2004-3 area1 final subdivision report

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Comm on Interest DevelopmentThe project described in the attached Su bdivision PublicReport is know n as a comm on-interest development. Read thePublic Report carefully f or m ore information about the type ofdevelopm ent. The developm ent includes comm on areas andfacilities which w ill be owned and/or operated by an ow ners'association. Purchase of a lot or unit automatically entitles andobligates you as a m em ber of the association and, in m ostcases, includes a beneficial intgrest in the areas and facilities.Since mem bership in the association is mandatory, you shouldbe aware of the following information before you purchase:

Governing Instruments

Your ownership in this development and your rights andremedies as a m em ber of its association will be controlled bygoverning instrum ents which generally include a D eclarationof Restrictions (also known as CC&R' s), Articles of Ineorpo-ration (or association) and by laws. The provisions of thesedocuments are intended to be, and in m ost eases are, enforce-able in a court of law. Study these docum ents carefully beforeentering into a contract to p urchase a subdivision interest.

ssessments

In order to provide funds f or operation and maintenance of thecommon facilities, the association will levy assessmentsagainst your lot or unit. If you are delinquent in the paymentof assessments, the association m ay enforce paym ent throughcourt proceedings or your lot or unit m ay be liened and soldthrough the exercise of a power of sale. The anticipatedincome and ex penses of the association, including the amou ntthat you m ay expect to pay through assessments, are outlinedin the proposed budget. A sk to see a copy of the budget if thesubdivider has not already made it available for your exami-nation.

Common Facilities

A homeowner association provides a vehicle for the owner-ship and use of recreational and other common facilitieswhich w ere designed to attract you to buy in this development.The association also provides a means to accomplish architec-

tural control and to provide a base for hom eowner interactionon a variety of issues. The purchaser of an interest in acomm on-interest development should contemplate active par-ticipation in the affairs of the association. He or she should bewilling to serve on the board of directors or on com m itteescreated by the board. In short, they in a com m on interestdevelopment is you . Unless you serve as a m ember of the

governing board or on a committee appointed by the board,your control of the operation of the common areas andfacilities is limited to your vote as a member ofthe association.There are actions that can be taken by the governing bodywithout a vote of the members of the association which canhave a significant impact upon the quality of life f or associa-tion mem bers.

Subdivider Control

Until therehere is a sufficient number of purchasers of lots or unitsin a comm on interest developm ent to elect a majority of thegoverning body, it is likely that the subdivider will effectivelycontrol the affairs ofthe association. It is frequently necessaryand equitable that the subdivider do so during the early stages

of development. It is vitally important to the owners ofindividual subdivision interests that the transition from subdi-vider to resident-owner control be accom plished in an orderlym anner and in a spirit of cooperation.

Cooperative Living

W hen contemplating the purchase of a dwelling in a com m oninterest development, you should consider factors beyond theattractiveness of the dw elling units them selves. Study thegoverning instruments and give careful thought to w hetheryou w ill be able to exist happily in an atmosphere of coopera-tive living where the interests of the group must be taken intoaccount as well as the interests of the individual. Remember

that managing a com m on interest development is very m uchlike governing a small community the management canserve you well, but you w ill have to work for its success. [B& PCode Section 11018 .1(c))

Informational Brochure

The Departm ent of R eal Estate publishes the Common InterestDevelopmentBrochure. The inform ation contained in thisbrochure provides a brief overview of the rights, duties andresponsibilities of both associations and individual owners incom m on interest developments. To obtain a free copy of thisbrochure, please send your request to:

Book OrdersDepartment of R eal EstateP.O. Box 187006Sacramento, CA 95818-7006

COMMON INTEREST DEVELOPMENT

GENER L INFORM TION

Department of Real Estate —R E 646 (R ev. 1/97)



SPECIAL NOTES

1. THIS FINAL SUBDIVISION PUBLIC REPORT ( FINAL REPORT ) COVERS PHASE

3 OF PORTOFINO AT TERRA LAGO WHICH CONSISTS OF RESIDENTIAL LOTS 1

THROUGH 28, RESIDENTIAL LOTS 34 AND 35 AND RESIDENTIAL LOTS 172THROUGH 179 OF TRACT NO. 31601-2. PORTOFINO AT TERRA LAGO IS BEING

DEVELOPED BY WOODSIDE PORTOFINO, INC., A CALIFORNIA CORPORATION,

(THE NEIGHBORH OOD BUILDER ) AND IS A PART OF THE OVERALL MASTER

PLANNED COMMUNITY KNOWN AS TERRA LAGO. TERRA LAGO IS BEING

DEVELOPED BY INDIO LAND VENTURES, LLC, A DELAWARE LIMITED LIABILITY

COMPANY ( THE MA STER DEVELOPER ) .

2. IF YOU HAVE RECEIVED A PRELIMINARY SUBDIVISION PUBLIC REPORT

( PRELIMINARY REPORT ) FOR P ORT OFINO AT T ERRA L AGO, YOU A RE A D VISED

TO CAREFULLY READ THIS FINAL REPORT SINCE IT CONTAINS INFORMATION

THAT IS MORE CURRENT AND IS PROBABLY DIFFERENT THAN THAT INCLUDED

IN THE PRELIMINARY R EPORT.

3. PORTOFINO AT TERRA LAGO IS A COMMON INTEREST SUBDIVISION OF THE

TYPE REFERRED TO AS A PLANNED DEVELOPMENT AND IS LOCATED WITHIN

TERRA LAGO. IF COMPLETED AS PRESENTLY PLANNED, PORTOFINO AT TERRA

LAGO W ILL BE D EVELOPED IN FIVE PHASES CONTAINING 179 RESIDENTIAL LOTS.

THERE IS NO ASSURANCE THAT PORTOFINO AT TERRA LAGO WILL BECOMPLETED A S PLANNED.

4. OVERVIEW OF TERRA LAGO: TERRA LAGO WHICH IS LOCATED IN THE CITY

OF INDIO (THE CITY ), COUNTY OF RIVERSIDE (THE COUNTY ), IS A MIXED-USEMASTER PLANNED DEVELOPMENT WHICH COMBINES A MIXTURE OF

RESIDENTIAL, OPEN SPACE, RECREATIONAL AND OTHER COMMERCIAL USES.TE RRA LA G O I NCLUDE S APPROXI MATE LY 310 ACRE S AND W HE N COM PLE TE D I S

PROPOSED TO INCLUD E AS MA NY AS 1 ,487 RESIDENCES.

TERRA LAGO IS ANTICIPATED TO BE DEVELOPED BY THE MASTER DEVELOPER

AND VARIOUS NEIGHBORHOOD BUILDERS IN A SERIES OF PHASES WITHIN A

LARGER DEPARTMENT OF REAL ESTATE ( DRE ) BUDGET INCREMENT. THE

FIRST INCRE ME NT OF TE RRA LAG O, OF WH I CH PORTOFI NO AT TE RR A LA G O I S APART, IS PLANNED TO CONSIST OF APPROXIMATELY 636 RESIDENCES

( INCREMENT 1 ). WITHIN INCREMENT 1 THE MASTER DEVELOPER PLANS TO

CONSTRUCT THE CLUB AT TERRA LAGO, ONE LAKE WITH A BOATHOUSE AND

DOCK, PRIVATE STREETS, ENTRY MONUMENTATION, SIDEWALKS,

STREETLIGHTS, OPEN SPACE, LANDSCAPING, PARKWAYS, POCKET PARKS,

RETENTION BASINS, GREENBELT CHANNELS, A DETENTION BASIN, WALLS AND

FENCES (COLLECTIVELY REFERRED TO AS THE INCREMENT 1 FACILITIES ).

THE CLUB AT TE RRA LAG O, WHI CH W I LL BE OW NE D AND MA I NTAINE D BY THE

Page 3 of 21 i le No. 125697LA -F00



SPECIAL NOTES: (Continued)

TERRA LAGO COMMUNITY ASSOCIATION ( MASTER ASSOCIATION ) IS A

RECREATIONAL FACILITY AND AQUATIC CENTER WHICH IS PLANNED TO

I NCLUDE , A SPORTS LAP POOL, A C HI LDRE N'S POOL W I TH A W ATE R PLAY A RE A ,SPA, TOT LOT, PASSIVE PARK, BARBEQUES, PICNIC AREAS, AND A RECREATION

BUI LDI NG THAT W I LL CONTAI N, AMONG OTHE R USE S, AN E XE RC I SE RO OM A ND

FITNESS CEN TER.

THERE IS NO ASSURANCE TH AT ANY PORTION OF TERR A LAGO, INCLUD ING ANYINCREMENT 1 FACILMES, WILL BE DEVELOPED OR COMPLETED AS PROPOSED

AND A S DESCRIBE D IN THIS FINAL REPORT.

5. THE CLUB AT TERRA LAGO: IN LATER PHASES OF TERRA LAGO, THE MASTER

DEVELO PER PLANS TO SELL TO THE MA STER ASSOCIATION IN FEE THE CLUB A T

TERRA LAGO. PLEASE REFER TO THE ACKNOWLEDGMENT AND DISCLOSURE

REGARDING THE CLUB AT TERRA LAGO WHICH DESCRIBES THE TERMS ANDCONDITIONS PURSUANT TO WHICH THE MASTER ASSOCIATION WILL ACQUIRE

THE CLUB AT TE RRA LA G O AND THE I MPACT SUCH ACQUI SI TI ON WI LL HAV E ONTHE A SSE SSME NTS THA T W I LL BE LE V IE D A G AI NST YOUR LOT TO PAY FOR THEP URC HA S E OF THE C L UB A T T ERRA L AGO BY T HE M A S TER A S SOC IAT ION.

6. PORTOFINO AT TERRA LA GO W ILL BE SUB JECT TO THE JURISDICTION OF THE

MASTER ASSOCIATION. THE MASTER ASSOCIATION WILL OWN AND/OR

MAI NTAI N AND MANA G E CE RTAI N MASTE R COM MON PROPE RTY AS SE T FORTHIN THE MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS

AND RESERVATION OF EASEMENTS FOR TERRA LAGO ( MASTER

DECLARATION ) A N D A N Y S U P PL E M E N TA L M A S TE R D E C L A R A T IO N R E C O R D E D

AGAINS T PORT OFINO A T T ERRA L AGO.

7. THE MA STER ASSOCIATION HAS THE RIGHT TO LEVY ASSESSMENTS AGAINSTYOU FOR MAINTENANCE OF THE MASTER COMMON PROPERTY AND OTHER

PURPOSES. YOUR CONTROL OF OPERATIONS AND EXPENSES IS LIMITED TO THE

RIGHT OF YOUR E LECTED R EPRESENTATIVES TO VOTE ON CE RTAIN PROVISIONSAT MEE TINGS.

8. SINCE THE MASTER COMMON PROPERTY WILL BE MAINTAINED BY THE

MASTER ASSOCIATION, IT IS ESSENTIAL THAT THE MASTER ASSOCIATION BE

FORMED EARLY AND PROPERLY. THE MASTER ASSOCIATION MUST HOLD

ELECTIONS OF ITS GOVERNING BODY WITHIN SIX MONTHS AFTER THE FIRST

CLOSING OF THE SALE OF A LOT UNDER THE FIRST PUBLIC REPORT FOR TERRALAGO (R EGU LATION 2792.17) .

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9. THE MASTER ASSOCIATION MUST ALSO PREPARE AND DISTRIBUTE TO ALL

HOMEOWNERS BALANCE SHEETS AND INCOME STATEMENTS (REGULATION

2792.22).

10.THE NEIGHBORHOOD BUILDER MUST PAY ASSESSMENTS TO THE MASTER

ASSOCIATION FOR ALL UNSOLD LOTS IN THIS PHASE OF PORTOFINO AT TERRA

LAGO. THE PAYMENTS SHALL COMMENCE ON THE FIRST DAY OF THE MONTH

FOLLOWING THE MONTH IN WHICH THE NEIGHBORHOOD BUILDER CONVEYS

THE FIR ST LOT IN THIS PHA SE (REGU LATIONS 2792.9 AND 2792.16) .

11.THE MASTER -DEVELOPER AND/OR THE NEIGHBORHOOD BUILDER MUST.

MAI NTAIN AND DE LI V E R TO THE MASTE R A SSOCI ATION THE SPE CI FIC RE COR DS

AND MATERIALS LISTED IN REAL ESTATE COMMISSIONER'S REGULATION

SECTION 2792.23 WITHIN THE STATED TIME PERIOD. THESE RECORDS AND

MATERIALS DIRECTLY AFFECT THE ABILITY OF THE MASTER ASSOCIATION TO

PERFORM ITS DUTIES AND RESPONSIBILITIES (REFER TO SECTION 11018 .5 OF TH E

BU SINESS AND PRO FESSIONS CODE AND SECTION 1363 OF THE CIVIL CODE) .

12.PRI OR TO CLOSE OF E SCROW , THE NE I G HBORH OOD B UI LDE R MUST PROV I DEYOU WITH A COPY OF THE MASTER DECLARATION, ARTICLES OFI NCORPORA TION AND BYLAW S OF THE MA STE R A SSOCI ATION, TOG E THE R W I THANY AMENDMENTS TO THESE DOCUMENTS (COLLECTIVELY REFERRED TO AS

THE MASTER ASSOCIATION GOVERNING DOCUMENTS ). THESE MASTER

ASSOCIATION GOVERNING DOCUMENTS CONTAIN NUMEROUS MATERIAL

PROVISIONS THAT SUBSTANTIALLY AFFECT AND CONTROL YOUR RIGHTS,

PRIVILEGES, USE, OBLIGATIONS, AND COSTS OF MAINTENANCE AND

OPERATION. YOU SHOULD READ AND UNDERSTAND THESE MASTER

ASSOCIATION GOVERNING DOCUMENTS BEFORE YOU OBLIGATE YOURSELF TO

PURCH ASE A LOT (SECTION 11018.6 OF THE BU SINESS AND PR OFESSIONS COD E) .

13.THE MASTER DEVELOPER WILL FURNISH THE CURRENT BOARD OF

DIRECTORS OF THE MASTER ASSOCIATION WITH THE DRE REVIEWED BUDGET.

THE NEIGHBORHOOD BUILDER WILL FURNISH EACH INDIVIDUAL PURCHASER

W ITH T HE D RE REVIEWE D BUD GET .

14. THE MASTER DEVELOPER HAS POSTED COMPLETION BONDS IN AMOUNTS

ACCEPTABLE TO THE DRE TO ASSURE COMPLETION OF THE INCREMENT 1

FACILITIES. THE ESTIMATED COMPLETION DATE FOR THE INCREMENT 1

FAC ILITIES IS DE CEM BE R 2006.

15. THE NEIGHBORHOOD BUILDER HAS INDICATED THAT IT INTENDS TO SELL

ALL OF THE LOTS IN PORTOFINO AT TERRA LAGO; HOWEVER, ANY OWNER,

INCLUDING THE NEIGHBORHOOD BUILDER HAS A LEGAL RIGHT TO RENT OR

LEASE TH E LOTS.

Page 5 of 21 ile No. 125697LA -F00




16. F YOU PURCH ASE FIVE OR MOR E SUBD IVISION INTERESTS (LOTS) FROM TH ENEIGHBORHOOD BUILDER, THE NEIGHBORHOOD BUILDER IS REQUIRED TO

NOTIFY THE REAL ESTATE COMMISSIONER OF THE SALE. IF YOU INTEND TO

SELL YOUR INTERESTS OR LEASE THEM FOR TERMS LONGER THAN ONE YEAR,

YOU ARE REQUIRED TO OBTAIN AN AMENDED SUBDIVISION PUBLIC REPORT

BEFORE Y OU C A N OFFER T HE INT ERES TS FOR S AL E OR L EA S E .

17.WARNING: WHEN YOU SELL YOUR LOT TO SOMEONE ELSE, YOU MUST GIVE

THAT PERSON A CO PY OF THE MA STER ASSOCIATION GOVERNING DOCUM ENTS.YOU MUST ALSO GIVE THAT PERSON A TRUE STATEMENT CONCERNING ANY

DELINQUENT ASSESSMENTS, PENALTIES, ATTORNEYS' FEES OR OTHER— --

CHARGES, ASSESSED IN ACCORDANCE WITH THE MASTER DECLARATION OR

OTHER MANAGEMENT DOCUMENTS ON THE LOT AS OF THE DATE THESTATEMENT WA S ISSUED .

NOTE: IF YOU FORGET TO DO THIS, IT MAY COST YOU A PENALTY OF

$500.00 -- PLUS ATTORNEYS' FEES AND DAMAGES (SEE CIVIL CODE

SECTION 1368).

18 .. THE NE I G HBO RHO OD B UI LDE R MUST MAK E AV A I LAB LE TO YOU, COPI E S OF

THE MASTER ASSOCIATION GOVERNING DOCUMENTS, A STATEMENT

CONCERNING ANY DELINQUENT ASSESSMENTS AND RELATED CHARGES

AUTHO RI ZE D BY TH E MA STE R A SSOCI ATI ON G OV E RNI NG DOC UME NTS, AND , IF

AVAILABLE, CURRENT FINANCIAL AND RELATED STATEMENTS (SEE BUSINESS

AND PROFESSIONS COD E SECTION 11018.6) .

19. NOTWITHSTANDING ANY PROVISION IN THE PURCHASE CONTRACT TO THECONTRARY, A PROSPECTIVE BUYER HAS THE RIGHT TO NEGOTIATE WITH THE

SELLER TO ALLOW AN INSPECTION OF THE PROPERTY BY THE BUYER OR THE

BUYERS DESIGNEE UNDER TERMS MUTUALLY AGREEABLE TO THE

PROSPECTIVE BUYER AND SELLER.

INTERESTS TO BE CONVEYED

You will receive fee title to a specified lot in Portofino at Terra Lago, together with a

m em bership in the Master A ssociation and rights to use the Master Com m on Property.

LOCATION AND SIZE

Portofino at Terra Lago is located at Golf Center Parkway and Landmark .Golf Parkway in the

City of Indio, County of Riverside. Prospective purchasers within Portofino at Terra Lago

should acquaint them selves with the kinds of C ity services available.




LOCATION AND SIZE: (Continued)

This is the 3rd phase of Portofino at Terra Lago, which consists of approximately 8.5 acres

subdivided into 38 residential lots. If developed as proposed, P.ortofino at Terra Lago will

consist of a total of 5 phases containing 179 residential lots and Master Common Property asdescribed in the Master Declaration.

Increment 1 of Terra Lago is currently planned to include 636 residences and the Increment 1

Facilities. There is no assurance that Portofino at Terra Lago or Increment 1 of Terra Lago will

be completed as proposed.

MANAGEMENT AND OPERATION

The Master Association, of which you become a member at time of purchase, manages and

operates the Master Common Property in accordance with the Master Association Governing

Documents.

MAINTENANCE AND OPERATIONAL EXPENSES

The M aster D eveloper has subm itted budgets for the m anagem ent, maintenance and operation ofthe Master Common Property and for long-term reserves when Terra Lago is substantially

completed ( Built-Out Budget ) and an interim budget applicable to Increment 1 ( Increment

1 B udget ) (the Built-Out B udget and the Increm ent 1 B udget are collectively referred to herein

as the Master Association Budgets ). The Master Association Budgets were reviewed and

approved by the DRE in January 2006. You should obtain a copy of these Master Association

B udgets from the Neighborhood Builder.

Under the Built-Out Budget, the monthly assessment against each subdivision interest is

$248.50. Under the Increment 1 Budget, the monthly assessment per interest is $264.99. Ofthese amounts, the m onthly contributions toward long-term reserves, which are not to be used topay for current management, maintenance and operating expenses, are $23.07 and $27.64,respectively.

The utility rates used for the cakulatioris within the Master Association Budgets are based on

information available at the time of the budgets' review date. Increases in regular assessments or

special assessments may be required as a measure to provide adequate funds to compensate for

potential utility rate increases. Purchasers should be aware of the possible affect these increases

m ay have on their hom eowner assessm ents.

According to the Master Developer, assessments under the Increment 1 Budget should be

sufficient for proper management, maintenance and operation of the Master Common Propertyuntil Increment 1 is completed, at which time it may be anticipated that assessments will be

adjusted.

Page 7 of 21 i le No. 125697LA -F00



MAINTENANCE AND OPERATIONAL EXPENSES: (Continued)

The Master Association may increase or decrease assessments at any time in accordance with theprocedure prescribed in the M aster Declaration. In considering the advisability of a d ecrease or a

smaller increase in assessments, care should be taken not to eliminate amounts attributable toreserves for replacement or major maintenance.

THE B UDGET INFORMATION INCLUDED IN THIS FINAL R EPORT IS APPLICABLE AS

OF THE DATE OF BU DG E T RE V I E W A S SHOW N ABOV E . E XPE NSE S OF OPE RATI ON

ARE DIFFICULT TO PREDICT ACCURATELY AND EVEN IF ACCURATELY

ESTIMATED INITIALLY, MOST EXPENSES INCREA SE W ITH THE A GE OF FAC ILITIES

AND W ITH INCREA SES IN THE CO ST OF LIVING.

M onthly assessments payable to the M aster Association w ill com m ence on all lots in this phaseof Portofino at Terra Lago on the first day of the first calendar month following the month in

which the conveyance occurs of the first subdivision interest in this phase of Portofino at Terra

Lago.

The remedies available to the Master Association against owners who are delinquent in the

payment of assessments are set forth in the Master Declaration. These remedies are available

against the Neighborhood Builder as well as against other owners.

The N eighborhood B uilder has posted a bond as partial security for the N eighborhood B uilder'sobligation to pay these assessments. The governing body of the Master Association should assureitself that the Neighborhood Builder has satisfied its obligations to the Master Association with

respect to the paym ent of assessm ents before agreeing to a release or exoneration of the security.

The Master Developer has entered into a Deficit Subsidy Agreement for Increment 1 with the

Master Association to subsidize the costs of Common Expenses actually paid by the MasterAssociation for maintenance and operation of the Master Association that exceed monthly

assessments collected from hom eowners.

The Master Developer has posted a bond to cover its obligations under this Deficit Subsidy

Agreement. The governing body of the Master Association should assure itself that the Master

Developer has satisfied its obligations to the Master Association with respect to the payment of

assessments before agreeing to a release or exoneration of the security.

EASEMENTS

Easem ents for utilities and other purposes are show n on the title report and subdivision m ap for

Tract No. 31601-2, recorded in Book 387, Pages 29 through 33 in the Office of the RiversideCounty Recorder.




RESTRICTIONS

Portofino at Terra Lago is subject to the Master Declaration recorded on January 10, 2006, asInstrument No. 2006-0 019 975 recorded in the Office of the Riverside County Recorder.

FOR INFORMA TION AS TO YOUR OB LIGATIONS AND RIGHTS, YOU SHOULD R EADTHE MASTER DECLARATION. THE NEIGHBORHOOD BUILDER MUST MAKE IT

AVA ILABLE TO YOU.

MINERA L RIGHTS

You w ill not own the m ineral, oil, and gas rights under your land. The right of surface entry hasbeen w aived as to the surface and upper 500 feet of the subsurface of your lot.

USES AND ZONING

The property surrounding Portofino at Terra Lago to the north is z oned for golf course use and tothe south, east and west is z oned for single fam ily residences.

SIGNIFICANT PROPERTY USES

The Master Developer advises that the following significant property uses exist within or nearTerra Lago. For m ore information in regard to these property uses, you are advised to read theTerra Lago C om m unity & Contiguous Area D isclosure Statement ( Terra Lago DisclosureStatement ) and any additional property use disclosure information as provided by theNeighborhood Builder.

Lake. Terra Lago will contain one l ke that sp ns approximately 21.30 acres. The lake is a

potential water hazard. People and pets must be closely watched to prevent accidentaldrownings and other such injuries around the lake ( Lake ). Due to the nature of the Lake,

environmental monitoring and reporting may become necessary in conjunction with the

maintenance thereof. Such monitoring and reporting as well as the regular maintenance of theLake may result in increased costs to parties responsible for such maintenance. MasterD eveloper and Neighborhood Builder are not responsible for m aintenance (or the cost thereof) ofthe Lake, or for the safety of you, y our fam ily, guests, invitees, tenants, agents, em ployees orpets. Except as expressly permitted in the Rules and Regulations, no one shall be permitted tofish, swim or boat in the Lake. A dditional restrictions regarding the use and enjoym ent of thelakes m ay be included in the Rules and R egulations or otherw ise established by the B oard ofD irectors of the Master A ssociation ( Board ).

Page 9 of 21 ile No. 125697LA-F00



SIGNIFICANT PROPERTY USES: (Continued)

Parks. One or more community parks are planned for construction within Terra Lago. The

facilities in these parks may include tot lots, multi-use sports fields, trails, walkways, barbeques,picnic tables or other popular park facilities.. There is no guarantee that any of these facilities

will be included in the parks. Residents living in the areas nearest to the parks may experience

noise, traffic and parking congestion, light spillage, glare and other impacts from the operation of

these parks and the events that take place there and may be inconvenienced by these impacts.

You are advised that Master Developer and Neighborhood Builder have no control over the

operation or use of the parks after the completion of construction thereof. The parks will be

ow ned and m aintained by the Master A ssociation.

The C lub at Terra Lago. All persons using The Club at Terra Lago are required to use caution

and to watch their children at all times to prevent drowning and other injuries. The Board may,

from time to time, promulgate rules for use and operation of The Club at Terra Lago, including

reasonable hours of operation. Ow ners and other residents living in the area of The C lub at Terra

Lago will most likely experience and otherwise be subject to or otherwise inconvenienced by

pedestrian and vehicular traffic in the areas surrounding The Club at Terra Lago. Residents of

Terra Lago may experience glare from night-lighted activities at The Club at Terra Lago.

Additionally, from time to time, balls and other objects may be hit out of The Club at Terra Lagoand into lots and adjacent areas. Residents of Terra Lago may also experience noises originatingfrom the activities at The C lub at Terra Lago, traffic noises from vehicles going to and from theC lub, and noises from landscaping and other m aintenance activities near The C lub at Terra Lago.

Fire Station Site. Master D eveloper has dedicated a tw o (2) acre site on the northeast' corner of

Golf Center Parkway and Avenue 43 to the fire department for the construction of a fire station.There is also a fire station site approximately. 5 miles away. Master Developer has no control

over property owned by others. If adjacent land and/or nearby land uses are significant to you,

you should conduct your own investigation into present and pending land use proposals by

contacting the relevant agency.

Golf Course. The Landmark Golf Course ( Golf Co urse ) weaves through Terra Lago as

shown on Exhibit B to the Terra Lago Disclosure Statement, but is not a part of Terra Lago nor

ow ned by the Master Association.

Use of Golf Cou rse. The purchase of a lot in Terra Lago does not confer upon you the

right to use the Golf C ourse or any of its facilities, nor does it include any access rights to or overthe Golf Course. In order to use the Golf Course, you will be required to pay such fees and

satisfy such other conditions as may be required by the owner of the Golf Course. Neither

Master Developer, Neighborhood Builder nor the Master Association have provided any

representations, warranties or assurances respecting the amount or level of such fees or other

conditions.'

Page 10 0121 ile No. 125697LA -F00



SIGNIFICAN T PRO PERTY U SES: (Continued)

Golf Ball Overflight and Dam age. Living adjacent to or near the Golf Course carries

with it the risk of damage caused to persons and property by golf balls. Each owner of a lot in

Terra Lago takes title subject to a nonexclusive easement for the benefit of persons using theGolf Course for golf ball overflight over and across all lots in Terra Lago and through the air

space above Terra Lago. Owners of lots may expect that golf balls will enter their lots and may

dam age im provem ents or injure persons. Neither M aster D eveloper, Neighborhood B uilder northe Master Association have provided any assurances whatsoever concerning the frequency withw hich golf balls will enter the adjacent lots, nor any g uaranties as to what, if any , action m ay be

taken by the Golf C ourse owner to m itigate golf ball overflight.

Golf Course Irrigation. The Golf Course may be irrigated by well water or reclaimed

water, neither of which may be suitable for domestic use. During irrigation, winds may carry

some irrigation spray onto residential lots in Terra Lago. Reclaimed water may stain

improvements or affect landscaping on residential lots, and neither Master Developer,

Neighborhood Builder nor the Master Association have any control over the irrigation ormaintenance of the Golf Course. You are advised to take appropriate precautions to minimize

the effect of water overspray on your lot.

Pesticide/Fertilizer Overspray. The owner of the Golf Course may from time to time

treat the Golf Course with sprayed fertilizer or pesticides. During treatment, winds may carry

sprayed materials onto adjacent residential lots in Terra Lago. Oversprayed fertilizers or

pesticides may enter the lot and such materials may harm some landscaping or other

improvements constructed on the lot. Neither Master Developer, Neighborhood Builder nor the

Master Association have any control over the application of fertilizers or pesticides in

maintenance of the Golf Course. You are advised to take appropriate precautions to minimize

the effect of any ov erspray of fertilizers and pesticides on your lot.

Golf Course Noise. Golf course use begins im m ediately after daylight and continues todark up to seven (7) days per week. Golf Course maintenance including irrigation and

application of fertilizers or pesticides may be carried on during nighttime and daylight hours.

Golf Course use and maintenance will create noise and other disturbances which may result in

inconvenience and disturbance to yo u, including interruption of sleep.

Continuation of Golf Course Operations. Master Developer provides no assurances,

representations or warranties that the Golf Course will continue in use as a golf course for any

particular period of time. Neither Master Developer, Neighborhood Builder nor the Master

Association have any ownership or control of the Golf Course. Use of the Golf Course may

change in the future and Master Developer and Neighborhood Builder have made no

representations or w arranties regarding the future use of the Golf C ourse.

Page 11 of 21 i le No. 125697LA -F00



n

HAZARDS AND MISCELLANEOUS DISCLOSURES

The Master Developer advises that the following hazards exist within or near Terra Lago. For

more information in regard to these hazards and miscellaneous disclosures, you are advised to

read the Terra Lago Disclosure Statement and any additional hazard disclosure information as

provided by the Neighborhood B uilder.

Electric Power Lines. Underground or overhead electric transmission and distribution lines and

transformers are located in and around Terra Lago. The lines and transformers are owned, -

operated and maintained by Imperial Irrigation District. Power lines and transformers produce

extrem ely low -frequency electrom agnetic fields ( ELF-EMF ) when operating. For some time,

there has been speculation in the scientific community about health risks associated with living

near ELF-EMF sources. In 1992, the United States Congress authorized the Electric and

Magnetic Fields Research and Public Information Dissemination Program ( EMF-RAPIDProgram ) to perform research on these issues and to analyze the existing scientific evidence inorder to clarify the potential for health risks from exposure to ELF-EMF, In May of 1999, the

National Institute of Environmental Health Sciences ( NIERS ) issued a report to Congress

summarizing its review of scientific data from over three hundred (300) studies on ELF-EMF

health risks. The EL F-E MF studies consist of both epidem iological studies (studies of ex posurein hum an populations) and controlled laboratory experim ents on animal and cell mod els. W hilesome epidemiological studies suggested some link between certain health effects and exposure toELF-EMF, the laboratory experiments did not support such a link. According to the NIEHS

report, the scientific evidence shows no clear pattern of health hazards from ELF-EMF exposure,

and the NIEHS report did not find evidence of any link sufficient to recommend widespread

changes in the design or use of electrical transmission equipment. However, because the

evidence does not clearly rule out any effect, NIEHS advocated continuing inexpensive and safereductions in exposure to E LF-E MF and endorsed current utility practices regarding design and

siting of new transmission and distribution lines. Further information on this subject is availablefrom the Regional EMT Manager, Southern. California Edison Company, 1851 West Valencia

Drive, Fullerton, California 92833. Additional information on ELF-EMF and copies of the

NIEHS report are available from the EMF RAPID website at

http://www.niehs.nih.gov/emfrapid/home.htm.

Retention Basins and Greenbelt Channels. Portions of Terra Lago will contain one or more

retention basins and/or greenbelt channels. All retention basins and/or greenbelt channels

(collectively, Basins ) are potential water hazards, and may contain standing water at times.

Children and pets must be closely watched to prevent accidental drownings and other such

injuries around the B asins. Due to the nature of B asins, environm ental m onitoring and reportingmay become necessary in conjunction with the maintenance thereof. Such monitoring and

reporting as well as the regular maintenance of the B asins m ay result in increased costs to partiesresponsible for such maintenance. Master Developer and Neighborhood Builder are not

responsible for maintenance (or the cost thereof) of the Basins, or for the safety of you, your

fam ily, guests, invitees, tenants, agents, em ployees or pets.

Page 12 of 21 i le No. 125697LA -F00



HAZAR DS AND MISCELLA NEOUS DISCLOSURES: (Continued)

Detention Basin #3. The Coachella Valley Water District's Detention Basin #3 crosses the

southeastern portion of Terra Lago diagonally from northeast to southwest. Detention Basin #3

is designed for storm drainage overflows in the event of hundred year flood. There is an isolatedarea where single-family lots in Terra Lago may be adjacent to the Detention Basin #3 right of

way.

Reclaimed Water. In its efforts to conserve water, the Indio Water Authority ( Water

Authority ) may require the use of reclaimed water (treated wastewater) in the future to irrigate

portions of Terra Lago. The W ater A uthority m ay also require the use of reclaim ed w ater in the

future to irrigate landscaping in private yards. The water used in the residences and outside in-

the patio and yard areas through hose bibs will be domestic potable water. The water used to

irrigate the Master Common Property may include reclaimed water. Reclaimed water is not

potable and therefore not suitable for human consumption. As with any water overspray, the

repeated spray of reclaimed water may stain or discolor personal property, fencing and structural

improvements.

According to the Water Authority, the Water Authority's reclaimed water is disinfected with

chlorine and its clarity to the human eye is indistinguishable from domestic water. The standardsimposed on the Water Authority for reclaimed water quality are established by governmental

regulatory agencies, and these standards are subject to change. Master D eveloper, NeighborhoodBuilder and the Master Association and their agents are not liable for any property damage or

personal injury by reclaimed water. Owners arc subject to Water Authority rules and

regulations, one of which prohibits the use of self-generating water softeners connected to the

C ity's sewer facilities. Further inform ation regarding W ater Authority regulations is available atthe W ater Authority's headquarters.

Wind. All of Southern California is subject to periods of high winds. Wind speeds in Terra

Lago may exceed that experienced in other areas of the surrounding region. You must ensure

that any structures or other improvements are constructed or designed to withstand high winds.

You are advised to consult with experienced architects and engineers in the design andspecification of any structures or Improvements that you plan to add.

Blowing Sand. Terra Lago is subject to certain environmental factors, including but not limitedto w ind and blowing sand. The C oachella Valley experiences occasional high w inds. W ind datafrom weather stations at Palm Springs Regional Airport (at the western end of the Coachella

Valley) and at Indio and Thermal (toward the eastern end of the Coachella Valley) suggest that

wind velocities at Terra Lago exceed 15 miles per hour less than 10% of the time. Occasional

seasonal storms promote the abnormally high winds; there are times when locations within theC oachella Valley and Terra Lago w ill be subject to adverse conditions. A s a result, from time totime, you may potentially be subject to and experience irritated eyes, respiratory ailments,

clogged air filters, dirty windows' and sills, increased and accumulated dust and sand in and

around the home (including the living areas, garages and landscaping and patios), scratched

l

2

Page 13 of 21 i le No. 125697LA -F00



exterior glass surfaces, weathered painting, dusty cars or other conditions resulting from the

w ind and blow ing sand.

HAZA RDS AND MISCELLAN EOUS DISCLOSURES: (Continued)

Pollutant Con trol. Terra Lago is subject to all federal, state and local requirements of the

National Pollutant Discharge Elimination System ( NPDES ), adopted in accordance with the

Federal Clean Water Act. Pursuant to a NPDES General Permit, adopted by the .State Water

Resources Control Board, the County and City have adopted a water quality management plan,and Master Developer has filed a Storm Water Pollutant Prevention Plan ( SWPPP ), which

imposes on all buyers in Terra Lago requirements for the design; implementation and..

m aintenance of best m anagement practices ( BMPs ) designed to elim inate or reduce storm andnon-storm w ater discharges of pollutants into storm drains before, during and after construction

of Terra Lago.

All-American Canal. The Coachella Branch of the All-American Canal ( Canal ) crossesTerra Lago d iagonally, flowing from northwest to southeast. The C anal conveys irrigation w ater

to the Coachella Valley from the Colorado River and also provides irrigation water to the Golf

Course and Terra Lago. There is an isolated area where single-family lots may be adjacent to theC anal right of w ay.

Con struction and S ales Activity. Development, construction and sales activity will continue

after all the residences in Terra Lago have been sold, and there will be increased noise, dust andtraffic in the areas surrounding Terra Lago as a result of such development activity. As a result

of construction and sales activities, public and private utilities (w ater, electrical, cable television,sewers, storm drain, etc.) within Terra Lago, and/or servicing your lot may be temporarily

interrupted and/or adversely affected. You are advised to exercise extreme caution, to observe

all signs while driving through construction areas, and to observe the tem porary closure of streetsand rerouting of traffic. M aster Developer and N eighborhood B uilder have reserved the right to

m aintain signs and flags in Terra Lago for the duration of the sales and m arketing period.

Future Development. Present plans to develop the real property adjoining or in the vicinity of

your lot are shown in the sales office of the Neighborhood Builder. No representations,

warranties or guarantees are made that the information currently available is complete, that

planned projects will be carried out, or that current plans will not change in the future. Future

development not currently shown in the materials provided by the Terra Lago sales office may

occur. Master Developer intends to construct some of the facilities necessary to implement the

land uses described on the subdivision m aps that depict the property located w ithin Terra L ago.

Nevertheless, completion of private and public facilities and im provem ents cannot be guaranteed

and not all financing to ensure com pletion has been obtained or approved.

D uring the construction of these f uture sites and the construction of other private and public sitesand improvements in Terra Lago, residents of Terra Lago may experience or otherwise be

inconvenienced by construction traffic, increased levels of noise, dust and other incidents of

construction. Once these facilities are complete, residents of Terra Lago may • continue to




experience traffic and noise from use of the facilities and light or glare from the operation of

these facilities at night.

HAZA RDS AND MISCELLA NEOUS DISCLOSURE S: (Continued)

Airport P roximity D isclosure. According to information provided to Master Developer fromits consultants, Terra Lago is located within the below estimated distances of the following

airports.Palm Springs International AirportDesert Springs International Airport

Bermuda Dunes Airport

24.2 m iles

9.4 m iles5.6 miles

ir

Occupants of Terra Lago m ay ex perience noise from overflying aircraft traveling to or from one

or m ore of the above listed airports. This disclosure is m ade in accordance w ith California CivilCode Section 1102.17 which requires disclosure when real property may be affected by

industrial uses, including airports.

ADJACENT PROPERTY USES

The zoning of the surrounding property is subject to change. Therefore, the type of future

development cannot be predicted with accuracy. Neither Master Developer, Neighborhood

Builder nor the Master Association have any control over use or changes in use of adjacent

property. You should contact the City Planning Division for further information regarding

designated land use and zoning. The real property in the vicinity of Terra Lago currently

includes, but is not lim ited to the following uses:

South/Southeast: The Interstate. 10 Freeway ( Freeway') is less than one mile from the main

entrance of Terra Lago and is located to the south of Terra Lago. Traffic on the Freeway may

create noise and dust in Terra Lago and additional automobile traffic on public surface streetsand that Master Developer and Neighborhood Builder have made no assurances concerning the

present or future impact of the. Freeway on Terra Lago. In addition to the Freeway, an existing

trailer park/residential development is located to the south/southeast of Terra Lago. In addition

to the Freeway, the Fantasy Springs Casino is located approximately one mile to the south of

Terra Lago.

East: Undeveloped property, zoned for single family residential.

West: Residential development.

South/Southwest: Undeveloped property, zoned for single family residential.

North: All-American Canal/Golf Course.




NATURAL HAZARDS

The Master Developer has been advised about the following natural hazards within or near Terra

Lago. For m ore inform ation in regard to these natural hazards, you are advised to read the Terra

Lago Disclosure Statement and any additional natural hazard disclosure information as provided

by the Neighborhood Builder.

Special Flood H azard A rea Determination. Master D eveloper has been advised that no portion _

of Terra Lago is located - within a Special Flood Hazard Area Determination as described in Title'

42 U nited States Code Section 4101.

Area of Special Flooding Determination. Master Developer has been advised that information

is not available to determine whether any portion of Terra Lago is located within an Area of

Special Flooding D eterm ination as described in C alifornia Governm ent Code Section 85 89.4,

Very High Fire Severity Zone Determination. Master Developer has been advised that no

portion of Terra Lago is located within a Very High Fire Severity Zone Determination as

described in California Governm ent Code Sections 5117 8 and 511 79.

State Fire Responsibility Area. Master Developer has been advised that no portion of Terra

Lago is located within a State Fire Responsibility Area as defined by California Public Resources

Code Section 4125.

Earthquake Fault Zone. California is subject to a wide range of earthquake activity.

C alifornia has m any k now n faults as well as yet undiscovered faults. Master D eveloper has been

advised that a portion of Terra Lago is located within an Earthquake Fault Zone as defined byCalifornia Public Resources Code Section 2621.9. You must evaluate the potential for future

seismic activity that might seriously damage your lot. A major earthquake, which some have

predicted will occur in our lifetim es, could cause very serious dam age to residences, located evenmany miles from the epicenter of the earthquake. A more moderate earthquake occurring on a

more minor fault, or on an undiscovered fault, could also cause substantial damage. Master

Developer makes no representations or warranties as to the degree of earthquake risk within

Terra Lago. Please read The Homeowner's Guide to Earthquake Safety, and consult with the

C ity, other public agencies, and appropriate ex perts to evaluate the potential risk.

Seismic Hazard Zone. Many portions of Southern California are subject to risks associated

with seismic activity or earthquakes. Master Developer has been informed that the State of

California has not yet produced any seismic hazard maps for the area of Terra Lago. Thus, no

information is currently available concerning whether Terra Lago will eventually be shown

within a Seismic Hazard Zone. A Seismic Hazard Zone is defined in the Seismic Hazards

M apping Act (C alifornia Public Resources C ode Section 269 0 et seq.), and show n on m aps thatare released by the California Department of Conservation, Division of Mines and Geology.

Copies of these maps w ill be on file w ith the C ity after they are released. There are two (2) types

Page 16 of 21 i le No. 125697LA -F00



of Seismic Haz ard Zones: a landslide zone and a liquefaction zone. Liquef action is the processby which water-saturated soils become unstable under heavy shaking and thereby jeopardize

foundations and other structures. For more information concerning seismic activity and risks,

read The H om eow ner's Guide to Earthquake Safety.

NATUR AL HAZA RDS: (Continued)

Compliance with Civil Code Section 1103 et seq. In addition to the foregoing natural hazard

disclosures, Master Developer has provided or will provide you with a Natural Hazard

Disclosure Statement in compliance with Article 1.7, commencing at Section 1103 of the

California Civil Code, if your lot is located in a Seismic Hazard Zone.

The N eighborhood Milder has advised that all or portions of the com m unity subject to this Final-

Report are located within an Earthquake Fault Zone A dditionally, the Neighborhood B uilder

has advised that prospective purchasers within this Zone will be provided a separate disclosure

required under Public R esources C ode Section 2621.9.

If any disclosure, or any material amendment to any disclosure, required to be made by the

Neighborhood B uilder regarding this natural hazard is delivered after the execution of an offer to

purchase, the purchaser shall have three days after delivery in person or five days after delivery

by deposit in the mail to terminate the offer by delivery of a written notice of termination to the

Neighborhood Builder or the Neighborhood Builder's agent.

Since all or portions of the community subject to this Final Report are located within one or

more natural hazard areas, your homeowner's insurance and/or insurance coverage for any

association or commonly owned areas may be affected. You should contact your lender and

insurance carrier for more information regarding types of insurance and costs to cover your

property, as well as the Master Association or Neighborhood Builder regarding any assessment

increases due to additional insurance costs.

At the time this Final Report was issued, information regarding whether all or portions of this

community are located' within certain natural hazard areas was not yet available to the

Neighborhood Builder. You should ask the Neighborhood Builder for updated information

before obligating yourself to purchase.

TAXES

The maximum amount of any tax on real property that can be collected annually by counties is

1% of the full cash value of the property. With the addition of interest and redemption charges

on any indebtedness; approved by voters prior to July 1,.1978, the total property tax rate in most

counties is approxim ately 1.25% of the full cash value. In som e counties, the total tax rate couldbe well above 1.25% of the full cash value. For example, an issue of general obligation bonds

previously approved by the voters and sold by a county water district, a sanitation district or

other such district could increase the tax rate.

For the purchaser of a lot in Portofino at Terra Lago, the full cash value of the lot will be the

valuation, as reflected on the tax roll, determined by the county assessor as of the date of




purchase of the lot or as of the date of completion of an improvement on the lot if that occurs

after the date of purchase.

TAXES: (Continued)

Your Policy of Title Insurance w ill be issued subject to the exception of any supplemental taxesassessed pursuant to Chapter 4989, statutes of 1983 of the State of California. The new valuationof the lot purchased by yo u w ill be placed on the assessm ent roll and added taxes w ill be due andshall be collected upon the close of escrow and as set forth below.

Notice of Your 'Supplemental' Property Tax Bill. California property tax law requires the

Assessor to revalue real property at the time the ownership of the property changes. Because of

this law, you may receive one or two supplemental tax bills, depending on when your loan

closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your

property tax payments to be paid through an impound account, the supplemental tax bills will notbe paid by your lender. It is. your responsibility to pay these supplemental bills directly to the

Tax Collector. If you have any questions concerning this matter, please call your local Tax

Collector's Office.

ASSESSMENTS

Community Facilities District No. 2004-3. Portofino at Terra Lago is located within

Community Facilities District No. 2004-3 ( CFD 2004-3 ), which was formed for the

construction of improvements in and around Terra Lago. All property within Terra Lago is

subject to any taxes, assessments and obligations associated with CFD 2004-3. Prior to your

execution of the Contract, you will be provided with the Notice of Special Tax, Community

Facilities District No. 2004- 3 of the City of Indio, County of R iverside, California ( C FD 200 4-3 Notice ). The CFD 2004-3 Notice contains important information about CFD 2004-3

functions, your obligations, rights of C FD 2004-3, and inform ation on how to contact CFD 2004-3 for additional information materials. You should carefully read and understand the informationcontained in the CF D 2004-3 Notice.

Community Facilities District No. 2004-1. Portofino at Terra Lago is located withinCommunity Facilities District No. 2004-1 ( CFD 2004-1 ) for police, fire and paramedic

services in and around Terra Lago. All property within Terra Lago is subject to any taxes,

assessments and obligations associated with CFD 2004-1. Prior to your execution of the

Contract, you will be provided with the Notice of Special Tax, Community Facilities District No.2004-1 of the City of Indio, County of Riverside, California ( CFI) 2004-1 Notice ). The CFD

2004-1 Notice contains important information about CFD 2004-1 functions, your obligations,

rights of C FD 2004-1 , and inform ation on how to contact CFD 2004- 1 for additional informationmaterials. You should carefully read and understand the information contained in the CFI)

2004-1 Notice.

Page 18 of 21 i le No. 125697LA -F00



The buyer has five (5) days after delivery of the CFD 2004- 3 Notice and the CFD 2004-1 Noticeby deposit in the mail, or three days after delivery of any notice in person, to terminate the

Contract by giving written notice of that termination to the owner, Neighborhood Builder, or

agent selling the property.

CONDITIONS OF SALE

Pursuant to Civil Code Sections 2956 through 2967, inclusive, developers and purchasers must

make certain written disclosures regarding financing terms and related information. The

Neighborhood B uilder w ill advise purchasers of disclosures needed from them, if any.

If your purchase involves financing, a form of deed of trust and note will be used. The

provisions of these documents may vary depending upon the lender selected. These documents

may contain the following provision(s):

Acceleration Clause. This is a clause in a mortgage or deed of trust which provides that if the

borrow er (trustor) defaults in repaying the loan, the lender m ay declare the unpaid balance of the

loan imm ediately due and payable.

Due-on-Sale Clause. If the loan instrument for financing your purchase of an interest in

Portofino at Terra Lago includes a due-on-sale clause, the clause will be automatically

enforceable by the lender when you sell the property. This means that the loan will not be

assumable by a purchaser without the approval of the lender. If the lender does not declare the

loan to be all due and payable on transfer of the property by y ou, the lender is nevertheless likelyto insist upon m odification of the term s of the instrum ent as a condition to perm itting assum ption

by the buyer. The lender will almost certainly insist upon an increase in the interest rate if theprevailing interest rate at the time of the proposed sale of the property is higher than the interestrate of the promissory note.

A Balloon Payment. This means that your monthly payments are not large enough to pay off

the loan, with interest, during the period for which the loan is written and that at the end of the

loan period, you m ust pay the entire remaining balance in one paym ent. If you are unable to paythe remaining balance, and the remaining balance is a sizable one, you should be concerned withthe possible difficulty in refinancing the balance. If you cannot refinance or sell your property,

or pay off the balloon paym ent, you m ay lose y our property through foreclosure by the lenders.

Prepayment Penalty. This means that if you wish to pay off your loan in whole or in part

before it is due, you m ust, in addition to the portion prepaid, pay a p enalty in accordance w ith theterm s of y our loan.

Late Charge. This mean s that if you fail to mak e your installment payment on or before the duedate, you in addition must pay a penalty.

Page 19 of 21 i le No. 125697LA -F00



BEFORE SIGNING, YOU SHOULD READ AND THOROUGHLY UNDERSTAND ALL

LOAN DOC UMENTS.

PURCHASE MONEY HANDLING

The Neighborhood Builder must impound all funds received from you in an escrow depository

until legal title is delivered to you. (Refer to Sections 11013, 11013.1, and 11013.2(a) of the

Business and Professions Code).

If the escrow has not closed on your lot within one (1) year of the date of your purchase

agreement, you m ay request the return of y our purchase m oney deposit.

Note: Section 2995 of the Civil Code provides: No real estate developer shall require as a

condition precedent to the transfer of real property containing a single family residential

dwelling that escrow services effectuating such transfer shall be provided by an escrow entity inw hich the developer owns or controls 5% or m ore of the escrow entity.

THE NEIGHBORHOOD BUILDER HAS NO SUCH INTEREST IN THE ESCROW

COMPA NY WH I CH I S TO BE USE D I N CONNE CTI ON WI TH THE SALE OR LE ASE OFLOTS IN PORTOFINO AT TERR A LA GO.

SOIL CONDITIONS

Some lots will contain filled ground. The information concerning filled ground, geologicinformation and soil conditions is available at the City of Indio, Engineering Services, 100 CivicCenter Mall, Indio, California 92202.

GEOLOGIC C ONDITIONS

THE UNIFORM BUILDING CODE, APPENDIX CHAPTER 33, PROVIDES FOR LOCAL

BUILDING OFFICIALS TO EXERCISE PREVENTIVE MEASURES DURING GRADING

TO ELIMINATE OR MINIMIZE DAMAGE FROM GEOLOGIC HAZARDS SUCH AS

LANDSLI DE S, FAULT MOV E ME NTS, E ARTHQUA K E SHAK I NG , RAPI D E R OSION ORSUBSIDENCE. PORTOFINO AT TERRA LAGO IS LOCATED IN AN AREA WHERE

SOME OF THESE HA ZARD S MAY EXIST. SOME C ALIFORNIA COUNTIES AND CITIES

HAV E A DOPTE D ORD I NANCE S THAT MA Y OR MA Y NOT BE AS E FFE CTIV E I N THECONTRO L OF GRA DING AND SITE PREPARA TION.

PURCHASERS MAY CONTACT EITHER THE NEIGHBORHOOD BUILDER, THE

ENGINEERING GEOLOGIST OR THE LOCAL BUILDING OFFICIALS TO DETERMINE

IF THE ABOVE-MENTIONED HAZARDS HAVE BEEN CONSIDERED AND IF THERE

HAS BEEN ADEQUATE COMPLIANCE WITH CHAPTER 33 OR AN EQUIVALENT OR

Page 20 of 21 i le No. 125697LA -F00



-)ORE STRINGENT GRADING ORDINANCE DURING THE CONSTRUCTION OF

PORTOFINO AT TERRA LAGO.

SCHOOLS

Portofino at Terra Lago is located w ithin the Desert Sands Unified School District ( D istrict ).

The District advises thatPortofino at Terra Lago is within the attendance boundaries for the following schools:

Grades K through 5:

Eisenhower Elementary School83-391 Dillon AvenueIndio, California 92201

Grades 9 through 12:Chino Hills High School81-750 A venue 46Indio, California 9220 1

Grades 6 through 8:

W ilson Middle School83-501 Dillon AvenueIndio, California 9220 1

This school information was provided prior to the date of issuance of this Final Report and issubject to change. For the m ost current information regarding school assignm ents, facilities andbus service fees purchasers are encouraged to contact the above m entioned District at (760 ) 777 -

4200.

CLOSING STATEMENT

If you need clarification as to the statements in this Final Report or if you desire to makearrangements to review the documents submitted by the Neighborhood Builder which the DR Eused in preparing this Final R eport, you m ay contact:

D epartment of R eal Estate - Subdivisions South320 W est Fourth Street, Suite 350

Los Angeles, CA 90013-11 05(213) 576-6983

Page 21 of 21 File No. 125697LA -F00