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Home My WebLink AboutTT 17148 PALM SHADOW CC&RS l �1 AA ! t}. l it 6131 . 09/JHF12t MAY 9 - 1984 RECORDING REQUESTED BY: Attorney X X 1 � WHEN RECORDED, MAIL TO: X X STERNBERG, EGGERS, KIDDER & FOX A Professional Corporation ] 225 Broadway, Suite 2020 SPACE ABOVE FOR RECORDER' S San Diego, California 92101 X USE Attn: James Henry Fox PALM SHADOW PLANNED DEVELOPMENT DECLARATION OF RESTRICTIONS Table of Contents Article page 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1. 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2 Use. . . . . . . . . . . . . . . . . 3 . . . . . . . . . . . . . . . . . . . . . . . . 2. 1 Residential Purposes ; General Rights and Obligations of Use. . . . . . . . . . . . . . . . 3 2. 2 Use of Open Space. . . . . . . . . . . . . . .. . . . . . . . 7 2. 3 Roof Encroachment. . . . . . . . . . . . . . . . . . . . . . . 8 9 3 Ownership of Open Space and Beneficial Interest in Common Personalty. . . . . . . . . . . . . . 9 3. 1 Association Owner of Open Space. . . . . . . . . 9 3. 2 Reservation of Easement by Declarant. . . . 9 3.3 Ownership of Personal Property; Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4 Planned Development Character of Project. . . . . 9 4. 1 Planned Development. . . . . . . . . . . . . . . . . . . . . 9 4 .2 No Partition of Open Space. . . . . . . . . . . 10 4 .3 Prior Consent of First Mortgagees. . . . . . . 10 5 The Association. . . . . . . . . . . . . . . . . . . 11 5. 1 Function of the Association. . . . . . . . . . . . . 11 5.2 Membership in the Association. . . . . . . . . . . 11 5.3 Association Right of Entry. . . . . . . . . . . . . . 11 5 . 4 Permits , Licenses and Easements Over Open Space. . . . . . . . . . . . . . . . . . . . . . . 12 i 6131. 09/JHF12t Article Page 5.5 Imposition of Monetary Penalties. . . . . . . . 12 5.6 Legal Action; Non-Judicial Procedure. . . . 13 5. 7 Copies of Declaration, Bylaws , Articles; Statement; Fees . . . . . . . . . . . . . 13 6 Architectural Control. . . . . . . . . . . . . . . 14 6. 1 Architectural Control Committee. . . . . . . . . 14 6. 2 Approval by Architectural Control Committee. . . . . . . . . . . . . . . . . . . . . 14 6.3 Amendment of Article. . . . . . . . . . . . . . . . . . . . 15 7 Assessments . . . . . . . . . . . . . . . . . . . . . 15 7. 1 Right of Board of Directors to Impose Assessments . . . . . . . . . . . . . . . . . . . . 15 7 . 2 Special Assessments. . . . . . . . . . . . . . . . 16 7 .3 Effect of Non-Payment of Assessments; Late Payment; Penalties. . . . . . . . . . . . . . . 17 7 . 4 Due Date of Assessments; Liability of Declarant . . . . . . . . . . . . . . . 18 7 .5 Taxation of Association. . . . . . . . . . . . . . . . . 18 8 Destruction; Insurance. . . . . . . . . . . . . . . . . . . . . . . 18 8. 1 Association Insurance. . . . . . . . . . . . . . . . 18 8. 2 Steam Boilers ; Flood Hazards. . . . . . . 19 8.3 Destruction; Replacement and Repair. . . . . 20 8.4 Public Liability Insurance. . . . . . . . . . . . . . 20 8.5 Fidelity Bond. . . . . . . . . . . . . . . . . . . . . . 20 8. 6 Owner' s Insurance; Blanket Policy. . . . . . . 20 8. 7 Requirements of Insurance Carrier. . . . . . . 21 8.8 Replacement of Uninsured Improvements . . . 21 8. 9 Insurance Policies - Copies ; Provisions. . . . . . . . . . . . . . . . . . . . . . . 21 8.10 Planned Development Character Not Superseded. . . . . . . . . . . . . . . . . . . . . . . . 22 9 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . 22 9. 1 Conflicting Provisions. . . . . . . . . . . . . . 22 9.2 Article Definitions. . 22 9.3 Appointment of Agent; Authority. . . . . . . . 23 9.4 Priority of Disbursement of Condemnation Award. . . . . . . . . . . 23 9.5 Provisions of Note or Deed of Trust Controlling. . . . . . . . . . . . . . . . . . . . . 23 10 Accounting. . . . . . . . . . . . . . . . . . . . . . . 24 10. 1 Accounting Books and Records. . . . . . . . . . . 24 11 Scope; Enforcement. . . . . . . . . . . . . . . . . . . . . . . 24 11. 1 Status of Declaration. . . . . . . . . . . . . . . . . . 24 11.2 Termination of Declaration. . . . . . . . . . . . . 24 ii 6131 . 09/JHF12t Article page 11 . 3 Breach; Right of Enforcement. . . . . . . . . . . 25 11. 4 Violation Constitutes Nuisance. . . . . . . . . 25 11. 5 Failure to Enforce; No Waiver.. . . . . . . . . 25 11. 6 Costs and Attorneys' Fees. . . . . . . . . . . . . . . 25 12 Rights of Mortgagees. . . . . . . . . . . . . . . . . 25 12. 1 Voluntary Encumbrance , Hypothecation. . . 25 12. 2 Limitations Binding Upon Subsequent Purchasers. . . . . . . . . . . . . . 26 12. 3 Subordination of Lien Created by Declaration. . . . . . . . . . . . 26 12. 4 Notice of Meetings ; Designation of Representative; Notice of Certain Events. . . . . . . . . . . . . . . . . . . . . 26 12.5 Agreement with First Mortgagees. . . . . . . . 27 12. 6 Conflicting Provisions ; Supremacy. . . . . . 27 13 Declarant' s Security for Its Obligations. . . . . 28 13. 1 Action by Association to Enforce Bond. . 28 13. 2 Arbitration of Disputes. . . . . . . . . . . . . . . . 29 14 Amendment. . . . . . . . 30 14. 1 Amendment of Declaration. . . . . . . . . . . . 30 14. 2 Deemed Consent of Eligible Mortgage Holder. . . . . . . . . . . . . . 30 . . . . . . . . . . . . . . . . . . 14 .3 Declarant' s Unilateral Right to Incorporate Required Provisions. . . . . . . 30 14. 4 Recordation of Amendment. . . . . . . . . . . . . . . 31 15 General Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . 31 15 . 1 Notices. . . . . . . . . . . . . . . . . . . 31 15.2 Severability of Provisions . . . . . . . . . . 31 15 .3 Invalidity of Contrary Provisions and Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 15. 4 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 15.5 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . 32 15 . 6 Gender and Number. . . . . . . . . . . . . . . . . 32 15. 7 Construction of Declaration. . . . . . . . . . . . 32 iii 6131 . 09/JHF16J PALM SHADOW PLANNED DEVELOPMENT DECLARATION OF RESTRICTIONS THIS DECLARATION OF RESTRICTIONS is made and executed by PALM SHADOW ASSOCIATES, a California limited partnership, herein referred to as "Declarant" and more specifically defined in Article 1 hereof. W I T N E S S E T H T H A T WHEREAS, Declarant is the owner of the property in the City of Palm Desert, County of Riverside, State of California, described as : Lots 1 through 10, inclusive, of Tract as shown by Map recorded in Book , pages and of Maps, Riverside County Records . WHEREAS, Declarant will create, on the property described above, a Planned Development pursuant to California Business and Professions Code Section 11003 . WHEREAS, Declarant is about to sell and convey portions of the property described above and Declarant desires and intends to hereby subject said property to mutual, beneficial restrictions under a general plan or scheme of improvement for the benefit of said property and of the future owners thereof. NOW, THEREFORE, Declarant hereby declares that all of the property described above is held by Declarant and shall be owned, held, conveyed, hypothecated, encumbered, leased, rented, used, occupied and/or improved subject to the limitations, restric- tions, conditions and covenants herein set forth, all of which are declared and agreed to be in furtherance of a plan for the subdivision, improvement and sale of said property and are estab- lished and agreed upon for the purposes of enhancing and protect- ing the value, desirability and attractiveness of said property and every part thereof. All of the limitations, restrictions, conditions and covenants herein set forth shall run with the land and shall be binding on all parties having or acquiring any right, title or interest in said property or any part thereof. ARTICLE 1 - DEFINITIONS 1 . 1 Definitions. Each of the following words and phrases shall, in this instrument, have the respective meaning shown below, unless a contrary meaning shall, by the context, be evident: 6131. 09/JHF16J 1 .1.1 Articles . "Articles" shall mean the Articles of Incorporation of the Association as said Articles of Incorpora- tion may from time to time be amended. 1.1.2 Association. "Association" shall mean the Palm Shadow Owners ' Association, Inc. , a California nonprofit mutual benefit corporation, formed and maintained pursuant to the California Nonprofit Mutual Benefit Corporation Law (California Corporations Code Sections 7110 et seq. ) , composed of the Owners as defined hereinbelow. 1 .1 .3 Board of Directors . "Board of Directors" shall mean the Board of Directors of the Association. 1. 1.4 Bylaws. "Bylaws" shall mean the Bylaws of the Association as said Bylaws may from time to time be amended. 1 .1.5 Declarant. "Declarant" shall mean (i) Palm Shadow Associates, a California limited partnership, and (ii) any successor in interest of Palm Shadow Associates, a California limited partnership, to whom all or any of the rights of Declarant under the Articles, Bylaws and this Declaration have been transferred and who is (a) a grantee under a deed, executed and delivered prior to the conveyance of the first Lot (herein- after defined) which conveys the entire Project (hereinafter defined) or (b) a grantee under a deed conveying two or more Lots . Notwithstanding the provisions of the Article hereof entitled "Amendment" to the contrar y, this Subparagraph may not be amended, modified or rescinded without the (i) prior, written consent of Declarant and (ii) recording of said written consent, in the office of the County Recorder of Riverside County, California. 1.1. 6 Declaration. "Declaration" ion shall mean this instrument, as the same may from time to time be amended pursuant to the Article entitled "Amendment. " 1 .1 .7 Eligible Mortgage Holder. "Eligible Mortgage Holder" shall mean a First Mortgagee (hereinafter defined) who, in a written document delivered to the Association, has requested that the Association notify such First Mortgagee of any proposed action that, by the terms of the Articles, the Bylaws or the Declaration, requires the consent of a specified percentage of such First Mortgagees . 1.1.8 FHLMC. "FHLMC" shall mean the Federal Home Loan Mortgage Corporation. 1 . 1 . 9 FNMA. "FNMA" shall mean the Federal National Mortgage Association. -2- 6131 . 09/JHF16J 1 .1.10 First Mortgage. "First Mortgage" shall mean any deed of trust or mortgage which is the only deed of trust or mortgage encumbering a Lot or which is first in priority, under the recording laws of the State of California, of a series of two or more mortgages or deeds of trust encumbering the same Lot. 1.1.11 First Mortgagee. "First Mortgagee" shall mean a Mortgagee (hereinafter defined) whose mortgage or deed of trust, as the case may be, is a First Mortgagee. 1.1. 12 Interested Person. "Interested Person" shall mean each Owner (or its duly appointed representative) and any First Mortgagee or any insurer or guarantor of any First Mortgage. 1.1.13 Lots . "Lots" shall mean all of Lots 1 through 10, inclusive, described above; "Lot" shall mean any one of the Lots . 1 .1.14 Member. "Member" shall mean an Owner (herein- after defined) entitled to membership in the Association. Membership shall be appurtenant to and may not be separated from ownership of a Lot. 1.1.15 Mortgagee. "Mortgagee" shall mean the mortgagee under any real property mortgage or beneficiary under any deed of trust which mortgage or deed of trust encumbers any Lot. 1.1.16 Open Space. "Open Space" shall mean the common area and shall consist of Lot 10 described above. 1.1.17 Owner. "Owner" shall mean Declarant prior to the first conveyance of a Lot and thereafter, shall mean the person(s ) who hold(s ) record title to any Lot, including Declarant for as long as Declarant holds title to a Lot. 1 . 1 . 18 Project. "Project" shall mean the Palm Shadow Planned Development, encompassing both the Lots and Open Space. ARTICLE 2 - USE 2 . 1 Residential Purposes; General Rights and Obligations of Use. As to Lots 1 through 9, and each of them: 2 . 1. 1 None of the Lots shall be used for other than single-family residential purposes . No buildings or structures shall be erected, altered, placed or permitted to remain on an I Y -3- 6131.09/JHF16J of the Lots other than one single-family dwelling, a private garage and other customary appurtenances incidental to the resi- dential use of a Lot. Notwithstanding the foregoing, Declarant may use any Lot owned by Declarant, not exceeding at any one time five in number, for the purpose of maintaining thereon a sales/ rental office, a construction office, and/or model homes con- structed by or on behalf of Declarant. Such use shall terminate after Declarant has conveyed the last Lot in the Project owned by Declarant. Anything in the Article of this Declaration entitled "Amendment" notwithstanding, this Paragraph shall not be amended, modified or rescinded so long as Declarant owns a Lot which has not been conveyed to an Owner other than Declarant without the (i ) prior written consent of Declarant and (ii) recording of said written consent in the Office of the County Recorder of Riverside County California. 2 .1.2 Except as othewise provided herein, each Owner shall be responsible for the maintenance, repair and replacement of all improvements, structures and landscaping on such Owner' s Lot, including, without limitation, the walls and roof of the residential structure, garage, fences, drainage systems, and all gas, electrical, heating, telephone and cable television lines, wires and conduits located on such Lot. Each Owner shall main- tain (i) the landscaping located on its Lot in a flourishing condition and (ii) all other structures and improvements located on its Lot in a good, clean and neat condition. Any such main- tenance, repair or replacement shall be subject to Article hereof entitled "Architectural Control. " 2 . 1 .3 Except as otherwise provided herein, the Owner of each Lot shall be responsible for maintaining any water drainage channel, cut, swale, berm or other water flow control facilities situated on its Lot and shall otherwise be responsible for effecting proper water drainage controls on its Lot. Each Owner shall have a nonexclusive easement for access to any other Lot for the purpose of maintaining (i) portions of any drainage control. facilities which pass through any such other Lot and (ii ) if necessary or prudent, the portions of its residential structure adjacent to any adjoining Lot which portions cannot reasonably be maintained without going on to such adjoining Lot. Provided, however, any damages to any Lot arising out of, or in connection with, any owner' s right of access onto such Lot pursuant to this Paragraph shall be immediately repaired at the entering Owner's sole cost and expense. 2. 1 .4 No horses, turkeys, geese, chickens, ducks, pigeons, cows, goats, sheep, rabbits, hares or other animals of any kind, except a reasonable number of commonly accepted house- hold pets, shall be kept or permitted on any Lot. Any household pet shall be maintained so as not to constitute a nuisance to any -4- 6131 . 09/JHF16J Owner and otherwise in compliance with laws or regulations of the City of Palmdale regarding noise abatement and control. All such household pets shall be kept for noncommercial purposes. The Board of Directors shall adopt rules and regulations concerning an Owner' s responsibility for its household pets when the same are in the Open Space of the Project. 2 . 1.5 No structure of a temporary character, trailer, tent, shack or other outbuilding shall be erected or placed on any Lot, either temporarily or permanently. Nothing contained in the foregoing shall be construed to preclude the use of a trailer, outbuilding or other temporary structure used to facili- tate construction, or the convenience of persons engaged in construction, during the period of construction of any single- family residence on any Lot, provided that any such trailer, outbuilding or structure shall be removed forthwith upon the completion of any such single-family residence. 2 . 1 . 6 No noxious or offensive activity shall be carried on upon any of the Lots, nor shall anything be done thereon which may be or may become an annoyance or nuisance to any person of reasonable sensitivity residing in the Project. 2 .1 .7 No sign of any kind, except that of a customary address sign, a "For Sale" sign or a "For Rent" sign, shall be displayed to the public view on any of the Lots; provided, how- ever, that any Owner displaying a "For Sale" or "For Rent" sign shall, in good faith and using its reasonable best efforts, en- deavor to effect the sale or rental of its Lot, as the case may be. Notwithstanding the foregoing, Declarant may display or post any signs, flags, poles or other objects in the Open Space and on any Lot owned by Declarant which Declarant, in Declarant' s sole discretion, deems appropriate in connection with the sale of any of the Lots and until Declarant has conveyed the last Lot owned by Declarant in the Project. Anything in the Article of this Declaration entitled "Amendment" to the contrary notwithstanding, this sentence, and the immediately preceding sentence of this Paragraph, shall not be amended, modified or rescinded so long as Declarant owns a Lot which has not been conveyed to an Owner other than Declarant, without the (i) prior written consent of the Declarant and (ii ) the recording of such written consent in the Office of the County Recorder of Riverside County, California. 2 . 1.8 All equipment, refuse cans and other containers shall be kept screened and concealed from view from any of the Lots, streets within the Project or the Open Space. All rubbish, trash and refuse shall be regularly removed from each Lot and shall not be allowed to accumulate thereon. -5- 6131. 09/JHF16J 2 .1. 9 No outside clotheslines or other outside clothes drying or airing facilities shall be erected or maintained on any Lot so as to be visible from any of the Lots, streets within the Project or the Open Space. 2 .1.10 No radio or television antenna or radio trans- mitter tower or facility shall be constructed, erected or other- wise placed on any Lot, unless the same is wholly within a build- ing designed and constructed for purposes of a residence. 2 . 1. 11 No automobile, truck, truck "cab, " tractor, bus, motorcycle, trailer, recreational vehicle, van, camper, camper shell, motor home, mobile home, dune buggy, boat, sailboat, yacht, or other vehicle, sea-going vessel or equipment of any kind shall be parked, stored, deposited, maintained, repaired or otherwise kept on any Lot other than within a garage or other enclosed building on a Lot; provided, however, that passenger automobiles owned or regularly used by an Owner or a member of an Owner' s immediate family, or guests thereof, may be temporarily parked in the driveway of such Owner' s Lot during the normal waking hours of such Owner or such Owner' s family. No dismantled or wrecked vehicle or equipment shall be parked, stored, deposited or the like on any Lot other than within a garage or other enclosed building on a Lot. 2 .1 .12 No Owner shall, either temporarily or perm- anently, use his garage for any use other than the parking of vehicles and the storage of miscellaneous personal property; in no event shall any garage be used for human habitation. 2 .1 . 13 No Owner shall lease or rent less than its entire Lot. No Owner shall lease or rent its Lot for a term of less than 30 days, except an Owner who is a lender in possession of a Lot following (i) a default in a first mortgage, (ii) a foreclosure proceeding or (iii) any deed or other arrangement in lieu of foreclosure. Any lease or rental agreement shall be in writing and is subject to the provisions of the Articles, Bylaws, Declaration and any rule or regulation adopted by the Board of Directors . Other than the foregoing, there shall be no restric- tion on the right of any Owner to lease or rent its Lot. An Owner shall be responsible for any act of any tenant or other occupant of such Owner' s Lot which constitutes a breach of any provision of the Articles, Bylaws, Declaration or any rule or regulation adopted by the Board of Directors. 2 .1.14 The Owner of a Lot whose residential structure has been damaged or destroyed by fire or other calamity shall promptly and diligently cause such structure to be repaired or restored. This obligation shall not extend to the installation of furniture and the like, but is for the purpose of preventing unsightliness caused by such damage or destruction and any resul- -6- 6131. 09/JHF16J tant health or safety problems to other Owners within the Project and to the public. 2 . 1. 15 No commercial trade or business shall be carried on upon any Lot. 2 .2 Use of Open Space. As to the Open Space: 2 .2 .1 The Open Space, except buildings, shall be improved and used only for (i) vehicular and pedestrian movement within the Project, including access to the Lots, (ii) vehicular parking in areas designated by the Board of Directors, (iii) recreational use by the Owners and occupants of Lots and their guests, subject to rules and regulations established by the Board of Directors and (iv) beautification of the Project and providing privacy to the residents thereof. A nonexclusive easement throughout the Open Space for ingress, egress and recreational purposes is and shall be appurtenant to each Lot, and a nonexclu- sive easement upon and across the Open Space for accepting and draining rainwater from the residential structure situated upon each Lot is and shall be appurtenant to each Lot; the Open Space is and shall be subject to such easements . In addition to the foregoing easements, a nonexclusive easement over, under, upon and across the Open Space for the purposes of installing, main- taining and repairing sewer and water pipelines and connections is and shall be appurtenant to each Lot; any Owner effecting the installation, maintenance or repair of any such sewer and water pipelines and connections servicing its Lot shall promptly remedy any damage caused thereby to the Open Space and shall restore the Open Space to its condition prior to any such work having been performed. 2 .2 .2 No activity shall be carried on in the Open Space which shall be contrary to rules and regulations adopted by the Board of Directors relating to use of and activity in the Open Space. 2.2 .3 No portion of the Open Space shall be used for any purpose or in any manner which shall cause any structure in the Project to be uninsurable against loss by fire or the perils covered under the extended coverage policy(ies ) of hazard insur- ance which the Board of Directors is required to keep in force pursuant to the Article hereof entitled "Destruction; Insurance, " or cause any policy or policies representing such insurance to be cancelled or suspended or the company issuing the same to refuse renewal thereof. 2 .2 .4 No Owner shall make any alteration or improve- ment to the Open Space, or remove any planting, structure, fur- -7- 6131 . 09/JHF16J nishing or other object therefrom except with the written consent of the Board of Directors . An Owner shall be liable to the Association for all costs incurred by the Association for the replacement or repair of any personal property owned by the Association (including without limitation, plants, furniture, rugs, kitchenware and pictures ) damaged or removed by such Owner, its guests or any occupant of such Owner' s Lot. 2 .2 . 5 An Owner shall be liable to the Association for all damage or destruction to the Open Space or to any improve- ments thereon or thereto, including but not limited to, build- ings, recreational facilities and landscaping, caused by the act or omission (including the failure to maintain such Owner's Lot) of such Owner, its guests or any occupant of such Owner' s Lot. 2 .2 .6 No automobile, truck, truck "cab, " tractor, bus, motorcycle, trailer, recreational vehicle, van, camper, camper shell, motor home, mobile home, dune buggy boat, sailboat, yacht or other vehicle, sea-going vessel or equipment of any kind shall be parked, stored, deposited, maintained, repaired or otherwise kept on or in the Open Space, and no dismantled or wrecked vehicle (including portions thereof) , sea-going vessel or equip- ment shall be parked, stored, deposited, maintained, repaired or otherwise kept in the Open Space except as permitted by rules and regulations adopted by the Board of Directors . Nothing herein shall in any manner limit or prohibit the Board of Directors from adopting regulations allowing guest parking in the Open Space. 2 .2 . 7 Except as provided in Paragraph 2 . 1 .7, no sign of any nature shall be displayed or posted by an Owner in the Open Space. 2.2 .8 No radio or television antenna, or radio trans- mitter tower or facility of any kind shall be constructed, erected or otherwise placed in the Open Space, excepting there- from (i ) one or more master television antenna(e) which may be erected thereon by Declarant or the Association and thereafter maintained by the Association or (ii) any facility for cable television which may be contracted for in accordance with an agreement entered into between the Association (or the Declarant for the benefit of the Association) and a cable television company, provided such cable television services will be made available to each and every Lot. 2 .3 Roof Encroachment. If any portion of the roof of any residential improve- ment on a Lot encroaches on any adjoining Lot or the Open Space, a valid easement for said encroachment (including, without limi- tation, the right of drainage of rainwater from said roof onto such Lot) and for the maintenance of same, so long as it stands, shall and does exist. -8- 6131. 09/JHF16J ARTICLE 3 - OWNERSHIP OF OPEN SPACE AND BENEFICIAL INTEREST IN COMMON PERSONALTY 3 .1 Association Owner of Open Space. The Associaton shall be and become the owner of the fee estate in and to the Open Space prior to or concurrently with the first conveyance by Declarant of a Lot to an Owner. 3 .2 Reservation of Easement by Declarant. Notwithstanding anything contained in this Declaration to the contrary, Declarant, for itself and its successors in interest, hereby reserves a nonexclusive easement over, under, upon and across the Open Space for common driveway purposes, drainage and encroachment purposes and for ingress and egress, all for Declarant' s reasonable use in completing the improvements and performing necessary repair work within the Project, said reservation of easement becoming effective concurrently with the conveyance by Declarant to the Association of the Open Space without necessity of Declarant setting forth such reservation in the deed with respect to said conveyance. Said reservation of easement shall expire and be of no further force and effect three years after the date on which this Declaration has been recorded. Notwithstanding the Article entitled "Amendment, " no amendment, revocation or rescission of said reservation of easement may be had prior to the conveyance by Declarant (or its successor) of the last Lot without the (i) written consent of the Declarant and (ii ) recording of such consent in the Office of the Recorder of Riverside County, California. 3 .3 Ownership of Personal Property• Equipment. The Association shall be and become the owner of all maintenance, recreational and other equipment acquired by it (i) for the maintenance and improvement of the Project and (ii ) to implement the performance of its other duties hereunder. The transfer of such personal property by the Association pursuant to the Bylaws shall transfer title thereto free and clear of any claim on the part of any Owner. ARTICLE 4 - PLANNED DEVELOPMENT CHARACTER OF PROJECT 4.1 Planned Development. The Project is and has been developed as a planned development pursuant to California Business and Professions Code Section 11003 . -9- 6131.09/JHF16J 4.2 No Partition of Open Space. The Open Space shall remain in the ownership and con- trol of the Association and there shall be no judicial partition thereof. Nothing herein shall be deemed to prevent partition of a co-tenancy in a Lot other than the Open Space. 4.3 Prior Consent of First Mortgagees. Except as set forth in this Article, neither the Owners nor the Association shall, by act or omission, without the prior written consent of at least two-thirds of all First Mortgagees (based upon one vote for each first mortgage or first deed of trust owned) be entitled to: (i) Abandon or terminate the planned development character of the Project; (ii) Partition, subdivide, encumber, sell or transfer the Open Space or the improvements thereon; provided, however, the granting of easements for public utilities or for other public purposes consistent with the intended use of the Open Space shall not be a transfer within the meaning of this clause; (iii ) Change the method of determining the obligations, assessments, dues or other charges which may be levied against an Owner; (iv) Waive or abandon any scheme of regulations or the enforcement thereof pertaining to the architectural design or the exterior appearance of the residential improvements situated on the Lots, the exterior maintenance of said residential improve- ments or the maintenance and upkeep of the Open Space and the improvements thereon; (v) Fail to maintain insurance coverage under an extended coverage hazard policy(ies ) against loss by . fire and perils with respect to all insurable improvements located in the Open Space and all insurable personalty owned by the Association in an amount not less than 100 percent of the insurable value (based on then current replacement costs ) of said improvements and of said personalty as determined annually by an insurance carrier selected by the Board of Directors pursuant to this Declaration; or (vi) Use hazard insurance proceeds for losses to said improvements located in the Open Space and/or said personalty owned by the Association for other than the repair, replacement or reconstruction of said improvements and/or personalty. -10- 6131.09/JHF16J ARTICLE 5 - THE ASSOCIATION 5.1 Function of the Association. The Association is, effective upon the recordation hereof, the "management body" to provide for the management, control, maintenance, architectural control and preservation of the Project, all as more specificallyset forth in this s Declara- tion, the Articles, the Bylaws and the regulations from time to time adopted by the Board of Directors . 5 .2 Membership in the Association. Each Owner shall be and become a Member of the Associa- tion contemporaneously with his acquisition of a Lot (whether such acquisition occurs by (i) conveyance of a Lot by Declarant, (ii ) voluntary .transfer, assignment or conveyance of a Lot, (iii ) involuntary transfer of a Lot, including without limitation by reaso n of the death of an Owner, or (iv) foreclosure [by trustee 's power of sale or by judicial process] of a deed of trust or other lien on a Lot without necessit y of documentation or other action, of any kind, by any person. The Board of Direc- tors may require that any person acquiring a Lot notify the Association in writing of such acquisition so as to facilitate accurate record keeping of the membership. Where two or more persons hold or own a Lot, as joint tenants or otherwise, they shall constitute a single Member. 5.3 Association Right of Entry. In addition to the maintenance of the Open Space, should any Owner fail to maintain such Owner' s Lot and the structures, landscaping and improvements located thereon in a manner as required by this Declaration (as determined in the sole and absolute discretion of the Board of Directors ) , the Associa- tion, and after approval by a two-thirds vote of the Board of Directors, and after giving at least 15 days ' written notice to such Owner regarding the work to be done, shall have the right, through its directors, officers, agents, employees, or indepen- dent contractors, to enter onto any such Lot and to maintain, repair and restore the Lot and any structures, landscaping and improvements located thereon to the condition required by the Declaration as determined by the Board of Directors. However, no entry into a residence may be made without the consent of the Owner thereof, and such entry shall be made with a little incon- venience to the Owner as possible and any damage caused thereby shall be repaired by the Association. There is hereby created a nonexclusive easement in favor of the Association, and its directors, officers, agents, employees and independent con- tractors, to enter onto each Lot to provide maintenance, repair and restoration as hereinabove stated, subject to the foregoing notice and consent requirements. -11- 6131 . 09/JHF16J In addition to the right of the Association to enter upon any Lot pursuant to the foregoing paragraph, the directors, officers, agents, employees and independent contractors of the Association shall have a nonexclusive easement to enter any Lot for the purpose of performing or satisfying the duties and obligations of the Association hereunder, provided that such entry shall occur (i) at a reasonable hour and (ii) after reason- able notice has been given to the Owner of such Lot. In the event that there is an emergency and the Owner of such Lot is not available at the time of such emergency, the directors, officers, agents, employees and independent contractors of the Association may enter such Lot immediately and without notice for the sole purpose of taking such action as is necessary under the circum- stances . 5 .4 Permits, Licenses and Easements Over Open Space. The Association shall have the right to grant permits, licenses and easements over, upon, under and across the Common Maintenance Areas for utilities and other purposes necessary for the proper operation of the Project. Each Owner, by acquiring its interest in a Lot, shall be deemed to have designated the Association as such Owner' s attorney in fact, to execute, on behalf of such Owner, any document effectng the grant of any such permit, license or easement. 5.5 Imposition of Monetary Penalties. In addition to all other rights, powers and duties possessed by and vested in the Board of Directors under this Declaration, the Articles and the Bylaws, the Board of Directors shall possess and be vested with the right and power to (i ) impose reasonable monetarypenalties, in such a P mounts not to exceed the sums allowed by law (see, e.q. , Title 1, Part 4 of Division 3 (Section 1725] of the California Civil Code) , against an Owner and (ii) seek reimbursement for costs as follows : 5. 5.1 As a disciplinary measure for any breach of any of the (i ) limitations, restrictions, conditions or covenants set forth in this Declaration (other than a breach by failure to pay an assessment) , (ii) provisions of the Articles or the Bylaws or (iii ) rules or regulations adopted by the Board of Directors pur- suant to this Declaration, the Articles or the Bylaws . 5. 5.2 As a means of reimbursing the Association for costs incurred by the Association (i) for the repair of damages to the Open Space or any improvements or personalty thereto or thereon allegedly caused by such Owner, its guests or any occu- pant of such Owner's Lot or (ii ). in bringing such Owner or the occupant of such Owner' s Lot and/or said Lot into compliance with this Declaration (other than the payment of assessments) , the Articles, Bylaws or said rules and regulations. -12- 6131. 09/JHF16J 5.6 Legal Action; Non-Judicial Procedure. Any procedure seeking to impose such a monetary penalty, or to obtain reimbursement for such costs incurred as contemplated by Paragraph 5.4 above, must be done in good faith and in a fair and reasonable manner. The Association, at its option, shall have the right and power to institute a legal action against an Owner seeking a personal judgment against such Owner to impose such a monetary penalty and/or to obtain reim- bursement of such costs, together with court costs and reasonable attorneys ' fees incurred in any such action, and the institution and prosecution of such action be deemed to be a fair and reasonable procedure as required by this Paragraph. Alterna- tively, prior to the institution of such a legal action, the Association may follow the nonjudicial procedure hereinafter set forth. The Owner shall be given 15 days ' prior notice of the imposition of a monetary penalty, or the amount of the costs to be reimbursed. Said aid notice mus t set forth the reasons for the imposition of the monetary penalty or for seeking reimbursement of such costs and may be given by any method reasonably cal- culated to provide actual notice. Any notice given by mail must be given by first-class, registered or certified mail sent to the last address of the Owner shown on the Association' s records. The Owner must be provided an opportunity to be heard, orally or in writing, not less than five days before the effective date of the imposition of each monetary penalty, or by which such costs are to be so reimbursed, by a properly convened meeting of the Board of Directors. Any such breach which is not remedied in the calendar month in which any such monetary penalty is imposed against an Owner g b there Y reason o£ shall, until fully remedied, be deemed to constitute a new breach in each succeeding calendar e dar month for which the Board of Directors may in each such calendar month impose a new monetary penalty pursuant to this Paragraph. 5. 7 Copies of Declaration Bylaws Articles; Statement; Fees. Upon written request, the Association shall, within ten days after the mailing of such request if such request is sent by mail, or within ten days after delivery of such request if such request is delivered other than by mail, provide to an Owner, or Mortgagee or Interested Person making such request, a copy of the Declaration, the Bylaws and the Articles, together with a true statement in writing as to any delinquent assessments, penalties, attorneys ' fees and other charges as of the date of such request on the Lot owned by such Owner or in which such Mortgagee or Interested Person has an interest. The Association may impose a fee for providing such documents and statement, but in no event shall the fee exceed the reasonable cost to prepare and reproduce the requested documents . A properly executed statement of the Association as to the status of assessments on a Lot is binding upon the Association as of the date of its issuance. -13- 6131 .09/JHF16J ARTICLE 6 - ARCHITECTURAL CONTROL 6. 1 Architectural Control Committee. An Architectural Control Committee consisting, at all times, of three persons, shall be formed as set forth below and in the Bylaws, for the purposes of performing its duties as described in this Declaration and the Bylaws and as may be dele- gated to it, from time to time, by the Board of Directors . The original Architectural Control Committee shall be appointed by Declarant. Thereafter, the Architectural Control Committee shall be appointed in accordance with the Bylaws (subject to Declar- ant' s rights herein reserved) . Declarant hereby reserves to itself the power to appoint a majority of the members of the Architectural Control Committee until (i ) 90 percent of the Lots have been sold by Declarant or (ii ) the fifth anniversary of the original issuance by the California Department of Real Estate of a Final Subdivision Public Report for the Project, whichever first occurs . 6.2 Approval by Architectural Control Committee. No building, fence, wall or other structure shall be constructed, erected, placed or altered upon any Lot, nor shall any alteration or change be made to the exterior of any resi- dential structure situated upon a Lot, nor shall any trees, bushes, shrubs or plants which are in excess of six feet in height, or are likely to grow to a height in excess of six feet, be planted or placed on any Lot, until the building or alteration plans, landscaping plans, specifications, location plat and color scheme thereof have been approved by the 'Architectural Control Committee. In considering any such plans, the Architectural Control Committee shall take into account (i) the quality of workmanship and materials to be used, (ii ) harmony of external design with existing structures in the Project (iii) the inter- ference, or potential for interference with the view from any Lot and (iv) compliance with this Declaration. In the event the Architectural Control Committee fails to approve or disapprove any such plans, specifications, plats or schemes within 30 days after all necessary documents have been received by the Architec- tural Control Committee, the Owner requesting said approval may submit a written notice to the Architectural Control Committee advising the same of its failure to act; only if the Architec- tural Control Committee fails to approve or disapprove any such plans, specifications, plats or schemes within 30 days after the receipt of said notice from the Owner, said plans, specifica- tions, plats or schemes shall be incontrovertibly deemed to be approved. -14- 6131. 09/JHF16J 6.3 Amendment of Article. Notwithstanding the Article hereof entitled "Amend- ment, " no amendment, revocation or rescission of this Article may be had, nor shall Declarant, or any successor thereof, be inter- fered with or prohibited from completing the construction and development of the Project prior to the conveyance by Declarant (or its successor) of the last Lot in all phases of development of the Project without the (i) written consent of Declarant and (ii ) recording of such consent in the office of the Recorder of Riverside County, California. Such written consent shall not be required after the conveyance by Declarant (or its successor) of all the Lots . ARTICLE 7 - ASSESSMENTS 7 .1 Right of Board of Directors to Impose Assessments. The Board of Directors has and shall have the right and power to make, from time to time, reasonable assessments upon the Lots to meet anticipated authorized expenditures of the Associa- tion (which shall include the establishment of an adequate re- serve fund for replacement of all buildings, facilities and improvements in and to the Open Space and all personalty owned by the Association) and to change from time to time the amount, installments and/or frequency of payment of assessments . 7 . 1.1 No increase or decrease in the amount of such reasonable assessments for anticipated authorized expenditures of the Association in any one fiscal year of the Association which exceeds 20 percent of the regular assessment for the immediately preceding fiscal year may be made without the vote or written ballot of (i) the Owners entitled to exercise a majority of the total voting power in each of the two voting classes as provided in Paragraph 5 . 6 hereof and in the Article of the Bylaws entitled "Voting Rights, " or (ii) upon cessation of one of the two voting classes, the owners entitled to exercise a majority of the total voting power in the remaining voting class, provided that such vote or written ballot shall include the votes of a majority of the Owners other than Declarant. Each Owner shall be assessed separately for a share of such anticipated authorized expendi- tures, which share shall be levied against each Owner according to the ratio of the number of Lots owned by the Owner assessed to the total number of Lots subject to assessment. 7.1.2 Separate written notices of the making of such assessment (including in such notice the amount thereof and the frequency of payment) shall be deposited into the United States mail, postage prepaid, directed to the attention of each Owner, bearing the address of the Lot owned by such Owner (or such other 6131. 09/JHF16J address to which such Owner shall have directed the Association to deliver such notice) , at least 60 days prior to the beginning of a fiscal year; such assessment upon a Lot shall be a personal obligation of the Owner of the Lot to which such assessment relates at the time such assessment is made and, unless such assessment has been reduced to a recorded lien as hereinafter provided, the obligation to pay such assessment shall not pass to the successor in title to such Lot unless such successor ex- pressly agrees, in writing, to assume such obligation. The amount of any such assessment together with any late payment penalty, costs and reasonable attorneys ' fees in the event en- forcement is commenced shall be and become a lien upon any Lot assessed when the Board of Directors causes to be recorded in the Office of the County Recorder of Riverside County, California, a notice of assessment, which shall state the amount of such assessment and any late payment penalty, costs and attorneys ' fees, a description of the Lot against which the same has been assessed and the name of the record Owner thereof. Upon payment of said assessment and charges in connection with which such notice has been so recorded, or other satisfaction thereof, the Board of Directors shall cause to be recorded a further notice stating the satisfaction and the release of the lien thereof. Unless sooner satisfied and released or the enforcement thereof initiated as herein provided, such lien shall expire and be of no further force or effect one year after the date of recordation of said notice of assessment; provided, however, that said one-year period may be extended by the Board of Directors for not more than one additional year by recording a written extension thereof. 7. 1 .3 Such lien may be enforced by sale of the Lot by the Board of Directors, on behalf of the Association, its attor- ney or other person authorized by the Board of Directors to conduct the same after failure of the Owner to pay such an assessment in accordance with its terms; such sale shall be conducted in accordance with the provisions of California Civil Code Sections 2924, 2924b, 2924c, applicable to the exercise of powers of sale in mortgages and deeds of trust, or in any other manner permitted by law. The Board of Directors, on behalf of the Association, shall have the right to (i) bid at any fore- closure sale of a Lot, (ii) a credit, in any such bidding, in the amount of the aggregate of the unpaid assessment(s ) and said late charges, fees and other charges (as permitted by law) and (iii) hold, lease, mortgage and/or convey said Lot in the name of the Association. Nothing herein shall prohibit the Board of Direc- tors from instituting legal proceedings against an Owner to collect the debt of an assessment(s) owed by such Owner. 7.2 Special Assessments . The Board of Directors may also levy and collect special assessment(s ) for capital improvements or other purposes in the same manner as regular assessments are levied and col- -16- 6131. 09/JHF16J lected as described in Paragraph 7. 1. The amount of any such special assessment, together with any late payment penalty in- curred pursuant to this Article, costs and reasonable attorneys ' fees in the event enforcement is commenced, shall be and become a lien upon any Lot in the same manner as regular assessments become a lien. Provided, however, no such special assessment exceeding, in the aggregate, five percent of the budgeted gross expenses of the Association for the then current fiscal year of the Association may be levied without the vote or written ballot of (i) the Owners entitled to exercise a majority of the total voting power in each of the two voting classes as provided in the Article of the Bylaws entitled "Voting Rights" or (ii) upon cessation of one of the two voting classes, the Owners entitled to exercise a majority of the total voting power in the remaining voting class, provided that such vote or written ballot shall include the votes of a majority of the Owners other than Declar- ant. The provisions of the preceding sentence shall not apply to special assessment(s ) for repair, or the like, described in the Article entitled "Destruction; Insurance. " 7.3 Effect of Non-Payment of Assessments; Late Payment; Penalties. In the event the Association does not receive an Owner's payment of the entire amount of a regular or special assessment imposed upon its Lot pursuant to this Article within 30 days after the due date thereof, a late payment penalty by way of damages shall be immediately due and payable by such Owner. Each of the Owners recognizes and acknowledges that the late payment of assessments will cause the Association to incur additional costs and expenses in connection with its management, control, maintenance, architectural control and preservation of the Project. In the event of any such late payment, the Associa- tion shall be entitled to damages for the detriment caused there- by, but it is extremely difficult and impractical to ascertain the extent of such damages . Accordingly, each Owner shall pay to the Association a late payment penalty equal to such amount as may be provided under rules or regulations then promulgated by the Board of Directors, provided that such amount shall not ex- ceed the sums for such late payment penalties allowed by law (see, e.g. , Title I , Part 4 of Division 3 of the California Civil Code) . Such late payment penalties shall be liquidated damages for all such costs and expenses, other than attorneys ' fees, court costs and other costs incurred by the Association in con- nection with the creation and/or foreclosure of a lien for delinquent regular or special assessments. Acceptance of any such late payment penalty by the Association shall in no event constitute a waiver of such Owner' s default with respect to the late payment (i .e. , the overdue amount) , nor prevent the Associa- tion from exercising any of its other rights and remedies here- under or at law. In addition to the late payment penalty de- -17- 6131. 09/JHF16J scribed above, each Owner shall pay to the Association the amount of reasonable attorneys ' fees, court costs and other costs in- curred by the Association in connection with the creation and/or foreclosure of a lien for delinquent, regular or special assess- ments. 7.4 Due Date of Assessments; Liability of Declarant. Until such time as the Board of Directors shall change the same pursuant to Paragraph 7.1, such assessments shall be due and payable monthly on the first day of each calendar month, com- mencing, as to all Lots, on the first day of the calendar month next following the first conveyance by Declarant of a Lot. Recor- dation of this Declaration shall not constitute a "notice of as- sessment under Paragraph 7. 1, but shall be the equivalent of "separate written notice of the making of such assessment" de- scribed in Paragraph 7.1. Declarant shall be absolutely liable for the monthly installment of any assessment, and any special assessment, constituting a lien on any Lot and accruing prior to the conveyance thereof by Declarant. 7.5 Taxation of Association. Anything in Paragraph 7.1 to the contrary notwithstand- ing, if an tax is assessed Y to Declarant or to the Association upon the entire Project or upon the Open Space only, a share thereof shall be included in the assessment upon each Owner which share shall be the portion which bears to the total tax assessed the same relationship as the purchase price of the land which constitutes such Owner' s Lot bears to the aggregate of purchase prices of all such land. "Purchase price" means the price charged for such land by Declarant in its regular course of busi- ness; as to any land which has never been sold in the regular course of business, it shall mean the price at which such land is offered for sale to the public. ARTICLE 8 - DESTRUCTION.; INSURANCE 8 . 1 Association Insurance. The Board of Directors shall keep, - under one Associa- tion Master policy (i) all buildings (if any) and other insurable improvements (if any) in the Common Maintenance Areas and (ii ) all fixtures, equipment, supplies and personalty owned by the, Association, insured against loss by perils under a multiperil policy(ies ) of hazard insurance for the interest of all owners, protecting against, at least, (i ) loss or damage by fire and all Other hazards that are normally covered by the standard extended coverage endorsement, and (ii) perils covered for similar planned development projects, including those covered by the standard -18- 6131. 09/JHF16J "all risk" endorsement. In addition, the Association master policy shall contain an "agreed amount and inflation guard en- dorsement" if one is available from the insurance carrier. Further, such Association master policy shall contain a construc- tion code endorsements" if, at the time such policy is obtained, there is a construction code provision that requires changes to the undamaged portions of building or other improvements which constitute a part of the Common Maintenance Areas, even when only part of the Project is destroyed by an insured hazard. Typically, such endorsements include demolition cost endorsements, contin- gent liability from operation of building laws endorsement and increased cost of construction endorsement. 8 . 1 . 1 In addition to the foregoing, such policies shall include such other endorsements as may be required by the FNMA and/or FHLMC to purchase, guarantee, insure or subsidize any mortgage encumbering a Lot at any time that FNMA and/or FHLMC has acquired, or proposes to acquire an interest in any such mortgage. The amount of coverage of such insurance shall be not less than 100 percent of the insurable value (based on then current replacement cost) of said buildings and improvements, fair market value of such fixtures equipment, supplies and personalty as determined annually by an insurance carrier selected by the Board of Directors. 8. 1 .2 The name of the insured under each policy of such insurance shall be substantially Palm Shadow Owners ' Association, Inc. , a California nonprofit mutual benefit corporation, for use and benefit of individual owners, followed, if desired by either the Association or the insurance carrier(s) , by the designation of the Owners . Authority to adjust losses covered by the Association' s policy(ies) shall be vested in the Board of Directors, and insurance proceeds shall be payable to the Association or to Mortgagees, as their interests appear. 8 .2 Steam Boilers; Flood Hazards . If, within the Open Space a steam boiler is in opera- tion, the Board of Directors shall keep in force boiler explosion insurance evidenced by a standard form of boiler and machinery insurance policy and providing coverage as a minimum, $100, 000 per accident per location. If a steam boiler is in operation upon a Lot, the Owner of said Lot shall provide such insurance. If the Project is or becomes located in an area identified by the Secretary of Housing and Urban Development or the Federal Emergency Management Agency as an area having special flood hazards, a "master" or "blanket" policy of flood insurance on the Project must be maintained in the amount of the lesser of (i) the maximum coverage available under the National Flood Insurance Act of 1968, as amended, for all buildings and other insurable property within any portion of the Project which is located within such area identified as having special flood hazards or -19- 6131 .09/JHF16J (ii ) the greater of either (a) 100 percent of current "replace- ment cost" of all such buildings and other insurable property or (b) the outstanding principal balances of mortgage loans on all Lots . The name of the insured under each policy of insurance shall be as set forth in Paragraph 8 .1 above. 8 .3 Destruction; Replacement and Repair. In the event of any loss, damage or destruction so insured against, the Board of Directors shall cause the same to be replaced, repaired or rebuilt.. In the event the cost of such replacement, repair or rebuilding exceeds the hazard insurance proceeds received therefor, the Board of Directors shall levy and collect a special assessment in an equal amount from each Owner in the Project. In any event, all such hazard insurance proceeds received for such loss, damage or destruction shall be used for such replacement, repair or rebuilding. 8 .4 Public Liability Insurance. The Board of Directors shall procure and keep in force during the term hereof insurance (containing a "severability of interest" clause or endorsement) in the name of the Association and the Owners against any liability to the public (including the Owners ) resulting from any occurrence in or about the Open Space with coverage in the amount of at least $1, 000, 000 per occur- rence, for personal injury (including deaths of persons ) and/or property damage in connection with the operation, maintenance or use of the Open Space, and legal liability arising out of law- suits related to employment contracts in which the Association is a party. The policy(ies ) of such insurance shall contain a waiver of subrogation by the insurer(s) against (i ) the Associ- ation, (ii) each of the directors serving from time to time on the Board of Directors, and (iii ) the Owners. 8 . 5 Fidelity Bond. The Board of Directors shall procure and keep in force during the term hereof insurance in the name of the Association against dishonest acts on the part of the Board of Directors, volunteers and other persons responsible for handling funds belonging to or administered by the Association; such insurance or, in lieu thereof, fidelity bond, shall be written in an amount not less than one and one-half times the Association' s estimated annual operating expenses and reserves . 8 .6 Owner' s Insurance; Blanket Policy. Each Owner shall keep all buildings and other insurable improvements on such Owner' s Lot insured for the interest of such Owner and such Owner' s mortgagees, as their interests may appear. -20- 6131 . 09/JHF16J Such insurance shall provide, as a minimum, fire and extended coverage, with waiver of any fall of building clause, on a re- placement cost basis in an amount not less than that necessary to comply with any co-insurance percentage stipulated in such in- surance policy. The amount of coverage of such insurance shall be such that in the event of any damage or loss to the improve- ments so insured the insurance proceeds shall provide at least the lesser of (i ) compensation equal to the full amount of damage or loss or (ii) compensation to such Owner's first Mortgagee equal to the full amount of the unpaid balance of said first Mortgagee ' s mortgage on such Owner's Lot. In lieu of the in- surance to be maintained by each Owner pursuant to this Para- graph 8.8, the Association may procure and maintain a blanket policy of hazard insurance with the same coverage as described above in this Paragraph 8.8, insuring the single-family residen- tial structure on each Owner' s Lot. Any such blanket policy of insurance must name the Association as the insured for the bene- fit of the owners. The premiums for any such blanket insurance policy shall be an expense of the Association and included in the assessments described in Paragraph 7 .1 . 8. 7 Requirements of Insurance Carrier. Each multiperil policy(ies) of hazard insurance shall be issued by an insurance carrier which (i) has a financial rating by Best' s Insurance Reports of (a) Class VI or better% (provided it has a general policy holder' s rating of at least B) or (b) Class V or better, provided it has a general policy holder' s rating of at least A and (ii) is authorized to transact business within the State of California. 8 .8 Replacement of Uninsured Improvements. In the event of any loss, damage or destruction to any improvements in the Open Space or personalty owned by the Associ- ation not insured against under the policy(ies) of insurance required of the Association hereunder, the Board of Directors shall undertake to cause the same to be replaced, repaired or rebuilt. The cost of such replacement, repair or rebuilding shall be assessed equally to all of the Owners in the Project. 8. 9 Insurance Policies - Copies • Provisions . Copies of all such insurance policies (or certificates thereof showing the premiums thereon to have been paid) shall .be retained by the Association and open for inspection by the Owners at any reasonable time(s ) . All such insurance policies shall (i ) provide that they shall not be reducible or cancellable by the insurer, without first giving at least ten days ' prior notice in writing to the Association and all First Mortgagees, (ii ) contain a waiver of subrogation by the insurer(s) against the Associa- -21- O,Jl . 09/JHF16J tion, the Board of Directors and the Owners, (iii) contain or have attached a standard mortgagee clause or endorsement (customarily used by private institutional lenders in the County in which the Project is located) in favor of all First Mortgagees, (iv) provide that any insurance trust agreement will be recognized, (v) provide that the insurance will not be prejudiced by any acts or omissions of Owners that are not under the control of the Association, (vi ) provide that the policy will be primary, even if an Owner has other insurance that covers the same loss, and (vii ) contain such other endorsement(s ) as such First Mortgagees may require to fully protect their interests in form and of content as customarily used by private institutional lenders in the County in which the Project is located. 8 . 10 Planned Development Character Not Superseded. Nothing contained in this Article shall be construed to supersede any provision of the Article entitled "Planned Develop- ment Character of Project. " ARTICLE 9 - CONDEMNATION 9.1 Conflicting Provisions. In the event of any conflict between the provisions of this Article and those of any other Article of this Declaration, the provisions of this Article shall govern and control . 9 .2 Article Definitions. In this Article, the following words and phrases shall have, respectively, the following meanings : 9.2 . 1 "Appropriation" means any taking of or damage to any part of the Open Space (or any interest therein) by reason of any exercise of the power of eminent domain (whether by condem- nation proceedings, inverse . condemnation or otherwise) or by reason of any transfer of any part of the Open Space (or any interest therein) made in avoidance of such an exercise. 9 .2 .2 "Condemnor" means any governmental entity or person possessing the right and power of eminent domain which exercises said right and power, or threatens so to do, with respect to any part of the Open Space (or any interest therein) . 9.2 .3 "Award" means compensation, including but not limited to monetary and other consideration, paid by a Condemnor for an Appropriation. -22- 6131 .09/JHF16J 9.3 Appointment of Agent; Authority. The Board of Directors is hereby irrevocably appointed as the agent for every Owner to (i) negotiate with any Condemnor for settlement of an Award for any Appropriation, (ii) defend any action brought for an Appropriation, and to engage and compensate counsel and expert witnesses therefor or to aid the Board of Directors in the exercise of any of its powers under this Article, (iii) conduct, arrange or supervise an independent appraisal to determine the value of the Open Space affected by any Appropriation, (iv) receive in the name of the Association any Award and to retain the same, pending its disbursement, in a noninterest-bearing bank account in the name of the Association and (v) disburse or retain the same, pursuant to the following Paragraphs of this Article. 9.4 Priority of Disbursement of Condemnation Award. If an Award affecting all or a portion of the Open Space is not apportioned among the Owners by court judgment or by agreement between the Condemnor and the Board of Directors as the Owners ' agent, and after the value of the Open Space affected by any Appropriation has been determined by independent appraisal, as soon as may be practicable after the receipt by the Associa- tion of any Award, the Board of Directors will disburse the same pursuant to the following: 9.4.1 First, to contractors, subcontractors, material- men and others for the costs of the repair or restoration of damage or destruction to the Open Space caused by an Appropria- tion, or to the Association in reimbursement for such costs; the balance of the award is hereinafter referred to as "Award Balance. " 9 .4.2 Second, the Award Balance to the Association. In the event that the entire Open Space is appropriated, the Award Balance shall be distributed to the Owners so that each Owner receives one equal share of such Award Balance for each Lot in the Project owned by such owner. In the event that the Open Space is appropriated only in part, the Award Balance shall be retained by the Association or disbursed to the Owners in whole or in part as determined by the Board of Directors . 9.5 Provisions of Note or Deed of Trust Controlling. In the event there shall be any express or implied conflict between any provision of this Article and any provision of a note or deed of trust held by a Mortgagee, the provisions of said note or deed of trust shall govern and prevail. -23- 6131 . 09/JHF16J ARTICLE 10 - ACCOUNTING 10. 1 Accounting Books and Records. The Board of Directors shall maintain books of account of all its receipts and expenditures and shall cause such books to be examined annually as of the close of each fiscal year and a report to be made thereon to the Association. The Board of Directors shall deliver a copy of such report to the Owner of each Lot within 120 days after the end of such year. Each Owner (or its duly appointed representative) and each First Mortgagee shall be entitled at reasonable times to inspect the books and records of the Association, to have such books and records exam- ined at said Owner' s or First Mortgagee' s expense by an attorney or accountant representing such Owner or First Mortgagee and to make excerpts or copies of such books and records or portions thereof, and each such Owner (or its duly PP representa- tive) appointed resenta- P tive) or First Mortgagee, at his own expense, shall have the right to have g such books and records independently audited by an accountant. ARTICLE 11 - SCOPE; ENFORCEMENT 11.1 Status of Declaration. . The limitations, restrictions, conditions and cove- nants set forth in this Declaration constitute a general scheme for (i) the maintenance, protection and enhancement of the value of the Project and all Lots and (ii ) the benefit of all Owners . Said limitations, restrictions, conditions and covenants are imposed on each Lot and the Open Space for the benefit of every other Lot and the present and future Owners thereof. Said limi- tations, restrictions; conditions and covenants are and shall be covenants running with the land or equitable servitudes, as the case may be. 11.2 Termination of Declaration. Notwithstanding the provisions of the Articles hereof entitled "Partition and Severance" and "Amendment" to the con- trary, at any time, 65 years after the date of recordation of this Declaration, this Declaration and each and every limitation, restriction, condition and covenant contained herein may be terminated and extinguished upon execution and filing for record in the Office of the County Recorder of Riverside County, California, of a written instrument which (i) declares that the provisions of this Declaration are thereby terminated and extin- guished, (ii ) is signed and acknowledged by the Owners entitled to exercise a majority of the total voting power of the Associa- tion and (iii ) bears, or has attached thereto, the consent of -24- 6131.09/JHF16J two-thirds of all First Mortgagees as of the time of recordation of said written instrument. 11 .3 Breach; Right of Enforcement. Breach of any of said limitations, restrictions, conditions or covenants (or the continuation thereof) may be enjoined, abated or remedied by appropriate legal proceedings by (i) the Association, (ii ) any Owner, its heirs, devisees, execu- tors, administrators, successors and assigns or (iii) any Mort- gagee, any of whom is herein referred to as an "Enforcing Per- son. " Damages at law for any such breach, other than breach by failure to pay assessment(s ) , are hereby declared to be inade- quate. 11.4 Violation Constitutes Nuisance. The result of or condition caused by a violation 'of any of said limitations, restrictions, conditions or covenants, other than-- the payment of assessment(s ) , is and shall be a nuisance, and every remedy in law or equity now or hereafter available against a public or private nuisance may be exercised by any Enforcing Person. 11.5 Failure to Enforce; No Waiver. The failure of any Enforcing Person to enforce any of said limitations, restrictions, conditions or covenants shall not constitute a waiver of the right to enforce the same thereafter. No liability shall be imposed on or incurred by any Enforcing Person as a result of such failure. 11 .6 Costs and Attorneys ' Fees . The prevailing party in any action at law or in equity instituted by an Enforcing Person(s) to enforce or interpret the limitations, restrictions, conditions or covenants contained herein shall be entitled to all costs incurred in connection therewith, including but not limited to court costs and reason- able attorneys ' fees. ARTICLE 12 - RIGHTS OF MORTGAGEES 12 . 1 Voluntary Encumbrance Hypothecation. Any Owner may voluntarily or involuntarily encumber his Lot with or by a real property mortgage, deed of trust or other instrument of hypothecation. -25- 6131 . 09/JHF16J 12 .2 Limitations Binding Upon U Subsequent u a Purchasers. A breach of any of the foregoing limitations, restric- tions, conditions or covenants shall not defeat or render invalid the lien of any first mortgage or first deed of trust made in good faith and for value as to a Lot or any undivided interest therein; provided, however, such limitations, restrictions, conditions and covenants shall be binding upon and effective against any person whose title to said Lot is acquired by fore- closure, trustee ' s sale or otherwise. 12 .3 Subordination of Lien Created by Declaration. Each and every lien created by or pursuant to this Declaration, including but not limited to, the assessment liens described in the Article entitled "Assessments" is and shall be subordinate, inferior and subject to the lien and charge of any (i ) First Mortgage given for value and of record prior to the date of said lien, and (ii ) blanket construction (including acquisition) mortgage(s) or deed(s ) of trust encumbering all or any part of the Project which mortgage(s) or deed(s ) of trust may have been subordinated to this Declaration. 12 .3 . 1 Any person who acquires title to any Lot by purchasing the same at a foreclosure or trustee' s sale of a First Mortgage shall take title to such Lot free of any (i) claims by or on behalf of the Association for unpaid assessments, charges and/or fines (i£ any) levied by the Association which accrue prior to the time such purchaser takes title to such Lot and (ii ) assessment lien and/or other lien of the Association then encumbering any such Lot. Such unpaid assessments shall be reallocated among the Owners (other than said purchaser) . 12 .3 .2 In the event any Mortgagee (i) shall acquire title to any Lot by judicial foreclosure, exercise of power of sale contained in any real property mortgage or deed of trust, or deed in lieu of foreclosure and (ii) shall thereafter sell and convey such Lot, any real property mortgage or deed of trust received by such lender as security for all or a portion of the purchase price of such Lot shall be incontrovertibly deemed "given for value. " Notwithstanding the provisions of Paragraph 12 .3 above, any lien created by or pursuant to this Declaration, which lien arises from failure to pay assessment(s) accruing during the period of such Mortgagee' s holding of title to said Lot, shall be a lien superior to the lien of said real property mortgage or deed of trust received to secure a portion of said purchase price. 12 .4 Notice of Meetings; Designation of Representative; Notice of Certain Events . Each Mortgagee and any Interested Person shall be entitled, upon request, to (i ) receive written notice of any and -26- 6131 . 09/JHF16J all meetings of the Association, (ii ) designate a representative to attend such meetings on its behalf, (iii ) to receive notice of any condemnation or casualty loss that affects either a material portion of the Project or the Lot I securing a mortgage in which such person has an interest (iv), to receive written notice of any 60-day delinquency in the a q Y payment of any assessment or charges owned caned b the Y Owner of any Lot in which such person has an interest, (v) receive notice of a lapse, cancellation or material modification of any insurance policy or fidelity bond maintained by the Association, (vi) receive written notice of any action on which requires the prior approval of Mortgagees and/or Interested Persons and (vii) receive written notice of any breach or default hereunder by any Owner in the event such breach or default is not cured within 60 days after its occurrence. Provided, however, failure to give such notice shall in nowise affect any right or remedy of any Enforcing Person under the Article entitled "Scope; Enforcement. " To obtain any of the notices specified in this Paragraph, the Mortgagee or any such Interested Person shall deliver to the Association a written request setting forth both the name and address of the Mortgagee or such Interested Person and the address or Unit number of the Condominium in which such person has an interest. 12 . 5 Agreement with First Mortgagees. The Association shall, upon the request of any First Mortgagee, enter into an agreement with such First Mortgagee which agreement shall include the substance of the following provisions and/or any other reasonable requirements of FHLMC: (i) that the Association will pay when due all premiums on all insurance policies insuring the Open Space and taxes, assessments or other charges which may become a lien on the Open Space, (ii) that if the Association should fail to make a payment as described in clause (i) above that such Mortgagee by itself or in combination of other holders of mortgages encumbering Lots within the Project may, but shall not be required to, pay such taxes, assessments or charges and any such insurance premiums, (iii ) that should any policies of insurance insuring the Open Space lapse because of the Associations failure to pay such premium that such Mortgagee may by itself or in combination with any other holders of mortgages encumbering Lots, but shall not be required to, secure new policies of insurance as it may deem necessary and (iv) that Association shall promptly reimburse such Mortgagee for any and all payments made by it pursuant to clauses (ii) and (iii ) of this Paragraph. 12 . 6 Conflicting Provisions; Supremacy. In the event there shall be any express or implied conflict between any provision of this Article and any other -27- 6131 . 09/JHF16J provision of this Declaration, the provisions of this Article shall govern and prevail . ARTICLE 13 - DECLARANT' S SECURITY FOR ITS OBLIGATIONS 13 .1 Action by Association to Enforce Bond. If the Association is obligee under a bond (the "Bond" ) obtained pursuant to Business and Professions Code Sec- tion 11018 .5 (a) (2 ) (A) , to secure completion of improvements in and to the Open Space, the following provisions shall govern any action brought by the Association to enforce the obligations under the Bond: 13 .1.1 The Board of Directors shall, within ten days after passage of the Grace Period (hereinafter defined) , consider and vote on the question of action to be taken by the Association to enforce the obligations under the Bond with respect to any im- provement in or to the Open Space for which a Notice of Comple- tion has not been filed within 60 days (the "Grace Period" ) after the completion date specified for that improvement in the "Planned Construction Statement" appended to the Bond. If the Association has, in writing, extended the time for completion of any improvement in or to the Open Space, the Board of Directors shall consider and vote on the question of action to be taken to enforce the obligations under the Bond if a Notice of Completion has not been filed for said improvement within 30 days (the "Grace Period" ) after the expiration of said extended time per- iod. Any such extension granted by the Association shall over- ride any contrary decision of the Board of Directors . 13 .1 .2 If the Board of Directors fails to consider and vote on the question of action to be taken by the Association to enforce the obligations under the Bond or should the Board of Directors decide not to initiate action to enforce said obliga- tions, a special meeting of Members shall be held to consider and vote on such action if Members having at least five percent of the voting power of the Association sign and submit to the Board of Directors a petition demanding such meeting. Such meeting shall be held not less than 35 days nor more than 45 days after receipt by the Board of Directors of said petition. At such special meeting, all Members other than Declarant shall be en- titled to vote. 13 .1.3 If, at such special meeting, Members (other than Declarant) having a majority of the voting power of the Association (exclusive of the voting power attributed to Declar- ant) vote in favor of taking action to enforce the Bond, the Board of Directors shall immediately initiate and thereafter pursue appropriate action in the name of the Association to en- -28- 6131 .09/JHF16J force the obligations under the Bond. If the Board of Directors refuses to pursue such action, then any Member(s) may initiate and pursue appropriate action in the name of the Association to enforce the obligations under the Bond. Funds for pursuing such action shall be obtained by means of a special assessment of the Owners pursuant to the Article hereof entitled "Assessments; " such funds shall be kept in a separate account at a bank desig- nated by the Association and used only for initiation and prose- cution of said action. 13 .1 .4 If, at such special meeting, Members (other than Declarant) having a majority of the voting power of the Association (exclusive of the voting power attributed to Declar- ant) vote against taking action to enforce the Bond, then no such action may be taken by any Director serving on the Board of Directors or Member on behalf of the Association for a period of 60 days after said special meeting. If no Notice of Completion is filed for said improvements in or to the Open Space within 60 days after the date of said special meeting, the provisions of the foregoing Paragraphs shall govern the action to be taken by the Board of Directors and the Association with respect to en- forcing the obligations under the Bond. 13 .2 Arbitration of Disputes . If Declarant posts a surety bond or deposits funds (pursuant to Section 2792 . 9, Article 12, Chapter 6, Title 10, California Administrative Code) for the benefit of the Associa- tion, to assure the fulfillment by Declarant of its obligations to pay assessments, the exoneration or release of such bond or funds being subject to the conditions set forth in said Section 2792 . 9, and a dispute arises between Declarant and the Associa- tion with respect to the question of satisfaction of such con- ditions for exoneration or release, then, in such event, such dispute shall be settled by , arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Associa- tion, and judgment upon the award rendered by the Arbitrator(s ) may be entered in any court having jurisdiction thereof. The fee payable to the American Arbitration Association to initiate such arbitration shall be remitted by Declarant; however, the costs of such arbitration shall ultimately be borne as determined by the Arbitrator(s) under the aforesaid Commercial Arbitration Rules. ARTICLE 14 - AMENDMENT 14. 1 Amendment of Declaration. This Declaration may be amended only by written in- strument (or counterparts thereof) (i) signed and acknowledged (a) by the Owners entitled to exercise 67 percent of the total -29- 6131.09/JHF16J voting power in each of the two voting classes of the Associa- tion, as provided in Paragraph 5 .6 hereof and in the Article of the Bylaws entitled "Voting Rights" or (b) upon cessation of one of the two voting classes, by the Owners entitled to exercise 67 percent of the total voting power in the remaining voting class, provided that such signatures include the signatures of not less than a majority of Owners other than Declarant and (ii ) filed for record in the Office of the County Recorder of Riverside County, California. Any written instrument amending this Declaration shall bear, or have attached thereto, the written consent of 51 percent (based upon one vote for each First Mortgage owned) of all Eligible Mortgage Holders as of the time of recording such amendment who have requested in writing that the Association notify such Eligible Mortgage Holders of any pro- posed amendment that requires the consent of a specified per- centage of Eligible Mortgage Holders, if such amendment would (i) affect to any degree the rights, powers, privileges, interests or security of any Eligible Mortgage Holder as set forth in the Articles hereof entitled "Uses, " "Ownership of Open Space And Beneficial Interest in Common Personalty, " "Planned Development Character of the Project, " "Assessments, " "Destruction; Insur- ance, " "Condemnation, " "Accounting, " "Scope; Enforcement, " "Rights of Mortgagees" and the following Paragraphs hereof: 1 .1 . 7, 1.1 .10, 1 . 1.11, 1 . 1 .12, 1.1.15, 5 . 1, 5.2 and 14.1, (ii ) change the boundaries of any Lot or convert any Lot into common areas or vice versa, (iii) impose any restriction on an Owner's right to sell or transfer his or her Lot or (iv) establish self management when professional management had been required previously by an Eligible Mortgage Holder pursuant to the FNMA guidelines . 14.2 Deemed Consent of Eligible Mortgage Holder. If for any reason, the consent of any Eligible Mort- gage Holder is desired but not required by the provisions of Paragraph 14. 1 above, any such Eligible Mortgage Holder shall be conclusively deemed to have consented to an addition or amendment to this Declaration for which such consent is not so required if any such Eligible Mortgage Holder fails to submit a response to any written proposal for such an addition or amendment within 30 days after the delivery of such proposed addition or amendment to such Eligible Mortgage Holder. 14.3 Declarant' s Unilateral Right to Incorporate Required Provisions . It is the intent of Declarant that this Declaration, the Articles and Bylaws of the Association, and the Project meet all requirements necessary to purchase, guarantee, insure or subsidize any mortgage of a Lot by FNMA, FHLMC, Federal Housing Administration, Veterans Administration and such other similar -30- 6131 .09/JHF16J v entities, agencies or organizations . In the furtherance of that intent, Declarant expressly reserves the right and shall be en-titled by unilateral amendment of this Declaration as long as Declarant own more than 25 percent of the Lots to incorporate any provisions that are, in the opinion of the cited entities or governmental agencies, required to conform the Declaration, the Articles, the Bylaws or the Project to the requirements of any of the entities or governmental agencies including, without limita- tion, the execution on behalf of the Association of a regulatory agreement between the Association and the Federal Housing Commis- sioner. Provided, however, that any such provisions shall first have been approved by the California Department of Real Estate in connection with its issuance of a Final Subdivision Public Report or amendment to it with respect to the Project. Each Owner and each Mortgagee by acceptance of a deed of or encumbrance against a Lot consents to the incorporation in this Declaration of any such provisions as if set forth herein in full . The Board of Directors and each Owner shall take any action or shall adopt any resolutions required by Declarant or any Mortgagee to conform this Declaration or the Project to the requirements of any of the cited entities or agencies. 14.4 Recordation of Amendment. Each such amendment to this instrument shall become effective only upon being filed for record as hereinabove pro- vided and shall, from and after its effective date, be as effec- tive as this instrument as to all (i) the Open Space, (ii) the Lots, (iii ) the Project and (iv) the Owners (as of the effective date) and their successors in interest. ARTICLE 15 - GENERAL PROVISIONS 15 .1 Notices . Notices required by the Declaration, or desired, to be given shall be conclusively deemed served (i) if personally served, at the time of such service, and (ii) if mailed, 48 hours after deposit thereof in the United States mail, postage prepaid, addressed to the person(s) to whom such notice is to be given at the last known address of such person(s) . 15.2 Severability of Provisions . In the event any limitation, restriction, condition, covenant or provision contained in this Declaration is to be held invalid, void or unenforceable by any court of competent juris- diction, the remaining portions of this Declaration shall, never- theless, be and remain in full force and effect. -31- 6131.09/JHF16J 15 .3 Invalidity of Contrary Provisions and Action. No provision of the Articles or the Bylaws, and no action of the Association, in violation or contravention of any provision of this Declaration shall be valid, subsisting or of any effect whatsoever. 15 .4 Captions. Captions in this Declaration are inserted for con- venience of reference only and do not define, describe or limit the scope or the intent of this Declaration or any of the terms hereof. 15 . 5 Exhibits . All exhibits, if any, referred to herein and attached hereto are a part hereof. 15. 6 Gender and Number. The use herein of (i) the neuter gender includes the masculine and the feminine and (ii ) the singular number includes the plural, whenever the context so requires . 15 . 7 Construction of Declaration. This Declaration and every provision hereof shall be construed to facilitate the operation of the Project. IN WITNESS WHEREOF, this Declaration has been executed as of the day of 19 PALM SHADOW ASSOC TES, a California li Nd I Onership By -_ o0G neral Partner -32- 6131.09/JHF16J I STATE OF CALIFORNIA ) SS STATE OF CALIFORNIA ) On 198 before me, the under- signed, a Notary Public in and for said State, personally appeared , personally known to me or proved to me on the basis of satisfactory .evidence to be the General Partner of PALM SHADOW ASSOCIATES, a California limited partnership, the limited partnership that execute the within instrument, and acknowledged to me that such limited partnership executed the same. WITNESS my hand and official seal. Notary ror said CounOt State -33- 6131 . 09/JHF16J t SUBORDINATION TO DECLARATION OF RESTRICTIONS FOR GOOD, VALUABLE AND ADEQUATE CONSIDERATION, receipt of which is hereby acknowledged, , as beneficiary under that certain deed of trust and assignment of rents recorded , at File/Page No. Official Records of County, California, hereby consents to the recordation of, and subordinates the lien and charge of said deed of trust and assignment of rents to, the foregoing Declaration of Restrictions. Dated: 19 BY 1-ok A& By .. STATE OF CALIFORNIA ) SS COUNTY OF ) On 19 before me, the undersigned, a Notary Public in and for said County and State, personally appeared , known to me or proved , to me on the basis of satisfactory evidence to be the I and known to me or proved to me on the basis of satisfactory evidence to be of , and acknowledged to me that such corporation executed the within instrument pursuant to its Bylaws or a resolution of its Board of Directors . WITNESS my hand and official seal. 0 .�((`�`�� ` Notary Public and for said Coin and State -34-