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Article XIV - Protection of Lenders

Phase 1, Parcel 1 of Parcel Map No. 79-756
City of Orange, County of Orange
State of California

Article XIV
Protection of Lenders

Section 1. Written Notification to First Mortgages
A first mortgage, upon request, is entitled to written notice from the Board of any default in the performance of an individual condominium mortgagor of any obligation under this Declaration, the By-Laws and Articles of Incorporation, which is not cured within thirty (30) days. It shall be the responsibility of each owner of a condominium to notify the Association within thirty (30) days of the close of his escrow to purchase a condominium, of the name and address of the holder of his first mortgage on his particular condominium.

Section 2. Exemption from Right of First Refusal
Any first mortgage which comes into possession of the condominium pursuant to the remedies provided in the mortgage of foreclosure of the mortgage, shall be exempt from any right of first refusal.

Section 3. Subordination of Assessment Lien to Mortgage
Any holder of a mortgage which comes into possession of the condominium pursuant to the remedies provided in the mortgage or foreclosure of his mortgage, shall take the property free of any claim for unpaid assessments or charges against the mortgaged condominium, except for claims for a share of such assessments or charges resulting from reallocation of such assessments or charges to all residential units, including the mortgaged unit. The lien assessments provided for herein shall be subordinate to the lien of any mortgage or deed of trust now or hereafter placed on the properties subject to assessments; provided that, such subordination shall apply only to assessments which have become due and payable prior to a sale or transfer of such property pursuant to a decree of foreclosure or trustee's sale. Such transfer or sale shall not relieve such property from liability for any assessments thereafter becoming due, nor from the lien of any such subsequent assessment.

Section 4. Leasing
Any lease agreement between a condominium owner and a lessee shall be required to provide that the terms of the lease shall be subject, in all respects, to the provisions of this Declaration and Association By-Laws, and that any failure by a lessee to comply with the terms of such documents, shall be a default under the lease. All leases shall be required to be in writing. Further, with the exception of a lender in possession of a condominium unit following a default in a first mortgage, a foreclosure proceeding or any deed or other arrangement in lieu of foreclosure, no unit owner shall be permitted to lease his unit for transient or hotel purposes. No unit owner may lease less than the entire unit. Other than the foregoing, there is no restriction on the right of any condominium owner to lease his condominium.

Section 5. Prior Approval of First Mortgage Holders
Unless at least seventy-five (75%) percent of holder of first mortgage liens on individual condominiums have given their prior written approval, neither the Association, nor any individual owner shall:

(a) By act or omission, seek to abandon or terminate the condominium regime;

(b) Change the pro rata interest or obligation of any condominium for purpose of levying assessments or charges or allocating distributions of hazard insurance proceeds, or condemnation awards, and for determining the pro rata share of ownership of each condominium in appurtenant real estate and any improvements thereon which are owned by condominium owners in the project in undivided pro rata interests ("Common Area");

(c) By act or omission, change, waive or abandon any scheme of regulation or enforcement thereof, pertaining to the architectural design or exterior appearance of any condominium, exterior maintenance of condominiums, maintenance of driveways or upkeep of landscaping in the project;

(d) Partition or subdivide any condominium without the prior written approval of at least the holder of the first mortgage lien on such condominium;

(e) By act or omission seek to abandon, partition, subdivide, encumber, release, hypothecate, sell or transfer the Common Area. The granting of easements for public utilities or for other public purposes consistent with the intended use of the Common Area by the project, shall not be deemed a transfer within the meaning of this clause;

(f) Fail to maintain fire and extended coverage on insurable project common property and condominium on a current replacement cost basis in an amount not less than one hundred (100%) percent of the insurable value, based on current replacement costs;

(g) Use hazard insurance proceeds for losses to any project common property for other than repair, replacement or reconstruction of such improvements;

(h) Make material amendments to the Declaration and/or the By-laws

Section 6. Examination of Books and Records
The holders of first mortgages shall have the right to examine the books and records of the Association.

Section 7. Taxes, Assessments and Charges
All taxes, charges and assessments which may become liens prior to first mortgages under local law, shall relate only to the individual condominiums and not to the project as a whole. First mortgagees of condominiums may jointly and singly pay taxes or other charges which are in default and which may or have become a charge against the common property and may pay overdue premiums on hazard insurance policies or secure new hazard insurance coverage on the lapse of a policy for such property and first mortgagees making such payments shall be owed immediate reimbursement therefore from the Association.

Section 8. Reserves for Replacement
An adequate reserve fund for replacement of the Common Area facilities must be established by the Association and must be funded by regular monthly assessments, rather than by special assessments.

Section 9. No Priority Over Rights of First Mortgagees
No provision herein shall give a condominium owner, or any other party, priority over any rights of first mortgagees of condominiums pursuant to their mortgages in the case of a distribution to condominium owners of insurance proceeds or condemnation awards for losses to or a taking of condominiums and/or the Common Area. Such first mortgagees shall be entitled to timely written notice of any such damage or destruction of the Common Area, if such loss or taking exceeds $10,000.00, or damage to a condominium covered by a mortgage exceeds $1,000.00. Additionally, if any condominium or portion thereof is made the subject matter of any condemnation or eminent domain proceeding, no provision herein shall entitle the owner of a condominium, or any other party, to priority over a first mortgagee of a condominium with respect to any distribution to such condominium of the proceeds of any award or settlement. Such first mortgagees shall be entitled to timely written notice of any such proceeding or proposed acquisition.

Section 10. Further Notice to Lenders

(a) The Association shall give written notice to any first mortgagee, upon such mortgagee's request, of all meetings of the Association. Each such first lien holder shall have the right to be represented as such meetings, but shall have no voting rights, unless it has succeeded to title to one or more of the condominiums by foreclosure.

(b) The Association shall deliver to each such first mortgagee, a copy of the Association's annual audited statement within ninety (90) days after the end of the Association's fiscal year.

Section 11. Professional Management of Project
Any agreement for professional management of the project shall provide that any management contract or any agreement with Declarant, may be terminated, with or without cause, on ninety (90) days notice without payment of a termination fee and that the maximum term of such contract shall be one (1) year. In the event the Association determines to terminate professional management and assume self-management of the project, the prior written approval of at least holders of seventy-five (75%) percent of the first mortgages shall be required.

Section 12. Conflict
If there is any conflict between any provisions of this Article XIV and any other provisions in this Declaration, or in the Association By-laws, the language contained in this Article XIV, shall control.




For URGENT/EMERGENCY MAINTENANCE (Flooding, sewage, roof collapse, etc.)
Contact: Huntington West Properties
@ 714-891-1522, 24 hours a day, 7 days a week. After hours, press the number "4" to be connected to an operator.

DIAL 911 if you have a life threatening situation, need fire, medical or police assistance.

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