Village at Ledge Stone Condominium Owners Association, Inc.

Condominium Declaration

Condominium Declaration

Unofficial reading copy. This is a text version of the recorded instrument, provided for readability and accessibility. The authoritative version is the recorded instrument on file with the Hays County Clerk — Doc. No. 06035025, Official Public Records of Hays County, Texas (Vol. 3054, Pg. 359). If this copy and the recorded instrument differ, the recorded instrument controls.

Recorded PDF Hays County record ↗ All governing documents

After Recording Return To: Robert D. Burton Armbrust & Brown, L.L.P. 100 Congress Ave Ste 1300 Austin, Texas 78701-2744

VILLAGE AT LEDGE STONE

DEVELOPMENT AREA DECLARATION AND DECLARATION OF CONDOMINIUM REGIME FOR VILLAGE AT LEDGE STONE CONDOMINIUMS

[BUSH RANCH, PHASE 1, RESIDENTIAL CONDOMINIUM LOT]

Hays County, Texas

Declarant: 290 EAST BUSH, INC., a Texas corporation

Cross reference to that certain Village at Ledge Stone Master Covenant, recorded as Document No. 06034956 in the Official Public Records of Hays County, Texas. The terms and provisions of the aforementioned document also apply to the Development Area encumbered by this Development Area Declaration and Declaration of Condominium Regime.

Table of Contents

290 EAST BUSH, INC., a Texas corporation ("Declarant"), is the owner Lot 1, Block D, Bush Ranch, Phase 1. a subdivision located in Hays County, Texas, according to the map or plat recorded in Vol. 13, Page 225, et. seq., in the Plat Records of Hays County, Texas, together with all Improvements thereon and all easements, rights, and appurtenances thereto (collectively, the "Property"). The Property is hereby submitted to the terms and provisions of the Texas Condominium Act, Chapter 82 of the Texas Property Code, for the purpose of creating the Village at Ledge Stone Condominiums.

A. Pursuant to that one certain Village at Ledge Stone Master Covenant, recorded as Document No. 06034956 in the Official Public Records of Hays County, Texas (the "Master Covenant")., the Property is subject to the terms and provisions of the Master Covenant.

B. The Master Covenant permits the Declarant to file Development Area Declarations applicable to specific Development Areas, as those terms are used and defined in the Master Covenant, which shall be in addition to the covenants, conditions, and restrictions of the Master Covenant.

A Development Area is a portion of Village at Ledge Stone community is subject to the terms and provisions of both the Master Covenant and a Development Area Declaration. A Development Area may correspond to one or all of the lots or condominium units reflected on a recorded plat. A Development Area Declaration includes specific restrictions which apply to the Development Area. In order to determine what restrictions apply to your condominium unit, you must consult the terms and provisions of the Master Covenant the terms and provisions of this Development Area Declaration.

C. Declarant intends for this Development Area Declaration and Declaration of Condominium Regime to serve as one of the Development Area Declarations permitted under the Master Covenant and desires that the Property described and identified herein shall constitute one of the Development Areas which is permitted, contemplated and defined under the Master Covenant.

D. Declarant desires to create upon the Property a residential community and carry out a uniform plan for the improvement and development of the Property for the benefit of the present and all future owners thereof.

E. Declarant desires to provide a mechanism for the preservation of the community and for the maintenance of common areas and, to that end, desires to subject the Property to the covenants, conditions, and restrictions set forth in this Declaration for the benefit of the Property,

and each owner thereof, which shall be in addition to the covenants, conditions, and restrictions set forth in the Master Covenant.

NOW, THEREFORE, it is hereby declared that (i) the Property will be held sold, conveyed, leased, occupied, used, insured, and encumbered with this Declaration, including the representations and reservations of Declarant, set forth on Appendix A attached hereto, which will run with the Property, together with all improvements thereon and all easements, rights, and appurtenances thereto, and be binding upon all parties having right, title, or interest in or to such property, their heirs, successors, and assigns and shall inure to the benefit of each owner thereof; and (ii) this Declaration shall supplement and be in addition to the covenants. conditions, and restrictions of the Master Covenant. In the event of a conflict between the terms and provision of this Declaration and the Master Covenant, the terms of the Master Covenant will control.

ARTICLE 1 — DEFINITIONS

Unless otherwise defined in this Declaration, terms defined in Section 82.003 of the Act have the same meaning when used in this Declaration. The following words and phrases, whether or not capitalized, have specified meanings when used in the Documents, unless a different meaning is apparent from the context in which the word or phrase is used.

1.1. "Act" means Chapter 82 of the Texas Property Code, the Texas Uniform Condominium Act, as it may be amended from time to time.

1.2. "Applicable Law" means the statutes and public laws and ordinances in effect at the time a provision of the Documents is applied, and pertaining to the subject matter of the Document provision. Statutes and ordinances specifically referenced in the Documents are "Applicable Law" on the date of the Document, and are not intended to apply to the Property if they cease to be applicable by operation of law, or if they are replaced or superceded by one or more other statutes or ordinances.

1.3. "Architectural Reviewer" means Declarant during the Development Period. After expiration of the Development Period, the rights of the Architectural Reviewer will automatically be transferred to the Board.

1.4. "Assessment" means any charge levied against a Unit or Owner by the Association, pursuant to the Documents, the Act, or other public law, including but not limited to Regular Assessments, Special Assessments, Utility Assessments, Individual Assessments, and Deficiency Assessments as defined in Article 5 of this Declaration.

1.5. "Association" means Village at Ledge Stone Condominium Owners Association, Inc., a Texas non-profit corporation, the Members of which shall be the Owners of Units within the Regime. The term "Association" shall have the same meaning as the term "unit owners association" in Section 202.001(2) of the Texas Property Code. The failure of the Association to maintain its corporate charter from time to time does not affect the existence or legitimacy of the

Association, which derives its authority from this Declaration, the Certificate, the Bylaws, and the

1.6. "Board" means the Board of Directors of the Association.

1.7. "Builder'' means any party who constructs any General Common Elements, Limited Common Elements, Unit or any Improvement within the Regime

1.8. "Building" means a residential dwelling constructed within a Unit.

1.9. "Bylaws" mean the bylaws of the Association, as they may be amended from time to time.

1.10. "Certificate" means the Certificate of Formation of the Association filed in the Office of the Secretary of State of Texas, as the same may be amended from time to time.

1.11. "Common Element" means all portions of the Property save and except the Units. All Common Elements are "General Common Elements" except if such Common Elements have been allocated as "Limited Common Elements" by this Declaration for the exclusive use of one or more but less than all of the Units.

1.12. "Community Manual" means the community manual, adopted by the Board for the benefit of the Association as part of the initial project documentation for the Regime. The Community Manual shall include the Rules, and may also include such other policies governing the Association as the Board determines to be in the best interests of the Association, in its sole and absolute discretion.

1.13. "Declarant" means 290 EAST BUSH, INC., a Texas corporation, which is developing the Property, or the successors and assigns thereof which acquire any portion of the Property for the purpose of development and is designated as a Successor Declarant in accordance with this Declaration. A designation of a Successor Declarant must be expressly set forth in writing and Recorded.

1.14. "Declarant Control Period" means that period of time during which Declarant controls the operation and management of the Association, pursuant to Appendix "A" of this Declaration. The duration of Declarant Control Period is from the date this Declaration is recorded until one hundred and twenty (120) days after title to seventy-five percent (75%) of the maximum Units that may be created have been conveyed to Owners other than Declarant.

1.15. "Declaration" means this document, as it may be amended from time to time.

1.16. "Development Owner'' means any Owner who acquires a Unit for the purpose of resale to a Homebuilder.

1.17. "Development Period" means the fifteen (15) year period beginning on the date this Declaration is recorded, during which Declarant has certain rights as more particularly described on Appendix "A", attached hereto, including rights related to development, construction, expansion, and marketing of the Property. The Development Period is for a term

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of years and does not require that Declarant own any portion of the Property. Declarant may terminate the Development Period by recording a notice of termination.

During the Development Period, Appendix "A" has priority over the terms and provisions of this Declaration.

1.18. "Documents" mean, singly or collectively as the case may be, this Declaration, the Plat and Plans, attached hereto as Attachment 1, the Certificate, Bylaws, the Community Manual, and the Rules of the Association, as each may be amended from time to time. An appendix, exhibit, schedule, or certification accompanying a Document is a part of that Document

The Documents are subject to amendment or modification from time to time. By acquiring a Unit in Village at Ledge Stone Condominiums, you agree to comply with the terms and provisions of the Documents, as amended or modified.

1.19. "General Common Elements" mean Common Elements which are no t Limited Common Elements. General Common Elements refer to those portions of the Property that are designated as GCE "General Common Element", "General Common Area", "Common Area", or

by the notation "General Common Elements", "GCE", "General Common Area", "Common Area", or "Common Areas'' on Attachment 1. attached hereto. 4th Amendment Attachment only designated GCE's

1.20. "Homebuilder" means any Owner who is in the business of constructing residences for resale to third parties and intends to construct a residence on any portion of the Property for resale to a third party.

1.21. "Improvement" means every Building, structure and all appurtenances of every type and kind, whether temporary or permanent in nature, including, but not limited to, buildings, outbuildings, greenhouses, gazebos, storage sheds, patios, recreational facilities, swimming pools, garages, driveways, parking areas and/or facilities, storage buildings, sidewalks, fences, gates, screening walls, retaining walls, stairs, patios, decks, walkways, landscaping, mailboxes, poles, signs, antenna, exterior air conditioning equipment or fixtures, exterior lighting fixtures, water softener fixtures or equipment, and poles, pumps, wells, tanks, reservoirs, pipes, lines, meters, antennas, towers and other facilities used in connection with water, sewer, gas, electric, telephone, regular or cable television, or other utilities.

1.22. "Landscape Services" mean the following services: (a) mowing and edging all Yard Space turf areas at least once per week during the months of May through September of each year, and on an as-needed basis during the months of October through April; (b) applying fertilizer to the Yard Space turf areas twice a year; (c) manually and mechanically controlling weeds in the Yard Space as required to maintain a manicured appearance; (d) controlling fire ants in the Yard Space VU.LAGE AT LEDGE STONE CONDOMINIUMS

turf areas with applications of "Logic" or approved equal in the spring and fall. Notwithstanding the foregoing, the Board will have the right to modify the Landscape Services provided hereunder from time to time.

1.23. "Limited Common Elements", if any, mean those portions of the Property reserved for the exclusive use of one or more Owners to the exclusion of other Owners. Limited Common Elements are designated as "LCE", or "Limited Common Elements", or "Limited Common Areas" on Attachment 1. attached hereto. 4th Amendment Attachment 1 has no designations of any LCE's

1.24. "Majority''. means more than half.

1.25. "Master Association" means the "Village at Ledge Stone Property Owners' Association, Inc.", a Texas non-profit corporation, and the "Association" established pursuant to the Master Covenant.

1.26. "Master Covenant" means · that certain Villa&e at Ledge Stone Master Covenant, recorded as Document No. 06034956 in the Official Public Records of Hays County, Texas.

1.27. "Member'' means a member of the Association, each Member being an Owner of a Unit, unless the context indicates that member means a member of the Board or a member of a committee of the Association.

1.28. "Mortgagee" means a holder, insurer, or guarantor of a purchase money mortgage secured by a recorded senior or first deed of trust lien against a Unit.

1.29. "Owner'' means a holder of recorded fee simple title to a Unit. Declarant is the initial Owner of all Units. Mortgagees who acquire title to a Unit through a deed in lieu of foreclosure or through judicial or non-judicial foreclosure are Owners. Persons or entities having ownership interests merely as security for the performance of an obligation are not Owners. Every Owner is a Member of the Association.

1.30. "Person" shall mean any individual or entity having the legal right to hold title to real property.

1.31. "Plat and Plans" means the plat and plans attached hereto as Attachment 1. as changed, modified, or amended in accordance with this Declaration.

1.32. "Property'' means Lot 1, Block D, Bush Ranch, Phase 1, a subdivision of record in Hays County, Texas, according to the map or plat recorded in Vol. 13, Page 225, et. seq., in the Plat Records of Hays County, Texas, together with all Improvements thereon and all easements, rights, and appurtenances thereto, and includes every Unit and Common Element thereon.

1.33. "Recorded" means recorded in the Official Public Records of Hays County, Texas.

1.34. "Regime" means the Property, Units, General Common Elements, and Limited Common Elements that comprise the condominium regime established under this Declaration.

1.35. "Resident" means an occupant or tenant of the residence within a Unit, regardless of whether the person owns the Unit.

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1.36. "Rules" means rules and regulations of the Association adopted in accordance with the Documents or the Act. The initial Rules may be adopted by Declarant for the benefit of the Association.

1.37. "Underwriting Lender" means a national institutional mortgage lender, insurer, underwriter, guarantor, or purchaser on the secondary market, such as Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), or Government National Mortgage Association (Ginnie Mae), singularly or collectively. The use of this term and these institutions may not be construed as a limitation on an Owner's financing options or as a representation that the Property is approved by any institution.

1.38. "Unit" means a physical portion of the Property designated by this Declaration for separate ownership, the boundaries of which are shown on the Plat and Plans attached hereto as Attachment 1. as further described in Section 4.2 of this Declaration.

1.39. "Yard Space" means the front yard and the side yard portion of a Non-Owner Occupied Lot to a point which is the further of: (i) fifteen feet (15') beyond the front corner of the residence constructed upon the Lot or (ti) to the side yard fence line (if any) of the residence constructed upon the Lot. In the event of any dispute concerning what constitutes the Yard Space of a Lot, the Board"s determination of such area will be final, binding and conclusive.

ARTICLE 2 — PROPERTY SUBJECT TO DOCUMENTS

2.1. Subject To Documents

The Property is held, transferred, sold, conveyed. leased, occupied, used, insured, and encumbered subject to the terms, covenants, conditions, restrictions, liens, and easements of this Declaration, including Declarant' s representations and reservations as set forth on Appendix "A". attached hereto, which run with the Property, bind all parties having or acquiring any right, title, or interest in the Property, their heirs. successors, and assigns, and inure to the benefit of each Owner of the Property.

2.2. Additional Property

Additional real property may be annexed to the Property and subjected to the Declaration and the jurisdiction of the Association on approval of Owners representing at least two-thirds of the ownershlp interests in the Property, or, during the Development Period. by Declarant as permitted in Appendix "A". Annexation of additional property is accomplished by the Recording of a declaration of annexation, which will include a description of the additional real property. The declaration of annexation will also include a description of the Units and Common Elements added to the Regime.

Notwithstanding the foregoing. or any provision to the contrary in this Declaration: (i) any future Improvements constructed within the Regime shall be consistent with the initial Improvements in terms of quality of construction; and (ti) no additional real property may be

~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - U - = - - < l ; - . 1 ' . . . . . : ; , ~ sannexed to the Property and subjected to the Declaration and the jurisdiction of the Association after that date which is fifteen (15) years after the date on which this Declaration was Recorded.

2.3. Neighborhood Designation

Section 3.02 of the Master Covenant provides that Declarant may, by executing a written notice (expressly including any Development Area Declaration), and recording same in the Official Public Records of Hays County, Texas, create one or more new Neighborhoods (as defined in the Master Covenant), and designate any portion of the property encumbered by the Master Covenant as a part of any such newly created Neighborhood. Accordingly, Neighborhood "Cl" is hereby created, and includes Units 1 through 11, Units 55 through 86, and Units 115 through 137.

In accordance with the authority reserved to Declarant pursuant to Section 3.02 of the Master Covenant, by executing a written notice, and recording same in the Official Public Records of Hays County, Texas, Declarant will be entitled to unilaterally: (i) amend any previously created Neighborhood to add additional portions of the Property to such Neighborhood, or to withdraw from any previously created Neighborhood any portion of the Property which has been previously designated as a part of such Neighborhood; (ii) create one or more new Neighborhoods within the Property, and designate any portion of the Property as a part of any such newly created Neighborhood.

2.4. Adjacent Land Use

Declarant makes no representations of any kind as to current or future uses, actual or permitted, of any land that is adjacent to or near the Property.

2.5. Merger

Merger or consolidation of the Association with another association must be evidenced by an amendment to this Declaration. The amendment must be approved by Owners of at least two-thirds (2/3) of the Units. On merger or consolidation of the Association with another association, the property, rights, and obligations of another association may, by operation of law, be added to the properties, rights, and obligations of the Association as a surviving corporation pursuant to the merger. The surviving or consolidated association may administer the provisions of the Documents within the Property, together with the covenants and restrictions established on any other property under its jurisdiction. No merger or consolidation, however, will effect a revocation, change, or addition to the covenants established by this Declaration within the Property.

2.6. Recorded Easements and Licenses

In addition to the easements and restrictions contained in this Declaration, the Property is subject to all easements, licenses, leases, and encumbrances of record, including those described in the attached Attachment 1, and any shown on a recorded plat, each of which is incorporated herein by reference. Each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, covenants and agrees to be bound by prior-recorded easements, licenses, leases, and encumbrances. Each Owner further agrees to maintain any easement that crosses his Unit and for which the Association does not have express responsibility.

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2.7. Common Elements

The Common Elements of the Property consist of all of the Property, save and except the Units.

2.7.1. Ownership & Maintenance. The designation of Common Elements is determined by this Declaration. The Declarant may install, construct, or authorize certain Improvements on Common Elements in connection with the initial development of the Property, and the cost thereof is not a common expense of the Association. Thereafter, all costs attributable to Common Elements, including m aintenance, insurance, and enhancements, are automatically the responsibility of the Association, or and where this Declaration elsewhere provides for a different allocation for a specific Common Element.

2.7.2. Acceptance. By accepting an interest in or title to a Unit, each Owner is deemed: (i) to accept the Common Elements of the Property, and any hnprovement thereon, in its then-existing condition; (ii) to acknowledge the authority of the Association, acting through the Board, and the authority of the Master Association, acting through its Board of Directors, for decisions pertaining to the Common Elements;

(iii) to acknowledge that transfer of a Common Element's title (if any) to the Association by or through the Declarant is a ministerial task that does not require acceptance by the Association; and (iv) to acknowledge the continuity of maintenance of the Common Elements, regardless of changes in the Board or management of the Association or the Board of Directors or management of the Master Association.

ARTICLE 3 — PROPERTY EASEMENTS, RIGHTS AND RESTRICTIONS

3.1. General

In addition to other easements, rights and restrictions established by the Documents, the Property is subject to the easements, rights and restrictions contained in this Article.

3.2. Owner's Easement of Enjoyment

Every Owner is granted a right and easement of enjoyment over the General Common Elements and to use of Improvements therein, subject to other rights and easements contained in the Documents. An Owner who does not occupy a Unit delegates this right of enjoyment to the Residents of his Unit, and is not entitled to use the General Common Elements.

3.3. Owner's Maintenance Easement

Each Owner is hereby granted an easement over and across any adjoining Unit and Common Elements to the extent reasonably necessary to maintain or reconstruct such Owner's Unit, subject to the consent of the Owner of the adjoining Unit, or the consent of the Association in the case of Common Elements, and provided that the Owner's use of the easement granted hereunder does not damage or materially interfere with the use of the adjoining Unit or Common Element, and further provided that that the Owner's use of the easement granted hereunder does not extend to entry

into any residence. Requests for entry into an adjoining Unit must be made to the Owner of such Unit in advance. The consen t of the adjoining Unit Owner will not be unreasonably withheld; however, the adjoining Unit Owner may require that access to its Unit be limited to Monday through Friday, between the hours of 8 a.m. until 6 p.m., and then only in conjunction with actual maintenance or reconstruction activities. Access to the Common Elements for the purpose of maintaining or reconstructing any Unit shall be made in advance to the Board. The consent of the Board will not be unreasonably withheld; h owever, the Board may require that access to the Common Elements be limited to Monday trough Friday, between the hours of 8 a.m. until 6 p.m., and then only in conjunction with actual maintenance or reconstruction activities. In addition, the Board may require that the Owner abide by adclitional reasonable rules with respect to use and protection of the Common Elements during any such maintenance or reconstruction. If an Owner damages an adjoining Unit or Common Element in exercising the easement granted hereunder, the Owner will be required to restore the Unit or Common Element to the condition which existed prior to any such damage, at such Owner's expense, within a reasonable period of time not to exceed thirty (30) days after the date the Owner is notified in writing of the damage by the Association or the Owner of the damaged Unit.

3.4. Ingress/Egress Easement

Each Owner is hereby granted a perpetual easement over the Property, as may be reasonably required, for vehicular and pedestrian ingress to and egress from his Unit or the Limited Common Elements, if any, assigned thereto. Such easement shall be subject, in any event, to any Rules goveming or limiting each Owner's right of ingress and egress granted hereby. Adclitionally, each owner of a "Lot" or "Condominium Unit" (as such terms are defined in the Master Covenant) is hereby granted a perpetual easement over the Property, as may be reasonably required, for vehicular and pedestrian ingress to and egress from his Lot and/or Condominium Unit.

3.5. Owner's Encroachment Easement

Every Owner is granted an easement for the existence and continuance of any encroachment by his Unit on any adjoining Unit or Common Element now existing or which may come into existence hereafter, as a result of construction, repair, shifting, settlement, or movement of any portion of a building, or as a result of condemnation or eminent domain proceedings, so that the encroachment may remain undisturbed so long as the Improvement stands.

3.6. Easement Of Cooperative Support

Each Owner is granted an easement of cooperative support over each adjoining Unit and Limited Common Element as needed for the common benefit of the Property, or for the benefit of Units, or Units that share any aspect of the Property that requires cooperation. By accepting an interest in or title to a Unit, each Owner: (i) acknowledges the necessity for cooperation in a condominium; (ii) agrees to try to be responsive and civil in communications pertaining to the Property and to the Association; (iii) agrees to provide access to his Unit and Limited Common Elements when needed by the Association to fulfill its duties; and (iv) agrees to try refraining from actions that interfere with the Association or Master Association's maintenance and operation of the Property.

3.7. Easement for Maintenance by Master Association

As set forth more fully in Article 8, the streets, sidewalks and greenbelt park that constitute General Common Elements within the Regime (collectively, the "VLS Common Elements") will be designated as Master Community Facilities as defined in the Master Covenant and will be maintained and repaired by the Master Association. Each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, hereby grants to the Master Association an easement of access and entry over, across, under, and through the Property, including without limitation, the VLS Common Elements, as may be necessary or convenient for the Master Association to maintain and repair the VLS Common Elements. In addition, each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, hereby grants to the members of the Master Association an easement of access and entry over and across the VLS Common Elements, subject to reasonable rules adopted from time to time by the Board.

3.8. Access Easement

Each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, grants to the Association an easement of access and entry over, across, under, and through the Property, including without limitation, all Common Elements and the Owner's Unit and all Improvements thereon for the following purposes:

(i) To perform inspections and/or maintenance that is permitted or required of the Association by the Documents or by Applicable Law.

(ii) To perform maintenance that is permitted or required of the Owner by the Documents or by Applicable Law, if the Owner fails or refuses to perform such maintenance.

(iii) To enforce the Documents, including without limitation, the architectural standards and use restrictions.

(iv) To exercise self-help remedies permitted by the Documents or by Applicable Law.

(v) To respond to emergencies.

(vi) To grant easements to utility providers as may be necessary to install, maintain, and inspect utilities serving any portion of the Property.

(vii) To perform any and all functions or duties of the Association, as permitted or required by the Documents or by Applicable Law.

3.9. Association's Easement for Yard Maintenance on Units.

(i) The Association will cause to be provided Landscape Services to the Yard Space of each Unit and, accordingly, the Association is hereby granted an easement over and across each Unit to the extent reasonably necessary or convenient for the Association or its designated landscaping contractor to perform the Landscape Services within the Yard Space of such Unit. Access to the Yard Space of each Unit is limited to Monday through Friday, between the hours of 7 a.m. until 6 p.m., and then only in conjunction with actual performance of Landscape Services. If the Association damages any Improvements located within a Unit in exercising the easement granted hereunder, the Association will be required to restore such Improvements to the condition which existed prior to any such damage, at the Association's expense, within a reasonable period of time not to exceed thirty (30) days after the date the Association is notified in writing of the damage by the Owner of the damaged Improvements.

(ii) The Association or its designated landscape company may, from time to time, provide each Owner of a Unit with a schedule of dates on which the Landscape Services will be performed.

(ill) The cost of all Landscape Services will be paid by the Owner of each Unit to which the Association provides Landscape Services as an Individual Assessment.

(iv) From time to time, the Association may cause the Landscape Services to be provided by the Master Association; provided, however, that all costs incurred by the Master Association to provide the Landscape Services will be levied by the Association as an Individual Assessment against those Units receiving such services.

3.10. Utility Easement

The Association and Declarant (during the Development Period) may grant permits, licenses, and easements over the Common Elements for utilities, and other purposes reasonably necessary for the proper operation of the Regime. Declarant (during the Development Period) and the Association may grant easements over and across the Units and Common Elements to the extent necessary or required to provide utilities to Units; provided, however, that such easements will not unreasonably interfere with the use of any Unit for residential purposes. A company or entity, public or private, furnishing utility service to the Property, is granted an easement over the Property for ingress, egress, meter reading, installation, maintenance, repair, or replacement of utility lines and equipment, and -to do anything else necessary to properly maintain and furnish utility service to the Property; provided, however, this easement may not be exercised without prior notice to the Board. Utilities may include, but are not lirnlted to, water, sewer, trash removal, electricity, natural gas, telephone, cable television, and security.

NOTICE PLEASE READ CAREFULLY THE FOLLOWING PROVISIONS ENTITLED "SECURITY" AND "INJURY TO PERSON OR PROPERTY". THE PROVISIONS LIMIT THE RESPONSIBILITY OF DECLARANT AND TIIE ASSOCIATION FOR CERTAIN CONDITIONS AND ACTIVITIES.

3.11. Security

The Association and/or the Master Association may, but is not obligated to, maintain or support certain activities within the Property designed, either directly or indirectly, to improve safety in or on the Property. Each Owner and Resident acknowledges and agrees, for himself and hls guests, that Declarant, the Association, the master Association, and their respective directors, officers, committees, agents, and employees are not providers, insurers, or guarantors of security within the Property. Each Owner and Resident acknowledges and accepts as hls sole responsibility to provide security for hls own person and property, and assumes all risks for loss or damage to same. Each Owner and Resident further acknowledges that Declarant, the Association, the Master Association, and their respective directors, officers, committees, agents, and employees have made no representations or warranties, nor has the Owner or Resident relied on any representation or warranty, express or implied, including any warranty of merchantability or fitness for any particular purpose, relative to any fire, burglary, and/or intrusion systems recommended or installed, or any security measures undertaken within the Property. Each Owner and Resident acknowledges and agrees that Declarant, the Association, the Master Association and their respective directors, officers, committees, agents, and employees may not be held liable for any loss or damage by reason of any failure to provide adequate security or the ineffectiveness of security measures undertaken.

3.12. Injury to Person or Property

Neither the Association, the Master Association, nor Declarant, or their respective directors, officers, committees, agents, and employees have a duty or obligation to any Owner, Resident or their guests: (a) to supervise minor children or any other person; (b) to fence or otherwise enclose any Limited Common Element, General Common Element, or other Improvement; or (c) to provide security or protection to any Owner, Resident, or their guests, employees, contractors, and invitees from harm or loss. By accepting title to a Unit, each Owner agrees that the lirnltations set forth in this section are reasonable and constitute the exercise of ordinary care by the Association, the Master Association, and Declarant. Each Owner agrees to indemnify and hold harmless the Association, the Master Association, and Declarant, and Declarant's agents from any claim of damages, to person or property arising out of an accident or injury in or about the Regime to the extent and only to the extent caused by the acts or omissions of such Owner, hls tenant, hls guests, employees,

contractors, or invitees to the extent such claim is not covered by insurance obtained by the Association or the Master Association at the time of such accident or injury.

3.13. Easement to Inspect and Right To Correct

For a period of ten (10) years after the expiration of the Development Period, Declarant reserves for itself and for Declarant's architect, engineer, other design professionals, builder, and general contractor the right, but not the duty, to inspect, monitor, test, redesign, correct, and relocate any structure, Improvement, or condition that may exist on any portion of the Property, and a perpetual nonexclusive easement of access throughout the Property to the extent reasonably necessary to exercise this right. Declarant will promptly repair, at its sole expense, any damage resulting from the exercise of this right. By way of illustration but not limitation, relocation of a screening wall located may be warranted by a change of circumstance, imprecise siting of the original wall, or desire to comply more fully with public codes and ordinances. This Section may not be construed to create a duty for Declarant, the Master Association or the Association, and may not be amended without Declarant's written and acknowledged consent. In support of this reservation, each Owner, by accepting an interest in or title to a Unit, hereby grants to Declarant an easement of access and entry over, across, under, and through the Property, including without limitation, all Common Elements and the Owner's Unit and all Improvements thereon for the purposes contained in this Section.

3.14. Restriction on Transfer of Units

Unless otherwise approved in advance by Declarant during the Development Period, no Owner may offer a Unit for sale or advertise or otherwise market or attempt to market a Unit for sale in any way until the earlier to occur of: (i) twelve (12) months after the date on which such Owner acquired his Unit from the Declarant; or

(ii) the date on which Declarant no longer owns any Unit within the Regime.

Notwithstanding the foregoing, the following Unit conveyances will not be subject to the resale restriction set forth in this Section:

3.14.1. Conveyance to the Association. Any conveyance to the Association or its successors or assignees.

3.14.2. Conveyance to or from Declarant, a Homebuilder or a Development Owner. Any conveyance to or from Declarant, a Homebuilder or a Development Owner, or any of their respective successors or assigns.

3.14.3. Exempt Family or Related Conveyances. Any conveyance, whether outright or in trust, that is for the benefit of the Owner making such conveyance or his or her relatives, but only if there is no more than nominal consideration for such conveyance. For the purposes of this exclusion, the relatives of an Owner shall include all lineal descendants of any grandparent of the Owner, and the spouses of the descendants. Any person's stepchildren and adopted children shall be recognized as descendants of that person for all purposes of this exclusion.

3.14.4. Exemption for Conveyances on Death. Any conveyance or change of interest by reason of death, whether provided for in a will, trust or decree of distribution.

3.14.5. Exempt Technical Conveyances. Any conveyance made solely for the purpose of confirming, correcting, modifying or supplementing a conveyance previously recorded, making minor boundary adjustments, removing clouds on titles, or granting easements, rights-of-way or licenses.

3.14.6. Exempt Court Ordered Conveyance. Any conveyance pursuant to any decree or order of a court of record determining or vesting title, including a final order awarding title pursuant to a condemnation proceeding.

3.14.7. Exempt Conveyance to Satisfy Certain Debts. Any conveyance to secure a debt or other obligation or to release property which is security for a debt or other obligation, including conveyances in connection with foreclosure of a deed of trust or mortgage or conveyances in connection with a deed given in lieu of foreclosure.

3.15. Private Streets

Any private streets located within the Property are General Common Elements, are administered by the Association and are maintained by the Master Association. The Association, acting through the Board has the express authority to adopt, amend, repeal, and enforce the rules, regulations and procedures for use of private streets, including but not limited to:

(i) Identification of vehicles used by Owners and Residents and their guests.

(ii) Designation of parking or no-parking areas.

(iii) Limitations or prohibitions on curbside parking.

(iv) Removal or prohibition of vehicles that violate applicable rules and regulations.

(v) Fines for violations of applicable rules and regulations.

ARTICLE 4 — UNITS, LIMITED COMMON ELEMENTS & ALLOCATIONS

4.1. Initial Submitted Units and Maximum Number of Units

The Regime initially consists of sixty-six (66) Units. During the Development Period, Declarant, as permitted in Appendix "A", has reserved the right to create a total of one-hundred thirty-seven (137) Units Units. To add Units to the Regime, Declarant during the Development Period may, from time to time, file an amendment to this Declaration creating such additional Units. The initial Units subject to the Regime and each Unit added to the Regime by Declarant MUST BE BUILT. To

add additional units to the Regime established by the Declaration, Declarant shall prepare, execute, and record an amendment to this Declaration and the Plat and Plans which amendment will: (i) assign an identifying number to each new unit; (ii) reallocate the Common Interest Allocation among all units then existing within the Regime; (iii) describe any Limited Common Elements, if any, created or designated to each new unit; and (iv) with respect to new units, include the information required by Section 82.055 and Section 82.059(b )of the Texas Uniform Condominium Act. No assurance is given as to the dispersion of new units, total number of new units, or size of such units.

4.2. Units.

4.2.1. Unit Boundaries. The boundaries and identifying number of each Unit are shown on the Plat and Plans attached hereto as Exhibit "B". The boundaries of each Unit are further described as follows:

(i) Lower Boundary of the Unit: The horizontal plane corresponding to the finished grade of the land within the Unit as described and defined on Exhibit "B".

(ii) Upper Boundary of the Unit: The horizontal plane parallel to and fifty feet (50') above the lower boundary of the Unit.

(iii) Lateral Boundaries of the Unit: A plane located on each side of a Unit perpendicular to the lower and upper horizontal planes, from the lower boundary of the Unit to the upper boundary of the Unit.

Ownership of a Unit includes the entire Building, including the roof and foundation, and all other Improvements located within or exclusively serving the Unit.

4.2.2. What a Unit Includes. Each Unit includes the spaces and improvements within the lower, upper, and lateral boundaries defined in Section 4.2.1. above, including without limitation the Building, the roof and foundation of the Building, landscaping, driveways, sidewalks, fences, yards, utility lines and meters and all other Improvements located within the Unit. In addition to the Building and the Improvements within the Unit, each Unit also includes improvements, fixtures, and equipment serving the Building or Unit exclusively, whether located within, outside, or below the Unit, whether or not attached to or contiguous with the Building, including but not limited to any below-grade foundation, piers, retaining walls, fence, or other structural supports; plumbing, sewerage, and utility lines, pipes, drains, and conduits; landscape irrigation and subterranean components of plant material, including roots of trees on the Unit; and any other below-grade item that serves or supports the Building or Unit exclusively.

C,onc,Le, ~LCVJ,

Not a T~ical Condominium Unit Although a Unit resembles a platted lot; (i) a Unit does not include land; (ii) the conveyance of a Unit is not a metes and bounds conveyance of land; and (iii) the creation of a Unit does not constitute a subdivision of land. Instead, each Unit is the surface of a designated piece of land, and everything above the surface for 50 feet, and anything below the surface that serves or supports the above~surface improvements.

4.3. Building Size

The space contained within the vertical and horizontal boundaries of the Unit is not related to the size of the Building. A Building will only occupy a portion of a Unit in a location approved in advance by the Architectural Reviewer.

4.4. Designation Of Limited Common Elements.

4.4.l. Shown on Plats and Plans. Portions of the Common Elements may be allocated as Limited Common Elements on the Plats and Plans, attached hereto as Attachment 1. by use of "LCE" and the identifying number of the Unit to which the Limited Common Element is appurtenant, or by use of a comparable method of designation.

4.4.2. Appurtenant Areas. Only to the extent they are not part of the Unit, any front porch or sidewalk that is obviously intended for the sole and exclusive use of the Unit to which the area is appurtenant is deemed a Limited Common Element, whether or not the area is so designated on Plats and Plans. If the boundaries of an appurtenant area change, with the Board's approval, the altered boundaries of the appurtenant area are the boundaries of the Limited Common Element.

4.5. Subsequent Allocation Of Limited Common Elements

A Common Element not allocated by this Declaration as a Limited Common Element may be so allocated only pursuant to the provisions of this Article. Declarant reserves the right in Appendix "A" of this Declaration, to create and assign Limited Common Elements within the Property.

4.6. Common Interest Allocation

The percentage of interest in the Common Elements (the "Common Interest Allocation") is allocated to each Unit is set forth on Attachment 2. The Common Interest Allocation set forth on Attachment 2 has been assigned to each Unit in accordance with a ratio of 1 to the total number of Units that MUST BE BUILT. The same formula will be used in the event the allocated interests are reallocated as a result of any increase or decrease in the number of Units subject to this Declaration. In the event an amendment to this Declaration is filed which reallocates the Common Interest Allocation as a result of any increase or decrease in the number of Units, the reallocation will be effective on the date such amendment is Recorded.

4.7. Common E,q,ense Liabilities

The percentage of liability for common expenses allocated to each Unit and levied pursuant to Article 5 is equivalent to the Common Interest Allocation assigned to the Unit.

4.8. Votes

One (1) vote is allocated to each Unit. The one vote appurtenant to each Unit is weighted equally for all votes, regardless of the other allocations appurtenant to the Unit. In other words, the one vote appurtenant to each Unit is uniform and equal to the vote appurtenant to every other Unit.

ARTICLE 5 — COVENANT FOR ASSESSMENTS

5.1. Puzyose of Assessments

The Association will use Assessments for the general purposes of preserving and enhancing the Regime, and for the benefit of Owners and Residents, including but not limited to maintenance of real and personal property, management, and operation of the Association, and any expense reasonably related to the purposes for which the Property was developed. If made in good faith, the Board's decision with respect to the use of Assessments is final.

5.2. Personal Obligation

An Owner is obligated to pay Assessments levied by the Board against the Owner or the Owner's Unit. Payments are made to the Association at its principal office or at any other place the Board directs. The Board is expressly authorized to permit the Master Association to collect any Assessments provided for hereunder and, if the Board so elects, to direct that payment of Assessments be made directly to the Master Association at such place as it may direct. Payments must be made in full regardless of whether an Owner has a dispute with the Association, the Master Association, another Owner, or any other person or entity regarding any matter to which this Declaration pertains. No Owner may exempt himself from his Assessment liability by waiver of the use or enjoyment of the Common Elements or by abandonment of his Unit. An Owner's obligation is not subject to offset by the Owner, nor is it contingent on the Association's performance of the Association's duties. Payment of Assessments is both a continuing affirmative covenant personal to the Owner and a continuing covenant running with the Unit.

5.3. Types of Assessments

There are four (4) types of Assessments: Regular, Special, Individual, and Deficiency Assessments. Additionally, each Unit is subject to the terms and provisions of the Master Covenant and each Owner will be a mandatory member of the Master Association and will be required to pay assessments to the Master Association in accordance with the Master Covenant.

5.4. Regular Assessments.

5.4.l. Purpose of Regular Assessments. Regular assessments are used for common expenses related to the recurring, periodic, and anticipated responsibilities of the Association as provided for pursuant to this Declaration (including, without limitation, any expense which the Association is required by law or the Documents to pay, or which in the opinion of the Board is necessary or proper for the operation and maintenance of the Regime or for enforcement of the Documents).

5.4.2. Annual Budget-Regular. The Board will prepare and approve an annual budget with the estimated expenses to be incurred by the Association for each fiscal year. The budget will take into account the estimated income and common expenses for the year, conbibutions to reserve funds, and a projection for uncollected receivables. The Board will make the budget or a summary of the budget available to the Owner of each Urtlt, although failure to receive a budget or budget summary will not affect an Owner's liability for Assessments. The Board will provide copies of the budget to Owners who make written request and pay a reasonable copy charge.

5.4.3. Basis of Regular Assessments. Regular Assessments will be based on the annual budget, minus estimated income from sources other than Regular Assessments. Each Urtlt will be liable for its allocated share of the annual budget. If the Board does not approve an annual budget or fails to determine new Regular Assessments for any year, or delays in doing so, Owners will continue to pay the Regular Assessment as last determined.

5.4.4. Supplemental Increases. If during the course of a year the Board determines that Regular Assessments are insufficient to cover the estimated common expenses for the remainder of the year, the Board may increase Regular Assessments for the remainder of the fiscal year in an amount that covers the estimated deficiency.

5.5. Special Assessments

In addition to Regular Assessments, the Board may levy one or more Special Assessments against all Units for the purpose of defraying, in whole or in part, common expenses not anticipated by the annual budget or reserve funds. Special Assessments may be used for the same purposes as Regular Assessments. Special Assessments do not require the approval of the Owners, except that Special Assessments for the following purposes must be approved by at least a majority of the votes in the Association:

(i) acquisition of real property; and (ii) construction of additional Improvements within the Regime (excluding the repair or replacement of existing Improvements).

5.6. Individual Assessments

In addition to Regular and Special Assessments, the Board may levy an individual Assessment against an Owner and the Owner's Urtlt. Individual Assessments may include, but are not limited to: interest, late charges, and collection costs on delinquent Assessments; reimbursement for costs incurred in bringing an Owner or the

Owner's Unit into compliance with the Documents; fines for violations of the Documents; transfer-related fees and resale certificate fees; fees for estoppel letters and project documents; insurance deductibles; sub-metered utilities serving the Unit; reimbursement for damage or waste caused by willful or negligent acts of the Owner, the Owner's guests, invitees or Residents of the Owner's Unit; common expenses that benefit fewer than all of the Units, which may be assessed according to benefit received; fees or charges levied against the Association on a per-Unit basis; and "pass through" expenses for services to Units provided through the Association and which are equitably paid by each Unit according to benefit received.

5.7. Deficiency Assessments

The Board may levy a Deficiency Assessment against all Units for the purpose of defraying, in whole or in part, the cost of repair or restoration for General Common Elements if insurance proceeds or condemnation awards prove insufficient.

5.8. Working Capital Fund

Upon the transfer of a Unit (including both transfers from Declarant to the initial Owner, and transfers from one Owner to a subsequent Owner), a working capital fee in an amount equal to two (2) months of Regular Assessments will be paid by the Owner who acquired the Unit to the Association for the Association's working capital fund. Upon termination of the Development Period (and only at such time), the Board will be permitted to modify any working capital fund assessment payable on the transfer of a Unit. Each working capital contribution will be collected upon the conveyance of the Unit from one Owner to another (expressly including any re-conveyances of the Unit upon resale or transfer thereof). Notwithstanding the foregoing provision, the following transfers will not be subject to the working capital contribution: (i) foreclosure of a deed of trust lien, tax lien, or the Association's assessment lien; (ii) transfer to, from, or by the Association; (iii) voluntary transfer by an Owner to one or more co-owners, or to the Owner's spouse, child, or parent. Contributions to the fund are not advance payments of Regular Assessments and are not refundable. Declarant may not use working capital fees collected hereunder to pay operational expenses until the Declarant Control Period terminates. Additionally, an Owner who (i) is a Homebuilder; or (ii) a Development Owner will not be subject to the working capital assessment; however, the working capital assessment will be payable by any Owner who acquires a Unit from a Homebuilder or Development Owner for residential living purposes or by any Owner who: (i) acquires a Unit and is not in the business of constructing single-family residences for resale to a third party; or (ii) who acquires the Unit for any purpose other than constructing a single-family residence thereon for resale to a third party.

5.9. Due Date

Regular Assessments are due on such date as the Board may designate in its sole and absolute discretion, and are delinquent if not received by the Association on or before such date. Special, Individual, and Deficiency Assessments are due on the date stated in the notice of Assessment or, if no date is stated, within ten (10) days after notice of the Special, Individual, or Deficiency Assessment is given.

5.10. Reserve Funds

The Association will establish, maintain, and accumulate reserves for operations and for replacement and repair. The Association will budget for reserves and may fund reserves out of Regular Assessments.

5.10.1. Operations Reserves. The Association may maintain operations reserves at a level determined by the Board to be sufficient to cover the cost of operational or maintenance emergencies or contingencies, including deductibles on insurance policies maintained by the Association.

5.10.2. Replacement & Repair Reserves-General Common Elements. The Association will maintain replacement and repair reserves at a level that anticipates the scheduled replacement or major repair of components of the General Common Elements.

5.11. Declarant's Right To Inspect And Correct Accounts

For a period of 5 years after termination of the Declarant Control Period, Declarant reserves for itself and for Declarant's accountants and attorneys, the right, but not the duty, to inspect, correct, and adjust the Association financial records and accounts from the Declarant Control Period. The Association may not refuse to accept an adjusting or correcting payment made by or for the benefit of Declarant. By way of illustration but not limitation, Declarant may find it necessary to recharacterize an expense or payment to conform to Declarant's obligations under the Documents or applicable State law. This Section may not be construed to create a duty for Declarant or a right for the Association, and may not be amended without Declarant's written and acknowledged consent. In support of this reservation, each Owner, by accepting an interest in or title to a Unit, hereby grants to Declarant a right of access to the Association's books and records that is independent of Declarant's rights during the Declarant Control and Development Periods.

5.12. Association's Right To Borrow Money

The Association is granted the right to borrow money, subject to the consent of Owners representing at least a majority of the votes in the Association and the ability of the Association to repay the borrowed funds from Assessments. To assist its ability to borrow, the Association is granted the right to encumber, mortgage, or pledge any of its real or personal property, and the right to assign its right to future income, as security for money borrowed or debts incurred, provided that the rights of the lender in the pledged property are subordinate and inferior to the rights of the Owners hereunder.

5.13. Limitations of Interest

The Association, and its officers, directors, managers, and attorneys, intend to conform strictly to the applicable usury laws of the State of Texas. Notwithstanding anything to the contrary in the Documents or any other document or agreement executed or made in connection with the Association's collection of Assessments, the Association will not in any event be entitled to receive or collect, as interest, a sum greater than the maximum amount permitted by applicable law. If from any circumstances whatsoever, the Association ever receives, collects, or applies as interest a sum in excess of the maximum rate permitted by law, the excess amount will be applied to the reduction of unpaid Special and Regular Assessments, or reimbursed to the Owner if those Assessments are paid in full.

5.14. Audited Financial Statements

The Association shall have an audited financial statement for the preceding full fiscal year of the Association prepared and made available within one hundred and twenty (120) days after the Association's fiscal year-end.

ARTICLE 6 — ASSESSMENT LIEN

6.1. Assessment Lien

Each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, covenants and agrees to pay Assessments to the Association. Each Assessment is a charge on the Unit and is secured by a continuing lien on the Unit. Each Owner, and each prospective Owner, is placed on notice that his title may be subject to the continuing lien for Assessments attributable to a period prior to the date he purchased his Unit. An express lien on each Unit is hereby granted and conveyed by Declarant to the Association to secure the payment of Assessments.

6.2. Superiorily of Assessment Lien

The Assessment lien is superior to all other liens and encumbrances on a Unit, except only for: (i) real property taxes and assessments levied by governmental and taxing authorities; (ii) a recorded deed of trust lien securing a loan for construction or acquisition of the original Unit; (iii) a deed of trust or vendor's lien recorded before this Declaration; or (iv) a first or senior purchase money vendor's lien or deed of trust lien recorded before the date on which the delinquent Assessment became due. The Assessment lien is superior to a lien for construction of Improvements to the Unit, regarclless of when recorded or perfected. It is also superior to any recorded assigrunent of the right to insurance proceeds on the Unit, unless the assigrunent is part of a superior deed of trust lien.

6.3. Effect of Mortgagee's Foreclosure

Foreclosure of a superior lien extinguishes the Association's claim against the Unit for unpaid Assessments that became due before the sale, but does not extinguish the Association's claim against the former Owner. The purchaser at the foreclosure sale of a superior lien is liable for Assessments coming due from and after the date of the sale, and for the Owner's pro rata share of the pre-foreclosure deficiency as a common expense.

If you fail to pay Assessments to the Association, you may lose title to your home if the Association forecloses its assessment lien against your Unit.

6.4. Notice and Release of Notice

The Association's lien for Assessments is created by recordation of this Declaration, which constitutes record notice and perfection of the lien.

VJLLAGE AT LEDGE STONE CONDOMlNlUMS

No other recordation of a lien or notice of lien is required. However, the Association, at its option, may cause a notice of the lien to be Recorded. If the debt is cured after a notice has been recorded, the Association will record a release of the notice at the expense of the curing Owner. The Association may require reimbursement of its costs of preparing and recording the notice before granting the release.

6.5. Power of Sale

By accepting an interest in or title to a Unit, each Owner grants to the Association a private power of non-judicial sale in connection with the Association's assessment lien. The Board may appoint, from time to time, any person, including an officer, agent, trustee, substitute trustee, or attorney, to exercise the Association's lien rights on behalf of the Association, including the power of sale. The appointment must be in writing and may be in the form of a resolution recorded in the minutes of a Board meeting.

6.6. Foreclosure of Lien

The Assessment lien may be enforced by judicial or nonjudicial foreclosure. A non-judicial foreclosure must be conducted in accordance with the provisions applicable to the exercise of powers of sale as set forth in Section 51.002 of the Texas Property Code, or in any manner permitted by law. In any foreclosure, the Owner will be required to pay the Association's costs and expenses for the proceedings, including reasonable attorneys' fees. The Association has the power to bid on the Unit at foreclosure sale and to acquire, hold, lease, mortgage, and convey same.

ARTICLE 7 — EFFECT OF NONPAYMENT OF ASSESSMENTS

An Assessment is delinquent if the Association does not receive payment in full by the Assessment's due date. The Association, acting through the Board, is responsible for taking action to collect delinquent Assessments. From time to time, the Association may delegate some or all of the collection procedures and remedies, as the Board in its sole discretion deems appropriate, to the Association's manager, an attorney, or a debt collector. Neither the Board nor the Association, however, is liable to an Owner or other person for its failure or inability to collect or attempt to collect an Assessment. The following remedies are in addition to and not in substitution for all other rights and remedies which the Association may have pursuant to the Documents or applicable law.

7.1. Interest

Delinquent Assessments are subject to interest from the due date until paid, at a rate to be determined by the Board from time to time, not to exceed the lesser of eighteen percent (18%) per annum or the maximum permitted by Jaw. If the Board fails to establish a rate, the rate is ten percent (10%) per annum.

7.2. Late Fees

Delinquent Assessments are subject to reasonable late fees, at a rate to be determined by the Board from time to time.

7.3. Collection Ex_penses

The Owner of a Unit against which Assessments are delinquent is liable to the Association for reimbursement of reasonable costs incurred by the Association to collect the delinquent Assessments, including attorneys' fees and processing fees charged by the manager.

7.4. Acceleration

If an Owner defaults in paying an Assessment that is payable in installments, the Association may accelerate the remaining installments on ten (10) days' written notice to the defaulting Owner. The entire unpaid balance of the Assessment becomes due on the date stated in the notice.

7.5. Suspension of Vole

Subject to the below-described limitations, if an Owner's account has been delinquent for at least 30 days, the Association may suspend the right to vote appurtenant to the Unit during the period of delinquency. Suspension does not constitute a waiver or discharge of the Owner's obligation to pay Assessments. When the Association suspends an Owner's right to vote, the suspended Owner may nevertheless participate as a Member of the Association for the following activities: (i) be counted towards a quorum; (ii) attend meetings of the Association; (iii) participate in discussion at Association meetings; (iv) be counted as a petitioner for a special meeting of the Association; and (v) vote to remove a Director and for the replacement of the removed Director. If the number of suspended Members exceeds 20 percent of the total Members (Co-Owners of a Unit constituting one member), all Members are eligible to vote. These limitations are imposed to prevent a Board from disenfranchising a large segment of the membership and to preserve the membership's right to remove and replace Directors.

7.6. Assignment Of Rents

Every Owner hereby grants to the Association a continuing assignment of rents to secure the payment of assessments to the Association. If a Unit's account become delinquent during a period in which the Unit is leased, the Association may direct the tenant to deliver rent to the Association for application to the delinquent account, provided the Association gives the Owner notice of the delinquency, a reasonable opportunity to cure the debt, and notice of.the Owner's right to a hearing before the Board. The Association must account for all monies received from a tenant and must remit to the Owner any rents received in excess of the past-due amount. A tenant's delivery of rent to the Association under the authority hereby granted is not a breach of the tenant's lease with the Owner and does not subject the tenant to penalties from the Owner.

7.7. Money Judgment

The Association may file suit seeking a money judgment against an Owner delinquent in the payment of Assessments, without foreclosing or waiving the Association lien for Assessments.

7.8. Notice to Mortgagee

The Association may notify and communicate with any holder of a lien against a Unit regarding the Owner's default in payment of Assessments.

7.9. Application of Payments

The Association may adopt and amend policies regarding the application of payments. After the Association notifies the Owner of a delinquency, any payment received by the Association may be applied in the following order: Individual Assessments, Deficiency Assessments, Special Assessments, Utility Assessments, and (lastly) Regular Assessments. The Association may refuse to accept partial payment, i.e., Jess than the full amount due and payable. The Association may also refuse to accept payments to which the payer attaches conditions or directions contrary to the Association's policy for applying payments. The Association's policy may provide that endorsement and deposit of a payment does not constitute acceptance by the Association, and that acceptance occurs when the Association posts the payment to the Unit Owner's account.

ARTICLE 8 — MAINTENANCE AND REPAIR OBLIGATIONS

8.1. Maintenance of VLS Common Elements

The VLS Common Elements will be designated as Master Community Facilities in accordance with the Master Covenant, and as a result, the Master Association will be obligated to maintain and repair the VLS Common Elements in good condition and repair. In the event that the Master Association fails to maintain the VLS Common Elements in good condition and repair, the Board will provide written notice to the Master Association which notice will specify the deficiency and the corrective action requested of the Master Association. If the Master Association fails to take such corrective action or other action reasonably calculated to correct the deficiency on or before thirty (30) days after the date of the notice, the Board may cause the Association to take such corrective and the costs incurred by the Association will be paid by the Master Association. Any dispute between the Association and Master Association which may arise pursuant to this Section 8.1 will be resolved in accordance with Article 19 notwithstanding any provision in Article 19 to the contrary. ·

8.2. Annual Inspection Of Common Elements

From the period commencing at the expiration of the Development Period until ten (10) years thereafter, at least annually, the Association must examine the condition of the Common Elements to evaluate the quality, frequency, and adequacy of maintenance performed during the preceding year, and to recommend maintenance for the upcoming year. The examination and report may be performed by one or more experts hired by the Association for this purpose, such as a professional property manager, an engineer, or professional contractors such as landscapers and brick masons. Within 15 days after performing the inspection, the expert should submit to the Board a written report with findings and recommendations. The Board should evaluate the Master Association's operating budget and reserve accounts for maintenance, repair, and replacement of portions of the Regime in light of the expert's findings and recommendations. Any decision by the Board to reduce or defer recommended maintenance should be made with an evaluation of the potential consequences for future costs and deterioration. An expert's report must be made available to Owners for inspection and copying. To assist the Board in its

examination of the condition of Common Elements, a Guide to Examination of Common Elements is attached to this Declaration as Attachment 3.

Notwithstanding the foregoing, upon mutual agreement of the Board and the Board of Directors of the Master Association, the Master Association may undertake the responsibilities of the Association to this Section 8.2, but only insofar as such responsibilities relate to the VLS Common Elements; provided, however, that in no event will the Master Association's performance of the annual inspection relieve the Association of the obligation to cause such duties to be performed as provided herein.

6.3. Owner Responsibilily

Every Owner has the following responsibilities and obligations for the maintenance, repair, and replacement of the Property:

(i) To maintain, repair, and replace such Owner's Unit, except for components expressly assigned to the Association by this Declaration.

(ii) The maintenance of all landscaping located within the Owner's Unit (other than landscaping maintained by the Association pursuant to Section 3.9); or located within that portion of the General Common Elements which is parallel to the street facing any side of such Owner's Unit and between such Owner's Unit and a sidewalk, keeping same in a neat, clean, odorless, orderly, and attractive condition.

(iii) To maintain, repair, and replace all portions of the Property for which the Owner is responsible under this Declaration or by agreement with the Association.

(iv) To not do any work or to fail to do any work which, in the reasonable opinion of the Board, would materially jeopardize the soundness and safety of the Property, reduce the value thereof, or impair any easement or real property right thereto.

(v) To be responsible for the Owner's willful or negligent acts and those of the Owner or Resident's family, guests, agents, employees, or contractors when those acts necessitate maintenance, repair, or replacement of Common Elements, the property of another Owner, or any component of the Property for which the Association has maintenance or insurance responsibility.

6.4. Disputes

If a dispute arises regarding the allocation of maintenance responsibilities by this Declaration, the dispute will be resolved by delegating responsibility to the individual Owners. Unit maintenance responsibilities that are allocated to the Master Association or the Association are intended to be interpreted narrowly to limit and confine the

scope of Master Association and Association responsibility. It is the intent of this Article that all components and areas not expressly delegated to the Master Association or the Association are the responsibility of the individual Owners.

8.5. Mold

In the era in which this Declaration is written, the public and the insurance industry have a heightened awareness of and sensitivity to anything pertaining to mold. This Section addresses that environment. For more information about mold and mold prevention, an Owner should consult a reliable source, such as the U.S. Environmental Protection Agency.

8.5.1. Owner's Duties. To reduce the risks associated with concentrations of mold, Owners should be proactive in preventing circumstances conducive to mold, identifying mold, and eliminating mold. Towards that end, each Owner is responsible

(i) Regularly inspecting all Improvements constructed within his Unit for evidence of water leaks or penetrations or other conditions which may lead to mold growth;

(ii) Repairing promptly any water leaks, breaks, or malfunctions of any kind emanating from any Improvement constructed within his Unit that may cause damage to another Unit or Common Element;

(iii) Regularly inspecting all Improvements constructed within his Unit for visible surface mold and promptly removing same using appropriate procedures; and

(iv) Reporting promptly to the Association any water leak, penetration, break, or malfunction in any Improvement constructed within his Unit or any adjacent Common Elements for which the Association may have maintenance responsibility.

8.5.2. Insurance. Many insurance policies do not cover damages related to mold. The Association may not maintain insurance coverage applicable to mold damage with respect to any Improvements. Accordingly, an Owner who wants insurance coverage with respect to mold and mold-related damages is advised to purchase such insurance coverage as part of his homeowners insurance policy.

8.6. Warrant:y Claims

If the Owner is the beneficiary of a warranty against defects of the Common Elements, the Owner irrevocably appoints the Association, acting through the Board, as his attorney-in-fact to file, negotiate, receive, administer, and distribute the proceeds of any claim against the warranty that pertains to Common Elements.

8.7. Owner's Default In Maintenance

If the Board determines that an Owner has failed to properly discharge his obligation to maintain, repair, and replace items for which the Owner is responsible, the Board may give the Owner written notice of the Association's intent to provide the necessary maintenance at Owner's expense. The notice must state, with reasonable particularity, the maintenance deemed necessary and a reasonable period of time in which to complete the work. If the Owner fails or refuses to timely perform the maintenance, the Association may do so at Owner's expense, which is an Individual Assessment against the Owner and his Unit. In case of an emergency, however, the Board's responsibility to give the Owner written notice may be waived and the Board may take any action it deems necessary to protect persons or property, the cost of the action being the Owner's expense.

ARTICLE 9 — USE RESTRICTIONS

9.1. Variance

The use of the Property is subject to the restrictions contained in this Article, and subject to Rules adopted pursuant to this Article. The Board or the Declarant, as the case may be, may grant a variance or waiver of a restriction or Rule on a case-by-case basis when unique circumstances dictate, and may limit or condition its grant. To be effective, a variance must be in writing. The grant of a variance does not effect a waiver or estoppel of the Association's right to deny a variance in other circumstances.

9.2. Association's Right To Promulgate Rules and Adopt Community Manual

The Association, acting through the Board, is granted the right to adopt, amend, repeal, and enforce reasonable Rules, and penalties for infractions thereof, regarding the occupancy, use, disposition, maintenance, appearance, and enjoyment of the Property. The Association, acting through the Board, is further granted the right to adopt, amend, repeal, and enforce the Community Manual, setting forth therein such policies governing the Association as the Board determines to be in the best interests of the Association, in its sole and absolute discretion.

EVERY RESIDENT IS EXPECTED TO COMPLY WITII RULES ADOPTED BY TIIE BOARD OF DIRECTORS

9.3. Hazardous Activities

No activities may be conducted on or within the Regime no Improvements constructed on any portion of the Regime which, in the opinion of the Board or the Village at Ledge Stone Reviewer, are or might be unsafe or hazardous to any person or property. Without limiting the generality of the foregoing, no firearms or fireworks may be discharged upon any portion of the Regime unless discharged in conjunction with an event approved in advance by the Board and the Village at Ledge Stone Reviewer, and no open fires may be lighted or permitted except within safe and well-designed fireplaces or in contained barbecue units while attended and in use for cooking purposes. No portion of the Regime may be used for the takeoff, storage, or landing of aircraft (including, without limitation, helicopters) except for medical emergencies. VU.LAGE AT LEDGE STONE CONDOMINIUMS

9.4. Mining and Drilling

No portion of the Regime may be used for the purpose of mining, quarrying, drilling, boring, or exploring for or removing oil, gas, or other hydrocarbons, minerals of any kind, rocks, stones, sand, gravel, aggregate, or earth. This provision will not be construed to prevent the excavation of rocks, stones, sand, gravel, aggregate, or earth or the storage of such material for use as fill provided that such activities are conducted in conjunction with the construction of Improvements and/or the development of the Regime. Furthermore, this provision will not be interpreted to prevent the drilling of water wells approved in advance by the Board and the Village at Ledge Stone Reviewer which are required to provide water to all or any portion of the Property or the Development. All water wells must also be approved in advance by any applicable regulatory authority, including but not limited to the Hays County Groundwater Conservation District.

9.5. Animals - Household Pets

No animals, including pigs, hogs, swine, poultry, fowl, wild animals, horses, cattle, sheep, goats, or any other type of animal not considered to be a domestic household pet within the ordinary meaning and interpretation of such words may be kept, maintained, or cared for on or within the Regime. No Owner may keep on such Owner's Unit more than four (4) cats and dogs, in the aggregate. No animal will be allowed to make an unreasonable amount of noise, or to become a nuisance, and no domestic pets will be allowed within the Regime other than the Unit of its Owner unless confined to a leash no longer than ten feet (10') in length. No animal may be stabled, maintained, kept, cared for, or boarded for hire or remuneration within the Regime, and no kennels or breeding operation will be allowed. No animal will be allowed to run at large, and all animals will be kept within enclosed areas which must be clean, sanitary, and reasonably free of refuse, insects, and waste at all times. Such enclosed area must be: (i) constructed in accordance with plans approved by the Board and the Village at Ledge Stone Reviewer; (ii) of reasonable design and construction to adequately contain such animals in accordance with the provisions hereof; and (ill) screened so as not to be visible from any other portion of the Development. All pet waste will be removed and appropriately disposed of by the Owner of the pet. All pets must be registered, licensed and inoculated as required by law.

9.6. Rubbish and Debris

No rubbish or debris of any kind may be placed or permitted to accumulate on or within the Regime, and no odors will be permitted to arise therefrom so as to render all or any portion of the Regime unsanitary, unsightly, offensive, or detrimental to any other property or to its occupants. Refuse, garbage, and trash must be kept at all times in covered containers, and such containers must be kept within enclosed structures or appropriately screened from view. Each Owner will contract with an independent disposal service to collect all garbage or other wastes, if such service is not provided by a governmental entity, Quasi-Governmental Entity, the Association, or the Master Association.

9.7. Maintenance

The Owners of each Unit shall jointly and severally have the duty and responsibility, at their sole cost and expense, to keep their entire Unit and all Improvements thereon in good condition and repair and in a well-maintained, safe, clean and attractive condition at all times. The Board, the Village at Ledge Stone Reviewer, or the Manager, in its rzti9-t ()., f~ '. ~I-~ sole discretion, shall determine whether a violation of the maintenance obligations set forth in this Section 9.7 has occurred. Such maintenance includes, but is not limited to the following, which shall be performed in a timely manner, as determined by the Board and the Village at Ledge Stone Reviewer, in their sole discretion:

(i) Prompt removal of all litter, trash, refuse, and wastes.

(ii) Lawn mowing.

(iii) Tree and shrub pruning.

(iv) Watering.

(v) Keeping exterior lighting and mechanical facilities in working order.

(vi) Keeping lawn and garden areas alive, free of weeds, and attractive.

(vii) Keeping planting beds free from turf grass.

(viii) Keeping sidewalks and driveways in good repair.

(ix) Complying with all government, health and police requirements.

(x) Repainting of Improvements.

(xi) Repair of exterior damage, and wear and tear to Improvements.

9.8. Antenna

Except as expressly provided below, no exterior radio or television antennae or aerial or satellite dish or disc, nor any solar energy system, shall be erected, maintained or placed on a Unit without the prior written approval of the Board and the Village at Ledge Stone Reviewer; provided, however, that:

(i) An antenna designed to receive direct broadcast services, including directto-home satellite services, that is one meter or less in diameter; or

(ii) An antenna designed to receive video progranuning services via multipoint distribution services, including multi-channel multipoint distribution services, instructional television fixed services, and local multipoint distribution services, that is one meter or less in diameter or diagonal measurement; or

(iii) An antenna that is designed to receive television broadcast signals; (collectively, (i) through (iii) are referred to herein as the "Permitted Antennas") will be permitted subject to reasonable requirements as to location and screening as may be set forth in

Vil.LAGE AT LEDGE STONE CONDOMINIUMS rules adopted by the Village at Ledge Stone Reviewer, consistent with applicable law, in order to minimize obtrusiveness as viewed from streets and adjacent property.

9.9. Location of Permitted Antennas

A Permitted Antenna may be installed solely on the Owner's Unit and may not encroach upon any street, Common Elements, or any other portion of the Regime. A Permitted Antenna shall be installed in a location on the Unit from which an acceptable quality signal can be obtained and where least visible from the street and the Regime, other than the Unit. In order of preference, the locations of a Permitted Antenna which will be considered least visible by the Village at Ledge Stone Reviewer are as follows:

(i) Attached to a galvanized pole which including the satellite dish is no taller than five feet (5') or, if a fence is constructed, no taller than the lowest point of the fence line of any fence constructed on the Unit, and otherwise appropriately screened from public view utilizing plantings; then

(ii) Attached to the back of the principal single-family residence constructed on the Unit, with no part of the Pennitted Antenna any higher than the lowest point of the roofline and screened from view of adjacent Units and the street; then

(iii) Attached to the side of the principal single-family residence constructed on the Unit, with no part of the Permitted Antenna any higher than the lowest point of the roofline and screened from view of adjacent Units and the street. The Village at Ledge Stone Reviewer may, from time to time, modify, amend, or supplement the rules regarding installation and placement of Pennitted Antennas.

Satellite dishes one meter or less in diameter, e.g., DirectTV or Dish satellite dishes, are permitted, HOWEVER you are required to comply with the rules regarding installation and placement. These rules and regulations may be modified by the Village at Ledge Stone Reviewer from time to time. Please contact the Village at Ledge Stone Reviewer for the current rules regarding installation and placement

9.10. Signs

No sign of any kind shall be displayed to the public view on any Unit without the prior written approval of the Board and the Village at Ledge Stone Reviewer, except for:

(i) Signs which are pennitted pursuant to the Design Guidelines or rules adopted by the Board and the Village at Ledge Stone Reviewer;

(ii) Signs which are part of Declarant's overall marketing or construction plans or activities for the Regime;

(iii) Permits as may be required by legal proceedings; and

(iv) Permits as may be required by any governmental entity or Quasi- Governmental Entity. Unless otherwise permitted pursuant to Section 9.ll(i), no uFor Sale11 , "For Rent", "For Lease" or similar sign advertising a Unit for sale or for lease may be placed on any Unit or any portion of the Regime without the prior consent of the Declarant for so long as the Declarant owns a Unit and the Board and Village at Ledge Stone Reviewer thereafter. An Owner or resident will be permitted to post a "No Soliciting" and "Beware of Dog" sign near the front door to their residence, provided, that the sign may not exceed eighty-eight (88) square inches and must comply with the standard fonn adopted by the Village at Ledge Stone Reviewer.

9.11. Tanks

The Village at Ledge Stone Reviewer must approve any tank used or proposed in connection with a single-family residential structure, including tanks for storage of fuel, water, oil, or LPG, and including swimming pool filter tanks. No elevated tanks of any kind may be erected, placed or permitted on any Unit without the advance written approval of the Village at Ledge Stone Reviewer. All permitted tanks must be screened from view in accordance with a screening plan approved in advance by the Village at Ledge Stone Reviewer. This provision will not apply to no more than two (2) tanks used to operate a standard residential gas grill weighing no more than twenty (20) pounds each. Underground storage tanks are expressly prohibited.

9.12. Barbecue Units

Barbecue units are only permitted within the rear yard of each Unit in and placed in such manner as to not be visible from any other portion of the Regime. The "rear yard" for the purpose of this provision means the yard area in the rear or posterior to the residence constructed on a Unit. In the event of any dispute regarding what portion of a Unit constitutes the "rear yard" the opinion of the Village at Ledge Stone Reviewer will be final, binding, and conclusive.

9.13. Clotheslines; Awnings

No clotheslines and no outdoor clothes drying or hanging shall be permitted in the Regime, nor shall anything be hung, painted or displayed on the outside of the windows (or inside, if visible from the outside) or placed on the outside walls or outside surfaces of doors of any residence on any Unit, and no awnings, canopies or shutters (except for those heretofore or hereinafter installed in accordance with plans and specifications approved by the Village at Ledge Stone Reviewer) shall be affixed or placed upon the exterior walls or roofs of any residence on any Unit, or any part thereof, nor relocated or extended, without the prior written consent of the Village at Ledge Stone Reviewer. Window air conditioners are prohibited.

9.14. Temporary Structures

No tent, shack, or other temporary building, improvement, or structure shall be placed upon the Regime without the prior written approval of the Village at Ledge Stone Reviewer; provided, however, that temporary structures necessary for storage of tools and equipment, and for office space for architects, builders, and foremen during actual construction may be maintained with the prior approval of Declarant, approval to include the nature, size, duration, and location of such structure. No shed, outbuilding, or other storage building may be erected on any Unit without the advance written approval of the Village at Ledge Stone Reviewer, which approval may include requirements regarding placement, design, screening, and construction materials.

9.15. Unsightly Articles: Vehicles

No article deemed to be unsightly by the Board or the Village at Ledge Stone Reviewer shall be permitted to remain on any Unit so as to be visible from adjoining property or from public or private thoroughfares. Without limiting the generality of the foregoing, trailers, graders, trucks other than pickups, boats, tractors, campers, wagons, buses, motorcycles, motor scooters, all-terrain vehicles and garden maintenance equipment shall be kept at all times, except when in actual use, in enclosed structures or screened from view and no repair or maintenance work shall be done on any of the foregoing, or on any automobile (other than minor emergency repairs), except in enclosed garages or other structures. Each single-family residential structure constructed within the Regime shall have sufficient garage space to house all vehicles to be kept on the Unit. Notwithstanding the forgoing provision all-terrain vehicles, motor scooters, and motorized mini-bikes may not be used within the Regime or on any road or street within the Regime. Owners shall not keep more than two (2) automobiles in such manner as to be visible from any other portion of the Regime for any period in excess of seventy-two (72) hours. Service areas, storage areas, compost piles and facilities for hanging, drying or airing clothing or household fabrics shall be appropriately screened from view, and no lumber, grass, plant waste, shrub or tree clippings, metals, bulk materials, scrap, refuse or trash shall be kept, stored, or allowed to accumulate on any portion of the Regime except within enclosed structures or appropriately screened from view. No: (i) racing vehicles; (ii) off-road or unlicensed vehicles; or (iii) other vehicles (including, without limitation, motorcycles or motor scooters) which are inoperable or do not have a current license tag shall be permitted to remain visible on any Unit or to be parked on any roadway within the Regime.

Unless a written waiver is obtained from the Board, recreational vehicles (i.e., motor homes) may only be temporarily parked within the Regime for immecliate loading and unloading. In no event may a recreational vehicle be stored within the Regime. No garage may be permanently enclosed or otherwise used for habitation unless approved in advance by the Board and the Village at Ledge Stone Reviewer.

9.16. On Street Parking

No Owner or Resident may park a vehicle on any road or street within the Regime Area unless in the event of an emergency or as otherwise approved in writing by the Board. Guests and/or visitors may not park a vehicle on any road or street within the Regime for more than twelve (12) consecutive hours unless in the event of an emergency or as otherwise approved in writing by the Board. "Emergency" for purpose of this Seclio1t 9.17 means an event which jeopardizes llie or property. "Parked" as used herein shall be defined as a vehicle left unattended for more than thirty (30) consecutive minutes.

9.17. Mobile Homes

Manufactured Homes. Travel Trailers and Recreational Vehicles. No mobile home (with or without wheels, temporarily or permanently affixed), manufactured home, travel trailer, or recreational vehicle may be parked or placed on any Unit or used as a residence, either temporary or permanent, at any time. In the event of any dispute regarding the effect or application of this Section 9.17, the interpretation of the Village at Ledge Stone Reviewer will be final.

9.18. Basketball Goals

Permanent basketball goals are permitted on a Unit provided the basketball goal location and all materials are approved in advance and in writing by the Village at Ledge Stone Reviewer. The basketball goal backboard must be constructed of a clear material, must be perpendicular to the street and mounted on a black metal pole permanently installed in the ground, and may not be attached to the residence in any manner. Portable basketball goals are permitted, provided that: (i) no portable basketball goal may be placed on any right-of way; and (ii) the basketball goal location must be approved by the Village at Ledge Stone Reviewer and, if approved, must be stored out-of-site within thirty (30) minutes after use. In the event that an Owner fails to comply with the provisions of this Section 9.18, the Village at Ledge Stone Reviewer, or its agent, shall have the express authority to remove the offending Improvements, the expense of which shall be borne by the Owner thereof.

9.19. Recreational Courts and Playscapes

No recreational, e.g., "sport courts", shall be constructed on any Unit unless expressly approved by the Village at Ledge Stone Reviewer. The Village at Ledge Stone Reviewer may prohibit the installation of a recreational court on any Unit. Playscapes or any similar recreational facilities may not be constructed on any Unit without the advance written approval of the Village at Ledge Stone Reviewer and may not, in any event, be floodlit. The Village at Ledge Stone Reviewer may prohibit the installation of recreational courts, playscapes or similar recreational facilities on ariy Unit. Tennis courts may not be constructed on any Unit.

9.20. Display of US Flag

Notwithstanding any provision in this Declaration to the contrary, each Owner shall be permitted to display the flag of the United States, subject only to such reasonable restrictions pertaining to the time, place, or manner of displaying the flag of the United States necessary to protect a substantial interest of the Master Association or the Association.

9.21. Declarant Privileges

In connection with the development and marketing of the Property, Declarant has reserved a number of rights and privileges to use the Property in ways that are not available to other Owners and Residents, as provided in Appendix "A" of this Declaration. Declarant's exercise of a Development Period right that appears to violate restriction set forth in this Declaration does not constitute waiver or abandonment of the restriction by the Association.

ARTICLE 10 — USE AND CONSTRUCTION RESTRICTIONS

10.1. Architectural Approval

PURSUANT TO THE MASTER COVENANT, EACH OWNER OF A UNIT IS REQUIRED TO SUBMIT PLANS AND SPECIFICATIONS TO THE "VILLAGE AT LEDGE STONE REVIEWER" ESTABLISHED PURSUANT TO THE MASTER COVENANT FOR APPROVAL. NO IMPROVEMENTS SHALL BE CONSTRUCTED ON ANY UNIT UNTIL SUCH APPROVAL IS OBTAINED PURSUANT TO THE MASTER COVENANT.

10.2. Design Guidelines

Any and all Improvements erected, placed, constructed, painted, altered, modified, or remodeled on any portion of the Regime shall strictly comply with the requirements of the Design Guidelines, if any, unless a variance is obtained pursuant to the Master Covenant. The Design Guidelines may be supplemented, modified, amended, or restated by the Village at Ledge Stone Reviewer as authorized by the Master Covenant and the Design Guidelines.

If adopted by Declarant or the Village at Ledge Stone Reviewer, Design Guidelines will include additional requirements applicable to the construction of Improvements within the Regime. Each Owner is advised to ascertain whether Desien Guidelines have been adooted for their Unit.

10.3. Approval for Construction

No Improvements shall be constructed upon any Unit without the prior written approval of the Village at Ledge Stone Reviewer.

10.4. Single-Family Residential Use

The Units shall be used solely for private singlefamily residential purposes and there shall not be constructed or maintained thereon more than one detached single-family residence.

No professional, business, or commercial activity to which the general public is invited shall be conducted on any Unit, except an Owner or occupant of a residence may conduct business activities within a residence so long as: (i) such activity complies with all the applicable zoning ordinances (if any); (ii) the business activity is conducted without the employment of persons other than the residents of the home constructed in the Unit; (iii) the existence or operation of the business activity is not apparent or detectable by sight (i.e., no sign may be erected advertising the business on any Unit), nor may any sound or smell resulting from the business be detectable from outside the residence; (iv) the business activity conforms to all zoning requirements (if any) for the Regime; (v) the business activity does not involve door-todoor solicitation of residents within the Regime; (vi) the business does not, in the Board's judgment, generate a level of vehicular or pedestrian traffic or a number of vehicles parked within the Regime which is noticeably greater than that which is typical of residences in which no business activity is being conducted; (vii) the business activity is consistent with the residential character of the Regime and does not constitute a nuisance, or a hazardous or offensive use, or threaten the security or safety of other residents of the Regime as may be

determined in the sole ruscretion of the Board; and (viii) the business does not require the installation of any machinery other than that customary to normal household operations. The terms "business" and trade", as used in this provision, 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 provider's family and for which the provider receives a fee, compensation, or other form of consideration, regardless of whether: (x) such activity is engaged in full or part-lime; (y) such activity in intended to or does generate a profit; or (z) a license is required.

Leasing of a residence shall not be considered a business or trade within the meaning of this subsection. This subsection shall not apply to any activity conducted by Declarant or an Owner engaged in the business of constructing homes for resale who acquires a Unit for the purpose of constructing a residence thereon for resale to a third party.

10.5. Garages

All garages shall be approved in advance of construction by the Village at Ledge Stone Reviewer and shall comply with applicable requirements in the Design Guidelines. The Improvements on each Unit must contain a private, enclosed garage capable of housing two (2) full-size automobiles. Each garage will incorporate a two-car garage door. No carports or other open automobile storage units will be permitted. No garage may be permanently enclosed or otherwise used for habitation. The parking of vehicles in the yard of any Lot is not permitted.

10.6. Fences; Sidewalks

The design, construction materials, height and location of all fences must comply with the Design Guidelines and must be approved in advance by the Village at Ledge Stone Reviewer. If required by the Plat, prior to an Owner occupying any Improvement, a sidewalk will be constructed on such Owner's Unit located in conformance with the Plat and of a design and materials approved in advance by the Village at Ledge Stone Reviewer and in compliance with the Design Guidelines.

10.7. Building Materials

All building materials must be approved in advance by the Village at Ledge Stone Reviewer, and only new building materials (except for used brick) shall be used for constructing any Improvements. All projections from a dwelling or other structure, including but not limited to chimney flues, vents, gutters, downspouts, utility boxes, porches, railings and exterior stairways must, unless otherwise approved by the Village at Ledge Stone Reviewer, match the color of the surface from which they project. No highly reflective finishes (other than glass, which may not be mirrored) shall be used on exterior surfaces (other than surfaces of hardware fixtures), including, without limitation, the exterior surfaces of any Improvements.

10.8. Masonry Requirements

The masonry incorporated into each residence must comply with the Design Guidelines.

AND OECLARATJON OF CONDOMINIUM REGIME C,()rneJ.,e, fi) ,,.,.,, _,

l'lJ1l!-Q : ;;i, pg 1 a 1/

10.9. Driveways

The design, construction materials, and location of: (i) all driveways, and (ii) culverts incorporated into driveways for clitch or drainage crossings, shall be in accordance with the Design Guidelines and approved by the Village at Ledge Stone Reviewer. Driveways on comer lots abutting a cul-<le-sac and another roadway shall access off the cul-desac. No asphalt driveways shall be permitted. The Village at Ledge Stone Reviewer may establish design and materials requirements for all driveways and driveway culverts to insure that they are consistent in appearance throughout the Development Area.

10.10. Square Foota~e

The minimum and maximum heated/air conditioned square footage for each residence must comply with the Design Guidelines.

10.11. Address Markers

The location, design and materials used for address identification markers on each residence must be approved in advance of installation by the Village at Ledge Stone Reviewer. The painting of addresses on curbs is not allowed.

10.12. HVAC Location

No air conditioning units may be installed in front of a residence or on the roof of any residence. Window air conditioning units and evaporative coolers are expressly prohibited. All HVAC units must be screened with either structural screening to match the exterior of the residence or landscaping, as approved by the Village at Ledge Stone Reviewer. 1£ landscaping is utilized to screen HVAC units, all plantings must be deer resistant.

10.13. Alteration or Removal of Improvements

Any construction, other than normal maintenance, which in any way alters the exterior appearance of any Improvement, or the removal of any Improvement shall be performed only with the prior written approval of the Village at Ledge Stone Reviewer.

10.14. Trash Containers

Trash containers and recycling bins must be stored in one of the following locations:

(i) Inside the garage of the single-family residence constructed on the Unit; or

(ii) Behind the single-family residence constructed on the Unit in such a manner that the trash container and recycling bin is not visible from any street, alley, or adjacent Unit. The Village at Ledge Stone Reviewer shall have the right to specify additional locations on each Owner's Unit in which trash containers or recycling bins must be stored.

10.15. Drainage

There shall be no interference with the established drainage patterns over any of the Regime, except by Declarant, unless adequate provision is made for proper drainage and such provision is approved by Village at Ledge Stone Reviewer. Plans submitted to the Village at Ledge Stone Reviewer for approval shall indicate thereon an erosion control plan to be instituted during the construction of any residence on the Unit. The Owner of the Unit shall be obligated to maintain and keep such approved erosion controls in good condition and repair. No residence constructed upon a Lot may be occupied until such time as the erosion controls erected upon the Lot have been and the Lot has been fully revegetated in accorance with plans and specifications approved by the Village at Ledge Stone Reviewer.

10.16. Construction Activities

This Declaration will not be construed or applied so as to unreasonably interfere with or prevent normal construction activities during the construction of Improvements by an Owner (including Declarant) upon or within the Development. Specifically, no such construction activities will be deemed to constitute a nuisance or a violation of this Declaration by reason of noise, dust, presence of vehicles or construction machinery, posting of signs or similar activities, provided that such construction is pursued to completion with reasonable diligence and conforms to usual construction practices in the area. In the event that construction upon any Unit does not conform to usual practices in the area as determined by the Village at Ledge Stone Reviewer in its sole and reasonable judgment, the Village at Ledge Stone Reviewer will have the authority to seek an injunction to stop such construction. In addition, if during the course of construction upon any Unit there is excessive accumulation of debris of any kind which would render the Unit or any portion thereof unsanitary, unsightly, offensive, or detrimental to it or any other portion of the Development, then the Village at Ledge Stone Reviewer may contract for or cause such debris to be removed, and the Owner of the Unit will be liable for all reasonable expenses incurred in connection therewith.

10.17. Landscaping

Landscaping must be installed on each Unit in accordance with the Design Guidelines.

10.18. Roofing

Each roof must be constructed in accordance with the Design Guidelines, and the color and composition of all roof materials, and the pitch of each roof, shall be expressly approved by the Village at Ledge Stone Reviewer.

10.19. Swimming Pools: Flagpoles: Overhead Electric Lines

Any swimming pool constructed within a Unit must be enclosed with a fence or other enclosure device completely surrounding the swimming pool which, at a minimum, satisfies all applicable goverrunental requirements (including, without limitation, any applicable rules or policies promulgated _by the Texas Department of Health). In no event may any swimming pool be filled until such time as the fence or other enclosure device referenced in the preceding sentence has been constructed. Nothing in this Section 10.19 is intended or shall be construed to limit or affect an Owner's obligation to comply with any applicable goverrunental requirements concerning swimming pool enclosure requirements. Above-ground or temporary swimming pools are prohibited. Free-standing flagpoles erected on any Unit are prohibited. One flagpole not to exceed 4 inches in diameter or 60 inches in length may be mounted on the front of a residence; provided, however, that the Village at Ledge Stone Reviewer will be permitted to prohibit the erection of a flagpole on any residence if the Village at Ledge Stone Reviewer determines, in its sole and absolute discretion, that the flagpole is unsightly or otherwise detracts from the appearance of the Development. Notwithstanding any provision of this Section 10.19 to the contrary, Vll..LAGEATLEDGESTONECONDOMINIUMS homebuilders approved by the Declarant may erect free-standing flagpoles and flags of a reasonable size for the marketing and sale of residences mthin the Regime. Unless expressly approved by the Village at Ledge Stone Reviewer, all electric lines must be built underground in the Regime, and may not be erected overhead.

10.20. Occupancy

The Board may adopt Rules regarding the occupancy of Units. If the Rules fail to establish occupancy standards, no more than 2 persons per bedroom may occupy a Unit, subject to the exception for familial status. The Association's occupancy standard for Residents who qualify for familial status protection under the fair housing laws may not be more restrictive than the minimum (i.e., the fewest people per Unit) permitted by the U.S. Department of Housing and Urban Development. A person may not occupy a Unit of the person constitutes a direct threat to the health or safety of other persons, or if the person's occupancy would result in substantial physical damage to the property of others.

ARTICLE 11 — UNIT LEASING

11.1. Lease Conditions

The leasing of Units is subject to the following conditions: (i) no Unit may be rented for transient or hotel purposes or for a period less than six (6) months;

(ii) no Unit may be subdivided for rent purposes, and not less than an entire Unit may be leased; (iii) all leases must be in writing and must be made subject to the Documents; (iv) an Owner is responsible for providing his tenant wjth copies of the Documents and notifying him of changes thereto; and (v) each tenant is subject to and must comply mth all provisions of the Documents, federal and State laws, and local ordinances.

11.2. Owner Occupancy

For purposes of this Article only, a Unit is considered "Owner occupied" if at least one Resident of an occupied Unit is an Owner of the Unit or is related by blood, marriage, or adoption to an Owner of the Unit, or if the Unit is vacant; provided, however, except that a Unit being offered for lease may not be considered "Owner occupied" even though the Unit is then-vacant or then-occupied by an Owner. In calculating occupancy, Units are counted uniformly regardless of size.

11.3. Eviction Of Tenants

Every lease agreement on a Unit, whether written or oral, express or implied, is subject to and is deemed to include the following provisions:

11.3.1. Violation Constitutes Default. Failure by the tenant or his invitees to comply mth the Documents, federal or State law, or local ordinance is deemed to be a default under the lease. When the Association notifies an Owner of his tenant's violation, the Owner will promptly obtain his tenant's compliance or exercise his rights as a landlord for tenant's breach of lease. If the tenant's violation continues or is repeated, and if the Owner is unable, unwj]]ing, or unavailable to obtain his tenant's compliance, then the Association has the power and right to pursue the remedies of a

landlord under the lease or State law for the default, including eviction of the tenant, subject to the terms of this Section.

11.3.2. Association as Attorney-in-Fact. Notwithstanding the absence of an express provision in the lease agreement for enforcement of the Documents by the Association, each Owner appoints the Association as his attorney-in-fact, with full authority to act in his place in all respects, solely for the purpose of enforcing the Documents against his tenants, including but not limited to the authority to institute forcible detainer proceedings against his tenant on his behalf, provided the Association gives the Owner at least 10 days' notice, by certified mail, of its intent to so enforce the Documents.

11.3.3. Association Not Liable for Damages. The Owner of a leased Unit is liable to the Association for any expenses incurred by the Association in connection with enforcement of the Documents against his tenant. The Association is not liable to the Owner for any damages, including lost rents, suffered by the Owner in relation to the Association's enforcement of the Documents against the Owner's tenant.

11.4. Exemption

A Mortgagee that acquires title to the Unit by foreclosure of its deed of trust lien or by deed in lieu of foreclosure of its lien is exempt from the effect of this Article. During the Development Period, Declarant is exempt from the effect of this Article.

ARTICLE 12 — ASSOCIATION OPERATIONS

12.1. Board

Unless the Documents expressly reserve a right, action, or decision to the Owners, Declarant, or another party, the Board acts in all instances on behalf of the Association. Unless the context indicates otherwise, references in the Documents to the "Association" may be construed to mean "the Association acting through its Board of Directors."

12.2. The Association

The duties and powers of the Association are those set forth in the Documents, together with the general and implied powers of a condominium association and a nonprofit corporation organized under the laws of the State of Texas. Generally, the Association may do any and all things that are lawful and necessary, proper, or desirable in operating for the peace, health, comfort, and general benefit of its Members, subject only to the limitations on the exercise of such powers as stated in the Documents. The Association comes into existence on issuance of its corporate charter. The Association will continue to exist at least as long as the Declaration is effective against the Property, regardless of whether its corporate charter lapses from time to time.

12.3. Name

A name is not the defining feature of the Association. Although the initial name of the Association is the Village at Ledge Stone Condominium Owners Association, Inc., the Association may operate under any name that is approved by the Board and (1) filed

~----------------------------------0~6~0;3s~o~2~s,....,,.op,.R'--"'"'e--~~ Texas as the name of the filing entity. The Association may also change its name by amending the Documents. Another legal entity with the same name as the Association, or with a name based on the name of the Property, is not the Association, which derives its authority from this Declaration.

12.4. Duration

The Association comes into existence on the earlier to occur of the following two events: (1) the date on which the Certificate is filed with the Secretary of State of Texas, or (2) the date on which a Unit deed is recorded in the Official Public Records of Hays County, Texas, evidencing diversity of ownership in the Property (that the Property is not owned entirely by Declarant or its affiliates). The Association will continue to exist at least as long as this Declaration, as it may be amended, is effective against all or part of the Property.

12.5. Governance

The Association will be governed by a board of directors elected by the Members. Unless the Bylaws or Certificate provide otherwise, the Board will consist of at least three (3) persons elected at the annual meeting of the Association, or at a special meeting called for that purpose. The Association will be administered in accordance with the Bylaws. Unless the Documents provide otherwise, any action requiring approval of the Members may be approved in writing by Owners representing at least a majority of the ownership interests, or at a meeting by Owners' representing at least a majority of the ownership interests that are represented at the meeting.

12.6. Membership

Each Owner is a Member of the Association, ownership of a Unit being the sole qualification for membership. Membership is appurtenant to and may not be separated from ownership of the Unit. The Board may require satisfactory evidence of transfer of ownership before a purported Owner is entitled to vote at meetings of the Association. If a Unit is owned by more than one person or entity, each co-owner is a Member of the Association and may exercise the membership rights appurtenant to the Unit.

12.7. Manager

The Board may delegate the performance of certain functions to one or more managers or managing agents of the Association. To assist the Board in determining whether to delegate a function, a Guide to Association's Major Management & Governance Functions is attached to this Declaration as Attachment 4. The Guide lists several of the major management and governance functions of a typical residential development with a mandatory owners association. The Guide, however, may not be construed to create legal duties for the Association and its officers, directors, members, employees, and agents that are not justified by the needs of the Association. Rather, the Guide is intended as a tool or an initial checklist for the Board to use periodically when considering a delegation of its functions. As a list of functions that owners associations commonly delegate to a manager, the Guide should not be considered as a complete list of the Board's duties, responsibilities, or functions. Notwithstanding any delegation of its functions, the Board is ultimately responsible to the Members for governance of the Association.

12.8. Books and Records

The Association will maintain copies of the Documents and the Association's books, records, and financial statements. Books and records of the Association will be made available for inspection and copying pursuant to the requirements of the Texas Business Corporation Law applicable to non-profit corporations.

12.9. Indemnification

The Association indemnifies every officer, director, and committee member (for purposes of this Section, "Leaders") against expenses, including attorney's fees, reasonably incurred by or imposed on the Leader in connection with any threatened or pending action, suit, or proceeding to which the Leader is a party or respondent by reason of being or having been a Leader. A Leader is not liable for a mistake of judgment. A Leader is liable for his willful misfeasance, malfeasance, misconduct, or bad faith. This right to indemnification does not exclude any other rights to which present or former Leaders may be entitled. As a common expense, the Association may maintain general liability and directors and officers' liability insurance to fund this obligation.

12.10. Obligations of Owners

Without limiting the obligations of Owners under the Documents, each Owner has the following obligations:

12.10.1. Information. Within thirty (30) days after acquiring an interest in a Unit, within thirty (30) days after the Owner has notice of a change in any information required by this Subsection, and on request by the Association from time to time, an Owner will provide the Association with the following information: (i) a copy of the recorded deed by which Owner has acquired title to the Unit; (il) the Owner's address, phone number, and driver's license number, if any; (iii) any Mortgagee's name, address, and loan number; (iv) the name and phone number of any Resident other than the Owner; and (v) the name, address, and phone number of Owner's managing agent, if

12.10.2. Pay Assessments. Each Owner will pay Assessments properly levied by the Association against the Owner or such Owner's Unit and will pay Regular Assessments without demand by the Association.

12.10.3. Comply. Each Owner will comply with the Documents as amended from time to time.

12.10.4. Reimburse. Each Owner will pay for damage to the Property caused by the negligence or willful misconduct of the Owner, a Resident of the Owner's Unit, or the Owner or Resident's family, guests, employees, contractors, agents, or invitees.

12.10.5. Liability. Each Owner is liable to the Association for violations of the Documents by the Owner, a Resident of the Owner's unit, or the Owner or Resident's family, guests, employees, agents, or invitees, and for costs incurred by the Association to obtain compliance, including attorney's fees whether or not suit is filed.

12.11. Unit Resales

This Section applies to every sale or conveyance of a Unit or an interest in a Unit by an Owner other than Declarant (except as provided in Section 5.9 of this Declaration):

12.11.1. Resale Certificate. An Owner intending to sell his Unit will notify the Association and will request a condominium resale certificate from the Association.

12.11.2. No Right of First Refusal. The Association does not have a right of first refusal and may not compel a selling Owner to convey the Owner's Unit to the Association.

12.11.3. Working Capital Contribution. A working capital contribution will be paid in accordance with Section 5.9 of this Declaration.

12.11.4. Other Transfer Related Fees. A number of independent fees may be charged in relation to the transfer of title to a Unit, including but not limited to, fees for resale certificates, estoppel certificates, copies of Documents, compliance inspections, ownership record changes, and priority processing, provided the fees are customary in amount, kind and number for the local marketplace. Transfer-related fees are not refundable and may not be regarded as a prepayment of or credit against regular or special assessments. Transfer-related fees may be charged by the Association or by the Association's managing agent, provided there is no duplication of fees. Transfer-related fees charged by or paid to a managing agent must have the prior written approval of the Association, are not subject to the Association's assessment lien, and are not payable by the Association. This Section does not obligate the Board or the manager to levy transfer-related fees. This exclusion may be waived by a party to a conveyance who requests transfer-related services or documentation for which fees are charged.

12.11.5. Information. Within 30 days after acquiring an interest in a Unit, an Owner will provide the Association with the following information: a copy of the settlement statement, or deed by which Owner has title to the Unit; the Owner's email address (if any); U.S. Post address, and phone number; any mortgagee's name, address, and loan number; the name and phone number of any resident other than the Owner; the name, address, and phone number of Owner's managing agent, if any.

12.11.6. Exclusions. The requirements of this Section, including the obligation for transfer-related fees, do not apply to the following transfers: (i) foreclosure of a mortgagee's deed of trust lien, a tax lien, or the Association's assessment lien; (ii) conveyance by a mortgagee who acquires title by foreclosure or deed in lieu of foreclosure; transfer to, from, or by the Association; (iii) voluntary transfer by an Owner to one or more Co-Owners, or to the Owner's spouse, child, or parent; a transfer by a fiduciary in the course of administering a decedent's estate, guardianship, conservatorship, or trust; a conveyance pursuant to a court's order, including a transfer

Cond,g., "· ,, by a bankruptcy trustee; or (iv) a disposition by a government or governmental agency. Additionally, with the exception of Section 12.11.3, the requirements of this Section do not apply to the initial conveyance from Declarant.

ARTICLE 13 — ENFORCING THE DOCUMENTS

13.1. Notice And Hearing

Before levying a fine for violation of the Documents (other than nonpayment of Assessments), or before levying an Individual Assessment for property damage, the Association will give the Owner written notice of the levy and an opportunity to be heard, to the extent required by applicable law. The Association's written notice must contain a description of the violation or property damage; the amount of the proposed fine or damage charge; a statement that not later than the 30 th day after the date of the notice, the Owner may request a hearing before the Board to contest the fine or charge; and a stated date by which the Owner may cure the violation to avoid the fine - - unless the Owner was given notice and a reasonable opportunity to cure a similar violation within the preceding 12 months. The Association may also give a copy of the notice to the Resident. Pending the hearing, the Association may continue to exercise its other rights and remedies for the violation, as if the declared violation were valid. The Owner's request for a hearing suspends only the levy of a fine or damage charge. The Owner may attend the hearing in person, or may be represented by another person or written communication. The Board may adopt additional or alternative procedures and requirements for notices and hearing, provided they are consistent with the requirements of applicable law.

13.2. Remedies

The remedies provided in this Article for breach of the Documents are cumulative and not exclusive. In addition to other rights and remedies provided by the Documents and by Jaw, the Association has the following rights to enforce the Documents:

13.2.1. Nuisance. The result of every act or omission that violates any provision of the Documents is a nuisance, and any remedy allowed by law against a nuisance, either public or private, is applicable against the violation.

13.2.2. Fine. The Association may levy reasonable charges, as an Individual Assessment, against an Owner and the Owner's Unit if the Owner or Resident, or the Owner or Resident's family, guests, employees, agents, or contractors violate a provision of the Documents. Fines may be levied for each act of violation or for each day a violation continues, and does not constitute a waiver or discharge of the Owner's obligations under the Documents.

13.2.3. Suspension. The Association may suspend the right of Owners and Residents to use Common Elements (except rights of ingress and egress) for any period during which the Owner or Resident, or the Owner or Resident's family, guests,

employees, agents, or contractors violate the Documents. A suspension does not constitute a waiver or discharge of the Owner's obligations under the Documents.

13.2.4. Self-Help. The Association has the right to enter a Common Element or Unit to abate or remove, using force as may reasonably be necessary, any erection, thing, animal, person, vehicle, or condition that violates the Documents. In exercising this right, the Board is not trespassing and is not liable for damages related to the abatement. The Board may levy its costs of abatement against the Unit and Owner as an Individual Assessment. Unless an emergency situation exists in the good faith opinion of the Board, the Board will give the violating Owner fifteen (15) days' notice of its intent to exercise self-help. Notwithstanding the foregoing, the Association may not alter or demolish an item of construction on a Unit without judicial proceedings.

13.2.5. Suit. Failure to comply with the Documents will be grounds for an action to recover damages or for injunctive relief to cause any such violation to be remedied, or both. Prior to commencing any legal proceeding, the Association will give the defaulting party reasonable notice and an opportunity to cure the violation.

13.3. Board Discretion

The Board may use its sole discretion in determining whether to pursue a violation of the Documents, provided the Board does not act in an arbitrary or capricious manner. In evaluating a particular violation, the Board may determine that under the particular circumstances: (i) the Association's position is not sufficiently strong to justify taking any or further action; (ii) the provision being enforced is or may be construed as inconsistent with applicable law; (iii) although a technical violation may exist, it is not of such a material nature as to be objectionable to a reasonable person or to justify expending the Association's resources; or (iv) that enforcement is not in the Association's best interests, based on hardship, expense, or other reasonable criteria.

13.4. No Waiver

The Association and every Owner has the right to enforce all restrictions, conditions, covenants, liens, and charges now or hereafter imposed by the Documents. Failure by the Association or by any Owner to enforce a provision of the Documents is not a waiver of the right to do so thereafter.

13.5. Recove,;y of Costs

The costs of curing or abating a violation are the expense of the Owner or other person responsible for the violation. If legal assistance is obtained to enforce any provision of the Documents, or in any legal proceeding (whether or not suit is brought) for damages or for the enforcement of the Documents or the restraint of violations of the Documents, the prevailing party is entitled to recover from the non-prevailing party all reasonable and necessary costs incurred by it in such action, including reasonable attorneys' fees.

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ARTICLE 14 — INSURANCE

14.1. General Provisions

The broad purpose of this Article is to require that the Property be insured with the types and amounts of coverage that are customary for similar types of properties and that are acceptable to mortgage lenders, guarantors, or insurers that finance the purchase or Improvement of Units. Because the insurance requirements of mortgage underwriters are subject to change, as are State-promulgated insurance regulations and policies, this Articles tries to balance the need for certain minimUID insurance requirements with the desire to adapt to a periodically changing insurance environment. The Board will make every reasonable effort to comply with the requirements of this Article.

14.1.1. Unavailability. The Association, and its directors, officers, and managers, will not be liable for failure to obtain any coverage required by this Article or for any loss or damage resulting from such failure if the failure is due to the unavailability of a particular coverage from reputable insurance companies, or if the coverage is available only at demonstrably unreasonable cost.

14.1.2. No coverage. Even if the Association and the Owner have adequate amounts of recommended and required coverages, the Property may experience a loss that is not covered by insurance. In that event, the Association is responsible for restoring the Common Elements as a common expense, and the Owner is responsible for restoring his Unit at his sole expense. This provision does not apply to the deductible portion of a policy.

14.1.3. Requirements. The cost of insurance coverages and bonds maintained by the Association is a common expense. Insurance policies and bonds obtained and maintained by the Association must be issued by responsible insurance companies authorized to do business in the State of Texas. The Association must be the named insured on all policies obtained by the Association. The Association's policies should contain the standard mortgage clause naming either the Mortgagee or its servicer followed by "its successors and assigns." The loss payee clause should show the Association as trustee for each Owner and Mortgagee. Policies of property and general liability insurance maintained by the Association must provide that the insurer waives its rights to subrogation under the policy against an Owner. The Association's insurance policies will not be prejudiced by the act or omission of any Owner or Resident who is not under the Association's control.

14.1.4. Association as Trustee. Each Owner irrevocably appoints the Association, acting through its Board, as his trustee to negotiate, receive, administer, and distribute the proceeds of any claim against an insurance policy maintained by the Association.

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14.1.5. Notice of Cancellation or Modilication. Each insurance policy maintained by the Association should contain a provision requiring the insurer to give prior written notice, as provided by the Act, to the Board before the policy may be canceled, terminated, materially modilied, or allowed to expire, by either the insurer or the insured. The Board will give to Eligible Mortgagees, and the insurer will give go Mortgagees, prior notices of cancellation, termination, expiration, or material modification.

14.1.6. Deductibles. An insurance policy obtained by the Association may contain a reasonable deductible, and the amount thereof may not be subtracted from the face amount of the policy in determining whether the policy limits satisfy the coverage limits required by this Declaration or an Underwriting lender. In the event of an insured loss, the deductible is treated as a common expense of the Association in the same manner as the Insurance premium. However, if the Board reasonably determines that the loss is the result of the negligence or willful misconduct of an Owner or Resident or their invitee, then the Board may levy an Individual Assessment against the Owner and his Unit for the amount of the deductible that is attributable to the act or omission, provided the Owner is given notice and an opportunity to be heard in accordance with the Notice and hearing Section of this Declaration.

14.2. Property Insurance

The Association will obtain blanket all-risk insurance, if reasonably available, for all Common Elements insurable by the Association. 1f blanket all-risk insurance is not reasonably available, then at a minimum, the Association will obtain an insurance policy providing fire and extended coverage. This insurance must be in an amount sufficient to cover 100 percent of the replacement cost of any repair or reconstruction in event of damage or destruction from any insured hazard. The Federal National Mortgage Association recommends use of a guaranteed replacement cost endorsement, or a replacement cost endorsement, together with an agreed amount endorsement in case of coinsurance.

14.2.1. Common Property Insured. 1f insurable, the Association will insure: (i) Common Elements; and (ii) property owned by the Association including, if any, records, furniture, fixtures, equipment, and supplies.

14.2.2. Endorsements. To the extent reasonably available, the Association will obtain endorsements to its property insurance policy if required by an Underwriting Lender, such as Inflation Guard Endorsement, Building Ordinance or Law Endorsement, and a Special Condominium Endorsement.

14.3. Liability Insurance

The Association will maintain a commercial general liability insurance policy over the Common Elements - expressly excluding the liability of each Owner and Resident within his Unit- for bodily injury and property damage resulting from the operation, maintenance, or use of the Common Elements. The amount of coverage should be at least that required by an Underwriting Lender, to the extent reasonably available. The purpose

of this requirement is, in part, to assure mortgage companies that the Association maintains at least minimum levels of insurance coverage. For example, the Federal National Mortgage Association requires a minimum of $1 million for bodily injury and property damage per single occurrence. If the policy does not contain a severability of interest provision, it should contain an endorsement to preclude the insurer's denial of an Owner's claim because of negligent acts of the Association or other Owners.

14.4. Worker's Compensation

The Association may maintain worker's compensation insurance if and to the extent necessary to meet the requirements of State law or if the Board so chooses.

14.5. Fidelity Coverage

The Association may maintain blanket fidelity coverage for any person who handles or is responsible for funds held or administered by the Association, whether or not the person is paid for his services. The policy should be for an amount that exceeds the greater of: (i) the estimated maximum funds, including reserve funds, that will be in the Association's custody at any time the policy is in force; or (ii) an amount equal to 3 months of Regular Assessments on all Uruts. A management agent that handles Association funds should be covered for its own fidelity insurance policy with the same coverages. If the Property has more than 20 Units, the Association must maintain fidelity coverage to the extent reasonably available.

14.6. Directors And Officers Liability

The Association may maintain directors and officers liability insurance, errors and omissions insurance, indemnity bonds, or other insurance the Board deems advisable to insure the Association's directors, officers, committee members, and managers against liability for an act or orrussion in carrying out their duties in those capacities.

14.7. Mortgagee Required Policies

Unless coverage is not available or has been waived in writing, the Association will maintain any insurance and bond required by an Underwriting Lender for condominium developments as long as an Underwriting Lender is a Mortgagee or an Owner.

14.8. Other Policies

The Association may maintain any insurance policies and bonds deemed by the Board to be necessary or desirable for the benefit of the Association.

14.9. Owner's Responsibility For Insurance.

14.9.1. Insurance by Owners. Notwithstanding the foregoing, the Board may establish minimum insurance requirements, including types and minimum amounts of coverage, to be individually obtained and maintained by Owners if the insurance is deemed necessary or desirable by the Board to reduce potential risks to the Association or other Owners. If an Owner fails to maintain required insurance, the Board may

obtain it on behalf of the Owner who will be obligated for the cost as an Individual Assessment.

14.9.2. Owners' Responsibilities. On request, an Owner will give the Board written notification of any and all structural changes, additions, betterments, or Improvements to his Unit, and any other information the Board may require to maintain adequate levels of insurance coverage. Each Owner will comply with reasonable requests by the Board for periodic inspection of the Unit for purposes of insurance appraisal. Each Owner, at his expense, will maintain any insurance coverages required by the Association pursuant to this Article. Each Owner at his expense, may obtain additional insurance coverage of his real property, Improvements, and betterments thereto, or personal property.

14.9.3. Association Does Not Insure. The Association does not insure an Owner or Resident's personal property. Each Owner and Resident is solely responsible for insuring his personal property in his Unit and on the Property, including furnishings, vehicles, and stored items. The Association strongly recommends that each Owner and Resident purchase and maintain insurance on his personal belonlsings.

ARTICLE 15 — RECONSTRUCTION OR REPAIR AFTER LOSS

15.1. Subject To Act

The Association's response to damage or destruction of the Property will be governed by Section 82.lll(i) of the Act. The following provisions apply to the extent the Act is silent.

15.2. Restoration Funds

For purposes of this Article, "Restoration Funds" include insurance proceeds, condemnation awards, Deficiency Assessments, fud.ividua] Assessments, and other funds received on account of or arising out of injury or damage to the Property. All funds prud to the Association for purposes of repm or restoration will be deposited in a financial institution in which accounts are insured by a federal agency. Withdrawal of Restoration Funds requires the signatures of at least two (2) Association directors or that of an agent duly authorized by the Board.

15.2.1. Sufficient Proceeds. If Restoration Funds obtained from insurance proceeds or condemnation awards are sufficient to repair or restore the damaged or destroyed Property, the Association, as trustee for the Owners, will promptly apply the funds to the repair or restoration.

15.2.2. Insufficient Proceeds. If Restoration Funds are not sufficient to pay the estimated or actual costs of restoration as determined by the Board, the Board may levy a Deficiency Assessment against the Owners to fund the difference.

15.2.3. Surplus Funds. If the Association has a surplus of Restoration Funds after payment of all costs of repair and restoration, the surplus will be applied as follows: If Deficiency Assessments were a source of Restoration Funds, the surplus will be paid to Owners in proportion to their contributions resulting from the Deficiency Assessment levied against them; provided that no Owner may receive a sum greater than that actually contributed by him, and further provided that any Delinquent Assessments owed by the Owner to the Association will first be deducted from the surplus. Any surplus remaining after the disbursement described in the foregoing paragraph will be common funds of the Association to be used as directed by the Board.

15.3. Costs And Plans.

15.3.1. Cost Estimates. Promptly after tl,e loss, the Board will obtain reliable and detailed estimates of fue cost of restoring fue damaged Property. Costs may include premiums for bonds and fees for the services of professionals, as the Board deems necessary, to assist in estimating and supervising the repair.

15.3.2. Plans and Specifications. Common Elements will be repaired and restored substantially as fuey existed immediately prior to the damage or destruction. Un.its will be repaired and restored substantially in accordance with original construction plans and specifications.

15.4. Owner's Duty to Repair.

15.4.1. Un.insured Loss. Wifuin sixty (60) days after fue date of damage, fue Owner will begin repair or reconstruction of any portion of his Un.it, subject to the right of the Association to supervise, approve, or disapprove repair or restoration during the course fuereof.

15.4.2. Insured Loss. If fue loss to a Un.it is covered by fue Association's insurance policy, fue Owner will begin repair or restoration of damage on receipt of fue insurance proceeds or any portion thereof from the Association, subject to the rights of the Association to supervise, approve, or disapprove the repair or restoration during the course thereof.

15.5. Owner's Liability For Insurance Deductible

If repair or restoration of Common Elements is required as a result of an insured loss, the Board may levy an individual Assessment, in the amount of fue insurance deductible, against fue Owner or Owners who would be responsible for the cost of fue repair or reconstruction in tl,e absence of insurance.

ARTICLE 16 — TERMINATION AND CONDEMNATION

16.1. Association As Trustee

Each Owner hereby irrevocably appoints the Association, acting through the Board, as trustee to deal with the Property in the event of damage, destruction, obsolescence, condemnation, or termination of all or any part of the Property. As trustee, the Association will have full and complete authority, right, and power to do all things reasonable and necessary to effect the provisions of this Declaration and the Act, including, without limitation, the right to receive, administer, and distribute funds, awards, and insurance proceeds; to effect the sale of the Property as permitted by this Declaration or by the Act; and to make, execute, and deliver any contract, deed, or other instrument with respect to the interest of an Owner.

16.2. Terntlnation

Termination of the terms of this Declaration and the condominium status of the Property will be governed by Section 82.068 of the Act, subject to the following provisions. In the event of substantially total damage, destruction, or public condemnation of the Property, an amendment to terminate must be approved by Owners of at least 67 percent of the Units and by certain Mortgagees pursuant to the Mortgagee protection article of this Declaration. In the event of condemnation of the entire Property, an amendment to terminate may be executed by the Board without a vote of Owners or Mortgagees. In all other circumstances, an amendment to terminate must be approved by Owners of at least 80 percent of the Units and by certain Mortgagees pursuant to the Mortgagee Protection article of this Declaration.

16.3. Condemnation

The Association's response to condemnation of any part of the Property will be governed by Section 82.007 of the Act. On behalf of Owners, but without their consent, the Board may execute an amendment of this Declaration to reallocate allocated interests following condemnation and to describe the altered parameters of the Property. If the Association replaces or restores Common Elements taken by condemnation by obtaining other land or constructing additional Improvements, the Board may, to the extent permitted by law, execute an amendment without the prior consent of Owners to describe the altered parameters of the Property and any corresponding change of facilities or Improvements.

ARTICLE 17 — MORTGAGEE PROTECTION

17.1. Introduction

This Article is supplemental to, not a substitution for, any other provision of the Documents. In case of conflict, this Article controls. Some sections of this Article apply to "Mortgagees," as defined in Article 1. Other sections apply to "Eligible Mortgagees," as defined below.

17.1.1. Known Mortgagees. An Owner who mortgages his Unit will notify the Association, giving the complete name and address of his mortgagee and the loan number. The Association's obligations to mortgagees under the Documents extend only to those mortgagees known to the Association. All actions and approvals required by mortgagees will be conclusively satisfied by the mortgagees known to the Association, without regard to other holders of mortgages on Units. The Association may rely on the information provided by Owners and mortgagees.

17.1.2. Eligible Mortgagees. "Eligible Mortgagee" means the holder, insurer, or guarantor of a first purchase money mortgage secured by a recorded deed of trust lien against a Unit who has submitted to the Association a written notice containing its name and address, the loan number, and the identifying number and street address of the mortgaged Unit. A single notice per Unit will be valid so long as the Eligible Mortgagee holds a mortgage on the Unit. The Board will maintain this information. The Association will treat the notice as the Eligible Mortgagee's request to be notified of any proposed action requiring the consent of Eligible Mortgagees. A proyjsion of the Documents requiring the approval of a specified percentage of Eligible Mortgagees will be based on the number of Units subject to mortgages held by Eligible Mortgagees. For example, "51 percent of Eligible Mortgagees" means Eligible Mortgagees of fifty-one percent (51 %) of the Units that are subject to mortgages held by Eligible Mortgagees.

17.2. Amendment

This Article establishes certain standards for the benefit of Underwriting Lenders, and is written to comply with their requirements and guidelines in effect at the time of drafting. If an Underwriting Lender subsequently changes its requirements, the Board, without approval of Owners or mortgagees, may amend this Article and other provisions of the Documents, as necessary, to meet the requirements of the Underwriting Lender.

17.3. Termination

An action to terminate the legal status of the Property after substantial destruction or condemnation must be approved by Owners of at least 67 percent of the Units, and by at least 51 percent of Eligible Mortgagees, An action to terminate the legal status for reasons other than substantial destruction or condemnation must be approved by at least 67 percent of Eligible Mortgagees.

17.4. Implied Approval

The approval of an Eligible Mortgagee is implied when the Eligible Mortgagee fails to respond within sixty (60) days after receiving the Association's written request for approval of a proposed amendment, proyjded the Association's request was delivered by certified or registered mail, return receipt requested.

17.5. Other Mortgagee Rights.

17.5.1. Inspection of Books. The Association will maintain current copies of the Documents and the Association's books, records, and financial statements. Mortgagees may inspect the Documents and records, by appointment, during normal business hours. ~--------------------------------------lll.-----lfai---,:g

17.5.2. Financial Statements. A Mortgagee may have an audited statement prepared at its own expense.

17.5.3. Attendance at Meetings. A representative of an Eligible Mortgagee may attend and address any meeting which an Owner may attend.

17.5.4. Right of First Refusal. Any right of first refusal imposed by the Association with respect to a lease, sale, or transfer of a Unit does not apply to a lease, sale, or transfer by a Mortgagee, including transfer by deed in lieu of foreclosure or foreclosure of a deed of trust lien.

17.5.5. Management Contract. If professional management of the Association is required by this Article, the contract for professional management may not require more than ninety (90) days' notice to terminate the contract, nor payment of a termination penalty.

17.6. Insurance Policies

If an Underwriting Lender that holds a mortgage on a Unit or desires to finance a Unit has requirements for insurance of condominiums, the Association must try to obtain and maintain the required coverages, to the extent they are reasonably available, and must try to comply with any notifications or processes required by the Underwriting Lender. Because underwriting requirements are subject to change, they are not recited here.

17.7. Notice of Actions

The Association will use its best efforts to send timely written notice to Eligible Mortgagees of the following actions:

(i) Any condemnation or casualty loss that affects a material portion of the Property or the mortgaged Unit.

(ii) Any sixty (60) day delinquency in the payment of assessments or charges owed by the Owner of the mortgaged Unit.

(iii) A lapse, cancellation, or material modification of any insurance policy maintained by the Association.

(iv) Any proposed action that requires the consent of a specified percentage of Eligible Mortgagees.

(v) Any proposed amendment of a material nature, as provided in this Article.

(vi) Any proposed termination of the condominium status of the Property.

17.8. Amendments of a Material Nature

A Document amendment of a material nature must be approved by owners representing at least 67 percent of the votes in the Association, and by at least 51 percent of Eligible Mortgagees. THIS APPROVAL REQUIREMENT DOES NOT APPLY TO AMENDMENTS EFFECTED BY THE EXERCISE OF A DEVELOPMENT RIGHT PROVIDED IN APPENDIX "A" ATTACHED HERETO. A change to any of the provisions governing the following would be considered material:

(i) Voting rights.

(ii) Increases in assessments that raise the previously assessed amount by more than 25 percent, assessment liens, or the priority of assessment liens.

(iii) Reductions in reserves for maintenance, repair, and replacement of Common Elements.

(iv) Responsibility for maintenance and repairs.

(v) Reallocation of interests in the General Common Elements or Limited Common Elements, or rights to their use; except that when Limited Common Elements are reallocated by Declarant pursuant to any rights reserved by Declarant pursuant to Appendix "A", by agreement between Owners (only those Owners and only the Eligible Mortgagees holding mortgages against those Units need approve the action).

(vi) Redefinitions of boundaries of Units, except that when boundaries of only adjoining Units are involved, then only those owners and the Eligible Mortgagees holding mortgages against the Unit or Units need approve the action.

(vii) Convertibility of Units into Common Elements or Common Elements into Units.

(viii) Expansion or contraction of the Property, or the addition, annexation, or withdrawal of property to or from the Property.

(ix) Property or fidelity insurance requirements.

(x) Imposition of any restrictions on the leasing of Units.

(xi) Imposition of any restrictions on Owners' right to sell or transfer their Units.

(xii) Restoration or repair of the Property, in a manner other than that specified in the Documents, after hazard damage or partial condemnation.

(xiii) Any provision that expressly benefits mortgage holders, insurers, or guarantors.

ARTICLE 18 — AMENDMENTS

18.1. Consents Required

As permitted by the Act or by this Declaration, certain amendments of this Declaration may be executed by Declarant acting alone, or by certain owners acting alone, or by the Board acting alone. Otherwise, amendments to this Declaration must be approved by Owners representing at least sixty-seven percent (67%) of the votes in the Association.

18.2. Method of Amendment

This Declaration may be amended by any method selected by the Board from time to time, pursuant to the Bylaws, provided the method gives the Owner of each Unit the substance if not exact wording of the proposed amendment, a description in layman's terms of the effect of the proposed amendment, and an opportunity to vote for or against the proposed amendment. For amendments requiring the consent of Eligible Mortgagees, the Association will send each Eligible Mortgagee a detailed description, if not the exact wording, of any proposed amendment.

18.3. Effective

To be effective, an amendment must be in the form of a written instrument: (i) referencing the name of the Property, the name of the Association, and the recording data of this Declaration and any amendments hereto; (ii) signed and acknowledged by an officer of the Association, certifying the requisite approval of Owners and, if required, Eligible Mortgagees; provided, however, this subsection (ii) will not apply for amendments prosecuted by Declarant pursuant to any rights reserved by Declarant under this Declaration or Appendix "A"· and (iii) recorded in the Official Public Records of Travis County, Texas.

18.4. Declarant Provisions

Declarant has an exclusive right to unilaterally amend this Declaration for the purposes stated in Appendix A. An amendment that may be executed by Declarant alone is not required to name the Association or to be signed by an officer of the Association. No amendment may affect Declarant' s rights under this Declaration or the Act without Declarant's written and acknowledged consent, which must be part of the recorded amendment instrument. Because Appendix A of this Declaration is destined to become obsolete, beginning 12 years after the date this Declaration is first recorded, the Board may restate, rerecord, or publish this Declaration without Appendix A. The automatic expiration and subsequent deletion of Appendix A does not constitute an amendment of this Declaration. This Section may not be amended without Declarant's written and acknowledged consent.

ARTICLE 19 — DISPUTE RESOLUTION

Declarant may assign its rights and obligations pursuant to this Article 19, unilaterally and in whole or in part, to a Builder. In the event of a partial assignment of the rights and obligations of this Article 19 to a Builder, such assignment shall only govern defects in General Common Elements, Limited Common Elements, Units, and/or Improvements constructed or _ caused to be constructed by the Builder.

19.1. Introduction And Definitions

The Association, the Owners, Declarant, all persons subject to this Declaration, and any person not otherwise subject to this Declaration who agrees to submit to this Article (collectively, the "Parties") agree to encourage the amicable resolution of disputes involving the Property and to avoid the emotional and financial costs of litigation and arbitration if at all possible. Accordingly, each Party hereby covenants and agrees that this Article applies to all Claims as hereafter defined. As used in this Article only, the following words, when capitalized, have the following specified meanings:

19.1.1. "Claim" means any claim, grievance, or dispute between Parties involving the Property, except Exempt Claims as defined below, and including without limitation:

(i) Claims arising out of or relating to the interpretation, application, or enforcement of the Documents.

(ii) Claims relating to the rights and/or duties of Declarant as Declarant under the Documents.

(iii) Claims relating to the design, construction, or maintenance of the Property.

19.1.2. "Claimant" means any Party having a Claim against any other Party.

19.1.3. "Exempt Claims" means the following claims or actions, which are exempt from this Article:

(i) The Association's claim for Assessments, and any action by the Association to collect Assessments.

(ii) An action by a Party to obtain a temporary restraining order or equivalent emergency equitable relief, and such other ancillary relief as the court deems necessary to maintain the status quo and preserve the Party's ability to enforce the provisions of this Declaration.

(iii) Enforcement of the easements, architectural control, maintenance, and use restrictions of this Declaration.

(iv) A suit to which an applicable statute of limitations would expire within the notice period of this Article, unless a Party against whom the Claim is made agrees to toll the statute of limitations as to the Claim for the period reasonably necessary to comply with this Article.

(v) A dispute that is subject to alternate dispute resolution - such as mediation or arbitration - by the terms of a public law or another instrument, such as a contract or warr,anty agreement, in which case the dispute is exempt from this Article, unless the Parties agree to have the dispute governed by this Article.

19.1.4. "Respondent'' means any Party against which a Claim has been asserted by a Claimant.

19.2. Mandatory Procedures

Claimant may not initiate any proceeding before any administrative tribunal seeking redress of resolution of its Claim until Claimant has complied with the procedures of this Article. As provided in Section 19.7 below, a Claim asserted against the Declarant will be resolved by binding arbitration unless Declarant specifically waives arbitration in writing, otherwise the terms and provisions to this Article apply to Claims asserted against Declarant.

19.3. Notice

Claimant must notify Respondent in writing of the Claim (the "Notice"), stating plainly and concisely: (i) the nature of the Claim, including date, time, location, persons involved, and Respondent's role in the Claim; (ii) the basis of the Claim (i.e., the provision of the Documents or other authority out of which the Claim arises); (iii) what Claimant wants Respondent to do or not do to resolve the Claim; and (iv) that the Notice is given pursuant to this Section.

19.4. Negotiation

Claimant and Respondent will make every reasonable effort to meet in person to resolve the Claim by good faith negotiation. Within 60 days after Respondent's receipt of the Notice, Respondent and Claimant will meet at a mutuallyacceptable place and time to discuss the Claim. At such meeting or at some other mutuallyagreeable time, Respondent and Respondent's representatives will have full access to the property that is subject to the Claim for the purposes of inspecting the property. If Respondent elects to take corrective action, Claimant will provide Respondent and Respondent's representatives and agents with full access to the property to take and complete corrective action.

19.5. Mediation

If the parties negotiate but do not resolve the Claim through negotiation within 119 days from the date of the Notice (or within such other period as may be

agreed on by the parties), Claimant will have 30 additional days within which to submit the Oaim to mediation under the auspices of a mediation center or individual mediator on which the parties mutually agree. The mediator must have at least 5 years of experience serving as a mediator and must have technical knowledge or expertise appropriate to the subject matter of the Claim. If Oaimant does not submit the Claim to mediation within the 30-day period, Oairnant is deemed to have waived the Claim, and Respondent is released and discharged from any and all liability to Claimant on account of the Oaim.

19.6. Termination Of Mediation

If the Parties do not settle the Claim within 30 days after submission to mediation, or within a time deemed reasonable by the mediator, the mediator will issue a notice of termination of the mediation proceedings indicating that the Parties are at an impasse and the date that mediation was terminated. Thereafter, Claimant may file suit, initiate arbitration, or commence administrative proceedings on the Claim, as appropriate and permitted by this Article.

19.7. Binding Arbitration-Declarant Claims

All Oaims in which Declarant is the Respondent must be settled by binding arbitration unless binding arbitration is specifically waived in writing by the Declarant. Declarant may, by summary proceedings (e.g., a plea in abatement or motion to stay further proceedings), bring an action in court to compel arbitration of any Claim not referred to arbitration as required by this Section 19.7.

19.7.1. Governing Rules. If a Claim asserted against the Declarant has not been resolved after Mediation as required by Section 19.5, the Claim will be resolved by binding arbitration in accordance with the terms of this Section 19.7 and the rules and procedures of the American Arbitration Association ("AAA") or, if the AAA is unable or unwilling to act as the arbitrator, then the arbitration shall be conducted in accordance with Texas Civil Practice and Remedies Code Chapter 171. Regardless of what entity or person is acting as the arbitrator, the arbitration shall be conducted in accordance with the AAA's "Construction Industry Dispute Resolution Procedures" and, if they apply to the disagreement, the rules contained in the Supplementary Procedures for Consumer- Related Disputes. If such Rules have changed or been renamed by the time a disagreement arises, then the successor rules will apply. Also, despite the choice of rules to govern the arbitration of any Claim as provided above, if the AAA has, by the time of Claim, identified different rules that would specifically apply to the Claim, then those rules will apply instead of the rules identified above. In the event of any inconsistency between any such applicable rules and this Section 19.7, this Section 19.7 will control. Judgment upon the award rendered by the arbitrator shall be binding and not subject to appeal, but may be reduced to judgment in any court having jurisdiction. Notwithstanding any provision to the contrary any applicable rules for arbitration, any arbitration with respect to Claims arising hereunder shall be conducted by a panel of three (3) arbitrators, to be chosen as follows:

(1) One arbitrator shall be selected by Declarant, in its sole and absolute discretion;

(2) One arbitrator shall be selected by the Claimant, in its sole and absolute discretion; and

(3) One arbitrator shall be selected by mutual agreement of the arbitrators having been selected by Declarant and the Claimant, in their sole and absolute discretion.

19.7.2. Exceptions to Arbitration- Preservation of Remedies. No provision of, nor the exercise of any rights under, this Section 19.7 will limit the right of Claimant or Declarant, and Claimant and the Declarant will have the right during any Claim, to seek, use, and employ ancillary or preliminary remedies, judicial or otherwise, for the purposes of realizing upon, preserving, or protecting upon any property, real or personal, that is involved in a Claim, including, without limitation, rights and remedies relating to: (i) exercising self-help remedies (including set-off rights); or (ii) obtaining provisions or ancillary remedies such as injunctive relief, sequestration, attachment, garnishment, or the appoinhnent of a receiver from a court having jurisdiction before, during, or after the pendency of any arbitration. The institution and maintenance of an action for judicial relief or pursuit of provisional or ancillary remedies or exercise of selfhelp remedies shall not constitute a waiver of the right of any party, including the Claimant, to submit the Claim to arbitration nor render inapplicable the compulsory arbitration provisions hereof.

19.7.3. Statute of Limitations. All statutes of limitation that would otherwise be applicable shall apply to any arbitration proceeding under this Section 19.7.

19.7.4. Arbitrator. Unless the parties to the arbitration agree in writing to the contrary, all arbitration proceedings shall be conducted as provided herein and in accordance with the AAA Rules.

19.7.5. Scope of Award; Modification or Vacation of Award. The arbitrator shall resolve all Claims in accordance with the applicable substantive Jaw. The arbitrator may grant any remedy or relief that the arbitrator deem just and equitable and within the scope of this Section 19.7: provided, however, that in no event shall the arbitrator's award damages which exceed the damages for construction defects a Claimant would be entitled to under Chapter 27 of the Texas Property Code. The arbitrator may also grant such ancillary relief as is necessary to make effective the award. In all arbitration proceedings in which the amount in controversy exceeds $50,000.00, in the aggregate, the arbitrator shall make specific, written findings of fact and conclusions of law. In all arbitration proceedings in which the amount in controversy exceeds $50,000.00, in the aggregate, the parties shall have the right to seek vacation or modification of any award

that is based in whole, or in part, on an incorrect or erroneous ruling of law by appeal to an appropriate court having jurisdiction; provided. however. that any such application for vacation or modification of an award based on an incorrect ruling of law must be filed in a court having juriscliction over the Claim within fifteen (15) days from the date the award is rendered. The arbitrator's findings of fact shall be binding on all parties and shall not be subject to further review except as otherwise allowed by applicable law.

19.7.6. Other Matters. To the maximum extent practicable. an arbitration proceeding hereunder shall be concluded within 180 days of the filing of the Claim for arbitration by notice from either party to the other. Arbitration proceedings hereunder shall be conducted in Hays County, Texas. The arbitrator shall be empowered to impose sanctions and to take such other actions as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure and applicable law. The arbitrator shall have the power to award recovery of all costs and fees (including attorney's fees, administrative fees, and arbitrator's fees) to the prevailing party. Each party agrees to keep all Claims and arbitration proceedings strictly confidential, except for disclosures of information re<J,uired in the ordinary course of business of the par ties or by applicable law or regulation. In no event shall any party discuss with the news media or grant any interviews with the news media regarding a Claim or issue any press release regarding any Claim without the written consent of the other parties to the Oaim.

19.8. Allocation Of Costs

Except as otherwise provided in this Article, each Party bears all of its own costs incurred prior to and during the proceedings described in the Notice, Negotiation, Mediation, and Arbitration sections above, including its attorneys fees. Respondent and Claimant will equally divide all expenses and fees charged by the mecliator and arbitrator.

19.9. General Provisions

A release or clischarge of Respondent from liability to Claimant on account of the Claim does not release Respondent from liability to persons who are not party to Claimant's Claim. A Party have an Exempt Claim may submit it to the procedures of this Article.

19.10. Approval & Settlement

The initiation of litigation or binding arbitration as required by this Article, or the initiation of any juclicial or administrative proceeding by the Association is subject to the following conditions in addition to and notwithstancling the above alternate dispute resolution procedures. Each Owner, by accepting an interest in or title to a Unit, whether or not it is so expressed in the instrument of conveyance, covenants and agrees to be bound by this Section. This Section may not be amended without the approval of Owners of at least 80 percent of the Units and, until the Declarant's rights under Section 3.11 above have expired, the Declarant. Sections 19.7, 19.10.2 and 19.10.3 may not be amended without the approval of Owners of at least 80 percent of the Units and the Declarant.

,----------------------------_JJJ>U.>="-IJll'l>:-~J:>4.-• 19.10.1. Owner Approval. The Association may not initiate any judicial, or administrative proceeding without the prior approval of Owners of at least a majority of the Units, except that no such approval is required: (i) to enforce provisions of this Declaration, including collection of assessments; (ii) to challenge condemnation proceedings; (iii) to enforce a contract against a contractor, vendor, or supplier of goods or services to the Association; (iv) to defend claims filed against the Association or to assert counterclaims in a proceedings instituted against the Association; or (v) to obtain a temporary restraining order or equivalent emergency equitable relief when circumstances do not provide sufficient time to obtain the prior consent of Owners in order to preserve the status quo.

19.10.2. Suit Against Declarant. Notwithstanding any provision in this Declaration to the contrary, the Association may not initiate any judicial, arbitration, or administrative proceeding against Declarant without the approval of Owners representing at least 80 percent of the Units.

19.10.3. Funding; Litigation. Except in the case of a temporary restraining order or equivalent emergency equitable relief when circumstances do not provide sufficient time to levy a Special Assessment, the Association must levy a Special Assessment to fund the estimated costs of litigation or arbitration prior to initiating a judicial, arbitration, or administrative proceeding. The Association may not use its annual operating income or reserve funds or savings to fund litigation or arbitration, unless the Association's annual budget or a savings account was established and funded from its inception as a litigation and arbitration reserve fund.

19.10.4. Settlement. The Board, on behalf of the Association and without the consent of Owners, is hereby authorized to negotiate settlement of litigation, and may execute any document related thereto, such as settlement agreement and waiver or release of claims.

ARTICLE 20 — GENERAL PROVISIONS

20.1. Notices

Any notice permitted or required to be given by this Declaration shall be in writing and may be delivered either personally or by mail. If delivery is made by mail, it shall be deemed to have been delivered on the third day (other than a Sunday or legal holiday) after a copy of the same has been deposited in the United States mail, postage prepaid, addressed to the person at the address given by such person to the Association for the purpose of service of notices. Such address may be changed from time to time by notice in writing given by such person to the Association of created.

20.2. Compliance

The Owners hereby covenant and agree that the administration of the Association will be in accordance with the provisions of the Documents and applicable laws, regulations, and ordinances, as same may be amended from time to time, of any governmental or quasigovemmental entity having jurisdiction over the Association or Property.

20.3. Higher Authority

The documents are subordinate to federal and State law, and local ordinances. Generally, the terms of the Documents are enforceable to the extent they do not violate or conflict with local, State, or federal law or ordinance.

20.4. Interpretation

The provisions of this Declaration shall be liberally construed to effectuate the purposes of creating a uniform plan for the development and operation of the Regime and of promoting and effectuating the fundamental concepts of the Regime set forth in this Declaration. This Declaration shall be construed and governed under the laws of the State of Texas.

20.5. Duration

Unless terminated or amended by Owners as permitted herein, the provisions of this Declaration run with and bind the Property, and will remain in effect perpetually to the extent permitted by law.

20.6. Captions

In all Documents, the captions of articles and sections are inserted only for convenience and are in no way to be construed as defining or moclifying the text to which they refer. Boxed notices are inserted to alert the reader to certain provisions and are not to be construed as defining or modifying the text

20.7. Construction

The provisions of this Declaration shall be deemed independent and severable, and the invalidity or partial invalidity of any provision or portion thereof shall not affect the validity or enforceability of any other provision or portion thereof. Unless the context requires a contrary construction, the singular shall include the plural and the plural the singular; and the masculine, feminine, or neuter shall each include the masculine, feminine, and neuter. All captions and titles used in this Declaration are intended solely for convenience of reference and shall not enlarge, limit or otherwise effect that which is set forth in any of the paragraphs, sections, or articles hereof. Throughout this Declaration there appears text enclosed by a box. This text is used to aid in the reader's comprehension of certain provisions of this Declaration. In the event of a conflict between the text enclosed by a box and any provision of this Declaration, the provision of the Declaration will control.

20.8. Declarant as Attorney in Fact and Proxy

To secure and facilitate Declarant' s exercise of the rights reserved by Declarant pursuant to Appendix "A" and elsewhere in this Declaration, each Owner, by accepting a deed to a Unit and each Mortgagee, by accepting the benefits of a Mortgage against a Unit within the Regime, and any other Person, by acceptance of the benefits of a mortgage, deed of trust, mechanic's lien contract, mechanic's lien claim, vendor's lien and/or any other security interest against any Unit in the Regime, shall thereby be deemed to have appointed Declarant such Owner's, Mortgagee's, and Person's irrevocable attorney-in-fact, with full power of substitution, to do and perform, each and every act permitted or required to be performed by Declarant pursuant to Appendix "A" or elsewhere in this Declaration. The power thereby vested in Declarant as attorney-in-fact for each Owner, Mortgagee, and/or Person, shall be deemed, conclusively, to be coupled with an interest and shall survive the dissolution, termination, insolvency, bankruptcy, incompetency, and death of an Owner, Mortgagee, and/or Person and shall be binding upon the legal representatives, administrators, executors, successors, heirs, and assigns of each such party. In addition, each Owner, by accepting a deed to a Unit, and each Mortgagee, by accepting the benefits of a Mortgage against a Unit in the Regime, and any Person, by accepting the benefits of a mortgage, deed of trust, mechanic's lien contract, mechanic1 s lien claim, vendor's lien, and/or any other security interest against any Unit in the Regime, shall thereby appoint Declarant the proxy of such Owner, Mortgagee, or Person, with full power of substitution in the premises, to do and perform each and every act permitted or required pursuant to Appendix "A" or elsewhere in this Declaration, and which may otherwise be reasonably necessary in connection therewith, including without limitation, to cast a vote for such Owner, Mortgagee, or Person at any meeting of the Members for the purpose of approving or consenting to any amendment to this Declaration in order to effect and perfect any such act permitted or required pursuant to Appendix A" or elsewhere in this Declaration and to execute and record amendments on their

behalf to such effect; and the power hereby reposed in Declarant, as the attorney-in-fact for each such Owner, Mortgagee, or Person includes, without limitation, the authority to execute a proxy as the act and deed of any Owner, Mortgagee, or Person and, upon termination or revocation of any Owner's proxy as permitted by the Texas Non-profit Corporation Act the authority to execute successive proxies as the act and deed of any Owner, Mortgagee, or Person authorizing Declarant, or any substitute or successor Declarant appointed thereby, to cast a like vote for such Owner at any meeting of the Members of the Association. Furthermore, each Owner, Mortgagee, and Person upon request by Declarant, will execute and deliver a written proxy pursuant to Section 82.ll0(b) of the Act, including a successive written proxy upon the termination or revocation as permitted by the Act of any earlier proxy, authorizing Declarant, or any substitute or successor Declarant appointed thereby, to cast a like vote for such Owner at any meeting of the Members of the Association. All such appointments and successive proxies shall expire as to power reserved by Declarant pursuant to Appendix "A" or elsewhere in this Declaration on the date Declarant no longer has the right to exercise such rights. All such proxies shall be non-revocable for the maximum lawful time and upon the expiration of nonrevocable period, new proxies shall again be executed for the maximum non-revocable time until Declarant's right to require such successive proxies expires.

20.9. Attachment/Appendix/Exhibits

The following appendixes and exhibits are attached to this Declaration and are incorporated herein by reference:

Attachment 1 Plats and Plans Attachment 2 Schedule of Allocated Interests Attachment 3 Guide to Association's Examination of Common Elements

Vll,LAGE AT LEDGE STONE CONDOMINIUMS Attachment 4 Guide to Association's Major Management and Governance Functions Appendix "A" Oeclarant Representations and Reservations

[SIGNATURE PAGE FOLLOWS]

~ - - - - - -- - - - - - - - - - - - -------,'--1-n',.Slf--nlc------l"-'+----.---''''i-5:l. EXECUTED on this 15"' day of November, 2006.

DECLARANT:

290 EAST BUSH, INC., a Texas corporation

Michael L. Schoenhld,Vi ;;sident

Date: November 15"' 2006

STATE OF TEXAS §

COUNTY OF HAYS §

This instrument was acknowledged before me on this 15"' day November, 2006 by Michael

L. Schoenfeld, Vice President of 290 East Bush, Inc., a Texas corporation, on behalf of said corporation.

e lHOIIASPAIA.DARMSTAOTERJI tlollryl'Ullllc, St!I!! al Texas My CommllSm ExpillS 8-23-2010

CONSENT OF MORTGAGEE

The undersigned, being the sole owner and holder of deed of trust lien dated February 28"', 2006, recorded as Document No. 6005774, Official Public Records of Hays County, Texas, securing a note of even date therewith, executes this Covenant solely for the purpose of evidencing its consent to this Covenant.

REGIONS BANK

STATE OF TEXAS §

COUNTY OF ANGELINA §

This instrument was acknowledged before me on this 13 111 day of November, 2006 by Codie Jenkins, Senior Vice President of Regions Bank, an Alabama state-chartered bank, on behalf of said bank.

SUSAN K. EOFF Notmv Pubrc, Slate of Texas Mv Commission Expires DECEM~ER 19. 2008

ATTACHMENT 1

CONDOMINIUM PLATS AND PLANS

The plats and plans, attached hereto as Attachment 1 contains the information required by the Texas Uniform Condominium Act.

Printed Narne:.~H=ol=t~C=ar=so~n~---- RPLS or License No. ~s,_,1,,6,,6 _ _ __

Refer to Plat of Village at Ledge Stone Condominiums, attached hereto for Holt Carson's Certification.

ATTACHMENT 1

SCALE: 1· 1 100"

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prcpor11• .:., 11•••ldt: In P,.,1 .. a., A.4!vlfal An1nal• •A" la lhc D<'l:r:1,:11,C1~0,11~I hn an 1::u.,,•nl cna •l;hl ol ltl;r on a nd 1;t1u In C"d 111,ou;h uu camnon el1mc"lt [cl nllncd In the LU'i r Dnlorcll:~! ::r,a unih . .... a •• to:ua ~, Cc:1.,..,,.1 lor aur1111u1 111 un1t,u111:r;i 0 r.,11lnlo;,,...Q.m..,.c;.:;.11,.amarlelln;tn1p•a11trlr.on'1

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ATTACHMENT 1 ~ ~ ENCUMBRANCES

  1. Restrictive covenant recorded in Volume 1909, Page 231, Official Public Records of Hays County, Texas.

  2. Undivided ½ interest in and to all oil, gas and other minerals in, on, under or that may be produced from the property, together with all rights relating thereto, express or implied, reserved to grantor in a deed from C. F. llush, Jr. Family Limited Partnership to 194 llush, Ltd., dated February 27, 2001, and recorded in Volume 1777, Page 305, Official Public Records of Hays County, Texas.

Umol0- /U(¼) ATTACHMENT 2 COMMON INTEREST ALLOCATION

The Common Interest Allocation and percentage of liability for common expenses for each Unit is 1/66. Each Unit is allocated one (1) vote.

THE COMMON INTEREST ALLOCATION ASSIGNED TO A PARTICULAR UNIT WILL DECREASE IF ADDITIONAL UNITS ARE CREATED AND ADDED TO THE REGIME BY THE DECLARANT.

VlLLAGEATLEDGESTONECONDOMINIUMS

GUIDE TO lHE ASSOCIATION'S EXAMINATION OF COMMON ELEMENTS

This Guide provides information to assist the Board in conducting an annual examination of the Common Elements for the purpose maintaining replacement and repair reserves at a level that anticipates the scheduled replacement or major repair of components of the General Common Elements maintained by the Association. The annual examination is required by Section 8.2 of the Declaration and is a necessary prerequisite to establishing sufficient reserves as required by Section 5.11 of the Declaration. Additional information on conducting the examination may be obtained from the Community Associations Institute and their publication, The National Reserve Shtdy Standards of the CommunihJ Associations Instihtte. See www.caionline.org. In addition, the Community Associations Institute provides certification for qualified preparers of reserve studies, known as a "Reserve Professionals Designation" (R.S.). Neither this Declaration or current law requires that the Board engage an individual holding a Reserve Professional Designation for the purpose of conducting the annual examination of the Common Elements. Because laws and practices change over time, the Board should not use this Guide without taking into account applicable changes in law and practice.

Developing a Plan

In developing a plan, the age and condition of Common Elements maintained by the Association must be considered. The possibility that new types of material, equipment, or maintenance processes associated with the repair and/or maintenance of Common Elements should also be taken into account. The individual or company who prepares the examination calculates a suggested annual funding amount and, in doing so, may consider such factors as which components are included, estimated replacement costs of the components, useful lives of the components, inflation, and interest on reserve accormt balances or other earnings rates. Annual contributions to the replacement fund from arrnual assessments are based on this examination or reserve study. A reserve study generally includes the following:

• Identification and analysis of each major component of Common Elements maintained by the Association • Estimates of the remaining useful lives of the components Estimates of the costs of replacements or repairs • A cash flow projection showing anticipated changes in expenditures and contributions over a time period generally ranging between 20 and 30 years • The "Funding Goal" which is generally one of the following:

Component Full Funding: Attaining, over a period of time, and maintaining, once the initial goal is achieved, a cumulative reserve

account cash balance necessary to discharge anticipated expenditures at or near 100 percent; or

Threshold Funding: Maintaining the reserve account cash balance above a specified dollar or percent funded amount. Note that Threshold Funding will increase the likelihood that special assessments will be required to fund major repairs and replacements. For example, one study has shown that a Threshold Funding goal of 40 to 50% results in a 11.2% chance that the Association will be unable to fund repairs and replacement projects in the next funding year. See "Measuring the Adequacy of Reserves", Common Ground, July/August 1997. The same study found that Component Full Funding reduces this likelihood to between .09 and 1.4%.

Find.mg Common Element Component Replacement Information

Common Element component replacement information may be obtained from contractors, suppliers, technical specialists (IT, cable, fiber optics, etc), a "Reserve Study" specialist or from using tables in technical manuals on useful lives of various components. As provided in Section

8.2. of the Declaration, the Board must reevaluate its funding level each year based upon changes to the Common Elements as well as changes to replacement costs and component conditions. The specific components of Common Elements include, but are not limited to roads, recreational facilities, and furniture and equipment owned by the Association. Components covered by maintenance contracts may be excluded if the contracts include maintenance and replacement of the components. The Board must also include within their overall budget a deferred maintenance accoW1t for those components requiring periodic maintenance which does not occur annually. Typically, the deferred maintenance account would include such components as painting, staining, and caulking.

VU.LAGE AT LEDGE STONE CONDOMINIUMS ATIACHMENT4 GUIDE TO ASSOCIATION'S MATOR MANAGEMENT & GOVERNANCE FUNCTIONS

This Guide lists several of the major management and governance functions of a typical residential development with a mandatory owners assodation. The Assodation' s Board of Directors may, from time to time, use this Guide to consider what functions, if any, to delegate to one or more managers, managing agents, employees, or volunteers. Because laws and practices change over time, the Assodation and/or the Board should not use this Guide without taking account of applicable changes in law and practices.

Performed Delegated byHOA toHOA MAJOR MANAGEMENT & GOVERNANCE FUNCTIONS officers or employee directors or agent

FINANCIAL MANAGEMENT To adopt annual budget and levy assessments, per Declaration.

Prepare annual operating budge~ periodic operating statements, and year-end statement.

Identify components of the property the HOA is required to maintain. Estimate remaining useful life of each component. Estimate costs and schedule of major repairs and replacements, and develop replacement reserve schedule for 5, 10, and 20-year periods. Annually update same.

Collect assessments and maintain HOA accounts.

Pay HOA's expenses and taxes.

Obtain annual audit and income tax filing.

Maintain fidelity bond on whomever handles HOA funds.

Report annually to members on financial status of HOA.

PHYSICAL MANAGEMENT Inspect, maintain, repair, and replace, as needed, all components of the property for which the HOA has maintenance responsibility.

Performed Delegated byHOA toHOA MAJOR MANAGEMENT & GOVERNANCE FUNCTIONS officers or employee directors or agent

Contract for services, as needed to operate or maintain the property.

Prepare specifications and call for bids for major projects.

Coordinate and supervise work on the property, as warranted.

ADMINISTRATIVE MANAGEMENT Receive and respond to correspondence from owners, and assist in resolving owners' problems related to the HOA.

Conduct hearings with owners to resolve disputes or to enforce the governing documents.

Obtain and supervise personnel and/or contracts needed to fulfill HOA's functions.

Schedule HOA meetings and give owners timely notice of same.

Schedule board meetings and give directors timely notice of same.

Enforce the governing documents.

Maintain insurance and bonds as required by the governing documents or state law, or as customary for similar types of property in the same geographic area.

Maintain HOA books, records, and files.

Maintain HOA's corporate charter and registered agent & address. OVERALL FUNCTIONS Promote harmonious relationships within the community.

Performed Delegated byHOA toHOA MAJOR MANAGEMENT & GOVERNANCE FUNCTIONS officers or employee directors or agent

Protect and enhance property values in the community. Encourage compliance with governing documents and applicable laws and ordinances.

Act as liaison between the community of owners and governmental, taxing, or regulatory bodies.

Protect the HOA and the property from loss and damage by lawsuit or otherwise.

'UfJJ ; 2 P5 ?6l.S-

APPENDIX "A"

DECLARANT RESERVATIONS AND REPRESENTATIONS

A.1. General Provisions.

A.1.1. Introduction. Declarant intends the Declaration to be perpetual and understands that provisions pertaining to the initial development, construction, marketing, and control of the Property will become obsolete when Declarant's role is complete. As a courtesy to future users of the Declaration, who may be frustrated by then-obsolete terms, Declarant is compiling Declarant-related provisions in this Appendix.

A.1.2. General Reservation and Construction. Notwithstanding other provisions of the Documents to the contrary, nothing contained therein may be construed to, nor may any mortgagee, other Owner, or the Association, prevent or interfere with the rights contained in this Appendix which Declarant hereby reserves exclusively unto itself and its successors and assigns. In case of a conflict between this Appendix "A" and any other Document, this Appendix "A" controls. This Appendix may not be amended without the prior written consent of Declarant. The terms and provisions of this Appendix must be construed liberally to give effect to Declarant's intent to protect Declarant's interests in the Property.

A.1.2. Purpose of Development and Declarant Control Periods. This Appendix gives Declarant certain rights during the Development Period and Declarant Control Period to ensure a complete and orderly sellout of the Property, which is ultimately for the benefit and protection of Owners and mortgagees. The "Development Period", as specifically defined in the Section 1.15 of the Declaration, means the fifteen (15) year period beginning on the dale this Declaration is recorded, unless such period is earlier lenninaled by Declarant' s recordation of a notice of tennination. Declarant Control Period is defined in Section 1.13 of the Declaration. Declarant may not use its control of the Association and the Property for an advantage over the Owners by way of retention of any residual rights or interests in the Association or through the creation of any contractual agreements which the Association may not terminate without cause with ninety (90) days' written notice.

A.2. Declarant Control Period Reservations. For the benefit and protection of Owners and mortgagees, and for the purpose of ensuring a complete and orderly build-out and sellout of the Property, Declarant will retain control of the Association, subject to the following:

A.2.1. Association Budl;el. During the Declarant Control Period, the Declarantappointed Board will establish a projected budget for the Property as a fully developed,

fully constructed, and fully occupied residential community with a level of services and maintenance that is typical for similar types of developments in the general area of the Property, using cost estimates that are current for the period in which the budget is prepared.

A.2.2. Officers and Directors. During Declarant Control Period, the Board may consist of three (3) persons. Declarant may appoint, remove, and replace any officer or director of the Association, none of whom need be members or owners, and each of whom is indemnified by the Association as a "Leader," subject to the following limitation: within one hundred and twenty (120) days after 50 percent of the maximum number of Units that may be created have been conveyed to Owners other than Declarant, at least one-third of the Board must be elected by Owners other than Declarant.

A.2.3. Obligation for Assessments. For each Unit owned by Declarant, Declarant is liable for Special Assessments, [UtilittJ Assessments], Individual Assessments, and Deficiency Assessments in the same manner as any Owner. Regarding Regular Assessments, during the Declarant Control Period only, Declarant at Declarant's option may support the Association's budget by either of the following methods: (i) Declarant will pay Regular Assessments on each Declarant owned Unit in the same manner as any Owner; or (ii) Declarant will assume responsibility for the difference between the Association's actual common expenses as they are paid and the Regular Assessments received from Owners other than Declarant, and will provide any additional funds necessary to pay actuai cash outlays of the Association. On the earlier to occur of three (3) years after the first conveyance of a Unit by the Declarant or termination of the Declarant Control Period, Declarant must begin paying Assessments on each Declarant owned Unit according to the Unit's allocated Interest for Assessments.

A.2.4. Obligation for Reserves. During the Declarant Control Period, neither the Association nor Declarant may use the Association working capital or reserve funds to pay operational expenses of the Association.

A.2.5. Enhancements. During the Declarant Control and Development Periods, Declarant - solely at Declarant's discretion - may voluntarily provide enhancements for the Property, such as higher levels of maintenance, management, insurance, and seasonal color in landscaping. Such enhancements are not included in the Association's annual operating budget or, alternatively, if included are identified as Declarant enhancements.

A.2.6. Expenses of Declarant. Expenses related to the completion and marketing of the Property will be paid by Declarant and are not expenses of the Association.

A.2.7. Management Contract. If Declarant enters into a professional management contract on behalf of the Association during Declarant Control Period, the Association has the right to terminate the contract without cause or penalty, but with at least 30 days written notice to the manager, at any time after a Board elected by the Owners other than Declarant takes office.

A.2.8. Common Elements. At or prior to termination of Declarant Control Period, if title or ownership to any Common Element is capable of being transferred, Declarant will convey title or ownership to the Association. At the time of conveyance, the Common Element will be free of encumbrance except for the property taxes, if any, accruing for the year of conveyance. Declarant's conveyance of title or ownership is a ministerial task that does not require and is not subject to acceptance by the Association or the Owners.

A.3. Development Period Ri11;hts. Declarant makes the following representations and reservations regarding Declarant's development of the Property:

A.3.1. Phasing. The Property is subject to expansion by phasing for up to fifteen

(15) years from the date this Declaration is recorded.

A.3.2. Platting & Creation of Units. When created, the Property contains sixtysix (66) Units. Declarant reserves the right to create and plat up to and including onehundred thirty-seven (137) Units upon full buildout of all phases of the project. Declarant's right to create Units is for a term of years and does not require that Declarant own a Unit in the Property at the time or times Declarant exercises its right of platting and creation. The platting instrument must include a revised schedule of allocated interests.

A.3.4. Changes in Development Plan. During the Development Period, Declarant may modify the initial development plan to respond to perceived or actual changes and opportunities in the marketplace, Modifications may include, without limitation, the subdivision or combination of Units, changes in the sizes, styles, configurations, materials, and appearances of Units, and Common Elements.

A.3.5. Architectural Control. During the Development Period, Declarant has the absolute right of architectural control. Notwithstanding the foregoing, during the Development Period and after termination of Declarant Control, or earlier if Declarant permits, the Board may appoint or serve as a "modifications committee" to respond exclusively to modifications of completed Units that are owned by persons other than Declarant. A modifications committee may not involve itself with the approval of new Units or Common Elements.

A.3.6. Transfer Fees. During the Development Period, Declarant will not pay transfer-related and resale certificate fees.

A.3.7. Website & Propert;y Name. During the Development Period, Declarant has the unilateral right to approve or disapprove uses of any website purporting to serve the Property or the Association, all information available on or through the Property website, if any, and all uses of the property name by the Association.

A.3.8. Fines and Penalties. During the Development Period, neither Declarant nor Units owned by Declarant are liable to the Association for late fees, fines, administrative charges, or any other charge that may be considered a penalty.

A.3.9. Statutory Development Rights. As permitted by the Act, Declarant reserves the following Development Rights which may be exercised during the Development Period: (i) to add real property to the Property; (ti) to create Units, General Common Elements, and Limited Common Elements within the Property; (iii) to subdivide Units or convert Units into Common Elements; and (iv) to withdraw from the Property any portion of the real property marked on the Plat and Plans as "Development Rights Reserved" or "Subject to Development Rights," provided that no Unit in the portion to be withdrawn has been conveyed to an Owner other than Declarant.

A.3.10. Development Rights Reserved. Regarding portions of the real property shown on the Plat and Plans as "Development Rights Reserved" or "Subject to Development Rights," if any, Declarant makes no assurances as to whether Declarant will exercise its Development Rights, the order in which portions will be developed, or whether all portions will be developed. The exercise of Development Rights as to some portions will not obligate Declarant to exercise them as to other portions.

A.3.11. Amendment. During the Development Period, Declarant may amend this Declaration and the other Documents, without consent of other Owners or any mortgagee, for the following limited purposes:

(i) To meet the requirements, standards, or recommended guidelines of an Underwriting Lender to enable an institutional or governmental lender to make or purchase mortgage loans on the Units.

(ill To correct any defects in the execution of this Declaration or the other Documents.

(iii) To add real property to the Property, in the exercise of statutory Development Rights.

(iv) To create Units, General Common Elements, and Liotited Common Elements within the Property, in the exercise of statutory Development llights.

(v) To subdivide, combine, or reconfigure Units or convert Units into Common Elements, in the exercise of statutory Development llights.

(vi) To withdraw from the Property any portion of the real property marked on the Plat and Plans as "Development llights Reserved" or 'Subject to Development llights" in the exercise of statutory Development llights.

(vii) To resolve conflicts, clarify ambiguities, and to correct misstatements, errors, or omissions in the Documents.

(viii) To change the name or entity of Declarant.

(ix) For any other purpose, provided the amendment has no material adverse effect on any right of any owner.

A.4. Special Declarant lights. As permitted by the Act, Declarant reserves the below described Special Declarant llights, to the maximum extent permitted by law, which may be exercised, where applicable, anywhere within the Property during the Development Period. Unless terminated earlier by an amendment to this Declaration executed by Declarant, any Special Declarant Right may be exercised by Declarant so long as Declarant holds a Development Right to create additional Units or Common Elements or Declarant owns a Unit, whichever ceases last. Earlier termination of certain rights may occur by statute.

(i) The right to complete or make Improvements indicated on the Plat and Plans.

(ii) The right to exercise any Development Right permitted by the Act and this Declaration.

(iii) The right to make the Property part of a larger condominium or planned community.

(iv) The right to use Units owned or leased by Declarant as models, storage areas, and offices for the marketing, management, maintenance, customer service, construction, and leasing of the Property.

(v) For purposes of promoting, identifying, and marketing the Property, Declarant reserves an easement and right to place or install signs, banners, flags, display lighting, potted plants, exterior decorative items, seasonal decorations, temporary window treatments, and seasonal landscaping on the Property, including items and locations that are prohibited to other

Owners and Residents. Declarant reserves an easement and right to maintain, relocate, replace, or remove the same from time to time within the Property. Declarant also reserves the right to sponsor marketing events - such as open houses, MLS tours, and brokers parties - at the Property to promote the sale of Units.

(vi) Declarant has an easement and right of ingress and egress in and through the Common Elements and Units owned or leased by Declarant for purposes of constructing, maintaining, managing, and marketing the Property, and for discharging Declarant's obligations under the Act and this Declaration.

(vii) The right to appoint or remove any Declarant-appointed officer or director of the Association during Declarant Control Period consistent with the Act.

A.5. Additional Easements and Rights. Declarant reserves the following easements and rights, exercisable at Declarant' s sole discretion, for the duration of the Development Period:

(i) An easement and right to erect, construct, and maintain on and in the Common Elements and Units owned or leased by Declarant whatever Declarant determines to be necessary or advisable in connection with the construction, completion, management, maintenance, and marketing of the Property.

(ii) The right to sell or lease any Unit owned by Declarant. Units owned by Declarant are not subject to leasing or occupancy restrictions or prohibitions contained elsewhere in this Declaration or the other Documents.

(iii) The right of entry and access to all Units to perform warranty-related work, if any, for the benefit of the Unit being entered, adjoining Units, or Common Elements. Requests for entry must be made in advance for a time reasonably convenient for the Owner who may not unreasonably withhold consent.

(iv) An easement and right to make structural changes and alterations on Common Elements and Units used by Declarant as models and offices, as may be necessary to adapt them to the uses permitted herein. Declarant, at Declarant's sole expense, will restore altered Common Elements and Units to conform to the architectural standards of the Property. The restoration will be done within one hundred and twenty (120) days after termination of the Development Period.

(v) An easement over the entire Property, including the Units, to inspect the Common Elements and all Improvements thereon and related thereto to evaluate the maintenance and condition of the Common Element Improvements.

A.6. Common Elements. Because the Common Elements are owned by the owners, collectively and in undivided interest, the Common Elements are not capable of being separately conveyed. The transfer of control of the Association at the end of the Declarant Control Period is not a transfer of the ownership of the Common Elements. Because ownership of the Common Elements is not conveyed by Declarant to the Association, there is no basis for the popular misconception that Owners may "accept" or "refuse" the Common Elements.

A.7. Successor Declarant. Declarant may designate one or more Successor Declarants for specified designated purposes and/or for specified portions of the Property, or for all purposes and all of the Property. To be effective, the designation must be in writing, signed and acknowledged by Declarant and Successor Declarant, and Recorded. Declarant (or Successor Declarant) may subject the designation of Successor Declarant to limitations and reservations. Unless the designation of Successor Declarant provides otherwise, a Successor Declarant has the rights of Declarant under this Section and may designate further Successor Declarants.

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