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02 CUP 09-024/DR 09-024 etc.
Report to the Planning Commission DATE: MARCH 23, 2010 ITEM #2 SUBJECT: CONTINUED ITEM CONDITIONAL USE PERMIT 09-024 DESIGN REVIEW 09-024 AMENDMENT TO TRACT MAP 16581 AMENDMENT TO CONCEPT PLAN 03-003 TUSTIN APPLICANT: LENNAR HOMES OF CALIFORNIA MANAGING MEMBER OF TUSTIN COVENTRY, LLC C/O DONNA KELLY 25 ENTERPRISE ALISO VIEJO, CA 92656 PROPERTY OWNER: TUSTIN COVENTRY, LLC C/O DONNA KELLY 25 ENTERPRISE ALISO VIEJO, CA 92656 DEVELOPER/ FUTURE PROPERTY OWNER: TUSTIN COVENTRY SENIORS, LLC PROJECT/PROPERTY MANAGER: META HOUSING CORPORATION 1640 S. SEPULVEDA BLVD., SUITE 425 LOS ANGELES, CA 90025 LOCATION: COVENTRY COURT AT COLUMBUS SQUARE LOT 265 OF TRACT 16581 ZONING: MCAS TUSTIN SPECIFIC PLAN (MCAS -SP 1) PLANNING AREAS 4 AND 5 REUSE DISPOSITION PARCELS 23 AND 24 GENERAL PLAN: MCAS TUSTIN SPECIFIC PLAN ENVIRONMENTAL STATUS: THE PROJECT IS EXEMPT FROM FURTHER CEQA REVIEW PURSUANT TO SECTION 65457 OF THE CALIFORNIA GOVERNMENT CODE Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 2 REQUEST: TO DEVELOP 240 SENIOR APARTMENT HOMES, AGE - RESTRICTED FOR PERSONS 55 YEARS OR OLDER, FOR RENTAL TENURE, WITH A PARKING STANDARD OF 1.7 SPACES PER UNIT, INCLUDING 153 AFFORDABLE UNITS, RECREATION CENTER, AND ASSOCIATED SITE AND INFRASTRUCTURE IMPROVEMENTS AT LOT 265 OF TRACT 16581, ALSO REFERRED TO AS COVENTRY COURT IN COLUMBUS SQUARE AT TUSTIN LEGACY RECOMMENDATION That the Planning Commission adopt: 1. Resolution No. 4134 recommending that the City Council approve Conditional Use Permit 09-024 and Design Review 09-024 authorizing the development of a 240 -unit senior apartment residential complex, age restricted to persons of 55 years or older, for rental tenure, with a parking standard of 1.7 spaces per unit, including 153 affordable units, recreation center, and associated infrastructure and site improvements on Lot 265 of Tract 16581; 2. Resolution No. 4136 recommending that the City Council approve Amendment to Resolution No. 3951, which approved Concept Plan 03-003, to reflect a change in tenure from ownership to rental for the proposed 240 -unit age -restricted senior housing complex on Lot 265 of Tract 16581; 3. Resolution No. 4137 recommending that the City Council approve Amendment to Resolution No. 05-40, which approved Tentative Tract Map 16581, to reflect a change in tenure from ownership to rental for the proposed 240 -unit age - restricted senior housing complex on Lot 265 of Tract 16581. BACKGROUND The item has been continued from the January 26, 2010, and December 8, 2009, Planning Commission meetings. Due to the feedback received at the December 8, 2009, public hearing from Columbus Square homeowners, the Planning Commission continued the item to the January 26, 2010, meeting to allow the applicant (Lennar) and the proposed housing provider (Meta Housing) an opportunity to meet with the Community Association to address some of their concerns. At the January 26, 2010, Planning Commission meeting, several Columbus Square homeowners and residents spoke in opposition to the project and various items of concern were discussed. As a result, the Planning Commission continued the item for sixty (60) days for staff to conduct further research and for the applicant and community members to engage in further dialogue. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 3 The major issues raised at the January 26th public hearing which the Planning Commission requested further information on relate to: 1. Disclosure/notification documents, 2. Master Community Association dues and membership and voting rights within the master Community Association, 3. Occupancy limits for the proposed units, 4. Age restriction requirements, and 5. Property transfers or assignments. 6. Parking (email received from an individual following the last public hearing) This Report to the Planning Commission will address only new information relative to the above -listed issues. For full project -specific details and discussion, please reference the Planning Commission Reports dated December 8, 2009, and January 26, 2010 (Attachment A). Project Proposal The project proposal is to develop a 240 -unit age -restricted senior community for rental tenure including 153 affordable units, recreation center, and associated site and infrastructure improvements, at a parking standard of 1.7 spaces per unit, located on Lot 265 of Tract 16581, also known as Coventry Court at Columbus Square. The project was originally approved in 2005 and 2006, but since the project was not completed, entitlements and building permits expired. At this time the applicant is requesting approval for the same plans as previously approved, with a change from ownership tenure (as was previously approved) to rental tenure for the 240 units. In summary, the project proposal involves the following new or amended entitlements: 1. DR 09-024: New design review for the development of a 240 -unit senior housing project, including associated recreational facilities and site and building improvements. 2. CUP 09-024: New conditional use permit for age -restricted apartments utilizing a parking ratio of 1.7 parking spaces per unit. Pursuant to Sections 3.4.2.A and 3.4.5.A of the MCAS Tustin Specific Plan, multiple family dwelling units (apartments) are conditionally permitted in Planning Areas 4 and 5. 3. Amendment to Tract Map 16581: Due to the proposed change from ownership to rental tenure, an amendment to TM 16581 will be required to be documented in a resolution. 4. Amendment to Concept Plan 03-003: Due to the proposed change to rental tenure, an amendment to the Concept Plan is also required to be documented in a resolution. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 4 Public Input since the January 26th Planning Commission Hearing Since the January 26th Planning Commission meeting, staff has received written correspondence from two individuals who own/reside in Columbus Square regarding the project (see Attachment B). In summary: • Mr. Eric Higuchi submitted a letter via email on the subject of parking; • Ms. Colleen Tierney submitted an email to the City Council expressing opposition to the proposed project, citing decreased property values, increased HOA fees, and potential for a higher crime rate due to a lack of community policing by Tustin P.D. in Columbus Square. DISCUSSION 1. DISCLOSURE/NOTIFICATION DOCUMENTS Homebuyer Notification Document Condition 10.1 of Resolution No. 05-40 (City Council approval of Tentative Tract Map 16581) required the subdivider to submit a homebuyer notification document for review and approval by the Community Development Department to include notification to all homebuyers of certain characteristics which may affect the community such as roadway and train noise, public use of park sites, affordable units located within the community, assessment districts, etc. Section H of Condition 10.1 required the homebuyer notification to include "a notice stating that all development within the site is approved for ownership tenure only per Chapter 3.9.3J5 of the MCAS Tustin Specific Plan." The "Columbus Square Homebuyer Notification" (herein referred to as Notification) (Attachment C) is a document separate from the "Columbus Square Homebuyer Disclosure Statement" (herein referred to as Disclosure) (Attachment D). The Notification is a document that was required as a condition of approval on Tentative Tract Map 16581. The Notification is a document that is not to be amended without prior review and approval from the City. The City is not aware of any amendments to this document. The original version of the Notification, dated 3/6/06, includes a section, "SALE AND OWNERSHIP PER MCAS TUSTIN SPECIFIC PLAN," which states, "Development within the Community is approved for sale and ownership tenure only in accordance with Chapter 3.9.3J5 of the MCAS Tustin Specific Plan. If the project is approved and necessitates any amendments to the Notification, the applicant shall be responsible for providing an amendment or addendum for City review and approval, and then for distributing to existing and future homebuyers in the Community. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 5 Homebuyer Disclosure Document The Columbus Square Homebuyer Disclosure Statement is a document regarding the Community prepared and provided by the Master Developer or Neighborhood Builders directly to each homebuyer in the Community to "describe various matters which might affect [a homebuyer's] decision to purchase." This document is neither required nor approved by the City. This document is prepared by and for the purposes of the Developer. At the January 26, 2010, public hearing, attention was drawn to the fact that there was more than one version of this Disclosure document and homeowners who purchased at various stages of the Columbus Square development were given different versions of the documents from the homebuilders which contain varying language, specifically regarding rentals within the Community. Since the meeting, Lennar has provided City staff with what they have stated to be all versions (five in total) of the Columbus Square Homebuyer Disclosure Statement. A summary of the various versions is provided in Table 1 and a more detailed comparison is provided in Table 2. Attachment D contains copies of the versions provided to the City by Lennar, which include highlighted changes and handwritten annotation made by a representative of Lennar. The sections of the Disclosure document addressed in this Report pertain to items that are relevant to the subject project only (i.e. ownership or rental language, mention of senior housing, or specific reference to Lot 265). Items outside of the scope of the subject project that may have been changed in different versions of the document are not discussed herein. Table 1. Summary of versions of Developer's Homebuyer Disclosure Statement DATE Changes as they relate to the subject project 6/13/06 First version of the document 8/11/06 First appearance of language that Neighborhood Builders may rename, sell, or not build the listed neighborhoods at all 3/1/07 Substantially the same as prior version 9/25/08 First appearance of "rental" language at the Active Adult neighborhood (Coventry Court) 11/16/09 Also contains rental language Applicable sections of the Disclosure are quoted and compared in Table 2. At the January 26, 2010, public hearing, it was questioned when specific rental language was added to the Developer's Disclosure document. It appears that such language first appears in the September 25, 2008, version of the document. So, homebuyers who purchased prior to this date would have likely been provided a Disclosure Statement that did not disclose the possibility of rentals at the Active Adult neighborhood in express terms. Table 2. Comparison of different versions of Developer's Homebuyer Disclosure Statement document Section of Disclosure Statement 6/13/06 8/11/06 3/1/07 9/25/08 11/16/09 and Topic Section 1. "If developed as approved by the City, No change No change No change No change Location and Master Plan Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 single family dwellings, 552 condominiums, and 240 senior housing condominiums." Section 2. "The Community is being developed with Addition of the following language: Same as 8/11/06 version Same as prior 2 versions Same as prior 3 versions Neighborhoods Homes in numerous distinct [...]provided that any product may neighborhoods ("Neighborhoods") be renamed or sold by the constructed by various homebuilders Neighborhood Builder currently listed ( "Neighborhood Builders"). Neighborhood below and the Neighborhood Builders may have owner occupancy Builders reserve the right not to build restrictions, rental Homesites and Homes the Neighborhoods listed below at (each of which is defined below), and all." investor-owned Homesites and Homes." Section 23. "An 'Active Adult Neighborhood,'the No change No change Amended language. New language reads: Minor verbiage and "Active Adult" Neighborhood Coventry Court, consists of age restricted "An 'Active Adult' neighborhood, is proposed typographical changes. residences located within the Community. for the Community on Lot 265 of Tract 16581 Otherwise, substantially same In Coventry Court, each Home must be which is located on Charleston and Cambridge as 9/25/08 version. occupied by at least one resident who is at Streets adjacent to Georgis [sic] Street and least 55 years of age. Coventry Court is a Kensington Park Drive, and planned to consists community consisting of approximately [sic] of approximately 240 age restricted 240 Homes and has its own recreational residences.. [sic] Asan Active Adult facilities and activities. All assessments for neighborhood, each Home will be required to the maintenance of these recreation be occupied by at least one resident who is at facilities are the exclusive responsibility of least 55 years of age. If the Active Adult has its the Coventry Court residents. As a result, own recreational facilities and activities then all the recreational facilities located within assessments for the maintenance of these Coventry Court are not open to other recreation facilities are the exclusive Owners in the Community; provided, responsibility of the Active Adult residents. As a however, Coventry Court residents will result, the recreation facilities located within have the right to use recreational facilities the Active Adult neighborhood are not open to located throughout the Community. other Owners in the Community. However, Master Developer reserves the right to Active Adult residents will have the right to use construct other age restricted public recreational facilities located throughout communities in other locations in the the Community and, if annexed into the Community." Community Association and paying Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 7 Section of Disclosure Statement 6/13/06 8/11/06 3/1/07 9/25/08 11/16/09 and Topic assessments, will have the right to use the Community Association recreational facilities. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. Master developer may also, plan and construct other types and number of Homes, including rental, within Lot 265 with approval by the City of Tustin." Section 22. "The City of Tustin has required the No change No change No change No change Affordable Housing/Transitional Master Developer and Neighborhood Housing Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units") within the Community [... ] one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court) [...] for a period of 45 years." Section 19. "Notwithstanding the fact that you have No change No change No change No change Amendments to the Community received a copy of the Community Declaration Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions." Covenants, Conditions, and Restrictions (CC&Rs) The Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square (CC&Rs) was recorded on March 7, 2006 (Attachment E). Article XVII, Section 17.2 RIGHTS states, "Declarant and the Neighborhood Builders have the following rights. Nothing in the Community Association Governing Documents limits and no Owner or the Community Association will interfere with Declarant's or any Neighborhood Builder's exercise of these rights." Section 17.2.2 goes on to specify, "Sales. To sell and rent any portion of the Covered Property directly or through agents and representatives." A First Amendment to the CC&Rs document was recorded on August 2, 2006. It does not appear to contain any changes relative to the subject project. 2. MASTER COMMUNITY ASSOCIATION DUES AND MEMBERSHIP AND VOTING RIGHTS The issues of dues and voting rights within the Columbus Square Community Association remain topics of concern. As proposed, the applicant indicated that the change from ownership to rental tenure would result in the 240 -unit senior community being annexed into the master association at a rate of 2:1 assessments and voting rights. Therefore, the owner of the senior project would pay assessments at a rate of .5 assessments per unit, instead of the 1 assessment per unit which was envisioned when the association was formed and operating budget was prepared. As a result, all other homeowners outside of the senior project (835 homes) in the master association would be reassessed to make up the shortfall for 120 assessments over the life of the project. The owner 240 -unit senior project would also be allotted a total of 120 of the total 955 votes (12.5 percent) in the association. Staff has surveyed a sample of management companies who represent homeowners associations in nearby communities which may experience similar scenarios to that which is proposed at Columbus Square (master homeowners associations with a mix of rental and ownership members). The responses are summarized in Table 2 below. Table 3. Summary of responses received from other homeowners associations COMPANY COMMUNITIES RESPONSE REPRESENTED • Apartment communities in Tustin Ranch are not a part of The Irvine Company Tustin Ranch master associations. • Therefore, not subject to master association dues. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 9 COMPANY COMMUNITIES REPRESENTED RESPONSE • Apartment units represent 1300 of a total 8100 units (16 percent) in Ladera Ranch • There are 3 separate active adult (55+) communities within Ladera Ranch. They are part of the master association. Merit Property • These communities are assessed at a rate of 3:1. Management/Ladera Ladera Ranch Ranch Maintenance • Voting rights are proportionately allotted (3:1) and are Corp. (LRMC) granted to the owner of the complex (not renters). • At 3:1 ratio, apartments represent 433 of 7233 total votes (6 percent) in the master association. • Interviewee comment: While this is not near a majority, it can be enough to swing an election because of the rate of voter turnout in association elections. • AHPCA represents the largest of 5 master associations in the Anaheim Hills area (2273 homes). Anaheim Hills . Rental projects are not included in master associations. 1 Planned Community Anaheim Hills association features only 1 type of housing product (i.e. Association (portion of) condos, single family). (AHPCA) • Voting is not based on a straightforward ratio but members elect delegates to represent them in the association. Each delegate represents between 10 — 212 homeowners. • WVA consists of 1,096 apartment units and 7,685 single family or condo units (=12% apartments). • In CC&Rs, HOA membership is at two levels Class A: single family or condominium owners; Class B: apartment complex owners. • Class A: 1 voting right per assessment. • Class B: Assessment-- Base ssessment=Base assessment based on net acreage of site x 7.24 + supplemental declaration which is a percentage of the Woodbridge Village Woodbridge Class A assessment. Association (WVA) Village (in Irvine) (Each apartment complex negotiated the supplemental declaration amount with the HOA upon annexation into the master; varies but can be around 60-75% of Class A assessment). • Voting right for Class B is based on their base assessment only (varies by community), so voting rights: assessments are < 1:1 ratio. • Interviewee comment: Even within such a large association, apartments do constitute a large voting percentage and do have the possibility of swaying an election. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 10 COMPANY COMMUNITIES RESPONSE REPRESENTED • All projects in Orange County that feature apartment communities were developed as such since the initial phases, so no changes in dues or representation have occurred. • The makeup within each association varies. • When apartments units are part of such master Numerous associations, the rate of assessment for each apartment The Irvine Company communities in unit is approximately 75% of that paid per home (though it Irvine varies by project). • The assessment rate for rental units is less than for ownership units based on the assumption that dedicated amenities are provided in the rental community, so those residents would not be as likely to utilize the master association amenities. • Voting rights also vary, but in many cases are approximately 1:1 on a per unit basis. Staff was not able to locate a community with a circumstance very similar to that proposed at Columbus Square where within a homeowners association that features both ownership and rental units, apartment units constitute approximately 22 percent of the total units. Additionally, none of the communities surveyed had experienced a conversion of condominiums to apartments or vice versa; all had been planned since inception. However, amongst the communities surveyed, it appears that when rental units are part of the same association as ownership units, a distinction is made in the amount of assessments paid. Voting rights are allotted in some cases proportionate to the assessment rate, in other cases on a 1:1 basis, and in some other cases using an alternate formula. The applicant (Lennar) indicated they have been examining different alternatives to resolve the issues of association dues and voting rights for the subject project. In preliminary discussions with City staff, the applicant indicated they were considering not annexing the subject property into the master association and alternatively utilizing a recorded agreement between the Columbus Square Master Community Association (CSMCA) and the property owner of Lot 265. The applicant has indicated that the purpose of such an agreement is that the bottom line would result in the future owner of the 240 apartment complex paying full assessments while ensuring rights and commitments, and that such an agreement should result in a no -net -change for other homeowners in Columbus Square. The applicant submitted a "Summary of Rental Proposal' (Attachment F) just prior to the completion of this Report. Upon review of the Summary, it is consistent with what is discussed in the "Homeowner Association Dues" section of this Report. However, no details on this proposal have been submitted to the City. Condition 2.1 of Resolution No. 4134 requires the applicant to secure an agreement to this effect, for review and approval by the City. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 11 3. OCCUPANCY LIMITS Federal and State agencies offer guidelines for occupancy requirements. In a reasonable effort to allocate scarce financial resources for affordable housing, housing programs typically use occupancy standards that allow for up to "two persons per bedroom plus one" (e.g., five person in a two-bedroom unit). The California Health and Safety Code standard, applicable for housing receiving financial assistance from Redevelopment Housing Set -Aside Fund, is one person per bedroom plus one (e.g., three persons in a two-bedroom unit). The City in this case utilizes the federal and State agencies occupancy guidelines of two persons per bedroom plus one. This is reflected in the First Amendment to the Housing Agreement in which the applicant would need to execute as part of the condition of approval of the project (see Attachment G - Section 3.3.3 on Page 4 of the Regulatory Agreement and Declaration of Restrictive Covenants). 4. AGE RESTRICTION The Fair Housing Act protects all citizens from discrimination on the basis of race, color, national origin, religion, sex, handicap, or familial status. In 1995 the Act was amended ("Housing for Older Persons Act of 1995") to provide an exemption with respect to housing intended and operated for occupancy by persons 55 years of age or older, where at least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older. Accordingly, if approved, each unit must be occupied by at least one person who is 55 years of age or older. To ensure that the project remain as a senior development, proposed Condition No. 1.11 of Resolution No. 4134 requires an age -restrictive covenant to be recorded on the property. 5. PROPERTY TRANSFER AND/OR ASSIGNMENT The question of length of ownership and ability of the future property owner (proposed to be Tustin Coventry Seniors, LLC to transfer or assign ownership of the property were also raised at the January 26t Planning Commission meeting. At the hearing, Shaun Bradley of Meta Housing indicated that it was not the intention of Meta to build and ultimately sell the property because of the type of financing options they are pursuing. In benefitting from public tax finance credits and tax-exempt bonds, their compliance period would be minimum 15 years. As previously mentioned, the proposed project necessitates an amendment to the existing Housing Agreement and Affordable Housing Plan and inclusion of a Regulatory Agreement to reflect the change in tenure and implement new rental language and terms of affordability. Section 6 of the Regulatory Agreement states that the developer is not to sell, transfer, or otherwise dispose of the property without obtaining written approval from the City (Attachment G). Section 6 also states that that the provision is to terminate at the end of one year following the expiration of the Qualified Project Period, which is specified as 55 years. Section 8 of the Regulatory Agreement also states that the covenants and restrictions of the Regulatory Agreement shall run with the land and Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 12 are enforceable upon the Developer, its successors and assigns. Consequently, the City will have the authority to approve all transfers, sales, and assignments of the subject property (and associated obligations) for a period of up to 56 years. If a successor or assign to any portion of the property is approved, that party will be subject to all covenants and restrictions thereof. 6. PARKING A topic discussed by several Columbus Square residents who contacted staff and spoke at the prior hearings were current and future parking impacts within the community. Mr. Eric Higuchi submitted an email to the City (Attachment C) outlining concerns he holds regarding the proposed 1.7 spaces/unit parking ratio as discussed in the January 26, 2010, staff report. Mr. Higuchi states his challenges to the parking study: 1. The proposed project is for an "active adult" not "assisted living" community for individuals who are typically still employed and require two cars. 2. The proposed project is neither urban nor a desert gated community. 3. No Orange County senior communities were surveyed in the parking study. 4. The project is the highest density residential 'in Tustin with the most relaxed parking requirement. Staff maintains that the parking issue was fully addressed in the "Parking" section of the January 26th Report. The parking study justifying a 1.7 spaces/unit parking has been previously reviewed and accepted by City staff, the Planning Commission, and the City Council. The City's Traffic Engineer re -visited the study in conjunction with the subject application and determined the change in tenure to be negligible upon parking. As Commissioner Thompson summarized at the January 26, 2010, Planning Commission meeting, a technical study was completed, staff has verified that the proposed project does not involve significant variation and merits no necessity to update the study, and that the existing parking situation in the community, while it may be a valid issue to be resolved, is not particular to the proposed project. CONCLUSION Staff recommends that the Planning Commission adopt Resolution Nos. 4134, 4136, and 4137, recommending that the City Council approve CUP 09-024, DR 09-024, Amendment to CP 03-003, and Amendment to Tract Map 16581, with drafted findings and recommended conditions of approval. The draft resolutions also include stipulations (Condition 2.2 of Reso. 4134, Condition 1.3 of Reso. 4136, and Condition 1.6 of Reso. 4137), that if the project as apartments/for rental tenure is not instituted for any reason, the approval is to remain valid for ownership tenure (240 senior condominium units), as was originally intended and approved for the project site. Planning Commission Report March 23, 2010 CUP 09-024, DR 09-024, et al. Page 13 Emile 7t, Reina Kapadia Associate Planner Attachments: Elizabeth A. Binsack Community Development Director A. Report to the Planning Commission, December 8, 2009 and Report to the Planning Commission, January 26, 2010 B. Public Input - emails received from residents C. Columbus Square Homebuyer Notification Statement D. Columbus Square Homebuyer Disclosure Statement (5 versions) E. Master Declaration of CC&Rs and First Amendment to Master Declaration of CC&Rs F. "Summary of Rental Proposal' submitted by applicant G. First Amendment to Housing Agreement and Regulatory Agreement (draft) H. Planning Commission Resolution Nos. 4134, 4136, and 4137 ATTACHMENT A Report to the Planning Commission, December 8, 2009 and Report to the Planning Commission, January 26, 2010 FULL COPIES OF THE DECEMBER 8, 2009, AND JANUARY 26, 2010, REPORTS TO THE PLANNING COMMISSION, INCLUDING ATTACHMENTS, ARE AVAILABLE AT THE FOLLOWING LOCATIONS: 1. ON FILE WITH THE COMMUNITY DEVELOPMENT DEPARTMENT AT CITY HALL, 300 CENTENNIAL WAY, TUSTIN, CA 92780 2. ACCESSIBLE THROUGH "DOCUMENT ARCHIVE" ON THE CITY'S WEBSITE: http://www.tustinca.org 3. TWO COPIES WILL BE AVAILABLE FOR VIEWING AT THE MARCH 23, 2010, PLANNING COMMISSION MEETING ATTACHMENT B Public Input - emails received from residents Kapadia, Reina Subject: FW: Coventry Court - Staff Report & Parking Study From: Eric Higuchi [mailto:ehiguchi@gmail.com] Sent: Thursday, January 28, 2010 10:45 AM To: Binsack, Elizabeth Cc: Kapadia, Reina; Shingleton, Christine; CITY COUNCIL; pstoker@tustinca.org Subject: Coventry Court - Staff Report & Parking Study Dear Director Binsack, I would like to clarify a few issues and report some concerns that I have after having read Staffs Report to planning commission in regards to item 4 on January 26, 2010 Planning Commission Agenda (in re: Coventry court). While I had submitted questions in writing to Donna Kelley of Lennar at the December Columbus Square Board Meeting, I never received a direct response from her or any other Lennar representative. I had only learned that my questions had been addressed on the day of the meeting through the PC Staff Report. Regarding the following paragraph on Page 7 of the staff report: "In response to the suggested 1.58 parking ratio a revised parking study would need to be completed to determine the feasibility of the proposed ratio and a change in the parking of the community could be considered a significant change in the project. A reduction in parking for this site would negate the argument that is being made that the proposed parking is insufficient and could bifurcate this community from the rest of the Columbus Square community" Staff is correct that my argument is that the current parking ratio of 1.75 space per unit is grossly insufficient. However, since i was fairly certain that the developer would not concede to increasing the parking ratio, the purpose of reducing the parking ratio was to eliminate Coventry Court's access to on -street master association owned parking stalls thereby containing the potential parking problems within the bounds of the Coventry Court parcel. While eliminating Coventry Court's access to on -street parking could contribute to the bifurcation of the community, the City's and the Developer's actions and intentions have already segmented Coventry Court as a stand alone community through seeking a for -rent designation, age -restrictions, and separate common area facilities. I don't see how you can contend that my request would ultimately lead to the bifurcation of the community when the City's own actions have already done so. Furthermore, reducing the parking ratio to 1.58 by eliminating on -street parking has been suggested by the developers themselves who have stated that a 1:1 parking ratio would be sufficient. Furthermore, the parking study by Kaku suggests that a 1.75 parking ratio could be considered over parked. However, let me again reiterate, I do not believe a 1.75:1 parking ratio is anywhere near sufficient as: o this is an "active -adult" community as opposed to an "assisted -living" care facility. Individuals 55+ that do want to remain in orange county (outside of laguna woods) are typically not widowers, typically are still employed and typically require two cars. Even if only one spouse in the household worked, I foresee that individuals living here would typically be related to a young family in the community and would assist two working parents, specifically by driving the children to and from school and activities. o this is not an urban project, nor is it a desert gated community. Urban projects are allowed lower parking ratios because of proximity to mass transit and community services. There is a single bus stop within a 1/4 mile and no community services. Desert, gated communities are self contained lifestyle neighborhoods with golf courses, large rec centers, and even restaurants, Coventry court is NOT a retirement lifestyle community. Yes, many argue that these communities are over parked as all the homes have two car garages, but that's what this demographic still wants in order to have open streets and additional storage space. o this is the densest residential housing type in all of tustin yet it has the most lax parking requirement and was not even required to have a parking management plan in place. it does not make sense from an overall general plan standpoint to suddenly allow urban specifications in a sub -urban city. Regarding the November 2005 Parking Study by Kaku Associates, a new parking study MUST be conducted. Staffs excuses for not requiring a new parking study are no longer valid as, one, planning commission has continued the hearing for 60 days allowing for more - than sufficient time to complete a new parking study. Second, according to staff's Dec 8, 2009 report, the parking study was required for the CUP, NOT any environmental approvals. Deviation from the parking standard in the MCAS Tustin Specifc Plan are allowable if accompanied by a parking study tied to the CUP. Regarding the Kaku Parking Study itself, it is absolutely ridiculous that not a single Orange County senior community was surveyed. Furthermore, Kaku relied on surveys performed by 3rd party engineering firms that they are not affiliated with as well as an outdated 2001 survey of urban, coastal communities in Los Angeles. I've had the opportunity to actively work on the entitlement and development of an active adult community within orange county and we actually had a traffic engineer provide the city with candidate communities, the city selected applicable communities and the engineer physically went out to the community and tracked the parking utilized in those communities every other day over the course of two weeks. That was at marginal cost and took less than one month. It's not hard to do, it's literally an intern counting cars and snapping a photo. It is incredibly frustrating to see that the city has relied upon a parking study that I believe was completed within literally one day to make a decision allowing an incredibly drastic deviation to their parking code. Please, again, this is the highest density residential housing in all of tustin and the city's drastically reduced parking requirements based upon an incomplete study. We have the time and authority to conduct a new one, the right way. Please do so. Please forward my letter to the members of the planning commission. Eric Higuchi (949) 290 - 7510 F1 Kapadia, Reina Subject: FW: Stop Coventry From: Tierney, Colleen J. [mailto:Colleen,Tierney@aecom.com] Sent: Saturday, February 20, 2010 4:11 PM To: CITY COUNCIL Subject: Stop Coventry To: City of Tustin City Council Councilmember Re: Stop Coventry Date: February 20, 2010 Dear Council Members I am writing as new Cambridge Lane homeowners to voice my concern over Lennar's request to convert Coventry Court to an Apartment. Complex. When I purchased my new townhome in May 2009, my homebuilder, William Lyons, went over every detail the plans for the Columbus Square community and adjacent Tustin Legacy Park. At no time was there any mention either verbally or written that there were plans to build a 200 plus unit apartment building in such close proximity to my home. Had that been communicated to me I would have not elected to buy my new home in Tustin and I feel that I have been defrauded. I moved to Tustin from Irvine last May and 1 immediately recognized a drop in policing and community services that the City of Tustin provides to its resident. Irvine practices community policing and I have yet to see a Tustin police car patrol the streets of Columbus Square. I fear that with so little police presence, having an apartment building in the area will only contribute to a higher crime rate since there is little, or no, police presence in the community to begin with. In addition, are property values will plummet and we will be asked to pay higher HOA dues at a time when just about everyone is struggling to make ends meet. Being a new homeowner I will consider the option of walking away from my new home rather than have the home devalued to an unsellable price or be forced to sell at a loss. I predict I will not be the only homeowner to contemplate walking away and the city of Tustin will have less property tax for police and fire and other services as a result. It is disheartening to find ourselves in this predicament since we did everything right when we bought our new homes in Columbus Square. Now we are having the rug pulled out from us by a sleazy homebuilder (Lennar) who is simply interested in making money who does not care about one bit about the residents of this fine community. We are all hard working, taxpaying residents and we deserve better than this. Please join us in our fight to STOP COVENTRYI It is in the best interest for the City of Tustin and all of its residents. Thank you. Regards, Colleen Tierney 15243 Cambridge Street Tustin, CA 92782 ATTACHMENT C Columbus Square Homebuyer Notification Statement Columbus Square HOMEBUYER NOTIFICATION INTRODUCTION You, the undersigned Buyer, are considering the purchase of a new home in the Columbus Square master planned residential community (the "Community') in the City of Tustin (the "City"). The master developer of the Community will be Moffett Meadows Partners, LLC ( "Master Developer ") and the Columbus Square Community Association, a California nonprofit mutual benefit corporation (the "Community Association") will maintain portions of the Community. We want you (the "Buyer") to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned Community. We offer this Homebuyer Notification ("Notification") as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Notification has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Notification is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Notification. By signing this Notification, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different times to familiarize yourself with the Community, its location and its surroundings. Unless defined in this Notification, capitalized terms used in this Notification have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square (the "Master Declaration "). OPEN SPACE/PARK AREAS Master Developer plans to construct three (3) Open Space/Park Areas within the Community. The facilities in these Open Space/Park Areas may include tot lots, basketball courts, barbeques, picnic tables or restrooms or other popular park facilities. There is no guarantee that any of these facilities will be included in the Open Space/Park Areas. Residents living in the areas nearest to the Open Space/Park Areas may experience noise, traffic and parking congestion, light spillage, glare and other impacts from the operation of these Open Space/Park Areas and the events that take place there and may be inconvenienced by these impacts. You are advised that Master Developer has no control over the operation or use of the Open Space/Park Areas after the completion of construction thereof. The Community Association or Neighborhood Association, as applicable, shall maintain the Open Space/Park Areas in accordance with all City rules and regulations. Some Open Space/Park Areas may be located immediately adjacent to your Lot or Condominium. Those portions of the Open Space/Park Areas which will be open for public use and any associated access or use easements to the public in connection with these Open Space/Park Areas are located approximately as shown on Exhibit "OS" attached to the Master Declaration. Residents of the -1- 2544-3325MCLP428W18CUR\ 581337.8 3/6/06 Community may experience glare from night -lighted activities at the Open Space/Park Areas. Additionally, from time to time, balls and other objects may be hit out of the Open Spaoe/Park Areas and into lots and adjacent areas. Residents of the Community may also experience noises originating from the activities at the Open Space/Park Areas, traffic noises from vehicles going to and from the club, and noises from landscaping and other maintenance activities near the Open Space/Park Areas. Master Developer has no control over the use, operation or maintenance of the Open Space/Park Areas. l MI7C�af 11 1 S There is a rail corridor located to the north of the Community. As of the date of this Notification, an estimated fifty-nine (S9) trains per day pass through the rail corridor. Master Developer has been informed by the City that this number is estimated to increase to over one hundred (100) trains per day by the year 2020. The impact of this rail corridor may include, without limitation, increased noise, light and vibration levels in the area of the Community. The rail corridor could be an attractive nuisance to children who may play in the vicinity of the rail corridor. Master Developer and the Community Association have no control over the use, maintenance or care of the rail corridor. You should evaluate the impact of this rail corridor on your decision to purchase a Lot or Condominium in the Community. MAJOR THOROUGHFARES Major thoroughfares are located within the vicinity of the Community, which include, among others, Edinger Avenue, North Loop Road and West Connector Road. Master Developer and the Neighborhood Builders have no control over the use, maintenance or care of these streets and thoroughfares. You may experience noise, dust and traffic within and in the vicinity of the Community based on the public's use of some of these streets and thoroughfares. SOUND ATTENUATION Pursuant to a noise analysis conducted by or on behalf of Master Developer, Lots or Condominiums that may most likely be susceptible to noise impacts from property uses surrounding the Community are identified as sensitive receptors, as depicted on Exhibit A attached hereto. Approved building plans may contain sound attenuation measures. If your Lot or Condominium is improved with any sound attenuation measures, you are prohibited from altering or modifying any such measures and you acknowledge and understand that the indoor sound attenuation measures will only work as intended if the windows and doors remain closed. You further acknowledge that individuals have varying sensitivity to noise, and any sound attenuation measures installed by Master Developer or a Neighborhood Builder may not reduce noise to a level that will satisfy every expectation. Owners of Lots or Condominiums identified as sensitive receptors on Exhibit A and located at the southwest corner of the Community are advised that these Lots and Condominiums are adjacent to an area west of the Community that is currently zoned for commercial and light industrial uses. Owners of Lots or Condominiums in this area of the Community may experience noise, traffic, dust, odors and other impacts from the operation of this commercial and industrial property. By acceptance of a deed to a Lot or a Condominium, each Owner acknowledges and accepts that Declarant has no control over any commercial or industrial property or its impact on the Owners or the Community. -2- 2544-33253\CLP428\DISCLSR\981357.8' 3/6/06 AFFORDABLE HOUSING/TRANSITIONAL HOUSING The City has required Master Developer to provide two hundred sixty-six (266) units of affordable housing within the Community. Certain Lots or Condominiums in the Community will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Lots or Condominiums subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. Buyers who are interested in the affordable housing program should consult their sales counselor for further information, UTILITY IMPROVEMENTS In addition to utility lines, all of which will be installed underground in the Community, there may be above -ground and subterranean utility Improvements such as transformers, lift stations, water or sewer facilities, fire hydrants, lighting Improvements, telecommunications vaults and other visible Improvements necessary for the delivery of utilities or other services either on or adjacent to each Lot or Condominium.. Each Owner understands that the placement of such Improvements is dictated by the needs of the applicable utility or service provider, and the presence of such Improvements in the Community is in accordance with easements created prior to or during the development of the Community. You understand, by accepting a deed to a Lot or Condominium in the Community, that each Lot or Condominium and portions of the Association Property are subject to one (1) or more such easements for placement of utility Improvements. You may not modify, remove or otherwise interfere with utility Improvements on any Lot or Condominium or other portion of the Community. COMMUNITY FACILITIES DISTRICT AND ASSESSMENT DISTRICTS The Community lies within the boundaries of Special Assessment Districts and Mello -Roos Community Facilities Districts which require the levy of special taxes for the repayment of bonds issued for the purpose of paying the cost of services or capital improvements that have been or are being provided. The amount of the special tax and any other information pertaining to any such district can be obtained from the County Assessor's office. You will be obligated to pay these assessments and taxes in addition the assessments imposed by the Community Association or any Neighborhood Corporation. MAINTENANCE The Community Association shall maintain all completed Improvements on the Association Property it is obligated to maintain (including the Parkways described in Section 9.2.2 of the Master Declaration, Open Space/Park Areas, streets (i.e., lighting, drainage facilities), alleys and paseos), all in conformance with any Maintenance Guidelines. The Association Property is described in Exhibit "AP" attached to the Master Declaration. Please refer to Section 9.2 of the Master Declaration for further information concerning maintenance by the Community Association. -3- 2544-33253\CLP428\DISCLSR\ 581357.8 3/6/06 ACCESS Neither the Community nor any street, sidewalk, alleyway or paseo located within the Community shall be privately gated; provided however, that any swimming pool and/or spa facility within the Association Property and any indoor recreational facilities, such as a clubhouse and bathrooms, may be gated or locked and made available solely to Residents of the Community and their family, invitees and guests. Neither Master Developer nor the Community Association undertake to provide security or privacy for the Community or buyers, nor do they make any representations or warranties concerning the security or privacy of the Community or Residents. HOME BUSINESS USE Any Home within the Community may be used for business purposes, provided such use is subject to City regulations pertaining to allowable home business use and such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses that are allowed in your Home. TRASH For certain Homes in the Community, trash must be kept in individual and sanitary containers at designated locations, as approximately shown on Exhibit "TC" to the Master Declaration. In accordance with the Community Guidelines, no odor may be permitted to arise therefrom so as to render any portion of the Community offensive or detrimental to any other property in the vicinity thereof or to its occupants. Your trash containers may be exposed to the view of neighboring Homes only when set out for a reasonable period of time (no earlier than 6:00 p.m. on the day before scheduled trash collection times and no later than midnight the day of pickup). VIEWS/SURROUNDING PROPERTIES Properties surrounding the Community may be developed in accordance with City ordinances in a manner which may partially or totally obstruct views from your Lot or Condominium. Master Developer and the City make no claim, warranty or guarantee that views from any Lot or Condominium will be preserved as development of surrounding properties occurs. PARKING Vehicles may not be parked in the "no parking" zones identified in the Master Declaration or any Supplemental Declarations. Certain of these "no parking" zones will be identified only by signs and will not be identified with red -painted curbs. Vehicles parked in these "no parking" zones may be towed immediately without advance notice to vehicle owners. The parking and circulation areas in the Community are located approximately as shown on Exhibit "PC" and Exhibit "OS" to the Master Declaration. Vehicle parking in private streets is subject to local ordinances and Community Association regulations. Please refer to Section 2.4 of the Master Declaration for filrther restrictions concerning parking of vehicles within the Community. -4- 2544.3325MCLP428USCLSM 581357.8 3/6/06 BUILDING SETBACKS Construction of Improvements in the yard of any Lot or Condominium such as pools, spas, patio covers, BBQ, fountains, trellises, and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning the construction of any Improvements to your Lot or Condominium. PHASED CONSTRUCTION AND SALES ACTIVITY Phased Construction and sales activities will be occurring within and in the vicinity of the Community. Sales activity will increase the vehicle and pedestrian traffic within the Community. This may result in inconvenience to residents in the Community, due to increased light, noise and dust from the construction activities and the operation of the model homes and sales office. As a result of construction and sales activities, public and private utilities (water, electrical, cable television, sewers, storm drain, etc.) within the Community, and/or servicing your Horne, may be temporarily interrupted and/or adversely affected. You agree to exercise extreme caution and to observe all signs while driving through construction areas and to observe the temporary closure of streets and the rerouting of traffic. SCHOOLS The Community is currently located in the Tustin Unified School District, telephone: (714) 730- 7301 (the "School District'j. To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Lot or Condominium in the Community. FUTURE FIRE STATION SITE The Community is located adjacent to a future fire station site at the comer of Edinger Avenue and West Connector Road. The fire station will operate twenty-four (24) hours a day and seven (7) days a week. Residents in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advised that Master Developer has no control over the operation or use of the fire station. You should evaluate the impact of the fire station on your decision to purchase a Lot or Condominium in the Community. SALE AND OWNERSHIP PER MCAS TUSTIN SPECIFIC PLAN Development within the Community is approved for sale and ownership tenure only in accordance with Chapter 3.9.3J5 of the MCAS Tustin Specific Plan, ENVIRONMENTAL CONDITION The Community is located on a portion of the former Marine Corps Air Station Tustin ("MCAS Tusdin'� that the United States Government once owned and operated. Certain Lots within the Community are located in areas that were previously used by the U.S. Government to store and wash vehicles and equipment that were used at MCAS Tustin. These areas are designated "IRP- -5- 2544.33253\CLP42M15CLSR\ 581357.8 3/6/06 13S" and "IRP -13W" on the final subdivision map that was recorded for the Community and are depicted in Exhibit B attached hereto ("Release Areas'. As a result of these activities, hazardous substances have been released into the groundwater underlying the portions of the Release Areas. Volatile Organic Compounds ("VOC"s), including trichloroetheleyne ("TCE'� and 1,2,3 Trichloropropane ("I,2,3 TCP'), were found in groundwater at concentrations that could result in adverse effect to human health if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the Release Area and past and ongoing remediation efforts. The following reports are available for public review at either (1) BRACS Environmental Coordinator's Office, Library Building 307, MCAS El Toro, telephone (949) 726-5398 or (2) City of Tustin, Department of Community Development, 300 Centennial Way, Tustin, CA 92780, telephone (714) 573-3100: • Draft Feasibility Study Report For Operable Unit 413, Former Marine Corps Air Station, Tustin, California, August 2005, Bechtel Environmental, Inc., August 2005. • Final Record of Decision/Remedial Action Plan Operable Unit ]A, Former Marine Corps Air Station Tustin, California, Department of Navy, October 2004. • Final Feasibility Study Report, OU -1A, Marine Corps Air Station, Tustin, California, Bechtel Environmental, Inc., August 2003. • Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California, Department of Navy and City of Tustin, December, 1999. Deed restrictions may also be recorded on all or a portion of lots within the Release Areas that will limit certain activities on such lots. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the Release Areas to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. PROPOSED PARKS. A proposed Urban Regional Park and a proposed Community Park (collectively, the "Parks") may eventually be constructed southwest and west of the Community, respectively. If constructed, the Urban Regional Park will be maintained by the County of Orange and the Community Park will be maintained by the City of Tustin. The MCAS Tustin Specific Plan provides that the following uses may be included in the Urban Regional Park: animal shelter; arboretums and horticultural gardens; Children, Youth and Family Resource Center; commercial recreation facilities; live performance facility/amphitheater•, museum, cultural center, interpretive center and/or other educational and cultural facility, nature center with live animals; picnic areas; recreation facilities; regional law enforcement training classrooms; park, Regional Archaelogical Curation Center; retail or service commercial uses (other than concessionaire commercial uses); riding and hiking trails and stage areas; sports lighting (where exterior lighting is designed to confine direct rays and glare to the -6- 2544-33253\CLP428\DISCLSR\581357.8 3/6/06 premises; and theatres. The MCAS Tustin Specific Plan further provides that the following uses may be included in the Community Park: ballfields, courts, playgrounds and other recreation facilities; civic, cultural and community center buildings; nature center with live animals; private recreational facilities; public park; sports field lighting (where lighting is designed to confine direct rays and glare to the premises). Master Developer makes no guarantee that either Park will be constructed, or, if constructed, that it will include any or all of the facilities described in the MCAS Tustin Specific Plan. Residents in the Community can experience increased noise, traffic and glare of lights from activities within the Parks, if constructed. Owners acknowledge that Master Developer and the Master Association have no control over the use, maintenance or care of the Parks, if constructed. By signing below you acknowledge you have received and understand this Notification, and you agree to purchase a Home in the Community subject to it terms. Date: Buyer: Signature Signature Signature Name Name Name -7- 2544-3325MLP42ADISCLSM 581357.8 3/6/06 EXHIBIT A DEPICTION OF SENSITIVE RECEPTORS 2544-33253\CLP428\DISCLSR\ 581357.8 3/6/06 EXHIBIT B DEPICTION OF RELEASE AREAS 254433253\CLP428\DISCLSR\ 581357.8 3/6/06 � ao ° v ©a v0000©o ao oo ' n©- : o®n o; o; nn n nn ®\ �� � 0 �• D Q®QO®9® ago _.O 9M SIR pal RM �S • _.i000DI Y • }7:F0 _ ATTACHMENT D Columbus Square Homebuyer Disclosure Statement (5 versions) Columbus Square HOMEBUYER DISCLOSURE STATEMENT Meriwether • Camden Place The Gables • Astoria • Coventry Court Cambridge Lane • Kensington Court • Verandas June 2006 Welcome to Columbus Square. We are pleased you are considering the purchase of a new home in Columbus Square. We want you (the "Buyer") to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned community of Columbus Square ("Community's, located in the City of Tustin. We offer this Homeowner Disclosure Statement ("Disclosure') as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Disclosure has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Disclosure is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Disclosure. In addition to this Disclosure, the City of Tustin has required that the Master Developer provide you with a Columbus Square Homebuyer Notification (the "Homebuyer Notification'. The Master Developer prepared the Homebuyer Notification with information provided by the City of Tustin, at the direction of the City of Tustin and do not have the right to alter or update the Homebuyer Notification. To the extent any of the information provided in the Homebuyer Notification is inconsistent with the information provided in this Disclosure, this Disclosure shall supersede that portion of the Homebuyer Notification. By signing this Disclosure, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different tines to familiarize yourself with the Community, its location and its surroundings. You will receive many documents in addition to this Disclosure to review, Complete and sign before the Close of Escrow for the purchase of your home. These other documents are called the "Purchase Documents" in this Disclosure, and they include documents pertaining to the Community, defined below as the "Community Association Governing Documents". This Disclosure is not intended as a substitute for your review of the Community Association Governing Documents. This Disclosure does not amend, modify or supersede the Community Buyer Initials: / _]_ 254433253\C1,P42801SCLSM 6099653 6/13/06 Association Governing Documents. If the Community Association Governing Documents are inconsistent with this Disclosure, the Community Association Governing Documents will supersede this Disclosure. Unless defined in this Disclosure, capitalized terns used in this Disclosure have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Community Declaration'J. If the Community Declaration gives the same capitalized term a different meaning than this Disclosure, the meaning given in the Community Declaration shall apply. ISM s! � [�Ii��y;amu/:R'llYaie�Qs►y�11[�)d�1:7 Moffett Meadows Partners, LLC, a Delaware limited liability company, is the initial - Master Developer of the Columbus Square master -planned community ("Master Developer'). INTRODUCTION TO COLUMBUS SQUARE 1. Location and Master Plan. The Community is east of Interstate 55 near the intersection of Edinger Avenue and Redhill Avenue, in the City of Tustin (the "City'l. The master land -use plan approved by the City of Tustin for the Community is called the MCAS Tustin Specific Plan (the "Specific Plan's and it contains numerous design standards and development conditions. Such conditions establish, among other things, the number of single family dwellings and condominiums and other development requirements. If developed as approved by the City, Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 single family dwellings, 552 condominiums and 240 senior housing condominiums. The actual number of Homes built may increase or decrease subject to approval by the City. All Homes in the Community are planned to be subject to the jurisdiction of the Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association', as described in the Community Declaration. INTRODUCTION TO COLUMBUS SQUARE'S NEIGHBORHOODS AND NEIGHBORHOOD BUILDERS 2. Neighborhoods. The Community is being developed with Homes in numerous distinct neighborhoods ("Neighborhoods' constructed by various homebuilders ("Neighborhood Builders'). Neighborhood Builders may have owner occupancy restrictions, rental Homesites and Homes (each of which is defined below), and investor-owned Homesites and Homes. You are advised to read the individual Neighborhood Builder disclosures and any other documentation relating to the Neighborhood in which you choose to purchase a Homesite or Home thoroughly. Neighborhood Builder policies may differ from those described in this Disclosure and the Community Declaration and are enforceable by the applicable Neighborhood Builders. The following is a list of the different Neighborhoods to be developed by the Neighborhood Builders in the Community and the approximate number of Homes to be constructed in each Neighborhood: Buyer Initials: / -2- 254433253\CLP428\DISCLSR\609965.3 6/13/06 (a) Lennar Homes of California, Inc. a Meriwether 114 Homes • Camden Place 222 Homes The Gables 84 Homes • Coventry Court 240 Homes (b) William Lyon Homes, Inc. • Astoria 102 Homes • Cambridge Lane 156 Homes • Kensington Court 60 Homes • Verandas 97 Homes 3. Ownership. A residential Lot in the Community is referred to as a "Homesite" in this Disclosure. If you are purchasing a residential Lot in the Community, upon the Close of Escrow, you will receive fee title to a Homesite, which will be improved with a single family dwelling (a "Home'). If you are purchasing a Condominium in the Community, upon the Close of Escrow, you will receive fee title to a Unit and you will also receive easements for maintenance and use over Exclusive Use Areas (collectively, a "Home'). If you purchase a Homesite, you will not own the mineral, oil, and gas rights under the land below a depth of five hundred (500) feet, or the water rights. The holder of these rights has no right of surface entry. COMMUNITY ASSOCIATION GOVERNING DOCUMENTS Your Home will be subject to the following documents ("Community Association Governing Documents': (a) The Community Declaration, and any amendments or modifications thereto; (b) The Articles of Incorporation of the Columbus Square Community Association ("Community Association'); (c) The Bylaws of the Community Association; (d) The Supplemental Declaration of Covenants, Conditions and Restrictions ("Supplemental Declaration") that is applicable to the Neighborhood in which your Home is located, and may annex that Neighborhood to the coverage of the Community Declaration; and (e) Any Community Guidelines or Design Guidelines which may be adopted from time to time, respectively, by the Community Association's Board of Directors or the Design Review Committee ("Committee's pursuant to the Community Declaration. You should carefully review the Community Association Governing Documents in order to understand your specific rights and obligations as an Owner in the Community. The Community Association GoverYing Documents establish limits and restrictions on the use of the Buyer Initials: / _3_ 2544-33253\CLP428\D1SCLSR\6099653 6/13/06 Home you are purchasing. You will also be provided with a preliminary title report. The title report will list other recorded documents affecting the use of the Home you are purchasing. You should review the title report and the documents referenced in the report closely prior to your purchase of a Home. SPECIFIC PROVISIONS OF THE COMMUNITY DECLARATION 4. Assessment Obligation. The Community Declaration authorizes the Community Association's Board of Directors to levy a Common Assessment against each Home to meet the Community Association's Common Expenses. The Board of Directors is also authorized to levy various special assessments for specific purposes, in conformance with Articles I and VIII of the Community Declaration. The monthly installment of the Common Assessment will vary as each Phase of the Community is developed. You should review the Budget approved by the California Department of Real Estate and provided to you with the Final Subdivision Public Report for your Home. The Board of Directors' ability to increase the Common Assessments and improve additional special assessments without a vote of the Members is subject to certain limitations set forth in Sections 8.5 and 8.6 of the Community Declaration. The Community Association is obligated to provide you with an annual budget and other financial statements for the Community Association. 5. Use Restrictions. You must comply with all the various use restrictions set forth in the Community Declaration. These restrictions include, among other things, restrictions on non-residential uses of your Home, keeping of animals, improvements to your Homesite and Home, parking of vehicles, etc. The Community Association has the power to enforce the use restrictions set forth in the Community Declaration, as well as the Community Guidelines and the Design Guidelines. 6. Prohibited Dwelling Structures. You may not use your garage as a living area. Further, in accordance with Section 2.7 of the Community Declaration, you may not erect or use any outbuilding, tent, shack, storage shed, trailer, camper, motor home, recreational vehicle or any other vehicle on your Homesite for a living area. 7. Use of Garages. All vehicles owned or operated by or within the control of an Owner and kept in the Community must be parked in the assigned parking space or garage of that Owner; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Section 2.4.3 of the Community Declaration and Exhibit PC-] attached thereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted within the Community except in an enclosed garage when the garage door is closed; provided, however, that such activity may not be undertaken as a business, and provided further that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. 8. Parking of Recreational and Commercial Vehicles. Sections 2.4.1, 2.4.2 and 2.4.3 of the Community Declaration impose limitations and prohibitions on the parking of. Authorized Vehicles and Prohibited Vehicles within the Community. In accordance with Section 2.4.6 of the Community Declaration, an Owner may park any Authorized Vehicle that Buyer Initials: / -4- 2544-33253\CLP429\DISCLSR\6099653 6/13/06 exceeds seven (7) feet high, seven (7) feet wide, and nineteen (19) feet long in the Owner's garage or driveway (as long as the Authorized Vehicle does not extend onto the sidewalk or drive approach area). In addition, no delivery and/or moving trucks larger than forty (40) feet are permitted on any private drive having less than a twenty-five (25) foot radius that is located within a Neighborhood in the Community. You further acknowledge that it is your responsibility to determine whether the parking provided in the Community and your Neighborhood is satisfactory for your purposes and to verify that the standard height and depth of the garage will provide adequate clearance for your vehicles before the Close of Escrow on your Home. 9. Owner Maintenance Guidelines. As set forth in Section 9.1.1 of the Community Declaration, each Owner must maintain his Home and Homesite in a neat and attractive condition at all times. The maintenance of all areas located within the boundaries of a Homesite is the responsibility of each Owner. The Neighborhood Builders will provide you with important guidelines on the proper maintenance of improvements in your Homesite. Failure to properly maintain interior improvements may cause premature deterioration of important features, finishes or equipment. The Neighborhood Builders are not responsible for failure of equipment or other improvements caused by your failure to properly maintain such improvements. In addition, you acknowledge that some upgraded materials, if any are selected by you, may have specific maintenance requirements. The Neighborhood Builders are not responsible for any damages that may occur to such materials due to your failure to properly maintain them. 10. Insurance. In accordance with Article D{ of the Community Declaration, you are solely responsible for determining the type and quality of insurance required to adequately insure your Homesite and Home, your personal property, and your personal liability for ownership of your Homesite and Home. You are solely responsible for determining if natural disaster insurance is required for your Homesite and Home. If any insurance is required by your lender, you are responsible for obtaining that insurance prior to Close of Escrow. 11. Design Review of Improvements and Alterations. You may not build, construct, install or plant any improvements on your Homesite (or alter any improvements located on your Homesite, including your Home), until you have submitted plans and specifications and obtained approval from the Design Review Committee, as set forth in Article V of the Community Declaration. The Design Review Committee will establish Design Guidelines containing rules and guidelines for the submission of plans and specifications. The Design Review Committee may collect a fee to review the plans. All Improvements must comply with any applicable restrictions in the Community Declaration and the Design Guidelines, as well as with all requirements imposed by the City and any other local governmental agency. The Design Guidelines and City and other local governmental agency regulations may change from time to time, and you will be subject to the regulations in effect at the time plans are submitted. After obtaining written approval of the Design Review Committee, you must submit the plans and specifications to the appropriate local governmental agencies for any proposed improvements that require the issuance of a building permit, or other approval by the City or any other local governmental agencies, as applicable. You should read Article V of Buyer Initials: / -5- 254433253\CLP4281nISCLSR1609965.3 6/13/06 the Community Declaration before constructing any Improvements. You may be subject to a Neighborhood Association Design Review Committee if you live in a Condominium project. (a) Landscaping and Irrigation Improvements. All landscape materials and irrigation systems installed by Owners must comply with plans and specifications approved by the Design Review Committee. You may need to install yard drains when installing landscaping and patios. Your landscaping plans are required to conform with the original drainage plan of the Homesite. Changes to drainage and grading require approval of the Design Review Committee and generally require you to obtain a permit from the City, as applicable. The slope areas, if any, located on a Homesite may include drainage facilities and temporary erosion control measures. No modificationsto the slope areas shall be undertaken without the prior approval of the Design Review Committee and the City, as applicable. (b) Landscaping Completion Deadline. Section 2.18 of the Community Declaration requires you to install landscaping on any portions of your Homesite that have not been landscaped by a Neighborhood Builder. Landscaping in the front yard of a Homesite must be completed within six (6) months after the Close of Escrow for the purchase of the Homesite and landscaping in the back yard of a Homesite must be completed within one (1) year after the Close of Escrow for the purchase of the Homesite. The time period for the completion of such improvements is set forth in the Community Declaration. (c) Owner Liability. Any alterations or Improvements made by you to your Homesite, to its drainage pattern or to the Home shall be made at your sole risk. The Neighborhood Builders assume no responsibility for any damage caused by the design, construction, installation, alteration or maintenance by you of any Improvement on the Homesite, or caused by the impact of such an Improvement on the Homesite's drainage pattern. (d) Licensed Professionals. If you wish to alter or install any Improvement on your Homesite, you should obtain the advice of a licensed architect or civil, soil or structural engineer, as applicable, and should design and complete the alteration or installation of the Improvement in accordance with such licensed professional's advice and specifications. 12. Drainage. Section 2.14 of the Community Declaration contains important restrictions concerning drainage of water and water pollution. (a) Surface Water. The Master Developer and Neighborhood Builders have provided for surface and underground drainage of water from all Homesites and Homes in the Community. Your Homesite may have surface "swales" or area drains to carry the water from the rear and sides of the Home to the street or other designated outlet points. The Homesites and Homes are graded in accordance with plans approved by the City and certified by a registered civil engineer. In connection with the preparation of landscape plans for your yard, it is important that you consider any possible harmful effects that such landscaping and associated Improvements may have on adjacent property and structures as well as your Homesite and Home. Because the Community and your Homesite are located in an Area which may contain expansive soils as more particularly explained in the Paragraph below entitled "Soil Conditions," water may have a detrimental impact upon such soils and the soils of surrounding Homesites and Buyer Initials: ! _6_ 2544-33253\171,P428MISCLSa\ 609965.3 6/13/06 slopes. Existing drainage patterns must be maintained and all drainage systems must be kept free of debris and free flowing. (b) Effect of Improvements and Alterations. Raising the existing grade, constructing planters, changing the drainage pattern and other similar activities may cause damage to your Homesite, adjacent property (including, without limitation, your neighbor's Homesite, adjacent slopes and lower Homesites) and Improvements located thereon, including the Home. It is recommended that you consult with a licensed professional on landscaping and drainage, such as a qualified landscape architect and soils engineer, geotechnical engineer, geologist, civil engineer or other similar specialist, before making any alterations. Any Improvements must be designed and constructed in a manner to prevent any possible damage to your Homesite and to adjacent property. If any obstruction occurs to the drainage on your yard, it may result in obstruction of drainage from adjacent property or cause major problems such as trapped water or flooding which may undermine the foundation of your Home and surrounding Homes or create moisture intrusion or mold and mildew problems. You are solely responsible for any damage to your Homesite and Home or surrounding property and the Improvements located thereon as a result of any alterations you make to the approved existing drainage pattern or failure to maintain proper drainage. The Master Developer, Neighborhood Builders and Community Association shall have no liability or responsibility for any such damage. Any grading or drainage modifications are subject to applicable codes of the City, approval by the Design Review Committee, and the terms of any drainage easements that may be of record. You acknowledge and understand that if your Homesite or Home does not include area drains, you shall be responsible for installing area drains on your Homesite or Home when installing your landscaping. Your responsibilities for maintaining all grading and other drainage -related features on your Homesite and Home are set forth in Section 2.14.1 of the Community Declaration. (c) Water Quality Management Requirements. The Master Developer and Neighborhood Builders are developing the Community and Neighborhoods in accordance with a water quality management plan ("Plan') required by the California State Water Quality Control Board. The Plan imposes requirements for the design, implementation and maintenance of Best Management Practices ("BMPs'l to eliminate or mitigate all non -storm water discharges into storm drains during and after construction of the Community and Neighborhoods. The requirements imposed by the Plan are in addition to any local ordinances with regard to discharge of non -storm water into storm drains. The Plan imposes post -construction requirements. This means that after the Close of Escrow, you and your sub -contractors and other agents, are required to comply with all BMPs which are necessary to prevent, without limitation, run-off of soil, sand, sediment, oil, gasoline or other hydrocarbons, paint, fertilizers, pool chemicals and other household chemicals into the storm drains located in your Neighborhood. For example, when fertilizing landscaping, measures must be taken to prevent over -watering the landscaping to ensure that fertilizer and other lawn chemicals do not run into the storm drains. Your Neighborhood Builder'will provide you with a Best Management Practices Handbook containing BMP 'recommendations for the prevention of run-off into storm drains from your Homesite and Home. The Plan affirmatively obligates all Owners to take immediate corrective action whenever there is a violation of the Plan as to an Owner's Homesite or Home. Penalties include Buyerrnidels: / -7- 2544-33253TU4281n15CLSM 609965.3 6/13/06 significant fines that may be imposed against an Owner for failing to comply with BMPs necessary to prevent non -storm water run-off into storm drains, in violation of the Plan. 13. Utility and Other Easements. Article VII of the Community Declaration contains provisions pertaining to easements which may affect Owners and Homes. Your Homesite and Home may be subject to easements or other rights in favor of utility companies, local governmental agencies and other parties. These easements and rights may include access onto your Homesite or to exterior portions of the Home for purposes of installing, constructing, inspecting, maintaining and repairing facilities which are customary for residential developments (including, but not limited to, water lines, sewer lines, electrical lines and facilities, transformer boxes, natural gas pipelines, street lights, telephone lines and facilities, cable television lines, mailboxes, traffic signs, fire hydrants, etc.). These facilities and structures may be located above ground or below ground. In either case, the foregoing easements, rights and facilities may restrict the use and type of improvements you can make to your Homesite and Home, and the utility company, local government agency or other parties benefited by such easement or right may have the right to remove improvements made by you on the easement area without any obligation to repair or restore them. You should review the policy of title insurance, the tract map for your Homesite, Article VII of the Community Declaration, and the Supplemental Declaration to determine what easements and other rights, if any, affect your Homesite and Home. Such easements may preclude construction of structures or other improvements or may require an encroachment permit to be obtained. You should not excavate or construct an improvement on any portion of your Homesite, as applicable, until you have consulted with an applicable licensed design professional (for example, an engineer) and located all easements and facilities. A copy of the tract map depicting your Homesite is available for review in the sales office. The location of gas and electric meters, telephone and cable access panels may change from the locations shown in the models. Please ask your sales representative for information concerning the proposed location of utility facilities and structures for your Home, The Master Developer and Neighborhood Builders make no representations or warranties concerning the final location of these facilities or structures for your Home. 14. Pets. Household pets, such as dogs or cats, are limited to reasonable quantities as established in Section 2.5 of the Community Declaration. Buyers shall be liable for any unreasonable noise or damage (including, but not limited to, clean up after such animal(s)) caused by any animal brought or kept upon the Community and Neighborhoods as more fully described in the Community Declaration. 15. Window Coverings. In accordance with Section 2.10 of the Community Declaration, the Design Guidelines and Community Guidelines may prohibit or restrict certain types of window coverings such as paint, foil, reflective tint or other similar materials or substances, and may permit certain types of temporary window coverings pending installation of permanent window coverings. 16. Walls and Fences. Wall and fence heights may vary throughout the Community and your Neighborhood. Walls and fences are subject to change, at any time and without notice to you, from any depiction that may have been provided or shown to you. Section 9.1.4 of the Community Declaration sets forth Owner's wall maintenance responsibilities. Owners are responsible for maintenance of all portions of the walls and fences that border the perimeter of Buyer Initials: / -g- 2544-33253TLP428MI5CLSM 609965.3 6/]3/06 the Homesite, including any pilasters located on an Owner's Homesite, except for those portions that are designated for maintenance by the Community Association or a Neighborhood Association. You 'should review the Community Association Governing Documents for further information. Community Walls, Neighborhood Walls and/or Party Walls (all as defined in the Community Declaration) may be installed on the property line(s) of your Homesite (collectively, the "Walls', as shown as Exhibit WM attached to the Community Declaration, Neighborhood Declaration or a Supplemental Declaration. Owners must maintain any portion of the Walls not otherwise maintained by the Community Association or a Neighborhood Association. Master Developer, Neighborhood Builders and the Community Association are not responsible for damage to any Wall on the Homesite if such damage results from your failure to properly maintain the Walls. 17. Solar Energy Systems. Pursuant to Section 2.17 of the Community Declaration, you and all other Owners of Homesites in the Community have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar energy systems ("5ystem'�. The installation and maintenance of any System by you shall be subject to all applicable ordinances and zoning regulations of the City, the Uniform Building Code and associated ordinances. California has a strong public policy in favor of solar energy needs of a neighbor, including but not limited to the location and height of trees on your Homesite. You must obtain written approval from the Design Review Committee prior to installation of a System and you must comply with reasonable restrictions placed on the System by the Design Review Committee, subject to California Civil Code Sections 714 and 714. 1, as the same may be amended from time to time. 18. Satellite Dishes. Satellite dish antennas (or Authorized Antennae, as defined in the Community Declaration) may be installed and used in the Community in accordance with Section 2.11 of the Community Declaration. However, Master Developer and Neighborhood Builders have provided no assurances or guarantees that any satellite dish or other antenna installed within the Community will remain unobstructed or that satellite service will be provided to an Owner after installation of an Authorized Antennae. You should understand that broadcast signals may be obstructed by the installation of additional improvements within and outside of the Community including, without limitation, homes, walls, fences, trees and other landscaping and such obstructions may not allow for acceptable satellite reception. You should also understand that Neighborhood Associations may impose additional restrictions. 19. Amendments to the Community Declaration. Notwithstanding the fact that you have received a copy of the Community Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions. 20. Additional Provisions. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code and the Federal Fair Housing Act codified at Title 42 United States Code, Section 3601 et seq., which may supplement or override the Community Association Governing Documents. The Master Developer, Neighborhood Builders and Community Association make Buyer InWals: / -9_ 2544.33253TU428USCLSM 609965.3 6/13/06 no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. COLUMBUS SQUARE DISCLOSURES 21. Charitable Endowment Fee. A recorded Charitable Housing Agreement Imposing Endowment Fee On Transfer ("Agreement'l affects your Home and the other Homes in the Community. The Agreement requires that an "Endowment Fee" equal to one -twentieth of one percent (0.05%) of the total sales price (0.0005 x total sales price) be paid each time a Home in the Community is transferred to a new owner. The Endowment Fee will be paid to Lennar Charitable Housing Foundation, a California nonprofit public benefit corporation ("Foundation'), to be used for the purposes described in the Agreement. When you close escrow for the purchase of your Home, you will pay the Endowment Fee to the Foundation. Thereafter, each time your Home is resold, the Endowment Fee must be paid at the close of escrow, but it may be paid either by the new buyer or the then current seller. The Agreement will be in effect for an indefinite period of time. 22. Affordable Housing/Transitional Housing. The City of Tustin has required the Master Developer and Neighborhood Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units') within the Community. Sixty-three (63) Affordable Housing Units will be located in the Camden Place Neighborhood, fifty (50) Affordable Housing Units will be located in the Cambridge Lane Neighborhood, and one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court). Certain of these Affordable Housing Units will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Homes subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. If you are interested in the Affordable Housing Units you should consult your sales representative for further information. 23. "Active Adult" Neighborhood. An "Active Adult Neighborhood," the Coventry Court, consists of age restricted residences located within the Community. In Coventry Court, each Home must be occupied by at least one resident who is at least 55 years of age. Coventry Court is a community consisting of approximately 240 Homes and has its own recreational facilities and activities. All assessments for the maintenance of these recreation facilities are the exclusive responsibility of the Coventry Court residents. As a result, the recreational facilities located within Coventry Court are not open to other Owners in the Community; provided, however, Coventry Court residents will have the right to use the recreational facilities located throughout the Community. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. 24. Home Business Use. Any Home within the Community may be used for home based business purposes, provided that such use is subject to the City of Tustin's Home Occupation Ordinance (if applicable), the provisions in Section 2.1 of the Community Declaration and the Community Guidelines. You are advised that the Community Declaration and the Community Guidelines may contain stricter restrictions than those in the City Ordinance Buyer Initials: ! -to- 2544-33253\CLP4Z5\nISCLSR1609965.3 6/13/06 and that such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses in your Home. 25. MCAS Tustin. (a) Prior Use as MCAS Tustin. You are advised that the Community was previously used as the Tustin Marine Corps Air Station ("MCAS Tusiin'�. The Marine Corps and the Department of the Navy ("DONT are the responsible agencies for the Installation Restoration Program ("IRP'). The IRP is a comprehensive environmental investigation and cleanup program formed to identify, investigate and clean up chemical and nuclear contamination that has resulted from past land use operations. When MCAS Tustin was an active base, it received a permit from the California Department of Toxic Substances Control ("DTSC'j pursuant to the Federal Resources Conservation and Recovery Act ("RCRA'� (42 U.S.C. 6901 et seq.) to store hazardous waste on portions of the base. One of the conditions of that permit was to perform "corrective action" to clean-up releases of hazardous waste constituents throughout the base. Although the permit has expired, these corrective action obligations continue, and the DON is undertaking environmental investigation and cleanup activities on portions of the former base that are within the Community. (b) Asbestos Containing Material. Hazardous material in the form of asbestos or asbestos -containing materials ("ACM's have been found and are otherwise presumed to exist in buildings and structures previously located in the Community. At such time as demolition of the prior existing buildings on the Community containing ACM was completed, the appropriate governmental regulatory agency confirmed that ACM had been removed from the buildings and any necessary soil remediation had been conducted in accordance with all applicable federal, state and local laws and regulations. (c) Easement for Environmental Remediation. An easement over the Community granted to the United States of America, acting by and through the Department of the Navy ("DON'S in a document entitled "Quitclaim Deed for Marble Mountain Parcel and Environmental Restriction Pursuant to Civil Code Section 1471," was recorded on March 11, 2003, as Document No. 200300263521. In connection with ongoing remediation on the DON's property within the Community, it was agreed, as a covenant running with the land, that the DON and its officers, agents, employees, contractors and subcontractors shall have the right, upon reasonable notice, to enter the Community when a response or corrective action is found to be necessary or when such access is necessary to carry out a response action or corrective action. The right for the DON to enter the Community shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or corrective action as required or necessary, including, but not limited to, monitoring wells, pumping wells, treatment facilities, and the installing of associated utilities. In exercising these rights of access, except in the case of imminent and substantial endangerment to human health or the environment, the DON shall give reasonable notice of any action to be taken related to such Buyerinmpalsl / _j]_ 254433253\CLP428\DISCLSa\ 609965.3 6/13/06 remedial or corrective actions on the Community. Further, the DON will make reasonable efforts to minimize interference with the on going use of the Community and act in good faith to minimise any conflict between the necessary environmental investigation and remediation activities and the use of the Community. The DON is not required to restore or repair any Improvements in the Community damaged as a result of this right to access the Community. If any Improvements on Association Property are damaged as a result of the DON's access to the Community, you are advised that any such damaged Improvement may be repaired or replaced by the Community Association and you may be charged a Reconstruction Assessment or Extraordinary Assessment (if applicable). (d) Groundwater Plume. The City Environmental Impact Report (1999) ("EIR") indicates the presence of subsurface plumes of chlorinated volatile organic compounds ("VOCs'% dissolved trichloroethene ("TCE") and methyl tertiary -butyl ether ("MTBE") at ground water level in portions of MCAS Tustin located outside the Community. It is presently unknown whether and to what extent these contaminants will migrate towards the Community. According to the EIR, estimated human health risks associated with residential use of groundwater from the plumes are above the acceptable limits of the United States Environmental Protection Agency. Master Developer and Neighborhood Builders make no representations or warranties with respect to the plumes described above or whether such plumes will migrate into the groundwater under Community. 26. LIFOC PROPERTY/ENVIRONMENTAL CONDITIONS. Due to its prior use as a military base, certain areas within the Community, designated on the map for Tract No. 16581, as "IRP -13S" and "IRP -13W" (collectively, the "LIFOC Property"), are owned by the United States of America ("U.S. Government") and will ultimately be annexed into the Covered Property pursuant to Section 16.6 of the Community Declaration. (a) Prior Use of the LIFOC Property. That portion of the LIFOC Property identified as IRP -13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA") and as a "Miscellaneous Wash Area" ("MWA'�. The TSA consisted of two (2) buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad. That portion of the LIFOC Property identified as IRP 13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, batter acid and solvent were stored. (b) Release of Volatile Organic Compounds. As a result of the historic use of the LIFOC Property, hazardous substances have been released into the groundwater at the LIFOC Property. Volatile Organic Compounds ("VOCs"), including trichloroethylene ("TCE'� and 1,2,3 Trichloropropane ("1,2,3 TCP"), were found in groundwater at concentrations that could result in adverse effect to human health if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. Buyerbitials: / -12- 2544.33253\CLP429\DISCLSP\609965.3 6/13/06 (c) Remedial Action Plan. As a result of the release of hazardous substances at the LIFOC Property, various remedial activities have occurred at the LIFOC Property and will continue to occur until remediation goals have been achieved. In October 2004, the Department of Navy issued a report entitled "Final Record of Decision/Remedial Action Plan, Operable Unit IA, Former Marine Corps Air Station, Tustin, California", which describes the specific remedial action plan ("RAP'S that has been approved for IRP 13S to address groundwater contamination. In August 2005, the Department of Navy published a report entitled "Draft Feasibility Study Report for Operable Unit 4B [includes IRP 13W], Former Marine Corps Air Station, Tustin, California," ("Feasibility Study's which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil a OU -4B sites... therefore, soil remediation..." was not addressed in the Feasibility Study. A final groundwater remedial action plan has not yet been selected for IRP 13W. (d) Deed Restrictions. Deed restrictions will ultimately be recorded on all or a portion of the Homesites or Homes in the Community lying within the LIFOC Property, and will limit certain activities on such Homesites or Homes. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the LIFOC Property to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. (e) Documentation Relating to the Release and Remediation Activities. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the LIFOC Property, The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the LIFOC Property: (i) Draft Feasibility Study Report For Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005 (Bechtel Environmental, Inc., August 2005); (ii) Final Record of Decision/Remedial Action Plan Operable Unit IA, Former Marine Corps Air Station, Tustin, California (Department of Navy, October 2004); (iii) Final Feasibility Study Report, OU -IA, Marine Corps Air Station, Tustin, California (Bechtel Environmental, Inc., August 2003); and (iv) Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California (Department of Navy and City of Tustin, December 1999). You should carefully review these reports before making a decision to buy a Home in the Community. Copies of the reports are available for review at either (1) BRACS Environmental Coordinator's Office, Library Building 307, MCAS EI Toro, telephone (949) 726-5398 or (2) City of Tustin, Department of Community Development, 300 Centennial Way, Tustin, CA 92780, telephone (714) 573-3100. The Master Developer and Neighborhood Builders make no representations or warranties with respect to the LIFOC Property and the Buyer initials: / -13- 254443325ACLP421IDISCLSM 609965.3 6/13/06 environmental conditions described above or in the reports. Due to the fact that groundwater in the Community has been found at depths of six (6) to twenty-five (25) feet below the ground surface, as described below, you are advised to avoid eating any fruit from trees with deep root systems in the Community or drinking any groundwater, and to keep your children and animals away from such fruit and groundwater. (f) The following items have been indicated in the EIR as affecting portions of MCAS Tustin that are outside of the Community. These items are not expected to impact the Community, and are listed in this Disclosure for your information only. Master Developer and Neighborhood Builders make no representations or warranties as to any future impact these items may have on the Community or Residents using public parks and other areas outside the Community. (i) Former crash drill site area; (ii) Former skeet ranges; (iii) Transformers containing polychlorinated biphenyls (PCBs); (iv) Buildings formerly on property containing lead based paint; (v) Moffit Meadow fire fighting trenches and crash crew bum pits; (vi) JP -5 pipeline, currently classified as out of service; and (vii) Petroleum hydrocarbons in subsurface soil. If you have any questions or concerns about environmental activities at MCAS Tustin or the Community, please contact the Local Redevelopment Authority at the City of Tustin or visit the United States Naval Facilities Engineering Command's intemet website at www.efdsw.navfac.navy.mil/EnvironmentaVrustin.htm. 27. Prior Agricultural Use. The Community is located on or near lands that are or were previously used for agricultural purposes, including farming operations. By reason of such agricultural use, you may be subject to dust, noise and odors and may be exposed to pesticides, herbicides, insecticides and other chemicals. By acceptance of a deed to a Home, you on your own behalf, and on behalf of the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept these existing and future impacts and forever waive any and all causes of actions against the Master Developer, Neighborhood Builders and Community Association and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 28. Private Recreational Center. The Community is planned to include a private recreational center (the "Center'j. The Center is planned to include swimming and wading pools, spas and recreational building and other recreational facilities. While the Center is planned to be private and only open to Owners and guests in the Community, the public will have access to the open space areas surrounding the Center and some outdoor recreational Buyer Initials: / -14- 2544-33253\CLP428\DISCLSR\609965.3 6/13/06 facilities in the Open Space/Park Areas. All persons using the Center are required to use caution and to watch their children at all times to prevent drowning and other injuries. The Community Association may, from time to time, promulgate rules for use and operation of the Center, including reasonable hours of operation. Owners and other residents living in the area of the Center will most likely experience and otherwise be subject to or inconvenienced by noise and pedestrian and vehicular traffic in the areas surrounding the Center. 29. Natural Hazard Zone Disclosures. Your Neighborhood Builder will provide you with a Natural Hazard Disclosure Statement in compliance with Section 1103 of the California Civil Code that discloses whether your Home is located in a seismic hazard zone. (a) Earthquakes. California is subject to a wide range of earthquake activity. California has many known earthquake faults as well as yet undiscovered faults. While the Community is not located in an Alquist Priolo Earthquake Zone, earthquakes are always a possibility. You must evaluate the potential for future seismic activity that may seriously damage your Homesite and Home. A major earthquake, which some have predicted will occur in our lifetimes, could cause very serious damage to Homes located even many miles from the epicenter of the earthquake. A more moderate earthquake occurring on a more minor fault, or on an as yet undiscovered fault, could also cause substantial damage. For more information, read "The Homeowners Guide to Earthquake Safety" which explains the various geological hazards associated with earthquakes and contains information on planning ahead for earthquakes, as well as what to do during and after an earthquake. Master Developer and Neighborhood Builders make no representations or warranties as to the degree of earthquake risk in the Community. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. (b) Seismic Hazard Zones. Many portions of California are subject to risks associated with seismic activity. Areas that meet the definition of "Seismic Hazard Zone" in the Seismic Hazards Mapping Act (California Public Resources Code Section 2690, et seq.) are shown on maps that are prepared and released by the California Department of Conservation, Division of Mines and Geology. Such zones may pose an increased risk of damage to property from earthquakes and liquefaction. "Liquefaction" is the process by which water -saturated soils become unstable under heaving shaking and thereby jeopardize foundations and other structures. The Master Developer has been informed that all or a portion of the Community is located within a Seismic Hazard Zone. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. For more information concerning seismic activity and risks, read "The Homeowner's Guide to Earthquake Safety." (c) Area of Potential Hooding. The Master Developer has been informed that the Community is located within an Area of Potential Flooding (or Dam Inundation Zone) pursuant to applicable maps. The Office of Emergency Services is required to designate areas within which personal injury or death would, in its determination, result from the partial or total failure of any dam. These areas of potential flooding, as defined in the California Emergency Services Act (California Government Code Section 8984.4, et seq.), are shown on maps released by the Office of Emergency Services, copies of which are also on file with the City. These maps are updated periodically, and the Master Developer, Neighborhood Builders and Community Association make no representations, guarantees or warranties with respect to any future dam Buyer Initials: / _]j_ 2544-33253%CLP428USCLSM 609965.3 6/13/06 inundation zone determinations. The Community is downstream from the Santiago Creek Dam, an earthfill dam approximately one hundred and thirty-six (136) feet high which has a capacity of 25,000 acre feet of water. Santiago Creek Dam is jointly owned and maintained by the Serrano Irrigation District and the Irvine Ranch Water District. Information about the Santiago Creek Dam can be found on the California Department of Water Resources website: http://cdec.water.ca.gov/mise/resinfo.html. Please contact the Office of Emergency Services for further information concerning Areas of Potential Flooding. 30, Soil Conditions. In purchasing your Home, you should review soils reports for the Community, available for review at the City, and take into consideration the following: (a) Expansive Soil. According to the soils report, soil in the Community is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other Improvements, you should advise your consultants that designs must accommodate soils with expansion potential. In addition, you should consider the following information and recommendations before making or modifying any Improvements. (b) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs. Block walls may require extra horizontal and vertical steel reinforcing bars. (c) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Community by the Master Developer and Neighborhood Builders should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by the Master Developer and Neighborhood Builders designed to serve more than the (1) Home should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. (d) Fill Soil. Homes in the Community may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. A soils report certifying the compaction of fill soils is available for review at the City. Buyer Initials: / _16- 2544-33253\CLP428\I)lSCLSR\609965.3 6/13/06 (e) Corrosive Soil. Soils in some areas of the Community are potentially severely corrosive to buried concrete and ferrous metals. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, you must use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on your Homesite. Overwatering soil will exacerbate the corrosivity of the soil. You should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. (f) Groundwater. Groundwater has been encountered in portions of the Community at depths of six (6) to twenty-five (25) feet below the ground surface. You may not dig or drill on any Homesite to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. (g) Pools/Spas. Prior to designing any pool, spa, or other similar amenity, it is recommended you consult with a licensed civil engineer to determine the depth of the water table under your Homesite to insure that your Improvements are compatible with the depth of the water table and that they will not disturb or come in contact with the groundwater during a rainy season. The Master Developer and Neighborhood Builders make no guarantee that any Homesite has the ability for pool or spa installation. Homesites 242 through 245, inclusive, of Tract No. 16581, which are located within the LIPOC Property, have been determined to be unsuitable for installation of pools, spas or other similar amenity. The deeds for these Lots will contain deed restrictions that prohibit the use of the Lots for such purposes. (h) Soils Professionals. Before starting a pool or spa or any patio, concrete or other flatwork on the Homesite, you should consult with a licensed soils engineer to ensure that such work is constructed correctly in light of current soils conditions. Although consulting with a soils professional may add substantially to the cost of installation of improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking in improvements. (i) Interior Gases and Other Contaminants. The aging process of soil and natural soil elements, as well as the aging of man-made building materials, may create unwanted and undesired gases and other contaminants in Homes, both new and previously occupied. In addition, a lower rate of air exchange between outdoor and indoor environments has resulted from modem construction techniques which comply with energy conservation requirements enacted by the State of California. A lower air exchange rate can result in the build-up of unwanted gases and other contaminants in varying degrees. As the quality of the air we breathe can affect our health, you should frequently air out your Home by opening the windows. 31. Post -Tension Concrete System. Your Home may have been built using a post - tension concrete system ("System'J. If any portion of your Home has been constructed using the System, a placard or stamp will be placed in the garage signifying the existence of such System. The System involves placing steel cables under high tension in the concrete slab located beneath the Home. Therefore, any attempt to alter or pierce the foundation (for example, sawing, cutting or drilling) could damage the integrity of the System and cause serious injury or damage to persons and property. The Master Developer and Neighborhood Builders shall not be Buyer Initials: / -17- 2544-33253\CLP42MISCLSR\609965.3 6/13/06 responsible for any damage or injury resulting from or arising in connection with the alteration of the slab or foundation of any Home. By acceptance of a deed to a Home, you agree that: (i) you shall not cut into or otherwise tamper with the System; (ii) you shall not knowingly permit or allow any other person to cut into or tamper with the System so long as you own any interest in the Home; (iii) you shall disclose the existence of the System to any person who rents, leases or purchases your Home; and (iv) you shall indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns free and harmless from any and all claims, damages, losses or other liability (including attorneys' fees and costs) arising from any breach of this covenant. 32. Reclaimed Water. In its efforts to conserve water, the Irvine Ranch Water District (the "Water District") requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The Water District may require the use of reclaimed water to irrigate landscaping in private yards. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable water. The water used to irrigate the Association Property may include reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. The Master Developer, Neighborhood Builders and Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. You are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 33. Air Quality. Southern California is subject to Stage I smog alerts. You should take advantage of the Air Quality Management District's ("A.Q.M.D.'� forecasts to plan your outdoor activities to avoid peak pollution by checking your television, radio or daily newspapers to find out if unhealthful air quality is expected. For more information, you can also call A.Q.M.D. at 1 -800 -CUT -SMOG (1-800-288-7664) or check their website at www.ggmd,.sov. By acceptance of a deed to a Home, you (for and on your behalf, and the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept the existing and possible future impacts of smog on yourself and your family and forever waive any and all causes of actions against the Master Developer and Neighborhood Builders and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 34. Wind. All of Southern California is subject to periods of high winds. Wind speeds in the Community may exceed that experienced in other areas of the surrounding region. You must ensure that any structures or other Improvements you install on your Homesite arc constructed or designed to withstand high winds. You are advised to consult with experienced Buyer Initials; / -Ig- 2544-3325MCLP42MISCLM 609965,3 &13/06 architects and engineers in the design and specification of any structures or Improvements that you plan to add. 35. Private Streets. All of the streets within the Community are private streets. Maintenance and repair of the private streets is the responsibility of the Community Association or the Neighborhood Associations, as applicable. 36. Building Setbacks. Construction of Improvements in the yard of any Homesite such as pools, spas, patio covers, BBQ, fountains, trellises and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning the construction of any Improvements to your Homesite. 37. Boundaries. You may not rely on any written or oral statements by Master Developer, Neighborhood Builders or their agents regarding the exact boundaries of your Homesite or Home or whether any wall or fence has been or will be constructed exactly on the boundaries of your Homesite. 38. Square Footage Representations. Representations of square footage are approximate only. You may not rely on any written (brochures and other sales documents) or verbal statements by Master Developer, Neighborhood Builders or their agents regarding the exact square footage of your Homesite or Home. The computation of square footage varies based on the criteria used. You agree by acceptance of a deed to a Home to hold the Master Developer and Neighborhood Builders harmless in any dispute arising over any representations concerning the square footage of your Homesite or Home. TAXES AND ASSESSMENTS 39. Supplemental Real Property Taxes. The California law requires real property to be revalued whenever it changes ownership or when improvements are newly constructed. After the Close of Escrow for your Home, the County of Orange Tax Assessor ("Assessor") will determine a new taxable value for your Home basedon current market values. The property tax will increase and you will receive one or more supplemental tax bills depending upon the time of the year in which Escrow closed for the purchase of your Home. Master Developers and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of any supplemental tax bills. The following notice is given pursuant to Section 1102.6c of the California Civil Code: "California property tax law requires the Assessor to revalue real property at the time the ownership of the property changes. Because of this law, you may receive one or two supplemental tax bills, depending on when your loan closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account, the supplemental tax bills will not be paid by your lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If Buyer Initials: / _19_ 2544-3325MI-P428\DISCLM 609965.3 6/13/06 you have any question concerning this matter, please call your local Tax Collector's Office." Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of the supplemental tax bill. You hereby acknowledge, accept and agree that neither Master Developer, Neighborhood Builders nor any of their authorized agents, representatives, employees or sales people have made any representations or warranties respecting the amount of the supplemental assessment or the assessed value. Should you have any questions or concerns relating to the supplemental assessment, you agree, prior to the Close of Escrow, to consult with the County Assessor or your legal or other advisors to satisfy such questions or concerns. 40. Estimated Taxes. You have been provided with an estimate of your assessments. THE AMOUNT OF ASSESSMENTS ARE ESTIMATES ONLY, and are based on current information provided by the City, County or those public or private agencies responsible for the administration for the districts. These assessments may INCREASE or DECREASE, based upon changes in real property tax law; the district(s) may dissolve; formation of new districts may occur, an extension of the districts or the services to the districts and other factors NOT IN MASTER DEVELOPER'S OR NEIGHBORHOOD BUILDER'S CONTROL may transpire. The amount of special taxes may appear on your property tax bill or may be billed separately. 41. Special Tax Assessment Districts. All or a portion of the Community lies within the boundaries of the following Special Tax and Assessment Districts: (a) Proposed Tustin LLD. Master Developer currently intends to form a landscape and lighting maintenance assessment district with the City of Tustin ("Proposed City LLD'D. The Proposed City LLD is expected to be formed to pay for the maintenance of public street lighting, landscaping and park maintenance within the Proposed City LLD area. (b) Proposed Tustin CFD. Master Developer currently intends to form a community facilities district with the City of Tustin ("Proposed City CFD' which would pay for the maintenance of City park improvements, biking and hiking trails, road improvements, dry and wet utilities and the MCAS Tustin Master infrastructure -backbone improvement items. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. 'M1y 5u {1 e+1 delGked m A* Utu'�j►s vt• (c) Recreation and Improvement Maintenance District. The Irvine Unified School District has formed a recreation and improvement maintenance district which is an annual assessment for maintenance of public sports/playfields. Please contact David Taussig & Associates, telephone (949) 955-1500 for additional information. The Neighborhood Builder will provide you with disclosures entitled "Notice of Special Tax" ("Notice') prior to entering into a contract to purchase s Home, These Notices will inform you of the special tax and assessment districts that apply to your Home. The Notices will also contain a detailed description of the special tax calculation, important information about functions and rights of the special tax and assessment districts, your obligations, and who to Buyer Initials: / -20. 2544-3325MLP42801SCLM 609965.3 6113106 contact for additional information about the special tax and assessment districts. You should thoroughly understand the information contained in the Notices prior to entering into a contract to purchase a. Home. You will have five days after the Notice is delivered by mail, or three days after its delivery in person, to terminate the contract to purchase by giving written notice of that termination. All Homes will be subject to annual special taxes levied by one or more of the special tax and assessment districts listed above. Not all special tax or assessment districts listed above will apply to your Home. These special taxes will be a continuing lien on your Home and will be billed to you with the annual real property tax bill issued by the County Assessor. The lien of these special taxes will continue until the obligation is satisfied. If you fail to pay a special tax when due, the assessment districts may exercise their right to foreclose on your Home. Information concerning the estimated amount of the annual special tax on your Home for the special tax and assessment districts is available from the City and County. 42. Changes in Special Taxes. The amount of any special taxes disclosed to you are estimates only, and are based on current information provided by the City, County or other public or private agencies responsible for the administration of special tax districts. Special taxes may increase or decrease, based upon the terns of the special tax lien, changes in real property tax law, the dissolution of special tax districts, the formation of new special tax districts, extension of special tax district(s), changes in services by the districts and other facts not in Master Developer's or Neighborhood Builders' control. The amount of special taxes may appear on your real property tax bill or may be billed separately. ADJACENT AREA DISCLOSURES 43. Adjacent Property Disclosures. The land adjacent to the Community within the MCAS Tustin Specific Plan has a variety of land use designations. The land use designations are subject to change. Therefore, the type of future development adjacent to the Community cannot be predicted with accuracy. 44. WAS Specific Plan. MCAS Tustin was realigned and closed on July 2, 1999, in accordance with Base Realignment and Closure Act. The Department of Defense recognized the City of Tustin as the Lead Agency or Local Redevelopment Authority ("LRA") for preparation of the required reuse planning documents in late 1991. The MCAS Tustin Specific Plan/Reuse Plan (the "Plan') includes detailed planning, policies, regulations, implementation strategies and procedures necessary to guide the reuse and development of the site into the next century. Since implementation of the Plan will be a long- term process and there are unique circumstances associated with converting military bases to civilian uses, the Plan is intended to be practical in economic terms and visionary in terms of its ability to create and respond to future market opportunities. This means that it must provide sufficient guidance to provide investors with a high confidence level -that their investments will be protected. At the same time, it must offer sufficient flexibility to respond to changing market conditions. A careful balance between certainty and flexibility underlies the provisions of this Plan. Buyer Initials: / -21- 254433253\CLP428\DISCLSR\609965.3 6/13/06 The Plan is intended to serve as both a policy -oriented and regulatory document. The Plan has been submitted to the Department of Defense as a policy guide outlining the intended reuse for the Community. Subsequently, the Plan will be adopted by the Tustin City Council as the zoning for the Community. The Plan may also be amended one or more times by the City of Tustin. The Plan is one device for implementing goals and policies of the Tustin General Plan. The Plan also contains the development and reuse regulations that constitute the zoning for the Community. As a federal installation, MCAS Tustin was not subject to local zoning and planning requirements. Upon conversion to civilian use, the former MCAS Tustin property will be under the jurisdictional authority of either the City of Tustin or the City of Irvine, as applicable, and will be subject to local codes and ordinances. The City of Irvine has assigned responsibility for preparation of the Plan (and accompanying joint Environmental Impact Statement/Environmental Impact Report) to Tustin for that portion of the Plan area within Irvine. However, the City of Irvine will have to adopt any General Plan and zoning changes necessary to implement the provisions of the Plan within the City of Irvine. The land uses described in the Plan for the area covered by the Plan include, but are not limited to, Low -High Density Residential, Transitional and Affordable Housing, Golf Resort Living, Commercial Business and Retail, and Institutional/Recreational designations such as Parks, Trails and Schools. Also recommended were applications by the Orange County Sheriffs Department, City of Tustin and County of Orange Social Service Agency. The Master Developer and Neighborhood Builders have no control over the Plan, changes to the Plan, or development of the area covered by the Plan in accordance with the Plan. For further information, you should review the Plan. The Plan and information regarding the development of the Plan is available for review at the office of the Local Redevelopment Agency, City of Tustin. 45. The District. The District is a proposed one million square foot outdoor shopping center to be located approximately one and one-half (1%) miles southwest of the Community, at the corner of Jamboree Road and Barranca Parkway. The District is planned to include, among other businesses, several retail stores, a grocery store and a movie theater. The District will result in increased noise and traffic in and around the Community, particularly along Jamboree Road and Barranca Parkway. Neither Master Developer, Neighborhood Builders nor the Community Association have any control over the use or maintenance of the District or its impact on the Community. 46. Rail Corridor/ Metrolink Station. As disclosed in the Homebuyer Notification, there is a rail corridor ("Corridor'l located to the north of the Community. There is also a Metrolink station ("Stafion'� located to the north of the Community at 2975 Edinger Avenue, Tustin, CA 92780. The impact of the Corridor and Station may include, without limitation, increased noise, light and vibration levels in the vicinity of the Community. The Corridor and Station could be an attractive nuisance to children and animals who may wish to play in the vicinity of the rail corridor. The Master Developer, Neighborhood Builders and the Community Association have no control over the use, maintenance or care of the Corridor or Station. You acknowledge and understand that you are responsible for keeping your children and animals Buyer Initials: / -22- 2544-33253\CLP428\DISCI,SR\609965.3 6/13/06 away from the Corridor and Station and the danger that is inherent around the Corridor and Station. You should evaluate the impact of the Corridor and Station on your decision to purchase a Home in the Community. 47. Temporary Sewer Lift Station. A temporary sewer lift station will be constructed within the vicinity of the Community at the northeast corner of West Connector and Valencia North Loop Road to serve the Community. The lift station will be installed below- grade and will be constructed, owned and maintained by the Master Developer. Owners of Homes near the lift station may experience an increase in noise and dust levels in the area of the lift station during the construction period and less significant noise levels after completion. Owners may encounter some odors in the areas near the lift station. You acknowledge, understand and agree that neither the Community Association nor the Neighborhood Builders will have any control over the use, maintenance or care of the lift station. 48. Areas Outside the Specific Plan. The MCAS Tustin Specific Plan, which is bounded by Edinger Avenue, Redhill Avenue, Barranca Parkway and Harvard Avenue has the following surrounding uses. (a) A rail corridor and Metrolink station (described above) are located along Edinger Avenue; (b) A business park, commercial and industrial areas, sports park and utility power lines are located along Barranca Parkway; (c) Adjacent to the west side of Warner Avenue exists a Southern California Edison easement with high voltage transmission lines and usages by a wholesale plant nursery and public storage facility; and (d) A Southern California Edison easement area with high voltage transmission lines, landscaped areas available for public access and residential neighborhoods are located along Harvard Avenue. The Master Developer, Neighborhood Builder and the Community Association have no control over development outside of the Community. 49. Airport Proximity Disclosure. The Community is located within what is known as an airport influence area (as defined in California Civil Code Section 1353) surrounding John Wayne Airport. John Wayne Airport is located approximately 3.6 miles southwest of the Community at the (405) San Diego Freeway and MacArthur Boulevard in the City of Santa Ana. For that reason, the Community may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. You.may wish to consider what airport annoyances, if any, are associated with the, Community before you complete your purchase and determine whether they are acceptable to you. John Wayne Airport has noise abatement procedures in place, but there is no guarantee that these procedures will lessen the impacts on the Community of noise and vibrations caused by aircraft using this airport or that these noise abatement procedures will continue in the future. Further information is Buyer initials: / -23- 2544-332531CLP428\DISCLSR\609965.3 6/13/06 available from the airport website: www.ocair.com. Your Neighborhood Builder will provide you with a separate airport proximity notice required by California Civil Code Section 1353. 50. Avigation Easement. An avigation easement has been recorded against the Community. The avigation easement establishes a permanent right to travel through the air space over the Community for the benefit of John Wayne Airport. You may notice noise and vibration from overflying aircraft approaching or leaving the airstrip. By accepting a deed to a Home in the Community, you understand that the avigation easement gives the users of the airstrip a perpetual legal right to fly over the Community without interference from the occupants of the Community. 51. Residential Developments. There are existing single-family residential developments adjacent to the northern, eastern and western boundaries of the Community. In addition to increased automobile and pedestrian traffic resulting from the proximity of these residential developments to the Community, the solitude of a Home's yard area may be significantly impacted by the proximity, height and design of multi -story, residential buildings constructed on property adjacent to the Community. The Master Developer and Neighborhood Builders have no control over the proximity, height and design of such nearby buildings and make no representation on the future impacts that these residential developments will have on residents of the Community. 52. Commercial/Industrial Property. The Community is located within the vicinity of property zoned for commercial and heavy industrial uses. This area consists of, among others, a Waste Management Public Recycling/Transferring Station, asphalt recycling, trucking facilities and multiple concrete companies, all with product deliveries. These commercial and industrial properties may generate dust, offensive odor, noise and other effects. The Master Developer and Neighborhood Builders have no control over the existing or potential uses of this property. These uses may create light, noise and other nuisances twenty-four (24) hours a day, seven (7) days a week. 53. Elementary School. The Tustin Unified School District owns an elementary school site located to the southeast of the Community. Owners and other residents within the Community may experience, among other things, glare from bright lights, noise and increased traffic and parking congestion in connection with the use of this site. There are no assurances if or when any school will be completed on the site, nor the type of facilities that may be included as part of the school. You should contact the Tustin Unified School District at (714) 730-7301 for more information. Master Developer, Neighborhood Builders and the Community Association make no representations as to the future use of this school site. 54. Development Area. The Community lies in a rapidly expanding area. As future commercial and residential developments are built in and around MCAS Tustin, you may expect attendant limitations on solitude and inconveniences. For example, you can expect to hear noise from the development of future adjacent residential and commercial areas and the machinery used to develop these areas. You can also expect increased traffic and rerouting of traffic as new residential and commercial developments are constructed, nearby streets and major thoroughfares are widened and new streets are built, As the area around the Community develops, you may experience light entering your Home from exterior sources including Buyu Initials: / -24- 2544.33253\CLP428\131SCLSM 609965,3 6/13/06 streetlights, parking lot lighting and nearby residential and commercial buildings. The Master Developer, Neighborhood Builders and the Community Association have no control over the transmission of noise, light, vibration, odor and other impacts or their potential effects on Homes in the Community, including any which may be a direct result of current and future construction activity. 55. MCAS Tustin Airship Hangars. Two (2) airship hangars ("Hangars' are located within MCAS Tustin southwest of the Community. The hangars are each approximately one thousand (1,000) feet long, three hundred (300) feet wide, and one hundred and seventy (170) feet tall. The view from your Home may be effected by the nearby presence of the Hangars. It has not been determined whether these Hangars will remain or be demolished, or what uses might be made of them. For further information regarding the Hangars, please contact the City of Tustin. 56. Future Fire Station Site. The Community is located adjacent to a future fire station site at the corner of Edinger Avenue and West Connector Road. The fire station will operate twenty four (24) hours a day and seven (7) days a week. Owners whose Homes are located in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advise that Master Developer and Neighborhood Builders have no control over the operation or use of the fire station. You should carefully evaluate the impact of the fire station on your decision to purchase a Homesite or Home in the Community. 57. Village Services. The Community is located northwest of an area designated in the Plan as the Village Services area. When and if built, this area is intended to be accessible to both vehicle and pedestrian traffic, and to provide localized commercial retail and service uses to adjacent residential areas within the Plan area. 58. Learning Village/Transitional and Emergency Housing. The Community is located east of an area designated in the Plan as the Learning Village area. When and if built,. this area is intended to provide a specialized educational environment with a variety of public - serving uses. GENERAL DISCLOSURES 59. Neighborhood Model Homes. Neighborhood model homes reflect typical exterior elevations, floor plans and methods of construction, and also illustrate possibilities for future interior decoration and exterior landscaping and hardscape improvements. Your Home will not necessarily conform to any model shown. The exterior elevations, architectural treatments, floor plans and colors shown on the master plot plans on display at the office of each Neighborhood Builder may be different than those both displayed in the models and those actually constructed by the Neighborhood Builder. Additionally, window locations, window types, roof lines, architectural projections and other similar features vary by elevation and Home location, and not all of the features displayed in the models may be included in your Home. The models have also been professionally decorated to show various decor ideas. Decoration items such as furnishings, draperies and other window treatments, any window tinting, wallpaper, custom carpet, coordinated paint, built-in shelves, beams, certain lighting fixtures (including Buyer[nipals: / -25- 2544-33253TU42MISCLSM 609965.3 6113/06 halogen lighting), special ceiling treatments and some mirrors are for display purposes only, and are not included in the purchase price for your Home. Entries, walkways and driveways are shown in a variety of materials to show design ideas; however, for your Home, they will be constructed using only standard concrete. The hardscape shown in the model complex may not depict what may be constructed in all locations. Additionally, landscaping for the models is greater in density and type than any landscape package offered by a Neighborhood Builder. If not expressly included in the purchase price for your Home in writing by a Neighborhood Builder, the rear, side and front yard landscaping is your responsibility. The type of plants, and the size and density of the landscaping in the yards of the models are merely intended to suggest ideas to you. Certain models may also include hardscape items (patio slabs, patio covers, pools, spas, etc.) which are not included in the purchase price of your Home. All such options and upgrades displayed in the models (including decorator items, landscaping and hardscape) are not included in the purchase price for your Home unless expressly agreed to in writing by the Neighborhood Builder. You should consult your sales representative for additional information regarding non-standard items used in the model homes. 60. Extended Use of the Model Complex. Each Neighborhood Builder reserves the right to use one or more Homes in a Neighborhood as a sales office and model home complex, and to display signs and banners, in connection with its program of marketing and selling Homes in the Neighborhood as well as other Homes owned by Neighborhood Builders, even if they are located in separate and unrelated Neighborhoods. 61. Grading Variations. Your Homesite has been graded to City specifications and may vary significantly from other Homesites. Variations may include slopes, swales, drains, flood control channels and retaining walls as required. Any changes made to the grading of the Hon which your Home is located may significantly affect you or your neighbor's drainage pattern and cause significant property damage to your Home or a neighbor's Home. 62. Wall/Ceiling Heights. Wall and ceiling heights and configurations may vary significantly by elevation. Your Home's walls and ceiling heights may be different from those used in the model homes. You are encouraged to speak to a sales representative if you have any questions. 63. Right of Substitution. From time to time due to unavailability and other production considerations, it is necessary for a Neighborhood Builder to make substitutions of materials and other items used in construction of the Homes from those materials and items displayed in the models. Therefore, each Neighborhood Builder reserves the right to make any changes or substitutions as the Neighborhood Builder deems necessary or desirable to the color schemes, building materials, fixtures, appliances and other components of the Homes. The foregoing substitutions may include, without limitation, kitchen appliances, household fixtures, electrical outlets and switches, hardware, wall surfaces, painting and other similar items. Each Neighborhood Builder shall have the right to make the substitutions described above without adjustment to the purchase price of your Home. 64. Changes in Construction Plans. The construction, grading, drainage and improvement plans (collectively, the "Construction Plans') for Homesites and Homes within each Neighborhood all contain dimensions that are approximate. They are not intended to be Buyer Initials: / -26- 2544-33253\CLP42MISCLSM 609965.3 6/13/06 precise dimensions with regard to the Neighborhood. Room dimensions and electrical outlet placement will vary slightly from models and from printed information. Construction will be performed in substantial conformance with the Construction Plans, but dimensions may change slightly from them. If there is a discrepancy between the Construction Plans and the actual as - built conditions of your Homesite or Home, the as -built conditions will control. The usable or buildable area, location and configuration of the Homesite and all improvements located thereon may fluctuate from that shown or displayed to you in the Construction Plans or any other drawings, topographic maps or models based upon a Neighborhood Builder's construction of final improvements including, without limitation, fencing and slopes, which shall be constructed in a Neighborhood Builder's sole and absolute discretion. The location, size, height and composition of all walls and fences to be constructed on your Homesite or Home or adjacent to your it shall be determined by the Neighborhood Builder in its sole and absolute discretion and despite the Construction Plans or any other models, drawings or topographic maps displayed to you. The Neighborhood Builder makes no representations, warranties or assurances as to the size, height, location or composition of any wall or fence to be constructed on or adjacent to your Homesite or Home. The Construction Plans are subject to change at any time without notice or obligation. 65. Non -Standard Construction. You may not personally perform any changes of any kind to your Home (such as alarm systems, home intercoms, stereo wiring, etc.) during construction and prior to the Close of Escrow, Such changes may void your warranty. Only those options and upgrades specifically agreed to by the Neighborhood Builder will be made. Any other changes and unapproved options found in a Home during the construction period will be removed by the Neighborhood Builder and the cost of removal and any repairs shall be your responsibility. 66. Changes In Development Plan and Prices. The residential real estate market continually fluctuates due to changes in economic, social and political conditions that directly affect the supply of and demand for housing. As a result, the development plan for the Neighborhood and the Community, and home prices and the terms and conditions of sale are also subject to change. Therefore: (a) With the exception of your Home, each Neighborhood Builder reserves the right at any time prior to or after the Close of Escrow for the sale of a Home and without notice, (i) to increase or decrease the sale price, adjust incentives or otherwise adjust the terns and conditions of sale for Homes in the Neighborhood or in the Community, and (ii) change the number, size, location, elevation, design or type of homes constructed in current or future phases of development of the Neighborhood; (b) No Neighborhood Builder is obligated to offer you the same price, incentives or other terms and conditions of sale that the Neighborhood Builder has previously offered or may subsequently offer to another purchaser; (c) No Neighborhood Builder has either offered or agreed to any price protection or other similar commitment to you regarding the value or resale value of your Home (or any other property), and no Neighborhood Builder shall not have any obligation or liability Buyer Initials: / -27- 2544.33253\CLP428\DISCLSR\609965.3 6/13/06 whatsoever to you in the event any price changes directly or indirectly affect the value of your Home; (d) When you entered into a Purchase Agreement, the Neighborhood Builder may have owned other properties which may have been off the market and may not have been shown to or otherwise made available for purchase by you. No Neighborhood Builder has any obligation to notify you if any of such properties come on the market or are otherwise available . for purchase or any obligation to notify you of any fixture properties the Neighborhood Builder may develop and make available for purchase. (e) You shall not hold a Neighborhood Builder responsible for any fluctuations in the purchase price of Homes within the Neighborhood or the Community. In consideration of a Neighborhood Builder's agreement to sell a Home to you, you agree that you shall have no claims against the Master Developer or the Neighborhood Builder for any possible change (decrease or increase) in the purchase price of Homes within the Neighborhood or any other terms of purchase, including, without limitation, upgrades or other concessions or incentives offered by a Neighborhood Builder to other purchasers of Homes within the Neighborhood and the construction of any additional floor plans on any of the Homes in the Neighborhood. 67. Use of Subcontractors. Neighborhood Builders generally perform construction through the use of subcontractors, and may not employ construction trades or workers. A Neighborhood Builder is not permitted to change its subcontracts without approval of the respective subcontractor; therefore, you may not request interior or exterior construction changes or alterations not otherwise offered to other purchasers in the sales office. 68. Elevation/Floor Plan Specifications. In order to provide architectural diversity in the street scene, each Neighborhood Builder's architect has produced more than one exterior design (elevation) for each floor plan. Consequently, differences may be noticed between the model home for your floor plan and the elevation of your Home. You acknowledge that you have received a description of the exterior configuration for the elevation and the exterior color scheme number for your Home. You also acknowledge that your Home's elevation and floor plan may vary from the configuration of the model home for your Home in terms of layout, sizes of certain rooms, exterior elevation features and other items such as sloped ceilings, veneer treatments, window locations and sizes, roof lines and color schemes. 69. Upper Floor Weight Limits. The upper floors of Homes are designed to support weight limits as outlined in the Uniform Building Code ("UBC"). If you currently own or are planning to purchase a waterbed, pool table or other heavy furniture you must confirm with the manufacturer that the weight introduced by these items does not exceed the UBC weight limit. Master Developer and Neighborhood Builders shall not be responsible for damage caused by anything you place on the upper floors that exceeds the UBC weight limit. 70. Air Conditioning. The air conditioning system and equipment specifications installed in the model homes may vary and operate at a higher capacity than those provided in your Home. You are encouraged to speak with your sales representative to determine the exact equipment specifications that will be provided with your Home. The location of the air Buyer Initials: / _28_ 2544.3325MCLF42MISCLSM 609965.3 6/13/06 conditioning compressor may vary between the model and your Home and between your Home and other Homes in your Neighborhood. 71. Alarm System. If you purchase an alarm system from a Neighborhood Builder, you specifically waive any claims against Master Developer, the Neighborhood Builder and the Community Association as a result of any failure of the alarm system to warn, frighten off, or alert anyone about intruders or any other problems. The sale of such system to you by the Neighborhood Builder is not a guarantee or warranty against criminal acts. Master Developer, the Neighborhood Builders and the Community Association are not insurers against criminal acts. 72. Energy Conservation. Homes in the Community meet or exceed the energy conservation standards that are a part of Title 24 of the California Administrative Code. Each Neighborhood Builder is required to design and install heating and cooling units that meet strict guidelines in Title 24. This is an energy conservation law that is designed to help reduce the overall use of energy in your Home. Title 24 describes the amount of cooling capacity as well as the minimum efficiency ratings for each geographic location in the state. In complying with Title 24, the cooling units installed in your Home are designed for maximum efficiency. Due to the Title 24 geographic requirements, on extremely warm days your inside room temperature may be warmer than your thermostat selection. This is due to design restrictions imposed by Title 24, not any design or installation defect by the Neighborhood Builder or its contractor. 73. Water Conservation. Each Home in the Community is equipped with low flow fixtures and other equipment to aid in water conservation in compliance with the City's Conditions of Approval for the Neighborhood. 74. Gas Barbecue Stub. If a natural gas service line is stubbed-out to an exterior backyard wall of your Home, it is suitable only for use in connection with a gas barbecue. Any other use may result in a serious fire hazard. The Neighborhood Builder and Master Developer are not responsible for any damage resulting from your use of the exterior gas stub. 75. Stain Grade Material Discoloration. Natural hardwoods used for cabinets, doors, stair systems, moldings, etc., are finished with stain and lacquer finish products which will change color over time. Color change may be the result of exposure to sunlight or weather, or simply the consequence of aging. Discoloration is not a defect. 76. Paint Discoloration. Certain portions of your Home, such as paint-grade cabinets, casework, moldings and interior doors, may be painted with oil-based enamel paint. Yellowing is common with oil-based enamel paints. Additionally, if your Home has white oil- based enamel paint-grade cabinets, yellowing will occur. 77. Variations In Natural Materials. Your Home may include various natural materials (e.g., wood products and/or stone products). Wood products vary in dimension, grain, color, moisture content, and performance when subjected to high moisture environments. Dimensional variations in the wood framing members (studs, plates, joists, rafters, and beams) or the required structural hardware connectors may show through the drywall and stucco finishes under certain lighting conditions. Wood panels and trim, exposed timbers, rafters, and posts will Buyer Initials! / -29- 254433253\CLP428\DISCLSR\6099653 6/13/06 require periodic painting. Wood exposed to weather will require more frequent painting. Consult the maintenance schedule included in your Homeowners Manual. Some of the natural characteristics of wood will show through the painted or stained finish. For example, there may be shades of white, red, black, grey or even green in areas. Mineral streaks may also be visible. This is caused by the irregularity of mineral absorption from one part of the tree to another. Grain patterns or texture will vary from even to irregular throughout your cabinetry. Similarly, granite and natural stone products are composed of various mineral contents. Marble is less dense and more porous than granite. Great care must be taken to prevent damage to marble and other stone products. You should follow the manufacturers' recommendations for cleaning and maintenance. Because these are natural products, they are subject to variation in color, veining, spotting, holes, cloudiness, texture and cracking. Some may vary significantly in filler and sheen. The samples in the sales office are actual pieces of natural stone which indicate general color and character; however, no two (2) pieces can be expected to match, even when taken from the same box. You should view the stone prior to purchase, and any questions regarding these materials must be resolved prior to installation. If replacement of natural material tile or carpet is required, you understand and agree that a match with existing material cannot be guaranteed. 78. Brass Plumbing/Light Fixtures/Hardware. Brass, bronze or other finishes have their limitations. In time, the protective lacquer may deteriorate from exposure to weather, perspiration, cleaning agents, frequency of use and other factors. Tarnishing or excessive wear of these finishes is, therefore, not a defect, but a normal process which is unavoidable. Under the circumstances, these finishes cannot be guaranteed and products will not be repaired or replaced under the manufacturer's warranties for tarnishing or wear of finishes. 79. Drywall Panels and Finishes. Drywall panels are placed over the wall studs, joists, rafters and beams. Drywall is typically used to finish window openings. Drywall panels will not completely eliminate variations in the dimension and plane of wood framing members. Metal trim (i.e., corner bead) is used at corners, window edges, soffits and ceilings. They are designed to be filled with finish compounds. These trim metals provide a durable finish but cause the wall plane to "flare" at the metal edge. Panel joints and seams are taped and coated with finish compounds. Fasteners are coated with finish compounds to cover the small "dimple" in the surface of the drywall panel. Progressive applications of finish compounds are required to cover the joints, fasteners, and seams. In some cases, the normal finishing of these joints, fasteners, and seams will cause a subtle "bulge". When the finishing process is complete, the walls and ceilings receive a texture coat. In certain lighting conditions (up -lights placed close to the walls), irregularities and variations in the wall plane or intersection of vertical and horizontal panels may be evident, These variations are normal. 80. View. Master Developer, Neighborhood Builders, the Community Association and their counselors, agents, representatives or employees make no representations, warranties or promises concerning any view, present or future, that may be enjoyed from all or any portion of your Homesite or Home. The view from your Homesite or Home may change or may be fully or partially obstructed by (a) the construction of other homes, Improvements, structures, fences, walls and/or landscaping by Master Developer, Neighborhood Builders or other Owners within the Community, (b) activities and Improvements on real property outside the Community, and/or (c) the growth of trees and/or other vegetation within or outside the Community. You are advised that trees installed in the Community are generally smaller than they will be once mature Buyer initials: / _30_ 2544.33253TU42801SCLS&\609965.3 6/13/06 and trees that do not block views when you purchase your Home may obstruct views as they grow. Master Developer and Neighborhood Builders make no representations or warranties with respect to any open space on property adjacent to your Homesite or Home, or the Community as a whole, whether this property is owned or controlled by Master Developer, Neighborhood Builders, government agencies or private property owners. 81. Warranties for Consumer Products. The manufacturers' warranties for the consumer products included in your Home (e.g., water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the sales office of your Neighborhood Builder. 82. Financing. This paragraph only applies if you are purchasing your Home from a Neighborhood Builder who is also a Lennar Family Builder and you are financing the purchase with Universal American Mortgage Corporation (' UAMC'�. You will be required to provide UAMC with all documents necessary to obtain loan approval. UAMC may be affiliated with the Neighborhood Builder. You are not obligated to accept a loan from UAMC, but you may be required to submit documentation to UAMC to permit the Neighborhood Builder to determine whether it is likely that you will qualify to purchase the Home you desire. You may select your lender independently; however, if you select a lender other than VAMC, you must ensure that the lender can meet the time limitations and requirements imposed on lenders in the Purchase Agreement. Master Developer and Neighborhood Builder have not reviewed or approved any lender's sales or marketing materials, and does not make any representations or warranties whatsoever regarding any matters set forth therein or your ability to obtain any financing under any particular terms. You are strongly encouraged to make your own independent evaluation of the rates and loan programs offered by all lenders, including VAMC. You understand that the interest rate and loan fees for the loan applied for will be determined at the time of the Close of Escrow and may be higher or lower than on the date you signed a purchase agreement for your Home. You also acknowledge that the interest rate and loan fees referenced on the loan application are approximate only and do not constitute a binding commitment. 83. Schools. The Community is currently located in the Tustin Unified School District, telephone: (714) 730-7301 (the "School District'j. To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Due to the rate of population change, the school district may find it necessary to change boundaries and designated schools periodically, prior to or after your close of escrow. In addition, it is possible that school district boundaries may change and your children will be required to attend a different school district in the future. Master Developer and Neighborhood Builders have no control or responsibility for such changes should they occur. The Community is currently expected to be served by the following schools: Marjorie Veeh Elementary School (K-6) 1701 San Juan Street Tustin, California (714)730-7544 Buyer Initials: / -31- 2544-33253\CLP428\nISCLSR\609965.3 6/13/06 A.G. Currie Middle School (7-8) 1402 Sycamore Avenue Tustin, California (714) 730-7352 Tustin High School (9-12) 4321 1171 El Camino Real Tustin, California (714)730-7414 To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the applicable school referenced above or the School District, or you can visit the School District's website at www.tustin.kl2.ca.us. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. 84. Mailboxes. Mailboxes in the Community may be clustered in groups as required by the United States Postal Service. The location of mailboxes and above -ground utility structures are determined by governmental agencies or utility companies, or both. You may not change the type of mailbox being used or the location. Master Developer and Neighborhood Builders reserve the right to modify such locations as may be dictated by field conditions without prior notice. 85. Residential Construction Legislation. California Civil Code Sections 895 through 945.5 ("Construction Claims Statute'l, went into effect on January 1, 2003. The Construction Claims Statute (a) delineates standards for how various components of your Home should be constructed and function, (b) limits the time frames for bringing various claims against the Neighborhood Builder to anywhere from one year to ten years (as listed in the Construction Claims Statute) after the Close of Escrow, (c) imposes an obligation on all Owners and their successors in interest to follow Neighborhood Builder's maintenance recommendations and schedules or other applicable maintenance guidelines, and (d) establishes a non -adversarial claims resolution procedure. Pursuant to Section 914 of the Construction Claims Statute, the Neighborhood Builder is permitted to elect to utilize the procedure in the Construction Claims Statute or its own alternate contractual pre -litigation procedures. The applicable claims handling procedures are outlined in the Purchase Documents you receive from the Neighborhood Builder, including the "Dispute Resolution" provision in Section 13.5 of the Master Declaration. A separate notice further describing claims handling procedures may have been recorded against the title to Homes by the Neighborhood Builder in some Neighborhoods. You should review any such notice and your Purchase Documents carefully concerning these issues. YOU ARE ADVISED THAT THE CONSTRUCTION CLAIMS STATUTE AFFECTS YOUR LEGAL RIGHTS. YOU ARE ADVISED TO READ THE STATUTE CAREFULLY AND SEEK LEGAL ADVICE IF YOU HAVE ANY QUESTIONS REGARDING ITS EFFECT ON YOUR LEGAL RIGHTS. Buyer Initials: / _32- 2544-33253TI-P42WISCLSM 609965.3 6/13/06 Buyer Initials Buyer Initials 86. Duty to Follow Maintenance Guidelines. An Owner is obligated by Section 907 of the Construction Claims Statute to follow any maintenance recommendations and schedules from the Neighborhood Builder, including the maintenance recommendations and schedules for manufactured products and appliances included with the Home, as well as all commonly accepted maintenance practices (collectively, "Maintenance Guidelines'. Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow any such Maintenance Guidelines may reduce or preclude an Owner's right to recover damages relating to an Owner's Home which could have been prevented or mitigated had the Maintenance Guidelines been followed. Buyer Initials Buyer Initials 87. Obligation to Retain Purchase Documents. The Purchase Documents that you receive through escrow in conjunction with the purchase of a Home may include Maintenance Guidelines, a written limited warranty, claim forms, and other documentation relating to the Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these documents and provide copies of such documents to an Owner's successors in interest upon the sale or transfer of the Owner's Home. Buyer Initials Buyer Initials 88. Warranty and Limitations on Liability. A Neighborhood Builder may provide a written limited warranty for the Homesite or Home covering certain defects for a limited period after the date the limited warranty commences. Warranty periods for items will vary as set forth in the written limited warranty. During the written limited warranty period, if any, the Neighborhood Builder will repair or replace, at the Neighborhood Builder's sole discretion, certain components of your Homesite or Home, as set forth in the written limited warranty. A written limited warranty generally does not cover defects resulting from the failure of an Owner to perform commonly- accepted maintenance. Minor expansion, contraction, settlement cracks normal to home construction, and secondary damage, are generally not covered under the terms of a written limited warranty. Please refer to the written limited warranty you may receive for additional information. No other warranties or guarantees, whether expressed or implied, are provided, unless stated in writing and signed by a Neighborhood Builder. The manufacturers' warranties for the manufactured consumer products included in your Home (for example, water heater, air conditioning system, dishwasher, garbage, disposal and other household appliances) are available for review in the Neighborhood Builder's sales office. 89. Notice of Sexual Offenders. Section 2079.10a of the California Civil Code: Buyer Initials: The following notice is given pursuant to -33- 2544-33253TU428\131SCLSM 609965.3 6/13/06 Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meeanslaw.ca.gov. Depending on an offender's criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides. 90. Prior to the purchase of a Home in the Community, you may research the database to determine whether there are sex offenders in the area. Master Developer, Neighborhood Builders, the Community Association and their respective directors, officers, employees, agents, representatives and consultants make no representations, warranties, or guarantees regarding the presence or absence of registered sex offenders within the Community or in the surrounding area. In addition, Master Developer, Neighborhood Builder, the Community Association and their respective directors, officers, employees, agents, representatives and consultants have no obligation or duty to investigate existing residents or buyers to determine whether they are sex offenders. You are solely responsible for making your own investigation. For further information, please contact your local law enforcement agency. Most law enforcement agencies have special stations to view the Megan's Law database. 91. Benefit of Home Ownership. Although the purchase of a new home has traditionally been considered a wise decision, Master Developer and Neighborhood Builder have made no representations, guarantees or warranties to you regarding the tax benefits, investment benefits or other benefits of home ownership, regarding appreciation or depreciation in the value or equity accrual in your Home, and regarding future price adjustments. 92. Assumption of Risk and Liability. By acceptance of this Disclosure, you assume all risk and liability for injuries to persons and property that may be sustained by you, your family members and your social and business guests by reason of all conditions or circumstances disclosed in this Disclosure. VISITING THE COMMUNITY BEFORE MOVE -IN If you wish to visit the Community, the Neighborhood and your Home before your move in, please be aware that your Home is located within a construction area and that construction sites are potentially dangerous. The Neighborhood Builder will permit you to enter your Home and the construction area surrounding your Home provided that you are fully aware of the risks of such entry and are willing to comply with the procedures and requirements imposed on such visit by the Neighborhood Builder. You must be accompanied by your sales representative, or another representative of the Neighborhood Builder on any and all visits to your Home. Each Neighborhood Builder further requests that such visits be limited to non -construction hours. By signing this Disclosure you acknowledge that there are numerous risks associated with visiting your Home during construction, including without limitation, open trenches, construction traffic, potential falling debris, exposed nails and electrical wiring, incomplete construction and certain other potential hazards. You further agree to use due care while visiting your Home. In addition, prior to visiting any construction area you may be required to sign a waiver and release form provided by the Neighborhood Builder ("Waiver') in which you agree to comply with the provisoes of the Waiver. Whether or not you have signed a Waiver, by signing this Disclosure, Buyer Initials: / -34- 254433253\CLP428\DISCLSM 609965.3 6/13/06 You agree that you shall proceed at Your own risk and you release and waive any claims against Master Developer Neighborhood Builders all of their affiliated entities, officers, directors, agents and assigns and all other persons or entities potentially liable to you as a result of an iniury which may occur during your visit to your Home, to the Neighborhood and to the Community. ENTIRE DISCLOSURE; NO OTHER REPRESENTATIONS No sales representative, employee or agent of any Neighborhood Builder or the Master Developer has the authority to make any representation to you which contradicts or modifies the matters and information set forth in this Disclosure, the purchase agreement or any other written disclosure provided by the Master Developer or Neighborhood Builders in connection with the purchase of a Home in a Neighborhood (collectively, the "Disclosure Documents'. You acknowledge that no representations have been made to you by such persons other than as set forth in the Disclosure Documents and upon which you have relied in connection with the purchase of the Home. Please indicate below if any representations have been made by any such person which contradict or modify the matters and information set forth in the Disclosure Documents: RELEASE AND INDEMNITY REGARDING DISCLOSURES With respect to items of information disclosed to you in this Disclosure or in any Disclosure Documents provided by Master Developer or Neighborhood Builders (collectively, "Disclosure Items"), you agree that you and your family members release, waive and will not make any claims against Master Developer and Neighborhood Builders for (a) nondisclosure of Disclosure Items, (b) for alleged improper or incomplete Disclosure Items, and (c) personal injury, property damage, expenses (including attorney fees and costs) and other liability you, your family members and others experience from the nondisclosure, improper disclosure or incomplete disclosure of Disclosure Items. You also agree that you will indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns, harmless from all such claims by you, your family members and your social and business guests. Buyer Initials Buyer Initials [Buyer Acknowledgment on following page] Buyer Initials: 1 -35_ 2544-33253TI.P42MISCISM 609965.3 6/13106 Columbus Square HOMEBUYER DISCLOSURE STATEMENT B l ,W� I ./ _ 1 1 -1N By the signatures below, you acknowledge that you will close escrow with full knowledge, understanding and agreement as to all of the information contained in this Disclosure, and that this Disclosure constitutes a part of the terms of your Home purchase. Buyer: Date: Homesite or Condominium Tract No: Street Address: Buyer Initials: / _36_ 2544-33253\CLP426\DISCLSR\609965.3 6/13/06 Columbus Square HOMEBUYER DISCLOSURE STATEMENT Meriwether • Camden Place The Gables • Astoria • Coventry Court Cambridge Lane • Kensington Court • verandas August 2006 Welcome to Columbus Square. We are pleased you are considering the purchase of a new home in Columbus Square. We want you (the "Buyer's to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned community of Columbus Square ("Community's, located in the City of Tustin. We offer this Homeowner Disclosure Statement ("Disclosure's as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Disclosure has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Disclosure is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Disclosure. In addition to this Disclosure, the City of Tustin has required that the Master Developer provide you with a Columbus Square Homebuyer Notification (the "Homebuyer Notification"). The Master Developer prepared the Homebuyer Notification with information provided by the City of Tustin; at the direction of the City of Tustin and do not have the right to alter or update the Homebuyer Notification. To the extent any of the information provided in the Homebuyer Notification is inconsistent with the information provided in this Disclosure, this Disclosure shall supersede that portion of the Homebuyer Notification. By signing this Disclosure, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different times to familiarize yourself with the Community, its location and its surroundings. You will receive many documents in addition to this Disclosure to review, complete and sign before the Close of Escrow for the purchase of your home. These other documents are called the "Purchase Documents" in this Disclosure, and they include documents pertaining to the Community, defined below as the "Community Association Governing Documents". This Disclosure is not intended as a substitute for your review of the Community Association Governing Documents. This Disclosure does not amend, modify or supersede the Community Buyer Initials: / _l_ 2544-33257\CLP428TISCI—M 609965.4 8111/06 Association Governing Documents. If the Community Association Governing Documents are inconsistent with this Disclosure, the Community Association Governing Documents will supersede this Disclosure. Unless defined in this Disclosure, capitalized terms used in this Disclosure have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Community Declaration"). If the Community Declaration gives the same capitalized term a different meaning than this Disclosure, the meaning given in the Community Declaration shall apply. INTRODUCTION TO THE MASTER DEVELOPER Moffett Meadows Partners, LLC, a Delaware limited liability company, is the initial Master Developer of the Columbus Square master -planned community ("Master Developer'l. INTRODUCTION TO COLUMBUS SQUARE 1. Location and Master Plan. The Community is east of Interstate 55 near the intersection of Edinger Avenue and Redhill Avenue, in the City of Tustin (the "City"). The master land -use plan approved by the City of Tustin for the Community is called the MCAS Tustin Specific Plan (the "Specific Plan's and it contains numerous design standards and development conditions. Such conditions establish, among other things, the number of single family dwellings and condominiums and other development requirements. If developed as approved by the City, Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 single family dwellings, 552 condominiums and 240 senior housing condominiums. The actual number of Homes built may increase or decrease subject to approval by the City. All Homes in the Community are planned to be subject to the jurisdiction of the Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association'l, as described in the Community Declaration, INTRODUCTION TO COLUMBUS SQUARE'S NEI( AND NEIGHBORHOOD BUILDERS 2. Neighborhoods. The Cormnunity is being developed with Homes in numerous distinct neighborhoods ("Neighborhoods'l constructed by various homebuilders ("Neighborhood Builders'l. Neighborhood Builders may have owner occupancy restrictions, rental Homesites and Homes (each of which is defined below), and investor-owned Homesites and Homes. You are advised to read the individual Neighborhood Builder disclosures and any other documentation relating to the Neighborhood in which you choose to purchase a Homesite or Home thoroughly. Neighborhood Builder policies may differ from those described in this Disclosure and the Community Declaration and are enforceable by the applicable Neighborhood Builders. The following is a list of the different Neighborhoods to be developed by the Neighborhood Builders in the Community and the approximate number of Homes to be constructed in each Neighborhood; provided that that any product may be renamed or sold by the Neighborhood Builder currently listed below and the Neighborhood Builders reserve the right not to build the Neighborhoods listed below at all: NEW Buyer Initials; / -2- 2544-33253\CLP428\DISCLSR\609965.4 8/11/06 (a) Lennar Homes of California, Inc. • Meriwether 114 Homes • Camden Place 222 Homes • The Gables 84 Homes • Coventry Court 240 Homes (b) William Lyon Homes, Inc. • Astoria 102 Homes • Cambridge Lane 156 Homes • Kensington Court 60 Homes • Verandas 97 Homes 3. Ownership. A residential Lot in the Community is referred to as a "Homesite" in this Disclosure. If you are purchasing a residential Lot in the Community, upon the Close of Escrow, you will receive fee title to a Homesite, which will be improved with a single family dwelling (a "Home'. If you are purchasing a Condominium in the Community, upon the Close of Escrow, you will receive fee title to a Unit and you will also receive easements for maintenance and use over Exclusive Use Areas (collectively, a "Home'. If you purchase a Homesite, you will not own the mineral, oil, and gas rights under the land below a depth of five hundred (500) feet, or the water rights. The holder of these rights has no right of surface entry. COMMUNITY ASSOCIATION GOVERNING DOCUMENTS Your Home will be subject to the following documents ("Community Association Governing Documents"): (a) The Community Declaration, and any amendments or modifications thereto; (b) The Articles of Incorporation of the Columbus Square Community Association ("Community Association'; (c) The Bylaws of the Community Association; (d) The Supplemental Declaration of Covenants, Conditions and Restrictions ("Supplemental Declaration's that is applicable to the Neighborhood in which your Home is located, and may annex that Neighborhood to the coverage of the Community Declaration; and (e) Any Community Guidelines or Design Guidelines which_ may be adopted from time to time, respectively, by the Community Association's Board of Directors or the Design Review Committee ("Committee") pursuant to the Community Declaration. You should carefully review the Community Association Governing Documents in order to understand your specific rights and obligations as an Owner in the Community. The Community Association Governing Documents establish limits and restrictions on the use of the Huym Initials! / _3_ .2544-33253\CLP428\DISCLSR\ 609965.4 8/11/06 Home you are purchasing. You will also be provided with a preliminary title report. The title report will list other recorded documents affecting the use of the Home you are purchasing. You should review the title report and the documents referenced in the report closely prior to your purchase of a Home. SPECIFIC PROVISIONS OF THE COMMUNITY DECLARATION 4. Assessment Obligation. The Community Declaration authorizes the Community Association's Board of Directors to levy a Common Assessment against each Home to meet the Community Association's Common Expenses. The Board of Directors is also authorized to levy various special assessments for specific purposes, in conformance with Articles I and Vill of the Community Declaration. The monthly installment of the Common Assessment will vary as each Phase of the Community is developed. You should review the Budget approved by the California Department of Real Estate and provided to you with the Final Subdivision Public Report for your Home. The Board of Directors' ability to increase the Common Assessments and improve additional special assessments without a vote of the Members is subject to certain limitations set forth in Sections 8.5 and 8.6 of the Community Declaration. The Community Association is obligated to provide you with an annual budget and other financial statements for the Community Association. 5. Use Restrictions. You must comply with all the various use restrictions set forth in the Community Declaration. These restrictions include, among other things, restrictions on non-residential uses of your Home, keeping of animals, improvements to your Homesite and Home, parking of vehicles, etc. The Community Association has the power to enforce the use restrictions set forth in the Community Declaration, as well as the Community Guidelines and the Design Guidelines.. 6. Prohibited Dwelling Structures. You may not use your garage as a living area. Further, in accordance with Section 2.7 of the Community Declaration, you may not erect or use any outbuilding, tent, shack, storage shed, trailer, camper, motor home, recreational vehicle or any other vehicle on your Homesite for a living area, 7. Use of Garages. All vehicles owned or operated by or within the control of an Owner and kept in the Community must be parked in the assigned parking space or garage of that Owner; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Section 2.4.3 of the Community Declaration and Exhibit PGI attached thereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted within the Community except in an enclosed garage when the garage door is closed; provided, however, that such activity may not be undertaken as a business, and provided further that such. activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. 8. Parking of Recreational and Commercial Vehicles. Sections 2.4.1, 2.4.2 and 2.4.3 of the Community Declaration impose limitations and prohibitions on the parking of: Authorized Vehicles and Prohibited Vehicles within the Community. In accordance with Section 2.4.6 of the Community Declaration, an Owner may park any Authorized Vehicle that Buyer Initials: _ / 4- .2544-33253\CLP428\DISCLSR\ 609965.4 8/11/06 exceeds seven (7) feet high, seven (7) feet wide, and nineteen (19) feet long in the Owner's garage or driveway (as long as the Authorized Vehicle does not extend onto the sidewalk or drive approach area). In addition, no delivery and/or moving trucks larger than forty (40) feet are permitted on any private drive having less than a twenty-five (25) foot radius that is located within a Neighborhood in the Community. You further acknowledge that it is your responsibility to determine whether the parking provided in the Community and your Neighborhood is satisfactory for your purposes and to verify that the standard height and depth of the garage will provide adequate clearance for your vehicles before the Close of Escrow on your Home. 9. Owner Maintenance Guidelines. As set forth in Section 9.1.1 of the Community Declaration, each Owner must maintain his Home and Homesite in a neat and attractive condition at all times. The maintenance of all areas located within the boundaries of a Homesite is the responsibility of each Owner. The Neighborhood Builders will provide you with important guidelines on the proper maintenance of improvements in your Homesite. Failure to properly maintain interior improvements may cause premature deterioration of important features, finishes or equipment. The Neighborhood Builders are not responsible for failure of equipment or other improvements caused by your failure to properly maintain such improvements. In addition, you acknowledge that some upgraded materials, if any are selected by you, may have specific maintenance requirements. The Neighborhood Builders are not responsible for any damages that may occur to such materials due to your failure to properly maintain them. 10. Insurance. In accordance with Article IX of the Community Declaration, you are solely responsible for determining the type and quality of insurance required to adequately insure your Homesite and Home, your personal property, and your personal liability for ownership of your Homesite and Home. You are solely responsible for determining if natural disaster insurance is required for your Homesite and Home. If any insurance is required by your lender, you are responsible for obtaining that insurance prior to Close of Escrow. 11. Design Review of Improvements and Alterations. You may not build, construct, install or plant any improvements on your Homesite (or alter any improvements located on your Homesite, including your Home), until you have submitted plans and specifications and obtained approval from the Design Review Committee, as set forth in Article V of the Community Declaration. The Design Review Committee will establish Design Guidelines containing rules and guidelines for the submission of plans and specifications. The Design Review Committee may collect a fee to review the plans. All Improvements must comply with any applicable restrictions in the Community Declaration and the Design Guidelines, as well as with all requirements imposed by the City and any other local governmental agency. The Design Guidelines and City and other local governmental agency regulations may change from time to time, and you will be subject to the regulations in effect at the time plans are submitted. After obtaining written approval of the Design Review Committee, you must submit the plans and specifications to the appropriate local governmental agencies for any proposed improvements that require the issuance of a building permit, or other approval by the City or any other local governmental agencies, as applicable. You should read Article V of Buyer luirials: ! _j_ 2544-33253\CLP428\D19CLSR\609965.4 8/11/06 the Community Declaration before constructing any Improvements. You may be subject to a Neighborhood Association Design Review Committee if you live in a Condominium project. (a) Landscaping and Irrigation Improvements, All landscape materials and irrigation systems installed by Owners must comply with plans and specifications approved by the Design Review Committee. You may need to install yard drains when installing landscaping and patios. Your landscaping plans are required to conform with the original drainage plan of the Homesite. Changes to drainage and grading require approval of the Design Review Committee and generally require you to obtain a permit from the City, as applicable. The slope areas, if any, located on a Homesite may include drainage facilities and temporary erosion control measures. No modifications to the slope areas shall be undertaken without the prior approval of the Design Review Committee and the City, as applicable. (b) Landscaping Completion Deadline. Section 2.18 of the Community Declaration requires you to install landscaping on any portions of your Homesite that have not been landscaped by a Neighborhood Builder. Landscaping in the front yard of a Homesite must be completed within six (6) months after the Close of Escrow for the purchase of the Homesite and landscaping in the back yard of a Homesite must be completed within one (1) year after the Close of Escrow for the purchase of the Homesite. The time period for the completion of such improvements is set forth in the Community Declaration. (c) Owner Liability. Any alterations or Improvements made by you to your Homesite, to its drainage pattern or to the Home shall be made at your sole risk. The Neighborhood Builders assume no responsibility for any damage caused by the design, construction, installation, alteration or maintenance by you of any Improvement on the Homesite, or caused by the impact of such an Improvement on the Homesite's drainage pattern. (d) Licensed Professionals. If you wish to alter or install any Improvement on your Homesite, you should obtain the advice of a licensed architect or civil, soil or structural engineer, as applicable, and should design and complete the alteration or installation of the Improvement in accordance with such licensed professional's advice and specifications. 12. Drainage. Section 2.14 of the Community Declaration contains important restrictions concerning drainage of water and water pollution. (a) Surface Water. The Master Developer and Neighborhood Builders have provided for surface and underground drainage of water from all Homesites and Homes in the Community. Your Homesite may have surface "swales" or area drains to carry the water from the rear and sides of the Home to the street or other designated outlet points. The Homesites and Homes are graded in accordance with plans approved by the City and certified by a registered civil engineer. In connection with the preparation of landscape plans for your yard, it is important that you consider any possible harmful effects that such landscaping and associated Improvements may have on adjacent property and structures as well as your Homesite and Home, Because the Community and your Homesite are located in an area which may contain expansive soils as more particularly explained in the Paragraph below entitled "Soil Conditions," water may have a detrimental impact upon such soils and the soils of surrounding Homesites and Buyer Initials! / _6_ 254433253\CLP428\DISCLSR\ 609965.4 S/11/06 slopes. Existing drainage patterns must be maintained and all drainage systems must be kept free of debris and free flowing. (b) Effect of Improvements and Alterations. Raising the existing grade, constructing planters, changing the drainage pattern and other similar activities may cause damage to your Homesite, adjacent property (including, without limitation, your neighbor's Homesite, adjacent slopes and lower Homesites) and Improvements located thereon, including the Home. It is recommended that you consult with a licensed professional on landscaping and drainage, such as a qualified landscape architect and soils engineer, geotechnical engineer, geologist, civil engineer or other similar specialist, before making any alterations. Any Improvements must be designed and constructed in a manner to prevent any possible damage to your Homesite and to adjacent property. If any obstruction occurs to the drainage on your yard, it may result in obstruction of drainage from adjacent property or cause major problems such as trapped water or flooding which may undermine the foundation of your Home and surrounding Homes or create moisture intrusion or mold and mildew problems. You are solely responsible for any damage to your Homesite and Home or surrounding property and the Improvements located thereon as a result of any alterations you make to the approved existing drainage pattern or failure to maintain proper drainage. The Master Developer, Neighborhood Builders and Community Association shall have no liability or responsibility for any such damage. Any grading or drainage modifications are subject to applicable codes of the City, approval by the Design Review Committee, and the terms of any drainage easements that may be of record. You acknowledge and understand that if your Homesite or Home does not include area drains, you shall be responsible for installing area drains on your Homesite or Home when installing your landscaping. Your responsibilities for maintaining all grading and other drainage -related features on your Homesite and Home are set forth in Section 2.14.1 of the Community Declaration. (c) Water Quality Management Requirements. The Master Developer and Neighborhood Builders are developing the Community and Neighborhoods in accordance with a water quality management plan ("Plan") required by the California State Water Quality Control Board. The Plan imposes requirements for the design, implementation and maintenance of Best Management Practices (`BMPVto eliminate or mitigate all non -storm water discharges into storm drains during and after construction of the Community and Neighborhoods. The requirements imposed by the Plan are in addition to any local ordinances with regard to discharge of non -storm water into storm drains. The Plan imposes post -construction requirements. This means that after the Close of Escrow, you and your sub -contractors and other agents, are required to comply with all BMPs which are necessary to prevent, without limitation, run-off of soil, sand, sediment, oil, gasoline or other hydrocarbons, paint, fertilizers, pool chemicals and other household chemicals into the storm drains located in your Neighborhood. For example, when fertilizing landscaping, measures must be taken to prevent over -watering the landscaping to ensure that fertilizer and other lawn chemicals do not run into the storm drains. Your Neighborhood Builder will provide you with a Best Management Practices Handbook containing BMP recommendations for the prevention of run-off into storm drains from your Homesite and Home. The Plan affirmatively obligates all Owners to take immediate corrective action whenever there is a violation of the Plan as to an Owner's Homesite or Home. Penalties include Buyer Initials: / -7- 2544-33253\CLP428WI8CLSR\ 609965.4 8/11/06 significant fines that may be imposed against an Owner for failing to comply with BMPs necessary to prevent non -storm water run-off into storm drains, in violation of the Plan. 13. Utility and Other Easements. Article VII of the Community Declaration contains provisions pertaining to easements which may affect Owners and Homes. Your Homesite and Home may be subject to easements or other rights in favor of utility companies, local governmental agencies and other parties. These easements and rights may include access onto your Homesite or to exterior portions of the Home for purposes of installing, constructing, inspecting, maintaining and repairing facilities which are customary for residential developments (including, but not limited to, water lines, sewer lines, electrical lines and facilities, transformer boxes, natural gas pipelines, street lights, telephone lines and facilities, cable television lines, mailboxes, traffic signs, fire hydrants, etc.). These facilities and structures may be located above ground or below ground. In either case, the foregoing easements, rights and facilities may restrict the use and type of improvements you can make to your Homesite and Home, and the utility company, local government agency or other parties benefited by such easement or right may have the right to remove improvements made by you on the easement area without any obligation to repair or restore them. You should review the policy of title insurance, the tract map for your Homesite, Article VII of the Community Declaration, and the Supplemental Declaration to determine what casements and other rights, if any, affect your Homesite and Home. Such easements may preclude construction of structures or other improvements or may require an encroachment permit to be obtained. You should not excavate or construct an improvement on any portion of your Homesite, as applicable, until you have consulted with an applicable licensed design professional (for example, an engineer) and located all easements and facilities, A copy of the tract map depicting your Homesite is available for review in the sales office. The location of gas and electric meters, telephone and cable access panels may change from the locations shown in the models. Please ask your sales representative for information concerning the proposed location of utility facilities and structures for your Home. The Master Developer and Neighborhood Builders make no representations or warranties concerning the final location of these facilities or structures for your Home. 14. Pets. Household pets, such as dogs or cats, are limited to reasonable quantities as established in Section 2.5 of the Community Declaration. Buyers shall be liable for any unreasonable noise or damage (including, but not limited to, clean up after such animal(s)) caused by any animal brought or kept upon the Community and Neighborhoods as more fully described in the Community Declaration. 15. Window Coverings. In accordance with Section 2.16 of the Community Declaration, the Design Guidelines and Community Guidelines may prohibit or restrict certain types of window coverings such as paint, foil, reflective tint or other similar materials or substances, and may permit certain types of temporary window coverings pending installation of permanent window coverings. 16, Walls and Fences. Wall and fence heights may vary throughout the Community and your Neighborhood. Walls and fences are subject to change, at any time and without notice to you, from any depiction that may have been provided or shown to you. Section 9.1.4 of the Community Declaration sets forth Owner's wall maintenance responsibilities. Owners are responsible for maintenance of all portions of the walls and fences that border the perimeter of Huyerinitials: / _$_ 2544-33253\CLP428\DlSCLSR\609965.4 8/11/06 the Homesite, including any pilasters located on an Owner's Homesite, except for those portions that are designated for maintenance by the Community Association or a Neighborhood . Association. You should review the Community Association Governing Documents for further information. Community Walls, Neighborhood Walls and/or Party Walls (all as defined in the Community Declaration) may be installed on the property line(s) of your Homesite (collectively, the " Walls'% as shown as Exhibit 9W attached to the Connnunity Declaration, Neighborhood Declaration or a Supplemental Declaration. Owners must maintain any portion of the Walls not otherwise maintained by the Community Association or a Neighborhood Association. Master Developer, Neighborhood Builders and the Community Association are not responsible for damage to any Wall on the Homesite if such damage results from your failure to properly maintain the Walls. 17. Solar Energy Systems. Pursuant to Section 2.17 of the Community Declaration, you and all other Owners of Homesites in the Community have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar energy systems ("System"). The installation and maintenance of any System by you shall be subject to all applicable ordinances and zoning regulations of the City, the Uniform Building Code and associated ordinances. California has a strong public policy in favor of solar energy needs of a neighbor, including but not limited to the location and height of trees on your Homesite. You must obtain written approval from the Design Review Committee prior to installation of a System and you must comply with reasonable restrictions placed on the System by the Design Review Committee, subject to California Civil Code Sections 714 and 714. 1, as the same may be amended from time to time. 18. Satellite Dishes. Satellite dish antennas (or Authorized Antennae, as defined in the Community Declaration) may be installed and used in the Community in accordance with Section 2.11 of the Community Declaration. However, Master Developer and Neighborhood Builders have provided no assurances or guarantees that ;my satellite dish or other antenna installed within the Community will remain unobstructed or that satellite service will be provided to an Owner after installation of an Authorized Antennae. You should understand that broadcast signals may be obstructed by the installation of additional improvements within and outside of the Community including, without limitation, homes, walls, fences, trees and other landscaping and such obstructions may not allow for acceptable satellite reception. You should also understand that Neighborhood Associations may impose additional restrictions. 19. Amendments to the Community Declaration. Notwithstanding the fact that you have received a copy of the Community Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions. . 20. Additional Provisions. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq, of the California Civil Code and the Federal Fair Housing Act codified at Title 42 United States Code, Section 3601 et seq., which may supplement or override the Community Association Governing Documents. The Master Developer, Neighborhood Builders and Community Association make Buyer Initials: / -9- 2544-33253\CLP428\DISCLSa\ 609965.4 8/11/06 no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. COLUMBUS SQUARE DISCLOSURES 21. Charitable Endowment Fee. A recorded Charitable Housing Agreement Imposing Endowment Fee On Transfer ("Agreement'l affects your Home and the other Homes in the Community. The Agreement requires that an "Endowment Fee" equal to one -twentieth of one percent (0.05%) of the total sales price (0.0005 x total sales price) be paid each time a Home in the Community is transferred to a new owner. The Endowment Fee will be paid to Lennar Charitable Housing Foundation, a California nonprofit public benefit corporation ("Foundation'% to be used for the purposes described in the Agreement. When you close escrow for the purchase of your Home, you will pay the Endowment Fee to the Foundation. Thereafter, each time your Home is resold, the Endowment Fee must be paid at the close of escrow, but it may be paid either by the new buyer or the then current seller. The Agreement will be in effect for an indefinite period of time. 22. Affordable Housing/Transitional Housing. The City of Tustin has required the Master Developer and Neighborhood Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units") within the Community. Sixty-three (63) Affordable Housing Units will be located in the Camden Place Neighborhood, fifty (50) Affordable Housing Units will be located in the Cambridge Lane Neighborhood, and one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court). Certain of these Affordable Housing Units will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Homes subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. If you are interested in the Affordable Housing Units you should consult your sales representative for further information. 23. "Active Adult" Neighborhood. An "Active Adult Neighborhood," the Coventry Court, consists of age restricted residences located within the Community. In Coventry Court, each Home must be occupied by at least one resident who is at least 55 years of age. Coventry Court is a community consisting of approximately 240 Homes and has its own recreational facilities and activities. All assessments for the maintenance of these recreation facilities are the exclusive responsibility of the Coventry Court residents. As a result, the recreational facilities located within Coventry Court are not open to other Owners in the Community; provided, however, Coventry Court residents will have the right to use the recreational facilities located throughout the Community. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. 24. Home Business Use. Any Home within the Community may be used for home based business purposes, provided that such use is subject to the City of Tustn's Home Occupation Ordinance (if applicable), the provisions in Section 2.1 of the Community Declaration and the Community Guidelines. You are advised that the Community Declaration and the Community Guidelines may contain stricter restrictions than those in the City Ordinance Buyer Inifials: 2544-33253\CLP428\n1SCL8R\609965A 8/11/06 and that such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses in your Home. 25. MCAS Tustin. (a) Prior Use as MCAS Tustin. You are advised that the Community was previously used as the Tustin Marine Corps Air Station ("MCAS Tusdh'�. The Marine Corps and the Department of the Navy ("DON") are the responsible agencies for the Installation Restoration Program ("IRP"). The IRP is a comprehensive environmental investigation and cleanup program formed to identify, investigate and clean up chemical and nuclear contamination that has resulted from past land use operations. When MCAS Tustin was an active base, it received a permit from the California Department of Toxic Substances Control ("DTSC'j pursuant to the Federal Resources Conservation and Recovery Act ("RCRA'1(42 U.S.C. 6901 et seq.) to store hazardous waste on portions of the base. One of the conditions of that permit was to perform "corrective action" to clean-up releases of hazardous waste constituents throughout the base. Although the permit has expired, these corrective action obligations continue, and the DON is undertaking environmental investigation and cleanup activities on portions of the former base that are within the Community. (b) Asbestos Containing Material. Hazardous material in the form of asbestos or asbestos -containing materials ("ACM's have been found and are otherwise presumed to exist in buildings and structures previously located in the Community. At such time as demolition of the prior existing buildings on the Community containing ACM was completed, the appropriate governmental regulatory agency confirmed that ACM had been removed from the buildings and any necessary soil remediation had been conducted in accordance with all applicable federal, state and local laws and regulations. (c) Easement for Environmental Remediation. An easement over the Community granted to the United States of America, acting by and through the Department of the Navy ("DON'S in a document entitled "Quitclaim Deed for Marble Mountain Parcel and Environmental Restriction Pursuant to Civil Code Section 1471," was recorded on March 11, 2003, as Document No. 200300263521. In connection with ongoing remediation on the DON's property within the Community, it was agreed, as a covenant running with the land, that the DON and its officers, agents, employees, contractors and subcontractors shall have the right, upon reasonable notice, to enter the Community when a response or corrective action is found to be necessary or when such access is necessary to carry out a response action or corrective action. The right for the DON to enter the Community shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or corrective action as required or necessary, including, but not limited to, monitoring wells, pumping wells, treatment facilities, and the installing of associated utilities. In exercising these rights of access, except in the case of imminent and substantial endangerment to human health or the environment, the DON shall give reasonable notice of any action to be taken related to such Buyer Initials; / _jj_ 2544-33253\CLP428\DISC:5R\609965.4 8/11/06 remedial or corrective actions on the Community. Further, the DON will make reasonable efforts to minimize interference with the on going use of the Community and act in good faith to minimize any conflict between the necessary environmental investigation and remediation activities and the use of the Community. The DON is not required to restore or repair any Improvements in the Community damaged as a result of this right to access the Community. If any Improvements on Association Property are damaged as a result of the DON's access to the Community, you are advised that any such damaged Improvement may be repaired or replaced by the Community Association and you may be charged a Reconstruction Assessment or Extraordinary Assessment (if applicable). (d) Groundwater Plume. The City Environmental Impact Report (1999) ("EIR'� indicates the presence of subsurface plumes of chlorinated volatile organic compounds ("VOCs', dissolved trichloroethene ("TCE") and methyl tertiary -butyl ether ("MTBE") at ground water level in portions of MCAS Tustin located outside the Community. It is presently unknown whether and to what extent these contaminants will migrate towards the Community. According to the EIR, estimated human health risks associated with residential use of groundwater from the plumes are above the acceptable limits of the United States Environmental Protection Agency. Master Developer and Neighborhood Builders make no representations or warranties with respect to the plumes described above or whether such plumes will migrate into the groundwater under Community. 26. LIFOC PROPERTY/ENVIRONMENTAL CONDITIONS. Due to its prior use as a military base, certain areas within the Community, designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W" (collectively, the "LIFOC Property'% are owned by the United States of America ("U.S. Government's and will ultimately be annexed into the Covered Property pursuant to Section 16.6 of the Community Declaration. (a) Prior Use of the LIFOC Property. That portion of the LIFOC Property identified as IRP -13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA") and as a "Miscellaneous Wash Area" ("MWA'�. The TSA consisted of two (2) buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad. That portion of the LIFOC Property identified as IRP 13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, batter acid and solvent were stored. (b) Release of Volatile Organic Compounds. As a result of the historic use of the LIFOC Property, hazardous substances have been released into the groundwater at the LIFOC Property. Volatile Organic Compounds ("VOCs' , including trichloroethylene ("TCE'� and 1,2,3 Trichloropropane ("1,2,3 TCP', were found in groundwater at concentrations that could result in adverse effect to human health if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. Buyer Initials: / -12- 2544-33253\CLP429\DISCLSR\ 609965:4 S/11/06 (c) Remedial Action Plan. As a result of the release of hazardous substances at the LIFOC Property, various remedial activities have occurred at the LIFOC Property and will continue to occur until remediation goals have been achieved. In October 2004, the Department of Navy issued a report entitled "Final Record of Decision/Remedial Action Plan, Operable Unit IA, Former Marine Corps Air Station, Tustin, California", which describes the specific remedial action plan ("RAP'S that has been approved for IRP 13S to address groundwater contamination. In August 2005, the Department of Navy published a report entitled "Draft Feasibility Study Report for Operable Unit 4B [includes IRP 13W), Former Marine Corps Air Station, Tustin, California," ("Feasibility Study's which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil a OU -4B sites... therefore, soil remediation..." was not addressed in the Feasibility Study. A final groundwater remedial action plan has not yet been selected for IRP 13W. (d) Deed Restrictions. Deed restrictions will ultimately be recorded on all or a portion of the Homesites or Homes in the Community lying within the LIFOC Property, and will limit certain activities on such Homesites or Homes. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the LIFOC Property to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. (e) Documentation Relating to the Release and Remediation Activities. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the LIFOC Property. The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the LIFOC Property: (i) Draft Feasibility Study Report For Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005 (Bechtel Environmental, Inc., August 2005); (ii) Final Record of Decision/Remedial Action Plan Operable Unit IA, Former Marine Corps Air Station, Tustin, California (Department of Navy, October 2004); (iii) Final Feasibility Study Report, OU-lA, Marine Corps Air Station, Tustin, California (Bechtel Environmental, Inc., August 2003); and (iv) Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California (Department of Navy and City of Tustin, December 1999). You should carefully review these reports before making a decision to buy a Home in the Community. Copies of the reports are available for review at either (1) BRAGS Environmental Coordinator's Office, Library Building 307, MCAS El Toro, telephone (949) 726-5398 or (2) City of Tustin, Department of Community Development, 300 Centennial Way, Tustin, CA 92780, telephone (714) 573-3100. The Master Developer and Neighborhood Builders make no representations or warranties with respect to the LIFOC Property and the Buyer Initials: / -13- 2544-3325MCLP428USCLSM 609965.4 8/11/06 environmental conditions described above or in the reports. Due to the fact that groundwater in the Community has been found at depths of six (6) to twenty-five (25) feet below the ground surface, as described below, you are advised to avoid eating any fruit from trees with deep root systems in the Community or drinking any groundwater, and to keep your children and animals away from such fruit and groundwater. (f) The following items have been indicated in the EIR as affecting portions of MCAS Tustin that are outside of the Community. These items are not expected to impact the Community, and are listed in this Disclosure for your information only. Master Developer and Neighborhood Builders make no representations or warranties as to any future impact these items may have on the Community or Residents using public parks and other areas outside the Community. (i) Former crash drill site area; (ii) Former skeet ranges; (iii) Transformers containing polychlorinated biphenyls (PCBs); (iv) Buildings formerly on property containing lead based paint; (v) Moffit Meadow fire fighting trenches and crash crew burn pits; (vi) 7P-5 pipeline, currently classified as out of service; and (vii) Petroleum hydrocarbons in subsurface soil. If you have any questions or concerns about environmental activities at MCAS Tustin or the Community, please contact the Local Redevelopment Authority at the City of Tustin or visit the United States Naval Facilities Engineering Command's internet website at www.efdsw.nav,fac.navy.inil/EnvironmentaV.rustin.btin. 27. Prior Agricultural Use, The Community is located on or near lands that are or were previously used for agricultural purposes, including farming operations. By reason of such agricultural use, you may be subject to dust, noise and odors and may be exposed to pesticides, herbicides, insecticides and other chemicals. By acceptance of a deed to a Home, you on your own behalf, and on behalf of the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept these existing and future impacts and forever waive any and all causes of actions against the Master Developer, Neighborhood Builders and Community Association and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 28. Private Recreational Center. The Community is planned to include a private recreational center (the "Center'. The Center is planned to include swimming and wading pools, spas and recreational building and other recreational facilities. While the Center is planned to be private and only open to Owners and guests in the Community, the public will have access to the open space areas surrounding the Center and some outdoor recreational Buyer Initials; / _14_ 2544-33253\CLP426\DISCLSR\609965.4 S/11/06 facilities in the Open Space/Park Areas. All persons using the Center are required to use caution and to watch their children at all times to prevent drowning and other injuries. The Community Association may, from time to time, promulgate rules for use and operation of the Center, including reasonable hours of operation. Owners and other residents living in the area of the Center will most likely experience and otherwise be subject to or inconvenienced by noise and pedestrian and vehicular traffic in the areas surrounding the Center. 29. Natural Hazard Zone Disclosures. Your Neighborhood Builder will provide you with a Natural Hazard Disclosure Statement in compliance with Section 1103 of the California Civil Code that discloses whether your Home is located in a seismic hazard zone. (a) Earthquakes. California is subject to a wide range of earthquake activity. California has many known earthquake faults as well as yet undiscovered faults. While the Community is not located in an Alquist Priolo Earthquake Zone, earthquakes are always a possibility. You must evaluate the potential for future seismic activity that may seriously damage your Homesite and Home. A major earthquake, which some have predicted will occur in our lifetimes, could cause very serious damage to Homes located even many miles from the epicenter of the earthquake. A more moderate earthquake occurring on a more minor fault, or on an as yet undiscovered fault, could also cause substantial damage. For more information, read "The Homeowners Guide to Earthquake Safety" which explains the various geological hazards associated with earthquakes and contains information on planning ahead for earthquakes, as well as what to do during and after an earthquake. Master Developer and Neighborhood Builders make no representations or warranties as to the degree of earthquake risk in the Community. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. (b) Seismic Hazard Zones. Many portions of California are subject to risks associated with seismic activity. Areas that meet the definition of "Seismic Hazard Zone" in the Seismic Hazards Mapping Act (California Public Resources Code Section 2690, et seq.) are shown on maps that are prepared and released by the California Department of Conservation, Division of Mines and Geology. Such zones may pose an increased risk of damage to property from earthquakes and liquefaction. "Liquefaction" is the process by which water -saturated soils become unstable under heaving shaking and thereby jeopardize foundations and other structures. The Master Developer has been informed that all or a portion of the Community is located within a Seismic Hazard Zone. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. For more information concerning seismic activity and risks, read "The Homeowner's Guide to Earthquake Safety." (c) Area of Potential Flooding. The Master Developer has been informed that the Community is located within an Area of Potential Flooding (or Dam Inundation Zone) pursuant to applicable maps. The Office of Emergency Services is required to designate areas within which personal injury or death would, in its determination, result from the partial or total failure of any dam. These areas of potential flooding, as defined in the California Emergency Services Act (California Government Code Section 8984.4, et seq.), are shown on maps released by the Office of Emergency Services, copies of which are also on file with the City. These maps are updated periodically, and the Master Developer, Neighborhood Builders and Community Association make no representations, guarantees or warranties with respect to any future dam Buyer Initials: / _15_ 2544-33253\CL1'428\DISCLSR\609965A 8/11/06 inundation zone determinations. The Community is downstream from the Santiago Creek Dam, an earthfill dam approximately one hundred and thirty-six (13 6) feet high which has a capacity of 25,000 acre feet of water. Santiago Creek Dam is jointly owned and maintained by the Serrano Irrigation District and the hvine Ranch Water District. Information about the Santiago Creek Dam can be found on the California Department of Water Resources website: http://cdec.water.ca.gov/misc/resinfo.html. Please contact the Office of Emergency Services for further information concerning Areas of Potential Flooding. 30. Soil Conditions. In purchasing your Home, you should review soils reports for the Community, available for review at the City, and take into consideration the following: (a) Expansive Soil. According to the soils report, soil in the Community is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other Improvements, you should advise your consultants that designs must accommodate soils with expansion potential. In addition, you should consider the following information and recommendations before making or modifying any Improvements. (b) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs.. Block walls may require extra horizontal and vertical steel reinforcing bars. (c) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Community by the Master Developer and Neighborhood Builders should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by the Master Developer and Neighborhood Builders designed to serve more than the (1) Home should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. (d) Fill Soil. Homes in the Community may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. A soils report certifying the compaction of fill soils is available for review at the City. Buyer Initials:. / _16_ 2544-33253\CLP428\DI8CL3R\609965.4 6/11/06 (e) Corrosive Soil. Soils in some areas of the Community are potentially severely corrosive to buried concrete and ferrous metals. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, you must use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on your Homesite. Overwatering soil will exacerbate the corrosivity of the soil. You should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. (f) Groundwater. Groundwater has been encountered in portions of the Community at depths of six (6) to twenty-five (25) feet below the ground surface. You may not dig or drill on any Homesite to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. (g) Pools/Spas. Prior to designing any pool, spa, or other similar amenity, it is recommended you consult with a licensed civil engineer to determine the depth of the water table under your Homesite to insure that your Improvements are compatible with the depth of the water table and that they will not disturb or come in contact with the groundwater during a rainy season. The Master Developer and Neighborhood Builders make no guarantee that any Homesite has the ability for pool or spa installation. Homesites 242 through 245, inclusive, of Tract No. 16581, which are located within the LIFOC Property, have been determined to be unsuitable for installation of pools, spas or other similar amenity. The deeds for these Lots will contain deed restrictions that prohibit the use of the Lots for such purposes. (h) Soils Professionals. Before starting a pool or spa or any patio, concrete or other flatwork on the Homesite, you should consult with a licensed soils engineer to ensure that such work is constructed correctly in light of current soils conditions. Although consulting with a soils professional may add substantially to the cost of installation of improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking in improvements. (i) Interior Gases and Other Contaminants. The aging process of soil and natural soil elements, as well as the aging of man-made building materials, may create unwanted and undesired gases and other contaminants in Homes, both new and previously occupied. In addition, a lower rate of air exchange between outdoor and indoor environments has resulted from modern construction techniques which comply with energy conservation requirements enacted by the State of California. A lower air exchange rate can result in the build-up of unwanted gases and other contaminants in varying degrees. As the quality of the air we breathe can affect our health, you should frequently air out your Home by opening the windows. 31. Post -Tension Concrete System. Your Home may have been built using a post - tension concrete system ("System'J. If any portion of your Home has been constructed using the System, a placard or stamp will be placed in the garage signifying the existence of such System. The System involves placing steel cables under high tension in the concrete slab located beneath the Home. Therefore, any attempt to alter or pierce the foundation (for example, sawing, cutting or drilling) could damage the integrity of the System and cause serious injury or damage to persons and property. The Master Developer and Neighborhood Builders shall not be Buyer Tnitish: -17_ 2544-33253\CLP428\DISCLSR\609965.4 8/11706 responsible for any damage or injury resulting from or arising in connection with the alteration of the slab or foundation of any Home. By acceptance of a deed to a Home, you agree that: (i) you shall not cut into or otherwise tamper with the System; (ii) you shall not knowingly permit or allow any other person to cut into or tamper with the System so long as you own any interest in the Home; (iii) you shall disclose the existence of the System to any person who rents, leases or purchases your Home; and (iv) you shall indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns free and harmless from any and all claims, damages, losses or other liability (including attorneys' fees and costs) arising from any breach of this covenant. 32. Reclaimed Water. In its efforts to conserve water, the Irvine Ranch Water District (the "Wafer District') requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The Water District may require the use of reclaimed water to irrigate landscaping in private yards. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable water. The water used to irrigate the Association Property may include reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. The Master Developer, Neighborhood Builders and Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. You are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 33. Air Quality. Southern California is subject to Stage I smog alerts. You should take advantage of the Air Quality Management District's ("A.Q.M.D.'� forecasts to plan your outdoor activities to avoid peak pollution by checking your television, radio or daily newspapers to find out if unhealthful air quality is expected. For more information, you can also call A.Q.M.D. at 1 -800 -CUT -SMOG (1-800-288-7664) or check their website at www.aomd.gov. By acceptance of a deed to a Home, you (for and on your behalf, and the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept the existing and possible future impacts, of smog on yourself and your family and forever waive any and all causes of actions against the Master Developer and Neighborhood Builders and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. . 34. Wind. All of Southern California is subject to periods of high winds. Wind speeds in the Community may exceed that experienced in other areas of the surrounding region. You must ensure that any structures or other Improvements you install on your Homesite are constructed or designed to withstand high winds. You are advised to consult with experienced Buyer Initials: ! -18- 2544.33253\CiP428\DISCLSR\609965A 8/11/06 architects and engineers in the design and specification of any structures or Improvements that you plan to add. 35. Private Streets. All of the streets within the Community are private streets. Maintenance and repair of the private streets is the responsibility of the Community Association or the Neighborhood Associations, as applicable. 36. Building Setbacks. Construction of Itnprovements in the yard of any Homesite such as pools, spas, patio covers, BBQ, fountains, trellises and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning the construction of any Improvements to your Homesite, 37. Boundaries. You may not rely on any written or oral statements by Master Developer, Neighborhood Builders or their agents regarding the exact boundaries of your Homesite or Home or whether any wall or fence has been or will be constructed exactly on the boundaries of your Homesite. 38. Square Footage Representations. Representations of square footage are approximate only. You may not rely on any written (brochures and other sales documents) or verbal statements by Master Developer, Neighborhood Builders or their agents regarding the exact square footage of your Homesite or Home. The computation of square footage varies based on the criteria used. You agree by acceptance of a deed to a Home to hold the Master Developer and Neighborhood Builders harmless in any dispute arising over any representations concerning the square footage of your Homesite or Home. TAXES AND ASSESSMENTS 39. Supplemental Real Property Taxes. The California law requires real property to be revalued whenever it changes ownership or when improvements are newly constructed. After the Close of Escrow for your Home, the County of Orange Tax Assessor ("Assessor") will determine a new taxable value for your Home based on current market values. The property tax will increase and you will receive one or more supplemental tax bills depending upon the time of the year in which Escrow closed for the purchase of your Home. Master Developers and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of any supplemental tax bills. The following notice is given pursuant to Section 1102.6c of the California Civil Code: "California property tax law requires the Assessor to revalue real property at the time the ownership of the property changes. Because of thin law, you may receive one or two supplemental tax bills, depending on when your loan closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account, the supplemental tax bills will not be paid by your lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If Buyer Initials: / _19_ 2544-33253\CLP428\DISCLSR\609965.4 8/11/06 you have any question concerning this matter, please call your local Tax Collector's Office." Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of the supplemental tax bill. You hereby acknowledge, accept and agree that neither Master Developer, Neighborhood Builders nor any of their authorized agents, representatives, employees or sales people have made any representations or warranties respecting the amount of the supplemental assessment or the assessed value. Should you have any questions or concerns relating to the supplemental assessment, you agree, prior to the Close of Escrow, to consult with the County Assessor or your legal or other advisors to satisfy such questions or concerns. 40. Estimated Taxes. You have been provided with an estimate of your assessments. THE AMOUNT OF ASSESSMENTS ARE ESTIMATES ONLY, and are based on current information provided by the City, County or those public or private agencies responsible for the administration for the districts. These assessments may INCREASE or DECREASE, based upon changes in real property tax law; the district(s) may dissolve; formation of new districts may occur, an extension of the districts or the services to the districts and other factors NOT IN MASTER DEVELOPER'S OR NEIGHBORHOOD BUILDER'S CONTROL may transpire. The amount of special taxes may appear on your property tax bill or may be billed separately, 41. Special Tax Assessment Districts. All or a portion of the Community lies within o the boundaries of the following Special Tax and Assessment Districts: (a) Community Facilities District No. 06-1. Several Neighborhoods in the I Community are located within the boundaries of City of Tustin Community Facility District No. h 06-1 ("CFD No. 06-1'� which was formed for the construction and maintenance of public Do improvements, including, but not limited to, street improvements, parkway and landscaping, Qa storm drains, utilities, public parks, public libraries and fire protection facilities. If your Home is —G� located within CFD No. 06-1, your Home will be subject to any taxes, assessments and 3 ° obligations associated with CFD No. 06-1. You will be provided with a Notice of Special Tax Zi for CFD No. 06-1. This Notice contains important information about district functions, your oobligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in �j the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. (b) Tustin Unified School District Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of Tustin Unified School District Community Facility District No. 06-1 ("TUSDCFD No. 06-1'l which was formed for the construction and maintenance of elementary, middle and high school facilities 3 and any improvements in connection with such facilities. If your Home is located within TUSDCFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with TUSDCFD No, 06-1. You will be provided with a Notice of Special Tax for Buyerinitials: - / _20- 2544-33257\CLP428\DISCLSR\609965A 8/11/06 TUSDCFD No. 06-1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. l44 -t ` _ LGA ?"KA 'i( Cf) (c) Proposed Tustin LLD. Master Developer currently intends to form favi nA _ YGIA landscape and lighting maintenance assessment district with the City of Tustin ("Proposed City "Ve LLD"). The Proposed City LLD is expected to be formed to pay for the maintenance of public Vt"A*yl street lighting, landscaping and park maintenance within the Proposed City LLD area. kmewt -40 (c (d) Recreation and Improvement Maintenance District. The Irvine Unified School Dlslict has formed a recreation and improvement maintenance district which is an annual assessment for maintenance of public sports/playfields. Please contact David Taussig & Associates, telephone (949) 955-1500 for additional information. The Neighborhood Builder will provide you with disclosures entitled "Notice of Special Tax" ("Notice") prior to entering into a contract to purchase a Home. These Notices will inform you of the special tax and assessment districts that apply to your Home. The Notices will also contain a detailed description of the special tax calculation, important information about functions and rights of the special tax and assessment districts, your obligations, and who to contact for additional information about the special tax and assessment districts. You should thoroughly understand the information contained in the Notices prior to entering into a contract to purchase a Home. You will have five days after the Notice is delivered by mail, or three days after its delivery in person, to terminate the contract to purchase by giving written notice of that termination. All Homes will be subject to annual special taxes levied by one or more of the special tax and assessment districts listed above. Not all special tax or assessment districts listed above will apply to your Home. These special taxes will be a continuing lien on your Home and will be billed to you with the annual real property tax bill issued by the County Assessor. The lien of these special taxes will continue until the obligation is satisfied. If you fail to pay a special tax when due, the assessment districts may exercise their right to foreclose on your Home. Information concerning the estimated amount of the annual special tax on your Home for the special tax and assessment districts is available from the City and County. 42. Changes in Special Taxes. The amount of any special taxes disclosed to you are estimates only, and are based on current information provided by the City, County or other public or private agencies responsible for the administration of special tax districts. Special taxes may increase or decrease, based upon the terms of the special tax lien, changes in real property tax law, the dissolution of special tax districts, the formation of new special tax districts, extension of special tax district(s), changes in services by the districts and other facts not in Master Developer's or Neighborhood Builders' control. The amount of special taxes may appear on your real property tax bill or may be billed separately. Buyer Initials': / -21- 2544-33253\CLP428\nISCLSR\ 609965.4 8/11/06 ADJACENT AREA DISCLOSURES 43. Adjacent Property Disclosures. The land adjacent to the Community within the MCAS Tustin Specific Plan has a variety of land use designations. The land use designations are subject to change. Therefore, the type of future development adjacent to the Community cannot be predicted with accuracy. 44. MCAS Specific Plan. MCAS Tustin was realigned and closed on July 2, 1999, in accordance with Base Realignment and Closure Act. The Department of Defense recognized the City of Tustin as the Lead Agency or Local Redevelopment Authority ("LRA' for preparation of the required reuse planning documents in late 1991. The MCAS Tustin Specific Plan/Reuse Plan (the "Plan") includes detailed planning, policies, regulations, implementation strategies and procedures necessary to guide the reuse and development of the site into the next century. Since implementation of the Plan will be a long- term process and there are unique circumstances associated with converting military bases to civilian uses, the Plan is intended to be practical in economic terns and visionary in terms of its ability to create and respond to future market opportunities. This means that it must provide sufficient guidance to provide investors with a high confidence level that their investments will be protected. At the same time, it must offer sufficient flexibility to respond to changing market conditions. A careful balance between certainty and flexibility underlies the provisions of this Plan. The Plan is intended to serve as both a policy -oriented and regulatory document. The Plan has been submitted to the Department of Defense as a policy guide outlining the intended reuse for the Community. Subsequently, the Plan will be adopted by the Tustin City Council as the zoning for the Community. The Plan may also be amended one or more times by the City of Tustin. The Plan is one device for implementing goals and policies of the Tustin General Plan, The Plan also contains the development and reuse regulations that constitute the zoning for the Community. As a federal installation, MCAS Tustin was not subject to local zoning and planning requirements, Upon conversion to civilian use, the former MCAS Tustin property will be under the jurisdictional authority of either the City of Tustin or the City of Irvine, as applicable, and will be subject to local codes and ordinances. The City of Irvine has assigned responsibility for preparation of the Plan (and accompanying joint Environmental Impact Statement/Environmental Impact Report) to Tustin for that portion of the Plan area within Irvine. However, the City of Irvine will have to adopt any General Plan and zoning changes necessary to implement the provisions of the Plan within the City of Irvine. The land uses described in the Plan for the area covered by the Plan include, but are not limited to, Low -High Density Residential, Transitional and Affordable Housing, Golf Resort Living, Commercial Business and Retail, and Institutional/Recreational designations such as Parks, Trails and Schools. Also recommended were applications by the Orange County Sheriffs Department, City of Tustin and County of Orange Social Service Agency. Buy"Initials: ! -22- 2544-33253\CLP428\1)ISCLSR\609965.4 9/11/06 The Master Developer and Neighborhood Builders have no control over the Plan, changes to the Plan, or development of the area covered by the Plan in accordance with the Plan. For further information, you should review the Plan. The Plan and information regarding the development of the Plan is available for review at the office of the Local Redevelopment Agency, City of Tustin. 45. The District. The District is a proposed one million square foot outdoor shopping center to be located approximately one and one-half (I f2) miles southwest of the Community, at the comer of Jamboree Road and Barranca Parkway. The District is planned to include, among other businesses, several retail stores, a grocery store and a movie theater, The District will result in increased noise and traffic in and around the Community, particularly along Jamboree Road and Barranca Parkway. Neither Master Developer, Neighborhood Builders nor the Community Association have any control over the use or maintenance of the District or its impact on the Community. 46. Rail Corridor/ Metrolink Station. As disclosed in the Homebuyer Notification, there is a rail corridor ("Corridor") located to the north of the Community. There is also a Metrolink station ("Station'l located to the north of the Community at 2975 Edinger Avenue, Tustin, CA 92780. The impact of the Corridor and Station may include, without limitation, increased noise, light and vibration levels in the vicinity of the Community. The Corridor and Station could be an attractive nuisance to children and animals who may wish to play in the vicinity of the rail corridor. The Master Developer, Neighborhood Builders and the Community Association have no control over the use, maintenance or care of the Corridor or Station. You acknowledge and understand that you are responsible for keeping your children and animals away from the Corridor and Station and the danger that is inherent around the Corridor and Station. You should evaluate the impact of the Corridor and Station on your decision to purchase a Home in the Community. 47. Temporary Sewer Lift Station. A temporary sewer lift station will be constructed within the vicinity of the Community. It is located at the northeast comer of pr" Kensington Drive and Valencia North Loop Road and will serve a portion of the Community V ers� o Jl -t>Ctid until such time the master infrastructure is completed to connect your Homesite or Home to the sCwt"� main sewer lines. The lift station will be installed below -grade and will be owned d-�f lvY Conn¢ci&ru maintained by the Irvine Ranch Water District. Owners of Homes near the lift station may .4e experience experience an increase in noise and dust leve s in the area of the lift station during the VLA- .Miv►1• construction period and less significant noise le els after completion. Owners may encounter tvdud&A I Kewok J some odors in the areas near the lift station. You cknowledge, understand and agree that neither "CoVAYU4W the Community Association nor the Neighborho Builders will have any control over the use, maintenance or care of the lift station. prior ve. V"L; e.n re{re neer9. K4.0e,r bE4efol•not' ^0� IRV�C�, 48. Areas Outside the Specific Plan. The MCAS Tustin Specific Plan, which is bounded by Edinger Avenue, Redhill Avenue, Barranca Parkway and Harvard Avenue has the following surrounding uses. (a) Edinger Avenue; Buyer Initials:. A rail corridor and Metrolink station (described above) are located along _23- 254433253\CLP428\DISCLSR\609965.4 8/11/06 (b) A business park, commercial and industrial areas, sports park and utility power lines are located along Barranca Parkway; (c) Adjacent to the west side of Warner Avenue exists a Southern California Edison easement with high voltage transmission lines and usages by a wholesale plant nursery and public storage facility; and (d) A Southern California Edison easement area with high voltage transmission lines, landscaped areas available for public access and residential neighborhoods are located along Harvard Avenue. The Master Developer, Neighborhood Builder and the Community Association have no control over development outside of the Community. 49. Airport Proximity Disclosure. The Community is located within what is known as an airport influence area (as defined in California Civil Code Section 1353) surrounding John Wayne Airport, John Wayne Airport is located approximately 3.6 miles southwest of the Community at the (405) San Diego Freeway and MacArthur Boulevard in the City of Santa Ana. For that reason, the Community may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the Community before you complete your purchase and determine whether they are acceptable to you. John Wayne Airport has noise abatement procedures in place, but there is no guarantee that these procedures will lessen the impacts on the Community of noise and vibrations caused by aircraft using this airport or that these noise abatement procedures will continue in the future. Further information is available from the airport website: www.ocair.com. Your Neighborhood Builder will provide you with a separate airport proximity notice required by California Civil Code Section 1353. 50, Avigation Easement. An avigation easement has been recorded against the Community. The avigation easement establishes a permanent right to travel through the air space over the Community for the benefit of John Wayne Airport. You may notice noise and vibration from overflying aircraft approaching or leaving the airstrip. By accepting a deed to a Home in the Community, you understand that the avigation easement gives the users of the airstrip a perpetual legal right to fly over the Community without interference from the occupants of the Community. 51. Residential Developments. There are existing single-family residential developments adjacent to the northern, eastern and western boundaries of the Community. In addition to increased automobile and pedestrian traffic resulting from the proximity of these residential developments to the Community, the solitude of a Home's yard area may be significantly impacted by the proximity, height and design of multi -story, residential buildings constructed on property adjacent to the Community. The Master Developer and Neighborhood Builders have no control over the proximity, height and design of such nearby buildings and make no representation on the future impacts that these residential developments will have on residents of the Community. Buyer Initials; / -24- 2544-33253\CLP428\DISCLSR\ 609965.4 8/11/06 52. Commercial/Industrial Property. The Community is located within the vicinity of property zoned for commercial and heavy industrial uses. This area consists of, among others, a Waste Management Public Recycling/Transferring Station, asphalt recycling, trucking facilities and multiple concrete companies, all with product deliveries. These commercial and industrial properties may generate dust, offensive odor, noise and other effects. The Master Developer and Neighborhood Builders have no control over the existing or potential uses of this property. These uses may create light, noise and other nuisances twenty-four (24) hours a day, seven (7) days a week. 53, Elementary School, The Tustin Unified School District owns an elementary school site located to the southeast of the Community. Owners and other residents within the Community may experience, among other things, glare from bright lights, noise and increased traffic and parking congestion in connection with the use of this site. There are no assurances if or when any school will be completed on the site, nor the type of facilities that may be included as part of the school, You should contact the Tustin Unified School District at (714) 730-7301 for more information. Master Developer, Neighborhood Builders and the Community Association make no representations as to the future use of this school site. 54. Development Area. The Community lies in a rapidly expanding area. As future commercial and residential developments are built in and around MCAS Tustin, you may expect attendant limitations on solitude and inconveniences. For example, you can expect to hear noise from the development of future adjacent residential and commercial areas and the machinery used to develop these areas. You can also expect increased traffic and rerouting of traffic as new residential and commercial developments are constructed, nearby streets and major thoroughfares are widened and new streets are built. As the area around the Community develops, you may experience light entering your Home from exterior sources including streetlights, parking lot lighting and nearby residential and commercial buildings. The Master Developer, Neighborhood Builders and the Community Association have no control over the transmission of noise, light, vibration, odor and other impacts or their potential effects on Homes in the Community, including any which may be a direct result of current and future construction activity. 55. MCAS Tustin Airship Hangars. Two (2) airship hangars ("Hangars' are located within MCAS Tustin southwest of the Community. The hangars are each approximately one thousand (1,000) feet long, three hundred (300) feet wide, and one hundred and seventy (170) feet tall. The view from your Home may be effected by the nearby presence of the Hangars. It has not been determined whether these Hangars will remain or be demolished, or what uses might be made of them, For further information regarding the Hangars, please contact the City of Tustin. 56. Future Fire Station Site. The Community is located adjacent to a future fire station site at the comer of Edinger Avenue and West Connector Road. The fire station will operate twenty four (24) hours a day and seven (7) days a week. Owners whose Homes are located in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advise that Master Developer and Neighborhood Builders have no control over the operation or use of the fire Buyer Initials: / _Zj_ 2544-33253\CLP42S\DISCLSR\609965.4 S/11/06 station. You should carefully evaluate the impact of the fire station on your decision to purchase a Homesite or Home in the Community. 57, Village Services. The Community is located northwest of an area designated in the Plan as the Village Services area. When and if built, this area is intended to be accessible to both vehicle and pedestrian traffic, and to provide localized commercial retail and service uses to adjacent residential areas within the Plan area. 58. Learning Village/Transitional and Emergency Housing. The Community is located east of an area designated in the Plan as the Learning Village area. When and if built, this area is intended to provide a specialized educational environment with a variety of public - serving uses. GENERAL DISCLOSURES 59. Neighborhood Model Homes. Neighborhood model homes reflect typical exterior elevations, floor plans and methods of construction, and also illustrate possibilities for future interior decoration and exterior landscaping and hardscape improvements. Your Home will not necessarily conform to any model shown. The exterior elevations, architectural treatments, floor plans and colors shown on the master plot plans on display at the office of each Neighborhood Builder may be different than those both displayed in the models and those actually constructed by the Neighborhood Builder. Additionally, window locations, window types, roof lines, architectural projections and other similar features vary by elevation and Home location, and not all of the features displayed in the models may be included in your Home. The models have also been professionally decorated to show various decor ideas. Decoration items such as furnishings, draperies and other window treatments, any window tinting, wallpaper, custom carpet, coordinated paint, built-in shelves, beams, certain lighting fixtures (including halogen lighting), special ceiling treatments and some mirrors are for display purposes only, and are not included in the purchase price for your Home. Entries, walkways and driveways are shown in a variety of materials to show design ideas; however, for your Home, they will be constructed using only standard concrete. The hardscape shown in the model complex may not depict what may be constructed in all locations. Additionally, landscaping for the models is greater in density and type than any landscape package offered by a Neighborhood Builder. If not expressly included in the purchase price for your Home in writing by a Neighborhood Builder, the rear, side and front yard landscaping is your responsibility. The type of plants, and the size and density of the landscaping in the yards of the models are merely intended to suggest ideas to you. Certain models may also include hardscape items (patio slabs, patio covers, pools, spas, etc.) which are not included in the purchase price of your Home. All such options and upgrades displayed in the models (including decorator items, landscaping and hardscape) are not included in the purchase price for your Home unless expressly agreed to in writing by the Neighborhood Builder. You should consult your sales representative for additional information regarding non-standard items used in the model homes. 60. Extended Use of the Model Complex. Each Neighborhood Builder reserves the right to use one or more Homes in a Neighborhood as a sales office and model home complex, and to display signs and banners, in connection with its program of marketing and selling Homes Buyer Initials: / -26- 2544-33253\CLP428\DISCLSR\ 609965.4 8/11/06 in the Neighborhood as well as other Homes owned by Neighborhood Builders, even if they are located in separate and unrelated Neighborhoods. 61. Grading Variations. Your Homesite has been graded to City specifications and may vary significantly from other Homesites. Variations may include slopes, swales, drains, flood control channels and retaining walls as required. Any changes made to the grading of the Hon which your Home is located may significantly affect you or your neighbor's drainage pattern and cause significant property damage to your Home or a neighbor's Home. 62. Wall/Ceiling Heights. Wall and ceiling heights and configurations may vary significantly by elevation. Your Home's walls and ceiling heights may be different from those used in the model homes. You are encouraged to speak to a sales representative if you have any questions. 63. Right of Substitution. From time to time due to unavailability and other production considerations, it is necessary for a Neighborhood Builder to make substitutions of materials and other items used in construction of the Homes from those materials and items displayed in the models. Therefore, each Neighborhood Builder reserves the right to make any changes or substitutions as the Neighborhood Builder deems necessary or desirable to the color schemes, building materials, fixtures, appliances and other components of the Homes. The foregoing substitutions may include, without limitation, kitchen appliances, household fixtures, electrical outlets and switches, hardware, wall surfaces, painting and other similar items. Each Neighborhood Builder shall have the right to make the substitutions described above without adjustment to the purchase price of your Home. 64. Changes in Construction Plans. The construction, grading, drainage and improvement plans (collectively, the "Construction Plans') for Homesites and Homes within each Neighborhood all contain dimensions that are approximate. They are not intended to be precise dimensions with regard to the Neighborhood. Room dimensions and electrical outlet placement will vary slightly from models and from printed information. Construction will be performed in substantial conformance with the Construction Plans, but dimensions may change slightly from them. If there is a discrepancy between the Construction Plans and the actual as - built conditions of your Homesite or Home, the as -built conditions will control. The usable or buildable area, location and configuration of the Homesite and all improvements located thereon may fluctuate from that shown or displayed to you in the Construction Plans or any other drawings, topographic maps or models based upon a Neighborhood Builder's construction of final improvements including, without limitation, fencing and slopes, which shall be constructed in a Neighborhood Builder's sole and absolute discretion. The location, size, height and composition of all walls and fences to be constructed on your Homesite or Home or adjacent to your it shall be determined by the Neighborhood Builder in its sole and absolute discretion and despite the Construction Plans or any other models, drawings or topographic maps displayed to you. The Neighborhood Builder makes no representations, warranties or assurances as to the size, height, location or composition of any wall or fence to be constructed on or adjacent to your Homesite or Home. The Construction Plans are subject to change at any time without notice or obligation. Buyer Initials: I _27_ 2544.33253\CLP428\nISCLSR\609965.4 8/11/06 65. Non -Standard Construction. You may not personally perform any changes of any kind to your Home (such as alarm systems, home intercoms, stereo wiring, etc.) during construction and prior to the Close of Escrow. Such changes may void your warranty. Only those options and upgrades specifically agreed to by the Neighborhood Builder will be made. Any other changes and unapproved options found in a Home during the construction period will be removed by the Neighborhood Builder and the cost of removal and any repairs shall be your responsibility. 66. Changes In Development Plan and Prices. The residential real estate market continually fluctuates due to changes in economic, social and political conditions that directly affect the supply of and demand for housing. As a result, the development plan for the Neighborhood and the Community, and home prices and the terms and conditions of sale are also subject to change. Therefore: (a) With the exception of your Home, each Neighborhood Builder reserves the right at any time prior to or after the Close of Escrow for the sale of a Home and without notice, (i) to increase or decrease the sale price, adjust incentives or otherwise adjust the terms and conditions of sale for Homes in tbe'Neighborhood or in the Community, and (ii) change the number, size, location, elevation, design or type of homes constructed in current or future phases of development of the Neighborhood; (b) No Neighborhood Builder is obligated to offer you the same price, incentives or other terms and conditions of sale that the Neighborhood Builder has previously offered or may subsequently offer to another purchaser; (c) No Neighborhood Builder has either offered or agreed to any price protection or other similar commitment to you regarding the value or resale value of your Home (or any other property), and no Neighborhood Builder shall not have any obligation or liability whatsoever to you in the event any price changes directly or indirectly affect the value of your Home; (d) When you entered into a Purchase Agreement, the Neighborhood Builder may have owned other properties which may have been off the market and may not have been shown to or otherwise made available for purchase by you. No Neighborhood Builder has any obligation to notify you if any of such properties come on the market or are otherwise available for purchase or any obligation to notify you of any future properties the Neighborhood Builder may develop and make available for purchase. (e) You shall not hold a Neighborhood Builder responsible for any fluctuations in the purchase price of Homes within the Neighborhood or the Community. In consideration of a Neighborhood Builder's agreement to sell a Hosie to you, you agree that you shall have no claims against the Master Developer or the Neighborhood Builder for any possible change (decrease or increase) in the purchase price of Homes within the Neighborhood or any other terms of purchase, including, without limitation, upgrades or other concessions or incentives offered by a Neighborhood Builder to other purchasers of Homes within the Neighborhood and the construction of any additional floor plans on any of the Homes in the Neighborhood. Buyer Initials: / _Z$_ 254433253\CLP428\DISCLSR\609965.4 8/11/06 67. Use of Subcontractors. Neighborhood Builders generally perform construction through the use of subcontractors, and may not employ construction trades or workers. A Neighborhood Builder is not permitted to change its subcontracts without approval of the respective subcontractor; therefore, you may not request interior or exterior construction changes or alterations not otherwise offered to other purchasers in the sales office. 68. Elevation/Floor Plan Specifications. In order to provide architectural diversity in the street scene, each Neighborhood Builder's architect has produced more than one exterior design (elevation) for each floor plan. Consequently, differences may be noticed between the model home for your floor plan and the elevation of your Home. You acknowledge that you have received a description of the exterior configuration for the elevation and the exterior color scheme number for your Home, You also acknowledge that your Home's elevation and floor plan may vary from the configuration of the model home for your Home in terms of layout, sizes of certain rooms, exterior elevation features and other items such as sloped ceilings, veneer treatments, window locations and sizes, roof lines and color schemes. 69. Upper Floor Weight Limits. The upper floors of Homes are designed to support weight limits as outlined in the Uniform Building Code ("UBC'). If you currently own or are planning to purchase a waterbed, pool table or other heavy furniture you must confirm with the manufacturer that the weight introduced by these items does not exceed the UBC weight limit. Master Developer and Neighborhood Builders shall not be responsible for damage caused by anything you place on the upper floors that exceeds the UBC weight limit. 70. Air Conditioning. The air conditioning system and equipment specifications installed in the model homes may vary and operate at a higher capacity than those provided in your Home. You are encouraged to speak with your sales representative to determine the exact equipment specifications that will be provided with your Home. The location of the air conditioning compressor may vary between the model and your Home and between your Home and other Homes in your Neighborhood. 71. Alarm System. If you purchase an alarm system from a Neighborhood Builder, you specifically waive any claims against Master Developer, the Neighborhood Builder and the Community Association as a result of any failure of the alarm system to warn, frighten off, or alert anyone about intruders or any other problems. The sale of such system to you by the Neighborhood Builder is not a guarantee or warranty against criminal acts. Master Developer, the Neighborhood Builders and the Community Association are not insurers against criminal acts. 72. Energy Conservation. Homes in the Community meet or exceed the energy conservation standards that are a part of Title 24 of the California Administrative Code. Each Neighborhood Builder is required to design and install heating and cooling units that meet strict guidelines in Title 24. This is an energy conservation law that is designed to help reduce the overall use of energy in your Home, Title 24 describes the amount of cooling capacity as well as the minimum efficiency ratings for each geographic location in the state. In complying with Title 24, the cooling units installed in your Home are designed for maximum efficiency. Due to the Title 24 geographic requirements, on extremely warm days your inside room temperature Buyer initials: / _29_ 254433253\CLP428\DISCLSR\609965.4 8/11/06 may be wanner than your thermostat selection. This is due to design restrictions imposed by Title 24, not any design or installation defect by the Neighborhood Builder or its contractor. 73. Water Conservation. Each Home in the Community is equipped with low flow fixtures and other equipment to aid in water conservation in compliance with the City's Conditions of Approval for the Neighborhood. 74. Gas Barbecue Stub. If a natural gas service line is stubbed -out to an exterior backyard wall of your Home, it is suitable only for use in connection with a gas barbecue. Any other use may result in a serious fire hazard. The Neighborhood Builder and Master Developer are not responsible for any damage resulting from your use of the exterior gas stub. 75. Stain Grade Material Discoloration. Natural hardwoods used for cabinets, doors, stair systems, moldings, etc,, are finished with stain and lacquer finish products which will change color over time. Color change may be the result of exposure to sunlight or weather, or simply the consequence of aging. Discoloration is not a defect. 76. Paint Discoloration. Certain portions of your Home, such as paint -grade cabinets, casework, moldings and interior doors, may be painted with oil-based enamel paint. Yellowing is common with oil-based enamel paints. Additionally, if your Home has white oil- based enamel paint -grade cabinets, yellowing will occur. 77. Variations In Natural Materials. Your Home may include various natural materials (e.g., wood products and/or stone products). Wood products vary in dimension, grain, color, moisture content, and performance when subjected to high moisture environments. Dimensional variations in the wood framing members (studs, plates, joists, rafters, and beams) or the required structural hardware connectors may show through the drywall and stucco finishes under certain lighting conditions. Wood panels and trim exposed timbers, rafters, and posts will require periodic painting. Wood exposed to weather will require more frequent painting. Consult the maintenance schedule included in your Homeowners Manual. Some of the natural characteristics of wood will show through the painted or stained finish. For example, there may be shades of white, red, black, grey or even green in areas. Mineral streaks may also be visible. This is caused by the irregularity of mineral absorption from one part of the tree to another. Grain patterns or texture will vary from even to irregular throughout your cabinetry. Similarly, granite and natural stone products are composed of various mineral contents. Marble is less dense and more porous than granite. Great care must be taken to prevent damage to marble and other stone products. You should follow the manufacturers' recommendations for cleaning and maintenance. Because these are natural products, they are subject to variation in color, veining, spotting, holes, cloudiness, texture and cracking. Some may vary significantly in filler and sheen. The samples in the sales office are actual pieces of natural stone which indicate general color and character; however, no two (2) pieces can be expected to match, even when taken from the same box. You should view the stone prior to purchase, and any questions regarding these materials must be resolved prior to installation. If replacement of natgral material tile or carpet is required, you understand and agree that a match with existing material cannot be guaranteed. 78. Brass Plumbing/Light Fixtures/Iiardware. Brass, bronze or other finishes have their limitations. In time, the protective lacquer may deteriorate from exposure to weather, Buyer Initials: ! -30- 2544.33253\CLP428T=LSR\609965.4 8/11/06 perspiration, cleaning agents, frequency of use and other factors, Tarnishing or excessive wear of these finishes is, therefore, not a defect, but a normal process which is unavoidable. Under the circumstances, these finishes cannot be guaranteed and products will not be repaired or replaced under the manufacturer's warranties for tarnishing or wear of finishes. 79. Drywall Panels and Finishes. Drywall panels are placed over the wall studs, joists, rafters and beams. Drywall is typically used to finish window openings. Drywall panels will not completely eliminate variations in the dimension and plane of wood framing members. Metal trim (i.e., corner bead) is used at corners, window edges, soffits and ceilings. They are designed to be filled with finish compounds. These trim metals provide a durable finish but cause the wall plane to "flare" at the metal edge. Panel joints and seams are taped and coated with finish compounds. Fasteners are coated with finish compounds to cover the small "dimple" in the surface of the drywall panel. Progressive applications of finish compounds are required to cover the joints, fasteners, and seams. In some cases, the normal finishing of these joints, fasteners, and seams will cause a subtle "bulge". When the finishing process is complete, the walls and ceilings receive a texture coat. In certain lighting conditions (up -lights placed close to the walls), irregularities and variations in the wall plane or intersection of vertical and horizontal panels may be evident. These variations are normal. 80. View. Master Developer, Neighborhood Builders, the Community Association and their counselors, agents, representatives or employees make no representations, warranties or promises concerning any view, present or future, that may be enjoyed from all or any portion of your Homesite or Home. The view from your Homesite or Home may change or may be fully or partially obstructed by (a) the construction of other homes, Improvements, structures, fences, walls and/or landscaping by Master Developer, Neighborhood Builders or other Owners within the Community, (b) activities and Improvements on real property outside the Community, and/or (c) the growth of trees and/or other vegetation within or outside the Community. You are advised that trees installed in the Community are generally smaller than they will be once mature and trees that do not block views when you purchase your Home may obstruct views as they grow. Master Developer and Neighborhood Builders make no representations or warranties with respect to any open space on property adjacent to your Homesite or Home, or the Community as a whole, whether this property is owned or controlled by Master Developer, Neighborhood Builders, government agencies or private property owners. 81. Warranties for Consumer Products. The manufacturers' warranties for the consumer products included in your Home (e.g., water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the sales office of your Neighborhood Builder, 82. Financing. This paragraph only applies if you are purchasing your Home from a Neighborhood Builder who is also a Lennar Family Builder and you are financing the purchase with Universal American Mortgage Corporation ("UAMC"). You will be required to provide UAMC with all documents necessary to obtain loan approval. UAMC may be affiliated with the Neighborhood Builder. You are not obligated to accept a loan from UAMC, but you may be required to submit documentation to UAMC to permit the Neighborhood Builder to determine whether it is likely that you will qualify to purchase the Home you desire. You may select your lender independently; however, if you select a lender other than UAMC, you must ensure that Buyer Initials: / _31_ 2544-33253\CLP428\DISCLSR\609965.4 8/11/06 the lender can meet the time limitations and requirements imposed on lenders in the Purchase Agreement. Master Developer and Neighborhood Builder have not reviewed or approved any lender's sales or marketing materials, and does not make any representations or warranties whatsoever regarding any matters set forth therein or your ability to obtain any financing under any particular terms. You are strongly encouraged to make your own independent evaluation of the rates and loan programs offered by all lenders, including UAMC. You understand that the interest rate and loan fees for the loan applied for will be determined at the time of the Close of Escrow and may be higher or lower than on the date you signed a purchase agreement for your Home. You also acknowledge that the interest rate and loan fees referenced on the loan application are approximate only and do not constitute a binding commitment. 83. Schools. The Community is currently located in the Tustin Unified School District, telephone: (714) 730-7301 (the "School District"). To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Due to the rate of population change, the school district may find it necessary to change boundaries and designated schools periodically, prior to or after your close of escrow. In addition, it is possible that school district boundaries may change and your children will be required to attend a different school district in the future. Master Developer and Neighborhood Builders have no control or responsibility for such changes should they occur, The Community is currently expected to be served by the following schools: Marjorie Veeh Elementary School (K-6) 1701 San Juan Street Tustin, California (714) 730-7544 A.G. Currie Middle School (7-8) 1402 Sycamore Avenue Tustin, California (714)730-7352 Tustin High School (9-12) 4321 1171 El Camino Real Tustin, California (714) 730-7414 To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the applicable school referenced above or the School District, or you can visit the School District's website at www.trlstin.k12.ca.us. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. 84. Mailboxes. Mailboxes in the Community may be clustered in groups as required by the United States Postal Service. The location of mailboxes and above -ground utility structures are determined by governmental agencies or utility companies, or both. You may not change the type of mailbox being used or the location. Master Developer and Neighborhood Buyer Initials: / -34- 2544-33253\CLP42MISCLSM 609965.4 8/11106 Builders reserve the right to modify such locations as may be dictated by field conditions without prior notice. 85. Residential Construction Legislation. California Civil Code Sections 895 through 945.5 ("Construction Claims Statute', went into effect on January 1, 2003. The Construction Claims Statute (a) delineates standards for how various components of your Home should be constructed and function, (b) limits the time frames for bringing various claims against the Neighborhood Builder to anywhere from one year to ten years (as listed in the Construction Claims Statute) after the Close of Escrow, (c) imposes an obligation on all Owners and their successors in interest to follow Neighborhood Builder's maintenance recommendations and schedules or other applicable maintenance guidelines, and (d) establishes a non -adversarial claims resolution procedure. Pursuant to Section 914 of the Construction Claims Statute, the Neighborhood Builder is permitted to elect to utilize the procedure in the Construction Claims Statute or its own alternate contractual pre -litigation procedures. The applicable claims handling procedures are outlined in the Purchase Documents you receive from the Neighborhood Builder, including the "Dispute Resolution provision in Section 13.5 of the Master Declaration. A separate notice further describing claims handling procedures may have been recorded against the title to Homes by the Neighborhood Builder in some Neighborhoods. You should review any such notice and your Purchase Documents carefully concerning these issues. YOU ARE ADVISED THAT THE CONSTRUCTION CLAIMS STATUTE AFFECTS YOUR LEGAL RIGHTS. YOU ARE ADVISED TO READ THE STATUTE CAREFULLY AND SEEK LEGAL ADVICE IF YOU HAVE ANY QUESTIONS REGARDING ITS EFFECT ON YOUR LEGAL RIGHTS. Buyer Initials Buyer Initials 86. Duty to Follow Maintenance Guidelines. An Owner is obligated by Section 907 of the Construction Claims Statute to follow any maintenance recommendations and schedules from the Neighborhood Builder, including the maintenance recommendations and schedules for manufactured products and appliances included with the Home, as well as all commonly accepted maintenance practices (collectively, `Maintenance Guidelines'. Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow any such Maintenance Guidelines may reduce or preclude an Owner's right to recover damages relating to an Owner's Home which could have been prevented or mitigated had the Maintenance Guidelines been followed. Buyer Initials Buyer Initials 87. Obligation to Retain Purchase Documents, The Purchase Documents that you receive through escrow in conjunction with the purchase of a Home may include Maintenance Guidelines, a written limited warranty, claim forms, and other documentation relating to the Buyer Initials: / -33- 254433253\CLP428\DISCLSR\ 609965.4 6/11/06 Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these documents and provide copies of such documents to an Owner's successors in interest upon the sale or transfer of the Owner's Home. Buyer Initials Buyer Initials 88. Warranty and Limitations on Liability. A Neighborhood Builder may provide a written limited warranty for the Homesite or Home covering certain defects for a limited period after the date the limited warranty commences. Warranty periods for items will vary as set forth in the written limited warranty, During the written limited warranty period, if any, the Neighborhood Builder will repair or replace, at the Neighborhood Builder's sole discretion, certain components of your Homesite or Home, as set forth in the written limited warranty. A written limited warranty generally does not cover defects resulting from the failure of an Owner to perform commonly- accepted maintenance. Minor expansion, contraction, settlement cracks normal to home construction, and secondary damage, are generally not covered under the terms of a written limited warranty. Please refer to the written limited warranty you may receive for additional information. No other warranties or guarantees, whether expressed or implied, are provided, unless stated in writing and signed by a Neighborhood Builder. The manufacturers' warranties for the manufactured consumer products included in your Home (for example, water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the Neighborhood Builder's sales office. 89. Notice of Sexual Offenders. The following notice is given pursuant to Section 2079.10a of the California Civil Code: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at raww.meEanslaw.ca.gov. Depending on an offender's criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides. 90. Prior to the purchase of a Home in the Community, you may research the database to determine whether there are sex offenders in the area. Master Developer, Neighborhood Builders, the Community Association and their respective directors, officers, employees, agents, representatives and consultants make no representations, warranties, or guarantees regarding the presence or absence of registered sex offenders within the Community or in the surrounding area, In addition, Master Developer, Neighborhood Builder, the Community Association and their respective directors, officers, employees, agents, representatives and consultants, have no obligation or duty to investigate existing residents or buyers to determine whether they are sex offenders. You are solely responsible for making your own investigation. For further information, please contact your local law enforcement agency. Most law enforcement agencies have special stations to view the Megan's Law database. Buyer Initials: / -34_ 2544.3325MCLP428DISCLSM 609965.4 8/11/06 91. Benefit of Home Ownership. Although the purchase of a new home has traditionally been considered a wise decision, Master Developer and Neighborhood Builder have made no representations, guarantees or warranties to you regarding the tax benefits, investment benefits or other benefits of home ownership, regarding appreciation or depreciation in the value or equity accrual in your Home, and regarding future price adjustments. 92. Assumption of Risk and Liability. By acceptance of this Disclosure, you assume all risk and liability for injuries to persons and property that may be sustained by you, your family members and your social and business guests by reason of all conditions or circumstances disclosed in this Disclosure. VISITING THE COMMUNITY BEFORE MOVE -IN If you wish to visit the Community, the Neighborhood and your Home before your move in, please be aware that your Home is located within a construction area and that construction sites are potentially dangerous. The Neighborhood Builder will permit you to enter your Home and the construction area surrounding your Home provided that you are fully aware of the risks of such entry and are willing to comply with the procedures and requirements imposed on such visit by the Neighborhood Builder. You must be accompanied by your sales representative, or another representative of the Neighborhood Builder on any and all visits to your Home. Each Neighborhood Builder further requests that such visits be limited to non -construction hours. By signing this Disclosure you acknowledge that there are numerous risks associated with visiting your Home during construction, including without limitation, open trenches, construction traffic, potential falling debris, exposed nails and electrical wiring, incomplete construction and certain other potential hazards. You further agree to use due care while visiting your Home. In addition, prior to visiting any construction area you may be required to sign a waiver and release form provided by the Neighborhood Builder ("Waiver") in which you agree to comply with the provisons of the Waiver. Whether or not you have signed a Waiver, by signing this Disclosure. you agree that you shall proceed at your own risk and you release and waive any claims against Master Developer Neighborhood Builders all of their affiliated entities, officers, directors, agents and assigns and all other persons or entities potentially liable to You as a result of an injury which may occur during your visit to your Home to the Neighborhood and to the Community. ENTIRE DISCLOSURE; NO OTHER REPRESENTATIONS No sales representative, employee or agent of any Neighborhood Builder or the Master Developer has the authority to make any representation to you which contradicts or modifies the matters and information set forth in this Disclosure, the purchase agreement or any other written disclosure provided by the Master Developer or Neighborhood Builders in connection with the purchase of a Home in a Neighborhood (collectively, the "Disclosure Documents'. You acknowledge that no representations have been made to you by such persons other than as set forth in the Disclosure Documents and upon which you have relied in connection with the purchase of the Home. Please indicate below if any representations have been made by any such person which contradict or modify the matters and information set forth in the Disclosure Documents: Buyer Initials: / -35_ 2544-33253\CLR428\l)ISCLSR\609965.4 8/11/06 RELEASE AND INDEMNITY REGARDING DISCLOSURES With respect to items of information disclosed to you in this Disclosure or in any Disclosure Documents provided by Master Developer or Neighborhood Builders (collectively, "Disclosure Items'), you agree that you and your family members release, waive and will not make any claims against Master Developer and Neighborhood Builders for (a) nondisclosure of Disclosure Items, (b) for alleged improper or incomplete Disclosure Items, and (c) personal injury, property damage, expenses (including attorney fees and costs) and other liability you, your family members and others experience from the nondisclosure, improper disclosure or incomplete disclosure of Disclosure Items. You also agree that you will indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns, harmless from all such claims by you, your family members and your social and business guests. Buyer Initials Buyer Initials [Buyer Aeknowledgu:ent on following page) Buyer Initials: / -36- 2544-33253\CLP428\DISCLSR\ 609965A 8/11/06 Columbus Square HOMEBUYER DISCLOSURE STATEMENT BUYER ACKNOWLEDGMENT By the signatures below, you acknowledge that you will close escrow with full knowledge, understanding and agreement as to all of the information contained in this Disclosure, and that this Disclosure constitutes a part of the terms of your Home purchase. Buyer: Date: Homesite or Condominium Tract No: Street Address: Buyer Initials: / .37_ 2544-33253\CLP428@ISCLSR\609965.4 8/11/06 Columbus Square HOMEBUYER DISCLOSURE STATEMENT Meriwether • Camden Place The Gables • Astoria • Coventry Court Cambridge Lane • Mirabella • Verandas March 2007 Welcome to Columbus Square. We are pleased you are considering the purchase of a new home in Columbus Square. We want you (the "Buyer") to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned community of Columbus Square ("Community"), located in the City of Tustin. We offer this Homeowner Disclosure Statement ("Disclosure's as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Disclosure has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Disclosure is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Disclosure. In addition to this Disclosure, the City of Tustin has required that the Master Developer provide you with a Columbus Square Homebuyer Notification (the "Homebuyer Notification'. The Master Developer prepared the Homebuyer Notification with information provided by the City of Tustin, at the direction of the City of Tustin and do not have the right to alter or update the Homebuyer Notification. To the extent any of the information provided in the Homebuyer Notification is inconsistent with the information provided in this Disclosure, this Disclosure shall supersede that portion of the Homebuyer Notification. By signing this Disclosure, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different times to familiarize yourself with the Community, its location and its surroundings. You will receive many documents in addition to this Disclosure to review, complete and sign before the Close of Escrow for the purchase of your home. These other documents are called the "Purchase Documents" in this Disclosure, and they include documents pertaining to the Community, defined below as the "Community Association Governing Documents". This Disclosure is not intended as a substitute for your review of the Community Association Governing Documents. This Disclosure does not amend, modify or supersede the Community Buyer Initials; / _l_ 2544-33253\CLP428USCLSM 609965.6 3/01/07 Association Governing Documents. If the Community Association Governing Documents are inconsistent with this Disclosure, the Community Association Governing Documents will supersede this Disclosure. Unless defined in this Disclosure, capitalized terms used in this Disclosure have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Community Declaration"). If the Community Declaration gives the same capitalized term a different meaning than this Disclosure, the meaning given in the Community Declaration shall apply. INTRODUCTION TO THE MASTER DEVELOPER Moffett Meadows Partners, LLC, a Delaware limited liability company, is the initial Master Developer of the Columbus Square master -planned community ("Master Developer'. INTRODUCTION TO COLUMBUS SQUARE 1. Location and Master Plan. The Community is east of Interstate 55 near the intersection of Edinger Avenue and Redhill Avenue, in the City of Tustin (the "City'o. The master land -use plan approved by the City of Tustin for the Community is called the MCAS Tustin Specific Plan (the "Specific Plan") and it contains numerous design standards and development conditions. Such conditions establish, among other things, the number of single family dwellings and condominiums and other development requirements. If developed as approved by the City, Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 single family dwellings, 552 condominiums and 240 senior housing condominiums. The actual number of Homes built may increase or decrease subject to approval by the City. All Homes in the Community are planned to be subject to the jurisdiction of the Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association', as described in the Community Declaration. INTRODUCTION TO COLUMBUS SQUARE'S NEIGHBORHOODS AND NEIGHBORHOOD BUILDERS 2. Neighborhoods. The Community is being developed with Homes in numerous distinct neighborhoods ("Neighborhoods' constructed by various bomebuilders ("Neighborhood Builders"). Neighborhood Builders may have owner occupancy restrictions, rental Homesites and Homes (each of which is defined below), and investor-owned Homesites and Homes. You are advised to read the individual Neighborhood Builder disclosures and any other documentation relating to the Neighborhood in which you choose to purchase a Homesite or Home thoroughly. Neighborhood Builder policies may differ from those described in this Disclosure and the Community Declaration and are enforceable by the applicable Neighborhood Builders. The following is a list of the different Neighborhoods to be developed by the Neighborhood Builders in the Community and the approximate' number of Homes to be constructed in each Neighborhood; provided that that any product may be renamed or sold by the Neighborhood Builder currently listed below and the Neighborhood Builders reserve the right not to build the Neighborhoods listed below at all: Guyer Initials: / -2- 2544-33253\CLP428\DISCLSa\ 609965.6 3/01107 (a) Lennar Homes of California, Inc. • Meriwether 114 Homes • Camden Place 222 Homes • The Gables 84 Homes • Coventry Court 240 Homes (b) William Lyon Homes, Inc. • Astoria 102 Homes • Cambridge Lane 156 Homes • Mirabella 60 Homes • Verandas 97 Homes 3. Ownership. A residential Lot in the Community is referred to as a "Homesite" in this Disclosure. If you are purchasing a residential Lot in the Community, upon the Close of Escrow, you will receive fee title to a Homesite, which will be improved with a single family dwelling (a "Home'. If you are purchasing a Condominium in the Community, upon the Close of Escrow, you will receive fee title to a Unit and you will also receive easements for maintenance and use over Exclusive Use Areas (collectively, a "Home'l. If you purchase a Homesite, you will not own the mineral, oil, and gas rights under the land below a depth of five hundred (500) feet, or the water rights. The holder of these rights has no right of surface entry. COMMUNITY ASSOCIATION GOVERNING DOCUMENTS Your Home will be subject to the following documents ("Community Association Governing Doeuments'�: (a) The Community Declaration, and any amendments or modifications thereto; (b) The Articles of Incorporation of the Columbus Square Community Association ("Community Associalion'�; (c) The Bylaws of the Community Association; (d) The Supplemental Declaration of Covenants, Conditions and Restrictions ("Supplemental Declaration's that is applicable to the Neighborhood in which your Home is located, and may annex that Neighborhood to the coverage of the Community Declaration; and (e) Any Community Guidelines or Design Guidelines which may be adopted from time to time, respectively, by the Community Association's Board of Directors or the Design Review Committee ("Committee's pursuant to the Community Declaration. You should carefully review the Community Association Governing Documents in order to understand your specific rights and obligations as an Owner in the Community. The Community Association Governing Documents establish limits and restrictions on the use of the Buyerinitials: / _3_ 2544-33253\CLP428\DISCLSR\609965.6 3/01/07 Home you are purchasing. You will also be provided with a preliminary title report. The title report will list other recorded documents affecting the use of the Home you are purchasing. You should review the title report and the documents referenced in the report closely prior to your purchase of a Home. SPECIFIC PROVISIONS OF THE COMMUNITY DECLARATION 4. Assessment Obligation. The Community Declaration authorizes the Community Association's Board of Directors to levy a Common Assessment against each Home to meet the Community Association's Common Expenses. The Board of Directors is also authorized to levy various special assessments for specific purposes, in conformance with Articles I and VIII of the Community Declaration. The monthly installment of the Common Assessment will vary as each Phase of the Community is developed. You should review the Budget approved by the California Department of Real Estate and provided to you with the Final Subdivision Public Report for your Home. The Board of Directors' ability to increase the Common Assessments and improve additional special assessments without a vote of the Members is subject to certain limitations set forth in Sections 8,5 and 8.6 of the Community Declaration. The Community Association is obligated to provide you with an annual budget and other financial statements for the Community Association. 5. Use Restrictions. You must comply with all the various use restrictions set forth in the Community Declaration. These restrictions include, among other things, restrictions on non-residential uses of your Home, keeping of animals, improvements to your Homesite and Home, parking of vehicles, etc. The Community Association has the power to enforce the use restrictions set forth in the Community Declaration, as well as the Community Guidelines and the Design Guidelines. 6. Prohibited Dwelling Structures. You may not use your garage as a living area. Further, in accordance with Section 2.7 of the Community Declaration, you may not erect or use any outbuilding, tent, shack, storage shed, trailer, camper, motor home, recreational vehicle or any other vehicle on your Homesite for a living area. 7. Use of Garages. All vehicles owned or operated by or within the control of an Owner and kept in the Community must be parked in the assigned parking space or garage of that Owner; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Section 2.4.3 of the Community Declaration and Exhibit PC -1 attached thereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted within the Community except in an enclosed garage when the garage door is closed; provided, however, that such activity may not be undertaken as a business, and provided further that such, activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. 8. Parking of Recreational and Commercial Vehicles. Sections 2.4.1, 2.4.2 and 2.4.3 of the Community Declaration impose limitations and prohibitions on the parking of: Authorized Vehicles and Prohibited Vehicles within the Community. In accordance with Section 2.4.6 of the Community Declaration, an Owner may park any Authorized Vehicle that Buyer Initials; / -4- 2544-3325MCLP428\DISCLSM 609965.6 3/01/07 exceeds seven (7) feet high, seven (7) feet wide, and nineteen (19) feet long in the Owner's garage or driveway (as long as the Authorized Vehicle does not extend onto the sidewalk or drive approach area). In addition, no delivery and/or moving trucks larger than forty (40) feet are permitted on any private drive having less than a twenty-five (25) foot radius that is located within a Neighborhood in the Community. You further acknowledge that it is your responsibility to determine whether the parking provided in the Community and your Neighborhood is satisfactory for your purposes and to verify that the standard height and depth of the garage will provide adequate clearance for your vehicles before the Close of Escrow on your Home. 9. Owner Maintenance Guidelines. As set forth in Section 9.1.1 of the Community Declaration, each Owner must maintain his Home and Homesite in a neat and attractive condition at all times. The maintenance of all areas located within the boundaries of a Homesite is the responsibility of each Owner. The Neighborhood Builders will provide you with important guidelines on the proper maintenance of improvements in your Homesite. Failure to properly maintain interior improvements may cause premature deterioration of important features, finishes or equipment. The Neighborhood Builders are not responsible for failure of equipment or other improvements caused by your failure to properly maintain such improvements. In addition, you acknowledge that some upgraded materials, if any are selected by you, may have specific maintenance requirements. The Neighborhood Builders are not responsible for any damages that may occur to such materials due to your failure to properly maintain them. 10. Insurance. In accordance with Article IX of the Community Declaration, you are solely responsible for determining the type and quality of insurance required to adequately insure your Homesite and Home, your personal property, and your personal liability for ownership of your Homesite and Home. You are solely responsible for determining if natural disaster insurance is required for your Homesite and Home. If any insurance is required by your lender, you are responsible for obtaining that insurance prior to Close of Escrow. 11. Design Review of Improvements and Alterations. You may not build, construct, install or plant any improvements on your Homesite (or alter any improvements located on your Homesite, including your Home), until you have submitted plans and specifications and obtained approval from the Design Review Committee, as set forth in Article V of the Community Declaration. The Design Review Committee will establish Design Guidelines containing rules and guidelines for the submission of plans and specifications. The Design Review Committee may collect a fee to review the plans. All Improvements must comply with any applicable restrictions in the Community Declaration and the Design Guidelines, as well as with all requirements imposed by the City and any other local governmental agency. The Design Guidelines and City and other local governmental agency regulations may change from time to time, and you will be subject to the regulations in effect at the time plans are submitted. After obtaining written approval of the Design Review Committee, you must submit the plans and specifications to the appropriate local governmental agencies for any proposed improvements that require the issuance of a building permit, or other approval by the City or any other local governmental agencies, as applicable. You should read Article V of Buyer lnitisls� / _5_ 2544-33253TU428\DISCLSM 609965.6 3/01/07 the Community Declaration before constructing any Improvements. You may be subject to a Neighborhood Association Design Review Committee if you live in a Condominium project. (a) Landscaping and Irrigation Improvements. All landscape materials and irrigation systems installed by Owners must comply with plans and specifications approved by the Design Review Committee. You may need to install yard drains when installing landscaping and patios. Your landscaping plans are required to conform with the original drainage plan of the Homesite. Changes to drainage and grading require approval of the Design Review Committee and generally require you to obtain a permit from the City, as applicable. The slope areas, if any, located on a Homesite may include drainage facilities and temporary erosion control measures. No modifications to the slope areas shall be undertaken without the prior approval of the Design Review Committee and the City, as applicable. (b) Landscaping Completion Deadline. Section 2.18 of the Community Declaration requires you to install landscaping on any portions of your Homesite that have not been landscaped by a Neighborhood Builder. Landscaping in the front yard of a Homesite must be completed within six (6) months after the Close of Escrow for the purchase of the Homesite and landscaping in the back yard of a Homesite must be completed within one (1) year after the Close of Escrow for the purchase of the Homesite. The time period for the completion of such improvements is set forth in the Community Declaration. (c) Owner Liability. Any alterations or Improvements made by you to your Homesite, to its drainage pattern or to the Home shall be made at your sole risk. The Neighborhood Builders assume no responsibility for any damage caused by the design, construction, installation, alteration or maintenance by you of any Improvement on the Homesite, or caused by the impact of such an Improvement on the Homesite's drainage pattern. (d) Licensed Professionals. If you wish to alter or install any Improvement on your Homesite, you should obtain the advice of a licensed architect or civil, soil or structural engineer, as applicable, and should design and complete the alteration or installation of the Improvement in accordance with such licensed professional's advice and specifications. 12. Drainage. Section 2.14 of the Community Declaration contains important restrictions concerning drainage of water and water pollution. (a) Surface Water. The Master Developer and Neighborhood Builders have provided for surface and underground drainage of water from all Homesites and Homes in the Community. Your Homesite may have surface "swales" or area drains to carry the water from the rear and sides of the Home to the street or other designated outlet points. The Homesites and Homes are graded in accordance with plans approved by the City and certified by a registered civil engineer. In connection with the preparation of landscape plans for your yard, it is important that you consider any possible harmful effects that such landscaping and associated Improvements may have on adjacent property and structures as well as your Homesite and Home. Because the Community and your Homesite are located in an area which may contain expansive soils as more particularly explained in the Paragraph below entitled "Soil Conditions," water may have a detrimental impact upon such soils and the soils of surrounding Homesites and Buyer Initials: / _6_ 2544-33253\CLP428\DISCLSR\ 609965.6 3/01/07 slopes. Existing drainage patterns must be maintained and all drainage systems must be kept free of debris and free flowing. (b) Effect of Improvements and Alterations. Raising the existing grade, constructing planters, changing the drainage pattern and other similar activities may cause damage to your Homesite, adjacent property (including, without limitation, your neighbor's Homesite, adjacent slopes and lower Homesites) and Improvements located thereon, including the Home. It is recommended that you consult with a licensed professional on landscaping and drainage, such as a qualified landscape architect and soils engineer, geotechnical engineer, geologist, civil engineer or other similar specialist, before making any alterations. Any Improvements must be designed and constructed in a manner to prevent any possible damage to your Homesite and to adjacent property. If any obstruction occurs to the drainage on your yard, it may result in obstruction of drainage from adjacent property or cause major problems such as trapped water or flooding which may undemdne the foundation of your Home and surrounding Homes or create moisture intrusion or mold and mildew problems. You are solely responsible for any damage to your Homesite and Home or surrounding property and the Improvements located thereon as a result of any alterations you make to the approved existing drainage pattern or failure to maintain proper drainage. The Master Developer, Neighborhood Builders and Community Association shall have no liability or responsibility for any such damage. Any grading or drainage modifications are subject to applicable codes of the City, approval by the Design Review Committee, and the terms of any drainage easements that may be of record. You acknowledge and understand that if your Homesite or Home does not include area drains, you shall be responsible for installing area drains on your Homesite or Home when installing your landscaping. Your responsibilities for maintaining all grading and other drainage -related features on your Homesite and Home are set forth in Section 2.14.1 of the Community Declaration. (c) Water Quality Management Requirements. The Master Developer and Neighborhood Builders are developing the Community and Neighborhoods in accordance with a water quality management plan ("Plan's required by the California State Water Quality Control Board. The Plan imposes requirements for the design, implementation and maintenance of Best Management Practices ("BMPVto eliminate or mitigate all non -storm water discharges into storm drains during and after construction of the Community and Neighborhoods. The requirements imposed by the Plan are in addition to any local ordinances with regard to discharge of non -storm water into storm drains. The Plan imposes post -construction requirements. This means that after the Close of Escrow, you and your sub -contractors and other agents, are required to comply with all BMPs which are necessary to prevent, without limitation, run-off of soil, sand, sediment, oil, gasoline or other hydrocarbons, paint, fertilizers, pool chemicals and other household chemicals into the storm drains located in your Neighborhood. For example, when fertilizing landscaping, measures must be taken to prevent over -watering the landscaping to ensure that fertilizer and other lawn chemicals do not run into the storm drains. Your Neighborhood Builder will provide you with a Best Management Practices Handbook containing BMP recommendations for the prevention of run-off into storm drains from your Homesite and Home. The Plan affirmatively obligates all Owners to take immediate corrective action whenever there is a violation of the Plan as to an Owner's Homesite or Home. Penalties include Buyer Initials: 2544-33253\CLP428\DISCLSR\609965.6 3/01/07 significant fines that may be imposed against an Owner for failing to comply with BMPs necessary to prevent non -storm water run-off into storm drains, in violation of the Plan. 13. Utility and Other Easements. Article VII of the Community Declaration contains provisions pertaining to easements which may affect Owners and Homes. Your Homesite and Home may be subject to easements or other rights in favor of utility companies, local governmental agencies and other parties. These easements and rights may include access onto your Homesite or to exterior portions of the Home for purposes of installing, constructing, inspecting, maintaining and repairing facilities which are customary for residential developments (including, but not limited to, water lines, sewer lines, electrical lines and facilities, transformer boxes, natural gas pipelines, street lights, telephone lines and facilities, cable television lines, mailboxes, traffic signs, fire hydrants, etc.). These facilities and structures may be located above ground or below ground. In either case, the foregoing easements, rights and facilities may restrict the use and type of improvements you can make to your Homesite and Home, and the utility company, local government agency or other parties benefited by such easement or right may have the right to remove improvements made by you on the easement area without any obligation to repair or restore them. You should review the policy of title insurance, the tract map for your Homesite, Article VII of the Community Declaration, and the Supplemental Declaration to determine what easements and other rights, if any, affect your Homesite and Home. Such easements may preclude construction of structures or other improvements or may require an encroachment permit to be obtained. You should not excavate or construct an improvement on any portion of your Homesite, as applicable, until you have consulted with an applicable licensed design professional (for example, an engineer) and located all easements and facilities. A copy of the tract map depicting your Homesite is available for review in the sales office. The location of gas and electric meters, telephone and cable access panels may change from the locations shown in the models. Please ask your sales representative for information concerning the proposed location of utility facilities and structures for your Home. The Master Developer and Neighborhood Builders make no representations or warranties concerning the final location of these facilities or structures for your Home. 14. Pets. Household pets, such as dogs or cats, are limited to reasonable quantities as established in Section 2.5 of the Community Declaration. Buyers shall be liable for any unreasonable noise or damage (including, but not limited to, clean up after such animal(s)) caused by any animal brought or kept upon the Community and Neighborhoods as more fully described in the Community Declaration. 15. Window Coverings. In accordance with Section 2.10 of the Community Declaration, the Design Guidelines and Community Guidelines may prohibit or restrict certain types of window coverings such as paint, foil, reflective tint or other similar materials or substances, and may permit certain types of temporary window coverings pending installation of permanent window coverings. 16. Walls and Fences. Wail and fence heights may vary throughout the Community and your Neighborhood. Walls and fences are subject to change, at any time and without notice to you, from any depiction that may have been provided or shown to you. Section 9.1.4 of the Community Declaration sets forth Owner's wall maintenance responsibilities. Owners are responsible for maintenance of all portions of the walls and fences that border the perimeter of Buyer Initials: 1 .$- 2544-33253\CLP428\DISCLSM 609965.6 3101/07 the Homesite, including any pilasters located on an Owner's Homesite, except for those portions that are designated for maintenance by the Community Association or a Neighborhood Association. You should review the Community Association Governing Documents for further information. Community Walls, Neighborhood Walls and/or Party Walls (all as defined in the Community Declaration) may be installed on the property line(s) of your Homesite (collectively, the "Walls'% as shown as Exhibit WM attached to the Community Declaration, Neighborhood Declaration or a Supplemental Declaration. Owners must maintain any portion of the Walls not otherwise maintained by the Community Association or a Neighborhood Association, Master Developer, Neighborhood Builders and the Community Association are not responsible for damage to any Wall on the Homesite if such damage results from your failure to properly maintain the Walls. 17. Solar Energy Systems. Pursuant to Section 2.17 of the Community Declaration, you and all other Owners of Homesites in the Community have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar energy systems ("Systenr'�. The installation and maintenance of any System by you shall be subject to all applicable ordinances and zoning regulations of the City, the Uniform Building Code and associated ordinances. California has a strong public policy in favor of solar energy needs of a neighbor, including but not limited to the location and height of trees on your Homesite. You must obtain written approval from the Design Review Committee prior to installation of a System and you must comply with reasonable restrictions placed on the System by the Design Review Committee, subject to California Civil Code Sections 714 and 714. 1, as the same maybe amended from time to time. 18. Satellite Dishes. Satellite dish antennas (or Authorized Antennae, as defined in the Community Declaration) may be installed and used in the Community in accordance with Section 2.11 of the Community Declaration. However, Master Developer and Neighborhood Builders have provided no assurances or guarantees that any satellite dish or other antenna installed within the Community will remain unobstructed or that satellite service will be provided to an Owner after installation of an Authorized Antennae. You should understand that broadcast signals may be obstructed by the installation of additional improvements within and outside of the Community including, without limitation, homes, walls, fences, trees and other landscaping and such obstructions may not allow for acceptable satellite reception. You should also understand that Neighborhood Associations may impose additional restrictions. 19. Amendments to the Community Declaration. Notwithstanding the fact that you have received a copy of the Community Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions. 20. Additional Provisions. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq, of the California Civil Code and the Federal Fair Housing Act codified at Title 42 United States Code, Section 3601,et seq., which may supplement or override the Community Association Governing Documents. The Master Developer, Neighborhood Builders and Community Association make Buyer Initials; / -9_ 2544-33253\CLP428\nISCL8R\ 609965.6 3/01/07 no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. COLUMBUS SQUARE DISCLOSURES 21. Charitable Endowment Fee. A recorded Charitable Housing Agreement Imposing Endowment Fee On Transfer ("Agreement's affects your Home and the other Homes in the Community. The Agreement requires that an "Endowment Fee" equal to one -twentieth of one percent (0.05%) of the total sales price (0.0005 x total sales price) be paid each time a Home in the Community is transferred to a new owner. The Endowment Fee will be paid to Lennar Charitable Housing Foundation, a California nonprofit public benefit corporation ("Foundation', to be used for the purposes described in the Agreement. When you close escrow for the purchase of your Home, you will pay the Endowment Fee to the Foundation. Thereafter, each time your Home is resold, the Endowment Fee must be paid at the close of escrow, but it may be paid either by the new buyer or the then current seller. The Agreement will be in effect for an indefinite period of time. 22. Affordable Dousing/Transitional Housing. The City of Tustin has required the Master Developer and Neighborhood Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units' within the Community. Sixty-three (63) Affordable Housing Units will be located in the Camden Place Neighborhood, fifty (50) Affordable Housing Units will be located in the Cambridge Lane Neighborhood, and one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court). Certain of these Affordable Housing Units will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Homes subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. If you are interested in the Affordable Housing Units you should consult your sales representative for furtber information. 23. "Active Adult" Neighborhood. An "Active Adult Neighborhood," the Coventry Court, consists of age restricted residences located within the Community. In Coventry Court, each Home must be occupied by at least one resident who is at least 55 years of age. Coventry Court is a community consisting of approximately 240 Homes and has its own recreational facilities and activities. All assessments for the maintenance of these recreation facilities are the exclusive responsibility of the Coventry Court residents. As a result, the recreational facilities located within Coventry Court are not open to other Owners in the Community; provided, however, Coventry Court residents will have the right to use the recreational facilities located throughout the Community. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. 24. Home Business Use, Any Home within the Community may be used for home based business purposes, provided that such use is subject to the City of Tustin's Home Occupation Ordinance (if applicable), the provisions in Section 2.1 of the Community Declaration and the Community Guidelines. You are advised that the Community Declaration and the Community Guidelines may contain stricter restrictions than those in the City Ordinance Buyer Initials: / _10_ 2544-33253\CLP42MISCLSB\609965.6 3/01/07 and that such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses in your Home. 25. WAS Tustin. (a) Prior Use as WAS Tustin. You are advised that the Community was previously used as the Tustin Marine Corps Air Station ("MCAS Tustiu'�. The Marine Corps and the Department of the Navy ("DON") are the responsible agencies for the Installation Restoration Program ("IRP'. The IRP is a comprehensive environmental investigation and cleanup program formed to identify, investigate and clean up chemical and nuclear contamination that has resulted from past land use operations. When MCAS Tustin was an active base, it received a permit from the California Department of Toxic Substances Control ("DTSC") pursuant to the Federal Resources Conservation and Recovery Act ("RCRA'� (42 U.S.C. 6901 et seq.) to store hazardous waste on portions of the base. One of the conditions of that permit was to perform "corrective action" to clean-up releases of hazardous waste constituents throughout the base. Although the permit has expired, these corrective action obligations continue, and the DON is undertaking environmental investigation and cleanup activities on portions of the former base that are within the Community. (b) Asbestos Containing Material. Hazardous material in the form of asbestos or asbestos -containing materials ("ACM'J have been found and are otherwise presumed to exist in buildings and structures previously located in the Community. At such time as demolition of the prior existing buildings on the Community containing ACM was completed, the appropriate governmental regulatory agency confirmed that ACM had been removed from the buildings and any necessary soil remediation had been conducted in accordance with all applicable federal, state and local laws and regulations. (c) Easement for Environmental Remediation. An easement over the Community granted to the United States of America, acting by and through the Department of the Navy ("DON") in a document entitled "Quitclaim Deed for Marble Mountain Parcel and Environmental Restriction Pursuant to Civil Code Section 1471," was recorded on March 11, 2003, as Document No. 200300263521. In connection with ongoing, remediation on the DON's property within the Community, it was agreed, as a covenant running with the land, that the DON and its officers, agents, employees, contractors and subcontractors shall have the right, upon reasonable notice, to enter the Community when a response or corrective action is found to be necessary or when such access is necessary to carry out a response action or corrective action. The right for the DON to enter the Community shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or connective action as required or necessary, including, but not limited to, monitoring wells, pumping wells, treatment facilities, and the installing of associated utilities. In exercising these rights of access, except in the case of imminent and substantial endangerment to human health or the environment, the DON shall give reasonable notice of any action to be taken related to such Buyer Initials: / _j ] _ 2544-33253\CLP428\DISCLSR\ 609965.6 3/01/07 remedial or corrective actions on the Community. Further, the DON will make reasonable efforts to minimize interference with the on going use of the Community and act in good faith to minimize any conflict between the necessary environmental investigation and remediation activities and the use of the Community. The DON is not required to restore or repair any Improvements in the Community damaged as a result of this right to access the Community. If any Improvements on Association Property are damaged as a result of the DON's access to the Community, you are advised that any such damaged Improvement may be repaired or replaced by the Community Association and you may be charged a Reconstruction Assessment or Extraordinary Assessment (if applicable). (d) Groundwater Plume. The City Environmental hnpact Report (1999) ("EIR'� indicates the presence of subsurface plumes of chlorinated volatile organic compounds ("VOCs', dissolved trichloroethene ("TCE") and methyl tertiary -butyl ether ("MTBE") at ground water level in portions of MCAS Tustin located outside the Community. It is presently unknown whether and to what extent these contaminants will migrate towards the Community. According to the EIR, estimated human health risks associated with residential use of groundwater from the plumes are above the acceptable limits of the United States Environmental Protection Agency. Master Developer and Neighborhood Builders make no representations or warranties with respect to the plumes described above or whether such plumes will migrate into the groundwater under Community. 26. LIFOC PROPERTY/ENVIRONMENTAL CONDITIONS. Due to its prior use as a military base, certain areas within the Community, designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W" (collectively, the "LIFOCProperty'% are owned by the United States of America ("U.S. Government") and will ultimately be annexed into the Covered Property pursuant to Section 16.6 of the Community Declaration. (a) Prior Use of the LIFOC Property. That portion of the LIFOC Property identified as IRP -13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA'o and as a "Miscellaneous Wash Area" ("MWA'�. The TSA consisted of two (2) buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad. That portion of the LIFOC Property identified as IRP 13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, batter acid and solvent were stored. (b) Release of Volatile Organic Compounds. As a result of the historic use of the LIFOC Property, hazardous substances have been released into the groundwater at the LIFOC Property. Volatile Organic Compounds ("VOCV0, including. trichloroethylene ("TCE") and 1,2,3 Trichloropropane ("1,2,3 TCP', were found in groundwater at concentrations that could result in adverse effect to human health if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. Buyer Initials; / .12- 2544-33253TU42801SCLM 609965.6 3/0]/07 (c) Remedial Action Plan. As a result of the release of hazardous substances at the LIFOC Property, various remedial activities have occurred at the LIFOC Property and will continue to occur until remediation goals have been achieved. In October 2004, the Department of Navy issued a report entitled "Final Record of Decision/Remedial Action Plan, Operable Unit 1A, Former Marine Corps Air Station, Tustin, California", which describes the specific remedial action plan (`RAP'S that has been approved for IRP 13S to address groundwater contamination. In August 2005, the Department of Navy published a report entitled "Draft Feasibility Study Report for Operable Unit 4B [includes IRP 13W], Former Marine Corps Air Station, Tustin, California," ("Feasibility Study') which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil a OU -4B sites... therefore, soil remediation.." was not addressed in the Feasibility Study. A final groundwater remedial action plan has not yet been selected for IRP 13W. (d) Deed Restrictions. Deed restrictions will ultimately be recorded on all or a portion of the Homesites or Homes in the Community lying within the LIFOC Property, and will limit certain activities on such Homesites or Homes. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the LIFOC Property to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. (e) Documentation Relating to the Release and Remediation Activities. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the LIFOC Property. The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the LIFOC Property: (i) Draft Feasibility Study Report For Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005 (Bechtel Environmental, Inc., August 2005); (ii) Final Record of Decision/Remedial Action Plan Operable Unit 1A, Former Marine Corps Air Station, Tustin, California (Department of Navy, October 2004); (iii) Final Feasibility Study Report, OU -IA, Marine Corps Air Station, Tustin, California (Bechtel Environmental, Inc., August 2003); and (iv) Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California (Department of Navy and City of Tustin, December 1999). You should carefully review these reports before making a decision to buy a Home in the Community. Copies of the reports are available for review at either (1) BRAGS Environmental Coordinator's Office, Library Building 307, MCAS El Toro, telephone (949) 726-5398 or (2) City of Tustin, Department of Community Development, 300 Centennial Way, Tustin, CA 92780, telephone (714) 573-3100. The Master Developer and Neighborhood Builders make no representations or warranties with respect to the LIFOC Property and the Buyer Initials: 7 -13- 2544-33253\CLP428\DISCLSR\609965.6 NOVO environmental conditions described above or in the reports. Due to the fact that groundwater in the Community has been found at depths of six (6) to twenty-five (25) feet below the ground surface, as described below, you are advised to avoid eating any fruit from trees with deep root systems in the Community or drinking any groundwater, and to keep your children and animals away from such fruit and groundwater. (f) The following items have been indicated in the EIR as affecting portions of MCAS Tustin that are outside of the Community. These items are not expected to impact the Community, and are listed in this Disclosure for your information only. Master Developer and Neighborhood Builders make no representations or warranties as to any future impact these items may have on the Community or Residents using public parks and other areas outside the Community. (i) Former crash drill site area; (ii) Former skeet ranges; (iii) Transformers containing polychlorinated biphenyls (PCBs); (iv) Buildings formerly on property containing lead based paint; (v) Moffit Meadow fire fighting trenches and crash crew burn pits; (vi) JP -5 pipeline, currently classified as out of service; and (vii) Petroleum hydrocarbons in subsurface soil. If you have any questions or concerns about environmental activities at MCAS Tustin or the Community, please contact the Local Redevelopment Authority at the City of Tustin or visit the United States Naval Facilities Engineering Command's internet website at www.e.fdsw.navfac.navy,mi.1/Environniental/Tustin.hln_. 27. Prior Agricultural Use. The Community is located on or near lands that are or were previously used for agricultural purposes, including farming operations. By reason of such agricultural use, you may be subject to dust, noise and odors and may be exposed to pesticides, herbicides, insecticides and other chemicals. By acceptance of a deed to a Home, you on your own behalf, and on behalf of the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept these existing and future impacts and forever waive any and all causes of actions against the Master Developer, Neighborhood Builders and Community Association and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 28. Private Recreational Center. The Community is planned to include a private recreational center (the "Center'. The Center is planned to include swimming and wading pools, spas and recreational building and other recreational facilities. While the Center is planned to be private and only open to Owners and guests in the Community, the public will have access to the open space areas surrounding the Center and some outdoor recreational Buyer Initials: / -14- 254433253\CLP428TISCLM 609965.6 3/01/07 facilities in the Open Space/Park Areas. All persons using the Center are required to use caution and to watch their children at all times to prevent drowning and other injuries. The Community Association may, from time to time, promulgate rules for use and operation of the Center, including reasonable hours of operation. Owners and other residents living in the area of the Center will most likely experience and otherwise be subject to or inconvenienced by noise and pedestrian and vehicular traffic in the areas surrounding the Center. 29. Natural Hazard Zone Disclosures. Your Neighborhood Builder will provide you with a Natural Hazard Disclosure Statement in compliance with Section 1103 of the California Civil Code that discloses whether your Home is located in a seismic hazard zone. (a) Earthquakes. California is subject to a wide range of earthquake activity. California has many known earthquake faults as well as yet undiscovered faults. While the Community is not located in an Alquist Priolo Earthquake Zone, earthquakes are always a possibility. You must evaluate the potential for future seismic activity that may seriously damage your Homesite and Home. A major earthquake, which some have predicted will occur in our lifetimes, could cause very serious damage to Homes located even many miles from the epicenter of the earthquake. A more moderate earthquake occurring on a more minor fault, or on an as yet undiscovered fault, could also cause substantial damage. For more information, read "The Homeowners Guide to Earthquake Safety" which explains the various geological hazards associated with earthquakes and contains information on planning ahead for earthquakes, as well as what to do during and after an earthquake. Master Developer and Neighborhood Builders make no representations or warranties as to the degree of earthquake risk in the Community. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. (b) Seismic Hazard Zones. Many portions of California are subject to risks associated with seismic activity. Areas that meet the definition of "Seismic Hazard Zone" in the Seismic Hazards Mapping Act (California Public Resources Code Section 2690, et seq.) are shown on maps that are prepared and released by the California Department of Conservation, Division of Mines and Geology. Such zones may pose an increased risk of damage to property from earthquakes and liquefaction. "Liquefaction" is the process by which water -saturated soils become unstable under heaving shaking and thereby jeopardize foundations and other structures. The Master Developer has been informed that all or a portion of the Community is located within a Seismic Hazard Zone. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. For more information concerning seismic activity and risks, read "The Homeowner's Guide to Earthquake Safety." (c) Area of Potential Flooding. The Master Developer has been informed that the Community is located within an Area of Potential Flooding (or Dam Inundation Zone) pursuant to applicable maps. The Office of Emergency Services is required to designate areas within which personal injury or death would, in its determination, result from the partial or total failure of any dam. These areas of potential flooding, as defined in the California Emergency Services Act (California Government Code Section 8984.4, et seq.), are shown on maps released by the Office of Emergency Services, copies of which are also on file with the City. These maps are updated periodically; and the Master Developer, Neighborhood Builders and Community Association make no representations, guarantees or warranties with respect to any future dam Buyer Initials: / _15- 2544-33253\CLP429TISCLSRI 609965.6 3/01/07 inundation zone determinations. The Community is downstream from the Santiago Creek Dam, an earthfill dam approximately one hundred and thirty-six (136) feet high which has a capacity of 25,000 acre feet of water. Santiago Creek Dam is jointly owned and maintained by the Serrano Irrigation District and the Irvine Ranch Water District. Information about the Santiago Creek Dam can be found on the California Department of Water Resources website: http://cdec.water.ca.gov/mise/resinfo.html. Please contact the Office of Emergency Services for further information concerning Areas of Potential Flooding. 30. Soil Conditions. In purchasing your Home, you should review soils reports for the Community, available for review at the City, and take into consideration the following: (a) Expansive Soil. According to the soils report, soil in the Community is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other Improvements, you should advise your consultants that designs must accommodate soils with expansion potential. In addition, you should consider the following information and recommendations before making or modifying any Improvements. (b) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs. Block walls may require extra horizontal and vertical steel reinforcing bars. (c) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Community by the Master Developer and Neighborhood Builders should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by the Master Developer and Neighborhood Builders designed to serve more than the (1) Home should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. , (d) Fill Soil. Homes in the Community may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. A soils report certifying the compaction of fill soils is available for review at the City. Buyer Initials: / -16- 2544-33253\CLP428\DISCLSR\ 609965.6 3/01/07 (e) Corrosive Soil. Soils in some areas of the Community are potentially severely corrosive to buried concrete and ferrous metals. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, you must use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on your Homesite. Overwatering soil will exacerbate the corrosivity of the soil. You should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. (f) Groundwater. Groundwater has been encountered in portions of the Community at depths of six (6) to twenty-five (25) feet below the ground surface. You may not dig or drill on any Homesite to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. (g) Pools/Spas. Prior to designing any pool, spa, or other similar amenity, it is recommended you consult with a licensed civil engineer to determine the depth of the water table under your Homesite to insure that your Improvements are compatible with the depth of the water table and that they will not disturb or come in contact with the groundwater during a rainy season. The Master Developer and Neighborhood Builders make no guarantee that any Homesite has the ability for pool or spa installation. Homesites 242 through 245, inclusive, of Tract No. 16581, which are located within the LIFOC Property, have been determined to be unsuitable for installation of pools, spas or other similar amenity. The deeds for these Lots will contain deed restrictions that prohibit the use of the Lots for such purposes. (h) Soils Professionals. Before starting a pool or spa or any patio, concrete or other flatwork on the Homesite, you should consult with a licensed soils engineer to ensure that such work is constructed correctly in light of current soils conditions. Although consulting with a soils professional may add substantially to the cost of installation of improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking in improvements. (i) Interior Gases and Other Contaminants. The aging process of soil and natural soil elements, as well as the aging of man-made building materials, may create unwanted and undesired gases and other contaminants in Homes, both new and previously occupied. In addition, a lower rate of air exchange between outdoor and indoor environments has resulted from modem construction techniques which comply with energy conservation requirements enacted by the State of California. A lower air exchange rate can result in the build-up of unwanted gases and other contaminants in varying degrees. As the quality of the air we breathe can affect our health, you should frequently air out your Home by opening the windows. 31. Post -Tension Concrete System. Your Home may have been built using a post - tension concrete system ("System's. If any portion of your Home has been constructed using the System, a placard or stamp will be placed in the garage signifying the existence of such System. The System involves placing steel cables under high tension in the concrete slab located beneath the Home. Therefore, any attempt to alter or pierce the foundation (for example, sawing, cutting or drilling) could damage the integrity of the System and cause serious injury or damage to persons and property. The Master Developer and Neighborhood Builders shall not be Buyer Initials: I -17- 2544-3325MCLP429U)ISCLM 609965.6 3/01/07 responsible for any damage or injury resulting from or arising in connection with the alteration of the slab or foundation of any Home. By acceptance of a deed to a Home, you agree that: (i) you shall not cut into or otherwise tamper with the System; (ii) you shall not knowingly permit or allow any other person to cut into or tamper with the System so long as you own any interest in the Home; (iii) you shall disclose the existence of the System to any person who rents, leases or purchases your Home; and (iv) you shall indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns free and harmless from any and all claims, damages, losses or other liability (including attorneys' fees and costs) arising from any breach of this covenant. 32. Reclaimed Water. In its efforts to conserve water, the Irvine Ranch Water District (the "Water District") requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The Water District may require the use of reclaimed water to irrigate landscaping in private yards. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable water. The water used to irrigate the Association Property may include reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. The Master Developer, Neighborhood Builders and Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. You are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 33. Electric Power Lines. Underground or overhead electric transmission and distribution lines and transformers are located in and around the Community. Two (2) 220 Kv and one (1) 66 Kv overhead transmission and distribution lines, which are located along Harvard and Warner Avenues and around other perimeter boundaries of the Community, and other lines and transformers are owned and maintained by Southern California Edison Company. Southern California Edison may increase the number of transmission and distribution lines and the electric current through such lines. Power lines and transformers produce extremely low -frequency electromagnetic fields ("ELF -EMF") when operating. For some time, there has been speculation in the scientific community about health risks associated with living near ELF -EMF sources. In 1992, the United States Congress authorized the Electric and Magnetic Fields Research and Public Information Dissemination Program to perform research on these issues and to analyze the existing scientific evidence in order to clarify the potential for health risks from exposure to ELF -EMF. In May of 1999, the National Institute of Environmental Health Sciences ("NIEHS'� issued a report to Congress summarizing its review of scientific data from over three hundred (300) studies on ELF -EMF health risks. The ELF -EMF studies consist of both epidemiological studies (studies of exposure in human populations) and controlled laboratory experiments on animal and cell models. While some epidemiological studies suggested some Buyer Initials: / -1$- 2544-33253\CLP428TISCLSR\609965.6 3lo 1107 link between certain health effects and exposure to ELF -EMF, the laboratory experiments did not support such a link. According to the NIEHS report, the scientific evidence shows no clear pattern of health hazards from ELF -EMF exposure, and the NIEHS report did not find evidence of any link sufficient to recommend widespread changes in the design or use of electrical transmission equipment. However, because the evidence does not clearly rule out any effect, NIEHS advocated continuing inexpensive and safe reductions in exposure to ELF -EMF and endorsed current utility practices regarding design and siting of new transmission and distribution lines. Further information on this subject is available from the Regional EMF Manager, Southern California Edison Company, 1851 West Valencia Drive, Fullerton, California 92833. Additional information on ELF -EMF and copies of the NIEHS report are available from the EMF -RAPID website at www.niehs.nih.gov/emfrapid/home.htm. 34. Air Quality. Southern California is subject to Stage I smog alerts. You should take advantage of the Air Quality Management District's ("A.Q.M.D.'J forecasts to plan your outdoor activities to avoid peak pollution by checking your television, radio or daily newspapers to find out if unhealthful air quality is expected. For more information, you can also call A.Q.M.D. at 1 -800 -CUT -SMOG (1-800-288-7664) or check their website at www.agind.gov. By acceptance of a deed to a Home, you (for and on your behalf, and the members of your fancily, tenants, lessees, guests and invitees) expressly acknowledge and accept the existing and possible future impacts of smog on yourself and your family and forever waive any and all causes of actions against the Master Developer and Neighborhood Builders and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 35. Wind. All of Southern California is subject to periods of high winds. Wind speeds in the Community may exceed that experienced in other areas of the surrounding region. You must ensure that any structures or other Improvements you install on your Homesite are constructed or designed to withstand high winds. You are advised to consult with experienced architects and engineers in the design and specification of any structures or Improvements that you plan to add. 36. Private Streets. All of the streets within the Community are private streets. Maintenance and repair of the private streets is the responsibility of the Community Association or the Neighborhood Associations, as applicable. 37. Building Setbacks. Construction of Improvements in the yard of any Homesite such as pools, spas, patio covers, BBQ, fountains, trellises and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning the construction of any Improvements to your Homesite. 38. Boundaries. You may not rely on any written or oral statements by Master Developer, Neighborhood Builders or their agents regarding the exact boundaries of your Homesite or Home or whether any wall or fence has been or will be constructed exactly on the boundaries of your Homesite. Buyer Initials: / -19- 2544-33253\CLP429\DISCLSR\609965.6 3/01/07 39. Square Footage Representations. Representations of square footage are approximate only. You may not rely on any written (brochures and other sales documents) or verbal statements by Master Developer, Neighborhood Builders or their agents regarding the exact square footage of your Homesite or Home. The computation of square footage varies based on the criteria used. You agree by acceptance of a deed to a Home to bold the Master Developer and Neighborhood Builders harmless in any dispute arising over any representations concerning the square footage of your Homesite or Home. TAXES AND ASSESSMENTS 40. Supplemental Real Property Taxes. The California law requires real property to be revalued whenever it changes ownership or when improvements are newly constructed. After the Close of Escrow for your Home, the County of Orange Tax Assessor ("Assessor") will determine a new taxable value for your Home based on current market values. The property tax will increase and you will receive one or more supplemental tax bills depending upon the time of the year in which Escrow closed for the purchase of your Home. Master Developers and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of any supplemental tax bills. The following notice is given pursuant to Section 1102.6c of the California Civil Code: "California property tax law requires the Assessor to revalue real property at the time the ownership of the property changes. Because of this law, you may receive one or two supplemental tax bills, depending on when your loan closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account, the supplemental tax bills will not be paid by your lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If you have any question concerning this matter, please call your local Tax Collector's Office." Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of the supplemental tax bill. You hereby acknowledge, accept and agree that neither Master Developer, Neighborhood Builders nor any of their authorized agents, representatives, employees or sales people have made any representations or warranties respecting the amount of the supplemental assessment or the assessed value. Should you have any questions or concerns relating to the supplemental assessment, you agree, prior to the Close of Escrow, to consult with the County Assessor or your legal or other advisors to satisfy such questions or concerns. 41. Estimated Taxes. You have been provided with an estimate of your assessments. THE AMOUNT OF ASSESSMENTS ARE ESTIMATES ONLY, and are based on current information provided by the City, County or those public or private agencies responsible for the administration for the districts. These assessments may INCREASE or DECREASE, based upon changes in real property tax law; the district(s) may dissolve; formation of new districts may Buyer Initials: / _30_ 2544-33253\CLP42M1SCL8R\609965.6 3/01/07 occur, an extension of the districts or the services to the districts and other factors NOT IN MASTER DEVELOPER'S OR NEIGHBORHOOD BUILDER'S CONTROL may transpire. The amount of special taxes may appear on your property tax bill or may be billed separately. 42. Special Tax Assessment Districts. All or a portion of the Community lies within the boundaries of the following Special Tax and Assessment Districts: (a) Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of City of Tustin Community Facility District No. 06-1 ("CFD No. 06-1'� which was formed for the construction and maintenance of public improvements, including, but not limited to, street improvements, parkway and landscaping, storm drains, utilities, public parks, public libraries and fire protection facilities. If your Home is located within CFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with CFD No. 06-1. You will be provided with allotice of Special Tax for CFD No. 06-1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. (b) Tustin Unified School District Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of Tustin Unified School District Community Facility District No. 06-1 ("TUSDCFD No. 06-1 ") which was formed for the construction and maintenance of elementary, middle and high school facilities and any improvements in connection with such facilities. If your Home is located within TUSDCFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with TUSDCFD No, 06-1. You will be provided with a Notice of Special Tax for TUSDCFD No. 06-1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. c) Recreation and Improvement Maintenance District. The Irvine Unified School District has formed a recreation and improvement maintenance district which is an annual assessment for maintenance of public sports/playfields. Please contact David Taussig & Associates, telephone (949) 955-1500 for additional information. dzl&M proposeq Test -In t�D 4-1(c) The Neighborhood Builder will provide you with disclosures entitled "Notice of Special Tax" ("Notice's prior to entering into a contract to purchase a Home. These Notices will inform you of the special tax and assessment districts that apply to your Home. The Notices will also contain a detailed description of the special tax calculation, important information about functions and rights of the special tax and assessment districts, your obligations, and who to Buyer Initials: / -21- 2544-33253\CLP429\D1SCLSR\609965.6 3/01/07 contact for additional information about the special tax and assessment districts. You should thoroughly understand the information contained in the Notices prior to entering into a contract to purchase a Home. You will have five days after the Notice is delivered by mail, or three days after its delivery in person, to terminate the contract to purchase by giving written notice of that terinination. All Homes will be subject to annual special taxes levied by one or more of the special tax and assessment districts listed above. Not all special tax or assessment districts listed above will apply to your Home. These special taxes will be a continuing lien on your Home and will be billed to you with the annual real property tax bill issued by the County Assessor. The lien of these special taxes will continue until the obligation is satisfied. If you fail to pay a special tax when due, the assessment districts may exercise their right to foreclose on your Home. Information concerning the estimated amount of the annual special tax on your Home for the special tax and assessment districts is available from the City and County. 43. Changes in Special Taxes. The amount of any special taxes disclosed to you are estimates only, and are based on current information provided by the City, County or other public or private agencies responsible for the administration of special tax districts. Special taxes may increase or decrease, based upon the terms of the special tax lien, changes in real property tax law, the dissolution of special tax districts, the formation of new special tax districts, extension of special tax disnict(s), changes in services by the districts and other facts not in Master Developer's or Neighborhood Builders' control. The amount of special taxes may appear on your real property tax bill or may be billed separately. ADJACENT AREA DISCLOSURES 44. Adjacent Property Disclosures. The land adjacent to the Community within the MCAS Tustin Specific Plan has a variety of land use designations. The land use designations are subject to change. Therefore, the type of future development adjacent to the Community cannot be predicted with accuracy. 45. MCAS Specific Plan. MCAS Tustin was realigned and closed on July 2, 1999, in accordance with Base Realignment and Closure Act. The Department of Defense recognized the City of Tustin as the Lead Agency or Local Redevelopment Authority ("LRA' for preparation of the required reuse planning documents in late 1991. The MCAS Tustin Specific Plan/Reuse Plan (the "Plan's includes detailed planning, policies, regulations, implementation strategies and procedures necessary to guide the reuse and development of the site into the next century. Since implementation of the Plan will be a long- term process and there are unique circumstances associated with converting military bases to civilian uses, the Plan is intended to be practical in economic terms and visionary in terms of its ability to create and respond to future market opportunities. This means that if must provide sufficient guidance to provide investors with a high confidence level that their investments will be protected. At the same time, it must offer sufficient flexibility to respond to changing market conditions. A careful balance between certainty and flexibility underlies the provisions of this Plan. Buyer Initials: / -22_ 2544-332MCLP42MISCLSK 609965.6 3/01/07 The Plan is intended to serve as both a policy -oriented and regulatory document. The Plan has been submitted to the Department of Defense as a policy guide outlining the intended reuse for the Community. Subsequently, the Plan will be adopted by the Tustin City Council as the zoning for the Community. The Plan may also be amended one or more times by the City of Tustin. The Plan is one device for implementing goals and policies of the Tustin General Plan. The Plan also contains the development and reuse regulations that constitute the zoning for the Community. As a federal installation, MCAS Tustin was not subject to local zoning and planning requirements. Upon conversion to civilian use, the former MCAS Tustin property will be under the jurisdictional authority of either the City of Tustin or the City of Irvine, as applicable, and will be subject to local codes and ordinances. The City of Irvine has assigned responsibility for preparation of the Plan (and accompanying joint Environmental Impact Statement/Environmental Impact Report) to Tustin for that portion of the Plan area within Irvine. However, the City of Irvine will have to adopt any General Plan and zoning changes necessary to implement the provisions of the Plan within the City of Irvine. The land uses described in the Plan for the area covered by the Plan include, but are not limited to, Low -High Density Residential, Transitional and Affordable Housing, Golf Resort Living, Commercial Business and Retail, and Institutional/Recreational designations such as Parks, Trails and Schools. Also recommended were applications by the Orange County Sheriffs Department, City of Tustin and County of Orange Social Service Agency. The Master Developer and Neighborhood Builders have no control over the Plan, changes to the Plan, or development of the area covered by the Plan in accordance with the Plan. For further information, you should review the Plan. The Plan and information regarding the development of the Plan is available for review at the office of the Local Redevelopment Agency, City of Tustin. 46. The District. The District is a proposed one million square foot outdoor shopping center to be located approximately one and one-half (P/z) miles southwest of the Community, at the comer of Jamboree Road and Barranca Parkway. The District is planned to include, among other businesses, several retail stores, a grocery store and a movie theater. The District will result in increased noise and traffic in and around the Community, particularly along Jamboree Road and Barranca Parkway. Neither Master Developer, Neighborhood Builders nor the Community Association have any control over the use or maintenance of the District or its impact on the Community. 47. Rail Corridor/ Metrolink Station. As disclosed in the Homebuyer Notification, there is a rail corridor ("Corridor'? located to the north of the Community. There is also a Metrolink station ("Station") located to the north of the Community at 2975 Edinger Avenue, Tustin, CA 92780. The impact of the Corridor and Station may include, without limitation, increased noise, light and vibration levels in the vicinity of the Community. The Corridor and Station could be an attractive nuisance to children and animals who may wish to play in the vicinity of the rail corridor. The Master Developer, Neighborhood Builders and the Community Association have no control over the use, maintenance or care of the Corridor or Station. You acknowledge and understand that you are responsible for keeping your children and animals Buyer Initials: / -23- 2544.33253\CLP42Ml9CLSR\609965.6 3/01/07 away from the Corridor and Station and the danger that is inherent around the Corridor and Station. You should evaluate the impact of the Corridor and Station on your decision to purchase a Home in the Community. 48, Temporary Sewer Lift Station. A temporary sewer lift station will be constructed within the vicinity of the Community. It is located at the northeast comer of Kensington Drive and Valencia North Loop Road and will serve a portion of the Community until such time the master infrastructure is completed to connect your Homesite or Home to the main sewer lines. The lift station will be installed below -grade and will be owned and maintained by the Irvine Ranch Water District. Owners of Homes near the lift station may experience an increase in noise and dust levels in the area of the lift station during the construction period and less significant noise levels after completion. Owners may encounter some odors in the areas near the lift station. You acknowledge, understand and agree that neither the Community Association nor the Neighborhood Builders will have any control over the use, maintenance or care of the lift station. 49. Areas Outside the Specific Plan. The MCAS Tustin Specific Plan, which is bounded by Edinger Avenue, Redhill Avenue, Barranca Parkway and Harvard Avenue has the following surrounding uses. (a) A rail corridor and Metrolink station (described above) are located along Edinger Avenue; (b) A business park, commercial and industrial areas, sports park and utility power lines are located along Barranca Parkway; (c) Adjacent to the west side of Warner Avenue exists a Southern California Edison easement with high voltage transmission lines and usages by a wholesale plant nursery and public storage facility; and (d) A Southern California Edison easement area with high voltage transmission Iines, landscaped areas available for public access and residential neighborhoods are located along Harvard Avenue. The Master Developer, Neighborhood Builder and the Community Association have no control over development outside of the Community. 50. Airport Proximity Disclosure. The Community is located within what is known as an airport influence area (as defined in California Civil Code Section 1353) surrounding John Wayne Airport. John Wayne Airport is located approximately 3.6 miles southwest of the Community at the (405) San Diego Freeway and MacArthur Boulevard in the City of Santa Ana. For that reason, the Community may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the Community before you complete your purchase and determine whether they are acceptable to you. John Wayne Airport has noise abatement procedures in place, but there is no guarantee that these procedures will Buyer Initials: / _24. 2544-33253T]LY429TISCLM 609965.6 3/01/07 lessen the impacts on the Community of noise and vibrations caused by aircraft using this airport or that these noise abatement procedures will continue in the future. Further information is available from the airport website: www.ocair.coni. Your Neighborhood Builder will provide you with a separate airport proximity notice required by California Civil Code Section 1353. 51. Avigation Easement. An avigation easement has been recorded against the Community. The avigation easement establishes a permanent right to travel through the air space over the Community for the benefit of John Wayne Airport. You may notice noise and vibration from overflying aircraft approaching or leaving the airstrip. By accepting a deed to a Home in the Community, you understand that the avigation easement gives the users of the airstrip a perpetual legal right to fly over the Community without interference from the occupants of the Community. 52. Residential Developments. There are existing single-family residential developments adjacent to the northern, eastern and western boundaries of the Community. In addition to increased automobile and pedestrian traffic resulting from the proximity of these residential developments to the Community, the solitude of a Home's yard area may be significantly impacted by the proximity, height and design of multi -story, residential buildings constructed on property adjacent to the Community. The Master Developer and Neighborhood Builders have no control over the proximity, height and design of such nearby buildings and make no representation on the future impacts that these residential developments will have on residents of the Community. 53, Commercial/Industrial Property. The Community is located within the vicinity of property zoned for commercial and heavy industrial uses. This area consists of, among others, a Waste Management Public Recycling/Transferring Station, asphalt recycling, trucking facilities and multiple concrete companies, all with product deliveries. These commercial and industrial properties may generate dust, offensive odor, noise and other effects. The Master Developer and Neighborhood Builders have no control over the existing or potential uses of this property. These uses may create light, noise and other nuisances twenty-four (24) hours a day, seven (7) days a week. 54. Elementary School. The Tustin Unified School District owns an elementary school site located to the southeast of the Community. Owners and other residents within the Community may experience, among other things, glare from bright lights, noise and increased traffic and parking congestion in connection with the use of this site. There are no assurances if or when any school will be completed on the site, nor the type of facilities that may be included as part of the school. You should contact the Tustin Unified School District at (714) 730-7301 for more information. Master Developer, Neighborhood Builders and the Community Association make no representations as to the future use of this school site. 55. Development Area. The Community lies in a rapidly expanding area. As future commercial and residential developments are built in and around MCAS Tustin, you may expect attendant limitations on solitude and inconveniences. For example, you can expect to hear noise from the development of future adjacent residential and commercial areas and the machinery used to develop these areas. You can also expect increased traffic and rerouting of traffic as new residential and commercial developments are constructed, nearby streets and major Buy" Initials: ! -25- 2544-33253\CLP428\DISCLSR\ 609965.6 3/01/07 thoroughfares are widened and new streets are built. As the area around the Community develops, you may experience light entering your Home from exterior sources including streetlights, parking lot lighting and nearby residential and commercial buildings. The Master Developer, Neighborhood Builders and the Community Association have no control over the transmission of noise, light, vibration, odor and other impacts or their potential effects on Homes in the Community, including any which may be a direct result of current and future construction activity. 56. MCAS Tustin Airship Hangars. Two (2) airship hangars ("Hangars") are located within MCAS Tustin southwest of the Community. The hangars are each approximately one thousand (1,000) feet long, three hundred (300) feet wide, and one hundred and seventy (170) feet tall. The view from your Home may be effected by the nearby presence of the Hangars. It has not been determined whether these Hangars will remain or be demolished, or what uses might be made of them. For further information regarding the Hangars, please contact the City of Tustin. 57. Future Fire Station Site, The Community is located adjacent to a future fire station site at the comer of Edinger Avenue and West Connector Road. The fire station will operate twenty four (24) hours a day and seven (7) days a week. Owners whose Homes are located in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advise that Master Developer and Neighborhood Builders have no control over the operation or use of the fire station. You should carefully evaluate the impact of the fire station on your decision to purchase a Homesite or Home in the Community. 58. Village Services, The Community is located northwest of an area designated in the Plan as the Village Services area. When and if built, this area is intended to be accessible to both vehicle and pedestrian traffic, and to provide localized commercial retail and service uses to adjacent residential areas within the Plan area. 59. Learning Village/Transitional and Emergency Housing. The Community is located east of an area designated in the Plan as the Learning Village area. When and if built, this area is intended to provide a specialized educational environment with a variety of public - serving uses. GENERAL DISCLOSURES 60. Neighborhood Model Homes. Neighborhood model homes reflect typical exterior elevations, floor plans and methods of construction, and also illustrate possibilities for future interior decoration and exterior landscaping and hardscape improvements. Your Home will not necessarily conform to any model shown. The exterior elevations, architectural treatments, floor plans and colors shown on the master plot plans on display at thti office of each Neighborhood Builder may be different than those both displayed in the models and those actually constructed by the Neighborhood Builder. Additionally, window locations, window types, roof lines, architectural projections and other similar features vary by elevation and Home location, and not all of the features displayed in the models may be included in your Home. The models have also been professionally decorated to show various decor ideas. Decoration items Buyer Initials: / -26-. 2544-33253\CLP429\DISCLSR\609965.6 3/01/07 such as furnishings, draperies and other window treatments, any window tinting, wallpaper, custom carpet, coordinated paint, built-in shelves, beams, certain lighting fixtures (including halogen lighting), special ceiling treatments and some mirrors are for display purposes only, and are not included ffi the purchase price for your Home. Entries, walkways and driveways are shown in a variety of materials to show design ideas; however, for your Home, they will be constructed using only standard concrete. The hardscape shown in the model complex may not depict what may be constructed in all locations. Additionally, landscaping for the models is greater in density and type than any landscape package offered by a Neighborhood Builder. If not expressly included in the purchase price for your Home in writing by a Neighborhood Builder, the rear, side and front yard landscaping is your responsibility. The type of plants, and the size and density of the landscaping in the yards of the models are merely intended to suggest ideas to you. Certain models may also include hardscape items (patio slabs, patio covers, pools, spas, etc.) which $re not included in the purchase price of your Home. All such options and upgrades displayed in the models (including decorator items, landscaping and hardscape) are not included in the purchase price for your Home unless expressly agreed to in writing by the Neighborhood Builder. You should consult your sales representative for additional information regarding non-standard items used in the model homes. 61. Extended Use of the Model Complex. Each Neighborhood Builder reserves the right to use one or more Homes in a Neighborhood as a sales office and model home complex, and to display signs and banners, in connection with its program of marketing and selling Homes in the Neighborhood as well as other Homes owned by Neighborhood Builders, even if they are located in separate and unrelated Neighborhoods. 62. Grading Variations. Your Homesite has been graded to City specifications and may vary significantly from other Homesites. Variations may include slopes, swales, drains, flood control chamnels and retaining walls as required. Any changes made to the grading of the Hon which your Rome is located may significantly affect you or your neighbor's drainage pattern and cause significant property damage to your Home or a neighbor's Home. 63. WaWCeiling Heights. Wall and ceiling heights and configurations may vary significantly by elevation. Your Home's walls and ceiling heights may be different from those used in the model homes. You are encouraged to speak to a sales representative if you have any questions. 64. Right of Substitution. From time to time due to unavailability and other production considerations, it is necessary for a Neighborhood Builder to make substitutions of materials and other items used in construction of the Homes from those materials and items displayed in the ruodels. Therefore, each Neighborhood Builder reserves the right to make any changes or substitutions as the Neighborhood Builder deems necessary or desirable to the color schemes, building materials, fixtures, appliances and other components of the, Homes. The foregoing substitutions may include, without limitation, kitchen appliances, household fixtures, electrical outlets and switches, hardware, wall surfaces, painting and other similar items. Each Neighborhood Builder shall have the right to make the substitutions described above without adjustment to the purchase price of your Horne. ihyu Initials! / -27_ 2544-33253\CLP428\RISCLSR\609965.6 3/01/07 65. Changes in Construction Plans. The construction, grading, drainage and improvement plans (collectively, the "Construction Plans' for Homesites and Homes within each Neighborhood all contain dimensions that are approximate. They are not intended to be precise dimensions with regard to the Neighborhood. Room dimensions and electrical outlet placement will vary slightly from models and from printed information. Construction will be performed in substantial conformance with the Construction Plans, but dimensions may change slightly from them. If there is a discrepancy between the Construction Plans and the actual as - built conditions of your Homesite or Home, the as -built conditions will control. The usable or buildable area, location and configuration of the Homesite and all improvements located thereon may fluctuate from that shown or displayed to you in the Construction Plans or any other drawings, topographic maps or models based upon a Neighborhood Builder's construction of final improvements including, without limitation, fencing and slopes, which shall be constructed in a Neighborhood Builder's sole and absolute discretion. The location, size, height and composition of all walls and fences to be constructed on your Homesite or Home or adjacent to your it shall be determined by the Neighborhood Builder in its sole and absolute discretion and despite the Construction Plans or any other models, drawings or topographic maps displayed to you. The Neighborhood Builder makes no representations, warranties or assurances as to the size, height, location or composition of any wall or fence to be constructed on or adjacent to your Homosite or Home. The Construction Plans are subject to change at any time without notice or obligation. 66. Non -Standard Construction. You may not personally perform any changes of any kind to your Home (such as alarm systems, home intercoms, stereo wiring, etc.) during construction and prior to the Close of Escrow. Such changes may void your warranty. Only those options and upgrades specifically agreed to by the Neighborhood Builder will be made. Any other changes and unapproved options found in a Home during the construction period will be removed by the Neighborhood Builder and the cost of removal and any repairs shall be your responsibility. 67. Changes In Development Plan and Prices. The residential real estate market continually fluctuates due to changes in economic, social and political conditions that directly affect the supply of and demand for housing. As a result, the development plan for the Neighborhood and the Community, and home prices and the terms and conditions of sale are also subject to change. Therefore: (a) With the exception of your Home, each Neighborhood Builder reserves the right at any time prior to or after the Close of Escrow for the sale of a Home and without notice, (i) to increase or decrease the sale price, adjust incentives or otherwise adjust the term and conditions of sale for Homes in the Neighborhood or in the Community, and (ii) change the number, size, location, elevation, design or type of homes constructed in current or future phases of development of the Neighborhood; (b) No Neighborhood Builder is obligated to offer you the same price, incentives or other terms and conditions of sale that the Neighborhood Builder has previously offered or may subsequently offer to another purchaser; Buyer Initials: / _Zg- 2544-33253\CLP428\DI8CLSR\609965.6 3/01/07 (c) No Neighborhood Builder has either offered or agreed to any price protection or other similar commitment to you regarding the value or resale value of your Home (or any other property), and no Neighborhood Builder shall not have any obligation or liability whatsoever to you in the event any price changes directly or indirectly affect the value of your Home; (d) When you entered into a Purchase Agreement, the Neighborhood Builder may have owned other properties which may have been off the market and may not have been shown to or otherwise made available for purchase by you. No Neighborhood Builder has any obligation to notify you if any of such properties come on the market or are otherwise available for purchase or any obligation to notify you of any future properties the Neighborhood Builder may develop and make available for purchase. (e) You shall not hold a Neighborhood Builder responsible for any fluctuations in the purchase price of Homes within the Neighborhood or the Community. In consideration of a Neighborhood Builder's agreement to sell a Home to you, you agree that you shall have no claims against the Master Developer or the Neighborhood Builder for any possible change (decrease or increase) in the purchase price of Homes within the Neighborhood or any other terms of purchase, including, without limitation, upgrades or other concessions or incentives offered by a Neighborhood Builder to other purchasers of Homes within the Neighborhood and the construction of any additional floor plans on any of the Homes in the Neighborhood. 68. Use of Subcontractors. Neighborhood Builders generally perform construction through the use of subcontractors, and may not employ construction trades or workers. A Neighborhood Builder is not permitted to change its subcontracts without approval of the respective subcontractor; therefore, you may not request interior or exterior construction changes or alterations not otherwise offered to other purchasers in the sales office. 69. Elevation/Floor Plan Specifications. In order to provide architectural diversity in the street scene, each Neighborhood Builder's architect has produced more than one exterior design (elevation) for each floor plan. Consequently, differences may be noticed between the model home for your floor plan and the elevation of your Home. You acknowledge that you have received a description of the exterior configuration for the elevation and the exterior color scheme number for your Home. You also acknowledge that your Home's elevation and floor plan may vary from the configuration of the model home for your Home in terms of layout, sizes of certain rooms, exterior elevation features and other items such as sloped ceilings, veneer treatments, window locations and sizes, roof lines and color schemes. 70. Upper Floor Weight Limits. The upper floors of Homes are designed to support weight limits as outlined in the Uniform Building Code ("UBC"). If you currently own or are planning to purchase a waterbed, pool table or other heavy furniture you must confirm with the manufacturer that the weight introduced by these items does not exceed the UBC weight limit. Master Developer and Neighborhood Builders shall not be responsible for damage caused by anything you place on the upper floors that exceeds the UBC weight limit. Buyer Initials:. / _29_ 2544-33253\CLP428\DISCLSR\609965.6 3/01/07 71. Air Conditioning. The air conditioning system and equipment specifications installed in the model homes may vary and operate at a higher capacity than those provided in your Home. You are encouraged to speak with your sales representative to determine the exact equipment specifications that will be provided with your Home. The location of the air conditioning compressor may vary between the model and your Home and between your Home and other Homes in your Neighborhood. 72. Alarm System. If you purchase an alarm system from a Neighborhood Builder, you specifically waive any claims against Master Developer, the Neighborhood Builder and the Community Association as a result of any failure of the alarm system to warn, frighten off, or alert anyone about intruders or any other problems. The sale of such system to you by the Neighborhood Builder is not a guarantee or warranty against criminal acts. Master Developer, the Neighborhood Builders and the Community Association are not insurers against criminal acts. 73. Energy Conservation. Homes in the Community meet or exceed the energy conservation standards that are a part of Title 24 of the California Administrative Code. Each Neighborhood Builder is required to design and install heating and cooling units that meet strict guidelines in Title 24. This is an energy conservation law that is designed to help reduce the overall use of energy in your Home. Title 24 describes the amount of cooling capacity as well as the minimum efficiency ratings for each geographic location in the state. In complying with Title 24, the cooling units installed in your Home are designed for maximum efficiency. Due to the Title 24 geographic requirements, on extremely warm days your inside room temperature may be warmer than your thermostat selection. This is due to design restrictions imposed by Title 24, not any design or installation defect by the Neighborhood Builder or its contractor. 74. Water Conservation. Each Home in the Community is equipped with low flow fixtures and other equipment to aid in water conservation in compliance with the City's Conditions of Approval for the Neighborhood. 75. Gas Barbecue Stub. If a natural gas service line is stubbed -out to an exterior backyard wall of your Home, it is suitable only for use in connection with a gas barbecue. Any other use may result in a serious fire hazard. The Neighborhood Builder and Master Developer are not responsible for any damage resulting from your use of the exterior gas stub. 76. Stain Grade Material Discoloration. Natural hardwoods used for cabinets, doors, stair systems, moldings, etc., are finished with stain and lacquer finish products which will change color over time. Color change may be the result of exposure to sunlight or weather, or simply the consequence of aging. Discoloration is not a defect. 77. Paint Discoloration. Certain portions of your Home, such as paint -grade cabinets, casework, moldings and interior doors, may be painted with oil-based' enamel paint. Yellowing is common with oil-based enamel paints. Additionally, if your Home has white oil- based enamel paint -grade cabinets, yellowing will occur. 78. Variations In Natural Materials. Your Home may include various natural materials (e.g., wood products and/or stone products). Wood products vary in dimension, grain, Buyerinitiels: / -30- 2544-33253\CLP428USCLSR\609965.6 3/01/07 color, moisture content, and performance when subjected to high moisture environments. Dimensional variations in the wood framing members (studs, plates, joists, rafters, and beams) or the required structural hardware connectors may show through the drywall and stucco finishes under certain lighting conditions. Wood panels and trim, exposed timbers, rafters, and posts will require periodic painting. Wood exposed to weather will require more frequent painting. Consult the maintenance schedule included in your Homeowners Manual. Some of the natural characteristics of wood will show through the painted or stained finish. For example, there may be shades of white, red, black, grey or even green in areas. Mineral streaks may also be visible. This is caused by the irregularity of mineral absorption from one part of the tree to another. Grain patterns or texture will vary from even to irregular throughout your cabinetry. Similarly, granite and natural stone products are composed of various mineral contents. Marble is less dense and more porous than granite. Great care must be taken to prevent damage to marble and other stone products. You should follow the manufacturers' recommendations for cleaning and maintenance. Because these are natural products, they are subject to variation in color, veining, spotting, holes, cloudiness, texture and cracking. Some may vary significantly in filler and sheen. The samples in the sales office are actual pieces of natural stone which indicate general color and character; however, no two (2) pieces can be expected to match, even when taken from the same box. You should view the stone prior to purchase, and any questions regarding these materials must be resolved prior to installation. If replacement of natural material tile or carpet is required, you understand and agree that a match with existing material cannot be guaranteed. 79. Brass Plumbing/Light Fixtures/Hardware. Brass, bronze or other finishes have their limitations. In time, the protective lacquer may deteriorate from exposure to weather, perspiration, cleaning agents, frequency of use and other factors. Tarnishing or excessive wear of these finishes is, therefore, not a defect, but a normal process which is unavoidable. Under the circumstances, these finishes cannot be guaranteed and products will not be repaired or replaced under the manufacturer's warranties for tarnishing or wear of finishes. 80. Drywall Panels and Finishes. Drywall panels are placed over the wall studs, joists, rafters and beams. Drywall is typically used to finish window openings. Drywall panels will not completely eliminate variations in the dimension and plane of wood framing members. Metal trim (i.e., corner bead) is used at corners, window edges, soffits and ceilings. They are designed to be filled with finish compounds. These trim metals provide a durable finish but cause the wall plane to "flare" at the metal edge. Panel joints and seams are taped and coated with finish compounds. Fasteners are coated with finish compounds to cover the small "dimple in the surface of the drywall panel. Progressive applications of finish compounds are required to coven the joints, fasteners, and seams. In some cases, the normal finishing of these joints, fasteners, and seams will cause a subtle "bulge". When the finishing process is complete, the walls and ceilings receive a texture coat. In certain lighting conditions (up -lights placed close to the walls), irregularities and variations in the wall plane or intersection of vertical and horizontal panels may be evident. These variations are normal. 81. View. Master Developer, Neighborhood Builders, the; Community Association and their counselors, agents, representatives or employees make no representations, warranties or promises concerning any view, present or future, that may be enjoyed from all or any portion of your Homesite or Home. The view from your Homesite or Home may change or may be fully or partially obstructed by (a) the construction of other homes, Improvements, structures, fences, Buyer Initials: / _31_ 2544-33253\CLP428\D18CLSR\609965.6 3/01/07 walls and/or landscaping by Master Developer, Neighborhood Builders or other Owners within the Community, (b) activities and Improvements on real property outside the Community, and/or (c) the growth of trees and/or other vegetation within or outside the Community. You are advised that trees installed in the Community are generally smaller than they will be once mature and trees that do not block views when you purchase your Home may obstruct views as they grow. Master Developer and Neighborhood Builders make no representations or warranties with respect to any open space on property adjacent to your Homesite or Home, or the Community as a whole, whether this property is owned or controlled by Master Developer, Neighborhood Builders, government agencies or private property owners. 82. Warranties for Consumer Products. The manufacturers' warranties for the consumer products included in your Home (e.g., water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the sales office of your Neighborhood Builder. 83. Financing. This paragraph only applies if you are purchasing your Home from a Neighborhood Builder who is also a Lennar Family Builder and you are financing the purchase with Universal American Mortgage Corporation ("UAMC'. You will be required to provide UAMC with all documents necessary to obtain loan approval. UAMC may be affiliated with the Neighborhood Builder. You are not obligated to accept a loan from UAMC, but you may be required to submit documentation to UAMC to permit the Neighborhood Builder to determine whether it is likely that you will qualify to purchase the Home you desire. You may select your lender independently; however, if you select a lender other than UAMC, you must ensure that the lender can meet the time limitations and requirements imposed on lenders in the Purchase Agreement. Master Developer and Neighborhood Builder have not reviewed or approved any lender's sales or marketing materials, and does not make any representations or warranties whatsoever regarding any matters set forth therein or your ability to obtain any financing under any particular terms. You are strongly encouraged to make your own independent evaluation of the rates and loan programs offered by all lenders, including UAMC. You understand that the interest rate and loan fees for the loan applied for will be determined at the time of the Close of Escrow and may be higher or lower than on the date you signed a purchase agreement for your Home. You also acknowledge that the interest rate and loan fees referenced on the loan application are approximate only and do not constitute a binding commitment. 84. Schools, The Community is currently located in the Tustin Unified School District, telephone: (714) 730-7301 (the "School District'. To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Due to the rate of population change, the school district may find it necessary to change boundaries and designated schools periodically, prior to or after your close of escrow. In addition, it is possible that school district boundaries may change and your children will be required to attend a different school district in the future. Master Developer and Neighborhood Builders have no control or responsibility for such changes should they occur. The Community is currently expected to be served by the following schools: Buyer Initials: / -32- 2544-33253\CLP428T1SCLSR\ 609965.6 3/01/07 Marjorie Veeh Elementary School (K-6) 1701 San Juan Street Tustin, California (714)730-7544 A.G. Currie Middle School (7-8) 1402 Sycamore Avenue Tustin, California (714) 730-7352 Tustin High School (9-12) 4321 1171 El Camino Real Tustin, California (714) 730-7414 To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the applicable school referenced above or the School District, or you can visit the School District's website at www.tustin.k12.ca.us. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. 85. Mailboxes. Mailboxes in the Community may be clustered in groups as required by the United States Postal Service. The location of mailboxes and above -ground utility structures are determined by governmental agencies or utility companies, or both. You may not change the type of mailbox being used or the location. Master Developer and Neighborhood Builders reserve the right to modify such locations as may be dictated by field conditions without prior notice. 86. Residential Construction Legislation. California Civil Code Sections 895 through 945.5 ("Construction Claims Statute', went into effect on January 1, 2003. The Construction Claims Statute (a) delineates standards for how various components of your Home should be constructed and function, (b) limits the time frames for bringing various claims against the Neighborhood Builder to anywhere from one year to ten years (as listed in the Construction Claims Statute) after the Close of Escrow, (c) imposes an obligation on all Owners and their successors in interest to follow Neighborhood Builder's maintenance recommendations and schedules or other applicable maintenance guidelines, and (d) establishes a non -adversarial claims resolution procedure. Pursuant to Section 914 of the Construction Claims Statute, the Neighborhood Builder is permitted to elect to utilize the procedure in the Construction Claims Statute or its own alternate contractual pre -litigation procedures. The applicable claims handling procedures are outlined in the Purchase Documents you receive from the Neighborhood Builder, including the "Dispute Resolution" provision in Section 13.5 of the Master Declaration. A separate notice further describing claims handling procedures may have been recorded against the title to Homes by the Neighborhood Builder in some Neighborhoods. You should review any such notice and your Purchase Documents carefully concerning these issues. YOU ARE ADVISED THAT THE CONSTRUCTION CLAIMS STATUTE AFFECTS YOUR LEGAL RIGHTS. YOU ARE ADVISED TO READ TI3E STATUTE Buyer Initials: / ,33- 2544.33253\CLP42&\DISCLSR\609965.6 3/01/07 CAREFULLY AND SEEK LEGAL ADVICE IF YOU HAVE ANY QUESTIONS REGARDING ITS EFFECT ON YOUR LEGAL RIGHTS. Buyer Initials Buyer Initials 87. Duty to Follow Maintenance Guidelines. An Owner is obligated by Section 907 of the Construction Claims Statute to follow any maintenance recommendations and schedules from the Neighborhood Builder, including the maintenance recommendations and schedules for manufactured products and appliances included with the Home, as well as all commonly accepted maintenance practices (collectively, "Maintenance Guidelines"). Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow any such Maintenance Guidelines may reduce or preclude an Owner's right to recover damages relating to an Owner's Home which could have been prevented or mitigated had the Maintenance Guidelines been followed. Buyer Initials Buyer Initials 88. Obligation to Retain Purchase Documents, The Purchase Documents that you receive through escrow in conjunction with the purchase of a Home may include Maintenance Guidelines, a written limited warranty, claim forms, and other documentation relating to the Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these documents and provide copies of such documents to an Owner's successors in interest upon the sale or transfer of the Owner's Home. Buyer .Initials Buyer Initials 89. Warranty and Limitations on Liability. A Neighborhood Builder may provide a written limited warranty for the Homesite or Home covering certain defects for a limited period after the date the limited warranty commences. Warranty periods for items will vary as set forth in the written limited warranty. During the written limited warranty period, if any, the Neighborhood Builder will repair or replace, at the Neighborhood Builder's sole discretion, certain components of your Homesite or Home, as set forth in the written limited warranty. A written limited warranty generally does not cover defects resulting from the failure of an Owner to perform commonly- accepted maintenance. Minor expansion, contraction, settlement cracks normal to home construction, and secondary damage, are generally not covered under the terms of a written limited warranty. Please refer to the written limited warranty you may receive for additional information. No other warranties or guarantees, whether expressed or implied, are provided, unless stated in writing and signed by a Neighborhood Builder. The manufacturers' warranties for the manufactured consumer products included in your Home (for example, water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the Neighborhood Builder's sales office. Buyer Initials: / -34- 2544-33253\CLP428\DISCLSZ 609965.6 3/01/07 90. Notice of Sexual Offenders. The following notice is given pursuant to Section 2079.10a of the California Civil Code: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.melzanslaw.ca.goy. Depending on an offender's criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides. Prior to the purchase of a Home in the Community, you may research the database to determine whether there are sex offenders in the area. Master Developer, Neighborhood Builders, the Community Association and their respective directors, officers, employees, agents, representatives and consultants make no representations, warranties, or guarantees regarding the presence or absence of registered sex offenders within the Community or in the surrounding area. In addition, Master Developer, Neighborhood Builder, the Community Association and their respective directors, officers, employees, agents, representatives and consultants have no obligation or duty to investigate existing residents or buyers to determine whether they are sex offenders. You are solely responsible for making your own investigation. For further information, please contact your local law enforcement agency, Most law enforcement agencies have special stations to view the Megan's Law database. 91. Benefit of Home Ownership. Although the purchase of a new home has traditionally been considered a wise decision, Master Developer and Neighborhood Builder have made no representations, guarantees or warranties to you regarding the tax benefits, investment benefits or other benefits of home ownership, regarding appreciation or depreciation in the value or equity accrual in your Home, and regarding future price adjustments. 92. Assumption of Risk and Liability. By acceptance of this Disclosure, you assume all risk and liability for injuries to persons and property that may be sustained by you, your family members and your social and business guests by reason of all conditions or circumstances disclosed in this Disclosure. VISITING THE COMMUNITY BEFORE MOVE -IN If you wish to visit the Community, the Neighborhood and your Home before your move in, please be aware that your Home is located within a construction area and that construction sites are potentially dangerous. The Neighborhood Builder will permit you to enter your Home and the construction area surrounding your Home provided that you are fully aware of the risks of such entry and are willing to comply with the procedures and requirements imposed on such visit by the Neighborhood Builder. You must be accompanied by your sales. representative, or another representative of the Neighborhood Builder on any and all visits to your Home. Each Neighborhood Builder further requests that such visits be limited to non -construction hours. By signing this Disclosure you acknowledge that there are numerous risks associated with visiting your Home during construction, including without limitation, open trenches, construction traffic, potential falling debris, exposed nails and electrical wiring, incomplete construction and certain other potential hazards. You further agree to use due care while visiting your Home. In Buyer Initials: / .35_ 2544.33253\CLP428\DISCLSR\609965.6 3/01/07 addition, prior to visiting any construction area you may be required to sign a waiver and release form provided by the Neighborhood Builder ("Waiver") in which you agree to comply with the provisons of the Waiver. Whether or not you have signed a Waiver, by signing this Disclosure, you agree that you shall proceed at your own risk and you release and waive any claims against Master Developer Neighborhood Builders all of their affiliated entities, officers, directors, agents and assigns and all other persons or entities potentially liable to you as a result of an iniury which may occur during your visit to your Home, to the Neighborhood and to the Community. ENTIRE DISCLOSURE; NO OTHER REPRESENTATIONS No sales representative, employee or agent of any Neighborhood Builder or the Master Developer has the authority to make any representation to you which contradicts or modifies the matters and information set forth in this Disclosure, the purchase agreement or any other written disclosure provided by the Master Developer or Neighborhood Builders in connection with the purchase of a Home in a Neighborhood (collectively, the "Disclosure Documents"). You acknowledge that no representations have been made to you by such persons other than as set forth in the Disclosure Documents and upon which you have relied in connection with the purchase of the Home, Please indicate below if any representations have been made by any such person which contradict or modify the matters and information set forth in the Disclosure Documents: RELEASE AND INDEMNITY REGARDING DISCLOSURES With respect to items of information disclosed to you in this Disclosure or in any Disclosure Documents provided by Master Developer or Neighborhood Builders (collectively, "Disclosure Items"), you agree that you and your family members release, waive and will not make any claims against Master Developer and Neighborhood Builders for (a) nondisclosure of Disclosure Items, (b) for alleged improper or incomplete Disclosure Items, and (c) personal injury, property damage, expenses (including attorney fees and costs) and other liability you, your family members and others experience from the nondisclosure, improper disclosure or incomplete disclosure of Disclosure Items. You also agree that you will indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns, harmless from all such claims by you, your family members and your social and business guests. Buyer Initials Buyer Initials [Buyer Acknowledgment on following page] Buyer Initials: / _36_ 254433253\CLP428\DISCLSR\609965.6 3/01/07 Columbus Square HOMEBUYER DISCLOSURE STATEMENT BUYER ACKNOWLEDGMENT By the signatures below, you acknowledge that you will close escrow with full knowledge, understanding and agreement as to all of the information contained in this Disclosure, and that this Disclosure constitutes a part of the terns of your Home purchase. Buyer: Date: Homesite or Condominium Tract No: Street Address: Buyer Initials; - J ,37- 254433253\CLP428\DISCLSR\609965.6 3/01/07 Columbus Square HOMEBUYER DISCLOSURE STATEMENT Meriwether • Camden Place The Cables • Astoria • Coventry Court Cambridge Lane • Mirabella • Verandas September 2008 Welcome to Columbus Square. We are pleased you are considering the purchase of a new home in Columbus Square. We want you (the "Buyer") to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned community of Columbus Square ("Community'), located in the City of Tustin. We offer this Homeowner Disclosure Statement ("Disclosure's as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Disclosure has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Disclosure is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Disclosure. In addition to this Disclosure, the City of Tustin has required that the Master Developer provide you with a Columbus Square Homebuyer Notification (the "Homebuyer Notification'). The Master Developer prepared the Homebuyer Notification with information provided by the City of Tustin, at the direction of the City of Tustin and does not have the right to alter or update the Homebuyer Notification without the express written consent of the City. To the extent any of the information provided in this Disclosure is inconsistent with the information provided in the Homebuyer Notification, the Homebuyer Notification shall supersede this Disclosure to the extent of any inconsistency; provided, however (a) the conflicting documents shall be construed to be consistent to the extent possible, and (b) the more restrictive provisions of the conflicting documents shall control. By signing this Disclosure, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different times to familiarize yourself with the Community, its location and its surroundings. You will receive many documents in addition to this Disclosure to review, complete and sign before the Close of Escrow for the purchase of your home. These other documents are called the "Purchase Documents" in this Disclosure, and they include documents pertaining to Buyer minas: 2544-33253\CLP428\DISCLSR\ 609965,7 9/25/O8 the Community, defined below as the "Community Association Governing Documents". This Disclosure is not intended as a substitute for your review of the Community Association Governing Documents. This Disclosure does not amend, modify or supersede the Community Association Governing Documents. If the Community Association Governing Documents are inconsistent with this Disclosure, the Community Association Governing Documents will supersede this Disclosure. Unless defined in this Disclosure, capitalized terms used in this Disclosure have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Community Declaration'). If the Community Declaration gives the same capitalized term a different meaning than this Disclosure, the meaning given in the Community Declaration shall apply. INTRODUCTION TO THE MASTER DEVELOPER Moffett Meadows Partners, LLC, a Delaware limited liability company, is the initial Master Developer of the Columbus Square master -planned community (WasterDeveloper'l. INTRODUCTION TO COLUMBUS SQUARE 1. Location and Master Plan. The Community is east of Interstate 55 near the intersection of Edinger Avenue and Redhill Avenue, in the City of Tustin (the "City'). The master land -use plan approved by the City of Tustin for the Community is called the MCAS Tustin Specific Plan (the "Specific Plan") and it contains numerous design standards and development conditions. Such conditions establish, among other things, the number of single family dwellings and condominiums and other development requirements. If developed as approved by the City, Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 single family dwellings, 552 condominiums and 240 senior housing condominiums. The actual number of Homes built may increase or decrease subject to approval by the City. All Homes in the Community are planned to be subject to the jurisdiction of the Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association', as described in the Community Declaration. INTRODUCTION TO COLUMBUS SQUARE'S NEIGHBORHOODS AND NEIGHBORHOOD BUILDERS 2. Neighborhoods. The Community is being developed with Homes in numerous distinct neighborhoods ("Neighborhoods' constructed by various homebuilders ("Neighborhood Builders'. Neighborhood Builders may have owner occupancy restrictions, rental Homesites and Homes (each of which is defined below), and investor-owned Homesites and Homes. You are advised to read the individual Neighborhood Builder disclosures and any other documentation relating to the Neighborhood in which you choose to purchase a Homesite or Home thoroughly. Neighborhood Builder policies may differ from those described in this Disclosure and the Community Declaration and are enforceable by the applicable Neighborhood Builders. The following is a list of the different Neighborhoods to be developed by the Neighborhood Builders in the Community and the approximate number of Homes to be constructed in each Neighborhood; provided that that any product may be renamed or sold by the Buyer lnitlals: ! -2- 2544-33253\CLP42M1SCLSM 609965.7 9/25/08 Neighborhood Builder currently listed below and the Neighborhood Builders reserve the right not to build the Neighborhoods listed below at all: (a) Lennar Homes of California, Inc. • Meriwether 114 Homes • Camden Place 222 Homes • The Gables 84 Homes • Coventry Court 240 Homes (b) William Lyon Homes, Inc. and/or Resmark Equity Partners, LLC • Astoria 102 Homes • Cambridge Lane 156 Homes • Mirabella 60 Homes • Verandas 97 Homes 3. Ownership. A residential Lot in the Community is referred to as a "Homesite" in this Disclosure. If you are purchasing a residential Lot in the Community, upon the Close of Escrow, you will receive fee title to a Homesite, which will be improved with a single family dwelling (a "Home'. If you are purchasing a Condominium in the Community, upon the Close of Escrow, you will receive fee title to a Unit and you will also receive easements for maintenance and use over Exclusive Use Area's (collectively, a "Home'). If you purchase a Homesite, you will not own the mineral, oil, and gas rights under the land below a depth of five hundred (500) feet, or the water rights. The holder of these rights has no right of surface entry. COMMUNITY ASSOCIATION GOVERNING DOCUMENTS Your Home will be subject to the following documents ("Community Association Governing Documems'J: (a) The Community Declaration, and any amendments or modifications thereto; (b) The Articles of Incorporation of the Columbus Square Community Association ("CommunityAssociation'�; (c) The Bylaws of the Community Association; (d) The Supplemental Declaration of Covenants, Conditions and Restrictions ("Supplemental Declaration") that is applicable to the Neighborhood in which your Home is located, and may annex that Neighborhood to the coverage of the Community Declaration; and (e) Any Community Guidelines or Design Guidelinei which may be adopted from time to time, respectively, by the Community Association's Board of Directors or the Design Review Committee ("Committee") pursuant to the Community Declaration. Buyer lnidals: / _3_ 2544-33253TU428MISCLSM 609965.7 9/25/08 You should carefully review the Community Association Governing Documents in order to understand your specific rights and obligations as an Owner in the Community. The Community Association Governing Documents establish limits and restrictions on the use of the Home you are purchasing. You will also be provided with a preliminary title report. The title report will list other recorded documents affecting the use of the Home you are purchasing. You should review the title report and the documents referenced in the report closely prior to your purchase of a Home. SPECIFIC PROVISIONS OF THE COMMUNITY DECLARATION 4. Assessment Obligation. The Community Declaration authorizes the Community Association's Board of Directors to levy a Common Assessment against each Home to meet the Community Association's Common Expenses. The Board of Directors is also authorized to levy various special assessments for specific purposes, in conformance with Articles I and VIII of the Community Declaration. The monthly installment of the Common Assessment will vary as each Phase of the Community is developed. You should review the Budget approved by the California Department of Real Estate and provided to you with the Final Subdivision Public Report for your Home. The Board of Directors' ability to increase the Common Assessments and improve additional special assessments without a vote of the Members is subject to certain limitations set forth in Sections 8.5 and 8.6 of the Community Declaration. The Community Association is obligated to provide you with an annual budget and other financial statements for the Community Association. 5. Use Restrictions. You must comply with all the various use restrictions set forth in the Community Declaration. These restrictions include, among other things, restrictions on non-residential uses of your Home, keeping of animals, improvements to your Homesite and Home, parking of vehicles, etc. The Community Association has the power to enforce the use restrictions set forth in the Community Declaration, as well as the Community Guidelines and the Design Guidelines. 6. Prohibited Dwelling Structures. You may not use your garage as a living area. Further, in accordance with Section 2.7 of the Community Declaration, you may not erect or use any outbuilding, tent, shack, storage shed, trailer, camper, motor home, recreational vehicle or any other vehicle on your Homesite for a living area. 7. Use of Garages. All vehicles owned or operated by or within the control of an Owner and kept in the Community must be parked in the assigned parking space or garage of that Owner; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Section 2.4.3 of the Community Declaration and Exhibit PGI attached thereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted within the Community except in an enclosed garage when the garage door is closed; provided, however, that such activity may not be undertaken as a business, and provided further that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. Buyer Initials: / -4- 2544-33253\CLP428\DISCLSR\609965.7 9/25/08 8. Parking of Recreational and Commercial Vehicles. Sections 2.4.1, 2,4.2 and 2.4.3 of the Community Declaration impose limitations and prohibitions on the parking of. Authorized Vehicles and Prohibited Vehicles within the Community. In accordance with Section 2.4.6 of the Community Declaration, an Owner may park any Authorized Vehicle that exceeds seven (7) feet high, seven (7) feet wide, and nineteen (19) feet long in the Owner's garage or driveway (as long as the Authorized Vehicle does not extend onto the sidewalk or drive approach area). In addition, no delivery and/or moving trucks larger than forty (40) feet are permitted on any private drive having less than a twenty-five (25) foot radius that is located within a Neighborhood in the Community. You further acknowledge that it is your responsibility to determine whether the parking provided in the Community and your Neighborhood is satisfactory for your purposes and to verify that the standard height and depth of the garage will provide adequate clearance for your vehicles before the Close of Escrow on your Home. 9. Owner Maintenance Guidelines. As set forth in Section 9.1.1 of the Community Declaration, each Owner must maintain his Home and Homesite in a neat and attractive condition at all times. The maintenance of all areas located within the boundaries of a Homesite is the responsibility of each Owner. The Neighborhood Builders will provide you with important guidelines on the proper maintenance of improvements in your Homesite. Failure to properly maintain interior improvements may cause premature deterioration of important features, finishes or equipment. The Neighborhood Builders are not responsible for failure of equipment or other improvements caused by your failure to properly maintain such improvements. In addition, you acknowledge that some upgraded materials, if any are selected by you, may have specific maintenance requirements. The Neighborhood Builders are not responsible for any damages that may occur to such materials due to your failure to properly maintain them. 10. Insurance. In accordance with Article IX of the Community Declaration, you are solely responsible for determining the type and quality of insurance required to adequately insure your Homesite and Home, your personal property, and your personal liability for ownership of your Homesite and Home. You are solely responsible for determining if natural disaster insurance is required for your Homesite and Home. If any insurance is required by your lender, you are responsible for obtaining that insurance prior to Close of Escrow. 11. Design Review of Improvements and Alterations. You may not build, construct, install or plant any improvements on your Homesite (or alter any improvements located on your Homesite, including your Home), until you have submitted plans and specifications and obtained approval from the Design Review Committee, as set forth in Article V of the Community Declaration. The Design Review Committee will establish Design Guidelines containing rules and guidelines for the submission of plans and specifications. The Design Review Committee may collect a fee to review the plans. All Improvements must comply with any applicable restrictions in the Community Declaration and the Design Guidelines, as well as with all requirements imposed by the City and any other local governmental agency. The Design Guidelines and City and other local governmental agency regulations may change from time to time, and you will be subject to the regulations in effect at the time plans are submitted. After obtaining written approval of the Design Review Committee, Buyu Initials: / _j_ 2544-33253\CLP428\DISCLSR\609965.7 9/25/08 you must submit the plans and specifications to the appropriate local governmental agencies for any proposed improvements that require the issuance of a building permit, or other approval by the City or any other local governmental agencies, as applicable. You should read Article V of the Community Declaration before constructing any Improvements. You may be subject to a Neighborhood Association Design Review Committee if you live in a Condominium project. (a) Landscaping and Irrigation Improvements. All landscape materials and irrigation systems installed by Owners must comply with plans and specifications approved by the Design Review Committee, You may need to install yard drains when installing landscaping and patios. Your landscaping plans are required to conform with the original drainage plan of the Homesite. Changes to drainage and grading require approval of the Design Review Committee and generally require you to obtain a permit from the City, as applicable. The slope areas, if any, located on a Homesite may include drainage facilities and temporary erosion control measures. No modifications to the slope areas shall be undertaken without the prior approval of the Design Review Committee and the City, as applicable. (b) Landscaping Completion Deadline. Section 2.18 of the Community Declaration requires you to install landscaping on any portions of your Homesite that have not been landscaped by a Neighborhood Builder. Landscaping in the front yard of a Homesite must be completed within six (6) months after the Close of Escrow for the purchase of the Homesite and landscaping in the back yard of a Homesite must be completed within one (1) year after the Close of Escrow for the purchase of the Homesite. The time period for the completion of such improvements is set forth in the Community Declaration. (c) Owner Liability. Any alterations or Improvements made by you to your Homesite, to its drainage pattern or to the Home shall be made at your sole risk. The Neighborhood Builders assume no responsibility for any damage caused by the design, construction, installation, alteration or maintenance by you of any Improvement on the Homesite, or caused by the impact of such an Improvement on the Homesite's drainage pattern. (d) Licensed Professionals. If you wish to alter or install any Improvement on your Homesite, you should obtain the advice of a licensed architect or civil, soil or structural engineer, as applicable, and should design and complete the alteration or installation of the Improvement in accordance with such licensed professional's advice and specifications. 12. Drainage. Section 2.14 of the Community Declaration contains important restrictions concerning drainage of water and water pollution. (a) Surface Water. The Master Developer and Neighborhood Builders have provided for surface and underground drainage of water from all Homesites and Homes in the Community. Your Homesite may have surface "swales" or area drains to catty the water from the rear and sides of the Home to the street or other designated outlet points. The Homesites and Homes are graded in accordance with plans approved by the City and certified by a registered civil engineer. In connection with the preparation of landscape plans for your yard, it is important that you consider any possible harmful effects that such landscaping and associated Improvements may have on adjacent property and structures as well as your Homesite and Home. Because the Community and your Homesite are located in an area which may contain Buyer Initials: / _6_ 2544-33253\CLP42"ISCLSR\ 609965.7 9/25/08 expansive soils as more particularly explained in the Paragraph below entitled "Soil Conditions," water may have a detrimental impact upon such soils and the soils of surrounding Homesites and slopes. Existing drainage patterns must be maintained and all drainage systems must be kept free of debris and free flowing. (b) Effect of Improvements and Alterations. Raising the existing grade, constructing planters, changing the drainage pattern and other similar activities may cause damage to your Homesite, adjacent property (including, without limitation, your neighbor's Homesite, adjacent slopes and lower Homesites) and Improvements located thereon, including the Home. It is recommended that you consult with a licensed professional on landscaping and drainage, such as a qualified landscape architect and soils engineer, geotechnical engineer, geologist, civil engineer or other similar specialist, before making any alterations. Any Improvements must be designed and constructed in a manner to prevent any possible damage to your Homesite and to adjacent property. If any obstruction occurs to the drainage on your yard, it may result in obstruction of drainage from adjacent property or cause major problems such as trapped water or flooding which may undermine the foundation of your Home and surrounding Homes or create moisture intrusion or mold and mildew problems. You are solely responsible for any damage to your Homesite and Home or surrounding property and the Improvements located thereon as a result of any alterations you make to the approved existing drainage pattern or failure to maintain proper drainage. The Master Developer, Neighborhood Builders and Community Association shall have no liability or responsibility for any such damage. Any grading or drainage modifications are subject to applicable codes of the City, approval by the Design Review Committee, and the terms of any drainage easements that may be of record. You acknowledge and understand that if your Homesite or Home does not include area drains, you shall be responsible for installing area drains on your Homesite or Home when installing your landscaping. Your responsibilities for maintaining all grading and other drainage -related features on your Homesite and Home are set forth in Section 2.14.1 of the Community Declaration. (c) Water Quality Management Requirements. The Master Developer and Neighborhood Builders are developing the Community and Neighborhoods in accordance with a water quality management plan ("Plan's required by the California State Water Quality Control Board. The Plan imposes requirements for the design, implementation and maintenance of Best Management Practices ("BMPs'� to eliminate or mitigate all non -stone water discharges into storm drains during and after construction of the Community and Neighborhoods. The requirements imposed by the Plan are in addition to any local ordinances with regard to discharge of non -storm water into storm drains. The Plan imposes post -construction requirements. This means that after the Close of Escrow, you and your sub -contractors and other agents, are required to comply with all BMPS which are necessary to prevent, without limitation, run-off of soil, sand, sediment, oil, gasoline or other hydrocarbons, paint, fertilizers, pool chemicals and other household chemicals into the storm drains located in your Neighborhood. For example, when fertilizing 'landscaping, measures must be taken to prevent over -watering the landscaping to ensure that fertilizer and other lawn chemicals do not run into the storm drains. Your Neighborhood Builder will provide you with a Best Management Practices Handbook containing BMP recommendations for the prevention of run-off into storm drains from your Homesite and Home. Buyer Initials: / -7- 2544-33253\CLP428\nI8CLSR\609965.7 9/25/08 The Plan affirmatively obligates all Owners to take immediate corrective action whenever there is a violation of the Plan as to an Owner's Homesite or Home. Penalties include significant fines that may be imposed against an Owner for failing to comply with BMPs necessary to prevent non -storm water run-off into storm drains, in violation of the Plan. 13. Utility and Other Easements. Article VII of the Community Declaration contains provisions pertaining to easements which may affect Owners and Homes. Your Homesite and Home may be subject to easements or other rights in favor of utility companies, local governmental agencies and other parties. These easements and rights may include access onto your Homesite or to exterior portions of the Home for purposes of installing, constructing, inspecting, maintaining and repairing facilities which arc customary for residential developments (including, but not limited to, water lines, sewer lines, electrical lines and facilities, transformer boxes, natural gas pipelines, street lights, telephone lines and facilities, cable television lines, mailboxes, traffic signs, fire hydrants, etc.). These facilities and structures may be located above ground or below ground. In either case, the foregoing easements, rights and facilities may restrict the use and type of improvements you can make to your Homesite and Home, and the utility company, local government agency or other parties benefited by such easement or right may have the right to remove improvements made by you on the easement area without any obligation to repair or restore them. You should review the policy of title insurance, the tract map for your Homesite, Article VII of the Community Declaration, and the Supplemental Declaration to determine what easements and other rights, if any, affect your Homesite and Home. Such easements may preclude construction of structures or other improvements or may require an encroachment permit to be obtained. You should not excavate or construct an improvement on any portion of your Homesite, as applicable, until you have consulted with an applicable licensed design professional (for example, an engineer) and located all easements and facilities. A copy of the tract map depicting your Homesite is available for review in the sales office. The location of gas and electric meters, telephone and cable access panels may change from the locations shown in the models. Please ask your sales representative for information concerning the proposed location of utility facilities and structures for your Home. The Master Developer and Neighborhood Builders make no representations or warranties concerning the final location of these facilities or structures for your Home. 14. Pets. Household pets, such as dogs or cats, are limited to reasonable quantities as established in Section 2.5 of the Community Declaration. Buyers shall be liable for any unreasonable noise or damage (including, but not limited to, clean up after such animal(s)) caused by any animal brought or kept upon the Community and Neighborhoods as more fully described in the Community Declaration. 15. Window Coverings. In accordance with Section 2.10 of the Community Declaration, the Design Guidelines and Community Guidelines may prohibit or restrict certain types of window coverings such as paint, foil, reflective tint or other similar materials or substances, and may permit certain types of temporary window coverings pending installation of permanent window coverings. 16. Walls and Fences. Wall and fence heights may vary throughout the Community and your Neighborhood. Walls and fences are subject to change, at any time and without notice to you, from any depiction that may have been provided or shown to you. Section 9.1.4 of the Buyu InWals: I _g. 2544-33253\CLP428\nISCLSR\ 609965.7 985108 Community Declaration sets forth Owner's wall maintenance responsibilities. Owners are responsible for maintenance of all portions of the walls and fences that border the perimeter of the Homesite, including any pilasters located on an Owner's Homesite, except for those portions that are designated for maintenance by the Community Association or a Neighborhood Association. You should review the Community Association Governing Documents for further information. Community Walls, Neighborhood Walls and/or Party Walls (all as defined in the Community Declaration) may be installed on the property line(s) of your Homesite (collectively, the "Walisl% as shown as Exhibit WM attached to the Community Declaration, Neighborhood Declaration or a Supplemental Declaration. Owners must maintain any portion of the Walls not otherwise maintained by the Community Association or a Neighborhood Association. Master Developer, Neighborhood Builders and the Community Association are not responsible for damage to any Wall on the Homesite if such damage results from your failure to properly maintain the Walls. 17. Solar Energy Systems. Pursuant to Section 2.17 of the Community Declaration, you and all other Owners of Homesites in the Community have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar energy systems ("System"). The installation and maintenance of any System by you shall be subject to all applicable ordinances and zoning regulations of the City, the Uniform Building Code and associated ordinances. California has a strong public policy in favor of solar energy needs of a neighbor, including but not limited to the location and height of trees on your Homesite. You must obtain written approval from the Design Review Committee prior to installation of a System and you must comply with reasonable restrictions placed on the System by the Design Review Committee, subject to California Civil Code Sections 714 and 714.1, as the same may be amended from time to time. 18. Satellite Dishes. Satellite dish antennas (or Authorized Antennae, as defined in the Community Declaration) may be installed and used in the Community in accordance with Section 2.11 of the Community Declaration. However, Master Developer and Neighborhood Builders have provided no assurances or guarantees that any satellite dish or other antenna installed within the Community will remain unobstructed or that satellite service will be provided to an Owner after installation of an Authorized Antennae. You should understand that broadcast signals may be obstructed by the installation of additional improvements within and outside of the Community including, without limitation, homes, walls, fences, trees and other landscaping and such obstructions may not allow for acceptable satellite reception. You should also understand that Neighborhood Associations may impose additional restrictions. 19. Amendments to the Community Declaration. Notwithstanding the fact that you have received a copy of the Community Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions. 20. Additional Provisions. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code and the Federal Fair Housing Act codified at Title 42 United States Code, Buyer Initials: i -9- 2544-33253TU428TISCLSM 609965.7 9/25/08 Section 3601 et seq., which may supplement or override the Community Association Governing Documents. The Master Developer, Neighborhood Builders and Community Association make no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. COLUMBUS SQUARE DISCLOSURES 21. Charitable Endowment Fee. A recorded Charitable Housing Agreement Imposing Endowment Fee On Transfer ("Agreement'l affects your Home and the other Homes in the Community. The Agreement requires that an "Endowment Fee" equal to one -twentieth of one percent (0.05%) of the total sales price (0.0005 x total sales price) be paid each time a Home in the Community is transferred to a new owner. The Endowment Fee will be paid to Lennar Charitable Housing Foundation, a California nonprofit public benefit corporation ("Foundation'l, to be used for the purposes described in the Agreement. When you close escrow for the purchase of your Home, you will pay the Endowment Fee to the Foundation. Thereafter, each time your Home is resold, the Endowment Fee must be paid at the close of escrow, but it may be paid either by the new buyer or the then current seller. The Agreement will be in effect for an indefinite period of time. 22. Affordable Housing/Transitional Housing. The City of Tustin has required the Master Developer and Neighborhood Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units'l within the Community. Sixty-three (63) Affordable Housing Units will be located in the Camden Place Neighborhood, fifty (50) Affordable Housing Units will be located in the Cambridge Lane Neighborhood, and one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court). Certain of these Affordable Housing Units will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Homes subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. If you are interested in the Affordable Housing Units you should consult your sales representative for further information. Browse d Jay, luld 23. "Active Adult" Neighborhood. An "Active Adult" neighborhood, is proposed for the Community on Lot 265 of Tract 16581 which is located on Charleston and Cambridge Streets adjacent to Georgis Street and Keningston Park Drive,and planned to consists of approximately 240 age restricted residences.. As an Active Adult neighborhood, each Home will be required to be occupied by at least one resident who is at least 55 years of age. If the Active Adult has its own recreational facilities and activities then all assessments for the maintenance of these recreation facilities are the exclusive responsibility of the Active Adult residents. As a result, the recreational facilities located within the Active Adult neighborhood are not open to other Owners in the Community. However, Active Adult residents will have the right to use the public recreational facilities located throughout the Community and, if annexed into the Community Association and paying assessments, will have the right to use the Community Association recreational facilities. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. Master Developer may also, plan NO -11L Buyer Initials; / _10_ 254433253\CLP428\DISCLSR\609965.7 925/08 and construct other types and number of Homes, including rental, within Lot 265 with approval by the City of Tustin. 24. Home Business Use. Any Home within the Community may be used for home based business purposes, provided that such use is subject to the City of Tustin's Home Occupation Ordinance (if applicable), the provisions in Section 2.1 of the Community Declaration and the Community Guidelines. You are advised that the Community Declaration and the Community Guidelines may contain stricter restrictions than those in the City Ordinance and that such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses in your Home. 25. MCAS Tustin. (a) Prior Use as MCAS Tustin. You are advised that the Community was previously used as the Tustin Marine Corps Air Station ("MCAS Tustin'J. The Marine Corps and the Department of the Navy ("DON11 are the responsible agencies for the Installation Restoration Program ("IRP'!. The IRP is a comprehensive environmental investigation and cleanup program formed to identify, investigate and clean up chemical and nuclear contamination that has resulted from past land use operations. When MCAS Tustin was an active base, it received a permit from the California Department of Toxic Substances Control ("DTSC'J pursuant to the Federal Resources Conservation and Recovery Act ("RCRA1 (42 U.S.C. 6901 et seq.) to store hazardous waste on portions of the base. One of the conditions of that permit was to perform "corrective action" to clean-up releases of hazardous waste constituents throughout the base. Although the permit has expired, these corrective action obligations continue, and the DON is undertaking environmental investigation and cleanup activities on portions of the former base that are within the Community. (b) Asbestos Containing Material. Hazardous material in the form of asbestos or asbestos -containing materials ("ACM'J have been found and are otherwise presumed to exist in buildings and structures previously located in the Community. At such time as demolition of the prior existing buildings on the Community containing ACM was completed, the appropriate governmental regulatory agency confirmed that ACM had been removed from the buildings and any necessary soil remediation had been conducted in accordance with all applicable federal, state and local laws and regulations. (c) Easement for Environmental Remediation. An easement over the Community granted to the United States of America, acting by and through the Department of the Navy ("DON'0 in a document entitled "Quitclaim Deed for Marble Mountain Parcel and Environmental Restriction Pursuant to Civil Code Section 1471," was recorded on March 11, 2003, as Document No. 200300263521. In connection with ongoing remediation on the DON's property within the Community, it was agreed, as a covenant running with the land, that the DON and its officers, agents, employees, contractors and subcontractors shall have the right, upon reasonable notice, to enter the Community when a response or corrective action is found to be necessary or when such Buyer Initials: / _11_ 2544-33253\CLP42MISCISR\6099659 9/25!08 access is necessary to carry out a response action or corrective action. The right for the DON to enter the Community shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or corrective action as required or necessary, including, but not limited to, monitoring wells, pumping wells, treatment facilities, and the installing of associated utilities. In exercising these rights of access, except in the case of imminent and substantial endangerment to human health or the environment, the DON shall give reasonable notice of any action to be taken related to such remedial or corrective actions on the Community. Further, the DON will make reasonable efforts to minimize interference with the on going use of the Community and act in good faith to minimize any conflict between the necessary environmental investigation and remediation activities and the use of the Community. The DON is not required to restore or repair any Improvements in the Community damaged as a result of this right to access the Community. If any Improvements on Association Property are damaged as. a result of the DON's access to the Community, you are advised that any such damaged Improvement may be repaired or replaced by the Community Association and you may be charged a Reconstruction Assessment or Extraordinary Assessment (if applicable). (d) Groundwater Plume. The City Environmental Impact Report (1999) ("EIR'� indicates the presence of subsurface plumes of chlorinated volatile organic compounds ("VOCs', dissolved trichloroethene ("TCE") and methyl tertiary -butyl ether ("MTBE") at ground water level in portions of MCAS Tustin located outside the Community. It is presently unknown whether and to what extent these contaminants will migrate towards the Community. According to the ETR, estimated human health risks associated with residential use of groundwater from the plumes are above the acceptable limits of the United States Environmental Protection Agency. Master Developer and Neighborhood Builders make no representations or warranties with respect to the plumes described above or whether such plumes will migrate into the groundwater under Community. 26. Lifoc Property/Environmental Conditions. Due to its prior use as a military base, certain areas within the Community are located within areas designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W' (collectively, the "LIFOC Property'. The LIFOC Property is owned by the United States of America acting by and through the DON and will ultimately be annexed into the Covered Property pursuant to Section 16.6 of the Community Declaration. t1Fewwr (ti6W76cmw� (a) Prior Uses of the LIFOC Property. A11)tt-3�t (i) IRP -135. That portion of the LIFOC Property identified as IRP - 13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA' and as a "Miscellaneous Wash Area" ("MWA'). The TSA consisted of two (2) buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used as adegreaser to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad. That portion of the LIFOC Property identified as IRP 13W was previously used as a former disposal area where Buyer lnitiaW / _12_ 2544-33253\CLP42A\D1SCLSR\609965.7 9/25/08 hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, batter acid and solvent were stored. (ii) IRP -13W. That portion of the LIFOC Property identified as IRP - 13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, battery acid and solvents were stored. This area was paved and cleared of stored materials. IQpI5� (b) Release of Volatile Organic Compounds. As a result of the historic use add!*� of the LIFOC Property, hazardous substances have been released into the soil an group water at the LIFOC Property. Volatile Organic Compounds ("VOCs'), including trichloroethene R l ej°w-0 ("TCE"), 1,2,3-trichloropropane ("1,2,3-TCP1j, and related chlorinated organic solvents, were found in soil and groundwater at concentrations that could result in adverse effect to human t5H health (including without limitation, cancer risks) if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. (c) Remedial Action Plan. As a result of the release of hazardous substances at the LIFOC Property, various remedial activities have occurred or shall occur at the LIFOC Property and will continue to occur until remediation goals have been achieved. Furthermore, institutional controls will be put in place at the time of transfer of the LIFOC Property and will include restrictions consistent with the protection of human health and the enviro�� as discussed in Paragraph (d) below. (i) IRP -135. In October 2004, the DON issued a report entitled "Final Record of Decision/Remedial Action Plan, Operable Unit IA, Former Marine Corps Air Station, Tustin, California" ("ROD'), which describes a specific remedial action plan ("RAP") that has been approved for IRP -13S to address groundwater contamination. As documented in the ROD, "groundwater is the only medium that presents a risk to human health at the site. Soil, however, is also being addressed as part of the groundwater remedy because of the potential for residual contaminants in soil to act as a continuing source of groundwater contamination." Pursuant to the ROD, the selected remedy for groundwater at IRP -13S includes hydraulic containment of VOC-contaminated groundwater combined with excavation and off-site disposal of the most highly contaminated source areas ("hot spots"). Treated soil would be used for excavation backfill and treated water from the treatment system would be discharged to a city of Tustin storm drain, ultimately discharging into Peters Canyon Channel. Actual or threatened releases of hazardous substances from groundwater at IRP -13S, if not addressed by implementing the remedial action selected in the ROD/RAP, may present a potential threat to public health and welfare or to the environment. Master Developers and Neighborhood Builders make no representations, guarantees or warranties with respect to whether the remedial action selected in the ROD/RAP has been or will be implemented for IRP -13S. (ii) IRP -13W. In August 2005, the DON published a report entitled "Draft Feasibility Study Report for Operable Unit 4B [includes IRP -13W], Former Marine Corps Air Station, Tustin, California," ("Feasibility Study') which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil at OU -0 sites... therefore, soil remediation..." was not Buyer Initials: / -13- 2544-33253\CLP428\DISCLSR\ 609965.7 9/25/08 Nom° U addressed in the Feasibility Study. As of the date of this disclosure, the Feasibility Study is currently being revised, and the DON is currently evaluating remedial alternatives for OU -4B sites in the Feasibility Study, to be followed by a proposed plan and a final Record of Decision. No final remedy has been selected for IRP -13W. Master Developers and Neighborhood Builders make no representations, guarantees or warranties with respect to whether or when a final groundwater remedial action plan has been or will be selected or implemented for IRP -13 W. �V 1 � (d) Early Transfer of LIFOC Property and Land Use Restrictions. Generally, environmental remedial actions must be completed prior to property transfer. However, Section 120(h)(3)(C) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA'l allows deferral of the requirement that the United States provide a covenant in the deed conveying property, warranting that all remedial action necessary to protect human health and the environment has been taken before the date of transfer. Specifically, CERCLA Section 120(h)(3)(C)(i)(I1) requires that the deed or other agreement governing the transfer contain assurances, among other things, that provide for any necessary restrictions on the use of the property to ensure the protection of human health and the environment, as follows: (i) Any necessary restriction on the use of the property will be implemented to ensure protection of human health and the environment; (ii) Restrictions will be implemented on use, as necessary, to ensure that required remedial investigations (RI), response actions, and oversight activities will not be disrupted; (iii) All necessary response actions will be taken and will identify schedules for investigation and completion of all necessary response actions, as approved by the appropriate regulatory agency; and (iv) The DON will submit a budget request to the Director of the Office of Management and Budget that adequately addresses schedules for investigation and completion of all necessary response actions, subject to congressional authorizations and appropriations. On February 13, 2007, the DON issued a "Draft Final Finding of Suitability for Early Transfer for a Portion of Parcel 24 (Early Transfer Parcel 24-1) Within Carve -Out 5, Former Marine Corps Air Station, Tustin, California" ("FOSET'l to request transfer of the LIFOC Property prior to completion of all remedial actions pursuant to CERCLA Section 120(h)(3)(C). The FOSET presented the findings that the LIFOC Property, which is still in the remediation process, is environmentally suitable for transfer prior to completing all remedial action pursuant to the provisions of CERCLA and that the LIFOC Property has been designated as part of Early Transfer Parcel 24-1 ("ETP 24-1). The DON has determined that there is a potential for exposure to CERCLA hazardous, substances at ETP 24-1, and associated groundwater plumes. Restrictions on the land use of ETP 24-1 (including, without limitation, the LIFOC Property) to ensure protection of human health and the environment are set forth in one or more documents entitled "Covenant to Restrict Use of Property Environmental Restriction", more particularly defined in Section 26(Q)(ii) and Section 26(e)(iii) below, Buyer Initials:. / -14- 2544-332531CLP428%DI5CLSR\609965.7 9125/08 (collectively, the "Covenano between the United States, acting through the DON, and the State of California acting by and through the California Department of Toxic Substances Control ("DISC") through deed restrictions set forth in the FOSET. As of the date of this disclosure, the transfer of the LIFOC Property has occurred, however, environmental remedial actions at the LIFOC Property have not yet been completed. You should review the notifications and additional disclosures contained in the FOSET concerning IRP -13S and IRP -13W, as well as school site considerations, hazardous substances and petroleum products, underground storage tanks, lead based paint, asbestos - containing materials, radon, groundwater monitoring wells, polycholorinated biphenyl, indoor `\ air quality, oil -water separators and other areas of concern within or near the vicinity of the LIFOC Property. Master Developers and Neighborhood Builders make no representations, guarantees or warranties with respect to if or when the FOSET will be finalized.. (e) Deed Restrictions. Deed restrictions will ultimately be recorded on all or a portion of the Homesites or Homes in the Community lying within the LIFOC Property, and will limit certain activities on such Homesites or Homes. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the LIFOC Property to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. (f) Inspection and Compliance Reporting Obligations, Indemnification. The Board of Directors of the Community Association shall be responsible for site inspections of the LIFOC Property and annual compliance reporting to address the monitoring and maintenance necessary to ensure compliance with the restrictions and terms of the Covenant. You shall not interfere with the Community Association's performance of such inspection and compliance reporting obligations. n/^ (g) Documentation Relating to the Release and Remediation Activities. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the LIFOC Property. The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the LIFOC Property: (i) Supplemental Declaration to Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square (Early Transfer Parcel (ETP) 24-1A and 24-1B), made by Moffett Meadows Partners, LLC, a Delaware limited liability company and consented to by the Community Association, which was re-recorded on June 26, 2008, as Instrument No. 2008000307660 (together with any amendment thereto, collectively, the "Supplemental Declaration', in the Official Records of Orange County, California (the "Official Records'. (ii) Covenant to Restrict Use of Property Environmental Restriction (Re: Former Marine Corps Air Station Tustin) Early Transfer Parcel (ETP) 24-1A (Portion of Parcel 24) made by and between the United States, acting through the DON, and the State of California acting by and through the DISC, which was recorded on February 28, 2008, as Instrument No. 2008000090055, of Official Records; A J54W, Buyer Initials: ✓ -15- 2544-33253\CLP428\DISCLSR1609965.7 9/25/08 (iii) Covenant to Restrict Use of Property Environmental Restriction (Re: Former Marine Corps Air Station Tustin) Early Transfer Parcel (ETP) 24-1B (Portion of Parcel 24) made by and between the United States, acting through the DON, and the State of California acting by and through the DTSC, which was recorded on February 28, 2008, as Instrument No. 2008000090056, and re-recorded on June 5, 2008 as Instrument No. 2008000270235 of Official Records; (iv) Draft Final Finding of Suitability for Early Transfer for a Portion of Parcel 24 (Early Transfer Parcel 24-1) Within Carve -Out 5, Former Marine Corps Air Station, Tustin, California (Department of Navy, February 13, 2007); (v) Draft (60% Design Submittal) Remedial Design, Hydraulic Containment with Hot Spot Removal, Operable Units IA and 1B, Former Marine Corps Air Station, Tustin, California (Department of Navy, June 2005); q / 73P / , (vi) Draft Feasibility Study Report For Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005 (Bechtel Environmental, Inc., August 2005); (vii) Final Record of Decision/Remedial Action Plan Operable Unit IA, Former Marine Corps Air Station, Tustin, California (Department of Navy, October 2004); (viii) Final Feasibility Study Report, OU -IA, Marine Corps Air Station, Tustin, California (Bechtel Environmental, Inc., August 2003); and (ix) Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California (Department of Navy and City of Tustin, December 1999). You should carefully review these reports before making a decision to buy a Home in the Community. Copies of the reports are available for review at either (1) BRACS Environmental Coordinator's Office, Library Building 307, MCAS EI Toro, telephone (949) 726-5398 or (2) University of California at Irvine Langson Library, Government Publication — Department, Irvine CA (949) 824-7362 or (949) 824-6836. or information regarding the �au'vrlG(� environmental documents prepared for former MCAS Tustin, p ease contact the Administrative Records Division by calling (619) 532-3673, located at Building 1, 937 Harbor Drive, San Ci �USTw Diego, California 92132, or the BRAC Information Repository Office located at 7040 Trabuco Road, Building 307 on the former MCAS EI Toro, (949) 726-5398. The Master Developer and Neighborhood Builders make no representations or warranties with respect to the LIFOC Property and the environmental conditions described above or in the reports. rrovwlWlvl 2.51 c Due to the fact that groundwater in the Community has been found at depths of six (6) t' seventeen (17) feet below the ground surface, you are rohibited om drinking any groundwater pursuant to covenants recorded against the Community and is advised to avoid Cm `M eating any fruit from trees with deep root systems in the Community. You are also advised to *VkX4C4f at keep children and animals away from such fruit, soil and groundwater. Should any Person come fn Wt into contact with such fruit, soil or groundwater, such Person is advised to wash thoroughly with Y Af* UI. soap and water and seek immediate medical attention. Buyer Initials: / _I(_ 2544.3325MCLP42MISCLSM 609965,7 9/25/08 (h) Surrounding Areas. The following items have been indicated in the EIR as affecting portions of MCAS Tustin that are outside of the Community. These items are not expected to impact the Community, and are listed in this Disclosure for your information only. Master Developer and Neighborhood Builders make no representations or warranties as to any future impact these items may have on the Community or Residents using public parks and other areas outside the Community. (i) Former crash drill site area; (ii) Former skeet ranges; (iii) Transformers containing polychlorinated biphenyls (PCBs); (iv) Buildings formerly on property containing lead based paint; (v) Moffit Meadow fire fighting trenches and crash crew burn pits; (vi) JP -5 pipeline, currently classified as out of service; and (vii) Petroleum hydrocarbons in subsurface soil. If you have any questions or concerns about environmental activities at MCAS Tustin or the Community, please contact the Local Redevelopment Authority at the City of Tustin or visit the United States Naval Facilities Engineering Command's intemet website at www.efdsw.navfac.navy.mil/EnvironmentaUTustin.htm. 27. Prior Agricultural Use. The Community is located on or near lands that are or were previously used for agricultural purposes, including farming operations. By reason of such agricultural use, you may be subject to dust, noise and odors and may be exposed to pesticides, herbicides, insecticides and other chemicals. By acceptance of a deed to a Home, you (on your own behalf, and on behalf of the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept these existing and future impacts and forever waive any and all causes of actions against the Master Developer, Neighborhood Builders and Community Association and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. t�c�u Y�a.w>.e — �S,rwtet k,� p.� • Qct,Gc,VL 28. The Village Conservatory. The Community includes a private recreational center (the "Conservatory'. The Conservatory includes swimming and wading pools, spa, recreational building and related facilities. While the Conservatory is planned to be private and only open to Owners and guests in the Community, the public will have access to the Open Space/Park area (the "Village Green") surrounding the Conservatory and use of the outdoor recreational facilities with include an open turf area, tot lot, BBQ, and picnic area. The Village Green is maintained by the Comminity Association. All persons using the Conservatory are required to use caution and to watch their children at all times to prevent drowning and other injuries. The Community Association may, from time to time, promulgate rules for use and operation of the Conservatory, including reasonable hours of operation. Owners and other residents living in the area of the Conservatory and Village Green will most likely experience Buyer Initials: / -17- 2544-33253\CLP428\DISCLSR\ 609965.7 9/25/08 and otherwise be subject to or inconvenienced by noise and pedestrian and vehicular traffic in the areas surrounding the Conservaotry and Village Green. 29. Natural Hazard Zone Disclosures. Your Neighborhood Builder will provide you with a Natural Hazard Disclosure Statement in compliance with Section 1103 of the California Civil Code that discloses whether your Home is located in a seismic hazard zone. (a) Earthquakes. California is subject to a wide range of earthquake activity. California has many known earthquake faults as well as yet undiscovered faults. While the Community is not located in an Alquist Priolo Earthquake Zone, earthquakes are always a possibility. You must evaluate the potential for future seismic activity that may seriously damage your Homesite and Horne. A major earthquake, which some have predicted will occur in our lifetimes, could cause very serious damage to Homes located even many miles from the epicenter of the earthquake. A more moderate earthquake occurring on a more minor fault, or on an as yet undiscovered fault, could also cause substantial damage. For more information, read "The Homeowners Guide to Earthquake Safety" which explains the various geological hazards associated with earthquakes and contains information on planning ahead for earthquakes, as well as what to do during and after an earthquake. Master Developer and Neighborhood Builders make no representations or warranties as to the degree of earthquake risk in the Community. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. (b) Seismic Hazard Zones. Many portions of California are subject to risks associated with seismic activity. Areas that meet the definition of "Seismic Hazard Zone" in the Seismic Hazards Mapping Act (California Public Resources Code Section 2690, et seq.) are shown on maps that are prepared and released by the California Department of Conservation, Division of Mines and Geology. Such zones may pose an increased risk of damage to property from earthquakes and liquefaction. "Liquefaction" is the process by which water -saturated soils become unstable under heaving shaking and thereby jeopardize foundations and other structures. The Master Developer has been informed that all or a portion of the Community is located within a Seismic Hazard Zone. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. For more information concerning seismic activity and risks, read "The Homeowner's Guide to Earthquake Safety." (c) Area of Potential Flooding. The Master Developer has been informed that the Community is located within an Area of Potential Flooding (or Dam Inundation Zone) pursuant to applicable maps. The Office of Emergency Services is required to designate areas within which personal injury or death would, in its determination, result from the partial or total failure of any dam. These areas of potential flooding, as defined in the California Emergency Services Act (California Government Code Section 8984.4, et seq.), are shown on maps released by the Office of Emergency Services, copies of which are also on file with the City. These maps are updated periodically, and the Master Developer, Neighborhood Builders and Community Association make no representations, guarantees or warranties with respect to any future dam inundation zone determinations. The Community is downstream from the Santiago Creek Dam, an earthfill dam approximately one hundred and thirty-six (136) feet high which has a capacity of 25,000 acre feet of water. Santiago Creek Dam is jointly owned and maintained by the Serrano Irrigation District and the Irvine Ranch Water District. Information about the Santiago Buyer Initials: / _l8_ 254433253\CLP428\DISCLSR\609965.7 9125/08 Creek Dam can be found on the California Department of Water 'Resources website: http://cdec.water.ca.gov/misc/resinfo.html. Please contact the Office of Emergency Services for further information concerning Areas of Potential Flooding. 30. Soil Conditions. In purchasing your Home, you should review soils reports for the Community, available for review at the City, and take into consideration the following: (a) Expansive Soil. According to the soils report, soil in the Community is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other improvements, you should advise your consultants that designs must accommodate soils with expansion potential. In addition, you should consider the following information and recommendations before making or modifying any Improvements. (b) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs. Block walls may require extra horizontal and vertical steel reinforcing bars. (c) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Community by the Master Developer and Neighborhood Builders should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by the Master Developer and Neighborhood Builders designed to serve more than the one (1) Home should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. (d) Fill Soil. Homes in the Community may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. A soils report certifying the compaction of fill soils is available for review at the City. (e) Corrosive Soil. Soils in some areas of the Community are potentially severely corrosive to buried concrete and ferrous metals. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, you must Buyer Initials: / _19_ 2544-33253\CLP428\DISCLSR\609965.7 9125108 use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on your Homesite. Overwatering soil will exacerbate the corrosivity of the soil. You should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. (f) Groundwater. Groundwater has been encountered in portions of the Community at depths of six (6) to twenty-five (25) feet below the ground surface. You may not dig or drill on any Homesite to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. (g) Pools/Spas. Prior to designing any pool, spa, or other similar amenity, it is recommended you consult with a licensed civil engineer to determine the depth of the water table under your Homesite to insure that your Improvements are compatible with the depth of the water table and that they will not disturb or come in contact with the groundwater during a rainy season. The Master Developer and Neighborhood Builders make no guarantee that any Homesite has the ability for pool or spa installation. Homesites 242 through 245, inclusive, of Tract No. 16581, which are located within the LIFOC Property, have been determined to be unsuitable for installation of pools, spas or other similar amenity. The deeds for these Lots will contain deed restrictions that prohibit the use of the Lots for such purposes. (h) Soils Professionals. Before starting a pool or spa or any patio, concrete or other flatwork on the Homesite, you should consult with a licensed soils engineer to ensure that such work is constructed correctly in light of current soils conditions. Although consulting with a soils professional may add substantially to the cost of installation of improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking in improvements. (i) Interior Gases and Other Contaminants. The aging process of soil and natural soil elements, as well as the aging of man-made building materials, may create unwanted and undesired gases and other contaminants in Homes, both new and previously occupied. In addition, a lower rate of air exchange between outdoor and indoor environments has resulted from modem construction techniques which comply with energy conservation requirements enacted by the State of California. A lower air exchange rate can result in the build-up of unwanted gases and other contaminants in varying degrees. As the quality of the air we breathe can affect our health, you should frequently air out your Home by opening the windows. 31. Post -Tension Concrete System. Your Home may have been built using a post - tension concrete system ("System's. If any portion of your Home has been constructed using the System, a placard or stamp will be placed in the garage signifying the existence of such System. The System involves placing steel cables under high tension in the concrete slab located beneath the Home. Therefore, any attempt to alter or pierce the foundation (for example, sawing, cutting or drilling) could damage the integrity of the System and cause serious injury or damage to persons and property. The Master Developer and Neighborhood Builders shall not be responsible for any damage or injury resulting from or arising in connection with the alteration of the slab or foundation of any Home. By acceptance of a deed to a Home, you agree that: (i) you shall not cut into or otherwise tamper with the System; (ii) you shall not knowingly permit or allow any other person to cut into or tamper with the System so long as you own any interest in the Home; (iii) you shall disclose the existence of the System to any person who rents, Buyer initials: / -20- 254¢33253\CLP428\DISCLSM 609965.7 9/25/08 leases or purchases your Home; and (iv) you shall indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns free and harmless from any and all claims, damages, losses or other liability (including attorneys' fees and costs) arising from any breach of this covenant. 32. Reclaimed Water. In its efforts to conserve water, the Irvine Ranch Water District (the "Water District") requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The Water District may require the use of reclaimed water to irrigate landscaping in private yards. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable water. The water used to irrigate the Association Property may include reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. The Master Developer, Neighborhood Builders and Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. You are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 33. Electric Power Lines. Underground or overhead electric transmission and distribution lines and transformers are located in and around the Community. Two (2) 220 Kv and one (1) 66 Kv overhead transmission and distribution lines, which are located along Harvard and Warner Avenues and around other perimeter boundaries of the Community, and other lines and transformers are owned and maintained by Southern California Edison Company. Southern California Edison may increase the number of transmission and distribution lines and the electric current through such lines. Power lines and transformers produce extremely low -frequency electromagnetic fields ("ELF -EMF") when operating. For some time, there has been speculation in the scientific community about health risks associated with living near ELF -EMF sources. In 1992, the United States Congress authorized the Electric and Magnetic Fields Research and Public Information Dissemination Program to perform research on these issues and to analyze the existing scientific evidence in order to clarify the potential for health risks from exposure to ELF -EMF. In May of 1999, the National Institute of Environmental Health Sciences ("NIEHS") issued a report to Congress summarizing its review of scientific data from over three hundred (300) studies on ELF -EMF health risks. The ELF -EMF studies consist of both epidemiological studies (studies of exposure in human populations) and controlled laboratory experiments on animal and cell models. While some epidemiological studies suggested some link between certain health effects and exposure to ELF -EMF, the laboratory experiments did not support such a link. According to the NIEHS report, the scientific evidence shows no clear pattern of health hazards from ELF -EMF exposure, and the NIEHS report did not find evidence of any link sufficient to recommend widespread changes in the design or use of electrical transmission equipment. However, because the evidence does not clearly rule out any effect, Buyerinidals: / -Zl- 254433253\CLP428\DISCLSR\609965.7 9/25/08 NIEHS advocated continuing inexpensive and safe reductions in exposure to ELF -EMF and endorsed current utility practices regarding design and siting of new transmission and distribution lines. Further information on this subject is available from the Regional EMF Manager, Southern California Edison Company, 1851 West Valencia Drive, Fullerton, California 92833. Additional information on ELF -EMF and copies of the NIEHS report are available from the EMF -RAPID website at www.niehs.nih.gov/emfrapid/home.htm. 34. Air Quality. Southern California is subject to Stage I smog alerts. You should take advantage of the Air Quality Management District's ("A. Q.M.D. ") forecasts to plan your outdoor activities to avoid peak pollution by checking your television, radio or daily newspapers to find out if unhealthful air quality is expected. For more information, you can also call A.Q.M.D. at 1 -800 -CUT -SMOG (1-800-288-7664) or check their website at www.aumd.lroy. By acceptance of a deed to a Home, you (for and on your behalf, and the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept the existing and possible future impacts of smog on yourself and your family and forever waive any and all causes of actions against the Master Developer and Neighborhood Builders and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 35. Wind. All of Southern California is subject to periods of high winds. Wind speeds in the Community may exceed that experienced in other areas of the surrounding region. You must ensure that any structures or other Improvements you install on your Homesite are constructed or designed to withstand high winds. You are advised to consult with experienced architects and engineers in the design and specification of any structures or Improvements that you plan to add. 36. Private Streets. All of the streets within the Community are private streets. Maintenance and repair of the private streets is the responsibility of the Community Association or the Neighborhood Associations, as applicable. 37. Building Setbacks. Construction of Improvements in the yard of any Homesite such as pools, spas, patio covers, BBQ, fountains, trellises and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning, the construction of any Improvements to your Homesite. 38. Boundaries. You may not rely on any written or oral statements by Master Developer, Neighborhood Builders or their agents regarding the exact boundaries of your Homesite or Home or whether any wall or fence has been or will be constructed exactly on the boundaries of your Homesite. 39. Square Footage Representations. Representations of square, footage are approximate only. You may not rely on any written (brochures and other sales documents) or verbal statements by Master Developer, Neighborhood Builders or their agents regarding the exact square footage of your Homesite or Home. The computation of square footage varies based on the criteria used. You agree by acceptance of a deed to a Home to hold the Master Buyer Initials: /. -22- 2544-33253\CLP428MISCLSR\609965.7 9/25/08 Developer and Neighborhood Builders harmless in any dispute arising over any representations concerning the square footage of your Homesite or Home. TAXES AND ASSESSMENTS 40. Supplemental Real Property Taxes. The California law requires real property to be revalued whenever it changes ownership or when improvements are newly constructed. After the Close of Escrow for your Home, the County of Orange Tax Assessor ("Assessor") will determine a new taxable value for your Home based on current market values. The property tax will increase and you will receive one or more supplemental tax bills depending upon the time of the year in which Escrow closed for the purchase of your Home. Master Developers and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of any supplemental tax bills. The following notice is given pursuant to Section 1102.6c of the California Civil Code: "California property tax law requires the Assessor to revalue real property at the time the ownership of the property changes. Because of this law, you may receive one or two supplemental tax bills, depending on when your loan closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account, the supplemental tax bills will not be paid by your lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If you have any question concerning this matter, please call your local Tax Collector's Office." Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of the supplemental tax bill. You hereby acknowledge, accept and agree that neither Master Developer, Neighborhood Builders nor any of their authorized agents, representatives, employees or sales people have made any representations or warranties respecting the amount of the supplemental assessment or the assessed value. Should you have any questions or concerns relating to the supplemental assessment, you agree, prior to the Close of Escrow, to consult with the County Assessor or your legal or other advisors to satisfy such questions or concerns. 41. Estimated Taxes. You have been provided with an estimate of your assessments, THE AMOUNT OF ASSESSMENTS ARE ESTIMATES ONLY, and are based on current information provided by the City, County or those public or private agencies responsible for the administration for the districts. These assessments may INCREASE or DECREASE, based upon changes in real property tax law; the district(s) may dissolve; formation of new districts may occur, an extension of the districts or the services to the districts and other factors NOT IN MASTER DEVELOPER'S OR NEIGHBORHOOD BUILDER'S CONTROL may transpire. The amount of special taxes may appear on your property tax bill or may be billed separately. Buyer Initials: / _23_ 2544-33253\CLP428\DISCLSR\609965.7 9!25/08 42. Special Tag Assessment Districts. All or a portion of the Community lies within the boundaries of the following Special Tax and Assessment Districts: (a) Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of City of Tustin Community Facility District No. 06-1 ("CFD No. 06-1') which was formed for the construction and maintenance of public improvements, including, but not limited to, street improvements, parkway and landscaping, storm drains, utilities, public parks, public libraries and fire protection facilities. If your Home is located within CFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with CPD No. 06-1. You will be provided with a Notice of Special Tax for CFD No. 06-1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. (b) Tustin Unified School District Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of Tustin Unified School District Community Facility District No. 06-1 ("TUSDCFD No. 06-1 which was formed for the construction of elementary, middle and high school facilities and any improvements in connection with such facilities. If your Home is located within TUSDCFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with TUSDCFD No. 06-1. You will be provided with a Notice of Special Tax for TUSDCFD No. 06- 1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developers and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. 12- *.Cc, Rec. # NtuKC tWtpv. bts yRet The Neighborhood Builder will provide you with disclosures entitled "Notice of Special Tax" ("Notice'l prior to entering into a contract to purchase a Home. These Notices will inform you of the special tax and assessment districts that apply to your Home. The Notices will also contain a detailed description of the special tax calculation, important information about functions and rights of the special tax and assessment districts, your obligations, and who to contact for additional information about the special tax and assessment districts. You should thoroughly understand the information contained in the Notices prior to entering into a contract to purchase a Home. You will have five days after the Notice is delivered by mail, or three days after its delivery in person, to terminate the contract to purchase by giving written notice of that termination. All Homes will be subject to annual special taxes levied by one or more of the special tax and assessment districts listed above. Not all special tax or assessment districts listed above will apply to your Home. These special taxes will be a continuing lien on your Home and Buyer Initials: ! -24- 2544-33253\CLP428\DISCLSR\609965.7 9/25/08 will be billed to you with the annual real property tax bill issued by the County Assessor. The lien of these special taxes will continue until the obligation is satisfied. If you fail to pay a special tax when due, the assessment districts may exercise their right to foreclose on your Home. Information concerning the estimated amount of the annual special tax on your Home for the special tax and assessment districts is available from the City and County. 43. Changes in Special Taxes. The amount of any special taxes disclosed to you are estimates, only, and are based on current information provided by the City, County or other public or private agencies responsible for the administration of special tax districts. Special taxes may increase or decrease, based upon the terms of the special tax lien, changes in real properly tax law, the dissolution of special tax districts, the formation of new special tax districts, extension of special tax district(s), changes in services by the districts and other facts not in Master Developer's or Neighborhood Builders' control. The amount of special taxes may appear on your real property tax bill or may be billed separately. ADJACENT AREA DISCLOSURES 44. Adjacent Property Disclosures. The land adjacent to the Community within the MCAS Tustin Specific Plan has a variety of land use designations. The land use designations are subject to change. Therefore, the type of future development adjacent to the Community cannot be predicted with accuracy. 45. MCAS Specific Plan. MCAS Tustin was realigned and closed on July 2, 1999, in accordance with Base Realignment and Closure Act. The Department of Defense recognized the City of Tustin as the Lead Agency or Local Redevelopment Authority ("LRA") for preparation of the required reuse planning documents in late 1991. The MCAS Tustin Specific Plan/Reuse Plan (the "Plan") includes detailed planning, policies, regulations, implementation strategies and procedures necessary to guide the reuse and development of the site into the next century. Since implementation of the Plan will be a long- term process and there are unique circumstances associated with converting military bases to civilian uses, the Plan is intended to be practical in economic terms and visionary in terms of its ability to create and respond to future market opportunities. This means that it must provide sufficient guidance to provide investors with a high confidence level that their investments will be protected. At the same time, it must offer sufficient flexibility to respond to changing market conditions. A careful balance between certainty and flexibility underlies the provisions of this Plan.Gyipyy�� f Ad.L a ` b ppnv.O @ccfc�+ltku The Plan is intended to serve as both a pol cy-oriented and regulatory document. The Plan has been submitted to the Department of Def nse as a policy guide outlining the intended reuse for the Community. Subsequently, the Plan as adopted by the Tustin City Council by City Council Ordinance No. 1257 on February 3, 2003 as the zoning for the Community. The Plan may also be amended one or more times by the City of Tustin. The Plan is one device for implementing goals and policies of the Tustin General Plan. The Plan also contains the development and reuse regulations that constitute the zoning for the Community. As a federal installation, MCAS Tustin was not subject to local zoning and Buyer Initials: I -25- 2544-33253TLP428\13ISCLM 609965.7 9/25/08 planning requirements. Upon conversion to civilian use, the former MCAS Tustin property will be under the jurisdictional authority of either the City of Tustin or the City of Irvine, as applicable, and will be subject to local codes and ordinances. The City of Irvine has assigned responsibility for preparation of the Plan (and accompanying joint Environmental Impact Statement/Environmental Impact Report) to Tustin for that portion of the Plan area within Irvine. However, the City of Irvine will have to adopt any General Plan and zoning changes necessary to implement the provisions of the Plan within the City of Irvine. The land uses described in the Plan for the area covered by the Plan include, but are not limited to, Low -High Density Residential, Transitional and Affordable Housing, Golf Resort Living, Commercial Business and Retail, and Institutional/Recreational designations such as Parks, Trails and Schools. Also recommended were applications by the Orange County Sheriffs Department, City of Tustin and County of Orange Social Service Agency. The Master Developer and Neighborhood Builders have no control over the Plan, changes to the Plan, or development of the area covered by the Plan in accordance with the Plan. For further information, you should review the Plan. The Plan and information regarding the development of the Plan is available for review at the office of the Local Redevelopment Agency, City of Tustin. d fe, ed u pyu Gt spoSc.0 46. The District, The District is a one million square foot outdoor shopping center under development and is located approximately one and one-half (1'/2) miles southwest of the Community, at the corner of Jamboree Road and Barranca Parkway. The District includes, among other businesses, several retail stores, a grocery store and a movie theater. The District will result in increased noise and traffic in and around the Community, particularly along Jamboree Road and Barranca Parkway. Neither Master Developer, Neighborhood Builders nor the Community Association have any control over the use or maintenance of the District or its impact on the Community. 47. Rail Corridor/ Metrolink Station. As disclosed in the Homebuyer Notification, there is a rail corridor ("Corridor") located to the north of the Community. There is also a Metrolink station ("Station'l located to the north of the Community at 2975 Edinger Avenue, Tustin, CA 92780. The impact of the Corridor and Station may include, without limitation, increased noise, light and vibration levels in the vicinity of the Community. The Corridor and Station could be an attractive nuisance to children and animals who may wish to play in the vicinity of the rail corridor. The Master Developer, Neighborhood Builders and the Community Association have no control over the use, maintenance or care of the Corridor or Station. You acknowledge and understand that you are responsible for keeping your children and animals away from the Corridor and Station and the danger that is inherent around the Corridor and Station. You should evaluate the impact of the Corridor and Station on your decision to purchase a Home in the Community. L 'f "Gvvse CkKAkte-- 48. Temporary Sewer Lift Station. A temporary sewer lift station has been constructed within the vicinity of the Community. It is located at the northeast comer of Kensington Drive and Valencia North Loop Road and will serve a portion of the Community until such time the master infrastructure is completed to connect your Homesite or Home to the main sewer lines. The lift station has been installed below -grade and will be owned and Buyer Initials: / -26- 2544-33253\CLP428\DISCLSR\609965.7 9/25/08 (�e�li'eL� �a.hquuC,�.'�D a�f.flf�IS Lottig�YUc{�v� maintained by the Irvine Ranch Water District. Owners may encounter some odors in the areas near the lift station. You acknowledge, understand and agree that neither the Community Association nor the Neighborhood Builders will have any control over the use, maintenance or care of the lift station. 49. Areas Outside the Specific Plan. The MCAS Tustin Specific Plan, which is bounded by Edinger Avenue, Redhill Avenue, Barranca Parkway and Harvard Avenue has the following surrounding uses. (a) A rail corridor and Metrolink station (described above) are located along Edinger Avenue; (b) Offices, commercial and light industrial areas, are located along Edinger Avenue and adjacent to the Community at Redhill and Edinger Avenues; C'1 aLv-r5e.ek (c) A Southern California Edison easement area with high voltage transmission lines, is located along Edinger Avenue. GYtQ v��e Q The Master Developer, Neighborhood Builder and the Community Association have no control over development outside of the Community. 50. Airport Proximity Disclosure. The Community is located within what is known as an airport influence area (as defined in California Civil Code Section 1353) surrounding John Wayne Airport. John Wayne Airport is located approximately 3.6 miles southwest of the Community at the (405) San Diego Freeway and MacArthur Boulevard in the City of Santa Ana. For that reason, the Community may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the Community before you complete your purchase and determine whether they are acceptable to you. John Wayne Airport has noise abatement procedures in place, but there is no guarantee that these procedures will lessen the impacts on the Community of noise and vibrations caused by aircraft using this airport or that these noise abatement procedures will continue in the future. Further information is available front the airport website: www.ocair.com. Your Neighborhood Builder will provide you with a separate airport proximity notice required by California Civil Code Section 1353. 51. Avigation Easement. An avigation easement has been recorded against the Community. The avigation easement establishes a permanent right to travel through the air space over the Community for the benefit of John Wayne Airport. You may notice noise and vibration from overflying aircraft approaching or leaving the airstrip. By accepting a deed to a Home in the Community, you understand that the avigation easement gives the users of the airstrip a perpetual legal right to fly over the Community without interference from the occupants of the Community. 52. Residential Developments. There are existing single-family residential developments to the north of the Community across Edinger Ave. In addition to increased automobile and pedestrian traffic resulting from the proximity of these residential developments nXAr b(./hr, lock.) 1"ow5r1ce4ltw Buyer Initials: / .27- 2544-33253\CLP428\DISCLSR\609965.7 9/15/08 to the Community, the solitude of a Home's yard area may be significantly impacted by the proximity, height and design of multi -story, residential buildings constructed on property adjacent to the Community. The Master Developer and Neighborhood Builders have no control over the proximity, height and design of such nearby buildings and make no representation on the future impacts that these residential developments will have on residents of the Community. 53. CommereiaVlndustrial Property. The Community is located within the vicinity '� I of property zoned for commercial and heavy industrial uses located in the area of Barranca and LU Jamboree Streets. This area consists of, among others, a Waste Management Public Recycling/Transferring Station, asphalt recycling, trucking facilities and multiple concrete companies, all with product deliveries. These commercial and industrial properties may generate � dust, offensive odor, noise and other effects. The Master Developer and Neighborhood Builders U have no control over the existing or potential uses of this property. These uses may create light, k noise and other nuisances twenty-four (24) hours a day, seven (7) days a week. O� 54. Proposed Schools. The Tustin Unified School District owns an elementary school site located to the west of the Community on Landsdowne Road and a high school site is proposed adjacent to the Regional Park at the intersection of Kensington Park Drive and Valencia Avenue. Owners and other residents within the Community may experience, among other things, glare from bright lights, noise and increased traffic and parking congestion in connection with the use of this site. There are no assurances if or when any school will be completed on the site, nor the type of facilities that may be included as part of the school. You should contact the Tustin Unified School District at (714) 730-7301 for more information. Master Developer, Neighborhood Builders and the Community Association make no representations as to the future use of this school site. 55. Development Area. The Community lies in a rapidly expanding area. As future commercial and residential developments are built in and around MCAS Tustin, you may expect attendant limitations on solitude and inconveniences. For example, you can expect to hear noise from the development of future adjacent residential and commercial areas and the machinery used to develop these areas. You can also expect increased traffic and rerouting of traffic as new residential and commercial developments are constructed, nearby streets and major thoroughfares are widened and new streets are built. As the area around the Community develops, you may experience light entering your Home from exterior sources including streetlights, parking lot lighting and nearby residential and commercial buildings. The Master Developer, Neighborhood Builders and the Community Association have no control over the transmission of noise, light, vibration, odor and other impacts or their potential effects on Homes in the Community, including any which may be a direct result of current and future construction activity. 56. MCAS Tustin Airship Hangars. Two (2) airship hangars ("Hangars' are located within MCAS Tustin southwest of the Community. The hangars are each approximately one thousand (1,000) feet long, three hundred (300) feet wide, and'one hundred and seventy (170) feet tall. The view from your Home may be effected by the nearby presence of the Hangars. It has not been determined whether these Hangars will remain or be demolished, or what uses might be made of them. For further information regarding the Hangars, please contact the City of Tustin. Buyer Initials; / -28- 2544-33253TU42801SCLM 609965.7 9125/08 57. Future Fire Station Site. The Community is located adjacent to a future fire station site at the comer of Edinger Avenue and Keningston Park Drive. The fire station will operate twenty four (24) hours a day and seven (7) days a week. Owners whose Homes are located in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advise that Master Developer and Neighborhood Builders have no control over the operation or use of the fire station. You should carefully evaluate the impact of the fire station on your decision to purchase a Homesite or Home in the Community. 58. Village Services, The Community is located northwest of an area designated in the Plan as the Village Services area. When and if built, this area is intended to be accessible to both vehicle and pedestrian traffic, and to provide localized commercial retail and service uses to adjacent residential areas within the Plan area. 59. Learning Village/Transitional and Emergency Housing. The Community is located east of an area designated in the Plan as the Learning Village area. When and if built, this area is intended to provide a specialized educational environment with a variety of public - serving uses. GENERAL DISCLOSURES 60. Neighborhood Model Homes. Neighborhood model homes reflect typical exterior elevations, floor plans and methods of construction, and also illustrate possibilities for future interior decoration and exterior landscaping and hardscape improvements. Your Home will not necessarily conform to any model shown. The exterior elevations, architectural treatments, floor plans and colors shown on the master plot plans on display at the office of each Neighborhood Builder may be different than those both displayed in the models and those actually constructed by the Neighborhood Builder. Additionally, window locations, window types, roof lines, architectural projections and other similar features vary by elevation and Home location, and not all of the features displayed in the models may be included in your Home. The models have also been professionally decorated to show various decor ideas. Decoration items such as furnishings, draperies and other window treatments, any window tinting, wallpaper, custom carpet, coordinated paint, built-in shelves, beams, certain lighting fixtures (including halogen lighting), special ceiling treatments and some mirrors are for display purposes only, and are not included in the purchase price for your Home. Entries, walkways and driveways are shown in a variety of materials to show design ideas; however, for your Home, they will be constructed using only standard concrete. The hardscape shown in the model complex may not depict what may be constructed in all locations. Additionally, landscaping for the models is greater in density and type than any landscape package offered by a Neighborhood Builder. If not expressly included in the purchase price for your Home in writing by a Neighborhood Builder, the rear, side and front yard landscaping is your responsibility. The type of plants, and the size and density of the landscaping in the yards of the models are merely intended to suggest ideas to you. Certain models may also include hardscape items (patio slabs, patio covers, pools, spas, etc.) which are not included in the purchase price of your Home. All such options and upgrades displayed in the models (including decorator items, landscaping and hardscape) are not included in the purchase price for your Home unless expressly agreed to in writing by the Buyer Initials: / _29_ 2544.33253\CLP428\mSCLSR\609965.7 9/25/08 Neighborhood Builder. You should consult your sales representative for additional information regarding non-standard items used in the model homes. 61. Extended Use of the Model Complex. Each Neighborhood Builder reserves the right to use one or more Homes in a Neighborhood as a sales office and model home complex, and to display signs and banners, in connection with its program of marketing and selling Homes in the Neighborhood as well as other Homes owned by Neighborhood Builders, even if they are located in separate and unrelated Neighborhoods. 62. Grading Variations. Your Homesite has been graded to City specifications and may vary significantly from other Homesites. Variations may include slopes, swales, drains, flood control channels and retaining walls as required. Any changes made to the grading of the Homesite which your Home is located may significantly affect you or your neighbor's drainage pattern and cause significant property damage to your Home or a neighbor's Home. 63. Rall/Ceiling Heights. Wall and ceiling heights and configurations may vary significantly by elevation. Your Home's walls and ceiling heights may be different from those used in the model homes. You are encouraged to speak to a sales representative if you have any questions. 64, Right of Substitution. From time to time due to unavailability and other production considerations, it is necessary for a Neighborhood Builder to make substitutions of materials and other items used in construction of the Homes from those materials and items displayed in the models. Therefore, each Neighborhood Builder reserves the right to make any changes or substitutions as the Neighborhood Builder deems necessary or desirable to the color schemes, building materials, fixtures, appliances and other components of the Homes. The foregoing substitutions may include, without limitation, kitchen appliances, household fixtures, electrical outlets and switches, hardware, wall surfaces, painting and other similar items. Each Neighborhood Builder shall have the right to make the substitutions described above without adjustment to the purchase price of your Home. 65. Changes in Construction Plans. The construction, grading, drainage and improvement plans (collectively, the "Construction Plans' for Homesites and Homes within each Neighborhood all contain dimensions that are approximate. They are not intended to be precise dimensions with regard to the Neighborhood. Room dimensions and electrical outlet placement will vary slightly from models and from printed information. Construction will be performed in substantial conformance with the Construction Plans, but dimensions may change slightly from them. If there is a discrepancy between the Construction Plans and the actual as - built conditions of your Homesite or Home, the as -built conditions will control. The usable or buildable area, location and configuration of the Homesite and all improvements located thereon may fluctuate from that shown or displayed to you in the Construction Plans or any other drawings, topographic maps or models based upon a Neighborhood Builder's construction of final improvements including, without limitation, fencing and slopes, which shall be constructed in a Neighborhood Builder's sole and absolute discretion. The location, size, height and composition of all walls and fences to be constructed on your Homesite or adjacent thereto shall be determined by the Neighborhood Builder in its sole and absolute discretion and despite the Construction Plans or any other models, drawings or topographic maps displayed to you. The Buyer Initials: / -30- 2544<33253\C1,1`42INDISCLSM 609965.7 9/25/06 Neighborhood Builder makes no representations, warranties or assurances as to the size, height, location or composition of any wall or fence to be constructed on or adjacent to your Homesite or Home. The Construction Plans are subject to change at any time without notice or obligation. 66. Non -Standard Construction. You may not personally perform any changes of any kind to your Home (such as alarm systems, home intercoms, stereo wiring, etc.) during construction and prior to the Close of Escrow. Such changes may void your warranty. Only those options and upgrades specifically agreed to by the Neighborhood Builder will be made. Any other changes and unapproved options found in a Home during the construction period will be removed by the Neighborhood Builder and the cost of removal and any repairs shall be your responsibility. 67. Changes In Development Plan and Prices. The residential real estate market continually fluctuates due to changes in economic, social and political conditions that directly affect the supply of and demand for housing. As a result, the development plan for the Neighborhood and the Community, and home prices and the terms and conditions of sale are also subject to change. Therefore: (a) With the exception of your Home, each Neighborhood Builder reserves the right at any time prior to or after the Close of Escrow for the sale of a Home and without notice, (i) to increase or decrease the sale price, adjust incentives or otherwise adjust the terms and conditions of sale for Homes in the Neighborhood or in the Community, and (ii) change the number, size, location, elevation, design or type of homes constructed in current or future phases of development of the Neighborhood; (b) No Neighborhood Builder is obligated to offer you the same price, incentives or other terms and conditions of sale that the Neighborhood Builder has previously offered or may subsequently offer to another purchaser; (c) No Neighborhood Builder has either offered or agreed to any price protection or other similar commitment to you regarding the value or resale value of your Home (or any other property), and no Neighborhood Builder shall have any obligation or liability whatsoever to you in the event any price changes directly or indirectly affect the value of your Home; (d) When you entered into a Purchase Agreement, the Neighborhood Builder may have owned other properties which may have been off the market and may not have been shown to or otherwise made available for purchase by you. No Neighborhood Builder has any obligation to notify you if any of such properties come on the market or are otherwise available for purchase or any obligation to notify you of any future properties the Neighborhood Builder may develop and make available for purchase. (e) You shall not hold a Neighborhood Builder responsible for any fluctuations in the purchase price of Homes within the Neighborhood' or the Community. In consideration of a Neighborhood Builder's agreement to sell a Home to you, you agree that you shall have no claims against the Master Developer or the Neighborhood Builder for any possible change (decrease or increase) in the purchase price of Homes within the Neighborhood or any Buyulnivals; / -31- 2544.33253\CLP428\n1SCLSR\609965.7 9/25/08 other terms of purchase, including, without limitation, upgrades or other concessions or incentives offered by a Neighborhood Builder to other purchasers of Homes within the Neighborhood and the construction of any additional floor plans on any of the Homes in the Neighborhood. 68. Use of Subcontractors. Neighborhood Builders generally perform construction through the use of subcontractors, and may not employ construction trades or workers. A Neighborhood Builder is not permitted to change its subcontracts without approval of the respective subcontractor; therefore, you may not request interior or exterior construction changes or alterations not otherwise offered to other purchasers in the sales office. 69. Elevation/Floor Plan Specifications. In order to provide architectural diversity in the street scene, each Neighborhood Builder's architect has produced more than one exterior design (elevation) for each floor plan, Consequently, differences may be noticed between the model home for your floor plan and the elevation of your Home. You acknowledge that you have received a description of the exterior configuration for the elevation and the exterior color scheme number for your Home. You also acknowledge that your Home's elevation and floor plan may vary from the configuration of the model home for your Home in terms of layout, sizes of certain rooms, exterior elevation features and other items such as sloped ceilings, veneer treatments, window locations and sizes, roof lines and color schemes. 70, Upper Floor Weight Limits. The upper floors of Homes are designed to support weight limits as outlined in the Uniform Building Code ("UBC'). If you currently own or are planning to purchase a waterbed, pool table or other heavy furniture you must confirm with the manufacturer that the weight introduced by these items does not exceed the UBC weight limit. Master Developer and Neighborhood Builders shall not be responsible for damage caused by anything you place on the upper floors that exceeds the UBC weight limit. 71. Air Conditioning. The air conditioning system and equipment specifications installed in the model homes may vary and operate at a higher capacity than those provided in your Home. You are encouraged to speak with your sales representative to determine the exact equipment specifications that will be provided with your Home. The location of the air conditioning compressor may vary between the model and your Home and between your Home and other Homes in your Neighborhood. 72. Alarm System. If you purchase an alarm system from a Neighborhood Builder, you specifically waive any claims against Master Developer, the Neighborhood Builder and the Community Association as a result of any failure of the alarm system to wam,, frighten off, or alert anyone about intruders or any other problems. The sale of such system to you by the Neighborhood Builder is not a guarantee or warranty against criminal acts. Master Developer, the Neighborhood Builders and the Community Association are not insurersagainst criminal acts. 73. Energy Conservation. Homes in the Community meet or exceed the energy conservation standards that are a part of Title 24 of the California Administrative Code. Each Neighborhood Builder is required to design and install heating and cooling units that meet strict guidelines in Title 24. This is an energy conservation law that is designed to help reduce the Buyer[nitials: / _32_ 254433253\CLP429\DISCLSR\609965.7 9/25/09 overall use of energy in your Home. Title 24 describes the amount of cooling capacity as well as the minimum efficiency ratings for each geographic location in the state. In complying with Title 24, the cooling units installed in your Home are designed for maximum efficiency. Due to the Title 24 geographic requirements, on extremely warm days your inside room temperature may be warmer than your thermostat selection. This is due to design restrictions imposed by Title 24, not any design or installation defect by the Neighborhood Builder or its contractor. 74. Water Conservation. Each Home in the Community is equipped with low flow fixtures and other equipment to aid in water conservation in compliance with the City's Conditions of Approval for the Neighborhood. 75. Gas Barbecue Stub. If a natural gas service line is stubbed -out to an exterior backyard wall of your Home, it is suitable only for use in connection with a gas barbecue. Any other use may result in a serious fire hazard. The Neighborhood Builder and Master Developer are not responsible for any damage resulting from your use of the exterior gas stub. 76. Stain Grade Material Discoloration. Natural hardwoods used for cabinets, doors, stair systems, moldings, etc., are finished with stain and lacquer finish products which will change color over time. Colorchange may be the result of exposure to sunlight or weather, or simply the consequence of aging. Discoloration is not a defect. 77. Paint Discoloration. Certain portions of your Home, such as paint -grade cabinets, casework, moldings and interior doors, may be painted with oil-based enamel paint. Yellowing is common with oil-based enamel paints. Additionally, if your Home has white oil- based enamel paint -grade cabinets, yellowing will occur. 78. Variations In Natural Materials. Your Home may include various natural materials (e.g., wood products and/or stone products). Wood products vary in dimension, grain, color, moisture content, and performance when subjected to high moisture environments. Dimensional variations in the wood framing members (studs, plates, joists, rafters, and beams) or the required structural hardware connectors may show through the drywall and stucco finishes under certain lighting conditions. Wood panels and trim, exposed timbers, rafters, and posts will require periodic painting. Wood exposed to weather will require more frequent painting. Consult the maintenance schedule included in your Homeowners Manual. Some of the natural characteristics of wood will show through the painted or stained finish. For example, there may be shades of white, red, black, grey or even green in areas. Mineral streaks may also be visible. This is caused by the irregularity of mineral absorption from one part of the tree to another. Grain patterns or texture will vary from even to irregular throughout your cabinetry. Similarly, granite and natural stone products are composed of various mineral contents. Marble is less dense and more porous than granite. Great care must be taken to prevent damage to marble and other stone products. You should follow the manufacturers' recommendations.for cleaning and maintenance. Because these are natural products, they are subject to variation in color, veining, spotting, holes, cloudiness, texture and cracking, Some may vary 'significantly in filler and sheen. The samples in the sales office are actual pieces of natural stone which indicate general color and character; however, no two (2) pieces can be expected to match, even when taken from the same box. You should view the stone prior to purchase, and any questions regarding these Buyer Initials: / -33- 254433253TU428WISCLSM 609965.7 925/08 materials must be resolved prior to installation. If replacement of natural material tile or carpet is required, you understand and agree that a match with existing material cannot be guaranteed. 79. Brass Plumbing/Light Fixtures/Hardware. Brass, bronze or other finishes have their limitations. In time, the protective lacquer may deteriorate from exposure to weather, perspiration, cleaning agents, frequency of use and other factors. Tarnishing or excessive wear of these finishes is, therefore, not a defect, but a normal process which is unavoidable. Under the circumstances, these finishes cannot be guaranteed and products will not be repaired or replaced under the manufacturer's warranties for tarnishing or wear of finishes. 80. Drywall Panels and Finishes. Drywall panels are placed over the wall studs, joists, rafters and beams. Drywall is typically used to finish window openings. Drywall panels will not completely eliminate variations in the dimension and plane of wood framing members. Metal trim (i.e., corner bead) is used at corners, window edges, soffits and ceilings. They are designed to be filled with finish compounds. These trim metals provide a durable finish but cause the wall plane to "flare" at the metal edge. Panel joints and seams are taped and coated with finish compounds. Fasteners are coated with finish compounds to cover the small "dimple" in the surface of the drywall panel. Progressive applications of finish compounds are required to cover the joints, fasteners, and seams. In some cases, the normal finishing of these joints, fasteners, and seams will cause a subtle "bulge". When the finishing process is complete, the walls and ceilings receive a texture coat. In certain lighting conditions (up -lights placed close to the walls), irregularities and variations in the wall plane or intersection of vertical and horizontal panels may be evident. These variations are normal. 81. View. Master Developer, Neighborhood Builders, the Community Association and their counselors, agents, representatives or employees make no representations, warranties or promises concerning any view, present or future, that may be enjoyed from all or any portion of your Homesite or Home. The view from your Homesite or Home may change or may be fully or partially obstructed by (a) the construction of other homes, Improvements, structures, fences, walls and/or landscaping by Master Developer, Neighborhood Builders or other Owners within the Community, (b) activities and Improvements on real property outside the Community, and/or (c) the growth of trees and/or other vegetation within or outside the Community. You are advised that trees installed in the Community are generally smaller than they will be once mature and trees that do not block views when you purchase your Home may obstruct views as they grow. Master Developer and Neighborhood Builders make no representations or warranties with respect to any open space on property adjacent to your Homesite or Home, or the Community as a whole, whether this property is owned or controlled by Master Developer, Neighborhood Builders, government agencies or private property owners. 82. Warranties for Consumer Products. The manufacturers' warranties for the consumer products included in your Home (e.g., water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the sales office of your Neighborhood Builder. 83. Financing. This paragraph only applies if you are purchasing your Home from a Neighborhood Builder who is also a Lennar Family Builder and you are financing the purchase with Universal American Mortgage Corporation ("UAMC"). You will be required to provide Buyer Initials: / _34- 254433253\CLP426\DISCLSZ 609965.7 9/25/08 UAMC with all documents necessary to obtain loan approval. UAMC may be affiliated with the Neighborhood Builder. You are not obligated to accept a loan from UAMC, but you may be required to submit documentation to UAMC to permit the Neighborhood Builder to determine whether it is likely that you will qualify to purchase the Home you desire. You may select your lender independently; however, if you select a lender other than UAMC, you must ensure that the lender can meet the time limitations and requirements imposed on lenders in the Purchase Agreement. Master Developer and Neighborhood Builder have not reviewed or approved any lender's sales or marketing materials, and does not make any representations or warranties whatsoever regarding any matters set forth therein or your ability to obtain any financing under any particular terms. You are strongly encouraged to make your own independent evaluation of the rates and loan programs offered by all lenders, including UAMC. You understand that the interest rate and loan fees for the loan applied for will be determined at the time of the Close of Escrow and may be higher or lower than on the date you signed a purchase agreement for your Home. You also acknowledge that the interest rate and loan fees referenced on the loan application are approximate only and do not constitute a binding commitment. 84. Schools. The Community is currently located in the Tustin Unified School District, telephone: (714) 730-7301 (the "School Disrricr'�. To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Due to the rate of population change, the school district may find it necessary to change boundaries and designated schools periodically, prior to or after your close of escrow. In addition, it is possible that school district boundaries may change and your children will be required to attend a different school district in the future. Master Developer and Neighborhood Builders have no control or responsibility for such changes should they occur. The Community is currently expected to be served by the following schools: Marjorie Veeh Elementary School (K-6) 1701 San Juan Street Tustin, California (714) 730-7544 A.G. Currie Middle School (7-8) 1402 Sycamore Avenue Tustin, California (714) 730-7352 Tustin High School (9-12) 4321 1171 El Camino Real Tustin, California (714)730-7414 To obtain further information about the schools serving the; Community, including transportation to and from the schools, please contact the applicable school referenced above or the School District, or you can visit the School District's website at www.tustin.kl2.ca.us. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Buyer Initial&: / _35_ 254433253\CLP428\nISCLSR\6099653 9/25/08 85. Mailboxes. Mailboxes in the Community may be clustered in groups as required by the United States Postal Service. The location of mailboxes and above -ground utility structures are determined by governmental agencies or utility companies, or both. You may not change the type of mailbox being used or the location. Master Developer and Neighborhood Builders reserve the right to modify such locations as may be dictated by field conditions without prior notice. 86. Residential Construction Legislation. California Civil Code Sections 895 through 945.5 ("Construction Claims Statute', went into effect on January 1, 2003. The Construction Claims Statute (a) delineates standards for how various components of your Home should be constructed and function, (b) limits the time frames for bringing various claims against the Neighborhood Builder to anywhere from one year to ten years (as listed in the Construction Claims Statute) after the Close of Escrow, (c) imposes an obligation on all Owners and their successors in interest to follow Neighborhood Builder's maintenance recommendations and schedules or other applicable maintenance guidelines, and (d) establishes a non -adversarial claims resolution procedure. Pursuant to Section 914 of the Construction Claims Statute, the Neighborhood Builder is permitted to elect to utilize the procedure in the Construction Claims Statute or its own alternate contractual pre -litigation procedures. The applicable claims handling procedures are outlined in the Purchase Documents you receive from the Neighborhood Builder, including the "Dispute Resolution" provision in Section 13.5 of the Master Declaration. A separate notice further describing claims handling procedures may have been recorded against the title to Homes by the Neighborhood Builder in some Neighborhoods. You should review any such notice and your Purchase Documents carefully concerning these issues. YOU ARE ADVISED THAT THE CONSTRUCTION CLAIMS STATUTE AFFECTS YOUR LEGAL RIGHTS. YOU ARE ADVISED TO READ THE STATUTE CAREFULLY AND SEEK LEGAL ADVICE IF YOU HAVE ANY QUESTIONS REGARDING ITS EFFECT ON YOUR LEGAL RIGHTS. Buyer Initials Buyer Initials 87. Duty to Follow Maintenance Guidelines. An Owner is obligated by Section 907 of the Construction Claims Statute to follow any maintenance recommendations and schedules from the Neighborhood Builder, including the maintenance recommendations and schedules for manufactured products and appliances included with the Home, as well as all commonly accepted maintenance practices (collectively, "Maintenance Guidelines'. Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow any such Maintenance Guidelines may reduce or preclude an Owner's right to recover damages relating to an Owner's Home which could have been prevented or mitigated had the Maintenance Guidelines been followed. Buyer Initials Buyer Initials Buyer Initials: / -36- 2544-3325MCLP428WISCLSM 609965.7 925/08 88. Obligation to Retain Purchase Documents. The Purchase Documents that you receive through escrow in conjunction with the purchase of a Home may include Maintenance Guidelines, a written limited warranty, claim forms, and other documentation relating to the Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these documents and provide copies of such documents to an Owner's successors in interest upon the sale or transfer of the Owner's Home. Buyer Initials Buyer Initials 89. Warranty and Limitations on Liability. A Neighborhood Builder may provide a written limited warranty for the Homesite or Home covering certain defects for a limited period after the date the limited warranty commences. Warranty periods for items will vary as set forth in the written limited warranty. During the written limited warranty period, if any, the Neighborhood Builder will repair or replace, at the Neighborhood Builder's sole discretion, certain components of your Homesite or Home, as set forth in the written limited warranty. A written limited warranty generally does not cover defects resulting from the failure of an Owner to perform commonly- accepted maintenance. Minor expansion, contraction, settlement cracks normal to home construction, and secondary damage, are generally not covered under the terms of a written limited warranty. Please refer to the written limited warranty you may receive for additional information. No other warranties or guarantees, whether expressed or implied, are provided, unless stated in writing and signed by a Neighborhood Builder. The manufacturers' warranties for the manufactured consumer products included in your Home (for example, water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the Neighborhood Builder's sales office. 90. Notice of Sexual Offenders. The following notice is given pursuant to Section 2079.1 Oa of the California Civil Code: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meeanslaw.ca.eov. Depending on an offender's criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides. Prior to the purchase of a Home in the Community, you may research the database to determine whether there are sex offenders in the area. Master Developer, Neighborhood Builders, the Community Association and their respective directors, officers, employees, agents, representatives and consultants make no representations, warranties, or guarantees regarding the presence or absence of registered sex offenders within the Community or in the surrounding area. In addition, Master Developer, Neighborhood Builder, the Community Association and their respective directors, officers, employees, agents, representatives and consultants have no obligation or duty to investigate existing residents or buyers to determine whether they are sex offenders. You are solely responsible for making your own investigation. For further Buyer Initials; / -37- 2544-332MCLP42ADISCLSM 609965.7 9/25/08 information, please contact your local law enforcement agency, Most law enforcement agencies have special stations to view the Megan's Law database. 91. Benefit of Home Ownership. Although the purchase of a new home has traditionally been considered a wise decision, Master Developer and Neighborhood Builder have made no representations, guarantees or warranties to you regarding the tax benefits, investment benefits or other benefits of home ownership, regarding appreciation or depreciation in the value or equity accrual in your Home, and regarding future price adjustments. 92. Assumption of Risk and Liability. By acceptance of this Disclosure, you assume all risk and liability for injuries to persons and property that may be sustained by you, your family members and your social and business guests by reason of all conditions or circumstances disclosed in this Disclosure. VISITING THE COMMUNITY BEFORE MOVE -IN If you wish to visit the Community, the Neighborhood and your Home before your move in, please be aware that your Home is located within a construction area and that construction sites are potentially dangerous. The Neighborhood Builder will permit you to enter your Home and the construction area surrounding your Home provided that you are fully aware of the risks of such entry and are willing to comply with the procedures and requirements imposed on such visit by the Neighborhood Builder. You must be accompanied by your sales representative, or another representative of the Neighborhood Builder on any and all visits to your Home. Each Neighborhood Builder further requests that such visits be limited to non -construction hours. By signing this Disclosure you acknowledge that there are numerous risks associated with visiting your Home during construction, including without limitation, open trenches, construction traffic, potential falling debris, exposed nails and electrical wiring, incomplete construction and certain other potential hazards. You further agree to use due care while visiting your Home. In addition, prior to visiting any construction area you may be required to sign a waiver and release form provided by the Neighborhood Builder ("Waiver') in which you agree to comply with the provisons of the Waiver. - Whether or not You have signed a Waiver, by signing this Disclosure, you agree that you shall proceed at your own risk and you release and waive any claims against Master Developer Neighborhood Builders all of their affiliated entities, officers, directors, agents and assigns and all other persons or entities potentially liable to You as a result of an iniury which may occur during Your visit to your Home, to the Neighborhood and to the Community. ENTIRE DISCLOSURE; NO OTHER REPRESENTATIONS No sales representative, employee or agent of any Neighborhood Builder or the Master Developer has the authority to make any representation to you which contradicts or modifies the matters and information set forth in this Disclosure, the purchase agreement or airy•other written disclosure provided by the Master Developer or Neighborhood Builders in connection with the purchase of a Home in a Neighborhood (collectively, the "Disclosure Documenls'�. You acknowledge that no representations have been made to you by such persons other than as set forth in the Disclosure Documents and upon which you have relied in connection with the purchase of the Home. Please indicate below if any representations have been made by any such Buyer Initials: / -38- 254433253\CLP428\nISCLSR\609965.7 9/25/08 person which contradict or modify the matters and information set forth in the Disclosure Documents: RELEASE AND INDEMNITY REGARDING DISCLOSURES With respect to items of information disclosed to you in this Disclosure or in any Disclosure Documents provided by Master Developer or Neighborhood Builders (collectively, "Disclosure Items"), you agree that you and your family members release, waive and will not make any claims against Master Developer and Neighborhood Builders for (a) nondisclosure of Disclosure Items, (b) for alleged improper or incomplete Disclosure Items, and (c) personal injury, property damage, expenses (including attorney fees and costs) and other liability you, your family members and others experience from the nondisclosure, improper disclosure or incomplete disclosure of Disclosure Items. You also agree that you will indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns, harmless from all such claims by you, your family members and your social and business guests. Buyer Initials Buyer Initials (Buyer Acknowledgment on following page] Buyer Initials: / _39_ 2544.33253TU4281DISCLSM 609965.7 9/15/08 Columbus Square HOMEBUYER DISCLOSURE STATEMENT E1i1!_`isl7 W -"I N`/71 PIef��1al`►Y1 By the signatures below, you acknowledge that you will close escrow with full knowledge, understanding and agreement as to all of the information contained in this Disclosure, and that this Disclosure constitutes a part of the terms of your Home purchase. Buyer: Date: Homesite or Condominium Tract No: Street Address: Buyer Initials: / _40. 2544-33253TU42ADISCLSM 609965.7 9/25/08 t. << Columbus Square HOMEBUYER DISCLOSURE STATEMENT Meriwether • Camden Place The Gables • Astoria • Coventry Court Cambridge Lane • Mirabella • Verandas November 2009 Welcome to Columbus Square. We are pleased you are considering the purchase of a new home in Columbus Square. We want you (the "Buyer's to be an extremely satisfied customer. Part of your satisfaction is in knowing as much as possible about your new home in the master -planned community of Columbus Square ("Community"), located in the City of Tustin. We offer this Homeowner Disclosure Statement ("Disclosure's as a service to describe to you various matters which might affect your decision to purchase. Please read it carefully. Be aware, however, that (a) much of the information in this Disclosure has been obtained from other sources (public agencies, public records, etc.), and (b) the information contained in this Disclosure is not comprehensive. This means that we cannot guarantee the accuracy or completeness of the information disclosed. Because this information is subject to change without notice to us, it also means that we cannot commit to advise you of any changes affecting the information in this Disclosure. In addition to this Disclosure, the City of Tustin has required that the Master Developer provide you with a Columbus Square Homebuyer Notification (the "Homebuyer Notification I). The Master Developer prepared the Homebuyer Notification with information provided by the City of Tustin, at the direction of the City of Tustin and does not have the right to alter or update the Homebuyer Notification without the express written consent of the City. To the extent any of the ,information provided in this Disclosure is inconsistent with the information provided in the Homebuyer Notification, the Homebuyer Notification shall supersede this Disclosure to the extent of any inconsistency; provided, however (a) the conflicting documents shall be construed to be consistent to the extent possible, and (b) the more restrictive provisions of the conflicting documents shall control. By signing this Disclosure, you agree to independently verify all information regarding matters of concern to you before the Close of Escrow for your home purchase. As a part of your pre -purchase investigation, we strongly recommend that you visit the Community and the general vicinity surrounding the Community on several different days at several different times to familiarize yourself with the Community, its location and its surroundings. You will receive many documents in addition to this Disclosure to review, complete and sign before the Close of Escrow for the purchase of your home. These other documents are called the "Purchase Documents" in this Disclosure, and they include documents pertaining to Buyer Initials: / a_ 254433253\CLP428\DISCISR\509965.10 11/16/09 4 k the Community, defined below as the "Community Association Governing Documents". This Disclosure is not intended as a substitute for your review of the Community Association Governing Documents. This Disclosure does not amend, modify of supersede the Community Association Governing Documents. If the Community Association Governing Documents are inconsistent with this Disclosure, the Community Association Governing Documents will supersede this Disclosure. Unless defined in this Disclosure, capitalized terms used in this Disclosure have the meanings given them in the Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Community Declaration'. if the Community Declaration gives the same capitalized term a different meaning than this Disclosure, the meaning given in the Community Declaration shall apply. INTRODUCTION TO THE MASTER DEVELOPER Moffett Meadows Partners, LLC, a Delaware limited liability company, is the initial Master Developer of the Columbus Square master -planned community ("Master Developer'. INTRODUCTION TO COLUMBUS SQUARE 1. Location and Master Plan. The Community is east of Interstate 55 near the intersection of Edinger Avenue and Redhill Avenue, in the City of Tustin (the "CiOI'�. The master land -use plan approved by the City of Tustin for the Community is called the MCAS Tustin Specific Plan (the "Specific Plan's and it contains numerous design standards and development conditions. Such conditions establish, among other things, the number of single family dwellings and condominiums and other development requirements. If developed as approved by the City, Columbus Square will encompass approximately 1075 Homes, which are planned to consist of 283 'single family dwellings, 552 condominiums and 240 senior housing condominiums. The actual number of Homes built may increase or decrease subject to approval by the City. All Homes in the Community are planned to be subject to the jurisdiction of the Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association', as described in the Community Declaration. INTRODUCTION TO COLUMBUS SQUARE'S NEI( AND NEIGHBORHOOD BUILDERS 2. Neighborhoods. The Community is being developed with Homes in numerous distinct neighborhoods ("Neigh.borhoods'� constructed by various homebuilders ("Neighborhood Builders'). Neighborhood Builders may have owner occupancy restrictions, rental Homesites and Homes (each of which is defined below), and investor-owned Homesites and Homes. You are advised to read the individual Neighborhood Builder disclosures and any other documentation relating to the Neighborhood in which you choose to purchase a Homesite or Home thoroughly. Neighborhood Builder policies may differ from those described in this Disclosure and the Community Declaration and are enforceable by the applicable Neighborhood Builders. The following is a list of the different Neighborhoods to be developed by the Neighborhood Builders in the Community and the approximate number of Homes to be constructed in each Neighborhood; provided that that any product may be renamed or sold by the Buyer Initials: / -2- 2544-33253\CLP429\D1_SCLSR\609965.10 11/16/09 4, Neighborhood Builder currently listed below and the Neighborhood Builders reserve the right not to build the Neighborhoods listed below at all: (a) Lennar Homes of California, Inc. • Meriwether 114 Homes • Camden Place 222 Homes The Gables 84 Homes • Coventry Court 240 Homes (b) William Lyon Homes, Inc. and/or Resmark Equity Partners, LLC • Astoria 102 Homes • Cambridge Lane 156 Homes Mirabella 60 Homes Verandas 97 Homes 3. Ownership. A residential Lot in the Community is referred to as a "Homesite" in this Disclosure. If you are purchasing a residential Lot in the Community, upon the Close of Escrow, you will receive fee title to a Homesite, which will be improved with a single family dwelling (a "Home'. If you are purchasing a Condominium in the Community, upon the Close of Escrow, you will receive fee title to a Unit and you will also receive easements for maintenance and use over Exclusive Use Areas (collectively,; a "Home"). If you purchase a Homesite, you will not own the mineral, oil, and gas rights under the land below a depth of five hundred (500) feet, or the water rights. The holder of these rights has no right of surface entry. COMMUNITY ASSOCIATION GOVERNING DOCUMENTS Your Home will be subject to the following documents ("Community Association Governing Documems'�: (a) The Community Declaration, and any amendments or modifications thereto; (b) The Articles of Incorporation of the Columbus Square Community Association ("Community Association 'I; (c) The Bylaws of the Community Association; (d) The Supplemental Declaration of Covenants, Conditions and Restrictions ("Supplemental Declaration") that is applicable to the Neighborhood in which your Home is located, and may annex that Neighborhood to the coverage of the Community Declaration; and (e) Any Community Guidelines or Design Guidelines which may be adopted from time to time, respectively, by the Community Association's Board of Directors or the Design Review Committee ("Committee's pursuant to the Community Declaration. Buyerbitials: / _3_ 2544-33253\CLP428\DISCLSR\609965.10 11/16/09 9 You should carefully review the Community Association Governing Documents in order to understand your specific rights and obligations as an Owner in the Community. The Community Association Governing Documents establish limits and restrictions on the use of the Home you are purchasing. You will also be provided with a preliminary title report. The title report will list other recorded documents affecting the use of the Home you are purchasing. You should review the title report and the documents referenced in the report closely prior to your purchase of a Home. SPECIFIC PROVISIONS OF THE COMMUNITY DECLARATION 4. Assessment Obligation. The Community Declaration authorizes the Community Association's Board of Directors to levy a Common Assessment against each Home to meet the Community Association's Common Expenses. The Board of Directors is also authorized to levy various special assessments for specific purposes, in conformance with Articles I and VIII of the Community Declaration. The monthly installment of the Common Assessment will vary as each Phase of the Community is developed. You should review the Budget approved by the California Department of Real Estate and provided to you with the Final Subdivision Public Report for your Home. The Board of Directors' ability to increase the Common Assessments and improve additional special assessments without a vote of the Members is subject to certain limitations set forth in Sections 8.5 and 8.6 of the Community Declaration. The Community Association is obligated to provide you with an annual budget and other financial statements for the Community Association. 5. Use Restrictions. You must comply with all the various use restrictions set forth in the Community Declaration. These restrictions include, among other things, restrictions on non-residential uses of your Home, keeping of animals, improvements to your Homesite and Home, parking of vehicles, etc. The Community Association has the power to enforce the use restrictions set forth in the Community Declaration, as well as the Community Guidelines and the Design Guidelines. 6. Prohibited Dwelling Structures. You may not use your garage as a living area. Further, in accordance with Section 2.7 of the Community Declaration, you may not erect or use any outbuilding, tent, shack, storage shed, trailer, camper, motor home, recreational vehicle or any other vehicle on your Homesite for a Hving area. 7. Use of Garages. All vehicles owned or operated by or within the control of an Owner and kept in the Community must be parked in the assigned parking space or garage of that Owner; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Section 2.4.3 of the Community Declaration and Exhibit PC -1 attached thereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted within the Community except in an enclosed garage when the garage door is closed; provided, however, that such activity may not be undertaken as a business, and provided further that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. Buyer Initials: / -4- 2544-33253\W429\13ISCLSM 609965.10 11/16/09 4 8. Parking of Recreational and Commercial Vehicles. Sections 2.4.1, 2.4.2 and 2.4.3 of the Community Declaration impose limitations and prohibitions on the parking of. Authorized Vehicles and Prohibited Vehicles within the Community. In accordance with Section 2.4.6 of the Community Declaration, an Owner may park any Authorized Vehicle that exceeds seven (7) feet high, seven (7) feet wide, and nineteen (19) feet long in the Owner's garage or driveway (as long as the Authorized Vehicle does not extend onto the sidewalk or drive approach area). In addition, no delivery and/or moving trucks larger than forty (40) feet are permitted on any private drive having less than a twenty-five (25) foot radius that is located within a Neighborhood in the Community. You further acknowledge that it is your responsibility to determine whether the parking provided in the Community and your Neighborhood is satisfactory for your purposes and to verify that the standard height and depth of the garage will provide adequate clearance for your vehicles before the Close of Escrow on your Home. 9. Owner Maintenance Guidelines. As set forth in Section 9.1.1 of the Community Declaration, each Owner must maintain his Home and Homesite in a neat and attractive condition at all times. The maintenance of all areas located within the boundaries of a Homesite is the responsibility of each Owner. The Neighborhood Builders will provide you with important guidelines on the proper maintenance of improvements in your Homesite. Failure to properly maintain interior improvements may cause premature deterioration of important features, finishes or equipment. The Neighborhood Builders are not responsible for failure of equipment or other improvements caused by your failure to properly maintain such improvements. In addition, you acknowledge that some upgraded materials, if any are selected by you, may have specific maintenance requirements. The Neighborhood Builders are not responsible for any damages that may occur to such materials due to your failure to properly maintain them. 10. Insurance. In accordance with Article IX of the Community Declaration, you are solely responsible for determining the type and quality of insurance required to adequately insure your Homesite and Home, your personal property, and your personal liability for ownership of your Homesite and Home. You are solely responsible for determining if natural disaster insurance is required for your Homesite and Home. If any insurance is required by your lender, you are responsible for obtaining that insurance prior to Close of Escrow. 11. Design Review of Improvements and Alterations. You may not build, construct, install or plant any improvements on your Homesite (or alter any improvements located on your Homesite, including your Home), until you have submitted plans and specifications and obtained approval from the Design Review Committee, as set forth in Article V of the Community Declaration. The Design Review Committee will establish Design Guidelines containing rules and guidelines for the submission of plans and specifications. The Design Review Committee may collect a fee to review the plans. All Improvements must comply with any applicable restrictions in the Community Declaration and the Design Guidelines, as well as with all requirements imposed by the City and any other local governmental agency. The Design Guidelines and City and other local governmental agency regulations may change from time to time, and you will be subject to the regulations in effect at the time plans are submitted. After obtaining written approval of the Design Review Committee, Buyer Initials: / -5- 2544-33253TLP428MISCLSM 609965,10 13/16/09 4 you must submit the plans and specifications to the appropriate local governmental agencies for any proposed improvements that require the issuance of a building permit, or other approval by the City or any other local governmental agencies, as applicable. You should read Article V of the Community Declaration before constructing any Improvements. You may be subject to a Neighborhood Association Design Review Committee if you live in a Condominium project. (a) Landscaping and Irrigation Improvements. All landscape materials and irrigation systems installed by Owners must comply with plans and specifications approved by the Design Review Committee. You may need to install yard drains when installing landscaping and patios. Your landscaping plans are required to conform with the original drainage plan of the Homesite. Changes to drainage and grading require approval of the Design Review Committee and generally require you to obtain a permit from the City, as applicable, The slope areas, if any, located on a Homesite may include drainage facilities and temporary erosion control measures. No modifications to the slope areas shall be undertaken without the prior approval of the Design Review Committee and the City, as applicable. (b) Landscaping Completion Deadline. Section 2.18 of the Community Declaration requires you to install landscaping on any portions of your Homesite that have not been landscaped by a Neighborhood Builder. Landscaping in the front yard of a Homesite must be completed within six (6) months after the Close of Escrow for the purchase of the Homesite and landscaping in the back yard of a Homesite must be completed within one (1) year after the Close of Escrow for the purchase of the Homesite. The time period for the completion of such improvements is set forth in the Community Declaration. (c) Owner Liability. Any alterations or Improvements made by you to your Homesite, to its drainage pattern or to the Home shall be made at your sole risk. The Neighborhood Builders assume no responsibility for any damage caused by the design, construction, installation, alteration or maintenance by you of any Improvement on the Homesite, or caused by the impact of such an Improvement on the Homesite's drainage pattern. (d) Licensed Professionals. If you wish to alter or install any Improvement on your Homesite, you should obtain the advice of a licensed architect or civil, soil or structural engineer, as applicable, and should design and complete the alteration or installation of the Improvement in accordance with such licensed professional's advice and specifications. 12. Drainage. Section 2.14 of the Community Declaration contains important restrictions concerning drainage of water and water pollution. (a) Surface Water. The Master Developer and Neighborhood Builders have provided for surface and underground drainage of water from all Homesites and Homes in the Community. Your Homesite may have surface "swales" or area drains to catty the water from the rear and sides of the Home to the street or other designated outlet points. The Homesites and Homes are graded in accordance with plans approved by the City and certified by a registered civil engineer. In connection with the preparation of landscape plans for your yard, it is important that you consider any possible harmful effects that such landscaping and associated Improvements may have on adjacent property and structures as well as your Homesite and Home. Because the Community and your Homesite are located in an area which may contain Buya Initials: / _6_ 2544-33253TU429TISCLSM 609965..10 11/16/04 a expansive soils as more particularly explained in the Paragraph below entitled "Soil Conditions," water may have a detrimental impact upon such soils and the soils of surrounding Homesites and slopes. Existing drainage patterns must be maintained and all drainage systems must be kept free of debris and free flowing. (b) Effect of Improvements and Alterations. Raising the existing grade, constructing planters, changing the drainage pattern and other similar activities may cause damage to your Homesite, adjacent property (including, without limitation, your neighbor's Homesite, adjacent slopes and lower Homesites) and Improvements located thereon, including the Home. It is recommended that you consult with a licensed professional on landscaping and drainage, such as a qualified landscape architect and soils engineer, geotechnical engineer, geologist, civil engineer or other similar specialist, before making any alterations. Any Improvements must be designed and constructed in a manner to prevent any possible damage to your Homesite and to adjacent property. If any obstruction occurs to the drainage on your yard, it may result in obstruction of drainage from adjacent property or cause major problems such as trapped water or flooding which may undermine the foundation of your Home and surrounding Homes or create moisture intrusion or mold and mildew problems. You are solely responsible for any damage to your Homesite and Home or surrounding property and the Improvements located thereon as a result of any alterations you make to the approved existing drainage pattern or failure to maintain proper drainage. The Master Developer, Neighborhood Builders and Community Association shall have no liability or responsibility for any such damage. Any grading or drainage modifications are subject to applicable codes of the City, approval by the Design Review Committee, and the terms of any drainage easements that may be of record. You acknowledge and understand that if your Homesite or Home does not include area drains, you shall be responsible for installing area drains on your Homesite or Home when installing your landscaping. Your responsibilities for maintaining all grading and other drainage -related features on your Homesite and Home are set forth in Section 2.14.1 of the Community Declaration. (c) Water Quality Management Requirements. The Master Developer and Neighborhood Builders are developing the Community and Neighborhoods in accordance with a water quality management plan ("Plan") required by the California State Water Quality Control Board. The Plan imposes requirements for the design, implementation and maintenance of Best Management Practices ("BMPVto eliminate or mitigate all non -storm water discharges into storm drains during and after construction of the Community and Neighborhoods. The requirements imposed by the Plan are in addition to any local ordinances with regard to discharge of non -storm water into storm drains. The Plan imposes post -construction requirements. This means that after the Close of Escrow, you and your sub -contractors and other agents, are required to comply with all BMPs which are necessary to prevent, without limitation, run-off of soil, sand, sediment, oil, gasoline or other hydrocarbons, paint, fertilizers, pool chemicals and other household chemicals into the storm drains located in your Neighborhood. For example, when fertilizing landscaping, measures must be taken to prevent over -watering the landscaping to ensure that fertilizer and other lawn chemicals do not run into the storm drains. Your Neighborhood Builder will provide you with a Best Management Practices Handbook containing BMP recommendations for the prevention of run-off into storm drains from your Homesite and Home. Buyer lnitlals:. /. _7- 254433253\CLP42801SCISR\609965.10 11/16/09 The Plan affirmatively obligates all Owners to take immediate corrective action whenever there is a violation of the Plan as to an Owner's Homesite or Home. Penalties include significant fines that may be imposed against an Owner for failing to comply with BMPs necessary to prevent non -stone water run-off into storm drains, in violation of the Plan. 13. Utility and Other Easements. Article VII of the Community Declaration contains provisions pertaining to easements which may affect Owners and Homes. Your Homesite and Home may be subject to easements or other rights in favor of utility companies, local governmental agencies and other parties. These easements and rights may include access onto your Homesite or to exterior portions of the Home for purposes of installing, constructing, inspecting, maintaining and repairing facilities which are customary for residential developments (including, but not limited to, water lines, sewer lines, electrical lines and facilities, transformer boxes, natural gas pipelines, street lights, telephone lines and facilities, cable television lines, mailboxes, traffic signs, fire hydrants, etc.). These facilities and structures may be located above ground or below ground. In either case, the foregoing easements, rights and facilities may restrict the use and type of improvements you can make to your Homesite and Home, and the utility company, local government agency or other parties benefited by such easement or right may have the right to remove improvements made by you on the easement area without any obligation to repair or restore them. You should review the policy of title insurance, the tract map for your Homesite, Article VII of the Community Declaration, and the Supplemental Declaration to determine what easements and other rights, if any, affect your Homesite and Home. Such easements may preclude construction of structures or other improvements or may require an encroachment permit to be obtained. You should not excavate or construct an improvement on any portion of your Homesite, as applicable, until you have consulted with an applicable licensed design professional (for example, an engineer) and located all easements and facilities. A copy of the tract map depicting your Homesite is available for review in the sales office. The location of gas and electric meters, telephone and cable access panels may change from the locations shown in the models. Please ask your sales representative for information concerning the proposed location of utility facilities and structures for your Home. The Master Developer and Neighborhood Builders make no representations or warranties concerning the final location of these facilities or structures for your Home. 14. Pets. Household pets, such as dogs or cats, are limited to reasonable quantities as established in Section 2.5 of the Community Declaration. Buyers shall be liable for any unreasonable noise or damage (including, but not limited to, clean up after such animal(s)) caused by any animal brought or kept upon the Community and Neighborhoods as more fully described in the Community Declaration. 15. Window Coverings. In accordance with Section 2.10 of the Community Declaration, the Design Guidelines and Community Guidelines may prohibit or restrict certain types of window coverings such as paint, foil, reflective tint or other similar materials or substances, and may permit certain types of temporary window coverings pending installation of permanent window coverings. 16. Walls and Fences. Wall and fence heights may vary throughout the Community and your Neighborhood. Walls and fences are subject to change, at any time and without notice to you, from any depiction that may have been provided or shown to you. Section 9.1.4 of the Buyer InWals: / _$_ 2544-3325ACLP42901SCLSM 60996510 11/16/09 Community Declaration sets forth Owner's wall maintenance responsibilities. Owners are responsible for maintenance of all portions of the walls and fences that border the perimeter of the Homesite, including any pilasters located on an Owner's Homesite, except for those portions that are designated for maintenance by the Community Association or a Neighborhood Association. You should review the Community Association Governing Documents for further information. Community Walls, Neighborhood Walls and/or Party Walls (all as defined in the Community Declaration) may be installed on the property line(s) of your Homesite (collectively, the "Walls"), as shown as Exhibit WM attached to the Community Declaration, Neighborhood Declaration or a Supplemental Declaration. Owners must maintain any portion of the Walls not otherwise maintained by the Community Association or a Neighborhood Association. Master Developer, Neighborhood Builders and the Community Association are not responsible for damage to any Wall on the Homesite if such damage results from your failure to properly maintain the Walls. 17, Solar Energy Systems. Pursuant to Section 2.17 of the Community Declaration, you and all other Owners of Homesites in the Community have the right to place and maintain equipment and facilities related to the installation and maintenance of individual solar energy systems ("System's. The installation and maintenance of any System by you shall be subject to all applicable ordinances and zoning regulations of the City, the Uniform Building Code and associated ordinances. California has a strong public policy in favor of solar energy needs of a neighbor, including but not limited to the location and height of trees on your Homesite. You must obtain written approval from the Design Review Committee prior to installation of a System and you must comply with reasonable restrictions placed on the System by the Design Review Committee, subject to California Civil Code Sections 714 and 714. 1, as the same maybe amended from time to time. 18. Satellite Dishes. Satellite dish antennas (or Authorized Antennae, as defined in the Community Declaration) may be installed and used in the Community in accordance with Section 2.11 of the Community Declaration. However, Master Developer and Neighborhood Builders have provided no assurances or guarantees that any satellite dish or other antenna installed within the Community will remain unobstructed or that satellite service will be provided to an Owner after installation of an Authorized Antennae. You should understand that broadcast signals may be obstructed by the installation of additional improvements within and outside of the Community including, without limitation, homes, walls, fences, trees and other landscaping and such obstructions may not allow for acceptable satellite reception. You should also understand that Neighborhood Associations may impose additional restrictions. 19. Amendments to the Community Declaration. Notwithstanding the fact that you have received a copy of the Community Declaration and the Supplemental Declaration for your Phase of Development, these documents may be amended in accordance with their amendment provisions. 20. Additional Provisions. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code and the Federal Fair Housing Act codified at Title 42 United States Code, Buyer Initials; / -9- 2544-3325MLP428TISCLSM 609965.10 11/16f09 Section 3601 et seq., which may supplement or override the Community Association Governing Documents. The Master Developer, Neighborhood Builders and Community Association make no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. COLUMBUS SQUARE DISCLOSURES 21. Charitable Endowment Fee. A recorded Charitable Housing Agreement Imposing Endowment Fee On Transfer ("Agreement's affects your Home and the other Homes in the Community. The Agreement requires that an "Endowment Fee" equal to one -twentieth of one percent (0.05%) of the total sales price (0.0005 x total sales price) be paid each time a Home in the Community is transferred to a new owner. The Endowment Fee will be paid to Lennar Charitable Housing Foundation, a California nonprofit public benefit corporation ("Foundation'), to be used for the purposes described in the Agreement. When you close escrow for the purchase of your Home, you will pay the Endowment Fee to the Foundation. Thereafter, each time your Home is resold, the Endowment Fee must be paid at the close of escrow, but it may be paid either by the new buyer or the then current seller. The Agreement will be in effect for an indefinite period of time. 22. Affordable Housing/Transitional Housing. The City of Tustin has required the Master Developer and Neighborhood Builders to provide two hundred sixty-six (266) units of affordable housing ("Affordable Housing Units") within the Community. Sixty-three (63) Affordable Housing Units will be located in the Camden Place Neighborhood, fifty (50) Affordable Housing Units will be located in the Cambridge Lane Neighborhood, and one hundred fifty-three (153) Affordable Housing Units will be located in an area of the Community that will be designated as housing for seniors (Coventry Court). Certain of these Affordable Housing Units will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Homes subject to resale restrictions, as reflected in a recorded covenant agreement, for a period of forty-five (45) years. If you are interested in the Affordable Housing Units you should consult your sales representative for further information. 23. "Active Adult" Neighborhood. An "Active Adult" Neighborhood is proposed for the Community on Lot 265 of Tract No. 16581, which is located on Charleston and Cambridge Streets adjacent to Georgia Street and Kensington Park Drive, and is planned to consist of approximately 240 age restricted Homes; As an Active Adult Neighborhood, each Home must be occupied by at least one resident who is at least 55 years of age. If the Active Adult Neighborhood has its own recreational facilities, then all assessments for the maintenance of these recreation facilities are the exclusive responsibility of the residents of the Active Adult Neighborhood. As a result, the recreational facilities located within the Active Adult Neighborhood are not open to other Owners in the Community; provided, however, the residents A of the Active Adult Neighborhood will have the right to use the public recreational facilities t - located throughout the Community. In addition, If the residents of the Active Adult —o Neighborhood become members of the Community Association and pay assessments to the Community Association, then the residents of the Active Adult Neighborhood, as members of 20 the Community Association, will have the right to use the Community Association's private wg g.. Buyer Initials: / _10- 2544-33253\CLP4281DISCLSM 609965.10 11/16/09 recreational facilities. Master Developer reserves the right to construct other age restricted communities in other locations in the Community. Master Developer may also plan and construct other types and number of Homes, including rental, within Lot 265 of Tract No. 16581, with the approval by the City. h(tiq 4 24. Home Business Use. Any Home within the Community may be used for home based business purposes, provided that such use is subject to the City of Tustin's Home Occupation Ordinance (if applicable), the provisions in Section 2.1 of the Community �— Declaration and the Community Guidelines. You are advised that the Community Declaration and the Community Guidelines may contain stricter restrictions than those in the City Ordinance and that such use may require zoning clearance and a business license. You should contact the City for more information regarding business uses in your Home. 25. MCAS Tustin. (a) Prior Use as MCAS Tustin. You are advised that the Community was previously used as the Tustin Marine Corps Air Station ("MCAS Tustin'j. The Marine Corps and the Department of the Navy ("DON") are the responsible agencies for the Installation Restoration Program ("IRP'j. The IRP is a comprehensive environmental investigation and cleanup program formed to identify, investigate and clean up chemical and nuclear contamination that has resulted from past land use operations. When MCAS Tustin was an active base, it received a permit from the California Department of Toxic Substances Control ("DTSC') pursuant to the Federal Resources Conservation and Recovery Act ("RCRA'j (42 U.S.C. 6901 et seq.) to store hazardous waste on portions of the base. One of the conditions of that permit was to perform "corrective action" to clean-up releases of hazardous waste constituents throughout the base. Although the permit has expired, these corrective action obligations continue, and the DON is undertaking environmental investigation and cleanup activities on portions of the former base that are within the Community. p U ddt (b) Asbestos Containing Material and Lead -Based Paint. Hazardous material in the form of asbestos or asbestos -containing materials ("ACM") and lead-based paint ("LBP') have been found and are otherwise presumed to exist in buildings and structures previously located in the Community. At such time as demolition of the prior existing buildings on the Community containing ACM was completed, the appropriate governmental regulatory agency confirmed that ACM had been removed from the buildings and any necessary soil remediation had been conducted in accordance with all applicable federal, state and local laws and regulations. A state -certified lead consultant confirmed that the LBP from demolished structures was properly removed and disposed of in accordance with all applicable federal, state, a !� and local regulatory guidelines. add *" + (c) Easement for Environmental Remediation. r An easement over the Community granted to the United States of America, acting by and through the Department of the Navy ("DON') in a document entitled "Quitclaim Deed for Marble Mountain Parcel and Environmental Restriction Pursuant to Civil Code Section 1471," was recorded on March 11, 2003, as Document No. 200300263521. Buyer Initials: / _ 11 _ 1544.33253\CLP428\nISCLSR\ 609965.10 11/16/09 In connection with ongoing remediation on the DON's property within the Community, it was agreed, as a covenant running with the land, that the DON and its officers, agents, employees, contractors and subcontractors shall have the right, upon reasonable notice, to enter the Community when a response or corrective action is found to be necessary or when such access is necessary to carry out a response action or corrective action. The right for the DON to enter the Community shall include the right to conduct tests, investigations and surveys, including, where necessary, drilling, test -pitting, boring and other similar activities. Such right shall also include the right to construct, operate, maintain or undertake any other response or corrective action as required or necessary, including, but not limited to, monitoring wells, pumping wells, treatment facilities, and the installing of associated utilities. In exercising these rights of access, except in the case of imminent and substantial endangerment to human health or the environment, the DON shall give reasonable notice of any action to be taken related to such remedial or corrective actions on the Community. Further, the DON will make reasonable efforts to minimize interference with the on going use of the Community and act in good faith to minimize any conflict between the necessary environmental investigation and remediation activities and the use of the Community. The DON is not required to restore or repair any Improvements in the Community damaged as a result of this right to access the Community. If any Improvements on Association Property are damaged as a result of the DON's access to the Community, you are advised that any such damaged Improvement may be repaired or replaced by the Community Association and you may be charged a Reconstruction Assessment or Extraordinary Assessment (if applicable). (d) Groundwater Plume. The City Environmental Impact Report (1999) ("EIR") indicates the presence of subsurface plumes of chlorinated volatile organic compounds ("VOCs', dissolved trichloroethene ("TCE'l and methyl tertiary -butyl ether ("MTBE' at ground water level in portions of MCAS Tustin located outside the Community. It is presently unknown whether and to what extent these contaminants will migrate towards the Community. According to the EIR, estimated human health risks associated with residential use of groundwater from the plumes are above the acceptable limits of the United States Environmental Protection Agency. Master Developer and Neighborhood Builders make no representations or warranties with respect to the plumes described above or whether such plumes will migrate into the groundwater under Community. ahi-Vi led ROM yf-Oc- 26. Early Transfer Property/Environmental Conditions. Due to its prior use as a military base, certain areas within the Community known in the Navy's environmental investigation program a 13S" and "IRP -13W' (collectively, the "Early Transfer td Property's. EarlyTransfer Property was owned by the United States of America acting by J and through the DON until February, 2008, when it was transferred to Master Developer and VQD(yl annexed into the Covered Property pursuant to Section 16.6 of the Community Declaration. The III 5 y Early Transfer Property is defined as. the "LIFOC Property" in the Community Declaration.— a.vW-eck (a) Prior Uses of the Early Transfer Property. ehangfed fyi?m t4VO(- (i) IRP -13S. That portion of the Early Transfer Property identified as IRP -13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA') and as a "Miscellaneous Wash Area" ("MWA'�. The TSA consisted of two (2) buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used as a Buyer Initials: / _12- 2544.53253\CLP42M1SCLSR\609965.10 11/16/09 degreaser to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad. That portion Ch�nq�d o`-e-tarly Transfer Property identified as IRP 13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, leaded gasoline, oil, paint stripper, battery acid and %0 m solvent were stored. 1. 0C, u - That portion 'of the Early Transfer Property identified as peogeo� IRP -13W was previously used as a former disposal area where hydraulic fluid, diesel fuel, r"Loundwater aded gasoline, oil, paint stripper, battery acid and solvents were stored. This area was paved d cleared of stored materials. (b) Release of Volatile Organic Compounds. As a result of the historic use the Early Transfer Property, hazardous substances have been released into the soil and at the Early Transfer Property. Volatile Organic Compounds ("VOCs'l, including trichloroethene ("TCE'% 1,2,3-trichloropropane (111,2,3 -TCP"), and related chlorinated organic solvents, were found in soil and groundwater at concentrations that could result in adverse effect to human health (including without limitation, cancer risks) if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. (c) Remedial Action Plan. As a result of the release of hazardous substances 6I�,1`at the Early Transfer Property, various remedial activities have occurred or shall occur at the O(/�UN IIAA Early Transfer Property and will continue to occur until remediation goals have been achieved. fy011yl Furthermore, institutional controls will be put in place at the time of transfer of the Early 'Transfer Property and will include restrictions consistent with the protection of human health uFOG and the environment, as discussed in Paragraph (d) below. rofilp V' (i) IRP -13S. In October 2004, the DON issued a report entitled "Final Record of Decision/Remedial Action Plan, Operable Unit IA, Former Marine Corps Air Station, Tustin, California" ("ROD'), which describes a specific remedial action plan ("RAP'S that has been approved for IRP -13S to address groundwater contamination. As documented in the ROD, "[g]roundwater is the only medium that presents a risk to human health at the site. Soil, however, is also being addressed as part of the groundwater remedy because of the potential for residual contaminants in soil to act as a continuing source of groundwater contamination." Pursuant to the ROD, the selected remedy for groundwater at IRP -13S includes hydraulic containment of VOC-contaminated groundwater combined with excavation and off-site disposal of the most highly contaminated source areas ("hot spots"). Treated soil would be used for excavation backfill and treated water from the treatment system would be discharged to a city of Tustin stone drain, ultimately discharging into Peters Canyon Channel. Actual or threatened releases of hazardous substances from groundwater at IRP -13S, if not addressed by implementing the remedial action selected in the ROD/RAP, may present a potential threat to public health and welfare or to the environment. Master Developer and Neighborhood Builders make no representations, guarantees or warranties with respect to whether the remedial action selected in the ROD/RAP has been or will be implemented for 1RP-13S. Buyer initials: / -13- 2544-33253TLP428USCLM 609965.10 11/16/09 4 "A (ii) IRP-13W. In September, 2008, the DON published a report entitled "Draft Final Feasibility Study Report for Operable Unit 4B [includes IRP-13W], Former Marine Corps Air Station, Tustin, California," ("Feasibility Study") which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil at OU-413 sites... therefore, soil remediation..." was not addressed in the Feasibility Study. As of the date of this disclosure, the Feasibility Study is currently being circulated for comments, and upon approval will be followed by a proposed plan and a final Record of Decision. No final remedy has been selected for IRP- 13W. Master Developer and Neighborhood Builders make no representations, guarantees or warranties with respect to whether or when a final groundwater remedial action plan has been or will be selected or implemented for IRP-13W. r rmer1`, u AUG �YDp$If (d) Early Transfer of the Early Transfer Property and Land Use Restrictions. The DTSC, the environmental agency responsible f r overseeing cleanu activities at MCAS Tustin, has determined that the Early Transfer Property is suitable for residential use in their current condition. Specifically, the DTSC has concluded: "In reviewing the environmental investigations and human health risk assessments conducted at the site to determine what types of restrictions to impose in that land use covenant, DTSC determined that it was not necessary to impose any restrictions on residential use or any other type of land use at the parcels, but instead just limit certain types of activities. " I� �IIV =orr*evl\4 L4"& Because the surface of the Early Transfer Property lies over an area of groundwater contamination which is undergoing active remediation by the Navy, the transfer of the Early Transfer Property from the federal government was considered an "early transfer" requiring the approval of the governor after the Nary issued a Draft Final Finding of Suitability for Early Transfer for a Portion of Parcel 24 (Early Transfer Parcel 24-1) Within Carve -Out 5, Former Marine Corps Air Station, Tustin, California" ("FOSET'� on February 13, 2007. The governor provided that approval upon the recommendation of the DTSC, which determined that the Early Transfer Property was suitable for residential use after review of all of the environmental data, including investigations of the potential for contamination from groundwater or soil vapor to impact indoor air. Generally, environmental remedial actions must be completed prior to property transfer. However, Section 120(h)(3)(C) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA'� allows deferral of the requirement that the United States provide a covenant in the deed conveying property, warranting that all remedial action necessary to protect human health and the environment has been taken before the date of transfer. Specifically, CERCLA Section 120(h)(3)(C)(i)(II) requires that the deed or other agreement governing the transfer contain assurances, among other things, that provide for any necessary restrictions on the use of the property to ensure the protection of human health and the environment, as follows: (i) Any necessary restriction on the use of the property will be implemented to ensure protection of human health and the environment; Buyer Initials: / -14- 2544-33253\CLP42801SCLSR\ 609965.10 11/16/09 (ii) Restrictions will be implemented on use, as necessary, to ensure that required remedial investigations (RI), response actions, and oversight activities will not be disrupted; (iii) All necessary response actions will be taken and will identify schedules for investigation and completion of all necessary response actions, as approved by the appropriate regulatory agency; and (iv) The DON will submit a budget request to the Director of the Office of Management and Budget that adequately addresses schedules for investigation and completion of all necessary response actions, subject to congressional authorizations and appropriations. YAaAL� "daftA 4 OAA W � C,, j�i l P(dp&- On February 13, 2007, the DON issued the FOSET torequest transfer of the Early Transfer Property prior to completion of all remedial actions pursuant to CERCLA Section 120(h)(3)(C). The FOSET presented the findings that the Early Transfer Property, which is still in the remediation process, is environmentally suitable for transfer prior to completing all remedial action pursuant to the provisions of CERCLA and that the Early Transfer Property has been designated as part of Early Transfer Parcel 24-1 ("ETP 24 -Il. The DON has determined that there is a potential for exposure to CERCLA hazardous substances at ETP 24-1, and associated groundwater plumes. Restrictions on the land use of ETP 24-1 (including, without limitation, the Early Transfer Property) to ensure protection of human health and the environment are set forth in one or more documents entitled "Covenant to Restrict Use of Property Environmental Restriction", more particularly defined in Paragraph 6 h ii an WVN Paragraph 26(h)(iii) below, (collectively, the "Covenants' between the United States, actingy�(m through the DON, and the State of California acting, by and through the California Department ofG" Toxic Substances Control ("DTSC') through deed restrictions set forth in the FOSET. As of the date of this disclosure, the transfer of the Early Transfer Property has occurred, however,. environmental remedial actions at the Early Transfer Property have not yet been completed. You should review the notifications and additional disclosures contained in the FOSET concerning IRP -13S and IRP -13W, as well as school site considerations, hazardous substances and petroleum products, underground storage tanks, lead based paint, asbestos - containing materials, radon, groundwater monitoring wells, polycholorinated biphenyl, indoor air quality, oil -water separators and other areas of concern within or near the vicinity of the Early QIP Transfer Property. Master Developer and Neighborhood Builders make no representations, U� guarantees or warranties with respect to if or when the FOSET will be finalized.. io ���y, I t `j (e) DTSC Restrictions. The only restrictions DTSC determined to be necessary on the Early Transfer Property were restrictions against certain types of excavations and other activities which could disturb groundwater or disturb the groundwater remediation t A r systems, which restrictions are contained in the Covenants. In addition, the Master Developer NQ {%uv has prepared and recorded the Supplemental Declaration (as defined in Paragraph 26(h)(i) below) in a manner satisfactory to DTSC to ensure that these activity restrictions will be monitored and enforced. Furthermore, these deed restrictions are referenced in the purchaser deeds to buyers purchasing Homes located in the Early Transfer Property. Buyer initials: / _15_ 2544-33253\CLP42801SCLSR\ 609965. 10 11/16/09 (f) Engineering Controls Within Early Transfer Property. All residential ,structures on the Early Transfer Property will be constructed with one of the following engineering controls: (i) a sub -slab venting system; or (ii) a LIQUID BOOT® Gas Vapor Barrier System, (iii) or an alternative control that is determined by either the City of Tustin or the DTSC to provide equivalent protection. (g) Inspection and Compliance Reporting Obligations, Indemnification. The Board of Directors of the Community Association shall be responsible for site inspections of the.Early Transfer Property and annual compliance reporting to address the monitoring and maintenance necessary to ensure compliance with the restrictions and terms of the Covenant. You shall not interfere with the Community Association's performance of such inspection and compliance reporting obligations. (h) Documentation Relating to the Release and Remediation Activities. UExtensive documentation has been pre aced that describes the nature and extent of the release of hazardous substances mat has occurred at the arly Transfer Property. The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the Early Transfer Property: (i) Supplemental Declaration to Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square (Early Transfer Parcel (ETP) 24-1A and 24-113)„ made by Moffett Meadows Partners, LLC, a Delaware limited,,,,�� n liability company and consented to by the Community Association, which was recorded on Gf February 29, 2008, as Instrument No. 2008000093933, and re-recorded on June 26, 2008, as Instrument No. 2008000307660 (together with any amendment thereto, collectively, the "Supplemental Declaration"), in the Official Records of Orange County, California (the "Official Records'. (ii) Covenant to Restrict Use of Property Environmental Restriction (Re: Former Marine Corps Air Station Tustin) Early Transfer Parcel (ETP) 24-1A (Portion of Parcel 24) made by and between the United States, acting through the DON, and the State of California acting by and through the DTSC, which was recorded on February 28, 2008, as Instrument No. 2008000090055, of Official Records; (iii) Covenant to Restrict Use of Property Environmental Restriction (Re: Former Marine Corps Air Station Tustin) Early Transfer Parcel (ETP) 24-1B (Portion of Parcel 24) made by and between the United States, acting through the DON, and the State of California acting by and through the DTSC, which was recorded on February 28, 2008, as Instrument No. 2008000090056, and re-recorded on June 5, 2008, as Instrument No. 2008000270235, both of Official Records; (iv) Draft Final Finding of Suitability for Early Transfer for a Portion of Parcel 24 (Early Transfer Parcel 24-1) Within Carve -Out 5, Former Marine Corps Air Station, Tustin, California (Department of Navy, February 13, 2007); Buyer Initials: / -16- 2544-3325MCLP428MISCLSM 609965.10 11/16/09 (v) Draft (60% Design Submittal) Remedial Design, Hydraulic Containment with Hot Spot Removal, Operable Units IA and 113, Former Marine Corps Air Station, Tustin, California(Departmentof Navy, June 2005); (vi) Draft Feasibility Study Report For Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005 (Bechtel Environmental, Inc., August 2005); (vii) Final Record of Decision/Remedial Action Plan Operable Unit IA, Former Marine Corps Air Station, Tustin, California (Department of Navy, October 2004); (viii) Final Feasibility Study Report, OU -IA, Marine Corps Air Station, Tustin, California (Bechtel Environmental, Inc., August 2003); and (ix) Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California (Department of Navy and City of Tustin, December 1999). You should carefully review these reports before making a decision to buy a Home in the Community. Copies of the reports are available for review at either (1) BRAC Environmental Coordinator's Office, Library Building 307, MCAS EI Toro, telephone (949) 726-5398 or (2) University of California at Irvine Langson Library, Government Publication Department, Irvine, CA, (949) 824-7362 or (949) 824-6836. For information regarding the environmental documents prepared for former MCAS Tustin, please contact the Administrative Records Division by calling (619) 532-3673, located at Building 1, 937 Harbor Drive, San Diego, California 92132, or the BRAC Information Repository Office located at 7040 Trabuco Road, Building 307 on the former MCAS EI Toro, (949) 726-5398. The Master Developer and ��e,r�� Neighborhood Builders make no representations or warranties with respect to the Early Transfer Property and the environmental conditions described above or in the reports. u �W Due to the fact that groundwater in the Community has been found at depths of six (6) to seventeen (17) feet below the ground surface, you are prohibited from drinking any groundwater pursuant to covenants recorded against the Community and is advised to avoid eating any fruit from trees with deep root systems in the Community. You are also advised to keep children and animals away from such fruit, soil and groundwater. Should any Person come into contact with such fruit, soil or groundwater, such Person is advised to wash thoroughly with soap and water and seek immediate medical attention. (i) Surrounding Areas. The following items have been indicated in the EIR as affecting portions of MCAS Tustin that are outside of the Community. These items are not expected to impact the Community, and are listed in this Disclosure for your information only. Master Developer and Neighborhood Builders make no representations or warranties as to any future impact these items may have on the Community or Residents using public parks and other areas outside the Community. (i) Former crash drill site area; (ii) Former skeet ranges; Buyer Initials: / -17- 2544.33253\CLP428\DI5CLSR\ 609965.10 11/16/09 (iii) Transformers containing polychlorinated biphenyls (PCBs); (iv) Buildings formerly on property containing lead-based paint where ��� 0/J abatement or removal activities may not have been completed; T,(/� (v) Moffit Meadow fire fighting trenches and crash crew burn pits; (vi) JP -5 pipeline, currently classified as out of service; and (vii) Petroleum hydrocarbons in subsurface soil. If you have any questions or concerns about environmental activities at MCAS Tustin or the Community, please contact the Local Redevelopment Authority at the City of Tustin or visit the United States Naval Facilities Engineering Command's internet website at www.efdsNv.navfac.navy.mil/EnvironmentaUTustin.litm. 27. Prior Agricultural Use. The Community is located on or near lands that are or were previously used for agricultural purposes, including farming operations. By reason of such agricultural use, you may be subject to dust, noise and odors and may be exposed to pesticides, herbicides, insecticides and other chemicals. By acceptance of a deed to a Home, you (on your own behalf, and on behalf of the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept these existing and future impacts and forever waive any and all causes of actions against the Master Developer, Neighborhood Builders and Community Association and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 28. The Village Conservatory. The Community includes a private recreational center (the "Conservatory"). The Conservatory includes swimming and wading pools, spa, a recreational building and related facilities. While the Conservatory is planned to be private and nn only open to Owners and guests in the Community, the public will have access to the Open Space/Park areas surrounding the Conservatory (the "Village Green") and use of the outdoor recreational facilities in the Village Green which include, but are not limited to, an open turf I►J area, tot lot, BBQ and picnic areas. The Village Green is maintained by the Community Association. All persons using the Conservatory are required to use caution and to watch their children at all times to prevent drowning and other injuries. The Community Association may, n from time to time, promulgate rules for use and operation of the Conservatory, including Y , reasonable hours of operation. Owners and other residents living in the area of the Conservatory and the Village Green will most likely experience and otherwise be subject to or inconvenienced by noise and pedestrian and vehicular traffic in the areas surrounding the Conservatory and the Village Green. 29, Natural Hazard Zone Disclosures. Your Neighborhood Builder will provide you with a Natural Hazard Disclosure Statement in compliance with Section 1103 of the California Civil Code that discloses whether your Home is located in a seismic hazard zone. (a) Earthquakes. California is subject to a wide range of earthquake activity. California has many known earthquake faults as well as yet undiscovered faults. While the Buyer Initials, / -18- 2544-33253\CLP428\DISCLSR\609965.10 11/16/09 Community is not located in an Alquist Priolo Earthquake Zone, earthquakes are always a possibility. You must evaluate the potential for future seismic activity that may seriously damage your Homesite and Home. A major earthquake, which some have predicted will occur in our lifetimes, could cause very serious damage to Homes located even many miles from the epicenter of the earthquake. A more moderate earthquake occurring on a more minor fault, or on an as yet undiscovered fault, could also cause substantial damage. For more information, read "The Homeowners Guide to Earthquake Safety" which explains the various geological hazards associated with earthquakes and contains information on planning ahead for earthquakes, as well as what to do during and after an earthquake. Master Developer and Neighborhood Builders make no representations or warranties as to the degree of earthquake risk in the Community. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. (b) Seismic Hazard Zones. Many portions of California are subject to risks associated with seismic activity. Areas that meet the definition of "Seismic Hazard Zone" in the Seismic Hazards Mapping Act (California Public Resources Code Section 2690, et seq.) are shown on maps that are prepared and released by the California Department of Conservation, Division of Mines and Geology. Such zones may pose an increased risk of damage to property from earthquakes and liquefaction. "Liquefaction" is the process by which water -saturated soils become unstable under heaving shaking and thereby jeopardize foundations and other structures. The Master Developer has been informed that all or a portion of the Community is located within a Seismic Hazard Zone. You are advised to consult with the City, County, other public agencies and appropriate experts to evaluate the potential risk. For more information concerning seismic activity and risks, read "The Homeowner's Guide to Earthquake Safety." (c) Area of Potential Flooding. The Master Developer has been informed that the Community is located within an Area of Potential Flooding (or Dam Inundation Zone) pursuant to applicable maps. The Office of Emergency Services is required to designate areas within which personal injury or death would, in its determination, result from the partial or total failure of any dam. These areas of potential flooding, as defined in the California Emergency Services Act (California Government Code Section 8984.4, et seq.), are shown on maps released by the Office of Emergency Services, copies of which are also on file with the City. These maps are updated periodically, and the Master Developer, Neighborhood Builders and Community Association make no representations, guarantees or warranties with respect to any future dam inundation zone determinations. The Community is downstream from the Santiago Creek Dam, an earthfill dam approximately one hundred and thirty-six (136) feet high which has a capacity of 25,000 acre feet of water. Santiago Creek Dam is jointly owned and maintained by the Serrano Irrigation District and the Irvine Ranch Water District. Information about the Santiago Creek Dam can be found on the California Department of Water Resources website: http://cdee.water.ca.gov/misc/resinfo.html. Please contact the Office of Emergency Services for further information concerning Areas of Potential Flooding. 30. Soil Conditions. In purchasing your Home, you should: review soils reports for the Community, available for review at the City, and take into consideration the following: (a) Expansive Soil. According to the soils report, soil in the Community is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when Buyer Inidelc / _19_ 2544.33253\CLP428\DISCLSR\609965.10 11/16/09 it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other improvements, you should advise your consultants that designs must accommodate soils with expansion potential. In addition, you should consider the following information and recommendations before making or modifying any Improvements. (b) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs. Block walls may require extra horizontal and vertical steel reinforcing bars. (c) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Community by the Master Developer and Neighborhood Builders should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by the Master Developer and Neighborhood Builders designed to serve more than the one (1) Home should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. (d) Fill Soil. Homes in the Community may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. A soils report certifying the compaction of fill soils is available for review at the City. (e) Corrosive Soil. Soils in some areas of the Community are potentially severely corrosive to buried concrete and ferrous metals. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, you must use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on your Homesite. Overwatering soil will exacerbate the corrosivity of the soil. You should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. (I) Groundwater. Groundwater has been encountered in portions of the Community at depths of six (6) to twenty-five (25) feet below the ground surface. You may not dig or drill on any Homesite to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. Buyer Initials: / -20- 2544-33253\CL11428\D1SC1SR\609965.10 11/16/09 (g) Pools/Spas. Prior to designing any pool, spa, or other similar amenity, it is recommended you consult with a licensed civil engineer to determine the depth of the water table under your Homesite to insure that your Improvements are compatible with the depth of the water table and that they will not disturb or come in contact with the groundwater during a rainy season. The Master Developer and Neighborhood Builders make no guarantee that any Homesite has the ability for pool or spa installation. Homesites 242 through 245, inclusive, of Tract No. 16581, which are located within the Early Transfer Property, have been determiner Itw be unsuitable for installation of pools, spas or other similar amenity. The deeds for these Lots LI Yi/1/ will contain deed restrictions that prohibit the use of the Lots for such purposes. i lil (h) Soils Professionals. Before starting a pool or spa or any patio, concrete or other flatwork on the Homesite, you should consult with a licensed soils engineer to ensure that such work is constructed correctly in light of current soils conditions. Although consulting with a soils professional may add substantially to the cost of installation of improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking in improvements. (i) Interior Gases and Other Contaminants. The aging process of soil and natural soil elements, as well as the aging of man-made building materials, may create unwanted and undesired gases and other contaminants in Homes, both new and previously occupied. In addition, a lower rate of air exchange between outdoor and indoor environments has resulted from modem construction techniques which comply with energy conservation requirements enacted by the State of California. A lower air exchange rate can result in the build-up of unwanted gases and other contaminants in varying degrees. As the quality of the air we breathe can affect our health, you should frequently air out your Home by opening the windows. 31. Post -Tension Concrete System. Your Home may have been built using a post - tension concrete system ("Systent'J. If any portion of your Home has been constructed using the System, a placard or stamp will be placed in the garage signifying the existence of such System. The System involves placing steel cables under high tension in the concrete slab located beneath the Home. Therefore, any attempt to alter or pierce the foundation (for example, sawing, cutting or drilling) could damage the integrity of the System and cause serious injury or damage to persons and property. The Master Developer and Neighborhood Builders shall not be responsible for any damage or injury resulting from or arising in connection with the alteration of the slab or foundation of any Home. By acceptance of a deed to a Home, you agree that: (i) you shall not cut into or otherwise tamper with the System; (ii) you shall not knowingly permit or allow any other person to cut into or tamper with the System so long as you own any interest in the Home; (iii) you shall disclose the existence of the System to any person who rents, leases or purchases your Home; and (iv) you shall indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns free and harmless from any and all claims, damages, losses or other liability (including attorneys' fees and costs) arising from any breach of this covenant. 32. Reclaimed Rater. In its efforts to conserve water, the Irvine Ranch Water District (the "Water District") requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The Water District may require the use of reclaimed water to irrigate landscaping in private yards. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable Buyerinitials: 1 _21- 254+433253\CLP428\D1SCLSR\609965.10 11/16/09 water. The water used to irrigate the Association Property may include reclaimed water. Reclaimed water is not potable and therefore not suitable for human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. The Master Developer, Neighborhood Builders and Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. You are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 33. Electric Power Lines. Underground or overhead electric transmission and n distribution lines and transformers are located in and around the Community, which lines and d/ transformers are owned and maintained by Southern California Edison Company. Southern California Edison may increase the number of transmission and distribution lines and the electric current through such lines. Power lines and transformers produce extremely low -frequency electromagnetic fields ("ELF -EMF") when operating. For some time, there has been speculation in the scientific community about health risks associated with living near ELF -EMF sources. In 1992, the United States Congress authorized the Electric and Magnetic Fields Research and Public Information Dissemination Program to perform research on these issues and to analyze the existing scientific evidence in order to clarify the potential for health risks from exposure to ELF -EMF. In May of 1999, the National Institute of Environmental Health Sciences ("NIEHS") issued a report to Congress summarizing its review of scientific data from over three hundred (300) studies on ELF -EMF health risks. The ELF -EMF studies consist of both epidemiological studies (studies of exposure in human populations) and controlled laboratory experiments on animal and cell models. While some epidemiological studies suggested some link between certain health effects and exposure to ELF -EMF, the laboratory experiments did not support such a link. According to the NIEHS report, the scientific evidence shows no clear pattern of health hazards from ELF -EMF exposure, and the NIEHS report did not find evidence of any link sufficient to recommend widespread changes in the design or use of electrical transmission equipment. However, because the evidence does not clearly rule out any effect, NIEHS advocated continuing inexpensive and safe reductions in exposure to ELF -EMF and endorsed current utility practices regarding design and siting of new transmission and distribution lines. Further information on this subject is available from the Regional EMF Manager, Southern California Edison Company, 1851 West Valencia Drive, Fullerton, California 92833. Additional information on ELF -EMF and copies of the NIEHS report are available from the EMF -RAPID website at www.niehs.nih.gov/emfrApid/home.htm., 34. Air Quality. Southern California is subject to Stage I smog alerts. You should take advantage of the Air Quality Management District's ("A.Q.M.D.'� forecasts to plan your outdoor activities to avoid peak pollution by checking your television, radio or daily newspapers to find out if unhealthful air quality is expected. For more information, you can also call A.Q.M.D. at 1 -800 -CUT -SMOG (1-800-288-7664) or check their website at www.agmd.gov. Buyulni6als: / -22- 254433253\CLP429\DISCLSR\609965.10 11/16/09 By acceptance of a deed to a Home, you (for and on your behalf, and the members of your family, tenants, lessees, guests and invitees) expressly acknowledge and accept the existing and possible future impacts of smog on yourself and your family and forever waive any and all causes of actions against the Master Developer and Neighborhood Builders and their respective directors, officers, employees, agents, representatives and consultants for any damages or injuries which may arise from or relate to any such conditions or risks. 35. Wind. All of Southern California is subject to periods of high winds. Wind speeds in the Community may exceed that experienced in other areas of the surrounding region, You must ensure that any structures or other Improvements you install on your Homesite are constructed or designed to withstand high winds. You are advised to consult with experienced architects and engineers in the design and specification of any structures or Improvements that you plan to add. 36. Private Streets. All of the streets within the Community are private streets. Maintenance and repair of the private streets is the responsibility of the Community Association or the Neighborhood Associations, as applicable. 37. Building Setbacks. Construction of Improvements in the yard of any Homesite such as pools, spas, patio covers, BBQ, fountains, trellises and water features are subject to minimum setback and height restrictions and may not be permitted. You should refer to the Community Association Governing Documents and applicable City ordinances for any restrictions concerning the construction of any Improvements to your Homesite. 38. Boundaries. You may not rely on any written or oral statements by Master Developer, Neighborhood Builders or their agents regarding the exact boundaries of your Homesite or Home or whether any wall or fence has been or will be constructed exactly on the boundaries of your Homesite. 39, Square Footage Representations. Representations of square footage are approximate only. You may not rely on any written (brochures and other sales documents) or verbal statements by Master Developer, Neighborhood Builders or their agents regarding the exact square footage of your Homesite or Home. The computation of square footage varies based on the criteria used. You agree by acceptance of a deed to a Home to hold the Master Developer and Neighborhood Builders harmless in any dispute arising over any representations concerning the square footage of your Homesite or Home. TAXES AND ASSESSMENTS 40. Supplemental Real Property Taxes. The California law requires real property to be revalued whenever it changes ownership or when improvements are newly constructed. After the Close of Escrow for your Home, the County of Orange Tax Assessor ("Assessor") will determine a new taxable value for your Home based on current market values. The property tax will increase and you will receive one or more supplemental tax bills depending upon the time of the year in which Escrow closed for the purchase of your Home. Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the Buyer initials: / _23_ 2544-33253\CLP428TISCLSR\609965,10 11/16/09 supplemental bill resulting from the reassessment, You are solely responsible for the payment of any supplemental tax bills, The following notice is given pursuant to Section 1102.6c of the California Civil Code: "California property tax law requires the Assessor to revalue real property at the time the ownership of the property changes. Because of this law, you may receive one or two supplemental tax bills, depending on when your loan closes. The supplemental tax bills are not mailed to your lender. If you have arranged for your property tax payments to be paid through an impound account, the supplemental tax bills will not be paid by your lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If you have any question concerning this matter, please call your local Tax Collector's Office." Master Developer and Neighborhood Builders have no control over the valuation, timing or the amount of the supplemental bill resulting from the reassessment. You are solely responsible for the payment of the supplemental tax bill. You hereby acknowledge, accept and agree that neither Master Developer, Neighborhood Builders nor any of their authorized agents, representatives, employees or sales people have made any representations or warranties respecting the amount of the supplemental assessment or the assessed value. Should you have any questions or concerns relating to the supplemental assessment, you agree, prior to the Close of Escrow, to consult with the County Assessor or your legal or other advisors to satisfy such questions or concerns. 41. Estimated Taxes. You have been provided with an estimate of your assessments. THE AMOUNT OF ASSESSMENTS ARE ESTIMATES ONLY, and are based on current information provided by the City, County or those public or private agencies responsible for the administration for the districts. These assessments may INCREASE or DECREASE, based upon changes in real property tax law; the district(s) may dissolve; formation of new districts may occur, an extension of the districts or the services to the districts and other factors NOT IN MASTER DEVELOPER'S OR NEIGHBORHOOD BUILDER'S CONTROL may transpire. The amount of special taxes may appear on your property tax bill or may be billed separately. 42. Special Tax Assessment Districts. All or a portion of the Community lies within the boundaries of the following Special Tax and Assessment Districts: (a) Conununity Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of City of Tustin Community Facility District No. 06-1 ("CFD No, 06-1 which was formed for the construction and maintenance of public improvements, including, but not limited to, street improvements, parkway and landscaping, storm drains, utilities, public parks, public libraries and fire protection facilities. If your Home is located within CFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with CFD No. 06-1. You will be provided with a Notice of Special Tax for CFD No. 06-1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in Buyer Initials: / -24- 2544-33253\CLP4281D1SCLSR\609965.10 11/16/09 the Notice. Master Developer and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. (b) Tustin Unified School District Community Facilities District No. 06-1. Several Neighborhoods in the Community are located within the boundaries of Tustin Unified School District Community Facility District No. 06-1 ("TUSDCFD No. 06-111) which was formed for the construction of elementary, middle and high school facilities and any improvements in connection with such facilities. If your Home is located within TUSDCFD No. 06-1, your Home will be subject to any taxes, assessments and obligations associated with TUSDCFD No. 06-1. You will be provided with a Notice of Special Tax for TUSDCFD No. 06- 1. This Notice contains important information about district functions, your obligations, rights of the district, and information on how to contact the district for additional information materials. You should carefully read and understand the information contained in the Notice. Master Developer and Neighborhood Builders have no control over the amount of tax assessments levied or imposed against your Home or any increase or decrease in the amount of such assessments. Please contact the City of Tustin (City Clerk), telephone (714) 573-3025 for additional information. The Neighborhood Builder will provide you with disclosures entitled "Notice of Special Tax" ("Notice'l prior to entering into a contract to purchase a Home. These Notices will inform you of the special tax and assessment districts that apply to your Home. The Notices will also contain a detailed description of the special tax calculation, important information about functions and rights of the special tax and assessment districts, your obligations, and who to contact for additional information about the special tax and assessment districts. You should thoroughly understand the information contained in the Notices prior to entering into a contract to purchase a Home. You will have five days after the Notice is delivered by mail, or three days after its delivery in person, to terminate the contract to purchase by giving written notice of that termination. All Homes will be subject to annual special taxes levied by one or more of the special tax and assessment districts listed above. Not all special tax or assessment districts listed above will apply to your Home. These special taxes will be a continuing lien on your Home and will be billed to you with the annual real property tax bill issued by the County Assessor. The lien of these special taxes will continue until the obligation is satisfied. If you fail to pay a special tax when due, the assessment districts may exercise their right to foreclose on your Home. Information concerning the estimated amount of the annual special tax on your Home for the special tax and assessment districts is available from the City and County. 43. Changes in Special Taxes. The amount of any special taxes disclosed to you are estimates only, and are based on current information provided by the City, County or other public or private agencies responsible for the administration of special tax districts. Special taxes may increase or decrease, based upon the terms of the special tax lien, changes in real property tax law, the dissolution of special tax districts, the formation of new special tax districts, extension of special tax district(s), changes in services by the districts and other facts Buyer lnWals: ! -25- 254433253\CLP428\1)ISCLSR\609965.10 11/16/09 not in Master Developer's or Neighborhood Builders' control. The amount of special taxes may appear on your real property tax bill or may be billed separately. ADJACENT AREA DISCLOSURES 44. Adjacent Property Disclosures. The land adjacent to the Community within the MCAS Tustin Specific Plan has a variety of land use designations. The land use designations are subject to change. Therefore, the type of future development adjacent to the Community cannot be predicted with accuracy. 45. WAS Specific Plan. MCAS Tustin was realigned and closed on duly 2, 1999, in accordance with Base Realignment and Closure Act, The Department of Defense recognized the City of Tustin as the Lead Agency or Local Redevelopment Authority (`TRA' for preparation of the required reuse planning documents in late 1991. The MCAS Tustin Specific Plan/Reuse Plan (the "Pian' includes detailed planning, policies, regulations, implementation strategies and procedures necessary to guide the reuse and development of the site into the next century. Since implementation of the Plan will be a long- term process and there are unique circumstances associated with converting military bases to civilian uses, the Plan is intended to be practical in economic terms and visionary in terms of its ability to create and respond to future market opportunities. This means that it must provide sufficient guidance to provide investors with a high confidence level that their investments will be protected. At the same time, it must offer sufficient flexibility to respond to changing market conditions. A careful balance between certainty and flexibility underlies the provisions of this Plan. The Plan is intended to serve as both a policy -oriented and regulatory document. The Plan has been submitted to the Department of Defense as a policy guide outlining the intended reuse for the Community. Subsequently, the Plan was adopted by the Tustin City Council by City Council Ordinance No. 1257 on February 3, 2003 as the zoning for the Community. The Plan may also be amended one or more times by the City of Tustin. The Plan is one device for implementing goals and policies of the Tustin General Plan. The Plan also contains the development and reuse regulations that constitute the zoning for the Community. As a federal installation, MCAS Tustin was not subject to local zoning and planning requirements. Upon conversion to civilian use, the former MCAS Tustin property will be under the jurisdictional authority of either the City of Tustin or the City of Irvine, as applicable, and will be subject to local codes and ordinances. The City of Irvine has assigned responsibility for preparation of the Plan (and accompanying joint Environmental Impact Statement/Environmental Impact Report) to Tustin for that portion of the Plan area within Irvine. However, the City of Irvine will have to adopt any General Plan and zoning changes necessary to implement the provisions of the Plan within the City of Irvine. The land uses described in the Plan for the area covered by the Plan include, but are not limited to, Low -High Density Residential, Transitional and Affordable Housing, Golf Resort Living, Commercial Business and Retail, and InstitutionaMecreational designations such as Buyer lni5als; / -26- 2544.33253\CLP42801SCLSM 609965.10 11/16/09 3 Parks, Trails and Schools. Also recommended were applications by the Orange County Sheriffs Department, City of Tustin and County of Orange Social Service Agency. The Master Developer and Neighborhood Builders have no control over the Plan, changes to the Plan, or development of the area covered by the Plan in accordance with the Plan. For further information, you should review the Plan. The Plan and information regarding the development of the Plan is available for review at the office of the Local Redevelopment Agency, City of Tustin. 46. The District. The District is a one million square foot outdoor shopping center under development and is located approximately one and one-half (1'/z) miles southwest of the Community, at the comer of Jamboree Road and Barranca Parkway. The District includes, among other businesses, several retail stores, a grocery store and a movie theater. The District will result in increased noise and traffic in and around the Community, particularly along Jamboree Road and Barranca Parkway. Neither Master Developer, Neighborhood Builders nor the Community Association have any control over the use or maintenance of the District or its impact on the Community. 47. Rail Corridor/ Metrolink Station. As disclosed in the Homebuyer Notification, there is a rail corridor ("Corridor'l located to the north of the Community. There is also a Metrolink station ("Station") located to the north of the Community at 2975 Edinger Avenue, Tustin, CA 92780. The impact of the Corridor and Station may include, without limitation, increased noise, light and vibration levels in the vicinity of the Community. The Corridor and Station could be an attractive nuisance to children and animals who may wish to play in the vicinity of the rail corridor. The Master Developer, Neighborhood Builders and the Community Association have no control over the use, maintenance or care of the Corridor or Station. You acknowledge and understand that you are responsible for keeping your children and animals away from the Corridor and Station and the danger that is inherent around the Corridor and Station. You should evaluate the impact of the Corridor and Station on your decision to purchase a Home in the Community. 48. Temporary Sewer Lift Station. A temporary sewer lift station has been constructed within the vicinity of the Community. It is located at the northeast corner of Kensington Drive and Valencia North Loop Road and will serve a portion of the Community until such time the master infrastructure is completed to connect your Homesite or Home to the main sewer lines. The lift station has been installed below -grade and will be owned and maintained by the Irvine Ranch Water District. Owners may encounter some odors in the areas near the lift station. You acknowledge, understand and agree that neither the Community Association nor the Neighborhood Builders will have any control over the use, maintenance or care of the lift station. 49. Areas Outside the Specific Plan. The MCAS Tustin Specific Plan, which is bounded by Edinger Avenue, Redhill Avenue, Barranca Parkway and Harvard Avenue has the following surrounding uses. (a) A rail corridor and Metrolink station (described above) are located along Edinger Avenue; and Buyer Initials: / -27- 2544-33253TLP428TISCLSM 609965.10 11/16/09 (b) Offices, commercial and light industrial areas are located along Edinger Avenue and adjacent to the Community at Redhill and Edinger Avenues. The Master Developer, Neighborhood Builder and the Community Association CI have no control over development outside of the Community. 1n/ 50. Airport Proximity Disclosure. The Community is located within what is known NOW ' as an airport influence area (as defined in California Civil Code Section 1353) surrounding John Wayne Airport. John Wayne Airport is located approximately 3.6 miles southwest of the Community at the (405) San Diego Freeway and MacArthur Boulevard in the City of Santa Ana. For that reason, the Community may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the Community before you complete your purchase and determine whether they are acceptable to you. John Wayne Airport has noise abatement procedures in place, but there is no guarantee that these procedures will lessen the impacts on the Community of noise and vibrations caused by aircraft using this airport or that these noise abatement procedures will continue in the future. Further information is available from the airport website: www.ocair.com. Your Neighborhood Builder will provide you with a separate airport proximity notice required by California Civil Code Section 1353. 51. Avigation Easement. An avigation easement has been recorded against the Community. The avigation easement establishes a permanent right to travel through the air space over the Community for the benefit of John Wayne Airport. You may notice noise and vibration from overflying aircraft approaching or leaving the airstrip. By accepting a deed to a Home in the Community, you understand that the avigation easement gives the users of the airstrip a perpetual legal right to fly over the Community without interference from the occupants of the Community. VU 52. Commercial/Industrial Property. The Community is located within the vicinity of property zoned for commercial and heavy industrial uses located in the area of Barranca and `\ Jamboree Streets. This area consists of, among others, a Waste Management Public Recycling/Transferring Station, asphalt recycling, trucking facilities and multiple concrete companies, all with product deliveries. These commercial and industrial properties may generate dust, offensive odor, noise and other effects. The Master Developer and Neighborhood Builders f have no control over the existing or potential uses of this property. These uses may create light, noise and other nuisances twenty-four (24) hours a day, seven (7) days a week. 53. Proposed Schools. The Tustin Unified School District owns an elementary school site located to the west of the Community on Landsdowne Road and a high school site is >proposed to be constructed adjacent to the Regional Park at the intersection of Kensington Park Drive and Valencia Avenue. Owners and other residents within the Community may experience, among other things, glare from bright lights, noise and increased traffic and parking congestion in connection with the use of this site. There are no assurances if or when any school will be completed on the site, nor the type of facilities that may be included as part of the school. You should contact the Tustin Unified School District at (714) 730-7301 for more information. Buyer lnidals: / _28_ 2544-332531CLP428MISCLM 609965.10 11/16/09 Master Developer, Neighborhood Builders and the Community Association make no representations as to the future use of this school site. 54. Development Area. The Community lies in a rapidly expanding area. As future commercial and residential developments are built in and around MCAS Tustin, you may expect attendant limitations on solitude and inconveniences. For example, you can expect to hear noise from the development of future adjacent residential and commercial areas and the machinery used to develop these areas. You can also expect increased traffic and rerouting of traffic as new residential and commercial developments are constructed, nearby streets and major thoroughfares are widened and new streets are built. As the area around the Community develops, you may experience light entering your Home from exterior sources including streetlights, parking lot lighting and nearby residential and commercial buildings. The Master Developer, Neighborhood Builders and the Community Association have no control over the transmission of noise, light, vibration, odor and other impacts or their potential effects on Homes in the Community, including any which may be a direct result of current and future construction activity. 55. WAS Tustin Airship Hangars. Two (2) airship hangars ("Hangars' are located within MCAS Tustin southwest of the Community. The hangars are each approximately one thousand (1,000) feet long, three hundred (300) feet wide, and. one hundred and seventy (170) feet tall, The view from your Home may be effected by the nearby presence of the Hangars. It has not been determined whether these Hangars will remain or be demolished, or what uses might be made of them. For further information regarding the Hangars, please contact the City of Tustin. 56. Future Fire Station Site. The Community is located adjacent to a future fire station site at the corner of Edinger Avenue and Kensington Park Drive. The fire station will operate twenty four (24) hours a day and seven (7) days a week. Owners whose Homes are located in the vicinity of the fire station will notice noise, sirens, light, glare and other impacts from the operation of the fire station and emergency vehicles. You are advise that Master Developer and Neighborhood Builders have no control over the operation or use of the fire station. You should carefully evaluate the impact of the fire station on your decision to purchase a Homesite or Home in the Community. 57. Village Services. The Community is located northwest of an area designated in the Plan as the Village Services area. When and if built, this area is intended to be accessible to both vehicle and pedestrian traffic, and to provide localized commercial retail and service uses to adjacent residential areas within the Plan area. 58. Learning Village/Transitional and Emergency Housing. The Community is located east of an area designated in the Plan as the Learning Village area. When and if built, this area is intended to provide a specialized educational environment with a variety of public - serving uses. Buyer Initials: / _29_ 2544-33253TU428TISCLSM 609965,10 11/16/09 GENERAL DISCLOSURES 59, Neighborhood Model Homes. Neighborhood model homes reflect typical exterior elevations, floor plans and methods of construction, and also illustrate possibilities for future interior decoration and exterior landscaping and hardscape improvements. Your Home will not necessarily conform to any model shown. The exterior elevations, architectural treatments, floor plans and colors shown on the master plot plans on display at the office of each Neighborhood Builder may be different than those both displayed in the models and those actually constructed by the Neighborhood Builder. Additionally, window locations, window types, roof lines, architectural projections and other similar features vary by elevation and Home location, and not all of the features displayed in the models may be included in your Home. The models have also been professionally decorated to show various decor ideas. Decoration items such as furnishings, draperies and other window treatments, any window tinting, wallpaper, custom carpet, coordinated paint, built-in shelves, beams, certain lighting fixtures (including halogen lighting), special ceiling treatments and some mirrors are for display purposes only, and are not included in the purchase price for your Home. Entries, walkways and driveways are shown in a variety of materials to show design ideas; however, for your Home, they will be constructed using only standard concrete. The hardscape shown in the model complex may not depict what may be constructed in all locations. Additionally, landscaping for the models is greater in density and type than any landscape package offered by a Neighborhood Builder. If not expressly included in the purchase price for your Home in writing by a Neighborhood Builder, the rear, side and front yard landscaping is your responsibility. The type of plants, and the size and density of the landscaping in the yards of the models are merely intended to suggest ideas to you. Certain models may also include hardscape items (patio slabs, patio covers, pools, spas, etc.) which are not included in the purchase price of your Home. All such options and upgrades displayed in the models (including decorator items, landscaping and hardscape) are not included in the purchase price for your Home unless expressly agreed to in writing by the Neighborhood Builder. You should consult your sales representative for additional information regarding non-standard items used in the model homes. 60. Extended Use of the Model Complex. Each Neighborhood Builder reserves the right to use one or more Homes in a Neighborhood as a sales office and model home complex, and to display signs and banners, in connection with its program of marketing and selling Homes in the Neighborhood as well as other Homes owned by Neighborhood Builders, even if they are located in separate and unrelated Neighborhoods. 61. Grading Variations. Your Homesite has been graded to City specifications and may vary significantly from other Homesites. Variations may include slopes, swales, drains, flood control channels and retaining walls as required. Any changes made to the grading of the Hon which your Home is located may significantly affect you or your neighbor's drainage pattern and cause significant property damage to your Home or a neighbor's Home. 62. Wall/Ceiling Heights. Wall and ceiling heights and configurations may vary significantly by elevation. Your Home's walls and ceiling heights may be different from those used in the model homes. You are encouraged to speak to a sales representative if you have any questions. Buyer Ini8als: / -30- 2544-33253TU4281nISCLSa1609965. 10 11/16/09 63. Right of Substitution. From time to time due to unavailability and other production considerations, it is necessary for a Neighborhood Builder to make substitutions of materials and other items used in construction of the Homes from those materials and items displayed in the models. Therefore, each Neighborhood Builder reserves the right to make any changes or substitutions as the Neighborhood Builder deems necessary or desirable to the color schemes, building materials, fixtures, appliances and other components of the Homes. The foregoing substitutions may include, without limitation, kitchen appliances, household fixtures, electrical outlets and switches, hardware, wall surfaces, painting and other similar items. Each Neighborhood Builder shall have the right to make the substitutions described above without adjustment to the purchase price of your Home, 64. Changes in Construction Plans. The construction, grading, drainage and improvement plans (collectively, the "Construction Plans' for Homesites and Homes within each Neighborhood all contain dimensions that are approximate. They are not intended to be precise dimensions with regard to the Neighborhood. Room dimensions and electrical outlet placement will vary slightly from models and from printed information. Construction will be performed in substantial conformance with the Construction Plans, but dimensions may change slightly from them. If there is a discrepancy between the Construction Plans and the actual as - built conditions of your Homesite or Home, the as -built conditions will control. The usable or buildable area, location and configuration of the Homesite and all improvements located thereon may fluctuate from that shown or displayed to you in the Construction Plans or any other drawings, topographic maps or models based upon a Neighborhood Builder's construction of final improvements including, without limitation, fencing and slopes, which shall be constructed in a Neighborhood Builder's sole and absolute discretion. The location, size, height and composition of all walls and fences to be constructed on your Homesite or adjacent thereto shall be determined by the Neighborhood Builder in its sole and absolute discretion and despite the Construction Plans or any other models, drawings or topographic maps displayed to you. The Neighborhood Builder makes no representations, warranties or assurances as to the size, height, location or composition of any wall or fence to be constructed on or adjacent to your Homesite or Home. The Construction Plans are subject to change at any time without notice or obligation. 65. Non -Standard Construction. You may not personally perform any changes of any kind to your Home (such as alarm systems, home intercoms, stereo wiring, etc.) during construction and prior to the Close of Escrow. Such changes may void your warranty. Only those options and upgrades specifically agreed to by the Neighborhood Builder will be made. Any other changes and unapproved options found in a Home during the construction period will be removed by the Neighborhood Builder and the cost of removal and any repairs shall be your responsibility. 66. Changes In Development Plan and Prices. The residential real estate market continually fluctuates due to changes in economic, social and political conditions that directly affect the supply of and demand for housing. As a result, the development plan for the Neighborhood and the Community, and home prices and the terms and conditions of sale are also subject to change, Therefore: (a) With the exception of your Home, each Neighborhood Builder reserves the right at any time prior to or after the Close of Escrow for the sale of a Home and without Buyer Initials: / -31- 2544-332531CLP42MISCLSM 609%5.10 11/16/09 I notice, (i) to increase or decrease the sale price, adjust incentives or otherwise adjust the terms and conditions of sale for Homes in the Neighborhood or in the Community, and (ii) change the number, size, location, elevation, design or type of homes constructed in current or future phases of development of the Neighborhood; (b) No Neighborhood Builder is obligated to offer you the same price, incentives or other terms and conditions of sale that the Neighborhood Builder has previously offered or may subsequently offer to another purchaser; (c) No Neighborhood Builder has either offered or agreed to any price protection or other similar commitment to you regarding the value or resale value of your Home (or any other property), and no Neighborhood Builder shall have any obligation or liability whatsoever to you in the event any price changes directly or indirectly affect the value of your Home; (d) • When you entered into a Purchase Agreement, the Neighborhood Builder may have owned other properties which may have been off the market and may not have been shown to or otherwise made available for purchase by you. No Neighborhood Builder has any obligation to notify you if any of such properties come on the market or are otherwise available for purchase or any obligation to notify you of any future properties the Neighborhood Builder may develop and make available for purchase, (e) You shall not hold a Neighborhood Builder responsible for any fluctuations in the purchase price of Homes within the Neighborhood or the Community. In consideration of a Neighborhood Builder's agreement to sell a Home to you, you agree that you shall have no claims against the Master Developer or the Neighborhood Builder for any possible change (decrease or increase) in the purchase price of Homes within the Neighborhood or any other terms of purchase, including, without limitation, upgrades or other concessions or incentives offered by a Neighborhood Builder to other purchasers of Homes within the Neighborhood and the construction of any additional floor plans on any of the Homes in the Neighborhood. 67. Use of Subcontractors. Neighborhood Builders generally perform construction through the use of subcontractors, and may not employ construction trades or workers. A Neighborhood Builder is not permitted to change its subcontracts without approval of the respective subcontractor; therefore, you may not request interior or exterior construction changes or alterations not otherwise offered to other purchasers in the sales office. 68. Elevation/Floor Plan Specifications. In order to provide architectural diversity in the street scene; each Neighborhood Builder's architect has produced more than one exterior design (elevation) for each floor plan. Consequently, differences may be noticed between the model home for your floor plan and the elevation of your Home. You acknowledge that you have received a description of the exterior configuration for the elevation and the exterior color scheme number for your Home. You also acknowledge that your Home's elevation and floor plan may vary from the configuration of the model home for your Home in terms of layout, sizes of certain rooms, exterior elevation features and other items such as sloped ceilings, veneer treatments, window locations and sizes, roof lines and color schemes. Buyer Initials: / _32. 254433253\CLP428MI5CLSM 609965.10 11/16/09 69. Upper Floor Weight Limits. The upper floors of Homes are designed to support weight limits as outlined in the Uniform Building Code ("UBC'). If you currently own or are planning to purchase a waterbed, pool table or other heavy furniture you must confirm with the manufacturer that the weight introduced by these items does not exceed the UBC weight limit. Master Developer and Neighborhood Builders shall not be responsible for damage caused by anything you place on the upper floors that exceeds the UBC weight limit. 70. Air Conditioning. The air conditioning system and equipment specifications installed in the model homes may vary and operate at a higher capacity than those provided in your Home. You are encouraged to speak with your sales representative to determine the exact equipment specifications that will be provided with your Home. The location of the air conditioning compressor may vary between the model and your Home and between your Home and other Homes in your Neighborhood. 71. Alarm System. If you purchase an alarm system from a Neighborhood Builder, you specifically waive any claims against Master Developer, the Neighborhood Builder and the Community Association as a result of any failure of the alarm system to warn, frighten off, or alert anyone about intruders or any other problems. The sale of such system to you by the Neighborhood Builder is not a guarantee or warranty against criminal acts. Master Developer, the Neighborhood Builders and the Community Association are not insurers against criminal acts. 72. Energy Conservation. Homes in the Community meet or exceed the energy conservation standards that are a part of Title 24 of the California Administrative Code. Each Neighborhood Builder is required to design and install heathig and cooling units that meet strict guidelines in Title 24. This is an energy conservation law that is designed to help reduce the overall use of energy in your Home. Title 24 describes the amount of cooling capacity as well as the minimum efficiency ratings for each geographic location in the state. In complying with Title 24, the cooling units installed in your Home are designed for maximum efficiency. Due to the Title 24 geographic requirements, on extremely warm days your inside room temperature may be wanner than your thermostat selection. This is due to design restrictions imposed by Title 24, not any design or installation defect by the Neighborhood Builder or its contractor. 73. Water Conservation. Each Home in the Community is equipped with low flow fixtures and other equipment to aid in water conservation in compliance with the City's Conditions of Approval for the Neighborhood. 74. Gas Barbecue Stub. If a natural gas service line is stubbed -out to an exterior backyard wall of your Home, it is suitable only for use in connection with a gas barbecue. Any other use may result in a serious fire hazard. The Neighborhood Builder and Master Developer are not responsible for any damage resulting from your use of the exterior gas stub. 75. Stain Grade Material Discoloration. Natural hardwoods used for cabinets, doors, stair systems, moldings, etc., are finished with stain and lacquer finish products which will change color over time. Color change may be the result of exposure to sunlight or weather, or simply the consequence of aging. Discoloration is not a defect. Buyer Initials; / _33- 2544-33253\CLP428\DISCLSR\609965.10 11/16/09 Y 76. Paint Discoloration. Certain portions of your Home, such as paint -grade cabinets, casework, moldings and interior doors, may be painted with oil-based enamel paint. Yellowing is common with oil-based enamel paints. Additionally, if your Home has white oil- based enamel paint -grade cabinets, yellowing will occur. 77. Variations In Natural Materials, Your Dome may include various natural materials (e.g., wood products and/or stone products). Wood products vary in dimension, grain, color, moisture content, and performance when subjected to high moisture environments. Dimensional variations in the wood framing members (studs, plates, joists, rafters, and beams) or the required structural hardware connectors may show through the drywall and stucco finishes under certain lighting conditions. Wood panels and trim, exposed timbers, rafters, and posts will require periodic painting. Wood exposed to weather will require more frequent painting. Consult the maintenance schedule included in your Homeowners Manual. Some of the natural characteristics of wood will show through the painted or stained finish. For example, there may be shades of white, red, black, grey or even green in areas. Mineral streaks may also be visible. This is caused by the irregularity of mineral absorption from one part of the tree to another. Grain patterns or texture will vary from even to irregular throughout your cabinetry. Similarly, granite and natural stone products are composed of various mineral contents. Marble is less dense and more porous than granite. Great care must be taken to prevent damage to marble and other stone products. You should follow the manufacturers' recommendations for cleaning and maintenance. Because these are natural products, they are subject to variation in color, veining, spotting, holes, cloudiness, texture and cracking. Some may vary significantly in filler and sheen. The samples in the sales office are actual pieces of natural stone which indicate general color and character; however, no two (2) pieces can be expected to match, even when taken from the same box. You should view the stone prior to purchase, and any questions regarding these materials must be resolved prior to installation. If replacement of natural material tile or carpet is required, you understand and agree that a match with existing material cannot be guaranteed. 78. Brass Plumbing/Light Fixtures/Hardware. Brass, bronze or other finishes have their limitations. In time, the protective lacquer may deteriorate from exposure to weather, perspiration, cleaning agents, frequency of use and other factors. Tarnishing or excessive wear of these finishes is, therefore, not a defect, but a normal process which is unavoidable. Under the circumstances, these finishes cannot be guaranteed and products will not be repaired or replaced under the manufacturer's warranties for tarnishing or wear of finishes. 79. Drywall Panels and Finishes. Drywall panels are placed over the wall studs, joists, rafters and beams. Drywall is typically used to finish window openings. Drywall panels will not completely eliminate variations in the dimension and plane of wood framing members. Metal trim (i.e., corner bead) is used at corners, window edges, soffits and ceilings. They are designed to be filled with finish compounds. These trim metals provide a durable finish but cause the wall plane to "flare" at the metal edge. Panel joints and seams are taped and coated with finish compounds. Fasteners are coated with finish compounds to cover the small "dimple" in the surface of the drywall panel. Progressive applications of finish compounds are required to cover the joints, fasteners, and seams. In some cases, the normal finishing of these joints, fasteners, and seams will cause a subtle "bulge". When the finishing process is complete, the walls and ceilings receive a texture coat. In certain lighting conditions (up -lights placed close to Buyer Initials: / _34- 254433253\131.1`428\DISCLSa\609965.10 11/16/09 the walls), irregularities and variations in the wall plane or intersection of vertical and horizontal panels may be evident. These variations are normal. 80. View. Master Developer, Neighborhood Builders, the Community Association and their counselors, agents, representatives or employees make no representations, warranties or promises concerning any view, present or future, that may be enjoyed from all or any portion of your Homesite or Home. The view from your Homesite or Home may change or may be fully or partially obstructed by (a) the construction of other homes, Improvements, structures, fences, walls and/or landscaping by Master Developer, Neighborhood Builders or other Owners within the Community, (b) activities and Improvements on real property outside the Community, and/or (c) the growth of trees and/or other vegetation within or outside the Community. You are advised that trees installed in the Community are generally smaller than they will be once mature and trees that do not block views when you purchase your Home may obstruct views as they grow. Master Developer and Neighborhood Builders make no representations or warranties with respect to any open space on property adjacent to your Homesite or Home, or the Community as a whole, whether this property is owned or controlled by Master Developer, Neighborhood Builders, government agencies or private property owners. 81. Warranties for Consumer Products. The manufacturers' warranties for the consumer products included in your Home (e.g., water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the sales office of your Neighborhood Builder. 82. Financing. This paragraph only applies if you are purchasing your Home from a Neighborhood Builder who is also a Lennar Family Builder and you are financing the purchase with Universal American Mortgage Corporation ("UAMC'. You will be required to provide UAMC with all documents necessary to obtain loan approval. UAMC may be affiliated with the Neighborhood Builder. You are not obligated to accept a loan from UAMC, but you may be required to submit documentation to UAMC to permit the Neighborhood Builder to determine whether it is likely that you will qualify to purchase the Home you desire. You may select your lender independently; however, if you select a lender other than UAMC, you must ensure that the lender can meet the time limitations and requirements imposed on lenders in the Purchase Agreement. Master Developer and Neighborhood Builder have not reviewed or approved any lender's sales or marketing materials, and does not make any representations or warranties whatsoever regarding any matters set forth therein or your ability to obtain any financing under any particular terms. You are strongly encouraged to make your own independent evaluation of the rates and loan programs offered by all lenders, including UAMC. You understand that the interest rate and loan fees for the loan applied for will be determined at the time of the Close of Escrow and may be higher or lower than on the date you signed a purchase agreement for your Home. You also acknowledge that the interest rate and loan fees referenced on the loan application are approximate only and do not constitute a binding commitment. 83. Schools. The Community is currently located in the; Tustin Unified School District, telephone: (714) 730-7301 (the "School Distrlct'�. To obtain further information about the schools serving the Community, including, transportation to and from the schools, please contact the School District. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. Due to the rate of population change, the school Buyer Initials! 1 _35- 254433253\CLP425\DISCLSR\609965.10 11/16/09 district may find it necessary to change boundaries and designated schools periodically, prior to or after your close of escrow. In addition, it is possible that school district boundaries may change and your children will be required to attend a different school district in the future. Master Developer and Neighborhood Builders have no control or responsibility for such changes should they occur. The Community is currently expected to be served by the following schools: Marjorie Veeh Elementary School (K-6) 1701 San Juan Street Tustin, California (714)730-7544 A.G. Currie Middle School (7-8) 1402 Sycamore Avenue Tustin, California (714)730-7352 Tustin High School (9-12) 4321 1171 El Camino Real Tustin, California (714)730-7414 To obtain further information about the schools serving the Community, including transportation to and from the schools, please contact the applicable school referenced above or the School District, or you can visit the School District's website at www.tustin.kl2.ca.us. You should investigate this matter to your satisfaction prior to purchasing a Home in the Community. 84. Mailboxes. Mailboxes in the Community may be clustered in groups as required by the United States Postal Service. The location of mailboxes and above -ground utility structures are determined by governmental agencies or utility companies, or both. You may not change the type of mailbox being used or the location. Master Developer and Neighborhood Builders reserve the right to modify such locations as may be dictated by field conditions without prior notice. 85, Residential Construction Legislation. California Civil Code Sections 895 through 945.5 ("Construction Claims Statute"), went into effect on January 1, 2003. The Construction Claims Statute (a) delineates standards for how various components of your Home should be constructed and function, (b) limits the time frames for bringing various claims against the Neighborhood Builder to anywhere from one year to ten years (as listed in the Construction Claims Statute) after the Close of Escrow, (c) imposes an obligation on all Owners and their successors in interest to follow Neighborhood Builder's maintenance recommendations and schedules or other applicable maintenance guidelines, and (d) establishes a non -adversarial claims resolution procedure. Pursuant to Section 914 of the Construction Claims Statute, the Neighborhood Builder is permitted to elect to utilize the procedure in the Construction Claims Statute or its own alternate contractual pre -litigation procedures. The applicable claims handling procedures are outlined in the Purchase Documents you receive from the Neighborhood Builder, including the "Dispute Resolution" provision in Section 13.5 of the Community Declaration. A�1 separate notice further describing claims handling procedures may have been recorded against' W Buyulnitlels: / -36- 2544-33253\CLP428\DISCLSR\609965.10 �� n 11/16/09 �M� ✓/}I' t�rtli�M�'�I� the title to Homes by the Neighborhood Builder in some Neighborhoods. You should review any such notice and your Purchase Documents carefully concerning these issues. YOU ARE ADVISED THAT THE CONSTRUCTION CLAIMS STATUTE AFFECTS YOUR LEGAL RIGHTS. YOU ARE ADVISED TO READ THE STATUTE CAREFULLY AND SEEK LEGAL ADVICE IF YOU HAVE ANY QUESTIONS REGARDING ITS EFFECT ON YOUR LEGAL RIGHTS. Buyer Initials Buyer Initials 86. Duty to Follow Maintenance Guidelines. An Owner is obligated by Section 907 of the Construction Claims Statute to follow any maintenance recommendations and schedules from the Neighborhood Builder, including the maintenance recommendations and schedules for manufactured products and appliances included with the Home, as well as all commonly accepted maintenance practices (collectively, "Maintenance Guidelines'). Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow any such Maintenance Guidelines may reduce or preclude an Owner's right to recover damages relating to an Owner's Home which could have been prevented or mitigated had the Maintenance Guidelines been followed. Buyer Initials Buyer Initials 87. Obligation to Retain Purchase Documents. The Purchase Documents that you receive through escrow in conjunction with the purchase of a Home may include Maintenance Guidelines, a written limited warranty, claim forms, and other documentation relating to the Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these documents and provide copies of such documents to an Owner's successors in interest upon the sale or transfer of the Owner's Home. Buyer Initials Buyer Initials 88. Warranty and Limitations on Liability. A Neighborhood Builder may provide a written limited warranty for the Homesite or Home covering certain defects for a limited period after the date the limited warranty commences. Warranty periods for items will vary as set forth in the written limited warranty. During the written limited warranty period, if any, the Neighborhood Builder will repair or replace, at the Neighborhood Builder's sole discretion, certain components of your Homesite or Home, as set forth in the written limited warranty. A written limited warranty generally does not cover defects resulting from' the failure of an Owner to perform commonly- accepted maintenance. Minor expansion, contraction, settlement cracks normal to home construction, and secondary damage, are generally not covered under the terms of a written limited warranty. Please refer to the written limited warranty you may receive for Buyer Initials: / -37- 2544-33253\CLP428\DISCLSR\ 609965.10 11/16/09 additional information. No other warranties or guarantees, whether expressed or implied, are provided, unless stated in writing and signed by a Neighborhood Builder. The manufacturers' warranties for the manufactured consumer products included in your Home (for example, water heater, air conditioning system, dishwasher, garbage disposal and other household appliances) are available for review in the Neighborhood Builder's sales office. 89. Notice of Sexual Offenders. The following notice is given pursuant to Section 2079.10a of the California Civil Code: Pursuant to Section 290.46 of the Penal Code, information about specified registered sex offenders is made available to the public via an Internet Web site maintained by the Department of Justice at www.meEanslaw.ca.gov. Depending on an offender's criminal history, this information will include either the address at which the offender resides or the community of residence and ZIP Code in which he or she resides. Prior to the purchase of a Home in the Community, you may research the database to determine whether there are sex offenders in the area. Master Developer, Neighborhood Builders, the Community Association and their respective directors, officers, employees, agents, representatives and consultants make no representations, warranties, or guarantees regarding the presence or absence of registered sex offenders within the Community or in the surrounding area. In addition, Master Developer, Neighborhood Builder, the Community Association and their respective directors, officers, employees, agents, representatives and consultants have no obligation or duty to investigate existing residents or buyers to determine whether they are sex offenders. You are solely responsible for making your own investigation. For further information, please contact your local law enforcement agency. Most law enforcement agencies have special stations to view the Megan's Law database. 90. Benefit of Home Ownership. Although the purchase of a new home has traditionally been considered a wise decision, Master Developer and Neighborhood Builder have made no representations, guarantees or warranties to you regarding the tax benefits, investment benefits or other benefits of home ownership, regarding appreciation or depreciation in the value or equity accrual in your Home, and regarding future price adjustments. 91. Assumption of Risk and Liability. By acceptance of this Disclosure, you assume all risk and liability for injuries to persons and property that may be sustained by you, your family members and your social and business guests by reason of all conditions or circumstances disclosed in this Disclosure. VISITING THE COMMUNITY BEFORE MOVE -IN If you wish to visit the Community, the Neighborhood and your Home before your move in, please be aware that your Home is located within a construction area and that construction sites are potentially dangerous. The Neighborhood Builder will permit you to enter your Home and the construction area surrounding your Home provided that you are fully aware of the risks of such entry and are willing to comply with the procedures and requirements imposed on such Buyer Initials: / _38_ 2544.33253\CLP428\DISCLSR\ 609965.10 11/16/09 visit by the Neighborhood Builder. You must be accompanied by your sales representative, or another representative of the Neighborhood Builder on any and all visits to your Home. Each Neighborhood Builder further requests that such visits be limited to non -construction hours. By signing this Disclosure you acknowledge that there are numerous risks associated with visiting your Home during construction, including without limitation, open trenches, construction traffic, potential falling debris, exposed nails and electrical wiring, incomplete construction and certain other potential hazards. You further agree to use due care while visiting your Home. In addition, prior to visiting any construction area you may be required to sign a waiver and release form provided by the Neighborhood Builder ("Waiver") in which you agree to comply with the provisons of the Waiver. Whether or not you have signed a Waiver, by signing this Disclosure, you agree that you shall proceed at your own risk and you release and waive any claims a ag inst Master Developer, Neighborhood Builders, all of their affiliated entities, officers, directors, agents and assigns, and all other persons or entities potentially liable to you as a result of an iniury which may occur duringyourvisit to your Home, to the Neighborhood and to the Community. ENTIRE DISCLOSURE; NO OTHER REPRESENTATIONS No sales representative, employee or agent of any Neighborhood Builder or the Master Developer has the authority to make any representation to you which contradicts or modifies the matters and information set forth in this Disclosure, the purchase agreement or any other written disclosure provided by the Master Developer or Neighborhood Builders in connection with the purchase of a Home in a Neighborhood (collectively, the "Disclosure Documents'. You acknowledge that no representations have been made to you by such persons other than as set forth in the Disclosure Documents and upon which you have relied in connection with the purchase of the Home. Please indicate below if any representations have been made by any such person which contradict or modify the matters and information set forth in the Disclosure Documents: RELEASE AND INDEMNITY REGARDING DISCLOSURES With respect to items of information disclosed to you in this Disclosure or in any Disclosure Documents provided by Master Developer or Neighborhood Builders (collectively, "Disclosure Items"), you agree that you and your family members release, waive and will not make any claims against Master Developer and Neighborhood Builders for (a) nondisclosure of Disclosure Items, (b) for alleged improper or incomplete Disclosure Items, and (c) personal injury, property damage, expenses (including attorney fees and costs) and other liability you, your family members and others experience from the nondisclosure, improper disclosure or incomplete disclosure of Disclosure Items. You also agree that you will indemnify and hold the Master Developer, Neighborhood Builders and all of their affiliated entities, officers, directors, agents and assigns, harmless from all such claims by you, your family members and your social and business guests. Buyer Initials: / _39_ 2544-33253\CLP428\DISCLSR\ 609965.10 11/16/09 Buyer Initials Buyer Initials [Buyer Acknowledgment on following page] Buyer Initials: / _40_ 2544-33253\CLP428\DISCLSR\ 609965.10 11/16/09 Columbus Square HOMEBUYER DISCLOSURE STATEMENT BUYER ACKNOWLEDGMENT By the signatures below, you acknowledge that you will close escrow with full knowledge, understanding and agreement as to all of the information contained in this Disclosure, and that this Disclosure constitutes a part of the terms of your Home purchase. Buyer: Date: Homesite or Condominium No: Tract No: Street Address: Buyer Initials: / -41- 2544-33253\CLP428\DISCLSR\ 609965.10 11/16/09 ATTACHMENT E Master Declaration of CC&Rs and First Amendment to Master Declaration of CC&Rs This Document was electronically recorded by North American Recorded in Official Records, Orange County Tom Daly, Clerk -Recorder RECORDING REQUESTED BY: 11111111111111 1 111111 438.00 2006000149773 10:35am 03/07/06 203 59 D02 R27 143 0.00 0.00 0.00 0.00 426.00 0.00 0.00 0.00 NORTH AMERICAN TITLE COMPANY WHEN RECORDED, MAIL TO: MOFFETT MEADOWS PARTNERS, LLC c/o Lermar Homes of California, Inc. Attn: T. Wilson 25 Enterprise, Suite 300 Aliso Viejo, CA 92656 (SpacestboveforRecorder's Use) MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR �►�I:fif 011 2544-332531CLP4281CCRS1581730.13 2/1!06 TABLE OF CONTENTS MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE Page ARTICLE I DEFINITIONS.................................................................................................. 3 1.1 ARTICLES........................................................................................................3 1.2 ASSESSMENT, CAPITAL IMPROVEMENT ................................................ 3 1.3 ASSESSMENT, COMMON.............................................................................3 1.4 ASSESSMENT, COMPLIANCE..................................................................... 3 1.5 ASSESSMENT, EXTRAORDINARY............................................................. 3 1.6 ASSESSMENT, RECONSTRUCTION...........................................................4 1.7 ASSESSMENT UNIT....................................................................................... 4 1.8 ASSOCIATION PROPERTY........................................................................... 4 1.9 BENEFICIARY................................................................................................ 4 1.10 BOARD OR BOARD OF DIRECTORS..........................................................4 1.11 BUDGET.......................................................................................................... 4 1.12 BYLAWS..........................................................................................................4 1.13 CITY.................................................................................................................4 1.14 CLOSE OF ESCROW......................................................................................4 1.15 COMMON EXPENSES...................................................................................4 1.16 COMMUNITY ASSOCIATION......................................................................5 1.17 COMMUNITY ASSOCIATION FUNDS ........................................................ 6 1.18 COMMUNITY ASSOCIATION GOVERNING DOCUMENTS ................... 6 1.19 COMMUNITY CENTER................................................................................. 6 1.20 COMMUNITY GUIDELINES......................................................................... 6 1.21 COMMUNITY MANAGER............................................................................ 6 1.22 COMMUNITY WALL..................................................................................... 6 1.23 CONDOMINIUM.............................................................................................6 1.24 COUNTY.......................................................................................................... 7 1.25 COVERED PROPERTY.................................................................................. 7 1.26 DECLARANT.................................................................................................. 7 1.27 DEED OF TRUST............................................................................................ 7 1.28 DESIGN GUIDELINES................................................................................... 7 1.29 DESIGN REVIEW COMMITTEE...................................................................7 1.30 DRE................................................................................................................... 7 1.31 FHA...................................................................................................................7 1.32 FREDDIE MAC................................................................................................ 7 1.33 FANNIE MAE.................................................................................................. 7 1.34 FAMILY........................................................................................................... 8 1.35 FISCAL YEAR................................................................................................. 8 1.36 GINNIE MAE................................................................................................... 8 1.37 HOME ............................................................................................................... 8 2544-3325ACLP428TCM 581730.13 2/1/06 TABLE OF CONTENTS (continued) Page 1.38 IMPROVEMENT............................................................................................. 8 1.39 INCLUDES, INCLUDING............................................................................... 8 1.40 LOCAL GOVERNMENTAL. AGENCY......................................................... 8 1.41 LOT...................................................................................................................8 1.42 MAINTAIN, MAINTENANCE....................................................................... 8 1.43 MAINTENANCE AREA.................................................................................. 8 1.44 MAINTENANCE GUIDELINES..................................................................... 9 1.45 MASTER DECLARATION............................................................................. 9 1.46 MEMBER, MEMBERSHIP............................................................................. 9 1.47 MODEL HOMES............................................................................................. 9 1.48 NEIGHBORHOOD..........................................................................................9 1.49 NEIGHBORHOOD ASSOCIATION............................................................... 9 1.50 NEIGHBORHOOD BUILDER........................................................................9 1.51 NEIGHBORHOOD DECLARATION...........................................................10 1.52 NEIGHBORHOOD PROPERTY...................................................................10 1.53 NEIGHBORHOOD WALL............................................................................10 1.54 NOMINATING COMMITTEE......................................................................10 1.55 NOTICE AND HEARING.............................................................................10 1.56 OPEN SPACE/PARK AREAS.......................................................................10 1.57 OWNER.....................................................................................................10 1.58 PERSON.........................................................................................................10 1.59 PHASE OF DEVELOPMENT.......................................................................10 1.60 PUBLIC REPORT..........................................................................................10 1.61 RECORD OR FILE........................................................................................11 1.62 RESERVES.............:.......................................................................................11 1.63 RESIDENTIAL AREA...................................................................................11 1.64 SUPPLEMENTAL DECLARATION............................................................11 1.65 TELECOMMUNICATION FACILITIES......................................................11 1.66 'TELECOMMUNICATION SERVICES........................................................11 1.67 VA................................:..................................................................................11 ARTICLE II USE RESTRICTIONS....................................................................................11 2.1 SINGLE FAMILY HOME............................................................................. 12 2.2 NUISANCES..................................................................................................13 2.3 SIGNS.............................................................................................................13 2.4 PARKING AND VEHICULAR RESTRICTIONS ........................................ 14 2.5 ANIMAL RESTRICTIONS...........................................................................16 2.6 EXTERIOR ITEMS........................................................................................16 2.7 TEMPORARY BUILDINGS.........................................................................17 2.8 ASSOCIATION PROPERTY/MAINTENANCE AREAS ............................17 2.9 OUTSIDE INSTALLATIONS.......................................................................17 2.10 INSIDE INSTALLATIONS...........................................................................17 2.11 ANTENNAE................................................................................................... 17 2.12 DRILLING......................................................................................................18 254433253\CLP428\CCRS\ 581730.13 2/1/06 TABLE OF CONTENTS (continued) Page 2.13 FURTHER SUBDIVISION............................................................................18 21 2.14 DRAINAGE....................................................................................................19 22 2.15 WATER SUPPLY SYSTEMS........................................................................ 20 2.16 VIEW OBSTRUCTIONS............................................................................... 20 2.17 SOLAR ENERGY SYSTEMS....................................................................... 20 2.18 INSTALLATION OF LANDSCAPING........................................................ 20 2.19 POST TENSION CONCRETE SLABS......................................................... 20 2.20 RIGHTS OF DISABLED............................................................................... 21 ARTICLE III DISCLOSURES..............................................................................................21 3.1 SOIL CONDITIONS...................................................................................... 21 3.2 ENVIRONMENTAL CONDITION............................................................... 22 3.3 GRADING...................................................................................................... 24 3.4 AFFORDABLE HOUSING........................................................................... 24 3.5 .................................... UTILITY IMPROVEMENTS ........................ ............24 3.6 COMMUNITY FACILITIES DISTRICT AND ASSESSMENT DISTRICTS.................................................................................................... 24 3.7 AIRPORT INFLUENCE AREA NOTICE.....................................................24 31 3.8 RECLAIMED WATER.................................................................................. 25 3.9 PROPERTY LINES........................................................................................ 25 3.10 OFFERS OF DEDICATION................................................•.........................25 3.11 CHANGE IN PLANS..................................................................................... 25 3.12 NO ENHANCED PROTECTION AGREEMENT ........................................ 25 3.13 ADDITIONAL PROVISIONS....................................................................... 25 3.14 OTHER REPRESENTATIONS AND WARRANTIES ................................ 26 ARTICLE IV GOVERNANCE BY THE COMMUNITY ASSOCIATION ........................ 26 4.1 ORGANIZATION OF THE COMMUNITY ASSOCIATION ...................... 26 4.2 GENERAL DUTIES AND POWERS............................................................26 4.3 SPECIFIC DUTIES AND POWERS.............................................................26 4.4 PERMITTED FUNCTIONS........................................................................... 30 4.5 PROHIBITED ACTIVITIES..........................................................................30 4.6 COMMENCEMENT OF COMMUNITY ASSOCIATION MAINTENANCE........................................................................................... 31 4.7 CONVEYANCE OF ASSOCIATION PROPERTY ...................................... 31 4.8 STANDARD OF CARE, NONLIABILITY................................................... 32 ARTICLE V DESIGN REVIEW COMMITTEE................................................................. 33 5.1 MEMBERS OF COMMITTEE...................................................................... 33 5.2 POWERS AND DUTIES................................................................................ 34 5.3 RIGHTS OF APPOINTMENT....................................................................... 34 5.4 REVIEW OF PLANS AND SPECIFICATIONS...........................................35 5.5 MEETINGS OF THE DESIGN REVIEW COMMITTEE ............................. 37 5.6 NO WAIVER OF FUTURE APPROVALS ................................................... 37 -II]- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 TABLE OF CONTENTS (continued) Page 5.7 COMPENSATION OF MEMBERS............................................................... 37 5.8 INSPECTION OF WORK..............................................................................38 5.9 SCOPE OF REVIEW...................................................................................... 38 5.10 VARIANCE....................................................................................................38 5.11 PRE-APPROVALS.........................................................................................39 5.12 APPEALS....................................................................................................... 39 ARTICLE VI OWNERS' MEMBERSHIP AND VOTING RIGHTS .................................. 39 6.1 MEMBERSHIP...............................................................................................39 6.2 TRANSFER OF MEMBERSHIPS.................................................................39 6.3 CLASSES OF VOTING MEMBERSHIP......................................................40 6.4 VOTING RIGHTS.......................................................................................... 41 6.5 DECLARANT' S VETO RIGHT.................................................................... 41 6.6 ACTIONS SUBJECT TO DECLARANT'S VETO.......................................42 ARTICLE VII OWNERS' PROPERTY RIGHTS AND PROJECT EASEMENTS .............42 7.1 OWNERS' EASEMENTS OF ENJOYMENT...............................................42 46 7.2 EASEMENTS FOR VEHICULAR AND PEDESTRIAN TRAVEL ............ 43 7.3 EASEMENTS FOR PUBLIC SERVICE USE...............................................44 47 7.4 EASEMENTS FOR WATER AND UTILITY PURPOSES .......................... 44 7.5 EASEMENT FOR DECLARANT AND NEIGHBORHOOD 48 8.6 BUILDERS OVER ASSOCIATION PROPERTY ........................................ 44 7.6 TELECOMMUNICATIONS EASEMENT ................................................... 44 7.7 MISCELLANEOUS EASEMENTS...............................................................45 50 7.8 DELEGATION OF USE................................................................................ 45 7.9 WAIVER OF USE.......................................................................................... 45 7.10 TAXES............................................................................................................ 45 7.11 RIGHT TO GRANT ADDITIONAL EASEMENTS ..................................... 46 ARTICLE VIII OBLIGATION TO SHARE COSTS.............................................................. 46 8.1 CREATION OF ASSESSMENT OBLIGATION .......................................... 46 8.2 FUNDS OF THE COMMUNITY ASSOCIATION.......................................46 8.3 PURPOSE OF ASSESSMENTS.................................................................... 47 8.4 ASSESSMENT COMPONENTS, RATES AND EXEMPTIONS ................ 47 8.5 LIMITS ON COMMON ASSESSMENT INCREASES ................................ 48 8.6 SPECIAL ASSESSMENTS............................................................................ 49 8.7 COMMENCEMENT OF COMMON ASSESSMENTS................................49 8.8 COLLECTION OF COMMON ASSESSMENTS ......................................... 50 8.9 EXEMPT PROPERTY................................................................................... 50 8.10 CAPITAL CONTRIBUTIONS TO THE COMMUNITY ASSOCIATION.............................................................................................. 51 ARTICLE IX RESIDENTIAL AREA MAINTENANCE OBLIGATIONS ......................... 51 9.1 OWNER MAINTENANCE OBLIGATIONS ................................................ 51 -1V- 2544-332531CLP4281CCRS\ 581730.13 2!1/06 TABLE OF CONTENTS (continued) Page 9.2 COMMUNITY ASSOCIATION MAINTENANCE OBLIGATIONS.......... 53 9.3 NEIGHBORHOOD ASSOCIATION OBLIGATIONS ................................. 55 9.4 MAINTENANCE STANDARDS.................................................................. 56 ARTICLE X DAMAGE AND CONDEMNATION............................................................ 56 10.1 REPAIR AND RECONSTRUCTION............................................................ 56 10.2 OWNERS' RESPONSIBILITIES.................................................................. 56 10.3 EMINENT DOMAIN..................................................................................... 57 ARTICLEXI INSURANCE.................................................................................................. 57 11.1 PROPERTY INSURANCE............................................................................ 57 11.2 INSURANCE OBLIGATIONS OF OWNERS .............................................. 57 11.3 WAIVER OF SUBROGATION..................................................................... 58 11.4 LIABILITY AND OTHER INSURANCE..................................................... 58 11.5 NOTICE OF EXPIRATION REQUIREMENTS ........................................... 59 ARTICLE XII RIGHTS OF BENEFICIARIES...................................................................... 59 12.1 GENERAL PROTECTIONS.......................................................................... 59 12.2 WRITTEN NOTIFICATION......................................................................... 59 12.3 RIGHT OF FIRST REFUSAL........................................................................ 60 12.4 RIGHTS UPON REQUEST........................................................................... 60 12.5 PAYMENTS OF DELINQUENT AMOUNTS .............................................. 60 12.6 CONTRACTS................................................................................................. 60 ARTICLE XIII ENFORCEMENT........................................................................................... 60 13.1 ENFORCEMENT OF COMMUNITY ASSOCIATION GOVERNING ARTICLE XIV GENERAL PROVISIONS............................................................................. 74 14.1 TERM..............................................................................................................74 14.2 INTERPRETATION....................................................................................... 74 _V_ 2544-33253\CLP4281CCRS1581730.13 211106 DOCUMENTS................................................................................................ 60 13.2 NONPAYMENT OF ASSESSMENTS.......................................................... 62 13.3 ENFORCEMENT OF BONDED OBLIGATIONS ........................................ 66 13.4 DAMAGE TO PROPERTY DISPUTES........................................................ 66 13.5 DISPUTE RESOLUTION.............................................................................. 67 13.6 CONSTRUCTION DEFECT DISPUTES...................................................... 67 13.7 OTHER DISPUTES........................................................................................ 70 13.8 ALTERNATE DISPUTE RESOLUTION PROCEDURES ........................... 70 13.9 DISPUTES RELATING TO ENFORCEMENT OF COMMUNITY ASSOCIATION GOVERNING DOCUMENTS ........................................... 72 13.10 CIVIL CODE SECTIONS 1368.4, 1375, 1375.05 and 1375.1 ...................... 72 13.11 USE OF DAMAGE AWARD AMOUNTS .................................................... 72 13.12 MISCELLANEOUS....................................................................................... 73 13.13 ENFORCEMENT BY CITY.......................................................................... 73 ARTICLE XIV GENERAL PROVISIONS............................................................................. 74 14.1 TERM..............................................................................................................74 14.2 INTERPRETATION....................................................................................... 74 _V_ 2544-33253\CLP4281CCRS1581730.13 211106 TABLE OF CONTENTS (continued) Page 14.3 TERMINATION AND AMENDMENT........................................................ 75 14.4 NO PUBLIC RIGHT OR DEDICATION...................................................... 77 14.5 CONSTRUCTIVE NOTICE AND ACCEPTANCE ...................................... 77 14.6 NOTICES........................................................................................................ 77 14.7 ADDITIONAL PROVISIONS....................................................................... 78 14.8 MERGERS OR CONSOLIDATIONS........................................................... 78 ARTICLE XV LAND CLASSIFICATIONS.......................................................................... 78 ARTICLE XVI ANNEXATION OF ADDITIONAL PROPERTY ......................................... 79 16.1 ANNEXED TERRITORY..............................................................................79 16.2 SUPPLEMENTAL DECLARATION CONTENT ......................................... 79 16.3 APPROVAL OF ANNEXATIONS................................................................79 16.4 DEANNEXATION AND AMENDMENT .................................................... 80 16.5 RIGHTS OF ANNEXED TERRITORY MEMBERS .................................... 80 16.6 AUTOMATIC ANNEXATION OF LIFOC PROPERTY ............................. 80 ARTICLE XVII DECLARANT AND NEIGHBORHOOD BUILDER RIGHTS AND EXEMPTIONS............................................................................................... 81 17.1 INTEREST OF DECLARANT....................................................................... 81 17.2 RIGHTS.......................................................................................................... 81 17.3 EXEMPTION..................................................................................................82 17.4 ASSIGNMENT OF RIGHTS......................................................................... 82 17.5 EASEMENT RELOCATION......................................................................... 83 17.6 DECLARANT'S REPRESENTATIVE ......................................................... 83 ARTICLE XVIII CITY REQUIRED PROVISION.................................................................... 83 18.1 ISSUANCE OF RESIDENTIAL BUILDING PERMITS WITHIN LIFOCPROPERTY........................................................................................ 83 EXHIBIT "CP" - DESCRIPTION OF COVERED PROPERTY EXHIBIT "AP" - ASSOCIATION PROPERTY TO BE CONVEYED IN THE COVERED PROPERTY EXHIBIT "PM" - PRIVATE PARKWAY MAINTENANCE AREAS IN THE COVERED PROPERTY EXHIBIT "SD" - STORM DRAIN MAINTENANCE AREAS 1N THE COVERED PROPERTY EXHIBIT "MA" - MAINTENANCE AREAS IN THE COVERED PROPERTY EXHIBIT "WM" - WALL MAINTENANCE IN THE COVERED PROPERTY -vi- 2544-332531CLP42MCM 581730.13 211106 TABLE OF CONTENTS (continued) Page EXHIBIT "OS" - OPEN SPACE/PARK AREAS IN THE COVERED PROPERTY EXHIBIT "PC" - PARKING AND CIRCULATION AREAS IN THE COVERED PROPERTY EXHIBIT "PC -1"- PARKING LIMITATIONS IN THE COVERED PROPERTY EXHIBIT "TC" - APPROVED CURBSIDE TRASH PICK-UP AREAS IN THE COVERED PROPERTY -vii- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE This Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Master Declaration") is made by MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company ("Declarant"). PREAMBLE: A. Declarant is the Owner of real property in the City of Tustin, County of Orange, State of California, more particularly described on Exhibit "CP" ('Covered Property'. B. Declarant, the Owners and all of the Neighborhood Builders have agreed that the Residential Area and any other area added to the Covered Property will be developed with objectives designed to benefit all the property in the Covered Property, even though the areas are of different character. This common development scheme created by Declarant with the input of the Neighborhood Builders imposes reciprocal burdens and benefits on all of the Covered Property, so that each portion and the entirety of the Covered Property are both burdened and benefited by the provisions of this Master Declaration. The signatories to this Master Declaration include all of the Owners of the Covered Property as of the date of Recordation of this Master Declaration. C. Declarant deems it desirable, for the efficient preservation of the amenities in the Covered Property, to create a "master planned development" (as defined in Section 2792.32 of Title 10 of the California Code of Regulations) which is also a "common interest development" within the meaning of Section 1351(c) of the California Civil Code, pursuant to the Davis -Stirling Common Interest Development Act. The Covered Property is planned to constitute a "subdivision" as defined in Section 11000 of the California Business and Professions Code. The general plan of development of the Covered Property will include forming a corporation pursuant to the California Nonprofit Mutual Benefit Corporation Law to which will be assigned the powers of (1) owning, maintaining and administering the Association Property, (2) maintaining the Maintenance Areas, (3) administering and enforcing the Community Association Governing Documents, and (4) collecting and disbursing the assessments and charges hereinafter created. Declarant will cause such corporation, the Members of which will be the Owners of real property in the Covered Property, to be formed to exercise such powers, as required by Section 1363 of the California Civil Code. D. Declarant declares that the Covered Property will be held, conveyed, encumbered, used, occupied and improved subject to the easements, restrictions, reservations, rights, covenants, conditions and equitable servitudes contained in this Master Declaration, all of which are for the purpose of enhancing the attractiveness and desirability of the Covered Property, in furtherance of a general plan for the protection, maintenance, subdivision, improvement and sale -1- 2544-33253%CLP4281CCRS1581730.13 2/1/06 of the Covered Property. The covenants, conditions, restrictions, rights, reservations, easements and equitable servitudes set forth in this Master Declaration will (1) run with and burden the Covered Property and will be binding upon all Persons having or acquiring any interest in the Covered Property or any part thereof, their heirs, successors and assigns; (2) inure to the benefit of every portion of the Covered Property and any interest therein; (3) inure to the benefit of and be binding upon Declarant, the Neighborhood Builders, and their respective successors -in - interest, each Owner and each Owner's successors in interest; and (4) may be enforced by Declarant, any Neighborhood Builder, any Owner and the Community Association. Introduction to Covered Property Declarant is the founder and developer of the Columbus ,Square master planned community and the creator of Columbus Square Community Association, a California nonprofit mutual benefit corporation ("Community Association'). The primary purpose of the Community Association is to manage, maintain and govern certain real property located within the Covered Property and to enforce this Master Declaration. Declarant has established this Master Declaration to provide a governance structure and statement of the objectives of that structure for the community in the Covered Property. This community will have a flexible system of standards and procedures for its overall development, administration, and operation. This Master Declaration establishes the powers and flexibility necessary to develop the community in the Covered Property. The Community Association is a nonprofit homeowners association. The Community Association's powers are described in Sections 4.2 and 4.3 of this Master Declaration. The Master Declaration empowers the Community Association to enter into agreements with other entities to exercise its powers and fulfill its responsibilities. The majority of the Community Association's business is overseen by its Board of Directors. Day-to-day activities are supervised by the Community Association's officers and the Community Manager. The Board is given the power of enforcing the use restrictions and other portions of the Master Declaration through administrative means. The Design Review Committee is a committee of the Community Association formed in Article V to have jurisdiction over design, development, aesthetics and the character of the Covered Property. Certain issues cannot be decided by the Board of Directors of the Community Association. Instead, these issues will be presented to the Members of the Community Association. Procedures for calling Member meetings are contained in the Community Association Bylaws. In addition to this Master Declaration, some Neighborhoods may also be governed by Neighborhood Declarations. These Neighborhood Declarations may impose additional restrictions on Lots or Condominiums in the affected Neighborhoods. The Neighborhood Declarations may also create Neighborhood Associations which will be operated pursuant to their own articles of incorporation and bylaws. The Neighborhood Associations may have their own aesthetics review committees and may adopt their own aesthetics standards or rules and regulations. The Neighborhood Declarations, the management documents of Neighborhood -2- 2544-33253\CLP428\CCAS\ 581730.13 2/t/o6 Associations, and architectural or landscaping guidelines and standards of various Neighborhoods may supplement or be more restrictive than the Community Association Governing Documents so long as they are consistent with the scheme of governance established by the Community Association Governing Documents. ARTICLE I DEFINITIONS When the following words and phrases are used in this Master Declaration, they will have the meanings given in this Article and be subject to the limits described in this Article. 1.1 ARTICLES. Articles mean the Articles of Incorporation of the Community Association as amended or restated. 1.2 ASSESSMENT, CAPITAL IMPROVEMENT. Capital Improvement Assessment means a charge which the Board may levy against the Owners and their Lots or Condominiums representing a portion of the cost to the Community Association for installing or constructing any capital Improvements on any of the Association Property. Capital Improvement Assessments will be levied in the same proportion as Common Assessments. Capital Improvement Assessments are special assessments as described in California Civil Code Section 1366. 1.3 ASSESSMENT, COMMON. Common Assessment means a charge against the Owners and their Lots or Condominiums to be used to satisfy Common Expenses, which is to be levied as provided in this Master Declaration. The Common Assessment is a regular assessment as described in California Civil Code Section 1366. 1.4 ASSESSMENT, COMPLIANCE. Compliance Assessment means a charge against a particular Owner or Neighborhood Association directly attributable to or reimbursable by that Owner or Neighborhood Association equal to the cost incurred by the Community Association for corrective action, or a fine or penalty assessed by the Board, plus interest and other charges on such Compliance Assessments, Compliance Assessments shall not include any late payment penalties, interest charges or costs (including attorneys' fees) incurred by the Community Association in the collection of Common, Capital Improvement or Reconstruction Assessments because these costs are added to the Common, Capital Improvement or Reconstruction Assessment for which they are incurred. Compliance Assessments may include any other collection costs, expenses and reasonable attorneys' fees. Compliance Assessments are monetary penalties described in Section 2792.26(b) of the California Code of Regulations. 1.5 ASSESSMENT, EXTRAORDINARY. Extraordinary Assessment means a charge which the Board may levy against Owners and their Lots or Condominiums representing any expense incurred or to be incurred in accordance with the Community Association Governing Documents which cannot be imposed as a Capital Improvement Assessment or Reconstruction Assessment but which qualifies as a special assessment described in California Civil Code Section 1366. Extraordinary Assessments will be levied in the same proportion as Common Assessments. -3- 2544-33253\CLP428\CCRS1581730.13 2/1/06 1.6 ASSESSMENT, RECONSTRUCTION. Reconstruction Assessment means a charge which the Board may levy against the Owners and their Lots or Condominiums representing a portion of the Community Association's cost to reconstruct any Improvements on the Association Property or Maintenance Areas. Reconstruction Assessments will be levied in the same proportion as Common Assessments. Reconstruction Assessments are special assessments as described in California Civil Code Section 1366. 1.7 ASSESSMENT UNIT. Assessment Unit means the value allocated to each Lot or Condominium pursuant to Section 8.4.1, for purposes of calculating the share of Common Expenses attributable to such Lot or Condominium. 1.8 ASSOCIATION PROPERTY. Association Property means all the real property and Improvements, whether annexed to the Covered Property or not, which is owned in fee simple by the Community Association. The Association Property is "common area" as defined in Section 1351(b) of the California Civil Code. The Association Property initially encumbered by this Master Declaration is identified in Exhibit "AP" attached hereto. Additional Association Property may be identified in Supplemental Declarations and may be annexed to the Covered Property pursuant to Article XVI. 1.9 BENEFICIARY. Beneficiary means a Person to whom a mortgage is made and includes the beneficiary of a deed of trust. 1.10 BOARD OR BOARD OF DIRECTORS. Board or Board of Directors means the Community Association's Board of Directors. 1.11 BUDGET. Budget means a written, itemized estimate of the Community Association's income and Common Expenses. 1.12 BYLAWS. Bylaws means the Bylaws of the Community Association adopted by the Board as amended or restated. 1.13 CITY. City means the City of Tustin, in Orange County, California, and its various departments, divisions, employees and representatives and any joint powers authority that may exercise jurisdiction over the Covered Property. 1.14 CLOSE OF ESCROW. Close of Escrow means the date on which a deed conveying a Lot or Condominium pursuant to a transaction requiring the issuance of a Public Report is Recorded. The term "Close of Escrow" shall not include the Recordation of a deed (a) between Declarant and (i) any successor to any rights of the Declarant or (ii) any Neighborhood Builder, or (b) between Neighborhood Builders. 1.15 COMMON EXPENSES. Common Expenses means those expenses for which the Community Association is responsible under this Master Declaration, and may include the actual and estimated costs of the following: Maintaining, managing and operating the Association Property or Maintenance Areas; 7544-33253\CLP42S\CCRS\ 581730.13 2/1/06 • Unpaid Capital Improvement Assessments, Common Assessments, Compliance Assessments, Extraordinary Assessments and Reconstruction Assessments; • Any commonly metered utilities or other commonly metered charges for the Covered Property not paid for by a Neighborhood Association; • Managing and administering the Community Association; • Board, officer and committee member training and continuing education seminars or materials; • Compensation paid by the Community Association to managers, accountants, attorneys and the Community Association employees; • All utilities, landscaping, trash pickup and other services benefiting the Association Property or Maintenance Areas; • Fire, casualty and liability insurance, worker's compensation insurance, and other insurance covering the Covered Property and the directors, officers and agents of the Community Association; • Bonding the members of the Community Association Board of Directors or its officers; • Taxes paid by the Community Association; • Amounts paid by the Community Association for discharge of any lien or encumbrance levied against the Covered Property, or portions thereof; • Reasonable Reserves; • Providing parking enforcement and site control services for the Association Property or other portions of the Covered Property; • Payments under a Mutual Benefit Agreement; • Managing, maintaining, repairing and replacing any structural improvements installed in accordance with the "Best Management Practices" (BMP's) in the Operation and Maintenance Plan for the Covered Property; • Expenses designated as Common Expenses in Supplemental Declarations; and • All other expenses incurred by the Community Association for any reason whatsoever in connection with the Covered Property, for the common benefit of the Owners. 1.16 COMMUNITY ASSOCIATION. Community Association means the Columbus Square Community Association, a California nonprofit mutual benefit corporation, formed pursuant to -5- 2544-3325ACLP42MCCRS1581730.13 2/1/06 the California Nonprofit Mutual Benefit Corporation Law, its successors and assigns. The Community Association is an "association" as defined in Section 1351(a) of the California Civil Code. 1.17 COMMUNITY ASSOCIATION FUNDS. The Community Association Funds means the accounts created for the Community Association receipts and disbursements pursuant to Article VIII hereof. 1.18 COMMUNITY ASSOCIATION GOVERNING DOCUMENTS. Community Association Governing Documents means this Master Declaration, all Supplemental Declarations, the Articles, Bylaws, the Community Guidelines, the Design Guidelines and the Maintenance Guidelines. 1.19 COMMUNITY CENTER Community Center means the Clubhouse of the Community Association constituting a portion of the Association Property. 1.20 COMMUNITY GUIDELINES. Community Guidelines mean the rules and regulations adopted, amended or restated by the Board. 1.21 COMMUNITY MANAGER. Community Manager means the Person who provides professional community management for the Community Association and who is retained to perform functions of the Community Association as limited by the Community Association Governing Documents and the terms of the agreement between the Community Association and said Person. 1.22 COMMUNITY WALL. Community Wall means any sound wall, retaining wall, or fence in the Covered Property that is maintained entirely or partially by the Community Association. Fences or walls maintained entirely by the Owners are not Community Walls. The Community Walls in the Covered Property maintained by the Community Association are depicted on Exhibit WM; however, the obligation to maintain the Community Walls in a particular Phase of Development will not arise until the commencement of Common Assessments in that Phase of Development or as otherwise directed in this Master Declaration, or in a Notice of Addition or Supplemental Declaration. Owners shall maintain the interior portion of the Community Wall while the Community Association shall maintain the structural integrity, cap and exterior surface of the Community Wall. Declarant may designate additional Community Walls in a Notice of Addition or Supplemental Declaration. Community Walls in the Covered Property in general (a) are constructed on or along a tract boundary; or (b) separate a Lot or Condominium from Association Property, Maintenance Areas or public property; or (c) are constructed entirely within Association Property, or (d) are designated as a Community Wall by Declarant in this Master Declaration, or in a Notice of Addition or Supplemental Declaration. Party Walls are not Community Walls. 1.23 CONDOMINIUM. Condominium means a condominium as defined in Sections 783 and 1351(f) of the California Civil Code. Condominium also means the individual ownership interests in a "community apartment project" or "stock cooperative," both of which are defined in California Civil Code Section 1351, but excludes any condominium defined as a Lot for purposes of this Master Declaration. -6- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 1.24 COUNTY. County means the County of Orange in the State of California, and its various departments, divisions, employees and representatives. 1.25 COVERED PROPERTY. The Covered Property means all of the real property known as "Columbus Square," which is covered by this Master Declaration and subject to the jurisdiction of the Community Association, including (a) all of the real property described in Paragraph A of the Preamble of this Master Declaration, (b) the Association Property designated in this Master Declaration or a Supplemental Declaration to be owned and maintained by the Community Association, (c) any Maintenance Areas not owned in fee simple by the Community Association but maintained by the Community Association; and (d) any property annexed by a Supplemental Declaration. The Covered Property is a "common interest development" and a "planned development" as defined in Sections 1351(c) and 1351(k), respectively, of the California Civil Code. 1.26 DECLARANT. Declarant means MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company, its successors and any Person to which it shall have assigned any rights hereunder by express written assignment. Any such assignment may include some or all of the rights of the Declarant and may be subject to such limits as MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company, may impose in its sole discretion. As used in this Section, "successor" means a Person who acquires Declarant or substantially all of its assets, or who merges with Declarant, by sale, merger, reverse merger, consolidation, sale of stock or assets, operation of law or otherwise. Declarant is a builder as described in California Civil Code Section 1375. 1.27 DEED OF TRUST. Deed of Trust means any Recorded mortgage or deed of trust or other conveyance of one (1) or more Lots, Condominiums, or other portions of the Covered Property to secure the performance of an obligation, which will be reconveyed upon the completion of such performance. 1.28 DESIGN GUIDELINES. Design Guidelines mean the design standards, procedures, rules and guidelines which may be adopted pursuant to Article V. 1.29 DESIGN REVIEW COMMITTEE. Design Review Committee means the Design Review Committee created pursuant to Article V. 1.30 DRE. DRE means the California Department of Real Estate and its successors. 1.31 FHA. FHA means the Federal Housing Administration of the United States Department of Housing and Urban Development and any department or agency of the United States government which succeeds to FHA's function of insuring notes secured by Deeds of Trust on residential real estate. 1.32 FREDDIE MAC. Freddie Mac means the Federal Home Loan Mortgage Corporation created by Title II of the Emergency Home Finance Act of 1970, and its successors. 1.33 FANNIE MAE. Fannie Mae means the Federal National Mortgage Association, a government-sponsored private corporation established pursuant to Title VIII of the Housing and Urban Development Act of 1968, and its successors. -7- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 1.34 FAMILY. Family means (a) one or more natural persons related to each other by blood, marriage or adoption, or (b) a group of natural persons not all so related, but who maintain a common household in a Home. 1.35 FISCAL YEAR. Fiscal Year means the fiscal accounting and reporting period of the Community Association selected by the Board. 1.36 GINNIE MAE. Ginnie Mae means the Government National Mortgage Association administered by the United States Department of Housing and Urban Development, and its successors. 1.37 HOME. Home means the dwelling intended for use and occupancy by a single Family whether a structure on a Lot in the Residential Area or a unit in a Residential Area Condominium. 1.38 IMPROVEMENT. Improvement means any structure, vegetation or appurtenance thereto including Homes, buildings, walkways, irrigation systems, parking areas, recreational facilities, pools, gazebos, roads, driveways, parking areas, fences, all types of walls, stairs, decks, landscaping, antennae, the paint on all exterior surfaces, windbreaks, patio covers, railings, poles, signs, storage areas, and exterior air conditioning. The Design Guidelines may identify additional items that are Improvements. 1.39 INCLUDES, INCLUDING. Whether capitalized or not, includes and including mean "includes without limitation" and "including without limitation," respectively. 1.40 LOCAL GOVERNMENTAL AGENCY. Local Governmental Agency means the City and any other local governmental entity or agency and any school district, special assessment district, maintenance district or community facilities district. 1.41 LOT. Lot means any lot or parcel of land shown upon any Recorded subdivision map or Recorded parcel map of any portion of the Covered Property, excluding the Association Property and the Neighborhood Property. Lot will also mean a condominium as defined in Sections 783 and 1351(f) of the California Civil Code if (a) the condominium is a volume of real property that is not located entirely within a building (a `site' condominium), and (b) the Supplemental Declaration annexing the condominium to this Master Declaration states that the condominium will be defined as a Lot for purposes of this Master Declaration. 1.42 MAINTAIN, MAINTENANCE. Whether capitalized or not, maintain and maintenance mean "maintain, repair and replace" and "maintenance, repair and replacement," respectively; provided, however that maintain or maintenance shall not include repair and replace(ment) where the context or specific language of this Master Declaration provides another meaning. 1.43 MAINTENANCE AREA. Maintenance Area means those areas not owned. in fee simple by the Community Association, but over which the Community Association has rights or maintenance obligations by easement, lease, encroachment, permit, license or other agreement. The Maintenance Areas in the Covered Property are depicted on Exhibit "MA" attached hereto. -8- 2544-332531CLP428\CCRS1581730.13 2/1/06 1.44 MAINTENANCE GUIDELINES. Maintenance Guidelines means any current written guidelines, manual, or recommendations containing procedures and standards for the operation, maintenance and preservation of the Association Property Improvements and for the maintenance of Improvements or products in the Maintenance Areas and within a Residential Area Home, Lot or Condominium. Among other things, the Maintenance Guidelines specify suggested maintenance levels, recommended intervals for regularly scheduled maintenance items, and the scope of required maintenance practices and procedures. Maintenance Guidelines provided to the Community Association by Declarant may be supplemented, amended and updated by the Board. 1.45 MASTER DECLARATION. Master Declaration means this entire instrument, including the Preamble, all other provisions, and the Exhibits, as amended or restated. 1.46 MEMBER, MEMBERSHIP. Member means any Person holding a Membership and the Declarant. Membership means the property, voting and other rights and privileges of Members established in the Community Association Governing Documents, together with the correlative duties and obligations contained therein. 1.47 MODEL HOMES. Model Homes mean any Lots or Condominiums used by Declarant for model home, sales office, design center, other sales or marketing purposes, construction office or similar purposes. Commencing on the first day of the calendar month following the sale of a Lot or Condominium being used by Declarant as a Model Home and ending on the date annual assessments commence against such Lot or Condominium, Declarant shall be responsible for the maintenance of all portions of such Phase of Development in which such Model Home Lot or Condominium is located. 1.48 NEIGHBORHOOD. Neighborhood means (a) an area covered by the jurisdiction of a Neighborhood Association, or (b) where there is no Neighborhood Association, a geographical area in the Covered Property which will be marketed under a separate marketing name. 1.49 NEIGHBORHOOD ASSOCIATION. Neighborhood Association means any California nonprofit corporation or unincorporated association, or its successor, established in connection with a Neighborhood Declaration, the membership of which is composed of Owners of Lots or Condominiums in a portion of the Covered Property. The Community Association is not a Neighborhood Association. 1.50 NEIGHBORHOOD BUILDER. Neighborhood Builder means (a) Lennar Homes of California, Inc., a California corporation, (b) William Lyon Homes, Inc., a California corporation, and (c) a Person designated by Declarant as a Neighborhood Builder in a Recorded document. Declarant intends to designate the following Persons as Neighborhood Builders: Persons who acquire a portion of the Covered Property for the purpose of developing Lots or Condominiums for sale to the general public. The term "Neighborhood Builder" does not include Declarant. Each Neighborhood Builder is a builder as described in California Civil Code Section 1375. -9- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 1.51 NEIGHBORHOOD DECLARATION. Neighborhood Declaration means any declaration of covenants, conditions and restrictions, or similar document, which affects solely a portion of the Covered Property. The Master Declaration and the Supplemental Declarations are not Neighborhood Declarations. 1.52 NEIGHBORHOOD PROPERTY. Neighborhood Property means that area in any portion of the Covered Property designated in a Neighborhood Declaration as "common area" (as defined in Section 1351(b) of the California Civil Code) owned or maintained by the Neighborhood Association for the primary benefit of the Owners under the jurisdiction of the Neighborhood Association. 1.53 NEIGHBORHOOD WALL. Neighborhood Wall means any wall or fence that is (a) maintained by a Neighborhood Association, (b) not a Party Wall and (c) identified on an exhibit to a Neighborhood Declaration or a Supplemental Declaration as being a Neighborhood Wall. 1.54 NOMINATING COMMITTEE. Nominating Committee means the Nominating Committee that may be established by the Board pursuant to Section 2.15.2 of the Bylaws. 1.55 NOTICE AND HEARING. Notice and Hearing means written notice and a hearing before the Board as authorized in the Bylaws and this Master Declaration. 1.56 OPEN SPACE/PARK AREAS. Open Space/Park Areas shall mean those portions of the Association Property over which the public has access for recreational purposes and over which no buildings or other enclosed structures are located. The Community Association or Neighborhood Association, as applicable, shall maintain the Open Space/Park Areas. Some Open Space/Park Areas may be located immediately adjacent to a Lot or Condominium within the Covered Property. The Open Space/Park Areas in the Covered Property are located approximately as depicted on Exhibit "OS" attached hereto. 1.57 OWNER. Owner means the Person or Persons, including Declarant and the Neighborhood Builders, holding fee simple interest of record to any Condominium or Lot. The term "Owner" includes a seller under an executory contract of sale but excludes Beneficiaries. 1.58 PERSON. Person means a natural individual or any entity with the legal right to hold title to real property. When the word "person" is used and is not capitalized, the word only refers to natural persons. 1.59 PHASE OF DEVELOPMENT. Phase of Development or Phase means each of the following: (a) all or any portion of the Covered Property for which a Public Report has been issued, or (b) any portion of the Covered Property covered by a Supplemental Declaration. A Phase may consist of only Association Property with no Lots or Condominiums contained therein. 1.60 PUBLIC REPORT. Public Report means a Final Subdivision Public Report issued by DRE in compliance with Sections 11000 et seq. of the California Business and Professions Code. -10- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 1.61 RECORD OR FILE. Record or File means, with respect to any document, entry of such document in the office of the County Recorder. 1.62 RESERVES. Reserves means those Common Expenses for which Community Association Funds are set aside pursuant to Article VIII and Section 1365.5 of the California Civil Code for funding the periodic maintenance of the major components of the Association Property and Maintenance Areas which would not reasonably be expected to recur on an annual or more frequent basis and for payment of deductible amounts for insurance policies which the Community Association obtains. The amount of Reserves to be maintained by the Community Association will be determined annually by the Board pursuant to reserve guidelines established in accordance with prudent property management practices generally applied for a "common interest development" (as defined in Section 1351(c) of the California Civil Code) in the City. 1.63 RESIDENTIAL AREA. Residential Area means the real property which is so classified in this Master. Declaration or a Supplemental Declaration. The Residential Area includes single-family Lots or Condominiums and may include Association Property and Neighborhood Property. 1.64 SUPPLEMENTAL DECLARATION. Supplemental Declaration means an instrument Recorded pursuant to Article XVI to annex additional real property to the Covered Property or supplementing this Master Declaration, as such instrument is amended or restated. 1.65 TELECOMMUNICATION FACILITIES. Telecommunication Facilities means equipment, cables, conduits, inner ducts, vaults, connecting hardware, wires, poles, transmitters, towers, antennae and other facilities and structures necessary for, or used in, the provisions of Telecommunication Services. 1.66 TELECOMMUNICATION SERVICES. Telecommunications Services means Telecommunication Facilities, Improvements, and services for cable television, communications, telecommunications, antenna, high-speed data, telephony and all related vertical services, intranet, internet, information transfer, transmission, video and other similar services. Declarant may expand this definition in any Supplemental Declaration. 1.67 VA. VA means the Department of Veterans Affairs of the United States of America and any department or agency of the United States government which succeeds to VA's function of issuing guarantees of notes secured by Deeds of Trust on residential real estate. ARTICLE H USE RESTRICTIONS This Article establishes limits on the use of Homes and Lots in the Residential Area of the Covered Property. The Board has the power to enforce the use restrictions. Potential purchasers of Lots and Condominiums in the Residential Area should read these use restrictions closely to make sure they can use their property as they intend without violating these use restrictions. For purposes of this Article H, the term "Owner" shall be deemed to refer to an Owner or to any person residing in the Owner's Home with the Owner's permission (a "Resident'). -11- 2544-33253\CLP428\CCRS\ 581730.13 2/1106 The Residential Area shall be held, used and enjoyed subject to the following restrictions. Real property added to the Covered Property that is not part of the Residential Area is exempt from the restrictions established in this Article unless the Supplemental Declaration annexing the property to the Covered Property indicates that the property being annexed is subject to the restrictions in this Article. Neighborhood Declarations may establish supplementary or more restrictive use restrictions for the property they encumber so long as the restrictions are consistent with the scheme of governance established in the Master Declaration and any applicable Supplemental Declaration. Supplemental Declarations may add use restrictions or replace the use restrictions contained in this Article for the property the Supplemental Declarations encumber. 2.1 SINGLE FAMILY HOME. Each Home shall be used only for (a) residential purposes, or (b) business or commercial activities authorized by this Section. An Owner may rent his Home to a single Family provided that the Home is rented pursuant to a lease or rental agreement which is (i) in writing, (ii) no less than thirty (30) days in duration, and (iii) subject to all of the provisions of the Community Association Governing Documents or any other requirements set forth by the Community Association. Notwithstanding the foregoing, in no event shall an Owner be permitted to rent his Home to any entity, club or other Person where the renters are multiple, unrelated Persons who pay for the right to occupy the Home for a limited period of time or who pay for the right to occupy the Home for purposes other than a primary residence (i.e., vacations). Any failure by the lessee of any Lot or Condominium to comply with the Community Association Governing Documents shall constitute a default under the lease or rental agreement. Homes may be used for business or commercial activities so long as the following requirements are met: 2.1.1 Compliance With Law. The activities are conducted in conformance with all applicable governmental ordinances; 2.1.2 Streets and Parking Areas. The patrons or clientele do not overburden the streets or parking areas in the Covered Property, considering the streets and parking areas are a part of a residential community, not a commercial development; 2.1.3 Exterior Effects. The existence or operation of such activities does not produce sounds, odors or materials outside the boundaries of the Home, or Neighborhood Property that are excessive or inappropriate for a residential community; 2.1.4 Insurance. The activity does not increase the Community Association's liability or casualty insurance obligation or premium; 2.1.5 No Signs. No sign, poster, billboard, balloon advertising device or other display of any kind pertaining to such activity may be displayed; and 2.1.6 Consistent. The activities are consistent with the character of the Residential Area and the Covered Property as a whole and conform to the provisions of this Master Declaration. -12- 2544-33253\CLP428\CCRS1581730.13 2/1/06 Offices operated by (A) the manager of a Neighborhood Association for the sole purpose of managing the Neighborhood Association, and (B) the Community Association, are exempt from the restrictions contained in this Section. Except as authorized in this Section 2. 1, no part of the Residential Area may be used for any business, commercial (including auctions or similar events), manufacturing, mercantile, storage, vending or other nonresidential purposes, including any activity for which the provider is compensated or receives any consideration, regardless of whether the activity is engaged in full or part-time, generates or does not generate a profit, or requires or does not require a license. 2.2 NUISANCES. No noxious or offensive activities may be carried on upon the Covered Property or on any public street abutting or visible from the Covered Property. The Community Association is entitled to determine if any noise, odor, or activity constitutes a nuisance. The Community Association is entitled to delegate responsibility for enforcing the restrictions on nuisances contained in this Section to the Owners or Neighborhood Associations. No Owner may permit or cause anything to be done or kept on the Covered Property or on any public street abutting the Covered Property which may (a) increase the rate of insurance in the Covered Property, (b) result in the cancellation of such insurance, or (c) obstruct or interfere with the rights of other Owners. No Owner may commit or permit any nuisance in the Covered Property. Each Owner shall comply with all requirements of the local or state health authorities and with all other applicable governmental ordinances regarding occupancy and use of a Condominium or Lot, including the Home thereon. Each Owner is accountable to the Community Association and other Owners for the conduct and behavior of Persons residing in or visiting his Home. The Community Association has the power to require that any damage to the Association Property, Maintenance Areas, personal property of the Community Association, or property of another Owner caused by such Persons shall be repaired at the sole expense of the Home where such Persons are residing or visiting. 2.3 SIGNS. Subject to Civil Code Sections 712, 713, and 1353.5, no sign, poster, billboard, balloon advertising device or other display of any kind shall be displayed in the Covered Property except the following, which must also be in accordance with the Tustin City Code or a City -approved sign program: 2.3.1 Declarant and Neighborhood Builder Signs. Signs (regardless of size or configuration) as may be used by Declarant and the Neighborhood Builders in connection with the development of the Covered Property and the sale, lease or other disposition of Homes; 2.3.2 Entry Monuments. Entry monuments and similar community identification signs either maintained by the Community Association or approved by the Design Review Committee and maintained by the Neighborhood Associations; 2.3.3 Lots or Condominiums. Subject to the Design Guidelines, one (1) nameplate or similar Owner name identification, and one (1) sign advising of the existence of security services protecting a Lot or Condominium; and -13- 2544-33253\CLP4281CCRS1591730.13 211/06 2.3.4 Sale or Lease. One (1) sign which may be displayed on each Lot or Condominium advertising the Lot or Condominium for sale or lease; provided that such sign complies with the Community Guidelines. 2.4 PARKING AND VEHICULAR RESTRICTIONS. The Community Association may elect to delegate the responsibility for enforcing the restrictions contained in this Section 2.4 to any Neighborhood Association. If the Community Association notifies a Neighborhood Association that the Community Association has delegated its responsibilities, the Neighborhood Association must enforce these restrictions as they apply to the property subject to the Neighborhood Association's jurisdiction. If a Neighborhood Association fails to enforce these restrictions, the Community Association may revoke the delegation or impose a Compliance Assessment. 2.4.1 Authorized Vehicles. The following vehicles are "Authorized Yehicles": (a) standard passenger vehicles, including automobiles, vehicles designed to accommodate ten (10) or fewer people, (b) motorcycles and (c) pick-up trucks having a payload capacity of one (1) ton or less. Authorized Vehicles may be parked in any portion of the Covered Property intended for parking of motorized vehicles, subject to the restrictions in the other portions of the Community Association Governing Documents. No Owner may park any vehicle in a manner so that the Community Association determines that the vehicle unreasonably extends beyond the boundaries of a parking space or into streets or sidewalks in the Covered Property. The Community Association has the power to identify additional vehicles as Authorized Vehicles in the Community Guidelines to adapt this restriction to new types of vehicles produced by manufacturers. 2.4.2 Prohibited Vehicles. The following vehicles are "Prohibited Yehich&': (a) recreational vehicles (including motorhomes, travel trailers, camper vans and water craft), (b) commercial -type vehicles (including pick-up trucks having a payload capacity in excess of one (1) ton, stakebed trucks, tank trucks, dump trucks, step vans, concrete trucks, limousines, and other commercial purpose vehicles) or vehicles with commercial advertisements, placards or other writing on the vehicle or any equipment on a vehicle used for any commercial purpose, (c) vehicles designed to accommodate more than ten (10) people, (d) vehicles having more than two (2) axles, (e) trailers, inoperable vehicles or parts of vehicles, (f) aircraft, (g) other similar vehicles, or (h) any vehicle or vehicular equipment deemed a nuisance by the Board. Prohibited Vehicles may not be parked, stored or kept on any public or private street in, adjacent to or visible from the Covered Property or any other Association Property parking area unless (i) they are owned and used by the Community Association or a Neighborhood Association in connection with management or maintenance of a part of the Covered Property, (ii) they are parked for brief periods as may be defined in the Community Guidelines (such as loading, unloading, making deliveries or emergency repairs), or (iii) they are parked in an Owner's fully enclosed garage with the door closed. Prohibited Vehicles may be parked in an Owner's garage only if, and to the extent that, an Owner has fewer Authorized Vehicles than the number of vehicles the garage was originally designed to hold. No Owner may fill a garage with a Prohibited Vehicle or Vehicles and park an Authorized Vehicle or Vehicles on a driveway or the street. If a vehicle qualifies as both an Authorized Vehicle and a Prohibited Vehicle, then the vehicle is presumed to be a Prohibited Vehicle, unless the vehicle is expressly classified as an Authorized Vehicle in writing by the Board. The Community Association has the power to -14- 2544-33253\CLP428\CCRs\ 581730.13 211106 identify additional vehicles as Prohibited Vehicles in the Community Guidelines to adapt this restriction to new types of vehicles produced by manufacturers. 2.4.3 General Restrictions. All vehicles owned or operated by or within the control of an Owner and kept in the Covered Property must be parked in the assigned parking space or garage of that Owner to the extent of the space available; provided that, although storage of personal items may occur in the garage, all Authorized Vehicles must be parked in the garage, in accordance with Exhibit PGI attached hereto. Notwithstanding the foregoing, Owners may not park any Authorized Vehicle in the street or in any guest parking spaces. No repair, maintenance or restoration of any vehicle may be conducted on the Covered Property except in an enclosed garage when the garage door is closed, provided such activity is not undertaken as a business, and provided that such activity may be prohibited entirely by the Board if the Board determines that it constitutes a nuisance. The Community Association has the power to enforce the restrictions in this Section 2.4.3. 2.4.4 No Parking Zones. Vehicles may not be parked in "no parking zones" identified in the Supplemental Declarations. Some of these no parking zones will be identified only by signs and will not be identified with red -painted curbs. Vehicles parked in these no parking zones may be towed immediately without advance notice to vehicle owners. The parking and circulation areas in the Covered Property are located approximately as shown on Exhibit "PC" attached hereto. Notwithstanding the foregoing, a minimum of five hundred sixty- two (562) unassigned parking spaces (a portion of which shall be for use by members of the public only and shall not be available for use by Owners or their guests), shall be permanently maintained in locations shown on Exhibit "PC", and such parking spaces shall have a minimum length of twenty-two (22) feet per stall for on -street parking. 2.4.5 Parking Regulations. The Community Association may establish additional regulations regarding any parking areas not assigned to individual Lots or Condominiums, including designating "parking," "guest parking," and "no parking" areas, setting time limits for parking vehicles in the Association Property parking areas, and requiring registration of vehicles or use of parking permits. The Community Association shall develop and adopt an enforcement program for parking and traffic regulations for the Covered Property and may enforce all parking and vehicle use regulations applicable to the Covered Property through any means allowed by law, including removing violating vehicles without Notice and Hearing pursuant to California Vehicle Code Section 22658.2 or other applicable ordinances or statutes. If the Community Association fails to enforce any of the parking or vehicle use regulations, the City may enforce such regulations. If the City fails to enforce any of its parking ordinances on public streets in or abutting the Covered Property, including the no parking zones identified in Supplemental Declarations, the Community Association has the power to enforce such ordinances against the Covered Property Owners. No one is allowed to obstruct the fire protection access easements identified (a) on the Recorded Tract Maps for the Covered Property, (b) in any Supplemental Declaration or (c) as may be designated by the Community Association with the approval of the Fire Chief. The approval of the Fire Chief is required for any modifications such as speed bumps, control gates or other changes in the fire protection access easement areas. -15- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 2.4.6 Additional Restrictions. Notwithstanding any provision to the contrary in this Section 2.4, (a) no delivery and/or moving trucks larger than forty (40) feet shall be permitted on any private drive located within a Condominium Neighborhood having less than a twenty-five foot (25') radius turn, and (b) an Owner may park any Authorized Vehicle that exceeds seven () feet high, seven () feet wide, and nineteen (19) feet long in an Owner's garage or driveway as long as the vehicle does not extend onto the sidewalk or drive approach areas. 2.5 ANIMAL RESTRICTIONS. The only animals that may be raised, bred or kept in the Residential Area are dogs, cats, fish, birds and other usual household pets; provided that they are not kept or bred for commercial purposes, in unreasonable quantities, or in violation of the Community Association Governing Documents. As used in this Master Declaration, "unreasonable quantities" ordinarily means more than three (3) pets per household; provided, however, that the Board may determine that a reasonable number in any instance may be more or less. The Board may also change the authorized number of pets in the Community Guidelines. The Board may limit the size of pets and may prohibit maintenance of any animal which, in the Board's opinion, constitutes a nuisance. Animals in the Covered Property must be either kept in an enclosure or on a leash held by a person capable of controlling the animal. Any Person shall be liable to each and every other Person for any unreasonable noise or damage to person or property caused by any animals brought or kept upon the Covered Property by such Person. Persons shall clean up after their animals use the Covered Property or public street abutting or visible from the Covered Property. Any Person who keeps any animal, insect or reptile in the Covered Property, whether in compliance with or in violation of the Community Association Governing Documents, shall indemnify, defend and hold harmless the Community Association, its officers, directors, contractors, agents and employees from any claim brought by any Person against the Community Association, its officers, directors, agents and employees for personal injuries or property damage caused by such animal, insect or reptile. The Community Association, at its option, may elect to only enforce this Section in connection with the Association Property, leaving for the Owners and the Neighborhood Associations the power to enforce this Section as it applies to other areas of the Covered Property. 2.6 EXTERIOR ITEMS. Weeds, rubbish, debris, unsightly material or objects and trash may not be kept upon the Covered Property or on any public street abutting or visible from the Covered Property. Trash may he kept in individual and sanitary containers in rear yards of those non -Condominium Homes located on an individual Lot in the Residential Area, or otherwise at the designated curbside areas, located approximately as shown on Exhibit "TC" attached hereto; and in accordance with the Community Guidelines. No odor may be permitted to arise from such containers so as to render any portion of the Covered Property offensive or detrimental to any other property in the vicinity thereof or to its occupants. Owners' trash containers may be exposed to the view of neighboring Homes only when set out for a reasonable period of time (no earlier than 6:00 p.m. on the day before scheduled trash collection times and no later than midnight the day of pick up); provided, however, that the Community Guidelines may set forth more restrictive times. Trash containers owned by the Community Association or by Neighborhood Associations may be kept on Association Property or Neighborhood Property so long as they are contained in an enclosure installed by Declarant or a Neighborhood Builder or approved by the Design Review Committee. No exterior fires are permitted, except in barbeques and fire pits. -16- 2544.33253\CLP428\CCAS\ 581730.13 2/1106 2.7 TEMPORARY BUILDINGS. Outbuildings, tents, storage sheds, shacks, or other temporary buildings or Improvements may not be placed on the Covered Property either temporarily or permanently, without the prior written consent of the Design Review Committee. Garages, carports, trailers, campers, motor homes, recreation vehicles or other vehicles may not be used as Homes in the Covered Property, either temporarily or permanently. 2.8 ASSOCIATION PROPERTY/MAINTENANCE AREAS. Owners and Neighborhood Associations shall not alter the Association Property or Maintenance Areas without the prior written consent of the Board. 2.9 OUTSIDE INSTALLATIONS. Projections of any type are not permitted above the roof of any building in the Covered Property, except chimneys and vent stacks originally installed, if at all, by Declarant or a Neighborhood Builder. Portable and fixed basketball backboard and other sports apparatus are subject to regulation by the Community Association. No fence or wall may be erected, altered or maintained around any Home or on any Lot except with the Design Review Committee's prior approval. No patio cover, wiring, or air conditioning fixture, water softeners, or other devices may be installed on the exterior of a Home or be allowed to protrude through the walls or roof of the Home (with the exception of those items installed by Declarant or a Neighborhood Builder) unless the Design Review Committee's prior written approval is obtained. 2.10 INSIDE INSTALLATIONS. The Community Association has the power to prohibit or restrict the use of aluminum foil, newspaper, paint, reflective tint or any other material as window coverings in the Community Guidelines or Design Guidelines. The Community Association also has the power in the Design Guidelines to authorize Owners to use temporary window coverings after the Close of Escrow pending the installation of drapes, curtains, shutters or other appropriate interior window coverings for limited periods of time. 2.11 ANTENNAE. Owners are prohibited from installing any antennae outside of or on the exterior of a Home for any purpose, except for an "Authorized Antenna," which may be installed in accordance with the Design Guidelines, the Community Guidelines and the City Code. An "Authorized Antenna" means (a) an antenna designed to receive direct broadcast satellite service, including direct -to -home satellite service, that is one meter or less in diameter, (b) an antenna that is designed to receive video programming service, including multichannel multipoint distribution service, instructional television fixed service, and local multipoint distribution service, that is one meter or less in diameter or diagonal measurement, (c) an antenna designed to receive television broadcast signals, or (d) a mast supporting an antenna described in items (a), (b), and (c) above. So long as the Owner consents, a Resident shall have the same rights as the Owner concerning the installation or use of an Authorized Antenna under this Section. The Design Review Committee may request proof of the Owner's consent before approving a Resident's application for installation of an Authorized Antenna. -17- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 i i t The Community Association may adopt restrictions on the installation or use of an Authorized Antenna on an Owner's Home so long as such restrictions do not (i) unreasonably delay or prevent installation, maintenance or use of an Authorized Antenna, (ii) unreasonably increase the cost of installation maintenance or use of an Authorized Antenna, (iii) preclude acceptable quality reception, or (iv) violate applicable law. The Community Association may prohibit the installation of an Authorized Antenna if the installation, location or maintenance of such Authorized Antenna unreasonably affects the safety of managers, agents or employees of the Community Association, any Neighborhood Association and other Owners, or for any other safety related reason established by the Community Association. The Community Association may also (A) prohibit an Owner from installing an Authorized Antenna on property which such Owner does not own or is not entitled to exclusively use or control under the Community Association Governing Documents, or (B) allow an Owner to install an antenna other than an Authorized Antenna subject to the Design Guidelines and review by the Design Review Committee. Notwithstanding anything contained in this Master Declaration, Declarant, Neighborhood Builders and the Community Association do not warrant, represent or guarantee that satellite service will be provided to an Owner after installation of an Authorized Antenna. The location of an Owner's Home Improvements surrounding the Home or other factors over which the Declarant, Neighborhood Builders and the Community Association have no control may not allow for acceptable satellite reception. This Section is intended to be a restatement of the authority granted to the Community Association under applicable law. All amendments, modifications, restatements and interpretations of the law applicable to the installation, use or maintenance of an antenna shall be interpreted to amend, modify, restate or interpret this Section. 2.12 DRILLING. No oil drilling, oil, gas or mineral development operations, oil refining, geothermal exploration or development, quarrying or mining operations of any kind may be conducted upon the Covered Property, nor are oil wells, tanks, tunnels or mineral excavations or shafts permitted upon the surface of any Lot or within five hundred feet (500') below the surface of the Covered Property. No derrick or other structure designed for use in boring for water, oil, geothermal heat or natural gas may be erected, maintained or permitted in the Covered Property. 2.13 FURTHER SUBDIVISION. Except as otherwise provided in this Master Declaration, no Owner may further partition or subdivide his Lot or Condominium, including any division of such Owner's Lot or Condominium into time-share estates or time-share uses. This provision does not limit the right of an Owner to (a) rent or lease his entire Lot or Condominium by means of a written lease or rental agreement subject to the Community Association Governing Documents; (b) sell such Owner's Lot or Condominium; or (c) transfer or sell any Lot or Condominium to more than one (1) Person to be held by them as tenants-in- common, joint tenants, tenants by the entirety or as community property. -18- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 2.14 DRAINAGE. 2.14.1 Drainage Systems. Rain gutters, down spouts, drainage systems or the established drainage pattern for a Lot, Condominium or Neighborhood Property originally installed or established by Declarant or the Neighborhood Builders, may not be altered or interfered with unless an adequate alternative provision is made. For the purpose hereof, "established" drainage means the pattern and drainage Improvements which exist at the time that such Lot, Condominium or Neighborhood Property is conveyed to a purchaser or Neighborhood Association (as appropriate) from Declarant or a Neighborhood Builder, and includes drainage from the Lots, Condominiums, Neighborhood Property, Association Property and Maintenance Areas onto adjacent Lots, Condominiums, Neighborhood Property and Association Property. 2.14.2 Pollutant Runoff. The Community Association, the Neighborhood Associations and the Owners shall comply with the City -approved Water Quality Management Plan for the regulation and control of pollutant run-off by using structural and non-structural "Best Management Practices," in accordance with City standards and a separate Operation and Maintenance Plan, the applicable provisions of which will be recorded separately against the Covered Property and distributed by (i) the Declarant to the Community Association and (ii) the Neighborhood Builders to any Neighborhood Association and to each Owner at the Close of Escrow for a Lot, and may include the following: (a) The Community Association and the Neighborhood Associations shall periodically provide to their members environmental awareness education materials made available by the local municipalities. These materials will describe the use of chemicals (including household types) that should be limited to the Covered Property with no discharge of specified wastes via hosing or other direct discharge to gutters, catch basins, settling basins and storm drains. The materials shall also provide a description of fertilizer and pesticide usage guidelines consistent with any City Management Guidelines for Use of Fertilizers and Pesticides. (b) The Community Association and the Neighborhood Associations shall establish trash management and litter control procedures aimed at reducing pollution of drainage water. (c) The Community Association and the Neighborhood Associations shall have any drainage systems, streets and catch basins on property they maintain inspected and cleaned, and any streets and parking areas they maintain swept prior to the storm season (no later than October 15th each year). (d) The Community Association and the Neighborhood Associations will maintain the property for which they are responsible consistent with the City Water Conservation Resolution and use fertilizers and pesticides consistent with City Management Guidelines for use of fertilizers and pesticides. Owners are responsible for implementing applicable Best Management Practices for their Lots and Condominiums. (e) The Community Association and the Neighborhood Associations shall implement irrigation and landscaping practices which will include provision -19- 2544-33253\CLP428\CCRM 581730.13 2/1/66 of water sensors, programmable irrigation times, grouping of plants with similar water requirements in order to reduce excess irrigation runoff and to promote surface filtration. The Community Association and the Neighborhood Associations shall maintain erosion control devices on the property they maintain until adequate vegetation coverage has been achieved following establishment of the landscape plantings. 2.15 WATER SUPPLY SYSTEMS. Individual water supply or water softener systems are prohibited on any Lot or in any Condominium unless such system is designed, located, constructed and equipped in accordance with the requirements, standards and recommendations of any applicable water district, the Design Review Committee, and all other applicable Local Governmental Agencies. 2.16 VIEW OBSTRUCTIONS. Each Owner acknowledges that (a) any construction or installation by Declarant, any Neighborhood Builder, the Community Association or any Neighborhood Association and (b) maturing plants and tree growth may impair the view of such Owner, and consents to such impairment. Each Owner acknowledges that there are no guaranteed views in the Covered Property, and no Lot or Condominium is assured the existence or unobstructed continuation of any particular view unless a Supplemental Declaration specifically provides otherwise. 2.17 SOLAR ENERGY SYSTEMS. Each Owner may install a solar energy system which serves his Home so long as (a) the design and location of the solar energy system meet the requirements of all applicable governmental ordinances and (b) said design and location receive the prior written approval of the Design Review Committee. 2.18 INSTALLATION OF LANDSCAPING. If any landscaping on a Residential Area Lot has not been installed by Declarant or a Neighborhood Builder, each Owner shall submit landscaping plans to the Design Review Committee within the time frame set in the Design Guidelines and complete the installation of any landscaping in accordance with a plan approved by the Design Review Committee within the time frame set in the Design Guidelines. 2.19 POST TENSION CONCRETE SLABS. The concrete slab for some or all of the Homes in the Covered Property may have been reinforced with a grid of steel cable which was installed in the concrete and then tightened to create a very high tension. This type of slab is commonly known as a "post -tension slab." Cutting into a post -tension slab for any reason (e.g., to install a floor safe, to remodel plumbing, etc.) is very hazardous and may result in serious damage to the Home and/or personal injury. Owners shall not cut into or otherwise tamper with a post -tension slab. Owners shall not knowingly permit or allow any other person to cut into or tamper with a post -tension slab, other than a licensed contractor who has been informed that the slab is post -tensioned and who has identified the location of the cables running within the slab. Owners shall disclose the existence of the post -tension slab (if any) to any tenant, subsequent purchaser or lessee of the Home. Owner shall indemnify and hold the Neighborhood Builders, Declarant, and their respective officers, employees, contractors and agents, free and harmless from and against any and all claims, damages, losses or other liability (including attorneys fees) arising from any breach of this Section. -20- 2544-33253\CLP428\CCAS\581730.13 211/06 2.20 RIGHTS OF DISABLED. Subject to the provisions of Article V hereof, each Owner may modify his Home and the route leading to the front door of his Home, at his sole expense, in order to facilitate access to his Home by persons who are blind, visually impaired, deaf or physically disabled, or to alter conditions which could be hazardous to such persons, in accordance with California Civil Code Section 1360 or any other applicable law. ARTICLE III DISCLOSURES This Article describes the characteristics of certain land uses, facilities and activities within and near the Covered Property which may have a continuing impact on the Covered Property and its residents. Potential purchasers or tenants of Homes should read these descriptions closely to make sure they can use their Home as they intend subject to these potential impacts. 3.1 SOIL CONDITIONS. For in-depth information regarding the geotechnical aspects of the Covered Property, Owners should review the soils report on file with the City for the Covered Property and take into consideration the following: 3.1.1 Expansive Soil. According to the soils report, soil in the Covered Property is highly expansive in nature. Expansive soil expands when it becomes wet and it contracts when it dries out. Expansion and contraction of soils may cause movement, lifting, cracking and distress in slabs, patios, sidewalks and other flatwork improvements. Some cracking is normal in all flatwork improvements, with or without expansive soils. However, some expansion damage may be reduced by use of appropriate design and construction techniques. When designing flatwork and other Improvements, Owners should advise their consultants that designs must accommodate soils with expansion potential. In addition, Owners should consider the following information and recommendations before making or modifying any Improvements: (a) Concrete and Masonry Improvements. Special attention is required in designing and constructing concrete and masonry Improvements such as masonry walls and planters, concrete slabs, and decking. For example, steel reinforcing bars may be required in lieu of steel mesh in concrete patio slabs. Block walls may require extra horizontal and vertical steel reinforcing bars. (b) Drainage and Irrigation. Owners must use adequate drainage and irrigation control. Drainage devices installed in the Covered Property by Declarant or a Neighborhood Builder should not be altered in any manner that will redirect or obstruct drainage through these devices. The construction or modification of Improvements should not result in ponding of water. Drainage devices, including, but not limited to, concrete ditches, area drain lines and gutters should be carefully designed and installed with professional assistance and then maintained in an unobstructed condition. Drainage devices installed by Declarant designed to serve more than the (1) Lot or Condominium should not be altered in a manner that will redirect or obstruct the drainage through these drainage devices. The landscape irrigation system should be designed, constructed and operated to prevent excessive saturation of soils. Water must drain away from the Home footings and other Improvements. Obstructions such as walls should not -21- 2544-332531CLP4281CCRS\ 581730.13 2/1/06 be constructed across swales unless adequate replacement drainage Improvements have been installed or created. Planters should be lined with an impervious surface and should contain outlets to drain excess water. 3.1.2 Fill Soil. Homes in the Covered Property may be constructed on fill soil in accordance with the recommendations and inspection of licensed civil and soils engineers. 3.1.3 Corrosive Soil. Soils in some areas of the Covered Property are potentially severely corrosive. Soluble sulfates and acidic soils are highly corrosive to buried metals and concrete and should be taken into account in the construction of below grade structures and hardscape. Sulfates may chemically and physically attack concrete that is not sulfate resistant, causing the concrete to break down. Thus, Owners must use the proper type of cement and water -to -cement ratio for the level of sulfates or acidity that exists on Owner's Lot or Condominium. Overwatering soil will exacerbate the corrosivity of the soil. Owners should inform contractors of this potential condition to allow them to use appropriate measures to combat the effects of corrosive soil on buried metals, below grade structures and hardscape. 3.1.4 Groundwater. Groundwater has been encountered in portions of the Covered Property at depths of six (6) to twenty-five (25) feet below the ground surface. No Person may dig or drill on any Lot or Condominium to a depth that would disturb or otherwise come in contact with the groundwater. Groundwater may rise during the rainy season. 3.1.5 Soils Experts. Before installation of a spa or any patio, concrete or other flatwork on the Lot or Condominium, Owners must consult with a licensed soils engineer to ensure that the Improvement is designed and constructed correctly in light of current soils conditions, including groundwater level determinations. Although consulting with a soils expert may add substantially to the cost of installation of Improvements, failure to do so may result in significant breaking, lifting, separating, tilting or cracking of concrete Improvements. 3.2 ENVIRONMENTAL CONDITION. Certain areas designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W" (collectively, the "LIFOCProperty'l are owned by the United States of America ("U.S. Government's and will ultimately be annexed into the Covered Property pursuant to Section 16.6. 3.2.1 Prior Use of the LIFOC Property, That portion of the LIFOC Property identified as IRP -13S is approximately 0.7 acres and was previously used as a "Temporary Storage Area" ("TSA'j and as a "Miscellaneous Wash Area" ("MWA'�. The TSA consisted of two buildings that were used for vehicle maintenance. Cleaning solvents were reportedly used to wash down floors in the buildings and waste solvent was likely released to storm drains, or to the ground outside the building. The MWA includes an inactive wash pad formerly used for cleaning small generators and other field equipment. Solvents were used in this area and may have been released to the subsurface through cracks in the concrete pad.. That portion of the LIFOC Property identified as IRP -13W was previously used as a former disposal area where hydraulic fluid, diesel, fuel, leaded gasoline, oil, paint stripper, batter acid and solvent were stored. -22- 2544-33253\CLP4281CCRS1581730.13 ?!1106 3.2.2 Release of Volatile Organic Compounds. As a result of the historic use of the LIFOC Property, hazardous substances have been released, into the groundwater at the LIFOC Property. Volatile Organic Compounds ("VOCs', including trichloroethylene ("TCE') and 1,2,3 Tricholoropropane ("1,2,3 TCP'), were found in groundwater at concentrations that could result in adverse effect to human health if this water was extracted from the ground and directly used for domestic purposes such as drinking or bathing. However, groundwater at this location is currently not used for such purposes. 3.2.3 Remedial Action Plan. As a result of the release of hazardous substances at the LIFOC Property, various remedial activities have occurred at the LIFOC Property and will continue to occur until remediation goals have been achieved. In October 2004, the Department of Navy issued a "Final Record of Decision/Remediation Plan, Operable Unit IA, Former Marine Corps Air Station, Tustin, California," which describes the specific remedial action plan "RAP' } that has been approved for W -13S to address groundwater contamination. In August 2005, the Department of Navy published a "Draft Feasibility Study report for Operable Unit 4B [includes IRP -13W], Former Marine Corps Air Station, Tustin, California," ( "Feasibility Study') which addresses a range of remedial alternatives to address the VOCs in groundwater. As documented in the Feasibility Study, "no further action was recommended for soil at OU -413 sites ... therefore, soil remediation..." was not addressed in the Feasibility Study. A final groundwater remedial action plan has not been selected for IRP -13W. 3.2.4 Deed Restrictions. Deed restrictions will ultimately be recorded on all or a portion of Lots within the LIFOC Property that will limit certain activities on such Lots. These deed restrictions will identify specific land use restrictions to prevent exposure of future landowners and/or users of the LIFOC Property to hazardous substances and to maintain the integrity of the remedial action until remediation is complete and remediation goals have been achieved. 3.2.5 Documentation Relating to the Release and Remediation Activities. Extensive documentation has been prepared that describes the nature and extent of the release of hazardous substances that has occurred at the LIFOC Property. The following reports are available for public review and document the investigation and remediation work that has been or will be performed at the LIFOC Property: • Draft Feasibility Study Report for Operable Unit 4B, Former Marine Corps Air Station, Tustin, California, August 2005, Bechtel Environmental, Inc., August 2005. • Final Record of Decision/Remedial Action Plan Operable Unit IA, Former Marine corps Air Station, Tustin, California, Department of Navy, October 2004. • Final Feasibility Study Report, OU -IA, Marine Corps Air Station, Tustin, California, Bechtel Environmental, Inc., August 2003. • Final Environmental Impact Statement/Environmental Impact Report, Disposal and Reuse of MCAS Tustin, California, Department of Navy and City of Tustin, December, 1999. -23- 2544-33253\CLP428\CCAs\ 581730.13 2/1/06 3.3 GRADING. The grading design in the Covered Property should not be altered to redirect surface water flow toward the Lots or Condominiums or onto adjacent property, or to trap water so that it ponds or floods. Grading modifications are subject to law, approval by the Board, and the terms of any Recorded drainage easements. 3.4 AFFORDABLE HOUSING. The City has required Declarant to provide units of affordable housing and units of transitional housing within the Covered Property. Certain Lots or Condominiums in the Covered Property will be offered to persons who qualify as very low, low and moderate income buyers pursuant to guidelines established by the United States Department of Housing and Urban Development for the City. Buyers who qualify as very low, low and moderate income will purchase their Lots or Condominiums subject to resale restrictions, as reflected in a recorded covenant agreement. Buyers who are interested in the affordable housing program should consult their sales counselor for further information. 3.5 UTILITY IMPROVEMENTS. All utility lines in the Covered Property shall be installed and maintained underground; however, there will be both above -ground and subterranean utility Improvements such as transformers, lift stations, water or sewer facilities, telecommunications vaults and other visible Improvements necessary for the delivery of utilities or other services either on or adjacent to each Lot or Condominium. Each Owner understands that the placement of such Improvements is dictated by the needs of the applicable utility or service provider, and the presence of such Improvements in the Covered Property is in accordance with easements created prior to or during the development of the Covered Property. 3.6 COMMUNITY FACILITIES DISTRICT AND ASSESSMENT DISTRICTS. The Covered Property lies within the boundaries of Special Assessment Districts and Mello - Roos Community Facilities Districts which require the levy of special taxes for the repayment of bonds issued for the purpose of paying the cost of services or capital improvements that have been or are being provided. The amount of the special tax and any other information pertaining to any such district can be obtained from the County Assessor's office. Owners will be obligated to pay these assessments as a part of the annual property tax bill. 3.7 AIRPORT INFLUENCE AREA NOTICE. The following notice is included in this Master Declaration in accordance with California Civil Code Section 1353: NOTICE OF AIRPORT IN VICINITY This property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you. An "airport influence area" is defined in California Civil Code Section 1353 as an area in which current or future airport -related noise, overflight, safety, or airspace protection factors may significantly affect land uses or necessitate restrictions on those uses as determined by an airport land use commission. -24- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 3.8 RECLAIMED WATER. The water used in the Homes and outside in the patio and yard areas through hose bibs will be domestic potable water. In its efforts to conserve water, the Irvine Ranch Water District (the "Water District') requires the use of reclaimed water (treated wastewater) to irrigate parks, school yards, golf courses, greenbelt areas and common areas. The water used to irrigate the Association Property and Maintenance Areas may therefore include reclaimed water. Reclaimed water is not potable and therefore not suitable for pet or human consumption. As with any water overspray, the repeated spray of reclaimed water may stain or discolor personal property, fencing and structural Improvements. According to the Water District, the Water District's reclaimed water is disinfected with chlorine and its clarity to the human eye is indistinguishable from domestic water. The standards imposed on the Water District for reclaimed water quality are established by governmental regulatory agencies, and these standards are subject to change. Declarant, the Community Association and their agents are not liable for any property damage or personal injury by reclaimed water. Owners are subject to Water District rules and regulations, one of which prohibits the use of self -generating water softeners connected to Water District sewer facilities. Further information regarding Water District regulations is available at the Water District's headquarters. 3.9 PROPERTY LINES. The boundaries of each Lot and Condominium in the Covered Property and the Association Property are delineated on subdivision (tract) maps, lot line adjustments, parcel maps, or condominium plans that are public records and are available at the County Recorder's Office. 3.10 OFFERS OF DEDICATION. Portions of the Association Property and Maintenance Areas are subject to irrevocable offers of dedication as shown on the Recorded tract maps for the Covered Property. The County or City may accept the offer of dedication and assume responsibility for maintaining these portions of the Association Property and Maintenance Areas at any time. If accepted by the City or County at a later time, the level of maintenance provided by the City or County may not be the same as that provided by the Community Association. 3.11 CHANGE IN PLANS. Declarant and Neighborhood Builders have the right to develop the Covered Property with Improvements that may be different in design, size, character, style and price from those in any previous Phase. 3.12 NO ENHANCED PROTECTION AGREEMENT. No provisions of this Master Declaration and any Supplemental Declaration are intended, or shall be interpreted, to be an "enhanced protection agreement" as defined in Section 901 of the California Civil Code. 3.13 ADDITIONAL PROVISIONS. There may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350, et seq. of the California Civil Code and the federal Fair Housing Act codified at Title 42 United States Code, Section 3601 et seq., which may supplement or override the Community Association Governing Documents. Declarant makes no representations or warranties regarding the future enforceability of any portion of the Community Association Governing Documents. -25- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 3.14 OTHER REPRESENTATIONS AND WARRANTIES. No representations or warranties of any kind, express or implied, have been given or made by Declarant, the Neighborhood Builders, the Community Association or their agents or employees in connection with the Covered Property, its physical condition, zoning, compliance with laws or fitness for intended use, or in connection with the subdivision, sale, operation, maintenance, cost of maintenance, taxes or regulation thereof as a master planned community, except as specifically and expressly set forth in the Community Association Governing Documents, as filed by Declarant or a Neighborhood Builder with the DRE, and as set forth in writing by Declarant or a Neighborhood Builder in an agreement for the purchase of a Home in the Covered Property or in an attachment thereto. ARTICLE IV GOVERNANCE BY THE COMMUNITY ASSOCIATION The success of the community is dependent upon the support and participation of each Owner in its governance and administration. This Master Declaration establishes the Community Association as the mechanism through which each Owner is able to provide that support and participation. This Article describes the organization of the Community Association, its powers, duties, authorized activities and prohibited activities. This Article also spells out the standards of care used to govern the Covered Property, identifies the limits of liability of the Community Association's Board of Directors and officers and identifies the scope of indemnification the Community Association can provide to its agents and other Persons. 4.1 ORGANIZATION OF THE COMMUNITY ASSOCIATION. The homeowners association which will manage and maintain the Covered Property has or shall be incorporated by Declarant under the name of Columbus Square Community Association as a corporation not for profit organized under the California Nonprofit Mutual Benefit Corporation Law. 4.2 GENERAL DUTIES AND POWERS. The Community Association has the duties and powers set forth in the Articles, Bylaws, this Master Declaration and the Supplemental Declarations and also has the general and implied powers of a nonprofit mutual benefit corporation, generally to do all things that a California corporation may lawfully do which are necessary or proper in operating for the general welfare of its Members, subject only to the limits upon the exercise of such powers set forth in the Articles, Bylaws, this Master Declaration and the Supplemental Declarations. All of the Community Association's powers shall be exercised by its Board of Directors except those powers reserved in specific provisions of the Articles, Bylaws, this Master Declaration or the Supplemental Declarations to the Members, Board or Design Review Committee. 4.3 SPECIFIC DUTIES AND POWERS. In addition to its general powers and duties, the Community Association has the following specific powers and duties. 4.3.1 Association Property. The power and duty to accept, maintain, inspect, modify, remove and manage the Association Property and any other real property designated for Community Association maintenance in this Master Declaration or any -26- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 Supplemental Declaration, in conformance with any Maintenance Guidelines, manufacturing recommendations and industry standards. 4.3.2 Sewers and Storm Drains. The power and duty to maintain any private sewer systems and any private storm drains or drainage facilities in the Association Property or Maintenance Areas if the drains and systems are not maintained by a Neighborhood Association, a Local Governmental Agency or a utility company. 4.3.3 Granting Rights. The power and duty to grant exclusive or nonexclusive easements, licenses, rights of way or fee interests in portions of the Association Property, to the extent any such grant is reasonably required for (a) utilities and sewer facilities to serve the Association Property, Neighborhood Property and the Lots, (b) purposes of conformity with the as -built location of Improvements, (c) purposes consistent with the intended use of the Covered Property as a master planned community, or (d) the operation of commercial concessions within Association Property for the convenience and enjoyment of the Members, subject to the provisions of the Community Association Governing Documents. The Community Association may deannex Association Property from the encumbrance of the Master Declaration in connection with any lot line adjustment. 4.3.4 Insurance. The power and duty to maintain liability and fire insurance with respect to the Association Property and personal property, if any, owned by the Community Association as provided in this Master Declaration. 4.3.5 Board, Officer and Committee Member Training. The power but not the duty to make training and continuing education seminars or materials available to the Board members, officers, and committee members either before or after the persons begin their service to the Community Association. Seminars can be designed to educate the Board, officers or committee members about their duties and responsibilities. All expenses associated with these training seminars shall be a Common -Expense- of the Community Association. 4.3.6 Right of Entry. The power, but not the duty, to enter upon any Lot, Condominium or Neighborhood Property to inspect it. The power but not the duty, after Notice and Hearing, to enter upon any Lot, Condominium or Neighborhood Property, without being liable to any Owner or Neighborhood Association except for damage caused by such entry, in order to (a) enforce by peaceful means the provisions hereof, or (b) maintain any Lot, Condominium or Neighborhood Property if for any reason the responsible Owner or Neighborhood Association fails to perform such maintenance or repair as required by the Community Association Governing Documents. The cost of such enforcement and maintenance shall be a Compliance Assessment enforceable as set forth in this Master Declaration. The Owner or Neighborhood Association shall promptly pay all amounts due for such work. The costs of collection may be added, at the option of the Board, to the amount assessed against such Owner or Neighborhood Association. If an emergency occurs, entry upon a Lot, Condominium or Neighborhood Property by or on behalf of the Community Association is permitted without Notice and Hearing. -27- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 4.3.7 Community Guidelines. The power but not the duty to establish, amend, restate, delete and create exceptions to the Community Guidelines for the use of the Association Property. (a) Effective Date. Any modifications to the Community Guidelines will become effective and binding fifteen (15) days after the modifications are either (i) posted in a conspicuous place in the Association Property or (ii) sent to the Members via first class mail or by any system or technology designed to record and communicate messages, facsimile, electronic mail, or other electronic means. Community Guidelines may be modified or repealed by the Board. (b) Areas of Regulation. Community Guidelines may include guidelines regarding use of the Association Property; Maintenance Areas; signs; parking restrictions; minimum standards of property maintenance; procedures for providing access to public utilities for maintenance of their facilities within the Covered Property; and any other matter within the Community Association's jurisdiction; provided, however, that such Community Guidelines are enforceable only to the extent they are consistent with the Articles, Bylaws, Master Declaration and the Supplemental Declarations. (c) Limits on Regulation. The Community Guidelines must apply uniformly to all Owners and cannot discriminate between tenants of Owners of Residential Area Lots and Condominiums or other areas of the Covered Property. The rights of Owners to display religious and holiday signs, symbols and decorations inside their Homes of the kinds normally displayed in single family residential neighborhoods shall not be abridged, except the Community Association may adopt time, place and manner restrictions with respect to such displays if they are visible outside of the Home. The Community Guidelines shall not regulate the content of political signs; however, they may regulate the time, place and manner of posting of such signs. No modification to the Community Guidelines may require an Owner to dispose of personal property that was in or on a Lot or Condominium prior to the adoption of such modification if such personal property was in compliance with all rules previously in force. This exemption shall apply only during the period of such Owner's ownership of the Lot or Condominium and shall not apply to (i) subsequent Owners who take title to the Lot or Condominium after the modification is adopted, or (ii) clarifications to the Community Guidelines. (d) Use of Facilities. The Community Guidelines may (i) specify a maximum number of guests which an Owner, tenant or other Person may admit to the Association Property facilities at one time, (ii) establish rules for allowing Owners, tenants or other Persons to use portions of Association Property facilities for groups of guests or private functions, or (iii) establish admission fees, deposit requirements or other fees for the use of any facilities on Association Property. 4.3.8 Maintenance Guidelines. The power and duty to review any Maintenance Guidelines for the Association Property and Maintenance Areas for necessary or appropriate revisions no less than annually after the Board has prepared the Budget. -28- 2544-33253\CLP428\CC= 581730.13 2/1/06 4.3.9 Borrowings. The power, but not the duty, to borrow money for purposes authorized by the Articles, Bylaws, Master Declaration or any Supplemental Declaration, and in aid thereof, to mortgage, pledge, deed in trust, establish a line of credit or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred. 4.3.10 Contracts and Leases. The power but not the duty to enter into contracts and leases, including the following: (a) Contracts for Services. Contracts with Owners, Neighborhood Associations or other Persons to provide services or to maintain Improvements in the Covered Property and elsewhere which the Community Association is not otherwise required to provide or maintain pursuant to the Community Association Governing Documents; provided, however, that any such contract shall provide for reimbursement of the Community Association for the costs of providing such services or maintenance; (b) Community Services. Contracts with Persons to provide various community services such as cultural programs, social services, community outreach programs, recreational programs and activities, educational programs and activities, festivals, holiday celebrations and activities, recycling programs or a community technology network to the residents of the Covered Property. The Community Association has the right to require payment of compensation for (i) making the Association Property available for events that will include Persons who are not residents of the Covered Property or (ii) providing any other services that benefit the Persons with whom the Community Association contracts; (c) Mutual Benefit Agreements. Contracts with Neighborhood Associations. (d) Cost Sharing. Contracts to share costs with any neighboring property for, among other things, shared or mutually beneficial property or services or a higher level of Association Property or Maintenance Area maintenance; and (e) Adjacent Owners. Contracts with adjacent property owners to provide for preservation and maintenance of real property which contribute to the overall understanding, appreciation and preservation of the environment in the Covered Property and the surrounding area. 4.3.11 Indemnification. (a) For the Community Association Representatives. The Community Association has the power and the duty to indemnify Board members, the Community Association officers, Design Review Committee members, and all other Community Association committee members for all damages and pay all expenses incurred by, and satisfy any judgment or fine levied against, any Person as a result of any action or threatened action against such Person brought because of performance of acts or omissions within what the Person reasonably believed to be the scope of the Person's Community Association duties ("Official Acts") to the fullest extent authorized by California law. Board members, the Community Association officers, Design Review Committee members, and all other Community Association -29- 2544-33253\CLP428\CCRS\ 581730.13 211106 committee members are deemed to be agents of the Community Association when they are performing Official Acts for purposes of obtaining indemnification from the Community Association pursuant to this Section 4.3.11. The entitlement to indemnification hereunder inures to the benefit of the successors, estate, executor, administrator, heirs, legatees, or devisees of any Person entitled to such indemnification. (b) For Other Agents of the Community Association. The Community Association has the power as authorized by California law, but not the duty, to indemnify any other Person acting as an agent of the Community Association for any damages and pay all expenses incurred by, and satisfy any judgment or fine levied against, any Person as a result of any action or threatened action against such Person because of an Official Act. (c) Provided by Contract. The Community Association also has the power, but not the duty, to contract with any Person to provide indemnification beyond the scope of indemnification authorized by applicable law on such terms and subject to such conditions and the Board may impose. 4.3.12 Annexing Additional Property. The power but not the duty to annex additional property to the property encumbered by this Master Declaration pursuant to Section 16.5. 4.3.13 Vehicle Restrictions. The power granted in Section 2.4 to identify Authorized Vehicles or Prohibited Vehicles and to modify the restrictions on vehicles. 4.3.14 Cooperation with City. The power and duty to file the name, address and telephone number of at least one (1) member of the Board of Directors of the Community Association and each Neighborhood Association and the individual or entity that is the Community Manager before January 1 of each year with the City of Tustin Community Development Department for the purpose of contacting the Community Association in case of emergency or in those cases where the City has an interest in a violation of the Master Declaration. 4.4 PERNE=D FUNCTIONS. The Community Association is formed exclusively for those social welfare purposes and activities which are specifically and directly related to (a) maintaining, operating and using the Association Property, including the social, recreational and other Improvements thereon, (b) collecting assessments to finance the maintenance and use of the Association Property and Maintenance Areas, and (c) administering and enforcing the Community Association Governing Documents (collectively, the "Permitted Functions"). Permitted Functions do not include those activities prohibited by Section 4.5 below. The funds and resources of the Community Association shall be used exclusively for the direct costs of Permitted Functions. This Section does not preclude the use of the Association Property facilities by Declarant or the Neighborhood Builders for promotional special events and other purposes. 4.5 PROHIBITED ACTIVITIES. The Community Association is prohibited from undertaking or performing any of the following activities ("Prohibited Activities"), or expending or using the Community Association funds or resources for any Prohibited Activities. -30- 2544-33253\CLP428\CCRS\ 581730.13 2/1106 4.5.1 Nuisances. Abating any annoyance or nuisance emanating from outside the physical boundaries of the Covered Property. This is not a limit on the Community Association's ability to enforce Sections 2.2 and 2.4 in connection with public streets in or abutting the Covered Property. 4.5.2 Political Activities. Engaging in any Federal, State or local political activities or activities intended to influence a governmental action. These activities include endorsement or support of legislative or administrative actions by a Local Governmental Agency, candidates for elected or appointed office, initiatives, recall elections or other ballot proposals. The Community Association is prohibited from conducting, sponsoring, participating in or expending funds or resources on any activity, campaign or event, including any social or political campaign, event or activity, which does not directly and exclusively pertain to a Permitted Function. 4.5.3 Abridging Rights. Taking any action which is inconsistent with, or which would abrogate, any right or exemption in Article XVII or elsewhere in the Community Association Governing Documents. 4.6 COMMENCEMENT OF COMMUNITY ASSOCIATION MAINTENANCE. For any Phase which includes a Home in the Residential Area, the Community Association's obligation to maintain the Association Property and Maintenance Areas, as applicable, shall commence on the date Common Assessments commence. For a Phase composed solely of Association Property, the Community Association's obligation to maintain the Association Property shall commence upon conveyance of such property to the Community Association. Until commencement of Common Assessments in a Phase, Declarant or the appropriate Neighborhood Builder shall maintain the Association Property or Maintenance Areas in such Phase. The nature, design, quantity, quality and all other attributes of the Association Property, and the facilities and amenities thereon, shall be determined in Declarant's sole and absolute discretion or by a Neighborhood Builder (with Declarant's written consent). 4.7 CONVEYANCE OF ASSOCIATION PROPERTY. Except as provided below in this paragraph, conveyance of Association Property in each Phase shall occur (a) for Residential Areas, before the fust Close of Escrow for a Home in such Phase, or (b) for any other area (such as a Phase consisting solely of Association Property), on the first day of the first month following the month in which the Phase becomes subject to this Master Declaration unless another arrangement is proposed by Declarant and approved by the DRE. The Community Association, acting through its Board, must accept title to and maintenance responsibility for each portion of Association Property when title and maintenance responsibility is tendered by Declarant or a Neighborhood Builder, execute each deed and any accompanying escrow instructions if requested to do so by Declarant or a Neighborhood Builder, and execute any bond exonerations when presented if the bonded obligations are satisfied. Improvements on Association Property shall be deemed to be complete when they have been completed in accordance with plans approved by the City. No Owner shall interfere with the exercise of rights or performance of obligations established in this Section by the Community Association, Declarant or a Neighborhood Builder. -31- 2544-33253\CLP428\CORS\ 581730.13 211106 4.8 STANDARD OF CARE, NONLIABILITY. 4.8.1 Scope of Powers and Standard of Care. (a) General Scope of Powers. Rights and powers conferred on the Board, the Design Review Committee or other Committees or representatives of the Community Association by the Community Association Governing Documents are not duties and obligations charged upon those Persons unless the rights and powers are explicitly identified in the Community Association Governing Documents or in applicable law as including duties and obligations. Unless a duty to act is imposed on the Board, Design Review Committee or other Committees or the representatives of the Community Association by the Community Association Governing Documents or applicable law, the Board, and the Committees have the right to decide to act or not act. Any decision to not act is not a waiver of the right to act in the future. (b) Business Affairs. This Section 4.8.1(b) applies to Board member actions in connection with management, personnel, maintenance and operations, insurance, contracts and finances, Board member actions and Design Review Committee member actions. Each person shall perform his duties in good faith, in a manner he believes to be in the best interests of the Community Association and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. When performing his duties, a person is entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (i) One (1) or more officers or employees of the Community Association whom the person believes to be reliable and competent in the matters presented; (ii) Counsel, independent accountants or other persons as to matters which the person believes to be in such person's professional or expert competence; or (iii) A committee of the Board upon which the person does not serve, as to matters within its designated authority, which committee the person believes to merit confidence, so long as, in any such case, the person acts in good faith, after reasonable inquiry when the need therefor is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted. (iv) This Section 4.8.1(b) is intended to be a restatement of the business judgment rule established in law applicable to the Community Association. All amendments, modifications, restatements and interpretations of the business judgment rule applicable to the Community Association shall be interpreted to amend, modify, restate or interpret this Section 4.8.1(b). (c) Community Association Governance. This Section 4.8.1(c) applies to Board actions, Design Review Committee decisions and Board decisions in connection with interpretation and enforcement of the Community Association Governing Documents, architectural and landscaping control, regulation of uses in the Covered Property, rule making and oversight of committees. Actions taken or decisions made in connection with these matters shall be reasonable, fair and nondiscriminatory. -32- 2544-33253\CLP4281CCRS1581730.13 2/1/06 4.8.2 Nonliability. (a) General Rule. No Person is liable to any other Person (other than the Community Association or a party claiming in the name of the Community Association) for injuries or damage resulting from such Person's Official Acts, except to the extent that injuries or damage result from the Person's willful or malicious misconduct. No Person is liable to the Community Association (or to any party claiming in the name of the Community Association) for injuries or damage resulting from such Person's Official Acts, except to the extent that such injuries or damage result from such Person's willful or malicious misconduct. The Community Association is not liable for damage to property in the Covered Property unless caused by the negligence of the Community Association, the Board, the Community Association's officers, the Community Manager or the Community Manager's staff. (b) Nonliability of Volunteer Board Members and Officers. A volunteer Board member or volunteer Community Association officer shall not be personally liable to any Person who suffers injury, including bodily injury, emotional distress, wrongful death or property damage or loss as a result of the tortious act or omission of the volunteer officer or Board member if all of the applicable conditions specified in Section 1365.7 of the California Civil Code are met. ARTICLE V DESIGN REVIEW COMMITTEE Jurisdiction over design, construction and aesthetic aspects of the Covered Property is given to the Design Review Committee. The Design Review Committee is a three (3) to five (5) person committee initially appointed by the Declarant and eventually appointed by the Board of Directors of the Community Association. The Design Review Committee must approve all plans for architectural or landscaping modifications in the Covered Property before the modifications are made. The Design Review Committee also has the right to review modifications as they are constructed and give final approval of completed modifications. In addition to establishing the Design Review Committee, this Article establishes the procedures for approving Improvements, preapproving certain Improvements, granting variances and appealing decisions of the Design Review Committee and Neighborhood Associations' aesthetics review board 5.1 MEMBERS OF COMMITTEE. The Design Review Committee shall be composed of not less than three (3) nor more than five (5) members with the exact number of members set by the Board. Design Review Committee members appointed by the Board must be Members or agents of Members, but Design Review Committee members appointed by Declarant are not subject to this limit. The Design Review Committee has the right and duty to promulgate Design Guidelines against which to examine any request made pursuant to this Article. Board members may also serve as Design Review Committee members only if a reasonable effort is made to fill the positions on the Design Review Committee with persons who are not Board members and a position remains vacant. No Design Review Committee member appointed by the Board may be a director or officer of a Neighborhood Association. -33- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 5.2 POWERS AND DUTIES. 5.2.1 General Powers and Duties. The Design Review Committee shall consider and act upon all plans and specifications submitted for its approval. The Design Review Committee also has the power but not the duty to inspect work in progress to assure conformance with plans approved by the Design Review Committee. The Design Review Committee shall perform such other duties as the Board assigns to it. The Design Review Committee shall not have the power to enforce the restrictions contained in the Community Association Governing Documents. This power is reserved to the Board. 5.2.2 Issuance of Design Guidelines. The Design Review Committee has the right to review its Design Guidelines and to recommend amendments to the Board. The Design Guidelines and any amendments or restatements must be approved by the Board. The Design Guidelines shall include rules or guidelines setting forth procedures for the submission of plans for approval, may require a fee to accompany each application for approval, and may identify additional factors which the Design Review Committee will consider in reviewing submissions. The Design Review Committee may provide that fees it imposes be uniform, or that fees be determined in any other reasonable manner, such as by the reasonable cost of the construction, alterations or installations contemplated. The Design Review Committee may require such detail in plans and specifications submitted for its review as it deems proper and may require submission of landscape plans, floor plans, site plans, drainage plans, elevation drawings and descriptions or samples of exterior material and colors. In addition, the Design Guidelines may include guidelines regulating exterior finishes, roof materials, fences and walls, accessory structures such as patios, sunshades, pools, spas, fountains, water features, fireplaces, trellises, gazebos, awnings, exterior mechanical equipment, and television and radio antennae, all consistent with the City Code and the MCAS Tustin Specific Plan. The Design Review Committee shall annually issue its Design Guidelines and provide notice of any requirements for Association approval of proposed Improvements. The notice shall describe the types of proposed Improvements that require Association approval and shall include a copy of the procedure used to review and approve or disapprove any proposed Improvements. 5.2.3 Retaining Consultants. The Design Review Committee has the power but not the duty to retain Persons to advise the Design Review Committee in connection with decisions. The Design Review Committee also has the power to delegate its decision-making power to such Persons for approval of plans that are consistent with the Design Guidelines; provided, however, that such Persons may not interpret the Design Guidelines, or grant allowances or variances from the Design Guidelines. 5.3 RIGHTS OF APPOINTMENT. 5.3.1 Initial Appointment. The initial members of the Design Review Committee shall be representatives of Declarant until one (1) year after the first Close of Escrow in the Covered Property ("First Anniversary"). 5.3.2 By Declarant. Declarant reserves the power to appoint and remove a majority of the members of the Design Review Committee until either (a) the fifteenth (15') anniversary of the first Close of Escrow for the sale of a Lot or Condominium pursuant to the -34- 2544-33253\CLP4281CCRS%581730.13 2/]!06 Final Subdivision Public Report issued for the first Phase of the Covered Property, or (b) ninety percent (90%) of the Lots and Condominiums in the overall Covered Property have been sold, whichever occurs first (the "Turnover Date"). Any person appointed to the Design Review Committee by the Declarant need not be a Member of the Community Association. Declarant may, in its discretion and at any time prior to the Turnover Date, assign to the Community Association by written instrument its powers of removal and appointment with respect to the Design Review Committee, subject to such terms and conditions regarding the exercise thereof as Declarant may impose. 5.3.3 By the Board. After one (1) year from the date of the first Close of Escrow, the member(s) of the Board who were elected by the Members, other than the Declarant and the Neighborhood Builders, shall have the power to appoint one (1) member to the Design Review Committee until the Turnover Date. From and after the Turnover Date, the Board shall have the power to appoint all of the members of the Design Review Committee; provided however, if on the Turnover Date, Declarant or any Neighborhood Builder owns any Lot in the Covered Property, Declarant reserves the right to appoint one (1) member to the Design Review Committee (the "Declarant's Representative"). Declarant's Representative shall serve on the Design Review Committee until Declarant and the Neighborhood Builders no longer own any portion of the Covered Property. All persons appointed to the Design Review Committee by the Board shall be a Member of the Community Association. 5.3.4 Liability Of Design Review Committee. No member of the Design Review Committee shall be liable to any person for the member's decisions or failure to act in making decisions as a member of the Design Review Committee 5.3.5 Notice of Appointment. Whenever a Design Review Committee member is appointed or removed while both Declarant and the Board have rights of appointment, written notice of such appointment or removal must be given by the appointing party to the other party. 5.4 REVIEW OF PLANS AND SPECIFICATIONS. 5.4.1 Improvements Requiring Approval. No construction, installation or alteration of an Improvement, in the Covered Property by an Owner or a Neighborhood Association may be commenced or maintained and no permits related to such construction, installation or alteration may be requested from the City until the plans and specifications, along with all other review materials required under this Article (collectively, an "Application") showing the nature, kind, shape, height, width, color, materials and location thereof have been submitted to and approved in writing by the Design Review Committee; provided, however, that any Improvement may be repainted without Design Review Committee approval so long as the Improvement is repainted with an approved color. All plans and specifications shall conform to all City Codes and regulations. The provisions of this Article also apply to the construction, installation and alteration of solar energy systems, as defined in Section 801.5 of the California Civil Code, subject to the provisions of California Civil Code Section 714, the City Building Code, applicable zoning regulations, and associated City ordinances. -35- 254433253\CLP428\CCRS\ 581730.13 2/1/06 5.4.2 Application Procedure. Until changed by the Board, the address for submission of the Application is the Community Association's principal office. The form of Application used by the Design Review Committee and any Neighborhood Association shall include spaces allowing "Adjacent Owners" to sign or initial the Application confirming that they have been notified of the Application. The Design Review Committee shall establish a definition of "Adjacent Owners" in its Design Guidelines for use by the Design Review Committee and the aesthetic review boards for all Neighborhood Associations. Applications will be complete even if all of the Adjacent Owners do not initial the Applications so Iong as the Owner submitting the Application ("Applicant") certifies that the Applicant requested that the Adjacent Owners sign the Applications. The requirement that the Applicant attempt to obtain the signatures of Adjacent Owners is intended only to provide notice of the pending Application to the Adjacent Owners. It does not create in the Adjacent Owners any power to approve or disapprove the Application by signing or withholding a signature. The Design Review Committee shall deliver its written approval, disapproval or request for additional information or materials to the Applicant at the address listed in the Application within forty-five (45) calendar days after the date on which the Community Association has issued its Acknowledgement of Receipt of Complete Application to the Applicant. The Application shall not be deemed approved if the Design Review Committee fails to respond to the Applicant at the end of the forty-five (45) day approval period. If the Community Association fails to respond to the Applicant within such forty-five (45) day period of time, the Applicant must submit by United States mail, with return receipt requested, a written request for notification of the status of the Application ("Status Request'. If the Design Review Committee fails to respond to the Applicant within forty-five (45) days of confirmed receipt by the Community Association, then the Application shall be deemed approved. Without confirmation of such receipt, the Application shall be deemed disapproved and a new Application must be submitted to the Design Review Committee. 5.4.3 Standard for Approval. The Design Review Committee shall approve plans and specifications submitted for its approval only if it determines that (a) the installation, construction or alteration contemplated thereby in the locations indicated will not be detrimental to the appearance of the surrounding area of the Covered Property as a whole, (b) the appearance of any structure affected thereby will be in harmony with the surrounding structures, (c) the installation, construction or alteration thereof will not detract from the beauty, wholesomeness and attractiveness of the Association Property or Maintenance Areas or the enjoyment thereof by the Members, and, if applicable, (d) the maintenance thereof will not become a burden on the Community Association. The Design Review Committee may condition its approval of plans and specifications upon any of the following: (i) the Applicant's furnishing the Community Association with security acceptable to the Community Association against any mechanic's lien or other encumbrance which may be Recorded against the Covered Property as a result of such work, (ii) such changes therein as the Design Review Committee deems appropriate, (iii) (if applicable) the Applicant's agreement to grant appropriate easements to the Community Association for the maintenance of the Improvements, (iv) the Applicant's agreement to install (at its sole cost) water, gas, electrical or other utility meters to measure any increased consumption, (v) (if applicable) the Applicant's agreement to reimburse the Community Association for the cost of -36- 2544-332531CLP428\CCRs\ 581730.13 2/1/06 such maintenance, or (vi) the Applicant's agreement to complete the proposed work within a stated period of time. 5.4.4 Relationship to Neighborhood Associations. The Design Review Committee may require that all plans and specifications be approved by any Neighborhood Association having jurisdiction before the Design Review Committee reviews the plans and specifications. Conditions and requirements imposed by the Design Review Committee supersede all conflicting conditions or requirements which may be imposed by a Neighborhood Association. The Design Review Committee's determination of the existence of a conflict or discrepancy between the conditions or requirements imposed by the Design Review Committee and those imposed by a Neighborhood Association are binding and conclusive upon the Neighborhood Association and any affected Applicant. 5.4.5 Conflicts Between the City and the Design Review Committee. In the event of any conflict in the conditions of approval of any proposed Improvements imposed by the City, any City ordinances and the Design Review Committee, the more restrictive of such conditions shall be controlling. Nothing herein shall limit the Design Review Committee from imposing conditions of approval of any proposed Improvements which are more restrictive than conditions as may be imposed by the City. 5.4.6 Exemption. Notwithstanding any other provision of the Community Association Governing Documents, Declarant, Neighborhood Builders and any Person Declarant designates in a Supplemental Declaration need not seek Design Review Committee approval with respect to their construction or development activities. Declarant may exclude portions of the Covered Property from jurisdiction of the Design Review Committee in the applicable Supplemental Declaration. Declarant may, at its option, establish an additional architectural review committee for any area exempted from the jurisdiction of the Design Review Committee. 5.5 MEETINGS OF THE DESIGN REVIEW COMMITTEE. The Design Review Committee shall meet as necessary to perform its duties. The vote or written consent of a majority of the Design Review Committee constitutes an act of the Design Review Committee. The Design Review Committee may, by a majority vote of the members, delegate the right to approve plans and specifications to one (1) or more duly licensed architects, who shall have full authority to act on behalf of the Design Review Committee on all matters so delegated. The Design Review Committee may not delegate the authority to approve variances as provided in Section 5.10. 5.6 NO WAIVER OF FUTURE APPROVALS. The Design Review Committee's approval does not waive any right to withhold future approvals. 5.7 COMPENSATION OF MEMBERS. The Design Review Committee's members shall receive no compensation for services rendered, other than reimbursement for expenses incurred by them in performing their duties. This Section shall not be interpreted or construed to prohibit the Community Association from compensating any duly licensed architect who has been delegated rights and duties as provided in this Article. -37- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 5.8 INSPECTION OF WORK The Design Review Committee or its duly authorized representative may inspect any work for which approval is required under the Community Association Governing Documents ("Work"). The right to inspect includes the right to require any Owner to take such action as may be necessary to remedy any noncompliance with the Design Review Committee -approved plans for the Work or with the requirements of the Community Association Governing Documents ("Noncompliance"). 5.8.1 Time Limit. The Design Review Committee's right to inspect the Work and notify the responsible Owner of any Noncompliance shall terminate sixty (60) days after the Design Review Committee has received written notice from the Owner that the Work is completed if the Work is, in fact, completed. If the Design Review Committee fails to send a notice of Noncompliance to an Owner before this time limit expires, the Work shall be deemed to comply with the approved plans. No Owner may unreasonably deny the Design Review Committee access to the Lot or Condominium to exercise its right to inspect such Work. 5.8.2 Remedy. If an Owner fails to remedy any Noncompliance within sixty (60) days from the date of notification from the Design Review Committee, the Design Review Committee may initiate the enforcement procedures established in Section 13.1.1. 5.9 SCOPE OF REVIEW. The Design Review Committee shall review and approve, conditionally approve or disapprove all plans submitted to it for any proposed construction, installation or alteration solely on the basis of aesthetic considerations, consistency with the Community Association Governing Documents, height of landscaping materials at maturity, and the overall benefit or detriment which would result to the immediate vicinity and the Covered Property generally. The Design Review Committee shall consider the aesthetic aspects of the architectural designs, placement of buildings, landscaping, color schemes, exterior finishes and materials and similar features. The Design Review Committee is not responsible for reviewing, nor may its approval of any plan or design be deemed approval of, any plan or design from the standpoint of structural safety or conformance with building or other codes. 5.10 VARIANCE. The Design Review Committee may authorize variances from compliance with any of the architectural and landscaping provisions of the Community Association Governing Documents, including restrictions upon height, size, floor area or placement of structures, or similar restrictions, when circumstances such as topography, natural obstructions, hardship, aesthetic or environmental consideration may require. Such variances must be evidenced in writing, must be signed by a majority of the Design Review Committee. After Declarant's right to appoint a majority of the Design Review Committee's members expires, the Board must approve any variance recommended by the Design Review Committee before any such variance becomes effective. if a variance is granted, no violation of the covenants, conditions and restrictions contained in the Community Association Governing Documents shall be deemed to have occurred with respect to the matter for which the variance was granted. The granting of such a variance does not waive any of the terms and provisions of the Community Association Governing Documents for any purpose except as to the particular property and particular provision hereof covered by the variance, nor does it affect the Owner's obligation to comply with all applicable governmental ordinances affecting the use of his Home. -38- 2544-3 32531CLP42 81CCRS1581730.13 2/1106 5.11 PRE -APPROVALS. The Board may authorize pre -approval of certain Improvements. 5.12 APPEALS. 5.12.1 Persons Who Have Appeal Rights. The only Person with the right to appeal an application that has been rejected is the Applicant. No Persons have the right to appeal an approved application, so long as Declarant has the right to appoint and remove Design Review Committee members, as described above. Thereafter, the Board shall have the right, at its sole discretion, to define the adjacent Owners, if any, who may have the right to appeal an application approved by the Design Review Committee. The Persons granted appeal rights by this Section 5.12.1 are referred to in Section 5.12.2 as "Appellants." 5.12.2 Appeals of Decisions of Design Review Committee. If a proposed Improvement is disapproved, the Appellant is entitled to reconsideration by the Board of Directors at an open meeting that satisfies the requirements of Civil Code Section 1363.05. This paragraph does not require reconsideration of a decision that is made by the Board, or the Design Review Committee if the Committee has the same membership as the Board. ARTICLE VI OWNERS' MEMBERSHIP AND VOTING RIGHTS Each Person who purchases a Lot or Condominium in the Covered Property becomes a Member of the Community Association with certain rights and privileges. Methods for transferring Memberships in the Community Association, Members' voting rights and the Declarant's veto rights are described in this Article. 6.1 MEMBERSHIP. Every Owner shall automatically be a Member and shall remain a Member until such Owner's Lot or Condominium ownership ceases, at which time such Owner's Membership shall automatically cease. Ownership of a Lot or Condominium is the sole qualification for Membership and Membership shall be inseparable from ownership in individual Lots or Condominiums. Memberships are not assignable except to the Person to whom title to the Lot or Condominium has been transferred. 6.2 TRANSFER OF MEMBERSHIPS. The Membership of any Owner may not be transferred, pledged or alienated in any way, except upon the transfer or encumbrance of such Owner's Lot or Condominium, and then only to the transferee or Beneficiary of such Lot or Condominium. A prohibited transfer is void and will not be reflected upon the books and records of the Community Association. A Class A Member who has sold his Lot or Condominium to a contract purchaser under an agreement to purchase may delegate his Membership rights to the contract purchaser. The delegation must be in writing and must be delivered to the Board before the contract purchaser may vote. The contract seller shall remain liable for all charges and assessments attributable to the contract seller's Lot or Condominium which accrue before fee title to the Lot or Condominium is transferred. If an Owner fails or refuses to transfer his Membership to the purchaser of such Owner's Lot or Condominium upon transfer of fee title thereto, the Board may record the transfer upon the Community Association's -39- 2544-33253\CLP428\CCM 581734.13 2/1/06 books. Until satisfactory evidence of such transfer has been presented to the Board, the purchaser will not be entitled to vote at Community Association meetings. 6.3 CLASSES OF VOTING MEMBERSHIP. Members of the Community Association are Declarant, for so long as Declarant is entitled to cast a Class A or B vote or the Class C appointment right and each Owner (including any Neighborhood Builder) of at least one (1) Lot or Condominium in the Covered Property. Membership in the Community Association is subject to the Community Association Governing Documents. Except for the Class C Membership, all Memberships in the Community Association are appurtenant to the Lots and Condominiums. Ownership of a Lot or Condominium is the sole qualification for Membership in the Community Association. The Community Association classes of voting Membership are as follows: 6.3.1 Class A. Class A Members are all Owners except Declarant and the Neighborhood Builders for so long as there exists a Class B Membership. Class A Members are entitled to one (1) vote for each Assessment Unit assigned pursuant to Section 8.4.1 to a Lot or Condominium owned by such Class A Members which is subject to assessment. Declarant and the Neighborhood Builders shall become Class A Members upon conversion of the Class B Membership. When more than one (1) Person owns any Lot or Condominium, all such Persons are Members. The vote for such Lot or Condominium shall be exercised in accordance with Section 6.4. The Class A votes allocated to Declarant and the Neighborhood Builders shall be exercised by Declarant. 6.3.2 Class B. The Class B Members are Declarant and the Neighborhood Builders. The Class B Members are entitled to three (3) votes for each Assessment Unit assigned to a Lot or Condominium owned by Declarant or a Neighborhood Builder which is subject to assessment. The Class B Membership shall be converted to Class A Membership on the first to occur of the following events: (a) The Close of Escrow for the sale of eight hundred eight (808) Lots and Condominiums in the overall development composed of the Covered Property, in accordance with the Conditions of Approval for the Covered Property; or (b) The fifth (5th) anniversary of the first Close of Escrow in the Phase for which a Public Report was most recently issued; or (c) The twenty-fifth (25th) anniversary of the first Close of Escrow for the sale of a Lot or Condominium in the Covered Property. 6.3.3 Class C. The Class C Member shall be Declarant (whether or not Declarant is a Member). The Class C Member is not entitled to vote on any matters except the Class C Member is entitled to select a majority of the members of the Board of Directors until the Class C Termination Date. The "Class C Termination Date" shall be the earlier to occur of the following events: (a) The Close of Escrow for the sale of eight hundred eight (808) Lots and Condominiums in the overall development composed of the Covered Property, in accordance with the Conditions of Approval for the Covered Property; or -40- 2544-332531CLP4281CCRS1581730.13 711/06 (b) The fifth (5th) anniversary of the first Close of Escrow in the Phase for which a Public Report was most recently issued; or (c) The twenty-fifth (25th) anniversary of the first Close of Escrow for the sale of a Lot or Condominium in the Covered Property. 6.4 VOTING RIGHTS. 6.4.1 General Rule. All voting rights are subject to the Community Association Governing Documents. Voting rights attributable to the Lots or Condominiums in a Phase shall be exercised only after assessments have commenced in the Phase. 6.4.2 Vote to Initiate Construction Defect Claims. Commencing on the date of the first annual meeting of Owners, Declarant relinquishes control over the Community Association's ability to decide whether to initiate a construction defect claim under Division 2, Part 2, Title 7 (commencing with Section 895) of the California Civil Code (a "Defect Claim"). This means that Declarant, current employees and agents of Declarant, Board members who are appointed by Declarant, Board members elected by a majority of votes cast by Declarant, and all other Persons whose vote or written consent is inconsistent with the intent of the preceding sentence, are prohibited from participating and voting in any decision of the Community Association or Owners to initiate a Defect Claim. 6.4.3 Co -Ownership. When more than one (1) Person holds an ownership interest in any Lot or Condominium ("co-owner"), all such co-owners are Members and may attend any the Community Association meetings, but only one (1) such co-owner shall be entitled to exercise the vote to which the Lot or Condominium is entitled. Co-owners owning the majority interests in a Lot or Condominium may designate in writing one (1) of their number to vote. Fractional votes shall not be allowed, and the vote for each Lot or Condominium shall be exercised, if at all, as a unit. Where no voting co-owner is designated or if the designation has been revoked, the vote for the Lot or Condominium shall be exercised as the co-owners owning the majority interests in the Lot or Condominium agree. Unless the Board receives a written objection in advance from a co-owner, it shall be conclusively presumed that the corresponding voting co-owner is acting with his co-owners' consent. No vote may be cast for any Lot or Condominium if the co-owners present in person or by proxy owning the majority interests in such Lot or Condominium cannot agree to said vote or other action. The nonvoting co-owner or co-owners are jointly and severally responsible for all of the obligations imposed upon the jointly owned Lot or Condominium and are entitled to all other benefits of ownership. All agreements and determinations lawfully made by the Community Association in accordance with the voting percentages established in the Articles, Bylaws and Master Declaration are binding on all Owners and their successors in interest. 6.5 DECLARANT'S VETO RIGHT. Declarant has the right to veto the Community Association actions listed in Section 6.6. This veto right shall terminate on the date on which neither Declarant nor any Neighborhood Builder owns or has any interest in the Covered Property; provided, however, this right shall expire for all purposes twenty-five (25) years after the date on which the first Close of Escrow occurs. -41- 2544-33253\CLP428\CCRS\581730.13 2/1/06 6.6 ACTIONS SUBJECT TO DECLARANT'S VETO. The following actions are subject to Declarant's veto: 6.6.1 Change in Design. Any change in the general, overall architectural and landscaping design of the Covered Property or the Association Property; 6.6.2 Design Review Committee. The adoption of and any supplement, amendment or restatement to the Design Guidelines, all decisions of the Design Review Committee, any decisions made on appeal to the Board, and any decision to terminate the Design Review Committee. 6.6.3 Community Guidelines. The adoption of any supplement, amendment or restatement to the Community Guidelines or the decision to terminate the Board. 6.6.4 Maintenance. Modifications to level or frequency of maintenance of Association Property or the Maintenance Areas or to the Maintenance Guidelines; 6.6.5 Reduction in Services. Any significant reduction of Association Property services, the amount of Common Assessments or entering into contracts for maintenance or other goods and services benefiting the Community Association or the Association Property at contract rates which are fifteen percent (15%) or more below the reasonable cost for such maintenance, goods or services as determined pursuant to the Maintenance Guidelines; 6.6.6 Annexations. The annexation to the Covered Property of real property pursuant to Section 16.5; 6.6.7 Amendments. Any proposed amendment to Article II, Article IX, Article XII, Article XVI and Article XVII, and to Sections 1.25, 1.26, 1.49 to 1.55, 1.59, 4.3, 4.5, 4.7, 5.3, 5.9, 6.3, 6.5, 6.6, 7.1, 7.5, 7.6, 7.7, 7.11, 8.4, 13.4, 14.2 and 14.3. ARTICLE VII OWNERS' PROPERTY RIGHTS AND PROJECT EASEMENTS Living or working in a master planned community involves sharing and cooperation. The various types of properties and uses in the Covered Property require the creation of special property rights and provisions to address the needs of the variety of Persons living and working in the Covered Property. The property rights acquired by Owners and other Persons in the Covered Property are described in this Article along with limits on the exercise of those rights. 7.1 OWNERS' EASEMENTS OF ENJOYMENT. Every Owner has a right and easement of ingress and egress and of enjoyment in, to and over the Association Property. Each such easement is appurtenant to and shall pass with title to every Home, subject to the following. Unless otherwise indicated, the rights of the Community Association described below may be exercised by the Board. 7.1.1 Community Association Exercise of Powers. The Community Association's exercise of its powers. -42- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 7.1.2 Suspension of Privileges. The Community Association's right to enforce provisions of the Community Association Governing Documents by suspending (a) the Membership right of any Owner (and of the Persons deriving rights and easements from an Owner) to use the Association Property and to use Community Association services and facilities, and (b) other rights and easements of any Owner, in accordance with the Notice and Hearing procedure established in the Bylaws. 7.1.3 Transfer of Property. Subject to the limits established in other Sections of this Master Declaration, the Community Association's right to transfer all or a part of the Association Property for such purposes and subject to such conditions as may be approved by the Members. 7.1.4 Declarant's Right to Access. The right of Declarant, the Neighborhood Builders and their sales agents, representatives and prospective purchasers to the nonexclusive use of the Association Property, Maintenance Areas and Neighborhood Property, without cost, for access, ingress, egress, use and enjoyment, in order to market and dispose of the Covered Property, until neither Declarant nor any Neighborhood Builder owns any portion of the Covered Property; provided, however, that such use shall not unreasonably interfere with the rights of enjoyment of the other Owners established by this Master Declaration. 7.1.5 Other Declarant Rights. The rights and reservations of Declarant and the Neighborhood Builders established in Article XVII. 7.1.6 Reconstructing Improvements. The Community Association's right to reconstruct, replace or refinish any Improvement or portion thereof on the Association Property or Maintenance Areas. 7.1.7 Maintenance. The Community Association's right to maintain the Association Property and the Maintenance Areas. 7.1.8 Restricting Access. The Community Association's right to reasonably restrict access to slopes and other landscaped areas, maintenance facilities, Open Space/Park Areas and other areas of the Association Property designated by the Board. A Supplemental Declaration may designate exclusive use areas in portions of the Association Property for the exclusive use or maintenance by one or more Owners (such as common driveway areas). 7.1.9 Access to Public. The Community Association's right to make portions of the Association Property available for use by Persons who are not residents or Owners in the Covered Property on such terms and at such times as may be negotiated by the Community Association. 7.1.10 Other Easements. The easements reserved in the other Sections of this Article. 7.2 EASEMENTS FOR VEHICULAR AND PEDESTRIAN TRAVEL. Declarant reserves, for the benefit of all Owners and the Neighborhood Builders, nonexclusive easements appurtenant to all the Homes and Neighborhood Property in the Covered Property for -43- 2544-33253\CLP428\CCRS% 581730,13 211/06 vehicular and pedestrian travel over the private streets and walkways in the Association Property, subject to the parking restrictions in Section 2.4. 7.3 EASEMENTS FOR PUBLIC SERVICE USE. Declarant reserves easements over the Covered Property for public services of the Local Governmental Agencies including the right of law enforcement and fire protection personnel to enter upon any part of the Covered Property for the purpose of carrying out their official duties. 7.4 EASEMENTS FOR WATER AND UTILITY PURPOSES. Declarant reserves easements over the Covered Property for public and private utility purposes including the right of any public utility or mutual water district of ingress or egress over the Association Property for purposes of reading and maintaining meters, and using and maintaining fire hydrants located in the Covered Property. 7.5 EASEMENT FOR DECLARANT AND NEIGHBORHOOD BUILDERS OVER ASSOCIATION PROPERTY. Declarant reserves for its benefit, for the benefit of the Neighborhood Builders, and for the benefit of Declarant's and Neighborhood Builders' agents, employees, contractors, customers and invitees and for the benefit of their successors and assigns, a nonexclusive easement appurtenant to the Covered Property, in, to, and over the Association Property for access, ingress, egress, use and enjoyment, in order to show the Covered Property to its prospective purchasers, or to develop, market, sell, lease or otherwise dispose of the Covered Property. Such easement shall continue for so long as Declarant or a Neighborhood Builder owns any portion of the Covered Property. Until ten (10) years following the last Close of Escrow in the Covered Property, Declarant and Neighborhood Builders shall also have easements and right of entry to access the Association Property to repair, remove and replace all or a portion of the Association Property as may be necessary from time to time to satisfy requirements of the City or otherwise. 7.6 TELECOMMUNICATIONS EASEMENT. All of the Covered Property is subject to exclusive and nonexclusive easements reserved to Declarant for access, ingress, and egress, for purposes of installing, operating, maintaining, inspecting and removing Telecommunication Facilities for the benefit of Declarant and its subsidiaries, transferees, successors and assigns, as reserved and granted by reservations and conveyances of Record and the provisions hereof. Such easements are freely transferable by Declarant to any other individual or entity and their successive owners for the purpose of providing Telecommunication Services to the Covered Property and to other real property. All such Telecommunication Facilities shall remain the property of Declarant, its subsidiaries, successors, transferees and assigns, and transfer of all or any portion of the Covered Property does not imply the transfer of any such Telecommunication Facilities or easements located thereon. Exercise of the easements reserved in this Section shall not unreasonably interfere with the reasonable use and enjoyment of the Covered Property. However, in the event that the holder of such easements is required to excavate or remove any sidewalk, driveway or other Improvements within the Covered Property in the exercise of these easements with respect to Telecommunications Facilities, such easement holder shall restore the Improvements to their condition prior to the excavation or removal, or to a better condition, within a reasonable period of time. -44- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 7.7 MISCELLANEOUS EASEMENTS. Declarant and each Neighborhood Builder reserve the following easements for the benefit of all of the real property in the Covered Property and the Owners: 7.7.1 Utilities. Reciprocal, nonexclusive easements over all Homes, Neighborhood Property and the Association Property, for maintenance and repair of utility services. 7.7.2 Drainage. Reciprocal, nonexclusive easements for drainage of water over, across and upon adjacent Homes and Association Property resulting from the normal use of adjoining Lots, Condominiums, Neighborhood Property or Association Property. 7.7.3 Maintenance and Repair. Nonexclusive easements for access to perform necessary maintenance of any Improvement constructed by Declarant or a Neighborhood Builder. 7.7.4 Easements on Maps. Easements as shown on any Recorded subdivision map or Recorded parcel map of any portion of the Covered Property. 7.7.5 Encroachments. Easements for minor encroachment and maintenance if any Improvement on a Home or Neighborhood Property encroaches upon the Association Property or if Association Property Improvements encroach upon any Lot, Condominium or Neighborhood Property as a result of construction by Declarant or a Neighborhood Builder or as a result of construction, repair or reconstruction approved by the Design Review Committee. 7.7.6 Other Accommodations. Easements for the benefit of the Homes and Neighborhood Property over adjacent Homes Neighborhood Property or Association Property for the purposes of accommodating any natural movement or settling of any Improvement, any encroachment of any Improvement due to minor engineering or construction variances, and any encroachment of eaves, roof overhangs and architectural features comprising parts of the original construction of any Home. 7.8 DELEGATION OF USE. Any Owner entitled to use and enjoyment of the Association Property may delegate his rights to such Owner's tenants, contract purchasers or subtenants who reside in such Owner's Home, subject to reasonable regulation by the Board. An Owner who has delegated his rights may not use or enjoy the recreational facilities or equipment on the Association Property for so long as such delegation remains in effect. 7.9 WAIVER OF USE. No Owner may exempt himself from personal liability for assessments levied by the Community Association, nor release his Home from the liens and charges hereof, by waiving the use and enjoyment of the Association Property services and facilities, or by abandoning such Owner's Lot or Condominium. 7.10 TAXES. Each Owner shall take such action as the Community Association may reasonably require to obtain separate real estate tax assessment of each Lot or Condominium. If any taxes or assessments may, in the Community Association's opinion, become a lien on the Association Property or any part thereof, the Community Association may pay them as a -45- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 Common Expense and charge the Community Association's costs to the appropriate Owners as a Common Assessment. 7.11 RIGHT TO GRANT ADDITIONAL EASEMENTS. Declarant reserves, together with the right to grant and transfer the same, easements over the Association Property for the exclusive use by an Owner or Owners of contiguous Homes as a yard, recreational, gardening, and/or landscaping area. Any such easement may be conveyed by the Declarant prior to conveying the last Lot or Condominium in the Covered Property. Such conveyance must be approved in advance by the Board of Directors of the Community Association. The purpose of the easement, the portion of the Association Property affected, the Lot or Condominium to which the easement is appurtenant, and any restrictions on use of the easement area shall be identified in the Recorded grant of easement. ARTICLE VIII OBLIGATION TO SHARE COSTS One of the obligations of Owners in the Covered Property is to contribute financially to support the operations of the Community Association. The Community Association funds its operations through the collection of different kinds of assessments: Common Assessments, Capital Improvement Assessments, Extraordinary Assessments, Reconstruction Assessments and Compliance Assessments. This Article describes how the different types of assessments are collected and used by the Community Association. This Article also sets limits on the amount of certain assessments that can be charged to Owners. 8.1 CREATION OF ASSESSMENT OBLIGATION. Declarant and each Neighborhood Builder, for each Lot or Condominium owned by Declarant or a Neighborhood Builder, covenants to pay, and each Owner is deemed to covenant to pay to the Community Association (a) Common Assessments, (b) Capital Improvement Assessments, (c) Compliance Assessments, (d) Extraordinary Assessments, and (e) Reconstruction Assessments. Except as provided in this Section, all assessments (other than certain Compliance Assessments), together with interest, costs and reasonable attorneys' fees for the collection thereof, are a charge and can become a lien upon the Lot or Condominium against which such assessment is made. Each assessment (including Compliance Assessments), together with interest, costs and reasonable attorneys' fees, is also the personal obligation of the Person who was the Owner of the Lot or Condominium at the time when the assessment fell due. The personal obligation for delinquent assessments may not pass to any new Owner ("Purchaser") unless expressly assumed by the Purchaser. 8.2 FUNDS OF THE COMMUNITY ASSOCIATION. The Community Association Funds may be established as trust accounts at a banking or savings institution and may be combined so long as reserve funds are not combined with operating funds and the funds are treated as separate funds for accounting purposes. The Board shall budget and keep at least the following accounts (the "Maintenance Funds") into which shall be deposited all monies paid to the Community Association, and from which disbursements shall be made in the Community Association's performance of its functions: -46- 2544-33253kCLP428\CCRS1581730.13 2/1/06 8.2.1 General Operating Fund. A General Operating Fund for current expenses of the Community Association. 8.2.2 General Reserve Fund. An adequate General Reserve Fund for the deposit of Reserves attributable to Improvements within the Association Property or Maintenance Areas. 8.2.3 Miscellaneous Maintenance Funds. Any other Maintenance Funds which the Community Association may deem necessary. 8.3 PURPOSE OF ASSESSMENTS. Assessments and any other amounts deposited into the Maintenance Funds shall be used exclusively to (a) promote the Owners' recreation and welfare, (b) improve and maintain the Association Property and Maintenance Areas, and (c) perform any other the Community Association function. Disbursements from the particular Maintenance Funds shall be limited to specific purposes as follows: 8.3.1 General Operations. Disbursements from the General Operating Fund shall be made to discharge the Community Association's responsibilities under the Community Association Governing Documents, for the common benefit of all Owners. 8.3.2 General Reserves. Disbursements from the General Reserve Fund shall be made to fund Reserve expenditures. 8.4 ASSESSMENT COMPONENTS, RATES AND EXEMPTIONS. Each annual Common Assessment is an aggregate of separate assessments for each of the Maintenance Funds, reflecting an itemization of the amounts of prospective deposits into the General Operating and Reserve Funds, and any other Maintenance Fund established by the Community Association. Common Assessments shall be assessed against the Owners of Homes as follows: 8.4.1 Assessment Units. The Common Expenses of the Community Association shall be allocated among the Owners of Homes for which Common Assessments have commenced based upon the number of Assessment Units chargeable to each Lot or Condominium. Assessment Units shall be allocated as follows: Each Residential Area Home and the Owner thereof, shall be allocated one (1) Assessment Unit. 8.4.2 Excess Funds. During the term of any subsidy agreement between Declarant or any Neighborhood Builder and the Community Association approved by the DRE ("Subsidy Agreement"), all excess funds in the Maintenance Funds over and above the amounts used for payment of Common Expenses (including Reserves) shall be used by the Community Association to fund future Maintenance Fund deficits. After the termination of any Subsidy Agreement, the Board of Directors may determine that excess funds remaining in the Operating Funds, over and above the amounts used for the operation of the Covered Property, may, in the sole discretion of the Board, be used to reduce the following year's Common Assessment attributable to such Maintenance Funds. -47- 2544-33253\CLP428\CCRS1581730.13 2/1/06 8.5 LD41TS ON COMMON ASSESSMENT INCREASES. 8.5.1 Increases in the General Assessment Component. For purposes of this Section 8.5 and Section 8.6, an "Increase Election" means a vote by written ballot of the Members with (i) a quorum requirement of fifty percent (50%) of the Members, and (ii) the minimum number of Members required to approve an action being a majority of the quorum. Sections 8.5.1(a) and 8.5.1(b) do not limit increases in the General Assessment Component necessary for addressing an "Emergency Situation" as defined in Section 8.5.2(c). (a) Maximum Authorized Increase for Initial Year of Operations. During the Fiscal Year in which Common Assessments commence, the Board may increase the General Assessment Component so that it exceeds one hundred twenty percent (120%) of the General Assessment Component disclosed for the Covered Property in the most current Budget approved by DRE at the time Common Assessments commence only if the Board first obtains the approval of Members in an Increase Election. (b) Maximum Authorized Increase for Subsequent Fiscal Years. After the Fiscal Year in which Common Assessments commence, the Board may increase the General Assessment Component over the General Assessment Component for the immediately preceding Fiscal Year only as follows: (i) If the increase in the General Assessment Component is less than or equal to twenty percent (20%) of the General Assessment Component for the immediately preceding Fiscal Year, then the Board must either (A) distribute the Budget for the current Fiscal Year in accordance with Section 1365(a) of the California Civil Code, or (B) obtain the approval of the Members casting a majority of votes in an Increase Election; and (ii) If the increase in the General Assessment Component is greater than twenty percent (20%) of the General Assessment Component for the immediately preceding Fiscal Year, then the Board must obtain the approval of Members casting a majority of votes in an Increase Election. 8.5.2 Provisions Applicable to All Common Assessments. (a) Supplemental Common Assessments. If the Board determines that Common Expenses may be properly paid by collection of a Common Assessment in an amount less than the maximum authorized Common Assessment, the Board may levy a Common Assessment which is less than the maximum authorized amount. If the Board determines that the Common Assessment being collected is or will become inadequate to pay all Common Expenses, the Board shall immediately determine the approximate amount of the inadequacy and levy a supplemental Common Assessment, subject to the limits described in Section 8.5.1, above. (b) Automatic Assessment Increases. Notwithstanding any other provisions of this Section 8.5, upon annexation of Annexed Territory, the Common Assessment shall be automatically increased by the additional amount, if any, necessary to maintain the Association Property and Maintenance Areas so long as the annexation of such Annexed Territory is permitted by the DRE. To minimize the need for frequent adjustments in the amount of the Common Assessments during the development of the Covered Property, the Board may -48- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 stabilize the amount of the Common Assessments invoiced to the Owners at a level amount calculated to defray the Common Expenses of the Community Association during the time that Common Assessments are fluctuating due to the periodic annexation of Lots, Condominiums and Association Property. of the following: (c) Emergency Situations. An "Emergency Situation" is any one (i) An extraordinary expense required by an order of a court; (ii) An extraordinary expense necessary to maintain any portion of the Covered Property for which the Community Association is responsible where a threat to personal safety on the Covered Property is discovered; and (iii) An extraordinary expense necessary to maintain any portion of the Covered Property for which the Community Association is responsible that could not have been reasonably foreseen by the Board when preparing the Budget. Prior to the imposition or collection of an assessment pursuant to this Subsection 8.5.2(c), the Board shall adopt a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. The resolution shall be distributed to the Members with the notice of assessment increase. 8.6 SPECIAL ASSESSMENTS. 8.6.1 Authorization. The Board is authorized to levy Capital Improvement Assessments, Reconstruction Assessments and Extraordinary Assessments (each, a "Special Assessment" for purposes of this Section 8.6) for purposes authorized in this Master Declaration or any Supplemental Declaration. 8.6.2 Limit on Special Assessments for Improvements. Special Assessments for Improvements which, if added to the Special Assessments already levied during a Fiscal Year for Improvements that exceed five percent (5%) of the Community Association's Budgeted gross expenses for such Fiscal Year may only be levied with the vote or written consent of Members casting a majority of votes at an Increase Election unless the Special Assessments are necessary for addressing Emergency Situations defined in Section 8.5.2(c). 8.7 COMMENCEMENT OF COMMON ASSESSMENTS. Common Assessments shall commence as to each Lot or Condominium in any Residential Area Phase requiring the issuance of a Public Report on the first day of the month following the first Close of Escrow in such Phase. Notwithstanding the foregoing, the conveyance of any Lot or Condominium in the Covered Property which is being used by Declarant or any Neighborhood Builder as a Model Home shall not serve to commence the levy of Common Assessments against such Model Home. Common Assessments shall be suspended against such Model Home until the first day of the month following the earlier of the following events: (a) Declarant or the respective Neighborhood Builder discontinue using such Lot or Condominium as a Model Home; or (b) any other Lot or Condominium in the same Phase of Development as such Model Home has been sold to a member of the homebuying public pursuant to a transaction requiring -49- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 the issuance of a Public Report and such Lot or Condominium is occupied by a member of the general public. During the period of time a Model Home is not subject to the Ievy of Common Assessments as provided herein, Declarant or the respective Neighborhood Builder shall maintain such Model Home at its sole cost and expense and shall keep same in an as -new condition. Common Assessments shall commence on each Lot in a Phase in an area other than the Residential Area on the first day that such Phase becomes subject to this Master Declaration. The first Common Assessment shall be adjusted according to the number of months remaining in the Fiscal Year. 8.8 COLLECTION OF COMMON ASSESSMENTS. The Board shall fix the amount of the Common Assessment against each Lot at least thirty (30) days in advance of each Common Assessment period. Written notice of any change in the amount of any Common Assessment, Capital Improvement Assessment or Reconstruction Assessment shall be sent via first-class mail to every Owner subject thereto not less than thirty (30) nor more than ninety (90) days prior to the increased assessment becoming due. The due dates shall be established by the Board. The Community Association shall, upon demand and for a reasonable charge, furnish a certificate setting forth whether the assessments on a specified Lot or Condominium have been paid. A properly completed certificate as to the status of assessments against a Lot or Condominium is binding upon the Community Association as of the date of its issuance. The Community Association may use any method of collecting assessments allowed by law including charging credit cards or electronic transfers. At the Community Association's discretion, the additional cost of any method of collection can be collected from the Owner electing the method of collection and does not have to be divided equally among all Owners. Each installment of Common Assessments may be paid by the ' Member to the Community Association in one (1) check or payment or in separate checks as payments attributable to specified the Community Association Funds. If any payment of a Common Assessment installment is less than the amount assessed and the payment does not specify the Maintenance Fund or Funds into which it should be deposited, the payment received by the Community Association from that Owner shall be credited in the order of priority set forth in the collection policy of the Community Guidelines. 8.9 EXEMPT PROPERTY. The following property is exempt from all assessments imposed pursuant to this Master Declaration: 8.9.1 Public Property. All portions of the Covered Property dedicated to and accepted by a Local Governmental Agency. 8.9.2 Maintenance Areas. The Maintenance Areas. 8.9.3 Association Property. The Association Property. 8.9.4 Neighborhood Property. All Neighborhood Property. 8.7, above. 8.9.5 Model Homes. Any Model Homes, subject to the provisions of Section -50- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 8.9.6 Other. Any areas exempted from assessments in a Supplemental Declaration, including those areas governed by Regulation 2792.16(c)(2) of the Regulations of the Real Estate Commissioner as contained in Title 10, California Code of Regulations, and Civil Code 1366.1 (regarding temporary exemption from assessment the amounts necessary to defray the costs for maintenance of Association until a notice of completion has been recorded and the Community Association has accepted the Association Property). 8.10 CAPITAL CONTRIBUTIONS TO THE COMMUNITY ASSOCIATION. On the acquisition of record title to a Lot or Condominium from Declarant or Neighborhood Builders, each Owner of a Lot or Condominium shall contribute to the capital of the Community Association an amount equal to One Hundred Fifty and No/100 Dollars ($150.00). This amount shall be deposited by the buyer into the purchase and sale escrow and disbursed therefrom to the Community Association or to Declarant if Declarant has previously advanced such funds to the Community Association. ARTICLE TX RESIDENTIAL AREA MAINTENANCE OBLIGATIONS To protect the aesthetics of the Covered Property, the Declarant has established standards for maintaining the various types of property in the Residential Area. This Article describes these standards. 9.1 OWNER MAINTENANCE OBLIGATIONS. Each Owner of a Lot in the Residential Area shall maintain his Home and Lot in accordance with this Section unless this Section is explicitly superseded in a Supplemental Declaration. 9.1.1 General Responsibilities. Each Owner, at the Owner's sole expense, shall maintain and restore all Improvements located on the Owner's Lot and the Lot itself, excluding any Parkway Improvements described below, in a neat, sanitary and attractive condition, and in conformance with any Maintenance Guidelines. Such maintenance responsibilities include the maintenance of the entire Home on the Lot, as well as any fence or wall constructed on the Lot along the Lot Line abutting any Association Property or Maintenance Area. Each Owner whose Lot uses a private drainage system installed by Declarant or a Neighborhood Builder is responsible for its maintenance. Each Owner whose Lot uses a sewer system lateral is responsible for the maintenance of that portion of the lateral which exclusively serves such Owner's Lot. If any Owner permits any Improvement which such Owner is responsible for maintaining to fall into disrepair or to become unsafe, unsightly or unattractive, or to otherwise violate the Community Association Governing Documents, the Board may seek any remedies at law or in equity which it may have. In addition, the Board may, after Notice and Hearing, enter upon such Owner's Lot to perform such maintenance and charge the cost thereof to the Owner. Said cost shall be a Compliance Assessment enforceable as set forth in this Master Declaration. 9.1.2 Insurance Obligations. Each Owner is also responsible for carrying public liability insurance in the amount such Owner deems desirable to cover such Owner's individual liability for damage to person or property occurring inside such Owner's Home or elsewhere upon such Owner's Lot. I -Sl- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 9.1.3 Damage to Homes -Reconstruction. If all or any portion of any Lot or Home is damaged or destroyed by fire or other casualty, the Owner of such Lot shall either (a) rebuild, repair or reconstruct the Lot and the Home thereon in a manner which will restore them substantially to their appearance and condition immediately prior to the casualty or as otherwise approved by the Design Review Committee, or (b) install landscaping on the Lot without rebuilding the Home as approved by the Design Review Committee. The Owner of any damaged Lot or Home and the Design Review Committee shall proceed with all due diligence. The Owner shall cause construction or landscaping to commence within six (6) months after the damage occurs and to be completed within twelve (12) months after damage occurs, unless prevented by causes beyond such Owner's reasonable control. A transferee of the Lot which is damaged or upon which is located a damaged Home shall commence and complete construction or landscaping in the respective periods which would have remained for the performance of such obligations if the Owner of the Lot at the time of the damage still held title to the Lot. However, no such transferee may be required to commence or complete such construction in less than thirty (30) days from the date such transferee acquired title to the Lot. 9.1.4 Walls. The walls in the Covered Property located on or within one (1) foot of a property line of a Lot are divided into the categories listed in this Section and shall be maintained as required by this Section. (a) Party Walls. Each wall or fence which is placed on the dividing line between the Lots (the "Party Wall'I is a party wall. The cost of reasonable maintenance of a Party Wall shall be shared equally by the Owners of the Lots divided by the Party Wall. However, each Owner is responsible for repainting the side of any Party Wall facing his Lot. If a Party Wall is destroyed or damaged, any Owner whose Lot is affected thereby may restore it, and the Owner of the other Lot which is affected thereby shall contribute equally to the cost of restoration. An Owner who by his negligent or willful act causes a Party Wall to require repair or replacement shall bear the whole cost of the necessary repairs or replacement. The right of any Owner to contribution from any other Owner under this Subsection is appurtenant to each Owner's Lot and passes to such Owner's successors in title. (b) Community Walls. The Community Association shall maintain the structural integrity, cap and exterior surface of the Community Walls in the Covered Property as shown on Exhibit "RM" attached hereto. The Owners shall maintain the interior portion of any Community Walls which face their Lot or Condominium. If a portion of a Community Wall is damaged or destroyed, the Owner of the damaged portion shall promptly repair or reconstruct the damaged their portion of the Community Wall using the same design and identical or substantially equivalent materials as used in the original construction. Additional Community Walls may be identified in Supplemental Declarations. (c) Neighborhood Walls. Neighborhood Walls maintained by the Neighborhood Association, in the Covered Property are located approximately as shown on Exhibit "RM" attached to a Neighborhood Declaration or to any Supplemental Declaration. Additional Neighborhood Walls may be identified in Supplemental Declarations. The Neighborhood Association shall maintain all portions of any Neighborhood Walls identified on Exhibit "WM" attached to a Neighborhood Declaration or to any Supplemental Declaration. -52- 2544-332531CLP4281CCRM 581730.13 2/1/06 Any Neighborhood Wall not shown on Exhibit '"" shall be maintained by the Owner of the Lot or Condominium which abuts such Neighborhood Wall. 9.2 COMMUNITY ASSOCIATION MAINTENANCE OBLIGATIONS. 9.2.1 Responsibilities. After completion of the construction or installation of the Improvements on the Association Property by Declarant or a Neighborhood Builder, no Improvement, excavation or work which in any way alters the Association Property or Maintenance Areas may be made or done by any Person other than the Community Association, its authorized agents, Declarant or the Neighborhood Builders. Unless otherwise expressly provided in this Master Declaration or a Supplementary Declaration, upon commencement of Common Assessments on the Lots or Condominiums in a Phase, the Community Association shall maintain all completed Improvements on the Association Property and Maintenance Areas it is obligated to maintain in such Phase (including the Parkways described below, public and private park areas, streets, alleys, paseos and storm drain areas as depicted on Exhibit "SD" attached hereto) in perpetuity, in conformance with any Maintenance Guidelines. In addition, the Community Association will maintain the Open Space/Park Areas to be constructed in the Covered Property and any associated access or use easements for the benefit of the public in connection with the use of such Open Space/Park Areas. The Open Space/Park Areas in the Covered Property are located approximately as shown on Exhibit "OS" attached hereto. Pursuant to requirements imposed by the City, upon commencement of Common Assessments on Lots or Condominiums in a Phase, the Community Association shall also maintain all completed Improvements on real property in the Phases (a) owned by the Community Association and designated for maintenance by the Community Association as shown on Exhibit "AP" attached hereto or any Exhibit "AP" attached to any Supplemental Declaration, and (b) owned by others which is designated for Community Association maintenance on Exhibit "MA" attached hereto or any Exhibit "MA" attached to any Supplemental Declaration. Unless otherwise provided in any Maintenance Guidelines, the Board shall determine, in its sole discretion, the level and frequency of maintenance of the Association Property and Maintenance Areas the Community Association is obligated to maintain. The Community Association may add or remove any landscaping Improvements to or from the Association Property or Maintenance Areas it is obligated to maintain and shall keep the landscaping thereon free of weeds and disease. 9.2.2 Parkway Maintenance Areas. The following areas will be maintained by the Community Association: (a) landscaped portions of the private streets adjacent to certain Lots identified as "Private Parkways" on Exhibit "PM" attached hereto or as identified in any Supplemental Declaration; and (b) portions of public streets not owned by the Community Association but maintained by the Community Association identified as "Public Parkways" on Exhibit "MA" attached hereto or as identified in any Supplemental Declaration. The Private Parkways (including sidewalks) and Public Parkways (collectively, "Parkways', are to be maintained by the Community Association, commencing not more than thirty (30) days after both a Notice of Completion for the Parkway Improvements has been filed and the City has performed a Final Inspection or provided other written acknowledgement of the approval of the completed Parkway Improvements. Improvements on Parkways adjacent to Lots in any Phase shall be maintained by the Neighborhood Builder until Community Association maintenance commences. Sidewalks within Public Parkways will be maintained by the City. Driveways in -53- 2544-33253\CLP428\CORS\ 581730,13 2/1106 multi -family Neighborhoods in the Covered Property shall be maintained by the applicable Neighborhood Association. Otherwise, each Owner shall be responsible for maintenance of the driveway of such Owner's Lot. The Community Association will be responsible for trimming and pruning the street trees and maintaining turf, shrubs, irrigation systems and any mailbox kiosks in the Parkways. Neighborhood Builders will plant street trees in the Parkways and in the front yard areas of some Lots, adjacent to the street. Each Owner of a Lot and each Neighborhood Association Owner of Neighborhood Property (as the case may be), on which no portion is identified as a "Private Parkway" on Exhibit "PM" or a "Public Parkway" on Exhibit "MA" attached hereto shall maintain all portions of the Lot or Neighborhood Property (as applicable), including any trees originally planted by Neighborhood Builders. Neither the Neighborhood Association nor Owners may remove or relocate the street trees originally planted by the Neighborhood Builder in the Parkways or the front yard of the Lot or on Neighborhood Property without the prior written consent of the Community Association. 9.2.3 Damage to Association Property or Maintenance Areas. The Board may levy the cost of any maintenance by the Community Association in the Association Property or Maintenance Areas caused by the willful or negligent act of an Owner, other Person or any Neighborhood Association as a Compliance Assessment against the responsible Owner, Person or Neighborhood Association after Notice and Hearing. 9.2.4 Community Association Maintenance Obligations. Except as otherwise provided in this Master Declaration, from and after the date of conveyance of fee title or appropriate easements thereto to the Community Association, the Community Association will be responsible for the maintenance, repair, replacement, irrigation, drainage facilities, brush clearance, landscaping and preservation of the appearance of the Association Property and Maintenance Areas in strict compliance with the Maintenance Manual provided to the Board by Declarant or a Neighborhood Builder ("Maintenance Manual', the Best Management Practices, and in accordance with all commonly accepted maintenance practices. To ensure compliance with the requirements of the Maintenance Manual, for a period of ten (10) years after the last Close of Escrow in the Covered Property, Declarant shall have the right, but not the obligation, at its own cost and expense, to retain the services of appropriate consultant(s) to (a) prepare, update and keep current the Maintenance Manual for the Community Association maintenance of the Association Property and Maintenance Areas, (b) conduct annual inspections of all elements of the Association Property and Maintenance Areas covered by the Maintenance Manual, and (c) prepare a report covering the results of such inspections and deliver such report to Declarant and to the Community Association. Declarant hereby reserves non-exclusive easements on, over, under, across and through all Association Property and Maintenance Areas within the Covered Property, for the purpose of such inspections and activities related thereto. The Community Association shall provide Declarants' consultant(s) with copies of its maintenance log, and related records reasonably requested by such consultant(s), at least thirty (30) days prior to the date scheduled for the Declarant's annual inspection. Declarant shall provide any updates to the Maintenance Manual to the Community Association. The Community Association shall cause such Association Property and Maintenance Areas to be regularly maintained and painted in accordance with the requirements and recommendations of the Maintenance Manual, as revised from time to time, and shall perform all remedial maintenance in accordance with the recommendations of the annual inspection reports prepared -54- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 by Declarant's consultant(s). The provisions of this Section shall not be amended without the prior written consent of Declarant. 9.2.5 Maintenance Manual Compliance. The Community Association has the duty and obligation, along with the attendant rights and power to carry out the Declarant's and its consultant(s)' required maintenance of the Association Property and Maintenance Areas in perpetuity, as set forth in the Maintenance Manual. The Board shall regularly determine whether the recommended inspections and maintenance activities have been followed, and, if any such recommendations have not been followed, what corrective steps need to be taken to assure proper inspections and maintenance of the Association Property and the Maintenance Areas. The Board shall keep a record of such determinations in the Board's minutes. The Board shall review the Maintenance Manual for any needed appropriate revisions at appropriate intervals, but in no event less frequently than annually. 9.2.6 Community Association Inspections. If in any year Declarant elects not to perform an annual maintenance inspection as provided for in Section 92.4 above, the Board shall have the duty and obligation to cause an inspection and report to be made in accordance with the provisions hereof. The Board's annual inspections shall (a) determine whether the Association Property and Maintenance Areas is being maintained adequately in accordance with the standards of maintenance established herein and by the Maintenance Manual, (b) identify the condition of the Association Property and the Maintenance Areas, including the existence of any hazards or defects, and the need for performing additional maintenance or refurbishing, and (c) recommend preventative actions, which may be taken to reduce potential maintenance costs to be incurred in the future. The Community Association may employ such experts and consultants as necessary to perform such inspections. With thirty (30) days after the Board's annual inspection, the Board shall have a report of the results of the inspection prepared, and such report shall include the following: (i) a description of the condition of the Association Property and the Maintenance Areas, including a list of items inspected and the status of maintenance, repair and need for replacement of such items; (ii) a description of all maintenance planned for the ensuing Fiscal Year and included in the Budget; (iii) if any maintenance is to be deferred, an explanation must be given for such deferral; (iv) a summary of all reports of inspections performed by any expert or consultant employed by the Board to perform inspections; (v) a report of the status of compliance with the maintenance needs set forth in all inspection reports for preceding years and identified in any applicable Maintenance Guidelines; and (vi) such other matters as the Board deems appropriate. The Board shall promptly cause a copy of each inspection report prepared in accordance with this Section to be delivered to Declarant. The Community Association's obligations under this Section shall continue until the expiration of the ten (10) -year period following the last Close of Escrow in the Covered Property. The requirements of this Section are in addition to the Board's obligations to perform ongoing reserve studies as required by Section 2.12 of the Bylaws. The provisions of this Section shall not be amended without the prior written consent of Declarant. 9.3 NEIGHBORHOOD ASSOCIATION OBLIGATIONS. Each Neighborhood Association, at its expense shall maintain and restore all Improvements located on its Neighborhood Property in a neat, sanitary and attractive condition. If any Neighborhood Association permits any Improvement which such Neighborhood Association is responsible for maintaining, to fall into disrepair or to become unsafe, unsightly or unattractive, to reasonably be -55- 2544-332531CLP428\CCRS1581730.13 2/1/06 deemed by a duly authorized City official that a public nuisance has been created by the absence of adequate maintenance such as to be detrimental to public health, safety or general welfare, or to otherwise violate this Master Declaration, the Board may seek any remedies at law or in equity which it may have. In addition, the Board may, after Notice and Hearing, enter upon such Neighborhood Property to make such repairs or to perform such maintenance and charge the cost thereof to the Neighborhood Association. Said cost shall be a Compliance Assessment enforceable as set forth in this Master Declaration. 9.4 MAINTENANCE STANDARDS. Notwithstanding any other provision of this Article IX, the Declarant, the Community Association, Neighborhood Builders, Neighborhood Associations and all Owners shall maintain everything they are required to maintain in a neat, safe and attractive condition, which maintenance shall include: (a) maintenance of all landscaping such that all landscaping is evenly cut, evenly edged, free of bare or brown spots, debris and weeds, (b) trimming of trees and shrubs so that they do not impede vehicular or pedestrian traffic, (c) pruning of trees so that they do not intrude, have droppings on or are another nuisance on neighboring Lots, Condominiums or other properties, (d) pruning of trees so as to eliminate exposed surface roots and damage to sidewalks, driveways and structures, (e) maintenance of all private roadways, sidewalks and Open Space/Park Areas so that they are safe for users, and (f) repair and removal of any significant pavement cracks, pavement distress, excessive slab settlement, abrupt vertical variations and debris on travelways. ARTICLE X DAMAGE AND CONDEMNATION This Article establishes the procedure for repairing or reconstructing damaged Association Property or Maintenance Areas and for obtaining funds from condemnation of Association Property. Damage to or destruction of the Association Property or Maintenance Areas and condemnation of the Association Property shall be handled in the following manner: 10.1 REPAIR AND RECONSTRUCTION. If the Association Property or any Maintenance Area is damaged or destroyed, the Community Association shall cause the Association Property or Maintenance Area to be repaired and reconstructed substantially in accordance with the original plans and specifications, and any restoration or repair of the Association Property or Maintenance Area shall be performed substantially in accordance with the original plans and specifications. If the cost of effecting total restoration of the Association Property or Maintenance Area exceeds the amount of insurance proceeds, then the Community Association shall levy a Reconstruction Assessment against the Lots and Condominiums and their respective Owners equal to the difference between the total restoration cost and the insurance proceeds. I0.2 OWNERS' RESPONSIBILITIES. Each Owner is liable to the Community Association for all expenses of repairing the Association Property and Maintenance Areas not fully reimbursed to the Community Association by insurance proceeds (including any deductible amounts under any insurance policies against which the Community Association files a claim for such damage) which may be sustained due to the negligence or willful misconduct of said Owner -56- 2544-33253\CLP428\CCRS\ 581730.13 211/06 or the Persons deriving their right and easement of use and enjoyment of the Association Property or Maintenance Area from said Owner. The Community Association may, after Notice and Hearing, (a) determine whether any claim shall be made upon the insurance kept by the Community Association and (b) levy against such Owner a charge equal to any deductible paid and the increase, if any, in the insurance premium directly attributable to the damage caused by such Owner or the Persons for whom such Owner may be liable as described in this Master Declaration, as a Common Assessment. If a Lot or Condominium is jointly owned, the liability of its Owners is joint and several, except to the extent that the Community Association has previously contracted in writing with such joint Owners to the contrary. After Notice and Hearing, the cost of correcting such damage, to the extent not reimbursed to the Community Association by insurance, shall be a Compliance Assessment against such Owner. 10.3 EMINENT DOMAIN. If any portion of the Association Property is taken by right of eminent domain or by private purchase in lieu of eminent domain, the award in condemnation shall be paid to the Community Association and deposited in the Operating Fund. No Owner may participate as a party, or otherwise, in any proceedings relating to such condemnation. ARTICLE XI INSURANCE This Article establishes minimum requirements for insurance kept by the Community Association and the Owners in the Covered Property. 11.1 PROPERTY INSURANCE. The Board shall obtain and keep all such property insurance for loss or damage to all insurable Improvements installed by Declarant, any Neighborhood Builder or by the Community Association on the Association Property and Maintenance Areas with an agreed amount endorsement for no less than one hundred percent (100%) of the full replacement cost (new without deduction for depreciation) of the cost of Improvements, fixtures and other property without deduction for coinsurance, and may obtain insurance against such other hazards and casualties as the Community Association may deem desirable if commercially reasonable and kept by reasonably prudent owners of similar properties. The Community Association may also insure any other real or personal property it owns against loss or damage by fire and such other hazards as the Community Association may deem desirable, with the Community Association as the owner and beneficiary of such insurance. The policies insuring the Association Property and Maintenance Areas must be written in the name of, and the proceeds thereof must be payable to, the Community Association. Unless the applicable insurance policy provides for a different procedure for filing claims, all claims made under such policy must be sent to the insurance carrier or agent, as applicable, by certified mail and be clearly identified as a claim. The Community Association shall keep a record of all claims made. The Community Association shall use insurance proceeds to repair or replace the property for which the insurance was carried. Premiums for all insurance carried by the Community Association are a Common Expense. 11.2 INSURANCE OBLIGATIONS OF OWNERS. Each Owner is responsible for insuring his personal property and all other property and Improvements in his Lot or Condominium as required by either Section 9.1.2, the applicable Supplemental Declaration or -57- 254433253\CLP428\CCR3\ 581730.13 2/1/06 Neighborhood Declaration. Such policies shall not adversely affect or diminish any coverage under any insurance obtained by or on behalf of the Community Association. Duplicate copies of such other policies shall be deposited with the Board upon the Board's request. If any loss intended to be covered by insurance carried by or on behalf of the Community Association occurs and the proceeds payable thereunder are reduced due to insurance carried by any Owner, such Owner shall assign the proceeds of such insurance to the Community Association, to the extent of such reduction, for application by the Board to the same purposes as the reduced proceeds are to be applied. 11.3 WAIVER OF SUBROGATION. All policies of insurance the Community Association keeps must provide, if available on commercially reasonable terms, for waiver of - (a) any defense based on coinsurance, and (b) any claim for subrogation and other rights of recovery that the Community Association and the Owners might have against each other and their respective agents, employees, entities and insurers with respect to all parties covered by whatever casualty insurance is in effect. As to each policy of insurance the Community Association keeps which will not be voided or impaired thereby, the Community Association waives and releases all claims against the Board, the Owners, the Community Manager, Declarant, the Neighborhood Builders and the agents and employees of each of the foregoing, with respect to any loss covered by such insurance, whether or not caused by negligence or breach of any agreement by such Persons, but only to the extent that insurance proceeds are received in compensation for such loss. 11.4 LIABILITY AND OTHER INSURANCE. The Community Association shall obtain commercial general liability insurance, including coverage for medical payments and malicious mischief, in such limits as it deems desirable with such minimum limits as are set forth in Section 1365.9 of the California Civil Code, insuring against liability for bodily injury, death and property damage arising from the Community Association's activities or with respect to property the Community Association maintains or is required to maintain including, if obtainable, a cross -liability endorsement insuring each insured against liability to each other insured. The Community Association may also obtain Worker's Compensation insurance and other liability insurance as it may deem desirable, insuring each Owner, the Community Association, the Board and Community Manager, against liability in connection with the Association Property and Maintenance Areas, the premiums for which are a Common Expense. The Board shall review all insurance policies at least annually and adjust the limits in its discretion. The Board may also obtain such errors and omissions insurance, indemnity bonds, fidelity insurance and other insurance as it deems advisable, insuring the Board, the Community Association's officers and the Community Manager against any liability for any act or omission in carrying out their obligations hereunder, or resulting from their membership on the Board or on any committee thereof. However, fidelity insurance coverage which names the Community Association as an obligee must be obtained by or on behalf of the Community Association for any Person handling the Community Association funds, including the Community Association officers, directors, employees and agents and Community Manager employees, whether or not such Persons are compensated for their services, in an amount not less than the estimated maximum of funds, including reserve funds, in the Community Association's or Community Manager's custody during the term of the insurance. The aggregate amount of such insurance coverage may not be less than one-fourth (1/4) of the annual Common Assessments on all Lots and Condominiums in the Covered Property, plus reserve funds. In addition, the Community -58- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 Association shall continuously keep in effect such casualty, flood and liability insurance and fidelity insurance coverage meeting the requirements for planned unit developments established by Fannie Mae, Ginnie Mae and Freddie Mac, so long as any of them is a Beneficiary or an Owner of a Lot or Condominium in the Covered Property, except to the extent such coverage is not reasonably available or has been waived in writing by Fannie Mae, Ginnie Mae and Freddie Mac, as applicable. For a period of ten (10) years following the last Close of Escrow in the Covered Property, the Board shall provide summaries of insurance, notices of significant changes in insurance coverage and notice if a policy of insurance is not renewed to the Members and to Declarant. 11.5 NOTICE OF EXPIRATION REQUIREMENTS. )f available, each insurance policy the Community Association keeps must contain a provision that said policy may not be canceled, terminated, materially modified or allowed to expire by its terms, without ten (10) to thirty (30) days' prior written notice to the Board, Declarant, and to each Owner and Beneficiary, insurer and guarantor of a first Deed of Trust who has filed a written request with the carrier for such notice, and every other Person in interest who requests such notice of the insurer. ARTICLE XII RIGHTS OF BENEFICIARIES This Article gives various rights to lenders. 12.1 GENERAL PROTECTIONS. Notwithstanding any other provision of this Master Declaration, no amendment or violation of the Master Declaration defeats or renders invalid the rights of the Beneficiary under any Deed of Trust upon one (1) or more Lots or Condominiums made in good faith and for value, provided that after the foreclosure of any such Deed of Trust such Lot or Condominium will remain subject to this Master Declaration. For purposes of the Community Association Governing Documents, "first Deed of Trust" means a Deed of Trust with first priority over other Deeds of Trust on a Lot or Condominium. 12.2 WRITTEN NOTIFICATION. Each Beneficiary, insurer and guarantor of a first Deed of Trust encumbering at least one (1) Home, upon filing a written request for notification with the Board, is entitled to written notification from the Community Association of (a) any condemnation or casualty loss which affects either a material portion of the Covered Property or the Homes securing the respective first Deed of Trust; and (b) any delinquency of ninety (90) days or more in the performance of any obligation under the Community Association Governing Documents, including the payment of assessments or charges owed by the Members, which notice each Member consents to and authorizes; and (c) a lapse, cancellation, or material modification of any policy of insurance or fidelity insurance kept by the Community Association; and (d) any abandonment or termination of the Community Association. -59- 2544-33253\CLP428\CCRS\ 581730.13 2/1106 12.3 RIGHT OF FIRST REFUSAL. Each Owner, including each first Beneficiary of a first Deed of Trust which obtains title to such Home pursuant to the remedies provided in such Deed of Trust, or by foreclosure of such Deed of Trust, or by deed or assignment in lieu of foreclosure, shall be exempt from any "right of first refusal" created or purported to be created by the Community Association Governing Documents. 12.4 RIGHTS UPON REQUEST. All Beneficiaries, insurers and guarantors of first Deeds of Trust, upon written request to the Community Association, shall have the right to: (a) examine current copies of the Community Association's books, records and financial statements and the Community Association Governing Documents during normal business hours; and (b) receive written notice of all meetings of Members; and (c) designate in writing a representative who shall be authorized to attend all meetings of Members. 12.5 PAYMENTS OF DELINQUENT AMOUNTS. Beneficiaries of First Deeds of Trust may, jointly or singly, pay taxes or other charges which are in default and which may or have become a charge against any Association Property and may pay any overdue premiums on hazard insurance policies, or secure new hazard insurance coverage on the lapse of a policy, for Association Property or Maintenance Areas and shall be owed immediate reimbursement therefor from the Community Association. 12.6 CONTRACTS. The Board may enter into such contracts or agreements on, behalf of the Community Association as are required in order to satisfy the guidelines of VA, FHA, Fannie Mae, Freddie Mac, Ginnie Mae or any similar entity, so as to allow for the purchase, insurance or guaranty, as the case may be, by such entities of first Deeds of Trust encumbering Lots and Condominiums. Each Owner agrees that it will benefit the Community Association and its Members, as a class of potential borrowers and potential sellers of their Homes, if such agencies approve the Covered Property as a qualifying subdivision under their respective policies, rules and regulations. Each Owner authorizes his Beneficiary to furnish information to the Board concerning the status of any Deed of Trust encumbering a Home. ARTICLE XIII ENFORCEMENT This Article establishes procedures for enforcing the provisions of the Community Association Governing Documents, collecting delinquent assessments, enforcing certain bonded obligations and resolving disputes with the Declarant. 13.1 ENFORCEMENT OF COMMUNITY ASSOCIATION GOVERNING DOCUMENTS. All disputes arising under the Community Association Governing Documents, other than those described in Section 13.2, Section 13.4 or regulated by Civil Code Section 1375, et seq., shall be resolved as follows: -60- 2544-332531CLP42MCCRS� 581730.13 2/1/06 13.1.1 Violations Identified by the Community Association. If, the Design Review Committee or the Board determines that there is a violation of the Community Association Governing Documents, then the Board shall give written notice to the responsible Owner or Neighborhood Association identifying (a) the condition or violation complained of, and (b) the length of time the Owner or Neighborhood Association has to remedy the violation including, if applicable, the length of time the Owner or Neighborhood Association has to submit plans to the Design Review Committee and the length of time the Owner or Neighborhood Association has to complete the work proposed in the plans submitted to the Design Review Committee. If an Owner or Neighborhood Association does not perform such corrective action as is required by the Board within the allotted time, the Board, after Notice and Hearing, may remedy such condition or violation complained of, and the cost thereof shall be charged to the Owner or Neighborhood Association as a Compliance Assessment. If the violation involves nonpayment of any type of assessment, then the Board may collect such delinquent assessment pursuant to the procedures set forth in Section 13.2. 13.1.2 Violations Identified by an Owner or Neighborhood Association. If an Owner or Neighborhood Association alleges that another Owner, other Person, or Neighborhood Association is violating the Community Association Governing Documents (other than nonpayment of any type of assessment), the complaining Owner or Neighborhood Association must first submit the matter to the Board for Notice and Hearing before the complaining Owner or Neighborhood Association may resort to alternative dispute resolution, as required by Section 1369.510, et seq., of the California Civil Code, or litigation for relief. 13.1.3 Legal Proceedings. Failure to comply with any of the terms of the Community Association Governing Documents by a Neighborhood Association or an Owner, or any other Person, is grounds for relief which may include an action to recover sums due for damages, injunctive relief, foreclosure of any lien, or any combination thereof; provided, however, that the procedures established in Sections 1363.810, et seq, and 1369.510, et seq., of the California Civil Code and in Sections 13.1.1 and 13.1.2 above must fust be followed, if they are applicable. 13.1.4 Limit on Expenditures. The Community Association may not incur litigation expenses, including attorneys' fees, or borrow money to fund litigation, where the Community Association initiates legal proceedings or is joined as a plaintiff in legal proceedings, unless the Community Association first obtains the consent of the Members (excluding the voting power of any Owner who would be a defendant in such proceedings), and, if applicable, complies with the requirements of Sections 1363.810, et seq., and 1369.510, et seq., of the California Civil Code. Such approval is not necessary if the legal proceedings are initiated (a) to enforce the use restrictions contained in Article II, (b) to enforce the architectural and landscaping control provisions contained in Article V, (c) to collect any unpaid assessments levied pursuant to the Community Association Governing Documents, (d) for a claim, the total value of which is less than five hundred thousand dollars ($500,000), or (e) as a cross-complaint in litigation to which the Community Association is already a party. If the Community Association decides to use or transfer reserve funds or borrow funds to pay for any litigation, the -61- 25"332531CLP428\CCRS\ 581730.13 2/1/O6 Community Association must notify its Members of the decision by mail. Such notice shall provide an explanation of why the litigation is being initiated or defended, why operating funds cannot be used, how and when the reserve funds will be replaced or the loan will be repaid, and a proposed budget for the litigation. The notice must state that the Members have a right to review an accounting for the litigation which will be available at the Community Association's office. The accounting shall be updated monthly. If the Association action to incur litigation expenses or borrow money to fund litigation concerns a Defect Claim defined in Section 6.4.2, then the voting requirements of both Sections 6.4.2 and 13.1.4 must be met. 13.1.5 Additional Remedies. The Board may adopt a schedule of reasonable fines or penalties which, in its reasonable discretion, it may assess against an Owner or Neighborhood Association for the failure of such Owner, or of a resident of or visitor to such Owner's Home, or Neighborhood Association to comply with the Community Association Governing Documents. The Board may Record a Notice of Noncompliance for any violation of the Community Association Governing Documents if permitted by law. Such fines or penalties may only be assessed after Notice and Hearing. 13.1.6 No Waiver. Failure to enforce any provision hereof does not waive the right to enforce that provision, or any other provision hereof. 13.1.7 Right to Enforce. The Board or any Owner (not at the time in default hereunder) may enforce the Community Association Governing Documents as described in this Article, subject to Sections 1363.810, et seq., and 1369.510, et seq., of the California Civil Code. Each remedy provided for in the Community Association Governing Documents is cumulative and not exclusive or exhaustive. 13.2 NONPAYMENT OF ASSESSMENTS. 13.2.1 Delinquency. Assessments are delinquent if not paid within fifteen (15) days after the due date established by the Community Association. Assessments not paid within fifteen (15) days after the due date, plus all reasonable costs of collection (including attorneys' fees) and late charges bear interest at the maximum rate permitted by law commencing thirty (30) days after the duedate until paid. The Community Association may also require the delinquent Owner to pay a late charge in accordance with California Civil Code Section 1366(d)(2). The Community Association need not accept any tender of a partial payment of an assessment and all costs and attorneys' fees attributable thereto. Acceptance of any such tender does not waive the Community Association's right to demand and receive full payment. 13.2.2 Creation and Release of Lien. (a) Priority of Lien. All liens levied in accordance with this Master Declaration shall be prior and superior to (i) any declaration of homestead Recorded after the Recordation of this Master Declaration, and (ii) all other liens, except (1) all taxes, bonds, assessments and other levies which, by law, would be superior thereto, and (2) the lien or charge of any first Deed of Trust of Record (meaning any Recorded Deed of Trust with fust priority or seniority over other Deeds of Trust) made in good faith and for value and Recorded before the -62- 2544-33253\CLP42S\CCAS\ 58 1730,13 2/1/06 date on which the "Notice of Delinquent Assessment" (described in this Section) against the assessed Lot or Condominium was Recorded. (b) Prerequisite to Creating Lien. Before the Community Association may place a lien on an Owner's Lot or Condominium to collect a past due assessment, the Community Association shall send written notice ("Notice of Intent to Lien"), at least thirty (30) days prior to recording of such lien, to the Owner by certified mail which contains the following information: (i) the fee and penalty procedure of the Community Association, (ii) an itemized statement of the charges owed by the Owner, including the principal owed, any late charges, any interest, and the method of calculation, any attorneys' fees, iii) the collection practices used by the Community Association, (iv) a statement that the Community Association may recover the reasonable costs of collecting past due assessments, (v) a statement that the Owner has the right to inspect the Community Association's records, pursuant to California Corporations Code Section 8333, (vi) the following statement in 14 -point boldface type or all capital letters: "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION," (vii) a statement that the Owner shall not be liable to pay the charges, interest and costs of collection if it is determined the assessment was paid on time to the Community Association, and (viii) a statement that the Owner has the right to request a meeting with the Board, as provided by California Civil Code Section 1367.1(c) and Section 13.2.2(d) below. (c) Dispute by Owner. An Owner may dispute the Notice of Intent to Lien by submitting to the Board a written explanation of the reasons for the Owner's dispute. The Board shall respond in writing to the Owner within fifteen (15) days of the date of the postmark of the explanation, if the explanation is mailed within fifteen (15) days of the postmark of the Notice of Intent to Lien. (d) Owner's Right to Request Meeting. An Owner may submit a written request to meet with the Board to discuss a payment plan for the debt noticed in Section 13.2.2(6) above. The Community Association shall provide the Owner with the standards for payment plans, if any exist. The Board shall meet with the Owner in executive session within forty-five (45) days of the postmark of the request, if the request is mailed within fifteen (15) days of the date of the postmark of the Notice of Intent to Lien, unless there is no regularly scheduled Board meeting within that period, in which case the Board may designate a committee of one (1) or more members to meet with the Owner. (e) Notice of Delinquent Assessment. The lien becomes effective on Recordation by the Board or its authorized agent of a Notice of Delinquent Assessment ("Notice of Delinquent Assessment") as provided in Section 1367 or 1367.1 of the California Civil Code. The Notice of Delinquent Assessment must identify (i) the amount of the assessment and other authorized charges and interest, including the cost of preparing and Recording the Notice of Delinquent Assessment, (ii) the amount of collection costs incurred, including reasonable attorneys' fees, (iii) a sufficient description of the Lot or Condominium that has been assessed, (iv) the Community Association's name and address, (v) the name of the Owner of the Lot or Condominium that has been assessed, and (vi) if the lien is to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by the Community -63- 2544-332531CLP428\CCW 581730.13 211/06 Association to enforce the lien by sale. The Notice of Delinquent Assessment must be signed by an authorized Community Association officer or agent and must be mailed in the manner required by Section 2924b of the California Civil Code to the Owner of record of the Lot or Condominium no later than ten (10) calendar days after Recordation. The lien relates only to the individual Lot or Condominium against which the assessment was levied and not to the Covered Property as a whole. (f) Exceptions. Assessments described in Section 1367.1(e) of the California Civil Code and Section 2792.26(c) of the California Code of Regulations may not become a lien against an Owner's Lot or Condominium enforceable by the sale of the Lot or Condominium under Sections 2924, 2924(b) and 2924(c) of the California Civil Code. (g) Release of Lien. Within twenty-one (21) days of payment of the full amount claimed in the Notice of Delinquent Assessment, or other satisfaction thereof, the Board shall cause to be Recorded a Notice of Satisfaction and Release of Lien ("Notice of Release") stating the satisfaction and release of the amount claimed. The Community Association shall provide the Owner with a copy of the Notice of Release or any other notice that the full amount claimed in the Notice of Delinquent Assessment has been satisfied. The Board may require the Owner to pay a reasonable charge for preparing and Recording the Notice of Release. Any purchaser or encumbrancer who has acted in good faith and extended value may rely on the Notice of Release as conclusive evidence of the full satisfaction of the sums identified as owed in the Notice of Delinquent Assessment. 13.2.3 Enforcement of Liens. The Board shall enforce the collection of amounts due under this Master Declaration by one (1) or more of the alternative means of relief afforded by this Master Declaration. The lien on a Lot or Condominium may be enforced by foreclosure and sale of the Lot or Condominium after failure of the Owner to pay any assessment or installment thereof as provided in this Master Declaration. The sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers of sale in Deeds of Trust, or in any manner permitted by law. The Community Association (or any Owner if the Community Association refuses to act) may sue to foreclose the lien if (a) at least thirty (30) days have elapsed since the date on which the Notice of Delinquent Assessment was Recorded and (b) at least ten (10) days have elapsed since a copy of the Notice of Delinquent Assessment was mailed to the Owner affected thereby. The Community Association may bid on the Lot or Condominium at the foreclosure sale, and acquire and hold, lease, mortgage and convey the same. On completion of the foreclosure sale, the Community Association or the purchaser at the sale may file suit to secure occupancy of the defaulting Owner's Lot or Condominium, and the defaulting Owner shall be required to pay the reasonable rental value for the Lot or Condominium during any period of continued occupancy by the defaulting Owner or any persons claiming under the defaulting Owner. A suit to recover a money judgment for unpaid assessments may be brought without foreclosing or waiving any lien securing the same, but this provision or any suit to recover a money judgment does not affirm the adequacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section may include reasonable attorneys' fees as fixed by the court. 13.2.4 Priority of Assessment Lien. Deeds of Trust Recorded before a Notice of Delinquent Assessment have lien priority over the Notice of Delinquent Assessment. Sale or -64- 2544-332531CLP428\CCRS1581730.13 211/06 transfer of any Lot or Condominium does not affect the assessment lien, except that the sale or transfer of any Lot or Condominium pursuant to judicial or nonjudicial foreclosure of a first Deed of Trust extinguishes the lien of such assessments as to payments which became due before such sale or transfer. No sale or transfer relieves such Lot or Condominium from liens for any assessments thereafter becoming due. No Person who obtains title to a Lot or Condominium pursuant to a judicial or nonjudicial foreclosure of the first Deed of Trust is liable for the share of the Common Expenses or assessments chargeable to such Lot or Condominium which became due before the acquisition of title to the Lot or Condominium by such Person. Such unpaid share of Common Expenses or assessments is a Common Expense collectible from all Owners including such Person. The Community Association may take such action as is necessary to make any assessment lien subordinate to the interests of the Department Veterans Affairs of the State of California under its Cal -Vet loan contracts as if the Cal -Vet loan contracts were first Deeds of Trust of record. 13.2.5 Receivers. In addition to the foreclosure and other remedies granted to the Community Association in this Master Declaration, each Owner conveys to the Community Association all of such Owner's right, title and interest in all rents, issues and profits derived from and appurtenant to such Lot or Condominium, subject to the right, power and authority of the Community Association to collect and apply such rents, issues and profits to any delinquent assessments owed by such Owner, reserving to the Owner the right, prior to any default by the Owner in the payment of assessments, to collect and retain such rents, issues and profits as they may become due and payable. Upon any such default the Community Association may, upon the expiration of thirty (30) days following delivery to the Owner of the "Notice of Delinquent Assessment" described in this Master Declaration, either in person, by agent or by receiver to be appointed by a court, and without regard to the adequacy of any security for the indebtedness secured by the lien described in this Master Declaration, (a) enter in or upon and take possession of the Lot or Condominium or any part thereof, (b) in the Community Association's name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and (c) apply the same, less allowable expenses of operation, to any delinquencies of the Owner hereunder, and in such order as the Community Association may determine. The entering upon and taking possession of the Lot or Condominium, the collection of rents, issues and profits and the application thereof, shall not cure or waive any default or notice of default hereunder or invalidate any act done pursuant to such notice. 13.2.6 Alternative Dispute Resolution of Assessment Disputes. Disputes between an Owner and the Community Association regarding the assessments imposed by the Community Association may be submitted to alternative dispute resolution in accordance with Civil Code Sections 1363.810, et seq., and 1369.510, et seq., if such Owner pays in full (a) the amount of the assessment in dispute, (b) any late charges, (c) any interest, and (d) all fees and costs associated with the preparation and filing of a Notice of Delinquent Assessment (including mailing costs and attorneys' fees not to exceed the maximum amount allowed by law), and states by written notice that such amount is paid under protest, and the written notice is mailed by certified mail to the Community Association not more than thirty (30) days from the Recording of a Notice of Delinquent Assessment. Upon receipt of such written notice, the Community Association shall inform the Owner in writing that the dispute may be resolved through alternative dispute resolution as set forth in Civil Code Sections 1363.810, et seq., and 1369.510, et seq. -65- 2544-33253\CLP428\CORS\ 581730.13 2/1/06 The right of any Owner to utilize alternative dispute resolution under this Section may not be exercised more than two (2) times in any single calendar year, and not more than three times within any five (5) calendar years. Nothing in this Section shall preclude any Owner and the Community Association, upon mutual agreement, from entering into alternative dispute resolution in excess of the limits set forth in this Master Declaration. An Owner may request and be awarded through alternative dispute resolution reasonable interest to be paid by the Community Association in the total amount paid under items (a) through (d) above, if it is determined that the assessment levied by the Community Association was not correctly levied. 13.3 ENFORCEMENT OF BONDED OBLIGATIONS. If (a) the Association Property and Improvements in any Phase are not completed prior to the issuance of a Public Report for such Phase by the DRE, and (b) the Community Association is obligee under a bond or other arrangement ("Bond") required by the DRE to secure performance of Declarant's or a Neighborhood Builder's commitment to complete such Improvements, then the following provisions of this Section will be applicable: 13.3.1 Board Action. The Board shall consider and vote on the question of action by the Community Association to enforce the obligations under the Bond with respect to any such Improvement for which a Notice of Completion has not been fled within sixty (60) days after the completion date specified for that Improvement in the Planned Construction Statement appended to the Bond. If the Community Association has given an extension in writing for the completion of any Association Property Improvement, then the Board shall be directed to consider and vote on the aforesaid question if a Notice of Completion has not been filed within thirty (30) days after the expiration of the extension. 13.3.2 Member Action. A vote by written ballot of Members to override a decision by the Board not to enforce the obligations under the Bond or on the Board's failure to consider and vote on the question shall be held no fewer than thirty-five (35) nor more than forty-five (45) days after the Board receives a petition for such a vote signed by Members representing at least five percent (5%) of the Community Association's voting power. A vote of a majority of the Community Association's voting power composed of Members other than Declarant or the Neighborhood Builders to enforce the obligations under the Bond shall be deemed to be the decision of the Community Association, and the Board shall thereafter implement such decision by initiating and pursuing appropriate action. 13.4 DAMAGE TO PROPERTY DISPUTES. Not later than thirty (30) days prior to the filing of any civil action by the Community Association against Declarant or any Neighborhood Builder for alleged damage to Association Property or Maintenance Areas, alleged damage to a Home Lot or Condominium that the Community Association is obligated to maintain or repair, or alleged damage to a Home, Lot or Condominium that arises out of, or is integrally related, to damage to the Association Property, Maintenance Areas or a Home, Lot or Condominium that the Community Association is obligated to maintain or repair, the Board shall provide written notice to each Member who appears on the records of the Community Association at the time notice is given, specifying (a) that a meeting of Members will be held to discuss problems that may lead to the filing of a civil action, (b) the options, including civil actions, that are available to address the problems, and (c) the time and place of the meeting. If the Community Association has reason to believe that the applicable statute of limitations will -66- 2544-33253 \CLP428\CCRS1581730,13 2/1/06 expire before the Community Association files the civil action, the Community Association may give the foregoing notice not later than thirty (30) days after the filing of the action. 13.5 DISPUTE RESOLUTION. Any disputes between all or any of the Community Association, Owner(s), Declarant, any Neighborhood Builder, or any director, officer, partner, employee, contractor, design professional, consultant, subcontractor or agent of Declarant (collectively "Declarant Parties"), arising under this Master Declaration or relating to the Covered Property, shall be subject to this Section 13.5 and the following Sections 13.6, 13.7 and 13.8. 13.6 CONSTRUCTION DEFECT DISPUTES. 13.6.1 Notice of Construction Claims Statute. California Civil Code Section 895 et seq., as hereafter amended ("Construction Claims Statute"), delineates standards for how various components of residential dwelling units should be constructed and function, limits the time frames for bringing various claims against the builder to anywhere from one (1) year to ten (10) years (as listed in the Construction Claims Statute) from the close of escrow for the residential dwelling unit, imposes an obligation on all Owner's to follow Declarant's or any Neighborhood Builder's maintenance recommendations and schedules, or other applicable maintenance guidelines, and establishes a non -adversarial claims resolution procedure that must be followed by an Owner before the Owner can initiate an adversarial claim and proceed to judicial reference or binding arbitration, as described in Section 13.8 below. THE CONSTRUCTION CLAIMS STATUTE AFFECTS EACH OWNER'S LEGAL RIGHTS. OWNERS ARE ADVISED TO READ THE STATUTE CAREFULLY AND SEEK LEGAL ADVICE IF OWNER HAS ANY QUESTIONS REGARDING ITS AFFECT ON OWNER'S LEGAL RIGHTS. PURSUANT TO CALIFORNIA CIVIL CODE SECTION 914, DECLARANT AND NEIGHBORHOOD BUILDERS ARE PERMITTED TO ELECT TO USE ALTERNATE CONTRACTUAL NON -ADVERSARIAL PROCEDURES INSTEAD OF USING THE STATUTORY PRE -LITIGATION PROCEDURES PROVIDED IN THE CONSTRUCTION CLAIMS STATUTE. DECLARANT AND NEIGHBORHOOD BUILDERS HAVE ELECTED TO USE THEIR OWN CONTRACTUAL NON - ADVERSARIAL PROCEDURES AS PROVIDED BELOW. Notwithstanding the above election, a Neighborhood Builder may in a Supplemental Declaration or a Notice of Election affecting a Phase of Development being developed by such Neighborhood Builder, make an alternative election pursuant to Civil Code Section 914 only as to construction defect claims which do not concern Association Property and which are not directed to Declarant or Declarant's directors, officers, partners, employees, contractors, design professionals, consultants, subcontractors or agents. 13.6.2 Owners' Construction Defect Claims. Prior to the commencement of any legal proceeding by any Owner against Declarant or any Declarant Party based upon a claim for defects in the design or construction of any Home, Lot or Condominium, Association Property or any Improvements thereon, the Owner must first comply with the provisions of this Section. If at any time during the ten (10) year period following the Close of Escrow for the original Owner's purchase of such Owner's Home from Declarant or a Neighborhood Builder, as such period may be extended by any applicable tolling statute or provision, or any shorter period as provided by applicable law, such Owner believes Declarant or a Neighborhood Builder has -67- 2544-33253\CLP428\CCM 581730.13 2/1/06 violated any of the standards set forth in the Construction Claims Statute ("Claimed Defect"), which such Owner feels may be the responsibility of Declarant or a Neighborhood Builder, such Owner shall promptly notify Declarant at Lennar Corporation, 700 NW 107 Avenue, 4th Floor, Miami, FL 33172, attention General Counsel, in writing, with a copy thereof to MOFFETT MEADOWS PARTNERS, LLC, c/o Lennar Homes of California, Inc., Attention: Western Region Corporate Legal Counsel, 25 Enterprise, Aliso Viejo, CA 92656, and shall promptly notify the Neighborhood Builder at such other address as has been provided to the Owner pursuant to the Construction Claims Statute. Such notice shall be deemed a notice of intention to commence a legal proceeding and shall include: (a) a detailed description of the Claimed Defect, (b) the date upon which the Claimed Defect was first discovered, and (c) dates and times when Owner or Owner's agent will be available during ordinary business hours, so that service calls or inspections by Declarant or a Neighborhood Builder can be scheduled. Declarant and any Neighborhood Builder shall, in their sole discretion, be entitled to inspect the applicable property regarding the reported Claimed Defect and, within their sole discretion, shall be entitled to cure such Claimed Defect. Nothing contained in this Article shall obligate Declarant and any Neighborhood Builder to perform any such inspection or repair, nor shall this Section be deemed to increase Declarant's and any Neighborhood Builder's legal obligations to Owner. Owner's written notice delivered to Declarant and any Neighborhood Builder shall be a condition precedent to Owner's right to institute any legal proceeding and to proceed to judicial reference or binding arbitration as set forth Section 13.8 below, and Owner shall not pursue any other remedies available to it, at law or otherwise, including the filing of any legal proceeding or action, until Declarant and any Neighborhood Builder has had the reasonable opportunity to inspect and cure the Claimed Defect_ During the term of any written limited warranty ("Limited Warranty") provided to the original Owner of the Home by Declarant or a Neighborhood Builder, any conflict between the provisions of this Section and the Limited Warranty shall be resolved in favor of the Limited Warranty. Declarant and Neighborhood Builders shall not be liable for any general, special or consequential damage, cost, diminution in value or other loss which Owner may suffer as a result of any Claimed Defect in the Home, which reasonably might have been avoided had Owner given Declarant and Neighborhood Builder the notice and opportunity to cure as described above within a reasonable time of discovering the Claimed Defect. Except as otherwise provided in the written Limited Warranty, if any, provided to Owner, nothing contained herein shall establish any contractual duty or obligation on the part of Declarant or a Neighborhood Builder to repair, replace or cure any Claimed Defect. If an Owner sells or otherwise transfers ownership of such Owner's Home to any other person during such ten (10) year period, as such period may be extended by any applicable tolling statute or provision, Owner covenants and agrees to give such other person written notice of these procedures by personal delivery. Owner's continuing obligation under this covenant shall be binding upon Owner and Owner's successors and assigns. (a) Owner Document Obligations. All Owners, who originally purchased a Home from Declarant or a Neighborhood Builder, were provided copies of certain documents through escrow in conjunction with the purchase of the Home, including copies of this Master Declaration, maintenance recommendations from Declarant or a Neighborhood Builder, maintenance recommendations for manufactured products or appliances included with the Home, a limited warranty, claim forms, and other documentation relating to the Construction Claims Statute. All Owners are required by the Construction Claims Statute to retain these -68- 2544-332531CLP428\CCRS1581730.13 211/06 documents and provide copies of such documents to Owner's successors in interest upon the sale or transfer of such Owner's Home. (b) Owner Maintenance Obligations. All Owners are obligated by Section 907 of the Construction Claims Statute to follow Declarant's or a Neighborhood Builder's maintenance recommendations and schedules, including the maintenance recommendations and schedules for manufactured products and appliances provided with the Lot or Condominium, as well as all commonly accepted maintenance practices (collectively, "Maintenance Recommendations"). Pursuant to Section 945.5 of the Construction Claims Statute, failure to follow the Maintenance Recommendations may reduce or preclude Owner's right to recover damages relating to such Owner's Lot or Condominium, which could have been prevented or mitigated had the Maintenance Recommendations been followed. 13.6.3 Community Association's Construction Defect Claims. DECLARANT ELECTS TO USE THE ALTERNATE CONTRACTUAL NON - ADVERSARIAL PROCEDURES CONTAINED IN CIVIL CODE SECTION 1375, EXCEPT AS OTHERWISE PROVIDED HEREIN, RATHER THAN THE STATUTORY PRE- LITIGATION PROCEDURES OF THE CONSTRUCTION CLAIMS STATUTE, WITH RESPECT TO CLAIMS BY THE COMMUNITY ASSOCIATION. Prior to the commencement of any legal proceeding by the Community Association against Declarant or any Declarant Party based upon a claim for defects in the design or construction of the, Association Property, or any Improvements thereon, or any other area within the Covered Property which the Community Association has standing to make a claim for defects in design or construction, the Community Association must first comply with all of the applicable requirements of Civil Code Section 1375, as the same may be amended from time to time, or any successor statute thereto. In addition to the requirements of said Section 1375, Declarant and any Neighborhood Builder shall have an absolute right, but not an obligation, to repair any alleged defect or condition claimed by the Community Association to be in violation of the standards set forth in the Construction Claims Statute, within a reasonable period of time after completion of the inspection and testing provided for in such Section and prior to submission of Neighborhood Builder's settlement offer under such Section. If the parties to such dispute are unable to resolve their dispute in accordance with the procedures established under Civil Code Section 1375, as the same may be amended from time to time, or any successor statute, the dispute shall be resolved in accordance with the judicial reference or binding arbitration provisions of Section 13.8 below and the parties to the dispute shall each be responsible for their own attorneys' fees. The Community Association shall have the power to initiate claims against a Declarant Party for violations of the Construction Claims Statute, as soon as the Community Association has one (1) Class A Member other than Declarant. Upon the written request of any Class A Member to the Board of Directors, the Board shall establish a committee consisting exclusively of Class A Member(s), other than Declarant's or any Neighborhood Builder's agents or employees to investigate claimed violations of the standards of the Construction Claims Statute. Upon the committee's determination that cause exists to initiate a claim, the decision of whether to initiate a claim shall be made by a vote of the Class A Members, other than Declarant's or any Neighborhood Builder's agents or employees. A majority of the votes cast shall be deemed to be the decision of the Community Association, which the Board shall carry out by submitting the necessary claim to Declarant or the appropriate Declarant Party; provided, however, that the vote is either conducted at a properly convened meeting with the requisite quorum in accordance with -69- 2544-33253kUP42MCCRS\ 581730.13 VIM the provisions of the Bylaws relating to meetings and voting, or the vote was conducted without a meeting in accordance with California Corporations Code Section 7513, as authorized by the Bylaws. 13.7 OTHER DISPUTES. Any other disputes arising under this Master Declaration, or otherwise, between the Community Association or any Owner and Declarant or any Declarant Party (except for any action taken by the Community Association against Declarant or a Neighborhood Builder for delinquent assessments, any action involving enforcement of any completion bonds or any action described in Civil Code Section 1369.520) shall be resolved in accordance with the alternate dispute resolution provisions of Section 13.8 below. The dispute resolution procedure in Section 13.8, as it applies solely to disputes under this Section 13.7, shall be deemed to satisfy the alternative dispute requirements of Civil Code Section 1363.810, et seq. and 1369.510, et seq., or any successor statute, as applicable. 13.8 ALTERNATE DISPUTE RESOLUTION PROCEDURES. 13.8.1 Judicial Reference. Subject to compliance with the provisions of Sections 13.5 through 13.7 above, to the extent applicable, it is the intention of Declarant and Neighborhood Builders that, except as otherwise expressly provided herein, any and all disputes upon which litigation is filed, shall be resolved by judicial reference under California law. Accordingly, except as otherwise expressly provided in this Master Declaration (such as the collection of delinquent assessments), any dispute between the Community Association or any Owner(s) and the Declarant or any Neighborhood Builder, or between the Community Association and any Owner with respect to the interpretation of any of the provisions of this Master Declaration, or with respect to any alleged breach hereof, or with respect to any other claim related to the Association Property, including, without limitation, any alleged latent or patent construction or design defect in the Association Property, or any part thereof, any alleged violation of the standards set forth in the Construction Claims Statute, any judicial determination to be made under California Civil Code Section 1375(h), or for alleged damage to the Association Property, alleged damage to Homes, Lots or Condominiums that arises out of, or is integrally related to the Association Property, or Homes, Lots or Condominiums that the Community Association is obligated to maintain or repair, shall be heard by a referee pursuant to the provisions of California Code of Civil Procedure Sections 638(a) and 641 through 645.1. Notwithstanding any other provision of this Master Declaration, this Article shall not be amended without the written consent of Declarant. In the event litigation is filed based upon any such dispute, the following shall apply: (a) The proceeding shall be brought and held in the County, unless the parties agree to an alternative venue. (b) The parties shall use the procedures adopted by JAMS for judicial reference and selection of a referee (or any other entity offering judicial reference dispute resolution procedures as may be mutually acceptable to the parties). (c) The referee must be a retired judge or a licensed attorney with substantial experience in relevant real estate matters. -70- 2544-332531CLP428\CCRS1581730.13 2/]/06 IF_ (d) The parties to the litigation shall agree upon a single referee who shall have the power to try any and all of the issues raised, whether of fact or of law, which may be pertinent to the matters in dispute, and to issue a statement of decision thereon to the court. Any dispute regarding the selection of the referee shall be resolved by JAMS or the entity providing the reference services, or, if no entity is involved, by the court with appropriate jurisdiction in accordance with California Code of Civil Procedure Sections 638 and 640. (e) The referee shall be authorized to provide all remedies available in law or equity appropriate under the circumstances of the controversy. (f) The referee may require one (1) or more pre -hearing conferences. (g) The parties shall be entitled to discovery, and the referee shall oversee discovery and may enforce all discovery orders in the same manner as any trial court judge. (h) A stenographic record of the trial shall be made. (i) The referee's statement of decision shall contain findings of fact and conclusions of law to the extent applicable. 0) The referee shall have the authority to rule on all post -hearing motions in the same manner as a trial judge. (k) The parties shall promptly and diligently cooperate with each other and the referee and perform such acts, as may be necessary for an expeditious resolution of the dispute. (1) Except as otherwise agreed by the parties or as required by applicable law, neither the Community Association nor any Owner shall be required to pay any fee of the judicial reference proceeding except to the extent of the cost that would be imposed upon the Community Association or Owner if the dispute had been resolved as a dispute in court. The referee may not award against the Community Association or any Owner any expenses in excess of those that would be recoverable as costs if the dispute had been litigated to final judgment in court. Each party to the judicial reference proceeding shall bear its own attorney fees and costs in connection with such proceeding. (m) The statement of decision of the referee upon all of the issues considered by the referee shall be binding upon the parties, and upon filing of the statement of decision with the clerk of the court, or with the judge where there is no clerk, judgment may be entered thereon. The decision of the referee shall be appealable as if rendered by the court. This provision shall in no way be construed to limit any valid cause of action that may be brought by any of the parties. DECLARANT, NEIGHBORHOOD BUILDERS AND OWNERS, BY ACCEPTING A DEED TO A HOME WITHIN THE COVERED PROPERTY, ACKNOWLEDGE AND ACCEPT THAT THEY ARE WAIVING THEIR RIGHT TO A JURY TRIAL. -71- 2544-33253\CLP428\CCRS\ 581730.13 2/1106 13.8.2 Binding Arbitration. If for any reason the judicial reference procedures in Section 13.8.1 are legally unavailable at the time a dispute would otherwise be referred to judicial reference, then such dispute shall be submitted to binding arbitration under the rules and procedures in this Section. Any dispute submitted to binding arbitration shall be administered by the AAA in accordance with the AAA's Construction Industry Arbitration Rules in effect on the date of the submission. If such entity is not then in existence, then the dispute shall be submitted to JAMS, and administered in accordance with the Comprehensive Arbitration Rules of JAMS. Any judgment upon the award rendered by the arbitrator may be entered in and enforced by any court having jurisdiction over such dispute. If the claimed amount exceeds $250,000.00 or includes a demand for punitive damages, the dispute shall be heard and determined by three arbitrators. Otherwise, unless mutually agreed to by the parties, there shall be one arbitrator. Arbitrators shall have expertise in the area(s) of dispute, which may include legal expertise if legal issues are involved. All decisions concerning the arbitrability of any dispute shall be decided by the arbitrator(s). At the request of any party, the award of the arbitrator(s) shall be accompanied by detailed written findings of fact and conclusions of law. Except as may be required by law or for confirmation of an award, neither party nor the arbitrator(s) may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties. 13.8.3 Interpretation. The binding arbitration procedures contained in Section 13.8.2 are implemented for the Covered Property in accordance with the philosophy and intent of the Federal Arbitration Act (9 U.S.C. Section 1 et seq.) ("FAA"), which is designed to encourage the use of alternative methods of dispute resolution and avoid costly and potentially lengthy traditional court proceedings. The binding arbitration procedures in said Section are to be interpreted and enforced as authorized by the FAA. Parties interpreting this Section shall follow the federal court rulings, which provide among other things that: (a) the FAA is a congressional declaration of liberal federal policy favoring alternate dispute resolution notwithstanding substantive or procedural state policies or laws to the contrary, (b) alternate dispute resolution agreements are to be rigorously enforced by state courts; and (c) the scope of issues subject to alternate dispute resolution are to be interpreted in favor of alternate dispute resolution. 13.9 DISPUTES RELATING TO ENFORCEMENT OF COMMUNITY ASSOCIATION GOVERNING DOCUMENTS. In the event of a dispute between the Community Association and an Owner, or between an Owner and another Owner, relating to the enforcement of the governing documents of the Community Association, the parties shall comply with the provisions of California Civil Code Section 1354(b) through 0), prior to filing of any civil action. 13.10 CIVIL CODE SECTIONS 1368.4, 1375, 1375.05 AND 1375.1. Nothing contained herein shall be deemed a waiver or limitation of the provisions of California Civil Code Sections 1368.4, 1375, 1375.05, or 1375.1. 13.11 USE OF DAMAGE AWARD AMOUNTS. Any and all amounts awarded to a claimant on account of a claimed construction or design defect in the Association Community, or damage suffered as a result thereof, shall be expended by such claimant for the attorney fees and costs of the proceeding and the repair, rehabilitation, or remediation of the claimed defect or damage. -72- 2544-33253%CLP4281CCRS1581730,13 2/1106 13.12 MLSCELLANEOUS. Nothing in Sections 13.4 through 13.12 shall constitute a waiver of any of the benefits of statutes of limitations or equitable defenses of any party. Furthermore, notwithstanding any other provision of this Master Declaration, Sections 13.4 through 13.12 may not be amended without the prior written consent of the Declarant. 13.13 ENFORCEMENT BY CITY. 13.13.1 Enforcement of Maintenance Obligation. The City shall have the right, but not the obligation, to enforce the performance of any Community Association obligations set forth herein and in the City's conditions of approval for the Covered Property contained in City Council Resolution No. 05-40, passed and adopted at a regular meeting of the Tustin City Council held on February 22, 2005, by notifying the Community Association in writing of the need to perform such maintenance. The Community Association shall promptly maintain the subject Improvements. Such maintenance shall be commenced by the Community Association within thirty (30) days after receipt by the Community Association of the City's notice, and thereafter pursued to completion as soon as reasonably possible 13.13.2 Failure to Perform. In the event that the Community Association does not commence the maintenance described in the City notice within the time permitted, or diligently pursue the work to completion, the City may undertake the necessary maintenance or other reasonable actions to ensure compliance. The City may then impose an assessment upon the Community Association in an amount sufficient to cover the actual costs of City maintenance and costs of other City actions to ensure compliance, including reasonable attorneys' fees, and other reasonable expenses. 13.13.3 Assessment and Lien. Declarant, for each Lot it owns, covenants to pay, and each Owner, by acceptance of a deed to a Lot, whether or not it shall be so expressed in such deed, is deemed to covenant to pay, to the City any assessment imposed pursuant to this Section. All such assessments, together with interest, costs and reasonable attorneys' fees for the collection thereof, are a charge and continuing lien upon the Lot against which assessment is made. In addition to the lien upon the Lot, each such assessment, together with interest, costs and reasonable attorneys' fees, is also the personal obligation of the Person who was the Owner of the Lot at the time when the assessment was due. The personal obligation for delinquent assessments, but not the lien, shall not pass to any new Owner ("Purchaser") unless expressly assumed by the Purchaser. 13.13.4 Assessment Payment. Any assessment pursuant to this Section is delinquent if not paid within thirty (30) days of the due date established by the City. Any assessment not paid within forty-five (45) days after the due date, plus all reasonable costs of collection (including attorneys' fees), bears interest at the legal rate commencing thirty (30) days from the date the assessment becomes due until paid. The City may bring an action at law against the Owner personally obligated to pay the same, or foreclose the lien against the Lot. The city need not accept any tender of a partial payment of an assessment and all costs and attorneys' fees attributable thereto, and any acceptance of any such tender does not waive the City's right to demand and receive full payment thereafter. -73- 254433253\CLP428\CCAS\ 581730.13 2/1/06 13.13.5 Enforcement of Lien. The lien created by this Section shall be enforced and perfected pursuant to Civil Code Sections 1366, et seq., as they now exist or may hereafter be amended. ARTICLE XIV GENERAL PROVISIONS Communities are dynamic and constantly evolving as circumstances, technology, needs, desires and laws change, and as the surrounding area changes. The Covered Property and the Community Association Governing Documents must be able to adapt to these changes while protecting the things that make the Covered Property unique. This Article includes provisions that will allow the Covered Property to adapt to different changes. 14.1 TERM, This Master Declaration continues in full force unless a Declaration of Termination satisfying the requirements of an amendment to the Master Declaration as set forth in Section 14.3 is Recorded. 14.2 INTERPRETATION. 14.2.1 General Rules. The Community Association Governing Documents shall be liberally construed to effectuate the goal of creating a uniform plan for the development of a master planned community and for the maintenance of the Association Property and Maintenance Areas. Any violation of the Community Association Governing Documents is a nuisance. The Community Association Governing Documents shall be interpreted so as to be consistent with applicable laws and regulations, including ordinances and regulations of the appropriate Local Governmental Agencies. The Article, Section and paragraph headings are inserted for convenience only, and may not be considered or referred to in resolving questions of interpretation or construction. As used in the Community Association Governing Documents, the singular includes the plural and the plural the singular; and the masculine, feminine and neuter each include the other, unless the context dictates otherwise. Except as otherwise expressly provided, any reference to time for performance of obligations or to elapsed time means consecutive calendar days, months, or years, as applicable. Exhibits "CP," "AP," "PM," "MA," "WM," "OS," "SD- `PC," "PGI" and "TC" are incorporated in this Master Declaration by this reference. All references made in the Community Association Governing Documents to statutes are to those statutes as amended or restated or to subsequently enacted replacement statutes. Unless otherwise indicated, reference to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of the document containing the reference. 14.2.2 Intent of Declarant. Declarant intends that the Covered Property be developed for single-family residential, and other uses defined in Supplemental Declarations, all consistent with this Master Declaration and any applicable Supplemental Declarations. In addition, Declarant, at its option, may designate areas for maintenance, recreational, institutional or other purposes. 14.2.3 Statements in Italics. The portions of the Community Association Governing Documents printed in italics are provided as simplified, general explanations of the purposes of the Articles, Sections or paragraphs of the Community Association Governing -74- 2544-332531CLP42&CCR51581730.13 2/1/06 Documents and the scheme of governance for the Covered Property. The statements in italics are provided for convenience and may not be considered in resolving questions of interpretation or construction of the Community Association Governing Documents. 14.2.4 Relationship to Supplemental Declarations. As each Phase of the Residential Area or other area in the Covered Property is developed, Declarant or Declarant and a Neighborhood Builder may Record at least one (1) Supplemental Declaration which shall designate the use classifications in the areas affected and which may supplement this Master Declaration with such additional covenants, conditions, restrictions and land uses as Declarant may deem appropriate for the real property being annexed ("Annexed Territory"). The provisions of any Supplemental Declaration may impose such additional, different or more restrictive conditions, covenants, restrictions, land uses and limits as Declarant may deem advisable, taking into account the particular requirements of each Phase. If there is any conflict between any Supplemental Declaration and the Master Declaration, the Supplemental Declaration shall control with respect to the Annexed Territory described in such Supplemental Declaration. If there is any conflict between any Neighborhood Declaration or the Master Declaration or applicable Supplemental Declaration, the Master Declaration and applicable Supplemental Declaration shall control, although such documents shall be construed to be consistent with one another to the extent possible. A Neighborhood Declaration may, but need not, provide for the establishment of a Neighborhood Association, to be composed of Owners of Homes located within the jurisdiction of such Neighborhood Declaration. 14.2.5 Relationship to Other Community Association Governing Documents. If there are conflicts or inconsistencies between this Master Declaration and the Articles, Bylaws, Design Guidelines or Community Guidelines then this Master Declaration shall prevail. 14.2.6 Severability. The provisions of the Community Association Governing Documents are independent and severable. A determination of invalidity or partial invalidity or unenforceability of any one provision or portion hereof by a court of competent jurisdiction does not affect the validity or enforceability of any other provision hereof. 14.3 TERMINATION AND AMENDMENT. Notice of the subject matter of a proposed amendment to, or termination of, this Master Declaration in reasonably detailed form shall be included in the notice of any meeting or election of the Community Association at which a proposed amendment or termination is to be considered. 14.3.1 Member Approval. The following amendments to this Master Declaration must be approved by the Members: Community Association. (a) Any amendment terminating this Master Declaration or the J (b) Amendments to Sections 4.3.10, 4.5, 6.3, 9.3, 13.1.4, 13.3, 13.4 j+ and 14.3.1, and to Articles XVI and XVII. 14.3.2 Beneficiary Approval. In addition to the required notice and consent of Members and Declarant, the Beneficiaries of fifty-one percent (511/o) of the first Deeds of -75- 2544332531CLP4281CCRS\ 581730.13 2/1/06 Trust on all the Homes who have requested the Community Association to notify them of proposed action requiring the consent of a specified percentage of Beneficiaries of first Deeds of Trust must approve any of the following amendments to the Community Association Governing Documents: (a) Any amendment which affects or purports to affect the validity or priority of Deeds of Trust or the rights or protection granted to Beneficiaries, insurers and guarantors of first Deeds of Trust in this Master Declaration. (b) Any amendment which would or could result in a Deed of Trust being canceled by forfeiture. (c) Any amendment relating to the insurance provisions as set out in Article XI hereof, or to the application of insurance proceeds as set out in Article X hereof, or to the disposition of any money received in any taking under condemnation proceedings. (d) Any amendment which would subject any Owner to a right of first refusal or other such restriction if such Home is proposed to be sold, transferred or otherwise conveyed. 14.3.3 Notice to Beneficiaries. Each Beneficiary of a first Deed of Trust on a Lot or Condominium in the Covered Property which is sent written notice of a proposed amendment or termination of this Master Declaration by certified or registered mail with a return receipt requested shall be deemed to have approved the amendment or termination if the Beneficiary fails to submit a response to the notice within thirty (30) days after the date of the mailing receipt. 14.3.4 Certification of Amendments. A copy of each amendment shall be certified by at least two (2) Community Association officers, and the amendment will be effective when a Certificate of Amendment is Recorded. The Certificate, signed and sworn to by at least two (2) officers of the Community Association that the requisite number of Owners have either voted for or consented in writing to any termination or amendment adopted as provided above, when Recorded, is conclusive evidence of that fact. The Community Association shall keep in its files the record of all such votes or written consents for at least four (4) years. The certificate reflecting any termination or amendment which requires the written consent of any of the Beneficiaries of first Deeds of Trust must include a certification that the requisite approval of such Beneficiary has been obtained. The certificate reflecting any termination or amendment which requires the written consent of Declarant or is subject to Declarant's veto right must include Declarant's signature. 14.3.5 Unilateral Amendment By Declarant. Notwithstanding any other provisions of this Section 14.3, at any time prior to the first Close of Escrow in the Covered Property, Declarant may, with the City's written consent, unilaterally amend or terminate this Master Declaration by Recording a written instrument which effects the amendment or termination and is signed and acknowledged by Declarant and the Neighborhood Builder who owns a portion of the Covered Property. Notwithstanding any other provisions of this Section 14.3, Declarant (for so long as Declarant or a Neighborhood Builder owns any portion of the -76- 2544-33253\CLP428\CORS\581730.13 2/1/06 Covered Property) may unilaterally amend this Master Declaration or a Supplemental Declaration by Recording a written instrument signed by Declarant in order to (a) conform this Master Declaration or a Supplemental Declaration to applicable law, including supplementing this Master Declaration or a Supplemental Declaration with provisions which pertain to the rights and obligations of Declarant, the Community Association or Owners arising under Division 2, Part 2, Title 7 (commencing with Section 895) of the California Civil Code, (b) conform this Master Declaration or a Supplemental Declaration to the requirements of VA, FHA, DRE, Fannie Mae, Ginnie Mae, Freddie Mac or the City, (c) correct typographical errors, (d) change any exhibit to this Master Declaration or a Supplemental Declaration or a portion of an exhibit, depicting property that is not part of an area for which assessments have commenced, and (e) change any exhibit to this Master Declaration or a Supplemental Declaration or portion of an exhibit to conform to as -built conditions. 14.3.6 Amendment By the Board. Notwithstanding any other provisions of this Section 14.3, the Board may amend this Master Declaration by Recording a written instrument signed by two officers of the Community Association certifying that the Board approved the amendment in order to (a) conform this Master Declaration to applicable law, (b) correct typographical errors, and (c) change any exhibit to this Master Declaration or portion of an exhibit to conform to as -built conditions. So long as Declarant or a Neighborhood Builder owns any portion of the Covered Property, the Board must obtain Declarant's or Neighborhood Builder's consent to any amendment the Board approves pursuant to this Section. 14.3.7 Amendments Requiring City Approval. Notwithstanding any other provisions of this Section 14.3, no amendment to alter, modify, terminate or change the Community Association's obligation to maintain the Association Property or Maintenance Areas (as set forth in Section 9.2 above) or any other provision of this Master Declaration in which the City has an interest (including the City's enforcement rights under this Master Declaration), shall be permitted without the prior written approval of the City of Tustin Community Development Department. 14.4 NO PUBLIC RIGHT OR DEDICATION. Nothing contained in this Master Declaration constitutes a gift or dedication of all or any part of the Covered Property to the public, or for any public use. 14.5 CONSTRUCTIVE NOTICE AND ACCEPTANCE. Every Person who owns, occupies or acquires any right, title, estate or interest in or to any Lot or Condominium or other portion of the Covered Property does consent and agree, and shall be conclusively deemed to have consented and agreed, to every limit, restriction, easement, reservation, condition and covenant contained in this Master Declaration, whether or not any reference to the Community Association Governing Documents is contained in the instrument by which such Person acquired an interest in the Covered Property. 14.6 NOTICES. Except as otherwise provided in this Master Declaration, notice to be given to an Owner must be in writing and may be delivered to the Owner or Mortgagee personally or by any system or technology designed to record and communicate messages, facsimile, electronic mail, or other electronic means. Delivery of such notice to one (1) or more co-owners of a Lot or Condominium, to any general partner of a partnership or to a member of a -77- 2544-332531CLP428\CCRB\ 581730.13 2/1/06 limited liability company, constitutes delivery to all co-owners, the partnership or the limited liability company. Delivery of such notice to any officer or agent for the service of process on a corporation constitutes delivery to the corporation. Alternatively, notice may be delivered by regular United States mail, postage prepaid, addressed to the Owner or Mortgagee at the most recent address furnished by such Owner or Mortgagee to the Community Association. If an Owner does not furnish an address, notice may be sent to the street address of an Owner's Lot or Condominium. Such notice is deemed delivered three (3) business days after the time of such mailing, except for notice of a meeting of Members or of the Board, in which case the notice provisions of the Bylaws control. Any notice to be given to the Community Association may be delivered personally to any member of the Board, or sent by United States mail, postage prepaid, addressed to the Community Association at such address as may be fixed from time to time and circulated to all Owners or sent by any system or technology designed to record and communicate messages, facsimile, electronic mail, or other electronic means to such address or telephone number as the Board may establish. 14.7 ADDITIONAL PROVISIONS. Notwithstanding the provisions contained in the Community Association Governing Documents, the Community Association and the Owners should be aware that there may be provisions of various laws, including the Davis -Stirling Common Interest Development Act codified at Sections 1350 et seq. of the California Civil Code and the federal Fair Housing Act codified at Title 42 United States Code, Sections 3601 et seq., which may supplement or override the Community Association Governing Documents. Declarant and the Neighborhood Builders make no representations or warranties regarding the future enforceability of the Community Association Governing Documents. 14.8 MERGERS OR CONSOLIDATIONS. Upon a merger or consolidation of the Community Association with another association, its properties, rights and obligations may, by operation of law, be transferred to another surviving or consolidated association or, alternatively, properties, rights and obligations of another association may, by operation of law, be added to the properties, rights and obligations of the Community Association as a surviving corporation pursuant to a merger. The surviving or consolidated association may administer and enforce the covenants, conditions and restrictions established by the Community Association Governing Document, together with the covenants and restrictions established upon any other property, as one (1) plan. ARTICLE XV LAND CLASSIFICATIONS The Covered Property is composed of many different types of properties. Each Supplemental Declaration shall describe the different classfications of the Covered Property and land in the Covered Property that is encumbered by such Supplemental Declaration. These classifications are used to establish use restrictions and various rights and obligations of the Owners of the different types of property in the Covered Property. The Covered Property, including each portion of Annexed Territory described in a Supplemental Declaration, shall be designated according to one or more of the following land classifications: (a) Residential Area; (b) Phase of Development; (c) Association Property; -78- 2544-33253\CLP428\CCAS\ 581730.13 2/1/06 (d) Maintenance Areas; and (e) Neighborhood Property. The Declarant has the right to create other area designations in Supplemental Declarations, ARTICLE XVI ANNEXATION OF ADDITIONAL PROPERTY The Community Association is given the power to add additional property to the property subject to this Master Declaration. Additional real property may be annexed to the Covered Property and such additional real property may become subject to this Master Declaration by the following method.• 16.1 ANNEXED TERRITORY. Additional real property may be annexed to the Covered Property and brought within the general plan of this Master Declaration upon the approval by Members holding at least two-thirds (2/3) of the voting power of the Community Association and by Recording a Supplemental Declaration encumbering the real property annexed thereby ("Annexed Territory"). 16.2 SUPPLEMENTAL DECLARATION CONTENT. Each Supplemental Declaration annexing real property to the Covered Property shall contain at least the following provisions: 16.2.1 Master Declaration Reference. A reference to this Master Declaration, which reference shall state the date of Recordation hereof and the Instrument number or other relevant Recording data of the County Recorder's office. 16.2.2 Extension of Comprehensive Plan. A statement that the provisions of this Master Declaration shall apply to the Annexed Territory as set forth therein. The Community Association shall commence maintaining any Association Property in any Annexed Territory containing only Association Property upon its completion and conveyance to the Community Association. 16.2.3 Description/Phases of Development. A description of the Annexed Territory, including any Association Property. A Supplemental Declaration may cover one (1) or more Phases of Development. 16.2.4 Land Classifications. The land classifications of the Annexed Territory, as required by Article XV. The Supplemental Declaration may create new land classifications, areas of the Association Property reserved for the exclusive use of Owners, or areas of individually owned Lots or Condominiums to be maintained by the Community Association. 16.3 APPROVAL OF ANNEXATIONS. For any annexation of property to the Covered Property, each Supplemental Declaration must be signed by the Record owner of the Annexed Territory and by an officer of the Community Association, certifying that the approval of the requisite percentage of Members has been obtained. -79- 2544-332531CLP428\CCRS\ 581730.13 2/1/06 16.4 DEANNEXATION AND AMENDMENT. 16.4.1 By Declarant. Declarant may unilaterally amend a Supplemental Declaration as it applies to a Phase or delete all or a portion of a Phase from coverage of this Master Declaration and the jurisdiction of the Community Association, so long as Declarant is the Owner of all of such Phase, and provided that (a) a Notice of Deletion or an amendment to the Supplemental Declaration, as applicable, is Recorded in the same manner as the applicable Supplemental Declaration was Recorded, (b) no Class A or Class B vote has been exercised with respect to any portion of such Phase, (c) Common Assessments have not yet commenced with respect to any portion of such Phase, (d) there has been no Close of Escrow for the sale of any Lot or Condominium in such Phase to a member of the home buying public, and (e) the Community Association has not made any expenditures or incurred any obligations with respect to any portion of such Phase. 16.4.2 By Neighborhood Builder. Neighborhood Builders may amend a Supplemental Declaration or delete all or any portion of a Phase fromcoverage of this Master Declaration and the jurisdiction of the Community Association, so long as such Neighborhood Builders or Declarant and such Neighborhood Builders together are the Owners of all of such Phase and provided further, that all requirements of items (a) through (e) set forth in Section 16.4.1 above have been satisfied, and Declarant has consented in writing to such amendment or deletion by executing the appropriate Notice of Deletion or amendment to the Supplemental Declaration, as applicable. 16.5 RIGHTS OF ANNEXED TERRITORY MEMBERS. Upon the Recording of a Supplemental Declaration containing the provisions as set forth in this Section, all provisions contained in this Master Declaration will apply to the Annexed Territory in the same manner as if it were originally covered by this Master Declaration, subject to the provisions of the applicable Supplemental Declaration. Thereafter, the rights, powers and responsibilities of the parties to this Master Declaration with respect to the Annexed Territory will be the same as with respect to the property originally covered by this Master Declaration, and the rights, powers and responsibilities of the Owners, lessees and Residents of Lots and Condominiums in the Annexed Territory, as well as within the property originally subject to this Master Declaration, will be the same as if the Annexed Territorywere originally covered by this Master Declaration, subject to such restrictions as may be imposed in the Supplemental Declaration. Any Supplemental Declaration may contain such additions and modifications of the covenants, conditions, restrictions, reservation of easements and equitable servitudes contained in this Master Declaration as may be necessary to reflect the different character, if any, of the Annexed Territory, and as are consistent with the general plan of this Master Declaration. 16.6 AUTOMATIC ANNEXATION OF LIFOC PROPERTY. As of the date of recordation of this Master Declaration, certain areas designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W' (collectively, the "LIFOC Property I are owned by the United States of America (the "U.S. Government's, which is responsible for performing remediation work on the LIFOC Property. Immediately upon transfer of fee title interest in the LIFOC Property to Declarant, notwithstanding anything to the contrary contained in this Master Declaration or this Article XVI, the LIFOC Property will be deemed automatically annexed to -80- 2544-33253\CL.P4281CCRS1581730.13 2/1/06 the Covered Property. Declarant will record an instrument reflecting the fact that the LIFOC Property has been annexed to the Covered Property and will provide the City with a copy of such recorded instrument. ARTICLE XVII DECLARANT AND NEIGHBORHOOD BUILDER RIGHTS AND EXEMPTIONS Declarant reserves various rights in this Article to facilitate the smooth, orderly development of the Covered Property and to accommodate changes in the development plan that inevitably occur as a community the size of the Covered Property grows and matures. 17.1 INTEREST OF DECLARANT. Declarant intends to develop the Covered Property into a master planned community. Declarant, in cooperation with the City, has created a comprehensive plan for the development of the Covered Property, which includes modern master -planning objectives which have been formulated for the common good in the community. Declarant, the Neighborhood Builders, or their successors or assigns intend, but are not obligated, to construct Homes and develop all of the Lots in the Covered Property. The completion of that work and sale, resale, rental and other disposal of Lots is essential to the establishment and welfare of the Covered Property as a quality master planned community. Each Owner acknowledges that Declarant has a substantial interest in assuring compliance with, and enforcement of, the covenants, conditions, restrictions and reservations contained in this Master Declaration and any Supplemental Declarations. 17.2 RIGHTS. The provisions of this Article XVII supersede and control over all other provisions of the Community Association Governing Documents as applied to Declarant and the Neighborhood Builders. Declarant and the Neighborhood Builders have the following rights. Nothing in the Community Association Governing Documents limits and no Owner or the Community Association will interfere with Declarant's or any Neighborhood Builder's exercise of these rights. 17.2.1 Subdivision. To subdivide and resubdivide any portion of the Covered Property. 17.2.2 Sales. To sell and rent any portion of the Covered Property directly or through agents and representatives. 17.2.3 Development. To complete excavation, grading, construction of Improvements and other development activities on the Covered Property. 17.2.4 Construction. To alter construction plans and designs, to modify Improvements and to construct such additional Improvements as Declarant or a Neighborhood Builder deems advisable. 17.2.5 Grading. To carry on such grading work as may be approved by the Local Governmental Agency having jurisdiction. -81- 2544-33253\CLP428\CCAS\ 581730.13 2/I/O6 17.2.6 Signs. To erect, construct and maintain on the Covered Property such structures, signs and displays reasonably necessary for the conduct of the business of completing the work and disposing of the Covered Property. 17.2.7 Creating Additional Easements. At any time prior to acquisition of title to a Lot or Condominium by a purchaser from Declarant or a Neighborhood Builder, to establish on that Lot, additional licenses, easements, reservations and rights-of-way to itself, to utility companies, or to others as reasonably necessary to the proper development and disposal of the Covered Property. 17.2.8 Sales and Leasing. To use the Association Property for access to the sales and leasing facilities of Declarant and Neighborhood Builders by prospective purchasers, sales agents, Declarant and Neighborhood Builders. 17.2.9 Models and Offices. To use any structures or vehicles owned or leased by Declarant or Neighborhood Builders in the Covered Property as model home complexes, or real estate sales or Ieasing offices. 17.2.10 Modifications. Subject to City approval, to unilaterally modify Declarant's or the Neighborhood Builders' development plan for the Covered Property, or any portion thereof, including designating and redesignating Phases of Development and constructing Homes of larger or smaller sizes, values or of different types. 17.2.11 Gated Communities. To create Neighborhoods in the Covered Property that are gated so that access to such Neighborhoods is limited. 17.2.12 Declarant's Rights After Sale of all Lots and Condominiums in the Covered Property. For a period of ten (10) years following the last Close of Escrow in the Covered Property, in addition to Declarant's rights as an Owner and as a Member, Declarant shall have the following rights: (a) access to and the right to inspect the Community Association's books and financial records; (b) access to and the right to inspect the Community Association's maintenance records; (c) access to and the right to inspect the Association Property; (d) right to receive notice of, attend and speak at all regular and special meetings of the Board and meetings of the Members; and (e) right to receive copies of the minutes of Board meetings and meetings of Members, upon request and payment of the actual costs to copy and distribute such records and documents. 17.3 EXEMPTION. Declarant and the Neighborhood Builders are exempt from the restrictions contained in Article U. 17.4 ASSIGNMENT OF RIGHTS. All or any portion of the rights of Declarant or a Neighborhood Builder in the Community Association Governing Documents may be assigned by Declarant or such Neighborhood Builder (with Declarant's consent), as applicable, to any successor in interest to any portion of Declarant's or Neighborhood Builder's interest in any portion of the Covered Property (including to any Neighborhood Builder) by an express written assignment which specifies the rights of Declarant or such Neighborhood Builder so assigned. -82- 2544-332531CLP428\CCRS1581730.13 711/06 17.5 EASEMENT RELOCATION. Association Property comprising easements over real property the fee title to which has not been made subject to the Master Declaration ("Interim Easement Area") may be relocated, modified or terminated by Declarant to accommodate the final plan of development for the future Phase in which the Interim Easement Area is located. Such relocation, modification or termination shall be set forth in the Recorded instrument annexing fee title to the Interim Easement Area to the Master Declaration. No such relocation, modification or termination shall prevent access to any Lot or Condominium. 17.6 DECLARANT'S REPRESENTATIVE. The Community Association shall provide Declarant with all notices and other documents to which a Beneficiary is entitled pursuant to this Master Declaration, provided that Declarant shall be provided such notices and other documents without making written request therefor. Commencing on the date on which Declarant no longer has an elected or appointed representative on the Board, and continuing until the date on which Declarant and the Neighborhood Builders no longer own a Lot or Condominium in the Covered Property, the Community Association shall provide Declarant with written notice of all meetings of the Board as if Declarant were an Owner and Declarant shall be entitled to have a representative present at all such Board meetings ("Declarant's Representative"). The Declarant's Representative shall be present in an advisory capacity only and shall not be a Board member or have any right to vote on matters coming before the Board. ARTICLE XVIII CITY REQUIRED PROVISION This Article is included in this Master Declaration to satisfy a requirement of the City. Notwithstanding any provision in this Master Declaration to the contrary, this Article and the following section of this Master Declaration shall be enforceable by the City. 18.1 ISSUANCE OF RESIDENTIAL BUILDING PERMITS WITHIN LIFOC PROPERTY. Building permits for residential structures on the LIFOC Property will not be issued until the City of Tustin receives written confirmation from either the Declarant, Owner or Neighborhood Builder, that the LIFOC Property has been determined by the California Department of Toxic Substances Control to be suitable for residential use. In addition, all residential structures on the LIFOC Property will be constructed with one of the following engineering controls: (1) a sub -slab venting system; or (2) a LIQUID BOOT® Gas Vapor Barrier System, (3) or an alternative control that is determined by either the City of Tustin or the California Department of Toxic Substances Control to provide equivalent protection. [Signatures on Following Page] -83- 2544-33253\CLP428\CCRS\ 581730.13 2/1!06 [SIGNATURE PAGE TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUAREI This Master Declaration is dated for identification purposes 1&MUTA 2006, MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a It. B, N; Ti [Signatures Continued on Following Pagel -84- 2544-33253\CLP428\CCRS1581730.13 2/1/06 [SIGNATURE PAGE TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE[ The following parties, as Owners or Neighborhood Builders of portions of the Covered Property, hereby consent to the terms and conditions set forth in the Master Declaration. TUSTIN VILLAS PARTNERS, LLC, a Delaware limited liability company By: Lennar Homes of California, Inc., a California corporation, Managi By: Name: Title: "Owner" ORA ASTORIA LLC, a California limited liability company By: ORA Residential Investments I, L.P., a California limited partnership, Its: Sole Member By: ORA California II, LLC, a Delaware limited liability company, Its: Manager By: Resmark Equity Partners, LLC, a Delaware limited liability company, Its: Manager By: Name: R. Pi Title: Executive Vice President & Chief Financial Officer "Owner" [Signatures Continued on Following Pagel -85- 25d4-33253\CLP428\CCRs\ 581730.13 211106 I STATE OF CALIFORNIA Loa 61e.5 ) ss. COUNTY OF @RA4i) On Vtjr, 2006, before me, �,�. "amS� (U6 P. I �i`4 personally appeared ��et %� , AA tZn , personally known to me is -of sati enft) to be the person whose'name is subscribed to the within instrument and acknowledged to me that (he) (shi) executed the same in (his) Owl authorized capacity, and that by (his) (W) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) 2Notary Publicfor said On 2 06, before me,,�p �C personally appeared �, j� 1 (J IA 1 , persoMlly known to me (e1`-prav'c�to ce) o—bee the �person whose name is subscribed to the within instrument and acknowledged to me that (he) (sho executed the same in (his) (h< authorized capacity, and that by (his) ( signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. [SEAL] WITNESS my hand and official seal. -87- and for said State 2544-33253\CLP428\CCRS\ 581730.13 2!1/06 [SIGNATURE PAGE TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUAREI WILLIAM LYON HOMES, INC., a California corporation By: .- Name: Title: Virga DrestA—& 1 y'r 77 .( "Owner" MW HOUSING PARTNERS III, L.P., a California limited partnership By: MW Housing Management III, LLC, a California limited liability company Its General Partner By: WRI CP Investments III, LLC, a Washington limited liability company Its Co -Manager By: Weyerhaeuser Realty Investors, Inc. a Washington corporation, Its Manager By: Name: Title By: Name: Title "Owner" -86- 2544-33253\CLP428\CORS\ 581730.13 211106 STATE OF CALIFORNIA ) } ss. COUNTY OF ORANGE ) On , 2006, fore me, personally appeared J, pers pally known to me 0 me nce) to the person whose name is subscribed to the within instrument and acknowledged to me that (he) (shtr) executed the same in (his) (h< authorized capacity, and that by (his) (h6rTsignature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. I '' LAURA LElGII 6�IlD, ERRAhA�1� Corrdnboion # 1430791 ( otary Pubh n and for said State 61MV NAVY Pubk - Callomla owrve County [SEAL] Con• ExPkw Jul 15, 2007 STATE OF CALIFORNIA } COUNTY OF ORANGE ) ss. On vi 7y2006, bAfore me personally aeared peared Vc (j . (Ct , personally known tome (e; -p is t acre f eatief�ntnnr a ;.;o ) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) 4he4 executed the same in (his) (hef) authorized capacity, and that by (his) (hgr4-signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. 70, FFICIAL SEAL SUSAN E MENARp 140TARY PUBLIC-CAUFORN A ` a`- COMMISSION # 144730 ORANGE COUNTY MY Commission Exp. October 2% 2007 Notary Public in and for said State [SEAL] -88- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. On b"Q.f a- 2006, before m SdsPc�► E J personally appeared @ U R , a �s, personally known to' me (or pr ed to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. OFFICIAL SEAL SUSAN E. MENARD NOTARY PUBLIC - CALIFORNIA N COMMISSION # 1447352 ORANGE COUNTY My Commission Exp. OCU)W 2% 2W [SEAL] STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) -4 ��6( Notary Public in and for said State On 2006, before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] Notary Public in and for said State -89- 2544-33253\CLP428\CCRS\581730.13 211/06 (SIGNATURE PAGE TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUAREI WILLIAM LYON HOMES, INC., a California corporation By: Name: Title: By: Name: Title: "Owner" MW HOUSING PARTNERS III, L.P., a California limited partnership By: MW Housing Management III, LLC, a California limited liability company Its General Partner By: WRI CP Investments III, LLC, a Washington limited liability company Its Co -Manager By: Weyerhaeuser Realty Investors, Inc. a Washington corporation, Its Manager By: Name: h �— Title Se eti, By: Name: Title "Owner" -86- 2544-33253TLP428\CCRS\ 581730.13 2/1/06 w gsH-t Q U-rti N STATE OF EbIf E)P,4df ) Kt h1 Cr ) ss. COUNTY OF AF64'P�1C-� ) On Z 2 , 2006, before me, W ld � M. A G+h"b{ 5 personally appeared _J)AVIO$47MrLA OErE1'Z-- , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. [SEAL] WITNESS my hand and official seal. LYNN M. RICHARDS STATE OF WASHINGTON NOTARY — • — PUBLIC W COMMISSION EXPIRES 10-04.08 W4 --A+ 06--Tofi STATE OF SA14409 UA ) ) ss. COUNTY OF OftAttdE N ) Notary Public in and for said State On a I 2006, before me, 6! ltc4+ -L S , personally appearedED W 1 N -T 51-Ef 4WJ,5 , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. [SEAL] WITNESS my hand and official seal. LYNN M. RICHARDS STATE OF WASHINGTON NOTARY — • — PUBLIC MY COMMISSION EXPIRES 10-04-08 -87- CCA fIlk.1a;4 Al? I //�L Notary Pu lic in and fo said State 2544-33253\CLP428\CCRS\581730.13 2/1/06 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , 2006, before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument WITNESS my hand and official seal. Notary Public in and for said State [SEAL] STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On 2006, before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument WITNESS my hand and official seal. [SEAL] Notary Public in and for said State -88- 2544-33253\CLP428\CCRS\ 58173D.13 2/1/06 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. On , 2006, before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. Notary Public in and for saidState [SEAL] STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. On 2006, before me, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] Notary Public in and for said State -89- 2544-332531CLP4281CCRS\ 581730.13 2/1/06 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On , 2006, before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) (her) authorized capacity, and that by (his) (her) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] Notary Public in and for said State -90- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated July 29, 2005, and recorded on July 29, 2005, as Instrument No. 2005000589860, in the Official Records of Orange County, California (the "Deed of Trust', which Deed of Trust is by and between Tustin Villas Partners, LLC, a Delaware limited liability company, as Trustor, and North American Title Company, a California corporation, as Trustee, and Moffett Meadows Partners, a Delaware limited liability company, as Beneficiary, expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Master Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Columbus Square, as amended or restated ("Master Declaration', to any Supplemental Declaration, as amended or restated, and to all easements to be conveyed to the Community Association in accordance with the Master Declaration and any Supplemental Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Properties by foreclosure (whether judicial or nonjudicial), deed-in-Iieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Master Declaration and any applicable Supplemental Declaration, which shall remain in full force and effect. Dated: F&A AY1A_�2006 MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a Lalirornjaa�orporatlon Its: Man;lRiuk Member By: Name: Title: [Notarial Acknowledgment on Following Page] -91- 2544-332531CLP4281CCRs 1581730.13 2/1/06 STATE OF CALIFORNIA ) ss. COUNTY OF ORANGE ) On , 20%, before me y personally appeared pers ally known to me me idence) M be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (site) executed the same in (his) (h< authorized capacity, and that by (his) (te* signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. LAUKA LEIGH LgDERRANIA v Commkdon # 1130791 r Notary Public d for said State �► �w Adit - CaLtmb [SEAL] , Conrn EV0 , 2w4 -92- 2544-33253\CLP428\CCRS\581730.13 2/1/06 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated July 29, 2005, and recorded on July 29, 2005, as Instrument No. 2005000590847, in the Official Records of Orange County, California (the "Deed of Trust'), which Deed of Trust is by and between ORA Astoria LLC, a California limited liability company, as Trustor, and North American Title Company, a California corporation, as Trustee, and Moffett Meadows Partners, LLC, a Delaware limited liability company, as Beneficiary, expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Master Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Columbus Square, as amended or restated ("Master Declaration', to any Supplemental Declaration, as amended or restated, and to all easements to be conveyed to the Community Association in accordance with the Master Declaration and any Supplemental Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Properties by foreclosure (whether judicial or nonjudicial), deed -in -lieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Master Declaration and any applicable Supplemental Declaration, which shall remain in full force and effect. Dated: 2, 2006 MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a It B' N T. [Notarial Acknowledgment on Following Page] -93- 2544-33253\CLP428\CCRS\581730.13 211106 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On ��dm oud4 9-�, 2006, b fore me, l� ii1 iy(/� i Ma Pa l/ " personally appeared , perso ►ally known to me (or-lmre+to m ce) to be/the person whose name is subscribed to the within instrument and acknowledged to me that (he) Casio executed the same in (his) (k6r—) authorized capacity, and that by (his) fir) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. n a 1430791 1 otary PublicYn Public'and for said State Omnge co, [S ] 161MVConvn.00mJW15.2007j -94- 2544-33253\CLP428\CORS\ 581730.13 2/1/06 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated July 29, 2005, and recorded on July 29, 2005, as Instrument No. 2005000591025, in the Official Records of Orange County, Cal ifomia (the "Deed of Trust', which Deed of Trust is by and between William Lyon Homes, Inc., a California corporation, as Trustor, and North American Title Company, a California corporation, as Trustee, and Moffett Meadows Partners, LLC, a Delaware limited liability company, as Beneficiary, expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Master Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Columbus Square, as amended or restated ("Master Declaration', to any Supplemental Declaration, as amended or restated, and to all easements to be conveyed to the Community Association in accordance with the Master Declaration and any Supplemental Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Properties by foreclosure (whether judicial or nonjudicial), deed -in -lieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Master Declaration and any applicable Supplemental Declaration, which shall remain in full force and effect. Dated: EfhY-JA')—.2006 MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a California corporation, Its: Managg ember By: Name: Title: V ce PAs-ent [Notarial Acknowledgment on Following Page] -95- 2544-33253\CLP428\CCRS\581730.13 211106 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) On RIM", 200 ,before me, Ll ZC'i personally appeared pe nally known tom (o to me ence) t` be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (,qk� executed the same in (his) Qaer authorized capacity, and that by (his) (i<w signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. [SEAL] -96- 2544-33253\CLP428\CCRS\581730.13 2/1/06 SUBORDINATION The undersigned, as Beneficiary of the beneficial interest in and under that certain Deed of Trust dated July 29, 2005, and recorded on July 29, 2005, as Instrument No. 2005000591382, in the Official Records of Orange County, California (the "Deed of Trust'j, which Deed of Trust is by and between MW Housing Partners III, L.P., a California limited partnership, as Trustor, and North American Title Company, a California corporation, as Trustee, and Moffett Meadows Partners, LLC, a Delaware limited liability company, as Beneficiary, expressly subordinates said Deed of Trust and its beneficial interest thereunder to the foregoing Master Declaration of Covenants, Conditions and Restrictions and Reservation of Easements for Columbus Square, as amended or restated ("Master Declaration', to any Supplemental Declaration, as amended or restated, and to all easements to be conveyed to the Community Association in accordance with the Master Declaration and any Supplemental Declaration. By executing this Subordination, the undersigned agrees that should the undersigned acquire title to all or any portion of the Properties by foreclosure (whether judicial or nonjudicial), deed -in -lieu of foreclosure or any other remedy in or relating to the Deed of Trust, the undersigned will acquire title subject to the provisions of the Master Declaration and any applicable Supplemental Declaration, which shall remain in full force and effect. Dated: _ 2006 MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a It B- N T [Notarial Acknowledgment on Following Page] -97- 2544-33253\CLP428\CM\581730.13 211106 STATE OF CALIFORNIA ) ) ss. COUNTY OF ORANGE ) • >��.f �- l._.L_._ __0111MM. personally a v p y ared ppe /n JA , pers ' ally known to me (o to t6 -6e the person whose name is subscribed to the within instrument and acknowledged to me that (he) (Sher] executed the same in (his) (hei'j authorized capacity, and that by (his) (kef) signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS my hand and official seal. !0aw*don # 1 791 MokxY ftft - CaVmoa Ownge Counly [SEAL] MY COM. AA 15.2007 r -98- 2544-33253\CLP428\CCRS\ 581730.13 2/1/06 EXHIBIT "CP" DESCRIPTION OF COVERED PROPERTY All that real property located in the City of Tustin, County of Orange, State of California, more particularly described as follows: All of Tract No. 16581, as shown on a Subdivision Map recorded in BoW 7 7 , Pages 3 3 to 5 0 , inclusive, of Miscellaneous Maps, in the Office of the Orange County Recorder; excepting therefrom those certain areas designated on the Subdivision Map for Tract No. 16581 as "IRP -13S" and "IRP -13W." 2544-33253\CLP4281CCRS1581730. 13 2/1/06 ASSOCIATION PROPERTY TO BE CONVEYED IN THE COVERED PROPERTY I . Association Property owned and maintained by the Community Association: (a) Private Street Lots A to M, P to U, X, Y, CA to CF, DA to DJ, EA to EB, FA to FD of Tract No. 16581, including parkway maintenance as shown on Exhibit "PM" attached to this Exhibit "AP" and storm drain maintenance as shown on Exhibit "SD" attached to this Exhibit "AP". (b) Landscaped and Recreation Area (1) Lots 263, 264 and 293, and 331 of Tract No. 16581 (Open Space/Park Areas shown on Exhibit "OS" available for public use). (2) Lot 365 of Tract No. 16581 (Community clubhouse and amenities are private for use by members and guests — not open to public use as shown on Exhibit "OS'�. (c) Lots AAA to AAJ, BAB, BAC, BAD, BAE, and BAF Tract No. 16581, Landscaped areas for Owner use (including Community Walls as shown on Exhibit "WM. (d) Lots BAA, BBA to BBZ, CCA to CCO, DAA, DEA, DDA to DDZ of Tract No. 16581, Landscaped areas adjacent to streets, (including Community Walls as shown on Exhibit "WM'O. 2544-332531CLP4281CCRS1581730.13 2/1/06 EXHIBIT "PM" PRIVATE PARKWAY MAINTENANCE AREAS IN THE COVERED PROPERTY 2544-3325MLP4281CCRS1581730.13 2/1/06 GOVERNMENT CODE [27361-7] I certify under the penalty of perjury that the notary acknowledgement on the document to which this statement is attached reads as follows: Name of notary: N +6ck • Date commission expires: L)C . `22 ,a Commission #: County where bond is filed: Manufacture/Vendor #: Place of execution: Orange Date: 3 o� Signature: North American Title Company Print Name: Melissa Flores GOVERNMENT CODE [27361-7] I certify under the penalty of perjury that the notary acknowledgement on the document to which this statement is attached reads as follows: Name of notary: Date commission expires: x N Commission County where bond is filed: `Q ManufactureNendor #: SNA_ Place of execution: Orange Date: 3 •`\ -0�R Signature: North American Title Company Print Name: Melissa Flores A z m e own ----------------------------- - ------ $EVERYNe FlOAAD rka w v N! co N A 1 rn I 0 o I ro co m 1 ro c ! Ch i w �I t co c� \ � Q MATCF�INE SEE SHEET 2 0 m m �m D2 Z� m -_{ z� ^A� z m m CO d� I a t33Hs age 3NnHo vw .� to z� S --� I m _ Iv N 11 0 m ' DAI STREET OAVFNWP`M STRffiT D o - z K oo v m :or, I o Z (�l,NHTFiOSE WAY < OfH]OlA6 WAY z� z I D Z Z Z V N Z I m d£-M WAY z Z Z� I W A W N -DG d ('f'I � D-v w w w w l oqo 4 rn i 9 (z� wrrc WAY ` w w m a D N I I I m Cn w w co } A to w I N Cv71 C4 W CAl qr pp u _ — _ k10���1L��a 1S3M J o I N I W f A I In 1 0) 1 � CfOU SWW3A3e W� W� W rrr� i'j' � LTi •moi DX m aD Z n � m D m CA W ,P. w W s N AVM NOIR { W rm- o N W A y D �g WW 0 g8y 1 AVM 3LL3/v*l W C� K� co Z Z Z I -- AVMCA 1K3QkPd O V (A�� A ( I AVM d0UV1 Lf7 C47' NWtA9 Z� ZZ W A W y Koro rn bz £ j�-- 0 A O AdM A3783µ m z D o cz Z m n AVM I Naas Z W O m D m CO Z AdM �134hOfM V 0 � W m -imypT i N N W � �mm Z W I N 9g AdA.16ry}b � Uwi M vI S L33M 338 3NnHOLYA Q � 4 � 'T N r � �5 'L Y � W� 4 13iLLL81li0B9AV0 w _W W SAW c�o Q w AdM N30YtYJ w o ro N i 4 AVM XYdkWA�_� W AVM AA*M O Q � � aw � �� AVM NO1}H11"IV9 i m N z 14 ti ou n POV rn ro z 0 I AVM 30akKW 9 o O N N cnt�*. zq� 0 a Q?N �' � � O � �--A'N31.63M� j AVM ti0(kld9 � "z I AVMINOWNDNYI a co flo n y v 3' A N N t EXHIBIT "SD" STORM DRAIN MAINTENANCE AREAS IN THE COVERED PROPERTY 2544-33253\CLP428\CCM 581730.13 211 /06 M a z W z C _ 0Cl) 0 I CDI M m a _ o a N u, ( .01030001 � rn EXHIBIT "MA" MAINTENANCE AREAS IN THE COVERED PROPERTY 1. Perimeter landscaping on public street rights of way as shown on Exhibit "MA" attached hereto or to a Supplemental Declaration. 2. Real property owned in fee by others but maintained by the Community Association (to be described in a Supplemental Declaration). 2544-33253\CLP428\CCR3\ 581730.13 2/1/06 oX Om ?$En m m m m Mm Vn m mz 0 m i AWSfON CFCLS 8 f� O A P-1 ��NGn 1 n _0 � O1 I w w I to � a �INI� P.I N �3 N O �p L9iCOLN WAY l w _ _ V \ N N LY O r0 cw � W co ' w , '�\ «CaWICiTOlL 87REE7 1O f N MotuWE WAY w 1) SCP �COLLVAM SWAM 1 KO 00 S} �� m a v O' f v r CD w MATCHLWE SEE SHEET 2 m v_ z 0 m z C: m m m m m Dy0 �m z P-1 ��NGn 1 n n Jn s m v_ z 0 m z C: m m m m m t 133HS 333 3NMOIt" �m I a w nwi Z DAVEMPOW STREET DAVEIVORT STREET D AHOHTF8D8! WAY I DOl10LA8 WAY Itl \ . y. C3 14 .AJ C m D _.q p f :4 o ' :0 a N CHESTER WAY I II > x rV D m Uvi A W N I � `Q i > Z t tSJT'TON WAY D a O { w w m z co �01N z w w o w 0 I m w N c`ii ww w w T ml I , mj 1-;:6 . WO W� N NW ` � ti a�vi of o cNti N N ,+ NN l3�HLS kilOA IT� A � m M m 0 W W t N AtlM I ( b N l_ W 1s AVM 3L3AYtN1 W I — AVMCA fTl w 0 A i o w OAVM t10lAVt T AVM NOUA9 fR w � a I-- >X Q AVM ATMWA O v DZ d � a o z AVM Haan —� z O w : I z t AVM r 0 V 'U N w O W AVM a�b N N N W gym' Z za O�AdM nz 2Nhp w w W � ut i 9 .L HS MS 3MKU" w 6 y� •,� N� LS �kus iaoaranva W N N �dM G3 — AVM SONVH I I AVM N3aV(VO II I I g N I 14 � I I I I c a W cu AVM XYAWJ --I' r — W — — V AYM V1736WW I I + AMMAW44Cb I + I Cb Aar SVM BTYaHVMI AVM NoUah M0 t ' co 1i _ Il I AVM—�f1 NI t Na i ' AVM NOW �%A,i91.83M AVM 1NOYRKkld1 N N tJ1 ( a0N1400 isam m m m D o 0 a z 0 Z FO > x < �m 0 P � I � o M I § � I 6 y� •,� N� LS �kus iaoaranva W N N �dM G3 — AVM SONVH I I AVM N3aV(VO II I I g N I 14 � I I I I c a W cu AVM XYAWJ --I' r — W — — V AYM V1736WW I I + AMMAW44Cb I + I Cb Aar SVM BTYaHVMI AVM NoUah M0 t ' co 1i _ Il I AVM—�f1 NI t Na i ' AVM NOW �%A,i91.83M AVM 1NOYRKkld1 N N tJ1 ( a0N1400 isam m m m EXHIBIT "WM" WALL MAINTENANCE IN THE COVERED PROPERTY 2544-332531CLP4281CCRS\581730.13 2/1106 ' ■ 1 ANNUnON aaa.E ED O O D�D m `O o SIN �: cniml na� t6o co Z FAMD z a m-< tt_� N N l' i D j 0 m� V F r W t� z m mg m f D m c�n { m m w I w I �r m V n M o w C.0 f m I r [— ca Om " ^W' fZ I WAeHWGrai srFkEr ! DM o - L9JOOlH WAY t oWi 1T7 W V ! W W t s covuaesoN sir N N d+ MONROE WAY t 1\ cp COLUABUB 60UME m 1\ I ' 9 i v aAi i O ZZP }}.��{{ cp v�E Iw 8 •\\ i A (co (jo b m q �cym a , MATCHLINE SEE t3HEET 2 0 w Z 133H3 338 3PA HO1VN1 b IT a cp Illjjj CD G EDzo zo Z n�'<� Z Tl 'ca r� A �oi i+areosrr srn�r OAVFNP= ts. FtEEs L D O z rRJS Z g O m r, ) cz a N rn I w N �' o v �C -a C 7t ! .9 C > MONTROM WAY I — OOUCLAB WAY Z (------_--- �3''11 r D T r`ru � m I T' m i Z mm S C4*Z PR WAY _0 I Z Z Mai 0� 6UI7ON WAY � co m C4 ti l Z W co CAI p 03I>; I y 1 N I fn co a� {m z >.l 00 5 7 1401�3NN0 ^a i- 14� 1- I m 1 ., w1 0 cn C W \J O z D r r D_ Z Dm Z = o� mco� O� K c Z Cl) O � D z w1 0 cn W �f AYM I ! ■ � art I � �I �o w �� _. W < Z z P C Cn a ! AVM 3113AV3d1 W � xg m m I w — AVM.�r' o � Ulm�� z m g ::� AYM H=Vl r rn x m zm D-n fl! Ww w w AYM NOMdQ D a, -� Dz� w I z rt1 V AYM A31831A �-I • D� z = co w m 03m m 1" 1'vv w m m y mr-- D m m n AVM N30M7 3 C m I z z AYM 3taaaAoud I O I V 1 CO w Q W I A > ° Io_ 1 AVM HaHt3M1�§n -D-� -� 14 -Im Z m 1 1 11 31331iB 338 3lJ" A 0 W P); d)y� LO v O VM ASP.WM w �- -� AVM NOOV NJ I I z o w I I I I • ( 1 w aNa Oho S2 iV ao r r0 !!I o ANM %V3WiCal ttvv ERMOMWcr AW � 3 " zRoR-0om{ ����Qm7 z r��� 7C AVM AHN3i i � 1 �Z I Q ' t Z Z T -, ai D v s I v l I ma) 4 AAI m m M I I 3 P i W { o N 3! 0 fTl D z 0 o m D CA AVM WWJ O 0 0 Opp[ v -+xAy � Nwr f W mn3 I 1�M ASM AVM � ro AVM U OYUMVI `-`--- s H Op iSam 0 EXHIBIT "OS" OPEN SPACE/PARK AREAS IN THE COVERED PROPERTY 2544-332531CLP4281CCRS1581730.13 2/1/06 S co m m 12 C4 m m q D D I x a s x a s g s x m n D C31 C 00 D aCo (n C, O G �0 4 �000000 3rn n� Z o �k m zitn S co m m 12 C4 m m q D D I x a s x a s g s x m n D C31 C 00 D aCo (n C, O G m 3rn n� Z o �k m zitn GI g * °� m m I D z A D $ � Mi X a z Mo M -V n fi — 0 n C) I ?� °r° � 14 a o -I m Z a m D m MIA— � I I y m N c.n I LS S co m m 12 C4 m m q EXHIBIT "PC" PARKING AND CIRCULATION AREAS IN THE COVERED PROPERTY 254433253\CLP4281CCRS\ 581130.13 2/1/06 EXHIBIT "PC -1" PARKING LIMITATIONS IN THE COVERED PROPERTY HOUSING TYPE NUMBER OF GARAGES PER HOME Detached Single -Family 2 or more Bedroom plans have a 2 car garage 4 or more Bedroom plans have 2 or 3 car garage Condominium 1 Bedroom plans have a 1 car garage 2 or more Bedroom plans have a 2 car garage All housing types are required to park the number of cars in each garage for which the garage was designed to accommodate. Use of garage for storage of personal property shall not interfere with the ability to park the required number of cars to the extent owner owns the total number of cars for which the garage was designed. 2544-332531CLP4281CCRS\ 581730.13 2/1/06 EXHIBIT "TC" .APPROVED CURBSIDE TRASH PICK-UP AREAS IN THE COVERED PROPERTY 2544-33253\CLP428\CCRS\581730.13 2/1/06 � I cn 1 -� o� m 1 m g (� I $S 9 I m PH m _ I m CA mm m RECORDING REQUESTED BY: NORTH AMERICAN TITLE COMPANY WHEN RECORDED, MAIL TO: MOFFETT MEADOWS PARTNERS, LLC c/o Lennar Homes of California, Inc. Attn: T. Wilson 25 Enterprise, Suite 300 Aliso Viejo, CA 92656 This Document was electronically recorded by North American Recorded In Official Records, Orange County Tom Daly, Clerk -Recorder 45.00 2006000517853 04:14pm 08/02/06 200 42 A1714 0.00 0.00 0.00 0.00 39.00 0.00 0.00 0.00 (Space Above for Recorder's Use) FIRST AMENDMENT TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE 2544-332531AMEND\ 641270.4 7125/06 FIRST AMENDMENT TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE THIS FIRST AMENDMENT TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQUARE ("First Amendment's is made by MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company ("Declarant'). RECITALS: A. That certain Master Declaration of Covenants, Conditions, Restrictions and Reservation of Easements for Columbus Square ("Master Declaration's was previously recorded on March 7, 2006, as Instrument No. 2006-000149773, in the Official Records of Orange County, California. B. The Master Declaration has been recorded against real property in the City of Tustin, County of Orange, State of California, described as follows ("Covered Property': All of Tract No. 16581, as shown on a Subdivision Map recorded in Book 877, Pages 33 to 50, inclusive, of Miscellaneous Maps, in the Office of the Orange County Recorder; excepting therefrom those certain areas designated on the Subdivision Map for Tract No. 16581 as "IRP -13S" and "IRP -13W." C. Section 14.3 of the Master Declaration provides that for so long as Declarant owns any portion of the Covered Property, Declarant may unilaterally, with the consent of the City, amend the Master Declaration by Recording a written instrument signed by Declarant in order to correct any typographical errors and to conform the Declaration to applicable law. As of the date hereof, Declarant owns all or portion of the Covered Property; therefore, Declarant has the right to unilaterally amend the Master Declaration as set forth herein. D. Pursuant to Section 14.3 of the Master Declaration, Declarant desires to amend the Master Declaration to correct typographical errors in Sections 1.59, 3.2, 14.2.1 and 16.6, and to revise Sections 4.3.3, 5.4.3 and 13.2 to conform to current applicable statutory law. NOW, THEREFORE, Declarant hereby declares that the Master Declaration is amended as follows: 1. Definition of "Phase of Development." Section 1.59 of the Master Declaration is deleted in its entirety and replaced with the following: 2544-33253\AMEND\ 641270.4 7/25/06 "1.59 PHASE OF DEVELOPMENT. Phase of Development or Phase means all or any portion of the Covered Property for which a Public Report has been issued, unless otherwise provided in a Supplemental Declaration covering a portion of the Covered Property. A Phase may consist of only Association Property with no Lots or Condominiums contained therein." 2. Environmental Condition. The first sentence of Section 3.2 of the Master Declaration is deleted in its entirety and replaced with the following to include a reference to Exhibit "LIFOC" attached to the Master Declaration: "3.2 ENVIRONMENTAL CONDITION. Certain areas designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W" (collectively, the `LIFOC Property', as approximately depicted on Exhibit "LIFOC" attached hereto, are owned by the United States of America ("U.S. Government') and will ultimately be annexed into the Covered Property pursuant to Section 16.6." 3. Interpretation. The seventh sentence of Section 14.2.1 of the Master Declaration is deleted in its entirety and replaced with the following to incorporate Exhibit "LIFOC": "Exhibits "CP," "AP," "PM," "SD," "MA," "WM," "OS," "PC," "PGI," "TC" and "LIFOC" are incorporated in this Master Declaration by this reference." 4. Automatic Annexation of LIFOC Property. The first sentence of Section 16.6 of the Master Declaration is deleted in its entirety and replaced with the following to include a reference Exhibit "LIFOC": "As of the date of recordation of this Master Declaration, certain areas designated on the map for Tract No. 16581 as "IRP -13S" and "IRP -13W" (collectively, the "LIFOC Property', as approximately depicted on Exhibit "LIFOC," are owned by the United States of America (the "U.S. Government'), which is responsible for performing remediation work on the LIFOC Property." 5. Specific Duties and Powers. Section 4.3.3 of the Master Declaration is deleted in its entirety and replaced with the following to conform to current applicable statutory law: "4.3.3 Granting Rights. The power and duty to grant exclusive or nonexclusive easements, licenses, rights of way or fee interests in portions of the Association Property, to the extent any such grant is reasonably required (a) for Improvements to serve the Covered Property, (b) for purposes of conformity with the as -built 2 2544-33253\AMEND\ 641270.4 7/25/06 location of Improvements installed or authorized by Declarant or the Community Association, (c) in connection with any lawful lot line adjustment, (d) for other purposes consistent with the intended use of the Covered Property as a master planned community, and (e) for the operation of commercial concessions within Association Property for the convenience and enjoyment of the Members, subject to the provisions of the Community Association Governing Documents. This power includes the right to create and convey easements for one or more Owners over portions of the Association Property, The Community Association may de -annex any portion of the Covered Property from the encumbrance of the Master Declaration in connection with any lawful lot line adjustment. After the Community Association acquires fee title to or any easement right over Association Property, the affirmative vote of members owning at least sixty-seven percent (67%) of the Lots and Condominiums in the Covered Property shall be required before the Board may grant exclusive use of any portion of that Association Property to any Member, except as provided in California Civil Code Section 1363.07. Any measure placed before the Members requesting that the Board grant exclusive use of any portion of the Association Property shall specify whether the Community Association will receive any monetary consideration for the grant and whether the Community Association or the transferee will be responsible for providing any insurance coverage for exclusive use of the Association Property." 6. Review of Plans and Specifications. Section 5.4.3 of the Master Declaration is deleted in its entirety and replaced with the following to conform to current applicable statutory law: "5.4.3 Standard for Approval. The Design Review Committee shall approve an application only if it determines that (a) installation, construction or alterations of the Improvements in the locations proposed will not be detrimental to the appearance of the Covered Property as a whole, (b) the appearance of the proposed Improvements will be in harmony with the existing Improvements and the overall design theme in the Covered Property, (c) installation, construction or alteration of the proposed Improvements will not detract from the beauty, wholesomeness and attractiveness of the Covered Property or the enjoyment of the Covered Property by the Owners, (d) maintenance of the proposed Improvements will not become a burden on the Community Association, and (e) the proposed Improvements are consistent with the Community Association Governing Documents. The 2544-33253\AMEND\ 641270.4 7/25/06 Committee's decision on any proposed change may not violate any governing provision of law, including the Fair Employment and Housing Act, or a building code or other applicable law governing land use or public safety. The Committee may consider the impact of views from other residences, Lots or Condominiums, reasonable privacy right claims, passage of light and air, beneficial shading and other aesthetic factors in reviewing, approving or disapproving any Application. However, neither the Declarant nor the Community Association warrants that any views in the Covered Property are protected. No residence, Lot or Condominium is guaranteed the existence or unobstructed continuation of any particular view. In review of an application, the Committee shall not make any determination as to non -aesthetic factors such as general safety, fire protection, noise mitigation or compliance with building codes or applicable industry building standards." 7. Enforcement. Section 13.2 of the Master Declaration is deleted in its entirety and replaced with the following to conform to current applicable statutory law: "13.2 NONPAYMENT OF ASSESSMENTS. 13.2.1 Delinquency. Assessments are delinquent if not paid within fifteen (15) days after the due date established by the Community Association. Assessments not paid within thirty (30) days after the due date, plus all reasonable costs of collection (including attorneys' fees) and late charges bear interest at the maximum rate permitted by law commencing thirty (30) days after the due date until paid. The Community Association may also require the delinquent Owner to pay a late charge in accordance with California Civil Code Section 1366(e)(2). The Community Association need not accept any tender of a partial payment of an Assessment and all costs and attorneys' fees attributable thereto. Acceptance of any such tender does not waive the Community Association's right to demand and receive full payment. 13.2.2 Creation and Release of Lien. (a) Priority of Lien. All liens levied in accordance with this Master Declaration shall be prior and superior to (1) any declaration of homestead Recorded after the Recordation of this Master Declaration, and (2) all other liens, except (A) all taxes, bonds, Assessments and other levies which, by law, would be superior thereto, and (B) the lien or charge of any First Deed of Trust made in good faith and for value and Recorded before the date on which the "Notice of Delinquent Assessment" (described 4 2544-33253\ANIEND1641270.4 7/25/06 in this Section) against the assessed Lot or Condominium was Recorded. (b) Notice Before Creating Lien. Before the Community Association may place a lien on an Owner's Lot or Condominium to collect a past due Assessment, the Community Association shall send written notice ("Notice of Intent to Lien', at least thirty (30) days before Recording the lien, to the Owner by certified mail which contains the following information: (1) the Community Association's fee and penalty procedure, (2) an itemized statement of the charges owed by the Owner, including the principal .owed, any late charges, any interest, the method of calculation, and any attorneys' fees, (3) the collection practices used by the Community Association, (4) a statement that the Community Association may recover reasonable costs of collecting past due Assessments, (5) a statement that the Owner has the right to inspect the Community Association's records, pursuant to California Corporations Code Section 8333, (6) the following statement in 14 -point boldface type or all capital letters: "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION," (7) a statement that the Owner shall not be liable to pay the charges, interest and costs of collection if it is determined the Assessment was paid on time to the Community Association, (8) a statement that the Owner has the right to request a meeting with the Board, as provided by California Civil Code Section 1367.1(c)(3) and Section 13.2.2(g) below, (9) a statement concerning the Owner's right to dispute the Assessment debt by submitting a written request for dispute resolution to the Community Association pursuant to the Community Association's "meet and confer" program required in California Civil Code Section 1363.810, et seq. and (10) a statement concerning the Owner's right to request alternative dispute resolution with a neutral third party pursuant to California Civil Code Section 1369.510 before the Community Association may initiate foreclosure against the Owner's separate interest, except that binding arbitration shall not be available if the Community Association intends to initiate a judicial foreclosure. (c) Dispute Resolution Before Recording Lien. Before Recording a Notice of Delinquent Assessment, the Community Association shall offer the Owner and, if the Owner so requests, participate in dispute resolution under the Community Association's "meet and confer" program. 2544-33253\AMENM 641270.4 7/25/06 (d) Dispute Resolution Before Foreclosure. Before initiating a foreclosure for delinquent Assessments, the Community Association shall offer the Owner and, if the Owner so requests, shall participate in dispute resolution under the Community Association's "meet and confer" or alternative dispute resolution with a neutral third party. The decision to pursue resolution or a particular type of alternative dispute resolution is the Owner's choice, except that binding arbitration is not available if the Community Association intends to initiate a judicial foreclosure. (e) Board Approval For liens recorded on or after January 1, 2006, the decision to Record a Notice of Delinquent Assessment shall be made only by the Board and may not be delegated to a Community Association agent. The Board must approve the decision by a majority vote of the Board members in an open meeting. The Board shall record the vote in the minutes of that meeting. (f) Dispute by Owner. An Owner may dispute the Notice of Intent to Lien by submitting to the Board a written explanation of the reasons for the Owner's dispute. The Board shall respond in writing to the Owner within fifteen (15) days after the date of the postmark of the explanation, if the explanation is mailed within fifteen (15) days after the postmark of the Notice of Intent to Lien. (g) Owner's Right to Request Meeting. An Owner may submit a written request to meet with the Board to discuss a payment plan for the debt noticed in Section 13.2.2(b) above. The Community Association shall provide the Owner with the standards for payment plans, if any exist. The Board shall meet with the Owner in executive session within forty-five (45) days of the postmark of the request, if the request is mailed within fifteen (15) days after the date of the postmark of the Notice of Intent to Lien, unless there is no regularly scheduled Board meeting within that period, in which case the Board may designate a committee of one or more members to meet with the Owner. (h) Notice of Delinquent Assessment The lien becomes effective on Recordation by the Board or its authorized agent of a Notice of Delinquent Assessment ("Notice of DelinquentAssessment'� securing the payment of any Assessment or installment thereof levied by the Community Association against any Lot or Condominium Owner, as provided in California Civil Code Section 1367 or 1367.1. The Notice of Delinquent 6 2544-332531AMEND\ 641270.4 7/25/06 Assessment must identify (1) the amount of the Assessment and other authorized charges and interest, including the cost of preparing and Recording the Notice of Delinquent Assessment, (2) the amount of collection costs incurred, including reasonable attorneys' fees, (3) a sufficient description of the Lot or Condominium that has been assessed, (4) the Community Association's name and address, (5) the name of the Owner of the Lot or Condominium that has been assessed, and (6) if the lien is to be enforced by non judicial foreclosure, the name and address of the trustee authorized by the Community Association to enforce the lien by sale. The Notice of Delinquent Assessment must be signed by an authorized Community Association officer or agent and must be mailed in the manner required by California Civil Code Section 2924b to the Owner of record of the Lot or Condominium no later than ten (10) calendar days after Recordation. The lien relates only to the individual Lot or Condominium against which the Assessment was levied and not to the Covered Property as a whole. (i) Service on Owner's Legal Representative. In addition to the requirements of California Civil Code Section 2924, a Notice of Delinquent Assessment shall be served by the Community Association on the Owner's legal representative as provided in California Code of Civil Procedure Section 415.10, et seq. (j} Secondary Addresses Upon receipt of an Owner's written request identifying a secondary address for purposes of collection notices, the Community Association shall send an additional copy of any Notice of Intent to Lien, Notice of Delinquent Assessment or other Notice given under Section 13.2.2 to the secondary address provided. The Community Association shall notify Owners of their right to submit secondary addresses to the Community Association, when the Community Association issues its pro forma operating budget under California Civil Code Section 1365. The Owner's request must be in writing and mailed to the Community Association in a manner which indicates the Community Association has received it. The Owner may identify or change a secondary address at any time, provided that, if a secondary address is identified or changed during the collection process, the Community Association shall only be required to send Notices to the indicated secondary address from the point the Community Association receives the request. (k) Exceptions Assessments described in California Civil Code Section 1367(c) and California Code of Regulations 7 2544-33253AMEND\ 641270.4 7/25/06 Section 2792.26(c) may not become alien against an Owner's Lot or Condominium enforceable by the sale of the Lot or Condominium under California Civil Code Sections 2924, 2924b and 2924c. (1) Release of Lien. Within twenty-one (2 1) days after payment of the full amount claimed in the Notice of Delinquent Assessment, or other satisfaction thereof, the Board shall cause to be Recorded a Notice of Satisfaction and Release of Community Lien ("Notice of Release's stating the satisfaction and release of the amount claimed. The Community Association shall provide the Owner with a copy of the Notice of Release or any other notice that the full amount claimed in the Notice of Delinquent Assessment has been satisfied. The Board may require the Owner to pay a reasonable charge for preparing and Recording the Notice of Release. Any purchaser or encumbrancer who has acted in good faith and extended value may rely on the Notice of Release as conclusive evidence of the full satisfaction of the sums identified as owed in the Notice of Delinquent Assessment. 13.2.3 Enforcement of Liens. The Board shall enforce the collection of amounts due under this Master Declaration by one (1) or more of the alternative means of relief afforded by this Master Declaration, subject to the restrictions in California Civil Code Section 1367.4. (a) The lien on a Lot or Condominium may be enforced by foreclosure and sale of the Lot or Condominium after the Owners failure to pay any Assessment, or installment thereof, as provided in this Master Declaration. (b) The decision to initiate foreclosure after Recording a Notice of Delinquent Assessment shall be made only by the Board and may not be delegated to a Community Association agent. The Board shall approve the decision by a majority vote of the Board members in an executive session. The Board shall record the vote in the minutes of the next Board meeting open to all members. The Board shall maintain the confidentiality of the Owner or Owners by identifying the matter in the minutes by the Lot or Condominium number, rather than the name of the Owner or Owners. A Board vote to approve foreclosure of a lien shall take place at least 30 days before any public sale. (c) The Board shall provide notice by personal service to an Owner who occupies the Lot or Condominium or to the Owner's legal representative, if the Board votes to foreclose on the 2544-33253\AMEND\ 641270.4 7/25/06 Lot or Condominium. The Board shall provide written notice to an Owner who does not occupy the Lot or Condominium by first- class mail, postage prepaid, at the most current address shown on the Community Association's books. Unless the Owner provides written notification of a different mailing address to the Community Association, the address of the Owner's Lot or Condominium may be treated as the Owner's mailing address. (d) The sale shall be conducted in accordance with the provisions of the California Civil Code applicable to the exercise of powers of sale in Deeds of Trust, or in any manner permitted by law. The Community Association (or any Owner if the Community Association refuses to act) may sue to foreclose the lien if (1) at least thirty (30) days have elapsed since the date on which the Notice of Delinquent Assessment was Recorded, and (2) at least ten (10) days have elapsed since a copy of the Notice of Delinquent Assessment was mailed to the Owner affected thereby. The Community Association may bid on the Lot or Condominium at foreclosure sale, and acquire and hold, lease, mortgage and convey the same. On completion of the foreclosure sale, the Community Association or the purchaser at the sale may file suit to secure occupancy of the defaulting Owner's Lot or Condominium, and the defaulting Owner shall be required to pay the reasonable rental value for the Lot or Condominium during any period of continued occupancy by the defaulting Owner or any persons claiming under the defaulting Owner. A nonjudicial foreclosure to collect delinquent Assessments shall be subject to the right of redemption within 90 days after the sale, as provided in California Civil Code Section 1367.4. (e) A suit to recover a money judgment for unpaid Assessments may be brought without foreclosing or waiving any lien securing the same, subject to the provisions of California Civil Code Section 1367.1(b), but this provision or any suit to recover a money judgment does not affirm the adequacy of money damages. Any recovery resulting from a suit at law or in equity initiated pursuant to this Section may include reasonable attorneys' fees as fixed by the court. 13.2.4 Priority of Assessment Lien. Deeds of Trust Recorded before a Notice of Delinquent Assessment have lien priority over the Notice of Delinquent Assessment. Sale or transfer of any Lot or Condominium does not affect the Assessment lien, except that the sale or transfer of any Lot or Condominium pursuant to judicial or non judicial foreclosure of a First Deed of Trust extinguishes the lien of such Assessments as to payments which became due 9 2544-33253\AMEND\ 641270.4 7125/06 before such sale or transfer. No sale or transfer relieves such Lot or Condominium from liens for any Assessments thereafter becoming due. No Person who obtains title to a Lot or Condominium pursuant to a judicial or non judicial foreclosure of the First Deed of Trust is liable for the share of the Common Expenses or Assessments chargeable to such Lot or Condominium which became due before the acquisition of title to the Lot or Condominium by such Person. Such unpaid share of Common Expenses or Assessments is a Common Expense collectible from all Owners including such Person. The Community Association may take such action as is necessary to make any Assessment lien subordinate to the interests of the California Department of Veterans Affairs under its Cal -Vet loan contracts as if the Cal -Vet loan contracts were First Deeds of Trust. 13.2.5 Alternative Dispute Resolution. An Owner may dispute the Assessments imposed by the Community Association as provided in this Master Declaration and in California Civil Code Sections 1367.1 and 1367.4. If it is determined through dispute resolution pursuant to the Community Association's "meet and confer" program required in this Master Declaration or alternative dispute resolution with a neutral third party pursuant to California Civil Code Section 1369.510 that the Community Association Recorded a Notice of Delinquent Assessment in error, the Community Association shall promptly reverse all late charges, fees, interest, attorney's fees, costs of collection, costs imposed for the Notice prescribed in Section 1367.1(a), and costs of Recordation and release of the lien authorized under Section 1367.4(b) and pay all costs related to the dispute resolution or alternative dispute resolution. 13.2.6 Receivers. In addition to the foreclosure and other remedies granted to the Community Association in this Master Declaration, each Owner, by acceptance of a deed to such Owner's Lot or Condominium, conveys to the Community Association all of such Owner's right, title and interest in all rents, issues and profits derived from and appurtenant to such Lot or Condominium, subject to the right of the Community Association to collect and apply such rents, issues and profits to any delinquent Assessments owed by such Owner, reserving to the Owner the right, before any default by the Owner in the payment of Assessments, to collect and retain such rents, issues and profits as they may become due and payable. On any such default, the Community Association may, on the expiration of thirty (30) days following delivery to the Owner of the "Notice of Delinquent Assessment" described in this Master Declaration, either in person, by agent or by receiver to be 10 2544-33253\AMENM 641270.4 7/25/06 appointed by a court, and without regard to the adequacy of any security for the indebtedness secured by the lien described in this Master Declaration, (a) enter in or on and take possession of the Lot or Condominium or any part thereof, (b) in the Community Association's name sue for or otherwise collect such rents, issues and profits, including those past due and unpaid, and (c) apply the same, less allowable expenses of operation, to any delinquencies of the Owner, and in such order as the Community Association may determine. The entering upon and taking possession of the Lot or Condominium, the collection of rents, issues and profits and the application thereof, shall not cure or waive any default or notice of default under this Master Declaration or invalidate any act done pursuant to such notice. 13.2.7 Compliance with Law. To the extent that any provision in this Section 13.2 conflicts with the provisions of the Davis -Stirling Act (California Civil Code Section 1350, et seq.) the statutory provisions shall control." 8. Ratification: Interpretation. Except as amended in this First Amendment, Declarant hereby ratifies and affirms the Master Declaration. Capitalized terms not defined herein shall have the meanings given to them in the Master Declaration. 9. Counterparts. This First Amendment may be executed in counterparts. [SIGNATURES INCLUDED ON FOLLOWING PAGES] 2544-33253WAENM 641270.4 7/_5/06 [SIGNATURE PAGE TO FIRST AMENDMENT TO MASTER DECLARATION OF COVENANTS, CONDITIONS, RESTRICTIONS AND RESERVATION OF EASEMENTS FOR COLUMBUS SQ'UAREJ Declarant has executed this First Amendment as of lk( Z '2006. MOFFETT MEADOWS PARTNERS, LLC, a Delaware limited liability company By: Marble Mountain Partners, LLC, a Delaware limited liability company Its: Sole Member By: Tustin Villas Partners, LLC, a Delaware limited liability company Its: Administrative Member By: Lennar Homes of California, Inc., a California corporation, Its: Managing Member By: Name: 1 Title: Vice President "Declarant" STATE OF CALIFORNIA COUNTY OF ORANGE r On �_, OQro ' , before me, A, Q 0 WG ere insert name and title &4he officer) personally appeared zM t, personally known to me ( to be the person whose name is subscribed to the within instrument and acknowledged to me that (he) (she) executed the same in (his) Fier) -authorized capacity, and that by (his) Oie4 signature on the instrument the person, or the entity upon behalf of which the person acted, executed the instrument. WITNESS Signature: SANJAA ZUPPANS a _Commission # 1600638 [ Notary Public - California Orange County Q.1MyComm. Expires Aug 12, 2009 EAL) 12 254433253\AMEND\ 641270.4 7/25/06 GOVERNM ENT CODE [27361-71 I certify under the penalty of perjury that the notary acknowledgement on the document to which this statement is attached reads as follows: Name of notary: Date commission expires: . \-2 � Commission #: NW"'* County where bond is filed: Manufacture/Vendor #:� Place of execution: Orange Date:• �- •Qvk Signature: North American Title Company Print Name: Melissa Flores ATTACHMENT F "Summary of Rental Proposal" submitted by applicant Summary of Rental Proposal Discussed March 17, 2010 1. The Coventry land, approved by the City as an age -restricted apartment project with "affordable" units ("Coventry"), will not be annexed to the Columbus Square master planned community. 2. No assessments shall be levied by Columbus Square Community Association ("Master Association") against the Coventry property, votes in the Master Association shall not be exercised by the owner of Coventry, and the Coventry Owner will not be a member of the Master Association. The California Department of Real Estate has confirmed in writing that the reasonable range of assessments and votes for an annexed apartment project within a master planned community is 1 vote (and 1 assessment unit) for every 2 or 3 units in the apartment project. However, the Coventry Owner is willing to pay to the Master Association an amount equal to one assessment unit for each rented unit as outlined below. 4. The Coventry Owner will enter into a recorded, perpetual Agreement with the Master Association, which Agreement will run with the land pursuant to Sections 845 and 1468 of the Civil Code, containing the following material provisions: (a) The renters in Coventry will have access over all roads owned and maintained by the Master Association. (b) The renters will have nonexclusive right to park in designated areas near the Coventry project, pursuant to the same rules that pertain to homeowners in Columbus Square. (c) The renters may use the Master Association facility, on the same basis as all members of the Master Association. (d) The Coventry Owner will pay a fair fee monthly to the Master Association for the foregoing benefits for the duration of the Agreement. This fee will be equal to what any member of the Master Association is obligated to pay. In other words, the Coventry Owner will pay to the Master Association the equivalent of 240 assessment units for its 240 apartment units. RECEIVED MAR 17 2010 COMMUNITY DEVELOPMENT OY 2544-33253\ 947872.1 3/17/10 ATTACHMENT G First Amendment to Housing Agreement and Regulatory Agreement (draft) FIRST AMENDMENT TO HOUSING AGREEMENT FOR COLUMBUS SQUARE This First Amendment to the Housing Agreement for Columbus Square (the "First Amendment"), is entered into as of , 2010 the ("Effective Date"), by and between the City of Tustin ("City"), a municipal corporation and Moffett Meadows Partners, LLC, a Delaware Limited Liability Company ("Developer"). The Developer and City are collectively referred to herein as the "Parties." Capitalized terms used herein and not otherwise defined shall have the same meanings given to them in the Housing Agreement. RECITALS A. The City and Developer entered into that certain Housing Agreement (Columbus Square) dated as of June 20, 2005 (the "Original Housing Agreement") in order to, among other things, ensure implementation of the Affordable Housing Requirements of the MCAS Tustin Specific Plan, the City's Density Bonus Ordinance, the Developer's City -approved "Affordable Housing Plan," the Developer's Density Bonus Application, the City's "Affordable Housing Policy," compliance with California Health and Safety Code Section 33413, subdivision (b)(2), and in accordance with conditions of approval for Tentative Tract Map 16581. B. The City and Developer agreed in the Housing Agreement that all 266 Affordable Housing Units at Columbus Square to be provided by Developer would be "for sale" units and would be owned and occupied only by Owner -Occupiers. C. Assignment Agreements were subsequently approved by the City for assignment and assumption of Developer's duties of performance under the Housing Agreement as follows, (i) an Assignment Agreement entered into by and between Moffett Meadows Partners and Tustin Villas Partners, LLC dated as of August 22, 2005 on Lot 4 of Finance and Conveyance Map No. 16857; (ii) an Assignment Agreement entered into by and between Tustin Villa Partners, LLC and Tustin Coventry, LLC dated as of October 19, 2009 on Lot 4 of Finance and Conveyance Map No. 16857; (iii) an Assignment Agreement entered into between Moffett Meadows Partners, LLC and Lennar Homes of California, Inc dated as of August 22, 2005 on Lots 8, 10 and 12 of Finance and Conveyance Map Tract 16857, and (iv) an Assignment Agreement entered into between Moffett Meadows Partners, LLC and William Lyon Homes, Inc. dated as of August 22, 2005 on Lot 7 of Finance and Conveyance Map No. 16857. D. Section 14 of the Housing Agreement provides that the Housing Agreement can be modified by written amendment if formally approved and executed by the Parties. E. Section 3.4.3 of the MCAS Tustin Specific Plan also permits multi -family dwelling units (Apartments) subject to review and City approval of a Conditional Use Permit. The Tustin Planning Commission reviewed and approved Conditional Use Permit 09-024 with adoption of Resolution No. 4134 on , 2010 requiring the 240 senior citizen units in the Coventry Court product at Columbus Square to be a multi -family senior citizen 90087986.2 1-13-09 apartment project rather than an owner occupied senior citizen multi -family condominium project. Of the 240 units in the Coventry Court project, 153 units were age and rent restricted to require occupancy by Senior Citizens who are Affordable Households, with the remaining 87 units age restricted for occupancy by Senior Citizens, but not income restricted. F. The Developer has submitted a formal request to the City to modify the Housing Agreement, consistent with the approval of Conditional Use Permit No. 09-024, to require Developer to make 153 Affordable Housing Units in Coventry Court of the total 266 Affordable Housing Units at Columbus Square identified in the Housing Agreement available as Affordable Housing Units for rental occupancy by Senior Citizens. G. The City Council has found that the conversion of 153 of the 266 Affordable Housing Units from for -sale units into rental units will not result in any adverse impacts on the public health, safety or physical environment. H. Pursuant to Developer's request, the City and Developer hereby amend the Housing Agreement by way of this First Amendment to allow, in the Developer's discretion, for some or all of the 266 Affordable Housing Units to be made available as rental units. NOW, THEREFORE, in consideration of the foregoing Recitals, which are hereby incorporated in the operative provisions of this Amendment by this reference and mutual covenants and agreements set forth herein and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereto agree as follows: 1. Sections 1.1, 1.2 and 1.3. The definitions for "Affordable Housing Cost for Lower Income Households," "Affordable Housing Cost for Moderate Income Households" and "Affordable Housing Cost of Very Low Income Households" in Sections 1. 1, 1.2, and 1.3 in the Housing Agreement are hereby amended and restated to read in their entirety as follows: "Ll 'Affordable Housing Cost' shall mean for any Affordable Housing Unit designated for sale as owner -occupied housing a price that does not exceed the Affordable Housing Cost for a Very Low Income Household, a Low Income Household, or a Moderate Income Household, as applicable. The Affordable Housing Cost for an Affordable Housing Unit shall be calculated as of the date of sale or resale of the Unit and shall take into account and include monthly payments for principal and interest on the mortgage loan, mortgage loan insurance, property taxes and assessments, fire and casualty insurance, property maintenance and repairs, homeowner association fees, and a reasonable allowance for utilities and in an amount not in excess of: (a) For'Very-Low Income Households,' as more particularly defined in Health and Safety Code Section 50052.5(b)(2) and as generally described herein as a price per unit which results in Monthly Housing Costs for the purchaser which shall not exceed one -twelfth of thirty percent (30%) times fifty percent (50%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. -2- 90087986.2 1-13-09 (b) For 'Loiv Income Households,' also defined as 'Lower Income Households' as more particularly defined in Health and Safety Code Section 50052.5(b)(3) and as generally described herein as a price per Unit which results in Monthly Housing Costs for the purchaser which shall not exceed one -twelfth of thirty percent (30%) times seventy percent (70%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. (e) For `Moderate Incoine Households,' as more particularly defined in Health and Safety Code Section 50052.5(b)(4) and as generally described herein as a price per unit which results in the annual Affordable Housing Cost for the purchaser which shall not be less than twenty-eight percent (28%) of the gross annual income of the household, nor exceed the product of thirty-five percent (35%) times one hundred ten percent (110%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. Notwithstanding the foregoing, in accordance with Health and Safety Code Section 50052.5(b)(4), the City has determined and hereby agrees that, for a Moderate Income Household with annual gross income that exceeds one hundred ten percent (110%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. 1.2 'Affordable Rene' shall mean for any for -rent Affordable Housing Unit a maximum monthly rental or lease price that does not exceed the Affordable Rent for a Very Low Income Household, a Low Income Household, or a Moderate Income Household, as applicable. The Affordable Rent for a for -rent Affordable Housing Unit shall be calculated as of the date of rent of the unit and shall take into account and include a reasonable allowance for utilities and in an amount not in excess of: (a) For 'Very Low Income Households,' as more particularly defined in Health and Safety Code Section 50053(b)(2) and as generally described herein as a monthly rent which does not exceed one -twelfth of thirty percent (30%) times fifty percent (50%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. (b) For 'Low Income Households,' also defined as 'Lower Income Households,' as more particularly defined in Health and Safety Code Section 50053(b)(3) and as generally described herein as applicable to those low income households whose gross incomes exceed the maximum income for very low income households, a monthly rent which does not exceed one - twelfth of thirty percent (30%) times sixty percent (60%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit. (c) For 'Moderate Income Households,' as more particularly defined in Health and Safety Code Section 50053(b)(4) and as generally described herein as a monthly rent which does not exceed one -twelfth of thirty percent (30%) times one hundred and ten percent (110%) of the annual Orange County Median Income, adjusted for family size. Notwithstanding the foregoing, in accordance with Health and Safety Code Section 50053(b)(4), the City has determined and hereby agrees that, for Moderate Income Households with annual gross incomes that exceed one hundred ten percent (I10%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit, a maximum monthly rent shall be calculated as not to exceed one - twelfth of thirty percent (30%) times one hundred and twenty percent (120%) of the annual -3- 90087986.2 1-13-09 Orange County Median Income, adjusted for family size. 1.3 'Affordable Regulatory Agreement' or the 'Regulatory Agreement' means the Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants in the form attached hereto as Attachment 9 to be recorded against property containing For -Rent Affordable Housing Units as described in Section 3.5." 2. Section 1.8. Section 1.8 of the Housing Agreement is hereby amended and restated to read in its entirety as follows: "1.8 'Affordable Housing Unit' means one of the one hundred thirteen (113) units to be provided by Developer for sale and to be occupied by Owner -Occupiers at an Affordable Housing Cost for Very Low, Lower or Moderate Income Households and the one hundred and fifty-three (153) Units identified by the Developer and approved by the City for rent to Senior Citizens at an Affordable Rent to Very Low Income Households, Low Income Households, and Moderate Income Households, as more specifically set forth in Section 3, collectively the 'For - Rent Affordable Housing Units."' 3. Section 1.13. The definition of "Lower Income Households" is hereby amended and restated to read in its entirety as follows: "1.13 'Low Income Household,' also defined as 'Lower Income Household shall mean a Household occupied by persons and families whose gross annual income is greater than fifty percent (50%) but does not exceed eighty percent (80%) of the annual Orange County Median Income, as published by the California Department of Housing and Urban Development, with adjustments for smaller and larger family sizes." 4. Section 1.16. The definition of "Memorandum of Agreement" in Section 1.16 of the Housing Agreement shall be hereby amended and restated to read: "1.16 'Memorandum of Agreement' shall have the meaning set forth in Section 3.9." 5. Section 1.17. The definition of 'Moderate Income Household' in Section 1.17 of the Housing Agreement is hereby amended and restated to read in its entirety as follows: "1.17 'Moderate Income Household' shall mean a Household occupied by persons and families whose gross annual income is greater than eighty percent (80%) but does not exceed one hundred and twenty percent (120%) of the Orange County Median Income, as published by the California Department of Housing and Urban Development, with adjustments for smaller and larger family sizes." 6. Section 1.23. The definition of "Very Low Income Household" in Section 1.23 of the Housing Agreement is hereby amended and restated to read in its entirety as follows: -4- 90087986.2 1-13-09 "1.23. 'Very Low Income Household' shall mean a Household occupied by persons and families whose gross annual income does not exceed fifty percent (50%) of the Orange County Median Income as published by the California Department of Housing and Urban Development, with adjustments for smaller and larger family sizes." 7. Section 1. Section 1 of the Housing Agreement is amended to add the following new Sections 1.24, 1.25, 1.26, 1.27 and 1.28 to read as follows: " 1.24 'Business Days' shall mean any day on which Tustin City Hall is open for business. 1.25. '0v Program Administrator' shall mean the Assistant City Manager or other Redevelopment Agency staff member as designated by either the Assistant City Manager or the City Manager. 1.26. 'Qualified Project Period' shall mean the period beginning on the first day on which at least fifty percent (50%) of the residential rental Senior Citizen units in the Coventry Court project are completed and first occupied and ending on the date that is fifty-five (55) years after the date on which at least fifty percent (50%) of the residential rental Senior Citizen units are completed and first occupied. 1.27 'Senior Citi.:en' means persons age 55 and older. 1.28. 'Verification of Income' shall mean the documentation by the Developer from the Very Low Income Household, Low Income Household, and Moderate Income Households verifying income as described in Section 3.5.10 hereof or such other form as may from time to time be provided by the City Program Administrator to the Developer." 8. Section 3. The title of Section 3 of the Housing Agreement is hereby amended and restated as follows: "3. Affordable Housing Unit Obligations and Tenure Restrictions 9. Sections 3.1 and 3.2 of the Housing Agreement are hereby deleted in their entirety and new Sections 3.1 and 3.2 are substituted in their place. "3.1. Affordable Housing Unit Obligations 3.1.1. Developer covenants and agrees for itself, its successors, its assigns and every successor in interest of Developer that no fewer than two hundred sixty-six (266) residential units shall be constructed and available for sale to and/or rental to and occupancy by, Very Low Income Households, Low -Income Households, and Moderate Income Households (the 'Affordable Housing Units'), as identified in Attachment No. 2. Of these two hundred and sixty- six (266) Affordable Housing Units: -5- 90087986.2 1-13-09 (a) no fewer than one hundred thirteen (113) of the Affordable Housing Units shall be constructed and shall be made available as for -sale units for occupancy by qualified persons at an Affordable Housing Cost for Very Low, Lower or Moderate Income Households. All for -sale Affordable Housing Units shall be sold to and occupied by Owner -Occupiers. Of these one hundred thirteen (113) units, a minimum of twenty-five (25) units shall be sold to Very Low Income Households, a minimum of sixty-four (64) units shall be sold to Lower Income Households, and a minimum of twenty-four (24) units shall be sold to Moderate Income Households; and (b) no fewer than one hundred fifty-three (153) of the Affordable Housing Units shall be constructed and shall be made available for rental occupancy by Senior Citizens, with a minimum of thirty-six (36) units rented to 'Very Low Income Households', a minimum of sixty- one (61) units rented to Low Income Households, and fifty-six (56) units rented to Moderate - Income Households. For rent Affordable Housing Units may only be rented to and occupied by Senior Citizens. The proposed general locations of such Affordable Housing Units by specific parcel, tenure (rental or ownership), bedroom count by tenure which shall not be less than the bedroom mix (shown in Table 4 of the Affordable Housing Plan, as amended), shall be in accordance with conditions of approval of Resolution CC 05-40, including Conditions 2.1, 2.2, and 2.3, and in Planning Commission Resolution No.4134, including Conditions 1. 8, 1.9, and L 10. 3.2 Affordable For -Sale Housing Unit Requirements: Marketing and Required Documents 3.2.1 Income Qualification Standards and Procedures The Developer shall submit to the City's Program Administrator an Affordable Housing Purchaser Selection and Criteria Plan for Redevelopment Agency review and approval thirty (30) days prior to approval of a final map or issuance of a building permit. The City's Program Administrator shall approve or disapprove the Affordable Housing Purchaser Selection and Criteria Plan within twenty (20) calendar days. The Developer shall initiate marketing and sales of the Affordable Housing Units after Program Administrator's approval of Developer's Affordable Housing Purchaser Selection and Criteria Plan. Sale of Affordable Housing Units can only be after final map recordation and all necessary California Department of Real Estate approvals. Prior to execution of a sales contract for an Affordable Housing Unit, Developer shall submit to Program Administrator proposed purchaser's income certification and related income verification materials in a form acceptable to the Program Administrator and in the event that the Program Administrator finds that the provisions of the Agreement have been complied with, Program Administrator shall approve same in writing. The Developer shall submit to Program Administrator individual escrow instructions for buyers of Affordable Housing Units and all other related documents at least twenty (20) calendar days prior to close of escrow of individual Affordable Housing Units and with submission of individual escrow instructions and related items by Developer to Program Administrator. The Program Administrator shall approve or disapprove individual escrow instructions and related items for buyers of Affordable Housing Units within ten (10) calendar days of the following submission by Developer. -6- 90087986.2 1-13-09 3.2.2 Housing Affordable Documents to be Recorded. At the time of closing of each sale of an Affordable Housing Unit to an Owner Occupier, the Developer shall cause to be recorded against such Affordable Housing Unit the applicable 'Affordable Housing Covenant' based on the income level for such Affordable Housing Unit (i.e., Very Low Income, Low Income, or Moderate Income), the applicable 'Affordable Housing Trust Deed, and the "Affordable Housing Option Agreement". The Developer shall also cause to be executed a promissory note executed by the applicable Owner -Occupier. In addition, Developer shall require the prospective Owner Occupier to execute a 'Reimbursement Agreement' (Exhibit 'E' to each Affordable Housing Covenant), which executed agreement shall be delivered to the City's Program Administrator as a condition of close of escrow on the Unit. In order to enable Developer to meet its continuing housing obligations under State law and as required by the Specific Plan and Housing Agreement, and because the City has facilitated the provision of the Affordable Housing Units through its adoption of the Specific Plan and housing incentives in the Density Bonus Ordinance, and provided that the Affordable Housing Covenant, Affordable Housing Trust Deed and Affordable Housing Option Agreement are recorded concurrently with the closing of the sale of an Affordable Housing Unit, the City agrees to accept the Affordable Housing Note, which Affordable Housing Note shall be in an amount equal to the difference between the appraised fair market value of the unit as if it was a Market Rate Unit and the sales price required to sell the Unit at an Affordable Housing Cost for Very Low Income Households, Low Income Households or an Affordable Housing Cost for Moderate Income Households, as applicable. The Affordable Housing Note shall be in the applicable form attached hereto as Attachment No. 3, Each Affordable Housing Note shall be assigned by the Developer to the City at the time of the closing of the sale of each Affordable Housing Unit, and shall be secured by a deed of trust executed by the purchasing Owner Occupier and recorded against the Unit at the time of the closing of such sale (the 'Affordable Housing Trust Deed') in the applicable form attached hereto as Attachment No. 4. The Affordable Housing Trust Deed shall secure the obligations of the Owner Occupier set forth in the Affordable Housing Covenant, the Reimbursement Agreement and the Affordable Housing Promissory Note and shall be subordinate in priority only to the monetary lien of a purchase money deed of trust also recorded at the time of closing of the sale securing an amount not in excess of the applicable Affordable Housing Cost of the Unit. The Affordable Housing Deed of Trust shall be subordinate in priority only to the monetary lien of a purchase money deed of trust also recorded at the time of closing." 12. Section 3.3. The title of Section 3.3 of the Housing Agreement is amended as restated to read in its entirety as follows: "3.3 Covenant: Affordable For Sale Units." 13. Sections 3.4 and 3.5 are hereby amended and restated to read in their entirety as follows: "3.4. For -Rent Affordable Housing Unit Requirements: Marketing and Required Documents. The 153 required For -Rent Senior Citizen Affordable Housing Units shall -7- 90087986.2 1-13-09 be constructed in the Coventry Court project as depicted in general location in Attachment No. 2. With respect to the Coventry Court Senior Citizen rental apartment project, 36 units shall be rent restricted and occupied by Very Low Income Senior Citizen Households, 61 units shall be rent restricted and occupied by Low Income Senior Citizen Households, and 56 units shall be rent restricted and occupied by Moderate Income Senior Citizen Households, and 87 units shall be rented at market rates. 3.5 Covenant Re: Affordable For -Rent Units. 3.5.1 The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to property designated to contain For -Rental Senior Citizen Affordable Housing Units to construct the For -Rent Senior Citizen Affordable Housing Units described in Section 3.4 and depicted as to general location on Attachment No. 2 and said units shall be restricted for a period terminating fifty-five (55) years from the issuance of a certificate of occupancy for a rental project and expiration of the Qualified Project Period and according to the following terms: (a) Affordable Housing Units designated by general parcel location in Attachment No. 2 as being For -Rent to Very Low -Income Households shall only be rented and occupied by Senior Citizens in Very Low -Income Households; (b) Affordable Housing Units designated by general parcel location in Attachment No. 2 as being For -Rent to Low -Income Households shall only be rented and occupied by Senior Citizens in Low -Income Households; and (c) Affordable Housing Units designated by general parcel location in Attachment No. 2 as being For -Rent to Moderate Income Households shall only be rented and occupied by Senior Citizens in Moderate Income Households. 3.5.2 In order to impose upon a parcel the obligations set forth above in Section 3.5.1, prior to issuance by the City's Building Official of further building permits for the Coventry Court project, there shall be recorded against the Coventry Court project site an 'Affordable Housing Regulatory Agreement and Declaration of Restrictive Covenants,' (hereinafter referred to as the 'Regulatory Agreement') in the form of the Regulatory Agreement and applicable covenants attached hereto as Attachment No. 9. The Developer shall cause the Regulatory Agreement, and all amendments and supplements hereto and thereto, to be recorded and filed in the Official Records and in such other places as the Program Administrator may reasonably request. The Developer shall pay all fees and charges incurred in connection with any such recording. Written evidence of the recorded Regulatory Agreement shall be provided to the Program Administrator. 3.5.3 Renting to Affordable Households. Very Low Income Units, Low Income Units and Moderate Income Units shall be rented to eligible and qualified Senior Citizens in Very Low Income Households, Low Income Households and Moderate Income Households in accordance with the following terms: a) Developer shall use its best efforts to fill vacancies of Very Low Income, Low Income, and Moderate Income Affordable Units as soon as possible following the date the Affordable Housing Unit becomes available for renting, by renting the units to Senior Citizens in Very Low Income Households, Low Income Households, and Moderate Income -8- 90087986.2 1-13-09 Households as applicable to such units and as described in Section 3.4.1 and generally depicted on Attachment No. 2. Developer shall lease available units to eligible Affordable Households on a first-come, first-served, and non-discriminatory basis. Developer shall notify the City Program Administrator of any Affordable Housing Units that either (a) fails to have been leased to a Senior Citizen in a Very Low Income Household, Low Income Household, or Moderate Income Household, as applicable, within thirty (30) days after the issuance of a certificate of occupancy for the unit (the 'Initial Leasing Period'), or (b) becomes available as a result of tenant vacation of the premises. b) Developer shall create and maintain an 'interest list' which includes all potential tenants who have expressed an interest in leasing a unit within each rental project. The interest list shall clearly designate whether such potential tenant is a Senior Citizen in a Very Low Income Household, Low Income Household, or Moderate Income Household. The interest list shall clearly indicate whether such potential tenant will be receiving rental assistance under the U.S. Department of Housing and Urban Development (HUD) Section 8 program (or other federal programs that may replace the Section 8 program). Developer shall use its best efforts to fill vacancies of Very Low Income Units, Low Income Units, and Moderate Income Units as soon as possible following the date the Affordable Housing Units become available for renting, by renting the units to Senior Citizens in Very Low Households, Low Income Households, and Moderate Income Households as applicable to such units. C) An Affordable Housing Unit that either (a) fails to be leased within the Initial Leasing Period to a Senior Citizen in a Very Low Income Household, Low Income Household, or Moderate Income Household, as may be applicable, or (b) becomes available as a result of tenant vacation of the premises, shall be rented to a new eligible and qualified tenant in accordance with the following procedure: (i) Developer shall make a reasonable effort to contact eligible and qualified prospective tenants in the order of priority on the interest list as set forth in this Section 3.5.3 above and, Developer shall lease available units to such eligible tenants on a first- come, first-served, basis; (ii) Each such eligible and qualified prospective tenant shall have three (3) business days to notify Developer of the prospective tenant's intent to accept the unit, and must thereafter execute a lease for the unit within seven (7) days of such acceptance; (iii) Failure of the eligible and qualified prospective tenant to timely notify Developer of accepting the unit or to thereafter timely execute a lease for the unit shall be deemed rejection of the unit, and Developer may seek other eligible tenants as set forth in this subsection (c) and following. d) In the event the 'interest list' maintained by the Developer does not include a prospective tenant that is eligible and qualified as a tenant of a vacant Affordable Housing Unit, or in the event Developer is unable to lease a vacant Affordable Housing Unit after fully complying with the procedures set forth herein, the Developer may lease the restricted -9- 90087986.2 1-13-09 unit to any eligible and qualified Very Low Income Household, Low Income Household, or Moderate Income Household for the appropriate restricted unit. e) Senior Citizens in Low Income Households, Very Low Income Households and Moderate Income Households who occupy Low Income Units, Very Low Income Units and Moderate Income Units at the expiration of the Qualified Project Period and who qualify as Very Low Income Households, Low Income Households, or Moderate Income Households on such date shall be permitted to continue to occupy those Low Income Units, Very Low Income Units and Moderate Income Units for a period of one (1) year, beginning on the first day after the expiration of the Qualified Project Period; provided, however, that annual rent increases during such one (1) year period shall not exceed an amount equal to the existing rent for such unit plus an amount equal to the greater of (i) five percent (5%) or (ii) the percentage increase that would have been permitted had the Qualified Project Period not expired. Except as provided in the preceding sentence, upon the expiration of the Qualified Project Period, the Affordable Housing Units shall no longer be subject to the provisions of this Section 3. f) The Developer agrees to provide to Very Low Income Households, Low Income Households, and Moderate Income Households within the rental project sites notice of all rent increases pursuant to applicable Governmental Requirements, including rules and regulations of the State. 3.5.4 Rental Rates. Rental rates for all Affordable Housing Units to which this Agreement and a Regulatory Agreement are applicable shall not exceed the higher of following: (a) The Affordable Housing Rent as defined in the California Health and Safety Code Section 50053 for Very Low Income Households (Section 50053 (b)(2)), for Low Income Households (Section 50053 (b)(3), and for Moderate Income Households (Section 50053 (b)(4), less the monthly allowance for utilities and services (excluding telephone) to be paid by the household; or (b) If an Affordable Housing Unit designated for rent to a Senior Citize in a Very Low Income Household or Low Income Household receives federal or state rental subsidy, and a Very Low or Low Income tenant pays as a contribution toward rent no more than thirty percent (30%) of the household's adjusted income, then the maximum rent (i.e., tenant contribution plus any rental subsidy) shall be the fair market rent allowable under the federal or state rental subsidy certificate or voucher program. Alternatively, the maximum monthly rent that may be charged to a qualified tenant who is subject to this limitation may be the monthly adjusted income of the qualified tenant multiplied by thirty percent (30%) and divided by 12 and, if applicable, a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant shall be subtracted. 3.5.5 Voucher Holders. No Affordable Housing Units designated for rent to a -10- 90087986.2 1-13-09 Senior Citizen in a Very Low Income Household or Low Income Income Household shall be refused for leasing to a holder of a certificate or voucher under 24 CFR Part 982 Section 8 Rental Certificate Program or Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a HOME tenant -based assistance program because of the status of the prospective Very Low Income Household or Low Income Household as a holder of such certificate of family participation, rental voucher, or comparable tenant -based assistance document. 3.5.6 Rent Schedule and Utility Allowances. The City Program Administrator shall annually review and approve rents proposed by the Developer for the Affordable Housing Units to determine that the Developer has properly applied the rental restrictions contained in this Section 3.5 and shall provide the Developer with a schedule establishing the monthly allowances for utilities and services to be paid by the tenants of the units. The Developer shall re-examine the income of each tenant household living in the Affordable Housing Unit at least annually. The maximum monthly rent shall be recalculated by the Developer and reviewed and approved by the City Program Administrator annually and may change as changes in the applicable gross rent amounts, the income adjustments, or the monthly allowance for utilities and services warrant. The Developer shall not impose on a tenant an increase in rent approved by the City Program Administrator if that increase is not permitted to be imposed under the lease between Developer and the tenant. Developer shall provide not less than thirty (30) days prior written notice to affected tenants before implementing any increase in rents. 3.5.7 Increases in Income. (a) If, as a result of the annual re-examination of incomes required pursuant to Section 3.5.6, the Developer determines that a household that qualified as a Very Low Income Household for purposes of paragraph 3.5.3 above, no longer is a Very Low Income Household but instead qualifies as a Low Income Household, then the Developer may require that household to pay the Affordable Rent for Low Income Units, and the Developer shall lease the next available Low Income or Moderate Income Unit to a Senior Citizen in a Very Low Income Household at the rent permitted under Section 3.5.3. (b) If, as a result of the annual re-examination of incomes required pursuant to Section 3.5.6, the Developer determines that a household that qualified as a Very Low Income Household for purposes of paragraph 3.5.3 above, no longer is a Very Low Income Household but instead qualifies as a Moderate Income Household, then the Developer may require that household to pay the Affordable Rent for Moderate Income Units, and the Developer shall lease the next available Low Income Unit or Moderate Income Unit to a Senior Citizen in a Very Low Income Household at the rent permitted under Section 3.5.3. (c) If, as a result of the annual re-examination of incomes required pursuant to Section 3.5.6, the Developer determines that a household that qualified as a Low Income Household for purposes of paragraph 3.5.3 above, no longer is a Low Income Household but instead qualifies as a Moderate Income Household, then the Developer may require that household to pay the Affordable Rent for Moderate Income Units, and the Developer shall lease -11- 90087986.2 1-13-09 the next available Moderate Income Unit to a Senior Citizen in a Low Income Household at the rent permitted under Section 3.5.3. (d) If, as a result of the annual re-examination of incomes required pursuant to Section 3.5.6, the Developer determines that a household that qualified as a Very Low Income Household, Low Income Household, or Moderate Income Household for purposes of paragraph 3.5.3 above, no longer is a Very Low Income Household, Low Income Household, or Moderate Income Household, then the Developer may require that household to pay fair market rent, and the Developer shall lease the next available apartment unit in the development to a Senior Citizen in a Very Low Income Household, Low Income Household, or Moderate Income Household (whichever class of household that the original Affordable Housing Units was to be leased to) at the affordable rent for such Very Low Income Unit, Low Income Unit, or Moderate Income Unit. Such next available apartment unit shall then be deemed to be a Very Low Income Unit, Low Income Unit, or Moderate Income Unit, subject to the provisions of this Section 3.5, and the previous unit shall no longer be subject to the provisions of this Section 3.5. (e) Notwithstanding the foregoing provisions, it is the intent of this Agreement and the Regulatory Agreement that the number of Very Low Income Units, Low Income Units, and Moderate Income Units be allocated as among the Affordable Housing Units as provided in Section 3.4. In the event the foregoing provisions result in an allocation of Affordable Housing Units different from that provided in Section 3.4, Developer shall lease the next available Affordable Housing Unit to a Senior Citizen in a Very Low Income Household, Low Income Household, or Moderate Income Household, as the case may be, in order to correct the allocation. 3.5.8 Minimum Rents. Notwithstanding the other provisions of this Section 3.5, Developer shall not be required to charge a rent for a Very Low Income Unit, Low Income Unit, or Moderate Income Unit that would be lower than the maximum rent Developer would have been permitted to charge for the Unit had the determination of maximum rent been made on the date the City and Developer entered into the Agreement. 3.5.9 Tenant Protections (a) Rental Agreement. The Rental Agreement (lease) between Developer and the Affordable Household must be for not less than one year, unless the City Program Administrator provides prior written approval, and may not contain any of the following provisions: (i) Any agreement by the tenant to be sued, to admit guilt or to consent to a judgment in favor of the Developer in a lawsuit brought in connection with the lease. (ii) Any agreement by the tenant that the Developer may take, hold, or sell personal property of household members without notice to the tenant and a court -12- 90087986.2 1-13-09 decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Developer may dispose of this personal property in accordance with applicable state law. (iii) Any agreement by the tenant not to hold the Developer or its agents legally responsible for any action or failure to act, whether intentional or negligent. (iv) Any agreement of the tenant that the Developer may evict the tenant or household members without notice to the tenant. (v) Any agreement by the tenant that the Developer may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties. (vi) Any agreement by the tenant to waive any right to a trial by jury. (vii) Any agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. (viii) Any agreement by the household to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the Developer against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. (b) Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of an affordable housing tenant except for violation of the terms and conditions of the lease; for violation of applicable federal, state, or local law; or for other good cause. Any termination or refusal to renew must be preceded by not less than sixty (60) days by the Developer's service upon the tenant of a written notice specifying the grounds for the action. 3.5.10 Very Low Income, Low Income, and Moderate Income Senior Citizen Tenants; Records and Reports. The Developer hereby represents, warrants and covenants as follows: (a) Within 30 days after the date on which at least ten percent (10%) of the dwelling units in the Project are first occupied, the Developer shall execute and deliver a written notice, in the form provided by the City Program Administrator or otherwise approved by Program Administrator a copy of a certificate identifying said date and the beginning date and earliest ending date of the Qualified Project Period, which certificate shall be in the form provided by Program Administrator or otherwise approved by City's Program Administrator. The Developer shall record a copy of such certificate in the Official Records. -13- 90087986.2 1-13-09 (b) The Developer shall obtain, complete and maintain on file Verifications of Income qualification, in the form provided by City's Program Administrator or otherwise approved by City's Program Administrator, from each Very Low Income Household, Low Income Household or Moderate Income Household, including (i) a Verification of Income and age qualification dated immediately prior to the initial occupancy of such Very Low Income Household, Low Income Household or Moderate Income Household and (ii) thereafter, annual Verifications of Income and age qualifications which must be dated as of June 1 st of each year, or such other date as may be mutually agreed upon by the City's Program Administrator and the Developer, and in no event less than once in every twelve-month period following each Very Low Income Household's, Low Income Household's, or Moderate Income Household's occupancy of a unit in the Project. The Developer will obtain such additional information as may be required in the future by the State or by the City's Program Administrator, due to changes in federal or state law. (c) A copy of the most recent Verification of Income and age qualification for Very Low Income Household, Low Income Household, and Moderate Income Household commencing upon occupation or continuing occupation of a Very Low Income Unit, Low Income Unit, or Moderate Income Unit (and not previously filed) shall be attached to the Certificate of Continuing Program Compliance, in the form provided by City's Program Administrator or otherwise approved by City's Program Administrator which is to be filed with the City's Program Administrator no later than the fifteenth (15th) day of each month following the receipt by the City's Program Administrator of the Completion Certificate to and including the month in which such report indicates that fifty percent (50%) of the units in the Coventry Court Project are occupied by Senior Citizens in Very Low Income Households, Low Income Households and Moderate Income Households and, thereafter, no later than the first (1st) day of the sixth (6th) month of each calendar year until the end of the Qualified Project Period. (d) The Developer shall make a diligent and good -faith effort to verify that the information provided by an applicant in the Verification of Income and Senior Citizen age qualifications is accurate by taking the following steps, as a part of the verification process: (1) obtain birth certificates for all household members; (2) obtain pay stubs for the most recent one-month period or the last three months bank statements for self-employed individuals, and (3) obtaining income W-2 Wage and Earnings Statements and tax returns for the most recent tax year; alternatively, if determined appropriate for the tenant's situation the following may be obtained: (i) obtain an income verification from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (ii) if the applicant is unemployed, does not have income tax returns or is otherwise unable to provide other forms of verification as required above, obtain another form of independent verification satisfactory to the Program Administrator. (e) The Developer shall maintain complete and accurate records pertaining to the Very Low Income Units, Low Income Units, and Moderate Income Units and shall permit any duly authorized representative of the City to inspect the books and records of the Developer pertaining to the Project, including those records pertaining to the occupancy of the Affordable Housing Units. -14- 90087986.2 1-13-09 (f) The Developer shall prepare and submit to the City Program Administrator no later than the first (1st) day of the sixth (6th) month of each calendar year until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance executed by the Developer with the following information: (i) The number of the dwelling units of the Project which were occupied, pursuant to Section 3.4 above, by Senior Citizens in Very Low Income Households, Low Income Households, and Moderate Income Households during such period and such other tenant information as may be reasonably required as stated on the form of the Certificate of Continuing Program Compliance acceptable to the Program Administrator; and (ii) A statement either: (a) that no un -remedied default has occurred under the Regulatory Agreement or (b) a default has occurred, in which event the Certificate shall describe the nature of the default in detail and set forth the measures being taken by the Developer to remedy such default. 3.5.11 Each lease or rental agreement for an Affordable Housing Unit shall contain a provision to the effect that the Developer has relied on the Verification of Income Certification and age qualification and supporting information supplied by the Very Low Income Household, Low Income Household, or Moderate Income Household in determining qualification for occupancy of the Very Low Income Units, Low Income Units and Moderate Income Units by Senior Citizens and that any material misstatement in such verification (whether or not intentional) will be cause for immediate termination of such lease or rental agreement. Each such lease or rental agreement shall also provide (and shall so disclose to the tenant) that the tenant's income and age qualification is subject to annual certification in accordance with the terms of the Regulatory Agreement, and that, if upon review of any such verification the tenant's income exceeds the then applicable income limit for a Very Low Income Household, Low Income Household, or Moderate Income Household, such household shall cease to qualify as a Very Low Income Household, Low Income Household, or Moderate Income Household, and, as a consequence, said household's Lease shall be subject to termination on such prior notice as the City's Program Administrator deems reasonable. 3.5.12 Termination of For -Rent Affordable Housing Covenants. The provisions of this Section 3.5 shall remain in full force and effect for the period provided in Section 3.5.1." 14. Section 3.6 is hereby deleted in its entirety and a new Section 3.6 is substituted in its place as follows: "3.6 Purpose of Affordable Housing Provisions. The City and the Developer hereby agree that the provisions of this Agreement relating to the Affordable Housing Units are entered into in order to achieve a stabilized community of Owner -Occupied for -sale Affordable Housing Units and for -rent Affordable Housing Units. It is the intention of the City and the Developer -15- 90087986.2 1-13-09 that the City and its successors and assigns be empowered to enforce the covenants contained in this Affordable Housing Agreement and all Affordable Housing Covenants, or Regulatory Agreements, that each of the foregoing empower the City and its successors and assigns to enforce the covenants contained herein, and that each of the foregoing should also be construed and interpreted." 15. Section 3 is hereby amended to add the following new Section 3.7: "3.7 Compliance with Density Bonus Ordinance, Specific Plan and Applicable State Law. The City and the Developer hereby agree that the provisions of this Agreement comply with the Specific Plan, Density Bonus Ordinance, Government Code Section 65915, and California Health and Safety Code Sections 33413, 33334.3, and 33334.14, and that such provisions fully satisfy the requirements of such code sections." 16. Section 3 is hereby amended to add the following new Section 3.8: "3.8 Other Covenants: Developer covenants and agrees for itself, its successors, its assigns that: 3.8.1 Obligation to Refrain from Discrimination. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site or any portion thereof, nor shall Developer itself or any person claiming under or through it (including any tenant) establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees on the Property or any portion thereof. 3.8.4 Redevelopment Law: Form of Nondiscrimination and Non -segregation Clauses. The Developer itself and any person claiming under or through it shall refrain from restricting the sale of the property on the basis of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry of any person. All deeds, leases or contracts shall contain or be subject to substantially the following non-discrimination or non - segregation clauses: (a) In Deeds: 'The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land.' -16- 90087986.2 1-13-09 (b) In Leases: 'The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: 'That there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein leased.' (c) In Contracts: 'There shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land.' The Developer covenants and agrees for itself, its successors, its assigns and every successor in interest to the Site or any part thereof, there shall be no discrimination against or segregation of any person, or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, transfer, rental or lease (where permitted), use, occupancy, tenure or enjoyment of the Site nor shall the Developer itself or any person claiming under or through it establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of purchasers of the Property, or renters or lessees of the Property, or any portion thereof." 17. Section 3 of the Housing Agreement is hereby amended to add a new Section 3.9 to read: "3.9 Memorandum of Agreement. A Memorandum of Agreement, substantially in the form of Attachment No. 8, attached hereto and incorporated herein by this reference, shall be recorded against the Property upon execution of this Agreement. A Memorandum of any Amendments to the Agreement, shall also be prepared, substantially in the form of Attachment No. 10, attached hereto and incorporated herein by this reference, and shall be recorded against the Property upon execution of any Amendments to the Agreement." 18. Section 17. Section 17 is hereby amended to delete the original Attachment No. 2 and replace it in its entirety with a new Attachment No. 2 , to add Attachment No. 9, and to add Attachment 10, with the Attachments included in the Agreement, as amended, to read as follows: -17- 90087986.2 1-13-09 "Attachment No. 1: Legal Description Attachment No. 2: Affordable Housing Units — Number, Location, Bedrooms Attachment No. 3: Affordable Housing Note Attachment No. 4: Affordable Housing Deed of Trust Attachment No. 5: Affordable Housing Covenant (Very Low Income) Attachment No. 6: Affordable Housing Covenant Attachment No. 7: Affordable Housing Covenant (Moderate Income) Attachment No. 8: Memorandum of Agreement Attachment No. 9: Regulatory Agreement and Declaration of Restrictive Covenants (Coventry Court Rental Project) Attachment No. 10: Memorandum of First Amendment to the Housing Agreement The new Attachment No. 2, Attachments No. 9 and Attachment No. 10 to the Housing Agreement will be in the forms attached hereto as Exhibits 'A,' , Exhibit `B' and 'C,' respectively." 19. Counterparts. This First Amendment may be executed in counterparts. Each counterpart shall be deemed an original, and all counterparts shall be deemed the same instrument with the same effect as if all parties hereto had signed the same signature page. In addition, a copy of this First Amendment executed by a party hereto and telecopied to the other party shall be deemed to constitute delivery of an originally executed copy of this First Amendment to the other party. A facsimile signature shall be enforceable to the same extent as an original signature. -18- 90087986.2 1-13-09 IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of the date above written. "CITY" CITY OF TUSTIN, ATTEST: a California municipal corporation Pamela Stoker, City Clerk By: William Huston, City Manager or Christine Shingleton, Assistant City Manager APPROVED AS TO FORM: Woodruff, Spradlin & Smart Douglas Holland, City Attorney "DEVELOPER" MARBLE MOUNTAIN PARTNERS, LLC, MOFFETT MEADOWS its sole member, a Delaware limited liability company, PARTNERS, LCC, its administrative member a Delaware limited liability company By: Its: By: Its: ACKNOWLEGMENT AND CONSENT OF ASSIGNEES TO FIRST AMENDMENT The Undersigned, as assignees of portions of the property subject to the Housing Agreement in accordance with the assignment agreements referenced in Recital C hereof, consent to the foregoing amendments and agree to be bound thereby if and the extent such amendments affect the property owned by them. ASSIGNEES: For Lot 4 of Finance and Conveyance Map No. 16857 -19- 90087986.1 9/24/09 TUSTIN COVENTRY, LLC, a California Delaware limited liability company By: Lennar Homes of California, Inc., a California corporation, its managing Member By: Name: Title: For Lots 8, 10 and 12 of Finance and Conveyance Map No. 16857 Lennar Homes of California, Inc, a California corporation By: Name: Title: For Lot 7 of Finance and Conveyance Map No. 16857 William Lyon Homes, Inc., a California corporation By: Name: Title: -20- 90087986.1 9/24/09 EXHIBIT "A" ATTACHMENT 2 TO HOUSING AGREEMENT AFFORDABLE HOUSING PLAN 0 a 0 a a as 0 a o o 0.. & gag g oaa . N € 11UHILI14, 111 a a a _ _ U0LO3NNOO1S3M --.— ----- l ... _ � 1,.,`• e' , � I Cd f �II pi 11� x , I L. II s� x u I k 2 x x d : 0 a 0 A g 5 35�a .0. o cy Jo ca cp4 .Cj A4 i5 LA fl l c3 UJ% is C4 ut tm Cb Income Level BUILDING 1 (TOTAL OF 8 BUILDINGS) - B.T.-1 Plan Bedrooms/Baths Units/Bldg No. of Bldgs Total Unit Very Low Income Plan 1 1 Bedroom/1 Bath 4 8 32 Low Income Plan 1 1 Bedroom/1 Bath 4 8 32 Low Income Plan 2 2 Bedroom/2 Bath 2 8 16 Moderate Income Plan 2 2 Bedroom/2 Bath 2 8 16 Moderate Income Plan 3 2 Bedroom/2 Bath 3 8 24 Total 15 120 Income Level BUILDING 2 (TOTAL OF 1 BUILDING) - B.T.-2 Plan Bedrooms/Baths Units/Bldg No. of Bldgs Total Unit Very Low Income Plan 1 1 Bedroom/1 Bath 4 1 4 Low Income Plan 1 1 Bedroom/1 Bath 4 1 4 Low Income Plan 2 2 Bedroom/2 Bath 1 1 1 Moderate Income Plan 2 2 Bedroom/2 Bath 3 1 3 Moderate Income Plan 3 2 Bedroom/2 Bath 3 1 3 Total 15 15 Income Levet BUILDING 3 (TOTAL OF 1 BUILDING) - B.T.-3 Plan Bedrooms/Baths Units/Bldg No. of Bldgs Total Unit Low Income Plan 1 1 Bedroom/1 Bath 8 1 8 Moderate Income Plan 2 2 Bedroom/2 Bath 4 1 4 Moderate Income Plan 3 2 Bedroom/2 Bath 3 1 3 Moderate Income Plan 4 2 Bedroom/2 Bath 3 1 3 Total 18 18 EXHIBIT "B" ATTACHMENT 9 TO HOUSING AGREEMENT AFFORDABLE HOUSING REGULATORY AGREEMENT AND DECLARATION OF COVENANTS CITY OF TUSTIN OFFICIAL BUSINESS REQUEST DOCUMENT BE RECORDED AND EXEMPT FROM RECORDING FEES PER GOVERNMENT CODE SECTION 6103 AND 27383 RECORDING REQUESTED BY ) AND WHEN RECORDED MAIL TO: ) City of Tustin ) 300 Centennial Way ) Tustin, California 92780 ) Attention: Redevelopment Agency ) City Clerk COPY TO: [SPACE ABOVE LINE FOR RECORDER'S USE ONLY] REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS THIS REGULATORY AGREEMENT AND DECLARATION OF RESTRICTIVE COVENANTS (this "Regulatory Agreement" ) is made and entered into as of , 2010, by and between the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a California Redevelopment Agency ("Agency") and the CITY OF TUSTIN, a municipal corporation and public body corporate and politic of the State of California (together with any successor of City, the "City") and together with the Agency collectively referred to as "CITY" and Tustin Coventry Seniors, , LLC, a California limited liability company (the "Developer"). The City and Developer are sometimes referred to herein individually as a "Party" and collectively as the "Parties". RECITALS A. Developer and City have entered into that Housing Agreement (Columbus Square) (the "Original Housing Agreement") dated as of June 20, 2005, as amended by that certain First Amendment to the Housing Agreement dated as of , 2010 (as amended, the "Housing Agreement") pursuant to which the Developer is required to construct a certain number of Affordable Housing Units and to provide for the sale and rental of these Affordable Housing Units to Senior Citizens at Affordable Rents to Very Low Income Households, Low Income Households and Moderate Income Households. Developer has also obtained site plan and design review approval and a conditional use permit as approved by the Planning Commission by Resolution No. 4134. B. Conditions of the Affordable Housing Agreement, site plan and design review and conditional use permit require the Developer's agreement to enforce certain senior citizen housing and affordable senior housing restrictions. C. Developer owns, or intends to acquire, the real property legally described on Exhibit "A" attached hereto and incorporated herein (the "Property), and to construct improvements (the "Improvements") for a rental housing project on the Property (the "Project") to meet a portion of its obligations under the Housing Agreement. D. The "Developer" as used in this Agreement shall solely mean Tustin Coventry Seniors, LLC a California limited liability company, which is the Developer as of the effective date of this Agreement, or following any assignment approved by the City, any assignee of or successor of the Developer's rights, obligations, powers, and responsibilities required by this Agreement. E. In consideration of the City's agreement to support the Project pursuant to the Developer's commitments under the Housing Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the City and the Developer now desire to enter into this Regulatory Agreement to set forth their agreement regarding the affordable housing restrictions for the Project and to cause said affordable housing restrictions to run with the land for the benefit of both the Agency and the City. AGREEMENT NOW, THEREFORE, the City and the Developer hereby agree as follows: 1. Definitions Capitalized terms used in this Regulatory Agreement, unless otherwise defined herein (including Exhibit "B" attached hereto), shall have the meanings specified in the Affordable Housing Agreement. 2. Development of the Project Site. 2.1 Permits and Governmental Approvals As part of the proposed construction of the Project, prior to any construction requiring a building permit for the Project, the Developer shall obtain all required City approvals, building permits and Design Review application approvals in accordance with the City of Tustin Municipal Code (the "City Code"), the Specific Plan, all Government Requirements and the Housing Agreement. 2.2 Local, State and Federal Law. The Developer shall carry out the construction of the Project in conformity with the Housing Agreement, the City Code, the Specific Plan and all applicable Governmental Requirements. Specifically, and without limiting the foregoing, the -2- Developer shall at all times comply with all applicable federal and State labor rules including, but not limited to, any applicable prevailing wage requirements under California law. 2.3 Inspections. 2.3.1 During the construction of the Project, the City shall have the right to inspect all Improvements thereto, including but not limited to, dwelling unit interiors and the grounds of the Project for City and/or the State of California (the "State") building, housing and fire code and safety violations. Developer shall correct any such violations within a reasonable period of time after receiving written notice of a violation of any building, housing, fire or safety code applicable to the Project. 2.3.2 Upon completion of the construction work, the City shall have the right to conduct annual inspections of the Project, including the dwelling unit interiors and the grounds of the Project for City and/or State building, housing and fire code and safety and occupancy violations. All rental agreements and contracts executed with the tenants in the Project shall include the right of the City to inspect the interior of the dwelling units upon forty- eight (48) hours notice. The City's Program Administrator ("Program Administrator") agrees to use its best efforts to cause representatives of City to coordinate annual inspections in conjunction with annual inspections by other agencies. 2.4 Time Limit for Construction. All Improvements on the Project shall be completed to the satisfaction of the Program Administrator in accordance with the Schedule of Performance which is attached as Exhibit C this Agreement, as may be modified by Program Administrator and Developer from time to time. The City may at its sole discretion, upon written request from the Developer, extend the times specified in the Schedule of Performance as evidenced by written notice and response from the Program Administrator. 3. Covenants Related to Affordable Housing. The Developer, for itself, its successors, its assigns and every successor in interest to the Property, hereby agrees, represents, warrants and covenants as follows: 3.1 Use of Very Low Income, Low Income and Moderate Income Senior Citizen Units. Developer shall construct on the Property a 240 unit Senior Citizen independent living rental housing Project. The Project shall include not less than 36 Very Low Income Units, 61 Low Income Units and 56 Moderate Income Units to be rented to, occupied by, or held available only for rental to Senior Citizens in Very Low Income Households, Low Income Households and Moderate Income Households at an Affordable Rent subject to the age and occupancy restrictions contained in this Section 3 and the Housing Agreement. The remaining 88 units in the Project shall be rented at market rates to Senior Citizens with no restrictive covenants on rental rates. 3.2 Identification of Affordable Housing Units. During the Qualified Project Period, occupancy of the Very Low Income Units, Low Income Units and Moderate Income Units shall -3- be dispersed throughout the Project in a manner approved by the City in order to avoid concentration of Very Low Income Units, Low Income Units and/or Moderate Income Units. The Very Low Income Units, Low Income Units and Moderate Income Units shall be allocated among the units as follows: Affordable Housing Unit Types Very Low Income Units Low Income Units Moderate Income Units Studio Units 1 Bedroom Units 36 44 2 Bedroom Units 17 56 3 Bedroom Units Totals 36 61 56 3.3 Renting Limited to Very Low Income Households, Low Income Households and Moderate Income Households. The Affordable Housing Units shall be rented to eligible and qualified Very Low Income, Low Income and Moderate Income Households in accordance with the following terms: 3.3.1 Developer may not charge rent for an Affordable Housing Unit in excess of an Affordable Rent for such Affordable Housing Unit. 3.3.2 Only one qualified household shall be permitted to occupy and reside in a unit at any one time and said unit shall be used as the principal residence of the qualified household during the term of any lease and for no other purpose. A qualified household shall not lease or sublease the unit or its right of occupancy. 3.3.3 The number of persons permitted to occupy the Affordable Housing Unit shall not exceed the occupancy permitted pursuant to the general requirements of the United States Department of Housing and Urban Development, which as the date of this Agreement is two persons per bedroom, plus one person (i.e., for a two bedroom unit the maximum number of persons residing in the unit can be five persons). 3.3.4 Developer shall use its best efforts to fill vacancies of Very Low Income Units, Low Income Units and Moderate Income Units as soon as possible following the date the Affordable Housing Unit becomes available for renting, by renting the units to Very Low Income Households, Low Income Households and Moderate Income Households as applicable to such units. Should multiple tenants be equally eligible and qualified for a Very Low Income Unit, Low Income Unit or Moderate Income Unit, Developer shall lease available units to such eligible tenants on a first-come, first-served, and non-discriminatory basis. Developer shall notify the Program Administrator of any Affordable Housing Unit that either (a) fails to be leased within thirty (30) days after the issuance of a certificate of occupancy for the unit to a Very Low Income Household, Low Income Household or Moderate Income Household, as may -4- be applicable (the "Initial Leasing Period"), or (b) becomes available as a result of tenant vacation of the premises. 3.3.5 Developer shall create and maintain an "interest list" which includes all those potential Senior Citizen tenants who have expressed an interest in leasing a unit within the Project. The interest list shall designate whether a potential Senior Citizen tenant is in a Very Low Income Household, Low Income Household or Moderate Income Household. The interest list shall clearly designate whether such potential tenant will be receiving rental assistance under the U.S. Department of Housing and Urban Development (HUD) Section 8 program. 3.3.6 An Affordable Housing Unit that either (a) fails to be leased within the Initial Leasing Period to a Very Low Income Household, Low Income Household or Moderate Income Household, as may be applicable, or (b) becomes available as a result of tenant vacation of the premises, shall be rented to a new eligible and qualified Senior Citizen tenant in accordance with the following procedure: 3.3.6.1 Developer shall make a reasonable effort to contact eligible and qualified prospective Senior Citizen tenants listed on the "interest list" created in Subsection 3.3.5 above, and Developer shall lease available units to such eligible tenants on a first-come, first-served, basis; 3.3.6.2 Each such eligible and qualified prospective Very Low Income Household(s), Low Income Household(s), or Moderate Income Household(s) shall have five (5) business days after being contacted by Developer to notify Developer of the tenant's intent to accept the unit, and must thereafter execute a lease for the unit within seven (7) days of such acceptance; 3.3.6.3 Failure of the eligible and qualified prospective Very Low Income Household(s), Low Income Household(s), or Moderate Income Household(s) to timely notify Developer of accepting the unit or to thereafter timely execute a lease for the unit, shall be deemed a rejection of the unit, and Developer may seek other eligible tenants as set forth in Subsections 3.3.6 and 3.3.7 and following. 3.3.7 In the event the "interest list" maintained by Developer as provided in Section 3.3.5 does not include a prospective Senior Citizen tenant that is eligible and qualified as a tenant of a vacant Affordable Housing Unit, or in the event Developer is unable to lease a vacant Affordable Housing Unit after fully complying with the procedures set forth in Subsections 3.3.6, then Developer may lease the restricted unit to any eligible and qualified Very Low Income Household, Low Income Household or Moderate Income Household for the appropriate restricted unit. 3.3.8 Senior Citizens who are in Very Low Income Households, Low Income Households or Moderate Income Households who occupy Affordable Housing Units at the expiration of the Qualified Project Period and who qualify as Very Low Income Households, Low Income Households or Moderate Income Households on such date shall be permitted to continue to occupy those Affordable Housing Units for a period of one (1) year, beginning on the first day after the expiration of the Qualified Project Period; provided, however, that (i) -5- annual rent increases during such one (1) year period shall not exceed an amount equal to the existing rent for such unit plus an amount equal to the greater of five percent (5%) or (ii) the increase that would have been permitted had the Qualified Project Period not expired. Except as provided in the preceding sentence, upon the expiration of the Qualified Project Period, the Affordable Housing Units shall no longer be subject to the provisions of this Section 3. 3.3.9 The Developer agrees to provide to Very Low Income Households, Low Income Households and Moderate Income Households within the Project notice of all rent increases pursuant to all applicable Governmental Requirements, including rules and regulations of the State of California. 3.4 Rental Rates. Rental rates for all Affordable Housing Units to which this Regulatory Agreement is applicable shall not exceed the higher of following: 3.4.1 The "Affordable Rent" for Very Low Income Households, Low Income Households and Moderate Income Households shall be as defined in Exhibit "B"; or 3.4.2 If the Senior Citizen in a Very Low Income Household or Low Income Household receives a federal or State rental subsidy and that Very Low Income Household or Low Income Household pays as a contribution toward rent no more than 30% of the household's adjusted income, then the maximum rent (i.e., tenant contribution plus any rental subsidy) is the fair market rent (FMR) allowable under the federal or State rental subsidy certificate or voucher program. To obtain the maximum monthly rent that may be charged to a qualified Tenant that is subject to this limitation, the Developer shall multiply the annual adjusted income of the qualified Tenant by 30 percent (30%) and divide by 12 and, if applicable, subtract a monthly allowance for any utilities and services (excluding telephone) to be paid by the tenant to be used in calculating the maximum rent allowed under this Subsection 3.4. 3.5 Voucher Holders. No Very Low Income Unit or Lower Income Unit shall be refused for leasing to a holder of a certificate or voucher under 24 CFR Part 982 Section 8 Rental Certificate Program or Section 8 Rental Voucher Program or to the holder of a comparable document evidencing participation in a tenant -based assistance program because of the status of the prospective Very Low Income Household or Low Income Household as a holder of such certificate of family participation, rental voucher, or comparable tenant -based assistance document. 3.6 Rent Schedule and Utility Allowances. The Program Administrator shall annually review, at Developer's sole cost, and approve rents proposed by the Developer for the Very Low Income Units, Low Income Units and Moderate Income Units to determine that the Developer has properly applied the restrictions contained in this Section 3 and shall provide the Developer with a schedule establishing the monthly allowances for utilities and services to be paid by the Very Low Income Households, Low Income Households and Moderate Income Households who occupy the Affordable Housing Units. The Developer shall re-examine the income of each tenant household living in the Affordable Housing Units at least annually. The maximum monthly rent shall be recalculated by the Developer and reviewed and approved by the Program Administrator annually, and may change as changes in the applicable gross rent 0 amounts, the income adjustments, or the monthly allowance for utilities and services warrant. The Developer shall not impose on a tenant an increase in rent approved by the Program Administrator if that increase is not permitted to be imposed under the lease between Developer and the tenant. Developer shall provide not less than sixty (60) days prior written notice to affected tenants before implementing any increase in rents. 3.7 Increases in Tenant Income. 3.7.1 If, as a result of the annual re-examination of incomes required pursuant to Subsection 3.10.2, the Developer determines that a household that qualified as a Very Low Income Household for purposes of Section 3.3 above, no longer is a Very Low Income Household but instead qualifies as a Low Income Household, then the Developer may require that household to pay the Affordable Rent for Low Income Senior Citizen Units, and the Developer shall lease the next available Lower Income Senior Citizen Unit or Moderate Income Senior Citizen Unit to a Very Low Income Household at the rent permitted under Section 3.3. 3.7.2 If, as a result of the annual re-examination of incomes required pursuant to Subsection 3.10.2, the Developer determines that a household that qualified as a Very Low Income Household for purposes of Section 3.3 above, no longer is a Very Low Income Household but instead qualifies as a Moderate Income Household, then the Developer may require that household to pay the Affordable Rent for Moderate Income Senior Citizen Units, and the Developer shall lease the next available Moderate Income Senior Citizen Unit to a Very Low Income Household at the rent permitted under Section 3.3. 3.7.3 If, as a result of the annual re-examination of incomes required pursuant to Subsection 3.10.2, the Developer determines that a household that qualified as a Low Income Household for purposes of Section 3.3 above, no longer is a Low Income Household but instead qualifies as a Moderate Income Household, then the Developer may require that household to pay the Affordable Rent for Moderate Income Households, and the Developer shall lease the next available Moderate Income Unit to a Low Income Household at the rent permitted under Section 3.3. 3.7.4 If, as a result of the annual re-examination of incomes required pursuant to Subsection 3.10.2, the Developer determines that a household that qualified as a Very Low Income Household, Low Income Household or Moderate Income Household for purposes of Section 3.3 above, no longer is a Very Low Income Household, Low Income Household or Moderate Income Household, then the Developer may require that household to pay the fair market rent, and the Developer shall lease the next available apartment unit in the Project to a Very Low Income Household, Low Income Household or Moderate Income Household (whichever class of tenant the original Affordable Housing Unit was to be rented to) at the Affordable Rent for such Very Low Income Household, Low Income Household or Moderate Income Household. Such next available apartment unit shall then be deemed to be a Very Low Income Unit, Low Income Unit or Moderate Income Unit, as the case may be, subject to the provisions of this Section 3, and the previous unit shall no longer be subject to the provisions of this Section 3. -7- 3.7.5 Notwithstanding the foregoing provisions, it is the intent of this Regulatory Agreement that the number of Very Low Income Units, Low Income Units and Moderate Income Units be allocated as among the Affordable Housing Units as provided in Section 3.2. In the event the foregoing provisions result in an allocation of Affordable Housing Units different from that provided in Section 3.2, Developer shall lease the next available Affordable Housing Unit to a Very Low Income Household, Low Income Household or Moderate Income Household, as the case may be, in order to correct the allocation. 3.8 Minimum Rents. Notwithstanding the other provisions of this Section 3, Developer shall not be required to charge a rent for a Very Low Income Unit, Low Income Unit or Moderate Income Unit that would be lower than the maximum rent Developer would have been permitted to charge for the Very Low Income Unit, Low Income Unit or Moderate Income Unit had the determination of maximum rent been made on the date the City and Developer entered into this Regulatory Agreement. 3.9 Tenant Protections. 3.9.1 Rental Agreement. The rental agreement between Developer and a Very Low Income Household, Low Income Household or Moderate Income Household must be for not less than one year, unless the Program Administrator provides prior written approval, and may not contain any of the following provisions: 3.9.1.1 Any agreement by the tenant to be sued, to admit guilt, or to a judgment in favor of the Developer in a lawsuit brought in connection with the lease. 3.9.1.2 Any agreement by the tenant that the Developer may take, hold, or sell personal property of household members without notice to the tenant and a court decision on the rights of the parties. This prohibition, however, does not apply to an agreement by the tenant concerning disposition of personal property remaining in the Unit after the tenant has moved out of the Unit. The Developer may dispose of such personal property in accordance with applicable State law. 3.9.1.3 Any agreement by the tenant not to hold the Developer or its agents legally responsible for any action or failure to act, whether intentional or negligent. 3.9.1.4 Any agreement of the tenant that the Developer may evict the tenant or household members without notice to the tenant. 3.9.1.5 Any agreement by the tenant that the Developer may evict the tenant or household members without instituting a civil court proceeding in which the tenant has the opportunity to present a defense, or before a court decision on the rights of the parties. 3.9.1.6 Any agreement by the tenant to waive any right to a trial by jury. 3.9.1.7 Any agreement by the tenant to waive the tenant's right to appeal, or to otherwise challenge in court, a court decision in connection with the lease. -8- 3.9.1.8 Any agreement by the tenant to pay attorney's fees or other legal costs even if the tenant wins in a court proceeding by the Developer against the tenant. The tenant, however, may be obligated to pay costs if the tenant loses. 3.9.2 Termination of Tenancy. Developer may not terminate the tenancy or refuse to renew the lease of a Very Low Income Household, Low Income Household or Moderate Income Household except for violation of the terms and conditions of the lease; for violation of applicable federal, State, or local law; or for other good cause. Any termination or refusal to renew must be preceded by not less than sixty (60) days by the Developer's service upon the tenant of a written notice specifying the grounds for the action. 3.10 Very Low Income, Low Income and Moderate Income Senior Citizen Tenants; Records and Reports. The Developer hereby represents, warrants and covenants as follows: 3.10.1 Within thirty (30) days after the date on which at least fifty percent (50%) of the dwelling units in the Project are first occupied, the Developer shall execute and deliver to the Program Administrator a copy of a certificate identifying said date and the beginning date and earliest ending date of the Qualified Project Period, which certificate shall be in the form provided by Program Administrator or otherwise approved by Program Administrator. The Developer shall record a copy of such certificate in the Official Records. 3.10.2 The Developer shall obtain, complete and maintain on file Verifications of Income and age qualification, in the form provided by Program Administrator, from each Very Low Income Household, Low Income Household and Moderate Income Household, including (i) a Verification of Income and Age dated immediately prior to the initial occupancy of such Very Low Income Household, Low Income Household or Moderate Income Household and (ii) thereafter, annual Verifications of Income and Age which must be dated as of June 1st of each year, or such other date as may be mutually agreed upon by the Program Administrator and the Developer, and in no event less than once in every twelve-month period following each Very Low Income Household's, Low Income Household's and Moderate Income Household's occupancy of a Unit in the Project. 3.10.3 A copy of the most recent Verification of Income and Senior Citizen age qualification for Very Low Income Household, Low Income Household and Moderate Income Household commencing occupation or continuing occupation of a Very Low Income Unit, Low Income Unit or Moderate Income Unit (and not previously filed) shall be attached to the Certificate of Continuing Program Compliance, in the form provided by Program Administrator, which is to be filed with the Program Administrator no later than the fifteenth (15th) day of each month following the receipt by the Program Administrator of the Completion Certificate to and including the month in which such report indicates that fifty percent (50%) of the units in the Project are occupied by Senior Citizens in Very Low Income Households, Low Income Households and Moderate Income Households and, thereafter, no later than the first day of the sixth month of each calendar year until the end of the Qualified Project Period. -9- 3.10.4 The Developer shall make a diligent and good -faith effort to verify that the information provided by an applicant in the Verification of Income and Senior Citizen age qualification information is accurate by taking the following steps, as a part of the verification process: (1) obtain copy of Birth Certificate or other evidence of tenant's qualifying age acceptable to the Program Administrator; (2) obtain pay stubs for the most recent one-month period, and; (3) obtain income W-2 Wage and Earning Statements and tax returns for the most recent tax year; alternatively, if determined appropriate for the tenant's situation the following may be submitted (a) income verification from the Social Security Administration and/or the California Department of Social Services if the applicant receives assistance from either of such agencies; or (b) if the applicant is unemployed, does not have income tax returns or is otherwise unable to provide other forms of verification as required above, obtain another form of independent verification satisfactory to the Program Administrator. 3.10.5 The Developer will maintain complete and accurate records pertaining to the Very Low Income Units, Low Income Units and Moderate Income Units and will permit any duly authorized representative of the City, without limitation, to inspect the books and records of the Developer pertaining to the Project, including those records pertaining to the occupancy of the Affordable Housing Units. 3.10.6 The Developer will prepare and submit to the Program Administrator no later than the first day of the sixth month of each calendar year until the end of the Qualified Project Period, a Certificate of Continuing Program Compliance executed by the Developer with the following information: 3.10.6.1 The number of the dwelling units of the Project which were occupied, pursuant to Section 3.1 above, by Very Low Income Households, Low Income Households and Moderate Income Households during such period and such other tenant information as may be reasonably required as stated on the form of the Certificate of Continuing Program Compliance acceptable to the Program Administrator; and 3.10.6.2 A statement that either (i) no unremedied default has occurred under this Regulatory Agreement or (ii) a default has occurred, in which event the Certificate shall describe the nature of the default in detail and set forth the measures being taken by the Developer to remedy such default. 3.10.7 Each lease or rental agreement for an Affordable Housing Unit shall contain a provision to the effect that the Developer has relied on the Verification of Income and Senior Citizen age qualification and supporting information supplied by the Very Low Income Household, Low Income Household or Moderate Income Household in determining qualification for occupancy of the Very Low Income Units, Low Income Units and Moderate Income Units and that any material misstatement in such verification (whether or not intentional) will be cause for immediate termination of such lease or rental agreement. Each such lease or rental agreement shall also provide (and shall so disclose to the tenant) that the tenant's income is subject to annual verification in accordance with Section 10.2, and that, if upon review of any such verification, the tenant's income exceeds the then applicable income limit for a Very Low Income, Low Income or Moderate Income Household, such tenant shall cease to qualify as a Low Income Household, Low Income Household, or Moderate Income Household and, as a consequence, said Tenant's lease shall be subject to termination on such prior notice as the Program Administrator deems reasonable. 3.10.8 Local Workforce Housing Preference Policy. In marketing and renting units to Very Low Income, Low Income and Moderate Income Senior Citizen Tenants, the Developer shall establish a priority system that ensures that prospective rental applicants who are currently employed in or currently residing in the City of Tustin have priority over an applicant that does not currently reside or is not employed in the City of Tustin (hereinafter referred to as the "Local Preference Policy", adopted by the Tustin City Council on November 6, 2007). To qualify for the Local Preference, Developer shall require an applicant to demonstrate a minimum of six months of current employment or current residency in Tustin. The Developer shall refer to the Local Preference Policy for detailed information required to be submitted by Developer for verification of residency and local employment and to ensure Developer's compliance with the Local Preference Policy. 3.11 Termination of Affordable Housing Covenants. The provisions of this Section 3 shall terminate in their entirety at the end of one year following the expiration of the Qualified Project Period. 4. Non -Discrimination Covenants. The Developer for itself, its successors, its assigns and every successor in interest to the Project Site or any part thereof jointly and severally, hereby represents, warrants and covenants as follows: 4.1 Obligation to Refrain from Discrimination. There shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Project Site or any portion thereof, nor shall the Developer itself or any person claiming under or through it (including any tenant) establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the Project Site or any portion thereof. All deeds, leases or contracts shall contain or be subject to substantially the following non-discrimination or non -segregation clauses: 4.1.1 In deeds: "The grantee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." 4.1.2 In leases: "The lessee herein covenants by and for itself, its successors and assigns, and all persons claiming under or through them, and this lease is made and accepted upon and subject to the following conditions: "That there shall be no discrimination against or segregation of any person or group of persons, on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the leasing, subleasing, renting, transferring, use, occupancy, tenure or enjoyment of the land herein leased, nor shall lessee itself, or any person claiming under or through it, establish or permit such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the land herein leased." 4.1.3 In contracts: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, sexual orientation, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land, nor shall the transferee itself or any person claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees of the land." 5. Maintenance of the Project. The Developer and its successors and assigns shall maintain at their cost the Property as follows: 5.1 Minimum Standards. Prior to construction of any units on the Property, the Property shall at all times be maintained in a clean and weed -free condition, reasonably free from any debris and waste materials. 5.2 During Construction. From the date upon which construction begins of any Improvements until issuance of a completion certificate for any such Improvements, the Developer and its successors and assigns shall maintain the Property and Improvements under construction consistent with best construction industry practice. 5.3 Following Construction 5.3.1 Upon completion of construction of the Improvements, the Housing Agreement and this Agreement on the Property, the Developer, its successors and assigns shall maintain the Improvements in the same aesthetic and same condition or better as the condition of such Improvements at the time the City issues a Certificate of Compliance, reasonable wear and tear excepted. The standard for the quality of maintenance of the Project Improvements required by this Section 5.3.1 shall be met whether or not a specific item of maintenance is listed below. However, representative items of maintenance shall include: (i) maintenance, repair and replacement on a regular schedule, consistent with like developments in Orange County, of private streets, roads, drives, bike paths, alleyways, sidewalks, utilities (except to the extent owned or controlled by a utility franchisee) common areas, landscaping, hardscaped areas and fountains; (ii) frequent and regular inspection for graffiti or damage or deterioration or failure, and immediate repainting or repair or replacement of all surfaces, fencing, walls, equipment, etc., -12- as necessary; (iii) emptying of trash receptacles and removal of litter; (iv) regular sweeping of roadways and sidewalks throughout the Property; (v) fertilizing and replacing vegetation as necessary; (vi) cleaning windows on a regular basis; (vi) painting the buildings on a regular program and prior to the deterioration of the painted surfaces; (vii) conducting roof inspections on a regular basis and maintaining roofs in a leak -free and weather -tight condition. 5.3.2 Upon completion of construction of Improvements as provided in the Housing Agreement and this Agreement on the Property, Developer shall maintain, repair and replace all or any portion of the Improvements as may be required to maintain the Improvements in a high quality condition. All Improvements repaired or replaced under this Subsection 5.3.2 shall be repaired or replaced with materials, apparatus and facilities of quality at least equal to the quality of the materials, apparatus and facilities identified for the Improvements under the Regulatory Agreement. 5.3.3 Developer's obligations to maintain the Improvements as provided in this Section 5.3 shall include, but not be limited to, the following: 5.3.3.1 Maintaining all paved surfaces, including streets, drives, parking areas and curbs of the common areas in a smooth and evenly covered condition, which maintenance work shall include without limitation, cleaning, sweeping, re -striping, repairing and resurfacing of the paved surfaces using surface material of an appearance and quality equal or superior to the materials installed under the DDA and this Regulatory Agreement; 5.3.3.2 Removal of all papers, debris, filth and refuse, and washing and sweeping the common areas to the extent necessary to keep the Project Site in a first-class, clean and orderly condition, and washing down and/or cleaning all hard surfaces including brick, metal, concrete, glass, wood and other structural members as required; 5.3.3.3 Operating, keeping in repair, cleaning and replacing and/or re - ballasting all common area lighting fixtures, equipment and facilities as may be reasonably required, including all lighting necessary or appropriate for the Project Site and Project Improvements, security and exterior lights intended to illuminate the Project Site and Project Improvements; 5.3.3.4 Cleaning and maintaining all landscaped areas, including landscape planting areas, lawn areas and planters around and adjacent to exterior walls of buildings, repairing automatic sprinklers, weeding, pruning, fertilizing and making replacement of shrubs and other landscaping as required; and 5.3.3.5 Maintaining, repairing and replacing as necessary any freestanding, monument or pylon signs on the Property. 5.4 Failure to Maintain. In the event the Developer or its successors or assigns fails to maintain the Improvements in accordance with the standard for the quality of maintenance, City representatives or the Program Administrator and its designee shall have the right but not the obligation to enter the Property upon thirty (30) days notice to the Developer or its successor -13- or assigns, to correct any violation, and hold the Developer, and/or such successors or assigns, responsible for the cost thereof, and such cost, until paid, shall constitute a lien on the applicable portion of the Property. 5.5 Assignment of Obligation to Maintain. The Developer may, subject to the prior approval of the Program Administrator, which approval shall not be unreasonably withheld, assign the maintenance responsibilities contained herein to the subsequent purchasers of the Property, a portion of the Property, or individual buildings thereon, or to any Homeowners Association to be created, through appropriate covenants, conditions and restrictions to be recorded against one or more Parcels, upon which assignment the Developer shall have no further liability under this Section 5. 6. Sale or Transfer of the Proiect. The Developer hereby covenants and agrees not to voluntarily sell, transfer or otherwise dispose of the Property, or any portion thereof (other than for individual tenant use as contemplated hereunder), without obtaining the prior written consent of the Program Administrator. It is hereby expressly stipulated and agreed that any sale, transfer or other disposition of the Property in violation of this Section 6 shall be null, void, and shall be ineffective to relieve the Developer of its obligations under the Housing Agreement and this Regulatory Agreement. Any transfer of the Project to any entity, whether or not affiliated with the Developer, shall be subject to the provisions of this Section 6. The provisions of this Section 6 shall terminate in their entirety at the end of one year following the expiration of the Qualified Project Period. 7. Term. This Regulatory Agreement and all and each of the provisions hereof shall become effective upon its execution and delivery and shall remain in full force and effect thereafter except as expressly provided herein. It is expressly agreed and understood that the provisions of this Regulatory Agreement are intended to survive the Housing Agreement. 8. Covenants and Restrictions to Run with the Land. 8.1 Developer States that: all covenants and restrictions contained in this Regulatory Agreement are intended to be covenants running with the land, and shall, in any event, and without regard to technical classification or designation, legal or otherwise, be, to the fullest extent permitted by law and equity, binding for the benefit and in favor of, and enforceable by the City, and its respective successors and assigns, against Developer, its successors and assigns, to or of the Property or any portion thereof or any interest therein, and any party in possession or occupancy of said Property or portion thereof. 8.2 The parties acknowledge and agree that all covenants and restrictions contained in this Regulatory Agreement are intended to be covenants running with the land of the entire Property. Without in any way limiting the foregoing, each of the parties hereto shall execute and deliver at their own cost and expense, any and all additional papers, documents, or instruments, and shall do any and all acts and things reasonably necessary or appropriate in connection with -14- the performance of their respective obligations hereunder in order to carry out the intent and purposes of this Regulatory Agreement. 8.3 In amplification and not in restriction of the provisions set forth hereinabove, Developer specifically states that it is intended and agreed that the City shall be deemed a beneficiary of the agreements, covenants and restrictions herein both for and in its own right and also for the purposes of protecting the interests of the community. All covenants and restrictions without regard to technical classification or designation shall be binding for the benefit of the City, and such covenants and restrictions shall run in favor of City for the entire period during which such covenants and restrictions shall be in force and effect, without regard to whether the City is or remains an owner of any land or interest therein to which such covenants and restrictions relate. The City shall have the independent right, in the event of any breach of this Regulatory Agreement or covenant or restriction herein, to exercise all the rights and remedies, and to maintain any action at law or suit in equity or other proper proceedings to enforce the curing of such breach of this Regulatory Agreement or covenants or restrictions. 8.4 The City and its successors and assigns, and Developer and the permitted successors and assigns of Developer in and to all or any part of the fee title to the Property and the Project, shall have the right upon written agreement signed by both parties to consent and agree to changes in, or to eliminate in whole or in part, any of the covenants or restrictions contained in this Regulatory Agreement without the consent of any tenant, lessee, easement holder, licensee, mortgagee, trustee, beneficiary under a deed of trust, or any other person or entity having any interest less than a fee in the Property or the Project. The covenants and restrictions contained in this Regulatory Agreement, without regard to technical classification shall not benefit or be enforceable by any owner of any other real property within or outside the Property or Project, or any person or entity having any interest in any other such realty. 8.5 No breach of any of the provisions of this Regulatory Agreement shall impair, defeat or render invalid the lien of any Mortgage made in good faith and for value encumbering the Property or Project or any portion thereof. 9. Burden and Benefit. The City and the Developer hereby declare their understanding and intent that the burden of the covenants and restrictions set forth herein touch and concern the Property in that the Developer's legal interest in the Property is rendered less valuable thereby. The Developer hereby further declares its understanding and intent that the benefit of such covenants and restrictions touching and concerning the land is the enhancement and enjoyment and use of the Project by Very Low Income Households, Low Income Households and Moderate Income Households, the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the public purposes for which the Housing Agreement was entered into with Developer. -is- 10. Uniformity; Common Plan. The covenants, reservations and restrictions hereof shall apply uniformly to the entire Property in order to establish and carry out a common plan for the use, development and improvement of the Project Site. 11. Default Enforcement. 11.1 Default. Developer shall be in Default under this Regulatory Agreement if any of the following occur: Property; 11.1.1 A Default occurs under the Housing Agreement as it relates to the 11. 1.2 A Default occurs under any deed of trust or mortgage against the Property; 11.1.3 The Developer or its successor in interest fails to perform fully any of its obligations set forth in this Regulatory Agreement within thirty (30) days following receipt of written notice regarding such other default; provided, that if such failure is capable of being remedied but not capable of being remedied within thirty (30) days, then the defaulting party shall have an additional period of time within which to remedy such failure, not in any event to exceed sixty (60) days. The failure of a City representative or the Program Administrator to notify Developer or its successor in interest of any such default shall not be deemed a waiver of the default, and the City shall have no obligation to notify the defaulting party of the default. 11.2 Remedies. Following a Default described in Subsection 11. 1, the City may pursue all of its rights and remedies set forth in the Housing Agreement or this Regulatory Agreement or otherwise available at law, in equity or by statute. The City's rights and remedies shall be cumulative and no one of such rights and remedies shall be exclusive of any of the others, or of any right or remedy at law or in equity which the City might otherwise have by virtue under this Agreement and the exercise of one such right or remedy by the City shall not impair the City's standing to exercise any other right or remedy. The parties agree that this Regulatory Agreement may be specifically enforced: 11.2.1 In the event of a Default by the Developer or its successor in interest, under any mortgage or deed of trust, the City shall have the right, but not the obligation, to perform the unperformed obligations at the expense of Developer, and all expenditures by City to cure such default shall accrue interest from the date such sums are actually spent by City at a default rate equal to the then "prime rate" specified by Wells Fargo Bank or its successor plus three percent (3%), but not in excess of such rate as may be permitted under applicable law. Payment shall be made by Developer to City within thirty (30) days after written request thereof. If payment is not made by Developer within thirty (30) days after such demand is made then City shall have the right to add such amount, to any sums then due or thereafter becoming due from Developer under the this Regulatory Agreement. In addition, the amount due to the City shall constitute a lien and charge upon the fee interest of Developer to Property and City shall have the right to record a notice (a "Delinquency Notice") against the Property, which states the amount due from the Developer. The aforesaid lien shall attach immediately upon recordation of the -16- Delinquency Notice. A copy of the Delinquency Notice shall be delivered to Developer pursuant to Section 14.4. The lien may be foreclosed by appropriate action in court or in the manner prescribed law. Upon such event, the Developer shall be required to pay all attorney fees and costs and expenses of City in connection with the preparation, recordation and foreclosure of such lien. Any such lien shall be prior to all encumbrances, liens, or charges on the Property except (a) taxes which are by law prior thereto; (b) the rights of tenants pursuant to bona fide leases; and (c) any permitted mortgage and advances thereunder made in good faith and for value and recorded prior to the Delinquency Notice. The transfer of the Property shall not affect the aforesaid lien. 11.2.2 Non -Complying Affordable Housing Units. In addition to and without limitation of any other rights and remedies set forth in this Regulatory Agreement or otherwise available to any party legally entitled to enforce this Regulatory Agreement, if a Default with respect to Section 3 occurs, and (i) if the Default is not cured within thirty (30) days after notice by City is provided to Developer, or (ii) if such Default cannot reasonably be cured within the thirty (30) day period and Developer has not commenced the curing of such Default, or if Developer is not otherwise diligently prosecuting such cure to completion, then City shall have the right to lease and Developer shall lease to City on demand for a rental of $1.00 per Unit per year any and all of the "Non -Complying Affordable Housing Units" at such time as the Non - Complying Affordable Housing Unit(s) is vacated. Notwithstanding any term or condition of the lease under which the City leases a Non -Complying Affordable Housing Unit pursuant to this Subsection 11.2, Developer hereby consents to and grants City the right to assign such lease or sublet such Unit(s) to a Very Low Income Household, Low Income Household or Moderate Income Household at the Affordable Rent for Very Low Income Unit(s), Low Income Unit(s) or Moderate Income Unit(s), or to any non-profit housing provider qualified as a 501 (c)(3) entity under the Internal Revenue Code (a "Provider") in the community for $1.00 per year. The assignment or sublet to a Provider shall be on the condition that such Provider subleases such Affordable Housing Unit(s), or assigns such lease(s) to a Very Low Income Household, Low Income Household or Moderate Income Senior Citizen Tenant at the Affordable Rent. If the City assigns or sublets to any Provider, notwithstanding any term or condition of the lease between the Developer and the City, the Developer hereby consents to and grants such Provider the right to assign such lease or sublet such Affordable Housing Unit to any Very Low Income Household, Low Income Household or Moderate Income Household at an Affordable Rent. If the City leases any Affordable Housing Unit(s) or a Provider subleases any Affordable Housing Unit(s) or is the assignee of any lease(s) from the City, the City or Provider, as the case may be, to the extent necessary to ensure compliance with Section 3 hereof, shall sublease such Assisted Unit(s) or assign such lease(s) to any Very Low Income Household, Low Income Household or Moderate Income Household at the Affordable Rent. Any rent paid under such a sublease or assignment shall be paid to the Developer after the City or Provider, as the case may be, has been reimbursed for any reasonable expenses incurred by it in connection with exercising the rights and remedies set forth in this Subsection 11.2.2; provided however, if the Developer is in Default under any Permitted Mortgage representing Senior Obligations, the Deeds of Trust and/or any other City approved encumbrance under the DDA in connection with the financing of the Property or any Improvements thereon, such rent shall be paid to the party legally entitled thereto under the terms of the applicable loan. ere 12. Recording and Filing. The Developer shall cause this Regulatory Agreement, and all amendments and supplements hereto and thereto, to be recorded and filed in the Official Records and in such other places as the Program Administrator may reasonably request. The Developer shall pay all fees and charges incurred in connection with any such recording. Written evidence of the recorded Regulatory Agreement shall be provided to the Program Administrator. 13 . Indemnification Developer shall defend, indemnify and hold harmless City and their respective officers, officials, agents, employees, representatives, and volunteers from and against all loss, damage, costs, expenses, liability, claim or judgment relating in any manner to Developer performance under this Agreement, except to the extent cause by the sole gross negligence or willful misconduct of City. 14. Miscellaneous. 14.1 Governing Law. This Regulatory Agreement shall be governed by, interpreted under, construed and enforced in accordance with the laws of the State of California. 14.2 Amendments This Agreement shall be amended only by written instrument executed by the parties hereto, or their successors in title and duly recorded in the Official Records. 14.3 Waiver. No waiver of any provision or consent to any action under this Regulatory Agreement shall constitute a waiver of any other provision or consent to any other action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver in the future except to the extent specifically set forth in writing. Any waiver given by a party shall be null and void if the party requesting such waiver has not provided a full and complete disclosure of all material facts relevant to the waiver requested. 14.4 Notices. All notices, demands, consents, requests and other communications required or permitted to be given under this Regulatory Agreement shall be in writing and shall be deemed conclusively to have been duly given (a) when hand delivered to the other party; (b) three (3) business days after such notice has been sent by United States mail via certified mail, return receipt requested, postage prepaid, and addressed to the other party as set forth below; or (c) the next business day after such notice has been deposited with a national overnight delivery service reasonably approved by the parties (Federal Express and Airborne Express are deemed approved by the parties), postage prepaid, addressed to the party to whom notice is being sent as set forth below with next -business -day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Unless otherwise provided in writing, all notices hereunder shall be addressed as follows: -18- Developer: Tustin Coventry Seniors, LLC Attention: John Huskey 1640 Sepulveda Blvd. Suite 425 Los Angeles, CA 90025 City: City of Tustin 300 Centennial Way Tustin, CA 92780 Attn: Assistant City Manager With copy to: Clay Gantz Special Counsel Manatt, Phelps & Phillips, LLC One Embarcadero Center, 30th Floor San Francisco, CA 94111 Douglas Holland City Attorney Woodruff, Spradlin & Smart 555 Anton Blvd. Suite 1200 Costa Mesa, California 92626 14.5 Severability. Any provision of this Regulatory Agreement that is deemed to be illegal, invalid or unenforceable by an arbitrator or court of competent jurisdiction shall be ineffective to the extent of the invalidity or unenforceability of such provision and shall be deemed stricken from this Regulatory Agreement. Any stricken provision shall not affect the legality, enforceability or validity of the remainder of this Regulatory Agreement. If any provision or part thereof of this Regulatory Agreement is stricken in accordance with the provisions of this Section, then the stricken provision shall be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in tenor and intent to the stricken provision as is legally possible. Any such invalidity or unenforceability of any provision in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 14.6 Authority of Signatories to Regulatory Agreement. Each person executing this Regulatory Agreement represents and warrants that he or she is duly authorized and has legal capacity to execute and deliver this Regulatory Agreement on behalf of the parties for which execution is made. Each party represents and warrants to the other that the execution of this Regulatory Agreement and the performance of such party's obligations hereunder have been duly authorized and that the agreement is a valid and legal agreement binding on such party and enforceable in accordance with its terms. M 14.7 Consent to Jurisdiction. The parties hereto agree that all actions or proceedings arising in connection with this Regulatory Agreement shall be tried and litigated exclusively in the state and federal courts located in the County of Orange, State of California. This choice of venue is intended by the parties to be mandatory and not permissive in nature, thereby precluding the possibility of litigation between or among the parties with respect to or arising out of this Regulatory Agreement in any jurisdiction other than that specified in this Section. Each party hereto waives any right that it may have to assert the doctrine forum non conveniens or similar doctrine or to object to venue with respect to any proceeding brought in accordance with this section, and stipulates that the state and federal courts located in the County of Orange, State of California, shall have in personam jurisdiction and venue over each of them for the purpose of litigating any dispute, controversy or proceeding arising out of this Regulatory Agreement. Each party hereby authorizes and accepts service of process sufficient for personal jurisdiction in any action against it as contemplated by this section by means of registered or certified mail, return receipt requested, postage prepaid, to its address for the giving of notices as set forth in this Regulatory Agreement, or in the manner set forth in the section of this Regulatory Agreement pertaining to notice. Any final judgment rendered against the party in any action or proceeding shall be conclusive as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. 14.8 Recitals. The recitals set forth at the beginning of this Regulatory Agreement of any matters or facts shall be conclusive proof of the truthfulness thereof and the terms and conditions set forth in the recitals, if any, shall be deemed a part of this Regulatory Agreement. 14. 9 Captions. All captions, titles or headings of the articles, sections, paragraphs or subparagraphs of this Regulatory Agreement are inserted solely as a matter of convenience of the parties hereto, and for reference, shall not be deemed to be a part of this Regulatory Agreement, and shall not define, limit, extend or describe the scope of this Regulatory Agreement nor be used or construed in the interpretation or determination of the validity of this Regulatory Agreement or any provision hereof. IN WITNESS WHEREOF, the City of Tustin and the Developer have executed this Regulatory Agreement and Declaration of Restrictive Covenants by duly authorized representatives, all as of the date first written above. -20- Dated: APPROVED AS TO FORM In In Doug Holland, City Attorney Clay Gantz, Special Tustin Counsel CITY OF TUSTIN: C William A. Huston, City Manager TUSTIN COMMUNITY REDEVELOPMENT AGENCY William A. Huston Executive Director EXHIBIT A LEGAL DESCRIPTION PROJECT SITE That certain real property located in the City of Tustin, County of Orange, State of California, and legally described as follows: Lot 265 of Tract No. 16581, in the City of Tustin, County of Orange, State of California, as shown on the map recorded in Book 877 Pages 33 through 50 inclusive Miscellaneous Maps, in the office of the county recorder of Orange County. Excepting therefrom all oil, oil rights, mineral rights, natural gas rights, and other hydrocarbons by whatsoever name known, geothermal steam and all products derived from any of the foregoing, that may be within or under the parcel of land hereinabove described, together with the perpetual right of drilling, mining or exploring and operating therefore and storing in and removing same from said land or any other land, including the right to whipstock or directionally drill or mine from lands other than those hereinafter described, oil or gas wells, tunnels and shafts into, through or across the subsurface of the land hereinabove described, and to bottom such whipstocked or directionally drilled wells, tunnels and shafts under and beneath or beyond the exterior limits thereof, and to redrill, retunnel, equip, maintain, repair, deepen and operate any such wells or mines without, however, the right to drill, mine, store, explore or operate through the surface or the upper 500 feet of the subsurface of the land, as reserved by Moffett Meadows Partners, LLC, by deed recorded July 25, 2005 as Instrument Nos. 2005000590846, 2005000591024 and 2005000591381, all of Official Records. EXHIBIT B GLOSSARY OF DEFINED TERMS For purposes of this Regulatory Agreement, the following initially capitalized terms shall mean the following: "Act" means Chapter 8 (commencing with Section 33750) of Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended. "Affordable Housing Agreement" shall mean the agreement entered into between the Developer and City as required by the Housing Agreement which identified specific restrictions to insure affordability of rental and for -sale Affordable Housing Units at Tustin Legacy and as required by the Regulatory Agreement. "Affordable Housing Units" means the units to be rented to, occupied by or held available for Very Low, Lower or Moderate Income Households at an Affordable Rent as described in Section 3 and in the Regulatory Agreement. "Affordable Rent" shall mean for any for -rent Affordable Housing Unit, a maximum monthly rent or lease price that does not exceed the Affordable Rent for a Very Low Income Household, a Low or Lower Income Household, or a Moderate Income Household, as specifically applicable. The Affordable Rent shall be calculated as of the date of rent of the unit and shall take into account and include a reasonable allowance for utilities and in an amount not in excess of: (a) For "Very Low Income Units," as more particularly defined in Health and Safety Code Section 50053 (b)(2) and as generally described herein as a monthly rent which does not exceed one -twelfth of the product of thirty percent (30%) times fifty percent (50%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit, including a reasonable utility allowance. (b) For "Low or Lower Income Units," as more particularly defined in Health and Safety Code Section 50053 (b)(3) and as generally described herein as applicable to those low income or Lower Income Households whose gross incomes exceed the maximum income for Very Low Income Households as the product of thirty percent (30%) times sixty percent (60%) of the annual Orange County Median Income, adjusted for family size appropriate for the units, including a reasonable utility allowance. (c) For "Moderate Income Units," as more particularly defined in Health and Safety Code Section 50053 (b)(4), and as generally described herein as the product of thirty percent (30%) times one hundred and ten percent (110%) of the annual Orange County Median Income adjusted for family size appropriate for the units, including a reasonable utility allowance Notwithstanding the foregoing, in accordance with Health and Safety Code Section 50053 (b) (4), the City has determined and hereby agrees that, for a Moderate Income Household with annual gross incomes that exceed one hundred and ten percent (110%) of the annual Orange County Median Income, adjusted for family size appropriate for the unit, a maximum monthly rent shall be calculated as not to exceed one twelfth of thirty percent (30%) times one hundred and twenty percent (120%) of the annual Orange County Median Income, adjusted for family size. "Certificate of Continuing Program Compliance" means the annual report of occupancy for the Affordable Housing Units including the verification of income provided by Developer to Agency as described in Section 3.10.6 hereof or such other form as may be prescribed by the Agency. "Completion Certificate" means the notice of completion of construction filed by Developer, a copy of which shall also be concurrently delivered to the City and Agency by the Developer. "Developer" means Marble Mountain Partners, LLC, and its permitted successors and assigns. "Gross Income" means as it is defined by California Code of Regulations Title 25, §6914 as the anticipated income of a person or family for the twelve-month period following the date of determination of income. To make the projection, "a 'snapshot' of the household's current circumstances is used to project future income. Today's circumstances should be assumed to continue for the next 12 months unless there is verifiable evidence to the contrary. Income, as defined in §6914, shall include, but not be limited to: 1) The gross amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses: 2) The net income from operation of a business or profession or from rental or real or personal property (for this purpose, expenditures for business expansion or amortization of capital indebtedness shall not be deducted to determine the net income from a business); 3) Interest and dividends; 4) The full amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits and other similar types of periodic receipts; 5) Payments in lieu of earnings, such as unemployment and disability compensation, worker's compensation and severance pay (but see subdivision (b)(3)). 6) Public Assistance. If the public assistance payment includes an amount specifically designated for shelter and utilities which is subject to adjustment by the public assistance agency in accordance with the actual cost of shelter and utilities, the amount of public assistance income to be included as income shall consist of. a. The amount of the allowance or grant exclusive of the amount specifically designated for shelter and utilities, plus b. The maximum amount which the public assistance agency could in fact allow for the family for shelter and utilities, 7) Periodic and determinable allowances such as alimony and child support payments, and regular contributions or gifts received from persons not residing in the dwelling; and 8) All regular pay, special pay and allowances of a member of the Armed Forces (whether or not living in the dwelling) who is head of the family or spouse (but see subdivision (b)(5)). The following items, as defined in §6914, shall not be considered as gross income: 1) Casual, sporadic and irregular gifts (includes casual, sporadic and irregular income under this exclusion); 2) Amounts which are specifically for or in reimbursement of the cost of medical expenses; 3) Lump -sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses; 4) Amounts of educational scholarships paid directly to the student or to the educational institution, and amounts paid by the government to a veteran for use in meeting the costs of tuition, fees, books and equipment. Any amounts of such scholarships, or payments to veterans not used for the above purposes of which are available for subsistence are to included in income; 5) The special pay to a serviceman head of a family away from home and exposed to hostile fire; 6) Relocation payments made pursuant to federal, state, or local relocation law; 7) Foster child care payments 8) The value of coupon allotments for the purchase of food pursuant to the Food Stamp Act of 1964 which is in excess of the amount actually charged the eligible household; and 9) Payments received pursuant to participation in the following volunteer programs under the ACTION Agency: a. National Volunteer Antipoverty Programs which include VISTA, Service Learning Programs and Special Volunteer Programs. b. National Older American Volunteer Programs for persons aged 60 and over which include Retired Senior Volunteer Programs, Foster Grandparent Program, Older American Community Services Program, and National Volunteer Program to Assist Small Business Experience, Service Corps of Retired Executive (SCORE) and Active Corps of Executives (ACE). "Low Income or Lower Income Household" means Senior Citizen households whose annual gross incomes do not exceed eighty percent (80%) of the annual Orange Median Income with adjustments for smaller and larger families. The determination of a tenant's status as a Low or Lower Income Household shall be made by the Developer upon initial occupancy of a unit in the Project by such tenant and annually thereafter on the basis of a Verification of Income executed by the tenant. "Improvements" means those Project Improvements described in Housing Agreement on the Project Site and included in Approved Plans (the Scope of Development). "Low or Lower Income Units" means the units in the Project required to be rented to, occupied by, and held available for Low or Lower Income Tenants in accordance with the Affordable Housing Agreement and this Regulatory Agreement. "Moderate Income Household" means Senior Citizen households whose annual gross incomes do not exceed one hundred and twenty percent (120%) of the annual Orange County Median Income with adjustments for smaller and larger families. The determination of a tenant's status as a Moderate Income Household shall be made by the Developer upon initial occupancy of a unit in the Project by such tenant and annually thereafter, on the basis of a Verification of Income executed by the tenant. "Moderate Income Units" means the units in the Project required to be rented to, occupied by, or held available for Moderate Income Households in accordance with the Affordable Housing Agreement and this Regulatory Agreement. "Non -Complying Assisted Units" shall mean an Affordable Housing Unit which is occupied and/or leased in violation of Section 3 of the Restriction (excluding the units leased by any Eligible Tenant who loses eligibility between certification dates). Determination of such a violation may be based on information provided in the Annual Report or determined by City in its reasonable discretion based on information otherwise available to it. "Orange County Median Income and AMI" means the median family income for the Orange County Primary Metropolitan Statistical Area as most recently established by official annual publication of the Federal Department of Housing and Urban Development as published, modified and released by the State Department of Housing and Community Development. "Permitted Mortgage (Permitted Mortgagee)" means Developer's interim and permanent financing loan(s) for acquisition, development, and construction, as may be approved by the City for the entire property and secured by a First Deed of Trust(s). "Project" means Project Site and Improvements including structures and related buildings and other Improvements to be constructed on the Project Site and all fixtures and other property owned by the Developer and located on, or used in connection with, such buildings, structures as described in the Scope of Development. "Project Site" means the real property legally described on Exhibit "A", which is attached hereto and by this reference incorporated herein, and all rights and appurtenances thereunto appertaining. "Senior Citizen" means persons age 55 and older. "Qualified Project Period" means the period beginning on the first day on which at least 50% of the residential units in the Project are completed and first occupied and ending on the date which is fifty-five (55) years after the date on which at least 50% of the residential units in the Project are completed and first occupied. "Verification of Income and Age Qualification" means the documentation obtained by the Developer from the Very Low Income Households, Lower Income Households and Moderate Income Households of the Verification of Income and age qualification described in Section 3.10 hereof or such other form as may from time to time be provided by the City to the Developer. "Very Low Income Household" means very low income Senior Citizen households whose gross annual incomes do not exceed fifty percent (50%) of the Orange County Median Income with adjustments for smaller and larger families. The determination of a tenant's status as a Very Low Income Household shall be made by the Developer upon initial occupancy of a unit in the Project by such tenant and annually thereafter, on the basis of a Verification of Income executed by the tenant. "Very Low Income Senior Citizen Units" means the units in the Project required to be rented to, occupied by, or held available for Very Low Income Households in accordance with the Housing Agreement and this Regulatory Agreement. EXHIBIT C SCHEDULE OF PERFORMANCE Milestones Date Site Acquisition Jan. 2010 General Contractor Selection Jan. 2010 Planning Hearing May 2010 Building Permit Issued June 2010 Construction Start June 2010 Construction Completion Dec. 2011 Placed In Service Jan. 12 Occupancy of All Affordable Units July 2012 Occupancy of All Market Rate Dec. 2012 Units STATE OF CALIFORNIA ) )ss. COUNTY OF ORANGE ) On 10 before me, notary public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) EXHIBIT "C" ATTACHMENT 10 TO HOUSING AGREEMENT MEMORANDUM OF AGREEMENT FOR FIRST AMENDMENT TO THE HOUSING AGREEMENT MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Tustin 300 Centennial Way Tustin, California 92780 Attention: Assistant City Manager No fee for recording requested pursuant to Government Code sections 6103 and 27383 MEMORANDUM OF FIRST AMENDMENT TO THE HOUSING AGREEMENT THIS MEMORANDUM OF THE FIRST AMENDMENT TO THE HOUSING AGREEMENT ("Memorandum of Agreement") is made as of , 2010 by and between the CITY OF TUSTIN, a municipal corporation (together with its successors and assigned, the "City"), and MARBLE MOUNTAIN PARTNERS, LLC a Delaware limited liability company (the "Developer") to confirm that the City and the Developer have entered into that certain FIRST AMENDMENT TO THE HOUSING AGREEMENT dated as of , 2009 (the "Amended Agreement") affecting the real property described below. The City and the Developer are sometimes referred to herein individually as a "Party" and collectively as the "Parties." Initially capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Agreement. 1. Property Affected by the Agreement. The following described land is subject to the terms, covenants, conditions and restrictions set forth in the Amended Agreement effective as to such land upon the date of acquisition thereof by the Developer: 1.1 The "Property" consisting as of the date hereof of that certain land at the former MCAS Tustin site, legally described on EXHIBIT A attached hereto and incorporated herein by this reference. 1.2 This Memorandum of Agreement has been executed and shall be recorded immediately following the recordation of the Amended Agreement for the Site and the Amended Agreement and this Memorandum of Agreement shall each be binding upon the Site in accordance with its terms. 2. Effect of Agreement. The Amended Agreement imposes certain obligations, agreements, covenants, conditions and restrictions with respect to the Property and Developer's development, use, operation and ultimate disposition thereof of required Affordable Units, that run with the land as further set forth below, including, but not limited to without limitation: (a) The covenants for the development and sale and rent of Affordable Units contained in Sections 3.1, 3.2, and 3.2 of the Amended Agreement; that remain in effect until execution and recordation by the City of a Certificate of Compliance on the Property and certain covenants and restrictions which continue on sold and rented Affordable Units under the terms of Section 3.3 of the Amended Agreement; (b) Certain restrictions on the sale or transfer of the Property contained in Section 6. 1, 6.2, and 7 and the assignment of the Amended Agreement contained in Section 3.3 of the Agreement, that terminate upon execution and recordation by the City of a Certificate of Compliance on the Property, (c) The non-discrimination covenants contained in Section 3.4 of the Amended Agreement that remain in effect in perpetuity; (f) The affordable housing covenants contained in Section 3.3 on for -sale Affordable Units and in Section 3.5 on for -rent Affordable Units, that remain in effect for the period specified in the Amended Agreement; 3. Amended Agreement and Memorandum of Agreement Run with the Land. The Amended Agreement and this Memorandum of Agreement, including, without limitation, the provisions recited and set forth above, and all other obligations, agreements, covenants, conditions and restrictions set forth in the Amended Agreement and this Memorandum of Agreement, are hereby agreed by the Developer and the City to be covenants running with the land and enforceable as equitable servitudes against the Site, and are hereby declared to be and shall be binding upon the Property and the Developer and the successors and assigns of the Developer owning all or any portion of the Property for the benefit of the City, except that a City approved written assignment by the Vertical Builder/Purchaser shall relieve Developer of its obligations under the Amended Agreement for that portion of the Property. 4. Acknowledgement and Assumption by Developer. The Developer hereby acknowledges and assumes all responsibilities placed upon the Developer under the terms of the Amended Agreement. 5. Public Documents. The documents constituting the Amended Agreement are public documents and may be reviewed at the official offices of the City. 6. Interpretation; Notice. This Memorandum of Agreement is prepared for recordation and notice purposes only and in no way modifies the terms, conditions, provisions and covenants of the Amended Agreement. In the event of any inconsistency between the terms, conditions, provisions and covenants of this Memorandum of Agreement and the Amended Agreement, the teams, conditions, provisions and covenants of the Agreement shall prevail. 7. Attachments. Exhibit A to this Memorandum of Agreement is hereby incorporated by this reference as though fully set forth in this Section. IN WITNESS WHEREOF, the parties have signed this Memorandum of Agreement as of the date first set forth above CITY: CITY OF TUSTIN Dated: By: ATTEST: Pamela Stoker, City Clerk APPROVED AS TO FORM By: Doug Holland, City Attorney Clay Gantz, Special Counsel William A. Huston, City Manager < Additional Signatures follow> "DEVELOPER" MARBLE MOUNTAIN PARTNERS, LLC, MOFFETT MEADOWS its sole member, a Delaware limited liability company, its PARTNERS, LCC, administrative member a Delaware limited liability company By: Its: By:, Its: ACKNOWLEGMENT AND CONSENT OF ASSIGNEES TO MEMORANDUM OF FIRST AMENDMENT The Undersigned, as assignees of portions of the property subject to the Housing Agreement, as amended by the First Amendment to the Housing Agreement, in accordance with the assignment agreements referenced in Recital C hereof of the First Amendment to the Housing Agreement, have consented to the Amended Agreement and this Memorandum of Agreement and agree to be bound thereby if and the extent such amendments affect the property owned by them. ASSIGNEES: For Lot 4 of Finance and Conveyance Map No. 16857 TUSTIN COVENTRY, LLC, a California Delaware limited liability company By: Lennar Homes of California, Inc., a California corporation, its managing Member By: Name: Title: <See additional signature page which follows> For Lots 8, 10 and 12 of Finance and Conveyance Map No. 16857 Lennar Homes of California, Inc, a California corporation By: Name: Title: For Lot 7 of Finance and Conveyance Map No. 16857 William Lyon Homes, Inc., a California corporation By: Name: Title: Dated: BY: STATE OF CALIFORNIA } )SS. COUNTY OF ORANGE } On before me, a Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity (ies), and that by his/her/their signature (s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) ATTACHMENT H Planning Commission Resolution Nos. 4134, 4136, and 4137 RESOLUTION NO. 4134 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF TUSTIN RECOMMENDING THAT THE CITY COUNCIL APPROVE DESIGN REVIEW 09-024 AND CONDITIONAL USE PERMIT 09-024, AUTHORIZING THE DEVELOPMENT OF A 240 -UNIT SENIOR APARTMENT RESIDENTIAL COMPLEX, AGE RESTRICTED TO PERSONS OF 55 YEARS OR OLDER, INCLUDING 153 AFFORDABLE UNITS, WITH A PARKING STANDARD OF 1.7 SPACES PER UNIT, RECREATION CENTER, AND ASSOCIATED INFRASTRUCTURE AND SITE IMPROVEMENTS ON LOT 265 OF TRACT 16581 WITHIN PLANNING AREA 4 AND PLANNING AREA 5 OF THE MCAS TUSTIN SPECIFIC PLAN, ALSO REFERRED TO AS COVENTRY COURT IN COLUMBUS SQUARE AT TUSTIN LEGACY The Planning Commission of the City of Tustin does hereby resolve as follows: I. The Planning Commission finds and determines as follows: A. That a proper application for Design Review 09-024 and Conditional Use Permit 09-024, Amendment to Tract Map 16581 and Amendment to Concept Plan 03-003 was submitted by Lennar Corporation for the development of a 240 -unit senior apartment housing project for rental tenure on a nine (9) acre site within Columbus Square within Planning Area 4 and Planning Area 5 of the MCAS -Tustin Specific Plan (Lot 265 of Tract 16581); B. That the site is located in the MCAS Tustin Specific Plan land use designation of the General Plan, which provides for residential development, and on Reuse Disposition Parcels 23 and 24 in Planning Areas 4 and 5 of the MCAS Tustin Specific Plan, which is designated for low and medium density residential; C. That a public hearing on the matter was duly called, noticed, and held for said application on December 8, 2009, by the Planning Commission; D. That at the December 8, 2009, meeting, the Planning Commission continued the project to the January 26, 2010, meeting to allow the project proponent to meet directly with the Community Association and any interested members of the community; E. That on January 26, 2010, the Planning Commission held a continued public hearing on the item and continued the item for sixty (60) days to allow staff, the applicant, and residents to conduct further research and report back on subjects raised at the hearing; F. That on March 23, 2010, the Planning Commission conducted a second PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 2 continued public hearing on the item; G. That the site is located within Tract 16581 previously approved by City Council Resolution No. 05-40 and Concept Plan 03-003 approved by Planning Commission Resolution No. 3951 for subdivision of 105.5 acres within Planning Areas 4 and 5 of the MCAS Tustin Specific Plan for the purpose of developing 1,075 residential units including 240 senior housing units for ownership tenure of which 153 units are designate as affordable units; H. That pursuant to Condition 2.2 of Resolution No. 05-40 approving TTM 16581, a Design Review is required for the overall design of the senior housing project and a Conditional Use Permit is required to permit a reduction in the number of on-site parking spaces; I. That the senior housing project was originally approved by Planning Commission Resolution No. 4014 as Design Review 05-019 and Conditional Use Permit 05-037 authorizing development of 240 age -restricted senior housing units for ownership tenure and a parking ratio of 1.7 spaces per unit; J. That pursuant to Condition 1.2 of Resolution No. 4014, permits must be obtained and substantial construction underway within 24 months; K. That some building permits were applied for, approved, and issued; and one (1) of the ten (10) buildings was constructed but the developer chose not to obtain additional permits or continue construction at Coventry Court; L. That since development at Coventry Court was discontinued, Design Review 05-019 and Conditional Use Permit 05-037 for Coventry Court are considered null; M. That new applications (DR 09-024, CUP 09-024, and Amendments to TM 16581 and CP 03-003) for continued development of the project and change in tenure type from ownership to rental are proposed; N. That the submitted plans are consistent with the plans that were previously approved by the Planning Commission and Community Development Department except for tenure type which is proposed to change from ownership to rental. Pursuant to Sections 3.4.2.A and 3.4.5.A of the MCAS Tustin Specific Plan, development in Planning Area 4 and 5 of apartments is a discretionary action requiring approval of a conditional use permit; O. That the proposed project is part of Tract 16581; thus all applicable conditions from City Council Resolution No. 05-40 for approval of Tentative Tract Map PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 3 16581 and Resolution No. 06-17 for approval of Final Tract Map 16581 remain applicable to proposed project; P. That the City's Traffic Engineer re -reviewed the parking demand analysis approved under CUP 05-037 in conjunction with the proposed project for the development of 240 senior rental apartments and determined that the difference in parking demand between a senior condominium (for sale) and senior apartment (for lease) project would be negligible. Accordingly, the parking ratio of 1.7 spaces per unit approved under CUP 05-037 remains valid and applicable to the subject project (CUP 09-024); Q. That pursuant to the MCAS Tustin Specific Plan and Section 9272 of the Tustin City Code, the location, size, architectural features, and general appearance of the proposed development will not impair the orderly and harmonious development of the area, the present or future development therein, or the occupancy as a whole, in that: The proposed senior residential apartment development is a permitted use in Planning Areas 4 and 5 of the MCAS Tustin Specific Plan, subject to approval of a conditional use permit, 2. As conditioned, the proposed project is consistent with the development standards and design guidelines of the MCAS Tustin Specific Plan, 3. As conditioned, conformance with all other applicable development standards, including current California building codes, will be verified by staff during plan check review, 4. The proposed site and building improvements are substantially consistent with plans previously approved by the Planning Commission and Community Development Department, 5. The location, size, architectural features and general appearance of the proposed development are consistent with and will not impair the orderly and harmonious development of the area, the present or future development therein, the occupancy thereof, or the community as a whole. In making such findings, the Commission has considered at least the following items: a) Height, bulk, and area of buildings. b) Setbacks and site planning. c) Exterior materials and colors. d) Type and pitch of roofs. e) Size and spacing of windows, doors, and other openings. f) Towers, chimneys, roof structures, flagpoles, radio and television PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 4 antennae. g) Location, height, and standards of exterior illumination. h) Landscaping, parking area design, and traffic circulation. i) Location and appearance of equipment located outside an enclosed structure. j) Location and method of refuse storage. k) Physical relationship of proposed structures to existing structures in the neighborhood. 1) Appearance and design relationship of proposed structures to existing structures and possible future structures in the neighborhood and public thoroughfares. m) Proposed signage. n) Development Guidelines and criteria as adopted by the City Council. R. That pursuant to Tustin City Code Section 9291, the proposed senior apartment housing development with a parking ratio of 1.7 spaces per unit will not be detrimental to the health, safety, morals, comfort, or general welfare of the persons residing or working in the neighborhood, nor be injurious or detrimental to the property and improvements in the neighborhood of the subject property, or to the general welfare of the City of Tustin, in that: 1. Multi -family residential apartment housing is a permitted use in Planning Areas 4 and 5 of the MCAS Tustin Specific Plan, subject to approval of a conditional use permit; 2. The 240 -unit senior apartment project is in conformance with the MCAS Specific Plan, including the limitation of rental units to a maximum 25 percent of the total number of units permitted in the Tustin portion of the Specific Plan; 3. The change from ownership to rental tenure will not result in a change in the design, operational characteristics, or intent of the project as previously considered and approved; 4. The aging and elderly are identified in the Housing Element of the City's General Plan as a growing special needs population in the City. The Housing Element identified Coventry Court as an implementation project to meet the City's housing projections and goals; 5. The project as proposed remains an age -restricted senior project and will benefit the target population as originally intended; 6. The 153 affordable housing units will be provided just as originally approved in terms of number, location, size, bedroom counts and income level, in PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 5 conformance with the approved Housing Agreement and Affordable Housing Plan for Columbus Square; 7. Approval of the project for rental tenure will allow for the project to progress and deliver the affordable housing units to the market in a more timely manner and in conformance with the requirement for reasonable proportionality in development of market -rate and affordable housing units; 8. A parking demand analysis utilizing a parking ratio of 1.7 spaces per unit was previously approved for senior condominiums as CUP 05-037 by Resolution No. 4014, has been re -reviewed by the City's Traffic Engineer in conjunction with the subject project, and has been determined to be satisfactory, adequate and applicable to the project as proposed for senior apartments. S. That the multiple family senior housing complex for ownership tenure was part of the subdivision of 105.5 acres and development of 1,075 residential units at the Columbus Square site, including was approved under Concept Plan (CP) 03-003 by Planning Commission Resolution No. 3951, under Tentative Tract Map (TTM) 16581 by City Council Resolution No. 05-40, and Final Tract Map (FTM) 16581 by City Council Resolution No. 06-17. The project proposed as rental units necessitates text amendments to CP 03-003, and TTM 16581 and FTM 16581 to ensure consistency of the approved housing tenure type from ownership to rental senior units, and that the necessary amendments are determined to be consistent with the intent of the approved Concept Plan and Tract Map; T. That should the proposed rental tenure not be carried out or instituted, the project approval shall remain valid for the development of 240 age -restricted senior condominium units, as was originally intended and approved for the project site; U. That this project is determined to be exempt from additional CEQA review pursuant to California Government Code Section 65457, which provides that once the EIR has been certified and the speck plan adopted, any residential development project that is undertaken to implement and is consistent with the specific plan is exempt from additional CEQA review. On January 16, 2001, the City of Tustin certified the Program Final Environmental Impact Statement/Environmental Impact Report for the Reuse and Disposal of MCAS Tustin (FEIS/EIR), which evaluated the environmental impacts of the reuse and disposal of MCAS -Tustin, in conjunction with the adoption of a Specific Plan. On February 3, 2003, the Tustin City Council adopted Ordinance No. 1257, which adopted the MCAS Tustin Specific Plan. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 6 On April 3, 2006, the City Council adopted Resolution No. 06-43 approving an Addendum to the FEIS/EIR for the Disposal and Reuse of MCAS Tustin. The FEIS/EIR and its Addendum considered the potential environmental impacts associated with development on the former Marine Corps Air Station, Tustin. The development of Coventry Court at Columbus Square is a residential development project that is being undertaken to implement and is consistent with the MCAS Tustin Specific Plan, as amended. No substantial changes in the project or circumstances under which it is being undertaken have occurred and no new information which was not known at the time the EIR was certified (or amended) has become available. Therefore, the proposed project is exempt from additional environmental review under CEQA. II. The Planning Commission hereby recommends that the City Council approve Design Review 09-024 and Conditional Use Permit 09-024 for development of a 240 -unit senior housing project age restricted for persons of 55 years or older for rental tenure utilizing a parking standard of 1.7 spaces per unit on Lot 265 of Tract 16581, including 153 affordable housing units, recreation center, and associated infrastructure and site improvements, subject to the recommended conditions contained in Exhibit A attached hereto. PASSED AND ADOPTED at a regular meeting of the Tustin Planning Commission held on the 23 Id day of March, 2010. ELWYN A. "AL" MURRAY Chairperson ELIZABETH A. BINSACK Planning Commission Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, ELIZABETH A. BINSACK, the undersigned, hereby certify that I am the Planning Commission Secretary of the Planning Commission of the City of Tustin, California; that Resolution No. 4134 duly passed and adopted at a regular meeting of the Tustin Planning Commission, held on the 23rd day of March, 2010. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 7 ELIZABETH A. BINSACK Planning Commission Secretary EXHIBIT A RESOLUTION NO. 4134 DESIGN REVIEW 09-024 AND CONDITIONAL USE PERMIT 09-024 RECOMMENDED CONDITIONS OF APPROVAL GENERAL (1) 1.1 The proposed project shall conform with the Tustin City Code and Tustin guidelines and standards and be consistent with submitted plans for the project date stamped [date of approval], on file with the Community Development Department, except as herein modified, or as modified by the Director of Community Development in accordance with this Exhibit. The Director of Community Development may also approve minor modifications to plans during plan check if such modifications are consistent with the provisions of the Tustin City Code, and other applicable codes. (1) 1.2 Unless otherwise specified, the conditions contained in this Exhibit shall be complied with as specified or prior to the issuance of any building permits for the project, subject to review and approval by the Community Development Department. (1) 1.3 The subject project approval shall become null and void unless permits for the proposed project are issued and substantial construction is underway within twelve (12) months. All time extensions may be considered if a written request is received within thirty (30) days prior to expiration date. Should this approval become null and void, the obligation that existed (prior to this approval) to develop 240 age -restricted senior condominium units, as was originally intended and approved for the project site, shall continue to apply. Associated conditions shall be applied accordingly. (1) 1.4 Approval of Design Review 09-024, Conditional Use Permit 09-024, Amendment to Tract Map 16581, and Amendment to Concept Plan 03-003 is contingent upon the applicant returning to the Community Development Department a notarized "Agreement to Conditions Imposed" form and the property owner signing and recording with the County Clerk -Recorder a notarized "Notice of Discretionary Permit Approval and Conditions of Approval' form. The forms shall be established by the Director of Community Development, and evidence of recordation shall be provided to the Community Development Department. SOURCE CODES (1) STANDARD CONDITION (5) RESPONSIBLE AGENCY REQUIREMENT (2) CEQA MITIGATION (6) LANDSCAPING GUIDELINES (3) UNIFORM BUILDING CODE/S (7) PC/CC POLICY (4) DESIGN REVIEW *** EXCEPTION PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 2 (1) 1.5 As a condition of approval of Design Review 09-024, Conditional Use Permit 09-024, Amendment to Tract Map 16581, and Amendment to Concept Plan 03-003, the applicant shall agree, at its sole cost and expense, to defend, indemnify, and hold harmless the City, its officers, employees, agents, and consultants, from any claim, action, or proceeding brought by a third party against the City, its officers, agents, and employees, which seeks to attack, set aside, challenge, void, or annul an approval of or conditions imposed by the City Council, the Planning Commission, or any other decision-making body, including staff, concerning this project. The City agrees to promptly notify the applicant of any such claim or action filed against the City and to fully cooperate in the defense of any such action. The City may, at its sole cost and expense, elect to participate in defense of any such action under this condition. (1) 1.6 Any violation of any of the conditions imposed is subject to issuance of an Administrative Citation pursuant to Tustin City Code Section 1162(a). (1) 1.7 The applicant shall be responsible for costs associated with any necessary code enforcement action, including attorney fees, subject to the applicable notice, hearing, and appeal process as established by the City Council by ordinance. (1) 1.8 The project approval is for 240 senior housing units age restricted to persons of 55 years or older for rental tenure utilizing a parking ratio of 1.7 spaces per unit, including 153 affordable units, recreation center, and infrastructure and site improvements. Any changes to the project description, scope, or affordable housing plan shall require further review and approval by the City. (***) 1.9 The subject project approval requires the approval and execution of an amendment to the Housing Agreement and Affordable Housing Plan by the City Council in form and content approved by the Redevelopment Agency, City Attorney, and City's Special Real Estate Counsel. The Amendment shall be approved and executed by all current parties to the Housing Agreement and all successors and assigns of each of the parties. Should amendments to the Housing Agreement and Affordable Housing Plan not be approved by the City Council, the subject approval shall become null and void. (***) 1.10 All applicable conditions of City Council Resolution Nos. 05-40 approving TTM 16581, density bonus, and affordable housing transfer and 06-17 approving FTM 16581, and Planning Commission Resolution No. 3953 approving DR 04-006 for the Columbus Square community shall remain applicable to Design Review 09-024, Conditional Use Permit 09-024, Amendment to Tract Map 16581, and Amendment to Concept Plan 03-003 as may be modified herein or in Planning Commission Resolution Nos. 4136 and/or 4137. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 3 (***) 1.11 The senior apartment development is proposed to be developed strictly as a senior complex with parking concession of 1.7 parking ratio per unit. Accordingly the senior apartment development shall be restricted to seniors of 55 years or older for the life of the project. An age restricted covenant running with the land shall be reviewed and approved by the Community Development Director and shall be recorded by the applicant prior to issuance of a building permit. PROJECT APPROVALS (***) 2.1 The subject project shall not be annexed into the Columbus Square Master Community Association (CSMCA). Instead, the applicant shall be responsible for drafting and obtaining from the CSMCA a written agreement regarding the use and maintenance of CSMCA community facilities, including but not limited to private streets and drives, common areas, recreational facilities, parking facilities (on- and off-street), parks, etc, and the payments to CSMCA of amounts equivalent to 240 units CSMCA assessments for the life of the project. The agreement shall be subject to review and approval by the City, and the provisions required by these Conditions of Approval may not be amended without the approval of the City. The agreement shall be recorded on and burden run with the property, and shall benefit the CSMCA property. The agreement shall provide that the subject lot and units shall not receive any voting rights within the CSMCA unless and until voting rights are required by the City or by operation of law. The applicant shall obtain agreements from all lenders and others possessing deeds of trust or other security interests secured by the property subordinating their interests to the agreement with CSMCA required by this Condition. Should the applicant be unable to fulfill this condition for any reason, the subject approval for the project for rental tenure shall be considered null and void. Should this project approval become null and void, the obligation that existed (prior to this approval) to develop 240 age -restricted senior condominium units, as was originally intended and approved for the project site, shall continue to apply. (***) 2.2 Should the project as proposed for rental tenure not be instituted or carried out, the subject approval shall be considered valid for ownership tenure (240 condominium units) as originally intended and approved for the project site. However, notwithstanding such an obligation to develop condominiums for ownership tenure, non condominium unit shall be sold except with the approval of the City. DESIGN REVIEW (4) 3.1 The applicant shall clearly demonstrate compliance with all applicable development standards of the MCAS Tustin Specific Plan and the Tustin PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 4 City Code on construction drawings at the time of plan check submittal. (4) 3.2 Architecturally compatible building design similar and provided at the constructed screens shall be provided check submittal. roof screening shall be incorporated into the comparable to the roof screens that have been model building on site. Details of proposed roof n the construction drawings at the time of plan (4) 3.3 Production plans shall incorporate additional chimneys as necessary to be consistent with the approved conceptual roof plans. GRADING PLAN SUBMITTAL (1) 4.1 Four (4) sets of final grading plans, including a site plan, and consistent with the landscaping plans, as prepared by a registered civil engineer, shall be submitted and shall include the following: A. Technical details and plans for all utility installations including telephone, gas, water, and electricity. B. Three (3) copies of a precise soils report provided by a civil engineer and less than one (1) year old. Expanded information regarding the levels of hydrocarbons and ground water contamination found on-site shall be provided in the soil report. All pavement "R" values shall be in accordance with applicable City of Tustin standards. C. Information demonstrating that all site drainage shall be handled on-site and shall not be permitted to drain onto adjacent properties. D. Information demonstrating that drainage, vegetation, circulation, street sections, curbs, gutters, sidewalks, and storm drains shall comply with the City of Tustin`s "Construction Standards for Private Streets, Storm Drain and On -Site Private Improvements," revised April 1989. E. Two (2) copies of a hydrology report. F. Information demonstrating that vehicle parking, primary entrance to the building, primary paths of travel, sanitary facilities, drinking fountain, and public telephones for the recreation building shall be accessible to persons with disabilities. G. Building and landscape setback dimensions and dimensions for all drive aisles, back up areas, each covered parking stall, and open parking stalls. (1) 2.2 The engineer of record must submit a final compaction report to the Building Division for review and approval prior to the issuance of a building permit. (1) 2.3 The engineer of record must submit a pad certification to the Building Division for review and approval prior to the issuance of a building permit. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 5 (1) 2.4 Prior to issuance of a grading permit, the applicant shall be required to provide a performance bond to assure grading work is completed in accordance with approved plans. The engineer's estimated cost shall be submitted to the Building Official for determination of the bond amount. (1) 2.5 A note shall be provided on the final plans indicating that a six (6) foot high chain link fence shall be installed around the site prior to grading. A nylon fabric or mesh shall be attached to the temporary construction fencing. Gated entrances shall be permitted along the perimeter of the site for construction vehicles. BUILDING PLAN SUBMITTAL (3) 3.1 At the time of building permit application, the plans shall comply with the latest applicable codes, City Ordinances, State, Federal laws, and regulations as adopted by the City Council of the City of Tustin. (3) 3.2 Building plan check submittal shall include the following: • Seven (7) sets of construction plans, including drawings for mechanical, plumbing, and electrical. • Structural calculations, two (2) copies. • Title 24 energy calculations, two (2) copies. • Elevations that include all proposed dimensions, materials, colors, finishes, and partial outlines of adjacent buildings on-site and off-site where applicable • Details for the proposed windows and doors. • Roofing material shall be fire rated class "B" or better. • The location of any utility vents or other equipment shall be provided on the roof plan. • Details of all proposed lighting fixtures and a photometric study showing the location and anticipated pattern of light distribution of all proposed fixtures. All new light fixtures shall be consistent with the architecture of the building. All exterior lighting shall be designed and arranged as not to direct light or glare onto adjacent properties, including the adjacent streets. Wall- mounted fixtures shall be directed at a 90 -degree angle directly toward the ground. All lighting shall be developed to provide a minimum of one (1) foot-candle of light coverage, in accordance with the City's Security Ordinance. • A note shall be provided on the plans that "All parking areas shall be illuminated with a minimum of one (1) foot-candle of light, and lighting shall not produce light, glare, or have a negative impact on adjacent properties." • Cross-section details showing the installation of the proposed rooftop equipment. Rooftop equipment shall be installed and maintained so as not to be visible from the public right-of-way. An elevation showing rooftop equipment installation related to the height of the parapet and PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 6 proposed equipment must be identified at plan check submittal and all equipment must be six (6) inches below the top of the parapet, subject to the approval of the Community Development Director. Noise attenuation features as required under the "Noise" section of this Resolution. Note on plans that no field changes shall be made without prior approval from the Building Official and architect or engineer of record. (1) 3.3 Sufficiently sized concrete pad in front of mailbox structures shall be provided to allow mail carrier to place mail and homeowner to retrieve mail without standing in the street or landscape area. (3) 3.4 Vehicle parking, primary entrance to the pool and recreational building, the primary path of travel, sanitary facilities, drinking fountains, and public telephones shall be accessible to persons with disabilities as per State of California Accessibility Standards (Title 24). Parking for disabled persons shall be provided with an additional five (5) foot loading area with striping and ramp; disabled persons shall be able to park and access the building without passing behind another car. At least one (1) accessible space shall be van accessible served by a minimum 96 inch wide loading area. (3) 3.5 The clear and unobstructed interior garage dimensions for each parking space shall be a minimum of ten (10) feet in width and twenty (20) feet in length and shall be shown on the plans. (4) 3.6 Information to ensure compliance with requirements of the Orange County Fire Authority shall be submitted including fire flow and installation of fire hydrants subject to approval of the City of Tustin Public Works and/or Irvine Ranch Water District. (1) 3.7 If determined feasible by the Building Official, the applicant shall implement one or more of the following control measures, if not already required by the SCAQMD under Rule 403 during construction as follows: a) Apply water twice daily, or chemical soil stabilizers according to manufacturers' specifications, to all unpaved parking or staging areas or unpaved road surfaces at all actively disturbed sites. b) Develop a construction traffic management plan that includes, but is not limited to, rerouting construction trucks off congested streets, consolidating truck deliveries, and providing dedicated turn lanes for movement of construction trucks and equipment on-site and off-site. c) Use electricity from power poles rather than temporary diesel or gasoline -powered generators. d) Reduce traffic speeds on all unpaved roads to 15 mph or less. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 7 e) Pave construction roads that have a traffic volume of more than 50 daily trips by construction equipment or 150 total daily trips for all vehicles. f) Apply approved chemical soil stabilizers according to manufacturers' specifications to all inactive construction areas (previously graded areas inactive for four days or more). g) Enclose, cover, water twice daily, or apply approved soil binders according to manufacturers' specifications to exposed piles of gravel, sand, or dirt. h) Cover all trucks hauling dirt, sand, soil, or other loose materials, and maintain at least two (2) feet of freeboard (i.e., minimum vertical distance between top of the load and top of the trailer). i) Sweep streets at the end of the day if visible soil material is carried over to adjacent roads (use water sweepers with reclaimed water when feasible). j) Install wheel washers where vehicles enter and exit unpaved roads onto paved roads or wash off trucks and any equipment leaving the site each trip. k) Use low VOC architectural coatings for all interior and exterior painting operations. PUBLIC WORKS DEPARTMENT (1) 4.1 A separate 24" x 36" street improvement plan, as prepared by a California Registered Civil Engineer, shall be required for all construction within the public right-of-way along Edinger Avenue and West Connector Road. Construction and/or replacement of any missing or damaged public improvements will be required adjacent to this development. Said plan shall include, but not be limited to the following: a) Curb and Gutter b) Sidewalk c) Drive aprons d) Catch basin/storm drain laterals/ connection to existing storm drain system e) Domestic water facilities f) Reclaimed water facilities g) Sanitary sewer facilities h) Underground utility connections In addition, a 24" x 36" reproducible construction area traffic control plan, as prepared by a California Registered Traffic Engineer or Civil Engineer experienced in this type of plan preparation may be required. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 8 (1) 4.2 Preparation of plans for and construction of: a. All sanitary sewer facilities shall be submitted as required by the City Engineer and Irvine Ranch Water District. b. A domestic water system shall be designed and installed to the standards of the Irvine Ranch Water District. The adequacy and reliability of the water system design and the distribution of fire hydrants shall be evaluated. The water distribution system and appurtenances shall also conform to the applicable laws and adopted regulations enforced by the Orange County Health Department. Any required reclaimed water system shall meet the standards as required by the Irvine Ranch Water District. (1) 4.3 The applicant shall comply and meet all conditions of Tract Map 16581. (1) 4.4 Prior to any work in the public right-of-way, an Encroachment Permit shall be obtained from and applicable fees paid to the Public Works Department. (1) 4.5 Any damage done to existing street improvements and utilities shall be repaired before issuance of a certificate of Occupancy. (1) 4.6 A complete hydrology study and hydraulic calculations shall be submitted for review and approval by the City. (1) 4.7 In addition to the normal full size map and plan submittal process, all final maps and development plans including, but not limited to: tract maps, parcel maps, right-of-way maps, records of survey, public works improvements, private infrastructure improvements, final grading plans, and site plans are also required to be submitted to the Public Works Department/Engineering Division in computer aided design and drafting (CADD) format. The standard file format is AutoCAD Release 2007, or latest version, having the extension "DWG." All layering and linotype conventions are AutoCAD -based (latest version available upon request from the Public Works Department). The CADD files shall be submitted to the City at the time the plans are approved and updated CADD files reflecting "as built" conditions shall be submitted once all construction has been completed. No project bonds will be released until acceptable "as built" CADD files have been submitted to the City. (1) 4.8 Facility Solid Waste Collection and Recycling Plan a. Prior to approval of a site plan or the issuance of a building permit, whichever occurs first, a Facility Solid Waste Collection and Recycling PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 9 Plan and a site plan covering the planned use o the facility shall be submitted utilizing the applicable from and approved by the City of Tustin Public Works Department. b. The applicant, property owner, and/or tenant(s) are required to participate in the City's recycling program. c. Waste and Recycling collection facilities shall be equally and readily accessible by the property owner(s) or tenant(s). d. Waste and Recycling collection facilities must be placed in a location that can be easily and safely accessed by the solid waste hauler which utilizing either front loader or side loading equipment. e. Adequate collection capability shall be provided to ensure that collection frequency shall not exceed four times per week for commercial customers. f. All trash enclosures shall utilize the City's standard enclosure designed to accommodate at least two (2) 4 -cubic yard bins, with at least one (1) bin reserved for recyclable materials. g. Prior to the issuance of a building permit, the Public Works Department shall review and approve the number of trash enclosures required to service the project site. (***) 4.9 Condition of approval 4.1 of Resolution 05-40 approving Tentative Tract Map16581, which is incorporated into this approval, requires that the applicant fund its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program. The applicant shall fund and provide security for its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program as required by Condition of approval 4.1 of Resolution 05-40, including its Fair Share Contribution of the cost estimates of the Tustin Legacy Backbone Infrastructure as adjusted by the Tustin City Council on April 3, 2006, and September 2, 2008, and subject to future increases in the Backbone Infrastructure Program costs and applicant's Fair Share Contribution thereto. WATER QUALITY (1) 5.1 This development shall comply with all applicable provisions of the City of Tustin Water Quality Ordinance and all Federal, State and Regional Water Quality Control Board rules and regulations. (1) 5.2 An updated Water Quality Management Plan (WQMP) shall be submitted and approved prior to issuance of grading permit. The WQMP shall be prepared using the City's WQMP Guidelines. The applicant shall submit a deposit of $2,700.00 for the estimated cost for reviewing WQMP to the City. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 10 The actual costs will be deducted from the deposit, and the applicant shall be responsible for any additional review cost that exceeded the deposit prior to issuance of grading permits. Any unused portion of the deposit will be refunded to the applicant. CONSTRUCTION PHASING AND MODEL UNIT PLAN (1) 6.1 The developer shall close and convert the model units (constructed units) to occupancy within 90 days from the last unit rented. (***) 6.2 No further building permits shall be issued for any portion of Tract 16581 until the balance of market -rate and affordable units within the entirety of Tract 16581 is reasonably in proportion, as determined by the Director of Community Development. The applicant shall submit a revised phasing plan, for review and approval by the Community Development Department, reflecting phasing in conformance with this condition, prior to the issuance of any further building permits in Tract 16581. LANDSCAPING/HARDSCAPE (1) 7.1 Submit at plan check complete detailed landscaping and irrigation plans for all landscaping areas, including the model complex, consistent with adopted City of Tustin Landscaping requirements. The plans shall include the following: ■ Include a summary table identifying plan materials. The plant table shall list botanical and common names, sizes, spacing, location, and quantity of the plant materials proposed. ■ Show planting and berming details, soil preparation, staking, etc. The irrigation plan shall show location and control of backflow prevention devices, pipe size, sprinkler type, spacing, and coverage. Details for all equipment must be provided. ■ Show all property lines on the landscaping and irrigation plans, public right-of-way areas, sidewalk widths, parkway areas, and wall locations. ■ The Community Development Department may request minor substitutions of plant materials or request additional sizing or quantity of materials during plan check. ■ Add a note that coverage of landscaping and irrigation materials is subject to inspection at project completion by the Community Development Department. 0 Turf is unacceptable for grades over 25 percent. A combination of PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 11 planting materials shall be used. On large areas, ground cover alone is not acceptable. Shrubs shall be a minimum of five (5) gallon size and shall be placed a maximum of five (5) feet on center. Fences, wall, and equipment areas shall be screened with walls, vines, and/or trees. All plant materials shall be installed in a healthy vigorous condition typical to the species and shall be maintained in a neat and healthy condition. Maintenance includes, but is not limited to, trimming, weeding, removal of litter, fertilizing, regular watering, and replacement of diseased or dead plants. Landscape adjacent to the right-of-way shall be in compliance with the requirements of MCAS Tustin Specific Plan. Perimeter walls should be treated with vines to relieve large expanse walls with greenery and color. Vines shall be informally grouped and installed with training devices. (4) 7.2 On-site walls and fences shall be noted on the plans with specific materials, colors, and decorative treatments. Interior wall/fences shall be made of durable materials subject to review and approval of the Community Development Department. PARKING (***) 8.1 The approved parking ratio of 1.7 parking spaces per unit is exclusive to the senior community and is contingent on the property remaining a senior housing complex for persons of 55 years and older. The project shall provide a minimum of 409 parking spaces including a minimum of 200 one -car garage spaces and 40 carports, 130 open guest parking stalls, 28 parallel street parking, 10 ADA accessible parking spaces and 1 ADA van accessible parking space. (***) 8.2 The applicant shall submit a Parking Management Plan for review and approval by the Community Development Department prior to issuance of any building permit. The Parking Management Plan shall include, but not be limited to, the following: • Of the 409 parking spaces, thirty-six (36) spaces (0.15 space per unit as recommended by the ULI Shared Parking Study) shall be set aside for guests, six (6) spaces shall be set aside for employees and a maximum of 367 spaces shall be available for residents. In any event, the owner and/or operator of the facility shall not permit residents to own and maintain any more than a total of 367 vehicles on-site at any given time. These restrictions shall be incorporated in any lease and/or PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 12 rental agreement. • The owner and/or operator of the facility shall ensure that required parking is provided to tenants, employees, and visitors such that off- site or surrounding properties parking are not negatively impacted. This could be accomplished using a decal systems, on-site security and/or manager parking enforcement, etc. • The owner and/or operator shall be responsible for monitoring and enforcing all parking and traffic regulations on the project site. • Any revision to the Parking Management Plan shall be reviewed and approved by the Community Development Department. (***) 8.3 If in the future the City determines that parking or traffic problems exist on the site or in the vicinity, the Community Development Director may require that the property owner prepare an analysis and bear all associated costs. If the study indicates that there is a parking or traffic impact, the applicant/property owner shall provide interim and permanent mitigation measures to alleviate the problem. RENTER NOTIFICATION (1) 9.1 The applicant shall submit to the Community Development Department for review and approval a renter notification document that includes the notifications listed below. The notification document shall be signed by each renter(s) prior to occupancy, and a copy of the signed notification shall be provided to the Community Development Department prior to final inspection and/or issuance of each Certificate of Occupancy. A. A notice for roadway, trail, and train noise that may impact the project, including roadway noise associated with, Edinger Avenue, North Loop Road, Kensington Park Drive, and train noise associated with the rail corridor north of the project. The notice shall indicate the current number of trains per day (59) and the estimated to increase to over 100 trains on a 24 hour basis by the year 2020. The notice shall indicate that additional building upgrades may be necessary for noise attenuation. This determination is to be made as architectural drawings become available and/or where field-testing determines inadequate noise insulation. B. A notice, to be reviewed by the City of Tustin and the Tustin Unified School District, regarding the location of existing and proposed elementary, middle, and high schools which will serve the subdivision (text and map) and advice to renters that proposed school sites may never be constructed. C. A notice regarding units that are adjacent to aboveground utilities or structures (such as light standards and fire hydrants) identifying the type of structure and their locations. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 13 D. A notice indicating that any use of a residence for a business shall be subject to the City's Home Occupation Ordinance and may require zoning clearance and a business license. E. A notice indicating that public use of a minimum one (1) acre or more portion of the park site, to be maintained by the CSMCA homeowners association, will be allowed and noting public ingress and egress through the subdivision will be provided for access to the park. F. A notice explaining the easements, facilities, amenities, and dedications that will be provided on lettered lots and indicating all on- site streets, alleys, paseos, and common areas are to be maintained by the CSMCA. The notice shall notify the renter that renters are not members of the CSMCA, and will not vote in CSMCA matters. The notice shall also identify any easements, facilities, amenities, and dedications that will be maintained by the owner or operator of the apartment complex. G. A notice, to be approved by the City Attorney, indicating that neither the site, nor the project nor any part thereof any street or sidewalk, alleyway, or paseo thereon shall be privately gated, provided however that any swimming pool and/or spa facility within the common area and any indoor common area improvements, including any clubhouse and bathrooms, may be gated or locked and made available solely to members of the CSMCA, to the residents of the project, and to their guests. H. A notice indicating that surrounding properties may be developed in accordance with City ordinances in a manner which may partially or totally obstruct views from the renter's unit and that the City of Tustin makes no claim, warranty, or guarantee that views from any unit will be preserved as development of surrounding properties occurs. A notice explaining that 153 affordable housing units will be dispersed throughout the project site. These units will remain affordable for a period of fifty-five (55) years or longer. J. A notice explaining the phasing of construction within the project site and surrounding subdivison and that activity may be disruptive. K. A notice that the project is located adjacent to a future fire station site at the southwest corner of Edinger Avenue and Kensington Park Drive and that the station will be operating 24 hours a day. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 14 ORANGE COUNTY FIRE AUTHORITY (5) 10.1 Prior to the issuance of any grading, the applicant shall submit a fire hydrant location plan to the Fire Chief for review and approval. (5) 10.2 Prior to the issuance of a building permit, the applicant shall submit evidence of the on-site fire hydrant system to the Fire Chief and indicate whether it is public or private. If the system is private, it shall be reviewed and approved by the Fire Chief prior to building permit issuance, and the applicant shall make provisions for the repair and maintenance of the system in a manner meeting the approval of the Fire Chief. Please contact the OCFA at (714) 573-6100 or visit the OCFA website for a copy of the "Guidelines for Private Fire Hydrant Wor Sprinkler Underground Piping." (5) 10.3 Prior to the issuance of any certificate of occupancy, all fire hydrants shall have a blue reflective pavement marker indicating the hydrant location on the street as approved by the Fire Chief, and must be maintained in good condition by the property owner. Please contact the OCFA at (714) 573- 6100 or visit the OCFA website for a copy of the "Guideline for Installation of Blue Dot Hydrant Markers." (5) 10.4 Prior to the issuance of any grading, the applicant shall provide evidence of adequate fire flow. The "Orange County Fire Authority Water Availability for Fire Protection" form shall be signed by the applicable water district and submitted to the Fire Chief for approval. If sufficient water to meet fire flow requirements is not available an automatic fire extinguishing system may be required in each structure affected. (5) 10.5 Prior to the issuance of building permits, a note shall be placed on the plans stating that all residential structures (R-1 occupancies) and any structure exceeding 6,000 square feet (per amendment) shall be protected by an automatic fire sprinkler system in a manner meeting the approval of the Fire Chief. (5) 10.6 Prior to the issuance of a building permit, the applicant shall submit plans for any required automatic fire sprinkler system in any structure to the Fire Chief for review and approval. Please contact the OCFA at (714) 573- 6100 for additional information. (5) 10.7 Prior to the issuance of a certificate of occupancy, this system shall be operational in a manner meeting the approval of the Fire Chief. (5) 10.8 Prior to the issuance of any grading or building permits, the applicant shall obtain approval of the Fire Chief for all fire protection access roads to within 150 feet of all portions of the exterior of every structure on site. Please contact the OCFA at (714) 573-6100 or visit the OCFA website to PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 15 obtain a copy of the "Guidelines for Emergency Access, or Bulletin number 08-99, "Fire Department Access Requirements for A Single Family Residence." (5) 10.9 Prior to the issuance of a precise grading permit or building permit, the applicant shall submit and obtain approval of the Fire Chief and City Staff of plans for all public or private access roads, streets and courts. The plans shall include plan and sectional views and indicate the grade and width of the access road measured flow -line to flow -line. When a dead- end street exceeds 150 feet or when otherwise required, a clearly marked fire apparatus access turnaround must be provided and approved by the Fire Chief. Applicable CC&R'S or other approved documents shall contain provisions which prohibit obstructions such as speed bumps/humps, control gates or other modifications within said easement or access road unless prior approval of the Fire Chief is granted. Please contact the OCFA at (714) 573-6100 or visit the OCFA website to obtain a copy of the "Guidelines for Emergency Access." (5) 10.10 A note shall be placed on the fire protection access easement plan indicating that all street/road signs shall be designed and maintained to be either internally or externally illuminated in a manner meeting approval of the Fire Chief. (5) 10.11 Prior to the issuance of any grading or building permits, the applicant shall submit plans and obtain approval from the Fire Chief for fire lanes on required fire access roads less than 36 feet in width. The plans shall indicate the locations of red curbs and signage and include a detail of the proposed signage including the height, stroke and colors of the lettering and its contrasting background. Please contact the OCFA at (714) 573- 6100 or visit the OCFA website to obtain a copy of the "Guidelines for Emergency Access Roadways and Fire Lane Requirements," or Bulletin 06-99, "Fire Lane Requirements on Private & Public Streets Within Residential Developments." (5) 10.12 Prior to the issuance of any certificate of occupancy, the fire lanes shall be installed in accordance with the approved fire lane plan. The CC&R'S or other approved documents shall contain a fire lane map, provisions prohibiting parking in the fire lanes, and an enforcement method. (5) 10.13 Prior to the issuance of any grading permits, the applicant shall obtain the approval from the Fire Chief for the construction of any gate across required fire department access roads. Please contact the OCFA at (714) 573-6100 or visit the OCFA website to obtain a copy of the "Guidelines for Design and Installation of Emergency Access Gates and Barriers." (5) 10.14 Prior to the issuance of a building permit for combustible construction, the builder shall submit a letter on company letterhead stating that water for PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 16 fire -fighting purposes and all-weather fire protection access roads shall be in place and operational before any combustible material is placed on site. Building permits will not be issued without OCFA approval obtained as a result of an on-site inspection. Please contact the OCFA at (714) 573- 6100 to obtain a copy of the standard combustible construction letter. (5) 10.15 Prior to the issuance of a building permit, the applicant shall submit architectural plans for the review and approval of the Fire Chief if required per the "Orange County Fire Authority Plan Submittal Criteria Form." Please contact the OCFA at (714) 573-6100 for a copy of the Site/Architectural Notes to be placed on the plans prior to submittal. (5) 10.16 Prior to the issuance of a building permit, plans for the fire alarm system shall be submitted to the Fire Chief for review and approval. Please contact the OCFA at (714) 573-6100 or visit the OCFA website to obtain a copy of the "Guideline for New and Existing Fire Alarm Systems." (5) 10.17 This system shall be operational prior to the issuance of a certificate of occupancy. k191 (1) 11.1 Noise attenuation measures as recommended by the noise analysis shall be included with the construction drawings for plan check, which ensure a minimum outdoor -indoor transmission class (OITC) of 37. The interior and exterior noise levels (including balconies of six feet in width) shall comply with City of Tustin noise requirements. (1) 11.2 In accordance with the noise analysis, all units are required to include air conditioning units or fresh air intake systems to achieve the minimum interior noise level standards shall have these units installed prior to issuance of a Certificate of Occupancy. Prior to final inspection and issuance of certificates of use and occupancy, the developer shall provide an independent noise analysis verifying that interior noise levels comply with Title 25 and City noise requirements. (1) 11.3 The perimeter sound walls' are included as part of the master wall plans for Columbus Square currently under review. PUBLIC SAFETY (4) 12.1 Required lighting shall be installed so as not to be in conflict with landscaping and possible reduced lighting output. Evidence of such shall be shown on lighting and landscape plans at the time of plan check submittal. PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 17 ENVIRONMENTAL (1) 13.1 Additional measures related to development of this project as noted in the adopted EIS/EIR including, but not limited to the following: A. Prior to issuance of a grading permit, the developer shall retain a County -certified archaeologist. If buried resources are found during grading within the reuse plan area, a qualified archaeologist would need to assess the site significance and perform the appropriate mitigation. The Native American viewpoint shall be considered during this process. This could include testing or data recovery. Native American consultation shall also be initiated during this process. B. The developer shall comply with the requirements established in a Palentological Resource Management Plan (PRMP) prepared for the site, which details the methods to be used for surveillance of construction grading, assessing finds, and actions to be taken in the event that unique paleontological resources are found. C. Prior to the issuance of a grading permit, the applicant shall provide written evidence to the Community Development Department that a County -certified paleontologist has been retained to conduct salvage excavation of unique paleontological resources if they are found. D. Prior to issuance of any permit, the developer shall provide traffic operations and control plans that would minimize the traffic impacts of proposed construction activity. The plans shall address roadway and lane closures, truck hours and routes, and notification procedures for planned short-term or interim changes in traffic patterns. Such plans shall minimize anticipated delays at major intersections. Prior to approval, the City of Tustin or the City of Irvine, as applicable, shall review the proposed traffic control and operations plans with any affected jurisdiction. FEES (1)(5) 14.1 Prior to issuance of any building permits, payment shall be made of all applicable fees, including but not limited to, the following. Payment shall be required based upon those rates in effect at the time of payment and are subject to change. a. Building plan check and permit fees to the Community Development Department based on the most current schedule at the time of permit PC Resolution No. 4134 DR 09-024 and CUP 09-024 Page 18 issuance. b. Engineering plan check and permit fees to the Public Works Department based on the most current schedule at the time of permit issuance. C. Orange County Fire Authority plan check and inspection fees to the Community Development Department based upon the most current schedule at the time of permit issuance. d. Major Thoroughfare and Bridge Fees to the Tustin Public Works Department based on the most current schedule at the time of permit issuance. e. Transportation System Improvement Program (TSIP), Benefit Area "B" fees in the amount of $3.31 per square foot of new or added gross square floor area of construction or improvements to the Community Development Department. f. Water and sewer connection fees to the Irvine Ranch Water District. g. New development tax in the amount of $350.00 per unit, plus $100.00 per bedroom over one (1) bedroom in each unit. h. School facilities fee in the amount as required by Tustin Unified School District. Other applicable parkland in -lieu fees and Tustin Legacy Backbone Infrastructure Program fees as required by Resolution No. 05-40. (1) 14.2 Within forty-eight (48) hours of final approval of the project, the applicant shall deliver to the Community Development Department, a CASHIER'S CHECK payable to the County Clerk in the amount of fifty dollars ($50.00) to enable the City to file the appropriate environmental documentation for the project. If within such forty-eight (48) hour period that applicant has not delivered to the Community Development Department the above -noted check, the statute of limitations for any interested party to challenge the environmental determination under the provisions of the California Environmental Quality Act could be significantly lengthened. RESOLUTION NO. 4136 A RESOLUTION OF THE PLANNING COMMISSION RECOMMENDING THAT THE CITY COUNCIL APPROVE AMENDMENT TO CONCEPT PLAN 03-003 TO REFLECT A CHANGE IN TENURE FROM OWNERSHIP TO RENTAL FOR THE PROPOSED 240 -UNIT AGE -RESTRICTED SENIOR HOUSING COMPLEX ON LOT 265 OF TRACT 16581 (COVENTRY COURT IN COLUMBUS SQUARE AT TUSTIN LEGACY) The Planning Commission of the City of Tustin does hereby resolve as follows: The Planning Commission finds and determines as follows: A. That a proper application for Design Review 09-024 and Conditional Use Permit 09-024, Amendment to Resolution No, 05-40 which approved Tract Map 16581 and Amendment to Resolution No. 3951 which approved Concept Plan 03-003 was submitted by Lennar Corporation for the development of a 240 -unit senior apartment housing project for rental tenure on a nine (9) acre site within Columbus Square within Planning Area 4 and Planning Area 5 of the MCAS -Tustin Specific Plan (Lot 265 of Tract 16581); B. That the site is located is located within Tract 16581 previously approved by City Council Resolution No. 05-40 in the MCAS Tustin Specific Plan land use designation of the General Plan, which provides for residential development, and on Reuse Disposition Parcels 23 and 24 in Planning Areas 4 and 5 of the MCAS Tustin Specific Plan, which is designated for low and medium density residential; C. That a public hearing on the matter was duly called, noticed, and held for said application on December 8, 2009, by the Planning Commission; D. That at the December 8, 2009, meeting, the Planning Commission continued the project to the January 26, 2010, meeting to allow the project proponent to meet directly with the Community Association and any interested members of the community; E. That on January 26, 2010, the Planning Commission held a continued public hearing on the item and continued the item for sixty (60) days to allow staff, the applicant, and residents to conduct further research and report back on subject raised at the hearing; F. That on March 23, 2010, the Planning Commission conducted a second continued public hearing on the item; G. That on February 14, 2005, the Planning Commission adopted Resolution No. 3951 approving Concept Plan 03-003 to subdivide 105.5 acres for the Resolution No. 4136 Amendment to Concept Plan 03-003 Page 2 purpose of developing 1,077 residential units including 84 Single Family Detached (SFD), 181 Carriage Way SFD, 72 Multiple Family Attached (senior housing - for ownership tenure) for a total of 337 units at an average density of 8.62 du/acre in Planning Area 4 (Parcel 23) and 18 carriage way units, 552 Multiple Family Attached (MFR), 170 Multiple Family Attached (senior housing -- for ownership tenure) for a total of 740 units at an Average density 17.53 du/acre for Planning Area 5 (Parcel 24) of the MCAS Tustin Specific Plan; H. That the submitted plans are consistent with the plans that were previously approved by the Planning Commission and Community Development Department except for tenure type which is proposed to change from ownership to rental; I. That the proposed project necessitates text amendments to Resolution 3951 which approved Concept Plan 03-003; J. That the amendment to Concept Plan 03-003 is in conformance with the Tustin Area General Plan and MCAS Tustin Specific Plan and approval of Concept Plan 03-003, subject to conditions contained in Resolution Nos. 4134 and 4137, would achieve the development concepts set forth by the MCAS Tustin Specific Plan, including: 1. Ensuring the continuity and adequacy of all circulation systems, such as: roadways, access points, trails, pedestrian ways, and other infrastructure systems needed to serve the project; 2. Ensuring the continuity and design quality of architecture, landscape, and hardscape themes and treatments; 3. Providing urban design features as per Chapters 2 and 3 of the MCAS Tustin Specific Plan; 4. Ensuring conformity with the Non -Residential Land Use Trip Budget; and, 5. Ensuring compliance with all applicable provisions of the MCAS Tustin Specific Plan. II. The Planning Commission hereby recommends that the City Council approve amendment to Concept Plan 03-003 to reflect a change in tenure from ownership to rental for the proposed 240 -unit age -restricted senior apartment housing project on a nine (9) acre site within Columbus Square within Planning Area 4 and Planning Area 5 of the MCAS -Tustin Specific Plan (Lot 265 of Tract 16581), subject to the conditions of approval attached hereto. Resolution No. 4136 Amendment to Concept Plan 03-003 Page 3 PASSED AND ADOPTED at a regular meeting of the Tustin Planning Commission held on the 23�d day of March, 2010. ELWYN A. "AL" MURRAY Chairperson ELIZABETH A. BINSACK Planning Commission Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, ELIZABETH A. BINSACK, the undersigned, hereby certify that I am the Planning Commission Secretary of the Planning Commission of the City of Tustin, California; that Resolution No. 4136 was duly passed and adopted at a regular meeting of the Tustin Planning Commission, held on the 23d day March, 2010. ELIZABETH A. BINSACK Planning Commission Secretary EXHIBIT A RESOLUTION NO. 4136 AMENDMENT TO CONCEPT PLAN 03-003 RECOMMENDED CONDITIONS OF APPROVAL (1) 1.1 Concept Plan 03-003 is approved for development of 1,075 residential units in Planning Area 4 and Planning Area 5 as follows: Planning Area 4 (Parcel 23) 84 Single Family Detached (SFD) 181 Carriage Way SFD 72 Multiple Family Attached (Senior Housing) Total: 337 units Average density of 8.62 du/acre Planning Area 5 (Parcel 24) 18 Carriage Way units 552 Multiple Family Attached (MFR) 170 Multiple Family Attached (Senior Housing) Total: 740 units Average density 17.53 du/acre (***) 1.2 The amendment to the approved Concept Plan is subject to execution of the First Amendment to the Housing Agreement and Regulatory Agreement in conformance with the requirements of the density bonus application as approved by the City Council, Condition 1.9 and 1.10 of Planning Commission Resolution No. 4134, and Condition 2.2 of Resolution No. 4137. (***) 1.3 Resolution No. 4136 shall become null and void in the event that Resolution Nos. 4134 approving Design Review 09-024 and Conditional Use Permit 09-024 and Resolution No. 4137 approving Amendment to the Tract Map 16581 are not approved by the City Council. (***) 1.4 Resolution No. 4136 shall become null and void in the event that the subject project is not approved or instituted as a rental project. In such event, Concept Plan 03-003 shall remain unchanged and the original approval (Resolution No. 3951, which approved the subject senior units for ownership tenure), shall remain valid. (1) 1.5 Approval of Amendment to Concept Plan 03-003 shall be contingent upon all conditions of approval contained within Resolution Nos. 4134 and 4137. (***) 1.6 Condition of Approval 4.1 of Resolution No. 05-40 approving Tentative Tract Map 16581, which is incorporated into this approval, requires that the applicant fund its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program. The applicant shall fund and provide security for its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program as required by Condition of Approval 4.1 of Resolution No. 05-40, Resolution No. 4136 Amendment to Concept Plan 03-003 Page 2 including its Fair Share Contribution of the cost estimates of the Tustin Legacy Backbone Infrastructure as adjusted by the Tustin City Council on April 3, 2006 and September 2, 2008, and subject to future increases in the Backbone Infrastructure Program costs and applicant's Fair Share Contribution thereto. RESOLUTION NO. 4137 A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF TUSTIN RECOMMENDING THAT THE CITY COUNCIL APPROVE AMENDMENT TO RESOLUTION NOS. 05-40 AND 06-17, WHICH APPROVED TENTATIVE TRACT MAP AND FINAL TRACT MAP 16581 RESPECTIVELY, TO REFLECT A CHANGE IN TENURE FROM OWNERSHIP TO RENTAL FOR THE PROPOSED 240 -UNIT AGE -RESTRICTED SENIOR HOUSING COMPLEX ON LOT 265 OF TRACT 16581 (COVENTRY COURT IN COLUMBUS SQUARE AT TUSTIN LEGACY) The Planning Commission of the City of Tustin does hereby resolve as follows: The Planning Commission finds and determines as follows: A. That a proper application for Design Review 09-024 and Conditional Use Permit 09-024, Amendment to Resolution No. 05-40, which approved Tract Map 16581, and Amendment to Resolution No. 3951, which approved Concept Plan 03-003, was submitted by Lennar Corporation for the development of a 240 -unit senior apartment housing project for rental tenure on a nine (9) acre site within Columbus Square within Planning Area 4 and Planning Area 5 of the MCAS Tustin Specific Plan (Lot 265 of Tract 16581); B. That the site is located in the MCAS Tustin Specific Plan land use designation of the General Plan, which provides for residential development, and on Reuse Disposition Parcels 23 and 24 in Planning Areas 4 and 5 of the MCAS Tustin Specific Plan, which is designated for low and medium density residential uses; C. That a public hearing on the matter was duly called, noticed, and held for said application on December 8, 2009, by the Planning Commission; D. That at the December 8, 2009, meeting, the Planning Commission continued the project to the January 26, 2010, meeting to allow the project proponent to meet directly with the Community Association and any interested members of the community; E. That on January 26, 2010, the Planning Commission held a continued public hearing on the item and continued the item for sixty (60) days to allow staff, the applicant, and residents to conduct further research and report back on subjects raised at the hearing; F. That on March 23, 2010, the Planning Commission conducted a second continued public hearing on the item; Resolution No. 4137 Amendment to TTM 16581 Page 2 G. That the site is located within Tract 16581 previously approved by City Council Resolution Nos. 05-40 and 06-17 for subdivision of 105.5 acres within Planning Areas 4 and 5 of the MCAS Tustin Specific Plan for the purpose of developing 1,075 residential units including 240 senior housing units for ownership tenure; H. That the applicant submitted a request to allow a change in tenure from ownership to rental for the proposed 240 -unit age restricted senior housing complex; I. That the request is consistent with the previously -approved project and the text changes are for consistency purposes and do not constitute a significant change from the intent of the original approvals; J. That the proposed project necessitates text amendments to Resolution No. 05-40 which approved Tentative Tract Map 16581; K. That pursuant to the previously -approved Tract Map 16581, density bonus, and transfer of affordable housing units for Columbus Square, the Columbus Square Housing Agreement, and the Affordable Housing Plan for Villages of Columbus, the senior housing project includes 153 affordable housing units (36 Very Low, 61 Low, and 56 Moderate Income units). The proposed project includes the prescribed number of affordable units identical in size, location, bedroom counts, and income levels as to the previously approved plans with the exception of the type of tenure; L. That should the proposed rental tenure not be carried out or instituted, the project approval shall remain valid for the development of 240 age -restricted senior condominium units, as was originally intended and approved for the project site; M. That this project is determined to be exempt from additional CEQA review pursuant to California Government Code Section 65457, which provides that once the EIR has been certified and the specific plan adopted, any residential development project that is undertaken to implement and is consistent with the specific plan is exempt from additional CEQA review; On January 16, 2001, the City of Tustin certified the Program Final Environmental Impact Statement/Environmental Impact Report for the Reuse and Disposal of MCAS Tustin (FEIS/EIR), which evaluated the environmental impacts of the reuse and disposal of MCAS -Tustin, in conjunction with the adoption of a Specific Plan. On February 3, 2003, the Tustin City Council adopted Ordinance No. 1257, which adopted the MCAS Tustin Specific Plan. On April 3, 2006, the City Council adopted Resolution No. 06-43 approving an Addendum to the FEIS/EIR for the Disposal and Reuse of MCAS Tustin. The Resolution No. 4137 Amendment to TTM 16581 Page 3 FEIS/EIR and its Addendum considered the potential environmental impacts associated with development on the former Marine Corps Air Station, Tustin. The development of Coventry Court at Columbus Square is a residential development project that is being undertaken to implement and is consistent with the MCAS Tustin Specific Plan, as amended. No substantial changes in the project or circumstances under which it is being undertaken have occurred and no new information which was not known at the time the EIR was certified (or amended) has become available. Therefore, the proposed project is exempt from additional environmental review under CEQA. The Planning Commission hereby recommends that the City Council approve amendment to Resolution Nos. 05-40 and 06-17, which approved Tentative Tract Map 16581, to reflect a change in tenure from ownership to rental for the proposed 240 -unit age -restricted senior housing complex on Lot 265 of Tract 16581, subject to the conditions contained in Exhibit A attached hereto. PASSED AND ADOPTED at a regular meeting of the Tustin Planning Commission held on the 23rd day of March, 2010. ELWYN A. "AL" MURRAY Chairperson ELIZABETH A. BINSACK Planning Commission Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) CITY OF TUSTIN ) I, ELIZABETH A. BINSACK, the undersigned, hereby certify that I am the Planning Commission Secretary of the Planning Commission of the City of Tustin, California; that Resolution No. 4137 duly passed and adopted at a regular meeting of the Tustin Planning Commission, held on the 23rd day of March, 2010. ELIZABETH A. BINSACK Planning Commission Secretary EXHIBIT A RESOLUTION NO. 4137 AMENDMENT TO TENTATIVE TRACT MAP 16581 CONDITIONS OF APPROVAL GENERAL (1) 1.1 All applicable conditions of City Council Resolution Nos. 05-40 approving TTM 16581, a density bonus, and affordable housing transfer and Resolution No. 06-17 approving FTM 16581 for the Columbus Square community shall remain applicable, as herein modified. (1) 1.2 Approval of Resolution No. 4137 is contingent upon the applicant returning to the Community Development Department a notarized "Agreement to Conditions Imposed" form and the property owner signing and recording with the County Clerk -Recorder a notarized "Notice of Discretionary Permit Approval and Conditions of Approval" form. The forms shall be established by the Director of Community Development, and evidence of recordation shall be provided to the Community Development Department. (***) 1.3 The senior apartment development shall be restricted to seniors of 55 years or older for the life of the project. An age -restrictive covenant running with the land shall be reviewed and approved by the Community Development Director and shall be recorded by the applicant prior to issuance of a building permit. (***) 1.4 Prior to issuance of a building permit, the applicant shall submit an Addendum to Homebuyer Notification for Columbus Square and a letter that will be sent to all existing homeowners explaining the change in Coventry Court. Proof of mailing of the Addendum to Homebuyer Notification and the letter to existing homeowners shall be submitted to the Community Development prior to final inspection and occupancy. (1) 1.5 The applicant shall submit an amendment to Final Tract Map 16581 or a Certificate of Correction to reflect the change from condominium to apartment units, for review and approval. The amended Final Tract Map or Certificate of Correction shall be recorded prior to issuance of a building permit. SOURCE CODES (1) STANDARD CONDITION (5) RESPONSIBLE AGENCY REQUIREMENT (2) CEQA MITIGATION (6) LANDSCAPING GUIDELINES (3) UNIFORM BUILDING CODE/S (7) PC/CC POLICY (4) DESIGN REVIEW *** EXCEPTION Exhibit A Resolution No. 4137 TTM 16581 Page 2 (1) 1.6 Resolution No. 4137 shall become null and void in the event that Resolution No. 4134 approving Conditional Use Permit 09-024 and Design Review 09-024 and Resolution No. 4136 approving amendment to Resolution No. 3951 which approved Concept Plan 03-003 are not approved by the City Council. (***) 1.7 Condition of Approval 4.1 of Resolution No. 05-40 approving Tentative Tract Map16581,which is incorporated into this approval, requires that the applicant fund its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program. The applicant shall fund and provide security for its Fair Share Contribution to the Tustin Legacy Backbone Infrastructure Program as required by Condition of Approval 4.1 of Resolution No. 05-40, including its Fair Share Contribution of the cost estimates of the Tustin Legacy Backbone Infrastructure as adjusted by the Tustin City Council on April 3, 2006, and September 2, 2008, and subject to future increases in the Backbone Infrastructure Program costs and applicant's Fair Share Contribution thereto. (***) 1.8 Should the project as proposed for rental tenure not be instituted or carried out, the subject approval shall be considered valid for ownership tenure (240 condominium units) as originally intended and approved for the project site. However, notwithstanding such an obligation to develop condominiums for ownership tenure, non condominium unit shall be sold except with the approval of the City. ***) 1.9 No further building permits shall be issued for any portion of Tract 16581 until the balance of market -rate and affordable units within the entirety of Tract 16581 is reasonably in proportion, as determined by the Director of Community Development. The applicant shall submit a revised phasing plan, for review and approval of the Community Development Department, reflecting phasing in conformance with this condition, prior to the issuance of any further building permit in Tract 16581. AFFORDABLE HOUSING (***) 2.1 The developer shall comply with the obligations contained in Resolution No. 05-40 regarding affordable housing units. The senior housing project shall contain a minimum of 153 affordable units including 36 Very Low, 61 Low, and 56 Moderate Income units and at locations depicted on the previously approved Affordable Housing Plan. Exhibit A Resolution No. 4137 TTM 16581 Page 3 (***) 2.2 The First Amendment to the Housing Agreement shall include a Regulatory Agreement as an exhibit to reflect rental tenure which will be required to be executed by Tustin Coventry Seniors, LLC. (the proposed owner of the project). The First Amendment to the Housing Agreement shall be subject to approval of the Redevelopment Agency, City Attorney, and City's Special Real Estate Counsel as to form and content and shall be executed and recorded prior to issuance of any building permits. Should the First Amendment to the Housing Agreement and Affordable Housing Plan not be approved by the City Council, the subject approval shall become null and void. (***) 2.3 Prior to issuance of any building permits, an Assignment and Assumption Agreement of Tustin Coventry, LLC's duties of performance under the Housing Agreement, as amended, shall be executed between Tustin Villas Partners, LLC and Tustin Coventry Seniors, LLC on Lot 265 of Tract 16581 in a form and content approved by the Redevelopment Agency, Community Development Department, City Attorney, and City's Special Real Estate Counsel and the Community Development Department (***) 2.4 The "Affordable Housing Plan and Density Bonus Application" document approved for the Columbus Square shall be amended to reflect the rental tenure and a clean copy of the document shall be provided to the City and Redevelopment Agency for final review and approval, prior to issuance of a building permit. (***) 2.5 The 240 -unit project shall not feature a mix of housing tenure (i.e. ownership and rental) during the term of affordability outlined in the First Amendment to the Housing Agreement and any executed Regulatory Agreement. (***) 2.6 The affordable units in the project shall be available during the qualified project period outlined in the First Amendment to the Housing Agreement which shall be not less than 55 years. (***) 2.7 The affordable units shall comply with the City's adopted Local Workforce Housing Preference Policy by granting current Tustin residents or individuals employed within the city of Tustin preference over an applicant who does not currently reside or is not employed in the City of Tustin. FEES (***) 3.1 The applicant shall submit all fees required by the City and other agencies as identified in Resolution No. 4134 including all Attorney and Special Counsel fees associated with the review of the project.