any subsequent Notice of Annexation, Regular and Special Assessments shall be levied at a uniform rate for all Lots and may be collected on a monthly basis. If any installment of a Regular Assessment is less than the amount assessed and the payment does not specify the Association funds or fund into which it should be deposited, the receipt by the Association from that Member shall be credited in order of priority first to the operating fund, until that portion of the Regular Assessment has been satisfied, and second to the reserve fund. Compliance Assessments and Special Benefit Assessments shall be due thirty (30) days after such Assessment has been levied unless otherwise determined by the Board in a manner consistent with Civil Code Section 1366, as may be amended from time to time. Section 10. Notice of Increase in Assessments. The Board shall provide to the Owners, by first class mail to the address on file with the Association, notice of any increase in Regular, Special, and/or Special Benefit Assessments not less than thirty (30) nor more than sixty (60) days prior to such increase becoming due. Section 11. Certification of Payment. The Association shall, upon demand and for a reasonable charge, furnish a cer- tificate signed by an officer or agent of the Association setting forth whether the Assessments on a specified Lot have been paid. If a certificate states that Assessments have been paid, such certif- icate shall be conclusive evidence of such payment. Section 12. Delivery by Owner. Each Owner of a Lot shall, as soon as practicable prior to the transfer of title to the Lot or the execution of a real property sales contract, as defined in California Civil Code, Section 2985, or as may be amended, from time to time, give to the prospective purchaser a copy of this Declaration and copies of the By -Laws and Articles of the Associa- 18324.283-14780.FCM 091307 - 5 9 - 0 0 tion, and a true statement, in writing, from the Board as to the amount of the Association's current Regular and Special Assessments and fees, as well as any delinquent Assessments and information relating to penalties, attorneys' fees and other charges authorized by this Declaration on the Lot as of the date the statement is issued, 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. Section 13. Delivery by Declarant. Within ninety (90) days following the first close of escrow for the sale of a Lot in the Project, or as soon as reasonably obtainable, the Declarant shall provide the Association with copies of the (1) recorded tract map for the Project; (2) Common Area easement and/or grant deeds in Phase 1; (3) this Declaration; (4) filed Articles of Incorporation; (5) the Association's By -Laws; (6) Rules and Regulations or architectural guidelines adopted by the Association, if any; (7) notice of completion certificates for Common Area, if any, in Phase 1; (8) completion bond(s) naming the Association as a beneficiary, if any; (9) warranties for Common Area equipment or fixtures, if any, in Phase 1; (10) insurance policies obtained for the Association; and (11) membership register, to the extent it is available and if required by law. Section 14. Reserves. The Regular Assessments shall include reasonable amounts, as determined by the Board, collected as reserves for the future periodic maintenance, repair and re- placement of all or a portion of the Common Area or any such other purpose determined by the Board. All amounts collected as reserves shall be deposited by the Board in a separate bank account for the purposes for which they were collected, and are to be segregated from and not commingled with any other funds of the Association. The expenditure of such funds shall be limited to the repair and replacement of those elements of the Common Area which must be repaired or replaced according to a reserve study as permitted by Section 1365.5 of the California Civil Code, as same may be amended from time to time. Section 15. Offsets and Waiver Prohibited. No Owner may waive or otherwise avoid liability for the Assessments provided for herein for any reason whatsoever, including, but not limited to, non-use of the Common Area or abandonment of his Lot, nor shall any Owner be entitled to any offset against any Assessment provided for herein for any reason whatsoever, including, but not limited to, any expenditure made by such Owner for or on behalf of the Association. 18324.283-14780.FCM 091307 -60- Section 16. Exempt Property. The following property subject to this Declaration shall be exempt from the Assessments herein: (a) All property dedicated to and accepted by any public authority; (b) All property owned by a charitable or nonprofit organization exempt from taxation by the laws of the State of California. However, no land or Improvements devoted to dwelling use shall be exempt from said Assessment; and (c) All Common Area owned in fee by the Associa- tion. ARTICLE VII EFFECT OF NONPAYMENT OF ASSESSMENTS: REMEDIES OF THE ASSOCIATION Section 1. Effect of Nonpayment of Assessments: Reme- dies of the Association. Any installment of a Regular, Special, Special Benefit, or Compliance Assessment not paid within fifteen (15) days after it is due and payable, shall be deemed delinquent and the Owner shall be required to pay: (a) reasonable costs of collection, including reasonable attorneys' fees; (b) a reasonable late charge not exceeding ten percent (100) of the delinquent Assessment or Ten Dollars ($10.00), whichever is greater, or as may, from time to time, be established by the Board in accordance with California law; and (c) interest on all sums imposed under this Section at an annual percentage rate not to exceed twelve per- cent (12%), commencing thirty (30) days after the Assessment was due. The Association need not accept any tender of a partial payment of an assessment installment and all costs and attorneys' fees attributable thereto, and any acceptance of any such tender does not waive the Association's right to demand and receive full payments thereafter. Payments for Assessments shall first be applied to the principal owed for the Assessments and only after such principal amount is paid in full, shall such payments be applied to interest or collection expenses for such Assessments. The Board, for and on behalf of the Association, may commence legal action against the Owner personally obligated to pay the same, or, in the case of a Regular, Special or Special Benefit Assessment, may foreclose the lien against his Lot. Such lien may also be fore- closed by a power of sale or other nonjudicial procedure provided for by the laws of the State of California. In furtherance thereof, each Owner hereby vests in the Association, its successors or assigns, the right and power to bring all actions at law or to pursue lien foreclosure against any Owner for purposes of col- 18324.283-14780.FCM 091307 - 6 1- • • lecting such Delinquent Assessments. To the extent permitted by law, each Owner waives, with respect to the extent of any liens created pursuant to this Article, the benefit of any homestead or exemption laws of California in effect at the time any Assessment, or installment thereof becomes delinquent or any lien is imposed. Section 2. Notice of Delinquent Assessments. No ac- tion shall be brought to foreclose a lien for delinquent Assess- ments, or to proceed under the power of sale herein, unless the Association complies with all applicable provisions of law (e.g., California Civil Code Section 1367.1(a), as the same may be amended from time to time, and provisions of California Civil Code Section 2924, 2924(b), and 2924(c), as may be amended from time to time). Section 3. Foreclosure Sale. Any foreclosure sale provided for above is to be conducted by the Board, its attorney or other persons authorized by the Board in accordance with the provisions of Sections 2924, 2924a, 2924b and 2924c of the Cali- fornia Civil Code, as same may be amended, from time to time, applicable to the exercise of powers of sale in Mortgages and deeds of trust, or in any other manner permitted by law. The Association, through duly authorized agents, shall have the power to bid on the Lot at a foreclosure sale, and to acquire, hold, lease, mortgage and convey the same. Any Owner, by acceptance of a deed for his Lot, hereby expressly waives any objection to the enforcement and foreclosure of the lien in this manner. Section 4. Curing of Default. Upon the timely curing of any default for which a Notice of Delinquent Assessments or lien was filed by the Association, the officers thereof are hereby authorized to file or record, as the case may be, an appropriate release of such Notice upon payment by the defaulting Owner of a reasonable fee to be determined by the Association to cover the costs of preparing and filing or recording such release. Section S. Cumulative Remedies. The Association's remedies for nonpayment of Assessments, including, but not limited to, an action to recover a money judgment, Assessment lien and right of foreclosure and sale, are cumulative and in addition to and not in substitution of any other rights and remedies which the Association and its assigns may have hereunder or at law. Section 6. Mortgagee Protection. Notwithstanding all other provisions hereof, no lien created hereunder, nor any breach of the terms and provisions of this Declaration, nor the en- forcement of any term or provision hereof, shall defeat or render invalid the rights of any Mortgagee under any recorded Mortgage or deed of trust upon a Lot made in good faith and for value; provided, that after such Mortgagee or other person or entity obtains title to such Lot by judicial or nonjudicial foreclosure, 18329.283-19780.FCM 091307 -62- such Lot shall remain subject to this Declaration and the payment of Assessments which fall due subsequent to the date of taking title. ARTICLE VIII USE RESTRICTIONS The Lots and Common Area shall be occupied and used only as set forth below. Section 1. Private Residential Dwelling. Each Lot shall be used as a private residential dwelling and for no other purpose, except such temporary uses as shall be permitted by Declarant while the Project is being developed and Lots are being sold by Declarant; provided, however, that Declarant reserves the right, for a period of five (5) years from recordation of this Declaration, or until all Lots in Tract No. 35060 and the Annex- ation Property are sold (and escrows closed), whichever shall first occur, to carry on normal sales activity on the Project, including the operation of models, sales offices, design centers, and construction offices, provided Declarant shall not unreasonably in- terfere with any other Owner's use of the Common Area. Section 2. Common Area Use. Use of the Common Area shall be subject to the provisions of this Declaration, the Rules and Regulations and to any additional limitations imposed by the Association. Section 3. Conduct Affecting Insurance. Nothing shall be done or kept in any Lot or in the Common Area which will in- crease the rate of insurance on the Common Area without the ap- proval of the Association. No Owner shall permit anything to be done or kept in his Lot or in the Common Area which will result in the cancellation of insurance on the Common Area or which would be in violation of any law. If, by reason of the occupancy or use of said premises by the Owner, the rate of insurance to the Common Area shall be increased, the Owner shall become personally liable for the additional insurance premiums. Section 4. Liability for Damage. Each Owner shall be liable to the Association, pursuant to the laws of the State of California, for any and all costs and expenses which may be in- curred by the Association to repair any damage to the Common Area which be sustained by reason of the negligence or willful misconduct of said Owner or of his family, tenants, lessees or contract purchasers, or their respective guests or invitees, whether minor or adult. After approval by a majority of the Board, 18324.283-14780.FCM 091307 -63- any such costs and expenses shall be levied by the Board as a Compliance Assessment against such Owner's Lot. Section 5. Signs. Subject to the provisions of Cali- fornia Civil Code, Sections 712, 713, 1353.5 and 1353.6, and California Government Code Section 434.5, as same may be amended from time to time, no sign of any kind shall be displayed to the public view on or from any Lot or the Common Area without the approval of the Association, except such signs as may be used by Declarant for a period of five (5) years from recordation of this Declaration or until all Lots in Tract No. 35060 and the Annexation Property are sold (and escrows closed), whichever is first to occur, in connection with the development of the Project and sale of Lots, and except one (1) "for sale," "for lease" or "for ex- change" sign of reasonable size (but not exceeding six [6] square feet) on any Lot. The foregoing restrictions shall not apply to any sign of customary and reasonable dimensions displayed on the Owner's Lot (or another Owner's Lot with consent) which states that the Residence is for sale, lease or exchange, or advertising directions to the Residence by the Owner or his or her agent, and which is reasonably located in plain view of the public, so long as it is consistent with any standards promulgated by the Architectur- al Review Committee. All signs permitted under this Section shall conform with the City's sign ordinance, if any, and with all applicable governmental regulations. Section 6. Maintenance of Animals. No animals of any kind shall be raised, bred or kept in any Lot or in the Common Area, except that common domesticated dogs, cats, birds, or other household pets (other than small household pets such as fish) may be kept in each Lot in reasonable numbers; provided, however, that no animal shall be kept, bred or maintained for any commercial purpose and shall not exceed any weight limitations, if any, estab- lished by the Board. As used in this Declaration, "reasonable numbers" shall ordinarily mean two (2) total pets (excluding, as an example only, fish, birds and other small household pets) per Lot; however, the Board may determine that a reasonable number in any instance may be more or less than two (2). Any Owner desiring to keep an "exotic animal" within his Lot shall make prior application to the Board for permission to keep an exotic animal. As used herein, the term "exotic animal" shall mean any type of snake or reptile which can grow to a length longer than two feet, any from of livestock, any type of spider, any animal which is poisonous or which would pose a risk of harm to any person or to a common domesticated household animal or human being if such exotic animal escaped from its Lot, or any other animal (other than a common domesticated dog, cat, bird or other household pet) which is designated by the Board, from time to time, as an exotic animal. The Board shall hold a hearing on such application and shall give at least five (5) days prior written notice of such hearing to the 18324.283-14780.FCM 091307 -64- applicant, to the applicant's adjoining neighbors, and to such other Owners within the Project as the Board may deem appropriate. The Board may, in its sole and absolute discretion, approve or disapprove such application, and may also impose such conditions upon the right to keep an exotic animal as the Board may deem appropriate, including, without limitation, requiring the Owner to construct a secure enclosure to prevent the animal from escaping, to give written notice to other Owners of the presence of such exotic animal, to procure and maintain additional liability insurance, to reimburse the Association for any costs incurred by the Association as a result of the animal escaping, etc. In all cases, animals may only be kept in accordance with applicable City ordinances and codes. Each Owner shall be responsible for cleaning up any excrement or other unclean or unsanitary condition caused by said animal in the Project. While walking or exercising an animal in the Project, the owner thereof shall, at all times, have readily available means to cleanup any excrement or other unclean or unsanitary conditions caused by said animal. All permissible pets belonging to Owners, tenants, lessees or guests must be kept within an enclosed area, or on a leash being held by a person capable of controlling the animal. The Association, upon the approval of two- thirds (2/3) of the Board, shall have the right to prohibit main- tenance of any animal within the Project which constitutes a pri- vate nuisance to any other person. Every person bringing an animal upon or keeping an animal in the Project shall be liable pursuant to the laws of the State of California to each and all persons for any injury or damage to persons or property caused by such animal. Section 7. Quiet Enjoyment. No Owner shall permit or suffer anything to be done or kept upon such Owner's Lot which will obstruct or interfere with the rights of quiet enjoyment of the other occupants, or annoy them by unreasonable noises or otherwise, nor will any Owner commit or permit any nuisance on the premises or commit or suffer any immoral or illegal act to be committed thereon. Notwithstanding the foregoing, for as long as Declarant owns an interest in the Project, the Declarant's efforts in selling the Lots may interfere with the Owners' quiet enjoyment of the Lots, however, by acceptance of a deed to a Lot in the Project, each Owner acknowledges this and waives any claims against the Declarant for nuisance due to any activity related to constructing, selling or marketing the Lots. Each Owner shall comply with all of the requirements of the Board of Health and of all other govern- mental authorities with respect to said premises, and shall remove all rubbish, trash and garbage from his Lot. All clotheslines, refuse containers, woodpiles, storage boxes, tools and equipment shall be prohibited from any Lot unless obscured from view by a wall or appropriate screen. Section 8. Grading/ Irrigation. No Owner shall permit any act to be performed on such Owner's Lot which would result in 18329.283-19780.FCM 091307 - 6 5- erosion of the Common Area, including, but not limited to, changing the grading of his Lot or over -irrigating same. If the Owner permits any such act resulting in erosion of or other damage to the Common Area, said Lot Owner will be personally liable to the Association for such damage and a Special Assessment shall be levied against such Lot Owner's Lot to recover all costs and expenses incurred to repair or reconstruct that portion of the Common Area damaged by such Lot Owner. Section 9. Structural Chancres. There shall be no structural alteration, construction or removal of any Residence, wall, or other structure whatsoever in the Project without the prior written approval of the Board or its designated Architectural Review Committee (including any necessary City approval), as required herein, except such works of construction by Declarant during the development of the Project. As required by the City, the entry tower height shall not exceed twenty-eight (28) feet; the perimeter wall and berming along the Washington Street frontage for the Project shall not exceed a combined height of ten (10) feet, of which the wall height shall not exceed six (6) feet; landscaping along the Washington Street frontage shall not include turf between the curb and sidewalk; where garages and courtyard walls meet, the wall shall be set back a minimum of six (6) inches from the face of the garage to minimize cracking; air conditioning compressors may not be placed in sideyards of Lots unless a minimum five (5) foot clearance between the compressor and the side property line of the Lot is provided; and no fence or wall shall be constructed around any retention basin unless approved by the City's Community Development Director and the City Engineer. As required by the City, all Lots located in that portion of the Project commonly known as "Hacienda" shall have a minimum front yard building setback of fifteen (15) feet, except for garages, which shall have a minimum front yard setback of twenty (20) feet; garages oriented parallel to the fronting street shall have a minimum front yard setback of fifteen (15) feet; setback measurements for the Hacienda units located on Lots 1 through 11, inclusive, of Tract 35060 shall be measured from the back of the curb. Nothing in this Declaration or the Rules and Regulations shall require the installation of an Improvement in any manner which violates Civil Code Section 1353.7 (relating to the installation and repair of a roof). Section 10. Improvements. There shall be no construc- tion, alteration or removal of any Improvement in the Project (other than those repairs or rebuilding permitted under the Article entitled "Damage or Destruction to the Common Area") without the approval of the Architectural Review Committee, as set forth 18324.283-14780.FCM 091307 -66- hereinbelow, and, if necessary, the City. No Improvement shall be constructed upon any portion of any Common Area, other than such Improvements as shall be constructed: (a) by the Declarant (or a person or entity to whom Declarant assigns its rights as develop- er), or (b) by the Association as provided herein. No fence or wall may be erected, altered or maintained on any Lot except with the Architectural Review Committee's prior written approval. No projections of any type may be placed or permitted to remain above the roof of any Residence within the Project, except one (1) or more chimneys and vents originally installed, if at all, by Declarant. No basketball backboard or other fixed sports apparatus may be constructed or maintained in the Project without the Architectural Review Committee's prior written approval (The Board may adopt Rules and Regulations regarding the use of portable basketball apparatus). No patio cover, wiring or air conditioning fixture, water softeners or other devices may be installed on the exterior of the Residence, on a Lot, or be allowed to protrude through the walls or roof of the Residence (with the exception of those items installed during the original construction of the Residence by Declarant) unless the Architectural Review Committee's prior written approval is obtained. Section 11. Windows. No window in any Residence shall be covered in whole or in part, inside or outside, with aluminum foil, newspaper, paint, tint or any other material reasonably deemed inappropriate for such use by the Association. Section 12. Commercial Activity. No business, commer- cial, manufacturing, mercantile, storage, vending or industrial operations of any kind shall be conducted in or upon any Lot or the Common Area, except such temporary uses as shall be permitted by Declarant. Notwithstanding the foregoing, this Section shall not preclude an Owner from maintaining a home -office and conducting business activities therefrom on the following conditions: (a) there is no external evidence of such activity; (b) such activities are conducted in conformance with all applicable government ordinances (e.q., all applicable permits and licenses are obtained); (c) the patrons or clientele of such activities do not visit the Residence or park automobiles or other vehicles within the Project; (d) the existence or operation of such activities is not apparent or detectable by sight, sound or smell from outside of the boundaries of the Residence or Lot; (e) no such activity increases the liability or casualty insurance obligation or premium of the Association; and (f) such activities are consistent with the residential character of the Project and conform with the provi- sions of this Declaration. Until such time as Declarant no longer has an ownership interest in the Project, no Owner or the Associa- tion shall use a Residence as an office for the rental, resale or leasing of Lots without the prior written consent of Declarant. 18324.283-14780.FCM 091307 -67- Section 13. Parking. All vehicles in the Project shall be parked in accordance with the following: (a) Restrictions Regarding the Private Streets. The streets within the Project (i.e., drives and aisles) are private streets and are subject to the Protective Covenants of the Declaration, as well as all applicable laws, ordinances and regulations of all governmental agencies having jurisdic- tion over the Project. Any unassigned open parking spaces shall be available on a first-come, first-served basis to guests and visitors and shall be marked as "visitor only." Notwithstanding the foregoing, no vehicle may be temporarily parked in any designated parking stall for more than twenty (20) continuous hours; (b) Vehicles. No Owner shall park, store or keep any large commercial type vehicle or any recreational vehicle (including, but not limited to, campers, motorhomes, trailers, boat trailers, boats, aircraft, mobile homes or other similar vehicles) on his Lot, unless such vehicle is adequately screened from public view in a manner approved by the Board, or any portion of the Common Area. Any standard passenger automobile (including campers, vans and similar vehicles up to and including one ton when used for everyday transportation) may be parked within an Owner's respective garage or on said Owner's driveway, provided such automobile does not extend into or onto any portion of the sidewalk, if any. Parking may only occur on a driveway, including the apron, which is equal to or in excess of eighteen feet (18') in length. (c) Repairs. No Owner shall conduct major repairs to any motor vehicle of any kind whatsoever in his garage or upon the Common Area, except for emergency repairs thereto within his garage and then only to the extent necessary to enable the vehicle to be moved to a proper repair facility. No Owner shall park or store an inoperative vehicle on his or her Lot, other than in the garage, or in the Project for more than forty-eight (48) hours. (d) Storage of Goods in Garages. Unless otherwise provided by the Rules and Regulations adopted by unanimous approval of the Board, each Owner shall keep his garage readily available for parking his respective vehicle therein and shall not store any goods or materials therein, nor use any portion of the garage for a workshop or other use if such storage or use would prevent said Owner from parking the number of four (4) wheel vehicles therein for which said garage was originally designed and constructed by Declarant (e.g., 2, 3 or 4, as the case may be). 18324.283-14780.FCM 091307 - 6 8 • • (e) Garage Doors/Size. Each Owner shall ensure that his garage door opener is in proper working order at all times. Each Owner acknowledges that one or more of the parking spaces in the garage may not be large enough to accommodate a full size vehicle. (f) Transfer of Interest. No Owner may lease, sub- lease, sell or give any parking space (s) within his garage to any individual who is not a resident within the Project. Section 14. Regulation of Parking. Subject to the rights of the Association, through its officers, committees and agents, the Board is hereby empowered to establish "parking" and "no parking" areas within the Common Area, and require parking in certain locations (e.g., garages), in accordance with Section 22658.2 of the California Vehicle Code, or any similar statute hereafter enacted, as well as to enforce these parking limitations by all means lawful for such enforcement, including, but not limited to, the levying of fines and the citing and towing of vehicles. Parking is limited in accordance with signs installed by Declarant or authorized by the City. Section 15. Compliance With Management Documents. All Owners shall be Members of the Association and shall comply with the terms and conditions as set forth herein and in the Articles and the By -Laws, and all Rules and Regulations of the Association and Architectural Review Committee. No Owner shall transfer any membership or interest in the Association, except upon the transfer of the Lot to which it is appurtenant. Section 16. Declarant's Improvements. Nothing in this Article or elsewhere in this Declaration shall limit the right of Declarant to complete construction of any Improvements to the Common Area and/or to any Lot owned by Declarant, or to alter the foregoing or to construct such additional Improvements as Declarant deems advisable prior to completion and sale of the entire Project. The rights of Declarant under this Declaration may be assigned by Declarant to any successor to all or any part of Declarant's interest in the Project, as developer, by an express assignment incorporated in a recorded deed transferring such interest to such successor. Section 17. Solar Heating. No solar heating panels or other solar energy collection equipment shall be installed on any portion of any Lot or Common Area, or any Improvement thereon, un- less such equipment is installed in such location and in such manner as to be obscured from the view of other persons in the Project to the greatest degree practicable without significantly decreasing its efficiency. No person shall install any such panels or equipment without the prior written consent of the Architectural 18329.283-19780.FCM 091307 -69- Review Committee, which shall have the right to reasonably restrict and determine the size, shape, color, style, materials or location of any such panels or equipment within the Project, subject to the provisions of California Civil Code Section 714, as same may be amended, from time to time. At a minimum, any solar panels are to be integrated with the roof design with the panels and frame colored to match the roof or bronze anodized. Section 18. Antennas. No radio station or shortwave operators of any kind shall operate from any Lot. Except as may be otherwise authorized by law, no Owner shall install, or cause to be installed, or maintain any television, radio, "Citizens Band" (C.B.) antenna, satellite dish or other similar electronic receiving or broadcasting device (including those devices having a diameter or diagonal measurement of one meter or less) in the Project in such a manner as to be visible from the Common Area, unless (1) approved by the Architectural Review Committee (which approval for a video or television antenna, including a satellite dish, shall not be unreasonably withheld or delayed but may include restrictions which do not significantly increase the cost of the installation, maintenance or use of the device or significantly decrease its efficiency or performance or preclude reception of an acceptable quality signal) and (2) in compliance with all applica- ble ordinances of the City, California Statutes (e.g., Civil Code Section 1376), and Federal Regulations, as each may be amended or revised. Section 19. Leasing. No Owner shall be permitted to rent or lease his Lot for transient or hotel purposes or for a period of less than thirty (30) days. All rental and lease agree- ments shall be in writing and shall provide that the terms of such agreement shall be subject in all respects to the provisions of this Declaration, By -Laws and Articles, and that any failure by the tenant or lessee to comply with the terms of such documents shall constitute a default under such agreement. Notwithstanding the foregoing, Declarant may require each Owner to comply with initial Owner occupancy restrictions that require the initial Owner of Lot purchased from Declarant to physically reside in a Lot for a fixed period of time after the close of escrow (e.g., one year) or resale restrictions which prohibit the sale of the Lot for a specific period of time unless a hardship situation exists, as determined by the Declarant. Section 20. Drilling. No oil drilling, oil development operations, oil refining, quarrying or mining operations of any kind shall be permitted within the Project, nor shall oil wells, tanks, tunnels or mineral excavations be permitted within the Project. No derrick or other structure designed for use in boring for oil, water or natural gas shall be erected, maintained or permitted within the Project. 18324.283-14780.FCM 091307 - 7 Section 21. Trash. No rubbish, trash, garbage or other waste material shall be kept or permitted upon any portion of the Project, except in covered sanitary containers approved by the City located in garages, or appropriate paved areas screened and concealed from view by a wall or other screen approved by the Architectural Review Committee, or in such portions of the Project, if any, improved with trash receptacles provided for the use of all Owners, and no odor shall be permitted to arise therefrom so as to render the Project, or any portion thereof, unsanitary, unsightly, offensive or detrimental to any other property in the vicinity thereof or to its occupants. All such refuse which is put out for pickup, shall be in conformance with all appropriate standards established by the City or governing agency. In the event trash is collected from each individual Lot, appropriate sanitary containers may be exposed to the view of neighboring Residences only when set out on the sidewalks or streets no earlier than 5:00 p.m. the night prior to the trash pick-up day and removed from the sidewalk or street within ten (10) hours after pickup, unless otherwise modified by the Board. Section 22. Drainage. There shall be no interference with the established drainage pattern over any Lot within the Project as to affect any other Lot or the Common Area, unless adequate alternative provision is made for proper drainage and is approved in writing by the Architectural Review Committee. For purposes hereof, "established" drainage is defined as the drainage which exists at the time such Lot is conveyed to a purchaser from Declarant, or later grading changes that are shown on plans ap- proved by the Architectural Review Committee. Each Owner further agrees not to obstruct, retard or otherwise interfere with, in any manner whatsoever, any drainage swales, or to perform any grading or construction on his Lot which may result in creating an excessive amount of surface water runoff (i.e., an amount of water beyond the flow originally intended and provided for by the as built condition of Declarant) to flow into said drainage swales. Except as may be otherwise maintained by the Association, each Owner of a Lot shall, at his sole cost and expense, maintain that portion of any drainage swale or other drainage devices located on his respective Lot. Section 23. Prohibition Against Further Subdivision. No Owner shall make any conveyance, execute any document or map, or enter into any contract which shall purport to further subdivide any Lot in any manner whatsoever, including, without limitation, subdividing such Lot into additional lots, condominiums, stock cooperatives or timeshare uses, whether by map, deed or contract. Any such conveyance, document, map or contract shall be void and of no force or effect whatsoever. 18329.283-19780.FCM 091307 -71- Section 24. Patios and Balconies. Patios and bal- conies, and all furniture, plants and other improvements situated therein, shall be kept at all times in a neat, clean, safe and attractive condition. Clothes, towels, blankets, laundry, or clotheslines shall not be placed on or hung from any patio or balcony, or any portion of the Common Area, where doing so would be visible from any other Lot, the Common Area or the public. Patios and balconies shall not be used for storage of any items deemed inappropriate by the Architectural Review Committee. Section 25. Exemption of Declarant. Nothing in this Article or elsewhere in this Declaration shall limit, restrict, abridge or control, in any manner whatsoever, the rights of De- clarant to complete the planning, development, grading, construc- tion, advertising, marketing, leasing and sales of the Lots, and all other property within the Project (including any property which may be annexed thereto pursuant to the provisions of this Declara- tion), including, without limitation, the following specific rights, which may be exercised by Declarant or by its agents and employees, in conjunction with such development and marketing of the Lots in the Project, including the Annexation Property: (a) The right to maintain and operate one (1) or more advertising, model, sales or leasing office(s), and construction trailer(s), construction parking areas, temporary utility facilities and/or lines, and parking area for employees located upon any Lot(s) owned by Declarant or upon any Common Area without payment of rent or approval of the - Association; (b) The right to post and display from any Lot(s) owned or controlled by Declarant or from any Common Area any sign, flag, banner, billboard or other advertising which Declarant may, in its sole discretion, deem appropriate, irrespective of size, color, shape or materials of such items, except to the extent that the exercise of said right conflicts with any provisions of the City's Municipal Code or other applicable governmental regulations; (c) The right to install, place, replace, con- struct, reconstruct, modify or remove any Improvement from any Lot owned or controlled by Declarant, from any Common Area, as Declarant may, in its sole discretion, deem appropriate; pro- vided that in the event Declarant removes any Association owned Improvement from any Common Area without the express prior written consent of the Board, Declarant shall replace such Improvement with an Improvement of substantially similar value, appearance and utility within a reasonable period following completion of any work necessitating the removal of the Improvement; 18329.283-19780.FCM 091307 -72- 0 0 (d) The right to conduct any commercial activity upon any Lot owned or controlled by Declarant or upon any Common Area which reasonably relates to the development, marketing, leasing or sales of the Lots in the Project; and (e) The right to park vehicles upon any Lot owned or controlled by Declarant or upon any Common Area. All or any portion of the rights of Declarant and elsewhere in this Declaration may be assigned by Declarant to any successor - in- interest in the Project, including the Annexation Property, by an express written assignment recorded in the Office of the County Recorder. Section 26. No Easements for View Purposes• Dis- claimer. This Declaration, including the Article entitled "Architectural Review - Approval," sets forth procedures for the approval of Improvements which may be constructed upon Lots in the Project which are consistent with the architectural standards adopted, from time to time, pursuant to said Article. The architectural standards may have some effect on views and the pass- age of light and air to individual Lots. However, by promulgation and enforcement of the architectural standards, or otherwise, neither Declarant, the Board nor the Architectural Review Com- mittee, or the members, employees or consultants of any of the foregoing, have made any representations whatsoever concerning the view, if any, that a particular Lot or other Improvement thereon will enjoy. There are no express or implied easements or rights whatsoever appurtenant to any Lot for view purposes, or for the passage of light and air. Each Owner, by accepting a deed to a Lot, hereby expressly acknowledges and agrees that further construction within the Project may impair the view from such Owner's Lot, and each Owner hereby expressly consents to any such impairment. The City makes no claim, warranty, or guarantee that views from any Lot will be preserved as development of surrounding properties occurs. Section 27. Post Tension Slabs. Each Owner hereby acknowledges that the concrete slab for Owner's Residence MAY be reinforced with a grid of steel cables which would be installed in the concrete and then tightened to create very high tension. This type of slab is commonly known as a "Post Tension Slab." Each Owner further acknowledges 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 the Lot, and subject to confirmation by the Owner that his/her Residence was constructed with a post tension slab, each such Owner hereby specifically covenants and agrees that: 18324.283-14780.FCM 091307 -73- 0 i (a) He/she shall not cut into or otherwise tamper with the Post Tension Slab; (b) He/she shall not knowingly permit any other person to cut into or tamper with the Post Tension Slab so long as Owner owns any interest in the Lot; (c) He/she shall disclose the existence of the Post Tension Slab to any tenant, lessee, or grantee of the Resi- dence; and (d) He/she shall indemnify and hold Declarant and its respective officers, employees, contractors and agents, free and harmless from and against any and all claims, damages, losses, or other liability (including attorneys' fees) arising from any breach of this Section. Section 28. Public Right -of -Way. No Owner shall construct any Improvement in the public right-of-way or public utility easement adjacent to or within the Project, if applicable, unless the Owner obtains all necessary permits from the City, public utility company, and approval from the Board, as necessary. Section 29. Pollutant Control. The Association and each Owner shall comply with any NPDES requirements and the BMP guidelines (as defined below), as such requirements and guidelines apply to the Project. A. NPDES Reguirements. The Project is subject to all Federal, State and local requirements of the National Pollutant Discharge Elimination System ("NPDES") adopted pursuant to the Federal Clean Water Act. Pursuant to a NPDES General Permit adopted by the State Water Resources Control Board, the City has adopted a Storm Water Pollution Prevention Plan for the Project ("SWPPP") which identifies certain Best Management Practices ("BMPs") to reduce the discharge of pollutants to storm water facilities, before, during and after construction on the Project is completed (e.g., NPDES and Section 5650 of the California Fish and Game Code prohibit, among other things, discharging anything other than natural rain water into storm drainage systems). The Association and the Owners shall comply with all applicable BMPs and perform all maintenance imposed by the SWPPP, as amended, and the Association shall obtain any certifications and permits or accept an assignment from Declarant of any such certifications and permits as are required by the SWPPP. The costs of the Asso- ciation's portion of such maintenance, if any, shall be treated as Common Expenses. B. Guidelines. The Association shall ensure that all Common Area landscape irrigation is implemented in accordance 18324.283-14780.FCM 091307 -74- with the BMPs, including without limitation (a) the provision for water sensors and programmable irrigation times allowing for short cycles, (b) the use of planting material similar to that installed by Declarant, as applicable, and with similar water requirements in order to reduce excess irrigation runoff and to promote surface filtration, and (c) maintain all permanent slopes with required landscaping with native or other drought tolerant planting materials. Except as specifically approved in writing by the City, no hazardous activities, including those described in the City's Municipal Code, as the same may be amended from time to time (e.g., welding, open flame or storage of flammable liquids) shall be conducted within the Project at any time. Nothing other than natural rain water or potable water may be discharged into the storm drains and storm drainage system located on private or public property. Toxic chemicals or hydrocarbon compounds such as gasoline, motor oil, antifreeze, solvents, paints, paint thinners, wood preservative and other such fluids shall not be discharged into any street, public or private, or into storm drains or storm water conveyance systems. Use and disposal of pesticides, fungicides, herbicides, insecticides, fertilizers and other such chemical treatments shall meet Federal, State, County, and City requirements as prescribed on their respective containers. All Owners within the Project are required to comply with such restrictions. Section 30. Water Quality Maintenance Obligations. The Association and Owners shall maintain the Project in a manner consistent with the Water Quality Management Plans ("WQMP") applicable to the Project, and shall at all times comply with, among other things, the following requirements and restrictions: (a) Automobile Washing. Anyone washing an automobile within the Project is encouraged to use a bucket and sponge only, rather than a hose. The Association shall strongly encourage the use of commercially available biode- gradable or low phosphate detergents for automobile washing. (b) Oil and Fluid Leaks. All automobiles with oil or fluid leaks must be given immediate attention, either through repair or the implementation of other measures (such as the use of a drip pan) to reduce the risk of fluids entering the storm drain system. (c) Automotive Repair Work. As set forth above, no Owner shall conduct any repairs to any motor vehicle of any kind whatsoever in his garage, driveway (if any) or upon any portion of the Common Area or his Lot, except for emergency repairs thereto (drip pans must be used during repair work to 18324.283-14780.FCM 091307 -75- • • catch any fluid leaks resulting from the repair) and then only to the extent necessary to enable the vehicle to be moved to a proper repair facility. All inadvertent spills must be cleaned up immediately using absorbent sand or other effective means. All clean-up materials shall be disposed of in compliance with applicable laws and regulations. (d) Cleaning Parking Areas. Parking area surfaces within the Project shall be swept clean as required by the Water Quality Management Plans. Section 31. Rights of Disabled. Subject to the provi- sions of the Declaration, Civil Code Section 1360, State and Federal laws regarding accommodations for the handicapped, and approval by the Architectural Control Committee, each Owner may modify his Lot and residence and the route 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. Section 32. Reclaimed Water. The water used to irrigate the Common Area may be reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. Based upon a number of independent studies, the California Department of Health Services has determined that inadvertent consumption of reclaimed water by domestic pets and other animals will generally not cause harm and, further, that the use of reclaimed water has not resulted in any reported significant adverse health consequences. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural improvements over time. The water district's reclaimed water may be disinfected with chlorine, and its clarity to the human eye is indistinguishable from domestic water. The standards for reclaimed water quality are established by various governmental regulatory agencies, and these standards are subject to change. Declarant and the Association, and their respective employees, consultants and agents are not liable for any property damage or personal injury by reclaimed water. Section 33. Guest Suites. As authorized by the Specific Plan in, which the Project is located, and subject to the approval of the Architectural Review Committee and the City, a maximum of one (1) guest suite may be established on any Lot within the Project, provided that the guest suite is architecturally compatible with the primary Residence on the Lot, does not include a garage or accessory structure, and does not have full kitchen facilities (except with the approval of a minor use permit). The Specific Plan defines a "guest suite" as an attached unit with sleeping and sanitary facilities and limited food preparation facilities which will be used primarily for sleeping purposes for members of the family occupying the main building, their non-paying 18324.283-14780.FCM 091307 -76- guests, and domestic employees. Guest suites may be attached to a garage that services the primary Residence on the Lot. Section 34. Sight Triangles. As required by the City, plants located within sight triangles (as defined by the American Association of State Highway Transportation Officials and depicted on Exhibit "F" attached hereto and incorporated by this reference) shall not be of a height greater than thirty (30) inches from the pavement surface, and tree canopies shall not hang lower than eighty (80) inches above the pavement surface. Section 35. Bighorn Sheet - Exterior Lighting and Landscaping and Hillside Restrictions. The Santa Rosa Mountains and hillside located immediately to the west of the Project are habitat for bighorn sheep. To minimize the effect of the Project on such habitat, as required by the City, all exterior lighting within the Project shall be directed away from the hillside located to the west of the Project. In addition, all exotic or toxic plants, such as Oleander and Prunis, and plants which are known to invade or degrade bighorn sheep habitat, such as tamarisk and fountain grass, are strictly prohibited within the Project. Additional prohibited plant materials are set forth in Exhibit "G" attached hereto and incorporated herein by this reference. Owners and other residents of the Project and their guests may not enter the hillside from any portion of the Project. To the extent that any portion of the Project begins to be used by persons to enter the hillsides, the Association shall post notices discouraging such use. Section 36. Zero Lot Line Restrictions. The specific Lot boundaries in the Project are similar to a zero lot line development. To accommodate this system of ownership, the Declarant creates, reserves, establishes, and grants various easements for ingress, egress, access, sideyard, and related purposes as generally set forth herein (e.g., referred to in Exhibit "H" as a side yard easement). The rights and obligations of the Owners of the Lots are as set forth herein, and each such Owner acknowledges and agrees that he or she has a vested interest in the establishment and preservation of said system of ownership. (a) Definitions. The following definitions shall be applicable to the Lots located within the Project: (1) "Adjoining Lot" shall mean and refer to each Lot which has a zero lot line wall constructed thereon, and which is burdened by permanent easements appurtenant to the adjoining Dominant Lot for sideyard (e.g., gardening, landscaping, irrigation, yard), drainage, encroachment, ingress, egress and access purposes (generally depicted on Exhibit "H". Lots may be both an "Adjoining Lot" and a "Dominant Lot" depending on 18324.283-14780.FCM 091307 -77- the location of the easements in the front, side or rear portions of the Lot). (2) "Dominant Lot" shall mean those Lots which have permanent easements appurtenant thereto over the Adjoining Lot (except the residential portion thereof) for sideyard (e.g., gardening, landscaping, irrigation, yard), drainage, encroachment, ingress, egress and access purposes as set forth herein. (3) "Dominant Owner" shall mean and refer to any Owner whose Lot is benefitted by permanent easements appurtenant thereto over an Adjoining Lot. (4) "Adjoining Owner" shall mean and refer to any Owner whose Lot is burdened by permanent easements appurtenant to an adjoining Dominant Lot. (5) "Zero Lot Line Walls" shall mean that certain portion of a particular structural wall of a Lot which contains no doors or first floor windows, and which is constructed substantially parallel to the Lot boundary, such that one (1) side of said Wall is the interior of the residential structure on the Lot (including but not limited to the garage) and the other side of the Wall serves as part of the boundary of the sideyard associated with the Dominant Lot. (6) "Fences" shall refer collectively to the types of fences and walls more particularly described below: i) "Front Yard Fences" shall mean and refer to any fence or wall (other than a wall which constitutes all or a portion of a Lot) which: (A) generally parallels the street or front yard area of any Lot and extends between two (2) adjacent Lot; or (B) extends parallel to the boundary line of the Lot within the Front Yard Landscaping Area; and/or (C) borders the street along a corner Lot. ii) "Rear Fences" shall mean and refer to any fence or wall (other than a fence or wall which constitutes all or a portion of a Lot) which: (A) is located approximately on the rear boundary line of a Lot or generally parallels the street or landscape area behind a Lot and extends between two (2) adjacent Lots; (B) is located generally parallel to the side boundary line between two Lots and serves as the effective boundary between the rear yard of adjacent Lots or the street; and (C) 18324.283-14780.FCM 091307 -78- u E which generally parallels a street or a corner Lot or a side boundary line paralleling the street. (7) "Ingress/Egress/Access Easement Areas" shall mean those areas designated on Exhibit "H" attached hereto, (i.e., described and depicted as a side yard easement). (8) "Front Yard Landscaping Areas" shall mean those areas of a Lot maintained by the Association as Common Area (see Exhibit "A" attached hereto). (b) Establishment of Zero Lot Line Easements. In order to create and establish a zero lot line system of owner- ship within the Project, Declarant hereby creates, estab- lishes, grants, and reserves permanent easements appurtenant to owners of Dominant Lots on, over and across those certain portions of their respective adjacent Adjoining Lots (except the residential portion thereof), which are shown and described on Exhibit "H" to accommodate ingress, egress, access, gardening, landscaping, irrigation, yard, drainage, and encroachments for any foundations, footings, eaves, overhangs, chimneys or other similar Improvements originally constructed by Declarant or shown on applicable Project improvement or architectural plans submitted by the Declarant and approved by the City. Said easements shall be used generally for gardening, landscaping, irrigation, yard, drainage, ingress, egress, access, encroachment, and other purposes provided herein, and shall be subject to each and all of the Protective Covenants set forth in this Declaration. (c) Ownership of Zero Lot Line Walls. Ownership of each Zero Lot Line Wall shall be vested in the Owner of the Adjoining Lot upon which the Zero Lot Line Wall is located. Notwithstanding said vesting of ownership, all Zero Lot Line Walls constitute party walls, and the rights and obligations of the Owners with respect to the use, enjoyment, maintenance and repair of Zero Lot Line Walls shall be as set forth herein. (d) Maintenance of Zero Lot Line Walls. The Adjoining Lot Owner shall paint, maintain, and repair the Zero Lot Line Wall, including that portion which faces the Dominant Owner's Lot, in a neat, clean, safe, sanitary and attractive condition at all times, and shall bear all costs thereof (the Declarant reserves unto the owners of the Adjoining Lots easement rights over the side yard easement area for maintenance purposes for the zero lot line wall, encroachments and drainage). Notwithstanding the foregoing, in the event any painting, maintenance or repair is required due to the fault of the Dominant Owner, the Dominant Owner shall promptly cause said work to be performed and shall bear all costs thereof. 18329.283-19780.FCM 091307 -79- In no event, may the Dominant Owner paint or drive nails, screws, bolts or other objects into the Zero Lot Line Wall, or permit or suffer anything else to be done to such Wall which would tend to damage, alter or impair the structural integrity of such Wall. Further, a Dominant Owner shall not, under any circumstances, plant any tree, shrub or other landscaping, or build, erect or otherwise install any Improvement of any kind which would unreasonably impede or interfere with (e.g., within two feet (21) of the Zero Lot Line Wall) the necessary maintenance and repairs to the Zero Lot Line Wall by the Adjoining Lot Owner, and impair the structural integrity of such Wall. (e) Use of Ingress/Egress/Access Easement Areas. Each Dominant Owner shall have the right and responsibility to landscape, improve, and otherwise maintain the In- gress/Egress/Access Easement Area appurtenant to his or her Lot in a neat, clean, safe, sanitary and attractive condition at all times, and shall bear all costs thereof, provided any hardscape, landscaping and irrigation system, and Improvements shall be first approved by the Board. However, said Owner shall not plant any tree, shrub or other landscaping (including the irrigation thereof) or allow to be constructed any Improvement (e.g., hardscape) upon the Ingress/Egress/Access Easement Area which would: (1) impair or otherwise threaten the structural integrity of any adjacent Lot; or (2) interfere with the Adjoining Owner's right of ingress, egress, and access, as set forth herein. Neither the Adjoining Owner nor the Dominant Owner may construct, install or erect any Improvement in the Ingress/Egress/Access Easement Area, except as expressly permitted by the Board, and, if necessary, approved by the City. (f) Adjoining Owner's Access Rights. The Owner of the Adjoining Lot shall have an easement for ingress, egress and access on, over and across the Ingress/ Egress/Access Easement Area and the Dominant Lot (which does not include any residential portion of said Lot) as may be reasonably neces- sary to allow the Owner of the Adjoining Lot to paint, main- tain and repair his/her Zero Lot Line Wall, his/her Lot, in- cluding any gutter or downspout attached thereto. The Ass- ociation, as otherwise noted herein, has all necessary easements over the Project, and all Lots located thereon, to access the residential structures to perform all necessary maintenance obligations of the Association. Except in the case of a bona fide emergency, the Owner of the Adjoining Lot shall give the Owner of the Dominant Lot at least twenty-four (24) hours prior written notice of his/her intention to enter upon the yard portion of the Dominant Lot and the Ingress/Egress/Access Easement Area, and shall perform all necessary work during reasonable daylight hours. In the event of an emergency, such entry may be made at any time and 18324.283-14780.FCM 091307 -80- • • • without notice. Under all circumstances, the Owners shall use their best efforts to minimize the duration of the work and the inconvenience to the Owners of other Lots. (g) Ownership of Walls. Ownership of each Front Yard Fence and Rear Fence, or portion thereof, shall be vested in the Owner of the Lot upon which said Fence, or portion thereof, is located. Notwithstanding said vesting of owner- ship, the rights and obligations of the Owners with respect to the use, enjoyment, maintenance and repair of the Fences shall be as set forth herein or otherwise determined by the Board. (h) Maintenance of the Fences. The rights and re- sponsibilities of the Owners with respect to the maintenance and repair of Fences shall be as follows (common fences dividing yard areas shall be maintained by the applicable Owners): (1) Front Yard Fences. As generally depicted on Exhibit "D" attached hereto, except as maintained by the Association or otherwise determined by the Board, Owners of a Front Yard Fence shall share the cost to paint, maintain, and repair such Front Yard Fence, so as to keep such Front Yard Fence in a neat, clean, safe, sanitary and attractive condition at all times. No Owner may construct, erect, raise, remove, or otherwise alter any Front Yard Fence without the prior express written consent of the Board. In the event that any portion of such fence, except the interior surface of one side, is damaged or injured from any cause, other than the act or negligence of either party, it shall be repaired or rebuilt at their joint expense. (2) Rear Fences. Except as may be maintained by the Association (e.g., see Exhibit "D") or determined by the Board, each co -Owner of a Rear Fence shall paint, maintain and repair such Rear Fence for which he/she/it is responsible, so as to keep such Fence in an attractive condition at all times. No Owner may construct, erect, raise, remove or otherwise alter any Rear Fence without the prior written approval of the Board. In the event that any portion of such fence, except the interior surface of one side, is damaged or injured from any cause, other than the act or negligence of either party, it shall be repaired or rebuilt at their joint expense. (i) Alterations. No alterations, repairs or restoration to any Zero Lot Line Wall, Front Yard Fence or Rear Fence shall be commenced, erected or maintained until the plans and specifications showing the nature, kind, shape, height, materials, location and approximate cost of same shall have been approved, in writing, by the Board. Except for the 18324.283-14780.FCM 091307 -81- Fences originally constructed by Declarant, no wall, fence or other structure of any kind shall be constructed on any Lot without the prior written approval of the Board. (j) Easements for Installation of Utility Lines. Other than as may be constructed by Declarant (e.g., as per plans submitted by the Declarant and approved by the City, or depicted on the final map for the Project, or described or depicted in a separate instrument), no Owner has any addition- al easement rights for the installation of utility lines in, on, over, under or through any other Lot. (k) Drainage Easements. The Declarant hereby creates, establishes, reserves, and grants to Owners of Dominant and Adjoining Lots nonexclusive reciprocal easements over the Ingress/Egress/Access Easement Areas for drainage purposes to accommodate the drainage system, including, but not limited to, area drains and pipes, originally installed by Declarant. The Dominant Owners and Adjoining Owners served by said drainage system shall be responsible to maintain and preserve that portion of said system servicing their respective Lot in an operating condition to ensure proper drainage on, over and across the Ingress/Egress/Access Easement Area in accordance with the established drainage patterns created by Declarant for each Lot. No Owner shall alter or remove the drainage system without the express written consent of the Owner of the Lot served by such drainage system and the Board. In the event any portion of the drainage system is damaged or destroyed, either Lot Owner may cause said repair or restoration work to be completed and shall be entitled to recover the actual expenses from the responsible Lot Owner. Without limiting the generality of the foregoing, if any portion of the drainage system is damaged or destroyed as a proximate result of any act or omission of any Owner, or any member of his family, guests, tenants, lessees and/or invitees (without regard to fault), such Owner shall repair and/or rebuild such drainage system, and shall bear all of the costs thereof. Pursuant to the provisions herein, the Association may have easement rights for drainage in, on, over, under, across and through the Lots. (1) Indemnification by Dominant Owners. Each Dominant Owner shall indemnify and save the respective Adjoining Owner harmless from and against any and all liabili- ty arising out of or otherwise resulting from any negligent act or omission of the Dominant Owner relating to the exercise of its rights or the performance of its obligations hereunder. (m) Indemnification by Adjoining Owners. Each Adjoining Owner shall indemnify and save the respective Domi- nant Owner harmless from and against any and all liability arising out of or otherwise resulting from any negligent act 18329.283-19780.FCM 091307 -82- 10. or omission of the Adjoining Owner relating to the exercise of its rights or the performance of its obligations hereunder. (n) Right of Contribution. The right of any Owner to contribution from any other Owner for work performed pursuant to this Article shall be appurtenant to and shall run with the land, and shall be binding upon the Owners and their successors, assigns and grantees. Notwithstanding the forego- ing, the duty and obligation to pay contribution for work already performed, pursuant to the provisions of this Section, shall not run with the land or be binding upon: (1) any Mortgagee who obtains title pursuant to either a foreclosure under its deed of trust or by a deed in lieu of foreclosure, or (2) any purchaser at a foreclosure sale under such deed of trust. Section 37. No Warranty of Enforceability. While Declarant has no reason to believe that any of the Protective Covenants contained in this Article or elsewhere in this Declara- tion are or may be invalid or unenforceable for any reason or to any extent, Declarant makes no warranty or representation as to the present or future validity or enforceability of any such Protective Covenants. Any Owner acquiring a Lot in the Project in reliance on one or more of such Protective Covenants shall assume all risks of the validity and enforceability thereof and, by acquiring the Lot, agrees to hold Declarant harmless therefrom. ARTICLE IX ARCHITECTURAL REVIEW - APPROVAL Section 1. Exemptions From Architectural Review. Declarant shall be exempt from compliance with any of the pro- visions of this Article as they may relate to the original con- struction and development of the Project by Declarant in accordance with the plans approved by the City; provided, however, if Declarant shall desire to construct any Improvements to the exteri- or of a Residence after such Residence has been completed and approved by the City, Declarant shall obtain approval for such Improvements from the City; and, provided further, if Declarant shall retain a Residence for personal use, any Improvements to the exterior of such Residence shall be subject to architectural ap- proval pursuant to this Article. The provisions of this Article may not be amended without the express written consent of Declarant so long as Declarant is offering any Lots for sale or lease, or so long as Declarant owns any portion of the Annexation Property and such property may be annexed into the Project in accordance with the Article herein entitled "Annexation of Additional Property." Section 2. Architectural Review. Except for the pur- poses of proper maintenance and repair, and except as may otherwise 18324.283-14780.FCM 091307 -83- be permitted hereunder, no person shall install any Improvement, including, without limitation, solar heating panels, lighting, shades, screens, awnings, patio covers, decorations, walls, screen doors, aerials, antennas, radio or television broadcasting or receiving devices, air conditioning units, or change or otherwise alter the exterior of any Residence or appurtenant Improvement unless same is approved by the Architectural Review Committee. For the purposes of this Section, the term "exterior" shall mean any outside wall, outside surface, roof, outside door, patio, balcony, deck, garage or other outside structure of said Residence which is visible to others in the Project and/or to the public. Wood fences and wind chimes are prohibited within the Project. Section 3. Architectural Review Committee. The Architectural Review Committee is hereby authorized with the rights and powers set forth in this Article. Said Committee shall consist of not less than three (3) members, nor more than five (5) members. In the event of the failure or inability of any member of the Architectural Review Committee to act, the remaining members shall designate a successor who shall serve for the remainder of the term of the member he replaces. The Declarant shall appoint all of the original members of the Architectural Review Committee, and replacements thereto. Further, Declarant reserves the power to appoint a majority of the members of the Architectural Review Committee until the fifth (5th) anniversary of the first Close of Escrow for the sale of a Lot pursuant to a final subdivision public report issued by the DRE for the Project. After one (1) year from the date of such first Close of Escrow, the Board shall have the power to appoint one (1) member to the Architectural Review Committee until ninety percent (90%) of the Lots in the Project have been sold, or until the fifth anniversary date of the first Close of Escrow for the sale of a Lot pursuant to a Final Subdi- vision Public Report for the first Phase of the Project, whichever first occurs. Thereafter, the Board shall have the power to appoint all of the members of the Architectural Review Committee. All mem- bers appointed to the Architectural Review Committee by the Board shall be from the membership of the Association. Members appointed to the Architectural Review Committee by the Declarant, however, need not be members of the Association. No member of the Architec- tural Review Committee shall be liable to any person for his decisions or failure to act in making decisions as a member of the Architectural Review Committee. Declarant may, in its discretion and at any time, assign to the Association by written assignment its powers of removal and appointment with respect to the Architec- tural Review Committee, subject to such terms and conditions regarding the exercise thereof as Declarant may impose. Section 4. Meetings of the Architectural Review Com- mittee. The Architectural Review Committee shall meet, from time to time, as necessary to perform its duties hereunder. The Architec- tural Review Committee may, by a majority vote of the members thereof, delegate any of its rights and responsibilities hereunder 18324.283-14780.FCM 091307 -84- (except the right to approve any Improvement or architectural submittal required by this Declaration) to one (1) or more duly licensed architects, who shall have full authority to act on behalf of the Architectural Review Committee on all matters so delegated. Section 5. Architectural Standards/Guidelines. The Board (or Architectural Review Committee if authorized by a majority of the Board) may, from time to time, adopt architectural standards/guidelines to be administered through the Architectural Review Committee for use by said Committee in reviewing plans and specifications for proposed Improvements to an Owner's Lot. The architectural standards/guidelines may include, without limitation, those guidelines, procedures, limitations and restrictions upon Owners set forth below: (a) The placement, reconstruction, addition, change or alteration of any Improvement on a Lot or the exterior of a Residence, including the nature, kind, shape, materials, ex- terior color, location, and height of any Improvement, including landscaping; (b) A description of the type of such construction, additions, changes or alterations which, if completed in conformity with the architectural standards, do not require approval of the Architectural Review Committee; (c) Conformity of completed Improvements to plans and specifications approved by the Architectural Review Committee; (d) Time limitations for the completion of the Improvements for which approval is required pursuant to the architectural standards; (e) Procedures for submission of plans and speci- fications submitted for Architectural Review Committee review, including, without limitation, floor plans, site plans, drainage plans, elevation drawings, landscape plans and a description or samples of exterior colors and materials; (f) Restrictions controlling the species and place- ment of any trees, plants, shrubbery, ground cover, etc., to be placed, planted, irrigated and maintained in the Project (i.e., approved landscape palettes, plant material consistent with the applicable fuel modification requirements); (g) Restrictions controlling the placement of any trees, plants, shrubbery, ground cover, etc., to be placed planted, irrigated and maintained in the Project (including requirements regarding the use of root barriers and/or other similar devices to prevent damage to Residences, hardscape and other Improvements); and 18324.283-14780.FCM 091307 -85- (h) A reasonable schedule of fees for submission of plans and specifications or bonds (or cash deposits) to ensure proper completion and clean up of the anticipated work and compliance with the approved plans. The architectural standards may be periodically updated or revised by the Board, as the Board, in its reasonable discretion, may deem appropriate. The Architectural Review Committee shall maintain a copy of the then current architectural standards on file at all times, and shall provide each Owner with a copy of the architectur- al standards upon written request. The Board shall establish a reasonable fee for copies of the architectural standards, and other related materials, to cover costs of reproduction, administration and handling. Section 6. Architectural Approval - Review of Plans and Specifications. The Architectural Review Committee shall comply with the Architectural guidelines/ standards adopted by the Board (including any supplementary Rules and Regulations thereto adopted by the Board) to examine any request made pursuant to this Article, in order to ensure that the proposed plans are in conformance with and are harmonious to the exterior design and existing materials of the buildings in the Project. The Architectural Review Committee shall consider and act upon any and all plans and specifications submitted for its approval under this Declaration, and perform such other duties as, from time to time, shall be assigned to it by the Board, including the inspection of construction and progress to ensure its conformance with the plans approved by the Architectural Review Committee. No construction, alteration, grading, addition, excavation, demolition, modification, decoration, redecoration or reconstruction of an Improvement shall be commenced or maintained by any Owner until the plans and specifications therefor showing the nature, kind, shape, height, width, color, materials and location of the same shall have been submitted to the Architectural Review Committee and approved in writing by the Architectural Review Committee. The address for submission of such plans and specifications, shall be provided to the Owners by the Board. The Architectural Review Committee shall approve the plans and specifications submitted for its approval only if it deems that: (a) the construction, alterations or additions contemplated thereby and the locations indicated will not be detrimental to the appearance of the surrounding area of the Project as a whole; (b) the appearance of any structure affected thereby will be in harmony with surrounding structures; (c) the construction thereof will not detract from the beauty, wholesome- ness and attractiveness of the Common Area, or the enjoyment thereof by the Owners; (d) the upkeep and maintenance thereof will not become a burden on the Association; and (e) the plans and specifications substantially comply with the Architectural standards/guidelines. The Architectural Review Committee may condition its approval of proposals or plans and specifications for 18324.283-14780.FCM 091307 -86- any Improvement: (i) on such changes therein as it deems ap- propriate, (ii) upon the agreement by the person submitting the same to grant appropriate easements to the Association for the maintenance of the Improvement, or (iii) upon the agreement of the person submitting the same to reimburse the Association for the cost of such maintenance, or all of the above, and may require submission of additional plans and specifications or other in- formation prior to approving or disapproving the submission. The Architectural Review Committee may also issue rules or guidelines setting forth procedures for submission of plans for approval, requiring a payment of a fee to the Association to accompany each submission of plans and specifications, or ad- ditional factors which it will take into consideration in reviewing submissions which are consistent with the Architectural stan- dards/guidelines. The Architectural Review Committee may require such detail in plans and specifications submitted for its review as it deems proper, including, without limitation, floor plans, site plans, drainage plans, elevation drawings, landscape plans and description or samples of exterior material and colors. Section 7. Decisions of the Architectural Review Com- mittee. Until receipt by the Architectural Review Committee of any required plans and specifications, and such other information as may be required in Section 6 above, the Architectural Review Committee may postpone review of any plans submitted for approval. Decisions of the Architectural Review Committee and the reasons therefor should be transmitted by the Architectural Review Committee to the applicant, at the address set forth in the ap- plication for approval, within forty-five (45) days after receipt by the Architectural Review Committee of all plans, specifications and materials required. Any application submitted pursuant to the provisions of Section 6 above shall be deemed approved, unless written disapproval or a request for additional information or materials by the Architectural Review Committee shall have been transmitted to the applicant within forty-five (45) days after the receipt by the Architectural Review Committee of all required materials. Section 8. Submittal to City - Right of Architectural Review Committee to Review. Upon obtaining the written approval of the Architectural Review Committee, the Owner shall thereafter submit plans and specifications to the City. In the event that all necessary approvals of the City for the issuance of a building permit or other permits required to commence the work contemplated in the plans and specifications are not obtained within six (6) months from the date of approval by the Architectural Review Committee, the Architectural Review Committee shall have the right, but not the obligation, to re -review all previously approved plans and specifications. In addition, in the event that the City 18324.283-14780.FCM 091307 -87- requires modifications to the plans and specifications previously approved by the Architectural Review Committee, the Owner shall submit to the Architectural Review Committee all modifications to the plans and specifications previously approved by the Architec- tural Review Committee. In the event the Owner is obligated to resubmit plans and specifications to the Architectural Review Committee to reflect the modifications required by the City, said Committee shall have the right to review and to impose further conditions on any such modifications. Section 9. Approval of City. Each Owner is solely responsible for ensuring that all plans and specifications submitted by such Owner to the Architectural Review Committee comply with, and do not violate, any applicable provision of law, including, without limitation, the Fair Employment and Housing Act (California Government Code Section 12900 et sect.), the City's Municipal Code, all applicable building and construction codes, and all other applicable laws, regulations, and ordinances governing land use and public safety. Approval of any proposed or existing Improvement, or completion of an Improvement, by the Architectural Review Committee or the Board shall not be construed to warrant or represent in any way that the Improvement was approved by or complies with the minimum standards of the City or any other applicable provisions of law. Similarly, approval of any proposed or existing Improvement by the City shall not be construed to constitute approval of such Improvement by the Architectural Review Committee or the Board. Section 10. Conflicts Between City and Architectural Review Committee. In the event of any conflict in the conditions of approval of any proposed Improvements imposed by the City and the Architectural Review Committee, the more restrictive of such conditions shall .be controlling. Further, nothing herein shall limit the Architectural Review Committee from imposing conditions of approval of any proposed Improvements which are more restrictive than conditions as may be imposed by the City. Section 11. No Waiver of Future Approvals. The approv- al of the Architectural Review Committee to any submissions for any work done, or proposed to be done, or in connection with any other matter requiring the approval or consent of the Architectural Review Committee, shall not be deemed to constitute a waiver of any right to withhold approval or consent of any similar proposals, plans and specifications, drawings or other matters subsequently or additionally submitted for approval. Section 12. Compensation of Members. The members of the Architectural Review Committee shall receive no compensation for services rendered, other than reimbursement by the Association for expenses incurred in the performance of such members' duties hereunder. The Association may compensate any duly licensed 18324.283-14780.FCM 091307 - 8 8 Architect who has been delegated rights and duties as provided in this Article. Section 13. Variances. Where circumstances such as to- pography, location of buildings, location of landscaping or other matters require, the Architectural Review Committee, by the vote or written assent of a majority of the members thereof, may allow reasonable variances as to any of the Protective Covenants con- tained in this Declaration or provisions under the rules and regulations promulgated by the Architectural Review Committee, on such terms and conditions as it shall require. The granting of such a variance shall not operate to waive any of the terms and provisions of this Declaration for any purpose, except as to the particular Lot and particular provision hereof covered by the variance, nor shall it affect in any way the Owner's obligation to comply with all governmental laws and regulations affecting the Owner's use of his Lot, including, but not limited to, zoning ordinances, Lot setback lines or requirements imposed by the City or other governmental authority. Section 14. Inspection of Work. Upon consent of the Owner, which consent shall not be unreasonably withheld, any member or authorized representative of the Architectural Review Committee may, at any reasonable hour and upon reasonable notice, enter and inspect any Lot which has been the subject matter of an approval of a submission for an Improvement to his Lot. Such entry shall be made with as little inconvenience to the Owner as reasonably possible, and any damage caused thereby shall be repaired by the Association. If the Architectural Review Committee finds that such work was not done in substantial compliance with the approved plans and specifications, it shall notify the Owner in writing of such noncompliance, specifying the particulars of noncompliance and shall require the Owner to remedy the same within thirty (30) days from the date of notification of such noncompliance. If a noncom- pliance exists, the Board, after Notice and Hearing, may levy a Compliance Assessment against such Owner for the costs of removing or remedying such noncompliance. Section 15. Non -Liability of Architectural Review Com- mittee Members. Neither Declarant, the Association, the Board or the Architectural Review Committee, or the members or designated representatives thereof, shall be liable for damages to any Owner submitting plans or specifications to them for approval, or to any Owner in the Project affected by this Declaration by reason of mistake in judgment, negligence or nonfeasance, unless due to willful misconduct or bad faith of the Architectural Review Com- mittee. The Architectural Review Committee's approval or disap- proval of a submission shall be based solely on the considerations set forth in this Article, and in such rules and regulations as may be promulgated by the Architectural Review Committee, and the Architectural Review Committee shall not be responsible for reviewing, nor shall its approval of any plan or design be deemed 18324.283-14780.FCM 091307 -89- approval of, any plans or design from the standpoint of structural safety and conformance with building or other codes. Section 16. Appeal. In the event plans and specifica- tions submitted to the Architectural Review Committee are disap- proved, the party making such submission may appeal in writing to the Board. The written request must be received by the Board not more than thirty (30) days following the final decision of the Architectural Review Committee. The Board shall submit such request to the Architectural Review Committee for review, and the written recommendations of the Architectural Review Committee will be submitted to the Board. Within sixty (60) days following receipt of the request for appeal, the Board shall consider the appeal at an open meeting and render its written decision. The failure by the Board to render a decision within said sixty (60) day period shall be deemed a decision in favor of the party making such submission. ARTICLE X REPAIR AND MAINTENANCE Section 1. Repair and Maintenance by Association. Without limiting the generality of the provisions herein, including the Article entitled "Powers and Duties of the Association," the Association shall have the duty to maintain, in a neat, clean, safe, sanitary, attractive and orderly condition at all times, the Common Area designated by the Board, the Declarant in this Declara- tion, or in any subsequent Notice(s) of Annexation, as generally indicated hereinbelow: (a) The Common Area (and all Improvements thereon) to be maintained, irrigated, landscaped, repaired, improved, restored and replaced in a neat, clean, safe, attractive and orderly condition at all times shall include, but not be limited to, the following: (1) Landscaping, irrigating, and otherwise maintaining the Common Area (including, without limitation, the storm water retention basins) and those portions of the Lots and parkways and medians along the streets described and/or depicted on Exhibit "A" attached hereto or a recorded Notice of Annexation, in a condition comparable to the condition originally approved by the City. (2) Maintaining the private house, tower, Project entry gates, and systems within the Project in a condition the condition originally approved by the E 18324.283-14780.FCM 091307 - 9 guard access control comparable to City; • 1 0 (3) Maintaining those portions of the Associa- tion Walls, if any, described and/or depicted in this Declaration or in a recorded Notice of Annexation (e.g., see Exhibit "D" attached hereto), in a condition comparable to the condition originally approved by the City. (4) Maintaining those portions of the private street that provide access from Washington Street to both the Project and the church property adjacent to the Project and the wall located outside of the Project described and/or depicted on Exhibit "A" attached hereto and incorporated by this reference, in a condition comparable to the condition originally approved by the City. (5) Maintaining all Project entry monumentation and recreational facilities, in a condition comparable to the condition originally approved by the City. (6) Maintaining all other areas, facilities, equipment, services, aesthetic components or other Improvements of whatever nature as may, from time to time, be set forth in any Notice of Annexation, budget approved by the DRE, or as approved by the Board or Declarant. (7) Performing all necessary tasks required to conform with applicable City and/or State regulations and the Entitlements from City. (b) Maintain everything that the Association is obligated to maintain in a clean, sanitary and attractive condition reasonably consistent with the level of maintenance reflected in the most current budget of the Association, and in conformance with any Maintenance Guidelines. Unless specifically provided in any Maintenance Guidelines, or as required by the product manufacturers' maintenance guidelines/recommendations, or as commonly accepted mainte- nance practices may govern, the Board shall determine, in its sole discretion, the level and frequency of maintenance of the Common Area and Improvements thereon (each Owner shall maintain everything that the Owner is obligated to maintain in a clean, sanitary and attractive condition and in conformance with any Maintenance Guidelines and Maintenance Recommenda- tions and any product manufacturers' maintenance guidelines/recommendations, as well as commonly accepted maintenance practices); (c) Maintain all other areas, facilities, furni- ture, equipment, services or aesthetic components of whatso- 18324.283-14780.FCM 091307 - 9 1- 0 • ever nature as may, from time to time, be requested by the vote or written consent of three-fourths (3/4) of the voting power of the Members or designated by the Board; and (d) Except as otherwise herein specified as being paid by individual Owners, the costs of maintenance, repair, restoration and replacement as provided in this Article shall be Common Expenses and shall be paid out of the general fund of the Association. Section 2. Maintenance Manual. The Declarant may deliver to the Board a "Maintenance Manual" which sets forth the Declarant's and its consultants' recommended frequency of inspec- tions and maintenance of various components of the Common Area. The Board shall, during its meetings, determine whether the recommended inspections and maintenance activities have been followed, and, if any such recommendations have not been followed, what corrective steps, if any, need to be taken to assure proper inspection and maintenance of the Common Area. The Board shall keep a record of such determinations in the Board's minutes. The Board shall, from time to time, make appropriate revisions to the Maintenance Manual. The Board shall review the Maintenance Manual for appropriate revisions at least on an annual basis after the Board has prepared the annual pro forma budget and reserve study required by the By -Laws. In addition to the obligations set forth in the Maintenance Manual, the Board may have the Common Area thoroughly inspected at least once every three (3) years (i.e., which does not include the standard inspections and clean out operations necessary to ensure that all Common Area drainage devices are free of debris and operating) to (a) determine whether the Common Area is being maintained adequately in accordance with applicable standards of maintenance, (b) identify the condition of the Common Area and any Improvements thereon, including the existence of any hazards or defects, and the need for performing additional maintenance, refurbishment, replacement or repair, and (c) recommend preventa- tive actions which may be taken to reduce potential maintenance costs to be incurred in the future. The Board may employ such experts and consultants as are necessary to perform such inspec- tion. The Board may have a report of the results of the inspection prepared. If determined appropriate by the Board, the report shall be furnished to Owners within the time set forth for furnishing Owners with the budget. The report should include at least the following: (a) A description of the condition of the Common Area, including a list of items inspected and the status of maintenance, repair and need for replacement of all such items; 18324.283-14780.FCM 091307 -92- (b) A description of all maintenance, repair and replacement planned for the ensuing fiscal year and included in the budget; (c) If any maintenance, repair or replacement is to be deferred, the reason for such deferral; (d) A summary of all reports of inspections performed by any expert or consultant employed by the Board to perform inspections; (e) A report of the status of compliance with the maintenance, replacement and repair needs set forth in the inspection report for preceding years; and (f) Such other matters as the Board deems appropri- ate. ppropri-ate. Section 3. Maintenance of Phases Subject to Construc- tion Easement. Notwithstanding anything stated to the contrary in this Declaration, the Association shall have no obligation to maintain or repair any portion of a Phase until commencement of the Association's Assessments against the Lots within such Phase. Should any Improvements overlap between Phases, the Association shall only be responsible to maintain that portion of such Improvements which lie in the Phase(s) in which the Association's maintenance obligations have commenced. Section 4. Repair and Maintenance by Owner. Except as the Association shall be obligated to maintain and repair as may be provided in this Declaration (including, without limitation, Section 1 above): (a) Each Owner shall maintain his Lot and the Residence located thereon, including, without limitation, all walls (but excepting therefrom those portions of the walls that are to be maintained by the Association, if any), roofs, patios, patio covers, decks, deck covers, balconies, windows, window frames, screens, locks and doors of his Residence, landscaping and irrigation improvements (except any slope areas and other landscape areas and/or walls that are to be maintained by the Association), irrigation lines, sewer laterals, and all other Improvements located on or servicing such Owner's Lot in a neat, clean, safe and attractive condition at all times, and make all repairs as they may be required. (b) Each Owner shall, within six (6) months after he or she closes escrow for the sale of his/her Lot from Declarant (i.e., the date of recordation of the grant deed conveying the Lot from the Declarant to the Owner), install the landscaping in the yard areas of Owner's Lot. Thereafter, 18324.283-14780.FCM 091307 -93- each Owner shall maintain his or her Lot in a neat and attrac- tive condition, including all necessary landscaping and gar- dening, to properly maintain and periodically replace, when necessary, the trees, plants, grass and other vegetation originally placed on such Lot by Declarant, if any. The Board may adopt Rules and Regulations proposed by the Architectural Review Committee to regulate landscaping permitted within the Project. In the event that any Owner shall fail to install and maintain landscaping, including all slope areas within the Lot, if any, in conformance with the Rules and Regulations, or shall allow his landscaping to deteriorate to a dangerous, unsafe, unsightly or unattractive condition, the Board, after Notice and Hearing, may enter such Owner's property for the purpose of remedying the condition, and such Owner shall promptly reimburse the Association for the cost thereof. Such cost may be levied by the Board as a Compliance Assessment. No Owner may modify, change, tamper with, or alter in any manner the Common Area without the prior written approval of the Board, which approval may be withheld in the Board's sole and absolute discretion. Section 5. Maintenance of Public Utilities. Nothing contained herein shall require or obligate the Association to maintain, replace or restore the underground facilities or public utilities which are located within easements in the Common Area owned by such public utilities. However, the Association shall take such steps as are necessary or convenient to ensure that such facilities are properly maintained, replaced or restored by such public utilities. Section 6. Damage and Destruction Affecting a Resi- dence - Duty to Rebuild. In the event any Residence is damaged or destroyed by fire or other casualty, it shall be the duty of the Owner of such Residence to repair or reconstruct said Residence in a manner which will restore it to its condition and appearance immediately prior in time to such damage or destruction, or as otherwise approved by the Architectural Review Committee. The Architectural Review Committee shall not approve such variance if the finished Residence would be inharmonious or out of keeping with the overall architectural theme of the Project, or with the exterior design of any adjacent Residences. The affected Owner shall be obligated to proceed, with all due diligence hereunder, and shall be responsible for commencing reconstruction within three (3) months after the damage occurs, and completing such reconstruc- tion as soon as reasonably possible thereafter. Section 7. Owners' Cooperation for Maintenance. The Owners of Residences which are located on adjacent Lots shall cooperate with each other as is reasonably necessary to enable each Owner to properly maintain and repair his respective Residence and/or to mitigate any damage to his Residence. 18324.283-14780.FCM 091307 -94- ARTICLE XI ENVIRONMENTAL AND OTHER DISCLOSURES AND REQUIREMENTS Section 1. Environmental Recruirements. (a) Duties and Obligations of the Owners. To reduce and/or eliminate negative effects on the environment within the Project, all Owners and/or tenants, as applicable, shall: (1) Coordinate efforts to establish or work with established disposal programs to remove and properly dispose of toxic and hazardous waste products. (2) Not discharge toxic chemicals or hydrocar- bon compounds such as gasoline, motor oil, antifreeze, solvents, paints, paint thinners, wood preservatives, and other such fluids into any streets, public or private, or into drainage, storm drain or storm water conveyance systems. Use and disposal of pesticides, fungicides, herbicides, insecticides, fertilizers and other such chemical treatments shall meet Federal, State, and County requirements as prescribed in their respective contain- ers. (3) Use Best Management Practices to eliminate or reduce surface pollutants when planning any changes to the landscaping and surface improvements to the Project. (4) Comply with the drainage requirements of all applicable National Pollution Discharge Elimination System (NPDES) requirements. (b) Duties and Obligations of the Association. Notwithstanding anything to the contrary set forth herein, the Association shall: (1) Contract with a contractor to perform all activities required to minimize the pollution of storm drain water and to comply with all Best Management Practices applicable to the Project, including, without limitation, the following: i) If applicable, maintain "NO DUMPING" stenciling message on all catch basins and storm drain inlet facilities within the Project; ii) systems on all Common Area; Provide efficient irrigation landscaped areas located in the 18324.283-14780.FCM 091307 -95- • • iii) Minimize irrigation runoff by using controllers to provide several short watering cycles; iv) Immediately correct any irrigation design or maintenance deficiencies which cause excessive runoff; V) Prohibit application of fertiliz- ers within three (3) days prior to an anticipated rain; vi) Follow all fertilizer applications with light irrigation to permit fertilizer to soak into the landscaped area; vii) Dispose of waste properly; and viii) Otherwise comply and implement all Best Management Practices set forth in the Water Quality Management Plans applicable to the Project. The Association and all Owners, as applicable, shall comply with all NPDES requirements and Best Management Practices and enforce all applicable structural, treatment control, and non-structural Best Management Practices as outlined and defined in the specific Water Quality Management Plans for the Project in order to prevent the discharge of pollutants and contaminants into the public water storm drain system. ARTICLE XII DAMAGE OR DESTRUCTION TO THE COMMON AREA Section 1. Restoration of Damaged Common Area. Except as otherwise provided in Section 2 hereinbelow, damage to or de- struction of all or any portion of the Common Area shall be handled in the following manner: (a) In the event of damage to or destruction of the Common Area, and the insurance proceeds are sufficient to effect total restoration, the Association shall, as promptly as is practical, cause the Common Area to be repaired and reconstructed in a good workmanlike manner to its condition prior to such damage or destruction. (b) If the insurance proceeds available are at least ninety percent (900) of the estimated cost of total repair and reconstruction to the Common Area, the Association shall, as promptly as practical, cause such Common Area to be 18329.283-19780.FCM 091307 -96- repaired and reconstructed in a good workmanlike manner to its condition prior to the damage or destruction, and the differ- ence between the insurance proceeds and the actual cost shall be levied by the Association as a Special Assessment against each of the Lots on an equal basis. (c) If the insurance proceeds available are less than ninety percent (90%) of the estimated cost of total repair and reconstruction to the Common Area, the Owners shall, by the written consent or vote of a majority of the Owners, determine whether: (1) To restore the Common Area as promptly as practical to its condition prior to the damage or destruction, and to raise the necessary funds over and above the insurance proceeds available by levying Assess- ments against each of the Lots on an equal basis; or (2) To restore the Common Area in a way which utilizes all available proceeds and an additional amount not in excess of ten percent (10%) of the estimated cost of total reconstruction and repair to the Common Area, and which is assessable as provided above to all Lots, but which is less expensive than restoring the Common Area to its condition prior to the damage or destruction. Section 2. Election by Owners Not to Restore Damaged Common Area. (a) Notwithstanding the provisions set forth in Section 1 hereinabove, in the event sixty-seven percent (67%) of the Owners, other than Declarant and sixty-seven percent (67%) of the first Mortgagees (based upon one [1] vote for each first Mortgage owned) have given their prior written approval, the Owners may not elect to rebuild or restore the Common Area and to disburse the available insurance proceeds to the general fund of the Association. (b) In the event the Owners shall have so voted not to rebuild the Common Area, the Common Area shall be cleared and landscaped and the cost thereof shall be paid for out of the available insurance proceeds prior to their distribution to the general fund of the Association. Section 3. Retention of Excess Insurance Proceeds in General Fund. In the event any excess insurance proceeds remain after restoring the destroyed Common Area pursuant to this Article, the Board shall retain such sums in the general fund of the Association. 18329.283-19780.FCM 091307 -97- ARTICLE XIII CONDEMNATION Section 1. Distribution of Awards - Common Area. A condemnation award affecting all or any portion of the Common Area shall be remitted to the general fund of the Association. Section 2. Board of Directors as Attorney - in - Fact. All Owners hereby appoint the Board as their special attorney-in- fact to handle the negotiations, settlements and agreements per- taining to any condemnation affecting only the Common Area. ARTICLE XIV COVENANT AGAINST PARTITION Section 1. Covenant Against Partition. By acceptance of a deed to a Lot, each Owner shall be deemed to covenant for himself, and for his heirs, representatives, successors and assigns, that he will not institute legal proceedings to effect judicial partition of his interest in the Project, unless the Project: (a) has been in existence in excess of fifty (50) years, (b) is obsolete and uneconomical, and (c) the Owners of fifty percent (50%) of the total of all Lots in the Project join in such action for partition. ARTICLE XV INSURANCE Section 1. Required Insurance Coverage. The Associa- tion, acting by and through the Board, shall obtain for the Asso- ciation and shall maintain and pay the premiums for the following insurance coverage: (a) Casualty and Fire Insurance. A policy or policies of casualty and fire insurance with extended coverage endorsement in an amount equal to one hundred percent (100%) of the current replacement cost (without deduction for depreciation or co-insurance) of the Common Area, together with all Improvements located thereon. Said policies shall be primary and shall be maintained for the benefit of the Association and Owners. The coverage does not need to include land, foundations, excavations or other items normally excluded from such coverage. Such policy or policies must contain, if required and if obtainable: (1) An Agreed Amount and Inflation Guard Endorsement; 18324.283-14780.FCM 091307 _98- L1 E (2) Construction Code Endorsements (such as Demolition Cost Endorsement); (3) A Contingent Liability from Operation of Building Laws Endorsement; and (4) An Increased Cost of Construction En- dorsement, if there is a construction code provision which would become operative and require changes to undamaged portions of any Improvements or the Common Area. (b) General Liability Insurance. A policy or pol- icies of full coverage general liability insurance (with cross -liability endorsement, if obtainable) insuring the Association, the Board, the Owners, the Declarant, and the agents and employees of each of the foregoing against any liability to the public or to any Owner, his family, invitees and/or tenants, arising from or incident to the ownership, occupation, use, maintenance and/or repair of the Common Area. The limits of liability under this Section shall be set by the Board and shall be reviewed at least annually by the Board and increased or decreased at the discretion of the Board; provided, however, if FHLMC and/or FNMA participate in the financing of Lots in the Project, said limits shall not be less than the minimum limits required under the then current FHLMC and/or FNMA regulations. (c) Fidelity Bonds. Officers' and Directors' errors and omissions insurance, and fidelity bonds naming all persons signing checks or otherwise possessing fiscal responsibilities on behalf of the Association, including, but not limited to, officers, Directors, trustees and employees of the Associa- tion, and officers, employees and agents of any management company employed by the Association who handle or are respon- sible for the administration of Association funds. Such coverage shall be in an amount deemed reasonably appropriate by the Association, but shall not be less than the estimated maximum funds, in the custody of the Association, or twenty- five percent (250) of the estimated annual operating expenses of the Project, plus reserves, whichever is greater. In addi- tion, if the Association enters into an agreement for pro- fessional management of the Project, the Association shall require such company to submit evidence of its fidelity bond coverage to the same extent as the Association's coverage. The Association shall be named as an additional obligee in the management agent's bond. Section 2. Optional Insurance Coverage. The Associa- tion, acting at its option and by and through the Board, may pur- chase such additional coverage or other insurance as it may deem necessary or appropriate, or otherwise financially beneficial for 18324.283-14780.FCM 091307 _99- • C1 the Owners, including, but not limited to, earthquake insurance, flood insurance, Workers' Compensation Insurance and plate glass insurance. Section 3. Notice of Cancellation of Insurance. All policies of insurance maintained by the Association pursuant to this Article shall contain a provision that coverage under said policies may not be canceled, terminated, allowed to expire by their own terms, or be substantially modified by any party without at least thirty (30) days' prior written notice to the Board, to each Owner and to such first Mortgagees who have filed written requests with the Association for such notice. A list of the Owners and such first Mortgagees shall be made available by the As- sociation to the insurance carrier upon request. Section 4. Review of Coverage. The Board shall annu- ally determine whether the amounts and types of insurance coverage that it has obtained pursuant to this Article shall provide adequate coverage for the Project, based upon the then current construction costs, insurance practices in the area in which the Project is located and all other factors which may indicate that either additional insurance coverage or increased coverage under the existing policies is necessary or desirable to protect the interests of the Association, the Owners and their respective Mortgagees. If the Board determines that increased coverage or additional insurance is appropriate, it shall obtain same. Section 5. Waiver by Owners. As to all policies of insurance maintained by the Association which will not be voided or impaired thereby, each Owner hereby waives and releases all claims against the Association, the Board, the Declarant, and the agents and employees of each of the foregoing, and all other Owners, with respect to any loss covered by such insurance, whether or not caused by the negligence of, or breach of, any agreement by said persons, but only to the extent of the insurance proceeds received in compensation for such loss. Section 6. Premiums Proceeds and Settlement. Insur- ance premiums for all blanket insurance coverage and any other insurance coverage which the Board has determined is necessary to protect the interests of the Association, the Owners and their respective Mortgagees, shall be a Common Expense to be included in the Regular Assessments levied by the Association. All insurance proceeds paid to the Association shall be disbursed as follows: (a) in the event of any damage or destruction to the Common Area, such proceeds shall be disbursed in accordance with the provisions of the Article herein entitled "Damage or Destruction to the Common Area"; and (b) in the event of any other loss, the proceeds shall be disbursed as the Board shall deem appropriate, subject to the limitations set forth in the Article herein entitled "Mortgagee Protection." The Association is hereby granted the authority to negotiate loss settlements with the appropriate insurance carriers. 18329.283-19780.FCM 091307 _100- Any two (2) Directors may sign a loss claim form and release form in connection with the settlement of a loss claim, and such signatures shall be binding on the Association and its Members. Section 7. Rights and Duties of Owners to Insure. Nothing herein shall preclude any Owner from carrying any casualty and fire insurance for his Residence and all personal property within his Residence, and/or public liability insurance as he may deem desirable to cover his individual liability for damage to person or property occurring inside his individual Lot or elsewhere upon the Project. Each Owner hereby acknowledges and agrees that the Association does not maintain any property or liability insurance for an Owner's Lot. If obtainable, any liability insurance coverage carried by an Owner shall contain a waiver of subrogation of claims against the Declarant, the Association, the Board, their agents and employees, and all other Owners. Such other policies shall not adversely affect or diminish any liability under insurance obtained by the Association. If any loss intended to be covered by insurance carried by the Association shall occur and the proceeds payable thereunder shall be reduced by reason of insurance carried by any Owner, such Owner shall assign the proceeds of such insurance carried by him to the Association to the extent of such reduction for application by the Board to the same purposes as the reduced proceeds are to be applied. Section 8. Trustee for Policies. The Association is hereby appointed and shall be deemed trustee for the interests of all insureds under the policies of insurance maintained by the Association. All insurance proceeds under such policies shall be paid to the Board, as trustees, and the Board shall have full power to receive such funds on behalf of the Association, the Owners and their respective Mortgagees, and to deal therewith as provided for in this Declaration. Section 9. Mortgage Clause. All insurance policies should have the "standard mortgage clause," or equivalent en- dorsement, providing that coverage of a Mortgagee under the in- surance policy will not be adversely affected or diminished by an act or neglect of the Mortgagor, which is commonly accepted by private institutional mortgage investors in the area in which the Project is located, unless such coverage is prohibited by ap- plicable law. Mortgages owned by FNMA must name as a Mortgagee either FNMA or the servicers for the Mortgages held by FNMA en- cumbering the Residences. When a servicer is named as the Mort- gagee, its name should be followed by the phrase "its successors and assigns." If the Mortgage is owned in whole by FHLMC, the name of the servicer of the Mortgage followed by the phrase "its successors and assigns, beneficiary" should be named as Mortgagee instead of FHLMC. The mortgage clause should be endorsed to fully protect FHLMC's interests or the interest of FHLMC and the servicer where applicable. If FHLMC must be named as Mortgagee, the endorsement should show the servicer's address in lieu of FHLMC's 18324.283-14780.FCM 091307 - 101 - • • address. A mortgage clause in favor of Mortgagees holding Mort- gages on Residences is not required on a policy insuring the Common Area. Section 10. Compliance With Requirements of FHLMC and FNMA. Notwithstanding the provisions of this Article, the Associa- tion shall obtain and maintain in effect such policies of insurance meeting all requirements of FHLMC and FNMA established by those entities for planned development projects for so long as any of such agencies continue to be a Mortgagee, Owner, insurer or guarantor of a Mortgage in the Project, except to the extent such coverage is not available or has been waived, in writing, by such agencies. Section 11. Required Waiver. All policies of hazard and physical damage insurance may provide, only if available at a reasonable cost to the Association as determined by the Board, in its sole discretion, for waiver of the following rights, to the extent that the respective insurers would have the rights without such waivers: (a) Any defense based on co-insurance; (b) Any right of set-off, counterclaim, apportion- ment, proration or contribution by reason of other insurance not carried by the Association; (c) Any invalidity, other adverse effect or defense on account of any breach of warranty or condition caused by the Association, any Owner or any tenant of any Owner, or arising from any act, neglect or omission of any named insured, or the respective agents, contractors and employees of any insured; (d) If applicable, any right of the insurer to repair, rebuild or replace, and, in the event the Residence is not repaired, rebuilt or replaced following loss, any right to pay under the insurance an amount less than the replacement value of the improvements insured or the fair market value thereof; (e) If applicable, notice of the assignment of any Owner of its interest in the insurance by virtue of a convey- ance of any Lot; and (f) Any right to require any assignment of any Mortgage to the insurer. Section 12. Annual Notification of Insurance. The Association shall, upon issuance or renewal of insurance, but not less than annually, notify its Members as to the amount and type of insurance carried by the Association, and it shall accompany this 18324.283-14780.FCM 091307 -102- notification with statements to the effect that the Association is or is not insured to the levels specified by this Article, and that if not so insured, Owners may be individually liable for the entire amount of a judgment, and if the Association is insured to the levels specified in Section 1 above, then Owners may be individual- ly liable only for their proportional share of Assessments levied to pay the amount of any judgment which exceeds the limits of the Association's insurance. The Association shall further prepare and distribute to all its Members a summary of the Association's insurance coverage pursuant to Section 1365 of the California Civil Code, as same may be amended from time to time. ARTICLE XVI MORTGAGEE PROTECTION Section 1. Mortgagee Protection Provisions. Notwith- standing any other provisions in this Declaration to the contrary, in order to induce FHLMC and FNMA, and other lenders and investors, to participate in the financing of the sale of Lots in the Project, the following provisions contained within this Article are added hereto, and to the extent these added provisions conflict with any other provisions in this Declaration, these added provisions shall control. This Declaration, the Articles and the By -Laws for the Association are hereinafter collectively referred to in this Article as the "constituent documents." (a) The right of an Owner to sell, transfer or otherwise convey his or her Lot shall not be subject to any right of first refusal or any similar restriction in favor of the Association; (b) The lien of the Assessments provided for herein shall be subordinate to the lien of any first Mortgage now or hereafter recorded upon any Lot. The sale or transfer of any Lot shall not affect the Assessment lien; however, the sale or transfer of any Lot pursuant to judicial or nonjudicial foreclosure of a first Mortgage or pursuant to any remedies provided for in the Mortgage shall extinguish the lien of such Assessments as to payments which became due prior thereto. No sale or transfer shall relieve such Lot from liability for Assessments due thereafter. Any first Mortgagee who obtains title to a Lot pursuant to the remedies provided in the Mortgage, or foreclosure of the Mortgage, or any purchaser at a foreclosure sale of a first Mortgage will not be liable for unpaid Assessments or charges which accrue prior to the ac- quisition of title to such Lot by the Mortgagee (except for claims for a share of such Assessments or charges resulting from a reallocation of such Assessments or charges to all Lots, including the mortgaged Lot); 18324.283-14780.FCM 091307 -103- C� C� (c) Except as provided by statute in case of con- demnation or substantial loss to the Lots and/or Common Area, unless sixty-seven percent (670) of the Owners, other than Declarant, or sixty-seven percent (67%) of the first Mortgag- ees (based upon one [1] vote for each Lot encumbered by said Mortgagee's first Mortgage) have given their prior written approval, neither the Association nor the Owners shall be entitled to: (1) Change the method of determining the obligations, Assessments, dues or other charges which may be levied against an Owner's Lot; (2) By act or omission seek to abandon, parti- tion, subdivide, encumber, sell or transfer all or any portion of the Common Area. The granting of easements for public utilities or for other purposes consistent with the intended uses of the Common Area or the residential nature of the Project, shall not be deemed a transfer within the meaning of this clause; (3) Use hazard insurance proceeds for losses to the Common Area for other than repair, replacement or reconstruction; (4) Effect any decision of the Association to terminate professional management and assume self- management of the Project, where such professional man- agement was previously a requirement by a holder, insurer or guarantor of any first Mortgage; (5) By act or omission, change, waive or abandon any provisions of this Declaration, or enforce- ment thereof, pertaining to architectural design of the Residences situated on a Lot or the maintenance and operation of the Common Area within the Project, in- cluding, without limitation, walls and landscaping within the Project; (6) Fail to maintain fire and extended cov- erage on the insurable Common Area on a current re- placement cost basis in an amount not less than one hundred percent (100%) of the insurable value thereof; and (7) Abandon or terminate the Association, except for abandonment, partition or termination as may be provided by law. (d) All taxes, Assessments and charges which may become liens prior to the first Mortgage under local law shall 18324.283-14780.FCM 091307 - 104 - relate only to individual Lots, and not to the Project as a whole; (e) No provision of the constituent documents shall be interpreted to give any Owner or any other party priority over any rights of the first Mortgagee in the case of a distribution to such Owner of insurance proceeds or condemna- tion awards for losses to or a taking of all or any portion of the Common Area or such Owner's Lot; (f) The Assessments provided for in the constituent documents shall include an adequate reserve fund for mainte- nance, repairs and replacement of those elements of the Common Area that must be replaced on a periodic basis, and shall be payable in regular installments, rather than by Special Assessments; (g) Each holder, insurer or guarantor of a first Mortgage who has filed with the Association a written request for notice shall be entitled to timely written notice of: (1) Any condemnation or eminent domain pro- ceeding, and any loss or taking resulting from such proceeding which affects the Project, or any portion thereof; (2) Any substantial damage or destruction to the Project, or any portion thereof, when such loss exceeds Ten Thousand Dollars ($10,000.00); (3) Any default in the performance by an indi- vidual Owner of any obligation under the constituent documents which is not cured within sixty (60) days after the Association learns of such default, which notice shall state the length of time which such Owner has been delinquent; (4) Any lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association; (5) Any abandonment or termination of the Project; and (6) Any proposed action that requires the consent of a specified percentage of eligible Mortgagees. (h) Any agreement for professional management of the Project, or any contract providing for services of the Declarant may not exceed one (1) year, renewable by agreement of the parties for successive one (1) year periods. Any such agreement must provide for termination by either party with or 18324.283-14780.FCM 091307 -105- • 0 without cause and without payment of a termination fee on at least thirty (30) days' written notice, but not more than ninety (90) days; (i) First Mortgagees of Lots may, jointly or singly, pay taxes or other charges which are in default and which may have become a lien on the Common Area, and may pay overdue premiums on hazard insurance policies or secure new hazard insurance coverage on the lapse of a policy for the Common Area, and first Mortgagees making such payments shall be owed immediate reimbursement therefor from the Association. Upon demand by any first Mortgagee, the Board shall execute, on behalf of the Association, an agreement establishing the right of all first Mortgagees to such reimbursement; (j) A first Mortgagee of a Lot in the Project will, upon request, be entitled to: (1) Examine the books and records of the Association during normal business hours; (2) An audited financial statement from the Association for the previous fiscal year (without expense to the holder, insurer or guarantor requesting said statement), however, if an audited financial statement is not available and until such time as the Project contains fifty (50) Lots, any Mortgage holder may be allowed to have an audited financial statement prepared, at its own expense; and (3) Receive written notice of all meetings of the Association and be permitted to designate a rep- resentative to attend all such meetings. (k) Each Owner shall notify the Association in writing within ten (10) days after the close of escrow for the purchase of his Lot of the name and address of his first Mortgagee, and thereafter, each Owner shall promptly notify the Association of any changes of name or address for his first Mortgagee; (1) If any Lot (or portion thereof) or the Common Area (or portion thereof) is made the subject matter of any condemnation or eminent domain proceeding, or is otherwise sought to be acquired by a condemning authority, then the institutional holder of any first Mortgage on such Lot will be entitled to timely written notice of any such proceeding or proposed acquisition; and (m) Subject to the provisions set forth herein, in the event any portion of the Common Area encroaches upon any Lot or any Lot encroaches upon the Common Area as a result of 18329.283-19780.FCM 091307 -106- the construction, reconstruction or repair by Declarant or shifting, settlement or movement of any portion of the Project, a valid easement for the encroachment and for the maintenance of the same shall exist so long as the encroach- ment exists. Section 2. Violation of Mortgagee Protection Provi- sions. No breach of any of the foregoing Protective Covenants shall cause any forfeiture of title or reversion or bestow any right of re-entry whatsoever, but in the event that any one or more of these Protective Covenants shall be violated, the Declarant, its successors and assigns, the Association, or any Owner in the Project may commence a legal action in any court of competent jurisdiction to enjoin or abate said violation and/or to recover damages; provided, however, that any such violation shall not defeat or render invalid the lien of any Mortgage or deed of trust made in good faith and for value. Said Protective Covenants shall be binding upon and effective against any Owner whose title is acquired by foreclosure, trustee sale or otherwise. Section 3. Amendments to Conform With Mortgagee Re- cruirements . It is the intent of Declarant that this Declaration and the Articles and By -Laws of the Association, and the Project in general, meet all requirements necessary to purchase, guarantee, insure or subsidize any Mortgage of a Lot in the Project by the FHLMC and the FNMA. In furtherance of said intent, Declarant may amend this Declaration without the consent of the Members at any time after the close of escrow for the first sale of a Lot in the Project by recording a written instrument setting forth the amendment, provided that the amendment is necessary to cause this Declaration to comply with the requirements of the DRE, FHLMC, FNMA, and/or GNMA; provided, however, that any such amendment shall be effective only if Declarant mails a copy of the amendment to all of the foregoing entities which are, or have agreed to be, a holder, insurer or guarantor of a first Mortgage, by certified or registered mail, with a "return receipt" requested, and does not, within sixty (60) days thereafter, receive a notice of disapproval from any such entity. Said amendments shall not be recorded by Declarant until after the expiration of such sixty (60) day period. ARTICLE XVII ENFORCEMENT OF BONDED OBLIGATIONS Section 1. Enforcement of Bonded Obligations. In the event that the Improvements of the Common Area in any Phase have not been completed prior to the first close of escrow for a Lot following the issuance of a Final Subdivision Public Report by the DRE for such Phase, and the Association is obligee under a bond or other arrangement (hereinafter referred to as the "Bond") to secure 18324.283-14780.FCM 091307 -107- • • a performance of the commitment of Declarant to complete such im- provements, the following provisions shall be applicable: (a) The Board shall consider and vote on the question of action by the Association to enforce the obliga- tions under the Bond with respect to any improvements for which a Notice of Completion has not been filed within sixty (60) days after the completion date specified for such im- provements in the Planned Construction Statement appended to the Bond. If the Association has given an extension in writing for the completion of any Common Area improvement, the Board shall consider and vote on the aforesaid question if a Notice of Completion has not been filed within thirty (30) days after the expiration of such extension. (b) In the event that the Board determines not to initiate action to enforce the obligations under the Bond, or in the event the Board fails to consider and vote on such question as provided above, the Board shall call a special meeting of the Members for the purpose of voting to override such decision or such failure to act by the Board. Such meeting shall be called according to the provisions of the By - Laws dealing with meetings of the Members, but in any event, such meeting shall be held not less than thirty-five (35) days nor more than forty-five (45) days after receipt by the Board of a petition for such meeting signed by Members representing five percent (5%) of the total voting power of the Associa- tion. (c) The only Members entitled to vote at such meeting of Members shall be the Owners, other than Declarant. A vote at such meeting of a majority of the voting power of such Members, other than the Declarant, to take action to enforce the obligations under the Bond shall be deemed to be the decision of the Association, and the Board shall thereaf- ter implement such decision by initiating and pursuing appropriate action in the name of the Association. ARTICLE XVIII ANNEXATION OF ADDITIONAL PROPERTY Additional property may be annexed to and become subject to this Declaration as set forth in this Article. Section 1. Development of the Proiect. The Declarant intends to sequentially develop the Annexation Property on a phased basis; however, Declarant may elect not to develop all or any portions of said Annexation Property, may annex such portions of the Annexation Property in Phases of any size, and may develop 18324.283-14780.FCM 091307 -108- • Phases in any order and at provisions of this Article. • any given time, subject to the Section 2. Annexation Pursuant to Approval. Except as otherwise allowed pursuant to Section 3 hereinbelow, upon obtaining the approval in writing of the Association pursuant to the vote or written assent of sixty-seven percent (67a) of the total voting power of Association Members, the owner of any property who desires to annex said property to the scheme of this Declaration and to subject it to the jurisdiction of the Association may file of record a Notice of Annexation, as described in Section 4 of this Article. Section 3. Annexation Pursuant to General Plan of Development. Declarant shall have the right, subject to the provisions of this Article, to annex into the Project all or any portions of the Annexation Property, thereby making such Annexation Property subject to this Declaration and to the jurisdiction of the Association, without the vote or written assent of the Association or its Members, provided and on condition that: (a) Any annexation pursuant to this Section shall be allowed when the proposed annexation is approved by the Declarant and in substantial conformance with the overall general plan of phased development for the Project originally submitted to and approved by the DRE with the Phase 1 Final Subdivision Public Report application (e.g., the Annexation Property as depicted and/or described on Exhibit "C"), or as subsequently approved by the DRE; and (b) A Notice of Annexation, as described in Section 4 of this Article, shall be recorded covering the designated portions of the Annexation Property. Section 4. Notice of Annexation. The annexation of additional property authorized under this Article shall be made in filing of record a Notice of Annexation, or similar instrument, covering said additional property, and the Notice of Annexation shall expressly provide that the scheme of this Declaration shall extend to such additional property. The Notice of Annexation may contain such complementary additions to and modifications of the Protective Covenants set forth in this Declaration which are neces- sary to reflect the different character, if any, of the annexed property, including, but not limited to, marketing and selling vacant Lots, the architectural guidelines for any construction thereon, maintenance responsibilities between the Association and the Owners in this annexed property and payment of Assessments which are fair, reasonable, and appropriate, and are not inconsis- tent with the general scheme of this Declaration. Except as set forth in this Section, no Notice of Annexation shall delete, revoke, modify or otherwise alter the Protective Covenants set forth in this Declaration. A Notice of Annexation may annex solely 18324.283-14780.FCM 091307 _109- • • Common Area so long as such annexation would not violate the provisions in this Declaration regarding increases in Regular Assessments and is approved by the DRE. Section 5. Effective Date of Annexation. Any Notice of Annexation recorded on a subsequent Phase of the Project shall become effective immediately upon the first close of an escrow for the sale of a Lot in said Phase, as evidenced by the recordation of the first instrument of conveyance for said Lot, or, in the event that only Common Area is being annexed, upon the recordation of the deed conveying the Common Area to the Association. Section 6. Amendments to Notice of Annexation. Not- withstanding any other provisions in this Declaration to the con- trary, a Notice of Annexation may be amended by the requisite affirmative vote of the Owners for such Phase upon the vote or written consent of a majority of a quorum of the Members (and first Mortgagees, if applicable), as set forth in the Article herein entitled "General Provisions," in only the annexed property described in said Notice of Annexation, rather than by the Owners casting affirmative votes or giving written consent on behalf of a majority of all Members of the Association (and first Mortgagees, if applicable) in the Project, on the following conditions: (a) Such amendment applies only to the annexed property described in said Notice of Annexation; and (b) Such amendment shall in no way contradict, revoke or otherwise alter any of the Protective Covenants set forth in this Declaration. Section 7. Right of De -Annexation. Declarant hereby reserves the right, following receipt of written approval from the City, to delete all or any portions of the Annexation Property which may be annexed to the Project pursuant to this Declaration, and to delete said property from the scheme of this Declaration and from the jurisdiction of the Association, provided and on condition that (i) the de -annexation shall be made prior to the first close of an escrow for the sale of a Residence in the property to be de - annexed, (2) the de -annexation is recorded in the same manner as the applicable Notice of Annexation, (3) the Declarant has not exercised any vote with respect to any Residence in such property, and (4) no Assessments have commenced on any portion of the property subject to the de -annexation. Section 8. Parties to Notice of Annexation. For so long as Declarant has the right to annex all or any portion of the Annexation Property into the Project, each Notice of Annexation covering property owned by Declarant shall be executed only by Declarant. Declarant's execution of any Notice of Annexation shall evidence Declarant's consent thereto. 18329.283-19780.FCM 091307 - 110 - 0 • ARTICLE XIX GENERAL PROVISIONS Section 1. Enforcement. (a) The City, Association and/or the Owner of any Lot in the Project, including the Declarant, shall have the right, but not the obligation, to enforce, by proceedings at law or in equity, any or all of the covenants imposed by this Declaration, including, without limitation, the right to prosecute a proceeding, at law or in equity, against the person or persons who have violated, or are attempting to violate, any of said covenants, to enjoin or prevent them from doing so, to cause said violation to be remedied and/or to recover damages for said violation; provided, however, that with respect to Assessment liens, the Association shall have the exclusive right to the enforcement thereof. (b) The result of every act or omission whereby any of the covenants contained in this Declaration are violated, in whole or in part, is hereby declared to be and constitutes a nuisance, and every remedy allowed by law or equity against a nuisance, either public or private, shall be applicable against every such result and may be exercised by the City, Association or by any Owner, including the Declarant or its successors in interest. (c) The remedies herein provided for breach of the covenants contained in this Declaration shall be deemed cumulative, and none of such remedies shall be deemed exclu- sive. (d) The failure of the City, the Association or any Owner, including the Declarant, to enforce any of the covenants contained in this Declaration shall not constitute a waiver of the right to enforce the same thereafter. (e) Prior to filing a civil action by either the Association or by an Owner solely for declaratory relief or injunctive relief, or for declaratory relief or injunctive relief in conjunction with a claim for monetary damages other than Association Assessments, related to the enforcement of the Association governing documents, the parties may be required to comply with the provisions set forth herein and Civil Code Section 1369.510, et sec., if applicable. Failure to comply with the prefiling requirements of Section 1369.510, et sect., of the Civil Code may result in the loss of the right to sue regarding enforcement of the Association's governing documents. 18324.283-14780.FCM 091307 - 111 - • 0 (f) A breach of the covenants contained in this Declaration shall not affect or impair the lien or charge of any bona fide mortgage or deed of trust made in good faith and for value on any Lot; provided, however, that any subsequent Owner of such Lot shall be bound by said covenants, whether or not such Owner's title was acquired by foreclosure, a trus- tee's sale or otherwise. (g) Each Owner agrees, by the acceptance of his deed, that recovery of damages at law for any breach of the provisions of this Declaration would not be an adequate remedy. In order to encourage compliance, deter noncompliance, and enable the effective enforcement of this Declaration, the Declarant, so long as Declarant owns any Lot within the Project, and/or the Association is authorized to establish and collect fines and penalties, in addition to any fines and penalties which may be imposed by the City pursuant to the appropriate authority of applicable municipal codes, for the breach of any provision of this Declaration which is not cured or which reoccurs after the violating Owner has received written notification of said violation. The fines and penal- ties shall be determined by taking into account the: (1) violation, (2) desirability of deterring future violations, (3) the expense related to alternative legal action, and (4) all other reasonable related factors. (h) The Board, for and on behalf of the Associa- tion, may assess monetary penalties against an Owner as a Compliance Assessment and/or temporarily suspend said Owner's voting rights for the period during which any Assessment against said Owner's Lot remains unpaid; provided, however, the requirements for Notice and Hearing set forth in the By - Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (i) The Board, for and on behalf of the Associa- tion, may, after Notice and Hearing, temporarily suspend an Owner's voting rights for a period not to exceed thirty (30) days for any infraction of the Association's published Rules and Regulations; provided, however, the requirements for Notice and Hearing set forth in the By -Laws shall be followed with respect to the accused Owner before a decision to impose discipline is reached. (j) Additional City Rights. In addition to the above general rights of enforcement, the City and any other governmental entity with appropriate jurisdiction shall have the right, through its agents and employees, to enter upon any part of the Project for the purpose of enforcing all applica- ble codes and/or local ordinances, including, but not limited to, the California Vehicle Code, and is hereby granted an 18324.283-14780.FCM 091307 -112- 0 0 easement over the Project for such purpose. The rights of City to compel performance shall include the following: (1) Failure of Association to Maintain Common Area. In the event that the Association fails to maintain the Common Area as required in this Declaration, the City shall have the right, but not the duty, to perform the necessary maintenance. If the City elects to perform such maintenance, the City shall give written notice to the Association, with a copy thereof to the Owners in the Project, setting forth with particularity the maintenance which the City finds to be required and requesting the same be carried out by the Association within a period of thirty (30) days from the giving of such notice. In the event that the Association fails to carry out such maintenance of the Common Area with the period specified by the City's notice, the City shall be entitled to cause such work to be completed and shall be entitled to reimbursement with respect thereto from the Owners as provided herein. (2) Special Assessments Levied by the City. In the event the City has performed the necessary maintenance to the Common Area, the City shall submit a written invoice to the Association for all costs incurred by the City to perform such maintenance of the Common Area. 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 collec- tion 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. Section 2. Severability. Invalidation of any one of these Protective Covenants by judgment or court order shall in no way affect any other provisions hereof, which shall remain in full force and effect. Section 3. Term. The Protective Covenants set forth in this Declaration shall run with and bind the Project, and shall inure to the benefit of the Association and be enforceable by the Board or the Owner of any land subject to this Declaration, their respective legal representatives, heirs, successors and assigns, for a term of sixty (60) years from the date this Declaration is recorded, after which time said Protective Covenants shall be automatically extended for successive periods of ten (10) years, unless an instrument, signed by a majority of the then Owners agreeing to terminate said Protective Covenants, in whole or in part, has been recorded within one (1) year prior to the termina- 18324.283-14780.FCM 091307 -113- • 0 tion of the initial sixty (60) year term, or within one (1) year prior to the termination of any successive ten (10) year period. Section 4. Construction. The provisions of this Dec- laration shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and maintenance of the Project. The Article and Section headings have been inserted for convenience only and shall not be considered or referred to in resolving questions of interpretation or construction. Section 5. Singular Includes Plural. Whenever the context of this Declaration may so require, the singular shall in- clude the plural, and the masculine shall include the feminine and neuter. Section 6. Covenants Running With the Land. Each of the Protective Covenants provided for in this Declaration shall be deemed to be established upon the recordation of this Declaration, and shall henceforth be deemed to be covenants running with the land for the use and benefit of the Lots, and superior to all other encumbrances applied against or in favor of any portion of the Project which are the subject of this Declaration. In furtherance of the easements provided for in this Declaration, the individual grant deeds to the Lots shall set forth said easements; provided however, in the event such deed does not set forth said easements, such will not impact the effectiveness thereof to convey said easements. Section 7. Amendments. (a) Amendments by Declarant. Prior to the close of escrow for the sale of a Lot to a member of the public, in accordance with a Final Subdivision Public Report issued by the DRE, this Declaration may be amended, restated or ter- minated by an instrument executed by Declarant. Notwithstand- ing any other provisions of this Declaration, for so long as Declarant owns any portion of Tract No. 35060 and/or the Annexation Property, Declarant may unilaterally amend this Declaration to (i) conform this Declaration to the require- ments of VA, DRE, FNMA, FHLMC, GNMA, the County, City or any other governmental agency or entity then in effect; (ii) correct typographical or inadvertent errors in the Declaration and/or Exhibits attached thereto; (iii) supplement provisions which pertain to rights or obligations of Declarant, the Association or Owners arising under Division 2, Part 2, Title 7 (commencing with Section 895) of the California Civil Code; and/or (iv) record maintenance recommendations/schedules for any Improvements on the Lots and/or Common Area. (b) Amendments by Association. Except as otherwise provided herein and all applicable provisions of law (e.g., the provisions of California Civil Code Section 1363.03 18329.283-19780.FCM 091307 - 114 - regarding secret ballots), this Declaration may be amended only by an affirmative vote of Owners representing not less than sixty-seven percent (67%) of the Class A voting power and the Class B voting power of the Association. At such time when the Class B membership shall cease and be converted to Class A membership, any and all amendments to this Declaration shall be enacted by requiring the vote or written assent of Owners representing both: (a) sixty-seven percent (67%) of the total voting power of the Association, and (b) sixty-seven percent (67%) of the votes of Members, other than the Declarant; provided, however, that the percentage of the voting power necessary to amend a specific provision shall not be less than the percentage of affirmative votes prescribed for action to be taken under said provision, and no amendment of a provision of this Declaration which affects the rights, interests, or obligations of Declarant or requires the approval or consent of Declarant be made without the written approval of Declarant (e.g., reservation of easements and construction rights, Declarant' s voting rights and powers to appoint members of the Board and Architectural Review Committee, provisions pertaining to the resolution of Disputes, Maintenance Guidelines, Maintenance Manual, Maintenance Recommendations, etc.). Any Owner or the Association may petition the Superior Court of the County for an order reducing the necessary percentage required under this Section to amend this Declaration; provided, however, that under no circumstance shall any provision requiring the consent of the Declarant be amended without such consent. The procedure for effecting this petition is set forth in Section 1356 of the California Civil Code, as the same may be amended, from time to time. (c) Approval of Mortgagees. In addition to the rights of first Mortgagees, as set forth in the Article herein entitled "Mortgagee Protection," in the event that FNMA participates in the financing of Lots in the Project, the written consent of not less than fifty-one percent (51%) of the first Mortgagees shall be required for any amendment of a "material" nature. An amendment which affects or purports to affect any of the following is considered material: (1) The legal status of the Project as a planned development; (2) Voting rights; (3) Increases in Assessments that raise the previously assessed amount by more than twenty-five percent (25%), assessment liens or the priority of assessment liens, including the levy and collection thereof, enforcement provisions for nonpayment and subordination of liens for nonpayment; 18324.283-14780.FCM 091307 - 115 - (4) Reduction in reserves for maintenance, repair and replacement of Common Area; (5) Responsibility for Common Area maintenance and repair; (6) Reallocation of interests in the Common Area or rights to use the Common Area; (7) Boundaries of any Lot; (8) Convertibility of Common Area into Lots or Lots into Common Area; (9) Expansion or contraction of the Project, or addition, annexation or de -annexation of additional property to or from the Project; (10) Insurance or fidelity bonds requirements; (11) Restrictions on the leasing of Lots; (12) Restrictions on alienation, including, but not limited to, rights of first refusal; (13) Any decision by the Association to es- tablish self-management, if professional management was previously required by an eligible first Mortgagee or legal documents governing the Project; (14) Restoration or repair of the Project in a manner other than as specified in this Declaration; (15) Any action to terminate the legal status of the Project after substantial destruction or condem- nation occurs; and (16) Mortgagee protection provisions as set forth in that Article hereinabove entitled "Mortgagee Protection," and such other provisions in this Declara- tion for which the consent of Mortgagees shall be re- quired or which are expressly for the benefit of Mort- gagees, insurers or guarantors of Mortgages. An addition or amendment to this Declaration shall not be considered material if it is for the purpose of correcting technical errors or for clarification only. In the event the Association is considering termination of the legal status of the Project for reasons other than the substantial destruction or condemnation of the Project, then sixty-seven percent (670) of the first Mortgagees must agree to said termination. Notwithstanding the foregoing, in the event any first Mort- 18324.283-14780.FCM 091307 -116- • • gagee receives a written request, delivered by certified or registered mail with return receipt requested, from the Board to approve any amendment to this Declaration, and such first Mortgagee does not deliver a negative response in writing to the Board within sixty (60) days of the mailing of such request by the Board, such first Mortgagee shall be deemed to have approved such proposed amendment. (d) Recordation of Amendments. An amendment made in accordance with the provisions set forth hereinabove, except any amendment pursuant to paragraph (a), shall be effective when executed by the President and Secretary of the Association, who shall certify that the amendment has been approved by the member- ship and, where appropriate, by the first Mortgages, in the percentages set forth hereinabove, and recorded in the Office of the County Recorder. Upon such recordation, the amendment shall be effective and binding upon all Owners and all Mortgagees, regard- less of whether such Owner or such Mortgagee consented to such amendment. Section 8. Encroachments. None of the rights and ob- ligations of the Owners created herein or by the deed shall be al- tered in any way by encroachments due to settlement or shifting of structures or any other cause. There shall be valid easements for the maintenance of said encroachments so long as they shall exist; provided, however, that in no event shall a valid easement for encroachment be created in favor of an Owner if said encroachment occurred due to the willful conduct of said Owner. Section 9. Notices. Any notice permitted or required to be delivered as provided herein shall be in writing and may be delivered either personally or by mail. If delivery is made by first-class, registered or certified mail, it shall be deemed to have been delivered forty-eight (48) hours after a copy of the same has been deposited in the United States mail, postage prepaid, ad- dressed to any person at the address given by such person to the Association for the purpose of service of such notice, or to the Lot of such person if no address has been given to the Association. If such notice is not sent by first-class, registered or certified mail, it shall be deemed to have been delivered when received. Such address may be changed, from time to time, by notice in writing to the Association. Section 10. Attorneys' Fees. Except as otherwise provided herein (e.g., resolution of Disputes whereby each party is responsible for payment of his attorney fees, without the right to reimbursement from the other party and notwithstanding which party may be the "prevailing party"), or in the Express Limited Warranty, applicable to claims covered thereby, in the event the Board, Association, or any Owner of a Lot shall commence legal proceedings against the Owner of any other Lot to enforce the covenants of this Declaration, or to declare rights hereunder as the result of any 18324.283-14780.FCM 091307 -117- • breach, or claim of breach, of said covenants, the prevailing party shall recover the cost of the suit, arbitration, or alternative dispute resolution, in addition to its costs of suit, including reasonable attorneys' fees, as may be fixed by the court. In addition, if any Owner defaults in making a payment of Assessments or in the performance or observance of any provision of this Declaration, and the Association and/or an Owner has obtained the services of an attorney in connection therewith, the Owner covenants and agrees to pay any costs or fees incurred, including reasonable attorneys' fees, regardless of whether dispute proceedings are instituted. Section 11. Mergers or Consolidations. Upon a merger or consolidation of the Association with another association, the Association's properties, rights and obligations may, by operation of law, be transferred to another surviving or consolidated association or, alternatively, the properties, rights and obliga- tions of another association may, by operation of law, be added to the properties, rights and obligations of the Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer and enforce the Protective Covenants established by this Declaration governing the Project, together with the covenants and restrictions established upon any other property as one plan. Section 12. No Representations or Warranties. No representations or warranties of any kind, express or implied, have been given or made by Declarant, or its agents or employees, in connection with the Project, or any portion thereof, its physical condition, zoning, compliance with applicable laws, fitness for intended use, or in connection with the subdivision, sale, operation, maintenance, cost of maintenance, taxes or regulation thereof as a planned development, except as specifically and expressly set forth in this Declaration, and except as may be filed by Declarant from time to time, with the DRE. Section 13. Proiect Disclosures. Each initial Owner may receive from the Declarant a more extensive list of disclosures. The items provided below are general in nature and not all-inclusive of issues impacting the Project. Each Owner is responsible for investigating all matters of concern to such Owner prior to completing the purchase of a Lot in the Project. (a) Conditions of Approval. The Project is subject to all terms and conditions set forth in the City's conditions for the approval of the tentative tract map and development permits for the Project (e.g., Entitlements from City). Neither this Declaration nor any contract of sale, lease, or other written document or any means or method shall be estab- lished, or shall attempt to establish, any requirement, restriction, or limitation on the Declarant, or any person, individual or entity, which would operate, directly or 18324.283-14780.FCM 091307 -118- indirectly, to prevent or preclude any other developers of the Property or Project, or any person, individual, or entity, in complying with all applicable provisions of the tentative map and/or development permits approved by the City and other City ordinances, rules, policies, or regulations. (b) Church. A church is located immediately to the north of the Project. The members of the church, as well as their guests and invitees, have the right to use the private street providing access to the church's property and the northern entrance to the Project from Washington Street (as depicted on Exhibit "I" attached hereto and incorporated by this reference. The Association shall be responsible for the maintenance of the entirety of the private street and wall depicted on Exhibit "I" hereto. It is anticipated that the buildings and other Improvements on the church property will be expanded in the near future. Owners and other residents of the Project may experience, and/or be exposed to, significant noise (e.g., from construction equipment, bells, singing, etc.), traffic congestion, and other adverse impacts arising out of or relating to the use and maintenance of the church. Declarant makes no representations or warranties of any kind or nature, express or implied, concerning the church or the church property. Each Owner is responsible for investigating these matters to the Owner's full and complete satisfaction prior to completing the purchase of a Lot in the Project. (c) Santa Rosa Mountains. The Santa Rosa mountains are located immediately to the west of the Project. Owners and other residents of the Project may experience, and/or be exposed to, falling rock, blowing sand, wildlife, and other adverse impacts arising out of or relating to the mountains. Declarant makes no representations or warranties of any kind or nature, express or implied, concerning the mountains. Each Owner is responsible for investigating these matters to the Owner's full and complete satisfaction prior to completing the purchase of a Lot in the Project. (d) Storm Water Retention Basins. If the Project is completed as planned, two storm water retention basins will be located along the eastern border of the Project (e.g., on Lots H and I of Tract 30560). The Association is responsible for maintaining such retention basins. Owners and other residents of the Project may experience, and/or be exposed to, potential flooding, unpleasant odors, noise, bright lights, wildlife (e.g., skunks, possums, etc.), birds and insects (including, without limitation, birds and insects that carry communicable diseases such as West Nile Virus and Avian Flu), and other adverse impacts relating to the maintenance and operation of the storm water retention basins. Declarant makes no warranties or representations of any kind or nature, express or implied, concerning the retention basins. Each 18324.283-14780.FCM 091307 -119- Owner is responsible for investigating these matters to the Owner's full and complete satisfaction prior to completing the purchase of a Lot in the Project. (e) NOTICE OF AIRPORT IN VICINITY. The Project is presently located in the vicinity of an airport (e.g., Desert Resorts Regional Airport, Palm Springs International Airport, etc.), within an area in which current or future airport - related noise, overflight, safety, or airspace protection factors may significantly affect land uses or necessitate restrictions on those uses as determined by an airport land use commission). For that reason, the Project may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. Each Owner may wish to, and should consider what airport annoyances, if any, are associated with the Project before an Owner completes his/her purchase of a Lot in the Project and determine whether such a location and airport annoyances are acceptable. Declarant makes no representations or warranties of any kind or nature regarding the type of aircraft that may be permitted at any airport, the flight paths of any aircraft, or the potential expansion, change in use, or hours of operation of any airport. Each Owner is responsible for investigating these matters to the Owner's full and complete satisfaction prior to completing the purchase of a Lot in the Project. (f) Waiver. Each Owner, for and on behalf of himself and the members of his family, his tenants, lessees, guests and invitees, expressly approve all of the foregoing conditions and risks, and waives all causes of action and covenants not to sue the City, the Declarant, and their respective directors, officers, members, employees, agents and consultants for any damages or injuries which may arise from or relate to any of such conditions and/or risks. Section 14. Conflicts in Management Documents For the Project. In the event of any conflict between and/or among the provisions of any of the management documents for the Project, the Declaration shall be deemed to supersede the provisions of any conflicting management documents, including, without limitation, the By -Laws, architectural standards, if any, and the Rules and Regulations, if any. Section 15. Davis -Stirling Act. Notwithstanding the provisions set forth in this Declaration, various laws (including, but not limited to, the Davis -Stirling Common Interest Development Act, Sections 1350, et seg., of the California Civil Code, and the Federal Fair Housing Act, Title 42 United States Code, Sections 3601, et sea. , as such laws may be amended, from time to time) , may 18329.283-14780.FCM 091307 -120- supplement or override the provisions of this Declaration. This Declaration shall be interpreted and construed to be consistent with such applicable laws, as same may be amended, from time to time, and, accordingly, in addition to the provisions set forth above, Declarant makes no representations or warranties regarding the future enforceability of the provisions of this Declaration. Section 16. Notices Provided Pursuant to Right to Repair Law. Declarant's notices pursuant to Division 2, Part 2, Section 895 et seg. of the California Civil Code ("Right to Repair Law") are set forth in Exhibit "J" attached hereto and incorporated by reference. Section 17. Declarant's Representative. Commencing on the date on which Declarant no longer has an elected representative on the Board, and continuing until the date that is ten (10) years after the date of the last close of escrow in the Project, the Declarant shall be entitled to have a representative ("Declarant's Representative") present at all meetings of the Members and the Board. For so long as Declarant's Representative is entitled to attend such meetings, the Association and/or Members, as appropri- ate, shall provide Declarant with written notice of all meetings of the Board as if Declarant were an Owner/Member, and the Association shall provide Declarant's Representative with the minutes for the meetings of Owners, the Board and committees. 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 or any liability as a Board member. This Section may not be amended without the prior written approval of the Declarant, which approval may be withheld in Declarant's sole and absolute discretion. Section 18. Exhibits. Except as otherwise provided herein, each and every Exhibit referenced herein and attached to this Declaration is incorporated herein by this reference as if set forth herein in full. All depictions in such Exhibits are for illustrative purposes only, and the "as -built" condition by Declarant shall be controlling. Notwithstanding anything herein to the contrary, the Exhibits attached hereto may depict Improvements associated with portions of the Project other than Phase 1; however the Association shall be responsible for the maintenance of those other Improvements only at such time as the Improvements are completed and Assessments have commenced for the applicable Phase in which the Improvements are located. (signatures to follow) 18329.283-19780.FCM 091307 -121- IN WITNESS WHEREOF, Declarant has executed this instru- ment on the day and year first above written. "DECLARANT" WL CANYON RIDGE ASSOCIATES, LLC, a Delaware limited liability company BY: WL HOMES LLC, a Delaware limited liability company, ITS: Managing Member By. Name: Title: STATE OF CALIFORNIA ) COUNTY OF ) On , 200_, before me, , a Notary Public in and for said State, personally appeared known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that s/he executed the same in his/her authorized capacity, and that by his/her signature on the instrument, the persons or the entities upon behalf of which the person acted executed the instrument. WITNESS my hand and official seal. Signature of Notary Public (SEAL) 18324.283-14780.FCM 091307 -122- EXHIBIT "A" FRONT YARD AREAS, PARKWAYS, MEDIANS, AND OTHER LANDSCAPED AREAS TO BE MAINTAINED BY ASSOCIATION [to be attached] 18324.283-14780.FCM 091307 Page 1 of 1 Page EXHIBIT "B" Shared Driveways 18329.283-19780.FCM 091307 Page 1 of 1 Page • EXHIBIT "C" ANNEXATION PROPER The Annexation Property is more particularly described as that certain real property located in the City of La Quinta, County of Riverside, State of California, more generally described as: All of Tract No. 35060 in the City of La Quinta, County of Riverside, as per Map recorded in Book , Pages through , inclusive, of Maps filed in the Office of the County Recorder of said County, except Phase 1. 18324.283-14780.FCM 091307 Page 1 of 1 Page EXHIBIT "D" WALLS [to be attached] 18324.283-14780.FCM 091307 Page 1 of 1 Page EXHIBIT "E" DISPUTE NOTIFICATION AND RESOLUTION PROCEDURE Arbitration of Disputes. Unless otherwise required by the Home Builder's Limited Warranty provided by Declarant to an Owner upon the Close of Escrow for a Lot ("Express Limited Warranty," of sample draft copy of which is attached hereto as Exhibit "D-1" for informational purposes only and is not incorporated herein by reference) for "Disputes" (defined below) covered thereunder, any and all claims, controversies, breaches or disputes (each a "Dispute") between or among the Declarant, or any director, officer, partner, attorney, member, employee or agent of Declarant, or any contractor, subcontractor, design professional, engineer or supplier who provided labor, services or materials to the Project (collectively, the "Declarant Parties"), the Association, and/or any Owner, relating to or arising out of the Project, this Declaration, sale of a Lot by Declarant, or any other agreements between the Declarant Parties, the Association, and/or an Owner, whether such Dispute is based on contract, tort, or statute, including, without limitation, any Dispute over (1) breach of contract, (2) negligent or intentional misrepresentation or fraud, (3) nondisclosure, (4) breach of any alleged duty of good faith and fair dealing, (5) allegations of latent or patent construction defects, or (6) any other matter arising from or related to the interpretation of any term or provision of this Declaration, or any defense going to the validity of this Declara- tion, or any provision of this Declaration, including without limitation, allegations of unconscionability, fraud in the inducement, or fraud in the execution, to the extent applicable, shall be resolved amicably and without the necessity of time consuming and costly litigation through arbitration pursuant to the Federal Arbitration Act and only to the extent not inconsistent with the Federal Arbitration Act, the California Arbitration Act, and subject to the procedures set forth in this Exhibit. Any Dispute concerning the interpretation or the enforceability of this Exhibit, including, without limitation, its revocability or voidability for any cause, any challenges to the enforcement or the validity of this Declaration, or this Exhibit, or the scope of arbitrable issues under this Exhibit, and any defense relating to the enforcement of this Exhibit, including, without limitation, waiver, estoppel, or laches, or any Dispute concerning an arbitration award made pursuant to this Exhibit, shall be decided by an arbitrator in accordance with this Exhibit and not by a court of law. Unless otherwise provided or adopted by the Declarant, the following nonadversarial procedure [e.g., subparagraphs (a) and (b) below] shall apply to Disputes. (a) Nonadversarial Procedures. (1) Notice. Any person with a Dispute shall notify the Declarant in writing of the claim, which writing (i.e., by personal or mail service as authorized by Code of Civil Procedure Sections 415.10, 415.20, 18324.283-14780.FCM 091307 Page 1 of 10 Pages 415.21, 415.30 or 415.40 to the party to whom the Dispute is directed) shall describe the nature of the claim and any proposed remedy (the "Claim Notice"). (2) Right to Inspect and Right to Corrective Action. If at any time during Owner's ownership of a Lot or the Association's ownership of Common Area in the Project, said Owner or Association (as the case may be) discovers a condition that the Owner or Association believes may be the responsibility of Declarant whether or not the Owner or Association believes it may be covered under the Express Limited Warranty, the Owner or Association shall notify Declarant (as applicable) in writing. Such notice shall include: (a) a description of the condition, (b) the date upon which the condition was discovered, (c) any reports, studies or other documents/materials prepared by or at the request of Owner or Association regarding the condition, and (d) dates and time when Owner or Owner's agent, or the Association or Association's agent, will be home or available during ordinary business hours so service calls or inspection by Declarant can be scheduled. Commencing on the date the Claim Notice is delivered and continuing until the Dispute (which includes the condition refer- enced above) is resolved, the Declarant and its represen- tatives shall have the right to (i) meet with the party alleging the Dispute at a reasonable time and place to discuss the Dispute, (ii) enter the Project to inspect any areas that are subject to the Dispute, and (iii) conduct inspections and testing (including destructive or invasive testing) in a manner deemed appropriate by the Declarant. Within a reasonable period after receipt of the Claim Notice, which period shall not exceed ninety (90) days, the Declarant and the claimant shall meet at a mutually acceptable place within or near the Project to discuss the Dispute. At such meeting or at such other mutually agreeable time, the Declarant and their respective representatives, as noted above, shall have full access to the property that is subject to the Dispute and shall have the right to conduct inspections, testing and/or destructive or invasive testing of the same in a manner deemed appropriate by Declarant, which rights shall continue until such time as the Dispute is resolved as set forth herein. The parties to the Dispute shall negotiate in good faith in an attempt to resolve the claim. If the Declarant elects to take any corrective action, Declarant and its representatives and agents shall be provided full access to the Project to take and complete corrective action. Nothing set forth in this Exhibit imposes any obligation on Declarant to inspect, repair or replace any items or alleged defects for which Declarant is not otherwise obligated under applicable State and federal law or the Express Limited Warranty in connection with the sale of the Lot, or increase Declar- 18324.283-14780.FCM 091307 Page 2 of 10 Pages 0 • ant's legal obligations to Owner. No Owner shall pursue any other remedies available to it, until Declarant has had the reasonable opportunity to inspect and cure the alleged Dispute. Declarant shall be entitled to a stay of any litigation brought by Owner in violation of this provision. During the period of such inspection and cure (but not to exceed the earlier to occur of ( i ) ninety (90) days after the date Declarant receives Owner's notice described above, or (ii) Declarant's delivery of written notice to Owner or the Association of Declarant's determination not to proceed with such cure), all applicable statutes of limitation shall be tolled. During the term of the Express Limited Warranty, any conflict between the provisions of this paragraph and the Express Limited Warranty shall be resolved in favor of the Express Limited Warranty. Declarant is not liable for any general, special or consequential damage, cost, diminution in value or other loss Owner may suffer as a result of any Dispute, which reasonably might have been avoided had Owner given to Declarant the notice and opportunity to cure described above. (b) Adversarial Procedures. (1) Binding Arbitration. In the event that a Dispute is raised and not resolved pursuant to the nonadversarial procedures set forth above or, with respect to Disputes subject to the Express Limited Warranty, the procedures set forth in the Express Limited Warranty, such Dispute shall be submitted to binding Arbitration. If the Dispute is not subject to the Express Limited Warranty, the Dispute shall be submitted to binding arbitration by and pursuant to the rules of a neutral, independent arbitration service agreed upon by the parties to the arbitration. If the parties to the Dispute are unable to agree upon a neutral, independent arbitration service, then any party may, pursuant to the provisions of the Federal Arbitration Act (9 U.S.C. §1 et sect.) apply to a court of competent jurisdiction to designate an arbitration service, which designation shall be binding on the parties. If the Dispute is subject to the Express Limited Warranty, the Dispute shall be submitted to binding arbitration by and pursuant to the rules of the arbitration service named in the Express Limited Warranty or such other neutral, independent arbitration service that the Express Limited Warranty administrator may appoint, in its sole discretion, at the time a request for arbitration is submitted. If the Owner or Association (if the Association is a party to the Dispute), objects to the arbitration service named in the 18324.283-14780.FCM 091307 Page 3 of 10 Pages . Express Limited Warranty or appointed by the Express Limited Warranty administrator, the Owner or Association (as applicable) must submit a written objection to the Express Limited Warranty administrator within the time period and according to the procedures set forth in the Express Limited Warranty. Upon receipt of such objection, the Express Limited Warranty administrator shall then appoint an alternative neutral arbitration service provider. If the Owner or Association (as applicable) objects to such alternative neutral arbitration service provider, and if the Owner or the Association (as applicable) and Declarant are unable to agree on another alternative, then any party may, pursuant to the provisions of the Federal Arbitration Act (9 U.S.C. §1 et sec.) apply to a court of competent jurisdiction to designate an arbitration service, which designation shall be binding on the parties. The rules and procedures of the designated arbitration service in effect at the time the request for arbitration is submitted shall be followed; otherwise, the parties agree to the following arbitration provisions: (2) General Arbitration Provisions. i) Declarant, each Owner (by acceptance of a deed to a Lot), and the Association (by accep- tance of a deed to the Common Area) acknowledges that this Declaration involves and concerns interstate commerce and is governed by the provisions of the Federal Arbitration Act (9 U.S.C. §1, et sec.) now in effect and as the same may from time to time be amended, to the exclusion of any different or inconsistent state or local law, ordinance, regulation, or judicial rule. Accord- ingly, any and all disputes shall be arbitrated - which arbitration shall be mandatory and binding - pursuant to the Federal Arbitration Act and the California Arbitration Act, to the extent the California Arbitration Act is consistent with the Federal Arbitration Act. As a result, each Owner, the Association, and Declarant acknowledge that there will be no court or jury trial of any Dispute. ii) This Exhibit shall inure to the benefit of, and be enforceable by, Declarant's subcontractors, agents, vendors, suppliers, design professionals, warranty administrator, insurers and any other persons whom any Owner or the Association contends is responsible for any Dispute (e.g., any alleged defect in or to the Project, the Common 18324.283-14780.FCM 091307 Page 4 of 10 Pages E Area, such Owner's Lot or any Improvement or appurtenance thereto). iii) Each party shall bear its own attorneys' fees and costs (including expert costs) for the arbitration. iv) Except as otherwise provided in the Express Limited Warranty with respect to Disputes subject thereto, the parties shall be entitled to conduct all discovery as otherwise provided in the California Code of Civil Procedure, and the arbitrator shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge, with rights to regulate discovery and to issue and/or enforce subpoenas, protective orders or other limitations on discovery available under California law. In the context of construction defect disputes, all parties shall be entitled to reasonable site inspections, visual inspections, destructive testing, and other discov- ery mechanisms commonly employed in such disputes. V) The arbitrator shall decide all issues of fact and law, and the decision of the arbitrator shall be final and binding. Declarant, each Owner (by acceptance of a deed to a Lot), and the Association (by acceptance of a deed to the Common Area), acknowledges that an application to confirm, vacate, modify or correct an award rendered by the arbitrator shall be filed in any court of competent jurisdiction in the County. vi) The participation by any party in any judicial proceeding concerning this Exhibit or any matter arbitrable hereunder shall not be deemed a waiver of the right to enforce this Exhibit notwithstanding any provision of law to the con- trary, and shall not be asserted or accepted as a reason to delay, to refuse to participate in, or to refuse to enforce this Exhibit. vii) Except as otherwise provided by the Express Limited Warranty for Disputes subject thereto, or as required by applicable law, the fees to initiate the arbitration shall be advanced by the Declarant and subsequent fees and costs of the arbitrator and/or the arbitration service shall be borne equally by the parties to the arbitration; provided, however, the administration and arbitration fees and any other fees and costs of the arbitration ultimately shall be borne as determined by the arbitrator (including, but not limited to, the fee to initiate arbitration). 18324.283-14780.FCM 091307 Page 5 of 10 Pages viii) The arbitrator appointed to serve shall be a neutral and impartial individual and shall be authorized to provide all recognized remedies available in law or equity for any cause or action that is the basis for arbitration. ix) No Arbitration proceeding shall involve more than one Lot. X) The venue of the arbitration shall be in the County unless the parties to the arbitration agree in writing to another location. xi) If any provision of this Exhibit shall be determined to be unenforceable or to have been waived, the remaining provisions shall be deemed to be severable therefrom and enforceable according to their terms. xii) Declarant, each Owner, by acceptance of a deed to a Lot, and the Association, by accep- tance of a deed to the Common Area, are giving up their respective judicial rights to discovery and appeal, unless those rights are specifically included in this Exhibit. If Declarant, the Association or any Owner refuses to submit to arbitration, the Association, such Owner, Declar- ant, may be compelled to arbitrate under the Federal Arbitration Act and the California Arbitra- tion Act, to the extent the California Arbitration Act is consistent with the Federal Arbitration Act. (3) Judicial Reference. In the event the foregoing arbitration provision is held not to apply or is held invalid, void or unenforceable in its entirety for any reason, Declarant, each Owner, by acceptance of a deed to a Lot, and the Association, by acceptance of a deed to the Common Area, agree that all Disputes shall be tried before a judge in a court of competent jurisdic- tion; provided that such lawsuit must be resolved by general judicial reference pursuant to California Code of Civil Procedure Sections 638 and 641 through 645, or any successor statutes thereto, and as modified by this paragraph. Declarant, each Owner (by acceptance of a deed to the Lot), and the Association (by acceptance of a deed to the Common Area) acknowledge, understand and agree that both the arbitration and judicial reference procedures noted herein, as applicable, involve a process whereby resolution of the Dispute does not involve a jury trial and specifically excludes a jury from any involvement in resolution of the Dispute. The parties to the Dispute shall cooperate in the judicial reference proceeding. Declarant, each Owner (by acceptance of a deed to a Lot), and the Association (by acceptance of a 18324.283-14780.FCM 091307 Page 6 of 10 Pages 0 • deed to the Common Area) grant the general referee authority to decide all issues, whether of fact or law, including without limitation, the validity, scope and enforceability of this dispute resolution provision, and to report a statement of decision to the court. All parties shall use the procedures adopted by any 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 in writing: i) The general referee must be a neutral and impartial retired judge with sub- stantial experience in real estate development and residential construction matters. 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; ii) The general reference proceeding shall proceed without a jury. Declarant, each Owner (by acceptance of a deed to a Lot), and the Association (by acceptance of a deed to the Common Area) each hereby acknowledge, understand, and agree that this procedure does not involve a jury trial and that this procedure and the lack of a jury trial shall be binding upon their respective successors and assigns and upon all persons or entities asserting rights or claims or otherwise acting on behalf of them or their successors and assigns. iii) The parties shall be entitled to conduct all discovery as otherwise provided in the California Code of Civil Procedure, and the general referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge, with rights to regulate discovery and to issue and/or enforce subpoenas, protective orders or other limitations on discovery available under California law. In the context of construction defect disputes, all parties shall be entitled to reasonable site inspections, visual inspections, destructive testing, and other discovery mechanisms commonly employed in such disputes; iv) The judicial reference proceeding shall be conducted in accordance with California law (including the rules of evidence), and in all regards the general referee shall follow California law as applicable at the time of the judicial reference proceeding. The general referee may 18324.283-14780.FCM 091307 Page 7 of 10 Pages 0 • issue any remedy or relief which the courts of the State of California could issue if presented the same circumstances, and the general referee shall follow and otherwise employ the standards for issuing such relief as defined by California law. The general referee may require one or more pre - hearing conferences. A stenographic record of the trial shall be made, provided that the record shall remain confidential except as may be necessary for post -hearing motions and any appeals. The general referee's statement of decision shall contain findings of fact and conclusions of law to the extent applicable. The general referee shall have the authority to rule on all post -hearing motions in the same manner as a trial judge. The statement of decision of the general referee upon all of the issues considered by the general referee shall be binding upon the parties, and upon filing the statement of decision with the clerk of any court of the State of California having the jurisdiction thereof, or with the judge if there is no clerk, judgment may be entered thereon. The judgment and decision of the general referee shall be appealable in the same manner and subject to the same rules as if rendered by the court. V) Any dispute involving third parties (i.e., a person or entity other than Declarant or Owner or the Association) shall be included in the judicial reference procedure prescribed herein to the extent permitted by law. All parties shall cooperate in good faith to ensure that all necessary and appropriate parties are included in the judicial reference proceeding. vi) The exclusive venue for all general reference proceedings shall be in the County where the Project is located; vii) Except where attorneys' fees are awarded as an element of sanctions, the parties shall bear their own attorneys' fees in any proceeding conducted under this paragraph. Declarant shall initially advance all fees and costs necessary to initiate the general reference proceeding; however, the general referee may, in his or her discretion, reallocate such fees and costs among the parties as the interests of justice dictate. The general referee may award litigation costs to the prevailing party. This provision does not modify any provision of a contract between Declarant and any other entity other than an Owner requiring indemnification or establishing a 18324.283-14780.FCM 091307 Page 8 of 10 Pages 0 • different allocation of costs between Declarant and such entity. viii) If any provision of this paragraph shall be determined to be unenforceable or to have been waived, the remaining provisions shall be deemed to be severable therefrom and enforceable according to their terms. (c) Inspection Easements. The Declarant reserves easements to enter any Lot, including the interior of the residence and the yard, and the Common Area to inspect those areas and to conduct destructive testing referred to in California Civil Code § 1375(d). However, the Declarant shall notify the Owner of the Lot and/or the Association of at least three (3) alternative dates and times when such inspection can take place (the earliest of which shall not be less than ten (10) days after the notification is given) and the Declarant shall give the Owner and/or Association (if the Common Area is to be inspected) the opportunity to specify which date and time is acceptable to the Owner and/or Association. Should the Owner and/or Association (as the case may be) not respond affirmatively with respect to one of the dates and times within five (5) days, then the Declarant may decide which of the dates and times the inspection and testing shall take place and so notify the Owner and/or Association. Alterna- tively, the Declarant may seek a judicial order allowing such inspection and testing to take place. Declarant shall be entitled to its reasonably incurred attorneys' fees and be deemed the "prevailing party" should such a court order be sought and obtained. Declarant shall be obligated to fully repair any damage caused by any such destructive testing. (d) Miscellaneous. Any and all communications by and between the parties, whether written or oral, which are delivered by the parties or their attorneys or other represen- tatives in an effort to settle the matter shall be considered communications undertaken in the course of effecting a settle- ment or compromise, as such shall not be admissible as an admission on the part of any party or any representative or agent of that party 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 Exhibit. (e) Manufactured Products Maintenance and Express Limited Warranty Information. Each Owner, as to his respective Lot, and the Association, as to the Common Area, acknowledge that Declarant has provided such Owner and the Association with manufactured product maintenance, preventa- 18324.283-14780.FCM 091307 Page 9 of 10 Pages tive maintenance and limited warranty information pertaining to such Owner's Residence and Lot and to the Common Area. Notwithstanding the foregoing, Declarant reserves the right, by written notice to each Owner and/or to the Association, to supplement and/or amend such manufactured product maintenance, preventative maintenance and limited warranty information from time to time. Each Owner and the Association also acknowledge that by law, such Owner and such Association is obligated to follow all reasonable maintenance and preventative maintenance schedules and obligations communicated in writing from Declarant, as well as commonly accepted maintenance practices. Each Owner and the Association covenant to faithfully follow all such maintenance and preventative maintenance schedules and obligations contained in all such manufactured product maintenance, preventative maintenance and limited warranty information (and each Owner shall require and cause any tenant or lessee of such Owner's Lot to follow all such schedules and obligations). (f) Indemnification. Each Owner of a Lot in the Project and the Association covenant to indemnify, defend and hold Declarant harmless from any loss, costs or damages arising from such Owner's or such Association's failure or refusal to perform its respective obligations. DECLARANT, THE ASSOCIATION AND EACH OWNER SHALL USE THE PROCEDURES ESTABLISHED IN THIS EXHIBIT TO RESOLVE ALL DISPUTES AND SHALL BE DEEMED TO WAIVE THEIR RIGHTS TO RESOLVE DISPUTES IN ANY OTHER MANNER. PURSUANT TO THIS EXHIBIT, DECLARANT, THE ASSOCIATION (BY ACCEPTANCE OF A DEED TO THE COMMON AREA), AND EACH OWNER (BY ACCEPTANCE OF A DEED TO A LOT) ACKNOWLEDGE, UNDERSTAND, AND AGREE THAT THEY SHALL HAVE NO RIGHT TO HAVE ANY DISPUTE TRIED BEFORE A JURY. THIS EXHIBIT MAY NOT BE AMENDED WITHOUT DECLARANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT MAY BE WITHHELD IN DECLARANT'S SOLE AND ABSOLUTE DISCRETION. 18324.283-14780.FCM 091307 Page 10 of 10 Pages • i Exhibit "F" Landscape Height Restrictions (line of sight) 18324.283-14780.FCM 091307 Page 1 of 1 i Exhibit "G" Prohibited Plants 18324.283-14780.FCM 091307 Page 1 of 1 E Exhibit "H" Sideyard Easements 18329.283-19780.FCM 091307 Page 1 of 1 • 0 Exhibit "I" Church Easement Depiction 18329.283-19780.FCM 091307 Page 1 of 1 0 • EXHIBIT "J" NOTICES PROVIDED BY DECLARANT PURSUANT TO RIGHT TO REPAIR LAW Declarant hereby gives notice to all Owners of the following matters: (1) Notice of Procedures. On September 20, 2002, the Governor of the State of California signed into law the construction dispute reform bill known as Senate Bill No. 800, which added Section 43.99 and Title 7 (commencing with Section 895) to Part 2 of Division 2 of the California Civil Code (the "Right to Repair Law"). The Right to Repair Law contains various procedures which may impact an Owner' s legal rights as a homeowner. Each Owner may wish to consult with an attorney or other legal advisor to ascertain the requirements of the Right to Repair Law and its impact upon his or her legal rights. (2) Declarant's Election to be Subject to Enhanced Protection Agreement. Each original Owner of a Lot shall receive, at the time of purchase of the Lot from Declarant several documents constituting an "Enhanced Protection Agree- ment" within the meaning of Section 901 of the California Civil Code (including, without limitation, the Express Limited Warranty and Maintenance Recommendations). Declarant has elected to be subject to an Enhanced Protection Agreement in lieu of the standards set forth in the Right to Repair Law. As a consequence, in any legal action seeking recovery of damages arising out of, or related to deficiencies in the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construc- tion, the liability of Declarant, and its respective trade contractors, material suppliers, individual product manufacturers, and design professionals, shall be limited to violation of the Enhanced Protection Standards set forth in the Enhanced Protection Agreement, except as otherwise set forth in California Civil Code Section 945.5. By accepting a deed to a Lot, each Owner covenants and agrees to provide any subsequent purchaser of the Lot from him with copies of the documents comprising the Enhanced Protection Agreement. No provisions within this Declaration constitute, or shall be interpreted to constitute, an "enhanced protection agreement," as defined in Section 901 of the California Civil Code. (3) Declarant's Election not to Engage in the Nonadversarial Procedure Provided by Right to Repair Law. Declarant has elected not to engage in the nonadversarial procedure for the resolution of disputes set forth in Chapter 4 of the "Right to Repair Law" (defined above). Instead, Declarant intends to seek to enforce the John Laing Homes' Alternative Non -Adversarial Procedures (e.g., located in the 18324.283-14780.FCM 091307 Page 1 of 3 Pages • 0 Declaration, the Purchase Agreement and Escrow Instructions between Declarant and Owner, John Laing Homes' Customer Care Service Processing Procedures, and John Laing Homes' Customer Care Service Processing Procedures), as same may be amended from time to time following approval by Declarant and the Express Limited Warranty in the applicable homeowners manual provided by Declarant to Owner. EACH OWNER, ON BEHALF OF ITSELF AND ITS SUCCESSORS IN INTEREST, AGREES TO PROVIDE COPIES OF THE DOCUMENTS MAKING UP JOHN LAING HOMES' ALTERNATIVE NON -ADVERSARIAL PROCEDURES TO ANY SUBSEQUENT PURCHASER OF SAID OWNER'S LOT. Notwithstanding the foregoing, nothing in this election shall be deemed to constitute a waiver of Declarant's rights, if any, to require any Owner to comply with the procedures of the Express Limited Warranty, if any, or the Calderon Act (set forth at Civil Code Section 1375) or to enforce any provision of law relating to the resolution of disputes other than the nonadversarial procedure for the resolution of disputes set forth in Chapter 4 of The Right to Repair Law. Each Owner, on behalf of itself and its successors in interest, agrees to provide copies of the documents making up John Laing Homes' Alternative Non -Ad- versarial procedures to any subsequent purchaser of said Owner's Lot. (4) The Association and each Owner shall maintain everything he/she/it/they is/are obligated to maintain in a manner consistent with the provisions herein and in the Declaration and in conformance with any "Maintenance Recommen- dations/Schedules" (i.e., procedures, standards, and/or schedules for the maintenance and operation which may be provided to said Owner and/or the Association by Declarant, as such procedures, standards, and/or schedules may be updated and revised as appropriate), product manufacturers' guidelines and recommendations, and commonly accepted maintenance standards. Unless otherwise provided in such Maintenance Recommendations/Schedules, or in this Declaration, each Owner and the Association, as applicable, shall determine the level and frequency of maintenance. (5) Notwithstanding any provision to the contrary in the Declaration regarding resolution of disputes regarding the Common Area, at such time as an Owner is elected or appointed to the Board, the Declarant shall be deemed to have relinquished control over the Association's ability to initiate claims regarding the Common Area. (6) The following individual ("Agent") is currently Declarant's agent for notice of claims pursuant to the nonadversarial dispute resolution procedures adopted by 18324.283-14780.FCM 091307 Page 2 of 3 Pages 0 0 Declarant (notice to Declarant or Laing does not constitute notice of a claim, or any other notice, under California Civil Code Sections 895 et seg.): Name: General Counsel Address: WL Homes LLC 895 Dove Street, Suite 200 Newport Beach, CA 92660 18329.283-19780.FCM 091307 Page 3 of 3 Pages EXHIBIT "F" SIGHT TRIANGLE RESTRICTIONS (to be attached) 18324.283-14780.FCM 091307 Page 1 of 1 M EXHIBIT "G" PROHIBITED PLANTS (to be attached) 18329.283-19780.FCM 091307 Page 1 of 1 11 • EXHIBIT "H" PORTIONS OF PRIVATE STREET PROVIDING ACCESS FROM WASHINGTON STREET TO PROJECT AND CHURCH PROPERTY AND WALL TO BE MAINTAINED BY ASSOCIATION (to be attached) 18324.283-14780.FCM 091307 Page 1 of 1 Cl -1 L CONSENT OF LIENHOLDER AND SUBORDINATION OF LIEN • The undersigned beneficiary under that certain Deed of Trust recorded on I as Instrument No. , in the Official Records of Riverside County, California, agrees that the lien of the Deed of Trust shall be junior and subordinate and subject to the attached "Declaration of Covenants, Conditions and Restrictions, and Reservation of Easements For The Estates at La Quinta" ("Declaration"), to any Notice of Annexation recorded pursuant to the Article herein entitled "Annexation of Additional Property" ("Notice of Annex- ation") and to any easements to be conveyed to The Estates at La Quinta Community Association in accordance with the terms of the Declaration and any Notice of Annexation. DATED: "LIENHOLDER" a BY: Its: BY: Its: • 0 STATE OF CALIFORNIA ) ss. COUNTY OF ) On , 200_, before me, a Notary Public in and for said State, personally appeared and personally known to me (or proved to me on the basis of satisfacto- ry evidence) to be the persons whose names are subscribed to the within instrument and acknowledged to me that they executed the same in their authorized capacity, and that by their signatures on the instrument the persons or the entities upon behalf of which the persons acted executed the instrument. WITNESS my hand and official seal. Signature of Notary Public (SEAL) 18329.283-19780.FCM 091307