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R~cording Requested Byand

When. Recorded Mail To: 'i:¡~1\". ".'",:::.:,,' •.••• ,,;; :"'~Ij')~.r~C'L~~ c¡ r"¡"r""": 1,11..- ".\,)-.;{\IIo4, Co.........'.l :.~.~~.!(~ ..3ï\ !(hc;:¡;a: Signatu " ~

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HECHT, SOLBERG, ROBINSON & GOLDBERG LLP

Mr. John Hecht600 West Broadway, Eighth FloorSan Diego, California 92101

Trilogy10/9/96

DECLARATION OF RESTRICTIONS

FOR

TRILOGY

(A Condominium Common Interest Development)

Ii.:

RECITALS

ARTICLE ISection 1.1Section 1.2Section 1.3Section 1.4Section 1.5Section 1.6Section 1.7Section 1.8Section 1.9Section 1.10Section 1.11Section 1.1 2Section 1. 1 3Section 1.14Section 1.1 5Section 1. 16Section 1. 17Section 1.1 8Section 1.19Section 1.20Section 1.21Section 1.22Section 1.23Section 1.24Section 1.25Section 1.26Section 1.27Section 1.28

ARTICLE"

Section 2.1Section 2.2Section 2.3Section 2.4

ARTICLE IIISection 3.1Section 3.2Section 3.3Section 3.4

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TABLE OF CONTENTS

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS 3Articles 3Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Association Property 3Board 3Bylaws 4Common Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Common Expenses . . . . '. . . . . . . . . . . . . . . . . . . . . . . . . . . 4Condominium 4Condominium Plan . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . 4Declarant 4Declaration 5Eligible Insurer or Guarantor '5·Eligible Mortgage Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Exclusive Use Area ,............... 5Front Yard Maintenance Area 5Maintenance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Member 5Module 5Mortgage 6Mortgagee 6Owner 6Phase 6Project 6Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Residential Unit .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Retail Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7VA 7Yard 7

.PROPERTY RIGHTS IN ASSOCIATION PROPERTY AND

COMMON AREA 7Title to the Association Property 7Owners' Easements of Enjoyment 7Power of Attorney to Correct Errors 9Delegation of Use.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION .... .. 10Each Owner Is A Member . . . . . . . . . . . . . . . . . . . . . . . .. 10Classes of Voting Membership 10Termination of Class B Membership 10Commencement of Voting Rights 11

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ARTICLE IV

Section 4.1Section 4.2Section 4.3Section 4.4Section 4.5Section 4.6Section 4.7Section 4.8Section 4.9Section 4.10Section 4.11

Section 4. 12

Section 4.13Section 4. 14Section 4.15Section 4.16Section 4.17Section 4.18Section 4.19Section 4.20

ARTICLE V

ARTICLE VISection 6.1Section 6.2Section 6.3Section 6.4Section 6.5Section 6.6Section 6.7Section 6.8

Section 6.9Section 6.10Section 6.11Section 6.12Section 6.13Section 6.14Section 6.15Section 6.16Section 6.1 7Section 6.18

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COVENANT FOR MAINTENANCE ASSESSMENTSTO ASSOCIATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Covenant for Assessments . . . . . . . . . . . . . . . . . . . . . . .. 11Purpose of Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . 11Limitation on Regular and Special Assessments . . . . . . . . .. 11Non-Lien Assessments (Compliance) 13Schedule of Monetary Penaltiës " 13Rate of Regular Assessments 13Rate of Special Assessments for Repairs 13Date of Commencement of Assessments 13Adjustment of Assessments; Due Dates 14Moqel Homes 14Effect of Non-Payment of Assessments; Remedies ofthe Association 14

Subordination of the Lien to First Deeds of Trust andFirst Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 15.

Estoppel Certificate 16Non-Use , . . . . .. 16Taxation of Association , 16Payment of Assessments By Declarant . .. . . . . . . . . . . . .. 16Capitalization of Association .. , . . . . . . . . . . . . . . . . . . . . 16Sub-metering of Water , . , . . . . . . . . . . . . . . . . . . . . . . . . 16Uncompeted Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Maintenance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 17

POWERS AND DUTIES OF ASSOCIATION 17

USE OF CONDOMINIUMS . . . . . . . . . . . . . . . . . . . . . . . . . .. 18Residential Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 18Lease of Condominium . . . . . . . . . . . . . . . . . . . . . . . . . .. 18Use Not to Impair Insurance 18Animals 18Nuisance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Sign Control 19Outside Antennae 19No Owner Modification to Association Property orCommon Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 19

No Offensive Activity; Quiet Enjoyment 19Use of Association Property and Common Area . . . . . . . . . . 19Owners Liable for Damage 20Exclusive Use Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . ., 20Use of Exclusive Use Areas . . . . . . . . . . . . . . . . . . . . . . . . 20Exterior Changes . . . . . . . . . . . . . . . . . . 21Use, Changes and Improvements to Yards; Drainage 21Parking Within Residential Units. . . . . . . . . . . . . . . . . . . . . 22Right of Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Restricted Use of Trailers, Etc. 22

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Section 6.19Section 6.20Section 6.21Section 6.22Section 6.23Section 6.24Section 6.25Section 6.26Section 6.27Section 6.28Section 6.29Section 6.30

ARTICLE VIISection 7.1Section 7.2Section 7.3

ARTICLE VIIISection 8.1Section 8.2Section 8.3

ARTICLE IX

Section 9.1Section 9.2Section 9.3Section 9,4Section 9.5

ARTICLE X

Section 10.1Section 10.2Section 10.3•Section 10,4

ARTICLE XI

ARTICLE XIISection 12.1Section 12.2

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Windows 23Fireplaces; Gas Logs Only 23No Attachments or Changes to Adjoining Residence 23Limitation on Basketball Hoops 23Commercial Activity '. . . . . . . . . 23Compliance With City Requirements . . . . . . . . . . . . . . . . . . 23Air Conditioners -: . . . . . . . . . . . . . . . . . . . . . . 24Solar Heating '.' . . . . . . . . . . . . . . . . . . . . . . 24No Easements for View Purposes; Disclaimer 24Declarant's Improvements . . . . . . . . . . . . . . . . . . . . . . . . . 25Post Tensioned Slabs , 25Trash Removal 25

RESPONSIBILITIES OF MAINTENANCE 25Maintenance by Owners 25Failure to Maintain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Maintenance by Association 26

SEPARATION OF INTERESTS AND PARTITION PROHIBITED 27No Separation of Interests 27No Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Power of Attorney " 27

DAMAGE, DESTRUCTION AND CONDEMNATION OFCOMMON AREA OR ASSOCIATION PROPERTY 28Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . . . . .. 28Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 29Insurance 30Mortgagee Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Association Represents Owners Re Common Area andAssociation Property 32

DAMAGE, DESTRUCTION AND CONDEMNATION OFRESIDENCES 32Damage or Destruction ...................•....... 32Each Owner to Insure His/Her Residential Unit 32Condemnation 32Mortgagee Approval ~ . . . . . . . 32

ASSOCIATION'S RIGHT OF ENTRY 33

EXCLUSIVE EASEMENTS AND LICENSES 33Common Area Licenses 33Association Property 33

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ARTICLE XIIISection 13.1Section 13.2Section 13.3Section 13.4

Section 13.5Section 13.6Section 13.7Section 13.8

ARTICLE XIVSection 14.1Section 14.2

ARTICLE XVSection 15.1Section 15.2Section 15.3Section 15.4Section 15.5Section 15.6Section 15.7Section 15.8Section 15.9Section 15.10Section 15.11Section 15.12Section 15.13Section 15.14Section 15.15Section 15.16Section 15.17Section 15.18Section 15.19Section 15.20Section 15.21Section 15.22Section 15.23

PAGE

EASEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Easements for Encroachments . . . . . . . . . . . . . . . . . . . . . . 33Easements for Utilities' . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Easements for Clustered Mailboxes 34Fences Installed By Declarant; Easements for CommonFences ..J! •••••••••••••••••••••• 34

Access Easements Over Side Yards for Maintenance 35Front Yard Maintenancè Areas 35Temporary Construction Access Easements 35Additional Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

.ENFORCEMENT . " . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37No Waiver '. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

OTHER PROVISIONS 37'Severability' '. . . . . . . . . . . . . . . . . . . 37Amendments Prior to Escrow Closings .. . . . . . . . . . . . . . . 37Amendments After Escrow Closings 37Amendments May Not Conflict With City Requirements . . . . 38Mortgagee Approval of Amendment -. . . 38Extension of Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . 39Annexation; Reservation of Easements 39Judicial Reference 41Enforcement Litigation ;. 42Provisions Apply to All Condominiums 42Special Responsibilities of Association 42Limitation of Restrictions on Declarant 42Owners' Compliance 43VA Approval '. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43FHA Approval 44Payments of Taxes or Premiums by First Mortgagees 44Mortgagee Curing Default . . . . . . . . . . . . . . . . . . . . . . . . . 44Approval of First Mortgagees 44Notice to Eligible Mortgagees 45Documents to be Available to Mortgagees 45Mortgagee Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46Documents to be Provided to Prospective Purchasers . . . . . . 46

SUBORDINATION AGREEMENT(S)

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DECLARATION OF RESTRICTIONS

THIS DECLARATION OF RESTRICTIONS is made this 9th day of October1996 , by SORRENTO HILLS HOMES, LLC, a Callfornië'Iimlted liability company ("Declarant").This Declaration is made with reference to the followinq

RECITALS:

A. The Real Property. Declarant is the owner of the real property located in theCity of San Diego ("City"), County of San Diego, California, described as:

Parcel 11 of PARCEL MAP NO. 17761 in the City of San Diego,County of San Diego, State of California, filed with the CountyRecorder of San Diego County, California, on October 3, 1996 asDocument No. 1996-0503643, and

Parcel 12 of PARCEL MAP NO. 17762 in the City of San Diego,County of San Diego, State of California, filed with the CountyRecorder of San Diego County, California, on October 3, 1996 asDocument No. 1996-0503644

(the "Real Property").

B. The Project. Declarant plans to construct a phased residential condominiumproject on the Real Property.

C. Phase 1. Phase 1 consists of the Phase 1 Module and the Recreation AreaModule shown on that certain Condominium Plan filed for record on "-S 'i) 'J qNv\ \o I-N' \ ,1996 as Document No. 1996- Q SS S \Q\¡ , Official Records of San Diego County,California, being a portion of Parcel 11 of PARCEL MAP NO. 17761 in the City of San Diego,County of San Diego, State of California, filed with the County Recorder of San Diego County,California, on October 3, 1996 as Document No. 1996-0503643. Phase 1 is the first Phaseof the Project and will consist of eight (8) detached homes within the Phase 1 Module. Eachdetached home will be located within space shown as a Residential Unit on a CondominiumPlan and Declarant intends to establish a condominium project under the provisions of theCalifornia CIVIL CODE.

D. Association. Each Condominium shall have appurtenant to it a membership inTRILOGY HOMEOWNERS ASSOCIATION, a California nonprofit mutual benefit corporation("Association"), which will be the management body for the Project and the owner in fee ofany Association Property.

E. Condominiums. Each Condominium will include the following interests and suchother interests as may be set forth in the initial deed conveying the Condominium: A

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Residential Unit and an appurtenant undivided interest in the Common Area of the Phase inwhich the Condominium is located (the undivided interest will be equal to the reciprocal of thenumber of Residential Units in the Phase) and an easement for ingress, egress and recreationaluse over portions of the Association Property in the Phase and over the Association Propertyin other Phases. Generally, the easement over Association Property in a Phase will notbecome effective to benefit a Phase until a Condominium is conveyed in the Phase benefittedby the easement and such easement will not become effective to burden a Phase until aCondominium in the Phase to be burdened is conveyed. to a Retail Purchaser. However, shouldaccess to a Phase require ingress and egress over a private drive located in a later Phase, eachOwner in the earlier Phase shall have access over such private drive.

F. Additional Phases. Phase 1 is the first phase of a planned fifteen (15) phasecondominium project which may be constructed on the Real Property. If all Phases arecompleted and annexed as planned, there will be a total of one hundred eighty-nine (189)Condominiums in the Project. However, Declarant cannot give any assurance that any Phasesubsequent to Phase 1 will be constructed or annexed to this Declaration or that the phasingwill be in any particular order.

G. The Condominium Plans. A separate Condominium Plan will be filed for recordfor each Phase and will show the location and dimensions of the Residential Units within thatPhase. Generally, each Condomintum Plan will show:

• A separate Phase Module and the Residential Units within the Phasecovered by the plan.

• The location of a Module For Future Phases.

• The Common Area and Association Property for the Phase covered bythe Plan. The Common Area will generally consist of certain air spaceabove the Residential Units in the Phase. The Association Property willgenerally consist of the remainder of the Phase and will include theprivate street(s), private drives(s), open space and any recreational areaswithin the Phase. It is also intended that the Association Property for aPhase will include easements for the Association to maintain Front YardMaintenance Areas shown on the Condominium Plan for such Phase.

H. Construction Plans. The present plans call for floor plans rangin.g in size fromapproximately 1,307 to 1,939 square feet. Construction plans are, however, subject tochange from time to time. Should the VA guaranty any Mortgage, the development of theProject will be consistent with the overall development plan submitted to the United StatesDepartment of Veterans Affairs. Recreational facilities built in the Project and made subjectto this Declaration may be used by all Members of the Association pursuant to this Declara-tion. Any Association Property to be owned by the Association with respect to a Phase shallbe conveyed to the Association prior to close of the first escrow in the respective Phase to aRetail Purchaser.

I. Type of Project. This Project will be a combined condominium and planneddevelopment Common Interest Development.

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J. Common Plan of Restrictions; Binding On Future Owners. Before selling orconveying any interests in Phase 1 Declarant desires to subject Phase 1 in accordance witha common plan to certain covenants and restrictions for the benefit of Declarant and any andall present and future owners of the Real Property. As stated below, it is intended that thecommon plan of these covenants and restrictions shall apply to each subsequent Phase whichis annexed to this Declaration.

NOW, THEREFORE, Declarant hereby declares that all of Phase 1 and, upon annexation,each subsequent Phase, shall be held, sold and conveyed subject to the following easements,restrictions and covenants, which are enforceable equitable servitudes as described inCalifornia CIVILCODESection 1354 and which are for the purpose of establishing a general planfor protecting the value and desirability of, and which shall run with, the Real Property and bebinding on all parties having any right, title or interest in Phase 1 and each subsequent Phasewhich is annexed to this Declaration, their heirs, successors and assigns, and shall inure to thebenefit of each Owner thereof. The provisions of this Declaration shall both benefit and burdenPhase 1 and each subsequent Phase which is annexed hereto.

ARTICLE I

DEFINITIONS

Section 1.1. "Articles" shall mean and refer to the Articles of Incorporation of theAssociation as they may from time to time be amended.

Section 1.2. "Association" shall mean and refer to TRILOGY HOMEOWNERSASSOCIATION, a California Nonprofit Mutual Benefit Corporation, its successors and assigns.

Section 1.3. "Association Property" shall mean all real property and easements ownedby the Association from time to time for the common use and enjoyment of the Owners. Itis anticipated that the Association Property will consist of the remainder of each Phase afterexcluding the Residential Units and the Common Area in the Phase and will include privatestreets and drives which provide access to more than one Residential Unit, open spaces,recreational areas (within two Phase Modules) and easements for the Association to maintainthe Front Yard Maintenance Areas of each Residential Unit. Any pipes, wires or other utilityinstallatipns which serve more than one Residential Unit but which are not owned andmaintained by the City or a public utility will also be Association Property (e.g., there areprivate water, storm drain and sewer systems with the Project), The Association Property forPhase 1 will also include the Recreation Area Module shown on the Condominium Plan forPhase 1. Although minor recreational facilities are planned for two subsequent Phases withinthe Project, no assurance is given that any subsequent Phase or recreational facilities will bebuilt.

Section 1.4. "Board" shall mean and refer to the Board of Directors of the Association.

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Section 1.5. "Bylaws" shall mean and refer to the Bylaws of the Association as theymay from time to time be amended.

Section 1.6. "Common Area" of a Phase will be shown on the Condominium Plan forthe Phase. The lateral boundaries of the Common Area shall be as designated on theCondominium Plan. The lower vertical boundary of the Common Area shall be the uppervertical boundary of the Residential Units shown on the plan. The upper vertical boundary ofthe Common Area shall extend 50.00 feet from the lewer vertical boundary. The Cwners ofthe Condominiums within a Phase shall receive an undivided ownership interest in the CommonArea of that Phase only, with the undivided interest of each such Owner being equal to thereciprocal of the number of Residential Units within the Phase.

Section 1.7. "Common Expenses" means and includes the actual and estimatedexpenses of operating the Project and any reasonable reserve for such purposes as found anddetermined by the Board and all sums designated common expenses by or pursuant to thecondominium documents.

Section 1.8. "Condominium" shall mean and refer to a fee simple estate in:

(a) A Residential Unit;

(b) An undivided interest as tenant in common to the Common Area of thePhase in which the Residential Unit is located equal to the reciprocal of the number ofResidential Units in that Phase;

(c) An easement for ingress, egress and recreational use over portions of theAssociation Property in the Phase together with an easement over the AssociationProperty in other Phases, with such easement not becoming effective to benefit a Phaseuntil a Condominium is conveyed in the Phase benefitted by the easement and sucheasement not becoming effective to burden a Phase until a Condominium in the Phaseto be burdened is conveyed to a Retail Purchaser. A membership in the Association shallalso be deemed a part of each Condominium; and

(d) A Condominium may also include additional easements (such as accesseasements over appropriate portions of a private street located in a later Phase butnecessary for access to the Condominium or Exclusive Use Areas for parking spaceslocated within the Association Property).

Section 1.9. "Condominium Plan" shall mean and refer to the Condominium Plan orCondominium Plans recorded pursuant to California CIVILCODESection 1351 (e) covering anyPhase of the Real Property which has been made subject to this Declaration, including suchamendments thereto as may from time to time be recorded.

Section 1.10. "Declarant" shall mean and refer to SORRENTO HILLS HOMES, LLC, aCalifornia limited liability company. Declarant shall also refer to (i) the assigns of Declarantwho are expressly assigned the rights of Declarant and (ii) successors of Declarant whobecome successors by operation of law or by exercise of the remedies under a mortgage, deedof trust or deed in lieu of foreclosure.

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Section 1.11. "Declaration" shall mean and refer to this enabling Declaration ofRestrictions, as it may from time to time be amended.

Section 1.12. "Eligible Insurer or Guarantor" shall mean and refer to an insurer orgovernmental guarantor who has requested notice from the Association of those matterswhich such insurer or guarantor is entitled to notice of by reason of this Declaration or theBylaws of the Association and who has provided the Association with the address to whichsuch notice is to be sent and the Condominium unit number which is encumbered by aMortgage in which it has an interest.

Section 1.13. "Eligible Mortgage Holder" shall mean and refer to a holder of a firstMortgage on a Condominium who has requested notice from the Association of those matterswhich such holder is entitled to notice of by reason of this Declaration or the Bylaws of theAssociation and who has provided the Association with the address to which such notice isto be sent and the Condominium unit number which is encumbered by a Mortgage in whichit has an interest.

Section 1.14. "Exclusive Use Area" shall mean and refer to those portions of theAssociation Property to which an exclusive right to use is granted to an Owner. No ExclusiveUse Areas are currently planned for the Project except as follows. An outside parking spacemay be assigned to those Residential Units which have only a one-car garage and no availablespace within the Yard of the Residential Unit for the outside parking of an additional car.

Section 1.15. "Front Yard Maintenance Area" of each Residential Unit shall mean andrefer to that portion of the Residential Unit (which may include side yards and other areas inaddition to the front yard) so described on the applicable Condominium Plan. Each Front YardMaintenance Area adjoins the Association Property ti.e., the private street or drive) andextends to (but does not include) the exterior surfaces of (il the residential structure and (ii)any privacy fence or gate in the locations where constructed within the Residential Unit. Asstated below, the Association will maintain all the landscaping within the Front YardMaintenance Areas. However, it shall be the responsibility of the Owner, and not theAssociation, to maintain the "flat work" (e.g., walkways and driveway) within the Front YardMaintenance Area covering the Owner's Residential Unit.

Section 1.16. "Maintenance Agreement" shall mean that certain Maintenance AndSubsidy Agreement dated as of October 14, 1996 and entered into between Declarant and theAssociation, a copy of which was reviewed by the California Department of Real Estate.

Seçtion 1.17. "Member" shall mean and refer to a person entitled to membership in theAssociation as provided herein.

Section 1.18. "Module" shall mean and refer to a three-dimensional portion or portionsof the Real Property, shown on a Condominium Plan and established pursuant to GOVERNMENTCODE§ 66427. It is intended that a separate Condominium Plan be recorded for each Phase.Each Condominium Plan will describe a Phase Module for the Phase covered by theCondominium Plan and the Residential Units, Common Area and Association Property withinthe Phase. In addition, each Condominium Plan (other than the Condominium Plan coveringthe final Phase) will describe a Module For Future Phases. A Module For Future Phases orportions thereof may be shown and described as one or more Phase Modules on a subsequent

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Condominium Plan or Plans. The Condominium Plan for Phase 1 will also describe a RecreationArea Module.

Section 1.19. "Mortgage" shall mean and refer to a mortgage or deed of trust whichencumbers a Condominium.

Section 1.20. "Mortgagee" shall mean and refer to a beneficiary under a deed of trustwhich encumbers a Condominium as well as a mortgagee under a Mortgage.~

Section 1.21. "Owner" shall mean and refer to the record owner, whether one (1) ormore persons or entities, of fee simple title to any Condominium, including contract sellers, butexcluding those having such interest merely as security for the performance of an obligation.

Section 1.22. "Phase" shall mean and refer to that portion of the Project which isdesignated as a separate Phase by a Final Subdivision Public Report issued by the Real EstateCommissioner for the State of California. Each portion of the Project which is covered by aseparate Final Subdivision Public Report will be a separate Phase unless otherwise stated inthe applicable Final Subdivision Public Report.

Section 1.23. "Project" shall mean and refer to Phase 1 described above together withall other Phases within the Real Property which become annexed to this Declaration.

Section 1.24. "Real Property" shall mean and refer to that real property located in theCity of San Diego, County of San Diego, California, described in Recital A above.

Section 1.25. "Residential Unit" shall mean and refer to a separate interest in space asdefined in CIVILCODESection 1351 (f) and shall have the dimensions shown and described assuch on the applicable Condominium Plan. Included within each Residential Unit are allportions of the residence, Yard and Yard improvements located in the Residential Unit. Forexample, included within the boundaries of each Residential Unit are the exterior surfaces ofthe walls, foundation, roof, windows and doors of the residential building built within theResidential Unit together with all other portions of such building and all other real propertyshown on the Condominium Plan as being within the Residential Unit but outside of theresidential building. Each Residential Unit includes the space so encompassed. The followingare also part of a Residential Unit: Bearing walls, columns, floors, roofs, foundations, heating,air conditioning equipment (if any), and other services, pipes, ducts, flues, chutes, conduits,wires and other utility installations, wherever located, except any such pipes, wires or otherutility installations which serve more than one Residential Unit or another Residential Unit.Any pipes, wires or other utility installations which serve more than one Residential Unit butwhich are not owned and maintained by the City or a public utility are Association Property(e.g., there are private water, storm drain and sewer systems with the Project). The verticaldimensions of each Residential Unit shall extend upwards to the boundary shown on theapplicable Condominium Plan and extend indefinitely downwards. In interpreting deeds andthe Condominium Plan, if the Condominium Plan shows the horizontal dimensions of aresidential building to be coterminous with a Residential Unit boundary, the then existingphysical boundaries of the residential building, whether in its original state or reconstructedin substantial accordance with the original plans and locations thereof, shall be conclusivelypresumed to be its boundaries rather than the coundar.es expressed in the deed or the

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Condominium Plan, regardless of settling or lateral movement of the buildinq and regardlessof minor variance between boundaries shown on the plan or deed and those of the building.

Section 1.26. "Retail Purchaser" shall mean and refer to anyone other than a Declarantor successive Declarant who purchases a Condominium from Declarant through authority ofa Final Subdivision Public Report issued by the California Department of Real Estate.

Section 1.27. "VA" shall mean and refer to the United States Department of VeteransAffairs.

Section 1.28. "Yard" shall mean and refer to that portion of a Residential Unit whichis not covered by a residential building or a Front Yard Maintenance Area. The following areAssociation Property and not part of any Yard regardless of whether the same may be locatedwithin or intrude within the.airspace envelope of a Yard:

(a) Any drainage facilities or other improvements designated on theapplicable Condominium Plan for Association maintenance; and

(b) Any sewer lines, water lines, CATV, power lines or other utilities whichserve more than one Residential Unit.

"Yard" shall also refer to an exclusive easement for yard purposes which may be granted overAssociation Property, Common Area or the Residential Unit of another Owner. For example,the Yard portion of a home(s) in one or more Phases may extend to an area within anotherPhase, in which case the portion which extends to the other Phase would be an exclusiveeasement for yard purposes rather than a Residential Unit.

ARTICLE"

PROPERTY RIGHTS IN ASSOCIATION PROPERTY AND COMMON AREA

Section 2.1. Title to the Associatic:1 Property. Declarant covenants for itself, itssuccessors and assigns, that Declarant will convey to the Association the Association Propertywithin a Phase free and clear of all encumbrances and liens, except non-delinquent taxes, non-delinquent assessments, easements, dedications, reservations, covenants, conditions andreservations (i) then of record, (ii) set forth in the deed of conveyance, and/or (iii) set forth inthis Declaration. Such conveyance shall be made for each Phase prior to the conveyance ofthe first Condominium in the respective Phase to a Retail Purchaser.

,Section 2.2. Owners' Easements of Enioyment. Every Owner of a Condominium shall

have a right and easement of ingress and egress and the right of enjoyment in and to theAssociation Property with such easement not becoming effective to benefit a Phase until aCondominium is conveyed in the Phase benefitted by the easement and such easement notbecoming effective to burden a Phase until a Condominium in the Phase to be burdened isconveyed to a Retail Purchaser. Each Owner shall also have the right to utilize any commonutilities within the Association Property or Common Area which are intended to serve theOwner's Residential Unit. These rights shall be appurtenant to and shall pass with the title ofeach Condominium, subject to the following provisions:

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(a) The right of the Board to make rules and regulations relating to theoperation and use of the Association Property and Common Area, including the right ofthe Board to restrict use of the recreational facilities to those in possession of ResidentialUnits and to control the hours of such use and to determine whether such facilities maybe used by guests. The Association shall have no right to restrict reasonable access toa Condominium by the persons who have the right to possession of the Condominium.

(b) The right of the Board to suspend the voting rights of an Owner and rightto suspend use of recreational facilities by' the Owñer and occupants of a Condominium:

(i) During the period of time any Association assessment against theCondominium remains delinquent: and/or

(ii) Eor a period of not more than thirty (30) days for any infraction.of the Board's published rules and regulations after reasonable written noticeand an opportunity for a hearing before the Board which satisfies the minimumnotice and hearing requirements of California CORPORATIONSCODESection 7341.

(c) The right of the Board, subject to the limitations stated in the Sectionbelow entitled "Approval of First Mortgagees" and subject to the restrictions stated inCalifornia CORPORATIONSCODESection 8724, to transfer less than substar+iallv all of theAssociation Property. It is specifically intended that the Board have the right tocooperate with Declarant and any Owner in adjusting the boundaries between theAssociation Property, Common Aréa and other portions of the Project.

(d) The sole and exclusive right of the Association, acting through its Board,to operate, maintain and control the Association Property and Common Area except asotherwise stated in this Declaration.

(e) The right of the Board to grant to third parties permits, licenses (whichmay be irrevocable) and easements over the Association Property and Common Area forutilities, roads and other purposes necessary for the proper operation of the Project or toserve other real property; and the right of the Board to convey portions of theAssociation Property or Common Area to others in connection with a boundaryadjustment requested by an adjacent property owner or public entity.

(f) The right of the Board to grant easements and licenses over theAssociation Property and the Common Area pursuant to the Article below entitled"E»CLUStVE EASEMENTS AND LICENSES".

(g) The right of the Association, in accordance with the Articles and Bylaws,to borrow money for the purpose of improving the Association Property and tohypothecate any or all real or personal property owned by the Association.

(h) The right of access, ingress and egress over the Association Property andthe right of installation and use of utilities on the Association Property and Common Areafor the benefit of the Condominiums.

(i) Each easement or restriction set forth in this Declaration.

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'" ",;

(j) Declarant and its agents, employees and independent contractors shallhave:

(i) a non-exclusive easement over the Association Property andCommon Area for the purposes of constructing homes and relatedimprovements within the Real Property, marketing homes within the RealProperty, maintaining and making repairs to the Real Property, including theAssociation Property or to the Commen Area. Nothing herein stated shallobligate Declarant to make such repairs; and

(ii) the right to the non-exclusive use of the Association Property andCommon Area and Residential Units owned or leased by Declarant for thepurpose of maintaining sales offices, parking, signs. and flags reasonably neces-sary to market the Condominiums in the Real Property.

These rights of Declarant may be exercised until close of escrow to Retail Purchasers ofall 189 Condominiums planned for the Real Property. However, the use of the CommonArea and the Association Property by Declarant and its agents shall not unreasoñablyinterfere with the use thereof by the Class A Members of the Association. Declarant shallrepair any portion of the Association Property or Common Area which may be damagedby Declarant.

Section 2.3. Power of Attorney to Correct Errors. The Association is hereby given apower of attorney to acton behalf of the Owners and their Mortgagees to correct errors in anyCondominium Plan by executing on behalf of the affected Owners and Mortgagees anamendment to the applicable Condominium Plan and an instrument to effect any conveyancesor partial reconveyances necessary to correct such errors. The power hereby given to theAssociation is limited as follows:

(a) The power may be exercised only to correct errors in a Condominium Planas evidenced by a written statement which describes the error(s) and which is signed bythe engineer who prepared the Condominium Plan or by Declarant. The power herebygiven may not be utilized for any other purpose.

(b) The power may not be exercised on behalf of an Owner or his or herMortgagee if the Owner's Residential Unit would be reduced in size by reason of thecorrection .

•The power hereby given is coupled with an interest and may not be revoked by an Owner butmay be revoked by a Mortgagee. Any such revocation by a Mortgagee shall be by means ofits signed statement of revocation recorded with the County Recorder of San Diego County.

Section 2.4. Delegation of Use. Subject to the restrictions stated in this Declaration,any Owner may delegate, in accordance with the Bylaws and the rules and regulations of theBoard, the Owner's right of enjoyment to the Association Property and Common Area andfacilities to persons who reside in the applicable residence. Each Owner shall be responsibleto the Association for any damage to the Association Property and Common Area caused by

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such Owner or persons to whom Common Area or Association Property rights have beentransferred.

ARTICLE '"

MEMBERSHIP AND VOTING RIGHTS IN ASSOCIATION

Section 3.1. Each Owner Is A Member. Each Owner of a Condominium shall be aMember of the Association. Membership shall be appurtenant to and may not be separatedfrom ownership of any Condominium. Each Owner is obligated promptly, fully and faithfullyto comply with and conform to this Declaration and the Bylaws and the rules and regulationsadopted from time to time by the Board and officers of the Association. Membership in theAssociation shall not be transferred, pledged or alienated in any way, except upon the sale orencumbrance of the Condominium to which it is appurtenant, and then only to the purchaser,in the case of a sale, or Mortgagee, in the case of an encumbrance of such Condominium.Any attempt to make a prohibited transfer is void. In the event the Owner of anyCondominium should fail or refuse to transfer the membership registered ¡Il the Owner's nameto the. purchaser of his Condominium, the Association shall have the right to record the.transfer upon its books and thereupon the old membership outstanding in the name of theseller shall be null and void.

Section 3.2. Classes of Voting Membership. The Association shall have two classesof voting~mEhnbership:

(a) Class A. Class A Members shall be all Owners of the Condominiumswith the exception of Declarant, and shall be entitled to one (1) vote for eachCondominium owned. When more than one person holds an interest in anyCondominium, all such persons shall be Members. The vote for such CondomInium shallbe exercised as they among themselves determine, but in no event shall more than one(1) vote be cast with respect to any Condominium.

(b) C/ass B. The Class B Member(sl shall be the Declarant and shall beentitled to three (3) votes for each Condominium owned.

Section 3.3. Termination of Class B Membership. The Class B membership shall ceaseand be converted to Class A membership on the happening of either of the following events,whichever occurs earlier:

(a) Two (2) years following the date of the first conveyance of record by,Declarant of a Condominium to a Retail Purchaser pursuant to the most recent FinalSubdivision Public Report issued by the California Department of Real Estate for a Phaseof the Project; or

(bl Four (4) years following the date of the first conveyance of record byDeclarant of a Condominium to a Retail Purchaser pursuant to the original FinalSubdivision Public Report issued by the California Department of Real Estate for Phase1 of the Project.

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Section 3.4. Commencement of Voting Rights. Voting rights shall be attributable toa Condominium commencing on the date the Association's regular assessments havecommenced against the Condominium.

ARTICLE IV

COVENANT FOR MAINTENANCE ASSESSMENTS TO ASSOCIATION

Section 4.1. Covenant for Assessments. The Declarant, for each Condominiumowned, covenants, and each Owner of any Condominium by acceptance of a deed to theCondominium, whether or not so expressed in such deed, is deemed to covenant and agreesto pay to the Association: (i) regular assessments, which shall include an adequate reservefund for periodic maintenance, repair and replacement of the Association Property andCommon Area, (ii) special assessments, and (iii) those other assessments provided for in thisArticle. The regular and special assessments, together with interest, costs, late charges andreasonable attorney's fees, shall, except as stated in the Section below entitled "Non-LienAssessments (Compliance)", be a charge and continuing lien upon the Condominium againstwhich each such assessment is made, the lien to become effective upon recordation of anotice of assessment. Each such assessment, together with interest, costs, late charges andreasonable attorney's fees shall also be the personal obligation of the person who was theOwner of such Condominium at the time when the assessment fell due. The personalobligation for delinquent assessments shall not pass to an Owner's successors in title unlessexpressly assumed by them; however, the assessment shall remain a lien on the Condominium.

Section 4.2. Purpose of Assessments. The assessments levied by the Associationshall be used exclusively to promote the recreation, health, safety and welfare of all theresidents in the entire Project, for the improvement and maintenance of the AssociationProperty and Common Area for the common good of the Project, to reimburse the Associationfor the costs incurred in bringing an Owner into compliance with the Bylaws, this Declarationand the rules and regulations adopted by the Board, and for those other purposes describedin this Declaration. The regular assessments shall be determined at least annually by the Boardto meet the expenses of the Association, including the establishment of reserve accounts,based upon the annual budget adopted by the Board pursuant to the Bylaws. A specialassessment is an assessment the Board, in its discretion, determines necessary if theAssociation's available funds are or will become inadequate to meet the estimated expensesof the Association for a fiscal year. The Board mav levy the entire special assessmentimmediately or levy it in installments over a period the Board determines appropriate. Inaddition, a special assessment against a particular Owner only mav be levied bv the Board asset forth in the Section below entitled "Non-Lien Assessments (Compliance)".,

Section 4.3. Limitation on Regular and Special Assessments. The Board shall levvregular and special assessments sufficient to perform the obligations of the Association asprovided in the Declaration and Bylaws; provided, however, except for assessment increasesnecessary for emergency situations:

(a) the Board may not increase the regular assessments for any fiscal yearunless the Board has complied with the provisions of California CIVIL CODE § 1365.5(preparation and distribution of the budget) I and

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~,.

(b) the Board may not impose a regular assessment that is more than twentypercent (20%) greater than the regular assessment for the Association's preceding fiscalyear nor special assessments which in the aggregate exceed five percent (6%) of thebudgeted gross expense of the Association for the fiscal year,

without the approval of Owners casting a majority of the votes at a meeting or election of theAssociation conducted in accordance with Chapter 6 (commencing with §7610) of Part 3 ofDivision 2 of Title 1 of the California CORPORATIONSCODEand §7613 of the California 80RPORA-TiaNSCODEat which a quorum was present or participated. For purposes of this Section 4.3,"quorum" means more than fifty percent (60%) of the Owners. An emergency situation is anyone of the following:

(1) An extraordinary expense required by an order of a court.

(2) An extraordinary expense necessary to repair or maintain the Project orany part of the Project for which the Association is responsible where a threat topersonal safetv in the Project is discovered.

(3) An extraordinary expense necessary to repair or maintain the Project orany part at the Project for which the Association is responsible that could not have beenreasonably foreseen by the Board in preparing and distributing the pro forma operatingbudget under CIVIL CODE §1365. However, prior to the imposition or collection of anassessment under this Subsection, the Board shall pass a resolution containing writtenfindings as to the necessity of the extraordinary expense involved and why the expensewas not or could not have been reasonably foreseen in the budgeting process, and theresolution shall be distributed to the Members with the notice of assessment.

The term "regular assessment for the Association's preceding fiscal year" as used in thisSection 4.3 is deemed to be the regular assessment which would have existed in the absenceof any subsidy of assessments agreed to be paid by Declarant. Anything in this Section 4.3to the contrary notwithstandinq, the limitation on regular and special assessments shall complywith the laws of the State of California at the time the regular or special assessment is leviedby the Association.

Notwithstanding the above stated limitation against increases in regular assessments:

(i) The Board may increase regular assessments more than 20% if suchincrease was shown on an Association budget approved by the California Department ofReal Estate and if such increase is allowed by California law;•

(ii) Sums assessed against Owners pursuant to the Section below entitled"Non-Lien Assessments (Compliance)" shall not be considered in calculating the increasesin assessments; and

. (iii) Sums assessed against Owners pursuant to the Section below entitled"Sub-metering of Water" shall not be considered in calculating the increases in assess-ments.

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The due dates of assessments shall be as the Board establishes them. TheAssociation shall, upon demand and for a reasonable charge, furnish a certificate signed by an.officer of the Association setting fortn whether the assessments on a specified Condominiumhave been paid. If a certificate states an assessment has been paid, such certificate shall beconclusive evidence of such payment.

Section 4.4. Non-Lien Assessments (Compliance!. The Association may also imposea special assessment aqainst any Owner to reimburse the Association for costs incurred inbringing an Owner and the Owner's Condominium into-compliance with the provisions of theDeclaration, the Bylaws and Association rules and regulations, or as a penalty imposed as adisciplinary measure for failure of an Owner or 'occupants of the Owner's Condominium tocomply with such provisions. Such special assessment may be imposed upon the vote of theBoard after notice and an opportunity for a hearing which satisfy the requirements of Section7341 of the California CORPORATIONSCODE,as set forth in the Bylaws and the Board shall meetin executive session if requested by the Owner being disciplined and the Owner shall beentitled to attend the executive session. Except to the extent such special assessment is toreimburse the Association for the cost of collecting assessments, the special assessment shallnot constitute a lien on the Owner's Condominium and shall be assessed only against theOwner who is or was in non-compliance. The Association shall have lien rights with respectto charges imposed against an Owner which are reasonable late payment fees for delinquentassessments, interest and other charges to reimburse the Association for costs reasonablyincurred (including attorney's fees) in its efforts to collect delinquent assessments.

Section 4.5. Schedule of Monetary Penalties. If the Association adopts a policy ofimposing any monetary penalty, including any fee, on any Owner for violation of thisDeclaration or the rules of the Association, including any monetary penalty relating to theactivities of a guest or invitee of an Owner, the Board shall adopt and distribute to eachOwner, by personal delivery or first-class mail, a schedule of the monetary penalties that maybe assessed for those violations, which shall be in accordance with the authorization forOwner discipline set forth in this Declaration and the Bylaws. The Board shall not be requiredto distribute any additional schedules of monetary penalties unless there are changes from theschedule that was adopted and distributed to the Owners pursuant to this Section.

Section 4.6. Rate of Regular Assessments. Both regular and special assessments shallbe levied upon each Condominium in a uniform amount. However, this Section does not applyto the sums payable by reason of (i) the Section above entitled "Non-Lien Assessments(Compliance), (ii) the Section below entitled "Sub-metering of Water". or (iii) the Section belowentitled "Model Homes".

,Section 4.7. Rate of Special Assessments for Repairs. Any special assessment to

raise funds for the rebuilding or major repair of a portion of the structural Common Area orAssociation Property shall be levied against each Condominium in the Project against whichthe Association's regular assessments have commenced. Such special assessments shall belevied in a uniform amount.

Section 4.8. Date of Commencement of Assessments. The regular assessments shallcommence as to all Condominiums in a particular Phase of the Project on the first day of themonth following the conveyance of the first Condominium to a Retail Purchaser in that Phase.

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A Condominium shall not be subject to any special assessments unless and until regularassessments have commenced against that Condominium.

Section 4.9. Adjustment of Assessments: Due Dates. The Board shall fix the amountof the regular assessments against each Condominium at least thirty (30) days in advance ofeach fiscal year but may change the assessment amount on any subsequent occasion.Although the amount of regular assessments (other than special assessments) shall bedetermined at least annually, commencement of reglJJar assessments against an additionalPhase during the marketing period may cause the regular assessment amounts to change.Unless otherwise determined by the Board, regular assessments shall be due and payable inmonthly installments on the first day of each calendar month. No notice of regularassessments shall be required except for notices of changes in assessment amount or changesin due dates. Written notice of changes in the regular assessments shall be sent by first classmail to every Owner subject thereto not less than 30 nor more than 60 days prior to thechange in assessments becoming due.

Section 4.10. Model Homes. Conveyance of a Condominium which is being used byDeclarant for model home, sales office, design center, construction office or similar purposes(any of which uses are referred to in this Section as "Model Home") shall not commence theregular assessments against such Condominiums or other Condominiums within the Phaseuntil: .

(a) discontinuance of use of such Condominium as a Model Home; or

(b) conveyance of any non-Model Home Condominium in the Phase,

whichever first occurs. During the period of time commencing on the first day of the monthafter conveyance of a Condominium being used by Declarant as a Model Home and ending onthe date regular assessments commence against such Condominium:

(i) Declarant shall be solely responsible to maintain all portions of the Phasein which a Condominium is being used as Model Home; and

(ii) Declarant shall pay to the Association that portion, if any, of thebudgeted reserves for replacement of Common Area and any Association Propertycomponents which is applicable to each Condominium being used as a Model Homewithin the Phase in which the Model Home which has been conveyed is located."Budgeted reserves for replacement of Common Area and any Association Propertycomponents" means and refers to such amounts as are shown to be for such purposeon the budget submitted by Declarant to and approved by the California Department ofReal Estate.

The Board shall have the right to inspect the areas being maintained by Declarantpursuant to this Section to determine that such maintenance meets reasonable standards.

Section 4.11. Effect of Non-Payment of Assessments: Remedies of the Association.Any assessment made in accordance with this Declaration (including lien and non-lienassessments) shall be a debt of the Owner of a Condornin.urn from the time the assessmentis due. Any assessment not paid within fifteen (15) days after the due date shall be

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delinquent. Any assessment not paid within thirty (30) days after the due date shall bearinterest at the rate of twelve percent (12%) per annum from thirty (30) days after the due dateuntil paid in full. In addition to charging interest, the Association shall have the right to imposea late charge on unpaid assessments in an amount not exceeding the greater of $10.00 or10% of each assessment which is fifteen (15) days delinquent. At any time after any assess-ments levied by the Association affecting any Condominium have become delinquent, theBoard may file for recording in the Office of the County Recorder of the County of San Diegoa notice of delinquency as to such Condominium, which notice shall state all amounts whichhave become delinquent with respect to such Condominium and the costs (including attorney'sfees), interest and late charges which have accrued thereon, the amount of any assessmentsrelating to such Condominium which is due and payable although not delinquent, a descriptionof the Condominium with respect to which the delinquent assessments are owed, the nameof the record or reputed record Owner of such Condominium, and the name and address of thetrustee authorized by the Association to enforce the lien by sale. Such notice shall be signedby an officer of the Associa'tion or its authorized agent.

Immediately upon recording of any notice of delinquency pursuant to theforegoing provisions of this Section, the amounts delinquent, as set forth in such notice,together with the costs (including attorney's fees), late charges and interest accruing thereon,shall (except as provided in the Section above entitled "Non-lien Assessments (Compliance)")be and become a lien upon the Condominium described therein, which lien shall also secureall other payments and/or assessments which shall become due and payable with respect tosaid Condominium following such recording; and all costs (including attorney's fees), latecharges and interest accruing thereon. When a notice of assessment has been recorded, suchassessmènt shall constitute a lien on each respective Condominium prior and superior to allother liens, except (i) all taxes, bonds, assessments and other levies which, by law, would besuperior thereto, and (ii) the lien or charge of any first Mortgage of record.

In the event the delinquent assessments and all other assessments which havebecome due and payable with respect to the same Condominium, together with all costs(including attorney's fees), late charges and interest which have accrued on such amounts, arefully paid or otherwise satisfied prior to the completion cf any sale held to foreclose the lienprovided for in this Article, the Board shall record a further notice, similarly signed, stating thesatisfaction and releasing of such lien.

Each assessment lien may be foreclosed in the same manner as the foreclosureof a mortgage upon real property under the laws of the State of California, or may be enforcedby sale pursuant to Sections 2924, 2924(b), 2924(c) and 1367 of the California CIVILCODE,and all other applicable statutes, and to that end a power of sale is hereby conferred upon the

•Association. The Association, acting on behalf of the Condominium Owners, shall have thepower to bid for the Condominium at a foreclosure sale, and to acquire and hold, lease,mortgage and convey the same. Suit to recover a money judgment for unpaid assessments,rent and attorney's fees shall be maintainable without foreclosing or waiving the lien.

Section 4.12. Subordination of the Lien to First Deeds of Trust and First Mortgages.The lien of the assessments, interest, costs, attorney's fees and late charges shall besubordinate to the lien of any first Mortgage upon any Condominium. Sale or transfer of anyCondominium shall not affect the assessment líen. However, the sale or transfer of anyCondominium pursuant to judicial or non-judicial foreclosure of a first Mortgage shall extinguish

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: <

the lien of such assessments as to payments which became due prior to such sale or transfer.However, the Association may treat as Common Expenses, assessable against all theCondominiums, any unpaid assessments for which lien rights have terminated. No sale ortransfer shall relieve such Condominium from lien rights for any assessments thereafterbecoming due.

Section 4.13. Estoppel Certificate. The Association shall furnish, upon demand by anyperson, a certificate signed by an officer of the Association setting forth whether theassessments on a specified Condominium have been paid. A properly executed certificate ofthe Association as to the status of assessments on a Condornlnlum is binding upon theAssociation as of the date of its issuance.

Section 4.14. Non-Use. No Owner shall be exempt from personal liability forassessments levied by the Association, nor shall any Condominium be released from the liensand charges of assessments because of the non-use of the Association Property or CommonArea nor because of abandonment of the Condominium.

Section 4.15. Taxation of Association. In the event that any taxes are assessed againstthe Common Area, Association Property or the personal property of the Association, ratherthan against the individual Condominiums, the taxes shall be added to the regular assessmentsand, if necessary, a special assessment may be levied against the Condcmlníur-:' ô.., nI"' amountequal to the taxes, to be paid in two (2) installments, thirty (30) days prior to the due date ofeach tax installment.

Section 4.16. Payment of Assessments By Declarant. Declarant shall pay all assess-ments levied by the Association against any Condominium owned by Declarant at the sametime, in the same manner and in the same amount as any other Owner.

Section 4.17. Capitalization of Association. Upon conveyance to a Retail Purchaser ofCondominium in Phase 1 from Declarant, the Retail Purchaser shall contribute to the capitalof the Association an amount equal to two times the then regular assessment for thatCondominium as determined by the Board. This amount shall be deposited by the RetailPurchaser into the purchase and sale escrow and disbursed therefrom to the Association atclose of escrow. Amounts paid pursuant to this Section are not advance payments of assess-ments and are in addition to and not in lieu of regular and special assessments of theAssociation. The capital contributions will be the Association's funds and may not be usedby Declarant to defray its expenses, construction costs or assessments. The obligation tomake capital contributions pursuant to this Section shall apply to each Condominium in Phase1 only and shall not apply to any Condominium located in any other Phase. This Section shallnot apply to any resales of any Condominium.

Section 4.18. Sub-metering of Water. It is currently intended the domestic water willbe supplied to the Residential Units through master water meters installed within the Projectand that water and sewer services will be billed to the Association based on readings from themaster meters. However, each Owner will be obligated to reimburse the Association in theamounts reasonably billed by the Association, or its contracting company, for the cost of thewater and sewer services supplied to the Owner's Residential Unit based on the reading fromthe sub-meter which monitors water consumption from the Owner's Residential Unit. In billingeach Owner, the Association or its contractor shall utilize water consumption information from

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the sub-meters and the billing information which is provided by the supplier of water and sewerservices. Should the supplier of such services charge penalties for excessive waterconsumption or should the supplier otherwise charge different rates for different levels ofconsumption, the Association may in any reasonable manner utilize such information in itsallocation and determination of reimbursement amounts pursuant to this Section.

The Association shall have the right to enter into an agreement with a privatewater metering service to (i) read the sub-meters, (ii) prepare and send the bills and (iii) collectsums billed to each Owner on behalf of the Association. Alternatively, the Association mayitself do any such billing activities for its reimbursement of amounts applicable to eachResidential Unit. In no event shall the charge for reimbursement for water or sewer servicesbe considered to be a part of the regular assessments. The reimbursement amounts so billed(whether billed by the Association or a private water metering service) shall be the personalobligation of the persons who owned the Residential Unit during the period of time the waterbeing billed for was supplied fa the Residential Unit. The charges for water or sewer servicesshall not constitute a lien on the Owner's Condominium. No Owner shall interfere with thereading of such sub-meters nor in any manner change or disconnect such sub-meters. TheAssociation is hereby granted an easement for it or its agents and contractors to read, repair,realign or replace such sub-meters, wherever located.

Section 4.19. Uncompleted Facilities. The Board shall exclude from assessments thatportion which is for the purpose of defraying expenses and reserves directly attributable to theexistence of an Association Property or Common Area improvement that is not complete atthe time the assessments commence. Any such exemption from assessments attributable toan Association maintained facility shall be in effect only until the earliest of the followingevents:

(a) The improvement has been completed as evidenced by the recordationof a Notice of Completion; or

(b) The improvement has been installed and placed into use.

Section 4.20. Maintenance Agreement. During the period that the Maintenance Agree-ment remains in effect, the Board shall exclude from assessments (il those items which theDeclarant is obligated to maintain or provide pursuant to the Maintenance Agreement and (ii)reserves applicable to the recreational improvements within the Recreation Area Module (theRecreation Area Module is shown and defined on the Condominium Plan for Phase 1).

ARTICLE V

POWERS AND DUTIES OF ASSOCIATION

The Association shall have those powers and duties set forth in its Bylaws or the Articles.

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ARTICLE VI

USE OF CONDOMINIUMS

Section 6.1. Residential Purposes. Each Condominium shall be improved, used andoccupied for private, sinpie-famllv dwelling purposes only, and shall be not be used for anycommercial purposes. However, the provisions of this Section shall not preclude professionalor administrative occupations or similar home office use without external evidence thereof, forso long as (i) such occupations are conducted in conformance with all applicable governmentalordinances, (il) such occupations are merely incidental to the use of the Residential Unit as aresidence, and (iii) the patrons or clientele of such professional or administrative occupationdo not regularly visit or conduct business on the Residential Unit. Declarant may use any ofthe Condominiums owned by Declarant as model homes, design centers, construction officesand sales offices until all the- Condominiums in all Phases of the Project are sold and conveyedby Declarant to Retail Purchasers.

Section 6.2. Lease of Condominium. Each Owner shall have the right to lease theOwner's Condominium provided that such lease is in writing. Each tenant shall be bound byand obligated to the provisions of this Declaration, the Bylaws and the rules and regulationsof the Board, and a tenant's failure to do so shall be deemed a default under the lease. NoOwner shall lease a Condominium for transient or hotel purposes. Any such lease which iseither for a period of less than thirty (30) days or pursuant to which the tessar provides anyservices normally associated with a hotel shall be deemed to be for transient or hotel purposes.Should the Board so request an Owner to do so, the Owner shall forward an executed copyof a lease to the Owner's Condominium to the Board together with the telephone number andstreet address of the residence of the Owner. Other than as provided in this Section, thereshall be no restriction on the right of any Owner to lease a Condominium.

Section 6.3. Use Not to Impair Insurance. No Condominium shall be occupied,improved or used for any purpose or in any manner which shall cause such Condominium. orany Condominium to be uninsurable against loss by fire or the perils of the extended coverageendorsement to the California Standard Fire Policy form, or cause any such policy or policiesrepresenting such insurance to be canceled or suspended, or the company issuing the sameto refuse renewal thereof or to increase the premium therefor.

Section 6.4. Animals. No animals, fowls, reptiles, insects or poultry shall be kept byany person within any Condominium or elsewhere within the Project, except that not morethan two (2) of each kind of common domesticated household pets, such as dogs, cats orbirds, mav be kept within each Residential Unit. No animals shall be kept, bred or raised withinthe Project by any person for commercial purposes or in unreasonable quantities. Each personbringing or keeping a pet within the Project shall be liable pursuant to the laws of the State ofCalifornia to third persons for any damage to persons or property caused by the pet broughton or kept within the Project by such person. The Board shall have the right to require theremoval from the Project of any pet which, in the Board's opinion, constitutes an unreasonableannoyance to any Condominium occupant and no pet shall be allowed within the CommonArea or Association Property except as permitted by the Board.

Section 6.5. Nuisance. No Condominium shall be used in such manner as to obstructor interfere with the enjoyment of occupants of other such areas or annoy them by

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unreasonable noise or otherwise, nor shall any nuisance be committed or permitted to occurin any portion of the Project. For example, each Owner shall take reasonable steps to preventthe accidental triggering of the house or car alarm(s), if any, used by the Owner or theoccupants of his or her Condominium. The Board shall have the right to adopt rules andregulations regarding such alarms, including rules which pertain to the length of time that suchalarms may be programmed to continue ringing.

Section 6.6. Sign Control. An Owner may place one (1) sign of reasonable andcustomary dimensions in the window of the Owner's residence to advertise the Condominiumfor sale or rent. No other signs may be placed anywhere in the Project without the priorwritten permission of the Board. All signs must conform with applicable City of San Diegoordinances. No signs shall be erected or displayed anywhere in the Project except signs placedby authority of the Board. Anything contained in this Declaration to the contrary notwith-standing, Declarant shall have the right to install and maintain in any Condominium owned orleased by it, on the Asseclatfon Property and Common Area during the sales period set forthin the Section above entitled "Residential Purposes", such signs, poles, flags, banners andadvertisements as it deems appropriate in connection with its sales program for the sale to thepublic of Condominiums.

Section 6.7. Outside Antennae. No Owner shall install or cause to be installed anytelevision or radio antenna, satellite dish or other similar electronic receiving or broadcastingdevice on the exterior or outside of any residence, unless the device has been expresslyapproved by the Board; provided, however, a small satellite dish not larger than thirty-six inch(36") diameter, which does not extend beyond the height of the chimney(s) on the roofs of theresidence within the Residential Unit, shall be permitted. However, neither Declarant nor theBoard makes any representation that the PRD Permit issued by the City allows satellite dishantennas to be installed.

Section 6.8. No Owner Modification to Association Property or Common Area. Exceptas otherwise specifically provided in this Declaration, no Owner shall have the right to alter,paint, decorate, remodel, landscape or adorn any part of the Association Property or CommonArea without the written consent of the Board. For example, no Owner shall have the rightto change any landscaping within the Front Yard Maintenance Area portion of the Owner'sResidential Unit.

Section 6.9. No Offensive Activity: Quiet Enjoyment. No Owner shall permit or sufferanything to be done or kept within the Project which will obstruct or interfere with the rightsof quiet enjoyment of the other residents in the Project, or annoy them by unreasonable noisesor otherwise, nor shall any Owner commit or permit any nuisance in the Project or commit or•suffer any immoral or illegal act to be committed in the Project. Each Owner shall comply withall health requirements and of all other governmental regulations with respect to his or herResidential Unit. No clotheslines, refuse, containers, wood piles, storage boxes, tools orequipment shall be placed or permitted to remain on any Residential Unit unless screened fromthe view of other residences and Yards and streets by a fence or other appropriate screen.

Section 6.10. Use of Association Property and Common Area. Except as otherwiseprovided in this Declaration, the Association Property and Common Area shall be improved andused only for the following purposes:

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(a) Affording vehicular passage and pedestrian movement within the Project,including access to the Condominiums;

(b) Recreational use by the Owners and occupants of Condominiums andtheir guests, subject to rules established by the Board;

(c) Beautification of the Project and providing privacy to the residents of theProject through landscaping and such other means as the Board shalf deem appropriate:

(d) Parking of automotive passenger vehicles in areas provided therefor asmay be designated and approved by the Board by such persons, upon such terms andconditions as may from time to time be determined by the Board; the rules andregulations of the Board may be enforced by the Board, which shall have the right andpower to remove vehicles from the Project at the cost of the vehicle owner and to levy,monetary penalties as provided in this Declaration. Owners who violate parkingrestrictions are subject to tow-away charges and Association imposed fines as may bedeterminer; by the Board. The Board shall set a minimum fine of $50.00 for parkingviolations;

(e) As Exclusive Use Areas to be used in the manner described in thisDeclaration or a Declaration of Annexation;

(f) By Declarant for marketing and construction activities; and

(g) Those additional purposes which may be allowed by the Board.

No Owner shall use or interfere with use of the Common Area or Association Property in anymanner which shall increase the Association's cost of insurance or which shall result incancellation of insurance or making insurance unavailable.

Section 6.11. Owners Liable for Damage. Each Owner shall be legally liable to theAssociation for all damages to the Association Property caused by such Owner, such Owner'sguests (or otherllcensees) or any occupant of such Owner's Residential Unit as such liabilitymay be determined under California law. Each Owner, shall be responsible for compliance withthe provisions of this Declaration, the Bylaws and rules and regulations of the Board by suchOwner's licensees and occupants of such Owner's Condominium.

Section 6.12. Exclusive Use Areas. Each Exclusive Use Area shall be appurtenant tothe Residential Unit it serves. Conveyance of a Residential Unit will automatically convey alf,appurtenant Exclusive Use Areas. No Owner shall make any improvements to an ExclusiveUse Area unless such improvements have been approved by the Board.

Section 6.13. Use of Exclusive Use Are,as. The Owners of Parking Exclusive Use Areaswill be entitled to use the same for parking a private passenger vehicle only. No largecommercial-type vehicle, recreational vehicle (including, but not limited to, any camper, motorhome, trailer, boat trailer, mobile home or other reasonably similar vehicle, boat or aircraft),or any vehicle other than a private passenger vehicle, shall be parked within a ParkingExclusive Use Area. No Exclusive Use Areas other than for Parking purposes are currentlyplanned for the Project. However, should Exclusive Use Areas for additional purposes be

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established in later Phases, those purposes (and maintenance responsibilities therefor) shall beset forth in the applicable Declaration of Annexation for the Phase in which the additionalExclusive Use Areas are located. Use of an Exclusive Use Area shall be subject to the Board'sright to restrict those activities and improvements which it reasonably believes would haveadverse structural, drainage or maintenance impacts or adverse visual or noise impacts onother Owners, and no Owner shall make any improvements to any Exclusive Use Area unlessand until the Board approves the plans therefor. The Board shall have the right from time totime to establish regulations regarding the content of plans for improvements and theprocedure of filing plans witn the Board. Should an Owner file plans with the Board incompliance with all applicable requirements and should the Board fail to approve, conditionallyapprove or disapprove such plans within forty-five (45) days, the plans shall be deemedapproved by the Board. The Board shall have the right to allow Owners to exclusively useportions of the Association Property above or below the vertical limits of any Exclusive UseArea.

Each Owner of a Parking Exclusive Use Area shall be responsible to keep andmaintain the Exclusive Use Area he or she owns in clean condition and free from debris andoil stains. The Association shall provide all other maintenance of the area.

Section 6.14. Exterior Changes. No Owner shall make any improvements or changesto any improvements within his or her Residential Unit which could be seen from outside theResidential Unit unless and until the Board has approved plans of such improvements orchanges showing such detail as the Board or its consultant deems appropriate. Any suchapproval may be conditional. The Board shall have forty-five (45) days to approve ordisapprove such plans from the date the plans, in form required by the Board, are received bythe Board. Failure of the Board to approve or disapprove the plans within such 45 day periodshall be deemed an approval. The Board shall have the right to hire a civil engineer, landscapearchitect or other expert consultant as the Board deems appropriate to evaluate plans andinspect the improvements or changes. The Owner shall be required to pay the cost of suchconsultant. The Board may require an Owner to deposit the estimated cost of such consultantat the time plans are submitted for Board approval.

It is intended that the Board have jurisdiction to review and approve any changein color, roof type, windows, room additions, patio covers, Yard improvements and similarmatters. It is unlikely that room additions would be approved for this Project.

There are expansive soils within this Project and !t shall be an Owner'sresponsibility to investigate and determine by consulting with an appropriate expert (e.g., asoils eng,ineer) what special precautions must be taken before installing any Yard or otherimprovements.

No Owner shall have any right whatsoever to make any change or improvementto any Front Yard Maintenance Area or other Association Property.

Section 6.15. Use. Changes and Improvements to Yards: Drainage. Each Owner shallhave the right to use his or her Yard for residential yard purposes. Unless the applicableCondominium Plan designates a drainage improvement for Association maintenance, eachOwner shall be responsible to maintain and repair any subsurface drainage improvementsinstalled by Declarant in the Owner's Yard, and no Owner shall interfere with the surface or

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any subsurface drainage of his er her Yard as established by Declarant. All imprevementsinstalled by an Owner in his er her Yard shall previde fer preper and adequate drainage asdetermined by the Beard. In the event a Cendeminium Plan designates a drainageimprovement fer Associatíon maintenance, the Association and persons designated by theAssociation shall have the right to. enter the applicable Yards fer such purpose, Should anOwner fail to. maintain pre per drainage within his or her Residential Unit, then the Associationshall have the right to. enter the Residential Unit to. correct the drainage deficiency. The Ownerwho. failed to. perferm his er her ebligatien to. rnaintgin preper .drainage shall reimburse theAssociation fer its reasonable costs so. incurred.

Each Owner assumes all risks which may result frem imprevements er changeshe er she makes to. his er her residence, Yard er Exclusive Use Area and each Owner indemni-fies and helds harmless the Association, the Beard, Declarant and each ether Owner from anyclaim, demands, liabilities, judgments, atterney's fees and ether ebligatiens which arise eutof er are incurred in connection with the changes er imprevements.

No. Owner shall make any improvements er changes to. imprevements to. theFront Yard Maintenance Area portion of his er her Residential Unit.

Section 6.16. Parking Within Residential Units. No Owner in the Project shall park, storeer keep any vehicle en his er her Residential Unit, except whelly within the garage er in suchether location as may have been improved by Declarant fer vehicular parking- by the Owner asshewn en the Cendeminium Plan (e.g., Residential Units with one-car garages may have suchareas impreved en the driveways er within an Exclusive Use Area as shewn en the applicableCondominium Plan). No.Owner shall park, store er keep any large cemmercial-type vehicle, anyrecreational vehicle (including, but net limited to, any camper, meter heme, trailer, beat trailer,mobile heme er ether reasenably similar vehicle, boat er aircraft), er any vehicle ether than aprivate passenger vehicle within the Project unless parked wholly within a garage. Variancesfrem the restrictions centainedin this Sectien may be permitted by the Beard if the sterageof the vehicle is screened frem view from streets and ether Residential Units in a mannersatisfactery to. the Beard. Each Owner shall maintain his garage so that it is readily availablefor parking the number of vehicles for which the garage was eriginaIly designed. All garagedoers shall remain closed at all times, except as reasenably required fer entry to. er exit fromthe garage. No. Owner shall conduct major repairs, painting er major restorations of any motervehicle of any kind whatsoever within his garage, upon his Residential Unit or elsewhere withinthe Project, except fer emergency repairs and then onlv to. the extent necessary to. enablemovement of the vehicle to. a pre per repair facility. All vehicles shall be parked in cempIiancewith applicable gevernmental erdinances.

Section 6.17. Right of Access. Each Owner shall have an unrestricted right of accessfor egress and ingress to. and frem such Owner's Condominium.

Section 6.18. Restricted Use of Trailers. Etc. No. tent, shack, shed, trailer, camper,meter heme, beat er structure of any kind shall be used as a residence er dwelling. Subjectto the time limitations stated in the Sectien above entitled "Residential Purposes", nethingherein stated shall restrict Declarant and its agents, contraeters and employees frem usingtrailers as ternporarv structures fer uses incidental to. the sales and constructlon within theProject.

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Section 6.19. Windows. No window in any residence shall be covered in whole or inpart, inside or outside, with aluminum foil, newspaper, reflective tint or paint. Any temporarywindow coverings must be replaced with permanent window coverings no later than onehundred and twenty (120) days after a residence first becomes occupied by the initialoccupant. Unless the Board allows otherwise, the backing of widow coverings shall be neutralin color.

Section 6.20. Fireplaces: Gas Logs Only Should Declarant have provided gas logs ina fireplace, the Owner shall keep the gas logs in good condition and the gas logs shall not beremoved except for replacement or repair. No wood or other substance (other than gas) shallbe burned in any fireplace which is specified for use of gas logs only.

Section 6.21. No Attachments or Changes to Adjoining Residence. No Owner shallattach any item to the exterior surface of a residential structure which adjoins the Owner'sResidential Unit. However, an Owner shall have the right to replace such Owner'simprovements which Declarant may have attached to the exterior of the adjoining residence.No Owner shall paint, decorate or otherwise change the exterior surface of a residentialstructure which adjoins the Owner's Residential Unit.

Section 6.22. Limitation on Basketball Hoops. No Owner shall place a basketball hoopanywhere in his or her Residential Unit (including the Yard) unless the Board gives its priorwritten consent to the location. Such consent may be conditioned on limiting the hours ofusage and other reasonable conditions.,

Section 6.23. Commercial Activity. No professional, commercial or industrial operationsof any kind shall be conducted in or upon any Residential Unit, except (il as allowed by Section6.1 above and (ii) such temporary uses as shall be permitted by Declarant while the Projectis being developed and Condominiums are being sold or leased by Declarant.

Section 6.24. Compliance With City Requirements. The Association and each Ownershall at all times comply with applicable City ordinances, regulations and permits, including,but not limited to, the requirements of Plarmed Résidentiel Permit No. 95-0599 (the "PROPermit") issued by the City of San Diego and recorded on July 12, 1996 as Document No.1996-0351509, Official Records of San Diego County, California. The following are some (butnot all) of the requirements set forth in the PRO Permit:

(a) Each parking space in the Project shall be permanently maintained andnot converted for any other use at any time.

(b) Exterior radio or television antennas shall be prohibited, except for onemaster antenna for the Project (there are no plans for a master antenna).

(c) No building additions, including patio covers, shall be permitted unlessapproved by the Development Services Manager. Patio covers may be permitted only ifthey are consistent with the architecture of the dwelling unit and do not encroach intoBrush Management zone areas which prohibit the same.

(dl All private outdoor lighting shall be shaded and adjusted so as to fall onlyon the same premises where such lights are located.

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(e) All accessory structures, including those less than 100 square feet inarea, require the approval of the Development Services Manager and must meet zoningcriteria and Planned Residential Development Permit Guidelines and Standards.

(f) All mechanical equipment shall be completely screened.

(g) All approved landscaping shall betmaintained in a disease, weed and litterfree condition at all times and shall not be modified or altered unless the PRD Permit hasbeen amended. Modifications such as severely pruning or "topping" of trees are notpermitted unless specifically noted in the PRO Permit. Damaged landscaping is to berepaired or replaced.

(h) Brush management conditions and Brush Management Zones are imposedon the Real Property and on certain Residential Units by the PRD Permit. Each Ownershall at all times comply with each Brush Management Zone requirement applicable tothe Owner's Residential Unit. The Association shall at all times comply with each BrushManagement Zone requirement applicable to the Association Property or the CommonArea.

Section 6.25. Air Conditioners. No Owner shall install an air conditiC'.--il'"''} svstern orreplace any system within his or her Residential Unit without the prior written approval of theBoard which shall have the right to approve or disapprove the size, shape, noise level andproposed location of the air conditioning unit. Any outside portion of any such system shallbe completely screened.

Section 6.26. Solar Heating. Each Owner shall have the right to place and maintain onhis or her residence or Yard (but not within the Front Yard Maintenance Area) equipment andfacilities related to the installation and maintenance of individual solar heating systems. Theinstallation and maintenance of any solar heating system by an Owner shall be subject to allapplicable zoning regulations, the, UNIFORMBUILDINGCODEand associated ordinances. No solarheating panels or other solar energy collection equipment shall be installed on any portion ofany Residential Unit unless the equipment is installed in a location and manner as to bescreened from the view of other persons in the Project to the greatest degree practicablewithout significantly decreasing its efficiency. No person shall install any solar heating panelor equipment without the prior written consent of the Board which shall have the right toreasonably restrict the nature, size, shape, color, style, materials or location of any such panelsor equipment within the Project, subject to the' provisions of California CIVILCODE§714 as thesame mav be amended from time to time.

Section 6.27. No Easements for View Purposes; Disclaimer. No representation orassurance whatsoever is given concerning the view, if any, from a particular Residential Unit.There are no express or implied easements appurtenant to any Residential Unit for viewpurposes, or for the passage of light and air across any other Residential Unit or any propertynot within the Project, regardless of whether such Residential Unit or property is owned byDeclarant. Each Owner, by accepting a deed to a Condominium, expressly acknowledges andagrees that walls and fences constructed by Declarant, and further construction within theProject and in the immediate vicinity of the Project, may impair the view from the Owner'sResidential Unit and each Owner expressly consents to any view impairment.

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Section 6.28. Declarant's Improvements. Nothing in this Article or elsewhere in thisDeclaration shall limit the right of Declarant to construct or alter any improvement to anyportion of the Project owned by Declarant, or to which Declarant has reserved a constructioneasement, prior to the completion and sale of the Residential Units in the entire Project.

Section 6.29, Post-Tensioned Slabs. It is anticipated that some or all of the residenceswithin the Project will be constructed with post-tensioned concrete slabs ("System") becauseof expansive soils. The System involves placing steel cables under high tension in the concreteslab located beneath the residence. Each Owner shall be responsible for determining whetherhis or her residence has been constructed with a System. Any attempt by an Owner or otherperson to alter or pierce the foundation (e.g., saw cutting or drilling to install a floor safe) coulddamage the integrity of the System and/or cause serious injury or damage to persons andproperty. No Owner shall cut into or otherwise disturb the System. Neither Declarant nor anycontractor of Declarant shallbe responsible for any damage or injury resulting from or arisingin connection with any alteration or piercing of the slab or the foundation of any residence.Each Owner shall hold Declarant harmless from and indemnify Declarant against all claims,demands, losses, costs (including attorney's fees), obligations and liabilities arising out of orin connection with the failure of the Owner to comply with the provisions of this Section.·

Section 6.30. Trash Removal. Each Owner shall keep garbage or trash only in sanitaryand suitable containers and each Owner shall remove all trash and garbage from his ResidentialUnit. Each Owner shall comply with any policies adopted by the Board regulating the size,type and location of trash containers.

ARTICLE VII

RESPONSIBILITIES OF MAINTENANCE

Section 7.1. Maintenance by Owners. Each Owner of a Condominium shall beresponsible for the maintenance and repair of:

(a) Residential Units. All portions of the Owner's Residential Unit, including,but not limited to, the interior and exterior, roof and foundation of the residence and theYard, other than those improvements which the Association is obligated to maintainwithin the Front Yard Maintenance Area.

(b) Flat Work. All flat work (e.g., walkways and driveways or portions ofdriveways) located within the Residential Unit regardless of whether the same are withina Front Yard Maintenance Area.

(c) Lateral Connections; Heating and Cooling Systems. The plumbing,electrical, cable television, water heating systems, heating systems and air conditioningsystems (if any), and other systems servicing the Owner's Condominium and locatedeither within or without the outside perimeter of the Residential Unit so long as thosesystems are used exclusively by such Owner and not in common another Owner(s).

(d) Exclusive Use Areas. Any Exclusive Use Area appurtenant to theCondominium; however, with respect to Exclusive Use Areas for outside parking, the

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Owner's sole responsibility shall be to (i} keep the Exclusive Use Area clean and free fromdebris and oil stains and (ii} reimburse the Association for damage or extraordinarymaintenance caused by the Owner.

(e) Interior of Solid Fences and Walls. The interior surface of any solid fenceor wall which adjoins the Owner's Residential Unit regardless of whether the Associationis obligated to maintain the exterior and structure of such fence or wall.

..(f) Lateral Fences and Walls. Should a fence or wall exist between two

Yards, unless the applicable Condominium Plan or a Fence Maintenance Exhibit attachedto a Declaration of Annexation designates the fence or wall for maintenance by theAssociation, the adjoining Owners shall be jointly and severally responsible to keep thestructure of the fence or wall in good condition and repair and share equally the cost ofmaintenance, repair and replacement of such fence or wall.

(g) Designated Areas Shown on Condominium Plan. An Owner shall beresponsible to maintain, repair and replace any other areas or impro , ements designatedon the applicable Condominium Plan for Owner maintenance.

Section 7.2. Failure to Maintain. In the event an Owner defaults in his or hermaintenance or repair obligations, the Board may give written notice of such default, statingwith particularity the work of maintenance or repair the Board finds to be required andrequesting the same be completed in a reasonable period of time as specified in the notice.In the event the Owner fails to complete such maintenance or repair within the period specifiedin the notice, the Board may cause such work to be completed and assess the Owner the costthereof.

Section 7.3. Maintenance by Association. Except for those items of maintenancewhich the Owner is required to perform pursuant to the Section above entitled" Maintenanceby Owners", the Association shall preserve, repair and maintain:

(a) Association Property. The Association Property il:e., private streets,drives, street lights, slopes, recreational facilities, sidewalks, landscaping, passive openspace, project identification, drainage and sewage systems which are private and theeasements to the Front Yard Maintenance Areas). Declarant hereby reserves on behalfof the Association the exclusive right and obligation to irrigate, maintain and replace thelandscaping and any drainage facilities within the Front Yard Maintenance Areas. Thiseasement shall become effective as to each Phase upon commencement of theAssociation's regular assessments with respect to such Phase. The applicable Owner,,and not the Association, shall be responsible to maintain any flat work improvementswithin a Front Yard Maintenance Area, such as walkways and driveways which may belocated within the Front Yard Maintenance Area.

(b} . Common Area. The Common Area, including other improvements locatedwithin the Common Area.

(c) Areas Designated on The Condominium Plan. Any area or improvementshown on an applicable Condominium Plan as being maintained by the Association (e.g.,certain fences and walls such as perimeter fences and walls).

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The Association shall at all times keep and maintain those areas which it isobligated to maintain in good appearance and condition and free from hazards. Furthermore,should the City so request, the Association shall enter into an agreement with the City of SanDiego which grants to the City certain rights (subject to due process safeguards) in the eventthe Association fails to maintain areas it is obligated to maintain to established standards.

Each Owner shall reimburse the Association for those costs incurred which resultfrom the Condominium occupants' excessive or neglectful use of the Common Area orAssociation Property.

ARTICLE VIII

SEPARATION OF INTERESTS AND PARTITION PROHIBITED

Section 8.1. No Separation of Interests. No Owner may sell, assign, lease or conveyany portion of his or her Condominium separate or apart from the entire Condominium. Anyconveyance, encumbrance, judicial sale or other transfer (voluntary or involuntary) of anyportion of his or her Condominium separate or apart from the entire Condominium shall bevoid.

Section 8.2. No Partition. There shall be no termination of the Project and theCommon Area of the Project shall remain undivided with no judicial partition thereof except:

(a) With the approval, after substantial destruction or condemnation of theProject occurs, of at least 67 % of the total voting power of the Association and approvalby Eligible Mortgage Holders who represent at least 61 % of the Condominiums that aresubject to Mortgages held by Eligible Mortgage Holders; or

(b) With the approval, for reasons other than substantial destruction orcondemnation of the Project, of at least 67% of the total voting power of the Associationand approval by Eligible Mortgage Holders who represent at least 67 % of theCondominiums that are subject to Mortgages held by Eligible Mortgage Holders; or

(c) As allowed by California law, including CIVIL CODESection 1369, as thesame may be amended from time to time.

An Eligible Mortgage Holder who receives a written request to give suchapprovals who does not deliver or mail the requesting party a negative response within thirty(30) davs shall be deemed to have given such approval provided such written request wasdelivered by certified mail or registered mail with "return receipt" requested.

Nothing in this Section shall be deemed to prohibit partition of a cotenancy ina Condominium.

Section 8.3. Power of Attorney. The Association is hereby granted an irrevocablepower of attorney to sell the Project for the benefit of all the Owners thereof when partitionof the Owners' interests in the Project may be had pursuant to this Article. The power ofattorney herein granted may be exercised upon the vote or written consent of Owners who

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own at least fifty percent (50%) of the Condominiums in the Project. Such power of attorneymay be exercised by any two (2) Members of the Board who are hereby authorized to recorda certificate of exercise in the Office of the County Recorder of the County of San Diego,which certificate shall be conclusive evidence thereof in favor of any person relying thereonin good faith; provided, however, that the power of attorney shall not apply to the Secretaryof the United States Department of Veterans Affairs, an officer of the United States ofAmerica.

ARTICLE IX -

DAMAGE. DESTRUCTION AND CONDEMNATION OFCOMMON AREA OR ASSOCIATION PROPERTY

Section 9.1. Damage or Destruction. If any portion of the Common Area orAssociation Property is damaged or destroyed by fire or other casualty, then:

(a; If the cost of repairing or rebuilding does not exceed the amount ofavailable insurance proceeds by more than five percent (5%) of the budgeted grossexpenses of the Association, the Board shall contract to repair or rebuild the damagedportions of the Common Area or Association Property. Such repair or rebuilding will bein substantial accordance with the original construction unless it is impractical to do so.As stated in Section 9.3 below, it is not expected that the Association will obtain fireinsurance covering the Common Area or Association Property.

(b) If the cost óf repairing or rebuilding exceeds the amount of availableinsurance proceeds by more than five percent (5% l of the budgeted gross expenses ofthe Association, then:

(il The Board shall obtain at least two competitive bids for the repairor rebuilding not more than forty-five (45) days after such damage occurs;

(ii) The Board shall use its best efforts to cause a special meeting ofthe Members to occur no later than ninety (90) days after such damage occurs.The notice of such meeting shall state that the reason for the meeting is toconsider repair or rebuilding the portion of the Project which was damaged andwhether to impose a special assessment to repair or rebuild. Such notice shallbe accompanied with a summary of the competitive bids for repair orreplacement.

(iii) Unless a majority of the voting power of the Association votesagainst the Board doing so, the Board shall within 180 days after such damageenter into a contract for repair or replacement and impose special assessmentstherefor pursuant to its Resolution to do so in accordance with the Sectionentitled "Limitation on Regular and Special Assessments" of the Article aboveentitled "COVENANT FOR MAINTENANCE ASSESSMENTS TO ASSOCIATION".For purposes hereof, a "Majority of the voting power of the Association" means:(A) a majority of the voting power of each Class of Members if the two-classvoting structure is in effect, or (B) a majority of the total voting power if onlyone-class voting is in effect.

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(iv) Nothing herein stated is intended to prevent the Board fromrepairing or replacing tne Common Area or Association Property and imposinga special assessment therefor pursuant to its authority to do so in accordancewith the Section entitled "Limitation on Regular and Special Assessments" ofthe Article above entitled "COVENANT FOR MAINTENANCE ASSESSMENTS TOASSOCIATION" .

(c) If the ûwners vote to not repair or rebuild the Common Area orAssociation Property, then each Owner (and the Owner's Mortgagee(s) as theirrespective interests shall then appear) shall be entitled to receive that portion ofinsurance proceeds equal to the proportion of the decrease in fair market value of theOwner's Condominium as compared to the aggregate decrease in fair market values ofall the Condominiums in the Project caused by such damage or destruction. Fair marketvalue shall bedeterrriined by an MAl (Member Appraisal Institute of the AmericanInstitute of Real Estate Appraisers) appraiser selected by the Board and hired by and atthe expense of 'the Association. Should dispute arise as to the distribution of insuranceproceeds, the dispute shall be decided by arbitration by the American ArbitrationAssociation pursuant to its Commercial Rules of Arbitration.

(d) If a bid to repair or rebuild is accepted, the Board shall levy a specialassessment against each Condominium pursuant to the Section entitled "Rate of SpecialAssessments For Repairs" of the Article above entitled "COVENANT FOR MAIN:ENANCEASSESSMENTS TO ASSOCIATION" for purposes of raising funds for the rebuilding orrepair and to make up any deficiency between the total insurance proceeds and thecontract price for such repair and rebuilding, and such assessment and all insuranceproceeds, whether or not subject to liens of Mortgagees, shall be paid to the account ofthe Association to be used for such rebuilding.

(e) This Article shall not apply to any destruction of a Phase unless and untila Condominium has been conveyed in such Phase. Prior to any such conveyance withina Phase, the Association shall have no right or obligation to insure or repair the improve-ments of such Phase and no Owner (other than Declarant) shall be entitled to theproceeds of any insurance carried by Declarant.

Section 9.2. Condemnation. If any portion of the Common Area or AssociationProperty in any Phase is taken by condemnation, eminent domain or any proceeding in lieuthereof, then all the Owners in all Phases of the Project, and their Mortgagees as theirrespective interests then appear, shall be entitled to receive a distribution from the award forsuch taklng in the same proportion as insurance proceeds would be distributed pursuant toSubsection (c) of the Section above entitled "Damage or Destruction"; provided, however, thatshould it be determined to repair or rebuild any po ..tion of the Common Area or AssociationProperty, such proceeds shall be paid to the Association for that purpose in the same mannerand subject to the same terms, conditions and limitations as are set forth above in this Articlefor repairing damaged or destroyed portions of the Common Area and Association Property.A decision to repair or rebuild shall be made in the same manner and subject to the sameconditions and limitations as provided above in this Article for determining whether to rebuildor repair following damage or destruction,

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Section 9.3. Insurance.

(a)insurance:

The Association shall obtain and continue in effect at least the following

(j) A comprehensive general liability and property damage insurancepollev with cross liability endorsement, if available, insuring the Association, anymanager, the Declarant and the Owners against liability incident to ownershipor use of the Association Property and Common Area. The limits of suchinsurance shall not be less than $3 Million covering all claims for death, personalinjury and property damage arising out of a single occurrence. The form andcontent of the comprehensive general liability policy must satisfy the require-ments of FNMA and FHLMC.

(ii) A policy insuring the Association's officers and directors againstliability for their negligent acts or omissions while acting in their capacity asofficers and directors. The limits of such insurance shall be not less than$1 Million for all claims arising out of a single occurrence.

(iii) Section 1365.7 of the California CIVILCODEprovides for a partiallimitation on the liability of volunteer officers and directors of the Association,provided that certain requirements, as set forth in the Code section, aresatisfied. The requirements include that general liability insurance and insurancecovering individual liability of officers and directors for negligent acts oromissions be carried by the Association in specified amounts. The Associationshall maintain general liability insurance and insurance covering individualliability of officers and directors for negligent acts or omissions in amountswhich satisfy the requirements of the Code to limit the liability of volunteerofficers and directors of the Association.

(iv) A fidelity bond covering members of the Board, officers andemployees of the Association and employees of any manager or managingagent, whether or not such persons are compensated for their services, namingthe Association as obligee and written in an amount equal to at least three (3)months' aggregate regular assessments (including reserves) by the Associationagainst all Condominiums then subject to assessment.

(v) Workers' compensation insurance covering any employees of theAssociation.

(vil The following fire insurance covering the Association Propertyshould a building with a replacement value of $10,000 or more, in 1996 dollars,become located on the Association Property. A master fire insurance policywith glass coverage and extended coverage endorsement for 100% of thecurrent replacement cost of all of the Association Property buildings within theProject, excluding land, foundations, excavations and other items that areusually excluded from insurance coverage. The maximum deductible amountshall be the lesser of $10,000 or 1% of the policy face amount. TheAssociation shall have no right or obligation to obtain such insurance for a

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Phase unless and until the first conveyance of a Condominium in such Phase.The form and content of such policy must satisfy the requirements of theFederal National Mortgage Association ("FNMA") and the Federal Home LoanMortgage Corporation ("FHLMC") and shall contain the following endorsements:

(A) An Inflation Guard Endorsement, when it can be obtained.

(B) A construction code endorsement, if there is a construc-tion code provision that would require changes to undamaged portionsof the building(s) even when only part of a building is destroyed by aninsured hazard (typical endorsements include Demolition Cost Endorse-ments, Contingent Liability From Operation of Building Laws Endorse-ment and Increased Cost of Construction Endorsement).

{C) A Special Condominium Endorsement which states thepolicy shall provide that any insurance trust agreement will berecognized; the right of subrogation against Owners will be waived; theinsurance will not be prejudiced by any acts or emissions of Owners thatare not under the control of the Association; and the policy witl beprimary, even if an Owner has other insurance that covers the same loss.

(b) Insurance premiums for the insurance obtained by the Association (otherthan the cost of endorsements which cover only particular Owners) shall be a CommonExpense to be included in the regular assessments levied by the Association.

(c) All insurance policies shall provide that they shall not be cancelable bythe insurer without first giving at least ten (10) days prior notice in writing to theAssociation and the servicer of each first Mortgage which requests such notice, and shallcontain a waiver of subrogation by the insurers against the Association, Board andOwners.

(d) The Association shall .naintaln such insurance coverage as may berequired by FNMA or FHLMC so long as either FNMA or FHLMC, respectively, holds aMortgage on or owns any Condominium.

(e) Nothing herein stated shall prevent the Association from obtainingadditional amounts of insurance or from adding to the items covered by a master policy.

(f) It shall be the responsibility of each Owner to insure the Owner'sresidence and related Residential Unit and any other Residential Unit improvements andto obtain any liability insurance covering these areas.

Section 9.4. Mortgagee Approval. Any restoration or repair of the Project, after apartial condemnation or damage due to an insurable hazard, shall be performed substantiallyin accordance with original plans and specifications, unless other action is approved by EligibleMortgage Holders of first Mortgages on Condominiums which have at least fifty-one percent(51 %) of the votes of Condominiums subject to Eligible Mortgage Holders' Mortgages.

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"

.. Section 9.5. Association Represents Owners Re Common Area and AssociationProperty. The Association is hereby designated to represent each Owner with respect toproceedings, negotiations, settlements or agreements pertaining to condemnation, destructionor repair of the Common Area and the Association Property and any proceeds from settlementshall be payable to the Association for the benefit of the Owners and their Mortgagees and areto be used as set forth in this Declaration. Each Owner hereby grants the Association a powerof attorney to so represent each Owner. Any condemnation proceeds that are wholly due toseverance damages to a particular Residential Unit shall belong to the Owner or Mortgagee of.that Residential Unit, as their respective interests theñ' appear.

ARTICLE ARTICLE X

DAMAGE. DESTRUCTION AND CONDEMNATION OF RESIDENCES

Section 10.1. Damage or Destruction. In the event of damage to or destruction of anyresidence within a Residential Unit the Owner shall reconstruct the same as soon as reasonablypracticable (unless the Association is not required to repair surrounding damaged CommonArea or Association Property pursuant to the terms of the Article above entitied "DAMAGE,DESTRUCTION AND CONDEMNATION OF COMMON AREA OR ASSOCiATION PROPERTY").

Section 10.2. Each Owner to Insure His/Her Residential Unit. Each O" ',",<lr ShAll at alltimes maintain either (i) the financial capacity to repair or rebuild the residence in his or herResidential Unit in the event of fire, or (ii) fire insurance insuring the full replacement value ofthe residence. Each such insurance policy shall contain a waiver of subrogation provision bothas to Declarant and the Association. An Owner shall within ten (10) days after request by theBoard provide the Board with reasonable evidence of such Owner's compliance with thisSection. However, the Board shall have no duty to makè any such request or to otherwisedetermine whether an Owner is in compliance with this Section. Failure of the Board todetermine compliance with this Section shall not constitute a waiver of the right of the Board,Declarant or any Owner to enforce this Section.

Section 10.3. Condemnation. In the event of any taking of a Residential Unit, theOwner of the Condominium (and such Owner's Mortgagees as their interests may appear) shallbe entitled to receive the award for such taking and after acceptance thereof the Owner andthe Owner's Mortgagee shall be divested of all further interest in the Project and membershipin the Association as to such Residential Unit. In such event the Owner shall grant theOwner's remaining interest in the Common Area appurtenant to the Residential Unit so taken,if any, to the other Owners owning a fractional interest in the same Common Area, such grantto be in proportion to the fractional interest in the Common Area then owned by each.

Section 10.4. Mortgagee Approval. Any restoration or repair of the Project, after apartial condemnation or damage due to an insurable hazard, shall be performed substantiallyin accordance with originai plans and specifications, unless other action is approved by EligibleMortgage Holders of first Mortgages on Condominiums which have at least fifty-one percent(51 %) of the votes of Condominiums subject to Eligible Mortgage Holders' Mortgages.

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"', ¡

ARTICLE XI

ASSOCIATION'S RIGHT OF ENTRY

For the purpose of performing the maintenance of the Association Property and CommonArea or for any other purpose reasonably related to the performance by the Board of itsresponsibilities under this Declaration, the Association's agents or employees shall have theright to enter any Residential Unit, Exclusive Use Area or upon any portion of the AssociationProperty and Common Area to effect repairs, improvements, replacements or maintenance asnecessary; provided, however, except in case of an emergency, there shall be no entry intoa Residential Unit or Exclusive Use Area without (i) a court order allowing such entry or (ji) theOwner's consent, which consent shall not unreasonably be withheld and shall be presumedif the Owner makes no objection to such entry within three (3) days after the Board deliversnotice of its intent to enter. When there is an entrance into any Residential Unit or ExclusiveUse Area such entrance shall be made with as little inconvenience to the Owner as possibleand any damage caused shall be repaired by the Association.

ARTICLE XII

EXCLUSIVE EASEMENTS AND LICENSES

The Board shall have the right to grant the following additional easements and licenses:

Section 12.1. Common Area Licenses. The Board shall have the right to grant licenses(which may be revocable or irrevocable) for Owners to exclusively use portions of the CommonArea adjoining the Owners' Residential Units provided that the granting of such licenses wouldnot materially and adversely affect any Owner's use of the Common Area.

Section 12.2. Association Property. The Board shall have the right to grant easementsor licenses (which may be revocable or irrevocable) for Owners to exclusively use portions ofthe Association Property adjoining the Owners' Residential Units provided that the granting ofsuch easements would not materially and adversely affect any Owner's use of the AssociationProperty.

ARTICLE XIII

EASEMENTS

Section 13.1. Easements for Encroachments. Easements are hereby reserved on, overand across each Residential Unit, the Common Area and the Association Property (i) to allowthe continuation of any encroachment of any improvements (e.g., foundations, footings,eaves, utility meters, utility lines or other overhangs, wing walls and/or chimneys), gates,walls, fences landscaping, and other improvements) as originally constructed by Declarant oras reconstructed in substantial accordance with the original plans and locations thereof, and(ji) to allow the continuation of any encroachment of improvements resulting from subsequentsettling or shifting of the improvements.

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Section 13.2. Easements for Utilities. The rights and duties of the Owners with respectto sanitary sewer, water, electricity, gas, television cable (or CATV service) and telephonelines, and other facilities, shall be governed by the following:

(a) Each Owner shall maintain those facilities and connections located uponthe Owner's Residential Unit or which serve only such Owner's Residential Unit unlessthe facilities or connections are maintained by the respective utility company or publicagency;

(b) Wherever sanitary sewer, water or gas connections, television cables,electricity or telephone lines are installed within the Project and it becomes necessary togain access to the connections, cables and/or lines through a Residential Unit owned bysomeone other than the Owner of the Residential Unit served by the connections, cablesand/or lines, the Owner of the Residential Unit served by the connections, cables and/orlines shall have the right, and is hereby granted an easement to the extent necessary, toenter upon such other Residential Unit or to have the utility companies enter upon suchother Residential Unit to repair, replace and generally maintain the connections, cablesand/or lines;

(c) Whenever sanitary sewer,' water or gas connections, television cables,electricity or telephone lines are installed within the Project and the connections, cablesand/or lines serve more than one (1) Residential Unit. the Owner of each Residential Unitserved by the connections, cables and/or lines shall be entitled to the full use andenjoyment of the portions of the facilities which service the Owner's Residential Unit;and

(d) No Owner shall construct any improvements on any utility easement areaof record which will unreasonably interfere with the maintenance and repair of thefacilities iocated in the easement without the prior written consent of the appropriateutility company or easement owner.

Section 13.3. Easements for Clustered Mailboxes. In order to comply with the variousrequirements of the City and the United States Postal Service, kiosk mailboxes may beinstalled on certain Residential Units within the Project. Easements are hereby created on andover the affected Residential Units in favor of the Association, all Owners and the UnitedStates Postal Service for delivery and deposit of mail.

Section 13.4. Fences Installed ByDeclarant: Easements for Common Fences. There iscreated, established and granted an easement appurtenant to all Residential Units in the Projectfor the centinuetion and replacement of all the fences which were originally installed byDeclarant, regardless of whether such fences are located precisely upon the boundaryseparating two (2) Residential Units. Those Owners who have a common fence which adjointheir Residential Units and effectively creates the boundary line between such Residential Unitsshall equally have the right to use the fence, and each shall have the exclusive right to the useof the interior surface of the fence facing his or her Residential Unit. Neither Owner shall drivenails, screws, bolts or other objects more than half way through any common fence, or impairin any way the structural integrity of the common fence. In the event that any portion of thecommon fence is damaged (other than damage to the interior surface of only one (1) side),

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from any cause other than the act or negligence of either party, it shall be repaired or rebuiltat their joint expense.

Section 13.5. Access Easements Over Side Yards For Maintenance. The CondominiumPlan for Phase 1 describes (and it is intended that the Condominium Plans for subsequentPhases will describe) areas within the side yards of certain Residential Units as being withinSide Yard Access Areas. Each Side Yard Access Area is the location of an easement to allowthe Owner ("Benefitted Owner") of the Residential Unit which adjoins the Side Yard AccessArea the right to enter the Side Yard Access Area in order to maintain, repair and rebuild theresidential structure located within the Residential Unit benefitted by the easement. Each sucheasement benefits and is appurtenant to the Residential Unit adjoining the easement andDeclarant hereby reserves a non-exclusive access easement over each Side Yard Access Areain favor of the applicable Benefitted Owner .for such purposes.

A Benefitted 0wner and such Owner's designated contractors and employeesshall have the right to enter the applicable Side Yard Access Area at reasonable times. Exceptfor emergency situations, the Benefitted Owner shall give the Owner of the Residential Unitin which the Side Yard Access Area is located (the" Adjoining Residential Unit") at least three(3) days notice of the dates and times when such entry will take place. The Benefitted Ownershall take reasonable precautions to avoid or minimize any damage to the landscaping andother improvements within the Side Yard Access Area. The Benefitted Owner shall beobligated to reimburse the Owner of the Adjoining Residential Unit for any damage whichmight occur to the Adjoining Residential Unit by reason of any such entry into the Side YardAccess Area.

Section 13.6. Front Yard Maintenaee Areas. Declarant hereby reserves over eachResidential Unit the Front Yard Maintenance Area shown on the applicable Condominium Plan.Such easement is reserved in favor of the Association for the purposes set forth in thisDeclaration.

Section 13.7. Temporary Construction Access Easements. Declarant hereby reservesover each Residential Unit any construction easement which may be shown on the applicableCondominium Plan. Such easement shall allow Declarant to enter those areas of theResidential Unit shown as covered by the easement for purposes of grading for andconstruction of the adjoining residence and Declarant shall have the right to place theapplicable side yard fence (or a temporary fence) on the easement boundary line rather thanthe Residential Unit boundary line. Each particular temporary construction easement shallautomatically terminate on the date the construction of the adjoining residence has beencompleted. Within sixty (60) days after termination of a particular construction easementreserved 'by this Section, the Declarant shall at its expense relocate the side yard fence to theResidential Unit boundary should the fence have been located at the easement boundary.

Section 13.8. Additional Easements. Declarant hereby reserves the following additionaleasements:

(a) To Construct Street Improvements. Declarant reserves easements forDeclarant to complete the construction of each private street and private drive and theutilities thereunder, planned by Declarant for the Real Property.

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"

(b) To Construct and Market Homes. Declarant reserves the easementsgranted in Section 2.2(j) above.

(c) To Fence Off Areas During Construction. Declarant reserves the rightand easement for Declarant to reasonably fence off areas prior to and during constructionfor reasons of public safety, provided that alternative access remains available to thepersons affected by any such fence.

~ .(d) Further Utility Easements. Declarant reserves easements to install, keep

and repair all gas, electric, sewer, water and other public utilities within or adjoining anyprivate street planned by Declarant for the Real Property, together with the right totransfer the same to the City or utility suppliers.

(e) .Access. In Favor of Rea! Property Not Annexed. Declarant reserveseasements for ingress, egress and utilities over, under, upon and across the private driveswithin the Association Property. This easement benefits and binds the Module For FuturePhases as shown on any Condominium Plan regardless of whether such Module orportion thereof is annexed to this Declaration as an additional Phase. This easement 'isa non-exclusive easement for ingress, egress and private utility (e.g., storm drain andCATV) purposes, and is subject to Declarant's right to fence off areas for constructionpurposes. Should this easement be utilized in favor of any portion of the Real Propertywhich has not been annexed to this Declaration, the owner(s) of such lot shall beobligated to share in the cost of maintenance and reserves of the easementimprovements proportionally to the use made of such improvements as provided inCalifornia CIVIL CODESection 845.

(f) Access And Private Utilities !n Later Phases. Declarant reserveseasements in favor of each Residential Unit in a Phase which has been annexed to thisDeclaration for access over private drives located in a portion of the Real Property notyet annexed to this Declaration and to utilize private utilities located in a portion of theReal Property not yet annexed to this Declaration if such easements are necessary foringress and egress or private utilities to be available to such Residential Unit.

(g) Easement to Inspect and Test. Easements for Declarant to enter anyResidential Unit, including the interior of the residence and the Yard, to inspect thoseareas and to conduct destructive testing referred to in California CIVILCODE§ 1375(d).However, Declarant shall notify the Owner of the Residential Unit of at least threealternative dates and times when such inspection can take place (the earliest of whichshe] not be less than ten (10) days after the notification is given) and Declarant shall givethe Owner the opportunity to specify which date and time is acceptable to the Owner.Should the Owner not respond affirmatively with respect to one of the dates and timeswithin five (5) days, then Declarant may decide which of the dates and times theinspection and testing shall take place and so notify the Owner. Alternatively, Declarantmay seek a judicial order allowing such inspection and testing to take place. Declarantshall be entitled to its reasonably incurred attorney's fees and be deemed the "prevailingparty" should such a court order be sought and obtained. Declarant shall be obligatedto fully repair any damage caused by any such destructive testing.

(h) Other Easements. Any other easement reserved in this Declaration.

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ARTICLE XIV

ENFORCEMENT

Section 14.1. Enforcement. The Association, Declarant, and/or any Owner shall havethe right to enforce against one another, by any proceeding at law or in equity, all restrictions,covenants, reservations, liens and charges now or hereafter imposed by this Declaration. TheCity shall have the right, but not the obligation, to enforce the provisions of this Declarationin the same manner as any Owner.

Section 14.2. No Waiver. Failure by the Association, Declarant or any Owner toenforce any provision of this Declaration shall in no event be deemed a waiver of the right todo so thereafter.

ARTICLE XV

OTHER PROVISIONS

Section 15.1. Severability. Should any provision in this Declaration be void or becomeinvalid or unenforceable in law or equity by judgment or court order, the remaining provisionshereof shall be and remain in full force and effect.

Section 15.2. Amendments Prior to Escrow Closings. Prior to the date escrow closesfor any sale of a Condominium to a Retail Purchaser, this Declaration may be unilaterallyamended by Declarant. Notwithstanding the foregoing, any amendment to the followingprovisions of this Declaration shall require the written consent of the City of San Diego: (i) Anyamendment which would diminish the obligation of the Association to maintain and repair theCommon Area or Association Property, or (ji) any amendment to any provision of thisDeclaration which specifically sets forth rights of the City.

Section 15.3. Amendments After Escrow Closings. The following provisions shall applyafter the close of the first escrow for a sale of a Condominium to a Retail Purchaser. Duringthe period of time prior to conversion of the Class B membership to Class A membership, thisDeclaration may be amended by an instrument in writing signed by the President or Secretaryof the Association certifying that at least sixty-seven percent (67 %) of the voting power ofeach class of Members of the Association have approved the amendment. After conversionof the Class B membership in the Association to Class A membership, the Declaration may beamended by an instrument in writing signed by the President or Secretary of the Associationcertifying that the following have approved the amendment: (i) at least sixty-seven percent(67 %) of the total voting power of the Association, and (ji) at least sixty-seven percent (67%)of the voting power of Members of the Association other than Declarant. The percentage ofvoting power necessary to amend a specific clause or provision of this Declaration shall notbe less than any percentage of affirmative votes prescribed for action to be taken under thatclause. An amendment shall become effective upon the recording thereof by the Office of theCounty Recorder of the County of San Diego, California.

Notwithstanding the foregoing, any amendment to the following provisions ofthis Declaration shall require the written consent of the City of San Diego: (i) Any amendment

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which would diminish the obligation of the Association to maintain and repair the CommonArea or Association Property, or (ii) any amendment to any provision of this Declaration whichspecifically sets forth rights of the City.

Section 15.4. Amendments May Not Conflict With City Requirements. This Declarationshall not be amended in any manner which will conflict with the requirements of the City.

Section 15.5. Mortgagee Approval of Amendm_~nt. Anything contained herein tö thecontrary notwithstanding, no amendment material to a Mortgagee may be made to thisDeclaration without the prior written consent of Eligible Mortgage Holders whose Mortgagesencumber fifty-one percent (51 %) or more of the Condominiums within the Project which aresubject to Eligible Mortgage Holder Mortgages. For purposes hereof, any amendments toprovisions of this Declaration governing any of the following subjects, shall normally bedeemed "material to a Mortgagee":

(a) Voting rights.

(b) Assessment liens and the priority of assessment liens and the right ofEligible Mortgage Holders to approve increases in regular assessments of in aggregatemore than twenty-five percent (25%) during any fiscal year from the regular assessmentsassessed during the previous fiscal year.

(c) The right of Eligible Mortgage Holders to approve reductions in reservesfor maintenance, repair and replacement of the Association Property and the CommonArea.

(d) Responsibility for maintenance and repairs.

(e) Reallocation of interests in the Common Area or Association Property(including Exclusive Use Area) or rights to its use.

(f) Redefinition of Residential Unit boundaries.

(g) Convertibility of Residential Units into Common Area and AssociationProperty and vice versa.

(h) Annexation and de-annexation.

(i) Hazard or fidelity insurance requirements.

(j) Imposition of any restrictions on the leasing of Condominiums.

(k) Imposition of any right of first refusal or similar restriction on the rightof a Condominium Owner to sell, transfer or otherwise convey the Owner'sCondominium.

(I) The Section below entitled nApproval of First Mortgagees n •

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-,

(m) Restoration or repair of the Project (after a hazard or partial condemna-tion) in a manner other than specified herein,

(n) Any action to terminate the legal status of the Project after substantialdestruction or condemnation occurs.

(o) Any provision which, by its terms, is specifically for the benefit of thefirst Mortgagees, or specifically confers rights on first Mortgagees.

An Eligible Mortgage Holder who receives a written request to approveamendments (including additions) who' does not deliver or mail to the requesting party anegative response within thirty (30) days, shall be deemed to have approved such requestprovided that such written request was delivered by certified mail or registered mail, with"return receipt" requested.

Section 15.6. Extension of Declaration. Each and all of these covenants, conditions andrestrictions shall terminate sixty (60) years following the recordation of this Declaration ofRestrictions with the Office of the County Recorder of the County of San Diego, after whichdate they shall automatically be extended for successive periods of ten (10) years unless allthe Owners have executed and recorded at any time within six (6) months prior to the end ofsaid sixty (60) year period, or within six (6) months prior to the end of any such ten (10) yearperiod, in the manner required for a conveyance of real property, a writing in which it is agreedthat said restrictions shall terminate at the end of said sixty (60) year period or at the end ofany such ten (10) year period,

Section 15.7. Annexation: Reservation of Easements.

(a) Phase 1 is the first Phase of a projected fifteen (15) Phase condominiumdevelopment. When completed, Declarant contemplates that the entire Project willconsist of 189 Condominiums. Nothing contained herein, however, shall require Declarantto complete the future Phases of the planned overall Project.

(b) If, within three (3) years of the date of the original issuance by theCalifornia Department of Real Estate of the most recently issued Final Subdivision PublicReport covering a Phase of the overall development Declarant should develop additionallands within the Real Property, such additional lands or any portion thereof may be addedto and included within the Project and the jurisdiction of the Association by action ofDeclarant without the assent of Members of the Association. Annexation may be accom-plished by the recording of a Declaration of Annexation which requires Owners of Condo-

I

miniums therein to be Members of the Association. The obligation of CondominiumOwners to pay dues to the Association and the right of such Condominium Owners toexercise voting rights in the Association in such annexed property shall not commenceuntil the first day of the month following close of the first sale of a Condominium byDeclarant in that particular Phase of development. Any Phase may be de-annexed if thefollowing conditions are satisfied:

(i) A Notice of De-annexation is recorded with the County Recorderof San Diego County;

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(ii) Declarant has not exercised any Association vote on behalf of anyCondominiums located or to be located within the Phase to be de-annexed;

(iii) The Association's assessments have not commenced against anyCondominiums within the Phase to be de-annexed; and

(iv) No escrows for the sale of any Condominiums within the Phaseto be de-annexed have closed to a Retail Purchaser.

(c) Annexation of any additional Phase is subject to the followingrequirements:

(i) Recordation of a Declaration of Annexation identifying the specificland to be annexed:

(ii) Declarant shall be obligated to pay the Association, concurrentlywith the closing of the escrow for the first sale of a Condominium in an annexedPhase, appropriate amounts (if any) for reserves for replacement or deferredmaintenance of Common Area or Association Property improvements in theannexed Phase necessitated by or arising out of the use and occupancy ofCondominiums under a rental program, if any, conducted by C: :-'''~;:II'"t whichhas been in effect for a period of at least one year as of closing of escrow forthe first sale of a Condominium in the annexed Phase;

(iii) The VA shall have the right to reasonably determine that theannexation is in substantial conformity with the overall development plan, ifany, approved by the VA;

(iv) Annexation shall not result in there being more than 189Condominiums in the Project;

(v) The structure type and quality of construction of future Phasesshall be substantially consistent with the initial improvements if so required byFNMA. This provision is intended to benefit and be enforceable by only FNMAand its requirements may be waived by FNMA; and

(vi) The Declaration of Annexation shall not change the provisionsherein set forth (including, but not limited to, those pertaining to voting rightsand assessments) but may impose additional restrictions, easements andcovenants on the Phase being annexed.

(d) Declarant reserves the right to construct on the portions of the RealProperty annexed to this Declaration, Condominiums of those sizes, price ranges, floorplans, architectural styles and designs as Declarant may, in its sole discretion, determine.Such sizes, price ranges, floor plans, architectural styles and/or designs need not beconsistent with any previous or other Phase except as may be required by FNMApursuant to Subsection 15.7{c)(v) above. Among other things, but not as a limitation,Declarant may construct on the Real Property annexed hereto, lower or higher pricedhomes, higher density or lower density residences, attached or detached residences.

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Moreover, Declarant shall not be obligated to complete the future Phases at all or in anyparticular order and has the right to change the Association Property and the numbersof Condominiums in a Phase, subject to the limitations stated in Subsection 15.7(c)above.

(e) The Declaration of Annexation shall contain (i) a description of theproperty to be annexed, and (ii) a statement that the property to be annexed shall besubject to this Declaration.

(f) Declarant hereby reserves reciprocal cross-easements in and to theCommon Area and Association Property (other than Exclusive Use Area) in all Phases ofthe Project for the benefit of the Owners of Condominiums in all other Phases of theProject to the same extent and with the same effect as if each Owner of a Condominiumin each Phase subject to this. Declaration owned an undivided interest in the CommonArea of each other PIlase in the Project. These cross-easements shall not benefit orburden a Phase until (i) such Phase has become subject to this Declaration and (ii) aCondominium has been conveyed to a Retail Purchaser in such Phase.

(g) As an alternative method of annexation, upon the approval in writing ofthe VA and of the Association, pursuant to a two-thirds (2/3) majority of the votingpower of its Members, or the written assent of such Members, excluding the votingpower or written assent of Declarant, the owner of any property who desires to add itto the scheme of this Declaration and to subject it to the jurisdiction of the Association,may file of record a Declaration of Annexation. Any annexation pursuant to thissubsection shall require the written approval of the City of San Diego.

(h) Declarant herebv reserves the right to use the private street system andany private utilities within the Project for access (and connection of utilities) by Declarantand future owners of portions of the Real Property, regardless of whether such portionsof the Real Property become annexed to this Declaration. The easements so reserved areappurtenant to the Real Property. Any owner utilizing easements reserved hereby shall,pursuant to California CIVILCODESection 845, reimburse the Association for its costs andreserves to maintain, repair and replace such private streets and private utilities, if any,based proportionally to the use made of such easements by the owners of portions of theReal Property not annexed hereto.

(j) This Section shall not be amended without the written approval ofDeclarant attached to the instrument of amendment during the period of time set forthin Subsection 15.7(b) above for annexation by Declarant without the assent of Membersof the Association.

Section 15.8. Judicial Reference. Each Owner by acceptance of his or her deed, theAssociation and Declarant hereby each agree that any I.itigation based on alleged defects in thedesign or construction of the Real Property or any portion of the Real Property and/or anyimprovements to the same, shall be submitted to Judicial Arbitration and Mediation Services,Inc. ("JAMS") for general reference without a jury pursuant to California CODE OF CIVILPROCEDURE§638, et seq. If any party refuses to stipulate to a general reference, the otherparty(íes) may move the court to refer the action. Once the action has been referred, theparties shall jointly select a member from JAMS' panel as referee; if the parties cannot agree

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r .

on a referee within ten (10) days after the reference, JAMS shall select the referee, subjectto challenge only pursuant to CODEOFCIVILPROCEDURE§641 within ten (10) days after noticeof JAMS' choice. The referee shall hear the matter as soon as he or she is able, or on suchlater date to which the parties agree in writing.

Section 15.9. Enforcement Litigation. In the event the Association, Declarant, the Cityor any Owner shall commence litigation to enforce any of the covenants or restrictionscontained in this Declaration, the prevailing party in such litigation shall be entitled to costsof suit and such attorney's fees as the Court may adjudge reasonable and proper. The"prevailing party" shall be the party in whose favor a final judgment is entered. It is notintended that this Section entitle a party to his or her attorney's fees for any claim based onalleged defects in the design or construction of the Real Property or any portion of the RealProperty and/or any improvements to the same.

Section 15.10. Provisions Apply to A" Condominiums. The provisions of this Declarationapply to all Condominrums which have been made subject to this Declaration, including anyunsold Condominiums which may be owned by Declarant. Declarant snail have the samerights and assumes the same duties as any other Owner with respect to unsold Condominiums,except as expressly stated otherwise.

Section 15.11. Special Responsibilities of Association. In the event that the improve-ments to be installed by Declarant to the Association Property or Common Area have not beencompleted prior to the issuance by the California Department of Real Estate of a FinalSubdivision Public Report covering a Phase and in the further event that the Association is theobligee under a bond to secure performance by the Declarant to complete such improvements,then if such improvements have not been completed and a Notice of Completion filed withinsixty (60) days after the completion date specified in the Planned Construction Statementappended to the bond, the Board shall consider and vote upon the question of whether or notto bring action to enforce the obligations under the bond. If the Association has given anextension in writing for the completion of any such improvement then the Board shall considerand vote on said question if such improvements have not been completed and a Notice ofCompletion filed within thirty (30) days after the expiration of the extension period. In theevent that the Board determines not to take action to enforce the obligations secured by thebond, or does not vote on the question as above provided, then, in either such event, uponpetition signed by Members representing not less than five percent (5%) of the total votingpower of the Association, the Board shall call a special meeting of the Members of theAssociation to consider the question of overriding the decision of the Board or of requiring theBoard to take action on the question of enforcing the obligations secured by the bond. Saidmeeting øf Members shall be held not less than thirty-five (35) days nor more than forty-five(45) days following receipt of the petition. At said meeting a vote of a majority of the votingpower of the Members of the Association, excluding the vote of Declarant, to take action toenforce the obligations under the bond shall be deemed to be the decision of the Association,and the Board shall thereafter implement the decision by initiating and pursuing appropriateaction in the name of the Association.

Section 15.12. Limitation of Restrictions on Declarant. Declarant is undertaking the workof construction of residential Condominium dwellings and incidental improvements within theProject. The completion of that work, and the sale, rental and other disposal of saidCondominium dwellings is essential to the establishment and welfare of the Project as a

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I,

residential community. In order that Declarant's work may be completed and the Project maybe established as a fully occupied residential community as rapidly as possible, nothing in thisDeclaration shall be understood or construed to:

(a) Require Declarant to obtain any approval of the Board; Declarant isexempt from the provisions of this Declaration which require Board approvals; or

(b) Prevent Declarant, its contractors or subcontractors from doing in theProject whatever is reasonably necessary or advisable in connection with the completionof such work; or

(c) Prevent Declarant or its representatives from erecting, constructing andmaintaining on any part of the Project such structures as may be reasonable andnecessary for the conduct of its business of completing such work and establishing theProject as a residential community and disposing of the same in parcels by sale, lease orotherwise; or

(d) Prevent Declarant from conducting on any part of the Project its businessof completing such work, and of establishing a plan of Condominium ownership and' ofdisposing of Condominiums in the Project by sale, lease or otherwise; or

(e) Prevent Declarant from maintaining such signs within the Project as maybe necessary for the sale, lease or disposition of Condominiums; provided, however, thatthe maintenance of any such sign shall not unreasonably intèrfere with the use by anyOwner of such Owner's Condominium.

The rights of Declarant provided in Subparagraphs (a) through (e) above may beexercised during the period of time commencing when the Condominiums are first sold oroffered for sale to the public and ending when all 189 Condominiums have closed escrow, orseven (7) years following the date of conveyance of the first Condominium in Phase 1 of theProject to a Retail Purchaser, whichever shall first occur.

Section 15.13. Owners' Compliance. Each Owner, tenant or occupant of a Condominiumshall comply with the provisions of this Declaration, the Bylaws, decisions and resolutions ofthe Association or its duly authorized representative, as lawfully amended from time to time,and failure to comply with any such provisions, decisions, or resolutions shall be grounds foran action to recover sums due, for damages, or for injunctive relief.

All agreements and determinations lawfully made by the Association inaccordance with the voting percentages established in this Declaration or in the Bylaws, shallbe deemed to be binding on all Owners of Condominiums, their successors and assigns.

Section 15.14. VA Approval. So long as there is a Class B membership in the Associa-tion, and during the period of time that the VA is the guarantor of a Mortgage encumberinga Condominium, the following actions will require the prior approval of the VA: Annexationor de-annexation of additional property to the Real Property, any mergers or consolidations ofthe Association, any special assessment, and amendment to the Declaration, a draft of whichshall be submitted to and approved by the VA prior to recordation.

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Section 15.15. FHA Approval. The Federal Housing Authority ("FHA") shall have thesame approval rights as are provided to VA in this Declaration during such period of time as .FHA is insuring a Mortgage encumbering a Condominium within the Project or owns aCondominium within the Project.

Section 15.16. Payments of Taxes or Premiums by First Mortgagees. First Mortgageesmay I jointly or severally, pay taxes or other charges which are in default and which mayorhave become a charge against the Association Propejtv, unless such taxes or charges areseparately assessed against the Owners, in which case, the rights of first Mortgagees shall begoverned by the provisions of their deeds of trust. First Mortgagees may, jointly or severally,also pay overdue premiums on casualty insurance policies, or secure a new casualty insurancecoverage on the lapse of a policy for the Association Property, and first Mortgagees makingsuch payments shall be owed immediate reimbursement thereof from the Association.Entitlement to such reimbursement shall be reflected in an agreement in favor of any firstMortgagee who requests the same to be executed by the Association.

Section 15. 17. Mortgagee Curing Defaults. A Mortgagee who acquires title by judicialforeclosure, deed in lieu of foreclosure or trustee's sale shall not be obligated to cure anybreach of the provisions of this Declaration which is non-curable or of a type which is notpractical or feasible to cure. The determination of the Board made in good faith as to whethera breach is non-curable or not feasible to cure shall be final and binding on all Mortgagees.

Section 15.18. Approval of First Mortgagees. Unless at least sixty-seven percent (67%)of the. first Mortgagees (based on one vote for each first Mortgage owned¡ however aconstruction lender shall have one vote for each Condominium encumbered by the firstMortgage which secures a construction loan) have given their prior written approval, theAssociation shall not be entitled to:

(a) By act or omission seek to abandon or terminate the Project.

(bl· Change the pro rata interest or obligations of any Condominium in orderto levy assessments or charges, allocate distribution of hazard insurance proceeds orcondemnation awards, or determine the pro rata share of ownership of eachCondominium in the Common Area. (This Subsection is not intended to require approvalof first Mortgagees to the annexation of additional Phases to the Project or to the saleof Condominiums in such additional Phases.)

(c) Partition or subdivide any Condominium.

(d) By act or omission, seek to abandon, partition, subdivide, encumber, sellor transfer the Association Property. The granting of easements for public utilities or forother public purposes and other easements allowed by this Declaration shall not bedeemed a transfer within the meaning of this Subsection nor shall non-material boundaryadjustments be deemed a transfer within the meaning of this Subsection.

(e) Restoration of the project (after hazard damage or partial condemnation)in such a manner other than specified in this Declaration. Any restoration or repair of theAssociation Property or Common Area after partial condemnation or damage due to aninsurable event, shall be performed substantially in accordance with this Declaration and

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"

original plans and specifications unless other action is approved by Eligible MortgageHolders, Insurers or Guarantors which have at least sixty-seven percent (67%) of thevotes of Condominiums subject to Eligible Mortgage Holders, Insurers or Guarantors.When Owners are considering termination of the legal status of the project for reasonsother than substantial destruction or condemnation of the project, Eligible MortgageHolders, Insurers or Guarantors which have at least sixty-seven percent (67%) of thevotes of Condominiums subject to Eligible Mortgage Holders, Insurers or Guarantors mustagree.

(f) Use hazard insurance proceeds or proceeds from other third parties forlosses to or claimed defects in any portion of the Association Property or Common Areafor other than the repair, replacement or reconstruction of such Association Property orCommon Area.

(g) When 'professional management has been previously required by anyEligible Mortgage Holder, Insurer or Guarantor, whether such entity became an EligibleMortgage Holder, Insurer or Guarantor at that time or later, any decision to establish self-management by the Association shall require the prior consent of at least sixty-sevenpercent (67 %) of the voting power of the Association and the approval of ElrgibleHolders, Insurers or Guarantors of Mortgages on Condominiums which have at least fifty-one percent (51 %) of the votes of Condominiums subject to Eligible Mortgage Holders,Insurers or Guarantors. This paragraph (g) applies only if the Project contains fifty (50)or more Residential Units.

Section 15.19. Notice to Eligible Mortgagees. Upon written request to the Associationidentifying the name and address of the Eligible Mortgage Holder, Insurer or Guarantor and theCondominium number or address, any Eligible Mortgage Holder, Insurer or Guarantor will beentitled to timely written notice of:

(a) Any condemnation loss or any casualty loss which affects a materialportion of the Project or any Condominium on which there is a Mortgage held, insuredor guaranteed by such Eligible Mortgage Holder, Insurer or Guarantor.

(b) Any delinquency in the payment of assessments or other default by anOwner subject to a Mortgage held, insured or guaranteed by such Eligible MortgageHolder, Insurer or Guarantor which remains uncured for a period of sixty (60) days.

(c) Any lapse, cancellation or material modification of any insurance policyor fidelity bond maintained by the Association.,

(d) Any proposed action which would require the consent of a specifiedpercentage of Eligible Mortgage Holders, Insurers or Guarantors as specified above.

Section 15.20. Documents to be Available to Mortgagees. The Association shall makeavailable to Owners and Mortgagees, and holders, insurers or guarantors of any Mortgage,current copies of this Declaration, the Bylaws, other rules concerning the Project and thebooks, records and financial statements of the Association. "Available" means available forinspection, upon request, during normal business hours or under other reasonablecircumstances. If the Project consists of fifty (50) or more Condominiums, the Association

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must provide an audited statement for the preceding fiscal year if an Eligible Mortgage Holderor Eligible Mortgage Insurer or Guarantor of a first Mortgage submits a written request for it.If the Project consists of less than fifty (50) Condominiums and no audited statement isavailable, the Eligible Mortgage Holder or Eligible Mortgage Insurer or Guarantor may have anaudited statement prepared at its expense. Any such financial statement so requested shallbe furnished within a reasonable time following such request.

Section 15.21. Mortgagee Protection. A breach by an Owner of any of the covenants,conditions and restrictions contained herein shall not affect, impair, defeat or render invalid thelien, charges or encumbrance of any first Mortgage made for value which may then exist onany Condominium; provided, however, that in the event of a foreclosure of any such firstMortgage, or if the holder of the note secured by such first Mortgage acquires title to aCondominium in any manner whatsoever in satisfaction of the indebtedness, then thepurchaser at the foreclosure sale shall, upon acquiring title, become subject to each and all ofthe covenants, conditions 'and restrictions contained herein, but free from the effects of anybreach occurring prior thereto. The Deed of Trust, Assignment of Rents and Fixture Filing infavor of Bankers Trust Company recorded June 26, 1996 in the Official Records of San DiegoCounty as Instrument No. 1996-0322380 shall be deemed a "first Mortgage" for purposes ofthis Declaration of Restrictions.

Section 15.22. Conflicts. In the event of any conflict between any of the provisions ofthis Article and any of the other provisions of this Declaration, the provisions of this Articleshall control.

Section 15.23. Documents to be Provided to Prospective Purchasers.

(a) By Owners. Each Owner shall, as soon as practicable before transfer oftitle to his or her Condominium or execution of a real. property sales contract therefor (asdefined in CIVILCODESection 2985), provide the following to the prospective purchaser:

(i) A copy of this Declaration, the Association's Articles and Bylaws,and the Condominium Plan for the Phase which describes the Condominiumoffered for sale;

(ii) The statement required by CIVIL CODE Section 1368(2), ifapplicable (i.e., if an age restriction becomes applicable);

(iii) A copy of the Association's most recent financial statementdistributed pursuant to CIVIL CODESection 1365;

(lv) A true statement, in writing, from an authorized representative ofthe Association, as to the respective amounts levied upon the Owner'sCondominium which are unpaid on the date of the statement. The statementshall' also include true information on late charges, interest and costs ofcollection which, as of the date of the statement, are or may be made a lienupon the Owner's Condominium pursuant to CIVIL CODESection 1367.

(bl By the Association. Upon written request to the Association it shall,within ten (10) days of mailing or delivery of the request, provide an Owner with a copyof the requested Association items specified in (i), (ii), (iii) and (iv) above. The Associa-tion may charge a fee for this service which may not exceed the cost to prepare andreproduce the requested items.

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;,_r_ •

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IN WITNESS WHEREOF, the undersigned, being Declarant herein, has executed thisinstrument the day and year first hereinabove written.

SORRENTO HILLS HOMES, LLC, a California limitedliability company

By: CALIFORNIA PACIFIC HOMES, INC.,a California corporation, Managing Member

.. "il.iJ0~n·YBy .._---::.~_·....;/;-I_,./~''--~/_·/,_./--r-------v r ~~,:) 1;'0. ;/1-' 1// 20' .Title: ~'¿ ,'(.I( o.' (¿/

/By:~ ~~~~-*~~------------

STATE OF CALIFORNIA

COUNTY OF SAN DIEGO) ss.)

O (' '_;'.< /)':./ir b f /'.. ',." .jl / ,', ! I N P bl'n i. r • ......¡· (. ,,~ ore me, ) ok'" I"i ;,~::-:.z_, .:·_j·}':,:J..lt:<-kX. .... , otary u IC,} , ' .'. (' -.....' J' / I r I ,personally appeared 6...' ",'t .•i L/, ( / /:' é Yl/) , ( t ,/. . ..C.c / cr ....,r' Ir' l) f-fl} t' /f'u' /' "o / t.:..: ,

M ........ ,,~

personally known to me (~ved to"me on the" b"àsÎs"of satisfactory ·ev~dence) to be thepers~whose nam~~subscribed to the within instrument and acknowledged to methat Ile/8he~ executed the same in his/Ile~~ir' authorized capacit~~ and that byhts/tTer~ signatu~n the instrument, the pers~ or the entity upon behalf of whichthe persorg:acted, executed the instrument.

1.·=;'::1lu!!.~~~~-:tlJ

,>

WITNESS my hand and official seal.

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SUBORDINATION AGREEMENT

BANKERS TRUST COMPANY, a New York banking corporation, being the beneficiaryunder those certain deeds of trust recorded June 26, 1996 as Document Nos. 1996~0322378and 1996-0322380 with the Office of the County Recorder of San Diego County, California,hereby declares that the lien and charge of said deeds of trust are and shall be subordinate andinferior to the Declaration of Restrictions to which this Subordination Agreement is attached .._.

BANKERS TRUST COMPANY, a New York bankingcorporation

" ""î

BY__~_·~~¡_GV~~~~-=·~~.~~~.~~·~~~ _

Title 1\\ • \) •

By_ _..::_~1: .~.. ~.. :..:.... :.._.';__......._; ..:.;.... ...,:;.,,::::;.. .;;;.....::...;_ ._ .. _.... 0 __

Title __ ..;:._ _

STATE OF .\ ¿\..""; :-">.-:;- ~) ss.

COUNTY OF~\¡¿.........-:.. " ,''':'. )

, \

On (C-\-L\'"\t;"'I"" 2(: n(1 '¡-" before me, '':...\·,:,,;\.,,;,·'_¡;c;___,·~_· _ ...I..._. _.:_' ~_¿;")-:...~_;_'''''..:.;,l__' , Notary Public,personally appeared ~x'\.,(.t ? \\0"\,,,"" ""' \ ,,:;,'\\ o.. -;""ï''',\u.. _c) ,)_. (' ?)'ï\~ ,",,-

~==------------------------------------------'_j)·~_~.~_?!ly.)<n,9~ñ--~o-m"Ef)(orproved to me on the basis of satisfactory evidence) to be theperson(s) whose name(s) is/are subscribed to the within instrument and acknowledged to methat he/she/they executed the same in his/her/their authorized capacity(ies), and that byhis/her/their signature(s) on the instrument, the person(s), or the entity upon behalf of whichthe personts) acted, executed the instrument.

WITNESS my hand and official seal.

(Seal)

TrNogy10/9/96

JUNE A. POLITANONotary Public, State of New York

No. 30-4905885Qualified in Nassau Coun!Y¡

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