DECLARATION
AND
COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS
AND RESERVATIONS
MORGAN CREEK
Table of Contents
Page
ARTICLE 1. DEFINITIONS................................... 6
Section 1.1 Words Defined........................... 6
Section 1.2 Form of Words........................... 8
ARTICLE 2. COMMON AREAS AND EASEMENTS.................... 8
Section 2.1 Common Areas............................ 8
Section 2.2 Association to Maintain Common Areas.... 8
Section 2.3 Alteration of Common Area............... 8
Section 2.4 Easement for Utilities and Drainage..... 8
ARTICLE 3. CONSTRUCTION ON LOTS AND USE OF LOTS.......... 9
Section 3.1 Uniformity of Use and Appearance........ 9
Section 3.15 Building Materials...................... 9
Section 3.2 Submission of Plans.................... 10
Section 3.3 Construction........................... 10
Section 3.4 Minimum Size........................... 11
3.4.1 Floor Area............................. 11
3.4.2 Lot Size............................... 11
Section 3.5 Maximum Height......................... 11
Section 3.6 Use Restrictions....................... 11
3.6.1 Residential Use........................ 11
3.6.2 Maintenance of Buildings and Lots...... 11
3.6.3 Completion of Construction............. 11
3.6.4 Parking................................ 11
3.6.5 Signs.................................. 12
3.6.6 Animals................................ 12
3.6.7 Hunting................................ 12
3.6.8 Temporary Structures................... 12
3.6.9 Clothes Lines.......................... 12
3.6.10 Radio and Television Aerials........... 12
3.6.11 Trash Containers and Debris............ 12
3.6.12 Offensive Activity..................... 13
3.6.13 Setbacks............................... 13
3.6.14 Fences................................. 13
3.6.15 Underground Utilities.................. 13
3.6.16 Drainage............................... 13
3.6.17 Tree Cutting........................... 14
3.6.18 Damage................................. 14
3.6.19 Driveways.............................. 14
3.6.20 No Access To BD-Ravensdale Road........ 14
3.6.21 Tract Maintenance...................... 14
3.6.22 View Control Plan...................... 15
3.6.23 Mailboxes.............................. 15
3.6.24 Compliance with Laws................... 16
Section 3.7 Solar Panel............................ 16
Section 3.8
Maintenance of Lots During the
Construction Period..................... 16
Page
ARTICLE 4. HOME/LOT OWNERS ASSOCIATION.................. 16
Section 4.1 Form of Association.................... 16
Section 4.2 Board of Directors..................... 16
Section 4.3 Qualification for Membership........... 17
Section 4.4 Transfer of Membership................. 17
Section 4.5 Number of Votes........................ 17
Section 4.6 Voting................................. 17
Section 4.7 Pledged Votes.......................... 17
Section 4.8 Annual and Special Meetings............ 18
Section 4.9 Books and Records...................... 18
Section 4.10 Transition Date........................ 18
ARTICLE 5. NOTICES FOR ALL PURPOSES..................... 18
ARTICLE 6. AUTHORITY OF THE BOARD....................... 19
Section 6.1 Adoption of Rules and Regulations...... 19
Section 6.2 Enforcement of Declaration, Etc........ 19
Section 6.3 Goods and Services..................... 19
Section 6.4 Protection of Commons Areas............ 19
ARTICLE 7. ASSOCIATION BUDGET, ASSESSMENTS, AND LIENS... 20
Section 7.1 Owner's Covenant to Pay Assessments.... 20
Section 7.2 Association Budget..................... 20
Section 7.3 Levy of General Assessment............. 20
Section 7.35 Initial Capital Contribution........... 21
Section 7.4 Payment of General Assessment.......... 21
Section 7.5 Non-Discriminatory Assessment.......... 21
Section 7.6 Commencement of Assessments............ 22
Section 7.7 Certificate of Assessment Payment...... 22
Section 7.8 Special Assessments.................... 22
Section 7.9 Effect of Non-Payment of Assessment.... 22
Section 7.10 Lien to Secure Payment of Assessments.. 23
Section 7.11 Suspension for Non-Payment of Assessment 23
Section 7.12 Reserves for Replacement............... 23
ARTICLE 8. Subordination of Liens....................... 24
Section 8.1 Intent of Provisions................... 24
Section 8.2 Mortgagee's Non-Liability.............. 24
Section 8.3 Mortgagee's Rights during Foreclosure.. 24
Section 8.4 Mortgagee as Owner..................... 24
Section 8.5
Mortgagee's Title Free and Clear of
Liens................................... 24
Section 8.6 Survival of Assessment Obligations..... 24
Section 8.7 Subordination of Assessment Liens...... 25
ARTICLE 9.
FAILURE OF BOARD TO INSIST ON STRICT
PERFORMANCE NO WAIVER........................ 25
ARTICLE 10. LIMITATION OF LIABILITY...................... 25
Page
ARTICLE 11. INDEMNIFICATION.............................. 25
ARTICLE 12. INSURANCE.................................... 26
ARTICLE 13. DAMAGE AND REPAIR OF DAMAGE TO PROPERTY...... 26
ARTICLE 14. AMENDMENTS OF DECLARATION.................... 26
ARTICLE 15. ANNEXATION AND SUBDIVISION................... 26
ARTICLE 16. DURATION..................................... 27
ARTICLE 17.
RESERVATION OF DECLARANT'S RIGHT TO
AMEND TO COMPLY WITH FNMA, FHLMC, OR FHA
REQUIREMENTS................................. 27
Section 17.1 Amendment by Declarant................. 27
Section 17.2 Authorization to Amend................. 27
Section 17.3 Duration............................... 27
ARTICLE 18. SEVERABILITY................................. 27
ARTICLE 19. EFFECTIVE DATE............................... 28
ARTICLE 20. ASSIGNMENT BY DECLARANT...................... 28
EXHIBIT PROPERTY DESCRIPTION......................... 29
THIS DECLARATION AND COVENANTS, CONDITIONS, RESTRICTIONS, EASEMENTS AND RESERVATIONS FOR MORGAN CREEK (the "Declaration") is made by Palmer Coking Coal Company, a Washington Partnership ("Declarant") as of this____ day of ____________, 1993
RECITALS
Declarant is the owner of certain real property (the "Property") in King County, Washington, legally described on Exhibit 1 hereto.
The property is subdivided as shown in _______________ recorded in Volume _______ of Plats, pages ________________, records of King County, Washington.
Declarant wishes to subject the Property to this Declaration
NOW, THEREFORE, Declarant declares that the Property subject to all restrictions and easements of said plat, shall be held, transferred, sold, conveyed, leased, used and occupied subject to the covenants, conditions, restrictions, easements, assessments, and liens hereinafter set forth which are for the purpose of protecting the value and desirability of and which shall touch and concern and run with title to the Property and which shall be binding on all parties having any right, title, or interest in the Property or any portion thereof, and their respective heirs, successors and assigns, and shall insure to the benefit of each owner thereof.
ARTICLE 1. DEFINITIONS
Section 1.1 Words Defined. For the purpose of this Declaration and any amendments hereto, the following terms shall have the following meanings and all definitions shall be applicable to the singular and plural forms of such terms:
1.1.1 "Association" shall mean MORGAN CREEK Homeowners' Association described in Article 4 of this Declaration, its successor and assigns.
1.1.2 "Board" shall mean the Board of Directors of the Association.
1.1.3 "Common Area" and "Common Area Improvements" shall each have the meaning set forth in Section 2.1.
1.1.4 "Construction" and "Constructed" shall mean any construction, reconstruction, erection or alteration of an Improvement, except wholly interior alterations to a then existing Structure.
1.1.5 "Declarant" shall mean Palmer Coking Coal Company, a Washington Partnership.
1.1.6 "Declaration" shall mean this Declaration of Covenants, Conditions, Restrictions, and Reservations for MORGAN CREEK, as it may from time to time be amended.
1.1.7 "First Mortgage" and "First Mortgagee" shall mean, respectively, (a) a recorded Mortgage on a Lot that has legal priority over all other Mortgagees thereon, an (b) the holder of a first Mortgage. For purposes of determining the percentage of First Mortgagees approving a proposed decision or course of action in cases where a Mortgagee holds First Mortgages on more than one Lot, such Mortgagee shall be deemed separate Mortgagee for each such First Mortgage so held.
1.1.8 "Lot" shall mean any one of the 129 lots numbered lots 1 through 129, together with the structures and improvements, if any, thereon.
1.1.9 "Mortgage" shall mean a recorded Mortgage or Deed of Trust that creates a lien against a Lot and shall also mean a real estate contract for the sale of a Lot.
1.1.10 "Mortgagee" shall mean the beneficial owner, or the designee of the beneficial owner, of an encumbrance on a Lot created by mortgage or deed of trust and shall also mean the vendor, or the designee of a vendor, of a real estate contract for the sale of a Lot.
1.1.11 "Owner" shall mean the record owner, whether one or more Persons, of fee simple title to a Lot within the Property, including a contract seller except those having such interest merely for the performance of an obligation.
1.1.12 "Participating Builder" shall mean a Person who acquires from Declarant two or more Lots for the purpose of improving the same for resale to future Owners.
1.1.13 "Person" shall mean an individual, corporation, partnership, association, trustee, or other legal entity.
1.1.14 "Plat" shall mean the recorded plat of MORGAN CREEK and any amendments, corrections or addenda thereto subsequently recorded.
1.1.15 "Property" shall mean the land described on Exhibit 1 and such additions thereto as may hereafter be subjected to the terms of the Declaration, and all improvements and structures now or hereafter placed on the land.
1.1.16 "Structure" shall mean any building, fence, wall, driveway, walkway, patio, deck, swimming pool, or the like.
1.1.17 "Transition Date" is defined in Section 4.10.
Section 1.2 Form of Words. The singular form of words shall include the plural and the plural shall include the singular. Masculine, feminine, and neuter pronouns shall be used interchangeably.
ARTICLE 2. COMMON AREAS AND EASEMENTS
Section 2.1 Common Areas. "Common Areas" and "Common Area Improvements" shall include any and all easements, improvements, and facilities reserved, set forth, described, or depicted in a Plat of any portion of the Property including, without limitation, access easements, storm water retention and detention systems and easements, cutoff drains, drainage channels and easements, sanitary sewer easements, trails, pedestrian trail-ingress/egress easements and landscape easements. In addition, Common Areas include, but are not limited to, the land described as Tract A (Morgan Creek; Morgan Creek Open Space/Forested Wetland/Trail); Tract C (Morgan Creek Open Space/Stream Buffer); Tract D (Open Space/Native Vegetation Area); Tract F (Recreation Lot); Tract G (Storm Drainage Retention Basin); Tract G' (Trail Connection); Tract H (Storm Drainage Retention Basin); Tract H' (Trail Connection); Tract I (Open Space/Recreation Area); Tract J (Open Space/Sport Court); Tract K (Open Space/Playground Area); Tract L (Trail Connection); the 10 foot drainage and pedestrian trail-ingress/egress easements (Tract "X"); Landscaping and Fencing Easement for landscaping and fencing frontage along the Black Diamond-Ravensdale Road (Tract "Y"); and the 10 foot pedestrian trail-ingress/egress easement (Tract "Z"). Common areas do not include Tract B, a privately owned 2.57 acre tract which is reserved for future development as a multi-family residential development or Tract E, a 4,506 square foot tract reserved for ingress, egress, and utilities for lots 43 and 44.
Section 2.2 Association to Maintain Common Areas. The Association shall have the right and the obligation to maintain those Common Areas not typically maintained by the City of Black Diamond.
Section 2.3 Alteration of Common Area. Nothing shall be altered or constructed upon or removed from the Common Areas except upon the prior written consent of the Board.
Section 2.4 Easements for Utilities and Drainage.
Declarant does hereby establish, create and reserve for the benefit of itself, the Association and all Owners, and their respective heirs and assigns, the following easements:
(i) An easement to the City of Black Diamond Water, Sewer, and Storm water District, TCI C.A.T.V., Washington Natural Gas Co., Puget Sound Power and Light Co., and US West Telephone Co., and their successors and assigns, under and upon the exterior 10 feet, parallel with and adjoining the street frontage of all lots and tracts, in which to install, lay, construct, renew, operated, and maintain underground conduits, cable, pipelines, water, storm and sewer mains, and wires with necessary facilities and other equipment for the purpose of service to this subdivision and other property with electric, telephone, gas, cable T.V. service, sewer, storm and water, together with the right to enter upon the lots at all times for the purposes stated; and,
(ii) An easement 2.5 feet in width, parallel with and adjacent to all interior lot lines, and 5 feet in width, parallel with and adjacent to all rear lot lines for the purpose of utilities and private drainage (hereinafter, the "Utilities and Drainage Easements"). No Lot Owner shall allow or permit any structure, fill or landscaping to be located, installed or grow upon the area subject to the Utilities and Drainage Easements which might in any way damage or interfere with the installation and operation of such utilities and systems. In particular, no lines or wires for the transmission of electric current or for telephone use, cable T.V., fire or police signals, or for other purposes, shall be placed upon any Lot outside Structures thereon unless the same shall be underground or in conduit attached to a Structure. Each person utilizing the Utilities and Drainage Easements areas located on another's lot shall promptly restore such area to a condition as close to its original condition as reasonably practical after making such use. Each Lot Owner shall maintain the area of his or her Lot subject to the Utilities and Drainage Easements in a condition which will not interfere with the operation and maintenance of said utilities and systems.
(iii) A permanent easement to Tract B over, under, and upon Tracts A and G for the purpose of access (including roads and trails); any and all utilities; private drainage; and surface water retention, detention and management purposes.
(iv) Easements, as necessary, through Tracts A, C, D, F, G, G', H, H', I, J, K, L, "X", "Y", and "Z" for the purpose of access, trails, utilities and private drainage and benefiting the Association and/or Tract B.
ARTICLE 3. CONSTRUCTION ON LOTS AND USE OF LOTS
Section 3.1 Uniformity of Use and Appearance. One of the purposes of this Declaration is to assure within the property a uniformity of use and quality of workmanship, materials, design, maintenance and location of Structures with respect to topography and finish grade elevation. It is in the best interests of each Owner that such uniformity of use be maintained as hereinafter provided. Architecture of all structures shall be limited to traditional & contemporary style architecture. No building (except for Accessory Structures) shall be erected, altered, placed or permitted to remain on any Lot other than one single family dwelling or as permitted under Section 3.6.11. Accessory Structures including storage buildings are permitted as allowed by the requirements of the Article 3. Notwithstanding anything herein set forth, the Construction of any Structure shall comply with the more restrictive of either (i) the terms and conditions of this Declaration or (ii) the laws, codes, ordinances and regulations of any governmental entity having jurisdiction.
Section 3.15 Building Materials. All homes constructed on each Lot shall be built of new materials, with the exception of "decor" items such as used brick , weathered planking, and similar items. The Board will determine whether a used material is a "decor" item. In making this determination, the Board will consider whether the material harmonizes with the aesthetic character of MORGAN CREEK development and whether the material would at to the attractive development of the subdivision. All roofs are to be cedar shake, wood fiber roofing, laminated composition roofing, or an equivalent approved by the Board. Siding and trim are to be resawn wood, lap siding or an equivalent to be approved by the Board. No T-111 or similar plywood product shall be allowed on the front elevation or side elevation facing streets of the structure.
The exterior of all construction on any Lot shall be designed, built, and maintained in such a manner as to blend in with the natural surroundings and landscaping within MORGAN CREEK. Exterior colors must be approved by the Board. Exterior trim, fences, doors, railings, decks, eaves, gutters, and the exterior finish of garages and other accessory buildings shall be designed, built and maintained to be compatible with the exterior of the structure they adjoin. All exterior paint color to be submitted to and approved by the Board.
Section 3.2 Submission of Plans. At least ten (10) days before commencing Construction of any Structure on any Lot, the Owner shall submit to the Board two (2) complete sets of detailed building, Construction, surface water run-off control and landscaping plans and specifications and a site plan showing the location of all proposed Structures (the plans, specifications and site plans are individually and collectively referred to herein as the "Plans"). The Plans shall be submitted in a form satisfactory to the Board, which may withhold its approval by reason of its reasonable dissatisfaction with the location of the Structure on the Lot; color scheme; finish; architecture; height; impact on view from another Lot or Lots; appropriateness of the proposed Structure; materials used therein; or because of by reasonable judgment of the Board, would render the proposed Structure inharmonious with the general plan of development of the Property of other Structures nearby. The Board's approval or disapproval of Plans shall be in writing and approval shall be evidenced by written endorsement on such Plans, one copy of which shall be delivered to the Owner of the Lot upon which the Structure is to be constructed. In any judicial action to enforce the Board's decision the losing party shall pay the prevailing party's attorney's fees and costs including those incurred in connection with any appeal.
Section 3.3 Construction. No structure shall be Constructed or caused to be Constructed on any Lot unless the Plans for the Structure, including landscaping, have been approved in writing by the Board (this includes storage sheds). The Board's review and approval or disapproval of Plans on the basis of cost, aesthetic design, harmony with previously approved Structures on or about other Lots in the Property, location, or consistency with this Declaration shall be absolute and enforceable in any court of competent jurisdiction. The Board's approval of any Plans, however, shall not constitute any warranty or representation whatsoever by the Board or any of its members that such Plans were examined or approved for engineering or structural integrity or sufficiency or compliance with applicable governmental laws, codes, ordinances, regulations, and setbacks and each Owner hereby releases any and all claims or possible claims against the Board or any of them, and their heirs, successors and assigns, or of any nature whatsoever, based upon engineering or structural integrity or sufficiency or compliance with applicable governmental laws, codes, ordinances, regulations, and setbacks.
Section 3.4 Minimum Size.
3.4.1 Floor Area. The floor area of the main house structure, exclusive of open porches and garages shall be not less than: (i) 1200 square feet for a dwelling containing a single level; and (ii) 1350 square feet for a dwelling containing two levels or more. All structures shall contain attached two (2) car garages.
3.4.2 Lot Size. No lot or portion of a lot in this plat shall be divided and sold or resold, or ownership change or transferred whereby the ownership of any portion of this plat shall be less than one area required for the use district in which the lot is located. At the time of this declaration, the Morgan Creek plat is contained within the City of Black Diamond's Residential zone, minimum lot size - 9,600 square feet.
Section 3.5 Maximum Height. All buildings or Structures shall be Constructed in accordance with the City of Black Diamond and other applicable Codes.
Section 3.6 Use Restrictions.
3.6.1 Residential Use. The dwellings within the Structures are intended for and restricted to use as single family residences only, on an ownership, rental, or lease basis, and for social, recreational, or other reasonable activities normally incident to such use. In addition to the foregoing, Declarant and any Participating Builder may use dwellings it owns as temporary sales offices and models for sales of other lots & homes.
3.6.2 Maintenance of Buildings and Lots. Each Owner shall, at the Owner's sole expense, keep the interior and exterior of the Structure on the Owner's Lot, as well as the Lot itself, in a clean and sanitary condition, free of rodents and pests, and in good order, condition and repair and shall do all redecorating, painting, landscaping, and maintenance at any time necessary to maintain the appearance and condition of the Structure and the Lot.
3.6.3 Completion of Construction. Any Structure erected or placed on any Lot shall be completed as to external appearance within six (6) months from the date Construction is started, however, with good cause shown, the Board may extend this term. All front yards and landscaping must be completed within three (3) months from the date of completion of the Structure, however, with good cause shown, the Board may extend this term. All lots shall be maintained in a neat and orderly condition during construction.
3.6.4 Parking. No trucks, campers, trailers, boats, motorcycles or any other vehicle or any part thereof shall be parked or permitted to remain on any Lot, unless the same is stored or placed in a garage or in the rear yard area, provided said Lot is fenced on 3 sides and item is out of public view. No such vehicles shall be parked overnight on any street adjoining any Lot; provided that such vehicles belonging to guests may occasionally be so parked.
3.6.5 Signs. No sign of any kind, except for political signs and then only for a period of 30 days prior to said election, shall be displayed to the public view on or from any Lot without the prior written consent of the Board, except for "For Rent" or "For Sale" signs in a form not prohibited by any rules and regulations of the Board. In any case, any displayed sign shall be constructed professionally, designed and displayed in a tasteful manner acceptable to the Board.
3.6.6 Animals. Animals, including horses, livestock, poultry, reptiles or pigs, shall not be kept on any lot. Household pets cannot exceed two (2) dogs and/or two (2) cats in number; provided that unweaned puppies or kittens may be kept. All animal enclosures must be kept in a clean, neat and odor free condition at all times. All household pets are to be licensed. All animals must be kept at a distance of not less than 50 feet from abutting Structures and erosion control Structures if directed by the Board. The Board may at any time require the removal of any pet which it finds disturbing other Owners or tenants unreasonably, in the Board's determination, and may exercise this authority for specific pets even though other pets are permitted to remain. Notwithstanding anything set forth herein all Owners shall comply with all applicable governmental laws, codes, ordinances, regulations and licensing requirements pertaining to animals.
3.6.7 Hunting. Hunting, stalking, trapping, feeding, or otherwise interfering with or disrupting wildlife is strictly forbidden. The discharge of firearms, crossbows, arrows, or any other weapons is also strictly forbidden.
3.6.8 Temporary Structures. No Structure of a temporary character, trailer, tent, shack, garage, barn, or other outbuilding shall be installed, placed or used on any Lot as a residence, either temporarily or permanently. Jobsite trailers and the like may be kept on site during construction of residence, so long as their appearance is kept up.
3.6.9 Clothes Lines. No washing, rugs, clothing, apparel or any other article shall be hung from the exterior of any Structure or on a Lot so as to be visible from the streets and roadways adjoining the Lots.
3.6.10 Radio and Television Aerials. No television or radio aerial shall be erected or placed on any Lot which is more than six (6) feet in height above the highest point (exclusive of chimneys) on the Structure upon which it is erected. No rotary beams, separate towers or other similar devises shall be constructed on any Lot without the written approval of the Board. No satellite receiving dishes or other such electronic receiving devices shall be located on any Lot unless within fenced yards with landscaping so as to be not visible from any street. All aerial installations must receive prior written approval from the Board.
3.6.11 Trash Containers and Debris. All trash shall be placed in sanitary containers either buried or screened so as not to be visible from adjoining Structures or streets or roadways. No Lot or any portion thereof shall be used as a dumping ground for trash or rubbish of any kind. Yard rakings, dirt and debris resulting from landscaping work or Construction shall not be dumped onto adjoining lots or streets or roadways. Compost piles may be kept upon the Lots provided they are kept in a clean, neat and sanitary condition.
3.6.12 Offensive Activity. With the exception of mineral recovery operations, operating pursuant to valid rights and operating permits, no trade, craft, business, profession, commercial or manufacturing enterprise or business or commercial activity of any kind, except day schools, nurseries, or church schools, shall be conducted or permitted on any Lot, nor shall goods, equipment, vehicles or materials used in connection therewith, be kept, parked, stored, dismantled or repaired outside of any Lot or any street within the property. No noxious or offensive activity, including but not limited to the creation of excess levels of noise, shall be carried on in any Lot, nor shall anything be done therein which may be or become an annoyance or nuisance to other Owners or tenants. Limited child day care is permitted so long as no more than four children are in attendance at any one residence. Any such day care must be strictly limited in scope of operation and receive Board approval should a written complaint be registered against the operation. The provisions of this Section may be waived in writing by the Board upon application by a Lot Owner. Such application shall describe the type of trade or business activity to be conducted, the estimated amount of traffic generated and the impact of such activity on the neighborhood. The Board shall exercise its discretion to approve or disapprove such activity, balancing the interests of the Lot Owner with the impact on the neighborhood. Nothing in this Section shall permit the use of a Lot for a purpose which violates law or applicable zoning codes.
3.6.13 Setbacks. Setbacks will be per City of Black Diamond requirements. For purposes of this Section, eaves, steps and open porches shall not be considered as part of the Structure; provided that this Section shall not be construed to permit any portion of a Structure on any Lot to encroach upon any other Lot. All Structures shall also comply with all applicable governmental laws, codes, ordinances and regulations pertaining to setbacks.
3.6.14 Fences. No fence shall be constructed on any Lot without prior written approval of the Board, which approval may be granted or denied in the Board's sole discretion. If approved by the Board, all fences shall be constructed in a good and workman-like manner of suitable fencing materials and shall be artistic in design and shall not detract from the appearance of any adjacent Structures. No fence higher than three feet shall be constructed in areas from the front of Structure to street.
3.6.15 Underground Utilities. All utility lines or wires located outside a dwelling unit shall be in utility conduits attached to such units or underground.
3.6.16 Drainage. All building down spouts, footing drains, and drains from all impervious surfaces, including without limitation, patios and driveways, shall be connected to the approved permanent storm drain outlet as shown on the approved construction drawings on file with City of Black Diamond. This plan shall be submitted with the application for any building permit. All connections of the drains must be constructed and approved prior to the final building inspection approval. Individual lot filtration systems, where permitted, shall be constructed at the time of the building permit and shall comply with said plans on file with City of Black Diamond, unless otherwise approved by Declarant or the Board. Any and all drainage from a Lot, which in the reasonable opinion of the Board causes erosion problems, shall be piped at the Lot Owner's expense to the nearest underground public storm sewer line. All roof drains shall be connected to public storm system. Absolutely no dumping of any pollutants in the storm sewer systems shall be permitted.
3.6.17 Tree Cutting. The cutting of any trees, 6" or larger in diameter at base (four feet above ground level) other than those necessary to clear for the building site and 10 feet perimeter on any lot is strictly prohibited unless approved by the Board. If the Owner wishes to remove any tree(s) outside the building area, and 10 feet perimeter those specific trees must be flagged and written permission to remove them must be obtained from the Board prior to removal. In the event trees outside of the building site area are removed without prior written permission from the Board, a fine of $500.00 (plus or minus charges in the Consumer Price Index from date of this declaration) per tree will be assessed against the Owner, which fine if unpaid may be foreclosed pursuant to Article 7 herein. Trees in imminent danger of falling or damaging a structure are exempt from this paragraph. The burden of proving imminent danger shall rest with the lot owner taking any action contrary to this paragraph.
3.6.18 Damage. Any damage to streets, plat improvements, entry structure, fences, landscaping, mailboxes, lights and lighting standards by Lot Owners, their children, contractors, agents, visitors, friends, relatives or service personnel shall be repaid by such Owner within twelve (12) days from the occurrence of such damage.
3.6.19 Driveways. All driveways shall be paved with Portland cement concrete from the edge of the paved street to the garage. If the drive exceeds 40' then blacktop is acceptable, but in any event the final 20' to the Structure shall be cement.
3.6.20 No Access Onto Black Diamond-Ravensdale Road. There shall be no vehicular ingress or egress directly onto the Black Diamond-Ravensdale Road from Lots 1-16 or 72.
3.6.21 Tract Maintenance. The tracts listed below shall be owned, improved, and maintained as follows:
Owned by: Maintained by:
Tract A MORGAN CREEK HOA City of Black Diamond (1)
Tract B Palmer Coking Coal Co.(2) Palmer Coking Coal Co.
Tract C MORGAN CREEK HOA City of Black Diamond (1)
Tract D MORGAN CREEK HOA MORGAN CREEK HOA
Tract E MORGAN CREEK HOA Lot 43 and Lot 44
Tract F MORGAN CREEK HOA MORGAN CREEK HOA
Tract G MORGAN CREEK HOA City of Black Diamond (1)
Tract H MORGAN CREEK HOA City of Black Diamond (1)
Tract I MORGAN CREEK HOA MORGAN CREEK HOA
Tract J MORGAN CREEK HOA MORGAN CREEK HOA
Tract K MORGAN CREEK HOA MORGAN CREEK HOA
Tract L MORGAN CREEK HOA MORGAN CREEK HOA
Tract G' (3) MORGAN CREEK HOA MORGAN CREEK HOA
Tract H' (4) MORGAN CREEK HOA MORGAN CREEK HOA
Tract "X" (5) Individual Lot Owners MORGAN CREEK HOA
Tract "Y" (6) Individual Lot Owners MORGAN CREEK HOA
Tract "Z" (7) MCHOA/Indiv. Lot Owners MORGAN CREEK HOA
Notes:
HOA = Homeowners' Association
(1) The hydraulics for Tracts A, C, G, and H shall be maintained by the City of Black Diamond.
(2) Tract B is a privately owned 2.57 acre property reserved and intended for future development as a multi-family residential development utilizing Tract A and the Tract G Storm Drainage Retention Basin for surface water retention and management purposes, together with other easements for access, utilities, and drainage as may be convenient and/or necessary to the owner of Tract B.
(3) (3) Tract G' is a 20 foot pedestrian ingress/egress and utility easement located along the easterly 20 feet of Tract G.
(4) (4) Tract H' is a 10 foot pedestrian ingress/egress and utility easement located along the westerly 10 feet of Tract H.
(5) (5) Tract "X" is a 10 foot cutoff drain and trail easement located along the north 10 feet of Lots 16 through 37 and Lot 41. Tract "X" includes a perforated storm drain pipe surrounded by drain rock and located below the trail surface. No fences, improvements or other obstructions shall be built or maintained by lot owners within the trail easement or which otherwise impedes the integrity of said trail.
(6) (6) Tract "Y" is a 10 foot landscaping buffer easement along the east 10 feet of Lots 1 through 16. Tract "Y" may, at Board's option, be improved and maintained by the Homeowners' Association
(7) (7) Tract "Z" is a 10 foot trail easement located along the south 10 feet of Tract H and the south 10 feet of Lots 71 and 72. No fences, improvements or other obstructions shall be built or maintained by lot owners within the trail easement or which otherwise impedes the integrity of said trail.
3.6.22 View Control Plan. The Board shall have the authority to promulgate, alter, amend and enforce a view control plan for the purpose of providing a uniform and equitable system for the maintenance of views from Lots within the Property. Such plan may obligate Owners to prune, trim or remove trees, shrubs or other vegetation as necessary to protect and maximize views. The expense of any such required pruning, trimming or removal shall be borne as agreed between affected parties or as determined by the Board.
3.6.23 Mailboxes. All mailboxes must be of a standard accepted by the U.S. Postal Authorities and must be located in those areas so designed by the U.S. Postal Department. Structures containing mailboxes must be approved by the Board, and must be grouped.
3.6.24 Compliance with Laws. Notwithstanding anything to the contrary set forth herein, each Owner and the Association shall comply with the more restrictive of either (i) terms and conditions of this Declaration, or (ii) the laws, codes, ordinances, and regulations of any governmental entity having jurisdiction.
Section 3.7 Solar Panels. Solar panels on any structure shall be prohibited unless express written authorization is obtained from the Board which shall be obligated to seek the advice and counsel of adjacent lot owners or other owners who may have to view said panels.
Section 3.8 Maintenance of Lots During the Construction Period. Each Lot Owner, exclusive of the Declarant shall have a responsibility to generally maintain the Lot in either a natural forested condition prior to any clearing, or in a neat and clean appearance after construction commences for a Residence on said Lot. After clearing of vegetation for construction, the debris from the clearing operation shall be promptly removed from the Lot and disposed of off site in an approved location or burned on site. In no case shall any vegetation cleared from one Lot be deposited on an adjacent Lot, with the exception of joint clearing of adjacent lots.
During construction of each Residence, periodic efforts shall be made by the Owner, or the Owner's construction representative, to pick up scrap materials and other construction debris and to periodically dispose of said materials. No dumping of any such debris or refuse shall be allowed on adjoining Lots or on any Common Area or Common Maintenance Areas within the Plat of MORGAN CREEK. Upon completion of the construction on any Lot and prior to the occupancy of the structure, the Lot Owner shall be responsible for keeping the landscaping improvements and the structure itself in a clean and neat appearance. This shall include the responsibility for regular landscape maintenance, watering, trimming, and upkeep to present a finished, manicured appearance of said premises from the adjacent right-of-way. In the event that the Lot Owner, or Owner's construction representative(s), fails to meet standards set forth in this Section, the Board shall have the right to complete such clean-up activity in accordance with the provisions as set forth in Article 9.
ARTICLE 4. OWNERS' ASSOCIATION.
Section 4.1 Form of Association. The Owners of Lots within the Property shall constitute the members of the MORGAN CREEK Homeowners' Association, a Washington nonprofit corporation, duly formed on _____________________________, 1993. The rights and duties of the members and the Association shall continue to be governed by the provisions of this Declaration, and the Association's Articles of Incorporation and ByLaws.
Section 4.2 Board of Directors. The affairs of the Association shall be governed by a Board of Directors (the "Board") which shall be composed of one or more members, to be determined by the reasonable discretion of the Board. The initial Board shall be as described in the Articles of Incorporation of MORGAN CREEK Homeowners' Association. Subject to any specific requirements hereof, the Board shall have authority to establish operating rules and procedures. In the event of death or resignation of any member or members of the Board, the remaining member or members, if any, shall have full authority to appoint a successor member or members. Members of the Board shall not be entitled to any compensation for services performed pursuant to this Declaration. Upon the Transition Date and without further action by any person or persons, (i) the term of the initial Board members and their then successors shall end, and (ii) the initial Board members and their then successors shall be released from any and all liability whatsoever for claims arising out of or in connection with this Declaration, exempting only claims arising prior to the Transition Date.
Section 4.3 Qualification for Membership. Each fee owner of a Lot (including Declarant) on the Property shall be a member of the Association and shall be entitled to one membership and one vote for each Lot owned; provided, that if a Lot has been sold on contract, the contract purchaser shall exercise the rights of an Owner for purposes of the Association, and this Declaration except as hereinafter limited, and shall be the voting representative unless otherwise specified. Ownership of a Lot shall be the sole qualification for membership in the Association.
Section 4.4 Transfer of Membership. The Association membership of each Owner (including Declarant) shall be appurtenant to the Lot giving rise to such membership, and shall not be assigned, transferred, pledged, hypothecated, conveyed, or alienated in any way except upon the transfer of title to the Lot and then only to the transferee of title to the Lot. Any attempt to make a prohibited transfer shall be void. Any transfer of title to a Lot shall operate automatically to transfer the membership in the Association to the new Owner.
Section 4.5 Number of Votes. The total voting power of the Association at any given time shall equal the number of Lots included within the Property at that time. The Owner or Owners of each Lot within the Property shall be entitled to one vote. If a Person (including Declarant) owns more than one Lot, he or she shall have the votes appertaining to each Lot owned.
Section 4.6 Voting. If a Lot is owned by husband and wife and only one of them is at a meeting, the one who is present will represent the marital community. The vote for a Lot must be cast as a single vote, and fractional votes shall not be allowed. If joint Owners are unable to agree among themselves how their vote shall be cast, they shall lose their right to vote on the matter in question.
Section 4.7 Pledged Votes. An Owner may, but shall not be obligated to, pledge his vote on all issues or on certain specific issues to a Mortgagee; provided, however, that if an Owner is in default under a Real Estate Contract, on his Lot for 90 consecutive days or more, the Owner's Mortgagee shall automatically be authorized to declare at any time thereafter that the Lot Owner has pledged his vote to the Mortgagee on all issues arising after such declaration and during the continuance of the default. If the Board has been notified of any such pledge to a Mortgagee, only the vote of the Mortgagee will be recognized on the issues that are subject to the pledge.
Section 4.8 Annual and Special Meetings. Within the period commencing thirty (30) days before the Transition Date and ending thirty (30) days after the Transition Date, there shall be a meeting of the members of the Association and thereafter there shall be an annual meeting of the members of the Association in the first quarter of each fiscal year at such reasonable place and time as may be designated by written notice from the Board delivered to the Owners no less than thirty (30) days before the meeting. At the first such meeting, and at each annual meeting thereafter, the Owners shall elect by majority vote individuals to serve as Board members until a successor is elected at the next annual meeting. Each Lot shall be entitled to one vote for each director and the voting for directors shall be non-cumulative. The financial statement for the preceding fiscal year (if any) and the budget the Board has adopted for the pending fiscal year shall be presented at the annual meeting for the information of the members. Special meetings of the members of the Association may be called at any time upon not less than fourteen (14) days prior written consent to all Owners, for the purpose of considering matters which require the approval of all or some of the Owners, or for any other reasonable purpose. Any First Mortgagee of a Lot may attend or designate a representative to attend the meetings of the Association.
Section 4.9 Books and Records. The Board shall cause to be kept complete, detailed, and accurate books and records of the receipts and expenditures (if any) of the Association, in a form that complies with generally accepted accounting principles. The books and records, authorizations for payment of expenditures, and all contracts, documents, papers, and other records of the Association shall be available for examination by the Lot Owners, Mortgagees, and the agents or attorneys of either of them, during normal business hours and at any other reasonable time or times.
Section 4.10 Transition Date. The "Transition Date" shall be the date control of the Board passes from the initial board to the Association. The Transition Date will be either (i) the date designated by Declarant in a written notice to the Owners, which date may be Declarant's election any date after this Declaration has been recorded; or (ii) the 120th day after Declarant has transferred title to the purchasers of Lots representing 100% of the total voting power of all Lot Owners in the Association. For purposes of the Foregoing clause (ii), however, transfer of title to a Lot by Declarant to any Participating Builder shall be disregarded and title to any Lot owned by Participating builder shall not be deemed transferred for purposes of determining the Transition Date until the Lot is further transferred by Participating builder to a purchaser who is not either a Participating Builder or Declarant. From and after the Transition Date, the then Owners of 75% of the Lots in the Property shall have the power through written instrument recorded in the real property Records of King County, Washington to restrict or eliminate all or any of the approval powers and duties of the Board set forth in this Declaration, excluding the duty to maintain the Common Areas.
ARTICLE 5. NOTICES FOR ALL PURPOSES.
All notices given under the provisions of this Declaration or rules or regulations of the Association shall be in writing and may be delivered either personally or by mail. If delivery is made by mail, the notice shall be deemed to have been delivered on the third day of regular mail delivery after a copy has been deposited in the United States mail, first class, postage prepaid, addressed to the Person entitled to such notice at the most recent address known to the Board. Mailing addresses may be changed by notice in writing to the Board. Notices to the Board may be given to any Board member or mailed to the following address: P.O. Box 10, Black Diamond, Washington 98010.
The Board's address may be changed from time to time by the execution and recording of an instrument in the real property Records of King County, Washington which (i) refers to this Declaration and this Article 5 and (ii) sets forth the Board's new address.
ARTICLE 6. AUTHORITY OF THE BOARD.
Section 6.1 Adoption of Rules and Regulations. The Board is empowered to adopt, amend, and revoke on behalf of the Association detailed administrative rules and regulations necessary or convenient from time to time to insure compliance with the general guidelines of this Declaration to promote the comfortable use and enjoyment of the Property and to govern the operation and procedures of the Association. The rules and resolutions may, without limitation, authorize voting by proxy or mail, or both, on Association matters. The rules and regulations of the Association shall be binding upon all Owners and occupants and all other Persons claiming any interest in the Property.
Section 6.2 Enforcement of Declaration, Etc. The Board shall have the power to enforce the provisions of this Declaration, and the rules and regulations of the Association for the benefit of the Association. The failure of any Owner to comply with the provisions of this Declaration, or the rules and regulations of the Association (acting through the Board) and any aggrieved Lot Owner for recovery of damages, or inductive relief, or both. If a legal action is brought to interpret or enforce compliance with the provisions of this Declaration, or the rules and regulations of the Association, the prevailing party shall be entitled to judgment against the other party for its reasonable expenses, court costs, and attorneys' fees in the amount awarded by the Court.
Section 6.3 Goods and Services. The Board shall acquire and pay for as common expenses of the Association all goods and services reasonably necessary or convenient for the efficient and orderly maintenance of all portions of the Common Areas not maintained by public utility companies or a governmental entity. The goods and services shall include (by way of illustration and limitation) utility services for the Common Areas; policies of insurance; and maintenance, repair, landscaping, gardening, and general upkeep of the Common Areas. The Board may hire such employees as it considers necessary.
Section 6.4 Protection of Common Areas. The Board may spend such funds and take such action as it may from time to time deem necessary to preserve the Common Areas, settle claims, or otherwise act in what it considers to be the best interest of the Association.
ARTICLE 7. ASSOCIATION BUDGET, ASSESSMENTS, AND LIENS.
Section 7.1 Owners Covenant to Pay Assessments. By acceptance of a deed to a Lot or Dwelling Unit, execution of a contract therefor, or any other means of acquisition of an ownership interest, whether or not it shall be so expressed in any such deed or other instrument, the Owner therefore covenants and agrees thereby, on behalf of himself and his heirs, successors, and assigns, to pay the Association, in advance, all general and special assessments levied as provided herein.
Section 7.2 Association Budget. The Association shall prepare, or cause the preparation of, an operating budget for the Association at least annually, in accordance with generally accepted accounting principles. The operating budget shall set forth all sums required by the Association, as estimated by the Association, to meet its annual costs and expenses, including but in no way limited to all management and administration costs, operating and maintenance expenses of the Common Area, planting strips, entry signs, and services furnished to or in connection with the Common Areas, including the amount of all taxes and assessments levied against, the cost of liability and other insurance on, the Common Areas, and including charges for any services furnished by or to the Association; the cost of utilities and other services; and the cost of funding all reserves established by the Association, including, when appropriate, a general operating reserve and a reserve for replacements. The funds required to meet the Association's annual expenses shall be raised from a general assessment against each Lot and/or each Dwelling Unit as provided hereafter. (Example: The Association may assess each unimproved lot one amount and each lot with a dwelling unit a greater amount.) The Association may revise the operating budget after its preparation at any time and from time to time, as it deems necessary or advisable in order to take into account and defray additional costs and expenses of the Association. The Association, after the transition date, shall be required to obtain liability insurance on the common areas, subject to the discretion provided by Article 12.
Section 7.3 Levy of General Assessment. In order to meet the costs and expenses projected in its operating budget, the Association shall by Association Action determine and levy in advance on every Lot Owner and Lot/Dwelling Unit owner a general assessment. The amount of each Owner's general assessment shall be the Association's operating budget divided by the sum of the number of Lots and lots with Dwelling Units. Different assessments have been established for Lot owners and Lot/Dwelling Unit owners. A calculation shall be made to determine the general assessment for Lot Owners and Lot/Dwelling Unit owners. The Association shall make reasonable efforts to determine the amount of the general assessment payable by each Owner for an assessment period at least thirty (30) days in advance of the beginning of such period and shall at that time prepare a roster of the owners and the general assessment allocated to each, which shall be kept in the office of the Association, and shall be open to inspection by any Owner upon reasonable notice to the Association. Notice of the general assessment shall thereupon be sent to each Owner; provided, however, that notification to an Owner of the amount of an assessment shall not be necessary to the validity thereof. The omission by the Association, before the expiration of any assessment period, to fix the amount of the general assessment hereunder for that or the next period, shall not be deemed a waiver of modification in any respect of the provisions of these Articles or a release of any Owner from the obligation to pay the general assessment, or any installment thereof, for that or any subsequent assessment period, but the general assessment fixed for the preceding period shall continue until a new assessment period, but the general assessment fixed for the preceding period shall continue until a new assessment is fixed. Upon any revision by the Association of the operating budget during the assessment period for which such budget was prepared, the Association shall, if necessary, revise the general assessment levied against the Owners and give notice of the same in the same manner as the initial levy of a general assessment for an assessment period.
Until January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment shall be Sixty Dollars ($60.00) per unimproved Lot or One Hundred Twenty Dollars ($120.00) per Lot improved with a Dwelling Unit.
A. From and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased each year by not more than twelve percent (12%) of the maximum assessment for the previous year without a vote of the membership.
B. From and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased above twelve percent (12%) by a vote of two-thirds (2/3) of each class of members who are voting in person or by proxy, at a meeting duly called for this purpose.
C. The authority of the Board of Directors of the Association as described to fix annual assessments shall be limited to the authority to fix annual assessments at an amount not in excess of the maximum, without prior Owner approval as specified above.
Section 7.35 Initial Capital Contribution. Upon the first transfer of title of each Lot from Declarant to Builder or Owner, said Builder or Owner shall be assessed at closing a one-time $50.00 Capital Contribution fee to be deposited with MORGAN CREEK Homeowners Association.
Section 7.4 Payment of General Assessment. Upon Association action, installments of general assessment may be collected on a monthly, quarterly, semi-annual, or annual basis. Any Owner may prepay one or more installments on any assessment levied by the Association without premium or penalty.
Section 7.5 Non-Discriminatory Assessment. With the exception of differing assessments for lot owners and for lots with dwelling units, no assessment shall be made at any time which may unreasonably discriminate against any particular Owner or group of Owners in favor of other Owners. However, a special assessment may be made against a particular Owner by a two-thirds majority vote of the Board to which such oversight responsibility has been delegated, in the event that, after notice from the Association of failing to maintain the same in a condition comparable to the other Lots or Living Units in MORGAN CREEK has been given to the Owner thereof, the Association elects to expend funds to bring such Owner's Lot or Living Unit up to such comparable standard.
Section 7.6 Commencement of Assessments. The general assessments provided for herein shall commence as to all Lots on the first day of the month following the conveyance of the Common Areas. The due dates of any special assessment payments shall be fixed by the Association action authorizing such special assessment.
Section 7.7 Certificate of Assessment Payment. Upon request, the Board shall furnish written certificates certifying the extent to which assessment payments on a specified Lot or Living Unit are paid and current to the date stated therein. Issuance of such certificates shall be conclusive evidence of payment of any assessments therein declared to have been paid. A reasonable charge may be made by the Association for the issuance of such certificate.
Section 7.8 Special Assessments. In addition to the general assessments authorized by this Article, the Association may, by Association Action, levy a special assessment or assessments at any time, applicable to that year only, for the purpose of defraying, in whole or in part, the cost of any construction or reconstruction, inordinate repair, or replacement of described capital improvement located upon or forming a part of the Common Areas, including necessary fixtures and personal property, related thereto, or for such other purpose as the Association may consider appropriate; provided, however, that any such assessment must have the prior favorable vote of Owners representing two-thirds of each class of members who are voting in person or by proxy at a meeting duly called for this purpose. The amount of each Owner's special assessment for any year shall be the total special assessment for such year, divided by the sum of the number of Lots. Special Assessments shall also be made against the Lots for their respective hook up fees as may be imposed by the local sewer district. If charged on any other than a one-time basis, such fee shall be charged as part of the general assessment.
Section 7.9 Effect of Non-Payment of Assessment. If any assessment payment is not made in full within thirty (30) days after it was first due and payable, there shall be assessed a one time late payment penalty of fifteen percent (15%) of the assessment, the unpaid amounts shall constitute a lien against the Lot assessed and shall bear interest from such due date at the rate of eighteen percent (18%) per annum until paid. By acceptance of a deed to a Lot or Living Unit, execution of a contract therefor, or any other means of acquisition of an ownership interest, and whether or not it shall be so expressed in any such deed or other instrument, each Owner shall be deemed to grant thereby to the Association, its agents and employees, the right and power to bring all actions against such Owner personally for the collection of such assessments as a debt, and to enforce the liens created by this Declaration in favor of the Association by foreclosure of the continuing liens in the same form of action as is then provided for in this Declaration shall be for the benefit of the Association as a corporate entity, and the Association shall have the power to bid on at any lien foreclosure sale and to acquire, hold, lease, mortgage, and convey the Lot or Living Unit foreclosed against.
Section 7.10 Lien to Secure Payment of Assessments. Declarant hereby creates in the Association perpetually the power to create a lien in favor of the Association against each Lot and Living Unit, to secure to the Association the payment to it of all assessments, interest, costs, and attorneys fees; and Declarant hereby subjects all Lots and Living Units perpetually to such power of the Association. Such lien shall arise in accordance with the terms of this Declaration without the necessity of any further action by the Association, and any such lien when created, shall be a security interest in the nature of a mortgage in favor of the Association. Such lien shall become continuing lien in the amount stated in the assessment from the time of the assessment, by expiring prorate as the assessment payments are made, and shall also be the personal obligation of the person or entity who is the Owner of the Lot or Living Unit at the time of the assessment. The personal obligation to pay a prior assessment shall not pass to successors in interest unless expressly assumed by them; provided, however, that in the case of a sale or contract for the sale of any Lot or Living Unit which is charged with the payment of an assessment, the person or entity who is the Owner immediately prior to the date of such sale shall be personally liable for the amounts of the monthly installments due prior to said date, and the new Owner shall be personally liable for monthly installments becoming due on or after such date. The foregoing limitation on the duration of the personal obligation of an Owner to pay assessments shall not, however, affect the validity or duration of the continuing lien for unpaid assessments against the respective Lot or Living Units.
Section 7.11 Suspension for Non-Payment of Assessment. If an Owner shall be in arrears in the payment of any assessment due, or shall otherwise be in default of the performance of any terms of the Governing Documents of the Association for a period of thirty (30) days, said Owner's voting rights shall without the necessity of any further action by the Association, be suspended (except as against foreclosing secured parties) and shall remain suspended until all payments, including interest thereon, are brought current and any other default is remedied. No Owner is relieved of liability for assessments by non-use of the Common Areas or by abandonment of a Lot or Living Unit.
Section 7.12 Reserves for Replacement. As a common expense the Association shall establish and maintain a reserve fund for replacement of the Common Areas and any improvements thereon, or on planter strips and entry signs, by the allocation and payment monthly to such reserve fund of an amount to be designated from time to time by the Association. Such fund shall either be deposited with a banking institution, the accounts of which are insured by any agency of the United States of America or, at the discretion of the Association, be invested in obligations of, or fully guaranteed as to principal by, the United States of America. The reserve fund shall be expended only for the purpose of affecting the replacement of the Common Areas and any improvements thereon, developed as a part of MORGAN CREEK, and for start-up expenses and operating contingencies of a non-recurring nature. The Association may establish such other reserves for such other purposes as it may from time to time consider to be necessary or appropriate. The proportional interest of any Owner in any such reserves shall be considered an appurtenance of his Lot or Living Unit and shall not be separately withdrawn, assigned, or transferred, or otherwise separated from the Lot or Living Unit to which it appertains and shall be deemed to be transferred with such Lot or Living Unit.
ARTICLE 8. SUBORDINATION OF LIENS.
Section 8.1 Intent of Provisions. The provisions of this Article 8 apply for the benefit of each Mortgagee who lends money for the purposes of construction or to secure the payment of the purchase price of a Lot or Living Unit.
Section 8.2 Mortgagee's Non-Liability. The holder of a Mortgage shall not, by reason of the security interest only, be liable for the payment of any assessment or charge, not for the observance or performance of any covenant or restriction, excepting only those enforceable by equitable relief and not requiring the payment of money, and except as hereafter provided.
Section 8.3 Mortgagee's Rights During Foreclosure. During the pending of any proceeding to foreclose a Mortgage, including any period of redemption, the holder of the Mortgage, or the receiver, if any, may exercise any or all of the rights and privileges of the Owner of the encumbered Lot or Living Unit, including but not limited to the right to vote in the Association to the exclusion of the Owner's exercise of such rights and privileges.
Section 8.4 Mortgagee as Owner. At such time as a Mortgagee shall become the record Owner of the Lot or Living Unit previously encumbered by the Mortgage, the Mortgagee shall be subject to