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FF $ 135° STC/7550 /KED/301 Cross-Reference to Master Declaration: Instrument 92-0076613 STATE OF TEXAS COUNTY OF COLLIN VILLAGE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR BALLANTRAE cial Scrivener's Note to Collin County Clerk and to all Abstracters and Title Examinerst This instrument specifically refers to, and constitutes a covenant running with, the residential nots within that certain 14.594+/acre tract situated in Collin County, Texas which has been formally subdivided in accordance with a certain subdivision plat entitled "Village of Ballantrae," filed and recorded in Cabinet I, Drawer 550-551 of the Map and plat Records of Collin County, Texas, to which reference is hereby made for all purposes.

Additional property may hereafter be subjected to this Village Declaration by filing or an instrument entitled "Supplemental Village Declaration for Ballantrae" describing the property to be subjected hereto. in accordance with the provisions of this village Declaration.

The name and address of the business entity which owns the land initially made subject to this village Declaration, which entity is the Declarant herein, is: Stonebridge Ranch Development Corporation 7605 W. Virginia Parkway McKinney, Texas 75070 (214) 540-5400 950023785 VILLAGE DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR BALLANTRAE BACKGROUND Declarant is the owner and developer of certain real property more particularly described on Exhibit "A" attached hereto which is a part of that certain master planned community located in Collin County, Texas, and commonly known as Stonebridge Ranch, This Village Declaration is intended to establish a sub-association within Stonebridge Ranch to administer certain responsibilities

ed in Collin County, Texas, and commonly known as Stonebridge Ranch, This Village Declaration is intended to establish a sub-association within Stonebridge Ranch to administer certain responsibilities with respect to the Common Properties, as defined in section 1.11, and to administer and enforce the provisions of this Declaration and the By-Laws. Declarant desires to impose these covenants, conditions, restrictions, and easements on the real property subjected hereto, yet retain reasonable flexibility to respond to changing or unforeseen circumstances so as to guide, control and maintain the distinction of the Ballantrae.

Declarant hereby declares that all of the property described in Exhibit "A" to this Declaration and any additional property which is hereafter made subject to this Declaration in accordance with Article X shall be held, sold, transferred, used and conveyed subject to the Master Declaration (as defined in Article I hereof) and the following additional easements, restrictions, covenants, and conditions, which shall run with the title to the real property subjected to this Declaration. This Declaration and the Master Declaration shall be binding on all parties having any right, title, or interest in the Properties or any part thereof, their heirs, successors, successors-in-title, and assigns, and shall inure to the benefit of each owner thereof.

This Declaration does not and is not intended to create a condominium within the meaning of the Texas Condominium Act, Tex.

Prop. Code Ann., Section 81.001, et seq. (Vernon 1984).

Article I DEFINITIONS The terms in this Declaration and the exhibits to this Declaration shall generally be given their natural, commonly accepted definitions except as otherwise specified. Capitalized

rticle I DEFINITIONS The terms in this Declaration and the exhibits to this Declaration shall generally be given their natural, commonly accepted definitions except as otherwise specified. Capitalized terms shall be defined as set forth below.

1.1. Area of Common Responsibility: The Common Properties, together with those areas, which by the terms of this Declaration, 1 2 any Supplemental Declaration or other applicable covenants or contracts become the responsibility of the Association.

1.2. Articles of Incorporation or Articles: The Articles of Incorporation of Ballantrae Homeowners Association, Inc., on file with the Secretary of State for the State of Texas, as they may be amended.

1.3. Association: Ballantrae Homeowners Association, Inc., a Texas non-profit corporation, its successors or assigns, which shall have the power, duty and responsibility for administering and enforcing this Declaration.

1.4. Base Assessment: Assessments levied on all Lots subject to assessment under Section 11.8 to fund Common Expenses for the general benefit of all Lots, as more particularly described in Sections 11.1 and 11.3.

1.5. Board of Directors or Board: The body responsible for administration of the Association, selected as provided in the By-Laws and generally serving the same role as the board of directors under Texas corporate law 1.6. Builder: Any Person which purchases one or more Lots for the purpose of constructing improvements for later sale to consumers in the ordinary course of such Person's business.

1.7. By-Laws: The By Laws of Ballantrae Homeowners Association, Inc., attached as Exhibit "C" and incorporated by reference, as they may be amended from time to time.

1.8. Class A: The class of membership in the Association

ws of Ballantrae Homeowners Association, Inc., attached as Exhibit "C" and incorporated by reference, as they may be amended from time to time.

1.8. Class A: The class of membership in the Association consisting of all Owners other than the Class "B" Member, as more particularly described in Section 4.3(a).

1.9. Class Br The class of membership in the Association consisting of the Declarant, as more particularly described in Section 4.3(b).

1.10.

Class "B" Control Period: The period of time during which the class "B" Member is entitled to appoint a majority of the members of the Board of Directors as provided in Section 3.3 of the By-Laws.

1.11.

Common Properties: All real and personal property which the Association owns, leases or otherwise holds possessory or use rights in for the common use and enjoyment of the Owners, which may include easements.

1.12.

Common Expenses: The actual and estimated expenses incurred, or anticipated to be incurred, by the Association for the general benefit of all Owners, including any reasonable reserves 3 for repairs and replacements, as the Board may find necessary and appropriate pursuant to this Declaration, the By-Laws, and the Articles of Incorporation and also including, without limitation, real estate taxes on the Common Properties, if any, and insurance premiums. Common Expenses shall not include any expenses incurred during the Class "B" Control Period for initial development, original construction, installation of infrastructure, original capital improvements, or other original construction costs unless approved by Members representing a majority of the total class "A" votes in the Association.

1.13.

Community-Wide Standard: The standard of conduct, maintenance, or other activity generally prevailing throughout the

bers representing a majority of the total class "A" votes in the Association.

1.13.

Community-Wide Standard: The standard of conduct, maintenance, or other activity generally prevailing throughout the Properties. Such standard may be more specifically determined by the Board of Directors and its designees, if any, but shall not be lower than the standard established by the Master Association for the Stonebridge Ranch community generally.

1.14.

Declarant: Stonebridge-- Ranch Development Corporation, a Delaware corporation qualified to do business in Texas, or any successor, successor-in-title," of assign who takes title to any portion of the property subject to this Declaration or subject to annexation pursuant to Section 10.2 for the purpose of development and/or sale and who is designated as the Declarant hereunder in a recorded instrument executed by the immediately preceding Declarant.

1.15.

"Front Yard(s)" That portion of a Lot lying between (a) the street toward which the dwelling faces and (b) the line formed by dwelling exterior and any fence running generally parallel to such street. In the case of a corner Lot, the term shall also include any portion of the Lot lying between (a) the side street and (b) the line formed by the side of the dwelling and any fence or privacy gate runhing generally parallel to the street toward which the dwelling faces or the side street. The term shall not include any patios, courtyards or fenced areas.

Un 4 Rear Yard HOBAHNE Rear Yard Dwelling | Privacy////// // Gate/////// //// /////// /////////////////////1 Dwelling ////// ////// ////// ////// -Front Lot Line ///////////Front Yard//TTTTTTUNLITTERIDE ////////////// Street -Front Dot LineILLUSTRATIONS OF FRONT YARDS E / N / S C / t r E / IIII IIII e t fofficial 1.16.

Lot:

//// ////// ////// -Front Lot Line ///////////Front Yard//TTTTTTUNLITTERIDE ////////////// Street -Front Dot LineILLUSTRATIONS OF FRONT YARDS E / N / S C / t r E / IIII IIII e t fofficial 1.16.

Lot: Each numbered, platted lot, whether improved or unimproved, shown on any subdivision plat of the Properties, which Lot is intended for development, use, and occupancy as a residence for a single family. The term shall refer to the land which is part of the Iot as well as any improvements thereon. The term shall not include Common Properties of the Association or the Master Association, or any portion of the Properties which may be dedicated to the public.

1.27.

Master Association: Stonebridge Ranch Community Association, Inc., a Texas corporation, its successors and assigns, which has the power, duty and responsibility for administering and enforcing the Master Declaration.

1.18.

Master Declaration: Declaration The Consolidated and Amended Master of Covenants, Conditions, Restrictions, Easements, Charges and Liens for Stonebridge Ranch, recorded on October 29, 1992, as Instrument Number 92-0076613 in the Public Real Estate Records of Collin County, Texas, as it may be amended and supplemented from time to time.

1.19.

Member: A Person subject to membership in the Association as provided in Article IV.

Г 5 1.20.

"Mortgage": A mortgage, a deed of trust, a deed to secure debt, or any other form of security instrument affecting title to a Lot.

1.21.

1.22.

1.23.

"Mortgagee": A beneficiary or holder of a Mortgage.

"Mortgagor": Any Person who gives a Mortgage.

"Owner": One or more Persons who hold the record title to any Lot, but excluding in all cases any party holding an interest merely as security for the performance of an obligation.

o gives a Mortgage.

"Owner": One or more Persons who hold the record title to any Lot, but excluding in all cases any party holding an interest merely as security for the performance of an obligation.

If a Lot is sold under a recorded contract of sale, and the contract specifically so provides, the purchaser (rather than the fee owner) will be considered the Owner.

1.24.

"Person": A natural person a partnership, a trustee, or any other legal entity.

1.25.

onation, a "Properties": The real property described in Exhibit "A," together with such additional property as is at any time subjected to this Declaration in accordance with Article X.

1.26.

"Special Assessment" Assessments accordance with Section 11.5 of this Declaration.

1.27.

"Specific Assessment": Assessments accordance with Section 11:6 of this Declaration.

1.28.

levied in levied in "Stonebridge Ranch": that certain real property located in Collin County, Texas, and made subject to the jurisdiction of Stonebridge Ranch Community Association, Inc. by the Stonebridge Ranch Covenants.

1.29.

"Stonebridge Ranch Covenants": one or more instruments recorded in the public records of Collin County, Texas, which by their terms subject the real property described therein to the jurisdiction of the Master Association and impose a system of covenants, conditions, restrictions, easements, charges and liens on such property, as such instrument(s) may be amended and supplemented from time to time, and/or any consolidation thereof.

1.30.

"Supplemental Declaration": An amendment or supplement to this Declaration filed pursuant to Article X which subjects additional property to this Declaration and/or imposes, expressly or by reference, additional restrictions and obligations on the real property described therein.

1.31.

ant to Article X which subjects additional property to this Declaration and/or imposes, expressly or by reference, additional restrictions and obligations on the real property described therein.

1.31.

"Village Declaration" or "Declaration": This Village Declaration of Covenants, Conditions and Restrictions for Ballantrae, as it may be amended and supplemented from time to time.

2 Article II MASTER ABBOCIATION This Declaration is intended to supplement the Master Declaration as it applies to the Properties. Every Owner, by acceptance of an interest in any Lot, acknowledges that he or she is subject to the Master Declaration, in addition to this Village Declaration, and that he or she is automatically a member of and subject to assessment by the Master Association, as well as by Ballantrae Homeowners Association, Inc.

In addition to all of the rights and obligations which are conferred or imposed upon the Association pursuant to this Declaration, the By-Laws or the Articles of Incorperation, the Association shall be entitled to exercise any of the rights conferred upon it and shall be subject to all of the obligations imposed upon it pursuant to the Master Declaration and the by-Laws of Stonebridge Ranch Community Association, Inc. The Association and all committees thereof shall also be subject to all superior rights and powers which have been conferred upon the Master Association pursuant to the Master Declaration and the By-Laws of the Master Association. The Association shall take no action in derogation of the rights of, or contrary to the interests of the Master Association.

Article III PROPERTY RIGHTS Every Owner shall have a right and nonexclusive easement of use, access, and enjoyment in and to the Common Properties, subject to:

the interests of the Master Association.

Article III PROPERTY RIGHTS Every Owner shall have a right and nonexclusive easement of use, access, and enjoyment in and to the Common Properties, subject to: (a) This Declaration, the Master Declaration, and any other applicable covenants; (b) Any restrictions or limitations contained in any deed conveying such property to the Association; (c) The right of the Board and the membership to adopt rules regulating the use and enjoyment of the Common Properties, pursuant to Article XIII (d) The right of the Association to enter into and execute contracts with any party (including, without limitation, the Declarant, its affiliates, or the Master Association) for the purpose of providing management, maintenance or other materials and services to the Association and the Owners consistent with the purposes of the Association and/or this Declaration; (e) The right of the Association to grant permits, licenses and easements over the Common Properties for utilities, roads, and other purposes deemed appropriate by the Board; 6 7 (f) The right of the Association, acting through the Board, to dedicate or transfer all or any part of the Common Properties pursuant to Section 5.8; and (g) The right of the Association, acting through the Board, to mortgage, pledge, or hypothecate any or all of its real or personal property as security for money borrowed or debts incurred.

Notwithstanding the above, an Owner who does not reside in his Unit but permits occupancy of his Unit by others, pursuant to a lease or otherwise, shall be deemed to have delegated his rights to use the recreational facilities to the occupants of his Unit ARTICLE IV ASSOCIATION FUNCTION, MEMBERSHIP AND VOTING RIGHTS 4.1. Function of Association. The Association shall be the

ated his rights to use the recreational facilities to the occupants of his Unit ARTICLE IV ASSOCIATION FUNCTION, MEMBERSHIP AND VOTING RIGHTS 4.1. Function of Association. The Association shall be the entity responsible for management, maintenance, operation and control of the Area of Common Responsibility, subject to its right to delegate or assign such responsibility to other entities as provided in this Declaration and the By-Laws.

The Association shall be the primary entity responsible for enforcement of this Declaration and such reasonable rules regulating use of the Properties as the Board may adopt. The Association shall perform [its functions in accordance with the Master Declaration, this Declaration, the By-Laws, the Articles of Incorporation and Texas law.

4.2. Membership. Every Owner shall be a Member of the Association. No Owner, whether one or more Persons, shall have more than one membership per Lot owned. If a Lot is owned by more than one Person, all such co-owners shall be jointly and severally obligated to perform the responsibilities of Owners hereunder. The membership rights and privileges of an Owner who is a natural Person may be exercised by the Member or the Member's spouse. The membership rights of an owner which is a corporation, partnership or other legal entity shall be exercised by the individual designated from time to time by the Owner in a written instrument provided to the Secretary of the Association.

4.3 Voting. The Association shall have two classes membership, Class "A" and Class "B."

(a) class "A".

of Class "A" Members shall be all Owners except the Class "B" Member, if any.

Class "A" Members shall have one equal vote for each Lot in which they hold the interest required for membership under

A".

of Class "A" Members shall be all Owners except the Class "B" Member, if any.

Class "A" Members shall have one equal vote for each Lot in which they hold the interest required for membership under Section 4.2; there shall be only one vote per Lot or if the Owner 7 8 owns multiple contiguous Lots with only one residence there shall be only one vote for multiple Lots.

In any situation in which there is more than one Owner of a particular Lot, the vote for such Lot may be exercised by any one of them; provided, it shall be exercised as directed by written notice signed by all such co-owners and filed with the Secretary of the Association prior to any vote of the membership, if such notice is given. Absent such direction, the Lot's vote shall be suspended if more than one Person seeks to exercise it.

(b) Class "B". The sole Class "B" Member shall be the Declarant. The rights of the Class "B" Member, including the right to approve, or withhold approval of, actions proposed under this Declaration and the By-Laws, are specified elsewhere in the Declaration and the By-Laws. The Class "B" Nember may appoint a majority of the members of the Board of Directors during the Class "B" Control Period, as specified in Section 3.3 of the By-Laws. After termination of the class "B" Control Period, the Class "B" Member shall have a right to disapprove actions of the Board and committees as provided in Section 3.16 of the By-Laws.

3.

The Class "B" membership shall terminate and become converted to Class "A" membership upon the earlier of: (i) two years after expiration of the Class "B" Control Period pursuant to Article IN of the By-Laws; or (ii) when, in its discretion, the Declarant so determines and declares in a recorded instrument.

Article V

rs after expiration of the Class "B" Control Period pursuant to Article IN of the By-Laws; or (ii) when, in its discretion, the Declarant so determines and declares in a recorded instrument.

Article V RIGHTS AND OBLIGATIONS OF THE ASSOCIATION 5.1. Common Properties. The Association, subject to the rights of the Owners set forth in this Declaration, shall manage and control the Common Properties and all improvements thereon (including, without Mimitation, furnishings, equipment, and landscaping), and shall keep them in good, clean, attractive, and sanitary condition, order, and repair, pursuant to the terms and conditions hereof and consistent with the Community-Wide Standard, subject to the right to assign such responsibilities to the Master Association by mutual agreement.

5.2. Personal Property and Real Property for Common Use. The Association may acquire, hold, and dispose of tangible and intangible personal property and real property. The Declarant may convey to the Association improved or unimproved real estate located within the properties subject to this Declaration or subject to annexation under Section 10.2, personal property, and leasehold and other property interests. Such property shall be 9 accepted by the Association and thereafter shall be maintained as a Common Expense for the benefit of the Members, subject to any restrictions set forth in the deed.

5.3. Rulemaking. The Association, pursuant to Article XIII, may make and enforce reasonable rules governing the use of the Properties, consistent with this Declaration and the Master Declaration and with the rules and regulations of the Master Association. This requirement of consistency shall not preclude the Association from adopting rules which are more restrictive than

Master Declaration and with the rules and regulations of the Master Association. This requirement of consistency shall not preclude the Association from adopting rules which are more restrictive than the provisions of the Master Declaration or the rules of the Master Association.

5.4. Enforcement. The Association may impose sanctions for violations of this Declaration, the By-Laws, or rules in accordance with procedures set forth in Section 3.23 of the By-Laws, including reasonable monetary fines. In addition, the Association may suspend a Member's right to vote, and may suspend any services provided by the Association to any Owner or such Owner's Lot, during the period of any delinquency in payment of assessments or other charges due to the Association. The Association may also exercise self-help and seek relief in any court for violations or to abate nuisances.

The Master Association shall be entitled to enforce the provisions of this Declaration to the same extent &B the Association or any Owner. The failure of the Master Association to enforce any of the limitations, restrictions, conditions or covenants contained herein shall not constitute a waiver of the right to enforce the same thereafter. No liability shall be imposed on, or incurred by, the Master Association as a result of such failure. The prevailing party in any action at law or in equity instituted by the Master Association or the Association to enforce or interpret said limitations, restrictions, conditions or covenants, shall be entitled to all costs incurred in connection therewith, including without limitation, reasonable attorneys' fees.

The City of McKinney shall be entitled to enforce the maintenance provisions of this Declaration in the event that the

n connection therewith, including without limitation, reasonable attorneys' fees.

The City of McKinney shall be entitled to enforce the maintenance provisions of this Declaration in the event that the Association, its successors or assigns, or the Master Association shall fail or refuse to, in accordance with procedures set forth in Section 17.12 of this Declaration.

The Association, by contract or other agreement, may enforce county and city ordinances, if applicable, and permit Collin County and the City of McKinney, Texas, to enforce ordinances on the Properties for the benefit of the Association and its Members.

5.5. Implied Rights; Board Authority. The Association may exercise any other right or privilege given to it expressly by this Declaration or the By-Laws, reasonably implied from or or 10 reasonably necessary to effectuate any such right or privilege.

Except as otherwise specifically provided in this Declaration, the By-Laws, Articles, or by law, all rights and powers of the Association may be exercised by the Board without a vote of the membership.

5.6. Governmental Interests. For so long as the Declarant owns any property subject to this Declaration or subject to annexation under Section 10.2, the Declarant may designate sites within the Properties for fire, police, water, drainage, and utility facilities, parks, and other public facilities. The sites may include Common Properties, in which case the Association shall take whatever action is required with respect to such site to permit such use, including conveyance of the site, if so directed by Declarant. The sites may include other property not owned by Declarant provided the owner consents thereto.

5.7. Indemnification. The Association shall indemnify every

e of the site, if so directed by Declarant. The sites may include other property not owned by Declarant provided the owner consents thereto.

5.7. Indemnification. The Association shall indemnify every officer, director, and committee member against all expenses, including counsel fees, reasonably incurred in connection with any action, suit, or other proceeding (including settlement of any suit or proceeding, if approved by the then Board of Directors) to which he or she may be a party by reason of being of having been an officer, director, or committee member.

The officers, directors and committee members shall not be liable for any mistake of judgment, negligent or otherwise, except for their own individual willful misfeasance, malfeasance, misconduct, or bad faith. The officers and directors shall have no personal liability with respect to any contract or other commitment made or action taken in good faith on behalf of the Association (except to the extent that such officers or directors may also be Members of the Association). The Association shall indemnify and forever hold each such officer, director and committee member harmless from any and all liability to others on account of any such contract, commitment or action. Any right to indemnification provided for herein shall not be exclusive of any other rights to which any present or former officer, director, or committee member may be entitled. The Association shall, as a Common Expense, maintain adequate general liability and officers' and directors' liability insurance to fund this obligation, if such insurance is reasonably available.

58. Dedication of Common Properties. The Association may dedicate portions of the Common Properties to Collin County, the

insurance to fund this obligation, if such insurance is reasonably available.

58. Dedication of Common Properties. The Association may dedicate portions of the Common Properties to Collin County, the City of McKinney, Texas, or to any other local, state, or federal governmental entity; provided, the City of McKinney shall have no obligation to accept any private streets for public access and maintenance and may impose such conditions upon acceptance as it deems appropriate.

10 11 5.9. Disclaimer Regarding Security. The Association and the Master Association may, but shall not be obligated to, maintain or support certain activities within the Properties designed to make the Properties safer than they otherwise might be. Neither the Association, the Master Association, the Declarant under the Master Declaration ("Master Declarant"), the Declarant hereunder, nor any successor declarant shall in any way be considered insurers or guarantors of security within the Properties, nor shall any of them be held liable for any loss or damage by reason of failure to provide adequate security or of ineffectiveness of security measures undertaken. No representation or warranty is made that any gate limiting vehicular access to the Properties or any fire protection system, burglar alarm system or other security system can not be compromised or circumvented, nor that any such systems or security measures undertaken will in all cases prevent loss or provide the detection or protection for which the system is designed or intended. Each Owner acknowledges understands and covenants to inform its tenants, invitees and licensees that the Association, the Master Association, their respective Boards of Directors and committees, the Master Declarant, and the Declarant

s and covenants to inform its tenants, invitees and licensees that the Association, the Master Association, their respective Boards of Directors and committees, the Master Declarant, and the Declarant hereunder are not insurers and that each Person using the Properties assumes all risks for loss or damage to Persons, to Lots and to the contents of Lots resulting from acts of third parties.

The gatehouse, if any located at the entrance to the Properties is intended as a convenience for the Declarant during initial construction within the Properties and is not designed or intended to enhance the security within or safety of persons residing within the Properties or their guests. The Declarant may, but shall not be obligated to, use such gatehouse during initial construction within the Properties for whatever purposes Declarant sees fit and may, but shall not be obligated to, employ or retain, at Declarant's sole cost and expense, a person or persons to occupy such gatehouse and perform such functions on behalf of Declarant as Declarant, in its sole discretion, deems appropriate, including but not limited to monitoring traffic and facilitating access by authorized persons to Lots which are under construction. Any such person employed or retained by the Declarant shall under no circumstances be responsible for providing security to any persons or property within the Properties. Upon termination of the Declarant's right to use the gatehouse, the Association may, but shall have no obligation to, staff or otherwise use the gatehouse for such purposes as the Board deems appropriate; however, at no time shall the Declarant have any obligation to staff or otherwise continue any prior use of the gatehouse.

5.10.

Private Streets.

ouse for such purposes as the Board deems appropriate; however, at no time shall the Declarant have any obligation to staff or otherwise continue any prior use of the gatehouse.

5.10.

Private Streets.

(a) Any streets which are conveyed to the Association shall be maintained by the Association as part of the Common Properties as set forth in Section 6.1, and the City of McKinney shall have no responsibility for maintenance of such streets. The City of 11 12 McKinney may, but shall not be obligated to, inspect such streets and require the Association to make any repairs necessary to bring such streets up to the standards of public streets within the city of McKinney. If the Association should fail to make any repairs within a reasonable time after receipt of written notice from the City of McKinney as to the need for such repairs, or if the Association and the city of McKinney otherwise agree, the City of McKinney shall have the right (i) to cause such repairs to be made and to assess each Lot within the Properties for an equal share of the cost of such repairs; or (ii) to revoke the special use permit for private streets, make any necessary repairs, remove any gate, gatehouse or other structures not permitted on public streets within the city, and unilaterally refile the subdivision plat(s) for the Properties dedicating the streets within the Properties to the public; or (iii) both of the above in the event the balance of the reserve fund is not sufficient to cover all street repairs. If the private streets are converted to public streets, under (ii) above the city shall be entitled to that portion of the Association's reserve funds allocated to maintenance of the streets so dedicated, as provided in Section 11.4.

(b) Each Owner, by acceptance of any interest in a Lot,

e entitled to that portion of the Association's reserve funds allocated to maintenance of the streets so dedicated, as provided in Section 11.4.

(b) Each Owner, by acceptance of any interest in a Lot, acknowledges and agrees that the city of McKinney shall have no obligation to provide certain services, such as but not limited to routine police patrols, enforcement of traffic and parking ordinances, or preparation of accident reports, in areas served by private streets.

(c) This Section shall not be amended without the prior written consent of the City of McKinney.

Article VI MAINTENANCE 6.1. Association's Responsibility. The Association shall maintain the Area of Common Responsibility and shall keep it in good, clean, attractive, and sanitary condition, order, and repair, pursuant to the terms and conditions hereof. The Area of Common Responsibility shall include, but need not be limited to: (a) all landscaping and other flora, open space, structures, and improvements, including, without limitation, walls, fences, private streets, sidewalks, medians, streetlights, signage, and entrance gates, entrance signage, gatehouse and other entrance features, if any, situated upon the Common Properties; (b) landscaping and other flora within any right-of-way within the Properties, unless responsibility therefor has been assigned to or assumed by the Master Association pursuant to the Master Declaration; 12 13 (c) landscaping within the Front Yards of all Lots, except that the Association's responsibility shall be limited to the mowing and fertilizing of lawns, application of herbicides and pesticides, pruning and trimming of trees and shrubs, weeding of shrub and flower beds, and edging along shrub and flower beds, driveways and sidewalks. Except as specifically set forth herein,

es and pesticides, pruning and trimming of trees and shrubs, weeding of shrub and flower beds, and edging along shrub and flower beds, driveways and sidewalks. Except as specifically set forth herein, the Association shall have no responsibility for maintenance of landscaping installed by the Owner or occupant of a Lot, irrigation of lawns or other landscaping on Lots, or eradication of mosquitos other pests, nor shall the Association be responsible for replacement of landscaping materials, plants or trees which are damaged or destroyed due to pests, disease, severe weather conditions or other causes except to the extent that the Board expressly agrees to assume responsibility for such maintenance or replacement, respectively; or (d) routine maintenance and winterizing (to the extent that the Board deems winterizing necessary) of the irrigation and sprinkler system(s), if any, serving the Common Properties (the Association shall have no responsibility for maintenance and winterizing of, repairs to or replacement of the irrigation system lying within the boundaries of any Lot, except to the extent expressly assumed by the Board); and (e) such portions of any additional property as may be dictated by this Declaration, any supplemental Declaration, or any contract or agreement for maintenance thereof entered into by the Association; and.

The Area of Common Responsibility described above shall not be reduced by amendment of this Declaration or any other means except with the prior written approval of the Declarant, so long as Declarant owns any property subject to this Declaration or subject to annexation under Section 10,2.

The Association may maintain other property which it does not own, including, without limitation, property dedicated to the

rty subject to this Declaration or subject to annexation under Section 10,2.

The Association may maintain other property which it does not own, including, without limitation, property dedicated to the public, if the Board of Directors determines that such maintenance is necessary or desirable to maintain the Community-Wide Standard.

Except as otherwise specifically provided herein, all costs associated with maintenance, repair and replacement (to the extent such is the responsibility of the Association) of the Area of Common Responsibility shall be a Common Expense to be allocated among all Lots as part of the Base Assessment, without prejudice to the right of the Association to seek reimbursement from the owner(s) of, or other Persons responsible for, certain portions of the Area of Common Responsibility pursuant to this Declaration, other recorded covenants, or agreements with the owner(s) thereof.

In the event that the Association fails to perform its responsibilities hereunder or under the Master Declaration, or 13 14 otherwise agrees Association shall with the Master Association, the Master be authorized to assume such maintenance responsibilities and to assess all costs thereof against the Owners and their Lots in equal shares, such assessments constituting a lien against each Lot which may be collected in the same manner as the lien for any assessment under the Master Declaration.

In the event that the Association or the Master Association fail to perform its responsibilities hereunder or under the Master Declaration, the City shall be authorized to assume such maintenance responsibilities and to assess all costs thereof against the Owners and their Lots in equal shares, such assessments constituting a lien against each Lot which may be collected in the

such maintenance responsibilities and to assess all costs thereof against the Owners and their Lots in equal shares, such assessments constituting a lien against each Lot which may be collected in the same manner as the lien for any assessment under the Master Declaration and this Declaration.

6.2. Owner's Responsibility. Each Owner shall be responsible for maintaining his or her Lot and all structures, driveways, sidewalks, parking areas and other improvements, comprising the Lot, except to the extent that such maintenance responsibility is assigned to or otherwise assumed by the Association or the Master Association as provided in Section 6.1. Each Owner shall be responsible for irrigating and re-seeding on sodding of lawn areas as needed; replacing landscaping materials; replacing flower beds; and maintenance, winterizing, repairing and replacing, as necessary, the irrigation and sprinkler system serving the Lot and any damage to landscaping resulting from such repairs or replacements.

In addition to any other enforcement rights, if an owner fails to properly perform his or her maintenance responsibilities, the Association may perform such maintenance responsibilities and assess all costs incurred by the Association against the Lot and the Owner in accordance with Section 11.6. The Association shall afford the owner reasonable notice and an opportunity to cure the problem prior to entry, except when entry is required due to an emergency situation.

6.3 Standard of Performance.

Except as otherwise specifically provided herein or in other instruments creating and assigning such maintenance responsibility, responsibility for maintenance shall include responsibility for repair and replacement, as necessary. All maintenance shall be performed in

ents creating and assigning such maintenance responsibility, responsibility for maintenance shall include responsibility for repair and replacement, as necessary. All maintenance shall be performed in a manner consistent with the Community-Wide Standard and all applicable covenants. The private streets shall be maintained to the standards of similarly situated public streets within the City of McKinney. Neither the Association nor an Owner shall be liable for any damage or injury occurring on, or arising out of the condition of, property which it does not own except to the extent that it has been negligent in the performance of its maintenance responsibilities.

14 15 Article VII INSURANCE AND CASUALTY LOSSES 7.1. Required Coverages. The Association, acting through its Board or its duly authorized agent, shall obtain and continue in effect if reasonably available the following types of insurance: (a) Blanket property insurance covering "risks of direct physical loss" on a "special form" basis (or comparable Coverage by whatever name denominated) for all insurable improvements on the Common Properties, if any, and on other portions of the Area of Common Responsibility to the extent that it has assumed responsibility for maintenance, repair and/or replacement in the event of a casualty. If such coverage is not generally available at reasonable cost, then "broad form" coverage may be substituted.

All property insurance policies obtained by the Association shall have policy limits sufficient to cover the full replacement cost of the insured improvements; (b) Commercial general liability policy on the Area of Common Responsibility, insuring the Association and its Members for damage or injury caused by the negligence of the Association or any of its

s; (b) Commercial general liability policy on the Area of Common Responsibility, insuring the Association and its Members for damage or injury caused by the negligence of the Association or any of its Members, employees, agents, or contractors, while acting on its behalf. If generally available at reasonable cost, the commercial general liability policy shall have a Timit of at least $1,000,000.00 per occurrence with respect to bodily injury, personal injury, and property damage, (c) Workers compensation Insurance and employers liability insurance if and to the extent required by law; (d) Directors and officers Mability coverage; (e) Fidelity insurance covering all Persons responsible for handling Association funds in an amount determined in the Board's best business judgment but not less than an amount equal to one-sixth of the annual Base Assessments on all Lots plus reserves on hand Fidelity insurance policies shall contain a waiver of all defenses based upon the exclusion of Persons serving without compensation; and Such additional insurance as the Board, in its best business judgment, determines advisable, which may include, without limitation, flood insurance, boiler and machinery insurance, and building ordinance coverage.

Premiums for all insurance on the Area of Common Responsibility shall be Common Expenses and shall be included in the Base Assessment.

7.2. Policy Requirements. The Association may arrange for an annual review of the sufficiency of insurance coverage by one or 15 16 more qualified Persons, at least one of whom must be familiar with insurable replacement costs in the metropolitan Dallas area.

the The policies may contain a reasonable deductible and amount thereof shall not be subtracted from the face amount of the

e familiar with insurable replacement costs in the metropolitan Dallas area.

the The policies may contain a reasonable deductible and amount thereof shall not be subtracted from the face amount of the policy in determining whether the policy limits satisfy the requirements of Section 7.2. In the event of an insured loss, the deductible shall be treated as a Common Expense in the same manner as the premiums for the applicable insurance coverage. However, if the Board reasonably determines, after notice and an opportunity to be heard in accordance with Section 3.23 of the By-Laws, that the loss is the result of the negligence or willful conduct of one or more Owners, their guests, invitees, or lessees, then the Board may specifically assess the full amount of such deductible against such Owner(s) and their Lots pursuant to Section A1.6.

All insurance coverage obtained by the Board shall: (a) be written with a company authorized to do business in the State of Texas which satisfies the requirements of the Federal National Mortgage Association, or such other secondary mortgage market agencies or federal agencies as the Board deems appropriate; (b) be written in the name of the Association as trustee for the benefitted parties. Policies on the Common Properties shall be for the benefit of the Association and its Members; (c) not be brought into contribution with insurance purchased by individual Owners, occupants, or their Mortgagees; (d) contain an inflation guard endorsement; and (e) include an agreed amount endorsement, if the policy contains a co-insurance clause In addition, the Board shall be required to use reasonable efforts to secure insurance policies which provide: (a) a waiver of subrogation as to any claims against the

y contains a co-insurance clause In addition, the Board shall be required to use reasonable efforts to secure insurance policies which provide: (a) a waiver of subrogation as to any claims against the Association's Board, officers, employees, and its manager, the Owners and their tenants, servants, agents, and guests; (b) a waiver of the insurer's rights to repair and reconstruct instead of paying cash; (c) an endorsement precluding cancellation, invalidation, suspension, or non-renewal by the insurer on account of any one or more individual Owners, or on account of any curable defect or violation without prior written demand to the Association to cure the defect or violation and allowance of a reasonable time to cure; 16 17 (d) an endorsement excluding individual Owners' policies from consideration under any "other insurance" clause; (e) an endorsement requiring at least 30 days' prior written notice to the Association of any cancellation, substantial modification, or non-renewal; (f) a cross liability provision; and (g) a provision vesting in the Board exclusive authority to adjust losses; provided, however, no Mortgagee having an interest in such losses may be prohibited from participating in the settlement negotiations, if any, related to the loss.

7.3. Damage and Destruction. Immediately after damage or destruction to all or any part of the properties covered by insurance written in the name of the Association, the Board or its duly authorized agent shall file and adjust all insurance claims and obtain reliable and detailed estimates of the cost of repair or reconstruction. Repair or reconstruction, as used in this paragraph, means repairing or restoring the property to substantially the condition in which it existed prior to the

of the cost of repair or reconstruction. Repair or reconstruction, as used in this paragraph, means repairing or restoring the property to substantially the condition in which it existed prior to the damage, allowing for changes improvements necessitated by changes in applicable building codes.

Any damage to or destruction of the Common Properties shall be repaired or reconstructed unless the Members representing at least 75% of the total class "A" votes in the Association, and the class "B" Member, if any, decide within 60 days after the loss not to repair or reconstruct.

If either the insurance proceeds or reliable and detailed estimates of the cost of repair or reconstruction, or both, are not available to the Association within such 60-day period, then the period shall be extended until such funds or information are available. However, such extension shall not exceed 60 additional days. No Mortgagee shall have the right to participate in the determination of whether the damage or destruction to the Common Properties shall be repaired or reconstructed.

If determined in the manner described above that the damage or destruction to the Common Properties shall not be repaired or reconstructed and no alternative improvements are authorized, the affected property shall be cleared of all debris and ruins and thereafter shall be maintained by the Association in a neat and attractive, landscaped condition consistent with the Community-Wide Standard.

Any insurance proceeds remaining after paying the costs of repair or reconstruction, or after such settlement as is necessary and appropriate, shall be retained by and for the benefit of the Association and placed in a capital improvements account. This is 17 18 a covenant for the benefit of Mortgagees and may be enforced by the

appropriate, shall be retained by and for the benefit of the Association and placed in a capital improvements account. This is 17 18 a covenant for the benefit of Mortgagees and may be enforced by the Mortgagee of any affected Lot.

If insurance proceeds are insufficient to cover the costs of repair or reconstruction, the Board of Directors may, without a vote of the Members, levy Special Assessments against the Lot Owners to cover the shortfall.

Article VIII NO PARTITION Except as permitted in this Declaration, there shall be no judicial partition of the Common Properties. No Person shall seek any judicial partition unless the Properties or such portion thereof have been removed from the provisions of this Declaration.

This Article shall not prohibit the Board from acquiring and disposing of tangible personal property nor from acquiring and disposing of real property which may or may not be subject to this Declaration.

Article IX CONDEMNATION If any part of the Common Properties shall be taken (or conveyed in lieu of and under threat of condemnation by the Board acting on the written direction of Members representing at least 67% of the total class "A" yotes in the Association and of the Declarant, as long as the Declarant owns any property subject to this Declaration or subject to annexation under Section 10.2) by any authority having the power of condemnation or eminent domain, each Owner shall be entitled to written notice. The award made for such taking shall be payable to the Association as trustee for all Owners to be disbursed as follows: If the taking involves a portion of the Common Properties on which improvements have been constructed, the Association shall restore or replace such improvements on the remaining land included

ollows: If the taking involves a portion of the Common Properties on which improvements have been constructed, the Association shall restore or replace such improvements on the remaining land included in the Common Properties to the extent available, unless within 60 days after such taking the Declarant, so long as the Declarant owns any property subject to this Declaration or subject to annexation under Section 10.2, and Members representing at least 75% of the total class "A" vote of the Association shall otherwise agree. Any such construction shall be in accordance with plans approved by the Board. The provisions of Section 7.3 regarding sufficiency of funds for the repair of damage or destruction, shall apply to such costs.

If the taking does not involve any improvements on the Common Properties, or if a decision is made not to repair or restore, or if net funds remain after any such restoration or replacement is 18 19 Board shall complete, then such award or net funds shall be disbursed to the Association and used for such purposes as the determine.

Article X ANNEXATION AND WITHDRAWAL OF PROPERTY 10.1.

Property Subject to Master Declaration.

Notwithstanding the annexation rights set forth in this Article X, no property shall hereafter be made subject to this Declaration unless at the time it is made subject hereto it is subject to the Master Declaration.

10.2.

Annexation Without Approval of Membership. Until December 31, 2014, Declarant may unilaterally subject the provisions of this Declaration all or any portion of the real property lying within a one-half mile radius of the perimeter boundaries of the property described on Exhibit "A. Declarant may assign this right to annex property, provided that such assignment

real property lying within a one-half mile radius of the perimeter boundaries of the property described on Exhibit "A. Declarant may assign this right to annex property, provided that such assignment is memorialized in a written, recorded Instrument executed by Declarant. Nothing in this Declaration shall be construed to require the Declarant or any successor to annex or develop any of the property subject to annexation in any manner whatsoever.

Such annexation shall be accomplished by filing a Supplemental Declaration annexing such property in the Public Real Estate Records of Collin County, Texas. Such Supplemental Declaration shall not require the consent of Members, but shall require the consent of the owner of such property, if other than Declarant.

Any such annexation shall be effective upon the filing for record of such Supplemental Declaration unless otherwise provided therein.

The 10.3. Annexation with Approval of Membership.

Association may annex real property to the provisions of this Declaration with the consent of the owner(s) of such property, the affirmative vote of Members representing at least 67% of the Class "A" votes of the Association represented at a meeting duly called for such purpose, and the consent of the Declarant so long as Declarant owns property subject to this Declaration or which may become subject to this Declaration in accordance with Section 10.2.

Annexation shall be accomplished by filing a Supplemental Declaration describing the property being annexed in the Public Real Estate Records of Collin County, Texas. Any such Supplemental Declaration shall be signed by the President and the Secretary of the Association, and by the owner of the annexed property. Any such annexation shall be effective upon filing unless otherwise

emental Declaration shall be signed by the President and the Secretary of the Association, and by the owner of the annexed property. Any such annexation shall be effective upon filing unless otherwise provided therein.

to 10.4.

Withdrawal of Property.

So long as it has a right annex additional property pursuant to Section 10.2, the 19 20 Declarant reserves the right to amend this Declaration for the purpose of removing property from the coverage of this Declaration, to the extent originally included in error or as a result of any changes in the Declarant's plans for the Properties, provided such withdrawal is not unequivocally contrary to the overall, uniform scheme of development for the Properties. Such withdrawal shall not require the consent of any Person except the owner of the property to be withdrawn, if other than Declarant.

10.5.

Amendment. This Article shall not be amended without the prior written consent of Declarant so long as the Declarant owns any property subject to this Declaration or subject to annexation under Section 10.2.

Article XI ASSESSMENTS Creation of Assessments.

at 11.1.

There are hereby created assessments for Association expenses as the Board may specifically authorize from time to time. There shall be three types of assessments: (a) Base Assessments to fund Common Expenses for the general benefit of all Lots; (b) Special Assessments as described in Section 11.5; and (c) Specific Assessments as described Section 11.6. Each Owner, by accepting deed or entering into a recorded contract of sale for any portion of the Properties, is deemed to covenant and agree to pay these assessments to the Association, in addition to such assessments as may be levied by the Master Association pursuant to the Master Declaration.

in

operties, is deemed to covenant and agree to pay these assessments to the Association, in addition to such assessments as may be levied by the Master Association pursuant to the Master Declaration.

in All assessments, together with interest (at a rate not to exceed the highest rate allowed by Texas law) as computed from the date the delinquency first occurs, reasonable late charges, costs, and reasonable attorney's fees, shall be a charge and continuing lien upon each Lot against which the assessment is made until paid, as more particularly provided in Section 11.7. Each such assessment, together with interest, late charges, costs, and reasonable attorneys' fees, also shall be the personal obligation of the Person who was the Owner of such Lot at the time the assessment arose. Upon a transfer of title to a Lot, the grantee shall be jointly and severally liable for any assessments and other charges due at the time of conveyance. However, no first Mortgagee who obtains title to a Lot by exercising the remedies provided in its Mortgage shall be liable for unpaid assessments which accrued prior to such acquisition of title.

The Association or its designee shall, upon request, furnish to any Owner liable for any type of assessment a certificate in writing signed by an Association officer setting forth whether such assessment has been paid. Such certificate shall be conclusive evidence of payment. The Association may require the advance 20 201 payment of a reasonable processing fee for the issuance of such certificate.

Assessments shall be paid in such manner and on such dates as the Board may establish. If the Board so elects, assessments may be paid in two or more installments, and in such case, may include a time-price differential charge, in the Board's discretion.

ates as the Board may establish. If the Board so elects, assessments may be paid in two or more installments, and in such case, may include a time-price differential charge, in the Board's discretion.

Unless the Board otherwise provides, the Base Assessment shall be due and payable in advance on the first day of each fiscal year and shall be considered delinquent if not paid within the time specified by the Board. If any Owner is delinquent in paying any assessments or other charges levied on his Lot, the Board may require any unpaid installments of all outstanding assessments to be paid in full immediately. The Association shall have the right to reject partial payments of an unpaid assessment, or other monetary obligation and demand the full payment thereof The Board may further prescribe: (a) procedures for collecting Base Assessments or installments thereof in advance from new Owners out of "closing transactions"; and (b) different procedures for collecting assessments from Owners who have had a history of being untimely in the payment of assessments.

No Owner may exempt himself from liability for assessments by non-use of the Common Properties, abandonment of his Lot, or any other means. The obligation to pay assessments is a separate and independent covenant on the part of each owner. No diminution or abatement of assessments or set off shall be claimed or allowed for any alleged failure of the Association or Board to take some action or perform some function required of it, or for inconvenience or discomfort arising from the making of repairs or improvements, or from any other action it takes.

All agreements between any Owner and the Association and/or Declarant are expressly limited so that the amount of interest

rom the making of repairs or improvements, or from any other action it takes.

All agreements between any Owner and the Association and/or Declarant are expressly limited so that the amount of interest charged, collected, or received on account of such agreement shall never exceed the maximum amount permitted by applicable law. If under any circumstances fulfillment of any provision of this Declaration or of any other document requires exceeding the lawful maximum interest rates, then, ipso facto, the obligation shall be reduced to comply with such lawful limits. If an amount received by the Association and/or Declarant should be deemed to be excessive interest, then the amount of such excess shall be applied to reduce the unpaid principal and not to the payment of interest.

If such excessive interest exceeds the unpaid balance due to the Association and/or Declarant, then such excess shall be refunded to Owner.

The Association is specifically authorized to enter into subsidy contracts or contracts for "in kind" contribution of services, materials, or a combination of services and materials with the Declarant or other Persons for payment of Common Expenses.

21 22 11.2.

Declarant's Obligation for Assessments. During the Class "B" Control Period, Declarant may annually elect either to pay Base Assessments on its unsold Lots in the same manner as any other Owner, or to pay the difference between the amount of assessments levied on all other Lots subject to assessment and the amount of actual expenditures by the Association during the fiscal year. Such obligations may be satisfied in the form of cash or by "in kind" contributions of services or materials, or by a combination of these.

11.3.

Computation of Base Assessment.

uring the fiscal year. Such obligations may be satisfied in the form of cash or by "in kind" contributions of services or materials, or by a combination of these.

11.3.

Computation of Base Assessment.

(a) At least 60 days before the beginning of each fiscal year, the Board shall prepare a budget covering the estimated Common Expenses for the coming year, including capital contribution to establish a reserve fund in accordance with a budget separately prepared, if required by Section 14.4.

Base Assessments shall be levied equally on all Lots subject to assessment under Section 11.8, except that in the Board's discretion, Lots for which a certificate of occupancy has been issued ("improved Lots") may be assessed at a higher rate than Lots without a completed dwelling ("unimproved Lots") to reflect the cost of any services provided by the Association only to improved Lots. The Board may fix the annual Base Assessment for each Lot without a vote of the membership, provided the Base Assessment does not exceed the limitation on assessments set forth in subsection (b) below; otherwise, the Base Assessment shall be subject to the approval of Members holding at least 67% of the Class "A" votes represented in person or by proxy at a meeting duly called for that purpose and the consent of the class "B" Member, if any.

In determining the level of assessments, the Board, in its discretion, may consider other sources of funds available to the Association. In addition, the Board may take into account the number of Lots subject to assessment under Section 11.8 on the first day of the fiscal year for which the budget is prepared and the number of Lots reasonably anticipated to become subject to assessment during the fiscal year.

assessment under Section 11.8 on the first day of the fiscal year for which the budget is prepared and the number of Lots reasonably anticipated to become subject to assessment during the fiscal year.

So long as the Declarant has the right unilaterally to annex additional property pursuant to Section 10.2, the Declarant may, but shall not be obligated to, reduce the Base Assessment for any fiscal year by payment of a subsidy (in addition to any amounts paid by Declarant under Section 11.2). Any such subsidy shall be conspicuously disclosed as a line item in the Common Expense budget and shall be made known to the membership. The payment of such subsidy in any year shall under no circumstances obligate the Declarant to continue payment of such subsidy in future years, unless otherwise provided in a written agreement between the Association and the Declarant.

22 23 The Board shall send a copy of the budget and notice of the amount of the Base Assessment for the following year to each Owner at least 30 days prior to the beginning of the fiscal year for which it is to be effective. If the Board fails for any reason to determine the budget for any year, then until such time as a budget is determined, the budget in effect for the immediately preceding year shall continue for the current year.

(b) Limitation on Base Assessments. Although the Board may elect to levy assessments in a lesser amount, the annual Base Assessment for the Association's 1995 fiscal year shall not exceed the equivalent of $100.00 per month per Lot. The maximum Base Assessment which may be levied in any subsequent fiscal year without approval of the Members as set forth in subsection (a) above shall be determined by increasing the maximum Base Assessment

mum Base Assessment which may be levied in any subsequent fiscal year without approval of the Members as set forth in subsection (a) above shall be determined by increasing the maximum Base Assessment which could have been levied for the previous fiscal year by the greater of ten percent (10%) or the percentage increase in the Consumer Price Index for All Urban Consumers (Dallas-Fort Worth Area; Base: 1982-1984 100) published by the Bureau of Labor Statistics of the U.S. Department of Labor ("OPIN. In the event the compilation and/or publication of the cpf shall be substantially revised, transferred to any other governmental department or bureau or agency or shall be discontinued, then the index (or a substitute procedure which reasonably reflects and monitors fluctuations in consumer prices) most nearly the same as the CPI shall be used to make the calculations envisioned herein, or in the event no such alternative index exists or a dispute arises concerning the selection of such alternative index, the Board shall have the final right and power to select and/or formulate such an alternate index.

11.4.

Reserve Budget and Capital Contribution. The Board shall annually prepare a reserve budget for maintenance of private streets and other improvements to the Common Properties which takes into account the number and nature of any replaceable assets which the Association owns or for which it is otherwise responsible, the expected life of each asset, and the expected repair or replacement cost. The Board shall set the required capital contribution, if any, in an amount sufficient to permit meeting the projected needs of the Association, as shown on the budget, with respect both to amount and timing by annual Base Assessments over the budget

ion, if any, in an amount sufficient to permit meeting the projected needs of the Association, as shown on the budget, with respect both to amount and timing by annual Base Assessments over the budget period The reserve fund shall not be co-mingled with other funds of the Association. The Association shall cause an annual review to be performed by a certified public accounting firm to verify the amount in the reserve fund and shall provide a copy of the review to the city of McKinney. If at any time the private streets are dedicated to the city of McKinney or converted to public streets, the City shall be entitled to that portion of the monies in the reserve fund allocated to maintenance, repair and replacement of the streets so dedicated. The reserve budgets will be based upon the initial construction value of the private streets.

Notwithstanding the foregoing, the fund shall have a 23 reserve 24 balance commencing upon the sale of a Lot to a third party (residence) but no later than one year after the recordation hereof, and thereafter, at all times. The reserve fund shall be equal to the total replacement cost of the private streets and other improvements divided by the average life expectancy of those improvements times the age of the improvements.

Special Assessments.

or 11.5.

In addition to other authorized assessments, the Association may levy Special Assessments from time to time to cover unbudgeted (expenses expenses in excess of those budgeted. Except as otherwise specifically provided in this Declaration, any Special Assessment which, when added to the Base Assessment, would require payments during any fiscal year to exceed the limitation on Base Assessments set forth in Section 11.3(b), shall require the affirmative vote or

which, when added to the Base Assessment, would require payments during any fiscal year to exceed the limitation on Base Assessments set forth in Section 11.3(b), shall require the affirmative vote or written consent of class "A" Members representing at least 51% of the total class "A" votes, and the written consent of the class "B" Member, if such exists. Special Assessments shall be payable in such manner and at such times as determined by the Board, and if so determined by the Board, may be payable in installments extending beyond the fiscal year in which the Special Assessment is approved.

a Specific Assessments 11.6.

The Board shall have the power to levy a Specific Assessment against any Lot or Lots for monetary fines authorized by this Declaration or the By-Laws, and for expenses of the Association incurred in providing benefits, items, or services not provided to all Lots within the Properties, whether such expenses are incurred (a) upon request of the Owner of a Lot for specific items or services relating to the Lot, or (b) as consequence of the conduct of less than all Owners, their tenants, invitees, or guests. The Association may also levy a Specific Assessment against any bot to reimburse the Association for costs incurred in bringing the Lot into compliance with the provisions of the Declaration, any applicable Supplemental Declaration, the Articles, the By-Laws, and rules, provided the Board gives prior notice to the Lot Owner and an opportunity for a hearing in accordance with Section 3.23 of the By-Laws.

11..

Lien for Assessments; Remedies for Nonpayment.

(a) The Declarant does hereby establish, reserve, create and subject each Lot to a perfected contractual lien in favor of the Association and City, as such lien rights inure to said city under

ayment.

(a) The Declarant does hereby establish, reserve, create and subject each Lot to a perfected contractual lien in favor of the Association and City, as such lien rights inure to said city under 17.12 hereof, to secure payment of delinquent assessments owed on account of ✓ such Lot, as well as interest (subject to the limitations of Texas law), late charges and costs of collection (including, without limitation, attorneys fees). Such lien shall be prior and superior to all other liens, except (a) the liens of all taxes, bonds, assessments, and other levies which by law would be superior thereto, (b) the lien or charge of any first Mortgage of record (meaning any recorded Mortgage with first priority over other Mortgages) made in good faith and for value; and (c) the lien 24 25 for assessments or other charges of the Master Association.

Declarant hereby assigns such lien to the Association without recourse. The lien shall be self operative, and shall continue in inchoate form without being reserved or referenced in any deed or other document and without any other action required. Such lien, when delinquent, may be enforced by suit, judgment, and judicial or nonjudicial foreclosure in accordance with Texas law.

The Association may bid for the Lot at the foreclosure sale and acquire, hold, lease, mortgage, and convey the Lot. While a Lot is owned by the Association following foreclosure: (a) no right to vote shall be exercised on its behalf; (b) no assessment shall be levied on it; and (c) each other Lot shall be charged, in addition to its usual assessment, its equal pro rata share of the assessment that would have been charged such Lot had it not been acquired by the Association. The Association may sue for unpaid

d, in addition to its usual assessment, its equal pro rata share of the assessment that would have been charged such Lot had it not been acquired by the Association. The Association may sue for unpaid Common Expenses and costs without foreclosing or waiving the lien securing the same.

The sale or transfer of any Lot shall not affect the assessment lien or relieve such Lot from the lien for any subsequent assessments. However the sale or transfer of any Lot pursuant to foreclosure of the first Mortgage shall extinguish the lien as to any installments of such assessments due prior to such sale or transfer. A Mortgagee or other purchaser of a Lot who obtains title pursuant to foreclosure of the Mortgage shall not be personally liable for assessments on such Lot due prior to such acquisition of title. Such unpaid assessments shall be deemed to be Common Expenses collectible from owners of all Lots subject to assessment under Section 11.8, including such acquirer, its successors and assigns.

(b) The Association may give written notification to the holder(s) of any Mortgage on the Lot of any non-paying Owner of such Owner's default in paying any assessment, charge or fine, but the Association shall not be obligated to provide such notification unless the Association has been furnished in writing with the correct name and address of the Mortgagee and a written request to receive such notification.

(c) The Association may, at its discretion but subject to all applicable debt collection statutes: (i) prepare and file a lien affidavit in the public records of Collin County, Texas which specifically identifies the unpaid assessments, charges or fines; and (ii) publish and post, within one or more locations within the

lien affidavit in the public records of Collin County, Texas which specifically identifies the unpaid assessments, charges or fines; and (ii) publish and post, within one or more locations within the Properties, a list of those Persons or entities who are delinquent and, if applicable, their suspended use and enjoyment of the Common Properties until and unless the delinquency has been cured to the reasonable satisfaction of the Association. Each Owner consents to these procedures and authorizes the Board to undertake such measures for the general benefit of the Association.

25 26 11.8.

Date of Commencement of Assessments. The obligation to pay assessments shall commence as to each Lot on the first day of the month following: (a) the month in which the Lot is made subject to this Declaration, or (b) the month in which the Board first determines a budget and levies assessments pursuant to this Article, whichever is later. The first annual Base Assessment levied on each Lot shall be adjusted according to the number of months remaining in the fiscal year at the time assessments commence on the Lot.

11.9.

Failure to Assess. Failure of the Board to fix assessment amounts or rates or to deliver or mail each Owner an assessment notice shall not be deemed a waiver, modification, or a release of any Owner from the obligation to pay assessments. In such event, each Owner shall continue to pay Base Assessments on the same basis as for the last year for which an assessment was made, if any, until a new assessment is made at which time the Association may retroactively assess any shortfalls in collections.

12.1.

Article XII 3 ARCHITECTURAL STANDARDS General. No structure shall be placed, erected, or installed upon any Lot, and no Ymprovements (including staking,

ely assess any shortfalls in collections.

12.1.

Article XII 3 ARCHITECTURAL STANDARDS General. No structure shall be placed, erected, or installed upon any Lot, and no Ymprovements (including staking, clearing, excavation, grading and other site work), exterior alteration of existing improvements, or planting or removal of landscaping materials, shall take place except in compliance with the architectural review procedures and restrictions set forth in the Master Declaration and the Subdivision Design Guidelines applicable to the Properties.

12.2.

Guidelines and Procedures.

The Declarant may adopt and amend design standards and guidelines ("Subdivision Design Guidelines") governing construction and modifications to Lots. Such standards and guidelines shall be consistent with the rules and guidelines promulgated by the Master Architectural Review Committee (MARC) established pursuant to the Master Declaration. Notwithstanding the above, the Subdivision Design Guidelines may be stricter than the master design guidelines established pursuant to the Master Declaration. Any amendments to the Subdivision Design Guidelines shall apply to construction and modifications commenced after the date of such amendment only and shall not apply to require modifications to or removal of structures previously approved once the approved construction or modification has commenced.

The Board or MARC shall make the Subdivision Design Guidelines available to Owners who seek to engage in any construction on or modifications to their Lots and all Persons shall conduct their activities in accordance with such Subdivision Design Guidelines.

26 27 The MARC may also promulgate, as part of the Subdivision Design Guidelines, detailed procedures and standards governing architectural review process.

the

with such Subdivision Design Guidelines.

26 27 The MARC may also promulgate, as part of the Subdivision Design Guidelines, detailed procedures and standards governing architectural review process.

the 12.3.

No Waiver of Future Approvals. Approval of proposals, plans and specifications, or drawings for any work done or proposed, or in connection with any other matter requiring approval, shall not be deemed to constitute a waiver of the right to withhold approval as to any similar proposals, plans and specifications, drawings, or other matters subsequently or additionally submitted for approval.

12.4.

Enforcement. Any structure or improvement placed or made in violation of this Article shall be deemed to be nonconforming. Upon written request from the Board or the Declarant, Owners shall, at their own cost and expense, remove such structure or improvement and restore the land to substantially the same condition as existed prior to the nonconforming work Should an Owner fail to remove and restore as required, the Beard or its designees shall have the right to enter the property, remove the violation, and restore the property to substantially the same condition as previously existed. All costs, together with the interest at the maximum rate then allowed by law, may be assessed against the benefitted Lot and collected as a Specific Assessment.

Any contractor, subcontractor, agent, employee, or other invitee of an Owner who fails to comply with the terms and provisions of this Article and the Subdivision Design Guidelines may be excluded by the Board from the properties, subject to the notice and hearing procedures contained in the By-Laws. In such event, neither the Association, its officers, or directors shall be

nes may be excluded by the Board from the properties, subject to the notice and hearing procedures contained in the By-Laws. In such event, neither the Association, its officers, or directors shall be held liable to any Person for exercising the rights granted by this paragraph.

In addition to the foregoing, the Association shall have the authority and standing to pursue all legal and equitable remedies available to enforce the provisions of this Article and the decisions of the MARC.

UP 13.1.

(a) Article XIII USE RESTRICTIONS AND RULES Plan of Development; Applicability; Effect.

Declarant has established a general plan of development for the Properties as a Village under the Master Declaration in order to protect the Owners' collective interests, and the aesthetics and environment within the Properties. In furtherance of that general plan, the Master Declaration, this Declaration, and the guidelines, rules and restrictions promulgated pursuant to the Master Declaration and this Declaration, establish affirmative and 27 28 negative covenants, easements, and restrictions on the Properties, subject to certain rights vested in the Board and the Members to enable them to respond to changes in circumstances, conditions, needs, and desires within the community.

(b) All provisions of the Master Declaration, this Declaration and any Association rules shall apply to all Owners, occupants, tenants, guests and invitees of any Lot. Any lease on any Lot shall provide that the lessee and all occupants of the leased Lot shall be bound by the terms of the Master Declaration, this Declaration, the By-Laws, and the rules of the Association and the Master Association.

13.2.

Authority to Promulgate Use Restrictions and Rules.

l be bound by the terms of the Master Declaration, this Declaration, the By-Laws, and the rules of the Association and the Master Association.

13.2.

Authority to Promulgate Use Restrictions and Rules.

Initial use restrictions applicable to the Properties are attached as Exhibit "B" to this Declaration. Subject to the terms of this Article, such initial use restrictions may be modified in whole or in part, repealed or expanded as follows: (a) In accordance with its duty to exercise business judgment and reasonableness on behalf of the Association and its Members, the Board, with the consent of the Declarant as long as the Declarant owns property subject to this Declaration or subject to annexation under Section 10.2, may adopt rules which modify, cancel, limit, create exceptions to or expand the initial use restrictions set forth on Exhibit B. " (b) In addition, the Members, at a meeting duly called for such purpose as provided in By-Laws Section 2.4, may adopt rules which modify, cancel, limit, create exceptions to, or expand the use restrictions and rules previously adopted by a vote of 2/3 of the total class "A" votes and the approval of the Class "B" Member, if any.

(c) At least 30 days prior to the effective date of any such action under subsections (a) or (b) of this Section, the Board shall send a copy of the rule to each Owner. The Association shall provide without cost, a copy of the use restrictions and rules then in effect (hereafter "Use Restrictions and Rules") to any requesting Member or Mortgagee.

13.3.

Owners' Acknowledgment. All Owners and occupants of Lots are given notice that use of their Lots is limited by the Use Restrictions and Rules as they may be amended, expanded and otherwise modified hereunder. Each Owner, by acceptance of a deed,

nts of Lots are given notice that use of their Lots is limited by the Use Restrictions and Rules as they may be amended, expanded and otherwise modified hereunder. Each Owner, by acceptance of a deed, acknowledges and agrees that the use and enjoyment and marketability of his or her Lot can be affected by this provision and that the Use Restrictions and Rules may change from time to time.

13.4.

Rights of Owners. Except as may be specifically set forth in the Master Declaration (either initially or by amendment) 28 29