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DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS TABLE OF CONTENTS Bellasera Corp., as the developer of Bellasera, has established this Declaration to provide a governance structure and a flexible system of standards and procedures for the overall development, administration, maintenance and preservation of Bellasera as a master planned community. Article I: Definitions Article II: Property
Rights Article III: Association Function, Membership
and Voting Rights Article IV: Rights and Obligations of
the Association Article V: Maintenance Article VI: Insurance and Casualty Losses Article VII: No Partition Article X: Assessments Article XI: Architectural
and Design Standards Article XII: Use Restrictions
Article XIII: Easements Article XIV: Mortgage
Provisions Article XVI: Dispute Resolution Article XVII: General
Provisions
Declarant is the owner of the real property described in Exhibit "A," which is attached hereto and incorporated herein by this reference. This Declaration imposes upon the Properties (as defined in Article I) mutually beneficial restrictions under a general plan of improvement for the benefit of the owners of each portion of the Properties and establishes a flexible and reasonable procedure for the overall development, administration, maintenance and preservation of the Properties. Declarant hereby declares that all of the property described in Exhibit "A" and any additional property subjected to this Declaration by a Supplemental Declaration (as defined in Article I) shall be held, sold, used and conveyed subject to the following easements, restrictions, covenants, and conditions, which are for the purpose of protecting the desirability and which shall run with the real property subjected to this Declaration. This Declaration shall be binding on and shall inure to the benefit of all parties having any right, title, or interest in the Properties or any part thereof, their heirs, successors, successors-in-title, and assigns. The terms used in this Declaration shall generally be given their natural, commonly accepted definitions except as otherwise specified. Capitalized terms shall be defined as set forth below. 1.1 "Area of Common Responsibility": The Common Area, together with those areas, if any, which by the terms of this Declaration, any Supplemental Declaration or other applicable covenants, or by contract become the responsibility of the Association. 1.2 "Articles": The Articles of Incorporation of Bellasera Community Association, Inc., filed with the Arizona Corporation Commission. 1.3 "Association": Bellasera Community Association, Inc., an Arizona nonprofit corporation, its successors and assigns. 1.4 "Base Assessment": Assessments levied on all Lots subject to assessment under Section 10.9 to fund Common Expenses for the general benefit of all Lots, as more particularly described in Sections 10.1 and 10.3. 1.5 'Bellasera": The Properties as described in Section 1.36. 1.6 "Benefited Assessment": Assessments levied under Section 10.7. 1.7 "Board of Directors" or "Board": The body responsible for administration of the Association, selected as provided in the By-Laws. 1.8 "Builder": Any Person purchasing one or more Lots to construct Dwelling Units thereon for later sale to Home Owners or one or more parcels of land within the properties to subdivide, develop, and / or resell in the ordinary course of such Person's business. 1.9 "Business" and "Trade": Shall be construed to have their ordinary, generally accepted meanings and shall include, without limitation, any occupation, work, or activity undertaken on an ongoing basis which involves the provision of goods or services to Persons other than the family of the producers of such goods or services and for which the producer receives a fee, compensation, or other form of consideration, regardless of whether: (a) such activity is engaged in full or part-time, (b) such activity is intended to or does generate a profit, or (c) a license is required. 1.10 "By-Laws": The By-Laws of Bellasera Community Association, Inc. incorporated by reference, as they may be amended from time to time. 1.11 "Class "B" Control Period": The period during which the Class "B" Members are entitled to appoint a majority of the Board members as provided in Section 3.3 of the By-Laws. 1.12 "Common Areas": All real and personal property which the Association now or hereafter owns, leases or otherwise holds possessory or use rights in for the common use and enjoyment of the Owners, including easements held by the Association for those purposes. The term shall include the Exclusive Common Area, as defined below, and scenic corridors and may include entry features, landscape medians, and cul-de-sacs. 1.13 "Common Expenses": The actual and estimated expenses incurred or anticipated to be incurred by the Association for the general benefit of all Lots, including any reasonable reserve, as the Board may find necessary and appropriate pursuant to this Declaration, the By-Laws, and the Articles. 1.14 "Community-Wide Standard": The standard of conduct, maintenance, or other activity generally prevailing throughout the Properties. Such standard may be more specifically determined by the Board of Directors and the Modifications Committee. 1.15 "Declarant": Bellasera Corp., d/b/a Del Webb Bellasera Corp., or any successor, successor-in-title, or assign of Bellasera Corp., d/b/a Del Webb Bellasera Corp., who has or takes title to any portion of the property described on Exhibits "A" or "B" for the purpose of development and/or resale in the ordinary course of business and who is designated as the Declarant in a recorded instrument executed by the immediately preceding Declarant. 1.16 "Design Guidelines": The architectural, design, development, and other guidelines, standards, controls, and procedures including but not limited to, application and review procedures, adopted pursuant to Article XI and applicable to the Properties. 1.17 "Dwelling Unit": Any building or structure or portion of a building or structure situated upon a Lot and which is intended for use and occupancy as an attached or detached residence for a single family. 1.18 "Exclusive Common Area": A portion of the Common Area intended for the exclusive use or primary benefit of one or more, but less than all, Neighborhoods, as more particularly described in Article II. 1.19 "Home Owner": An Owner other than the Declarant or Builder. 1.20 "Lot": A contiguous portion of the Properties, whether improved or unimproved, other than Common Area and property dedicated to the public, which may be independently owned and conveyed and which is intended to be developed, used, and occupied with an attached or detached residence for a single family. The term shall refer to the land, if any, which is part of the Lot as well as any improvements, including any Dwelling Unit, thereon. The term shall include, by way of illustration but not limitation, cluster homes, patio or zero lot line homes, and single-family detached houses on separately platted lots, as well as vacant land intended for development as such. In the case of any structure containing multiple Dwelling Units, each Dwelling Unit shall be deemed to be a separate Lot. Prior to recordation of a subdivision plat, a parcel of vacant land or land on which improvements are under construction shall be deemed to contain the number of Lots designated for residential use for such parcel on the applicable Master Plan, preliminary plat, or the site plan approved by Declarant, whichever is more current. Until a Master Plan, preliminary plat, or site plan has been approved, such parcel shall contain the number of Lots set by Declarant in conformance with the Master Plans. 1.21 "Master Plans": The Water, Waste Water and
Drainage Master Plans, Circulation Plan and Environmental Plan,
Reference No. 499PA96 for the development of 1.22 "Maximum Lots": The number of Lots approved for development under the Ordinance, as it may be amended or superseded from time to time; provided, however, that nothing in this Declaration shall be construed to require the Declarant or any successor to develop the maximum number of Lots approved. The current number of Maximum Lots is 360 Lots. 1.23 "Member": A Person entitled to membership in the Association. 1.24 "Mortgage": A mortgage, a deed of trust, a deed to secure debt, or any other form of security deed. 1.25 "Mortgagee": A beneficiary or holder of a Mortgage. 1.26 ""Natural Area Open Space" or "NAOS": Areas of undisturbed natural desert with no man-made improvements and approved revegetated areas, as designated by the City of Scottsdale. 1.27 "Neighborhood": A separately designated residential area within the Properties. In addition, each parcel of land intended for development as any of the above may constitute a Neighborhood, subject to division into more than one Neighborhood upon development. 1.28 "Neighborhood Assessments": Assessments levied against the Lots in a particular Neighborhood to fund Neighborhood Expenses, as described in Sections 10.1 and 10.4. 1.29 "Neighborhood Committee": Any committee established by the Board for a Neighborhood which has no formal organizational structure or association. 1.30 "Neighborhood Expenses": The actual and estimated expenses incurred or anticipated to be incurred by the Association for the benefit of the Owners of Lots within a particular Neighborhood, which may include a reasonable reserve for capital repairs, replacements and improvements, as the Board may specifically authorize and as may be authorized herein or in a Supplemental Declaration applicable to a Neighborhood. 1.31 "Office of the County Recorder": The Office of the County Recorder of Maricopa County, Arizona. 1.32 "Ordinance": The ordinance number 582N90#2 adopted by the Council of the City of Scottsdale, Maricopa County, Arizona, including the stipulations attached thereto, describing the zoning of the Properties, as such ordinance may be amended or superseded from time to time. 1.33 "Owner": One or more Persons who hold the record title to any Lot, except Persons holding an interest merely as security for the performance of an obligation in which case the equitable owner will be considered the Owner. 1.34 "Person": A natural person, a corporation, a partnership, a trustee, or any other legal entity. 1.35 "Phase": All Lots simultaneously subjected to this Declaration by the Declarant by its execution and recordation of this Declaration and each Supplemental Declaration in the Office of the County Recorder. The property described on Exhibit "A" to this Declaration shall constitute the first Phase ("Phase I"). A Phase may be developed in smaller areas called "Subphases." All Lots within a particular phase which are covered by an original Public Report obtained by Declarant or Builder shall constitute a Subphase. 1.36 "Properties": The real property described in Exhibit "A," together with such additional property as is subjected to this Declaration in accordance with Article IX. Exhibit "A" and each of the Supplemental Declarations which subject additional property to the Declaration shall provide a legal description of the Common Areas included therein, if any. 1.37 "Public Report": A public report issued by the Arizona Real Estate Commissioner for the Lots within any Phase or Subphase of the Properties which authorizes the offering and sale of the Lots in the State of Arizona. 1.38 "Special Assessment": Assessments levied under Section 10.6. 1.39 "Supplemental Declaration": An amendment or supplement to this Declaration filed pursuant to Article IX which subjects additional property to this Declaration and identifies the Common Area within the additional property, if any, and/or imposes, expressly or by reference, additional restrictions and obligations on the land described therein. 2.1 Common Areas. Every Owner shall have a right and nonexclusive easement of use, access, and enjoyment in and to the Common Area, subject to: (a) This Declaration, the By-Laws and any other applicable covenants; (b) Any restrictions or limitations contained in any deed conveying such property to the Association; (c) The right of the Board to adopt rules, regulations or policies regulating the use and enjoyment of the Common Area, including rules restricting use of recreational facilities within the Common Area to occupants of Dwelling Units and their guests, and rules limiting the number of occupants and guests who may use the Common Area, (d) The right of the Board to suspend the right of an Owner to use recreational facilities within the common Area (i) for any period during which any charge against such Owner's Lot remains delinquent, and (ii) for a period not to exceed thirty (30) days for a single violation or for a longer period in the case of any continuing violation, of the Declaration, any applicable Supplemental Declaration, the By-Laws, or rules of the Association after notice and a hearing pursuant to the Section 3.24 of the By-Laws; (e) The right of the Association to dedicate or transfer all or any part of the Common Area to governmental entities pursuant to Section 4.6; (f) The right of the Board to impose reasonable membership requirements and charge reasonable membership, admission, or other fees for the use of any recreational facility situated upon the Common Area; (g) The right of the Board to permit use of any recreational facilities situated on the Common Area by persons other than Owners, their families, lessees, and guests upon payment of use fees established by the Board; (h) The right of the Association to mortgage, pledge, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred, subject to the approval requirements set forth in Section 14.2; (i) The rights of certain Owners to the exclusive use of those portions of the Common Area designated as Exclusive Common Areas, as more particularly described in Section 2.2; and (j) The right of the Association to rent or lease any portion of any clubhouse and other recreational facilities within the Common Area on a short-term basis to any Owner for the exclusive use of such Owner and such Owner's family and guests. Any Owner may extend his or her right of use, access and enjoyment in and to the Common Area to the members of his or her family, co-occupants, lessees, and social invitees, subject to reasonable Board regulation. An Owner who leases his or her Lot shall be deemed to have assigned all such rights to the lessee of such Lot, unless the Board adopts a resolution permitting Owners to reserve such rights and such Owner provides the Board with written notice of such reservation. The Common Area within each Subphase shall be conveyed to the Association prior to or concurrent with the conveyance of the first Lot within such Subphase to a Home Owner. 2.2 Exclusive Common Area. Certain portions of the Common Area may be designated as Exclusive Common Areas and reserved for the exclusive use or primary benefit of Owners, occupants and invitees of Lots within a particular Neighborhood. By way of illustration and not limitation, Exclusive Common Areas may include entry features, recreational facilities, landscaped medians and cul-de-sacs, lakes and other portions of the Common Area within a particular Neighborhood. All costs associated with maintenance, repair, replacement, and insurance of Exclusive Common Areas shall be assessed as a Neighborhood Assessment against the Owners of Lots in those Neighborhoods to which the Exclusive Common Areas is assigned. Exclusive Common Area shall be designated and the exclusive use thereof assigned in the deed conveying the Common Area to the Association or on the plat of survey relating to such Common Area. No such assignment shall preclude the Declarant from later assigning use of the same Exclusive Common Area to additional Lots and/or Neighborhoods, so long as the Declarant has a right to subject additional property to this Declaration pursuant to Section 9.1. Thereafter, a portion of the Common Area may be assigned as Exclusive Common Area of a particular Neighborhood or Neighborhoods and Exclusive Common Area may be reassigned upon the vote of Members representing a majority of the total Class "A" votes in the Association, including a majority of the Class "A" votes within the Neighborhood(s) to which the Exclusive Common Areas are assigned, if applicable, and within the Neighborhood(s) to which the Exclusive Common Areas to be assigned. As long as the Declarant owns any property described on Exhibits "A" or "B" for development and/or sale, any such assignment or reassignment shall also require the Declarant's consent. The Association may, upon approval of a majority of the members of the Neighborhood Committee for the Neighborhood(s) to which certain Exclusive Common Areas are assigned or upon approval by a majority vote of the Owners within such Neighborhood(s), permit Owners of Lots in other Neighborhoods to use all or a portion of such Neighborhood(s), permit Owners of Lots in other Neighborhoods to use all or a portion of such Exclusive Common Areas upon payment of reasonable user fees, which fees shall be used to offset the Neighborhood Expense attributable to such Exclusive Common Areas. Article III: Association Function, Membership and Voting Rights 3.1 Function of Association. The Association shall be the entity responsible for management, maintenance, operation and control of the Area of Common Responsibility. The Association shall be the primary entity responsible for enforcement of this Declaration and such reasonable rules regulating use of the Properties as the Board may adopt. The Association shall also be responsible for administering and enforcing the Design Guidelines. The Association shall perform its functions in accordance with this Declaration, the By-Laws, the Articles, and Arizona law. 3.2 Membership. Every Owner shall be a Member of the Association. There shall be only one membership per Lot. If a Lot is owned by more than one Person, all co--Owners shall share the privileges of such membership subject to reasonable Board regulation and the restrictions on voting set forth in Section 3.3 and the By-Laws, and all such co-Owners shall be jointly and severally obligated to perform the responsibilities of Owners. The membership rights of an Owner which is a corporation, partnership or other legal entity may be exercised by any officer, director, partner, or trustee, or by any other individual designated from time to time by the Owner in a written instrument provided to the Secretary of the Association. 3.3 Voting. The Association shall have two classes of membership, Class "A" and Class "B." (a) Class "A". Class "A" shall be all Owners except the Class "B" Members, if any. Class "A" Members shall have one equal vote for each Lot in which they hold the interest required for membership under Section 3.2; there shall be only one vote per Lot. (b) Class "B." Members shall be the Declarant and any Builder(s) who are Owners. Class "B" Members shall be entitled to three votes for each Lot owned by such Class "B" Member. Unless otherwise specified in this Declaration, the By-Laws or an agreement between Declarant and a Builder, the vote for each Lot owned by Builders shall be exercised by the Declarant in its sole discretion. The Class "B" membership shall cease and be converted to Class "A" membership upon the earlier of the following: (i) when seventy-five percent (75%) of the Maximum Lots are
conveyed to the Home Owners; (iii) when, in its discretion, the Declarant so determines. From and after the first occurrence of these events, the Class "B" Members shall be deemed to be Class "A" Members entitled to one vote for each Lot in which they hold the interest required for membership under Section 3.2. The Declarant shall have a right to disapprove actions of the Board and committees as provided in Section 3.19 of the By-Laws. (c) Exercise of Voting Rights. Except as otherwise specified in this Declaration or the By-Laws or as required by law, the vote for each Lot owned by a Class "A" member shall be exercised by the Owner as it, in its discretion, deems appropriate. In any situation in which a Member is entitled personally to exercise the vote for his or her Lot and there is more than one Owner of a particular Lot, the vote for such Lot shall be exercised as such co-Owners determined among themselves and advise the Secretary of the Association in writing prior to any meeting. Absent such notice to the Association, the Lot's vote shall be suspended if more than one Person seeks to exercise it. 3.4 Neighborhoods. Every Lot shall be located within a Neighborhood. The Lots within a particular Neighborhood may be subject to additional covenants. The Owners of Lots within any Neighborhood which does not have a Neighborhood Committee may elect a Neighborhood Committee, as described in Section 5.3 of the By-Laws, to represent the interests of such Owners. Any Neighborhood may, upon the affirmative vote, written consent, or a combination thereof, of Owners of a majority of Lots within the Neighborhood, require the Association to provide an increased level of service or special services for the benefit of Lots in such Neighborhood, the costs of which shall be assessed against the Lots within such Neighborhood as a Neighborhood Assessment pursuant to Article IX. Exhibit "A" to this Declaration, and each Supplemental Declaration filed to subject additional property to this Declaration, shall initially assign the property described therein to an existing or newly created Neighborhood by name. Subject to any applicable law, the Declarant may unilaterally amend this Declaration or any Supplemental Declaration to redesignate Neighborhood boundaries; provided, however, that two or more Neighborhoods shall not be combined without the consent of Owners constituting a majority of the Lots in the affected Neighborhoods. Article IV: Rights and Obligations of the Association 4.1 Common Area. The Association, subject to the rights of the Owners set forth in this Declaration, shall manage and control the Common Area and all improvements thereon (including, without limitation, furnishings, equipment, and common landscaped areas) and shall keep it in good, clean, attractive, and sanitary condition, order, and repair, consistent with this Declaration and the Community-Wide Standard. 4.2 Personal Property and Real Property for Common Use. The Association may acquire, hold, and dispose of tangible and intangible personal property and real property. Declarant may convey to the Association improved or unimproved real estate located within the properties described in Exhibits "A" or "B," personal property and leasehold and other property interests. Such property shall be accepted by the Association and thereafter shall be maintained as Common Area by the Association at its expense for the benefit of its Members, subject to any restrictions set forth in the deed. The Declarant shall convey the initial Common Area as identified in Exhibit "A" to the Association prior to or concurrent with the conveyance of the first Lot to a Home Owner. 4.3 Enforcement. The Association may impose sanctions for violations of this Declaration, the By-Laws, or rules, in accordance with procedures set forth in the By-Laws, including reasonable monetary fines and suspension of the right to vote and to use any recreational facilities within the Common Areas. In addition, in accordance with Section 3.24 of the By-Laws, the Association may exercise self-help to cure violations and may suspend any services it provides to the Lot of any Owner who is more than thirty (30) days delinquent in paying any assessment or other charge due to the Association. The Association may levy Benefited Assessments to cover costs incurred in bringing a Lot into compliance in accordance with Section 10.7(b) and may seek relief in any court for violations or to abate nuisances. 4.4 Implied Rights: Board Authority. The Association may exercise any right or privilege given to it expressly by this Declaration or the By-Laws or which may be reasonably implied from, or reasonably necessary to effectuate any such right or privilege. Except as otherwise specifically provided in this Declaration, the By-Laws, Articles, or by law, all rights and powers of the Association may be exercised by the Board without a vote of the membership. 4.5 Governmental Interests. So long as the Declarant owns any property described on Exhibits "A" the Declarant may designate sites within the Properties for fire, police and utility facilities, public schools and parks, and other public facilities in accordance with the Master Plans and applicable laws. The sites may include Common Areas if otherwise permitted by the Master Plans. 4.6 Dedication of Common Areas. The Association may dedicate or grant easements over portions of the Common Areas to any local, state or federal governmental entity, subject to such approval as may be required by Section 14.2. 4.7 Security. The Association may maintain or support certain activities within the Properties designed and specifically limited to monitor vehicular access, provided, however, that the Association shall not be obligated to support such activities except as provided in Section 4.11. Neither the Association and its Board, the management company of the Association, the Declarant, nor any successor declarant shall in any way be considered insurers or guarantors of the security of any person or property within the Properties. Neither the Association, the management company of the Association, the Declarant, nor any successor declarant shall be held liable for any loss or damage for failure to provide adequate security or ineffectiveness of security measures undertaken. All Owners and occupants of any Lot, and all tenants, guests, and invitees of any Owner, acknowledge that the Association and its Board, the management company of the Association, the Declarant, any successor declarant, and Modifications Committee do not represent or warrant that any entry gate, patrolling of the Properties, any fire protection system, burglar alarm system, or other security system designed by or installed according to guidelines established by the Declarant or the Modifications Committee may not be compromised or circumvented; nor that any entry gate, patrolling of the Properties, fire protection system, burglar alarm system, or other security systems will prevent loss by burglary, theft, hold-up, or otherwise; nor that any entry gate, patrolling of the Properties, fire protection system, burglar alarm system, or other security systems will in all cases provide the detection or protection for which the system is designed or intended. All Owners and occupants of any Lot and all tenants, guests, and invitees of any Owner, assume all risks for loss or damage to persons, to Lots, and to the contents of Lots and further acknowledge that the Association, its Board and committees, the management company of the Association, the Declarant, or any successor declarant have made no representations or warranties, nor has any Owner, occupant, or any tenant, guest, or invitee of any Owner relied upon any representations or warranties, expressed or implied, relative to any entry gate, patrolling of the Properties, any fire protection system, burglar alarm system, or other security systems recommended or installed or any security measures undertaken within the Properties. 4.8 Powers of the Association Relating to Neighborhoods. Since a Neighborhood Committee is a committee of the Association, the Board shall have all of the power and control over any Neighborhood Committee that it has under applicable law over other committees of the Association. No action of any Neighborhood Committee shall become effective or be implemented until and unless the Association shall have been given written notice of such proposed action and the opportunity to disapprove the proposed action or unless such action is in strict compliance with guidelines set by the Board. The Association shall have ten (10) days from receipt of the notice to disapprove any proposed action. The Association may disapprove any action taken or contemplated by a Neighborhood Committee which the Board reasonably determines to be adverse to the interests of the Association or its Members or inconsistent with the Community-Wide Standard. The Association also may require specific action to be taken by any Neighborhood Committee to fulfill its obligations and responsibilities under this Declaration or any other applicable covenants. Without limiting the generality of the foregoing, the Association may (a) require specific maintenance or repairs or aesthetic changes to be effectuated by the Neighborhood Committee, and (b) require that a proposed Neighborhood budget include the cost of such work. Any action specified by the Association in a written notice pursuant to the foregoing paragraph to be taken by a Neighborhood Committee shall be taken within the reasonable time frame set by the Association in such written notice. If the Neighborhood Committee fails to comply with the requirements set forth in such written notice, the Association shall have the right to effect such action on behalf of the Neighborhood Committee. To cover the Association's administrative expenses in connection with the foregoing and to discourage failure to comply with the requirements of the Association, the Association shall assess the Lots in such neighborhood for their pro rata share of any expenses incurred by the Association in taking such action in the manner provided in Section 10.7. Such assessments may be collected as a Benefited Assessment hereunder and shall be subject to all lien rights provided for herein. 4.9 Recycling Programs: The Board may establish a recycling program and recycling center within the Properties, and in such event all occupants of Dwelling Units shall support such program by recycling, to the extent reasonably practical, all materials which the Association's recycling program or center is set up to accommodate. The Association may, but shall have no obligation to, purchase recyclable materials in order to encourage participation, and any income received by the Association as a result of such recycling efforts shall be used to reduce Common Expenses. 4.10 Provision of Services: The Association may provide services and facilities for the Members of the Association and their guests, lessees and invitees. The Association shall be authorized to enter into contracts or other similar agreements with other entities, including Declarant, to provide such services and facilities. The costs of services and facilities provided by the Association may be funded by the Association as a Common Expense. In addition, the Board shall be authorized to charge additional use and consumption fees for services and facilities. By way of example, some services and facilities which may be provided include landscape maintenance, pest control service, cable television service, security, caretaker, fire protection, utilities, and similar services and facilities. The Board, without the consent of the Class "A" Members of the Association, shall be permitted to modify or cancel existing services or facilities provided, if any, or to provide additional services and facilities. Nothing contained herein can be relied upon as a representation as to what services and facilities, if any, will be provided by the Association. 4.11 Change of Use of Common Areas: During the Class "B" Control Period and without the approval or consent of any Member or other Person, and after the Class "B" Control Period upon: (a) adoption of a resolution by the Board stating that, in the Board's opinion, a service provided by the Association pursuant to Section 4.7 or the then present use of a designated part of the Common Area is no longer in the best interest of the Owners or is no longer necessary or appropriate for the purposes intended; (b) the approval of such resolution by a majority of the Class "A" votes cast at a meeting duly called for such purpose; and (c) the consent of Declarant (so long as Declarant owns any property described on Exhibits "A"), the Board shall have the power and right to terminate such service or to sell, exchange, convey or abandon such Common Area or change the use thereof (and, in connection therewith, construct, reconstruct, alter or change the buildings, structures and improvements thereon in any manner deemed necessary by the Board to accommodate the new improvements thereon in any manner deemed necessary by the Board to accommodate the new use), provided that any such new use: (i) shall be for the benefit of the Owners; Notwithstanding the foregoing provision, if the Board determines, and the resolution of the Board recites, that any transaction involving the disposition or exchange of Common Area will not have an adverse affect on the Association and the Owner, the Board may, in lieu of calling a meeting pursuant to subsection (b) above, give notice to all Owners of the proposed transaction and of any right to object thereto which might be available hereunder, and if Owners representing less than ten percent (10%) of the Class "A" votes object in writing to the Association within thirty (30) days after the giving of such notice, the transaction shall be deemed approved by the Owners and the meeting of the Owners shall not be necessary. 4.12 View Impairment: Neither the Declarant nor the Association guarantees or represents that any view over and across the open space from adjacent Lots will be preserved without impairment. Neither the Declarant nor the Association shall have the obligation to prune or thin trees or other landscaping except as set forth in Article V. The owner of the open space shall have the right, in owner's sole and absolute discretion, to add trees and other landscaping to the open space from time-to-time subject to the Ordinance, applicable law, the Declaration, and the Design Guidelines, if applicable. ANY EXPRESS OR IMPLIED EASEMENT FOR VIEW PURPOSES OR FOR THE PASSAGE OF LIGHT AND AIR ARE HEREBY EXPRESSLY DISCLAIMED. 5.1 Association's Responsibility: The Association shall maintain and keep in good repair the Area of Common Responsibility, which shall include but not be limited to: (a) all Common Areas; (b) all landscaping and other flora, parks, signage, structures, and improvements, including any bike, pedestrian and equestrian pathways and trails, situated upon the Common Area; (c) all private streets, including any asphalt repairs thereto, situated upon the Common Area; (d) all walls and fences situated upon the Common Area, except that the allocation of responsibility for the maintenance and repair of party walls and party fences is set forth in Section 5.5; (e) open space corridors, vista corridors, scenic corridors, buffers, major boulder outcroppings, and washes situated upon the Common Area; (f) landscaping, sidewalk, street lights and signage within public rights-of-way abutting the Properties; (g) landscaping and other flora within any public utility easements and scenic easements within the Common Area (subject to the terms of any easement agreement relating thereto); (h) any additional property included within the Area of Common Responsibility as may be dictated by this Declaration, any Supplemental Declaration, the Covenant to Share Costs, any plat of any portion of the Properties, or any contract or agreement for maintenance thereof entered into by the Association; and (i) any property and facilities owned by the Declarant and made available, on a temporary or permanent basis, for the primary use and enjoyment of the Association and the Association's Members and identified by written notice from the Declarant to the Association until Declarant revokes such privilege of use and enjoyment by written notice to the Association. All watercourses with a one hundred (100) year flow of 750 cfs or greater shall be designated as "Vista Corridors" and shall generally be left in a natural state, except that a Vista Corridor may incorporate streets and utility rights-of-way crossings and storm water management systems, which may include flood control structures, multi-use recreational facilities including golf courses, and other similar improvements, subject to review of the applicable governing jurisdiction. Vista Corridors shall be maintained in such manner as to accommodate the passage of wildlife through the Properties. The Association shall be responsible for the preservation and maintenance of all portions of the Properties designated as NAOS by the applicable governing authority in a nature state as provided by law. The Association may assume maintenance responsibility for property within any Neighborhood, in addition to any property which the Association is obligated to maintain by this Declaration or any Supplemental Declaration, either by agreement with the Neighborhood Association or because, in the opinion of the Board, the level and quality of service then being provided is not consistent with the Community-Wide Standard. All costs of such maintenance shall be assessed as a Neighborhood Assessment against the Lots within the Neighborhood to which the services are provided. The provision of services in accordance with this Section shall not constitute discrimination within a class. The Association may also maintain other property which the Association does not own, including without limitation, property dedicated to public use, if the Board determines that such maintenance is necessary or desirable to maintain the Community-Wide Standard and if otherwise permitted by applicable law. Except as otherwise specifically provided herein, all costs for maintenance, repair and replacement of the Area of Common Responsibility shall be a Common Expense allocated among all Lots as part of the Base Assessment, without prejudice to the right of the Association to seek reimbursement from the Persons responsible for such work pursuant to this Declaration, other recorded covenants, or agreements with such Persons. All costs associated with maintenance, repair and replacement of Exclusive Common Areas shall be a Neighborhood Expense assessed as a Neighborhood Assessment against the Lots within the Neighborhood(s) to which the Exclusive Common Areas are assigned. 5.2 Owner's Responsibility: Each Owner shall maintain their Lot, and Dwelling Unit, and all other structures, parking areas, landscaping, and other improvements comprising the Lot in a manner consistent with the Community-Wide Standard and all applicable covenants, unless such maintenance responsibility is otherwise assumed by or assigned to the Association or a Neighborhood pursuant to any Supplemental Declaration or other declaration of covenants applicable to such Lot. In addition to any other enforcement rights, if an Owner fails properly to perform Owner's maintenance responsibility, the Association may perform such maintenance responsibilities and assess all costs incurred by the Association against the Lot and the Owner in accordance with Section 10.7. The Association shall afford the Owner reasonable notice and an opportunity to cure the problem prior to entry, except when entry is required due to an emergency situation. 5.3 Neighborhood's Responsibility: Upon Board resolution, the Owners of Lots within each Neighborhood shall be responsible for paying, through Neighborhood Assessments, the costs of operating, maintaining and insuring certain portions of the Area of Common Responsibility within or adjacent to such Neighborhood. This may include without limitation, the costs of maintaining any signage, entry features, right-of-way and open space between the Lots within the Neighborhood and adjacent public roads and private streets within the Neighborhood, regardless of ownership and regardless of the fact that such maintenance may be performed by the Association; provided, however, all Neighborhoods which are similarly situated shall be treated the same. All maintenance required of a Neighborhood Committee under this Declaration or any additional covenants or agreements shall be performed consistent with the Community-Wide Standard. If any Neighborhood Committee fails to perform such maintenance, the Association may perform it and assess the costs against all Lots within such Neighborhood as provided in Section 10.7. 5.4 Standard of Performance: Maintenance, as used in this Article, shall include without limitation, repair and replacement as needed, as well as such other duties, which may include irrigation, removal of debris which has not been removed by the Owner, as the Board may determine necessary or appropriate to satisfy the Community-Wide Standard. All maintenance shall be performed in a manner consistent with the Community-Wide Standard and all applicable covenants, as determined by the Board. Portions of the Properties, including but not limited to, some of the washes, buffers, and open space corridors, are environmentally sensitive and/or may provide greater aesthetic value than other portions of the Properties. The Board may establish a higher Community-Wide Standard for such areas and require additional maintenance for such areas to reflect the nature of such property. Notwithstanding anything to the contrary contained herein, neither the Association, nor any Owner, nor any Neighborhood Committee shall be liable for property damage or personal injury occurring on, or arising out of the condition of, property which the Board does not own unless and only to the extent that the Board has been negligent in the performance of the Board's maintenance responsibilities. 5.5 Party Walls and Party Fences: Each wall and fence built as a part of the original construction on the Lots: (i) any part of which is built upon or straddling the boundary line between two (2) adjoining Lots, or between a Lot and the Common Area; or (ii) which, in the reasonable determination of the Board, otherwise serves and/or separates two (2) adjoining Lots or a Lot and the Common Area, regardless of whether constructed wholly within the boundaries of one (1) Lot shall constitute a party wall or party fence (herein referred to as "party structures"). The owners of the property served by a party structure (the "Adjoining Owners") shall own that portion of the party structure lying within the boundaries of their respective properties and shall have an easement for use and enjoyment and, if needed, for support, in that portion, if any, of the party structure lying within the boundaries of the adjoining property. Each Adjoining Owner shall be responsible for maintaining a property insurance policy on that portion of any party structure lying within the boundaries of such Owner's Lot, as more particularly provided in Section 6.3 and shall be entitled to all insurance proceeds paid under such policy on account of any insured loss. With respect to party structures between Lots, the responsibility for the repair and maintenance of party structures and the reasonable cost thereof shall be shared equally by the Adjoining Owners. To the extent damage to a party structure from fire, water, soil settlement, or other casualty is not repaired out of the proceeds of insurance, any Adjoining Owner may restore it. If other Adjoining Owners thereafter use the party structure, they shall contribute to the restoration cost in equal shares without prejudice to any Owner's right to larger contributions from other users under any rule of law. Any Owner's right to contribution from another Owner under this Section shall be appurtenant to the land and shall pass to such Owner's successors-in-title. With respect to party structures between Lots and Common Area, the Association shall be responsible for all maintenance and repair thereof, subject to the provisions of Section 10.7(b), except that each Adjoining Owner shall be responsible for painting and making cosmetic repairs to the portion of the party structure, other than any wrought iron comprising such party structure, facing Their Lot. The Association shall be responsible for all maintenance and repair, including painting and cosmetic repairs, of all wrought iron comprising party structures between Lots and Common Area. The Association shall have the right to access the backyard for maintenance of all wrought iron structures. The costs incurred by the Association in maintaining and repairing party structures pursuant to this Section shall be a Common Expense allocated among all Lots as part of the Base Assessment, without prejudice to the right of the Association to seek reimbursement from the Persons responsible for such work pursuant to this Declaration, other recorded covenants, or agreements with such Persons. Article VI: Insurance and Casualty Losses 6.1 Association Insurance: The Association, acting through the Association's Board or the Association's duly authorized agent, shall obtain and continue in effect if reasonably available the following types of insurance: (a) blanket property insurance covering risks of physical loss on an "all-risk" basis (or comparable coverage by whatever name denominated) for all insurable improvements on the Common Area and on other portions of the Area of Common Responsibility to the extent that it has assumed responsibility for maintenance, repair and/or replacement in the event of a casualty. Such insurance shall include coverage for flood and earth movement to the extent that such insurance is reasonably available. In addition, the Association may, upon request of a Neighborhood Association, and shall, if so specified in a Supplemental Declaration applicable to the Neighborhood Association, obtain and continue in effect property insurance covering risks of physical loss on an "all risk" basis for all insurable improvements in the Neighborhood. All property insurance policies obtained by the Association shall have policy limits sufficient to cover the fully insurable replacement costs of the insured property. Costs of property insurance obtained by the Association on the behalf of a Neighborhood shall be charged to the Owners of Lots within the benefited Neighborhood as a Neighborhood Assessment; (b) commercial general liability insurance on the Area of Common Responsibility, insuring the Association and the Association's Members for damage or injury caused by the negligence of the Association or any of the Association's Members, employees, agents, or contractors while acting on the Association's behalf and including coverage for non-owned automobile liability. If generally available at reasonable cost, the commercial general liability insurance shall have a limit of at least $3,000,000 per occurrence with respect to bodily injury, personal injury, and property damage; (c) worker's compensation insurance and employer's liability insurance if and to the extent required by law; (d) directors and officers liability insurance or equivalent Association liability insurance; (e) commercial crime insurance, including employee fidelity insurance, in an amount determined by its best business judgment but not less than one-sixth (1/6) of the annual Base Assessments on all Lots plus reserves on hand. Such commercial crime insurance shall cover funds held by the Association's management company, unless such management company's insurance insures the Association against crimes committed by or against such management company. Fidelity insurance policies shall contain a waiver of all defenses based upon the exclusion of persons serving without compensation; and (f) such additional insurance as the Board, in the Board's best business judgment, determines advisable. 6.2 Association Policy Requirements: The Association shall arrange for an annual review of the sufficiency of insurance covering by one or more qualified persons, at least one of whom must be familiar with insurable replacement costs in the Maricopa County, Arizona area. Except as otherwise provided in Section 6.1 with respect to property within a Neighborhood, premiums for all insurance on the Area of Common Responsibility shall be Common Expenses and shall be included in the Base Assessment. However, premiums for insurance on Exclusive Common Areas may be included in the Neighborhood Assessment of the Neighborhood(s) benefited unless the Board reasonably determines that other treatment of the premiums is more appropriate. The policies may contain a reasonable deductible and the amount thereof shall not be subtracted from the face amount of the policy in determining whether the insurance at least equals the coverage required hereunder. In the event of an insured loss, the deductible shall be treated as a Common Expense or a Neighborhood Expense in the same manner as the premiums for the applicable insurance coverage. However, if the Board reasonably determines, after notice and an opportunity to be heard in accordance with Section 3.24 of the Bylaws, that the loss is the result of the negligence or willful conduct on one or more Owners, their guests, invitees, lessees then the Board may assess the full amount of such deductible against such Owner(s) and the Owner's Lots in accordance with Section 10.7. (a) All insurance coverage obtained by the Board shall: (i) be written with a company authorized to do business in
the State of (ii) be written in the name of the Association as trustee for the benefited parties. Policies on the Common Area shall be for the benefit of the Association and the Association's Members. Insurance coverage secured on behalf of a Neighborhood shall be for the benefit of the Neighborhood Association, if any, the Owners of Lots within the Neighborhood, and their Mortgagees, as their interests may appear; (iii) not be brought into contribution with insurance purchased by individual Owners, occupants, or their Mortgagees; (iv) include an agreed amount endorsement if the policy contains a co-insurance clause; and (v) contain replacement cost coverages. (b) In addition, the Board shall secure, if reasonably available, insurance policies providing the following: (i) a waiver of subrogation as to any claims against the Association's
Board, officers, employees, and the Association's manager and
the Owners; (iii) an endorsement preventing the Association's insurance carrier from invoking its "other insurance" clause to obtain any contribution from any insurance maintained by individual Owners; (iv) an endorsement requiring at least thirty (30) days prior written notice to the Association of any cancellation, substantial modification, or non-renewal; (v) a cross-liability provision; (vi) a provision vesting the Board with exclusive authority to adjust losses; provided, however, no Mortgage having an interest in such losses may be prohibited from participating in the settlement negotiations, if any, related to the loss; and (vii) a provision listing the Lot Owners as additional insured under the policy. 6.3 Owner's Insurance: By virtue of taking title to a Lot, each Owner covenants and agrees with all other Owners and with the Association to carry property insurance for the full insurable replacement cost on Owner's Lot(s), less a reasonable deductible, unless either the Neighborhood in which the Lot is located or the Association carries such insurance (which they are not obligated to do hereunder). Each Owner further covenants and agrees that in the event of damage to or destruction of the Dwelling Unit or any other structures on or comprising Owner's Lot, Owner shall proceed promptly to repair or to reconstruct in a manner consistent with the original construction or such other plans and specifications as are approved in accordance with Article XI of this Declaration. Alternatively, the Owner shall clear the Lot of all debris and ruins and maintain the Lot in a neat and attractive landscaped condition consistent with the Community-Wide Standard. The Owner shall pay any costs which are not covered by insurance proceeds. Additional recorded covenants applicable to any Neighborhood may establish more stringent requirements regarding the standards the rebuilding or reconstructing structures on the Lots within such Neighborhood and the standards for clearing and maintaining the Lots in the event the structures are not rebuilt or reconstructed. 6.4 Damage and Destruction: (a) Immediately after damage or destruction to all or any part of the Properties covered by insurance written in the name of the Association, the Board or the Association's duly authorized agent shall file and adjust all insurance claims and obtain reliable and detailed estimates of the cost of repair or reconstruction. Repair or reconstruction, as used in this Section, means repairing or restoring the Property to substantially the condition in which the Property existed prior to the damage, allowing for changes or improvements necessitated by changes in applicable building codes. (b) Any damage to or destruction of the Common Area shall be repaired or reconstructed unless the Owners representing at least seventy-five percent (75%) of the total Class "A" votes and the Declarant, as long as the Declarant owns any property described in Exhibits "A" and "B" of the Declaration, decide within sixty (60) days after the loss not to repair or reconstruct. Any damage to or destruction of the common property of any Neighborhood Association shall be repaired or reconstructed unless the Owners representing at least seventy-five percent (75%) of the total vote of the Neighborhood Association decide within sixty (60) days after the damage or destruction not to repair or reconstruct. If the Neighborhood Association's covenants, if any, require a greater percentage of Owners within the Neighborhood to approve, then such provision shall control. If either the insurance proceeds or reliable and detailed estimates of the cost of repair or reconstruction, or both, are not available to the Association within such sixty (60) day period, then the period shall be extended for not more than sixty (60) additional days. No Mortgagees shall have the right to participate in the determination of whether the damage or destruction to the Common Area or common property of a Neighborhood Association shall be repaired or reconstructed. (c) If determined in the manner described above that the damage or destruction to the Common Area or to the common property of any Neighborhood Association shall not be repaired or reconstructed and no alternative improvements are authorized, the affected property shall be cleared of all debris and ruins and maintained by the Association or the Neighborhood Association, as applicable, in a neat and attractive, landscaped condition consistent with the Community-Wide Standard. 6.5 Disbursement of Proceeds: Any insurance proceeds remaining after paying the costs of repair or reconstruction, or after such settlement as is necessary and appropriate, shall be retained by and for the benefit of the Association or the Neighborhood Association, as appropriate, and placed in a capital improvements account. This is a covenant for the benefit of Mortgagees and may be enforced by the Mortgagee of any affected Lot. 6.6 Repair and Reconstruction: If insurance proceeds are insufficient to cover the costs of repair or reconstruction, the Board may, without a vote of the Owners, levy Benefited Assessments against those Owners responsible for the premiums for the applicable insurance coverages under Section 6.1. Except as permitted in this Declaration, the Common Area shall remain undivided, and no Person shall bring any action for partition of the whole or any part thereof without the written consent of all Owners and Mortgagees. Whenever any part of the Common Area shall be taken or conveyed under threat of condemnation by any authority having the power of eminent domain, each Owner shall be entitled to notice thereof. The Board may convey Common Area under threat of condemnation only if approved in writing by (i) Owners representing at least sixty-seven percent (67%) of the total Class "A" votes in the Association and (ii) Declarant, as long as Declarant owns any property described on Exhibits "A" or "B". The award made for such taking shall be payable to the Association as trustee for all Owners to be disbursed as follows: · If the taking involves a portion of the Common Area on which improvements have been constructed, the Association shall restore or replace such improvements on the remaining land included in the Common Area to the extent practicable, unless within sixty (60) days after such taking the Declarant, so long as the Declarant owns any property described in Exhibits "A" and "B" of this Declaration, and owners representing at least sixty-seven percent (67%) of the total Class "A" votes in the Association shall otherwise agree. Any such construction shall be in accordance with plans approved by the Board. The provisions of Sections 6.5 and 6.6 regarding funds for the repair of damage or destruction shall apply. · If the taking does not involve any improvements on the Common Area, or if a decision is made not to repair or restore, or if net funds remain after any such restoration or replacement is complete, then such award or net funds shall be disbursed to the Association and used for such purposes as the Board shall determine. Article IX: Annexation and Withdrawal of Property 9.1 Annexation Without Approval of Membership: Prior to the issuance of the first Public Report, Declarant may unilaterally subject to the provisions of this Declaration all or portions of the real property described in Exhibit "B" until all property described on Exhibit "B" has been subjected to this Declaration or thirty (30) years after the recording of this Declaration, whichever is earlier. After the issuance of the first Public Report, Declarant may unilaterally subject to the provisions of this Declaration all or any portion of the real property described in Exhibit "B" until the earlier of: (a) the date on which all property described on Exhibit "B" has been subjected to this Declaration; or (b) the later of: (i) four (4) years from the issuance of the most recent Public Report; or (ii) four (4) years from the date of recording of the most recent Supplemental Declaration to annex additional property. Declarant may transfer or assign this right to annex property, provided that the transferee or assignee is the developer of at least a portion of the real property described in Exhibits "A" and "B" and that such transfer is memorialized in a written, recorded instrument executed by Declarant. Nothing in this Declaration shall be construed to require the Declarant or any successor to annex or develop any of the property set forth in Exhibit "B" in any manner whatsoever. Such annexation shall be accomplished by filing a Supplemental Declaration in the office of the County Recorder describing the property to be annexed and specifically subjecting it to the terms of this Declaration. Such Supplemental Declaration shall not require the consent of the Owners, but shall require the consent of the owner of such property, if other than Declarant. Any such annexation shall be effective upon the filing for record of such Supplemental Declaration unless otherwise provided therein. 9.2 Annexation with Approval of Membership: The Association or the Declarant may subject any real property to the provisions of this Declaration with the consent of the owner of such property, the affirmative vote of Owners representing sixty-seven percent (67%) of the Class "A" votes of the Association represented at a meeting duly called for such purpose, and the consent of the Declarant so long as Declarant owns property subject to this Declaration or which may become subject to this Declaration in accordance with Section 9.1. Such annexation shall be accomplished by filing a Supplemental Declaration in the office of the County Recorder describing the property to be annexed and specifically subjecting it to the terms of this Declaration. Any such Supplemental Declaration shall be signed by the President and the Secretary of the Association, and by the owner of the annexed property. Any such annexation shall be effective upon filing unless otherwise provided therein. 9.3 Withdrawal of Property: The Declarant reserves the right to amend this Declaration so long as Declarant has a right to annex additional property pursuant to this Article, without prior notice and without the consent of any Person, for the purpose of removing property then owned by the Declarant, declarant's affiliates, or the Association from the coverage of this Declaration, to the extent originally included in error or as a result of any change in the Declarant's plans for the Properties, provided such withdrawal is not unequivocally contrary to the overall, uniform scheme of development for the Properties. 9.4 Additional Covenants and Easements: The Declarant may unilaterally subject any portion of the property submitted to this Declaration initially or by Supplemental Declaration to additional covenants and easements, including covenants obligating the Association to maintain and insure such property on behalf of the Owners and obligating such Owners to pay the costs incurred by the Association through Neighborhood Assessments. Such additional covenants and easements shall be set forth in a Supplemental Declaration filed either concurrent with or after the annexation of the subject property and shall require the written consent of the owner(s) of such property, if other than the Declarant. 9.5 Amendment: This Article shall not be amended without the prior written consent of Declarant so long as the Declarant owns any property described in Exhibits "A" or "B" 9.6 Phasing of Construction: In addition to and not in lieu of the rights provided in this Article, and subject to any applicable regulations of any governing jurisdiction, and subject to the Declarant's prior written approval, any Builder or Declarant shall have the right to develop their Lots in Subphases, which include less than all Lots in a Phase. 10.1 Creation of Assessments: The Association may levy assessments
against each Lot for Association expenses as the Board may specifically
authorize from time-to-t-ime. There shall be four (4) types of
assessments for Association expenses: (b) Neighborhood Assessments for Neighborhood Expenses benefiting only Lots within a particular Neighborhood or Neighborhoods; (c) Special Assessments as described in Section 10.6; and (d) Benefited Assessments as described in Section 10.7. Each Owner, by accepting a deed or entering into a recorded contract of sale for any portion of the Properties is deemed to covenant and agree to pay these assessments. All assessments (except as otherwise provided in Section 10.7[b]), together with interest from the due date of such assessment at a rate determined by the Association (not to exceed the highest rate allowed by Arizona law), late charges, costs, including lien fees and administrative costs, monetary penalties, and reasonable attorneys' fees, shall be a charge and continuing lien upon each lot against which the assessment is levied until paid, as more particularly provided in Section 10.10. Each such assessment, together with interest, late charges, costs, including lien fees and administrative costs, monetary penalties, and reasonable attorneys' fee, also shall be the personal obligation of the Person who was the Owner of such Lot at the time the assessment arose. Upon a transfer of title to a Lot, the grantee shall not be liable for any assessments and other charges due at the time of conveyance unless expressly assumed by grantee. No first Mortgagee who obtains title to a Lot by exercising the remedies provided in its Mortgage shall be liable for unpaid assessments which accrued prior to such acquisition of title. Assessments shall be paid in such manner and by such dates as the Board may establish. Unless the Board otherwise provides, the Base Assessment and any Neighborhood Assessment shall be due and payable annually, billed at the Board's discretion. If any Owner is delinquent in paying any assessments or other charges levied on Owner's Lot, the Board may require any unpaid installments of all outstanding assessments to be paid in full immediately. The Association shall, upon request by an Owner, furnish to any Owner a certificate in writing signed by an officer of the Association setting forth whether assessments for such Owner's Lot have been paid and any delinquent amount. Such certificate shall be conclusive evidence of payment. The Association may require the advance payment of a reasonable processing fee for the issuance of such certificate. No Owner may exempt themselves from liability for assessments, by non-use of Common Area, abandonment of Owner's Lot or Dwelling Unit, or any other means. The obligation to pay assessments is a separate and independent covenant on the part of each Owner. No diminution or abatement of assessments or set-off shall be claimed or allowed for any alleged failure of the Association or Board to take some action or perform some function required of it or for inconvenience or discomfort arising from repairs or improvements or other action taken by it. 10.2 Declarant's and Builder's Obligation for Assessments: During the Class "B" Control Period, Declarant may annually elect either to pay regular assessments on all of Declarant's unsold Lots or to pay the difference between the amount of assessments collected on all other Lots subject to assessment and the amount of actual expenditures by the Association during the fiscal year notwithstanding the commencement date for assessments set forth in Section 10.9. If the Declarant elects to pay regular assessments, the assessments for Lots owned by the Declarant shall be calculated in the same manner as set forth below with regard to assessments on Lots owned by Builders. Unless the Declarant otherwise notifies the Board in writing at least sixty (60) days before the beginning of each fiscal year, the Declarant shall be deemed to have elected to continue paying on the same basis as during the immediately preceding fiscal year. Builders are subject to the payment of assessments against Lots which they own, provided, however, any Lot owned by a Builder which does not include a completed Dwelling Unit shall be exempt from payment of that portion of any such assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and the use of the Dwelling Unit. The exemption may include, but is not necessarily limited to: (a) roof replacement; (b) exterior maintenance; (c) walkway and carport lighting; (d) refuse disposal; (e) cable television; and (f) domestic water supplied to Lots. This exemption from the payment of assessments attributed to Lots shall be in effect only until the earliest of the following events: (a) a certificate of occupancy for the Dwelling Unit has been
Issued; Builders shall be exempt from the payment of that portion of any assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and use of any Common Area that is not complete at the time assessments commence. Any exemption from the payment of assessments attributed to Common Area facilities shall be in effect only until the earlier of the following events: (a) a notice of completion of the Common Area has been recorded; or (b) the Common Area has been placed into use. The Association is specifically authorized to enter into subsidy contracts or contracts for "in kind" contribution of services, materials, or a combination of services and materials with the Declarant or other entities for payment of Common Expenses. The Declarant's payment of assessments may be reduced or abated by the agreed value of any such services or materials provided by Declarant, in accordance with any such contract or agreement with the Association. 10.3 Computation of Base Assessment: The Board shall prepare a budget covering the Common Expenses estimated to be incurred during the coming year pursuant to the terms and provisions set forth in the Bylaws. The budget shall include a capital contribution to establish a reserve fund in accordance with a budget separately prepared as provided in Section 10.5, but shall not include expenses incurred during the Class "B" Control Period for initial development, original construction, installation of infrastructure, original capital improvements, or other original construction costs unless approved by Owners representing a majority of the total Class "A" vote of the Association. The Base Assessment shall be levied equally against all Lots subject to assessment and shall be set at a level which is reasonably expected to produce total income for the Association equal to the total budgeted Common Expenses, including reserves. In determining the level of assessments, the Board, in its sole discretion, may consider other sources of funds available to the Association. In addition, the Board shall take into account the number of Lots subject to assessment under Section 10.9 on the first (1st ) day of the fiscal year for which the budget is prepared and the number of Lots reasonably anticipated to become subject to assessment during the fiscal year. The Declarant may, but shall not be obligated to, reduce the Base Assessment for any fiscal year by payment of a subsidy (in addition to any amounts paid by Declarant under Section 10.2), which may be either a contribution, an advance against future assessments due from the Declarant, or a loan, in the Declarant's discretion. Any such subsidy shall be disclosed as a line item in the Common Expense budget. The payment of such subsidy in any year shall not obligate the Declarant to continue payment of such subsidy in future years, unless otherwise provided in a written agreement between the Association and the Declarant. In accordance with the Bylaws, the Board shall make available at reasonable times a copy of the budget, or a summary thereof, and notice of the amount of the Base Assessment for the following year to each Owner not less than thirty (30) days prior to the beginning of the fiscal year for which it is to be effective. 10.4 Computation of Neighborhood Assessments: The Board shall prepare a separate budget for each Neighborhood covering the estimated Neighborhood Expenses, if any, expected to be incurred on behalf of such Neighborhood during the coming year pursuant to the terms and provision set forth in Section 3.21(f) of the Bylaws. The Board shall be entitled to set such budget only to the extent that: (a) this Declaration, any Supplemental Declaration, or the Bylaws specifically authorizes the Board to assess certain costs as a Neighborhood Assessment; or (b) the Association expects to incur expenses to provide additional services for a Neighborhood. Any Neighborhood may request that additional services or an increased level of services be provided by the Association, and in such case, any additional costs shall be added to such budget. Such budget shall include a capital contribution establishing a reserve fund for repair and replacement of capital items maintained as a Neighborhood Expense, if any, within the Neighborhood. Neighborhood expenses shall be levied as a Neighborhood Assessment against all Lots within the benefited Neighborhood and shall be allocated equally among those Lots. If specified in the Supplemental Declaration applicable to such Neighborhood or if directed by petition signed by a majority of the Owners within the Neighborhood, any portion of the assessment intended for exterior maintenance of Dwelling Units or other structures, insurance on Dwelling Units or other structures, or replacement reserves which pertain to particular structures shall be levied on each of the benefited Lots in proportion to the benefit received. Such proportion shall be specified in the Supplemental Declaration applicable to such Neighborhood, or if not so specified, shall be approved by a majority of the Owners within the Neighborhood, and Declarant, as long as Declarant owns any portion within such Neighborhood. The Board shall make available at reasonable times a copy of such budget, or a summary thereof, and notice of the amount of the Neighborhood Assessment for the coming year to be delivered to each Owner of the Lot in the Neighborhood not less than thirty (30) days prior to the beginning of the fiscal year. 10.5 Reserve Budget and Capital Contribution: The Board shall prepare, on an annual basis, reserve budgets for both general and Neighborhood purposes which take into account the number and nature of replaceable assets, the expected life of each asset, and the expected repair or replacement cost of each asset. The Board shall include in Base Assessments and Neighborhood Assessments capital contributions in amounts sufficient to meet these projected needs. 10.6 Special Assessments: In addition to other authorized assessments, the Association may levy Special Assessments from time-to-time to cover unbudgeted expenses or expenses in excess of those budgeted subject to the limitations set forth in Section 10.8. Such Special Assessments may be levied against the entire membership, if for Common Expenses, or against the Lots within any Neighborhood, if for Neighborhood Expenses. Special Assessments shall be payable in such manner and at such times as determined by the Board and may be payable in installments extending beyond the fiscal year in which the Special Assessment is approved. 10.7 Benefited Assessments: The Board may levy Benefited Assessments against particular Lots for expenses incurred or to be incurred by the Association, as follows: (a) to cover the costs, including overhead and administrative costs, of providing benefits, items, or services to the Lot or occupants thereof upon request of the Owner pursuant to a menu of special services which the Board may from time-to-time authorize to be offered to Owners (which might include without limitation, landscape maintenance, caretaker service, etcetera), which assessments may be levied in advance of the provision of the requested benefit, item or service as a deposit against charges to be incurred by the Owner; and (b) to cover costs incurred in bringing the Lot into compliance with the terms of this Declaration, any applicable Supplemental Declaration, the Bylaws, the Design Guidelines, or rules of the Association, or costs incurred as a consequence of the conduct of the Owner or occupants of the Lot, their licensees, invitees, or guests; provided, the Board shall give the Lot Owner prior written notice and an opportunity for hearing before levying a Benefited Assessment under this subsection (b). The Association may also levy a Benefited Assessment against the Lots within a Neighborhood to reimburse the Association for costs incurred in bringing the Neighborhood into compliance with the provisions of the Declaration, any applicable Supplement Declaration, the Articles, the Bylaws, the Design Guidelines, and rules of the Association, provided the Board gives the Owners from such Neighborhood prior written notice and an opportunity to be heard before levying any such assessment. 10.8 Limitation of Increases of Assessments: Notwithstanding any provision to the contrary, and except for assessment increases necessary for emergency situations or to reimburse the Association pursuant to Section 10.7, the Board may not impose a Base Assessment, Neighborhood Assessment, or Benefited Assessment that is more than twenty percent (20%) greater than each of those assessments for the immediately preceding fiscal year nor impose a Special Assessment which in the aggregate exceed five percent (5%) of the budgeted Common Expenses or Neighborhood Expenses, as the case may be, for the current fiscal year, without a majority vote of a quorum of Owners representing the Lots which are subject to the applicable assessment at a meeting of the Association. For purposes of this Section, "quorum" means the Owners representing more than thirty percent (30%) of the Lots which are subject to the applicable assessment. For purposes of this Section, the term "Base Assessment" or "Neighborhood Assessment" shall be deemed to include the amount assessed against each Lot plus a pro rata allocation of any amounts the Association received through any subsidy or maintenance agreement, if any, in effect for the year immediately preceding the year for which the assessment is to be increased. An emergency situation is any one of the following: (a) an extraordinary expense required by an order of a court; (b) an extraordinary expense necessary to repair or maintain the Properties or any part of them for which the Association is responsible where a threat to personal safety on the Properties is discovered; or (c) an extraordinary expense necessary to repair or maintain the Properties or any part of them for which the Association is responsible which could not have been reasonably foreseen by the Board in preparing and distributing the pro forma budget pursuant to Section 10.3. However, prior to the imposition or collection of such an assessment, the Board shall pass a resolution containing a written finding as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. Such resolution shall be distributed to the Members with the notice of such assessment. 10.9 Date of Commencement of Assessments: Subject to Section 10.2, the obligation to pay the assessments provided for herein shall commence as to all Lots within each Subphase on the earlier of; (a) the first (1st) day of the month following the conveyance of the first (1st) Lot in the Subphase to a Homeowner; (b) the first (1st) day of the month following conveyance of the Common Area in the Subphase to the Association. The first (1st) assessment against each Lot shall be adjusted according to the number of days remaining in the fiscal year at the time assessments commence on the Lot. 10.10 Lien for Assessments: All assessments authorized in this Article, excluding Benefited Assessments under Section 10.7(b), shall constitute a lien against the Lot against which they are levied until paid unless otherwise specifically precluded in this Declaration. The lien shall also secure payment of interest, late charges (subject to the limitations of Arizona law), and costs of collection (including attorneys' fees, lien fees and administrative costs). Such lien shall be superior to all other liens, except: (a) the liens of all taxes, bonds, assessments, and other levies which by law would be superior; and (b) the lien or charge of any first Mortgage of record (meaning any recorded Mortgage with first priority over other Mortgages) made in good faith and for value. The Association may enforce such lien, when delinquent, by suit, judgment, and foreclosure. The Association may bid for the Lot at the foreclosure sale and acquire, hold, lease, mortgage, and convey the Lot. While a Lot is owned by the Association following foreclosure: (a) no right to vote shall be exercised on its behalf; (b) no assessment shall be levied on it; and (c) each other Lot shall be charged, in addition to its usual assessment, its equal pro rata share of the assessments that would have been charged such Lot had it not been acquired by the Association. The Association may sue for unpaid Common Expenses and costs without foreclosing or waiving the lien securing the same. The sale or transfer of any Lot shall not affect the assessment lien or relieve such Lot from the lien for any subsequent assessments. However, a Mortgagee holding a first Mortgage of record or other purchase of a Lot who obtains title pursuant to foreclosure of the Mortgage shall not be personally liable for assessments on such Lot due prior to such acquisition of title. Such unpaid assessments shall be deemed to be Common Expenses collectible from Owners of all Lots subject to assessment under Section 10.9, including such acquirer, acquirer's successors and assigns. 10.11 Failure to Assess: Failure of the Board to fix assessment amounts or rates or to deliver or mail each Owner an assessment notice shall not be deemed a waiver, modification, or a release of any Owner from the obligation to pay assessments. In such event, each Owner shall continue to pay Base Assessments and Neighborhood Assessments on the same basis as for the last year for which an assessment was made, if any, until a new assessment is made, at which time the Association may retroactively assess any shortfalls in collections. 10.12 Exempt Property: The following property shall be exempt from payment of Base Assessments, Neighborhood Assessments, and Special Assessments: (a) all Common Area: (b) all property dedicated to and accepted by any governmental authority or public utility; and In addition, the Declarant shall have the right, but not the obligation, to grant exemptions to certain Persons qualifying for Section 501(c) status under the Internal Revenue Code so long as such Persons own property subject to this Declaration for purposes listed in Section 501(c).
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