6.1 Budget Preparation. Not less than thirty days prior to the beginning of each fiscal year, the Board shall adopt a proposed Budget containing:

 

6.1.1 The projected income to the Association by category;

 

6.1.2 The projected Common Expenses and those specially Allocated Expenses that are subject to being budgeted, both by category;

 

6.1.3 The amount of the Assessments per Lot and the date the Assessments are due;

 

6.1.4 The current amount of regular Assessments budgeted for contribution to the Reserve Account;

 

6.1.5 A statement of whether the Association has a Reserve Study or is exempt pursuant to Article 7;

 

6.1.6 If a Reserve Study has been prepared, a statement of the extent to which the Budget meets or deviates from the recommendations of that reserve study; and

 

6.1.7 The current deficiency or surplus in reserve funding expressed on a per Lot basis. The Budget shall be based on an estimate of the charges for Common Expenses to be paid during the year,. which may also make provision for creating, funding and maintaining reserves for contingencies, operations, insurance, and maintenance, improvement, repair, replacement and acquisition of Common Area, including Common Area Structures, and which takes into account any expected income and any surplus available from the prior year's operating fund.

 

6.2 Ratification of Budget. With respect to any Budget adopted after the Transition Date, they Board shall set a date for a meeting of the Owners to consider ratification of the Budget. The date'of the meeting shall be not less than ten days and no more than fifty days after a summary of the annual Budget or special assessment supplemental Budget is mailed to each Owner. Unless at that meting a majority of the Owners reject the Budget, the Budget is ratified, whether or not a quorum is present. If the proposed Budget is rejected or the required Notice is not given, the periodic Budget last ratified by the Owners shall be continued until such time as the Owners ratify a subsequent Budget proposed by the Board.

 

6.3 Supplemental Budget/Special Assessment. If during the fiscal year the Budget proves to be inadequate for any reason, including nonpayment for any reason of any Owner's Assessment or an unbudgeted Common Expense, the Board may prepare a supplemental Budget for the remainder of the year that includes a special assessment. Any supplemental Budget that results in an increase in the Assessment charged to a Lot must be ratified pursuant to Section 6.2 above. The Board shall have the authority to determine the date payment of any special Assessment is due. The Board has the duty and/or right under various provisions of this Declaration to assess particular sums against specific Owners (and not against all Owners). Such Assessments against particular Owners shall be Assessments for all other purposes under this Declaration.

 

6.3.1 In addition, the Association may levy specific Assessments against a particular Lot for the costs incurred by the Association to bring the Owner's Lot into compliance with this Declaration or the other Governing Documents. Special assessments may be levied either before or after the work is done, in the discretion of the Board.

 

6.4 Assessment of Budgeted Common Expenses Against Lots. The annual expenditures contained in the Budget, net of budgeted income, shall be assessed in equal shares against each Lot. Annual Assessments shall commence on and become due and payable in twelve equal monthly installments, due on the first day of each month, or in any other manner as the Board may reasonably require. Each Owner shall be obligated to pay Assessments made pursuant to this Declaration as provided above, or in any other reasonable manner as the Board shall designate. Any Assessment not paid in full when due shall be delinquent and shall bear interest as specified herein until paid. Each Owner of a Lot, for himself or herself, and for his or her heirs, personal representatives, successors and assigns, hereby covenants and agrees, and each subsequent Owner of a Lot by acceptance of a deed therefore, whether or not it shall be so expressed in the deed, is deemed to covenant and agree to pay to the Association for each Lot owned any and all Assessments charged by the Association pursuant to this Declaration. No Owner may exempt himself or herself from liability for payment of Assessments for any reason, including waiver of use or enjoyment of any of the Common Areas or abandonment of the Owner's Lot.

 

6.5 Purpose of Assessments. The Assessments imposed by the Association shall be used (a) to promote the recreation, health, safety, and welfare of the residents of the Property, (b) for the improvement, maintenance, upkeep, repair, replacement, operation, and use of the Common Elements, (c) for legal fees and damages incurred in any action in which the Association or a member bf the Board, acting on behalf of the Association is named as a party, (d) for legal fees incurred by the Association, and (e) for any other reasonable expenses incurred by the Association.

 

6.6 Commencement of Assessments. Upon the conveyance of the first Lot, Assessments shall commence on all Lots; provided, Declarant may delay commencement of Assessments for some or all Common Expenses or Specially Allocated Expenses, provided Declarant pays all such expenses that have been delayed in equal monthly installments on or before the first day of each month during such year, or in such other reasonable manner as the Board shall designate.

 

6.7 Omission of Assessment. The omission by the Board before the expiration of any year to adopt the Budget and Assessments for that or the next year shall not be deemed a waiver or modification in any respect of the provisions of this Declaration or a release of an Owner from the obligation to pay the Assessments or any installment thereof for that or any subsequent year, but the Assessment established for the preceding year shall continue until a new Assessment is fixed.

 

6.8 Capitalization of Association. Upon the sale of each Lot by the Declarant (whether to a builder or otherwise), each Lot Owner, at the time of his/her purchase of the Lot, shall pay an initial start-up assessment to the Association in the amount of $500.00. Such initial assessment shall be in addition to any annual assessment provided for in this Article 6 and shall be for the purpose of reimbursing the Declarant and/or Association for maintenance and operating expenses of and for the Common' Areas during the initial development and house sales period, and for costs incurred by the Declarant and/or Association for the installation, activation and operation of street lights within the Subdivision. Notwithstanding the provisions set forth above, the Declarant shall not be liable for any initial assessments assessed or due so long as Declarant owns any Lot.

 

6.9 Special Assessments. In addition to the annual Assessments authorized above, the Association may levy, in any assessment year, a Special Assessment, applicable to that year only, for the purpose of defraying, in whole or in part, (a) the cost of any capital improvements to the Common Elements, (b) legal fees and damage costs, or (c) any other reasonable expenses incurred by the Association.

 

6.10 Only Some Lots Benefitted. The Board may elect that any Common Expense or portion thereof benefitting fewer than all of the Lots must be assessed exclusively against the Lots benefitte4.

 

6.11 Insurance Costs. The Board may elect that the costs of insurance must be assessed in proportion to risk.

 

6.12 Utility Costs. The Board may elect that the costs of utilities, if any, must be assessed in proportion to usage.

 

6.13 Assessments for Judgment. Assessments to pay a judgment against the Association may be made only against the Lots in the Subdivision at the time the judgment was entered in proportion to their Allocated Common Expense Liabilities at the time the judgment was entered. ,

 

6.14 Owner Misconduct. To the extent that any Common Expense is caused by the misconduct of any Owner, the Association shall assess that expense against the Owner's Lot.

 

6.15 Reallocation. If Common Expense Liabilities are reallocated, Common Expense Assessments and any installment thereof not yet due shall be recalculated in accordance with the reallocated Common Expense Liabilities.

 

6.16 Association Funds. The Association shall prepare an annual financial statement in accordance with accrual based accounting practices. If the Association's annual Assessments total fifty, thousand dollars or more, the financial statements must be audited annually by a certified public accountant. If the Association's annual Assessments are less than fifty thousand dollars, the audit may be waived on an annual basis by a majority vote of the Owners, excluding the vote for Lots owned by Declarant. The Association shall keep all funds of the Association in the name of the Association with a qualified financial institution. The funds shall not be commingled with the funds of any other person or entity, or kept in any trust account or custodial account in the name of any trustee or custodian.

 

6.17 Account Reconciliation. The Association shall establish and maintain its accounts and records in a manner that enables it to credit Assessments for Common Expenses and Specially Allocated Expenses, including Allocations to Reserves, and other income to the Association, and to charge expenditures, to the account of the appropriate Lots in accordance herewith. Unless the Board determines that a reconciliation would not result in a material savings to any Owner, the accounts (must be reconciled at least annually. Any surplus funds remaining after the payment of or provision for Common Expenses and any prepayment of Reserves shall be credited to Owners to reduce: future Common Expense Assessments.

 

 

6.18.1 Lien. The Association has a lien on a Lot for any unpaid Assessments levied against a Lot from the time the Assessment is due.

 

6.18.2 Priority. A lien under Section 6.18.1 shall be prior to all other liens and encumbrances on a Lot except: (a) liens and encumbrances recorded before the recording of this Declaration; (b) a Security Interest on the Lot recorded before the date on which the Assessment sought to be enforced became delinquent; and (c) liens for Real Estate taxes and other governm6tal Assessments or charges against the Lot.

 

6.18.3 Security Interest Priority. Except as provided in Sections 6.18.4 and 6.18.5, the lien for Assessments shall also be prior to the Security Interests described in Section 6.18.2(b)' to the extent of Assessments for Common Expenses, excluding any amounts for capital Improvements, based on the periodic Budget adopted by the Association pursuant to Section 6.1, which would have become due during the six months immediately preceding the date of the sheriff's sale in an action for judicial Foreclosure by either the. Association or a Mortgagee, the date of a trustee's sale in a non-judicial Foreclosure by a Mortgagee, or the date of recording of this Decl4ration of forfeiture in a proceeding by the vendor under a real estate contract.

 

6.18.4 Mortgagee Notice. The priority of the Association's lien against Lots encumbered by a Security Interest held by a First Mortgagee or by a Mortgagee which has given the Association a written request for a notice of delinquent Assessments shall be reduced by up to three months if and to the extent that the lien priority under Section 6.18.3 includes delinquencies which relate to a period after such holder becomes a First Mortgagee or has given such request for notice and before the Association gives the holder a written notice of the delinquency. This Section does not affect the priority of mechanics or materialmen's liens, or the priority of liens for other Assessments made by the Association.

 

6.18.5 Recording as Notice. Recording of this Declaration constitutes record notice and perfection of the lien for Assessments. While no further recording of any claim of lien for Ass6ssment under this Section shall be required to perfect the Association's lien, the Association may record a notice of claim of lien for Assessments under this Section in the real estate records of the County in which the Subdivision is located. Such recording shall not constitute the written notice of delinquency to a Mortgagee referred to in Section 6.18.3.

 

6.18.6 Limitation on Action. A lien for unpaid Assessments and the personal liability for payment of Assessments is extinguished unless proceedings to enforce the lien or collect the debt are instituted within six years after the amount of the Assessments sought to be recovered becomes due.

 

6.18.7 Foreclosure. The Association may not commence foreclosure unless unpaid amounts on a Lot being foreclosed total the equivalent of not less than three months of Common Expense Assessments; the Board approves commencement of the foreclosure action that Lot; and methods of collection, foreclosure, sale, or other conveyance under this Section, are commercially reasonable.

 

6.18.7.1 Judicial. The lien arising under Section 6.18 may be enforced judicially by the Association or its authorized representative in the manner set forth in Chapter 01.12 RCW. The Association or its authorized representative shall have the power to purchase the Lot at the Foreclosure sale and to acquire, hold, lease, security interest, or convey the same. Upon an express waiver in the complaint of any right to a deficiency judgment in a judicial Foreclosure action, the period of redemption shall be eight months. Nothing in this Section shall prohibit an Association from taking a deed in lieu of Foreclosure.

 

6.18.7.2 Non-Judicial. A lien arising under this Article may be foreclosed nonjudicially in the manner set forth in RCW 61.24 for nonjudicial foreclosure of deeds of trust. , For the purpose of preserving the Association's nonjudicial foreclosure option, this Declaration shall be considered to create a grant of each Lot in trust to Chicago Title Insurance Compaq or its successors or assigns ("Trustee"), to secure the obligations of each Owner ("Grantor") to the Association ("Beneficiary") for the payment of Assessments. Grantor shall retain the right to possession of Grantor's Lot so long as Grantor is not in default of an obligation to pay Assessments. The Trustee shall have a power of sale with respect to each Lot, which becomes 'operative in the case of a default in a Grantor's obligation to pay Assessments. The Lots are not used principally for agricultural or farming purposes. If the Association forecloses its lien nonjudicially pursuant to this section, it shall not be entitled to the lien priority over Security Interests provided in Section 6.18.3.

 

6.18.8 Receiver. From the time of commencement of an action by the Association to foreclose a lien for nonpayment of delinquent Assessments against a Lot that is not occupied by the Owner thereof, the Association shall be entitled to the appointment of a receiver to collect from the lessee thereof the rent for the Lot as and when due. If the rent is not paid, the receiver may obtain possession of the Lot, refurbish it for rental up to a reasonable standard for rental Lots in this type of Subdivision, rent the Lot or permit its rental to others, and apply the rents first to the cost of the receivership and attorneys' fees thereof, then to the cost of refurbishing the Lot, then, to applicable charges, then to costs, fees, and charges of the Foreclosure action, and then to the payment of the delinquent Assessments. Only a receiver may take possession and collect rents under this section, and a receiver shall not be appointed less than ninety days after the delinquency. The exercise by the Association of the foregoing rights shall not affect the priority of preexisting liens on the Lot.

 

6.18.9 Mortgagee Liability. Except as provided in Section 6.18.3, the holder of a Security Interest or other Purchaser of a Lot who obtains the right of possession of the Lot through foreclosure shall not be liable for Assessments or installments thereof that became due prior to such right of possession. Such unpaid Assessments shall be deemed to be Common Expenses collectible from all the Owners, including such Mortgagee or other Purchaser of the Lot. Foreclosure of a Security Interest does not relieve the prior Owner of personal liability for Assessments accruing against the Lot prior to the date of such sale as provided in this Section.

 

6.18.10 Lien Survives Sale. The lien arising under Section 6.18 shall not be affected by the sale or transfer of the subject Lot except in the event of sale through Foreclosure, as provided in Section 6.18.9.

 

6.19 Owner Liability. In addition to constituting a lien on the Lot, each Assessment shall be the joint and several obligation of the Owner of the Lot to which the same are assessed as of the time the Assessment is due. In a voluntary conveyance, the grantee of a Lot shall be jointly and severally liable with the grantor for all unpaid Assessments against the latter up to the time of the grantor's Conveyance, without prejudice to the grantee's right to recover from the grantor the amounts, paid by the grantee therefor. Suit to recover a personal judgment for any delinquent Assessment shall be maintainable in any court of competent jurisdiction without foreclosing or waiving the lien securing such sums. No Owner shall be entitled to assert as a setoff or defense against his or her obligation to pay Assessments for the amount of any obligation or liability due from, or claim asserted against, the Association or any other person.

 

6.19.1 Waiver of Homestead. Each Owner hereby waives, to the extent of any liens created pursuant to this Article, the benefit of any homestead or exemption law in effect at the time any assessment or installment thereof becomes delinquent or any lien is imposed pursuant to the terms hereof.

 

6.20 Late Charges. The Association may from time to time establish reasonable late charges and a rate of interest to be charged on all subsequent delinquent Assessments or installments thereof. In the absence of another established nonusurious rate, delinquent Assessments shall bear interest from the date of delinquency at the maximum rate permitted under RCW 19.52.020 on the date on which the Assessments became delinquent.

 

6.21 Attorneys' Fees. The Association shall be entitled to recover any costs and reasonable attorneys' fees incurred in connection with the collection of delinquent Assessments, whether or not those collection activities result in suit being commenced or prosecuted to judgment. In addition, the prevailing party shall be entitled to recover any costs and reasonable attorneys' fees incurred in connection with the collection of delinquent Assessments, whether or not such collection activities result in suit being commenced or prosecuted to judgment. In addition, the prevailing party shall be entitled to recover costs and reasonable attorneys' fees if it prevails on appeal and in the enforcement of a judgment.

 

6.22 Assessment Certificate. The Association, upon written request, shall furnish to an Owner or a Mortgagee a statement signed by an Officer or authorized agent of the Association setting forth the amount of unpaid Assessments or the priority amount against that Lot, or both. The statement shall be furnished within fifteen days after receipt of the request and is binding on the Association, the Board, and every Owner, unless and to the extent known by the recipient to be false.

 

6.23 Acceleration of Assessments. In the event any monthly Assessment or special charge attributable to a particular Lot remains delinquent for more than sixty days, the Board may, upon fifteen days' written notice to the Owner of such Lot, accelerate and demand immediate payment :of all, or such portion as the Board determines, of the monthly Assessments and special charges which the Board reasonably determines will become due during the next succeeding twelve months with respect to such Lot.

 

 

6.24.1 Delinquent Assessment Deposit. An Owner may be required by the Board, from time to time, to make and maintain a deposit equal to not less than one month nor in excess of three months estimated monthly Assessment and charges, which may be collected as are other Assessments and charges. Such deposit shall be held in a separate fund, be credited to the Lot owned by such Owner, and be for the purpose of establishing a reserve for delinquent Assessments.

 

6.24.1.1 Resort may be had thereto at any time when such Owner is ten days or more delinquent in paying his monthly or other Assessments and charges. Said deposits shall not be considered as advance payments of regular Assessments. In the event the Board should draw upon said deposit as a result of an Owner's delinquency in payment of any Assessments, said Owner shall continue to be responsible for the immediate and full payment of said delinquent Assessment (and all penalties and costs thereon) and thus the full restoration of said deposit, and the Board shall continue to have all of the rights and remedies for enforcing such Assessment payment:, and deposit restoration as provided by this Declaration and by law.

 

6.24.1.2 Upon the sale of a Lot, the seller/Owner thereof shall not be entitled to a refund from the Association of any deposit or reserve account made or maintained with respect to such Lot pursuant to this or any other Section of this Declaration; rather, any such deposit Or reserve account shall continue to be held by the Association for the credit of such Lot, and the Lot purchaser shall succeed to the benefit thereof, and the Lot seller shall be responsible for obtaining from the purchaser appropriate compensation therefor.