ARTICLE XVII - Requirements_City_of_Long_Beach

Exhibit_A (Property Conveyed)

Exhibit_B (Unit Interests in Common Area)

Exhibit_C (Determination of Regular Assessments)

Index

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Recording requested by, and

when recorded mail to:

.

STONEYBROOK VILLAS, LTD.,

a limited partnership

11538 San Vicente Boulevard

Los Angeles, California 90049

DECLARATION OF

COVENANTS, CONDITIONS AND RESTRICTIONS

ESTABLISHING A PLAN OF CONDOMINIUM OWNERSHIP

THIS DECLARATION is made as of the date set forth below by the undersigned Declarant (defined hereinbelow).

R E C I T A L S:

A. Declarant is the owner of certain real property located in the City of Long Beach, County of Los Angeles (hereinafter referred to as "said County"), State of California, more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference, which real property is presently improved in the manner described in Exhibit "B" attached hereto and incorporated herein by this reference. Pursuant to the Declaration, Declarant intends to convert said real property, together with all improvements now or hereafter constructed thereon, to condominium ownership. Said real property, together with all improvements now or hereafter constructed thereon, will hereinafter be referred to as the "Project."

B. Declarant has deemed it desirable to establish covenants, conditions, restrictions and easements applicable to the Project as hereinafter set forth which will constitute a for the management of the Project and for the use, occupancy and enjoyment thereof, all for the purpose of enhancing and protecting its value, desirability and attractiveness and the quality of life therein.

C. It is desirable for the efficient management of the Project to create a corporation to which should be delegated and assigned the powers of managing the Project, maintaining and administering the Common Area, administering and enforcing the covenants, conditions, restrictions and easements hereinafter set forth, collecting and disbursing funds pursuant to the assessments and charges hereinafter set forth and performing such other acts as shall generally benefit the Project.

D. The Association (defined hereinbelow), a , has been incorporated under the laws of the State of California for the purpose of exercising the powers and functions as aforesaid.

E. All purchasers of Condominiums within the Project shall be Owners as defined herein and shall thereby automatically become Members of the Association and shall be subject to its powers and jurisdiction.

F. Declarant will hereafter hold and convey title to the Project subject to certain protective covenants, conditions, restrictions and easements hereinafter set forth.

NOW, THEREFORE, Declarant hereby covenants, agrees and declares that all of its interests as the same may from time to time appear in the Project shall be held and conveyed subject to the covenants, conditions, restrictions and easements hereinafter set forth which are hereby declared to be for the benefit of said interests and for the benefit of all Owners of said interests and their respective successors and assigns. Said covenants, conditions restrictions and easements shall run with said interests and shall be binding upon all parties having or acquiring any right or title therein and shall inure to the benefit of each Owner thereof. Said covenants, conditions, restrictions and easements are hereby imposed upon each of said interests, and all rights and titles therein, as a servitude in favor of each and all other said interests as the dominant tenement or tenements.

ARTICLE I

DEFINITIONS

Unless the context clearly indicates otherwise, the following terms used in this Declaration are defined as follows:

Section 1. "Articles" and "Bylaws" " shall mean and refer to the Articles of Incorporation and Bylaws of the Association as the same may from time to time be duly amended.

Section 2. "Assessments" shall mean and refer to any or all of the following:

"Regular Assessment" shall mean the amount which is to be paid by each Member to the Association for Common Expenses.

"Special Assessment" shall mean a charge against a particular Owner and his Condominium, directly attributable to the Owner, to reimburse the Association for costs incurred in bringing the Owner and his Condominium into compliance with the provisions of this Declaration, the Articles, Bylaws or Association Rules, or any other charge designated as a Special Assessment in this Declaration, the Articles, Bylaws or Association Rules, together with attorneys’ fees and other charges payable by such Owner, pursuant to the provisions of this Declaration, plus interest thereon and other fees and costs as provided for in this Declaration.

"Reconstruction Assessment" shall mean a charge against each Owner and his Condominium representing a portion of the cost to the Association for reconstruction of any portion or portions of the Common Area Pursuant to the provisions of this Declaration.

"Capital Improvement Assessment" shall mean a charge against each Owner and his Condominium representing a portion of the cost to the Association for installation or construction of any capital improvements on the Common Area which the Association may from time to time authorize pursuant to the provisions of this Declaration.

Section 3. "Association" shall mean and refer to STONEYBROOK VILLAS OWNERS ASSOCIATION, a nonprofit mutual benefit corporation, incorporated under the laws of the State of California, its successors and assigns.

Section 4. "Association Rules" shall mean and refer to rules adopted by the Association pursuant to the Article hereof entitled "Duties and Powers of the Association."

Section 5. "Board" shall mean and refer to the Board of Directors of the Association.

Section 6. "Common Area" shall mean and refer to all portions of the Project except the Units.

(a) maintenance, management, operation, repair and replacement of the Common Area (unless repair and replacement is otherwise provided for elsewhere in this Declaration, including the Articles hereof entitled "Destruction of Improvements" and "Eminent Domain");

(b) unpaid Assessments;

(c) maintenance by the Association of areas not within the Project if provided for in this declaration or pursuant to one or more separate agreements;

(d) management and administration of the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys and employees;

(e) utilities, trash pickup and disposal, gardening and to Condominiums which generally benefit and enhance the value and desirability of the Project;

(f) fire, casualty, liability, workmen’s compensation and other insurance covering the Common Area;

(g) any other insurance obtained by the Association;

(h) reasonable reserves as deemed appropriate by the Board;

(i) bonding of the members of the Board, any professional managing agent or any other person handling the funds of the Association;

(j) taxes paid by the Association;

(k) amounts paid by the Association for discharge of any lien or encumbrance levied against the Common Area, or portions thereof;

(l) obligations incurred by committees established by the Board; and

(m) other expenses incurred by the Association for any reason whatsoever in connection with the Common Area, or any other item or items designated by this Declaration, the Articles, Bylaws or Association Rules or incurred in furtherance of the purposes of the Association or in the discharge of any duties or powers of the Association.

Section 8. "Condominium" shall mean and refer to a fractional undivided interest in common with the other Owners within the Project in the Common Area, together with a separate interest in a Unit and all easements and other interest appurtenant to said fractional undivided interest and/or appurtenant to said Unit. Such fractional undivided interest in common of each Owner is described in Exhibit "B" hereto. Such fractional undivided interest shall not be changed except as provided in the Section entitled "Amendment of Condominium Plan" of the Article hereof entitled "Destruction of Improvements" and the Section entitled "Change of Condominium Interest" of the Article hereof entitled "Eminent Domain."

Section 9. "Condominium Plan" shall mean and refer to that certain condominium plan recorded or to be recorded in the Office of the County Recorder of said County for the Project, and any amendments thereto.

Section 10. "Declarant" shall mean and refer to STONEYBROOK VILLAS, LTD., a limited partnership (in this Section referred to as "Original Declarant") and such of Original Declarant’s successors in title to all or a portion of the remainder of the Project as may be designated a "Declarant" in a recorded instrument executed by Original Declarant.

Section 11. "Exhibit" shall mean and refer to those documents so designated herein and attached hereto, and each such Exhibit is by this reference incorporated into this Declaration.

Section 12. "Final Subdivision Public Report" shall mean and refer to a final report issued by the Department of Real Estate of the State of California pursuant to Section 11018.2 of the California Business and Professions Code or any similar statute then in effect.

Section 13. "First Mortgage" shall mean and refer to a Mortgage which has priority over any other Mortgage encumbering a specific Condominium.

Section 14. "First Mortgagee" shall mean and refer to a Mortgagee under a First Mortgage.

Section 15. "Member" shall mean and refer to every person or entity who qualifies for membership pursuant to the Article hereof entitled "Membership," including Declarant so long as Declarant qualifies for membership pursuant to said Article.

Section 16. "Mortgage" shall mean and refer to any duly recorded mortgage or deed of trust encumbering a Condominium.

Section 17. "Mortgagee" shall mean and refer to the mortgagee or beneficiary under any Mortgage, or assignee thereof.

Section 19. "Trustee" shall mean and refer to the insurance trustee as more fully described in the Article hereof entitled "Insurance."

Section 20. "Unit" shall mean the elements of a Condominium not owned in common with the Owners of other Condominiums in the Project. Each Unit shall be defined, identified and designated in the Condominium Plan. In interpreting recorded instruments, including deeds, declarations and plans, the existing physical boundaries of a Unit constructed in substantial accordance with the Condominium Plan shall be conclusively presumed to be its boundaries rather than the description expressed in any such recorded instrument, regardless of settling or lateral movement of any building and regardless of minor variances between boundaries as shown on any such recorded instrument and those of any building as constructed. For purposes of this Declaration, any appurtenant exclusive easements forming a portion of a Condominium shall be treated as if same were part of the Unit of such Condominium except as otherwise expressly provided in this Declaration.

ARTICLE II

MEMBERSHIP

Section 1 - Membership. Every Owner shall be a Member of the Association. The terms and provisions set forth in this Declaration which are binding upon all Owners are not exclusive, as Owners shall, in addition, be subject to the terms and provisions of the Articles, Bylaws and Association Rules to the extent the provisions thereof are not in conflict with this Declaration. Membership of Owners shall be appurtenant to and may not be separated from the interest of such Owner in any Condominium. Ownership of a Condominium shall be the sole qualification for membership; provided, however, a Member’s voting rights may be regulated or suspended as provided in this Declaration, the Bylaws or the Association Rules.

Section 2 - Transfer. The membership held by any Owner shall not be transferred, pledged or alienated in any way, except that such membership shall automatically be transferred to the transferee of the interest of an Owner required for membership. Any attempt to make a prohibited transfer is void and will not be reflected upon the books and records of the Association. The

Association shall have the right to record the transfer upon the books of the Association without any further action or consent by the transferring Owner.

Section 3 - Voting Rights . Upon the first conveyance by Declarant of a Condominium to an individual Owner, the Association shall assume control of the Project and commence to perform its obligations hereunder at which time voting rights shall commence as to all Condominiums within the Project. All voting rights shall be subject to the restrictions and limitations provided herein and in the Articles, Bylaws and Association Rules.

Section 4 - Classes of Voting Membership . The Association shall have two (2) classes of voting membership.

Class A. Class A Members shall be all Owners with the exception of Declarant. Class A Members shall be entitled to one (1) vote for each Condominium in which they hold the interest required for membership (except in the case of cumulative voting as provided in the Bylaws). When more than one person Owns a portion of the interest in a Condominium required for membership, each such person shall be a Member and the vote for such Condominium shall be exercised as they among themselves determine, but in no event shall more than one (1) vote be cast with respect to any Condominium (except in the case of cumulative voting as provided in the Bylaws). The Association shall not be required to recognize the vote or written assent of any such co-Owner except the vote or written assent of the co-Owner designated in a writing executed by all of such co-Owners and delivered to the Association.

Class B. The Class B Member shall be Declarant. The Class B Member shall be entitled to three (3) votes for each Condominium in which it holds the interest required for membership (except in the case of cumulative voting as provided in the Bylaws); provided that the Class B Membership shall cease and be converted into Class A Membership on the happening of whichever of the following is first in time:

(a) when the total votes outstanding in the Class A Membership equal the total votes outstanding in the Class B Membership; or

(b) on the second anniversary of the original issuance of the Final Subdivision Public Report covering the Project.

Section 5 - Special Voting Rights. Notwithstanding the provisions of this Article, so long as there are two classes of membership or Declarant holds at least fifty-one percent (51%) of the total voting power of the Association, then Members other than Declarant shall, by majority vote, among themselves, elect one (1) of the directors. Said director so elected may only be removed by majority vote of Members other than Declarant.

Section 6 - Approval of Members. Unless elsewhere otherwise specifically provided in this Declaration or the Bylaws, any provision of this Declaration or the Bylaws which requires the vote

or written assent of a specified majority of the voting power of the Association or any class or classes of membership shall be deemed satisfied by the following:

(a) The vote of the specified percentage at a meeting duly called and noticed pursuant to the provisions of the Bylaws dealing with annual or special meetings of the Members, and such percentage must include the specified number of all Members entitled to vote at such meeting and not such a percentage of those Members present;

(b) A writing or writings signed by the specified percentage; and

(c) In any matter requiring the consent of the Members, but not specifically provided for in this Declaration or the Articles, Bylaws or any contract executed by the Association, a simple majority of the voting power of Members entitled to vote on such matters shall suffice except as otherwise provided in the Section of this Article entitled "When Approval of Classes and Categories or Required."

Section 7 - When Approval of Classes and Categories of Members Required. As long as there is a Class B membership or Declarant holds or directly controls twenty-five percent (25%) or more of the voting power of this Association, Association approval required by any of the following provisions of this Declaration shall require (i) approval of a majority of the total voting power of the Association and (ii) approval of a majority of the total voting power of the Association residing in Members other than Declarant: the Section entitled "Regular Assessments" of the Article hereof entitled "Covenant for Assessments"; and the Section entitled "General Limitations and Restrictions on the Powers of the Board" of the Article hereof entitled "Duties and Powers of the Association."

ARTICLE III

COVENANT FOR ASSESSMENTS

Section 1 - Creation of Lien and Personal Obligation for Assessments. Each Owner, including Declarant to the extent Declarant is an Owner as defined herein, of any Condominium, by acceptance of a deed or other instrument creating in such Owner the interest required to be deemed an Owner whether or not it shall be so expressed in any such deed or other instrument, is deemed to covenant and agree to pay to the Association: Regular Assessments, Special Assessments, Capital Improvement Assessments and Reconstruction Assessments, such Assessments to be fixed, established and collected from time to time as provided in this Declaration. The Assessments, together with interest thereon, late charges, attorneys’ fees, court costs and other costs of collection as hereinafter provided, shall, upon recordation of a notice of claim of lien or copy thereof in the office of the County Recorder of said County as described in the Section entitled "Notice of Lien" of the

Article entitled "Nonpayment of Assessments," become a lien upon the Condominium against which each such Assessments is made. Each such Assessment, together with such interest, late charges, costs and attorneys’ fees, shall also be the personal obligation of the Owner of such Condominium at the time the Assessments becomes due. The personal obligation shall not pass to the successors in title of an Owner unless expressly assumed by such successors.

Section 2 - Purpose of Assessments. The Assessments levied by the Association shall be used exclusively for the purposes of promoting the recreation, health, safety and welfare of the Members, the management, maintenance, care, preservation, protection and architectural control of the Project, enhancing the quality of life in the Project and the value of the Project including, without limitation, the improvement and maintenance of the properties, services and facilities devoted to this purpose and related to the use and enjoyment of the Common Area, or in furtherance of any other duty or power of the Association.

Section 3 - Regular Assessments. Not later than sixty (60) days prior to the beginning of each fiscal year, the Board shall distribute to each Member a pro forma operating statement or budget for the upcoming fiscal year which shall, among other things, estimate the total Common Expenses to be incurred for such . The Board shall at that time determine the amount of the Regular Assessment to be paid by each Member. Each Member shall thereafter pay to the Association his Regular Assessment in installments as established by the Board. Each such installment shall be due and payable on a date established by the Board in the written notice sent to Members. In the event the Board shall determine that the estimate of total charges for the current year is or will become, inadequate to meet all Common Expenses for any reason, it shall then immediately determine the approximate amount of such inadequacy and issue a supplemental estimate of the Common Expenses and determine the revised amount of Regular Assessment against each Member, and the date or dates when due. After the Association’s first fiscal year of operation, the Board shall not impose a Regular Assessment which is increased by more than twenty percent (20%) over the amount of the Regular Assessment for the immediately preceding fiscal year without the approval of a majority of the voting power of the Association.

Section 4 - Capital Improvement Assessments. In addition to Regular Assessments, the Association may levy in any fiscal year a Capital Improvement Assessment applicable to that year only for the purpose of defraying, in whole or in part, the cost of any construction or replacement (other than due to destruction) of a described capital improvement upon the Common Area, including the extent the same is not covered by the provisions affecting Reconstruction Assessments of the Article hereof entitled "Destruction of Improvements." The Association shall not impose a Capital Improvement Assessment the total amount of which exceeds five percent (5%) of the estimated Common Expenses, as set forth in the Section of this Article entitled "Regular Assessments," without the approval of a majority of the voting power of the Association. All amounts collected as Capital Improvement Assessments may only be used for capital improvements and shall be deposited by the Board in a separate bank account to be held in trust for such purposes. Said funds shall be deemed a contribution to the capital account of the Association by the Members. For purposes hereof, any Capital Improvement Assessment levied against an Owner and his Condominium shall be based upon the ratio of the square footage of the interior dwelling area of the Unit of such Owner’s Condominium to the total square footage of the interior dwelling areas of all Units of all Condominiums within the Project.

Section 5 - Rate of Regular Assessments. Regular Assessments shall be fixed for each Condominium as specified in Exhibit "C" hereto.

Section 6 - Certificate of Payment. The Association shall, upon demand, furnish to any Member liable for Assessments a certificate in writing signed by an officer or authorized agent of the Association setting forth whether the Assessments relating to a specified Condominium have been paid and the amount of delinquency, if any. A reasonable charge not to exceed Fifteen Dollars ($15.00) may be collected by the Board for the issuance of each such certificate. Each certificate shall be prima facie evidence of payment of any Assessments therein stated to have been paid.

Section 7 - Exempt Property. Any property subject to this Declaration shall be exempt from Assessments if the same is dedicated to and accepted by a public authority. Notwithstanding the foregoing, no real property or improvements subject to this Declaration and devoted to residential dwelling use shall be exempt from Assessments; provided, however, that nothing herein shall be construed as accelerating the date on which the payment of Assessments commence as specified in the Section entitled "Date of Commencement of Assessments" of this Article.

Section 8 - Special Assessments. Special Assessments shall be levied by the Board against a Condominium and its Owner to reimburse the Association for:

(a) costs incurred in bringing an Owner and his Condominium into compliance with the provisions of this Declaration, the Articles, Bylaws or Association Rules;

(b) any other charge designated as a Special Assessment in this Declaration, the Articles, Bylaws or Association Rules; and

(c) attorneys' fees, interest and other charges relating thereto as provided in this Declaration. In the event the Association undertakes to provide materials or services which benefit individual Units and which can be accepted or not by individual Owners, such Owners, in accepting such materials or services, agree that the costs thereof shall be a Special Assessment.

Section 9 - Date of Commencement of Assessments. Regular and other Assessments as to Condominiums within the Project shall commence as to all such Condominiums on the first day of the month following the conveyance of the first Condominium therein by Declarant to an individual Owner.

Section 10 - Reduction or Abatement of Regular Assessments. In the event the amount budgeted to meet Common Expenses for a particular fiscal year proves to be excessive in light of the actual Common Expenses, the Board in its discretion may either reduce the amount of the Regular Assessments or may abate collection of Regular Assessments as it deems appropriate. Nothing in the Section shall require the Board either to abate or reduce Regular Assessments. Notwithstanding the foregoing, neither an abatement nor a reduction in Regular Assessments shall be permitted so long as Declarant is possessed with or controls a majority of the voting power of the Association or the Board.

Section 11 - No Offsets. All Assessments shall be payable in the amount specified by the Assessment and no offsets against such amount shall be permitted for any reason, including, without limitation, (I) a claim that the Association is not properly exercising its duties and powers as provided in this Declaration; (ii) a Member has made or elects to make no use of the Common Area; or (iii) any construction or maintenance performed pursuant to the Section entitled "Assumption of Maintenance Obligations" of the Article entitled "Repair and Maintenance" of this Declaration shall in any way postpone Assessments or entitle a Member to claim any such offset or reduction.

Section 12 - Homestead Waiver. Each Owner, to the extent permitted by law, does hereby waive, to the extent of any liens created pursuant to this Declaration, whether such liens are now in existence or are created at any time in the future, the benefit of any homestead or exemption laws of the State of California now in effect, or in effect from time to time hereafter.

Section 13 - Reserves. Regular Assessments shall include reasonable amounts collected as reserves for the future periodic maintenance, repair or replacement of the Common Area, or any other purpose as determined by the Board. All amounts collected as reserves, whether pursuant to this Section or otherwise, shall be deposited by the Board in a separate bank account or accounts to be held in trust for the respective purposes for which they are collected. Said amounts must be segregated from and not commingled with any other funds of the Association. Such reserves shall be deemed a contribution to the capital account of the Association by the Members.

ARTICLE IV

NONPAYMENT OF ASSESSMENTS

Section 1 - Delinquency. Any Assessment provided for in this Declaration which is not paid when due shall be delinquent on said date (the "delinquency date"). If any such Assessment is not

Section 4 - Curing of Default. Upon the timely payment or other satisfaction of: (i) all delinquent Assessments specified in the notice of claim of lien, (ii) all other Assessments which have become due and payable with respect to the Condominium as to which

such notice of claim of lien was recorded and (iii) interest, late charges, attorneys’ fees and other costs pursuant to this Declaration and the notice of claim of lien which have accrued, officers of the Association or any other persons designated by Board are hereby authorized to file or record, as the case may be, in the office of the County Recorder of said County an appropriate release of such notice. Each defaulting Owner shall pay to the Association a fee, to be determined by the Board, but not to exceed Twenty-five Dollars ($25.00), to cover the costs of preparing and filing or recording such release. If such fee is not timely paid, the same may be collected by Special Assessment or in any other manner permitted by law or hereunder.

ARTICLE V

DUTIES AND POWERS OF THE ASSOCIATION

Section 1 - General Duties and Powers. In addition to the duties and powers enumerated in its Articles and Bylaws, or elsewhere provided for herein, and without limiting the generality thereof, the Association shall have the specific duties and powers specified in this Article.

Section 2 - General Duties of the Association. The Association through the Board shall have the duty and obligation:

(a) to enforce the provisions of this Declaration, the Articles, Bylaws and Association Rules by appropriate means and carry out the obligation of the Association hereunder and thereunder, including collection of Assessments and foreclosure of the liens therefor;

(b) to maintain and otherwise manage the following:

(c) to pay any real and personal property taxes and other charges assessed to or payable by the Association;

(d) to obtain and pay for the benefit of the Common Area, and for the benefit of Condominiums when they are not separately billed therefor, water, gas, electricity, refuse collection and other utilities and services;

(e) to establish and maintain working capital and contingency funds and asset replacement accounts;

(f) unless no longer required by lenders as set forth in the Section entitled "Seventy-Five Percent (75%) Vote of

First Mortgagees" of the Article hereof entitled "Rights of Lenders," to employ a managing agent who has professional experience in the management of residential developments similar to the Project (which management agent may be an affiliate of Declarant) to perform all or any part of the duties and responsibilities of the Association; and

(g) to act as managing agent for the Project as and when professional management thereof is no longer required aforesaid.

Section 3 - General Powers of the Association. The Association through the Board shall have the power but not the obligation:

(a) to contract with attorneys, accountants, other professionals, independent contractors and other persons to perform all or any part of the duties and responsibilities of the Association which are not being performed by the managing agent;

(b) to acquire interest in real or personal property that may be necessary or convenient for the management of the Project, the administration of the affairs of the Association or for the benefit of the Members;

(c) to borrow money as may be needed in connection with the discharge by the Association of its powers and duties;

(d) to establish in cooperation with any governmental entity a special tax assessment district for the performance of all or a portion of the maintenance or other functions now within the responsibility of the Association;

(e) unless otherwise provided by a governmental entity, to provide trash pickup and disposal service for the benefit of the Owners and their Condominiums;

(f) to negotiate and enter into such contracts with First Mortgagees and mortgage insurers and guarantors as may be necessary or desirable to facilitate the availability of loans secured by Mortgages within the Project;

(g) to cause such Board resolutions to be adopted as may be required in connection with financing pursuant to "Cal Vet Contracts’ in order to reflect the fact that such Contracts are superior in right to the liens for Assessments created by this Declaration to the same extent as First Mortgages are superior thereto (for purposes hereof, a "Cal Vet Contract" shall mean and refer to an installment sales contract as to a Condominium entered into under and pursuant to Article 3, Chapter 6, Division 4 of the California Military and Veterans Code whereunder the Department of Veterans Affairs of the State of California is Seller); and

(h) to assign, rent or license any unassigned parking and storage spaces, if any, upon such terms as it deems appropriate.

Section 4 - General Limitations and Restrictions on the Powers of the Board. In addition to the limitations and restrictions enumerated in the Articles and Bylaws, or elsewhere provided for herein, and without limiting the generality thereof, the Board shall be prohibited from taking any of the following action without the approval of a majority of the voting power of the Association:

(a) entering into contracts for materials or services which have a term in excess of one (1) year, with the following exceptions:

(b) incurring aggregate expenditures for capital improvements to the Project in any fiscal year in excess of five percent (5%) of the estimated Common Expenses for that fiscal year as set forth in the Article hereof entitled "Covenant for Assessments."

(c) selling any real or personal property of the Association in any fiscal year with a fair market value which in the aggregate exceeds five percent (5%) of said estimated Common Expenses 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 Board may cause a director or officer to be reimbursed for expenses.

(e) exercising the power of attorney granted to the Association pursuant to the Section entitled "Power of Attorney" of the Article hereof entitled "limitations Upon the Right to Partition and Severance."

(f) filling a vacancy on the Board created by the removal of a director.

Section 5 - Association Rules. The Board shall also have the power to adopt, amend and repeal such rules and regulations as it deems reasonable (the "Association Rules") which may include the establishment of a system of fine and penalties enforceable as Special Assessments, all as provided in the Bylaws. The Association Rules shall govern matters in furtherance of the purposes of the Association and other matters specified in this Declaration, including, without limitation, the conduct of persons within the Project and the use of the Common Area; provided, however, that the Association Rules may not discriminate among Owners (except that

special Association Rules may be adopted with respect to children), and shall not be inconsistent with this Declaration, the Articles or Bylaws. A copy of the Association Rules 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 Association Rules shall be delivered to each Owner in the same manner established in this Declaration for the delivery of notices. Upon compliance with such notice requirements, the Association Rules shall have the same force and effect as if they were set forth in and were part of this Declaration and shall be binding upon the Owners and their successors in interest whether or not actually received thereby. The Association Rules, as adopted, amended or repealed, shall be available at the principal office of the Association to each Owner and First Mortgagee upon request. In the event of any conflict between any such association Rules and any other provisions of this Declaration, or the Articles or Bylaws, the provisions of the Association Rules shall be deemed to be superseded by the provisions of this Declaration, the Articles or the Bylaws to the extent of any such conflict.

Section 6 - Delegation of Powers. The Board and the Association shall have the right to delegate to committees, officers, employees or agents any of their duties and powers under this Declaration, the Articles and Bylaws; provided, however, no such delegation to a professional management agent or to committees shall relieve the Board or Association of its obligation to perform such delegated duty.

Section 7 - Pledge of Assessment Rights. The Association shall have the power to pledge the right to exercise its Assessment powers in connection with the obtaining of funds to repay a debt of the Association; provided, however, any such pledge shall require the prior approval of not less than seventy-five percent (75%) of the voting power of the Association. Said power shall include, but not be limited to, the ability to make an assignment of Assessments which are then payable to or will become payable to the Association, which assignment may be then presently effective but shall allow said Assessments to continue to be paid to and used by the Association as set forth in this Declaration unless and until the Association shall default in the repayment of the debt which is secured by said assignment. The Board may levy a Special Assessment against the Members to obtain such funds. Upon the failure of any Member to pay said Special Assessment within thirty (30) days of its due date, the Board may resort to all remedies of the Association for the collection thereof, including those set forth in the Article hereof entitled "Nonpayment of Assessments." Notwithstanding the foregoing, any pledge of Assessments shall require the prior written approval of seventy-five percent (75%) of the First Mortgagees based on one (1) vote for each First Mortgage held.

Section 8 - Emergency Powers. The Board or any person authorized by the Board may enter any Unit in the event of an emergency involving illness or potential danger to life or property. Such entry shall be made with as little inconvenience to the Owner as practicable, and any damage caused thereby shall be repaired by the Association at its expense unless covered by insurance carried

by the Owner.

ARTICLE VI

REPAIR AND MAINTENANCE

Section 1 - Repair and Maintenance by Association. Except to the extent that an Owner may be obligated to maintain and repair as hereinafter provided in this Article, and without limiting the generality of the statement of duties and powers contained in this Declaration, the Articles, Bylaws or Association Rules, the Association shall have the duty to accomplish the following upon the Project or other land in such manner and at such times as the Board shall prescribe:

(a) maintain, repair, restore, replace and make necessary improvements to the Common Area so that the same are at all times in a first-class condition and good state of repair, including, without limitation, all exterior building surfaces, to include the painting thereof;

(b) maintain all other areas, facilities, equipment, services or aesthetic components of whatsoever nature as may from time to time be requested by the vote or written consent of two-thirds (2/3) of the voting power of the Members; and

(c) pay, out of the general funds of the Association, the costs of any such maintenance and repair pursuant to this Section, except as otherwise herein specified as payable by the particular Owners.

Section 2 - Repair and Maintenance by Owner. Except as the Association shall be obligated to maintain, repair, replace and restore as may be provided in other Articles of this Declaration, every Owner shall at his sole cost and expense:

(a) maintain, repair, replace and restore all portions of the Unit, including, without limitation, the interior walls, ceilings, floors and doors in a clean, sanitary and attractive condition;

(b) repair and replace all window glass for his own Unit, and Owners shall be responsible for the interior and exterior cleaning of such window glass;

(c) maintain in an open and unobstructed condition all water, sewer and drainage pipes and lines which serve only his own Unit between the points at which the same leave pipes and lines serving more than one (1) Unit to serve only his Unit and, if applicable, the points at which the same rejoin pipes and lines serving more than one (1) Unit;

(d) maintain, replace, repair and restore the following which serve his own Unit; water heating, air-conditioning and heating equipment; and

(e) maintain surface areas (other than exterior building surfaces) bounding all elements of his Unit, including balconies, the extent of and standards of such maintenance to be in accordance with rules adopted or to be adopted by the Board.

Section 3 - Damage from Within a Unit. Except to the extent covered by insurance carried by the Association, in the event the Board shall determine that the walls, ceiling, floors, doors, or windows or any other portion of the Common Area forming the boundaries of a Unit have been damaged from within the Unit, notwithstanding that such damage may be to the Common Area forming the boundaries of a Unit have been damaged from within the Unit, notwithstanding that such damage may be to the Common Area, the Owner of the Unit shall be responsible for repairing such damage in a timely manner and in accordance with such rules as the Board shall from time to time adopt.

Section 4 - Right of Association to Maintain and Install. In the event that an Owner fails to accomplish any maintenance or installation required by the Article, the Association or its agents may, but shall not be obligated, to cause such maintenance or installation to be accomplished as hereinafter set forth:

(a) Upon a finding by the Board of a deficiency in such maintenance or installation, the Board shall give notice of such deficiency to the Owner which shall briefly describe the deficiency to the Owner and which shall set a date for a hearing before the Board or a committee selected by the Board for such purpose. The Board may delegate its powers under this subsection to a duly appointed committee of the Association.

(b) Such hearing shall be held not less than ten (10) nor more than thirty (30) days from the date of said notice.

(c) Such hearing shall be conducted according to such reasonable rules and procedures as the Board shall adopt which shall provide the Owner with the right to present oral and written evidence and to confront and cross-examine any person offering at such hearing evidence adverse to such Owner. If the Board or any such committee renders a decision against the Owner, it shall further set a date by which the deficiency is to be corrected by the Owner. A decision of such committee may be appealed to the Board within ten (10) days of the rendering thereof, but a decision of the Board shall be final.

(d) If the deficiency continues to exist after the time limitation imposed by a final decision of the Board or any such committee, the Board or such committee may cause such maintenance or installation to be accomplished.

(e) In the event the Board or such committee elects to cause such maintenance or installation to be accomplished, the following shall apply:

(f) If the Association pays for all or any portion of such maintenance or installation, such amount shall be a Special Assessment to the affected Owner and Condominium. Upon the failure of any Owner to pay said Special Assessment within thirty (30) days of its due date, the Board may resort to all remedies of the Association for the collection thereof, including those set forth in the Article hereof entitled "Nonpayment of Assessments."

Section 5 - Right of Entry The Association shall have the right to enter any Unit in connection with any maintenance, repair or construction in the exercise of the powers and duties of the Association. In addition, in the case of an emergency threatening damage to persons or property, the Association and Owners shall have the right to enter any Unit in order to abate such condition. No person entering a Unit pursuant to this Section shall be deemed guilty of a trespass thereby.

Section 6 - Maintenance of Public Utilities. Nothing contained herein shall require or obligate the Association to maintain, replace or restore facilities of public utilities which are located within easements in the Common Area owned by such public utilities. However, the Board 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 7 - Assumption of Maintenance Obligations. Declarant and its subcontractors, and the agents and employees of the same, shall have the right to come upon the Common Area to complete the refurbishment or installation of any landscaping or other improvements to be installed thereupon. In the event that any of Declarant’s subcontractors are contractually obligated to maintain the landscaping and/or other improvements upon any portion of the Common Area, such maintenance shall not be assumed by the Association until the termination of such contractual obligation. If any

excess of Assessments collected over actual Common Expenses incurred by the Association is caused by reason of refurbishment or maintenance pursuant to this Section, or otherwise, such excess shall be placed in reserve to offset the future expenses of the Association in any manner designated by the Board.

Section 8 - Maintenance of Parking Areas. Any provisions of this Article to the contrary notwithstanding, the Association shall clean, maintain and repair all of the parking areas of the Project. The cost of such cleaning, maintenance and repair shall be borne by the Association, except for extraordinary maintenance and repairs caused by an Owner, members of his family or his invitees, which extraordinary maintenance and which repairs shall be paid for by such Owner. If an Owner fails to pay any amount required by this Section, such amount shall be a Special Assessment to the affected Owner and Condominium. Upon the failure of any Owner to pay said Special Assessment within thirty (30) days of its due date, the Board may resort to all remedies of the Association for the collection thereof, including those set forth in the Article hereof entitled "Nonpayment of Assessments."

ARTICLE VII

INSURANCE

Section 1 - Types. The Association shall obtain and maintain in effect the following types of insurance:

(a) A comprehensive public liability insurance policy insuring the Association, the Declarant and the agents and employees of each and the Owners and the respective family members, guests and invitees of the Owners against any liability incident to the ownership or use of the Common Area, and including, if obtainable, a cross-liability endorsement insuring each insured against liability to each other insured. The limits of such insurance shall not be less than $500,000.00 for death of or injury to any one person in any one occurrence, $750,000.00 for death of or injury to more than one person in any one occurrence, and $50,000.00 for property damage in any one occurrence.

(b) A master or blanket policy of fire insurance for the full insurable replacement value, without deduction for depreciation, of all of the improvements within the Project. Such policy and any endorsements thereon shall be in the amount, form and content, and for such term and in such company, as may be satisfactory to any First Mortgagee; and, if more than one First Mortgagee exists, such policy and endorsements shall meet the highest minimum standards of all such First Mortgagees. Such policy shall contain extended coverage and replacement cost endorsements, if available, and may also contain vandalism and malicious mischief coverage, special form endorsement and stipulated amount clause. Subject to the foregoing requirements of First Mortgagees, such policy shall be in such amounts as shall be determined from time to time by the

Board, shall name as insured the Association, the Owners and Declarant, so long as Declarant is the Owner of any of the Condominiums, and all Mortgagees as their respective interests may appear, and shall contain a loss payable endorsement in favor of the Trustee or the Board, as applicable.

(c) Fidelity coverage against dishonest acts on the part of directors, officers, employees or volunteers who handle or who are responsible for handling the funds of the Association, and such fidelity bonds shall name the Association as obligee, shall be written in an amount equal to one hundred fifty percent (150%) of the estimated annual Common Expenses of the Association, including reserves, and shall contain waivers of any defense based on the exclusion of persons who serve without compensation from any definition of "employee" or similar expression.

Section 2 - Waiver by Members. All insurance obtained by the Association shall be maintained by the Association for the benefit of the Association, the Owners and the Mortgagees as their respective interests may appear. As to each of said policies which will not be voided or impaired thereby, the Owners hereby waive and release all claims against the Association, the Board, other Owners, the Declarant and agents and employees of each of the foregoing, with respect to any loss covered by such insurance, whether or not caused by negligence of or breach of any agreement by said persons, but to the extent of insurance proceeds received in compensation for such loss only.

Section 3 - Other Insurance. The Board may, and if required by any First Mortgagee shall, purchase and maintain in effect demolition insurance in adequate amounts to cover demolition in the event of a total or partial destruction and a decision not to rebuild, as well as a blanket policy of flood insurance. The Board shall also purchase and maintain in effect workmen’s compensation insurance, to the extent that the same shall be required by law, for all employees of the Association. The Board shall also purchase and maintain in effect such insurance on personal property owned by the Association, and such other insurance as it deems necessary or as is required by any First Mortgagee including, without limitation, earthquake insurance, plate-glass insurance and officers’ and directors’ errors and omissions insurance.

Section 4 - Premiums, Proceeds and Settlement. Insurance premiums for any such blanket insurance coverage obtained by the Association and any other insurance carried by the Association shall be a Common Expense to be included in the Regular Assessments levied by the Association. Casualty insurance proceeds shall be used by the Association for the Repair or replacement of the property for which the insurance was carried, or otherwise disposed of as provided in the Article hereof entitled "Destruction of Improvements." The Association is hereby granted the authority to negotiate loss settlements with the appropriate insurance carriers. Any two (2) directors of the Association 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 the Members.

Section 5 - Annual Insurance Review.. The Board shall annually determine whether the amounts and types of insurance it has obtained provide adequate coverage for the Project in light of increased construction costs, inflation, practice in the area in which the Project is located or any other factor which tends to indicate that either additional insurance policies or increased coverage under existing policies is necessary or desirable to protect the interests of the Owners, the Mortgagees and the Association. If the Board determines that increased coverage or additional insurance is appropriate, it shall obtain the same.

Section 6 - Trustee. Except as provided below, all insurance proceeds payable under subsection (b) of the Section entitled "Types" of this Article shall be paid to a Trustee. The Trustee shall hold, distribute and expend such proceeds for the benefit of the Owners, Mortgagees and others, as their respective interests shall appear, pursuant to the provisions of the Article hereof entitled "Destruction of Improvements." The Trustee shall be appointed by the Board and shall be a commercial bank, or branch thereof, or a trust company in said County which has agreed in writing to accept such trust. When proceeds from a single claim do not exceed Ten Thousand Dollars ($10,000.00), such proceeds shall be paid to the Association to be used as provided in the Article hereof entitled "Destruction of Improvements." The foregoing notwithstanding, in the event the Board fails to appoint a Trustee or determines that the use of a Trustee is not practical, then all proceeds shall be paid to the Board and the members thereof shall collectively act in the place and stead of such Trustee.

Section 7 - Individual Casualty Insurance Prohibited. Except as expressly provided in the Section of this Article entitled "Rights of Owners to Insure," no Owner shall separately insure his Condominiun [sic] or any part thereof against loss by fire or other casualty covered by any insurance carried under subsection (b) of this Section entitled "Types" of this Article. Should any Owner violate this provision, and should any loss intended to be covered by insurance carried by the Association occur, and the proceeds payable thereunder be reduced by reason of insurance carried by any Owner, such Owner shall assign the proceeds of such insurance carried by him to the extent of such reduction to the Trustee or Board, as applicable, to the same purposes as the reduced proceeds are to be applied. In the event that such Owner has failed to pay such amount within thirty (30) days of a written demand therefor by the Trustee or Board, the Board may levy a Special Assessment against such Owner and his Condominium for such amount. In the event such Special Assessment is not paid within thirty (30) days of its due date, the Board may resort to all remedies of the Association for the Collection thereof, including those set forth in the Article hereof entitled "Nonpayment of Assessments."

Section 8 - Rights of Owners to Insure. Notwithstanding any other provisions of this Article, an Owner shall be permitted to insure his personal property against loss by fire or other casualty and may carry public liability insurance covering his individual liability for damage to persons or property occurring inside

his Unit. In addition, any improvements made by an Owner to his Unit may be separately insured by such Owner provided such insurance shall be limited to the type and nature of coverage commonly known as "tenant’s improvements" coverage. All such policies as may be carried by an Owner shall contain waivers of subrogation of claims against the Association, the Board, other Owners, Declarant and the agents and employees of each of the foregoing, with respect to any loss covered by such insurance, whether or not caused by negligence of or breach of any agreement by said persons, but to the extent of insurance proceeds received in compensation for such loss only; provided, however, such other policies shall not adversely affect or diminish any liability under any insurance obtained by the Association, and provided, further, duplicate copies or certificates of such other policies shall be deposited with the Board.

Section 9 - Waivers. All policies of physical damage insurance shall provide for waiver of the following rights to the extent such waivers are obtainable from the respective insurers:

(a) Subrogation of claims against the Board, Declarant, the Owners, tenants of the Owners, and the employees of each of the foregoing;

(b) Any defense based on co-insurance;

(c) any right of set-off, counterclaim, apportionment, proration or contribution by reason of other insurance not carried by the Association;

(d) 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;

(e) any right of the insurer to repair, rebuild or replace and, in the event a structure is not repaired, rebuilt or replaced following loss, any right to pay under the insurance the lesser of the replacement value of the improvements insured or the fair market value thereof;

(f) notice of the assignment of any Owner of his interest in the insurance by virtue of a conveyance of any Condominium; and

(g) any right to require any assignment of any Mortgage to the insurer.

Section 10 - Overriding Insurance Requirements. Notwithstanding any other provision of this Article, the Association shall continuously maintain in effect such casualty, flood and liability insurance and a fidelity bond meeting the insurance and fidelity requirements for condominium projects established by the Federal National Mortgage Association and the Government National Mortgage Association so long as either is a Mortgagee or Owner of a Condominium within the Project, except to the extent such coverage is not available or has been waived in writing by the Federal National Mortgage Association or the Government National Mortgage

Association.

ARTICLE VIII

DESTRUCTION OF IMPROVEMENTS

Section 1 - Automatic Reconstruction. In the event of partial or total destruction of any improvements within the Project, the Board shall promptly take the following action:

(a) The Board shall ascertain the cost of reconstruction by obtaining fixed price bids from at least two (2) reputable contractors, including the obligation to obtain a performance bond if the Board deems the same to be necessary or appropriate, and by obtaining one or more independent appraisals if the Board deems such appraisal or appraisals to be necessary or desirable.

(b) The Board shall determine the amount of insurance proceeds, if any payable by contacting the appropriate representative of the insurer of said improvements.

(c) The Board shall meet and determine whether the insurance proceeds, if any, will cover eighty-five percent (85%) or more of the estimated cost of reconstruction as determined pursuant to subsection (a) of this Section, or whether the portion of the estimated cost not covered by insurance is less than Five Hundred Dollars ($500.00) per Condominium within the Project. Such percentage covered by insurance or such cost shall hereinafter be referred to as the "Acceptable Range of Reconstruction Cost." If the Board finds that a bid obtained under this Section is within the Acceptable Range of Reconstruction Cost, the Board shall cause a notice to be sent to all Owners of Condominiums in the Project and to all First Mortgagees of Mortgages encumbering Condominiums in the Project setting forth such findings and informing said Owners and said First Mortgagees that the Board intends to commence reconstruction pursuant to this Declaration. In the event that at least twenty percent (20%) of the Owners, based on one (1) vote for each Condominium, and all First Mortgagees of Mortgages encumbering Condominiums object in writing to such reconstruction as indicated in such notice, the Board shall call a meeting of the Owners and all First Mortgagees pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this Article. In the event that the foregoing requirements are satisfied and the requisite number of Owners and all First Mortgagees of Mortgages encumbering Condominiums do not object in writing to such reconstruction, (I) the Trustee, if the Board is not acting in its place and stead, shall pay such insurance proceeds as are available to the Board and the Board shall cause reconstruction to take place as promptly as practicable thereafter, or (ii) the Board, if it is acting in the place and stead of the Trustee, shall cause reconstruction to take place as promptly as practicable thereafter. Proceeds paid by the Trustee

to the Board shall be disbursed from time to time by the Trustee to the Board against receipt by the Trustee of such evidence as it shall reasonably require that persons or entities who are entitled to assert mechanics lien claims in connection with such reconstruction will have delivered adequate lien and payment releases upon payment to them by the Board. In connection with such reconstruction, the Board shall levy a Reconstruction Assessment against each Owner based upon the ratio of the square footage of the interior dwelling area of the Unit of such Owner’s Condominium to the total square footage of the interior dwelling areas of all Units of all Condominiums within the Project at such time and in such amount as the Board shall determine is necessary to cover the costs of reconstruction in excess of insurance proceeds.

(d) If the Board in good faith determines that none of the bids submitted under this Section reasonably reflects the anticipated reconstruction costs, the Board shall continue to attempt to obtain an additional bid which it determines reasonably reflects such costs. Such determination shall be made by the Board as soon as possible. However, if such determination cannot be made within ninety (90) days of the date of such destruction because of the unavailability or unacceptability of an insurance estimate or reconstuction [sic] bid, or otherwise, the Board shall immediately call a meeting of the Owners and all First Mortgagees pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this Article.

(e) If the Board determines that any Unit has become uninhabitable by reason of its total or partial destruction, Regular Assessments shall abate against the Owner thereof until the Board determines that the reconstruction of the Unit has restored its habitability. However, if the Board determines that such abatement would adversely and substantially affect the management, maintenance and operation of the Project, it may elect to disallow such abatement.

Section 2 - . If reconstruction is not to take place pursuant to the Section entitled "Automatic Reconstruction" of this Article, as soon as practicable after same has been determined the Board shall call a meeting of the Owners and all First Mortgagees by mailing a notice of such meeting to each such Owner and each such First Mortgagee. Such meeting shall be held not less than fourteen (14) days and not more than twenty-one (21) days after the date of such notice. The Owners may, by a vote at such meeting or by the written consent of not less than sixty-six and two-thirds percent (66-2/3%) of the Owners based on one (1) vote for each Condominium, determine to proceed with such reconstruction; provided, however, reconstruction must take place unless a determination is made not to proceed therewith by seventy-five percent (75%) of the First Mortgagees based upon one (1) vote for each First Mortgage held thereby.

Section 3 - Decision to Reconstruct; Procedure After Meeting. In the event that the Association undertakes reconstruction pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this article, the following shall apply:

(a) Immediately after such meeting, the Board shall send a notice to each First Mortgagee of a Condominium, which notice shall advise of the decision to undertake reconstruction. The Board shall also send a true copy of each such notice to the Trustee unless the Board is acting in the place and stead of the Trustee.

(b) As to all insurance proceeds received, (I) the Trustee, if the Board is not acting in its place and stead, shall pay same to the Board, and the Board shall apply same to reconstruction undertaken by the Association pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this Article, or (ii) the Board, if it is acting in the place and stead of the Trustee, shall apply same to reconstruction undertaken by the Association pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this Article. Proceeds paid by the Trustee to the Board shall be disbursed from time to time by the Trustee to the Board against receipt by the Trustee of such evidence as it shall reasonably require that persons or entities who are entitled to assert mechanics lien claims in connection with such reconstruction will have delivered adequate lien and payment releases upon payment to them by the Board.

(c) In connection with such reconstruction, the Board shall levy a Reconstruction Assessment against each Owner based upon the ratio of the square footage of the interior dwelling area of the Unit of such Owner’s Condominium to the total square footage of the interior dwelling areas of all Units of all Condominiums within the Project at such time and in such amount as the Board shall determine is necessary to cover the costs of reconstruction in excess of insurance proceeds.

Section 4 - Decision Not to Reconstruct; Procedure After Meeting. In the event a decision is made not to reconstruct at the meeting called pursuant to the Section entitled "Reconstruction Pursuant to Meeting" of this Article, the Trustee or Board, as applicable, shall apply the insurance proceeds as follows:

(a) The insurance proceeds shall first be applied to the reduction or elimination, as the case may be, of all outstanding Mortgages encumbering Condominiums for which insurance proceeds have been paid by reason of the casualty; provided, however, as to any Condominium, the Trustee or Board, as applicable, shall not pay insurance proceeds to Mortgagees thereof in an amount greater than (I) the outstanding indebtednesses secured by Mortgages encumbering said Condominium, or (ii) the insurance proceeds allocable to said Condominium, whichever of (I) or (ii) is the lesser.

(b) All insurance proceeds allocable to each Condominium remaining after payments to Mortgagees thereof pursuant to subsection (a) of this Section shall be distributed by the Trustee or Board, as applicable, to the Owner of each such Condominium after deduction of an amount determined pursuant to subsection (c) of this Section.

(c) The Board shall levy a Reconstruction Assessment against each Owner based upon the ratio of the square footage of the interior dwelling area of the Unit of such Owner’s Condominium to the total square footage of the interior dwelling areas of all Units of all Condominiums with the Project in such amount as the Board shall determine necessary to cover the costs of clearing the debris of the totally or partially destroyed improvements and clearing the area in excess of insurance proceeds. To the extent available, the Reconstruction Assessment of the Owner of each Condominium shall be paid out of the insurance proceeds allocable to the respective Condominium of such Owner prior to the distribution of such proceeds pursuant to subsection (b) of this Section. In the event that the allocable insurance proceeds, after deduction of proceeds paid to Mortgagees, is not sufficient to pay the entire Reconstruction Assessment levied against such Owner, such Owner shall not be relieved of his obligation to pay any such excess.

(d) For the purposes of this Article, the amount of insurance proceeds "allocable" to a Condominium shall be determined pursuant to this subsection (d). Such allocation shall be made by the insurance carrier or by the Board in accordance with the following procedure and shall be final and binding on the Owners, the Mortgagees, the Association and the Trustee: the insurance carrier or the Board shall allocate a fractional portion of such proceeds among each of the Condominiums the numerator of which fractional portion is the decrease in value of the Unit of each such Condominium (as determined by appraisals obtained by the insurance carrier or Board, as applicable, made by an independent MAI appraiser as of a time before and as of a time after the occurrence of such destruction and, if made by the Board, paid for out of, or charged against, such proceeds) and the denominator of which fractional portion is the total decrease in value of all Units of all Condominiums in the Project (as determined by reference to all of said appraisals so made). Such allocation made by the insurance carrier or Board shall be final and binding on the Owner, the Mortgagees, the Association and the Trustee.

Section 5 - Certificate of Intention to Reconstruct. In the event the Association undertakes reconstruction pursuant to this Article, the Board shall, not later than two hundred ten (210) days from the date of destruction, execute, acknowledge and record in the Office of the County Recorder of said County a certificate declaring the intention of the Association to rebuild. If no such certificate of reconstruction is so recorded within said two hundred ten (210) day period, it shall be conclusively presumed that the Association has determined not to undertake reconstruction pursuant to this Article.

Section 6 - Partition. In the event that a certificate described in the Section entitled "Certificate of Intention to Reconstruct" of this Article is not recorded within the two hundred ten (210) day period provided therein, the right of any Owner to partition the Project through legal action as described in the Article hereof entitled "limitations Upon the Right to Partition and Severance" shall forthwith revive.

Section 7 - Compliance with Condominium Plan. Any reconstruction undertaken pursuant to this Article shall substantially conform to the Condominium Plan, as amended pursuant to the Section entitled "Amendment of Condominium Plan" of this Article, or otherwise, if appropriate.

Section 8 - Negotiations with Insurer. The Board shall have full authority to negotiate in good faith with representatives of the insurer of any totally or partially destroyed improvements, and to make settlements with the insurer for less than full insurance coverage on the damage to such improvements. Any settlement made by the Board in good faith shall be binding upon all Owners and Mortgagees.

Section 9 - Repair of Units. Except to the extent covered by insurance carried by the Association, installation of , and repair of any damage to, the interior of a Unit shall be made by and at the individual expense of the Owner of that Unit and, in the event of a determination to reconstruct after partial or total destruction, shall be completed as promptly as practicable and in a lawful and workmanlike manner.

Section 10 - Amendment of Condominium Plan. In the event reconstruction is to take place pursuant to this Article, the Board shall have the power to record an amendment to the Condominium Plan so that such Condominium Plan conforms to the improvements as designed to be reconstructed; provided, however, the Board shall not record an amendment to such Condominium Plan without the prior authorization of each Mortgagee of a Mortgage encumbering a Condominium with in the Project. In the event the Board, together with said Mortgagees, decide to record such amendment to the Condominium Plan, all Owners within the Project and the record holders of all security interest in the Project shall execute and acknowledge said amendment so that it will comply with Section 1351 of the California Civil Code or any similar statue then in effect. Said Owners and record holders of security interests shall also execute such other documents or take such other actions as may be required to make such amendment effective. The Board shall cause a of change in the Condominium Plan to be sent to each Owner and Mortgagee in the Project within ten (10) days of the recording of such amendment in the office of the County Recorder of said County.

Section 11 - Availability of Labor and Material. In determining whether the plans for reconstructed improvements are in substantial conformance with the Condominiun [sic] Plan, the Board may take into consideration the availability and expense of the labor and materials in the original construction of the Project. If such labor or materials is not available or is prohibitively expensive at the time of reconstruction, the Board may permit the substitution of such other labor or materials as it deems proper.

Section 12 - Contracting for Reconstruction. In the event repair or reconstruction is undertaken pursuant to this Article, other than the Section entitled "Repair of Units" hereof, the Board

or its delegates shall have the sole authority to contract for such work as may be necessary for said repair or reconstruction.

Section 13 - Seventy-Five Percent (75%) Vote Required. All insurance proceeds available from any total or partial destruction shall be applied as set forth in this Article, except upon the vote or written assent of not less than seventy-five percent (75%) of the based on one (1) vote for each First Mortgage held thereby.

Section 14 - Costs of Collecting Insurance Proceeds. If it should become necessary in the judgment of the Board to incur expenses in order to determine or collect insurance proceeds, such costs shall be first deducted before distribution or application of insurance proceeds as provided in this Article.

Section 15 - Priority. Nothing contained in this Article shall entitle an Owner to priority over any Mortgagee under a Mortgage encumbering his Condominium as to any portion of insurance proceeds allocated to such Condominium.

ARTICL