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HomeMy WebLinkAbout009 - Appendix C - Draft CCRsPage 1 of 35 PRELIMINARY DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS FOR WALLACE AND TAMARACK SUBDIVISION This Preliminary Declaration of Covenants, Conditions, and Restrictions for the Wallace and Tamarack Subdivision (hereinafter referred to as the “Covenants”) is made this day of , 2025, by Wallace Works LLC, a Delaware limited liability company with the mailing address of 113 East Oak Street, Suite 4A, Bozeman, Montana 59715 (together with its successors and assigns, the “Declarant”). RECITALS WHEREAS, the Declarant plans to develop its real property in Bozeman, Gallatin County, Montana, as more specifically described in Exhibit A attached hereto (the “Property”), which shall be known as the Wallace and Tamarack Subdivision (the “Subdivision”); and WHEREAS, Declarant desires to create a progressive urban community known as Wallace Works Condominiums within the Subdivision, and such other land as may be hereafter added to the Property. NOW, THEREFORE, Declarant declares that the Property will be held, sold, conveyed, encumbered, leased, occupied, and improved subject to these Covenants and the Bylaws (defined in Section 1.1.8) and any subsequent amendments hereto, all of which are intended to enhance the desirability and attractiveness of the Subdivision and are deemed to be covenants running with the land. These Covenants will be binding on all parties having any right, title, or interest therein or any part thereof, and their respective heirs, personal representatives, successors, and assigns, and will inure to the benefit of each Person who becomes an Owner (defined in Section 1.1.22) of a Lot (defined in Section 1.1.19) thereof. These Covenants supplement the requirements set forth in the City of Bozeman’s zoning regulations. If the zoning regulations conflict with these Covenants, the zoning regulations shall comply. ARTICLE I. DEFINITIONS 1.1. Definitions. The following terms shall have the meanings set forth in this ArticleARTICLE I and any supplemental Covenants (unless the context shall prohibit). 1.1.1. “Articles” means the Articles of Incorporation of the Association, as amended from time to time. 1.1.2. “Assessment Lien” shall have the meaning as described in 6.11; 1.1.3. “Assessments” include the following: (a) “Maintenance Assessment” as described in Section 6.6; (b) “Capital Improvement Assessment” as described in Section 6.8; (c) “Special Assessment” as described in Section 6.9; and (d) “Reimbursement Assessment” as described in Section 6.10. 1.1.4. “Association” shall mean the Wallace and Tamarack Subdivision Association, Inc., a Montana non-profit corporation, and its successors and assigns. Page 2 of 35 1.1.5. “Association Rules” shall mean the rules and regulations adopted by the Board pursuant to these Covenants, as such rules and regulations may be amended from time to time. 1.1.6. “Board of Directors” or “Board” shall mean the Board of Directors of the Association, which shall be the body responsible for the Association’s general governance and administration, and which shall be selected as provided in the Bylaws. 1.1.7. “Building” or “Buildings” shall mean a multiple-unit building or buildings, respectively, on a Lot comprising a part of the Property. 1.1.8. “Bylaws” shall mean the bylaws of the Association. 1.1.9. “City” shall mean the City of Bozeman, Montana, and appropriate departments, officials, and boards. 1.1.10. “Common Areas” shall mean the common areas that benefit all Lots and which the Association shall have a duty to maintain. Specifically included are any irrigation system placed on the Property for boulevard landscape maintenance; sidewalks; parking areas (other than parking that is designated a limited common area); footings; electrical, gas, telephone, water and sewer lines and connections serving all of the Lots; landscaping, plants and other materials and improvements located around the circumference of the Subdivision and in the parking area; all stormwater infrastructure located outside the public right-of-way; and other elements necessary for the safety and maintenance of the Property. 1.1.11. “Common Expenses” means the costs incurred by the Association in conducting its operations and activities, administering, maintaining, and operating the Subdivision, including, but not limited to, the following: (a) the costs for maintenance of all stormwater infrastructure located outside the public right-of-way; (b) the costs of any maintenance, management, operation, repair, and replacement of the Common Areas and Limited Common Areas, and all other areas in the Subdivision which are managed or maintained by the Association; (c) the costs of management and administration of the Association, including, but not limited to, compensation paid by the Association to managers, accountants, attorneys, and employees; (d) the costs of utilities and services (including, but not limited to, water, electricity, gas, sewer, trash pick-up, and disposal) which are provided to the Association or the Common Areas and Limited Common Areas, landscaping maintenance, and other services that generally benefit and enhance the value and desirability of the Subdivision and which are provided by the Association; (e) the costs of insurance maintained by the Association as permitted herein or purchased at the discretion of the Board of Directors; (f) reasonable reserves for contingencies, replacements, and other proper purposes, if deemed appropriate by the Board, to meet anticipated costs and expenses, including, but not limited to, maintenance, repairs, and replacement of those Common Areas which must be maintained, repaired, or replaced on a periodic basis; Page 3 of 35 (g) the costs which the Board may elect to incur to bond the members of the Board, officers of the Association, any professional managing agent, or any other Person handling the funds of the Association; (h) taxes paid by the Association; (i) amounts paid by the Association for the discharge of any lien or encumbrance levied against the Common Areas or portions thereof; (j) the costs incurred by any other committees established by the Board; (k) attorneys’ fees and other costs incurred pursuant to litigation or other legal remedies sought by the Board, in the Board’s sole discretion. (l) other expenses incurred by the Association for any reason whatsoever in connection with the Common Areas, or the costs of any other item or items designated by, or to be provided or performed by the Association pursuant to, this Declaration, the Articles, Bylaws, or in furtherance of the purposes of the Association or in the discharge of any duties or powers of the Association. 1.1.12. “Control Period” shall mean the period of time prior to the Transition Date, during which the Declarant has the sole voting authority and the right to appoint all the members of the Board of Directors for the Association. 1.1.13. “County” shall mean Gallatin County, Montana, and the appropriate departments, officials, and boards. 1.1.14. “Covenants” shall mean these Covenants, together with any subsequent amendments thereto. 1.1.15. “Declarant” means Wallace Works LLC and its successors and assigns or any person to whom Declarant’s rights hereunder are signed in whole or in part by Recorded instrument, or any mortgagee of Declarant which acquires title to or succeeds to the interest of Declarant in any portion of the Project by reason of the foreclosure (or conveyance in lieu of foreclosure) or trustee’s sale under the mortgage of said mortgagee. An assignment by Recorded instrument of all of Declarant’s rights shall vest in the assignee all of Declarant’s rights hereunder (including, but not limited to, all of Declarant’s easements, rights of consent or approval, and voting rights) shall be transferred on the same terms that they were held by Declarant. An assignment by the Recorded instrument of part of the Declarant’s rights shall vest in the assignee the specific Declarant’s right(s) named in the instrument of assignment on the same terms held by the Declarant. Notwithstanding anything to the contrary herein, an assignment of all or any portion of the Declarant’s rights shall not deprive the assignor of any protection, indemnity, or freedom from liability that would otherwise exist under this Declaration if the assignor had retained all of the Declarant’s rights hereunder. 1.1.16. “First Mortgage” means a Mortgage that is the first and most senior of all mortgages on the same property. 1.1.17. “First Mortgagee” means the holder of a First Mortgage. 1.1.18. “Fiscal Year” means calendar year unless otherwise determined by the Board in accordance with the Bylaws of the Association. Page 4 of 35 1.1.19. “Limited Common Areas” shall mean those Limited Common Areas which are reserved for the use of fewer than all of the Owners, Occupants, and their guests and invitees, and to the exclusion of other Owner, Occupants, and their guests and invitees or designated as such by the Board or the Declarant. Specifically, Limited Common Areas shall mean public utility lines, water, sewer, electrical, gas, cable television lines which service less than all of the Lots (if they service all Lots they shall be Common Areas) and parking areas that are designated by the Declarant or the Board as a Limited Common Area, including car ports, solar panel on the car port roofs, and electric charging stations. 1.1.20. “Lot” shall mean and refer to only the portions of the Property so divided into a lot, tract, or parcel, or hereafter annexed into the Property pursuant to these Covenants. 1.1.21. “Manager” means the manager, the Board of Directors, the management corporation, or any other person or group of persons retained or appointed by the Board or the Association for the purpose of conducting the Association’s day-to-day operations. 1.1.1. “Member” means every Person who is a member of the Association. Each Owner shall have one (1) membership in the Association. 1.1.22. “Owner,” or “Owners” shall mean each Person owning a Unit or a portion thereof, in fee simple absolute or an ownership interest represented by a buyer’s interest in a contract for deed as shown by an abstract or notice of purchaser’s interest Recorded in the County, individually or as a co-owner in any real estate tenancy relationship that is recognized under the laws of the state of Montana. A mortgagee shall not be considered an Owner. 1.1.2. “Occupants” means individuals who own, lease, or rent a Unit within the Subdivision. 1.1.3. “Person” means an individual, corporation, partnership, trustee, or other entity capable of holding title to real property, and their respective heirs, personal representatives, successors, and assigns. 1.1.23. “Project” means the development of the Subdivision and improvement of the Property, which is subject to these Covenants, including all elements reasonable and necessary for its completion. 1.1.24. “Property” shall mean all of the land described in Exhibit A, with such other land as may be annexed into the Property pursuant to the provisions of these Covenants. 1.1.25. “Supplemental Covenants” means an amendment or supplement to these Covenants that subjects additional property to these Covenants and/or imposes, expressly or by reference, additional restrictions and obligations on the land described therein. 1.1.26. “Record,” “Recording,” “Recorded,” or “Recordation” means an instrument of record in, or the act of recording an instrument with, the office of the County Clerk for Gallatin County, Montana, or other officer charged with the duty of recording and maintaining records for real property having jurisdiction of the Property. 1.1.27. “Subdivision” shall mean the Wallace and Tamarack Subdivision, which shall consist of two (2) Lots and five (5) Buildings, as more specifically depicted in Exhibit A attached hereto. 1.1.28. “Taking” means condemnation by eminent domain or sale under threat of condemnation of all or any portion of the Common Areas. Page 5 of 35 1.1.29. “Transition Date” shall mean one hundred twenty (120) days after the earlier of the date upon which fifty percent (50%) of the Lots have been conveyed to an Owner other than the Declarant or three (3) years after completion of the Project, as evidenced by the first conveyance to an Owner. 1.1.30. “Unit” and “Units” shall mean the separate Units of the Buildings, including each unit for sale in any Building. ARTICLE II. PROPERTY SUBJECT TO THESE COVENANTS 2.1. Description. The Property consists of the Lots more particularly described in Exhibit A. 2.2. General Purpose. 2.2.1. The Declarant intends to subdivide the Property into two (2) Lots and to develop, build, and sell either the Lots or the separate Units on each Lot, as portions of the Property are developed. All of the real property within the Property is and shall be held, conveyed, hypothecated, encumbered, leased, occupied, built upon, or otherwise used, improved, or transferred, in whole or in part, subject to these Covenants, and any Recorded supplemental Covenants, as amended or modified from time to time. These Covenants shall run with the real property for all purposes and shall be binding upon and inure to the benefit of the Property, the Declarant, and all the Owners, and their successors in interest. 2.2.2. NOTHING IN THESE COVENANTS SHALL BE CONSTRUED TO PREVENT DECLARANT FROM (a) MODIFYING THE DEVELOPMENT PLAN OR ANY PORTIONS THEREOF, OR (b) DEDICATING OR CONVEYING PORTIONS OF THE PROPERTY, INCLUDING STREETS OR ROADWAYS, FREE AND CLEAR OF THESE COVENANTS. 2.2.3. The Declarant may, from time to time, create a separate set of covenants for governance and maintenance of part or all of the Property and the Lots, Buildings, and/or Units. No separate covenants shall be in conflict with or at variance from any of these Covenants; and such separate covenants shall only bind the Owners subject thereto. 2.3. Association Bound. These Covenants shall be binding upon and shall benefit the Association and its Members upon filing of Record. 2.4. Future Development Provision. The Declarant may, from time to time, decide to further develop the Property, including with additional Units or Buildings, on any Lot(s) within the Property, subject to these Covenants. This provision provides notice to any future Owner of any Lot or other purchaser of any portion of the Property that the Declarant, or its successors or assigns, may conduct such development at a future date. By purchasing a Lot or any other portion of the Property subject to these Covenants, all Owners and prospective owners acknowledge and agree that they have consented to the future development. ARTICLE III. PROPERTY AND RIGHTS OF ENJOYMENT 3.1. Right of Enjoyment. Every Occupant shall have a nonexclusive license to use and enjoy the Common Areas, subject to all of the easements, covenants, conditions, restrictions, and other provisions contained in these Covenants, including, but not limited to, the following provisions. Page 6 of 35 3.1.1. The right of the Board to impose reasonable limits on the use of the Common Areas by Persons who are not Owners or Occupants, and to charge admission, membership, and other use fees for the use of any recreational or other facility situated upon the Common Areas when all or any portion of the costs of ownership, operation, maintenance and repair of such facilities should, in the opinion of the Board, be borne by users of the facilities rather than by all Owners or Occupants of the Association. 3.1.2. The right of the Board to establish reasonable rules and regulations, which are not inconsistent with this Declaration, pertaining to or restricting the use of the Common Areas or Limited Common Areas by Owners, Occupants, or other Persons. 3.1.3. The right of the Board to borrow money to improve, replace, restore, or expand the Common Areas or Limited Common Areas or add new Common Areas or Limited Common Areas; 3.1.4. The right of the Board to suspend the right of an Owner, Occupant, or any Person (including, but not limited to, a member of the family of an Owner) to use the Common Areas or any designated portion thereof (and to suspend the Owner’s voting rights) during any time in which any Assessment respecting such Owner or such Owner’s Lot or Unit remains unpaid and delinquent, or for any infraction of the Association Rules or breach of these Covenants, and for any repetition of any such payment delinquency or infraction, in accordance with the provisions of these Covenants and the Bylaws. Notwithstanding the foregoing, the Board shall not have the right hereunder to limit or suspend any Owner’s rights to such an extent that the Owner is denied access to his Lot or Unit; and 1.1.4. The right of the Board or Declarant to change the size, shape, or location of Common Areas or Limited Common Areas. 3.2. Delegation of Use. No Owner may delegate such Owner’s right to use and enjoy the Common Areas or Limited Common Areas to any Persons, except to the members of Owner’s immediate family, to Occupants of the Owner’s Unit, or to the Owner’s invitees, in each case as permitted by the Association Rules. 3.3. Waiver of Use. No Owner shall be exempt, from personal liability for Assessments and Reimbursement Assessments, and no Owner may release any Lot, Building, or Unit owned by such Owner from the liens, charges and other provisions of these Covenants, the Articles, Bylaws, or Association Rules, by voluntary waiver of or suspension or restriction of the Owner’s right to use and enjoy the Common Areas or by the abandonment of the Owner’s Lot, Building, or Unit. ARTICLE IV. ASSOCIATION 4.1. Purpose of Association. The Association has been, or will be, incorporated as a nonprofit corporation to serve as the governing body for all of the Members for the protection, improvement, alteration, maintenance, repair, replacement, administration and operation of the Common Areas, the assessment of expenses, payment of losses, disposition of casualty insurance proceeds, and other matters as provided in these Covenants, the Articles, the Bylaws, and the Association Rules. The Association shall not be deemed to be conducting a business of any kind, and all funds received by the Association shall be held and applied by it for the benefit of Members in accordance with the provisions of these Covenants, the Articles, the Bylaws, and the Association Rules. Page 7 of 35 4.2. Articles and Bylaws. In addition to the rights and powers of the Association set forth in these Covenants, the Association and its directors, officers, employees, agents and Members shall have such rights and powers as are set forth in the Articles and Bylaws and are not inconsistent with law or these Covenants. Such rights and powers, subject to the approval thereof by any agencies or institutions deemed necessary by Declarant, may encompass any and all things which a natural person could do or which now or hereafter may be authorized by law, provided the Articles, Bylaws, and Association Rules are not inconsistent with the provisions of these Covenants and are necessary, desirable or convenient in furtherance of the purposes set forth in these Covenants. A copy of the Articles, Bylaws, and Association Rules shall be available for inspection at the office of the Association’s Manager during reasonable business hours. 4.3. Board of Directors and Officers. The affairs of the Association shall be conducted by the Board and such officers as the Board may elect or appoint in accordance with the Articles and the Bylaws and these Covenants. The initial Board shall be composed of two (2) members appointed by Declarant and designated in the Articles. The Board may also appoint various committees (which may consist, in whole or in part, of individuals who are not on the Board) and may appoint a Manager who shall, subject to the direction of the Board, be responsible for the day-to-day operation of the Association. The Board shall determine the compensation to be paid to the Manager. 4.4. Association Rules. The Board shall be empowered to adopt, amend and repeal Association Rules as it deems reasonable and appropriate, effective upon adoption or at such later time as may be specified therein, and binding upon all Persons subject to these Covenants, to govern the use and/or occupancy of the Common Areas. The Association Rules may include the establishment of a system of fines and penalties. The Association Rules shall govern such matters in furtherance of the purposes of the Association including, but not limited to, the use of the Common Areas; provided, however, that the Association Rules may not discriminate among Owners, except as expressly provided or permitted herein, and shall not be inconsistent with these Covenants, the Articles, or Bylaws. The Association Rules shall have the same force and effect as if they were set forth in and were part of these Covenants and shall be binding on Owners and all other Persons having any interest in or making any use of the Property, whether or not actually received thereby. The Association Rules shall be available at the principal office of the Association’s Manager to each Owner or other Person reasonably entitled thereto, upon request. In the event of any conflict between any provision of the Association Rules and any provisions of these Covenants, or the Articles or Bylaws, the provisions of the Association Rules shall be deemed to be superseded by the provisions of (and in the following order of importance) any applicable laws and regulations, these Covenants, the Articles or Bylaws to the extent of any such conflict and in that order. 4.5. Indemnification. To the fullest extent permitted by law, every director and officer of the Association and the Declarant (to the extent a claim may be brought against Declarant, by reason of any appointment, removal or control over members of the Board) shall be indemnified by the Association, and every other Person serving as an employee or direct agent the Association, or on behalf of the Association as a member of a committee or otherwise, may, in the discretion of the Board, be indemnified by the Association against all expenses and liabilities including, but not limited to attorneys’ fees, reasonably incurred by or imposed in connection with any proceeding to which such Person may be a party or in which he may become involved, by reason of being or having served in such capacity on behalf of the Page 8 of 35 Association (or in the case of Declarant by reason of having appointed, removed or controlled or failed to control members of the Board), or any settlement thereof whether or not such person is a director, officer or serving in such other specified capacity at the time such expenses are incurred, provided that the Board shall determine, in good faith, that the Person to be indemnified hereunder did not act, fail to act, or refuse to act with gross negligence or fraudulent or criminal intent in the performance of his duties. The foregoing rights of indemnification on shall be in addition to and not exclusive of all other rights to which such Persons may be entitled at law or otherwise. 4.6. Non-Liability of Officials. To the fullest extent permitted by law, neither Declarant nor any other committees of the Association nor any member thereof, nor any directors or officers of the Association, shall be liable to any Member, the Association, or any other Person for any damage, loss or prejudice suffered or claimed on account of any decision, approval or disapproval of drawings or specifications (whether or not defective), course of action, act, inaction, omission, error, negligence or the like made in good faith and which Declarant, the Board, or such committees or Persons reasonably believed to be within the scope of their respective duties. 4.7. Accounting. The Association, at all times, shall keep, or cause to be kept, true and correct records of account in accordance with sound accounting principles, which shall specify in reasonable detail all expenses incurred, and funds accumulated from Assessments or otherwise. 4.8. Records. Upon reasonable written request and pursuant to procedures established in the Bylaws, the Association shall make the books, records and financial statements of the Association available for inspection by each Owner together with current copies, as amended from time to time, of these Covenants and the Articles, Bylaws, and Association Rules. The Declarant shall be under no obligation to make its own books and records available for inspection by any Owner or other Persons. The books and records of the Association maybe audited or unaudited as the Board, from time to time, may determine. 4.9. Manager or Managing Agent. All powers, duties and rights of the Association or the Board, as provided by law and herein, may be delegated to a Manager or managing agent; provided, however, that no such delegation shall relieve the Association of its obligation to perform any such delegated duty. 4.10. Rights of Enforcement. The Board shall have the first right to enforce the provisions of these Covenants and/or any and all covenants, restrictions, reservations, charges, servitudes, assessments, conditions, liens or easements provided for in any contract, deed, Covenants or other instrument relating to the Common Areas which (a) shall have been executed pursuant to, or subject to, the provisions of these Covenants, or (b) otherwise shall indicate that the provisions of such instrument were intended to be enforced either by the Association or by the Declarant. If, however, both the Board and the Declarant fail or refuse to enforce these Covenants or any provision thereof after reasonably informative written notice of a violation of these Covenants is provided to them, then an Owner may enforce them on behalf of the Association by any appropriate legal action, whether at law or in equity and the Association and the Declarant may pursue whatever rights and remedies might be available to them at law or in equity. 4.11. Contracts with Others for Performance of Association’s Duties. Subject to the restrictions and limitations contained herein, the Board may enter into contracts and transactions with Page 9 of 35 others, including Declarant and any affiliated Persons, for the performance of the Association’s duties and other purposes consistent with these Covenants, and such contracts or transactions shall not be invalidated or in any way affected by the fact that one or more directors or officers of the Association or members of any committee may be employed by or otherwise connected with Declarant or any affiliated Person, provided that the fact of such interest shall be disclosed or known to the other directors acting upon such contract or transaction, and provided further that the transaction or contract is fair and reasonable. Any such director, officer, or committee member may be counted in determining the existence of a quorum at any meeting of the Board or committee of which he or she is a member, which shall authorize any contract or transaction described above or grant or deny any approval sought by Declarant or other Person, and may vote thereon to authorize any such contract, transaction, or approval with like force and effect as if he or she were not so interested. Any contracts entered into by the Declarant prior to the Transition Date and subsequently assigned to the Association must give the right to the Association to terminate the contracts with no more than ninety (90) days’ notice. 4.12. Purposes for Which Association’s Funds May Be Used. The Association, except as otherwise permitted in these Covenants, shall apply all funds collected and received by it (including Assessments, fees, loan proceeds, surplus funds, interest earned, and all funds received by it from any other source) for the common good and benefit of the Common Areas and the Owners and Occupants by devoting said funds, among other things, to the Common Expenses. 4.13. Borrowing Power. The Association may borrow money in such amounts, at such rates, upon such terms and security, and for such periods of time as the Board deems necessary or appropriate. 4.14. Association’s Rights in Spending Funds from Year to Year. The Association shall not be obligated to spend in any year all the sums received by it in such year, regardless of source, unless specifically provided to the contrary in these Covenants, and may carry forward as additional working capital or reserves any balances remaining. The Association shall not be obligated to reduce the amount of the Maintenance Assessments in the succeeding year if a surplus exists from a prior year, and the Association may carry forward from year to year such surplus as the Board, in its discretion, may determine to be desirable for the greater financial security of the Association and the accomplishment of its purposes. ARTICLE V. MEMBERSHIP AND VOTING 5.1. Memberships. Every Owner shall be a Member of the Association, and such membership shall be appurtenant to, and inseparable from, ownership of a Lot. There shall be only one membership per Owner. If a Lot is owned by more than one person, all co-Owners shall share the privileges of such membership, subject to reasonable Board regulation and the restrictions on voting set forth in Section 5.4.3 and in the Bylaws, and all such co-Owners shall be jointly and severally obligated to perform the responsibilities of Owners. The membership rights of an Owner that is not a natural person may be exercised by any member, manager, officer, director, partner or trustee, or by the individual designated from time to time by the Owner in a written instrument provided to the Secretary of the Association. 5.2. Transfer of Membership. The rights and obligations of a Member shall not be assigned, transferred, pledged, conveyed or alienated in any way except upon transfer of ownership to an Owner’s Unit, and then only to the transferee of ownership to the Unit. A transfer of ownership may be affected by deed, intestate succession, testamentary disposition, foreclosure Page 10 of 35 of a Mortgage, or such other legal process as now in effect or as may hereafter be established under or pursuant to the laws of the state of Montana. Any attempt to make a prohibited transfer shall be void. Any transfer of ownership to a shall operate to transfer the Membership appurtenant thereto to the new Owner(s) thereof. 5.3. Use of Membership; Designees. The Board may provide in its roles or Bylaws for the use of proxies by Members. 5.4. Voting. The Association shall have two classes of membership, Class “A” and Class ‘‘B.’’ 5.4.1. Class “A”: Class “A” shall mean the Voting Member selected by the Class “A” Members and the Owner of Lot A2. On all matters to be decided by the members of the Association, unless otherwise provided in these Covenants, each Lot shall have one (1) vote. Class “A” Members’ voting authority does not begin until the occurrence of the Transition Date. 5.4.2. Class “B”: The sole Class “B” Member shall be the Declarant. The Class ‘‘B” Member may appoint the members of the Board and have the sole voting authority during the Control Period. The Class “B” membership shall terminate as of the Transition Date. Upon termination of the Class “B” Membership at the Transition Date, the Declarant shall become a Class “A” Member, and the Declarant shall be entitled to Class “A” votes for each Unit that it owns, including any unsold Units. 5.4.3. Exercise of Voting Rights: Except as otherwise specified in this Declaration or in the Bylaws, the vote for each Lot owned by a Class “A” Member shall be exercised by the Voting Member representing the Lot of which the Unit is a part, as provided in. Voting Member may cast all such votes as it, in its discretion, deems appropriate. 5.4.4. Multiple Members. In any situation where a Member is entitled personally to exercise the vote for a Unit and there is more than one Member of the Unit, the vote for such Unit shall be exercised as the co-Owners determine among themselves and advise the secretary of the Association in writing prior to the vote being taken. Absent such advice, the Unit’s vote shall be suspended if more than one Member seeks to exercise it. 5.4.5. Voting Members. Lot A1 shall elect a Voting Member to cast all-Class “A” Members' votes in Lot A1 on all Association matters requiring a vote, except as otherwise specified in this Declaration or in the Bylaws. An alternate Voting Member shall be elected to cast such votes in the absence of the Voting Member. 5.5. First Board. The Association shall call for the first election of the Board not later than thirty (30) days after the Transition Date. ARTICLE VI. ASSESSMENTS 6.1. Creation of Assessments. Assessments for Association expenses are hereby created, as the Board may specifically authorize from time to time. Each Owner, by accepting a deed for a Building or Unit, is deemed to covenant and agree to pay these Assessments. The Association shall also establish and maintain an account equal to the amount of the Association’s insurance(s) deductibles, which can be commingled with the Capital Improvements account. There shall be four (4) types of Assessments: 6.1.1. Maintenance Assessments, as described in Section 6.6; 6.1.2. Capital Improvement Assessments, as described in Section 6.8; Page 11 of 35 6.1.3. Special Assessments, as described in Section 6.9; and 6.1.4. Reimbursement Assessments, as described in Section 6.10. 6.2. Assessments as a Lien. All Assessments, together with interest (computed from thirty (30) days after the due date of such assessment at a rate of fifteen percent (15%) per annum or such higher rate as the Board may establish, subject to the limitations of Montana law), late charges of $100 a month or in such amount as the Board may establish by resolution, costs, and reasonable attorneys’ fees, shall be charged and a continuing lien upon each Unit or Lot against which the Assessment is made until paid, as more particularly provided in Section 6.11 (an “Assessment Lien”). Each Assessment, together with interest, late charges, costs, and reasonable attorney’s fees, also shall be the personal obligation of the Owner from and after the time the Assessment arises. Upon a transfer of title to a Lot or Unit, the grantee shall be jointly and severally liable for any Assessments and other charges due at the time of conveyance. 6.3. Certificate of Assessment Status. The Association shall, upon request, furnish to any Owner liable for any type of Assessment a certificate in writing signed by an Association officer or its authorized representative setting forth whether such Assessment has been paid. Such a certificate shall be conclusive evidence of payment. The Association may require the advance payment of a reasonable processing fee for the issuance of such a certificate. 6.4. Payment of Assessments. 6.4.1. Assessments shall be paid in such manner and on such dates as the Board may establish. The Board may require advance payment of an Assessment at the closing of the transfer of title to a Lot or Unit and impose special requirements for Owners with a history of delinquent payments. If the Board so elects, Assessments may be paid in two (2) or more installments. Unless the Board otherwise provides, the Maintenance Assessment shall be due and payable in advance on the first day of each fiscal year, unless the Board directs otherwise. If any Owner is delinquent in paying any Assessment or other charge levied on such Owner’s Lot, the Board may require any unpaid installment of any and all outstanding Assessments to be paid in full immediately. 6.4.2. No Owner is exempt from liability for Assessments by non-use of Common Areas, abandonment of the Owner’s Lot or Unit, or any other means. The obligation to pay Assessments is a separate and independent covenant on the part of each Owner. No diminution or abatement of Assessments or set off shall be claimed or allowed for any alleged failure of the Association or Board to take some action or perform some function required of it, or for inconvenience or discomfort arising from the making of repairs or improvements, or from any other action it takes. 6.4.3. The Association is specifically authorized to enter into contracts or contracts for “in kind” contribution of services, materials, or a combination of services and materials with the Declarant or other entities for payment of Common Expenses. 6.5. Declarant’s Obligation for Assessments. During the Control Period, Declarant shall not be required to pay Assessments on its unsold Lots or Units. After termination of the Control Period, the Declarant shall pay Assessments on the Lots in the same manner as any other Owner. 6.6. Maintenance Assessment. Page 12 of 35 6.6.1. Prior to the end of the year, the Board shall prepare a budget covering the estimated Common Expenses during the coming year, including any capital contribution to establish a reserve fund in accordance with a budget separately prepared. 6.6.2. The Board shall levy Maintenance Assessments equally against the two Lots (Lot A1 and Lot A2), the obligation to pay the proportional share of the Assessments shall be the obligation of each Owner of the Lot or Unit. The Board shall fix the amount of the Maintenance Assessment at least thirty (30) days in advance of each fiscal year. Within thirty (30) days after the Board's adoption of the budget, the Board shall provide a summary of the budget to all Owners. 6.6.3. In determining the total funds to be generated through the levy of Maintenance Assessments, the Board, in its discretion, may consider other sources of funds available to the Association, including any surplus from prior years and any Assessment income expected to be generated during the fiscal year. Assessments shall be levied equally against all Lots within the Subdivision. 6.7. Failure to Timely Approve Budget. If the proposed budget is disapproved or the Board, for any reason, fails to determine a budget for any year, then, until such time as a budget is determined, the budget in effect for the immediately preceding year shall continue for the current year. 6.8. Capital Improvement Assessment. The Board shall annually prepare a reserve budget that takes into account the number and nature of replaceable assets within the Common Areas, the expected life of each asset, and the expected repair or replacement cost. The Board shall set the required capital in an amount sufficient to permit meeting the projected needs of the Association, as shown on the budget, with respect to both amount and timing by annual Maintenance Assessments over the budget period, but not less than a minimum of 10% of the total amount required to operate the Association. 6.9. Special Assessments by Association. In addition to other authorized Assessments, the Association may levy Special Assessments from time to time to cover unbudgeted or excess budgeted expenses. Special Assessments shall be payable in such manner and at such times as determined by the Board and may be payable in installments extending beyond the fiscal year in which the Special Assessment is approved. 6.10. Reimbursement Assessments. The Association shall have the power to levy Reimbursement Assessments against a particular Lot as follows: 6.10.1. to cover the costs, including overhead and administrative costs, of providing benefits, items, or services to the Lot, upon request of the Owner and approval by the Association, which Assessments may be levied in advance of the provision of the requested benefit, item, or service as a deposit against charges to be incurred by the Owner; and 6.10.2. to cover costs incurred in bringing the Lot into compliance with the terms of these Covenants or the Declaration, or costs incurred as a consequence of the conduct of the Owner of the Lot, or the Owner’s agents, contractors, employees, licensees, invitees, or guests; provided, the Board shall give the Owner prior written notice and an opportunity for a hearing before levying any Assessments under this ARTICLE VI. 6.11. Lien for Assessments. Page 13 of 35 6.11.1. The Association shall have a lien against each Unit to secure its proportional payment of delinquent Assessments, including interest, subject to the limitations of Montana law, late charges, and costs of collection (including attorneys’ fees) (an “Assessment Lien”). Such Assessment Lien shall be superior to all other liens, except: (a) the liens of all taxes, bonds, assessments, and other levies that bylaw would be superior; and (b) the lien or charge of any first mortgage of record at the time such lien attaches (meaning any recorded mortgage with first priority over other mortgages) made in good faith and for value. Such a lien, when delinquent, may be enforced by foreclosure. The Association may bid for the Lot at foreclosure and acquire, hold, lease, mortgage, and convey the Lot. While a Lot is owned by the Association following foreclosure, no right to vote shall be exercised on its behalf; and no assessment shall be levied on it. 6.11.2. Nothing herein shall be construed as requiring the Association to take any action hereunder in any particular instance, and the failure of the Association to take such action at any time shall not constitute a waiver of the right to take the same or similar action at a later time or in a different instance. 6.11.3. The Association may sue the Owner(s) for unpaid assessments and other charges authorized hereunder without foreclosing or waiving the lien securing the same. The sale or transfer of any Lot shall not affect the Assessment Lien or relieve such Lot from the lien for any prior or subsequent assessments except pursuant to the foreclosure of a first mortgage. A mortgagee or other purchaser of a Lot who is unrelated to the Owner of the Lot being foreclosed, who obtains title pursuant to foreclosure of the mortgage, shall be jointly liable for the unpaid Assessments on such Lot due prior to such acquisition of title. 6.12. Commencement of Assessments. The obligation to pay Assessments shall commence as to each Lot on the first day of the month after all the following have occurred: (a) the Lot has been made subject to these Covenants; (b) the Board has first determined a budget and levied assessments pursuant to this Section; and (c) the first annual Maintenance Assessment levied on each Lot shall be adjusted according to the number of months remaining in the fiscal year at the time Assessments commence on the Lot. 6.13. Failure to Assess. Failure of the Board to fix Assessment amounts or to deliver or mail each Owner an Assessment notice shall not be deemed a waiver, modification, or a release of any Owner from the obligation to pay Assessments. In such an event, each Owner shall continue to pay Maintenance Assessments or whatever other Assessments as may be due on the same basis as during the last year for which an Assessment was made, if any, until a new Assessment is levied, at which time the Association may retroactively assess any shortfalls in collections. 6.14. Capitalization of Association. The Association shall require every Owner (other than the Declarant) upon purchase, to make a non-refundable working capital contribution to the Association in an amount equal to three (3) months of Maintenance Assessments. This amount shall be in addition to, not in lieu of, the annual Maintenance Assessments and shall not be considered an advance payment of such assessment. This amount shall be deposited into the purchase and sales escrow and disbursed therefrom to the Association for use in covering operating expenses and other expenses incurred by the Association pursuant to these Covenants and the Bylaws. 6.15. Rules Regarding Billing and Collection Procedures. The Board shall have the right to adopt rules and regulations setting forth procedures for the purpose of making the Assessments Page 14 of 35 provided for herein, and for the billing and collection thereof, provided that the procedures are not inconsistent with the provisions hereof. Any failure of the Association to send a bill to an Owner shall not relieve an Owner of liability for any Assessment or charge under these Covenants, but the Assessment Lien therefore shall not be foreclosed or otherwise enforced until the Owner has been given such notice prior to such foreclosure or enforcement as may be required by law or provided for in the Bylaws. Such a notice may be given at any time prior to or after delinquency of such payment. The Association shall be under no duty to refund any payments received has received, even if the ownership of a Lot changes during an assessment period. Successor Owners shall be given credit, on a prorated basis, for prepayments made by prior Owners. 6.16. Pledge of Assessment Rights as Security. The Association shall have the power to pledge the right to exercise its assessment powers and rights provided for in these Covenants as security; provided, however, that any such pledge occurring after the Transition Date shall require (a) the prior affirmative vote or written assent of a majority of Voting Members, and (b) the consent of Declarant (so long as Declarant owns any property subject to these Covenants). 6.17. Exemption of Unsold Lots. Notwithstanding anything in this ARTICLE VI to the contrary, prior to the Transition Date, no Assessments shall be levied upon Declarant, or payable with respect to any Lot or Unit owned by Declarant. For all other Lots, Assessments shall commence, and Owners (and their Lots) shall be subject to Assessments, upon the date the Lot or Unit is conveyed to a purchaser or upon the first day of the month after such a conveyance, as the Board may elect. 6.18. Other Charges and Costs Assessable. The Association may levy and assess charges, costs, and fees for matters such as, but not limited to, the following, in such reasonable amount(s) as the Board may determine in its discretion at any time and from time to time, including reimbursement of charges that are made to the Association by its Manager or any other Person for copying of Association or other documents; return check fees; facsimiles; long distance telephone calls; notices and demand letters; transfer charges including but not limited to charges related to transfer of ownership or to the leasing of a Lot, and the dwelling located thereon; and other charges incurred by the Association for or on behalf of any Owner(s). All such charges, costs, and fees shall be in addition to the Assessments levied by the Association but shall be subject to all of the Association’s rights with respect to the collection and enforcement of Assessments. 6.19. Notice of Annual Assessment. At least thirty (30) days before the expiration of each calendar year, the Board will prepare and distribute to each Owner a proposed budget for the Association assessment during the next ensuing year. 6.20. Time and Manner of Payment; Late Charges and Interest. The Board may, in its discretion and without waiving the imposition of a late charge or interest in any other instance, waive the late charge and/or interest in any particular instance. A delinquent Owner shall also be liable for attorneys’ fees and other related costs incurred by the Association as a result of his delinquency, and if any suit, action or arbitration proceeding is brought to collect and/or foreclose the Assessment Lien for any such Assessment or charge, then there shall be added to the amount thereof costs of suit and reasonable attorneys’ fees to be fixed by the court and included in any judgment or award rendered thereon. Page 15 of 35 ARTICLE VII. MAINTENANCE 7.1. Common Areas. 7.1.1. The Association, its Manager, or another duly delegated representative, shall maintain and otherwise manage all Common Areas, including, but not limited to, any landscaping walkways, sidewalks, and park facilities; providing snow removal; and maintaining stormwater infrastructure located outside the public right-of-way; provided; however, the Association shall not be responsible for any such maintenance and management on any Lot unless (a) such areas or structures being maintained and managed are within easements intended for the general benefit of the Property, and (b) the Association assumes in writing the responsibility for such maintenance, or such responsibility is set forth in a Recorded instrument as hereinafter provided. The Association shall be responsible for controlling noxious weeds per the Montana Noxious Weed Control Act (MCA §7-22-2101 through §7-22-2153) and the rules and regulations of the Gallatin County Weed Control District. 7.1.2. The Board shall use a reasonable standard of care in providing for the repair, management, and maintenance of Common Areas. In this connection, the Association may, subject to any applicable provisions relating to Capital Improvement Assessments, in the discretion of the Board: (a) construct, reconstruct, repair, replace, or refinish any improvement or portion thereof upon Common Areas; (b) replace injured and diseased trees and other vegetation in any Common Areas and maintain upon any Common Areas such signs as the Board may deem appropriate for the proper identification, use, and regulation thereof; and (c) do all such other and further acts which the Board deems necessary or appropriate to preserve and protect the Common Areas and the beauty thereof, in accordance with the general purposes specified in these Covenants. 7.1.3. The Board shall be the sole judges as to the appropriate maintenance of all Common Areas and other properties maintained by the Association. Any cooperative action necessary or appropriate to the proper maintenance and upkeep of said properties shall be taken by the Board, its Manager, or by its duly delegated representative. 7.1.4. In the event any subdivision plat, deed restriction, these Covenants, or any other agreement permits or requires the Board to determine whether or not Owners of certain Lots or the Association will be responsible for maintenance of certain Common Areas, the Board shall exercise its sole discretion to determine whether or not it would be in the best interest of the Association to conduct such maintenance, considering cost, uniformity of appearance, location and other factors deemed relevant by the Board. The Board may cause the Association to contract with others for the performance of the maintenance and other obligations of the Association under this Article VII end, in order to promote uniformity and harmony of appearance, the Board also may cause the Association to contract to provide maintenance services to Owners of Lots having such responsibilities in exchange for the payment of such fees as the Board and Owner may agree upon. 7.2. Assessment of Certain Costs of Maintenance and Repair of Common Areas. In the event that the need for maintenance, repair or replacement of Common Areas is caused through the willful or negligent act of any Owner, the cost of such maintenance or repairs shall be a Page 16 of 35 Reimbursement Assessment against the Owner and the Owner’s Lot secured by Assessment Lien, any charges or fees to be paid by the Owner in connection with a contract entered into by the Association with the Owner for the performance of the Owner’s maintenance responsibilities shall also be a Reimbursement Assessment and shall be secured by Reimbursement Assessment Lien. 7.3. Improper Maintenance and Use. In the event any portion of any Lot is so maintained as to present a public or private nuisance or an unreasonable condition (as determined by the Board) with respect to other Owners or Occupants, or as to detract from the appearance or quality of the surrounding Lots, Buildings, Units or other areas of the Subdivision which are affected thereby or related thereto, or in the event any portion of a Lot is being used in a manner which violates these Covenants, or in the event the Owner is failing to perform any of its obligations under the Covenants, the Board may by resolution make a finding to such effect, specifying the particular condition or conditions which exist, and pursuant thereto give notice to the offending Owner(s) that unless corrective action is taken within ten (10) days, the Board may cause such action to be taken at the Owner’s cost. If, at the expiration of the ten (10) day period of time, the requisite corrective action has not been taken, the Board shall be authorized and empowered to cause remedial action to be taken. The cost of any such remedial action shall become a Reimbursement Assessment against the offending Owner, and the Owner’s Lot, and shall be secured by an Assessment Lien. Notwithstanding the foregoing, if the Board believes that immediate action is or may be necessary to avoid a risk of serious physical injury to persons or damage to Property, the Board shall be entitled to take whatever action it may believe to be necessary to guard against or prevent such injuries or damage without being required to wait ten days after giving notice to the affected Owner. 7.4. Right of Entry. Representatives and agents of the Association, including, but not limited to, property managers, security patrolmen, and the Board shall have the right to enter upon all Lots and Common Areas for maintenance, remedial action, and when reasonably deemed necessary for the protection of persons or Property, and neither the Association, nor any representative or agent thereto shall have any liability to any person when acting in good faith in effecting such entry. ARTICLE VIII. CITY OF BOZEMAN REQUIRED COVENANTS 8.1. Stormwater Maintenance. The Association shall be responsible for the maintenance of all stormwater infrastructure located outside the public right-of-way. The Association shall be responsible for levying annual assessments to provide for the maintenance, repair, and upkeep of all stormwater infrastructure located outside the public right-of-way. The Association shall maintain the stormwater infrastructure in accordance with the maintenance plan for the Subdivision included as Exhibit B and incorporated herein by reference. ARTICLE IX. RESTRICTIONS ON ALL LOTS AND UNITS The following restrictions on use apply to all Lots within the Subdivision: 9.1. Zoning Regulations. The lawfully enacted zoning regulations of the City, County, and any building, fire, and health codes are in full force and effect, and no Lot may be occupied or utilized in a manner that is in violation of any such statute, law, or ordinance. 9.2. Sidewalks. All sidewalks will conform to City specifications and regulations. If an Owner, its representative, agent, or employee causes damage to any sidewalk on the Property, the Owner Page 17 of 35 must repair or replace the sidewalk so that it is returned to its original condition. The Association is responsible for sidewalk maintenance and repair, including ice and snow removal. 9.3. Parking. The Board is responsible for managing parking; provided, however, that the Board shall have no ownership interest in any parking area or facility within the Subdivision. 9.4. Vehicles. 9.4.1. Campers, Boats, Snowmobiles, and Recreational Vehicles. No campers, boats, marine craft, hovercraft, boat trailers, travel trailers, motorhomes, snowmobiles, golf carts, and other types of recreational vehicles and equipment, implements, or accessories may be kept on any Lot. The Board, as designated in these Covenants, will have the absolute authority to determine from time to time whether a vehicle and/or accessory is operable. Upon an adverse determination by said Board, the vehicle and/or accessory will be removed and/or otherwise brought into compliance with this subsection. All automobiles shall be parked in the respective parking areas. The Owners understand and agree that the Association may tow recreational vehicles off the public streets at the Owner’s expense. 9.5. Garbage. No garbage or trash shall be kept, maintained, or contained in or upon the any Lot so as to be visible except temporarily, in containers approved by the Association, for the day of pickup. No incinerators shall be kept or maintained on any Lot and no trash or garbage shall be burned on the premises. No refuse pile, garbage, compost pile, or unsightly objects shall be allowed to be placed, accumulated, or suffered to remain anywhere on any Lot. 9.6. Removal of Debris. If any Owner fails to remove debris or unsightly material, the Declarant or the Association may remove it and assess the removal cost, including reasonable overhead charges, against the Owner as a Reimbursement Assessment. 9.7. Violation of Law. No Owner shall permit anything to be done or kept in or upon the Owner’s Lot or in or upon any Common Areas which will violate any law or other applicable requirement of governmental authorities. 9.8. Animals. No animals, including, but not limited to, horses or other domestic farm animals, fowl, or poisonous reptiles of any kind, may be kept, bred, or maintained on any Lot or in or upon any Common Areas, except a reasonable number of commonly accepted household pets as determined in the Board’s discretion. No animals shall be kept, bred, or raised within the Subdivision for commercial purposes. In no event shall any domestic pet, including cats, be allowed to run free away from its owner without a leash or conduct itself so as to create an unreasonable annoyance. All City and County animal and animal control ordinances shall be complied with. If a particular animal or animals shall, at the discretion of the Board, become a nuisance, the Board shall have the authority to require that the same be kept tethered or confined on the owner’s property, and the Board may further require that when the said animal or animals are taken from the said property such animals must be kept on a leash and must be under the owner’s control at all times. If an animal becomes a nuisance, hazard, or threat to Persons or animals in the Subdivision, or wild animals, the Board may order the owner of such animal to remove the animal from the Subdivision. 9.9. Nuisances. No Owner shall permit or suffer anything to be done or kept about or within the Owner’s Lot, or on or about the Property, which will obstruct or interfere with the rights of the Declarant, other Owners, or authorized Persons to use and enjoy the Common Areas, or annoy Page 18 of 35 them by unreasonable noises or otherwise, nor shall an Owner commit or permit any such nuisance. The foregoing shall include a prohibition against speakers, horns, whistles, bells, or other devices audible from neighboring buildings, lots, or street. No Owner shall engage in any activity that materially disturbs or destroys the vegetation, wildlife, or air quality within the Property, or which results in unreasonable levels of sound or light pollution. Nothing shall be done or maintained on any part of a Lot that emits foul or obnoxious odors outside the Lot or creates noise or other conditions that tend to disturb the peace, quiet, safety, comfort, or serenity of the other Owners. No obnoxious, illegal, or offensive activity shall be carried on upon any portion of the Property, which in the Board’s reasonable determination tends to cause embarrassment, discomfort, annoyance, or nuisance to persons using the Common Areas or to the Owners of other Lots. Normal construction activities and parking in connection with the building of improvements on a Lot shall not be considered a nuisance or otherwise prohibited by this Declaration. The Board, in its sole discretion and power, but subject to the provisions hereto, shall have the right to determine the existence of any unreasonable annoyance or nuisance under this Declaration. 9.10. Development Activity. Notwithstanding any other provision herein, Declarant and its successors and assigns will be entitled to conduct all activities normally associated with and convenient to the development of the Property and the construction of Buildings and Units on the Property and selling and/or leasing of such Buildings and Units. Notwithstanding any provision in this Declaration, including Association Regulations to the contrary, Declarant may construct and maintain upon portions of the Common Areas and other property owned by Declarant such facilities, activities, and things as, in Declarant’s opinion, may reasonably be required, convenient, or incidental to the construction, sale, or leasing of Buildings or Units. Such permitted facilities, activities, and things shall include, without limitation, business offices, signs, flags (whether hung from flag poles or attached to a structure), model Units, sales and leasing offices, holding or sponsoring special events, and exterior lighting features or displays. The Declarant shall have easements for access to and use of such facilities at no charge. 9.11. Health, Safety and Welfare. In the event any uses, activities, and facilities are deemed by the Board to be an unreasonable annoyance or a nuisance or to adversely affect the health, safety, or welfare of Owners, the Board may make such rules restricting or regulating their presence on the Property as part of the Association Rules. Any such rules shall be consistent with the provisions of this Declaration. 9.12. Safe Condition. Without limiting any other provision in this Section, each Owner shall maintain and keep the Owner’s Lot at all times in a safe, sound, and sanitary condition and repair and shall correct my condition or refrain from any activity which might interfere with the reasonable enjoyment by other Owners or the Common Areas. 9.13. Storage. There shall be no obstruction of the Common Areas, nor shall anything be stored in or on the Common Areas without the prior written consent of the Board. 9.14. Insurance. Nothing shall be done or kept on any Lot or in the Common Areas which will increase the rate of insurance on the Lot or contents thereof without the prior written consent of the Board. No Owner shall permit anything to be done or kept on the Owner’s Lot or in the Common Areas which will result in the cancellation of insurance on the Lot or contents thereof, or which would be in violation of any law. No waste will be permitted on the Common Areas. Page 19 of 35 No Owner shall conduct any business that would increase the rate of the Association’s insurance. 9.15. Drainage. No Owner shall alter the direction of natural drainage from their Lot, nor shall any Owner permit accelerated storm run-off to leave their Lot without first using reasonable means to dissipate the flow energy. 9.16. Security. The Association is not responsible for security of any Lot or any Building or Unit thereon, and each Owner and each is responsible for the safety and the security of their Lot. The Association may, but shall not be obligated to, maintain or support certain activities within the Subdivision designed to enhance the level of safety or security which each Owner provides. Neither the Association nor Declarant shall in any way be considered insurers or guarantors of safety or security within the Subdivision, nor shall either be held liable for any loss or damage by reason of failure to provide adequate security or ineffectiveness of safety measures undertaken. 9.17. Security Waiver of Liability. No representation or warranty is made that any systems or measures, including any mechanism or system for limiting access to the Property, cannot be compromised or circumvented, nor that any such systems or security measures undertaken will in all cases prevent loss or provide the detection or protection for which the system is designed or intended. Each Owner acknowledges, understands, and shall be responsible for informing its tenants and all occupants of the Owner’s Lot that the Association, its Board and committees, and Declarant are not insurers or guarantors of security or safety and that each Person within the Subdivision assumes all risks of personal injury and loss or damage to property resulting from acts of third parties. 9.18. Construction Activities. These Covenants will not be construed so as to unreasonably interfere with or prevent normal construction activities during the remodeling of or making of additions to improvements by an Owner (including Declarant) upon any Lot, Building, or Unit within the Property. Specifically, no such construction activities by the Declarant will be deemed to constitute a nuisance or a violation of these Covenants by reason of noise, dust, presence of vehicles or construction machinery, posting of signs or similar activities, provided that such construction is pursued to completion with diligence and conforms to usual construction practices in the area. 9.19. Repair of Building. No structure on any Lot shall be permitted to fall into disrepair. Each such structure shall at all times be kept by the Owner thereof in good condition and repair and adequately painted or otherwise finished. In the event any building or structure is damaged or destroyed, then, subject to the approvals required by ARTICLE XII, such structure shall be promptly repaired or rebuilt or shall be removed within twelve (12) months after the incident and the portion of the Property upon which such improvements were located shall be cleared and restored to a presentable and safe condition. 9.20. Oil and Mining Operations. No oil drilling, oil development operations, oil refining, quarrying or mining operation of any kind will be permitted upon or in any Lot, nor will oil wells, tanks, tunnels, mineral excavations, or shafts be permitted upon any Lot. No derrick or other structure designed for use in boring for oil or natural gas will be erected, maintained or permitted upon any Lot. No tank for the storage of oil or other fluids may be maintained on Lot above the surface of the ground. Page 20 of 35 9.21. Mineral Exploration. No Lot shall be used in any manner to explore for or to remove oil or other hydrocarbons, minerals of any kind, gravel, gas, earth or any earth substance of any kind, except for the drilling; operation and maintenance of any testing inspection or other water wells approved by the Declarant. 9.22. Further Covenants; Zoning Changes. 9.22.1. No further covenants, conditions, restrictions or easements shall be recorded by any Owner (except Developer) or other Person against the Property or any Lot therein without the provisions thereof having been first approved in writing by the City where required, the Board or the Declarant (until the Transition Date occurs and Declarant no longer owns any Property subject to these Covenants) for consistency with these Covenants and the general plan of development for the project reflected by these Covenants and the development plan. Any covenants, conditions, restrictions or easements recorded without such approval being evidenced thereon shall be null and void. 9.22.2. No application for rezoning of any portion of the Property, and no application for any variance or use permit, shall be filed with any governmental authority by any Owner (except Developer) unless the proposed use has been approved by the Board and the proposed use otherwise complies with these Covenants. 9.23. Utility Service. No lines, wires, or other services for the communication or transmission of electric current or power or electromagnetic impulses, including telephone, television, and radio signals, shall be erected, placed or maintained anywhere in or upon the Property unless they are contained in conduits or cables installed and maintained underground or concealed in, under or on buildings or other structures approved by the Board. Notwithstanding the foregoing but subject to any applicable requirements of the City, the Board may authorize the erection of microwave towers and similar structures on Common Areas for centralized reception, transmission and retransmission of microwave and similar signals. No provision hereof shall be deemed to forbid the erection of temporary power or telephone structures incident to the construction of buildings or structures approved by the Board. No individual water supply system or sewage disposal system will be permitted on the Property, including but not limited to, water wells, cesspools or septic tanks. ARTICLE X. EASEMENTS 10.1. Blanket Easements and Utility Easements. There is hereby created a blanket easement upon, across, over and under the Property for ingress and egress for the purposes of installing, constructing, replacing, repairing, maintaining and operating all utilities (whether public or private) including, but not limited to, water, sewer, gas, telephone, electricity, cable (including, but not limited to, television cable), security systems, and communication lines and systems, and in addition thereto for the use of emergency vehicles of all types. By virtue of the easement, it shall be expressly permissible for Declarant and its contractors and/or the Association, and/or the providing utility company to construct (including, but not limited to, underground installation) and maintain the necessary facilities, wires, circuits, conduits, cables and related appurtenances, facilities and equipment for the project on every part of the Property and to enter upon every part of the said Property to accomplish the foregoing. 10.2. Parking Easement. There is hereby created a nonexclusive easement across the Lots as required for the purposes of access and ingress to and egress from the parking areas. This right Page 21 of 35 to use the parking areas for purposes of access and ingress and egress shall extend to each Owner and the occupants, agents, tenants, and invitees of each Owner, and shall be appurtenant to each respective Lot, subject to and governed by the provisions of these Covenants, the Articles, the Bylaws, and the Association Rules and such reasonable limitations and restrictions as may from time to time be contained herein. 10.3. Use of Common Areas. Each Owner shall have the nonexclusive right to use the Common Areas in common with all other Owners as required for the purposes of access and ingress to and egress from (and use, occupancy and enjoyment of) the Owner’s Lot. This right to use the Common Areas for purposes of access and ingress and egress shall extend to each Owner and the occupants, agents, tenants, and invitees of each Owner, and shall be appurtenant to each respective Lot, subject to and governed by the provisions of these Covenants, the Articles, the Bylaws, and Association Rules and such reasonable limitations and restrictions as may from time to time be contained herein. 10.4. Wall or Fence Easement. There is hereby created an affirmative easement in favor of the Declarant, the Association, and their employees and agents, upon, over and across each Lot for reasonable ingress, egress, installation, replacement, maintenance and repair of a perimeter wall, fence, or other boundary control for the Property. 10.5. Declarant Easement. There is hereby created an affirmative, nonexclusive easement appurtenant to the Property and to those portion(s) of any annexed property which, by amendment hereto, Declarant specifies as benefited by this easement, for ingress, egress and the installation and maintenance by Declarant (and its agents, employees and invitees) of utilities and drainage facilities on the Property including, but not limited for Declarant (and such agents, employees and invitees) to go over, under and across, and to enter and remain upon all Common Areas (to the minimum extent reasonably required) for all purposes reasonably related to Declarant’s rights and obligations hereunder, and Declarant’s development, operation, maintenance, management, administration, advertisement, sale, rental and use of the Property and any portion(s) of the annexed Property which Declarant specifies by amendment hereto as benefited hereby. 10.6. Association Easement. There is hereby created an affirmative, nonexclusive easement in favor of the Association for ingress and egress over the Property for the purpose of enabling the Association and its contractors, employees, representatives, and agents to implement the provisions of these Covenants. 10.7. Roads. Access roads are dedicated and reserved as shown on the recorded plats of the Property. No additional access roads or driveways, public or private, shall be constructed directly from any Lot or tract to any dedicated right of way, other than as shown on the final plat on record with the Gallatin County Clerk and Recorder. 10.8. Miscellaneous Easements. In addition to the blanket easements granted in Section 10.1 hereof, the Board is authorized and empowered to grant upon, across or under all the Property such permits, licenses, easements and rights-of-way for parking, sewer lines, water lines, underground conduits, storm drains and flow of stormwater, television cable and other similar public or private utility purposes, security lines, roadways or other purposes as may be reasonably necessary and appropriate for the orderly maintenance, preservation and enjoyment of the Common Areas or for the preservation of the health, safety, convenience and welfare of Page 22 of 35 the Owners, provided that any damage to a Lot resulting from such grant shall be repaired by the Association at its expense. 10.9. Utility And Structural Easements. Easements are reserved unto the Declarant and the Association through the Property and Common Areas as may be required for access roads, and utility easements and other common services, including water, sewer, power, telephone, natural gas and such other easements as shall be necessary to serve the Lots adequately. Any rights to minerals, water, oil, and natural gas underlying the Property are reserved to the Declarant. ARTICLE XI. RIGHTS OF MORTGAGEES 11.1. General Provisions. Notwithstanding and prevailing over any other provisions of these Covenants, the Declaration, Bylaws, or Association Rules the following provisions shall apply to and benefit each holder of a first mortgage (and, in the case of Section 11.2 to the holder of any mortgage) upon a Lot. 11.2. Subordination of Lien. 11.2.1. The Assessment Lien shall be subordinate to the lien of a prior recorded first mortgage on Lot, acquired in good faith and for value, except to the extent it secures the amount of any unpaid Assessment (together with any interest, costs, reasonable attorneys’ fees and any late charges related thereto) which accrues from and after the date on which a first mortgagee comes into possession of or acquires title to the Lot, whichever occurs first. If the Assessment Lien for unpaid Assessments that become payable after recordation of the first mortgage and prior to the date the first mortgagee comes into possession of or acquires title to the Lot is not extinguished to the extent it secures said unpaid Assessments by the process by which the first mortgagee acquired title to the Lot, neither the first mortgagee nor a third-party purchaser who acquires title through foreclosure of a mortgage and the subsequent foreclosure or trustee’s sale (or through any equivalent proceedings), shall be liable for the unpaid Assessments. Upon written request to the Association by the first mortgagee or purchaser who acquires title through foreclosure of a mortgage and the subsequent foreclosure or trustee’s sale (or through any equivalent proceedings), the Assessment Lien shall be released in writing by the Association to the extent it secures such unpaid Assessments. Nevertheless, if the Owner against whom the original Assessment was made is the purchaser or redemptioner, the lien shall continue in effect and may be enforced by the Association, or by the Board, for the respective Assessment including those due prior to the final conclusion of any such foreclosure or equivalent proceedings. 11.2.2. Further, any such unpaid Assessment shall continue to exist as the personal obligation of the defaulting Owner to the Association, and the Board may use reasonable efforts to collect the same from the Owner even after the Owner is no longer the Owner of the Lot. Except as above provided (and except for liens for taxes and other public charges which by applicable law are made prior d superior), the Assessment Lien shall be prior and superior to any and all charges, liens or encumbrances which hereafter in any manner may arise or be imposed on any Lot. 11.2.3. A first mortgagee shall not in any case be personally liable for the payment of any Assessment or charge, nor the observance or performance of any covenant, restriction, or Page 23 of 35 rule and regulation of the Association or any provision of the Articles or Bylaws, or any management agreement, except for those which are enforceable by a preliminary injunction or other equitable actions, not requiring the payment of money, except as specifically provided in this ARTICLE XI. 11.3. Enforcement After Foreclosure Sale. An action to recover assessments imposed after the foreclosure sale or to abate the breach of any of the covenants, conditions, restrictions, servitudes and reservations in these Covenants may be brought against any purchaser who acquires title through foreclosure of a mortgage and the subsequent foreclosure or trustee’s sale(or through any equivalent proceedings), and the successors in interest to any such purchaser, even though the breach existed prior to the time the purchaser acquired an interest in the Lot. 11.4. Exercise of Owners Rights. During the pendency of any proceedings to foreclose a first mortgage (including any period of redemption), the first mortgagee, or a receiver appointed in any such action, may, but shall not be required to, exercise any or all of the rights and privileges of the Owner default including, but not limited to, the right to vote as a Member of the Association in the place and stead of the defaulting Owner if the first mortgagee or receiver gives the Association written notice of its claimed rights and such evidence as the Board may reasonably request demonstrating the existence of the claimed rights. 11.5. Subject to Covenants. At such time as a mortgagee comes into possession of or becomes record Owner of a Lot, the mortgagee shall be subject to all of the terms and conditions of these Covenants. including, but not limited to, the obligation to pay (and be personally liable for) all Assessments and charges accruing thereafter, and the obligation to cure any physical conditions on the Lot which constitute a default under or violation of these Covenants in the same manner as any other Owner, whether or not the condition existed before the mortgagee came into possession of or became the record Owner of the Lot. 11.6. Exemption of Declarant from Restriction. Notwithstanding anything to the contrary in these Covenants, none of the covenants, conditions, restrictions, easements or other provisions in these Covenants shall be construed or deemed to limit or prohibit any act of Declarant, its employees, agents and contractors, or parties designated by it in connection with the construction, administration, management, completion, sale or leasing of Lots, any property annexed by the Developer into the Property, or the administration, management, development or other activities with respect to facilities outside the Property. ARTICLE XII. INSURANCE 12.1. Liability Insurance. From and after the date on which title to any Common Areas vests in the Association, the Association will purchase and carry a general comprehensive public liability insurance policy for the Board, the Association and its Members, covering occurrences on the Common Areas. The policy limits will be as determined by the Board of Directors. The Association will use its best efforts to see that such policy will contain, if available, cross- liability endorsements or other appropriate provisions for the benefit of Members, the Directors, and the management company retained by the Association (if any), insuring each against liability to each other insured as well as third parties. Any proceeds of insurance policies owned by the Association will be received, held in a segregated account and distributed to the Association’s general operating account, Members, Directors, the management company and other insureds, as their interests may be determined. Page 24 of 35 12.2. Coverages. The Association acting through its Board or its duly authorized agent, may obtain and continue in effect the following types of insurance, if reasonably available, or if not, the most nearly equivalent coverages as are reasonably available: 12.2.1. Blanket property insurance covering “all risks of direct physical loss” on a “special causes of loss form” basis (or comparable coverage) for all insurable improvements on the Common Areas and within other portions of the Common Areas to the extent that the Association has assumed responsibility in the event of a casualty, regardless of ownership. If such coverage is not generally available at reasonable co then “broad causes of loss form” (specified perils) coverage may be substituted. All Association property insurance policies shall have policy limits sufficient to cover the full replacement cost of the insured improvements under current building ordinances and codes; 12.2.2. Commercial general liability insurance on the Common Areas, insuring the Association and its Members for damage or injury caused by the negligence of the Association or any of its Members, employees or agents while acting on its behalf. If generally available at reasonable cost, such coverage (including primary and any umbrella coverage) shall have a limit of at least $2,000,000.00 per occurrence and in the aggregate with respect to bodily injury personal injury, and property damage. 12.2.3. With respect to any contractors working on the Property or any third parties holding events on the Property, all such individuals shall be required to carry sufficient commercial general liability insurance with minimum limits of $1,000,000.00 combined single limit per occurrence and $1,000,000.00 general aggregate limit. The commercial general liability policy shall also be endorsed to include Declarant, ‘its subsidiaries and affiliates and their respective directors, officers, employees, and agents as additional insureds with respect “to any claims, losses, expenses or other costs arising out of any Work performed for the Association. 12.2.4. Certificates of insurance evidencing the minimum coverage required herein by any parties described above (other than the Association) shall be filed with the Association at the time of execution of any Agreement for services or events conducted on the premises and shall be maintained in a current status throughout the term of any such agreement. Such certificates of insurance shall require the insurer(s) to provide not less than thirty (30) days advance written notice to the Association in the event of any cancellation, non-renewal or material (greater than twenty-five percent (25%) reduction) change in the policy limits, terms or conditions. Such third parties shall maintain all of their insurance and at the requested levels described above for not less than five (5) years following the expiration or termination of any agreement with the Association. 12.2.5. Statutory workers’ compensation and employer’s liability insurance in the amount of the State of Montana’s statutory limits to cover all employees engaged in the services. 12.2.6. Earthquake, wind and flood damage coverage, of and to the extent required by law and or appropriate for an Association based in Montana. 12.2.7. Automobile liability insurance for all owned, non-owned and hired vehicles with a minimum limit of $500,000.00 combined single limit per accident; 12.2.8. Directors and officers liability coverage; and Page 25 of 35 12.2.9. Commercial crime insurance covering all persons, including persons serving without compensation, responsible for handling Association funds in an amount determined in the Board’s business judgment but not less than an amount equal to one-quarter of the annual Maintenance Assessments on all Lots plus reserves on hand. 12.2.10. All of the coverage required herein shall be maintained with insurers rated A- or better, if possible, in the most current edition of Best’s Insurance Reports. 12.2.11. Insurance obtained for the Association is not meant to replace any individual’s personal liability or property insurance amounts not less than those stated below. 12.2.12. The Board, in the exercise of its business judgment, may obtain such additional insurance coverage and higher limits. 12.3. Premiums. Premiums for insurance on the Common Areas shall be Common Expenses. 12.4. Policy Requirements. In the event of an insured loss, the deductible shall be treated as a Common Expense in the same manner as the premiums for the applicable insurance coverage. However, if the Board reasonably determines, after notice and an opportunity to be heard in accordance with the Bylaws, that the loss is the result of the negligence or willful misconduct of one or more Owners or their employees, agents, tenants, guests, or invitees, then the Board may assess the full amount of such deductible against such Owner(s) and Lot(s) as a Special Assessment. 12.4.1. All insurance coverage obtained by the Board shall: (a) be written with a company authorized and licensed to do business in Montana; (b) be written in the name of the Association as trustee for the benefited parties; (c) not be brought into contribution with insurance purchased by individual Owners or their mortgagees; (d) contain an inflation guard endorsement clause; (e) a waiver of subrogation as to any claims against: (i) the Association’s Board, officers, employees, and its manager; and (b) the Owners and agents, tenants, guests, and invitees; (f) a waiver of the insurer’s rights to repair and reconstruct instead of paying cash; (g) an endorsement requiring at least 30 days’ prior written notice to the Association of any cancellation, substantial modification, or nonrenewal; (h) a cross-liability provision; and (i) a provision vesting in the Board or their authorized representative, which shall be Declarant so long as Declarant’s policy provides Association coverage exclusive authority to adjust losses; provided, no mortgagee having an interest in such losses may be prohibited from participating in the settlement negotiations, if any, related to the loss. 12.5. Owners Insurance. Each Owner covenants and agrees with all other Owners and with the Association to carry blanket “all-risk” property insurance on the Owner’s Lot or Unit providing full replacement cost coverage less a reasonable deductible. Each Owner further covenants and agrees that in the event of damage to or destruction of structures on or comprising the Owner’s Page 26 of 35 Lot or Unit, such Owner shall proceed promptly to repair or to reconstruct in a manner consistent with the original construction or such other plans and specifications as are approved by the Board. The Owner shall pay all costs which are not covered by insurance proceeds. 12.6. Additional Insurance. Additional recorded covenants applicable to any portion of the Property may establish more stringent requirements regarding the standards for rebuilding or reconstructing structures on the Lots and the standards for clearing and maintaining the Lots in the event the structures are not rebuilt or reconstructed. 12.7. Restoring Damaged Improvements. 12.7.1. In the event of damage to or destruction of Common Areas titled in the name of the Association or other property which the Association is obligated to insure, the Board or its duly authorized agent shall file and adjust all insurance claims and obtain reliable and detailed estimates of the cost of repairing or restoring the property to substantially the conditions which it existed prior to the damage, allowing for changes or improvements necessitated by changes in applicable building codes. 12.7.2. Damaged improvements on the Common Areas titled in the name of the Association shall be repaired or reconstructed unless the Members representing at least seventy-five percent (75%) of the total Member votes in the Association and the Declarant, if any, decide within sixty (60) days after the loss not to repair or reconstruct. If either the insurance proceeds or estimates of the loss, or both, are not available to the Association within such sixty (60) day period, then the period shall be extended for up to sixty (60) additional days until such funds or information are available. No mortgagees shall have the right to participate in the determination of whether the damage or destruction to the Common Areas titled in the name of the Association shall be repaired or reconstructed. 12.7.3. If a decision is made not to restore the damaged improvements, and no alternative improvements are authorized, the affected property shall be cleared of all debris and ruins and thereafter shall be maintained by the Association in a neat and attractive condition. The Association shall retain any insurance proceeds remaining after paying the costs of repair or reconstruction. or after an agreed upon settlement, for the benefit of the Members, and place in a capital improvements account. This is a covenant for the benefit of mortgagees and may be enforced by the mortgagee of any affected Building or Unit. 12.7.4. If insurance proceeds are insufficient to cover the costs of repair or reconstruction, the Board may, without a vote of the Members, levy Special Assessments to cover the shortfall against those Owners responsible for the applicable insurance coverage premiums. ARTICLE XIII. DAMAGE AND DESTRUCTION OF COMMON AREAS 13.1. Duty of Association. In the event of partial or total destruction of the Common Areas titled in the name of the Association, including but not limited to landscaped right of ways, or any improvements thereon, the Association may restore and repair the same, subject and pursuant to this Article ARTICLE XIII. The proceeds of any casualty insurance maintained by the Association may be used to the extent available for such purpose, subject to the prior rights of Mortgagees whose interests may be protected by the policies as determined in the sole discretion of the Association. 13.2. Vote of Members. If the amount available from the proceeds of any insurance policies for such restoration and repair, together with any uncommitted or unreserved capital of the Page 27 of 35 Association, is less than the estimated cost of restoration and repair, the Common Areas titled in the name of the Association may be replaced or restored unless a majority of Voting Members, at a special meeting held for such purpose, disapprove of such replacement or restoration. If such Voting Members do not disapprove the proposed replacement or restoration, the Board may levy a Reimbursement Assessment against each Owner and the respective Lot(s) and cause the damaged or destroyed. Common Areas titled in the name of the Association to be repaired or restored. If such Voting Members disapprove of the repair or restoration of the damaged or destroyed improvements on the Common Areas titled in the name of the Association as provided above, the Common Areas titled in the name of the Association so damaged or destroyed shall be cleared and landscaped for Common titled in the name of the Association of ways use or any other use determined by the Board, and the costs thereof shall be paid from insurance proceeds (to the extent available). 13.3. Excess Insurance Proceeds. In the event any excess insurance proceeds remain after any reconstruction by the Association pursuant to this Article ARTICLE XIII, the Board, in its sole discretion, may retain such sums in the general funds of the Association or may distribute all or a portion of such excess to the Owners in the ratio that they would pay a Reimbursement Assessment hereunder, subject to the prior rights of Mortgagees whose interest may be protected by the insurance policies carried by the Association and subject to any restrictions under applicable law. The rights of an Owner or the Mortgagee of a Lot to any distribution shall be governed by the provisions of the Mortgage encumbering the Lot. 13.4. Use of Reimbursement Assessments. All amounts collected as Reimbursement Assessments pursuant to Section 13.3 above shall only be used for the purposes set forth in this Article ARTICLE XIII and shall be deposited by the Association in a separate bank account for such purposes. Such funds shall not be commingled with any other funds of the Association and shall be deemed a contribution to the capital account of the Association by the Owners. Any paid Reimbursement Assessment shall be secured by an Assessment Lien. ARTICLE XIV. EMINENT DOMAIN 14.1. Representation in Condemnation Proceedings. The Owners hereby appoint the Association through such Persons as the Board may delegate to represent all of the Owners in connection with any threatened Taking. The Board shall act, in its sole discretion, with respect to any awards being made in connection with the Taking and shall be entitled to make a voluntary sale to the condemn or in lieu of engaging in a condemnation action. 14.2. Award for Common Areas. Any awards received by the Association on account of the Taking shall be paid to the Board. The Board may, in its sole discretion, retain any award in the general funds of the Association, expend the funds for restoration and repair of Common Areas titled in the name of the Association or distribute all or any portion thereof to the Owners in the ratio they would pay a Reimbursement Assessment hereunder, or as their interests otherwise may appear. The rights of an Owner and the mortgagee of the Owner’s Lot as to any distribution shall be governed by the provisions of the Mortgage encumbering such Building or Unit. ARTICLE XV. LIMITATION ON DECLARANT’S LIABILITY 15.1. Notwithstanding anything to the contrary in these Covenants, each Owner, by accepting title to any portion of the Property and becoming an Owner, and each other Person acquiring an interest in the Property including, but not limited to Mortgagees, acknowledges and agrees that Page 28 of 35 neither Declarant (including, but not limited to, any assignee of the interest of Declarant hereunder) nor any related entity (or any partner, shareholder, trustee, officer, director, principal or similar Person holding an interest or position in any such assignee of the interest of Declarant) shall have any personal liability to the Association, or any Owner, Member, or Mortgagee or other Person, arising under, in connection with, or resulting from (including, but not limited to, resulting from action or failure to act with respect to) these Covenants, the Association or the Committee except to the extent of such Person’s interest in the Property; and, in the event of a judgment, no execution or other action shall be sought or brought thereon against any other assets, nor be a lien upon such other assets, of the judgment debtor. ARTICLE XVI. AMENDMENT 16.1. Amendment to Covenants. Amendments to these Covenants shall be made by an instrument in writing entitled “Amendment to Covenants” which sets forth the entire amendment. Prior to the Transition Date, amendments may be adopted only by Declarant. After the Transition Date, amendments may be adopted only with the affirmative vote or written consent of a majority of all of the Voting Members and with the affirmative vote or written consent of Declarant so long as Declarant owns any property subject to these Covenants. In all events, the amendment when adopted shall bear the signature of the President the Association and shall be attested by the Secretary of the Association, who shall state whether the amendment was properly adopted, and shall be acknowledged by the as officers of the Association. Amendments once properly adopted shall be effective upon Recording in the appropriate governmental offices, or at such later date as may be specified in the amendment. Every Owner and any Mortgagee of a Lot or Unit, by acceptance of a deed or other conveyance, therefore, thereby agrees that these Covenants may be amended as provided in this Section. 16.2. Effect of Amendment. It is specifically covenanted and agreed that any amendment to these Covenants properly adopted will be completely effective to amend any and all provisions of these Covenants which may be affected and any or all clauses of these Covenants, unless otherwise specifically provided in the Section being amended or the amendment itself. 16.3. Requested Amendment; Legislative Change. Declarant specifically reserves the right to amend all or any part of these Covenants to such an extent and with such language as maybe requested by the U.S. Department of Housing & Urban Development (“HUD”), the Federal Housing Administration (“FHA”) or the Veterans Administration (‘“VA”) and to further amend to the extent requested by any other federal, state or local governmental agency, department, board or commission which requests such an amendment as a condition precedent to such entity’s approval of these Covenants (for example, but not as a limitation, to obtain authorization from state or federal authorities to sell or offer to sell any portion(s) of the project within the state or in interstate commerce), by any federally or state chartered lending institution as a condition precedent to lending funds upon the security of any Lot(s), Building(s), or Unit(s) or any portions thereof. It is the desire of Declarant to retain control of the Association and its activities for so long as Declarant desires to do so. If any amendment requested pursuant to the provisions of this Section, or if any federal, state or other legislation hereafter enacted, diminishes or alters such control, Declarant shall have the right to prepare, provide for and adopt as an amendment hereto, other and different control provisions to achieve said control or equivalent control. ARTICLE XVII. ENFORCEMENT Page 29 of 35 17.1. Enforcement. Each Owner shall comply strictly with the covenants, conditions, restrictions, and easements set forth in these Covenants. In the event of a violation or breach, or threatened violation or breach, of any of the same, the Declarant, the Association, or any Owner, jointly or severally, shall have the right to proceed at law or in equity for the recovery of damages, reasonable monetary fines and other sanctions for violations of these Covenants or any Supplemental Covenants hereto, for injunctive or other equitable relief, or all of the foregoing. If any Owner or the Association is the prevailing party in any litigation involving these Covenants, then that party also has a right to recover all costs and expenses incurred (including reasonable attorney’s fees). Failure by the Declarant, the Association or any Owner to enforce any covenant or restriction herein contained shall in no event be deemed a waiver of the right to do so hereafter. 17.2. Right of Abatement. In addition to the above rights, the Association shall have a right of abatement if the Owner fails to take reasonable steps to remedy any violation or breach within thirty (30) days after written notice sent by certified mail. A right of abatement, as used in this Section means the right of the Association, through its-agents and employees, to enter at all reasonable times upon any Lot, as to which a violation, breach or other condition to be remedied exists, and to take the actions specified in the notice to the Owner to abate, extinguish, remove or repair such violation, breach, or other condition which may exist thereon contrary to the provisions hereof without being deemed to have committed a trespass or wrongful act by reason of such entry and such actions; provided such entry and such actions are carried out in accordance with the provisions of this Section, The cost thereof including the costs of collection and reasonable attorneys’ fees shall be a binding personal obligation of such Owner, enforceable at law, and shall be a lien on such Owner’s Lot enforceable as provided herein. ARTICLE XVIII. DISPUTE RESOLUTION AND LIMITATION ON LITIGATION 18.1. Agreement to Avoid Litigation. The Declarant, the Association, its officers, directors, and committee members, all Persons subject to these Covenants, and any person or persons not otherwise subject to these Covenants who agrees to submit to this Section (collectively. “Bound Parties”) agree to encourage the amicable resolution of disputes involving the Property without the emotional and financial costs of litigation. Accordingly, each Bound Party covenants and agrees that those claims, grievances or disputes described in this ARTICLE XVIII shall use the procedures set forth herein in a good-faith effort to resolve such claims. 18.2. Claims. Unless specifically exempted below, all claims, grievances a dispute arising out of or relating to the interpretation, application or enforcement of the Governing Documents, or the rights, obligations and duties of any Bound Party under the Governing Documents or relating to the design or construction of improvements on the Properties, shall be subject to the provisions of this ARTICLE XVIII. 18.3. Notwithstanding the above, unless all parties thereto otherwise agree, the following shall not be Claims and shall not be subject to the provisions of this ARTICLE XVIII: 18.3.1. Any suit by the Association or the Declarant against any Bound Party to enforce the provisions of ARTICLE XVIII; 18.3.2. Any suit by the Association to obtain a temporary restraining order (or equivalent emergency equitable relief) and such other ancillary relief as the court may deem necessary Page 30 of 35 in order to maintain the status quo and preserve the Association’s ability to enforce the provisions of these Covenants; 18.3.3. Any suit between Owners that does not include Declarant or the Association as a party, if such suit asserts a Claim that would constitute a cause of action independent of the Governing Documents: (a) any suit in which any indispensable party is not a Bound Party; and (b) any suit that otherwise would be barred by any applicable statute of limitations. 18.3.4. Any fine imposed on the Lot of an Owner pursuant to the Bylaws by the Board, which shall be governed by the appeal procedures in the Bylaws. 18.4. Mandatory Procedures. 18.4.1. Any Bound Party having a Claim (“Claimant”) against any other Bound Party (‘‘Respondent”) (collectively the “Parties” shall notify each Respondent in writing (the “Notice”), stating plainly and concisely: (a) the nature of the Claim, including the Persons involved and Respondent’s role in the Claim; (b) the legal basis of the Claim (i.e.., the specific authority upon which the Claim arises); (c) Claimants proposed remedy; and (d) that Claimant will meet with Respondent to discuss, in good faith, ways to resolve the Claim. 18.4.2. The Parties shall make every reasonable effort to meet in person and confer for the purpose of resolving the Claim by good-faith negotiation. If requested in writing, accompanied by a copy of the Notice, the Board may appoint a representative to assist the Parties in resolving the dispute by negotiation. 18.4.3. If the Parties do not resolve the Claim within thirty (30) days of the date of the Notice (or within such other period as may be agreed upon by the Parties) (“Termination of Negotiations”). Claimant shall have thirty (30) additional days to submit the Claim to mediation under the auspices of an independent agency providing dispute resolution services in the Bozeman area or to appeal the matter to the Board for a final decision. 18.4.4. If Claimant does not submit the Claim to the Board or to mediation within thirty (30) days after Termination of Negotiations or does not appear for the mediation, Claimant shall be deemed to have waived the Claim, and Respondent shall be released and discharged from any and all liability to Claimant on account of such Claim; provided, nothing herein shall release or discharge Respondent from any liability to any Person other than the Claimant. 18.4.5. Any settlement of the Claim through mediation shall be documented in writing by the mediator and executed by the Parties. If the Parties do not settle the Claim within thirty (30) days after submission of the matter to the mediation process, or within such time as determined by the mediator, the mediator shall issue a notice of termination of the mediation proceedings (“Termination of Mediation”). The Termination of Mediation Page 31 of 35 notice shall set forth that the Parties are at an impasse and the date that mediation was terminated. The Claimant shall thereafter be entitled to file suit on the claim. 18.5. Allocation of Costs of Resolving Claims. Each Party shall bear its own, costs of mediation, including any attorneys’ fees incurred. and each Party shall share equally all charges rendered by the mediator(s) and all filing fees and costs of conducting the arbitration proceeding (“Post Mediation Costs”). 18.6. Enforcement of Resolution. After resolution of any Claim through negotiation or mediation, if any Party fails to abide by the terms of any agreement, then any other Party may file suit to enforce such agreement In such event, the Party taking action to enforce the agreement shall be entitled to recover from the non-complying Party (or if more than one non-complying Party, from all such Parties pro rata) all costs incurred in enforcing such agreement or Award, including, without limitation, attorneys’ fees and court costs. 18.7. All Other Litigation. Each Owner by accepting title to any portion of the, as well as the Association, when allowed under Montana law, agree with the Declarant to arbitrate disputes the Owner or Association might have with the Declarant, as described in this Section 7. Each Owner, the Association and the Declarant agree that any and all claims or disputes arising or the construction, design, or condition shall first be attempted to be settled through the process outlined in Section 1-6 of this Article, otherwise the parties agree that any unresolved controversy or claim shall be settled by arbitration administered by the American Arbitration Association and resolved exclusively by means of arbitration pursuant to M.C.A. 27-5-111, et seq., the Montana Uniform Arbitration Act (the “Act”), the provisions of this Section, and pursuant to the Commercial Arbitration Rules of the American Arbitration Association. Any judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Claims shall be heard by a single arbitrator. Within fifteen (15) days after the commencement of arbitration, each party shall select one (1) arbitrator and the two (2) selected shall select the arbitrator within ten (10) days of notification. If the arbitrators selected by the parties are unable or fail to agree upon the arbitrator, the arbitrator shall be selected by the American Arbitration Association. The place of arbitration shall be Bozeman, Montana. The arbitration shall be governed by the laws of the State of Montana. Each party shall bear its own costs and expenses and an equal share of the arbitrators and administrative fees of arbitration. ARTICLE XIX. REMEDIES 19.1. All remedies provided for in these Covenants and Bylaws shall not be exclusive of any other remedies which may now be, or are hereafter, available to the parties hereto as provided for by law. ARTICLE XX. SERVICE OF PROCESS 20.1. The name and address of the person to receive service of process for the Property until another designation is filed of record shall be the registered agent for the Declarant. ARTICLE XXI. MISCELLANEOUS 21.1. Term. 21.1.1. The provisions of these Covenants shall be binding for a term of twenty (20) years from the date these Covenants was originally recorded. After that initial twenty (20) year term, Page 32 of 35 these Covenants shall be automatically extended for successive periods of twenty (20) years not to exceed three (3) such extensions unless an instrument agreeing to amend, revoke or terminate the Covenants, has been signed by seventy-five percent (75%) of the Owners. Any covenant required by the County as a condition of subdivision approval shall not be altered or amended without the agreement of the County. These Covenants may be modified, altered or amended by the Declarant at the Declarant’s sole option with no approval by the Association or Owners being necessary so long as Declarant maintains control of the Subdivision and control has not been turned over to the Association. 21.1.2. In addition to the rights reserved to the Declarant to modify or supplement these Covenants with respect to the Subdivision, these Covenants may, only after control has been turned over to the Association from the Declarant, be amended or replaced upon the happening of all the following events: (a) The vote of not less than sixty percent (60%) of the Owners then within the Subdivision at a meeting of the Association duly held; provided that, the dedications or easements for roads, utilities and common areas shall not be changed or affect existing structures and uses of the Property, without the unanimous consent of all of the Owners affected by the change, or by the Declarant when necessary. Any covenant required as a condition of subdivision approval shall not be altered or amended without the agreement of the City. The notice of the meeting shall state that the purpose of the meeting is to consider the amendment or repeal of these Covenants, giving the substance of any proposed amendments or indicating the provisions to be repealed, as the case may be; and (b) The recordation of a certificate of the Secretary or an Assistant Secretary of the Association setting forth in full the amendment or amendments to the Covenants so approved, including any portion or portions thereof repealed, and certifying that said amendment or amendments have been approved by vote of the Owners pursuant to these covenants. 21.2. Binding Authority. All the limitations, conditions, and restrictions contained in these Covenants shall run with the Property and shall be binding on all parties and persons claiming under them. 21.3. Interpretation of Covenants. All the limitations, covenants, conditions of and restrictions of these Covenants shall be liberally construed together to promote and effectuate, the fundamental concepts of Wallace Works Subdivision. 21.4. Attorneys’ Fees. Enforcement of these covenants by Declarant, Board, Owner or any party having standing, shall include for the party seeking enforcement and prevailing in such enforcement, an award of costs, fees and reasonable attorneys’ fees. 21.5. Transition to Association. Any and all of the rights and powers vested in the Declarant pursuant to these Covenants may be delegated, transferred, assigned, conveyed or released by the Declarant to the Association and the Association shall accept the same effective upon the recording by the Declarant of a notice of such delegation, transfer, assignment, conveyance or release. Furthermore, the Declarant may sell, transfer, assign, or convey Declarant’s development rights for the Property to a third party. Page 33 of 35 21.6. Notices. Notices to the Association provided for in these Covenants, the Bylaws, or Association Rules, shall be in writing and shall be addressed to the Association at the address specified in the Bylaws. The Association may designate a different address or addresses for notice by giving written notice to all Owners. If applicable law, these Covenants or a resolution of the Board requires notice of any meeting or of any action or proposed action by the Association, the Board or any committee, to be given to any Owner or Occupant then, unless otherwise specified herein or in the resolution of the Board, or in the Bylaws, such notice requirement shall be deemed satisfied if notice of such action or meeting is published once in any newspaper in general circulation within the County or the project. This Section shall not be construed to require that any notice be given if not otherwise required and shall not prohibit satisfaction of any notice requirement in any other manner. 21.7. Captions and Exhibits; Construction. Captions given to various Sections herein, and the Table of Contents for these Covenants, are for convenience only and are not intended to modify or affect the meaning of any of the substantive provisions hereof. Any exhibits referred to herein are incorporated as though fully set forth where such reference is made. The provisions of these Covenants shall be liberally construed to effectuate its purpose of creating a uniform plan for the development and operation of the Property as hereinabove set forth. 21.8. Severability. If any provision of these Covenants, the Articles, Bylaws, or Association Rules, or any section, clause, sentence, phrase or word, or the application thereof in any circumstance, is held invalid, the validity of the remainder of these Covenants, the Articles, Bylaws, or Association Rules and of the application of any such provision, section, sentence, clause, phrase or word in any other circumstances, shall not be affected thereby, and the remainder of these Covenants, the Articles, Bylaws, or Association Rules shall be construed if such in valid part were never included therein. 21.9. Mortgage of Lots and Units. Each Owner shall have the right, subject to the provisions hereof, to make separate Mortgages for his or her respective Lot, Building, or Unit. No Owner shall have the right or authority to make or create or cause to be made or created any Mortgage or other lien or security interest, on or affecting the Property or any part thereof, except only to the extent of his or her Lot. 21.10. Power of Attorney. Unless otherwise specifically restricted by the provisions of these Covenants, in any instance in which the Association is empowered to take any action or do any act including, but not limited to, action or acts in connection with the Common Areas or sale thereof, which may at any time be deemed to require the act of an Owner, the Owners hereby constitute and appoint the Association (acting through the Board) as their attorney-in-fact, as maybe appropriate, for the purposes of taking such action or doing such acts including, but not limited to, executing, acknowledging and delivering any instruments or documents necessary, appropriate or helpful for such purposes. It is acknowledged that this power of attorney is irrevocable and coupled with an interest and by becoming an Owner of the Association or by the acceptance of a deed for a Lot or by signing a contract for purchase of a Lot, or by succeeding in any other manner to the ownership of a Lot, or any interest therein, or a Membership in. the Association, each Owner and Member shall be deemed and construed to have ratified and expressly granted the above power of attorney. 21.11. Gender. Masculine, feminine and neutral references herein each shall include the others as the context requires. Page 34 of 35 21.12. Interpretation. Except for judicial construction, the Association, by its Board, shall have the exclusive right to construe and interpret the provisions of these Covenants. In the absence of any adjudication to the contrary by a court of competent jurisdiction, the Board’s construction or interpretation of the provisions hereof shall be final conclusive and binding as to all persons and property benefited or bound by the provisions hereof. 21.13. References to Covenants in Deeds. Deeds to and instruments affecting any part of the Property may contain the provisions herein set forth by reference to these Covenants; but regardless of whether any such reference is made in any deed or instrument, all of the provisions hereof shall be binding upon the grantee-Owner or other person claiming through any instrument and his heirs, executors, administrators, successors and assigns as though set forth at length in such instrument. 21.14. Governing Law. These Covenants, the Articles, Bylaws, and Association Rules shall be subject to, and construed in accordance with, Montana law. 21.15. Conflicts. In the event of conflict between the terms of these Covenants, the Bylaws, Association Rules, or Articles, these Covenants will control then the following order of precedence Articles, the Bylaws, and Association Rules. 21.16. Declarant’s Disclaimer of Representations. Notwithstanding anything to the contrary in these Covenants, Declarant makes no warranties or representations whatsoever that the plans presently envisioned for the complete development of the Property or will be carried out, or that any land now owned or hereafter acquired by Declarant is or will be subjected to these Covenants, or that any such land (whether or not it has been subjected to these Covenants) is or will be committed to or developed for a particular (or any) use, or that if such land is once used for a particular use, such use will continue in effect. 21.17. Zoning and Plan. Each Owner, by accepting title to any portion of the Property and becoming an Owner, and each other Person, by acquiring any interest in the Property, acknowledges awareness that the project is an extensive project, the development of which is likely to extend over several years, and agrees, so long as he or she is an Owner Lot, or holds any other interest in the Property, not to protest or otherwise object to the zoning, use, density, or conceptual, development or plan revisions. Notwithstanding anything to the contrary in this Section, the provisions hereof shall be enforceable only to the extent not in violation of any applicable provision of law. [SIGNATURE PAGE FOLLOWS] Page 35 of 35 IN WITNESS WHEREOF, Declarant has hereunto set its hand as of this _______ day of _________________, 2025. ____________________________________ By: Its: Authorized Signer STATE OF MONTANA ) ) ss. COUNTY OF GALLATIN ) On the _______ day of __________, 2025, before me, a Notary Public for the State of Montana, personally appeared _________________ known to me to be the authorized signer for and who executed this instrument on behalf of , and acknowledged to me that such company executed the same. EXHBIBIT A TO COVENANTS LEGAL DESCRIPTION OF PROPERTY EXHBIBIT B TO COVENANTS STORMWATER MAINTENANCE PLAN JOB NO. B21-099 MONTANA | WASHINGTON | IDAHO | NORTH DAKOTA | PENNSYLVANIA JANUARY 2026 406.586.0277 tdhengineering.com 234 East Babcock Street Suite 3 Bozeman, MT 59715 CLIENT ENGINEER Lake Flato Architects 311 Third Street San Antonio, TX 78205 TD&H Engineering 234 East Babcock Street, Suite 3 Bozeman, MT 59715 Engineer:Tim Blystone, PE ON-SITE STORM WATER MAINTENANCE PLAN WALLACE WORKS MINOR SUBDIVISION BOZEMAN, MONTANA WALLACE WORKS MINOR SUBDIVISION Storm Water Maintenance Plan B21-099 1 WALLACE WORKS MINOR SUBDIVISION STORM WATER MAINTENANCE PLAN PURPOSE AND INTRODUCTION This maintenance plan identifies the recommended maintenance procedures necessary for the proper function of the on-site storm water management system proposed at the Wallace Works Minor Subdivision project in Bozeman, Montana. For the purpose of this plan, the on-site storm water management system includes stormwater conveyance paths and pipes within the two lots of the property; the subsurface retention chambers and inlets/manholes in the central plaza and parking lot; and the existing PVC stormdrains in East Tamarack Street and North Wallace Avenue to the north and east of the property. The maintenance responsibility for all on-site stormwater management infrastructure outside of the public right-of-way belongs to the property owners association (POA). The POA may delegate routine inspection and maintenance responsibilities to the on-site facility operations management team or may hire a qualified professional entity or individual to perform certain monitoring and maintenance tasks as necessary. A log shall be kept for all required inspections and maintenance. These logs shall be made available to the City of Bozeman Public Works Department for review as requested. A sample maintenance log is included in the attached Appendix. The POA shall be responsible for levying annual assessments to provide for the maintenance, repair, and upkeep of all on-site stormwater infrastructure outside of the public right-of-way. STORM WATER MANAGEMENT SYSTEM The on-site storm water management system of which the POA is responsible for maintenance includes on-site curb and gutter, curb inlets and associated piping, area inlets and associated piping, drainage chases, roof drain piping, subsurface infiltration galleries, and any storm manholes outside of the public right-of-way. These various components of storm water management infrastructure are designed to collect, convey, clean, detain, and/or infiltrate storm water runoff that is generated on the property before it leaves the site or enters local waterways. Storm water systems require proper maintenance to prevent sediment clogging, overgrown vegetation, erosion of detention ponds, obstruction of inlets, pipes, and structures, and prolonged standing water. Such issues may result in downstream pollution, unpleasant odors, unsightly areas, nuisance insects, or algae blooms, and must be mitigated. Scheduled inspections, times of inspections, locations inspected, maintenance completed, corrective actions taken, and any modifications or reconstruction performed shall be documented in the maintenance logs to be readily available upon request. Disposal of accumulated sediment must be in accordance with all applicable local, state and federal regulations. Wetlands are not anticipated to be encountered during maintenance activities for the on-site subsurface infiltration facilities. However, maintenance of off-site locations where outlet pipes or overflows discharge to protected water bodies within wetland areas may require wetland or stream bank permitting. If unsure of the regulatory status of wetland features observed at the site, consult the local authorities prior to undertaking any activities that may cause disturbance. WALLACE WORKS MINOR SUBDIVISION Storm Water Maintenance Plan B21-099 2 STORM WATER MAINTENANCE PROCEDURES The following maintenance procedures are intended to prolong the life of installed system components and ensure their continued functionality: General Storm Water System Maintenance – 1. Parking lot areas, curbs & gutters, drainage chases, and area drains should be cleared of leaves and other debris once after primary leaf drop in the fall and once after snow melt in early spring at a minimum. This will minimize the potential for debris to enter the system which could lead to premature clogging of structures, reduced storage capacity, and/or blockage of inlets. 2. Inspect the storm drain inlets, overflow structures, and cleanouts, for sediment build-up or clogging and flush/clear as needed. Inspect for snow/ice buildup at least once weekly during winter months and clear the inlet as needed. Do not pile snow over inlets. 3. Snow storage should be performed in designated areas during winter months and should not be allowed to be piled in front of or over inlets. Piled snow around or over the inlets could block early snowmelt run-off from entering the system, possibly causing overflows and icy conditions. 4. Sanding of the parking lots and drive aisles should be done sparingly or avoided completely. Sand or other sediment on the parking lot will likely be washed into stormwater system components which can lead to buildup and reduced capacity or blockages over time. Sub-surface Infiltration Gallery (StormTech system) Maintenance – The subsurface infiltration systems are designed with isolator rows that capture the “first flush” of pollutants from runoff events. The isolator rows are equipped with inspection ports and direct manhole access for maintenance. The isolator row should be inspected for sediment buildup once every 6-months during the first year of operation, and once a year after that. Use the general preventative measures described above to help reduce sediment build up and clogging. Clean out sediment buildup as necessary following the attached manufacturer recommended procedures. APPENDIX Sample Maintenance & Inspection Log StormTech Isolator Row O&M Manual Storm Water Facilities Inspection and Maintenance Log Facility Name Begin Date End Date Date Location Facility Description Inspected by: Cause for Inspection Exceptions Noted Comments and Actions Taken Instructions: Record all inspections and maintenance for all storm water facilities on this form. Use additional log sheets and/or attach extended comments or documentation as necessary. Save all completed logs in one place and have them readily available for the City of Bozeman’s review upon request.  Location — Specify the exact location of the facility either by its name, facility ID or physical location.  Inspected by — Note all inspections and maintenance on this form, including the required independent annual inspection.  Cause for inspection — Note if the inspection is routine, pre-rainy-season, post-storm, annual, or in response to a noted problem or complaint.  Exceptions noted — Note any condition that requires correction or indicates a need for maintenance.  Comments and actions taken — Describe any maintenance performed and need for follow-up. FIGURE 1FIGURE 1 FIGURE 6 An company 2 THE MOST ADVANCED NAME IN WATER MANAGEMENT SOLUTIONS TM ECCENTRICHEADER MANHOLEWITHOVERFLOWWEIR STORMTECHISOLATOR ROW OPTIONAL PRE-TREATMENT OPTIONAL ACCESS STORMTECH CHAMBERS  )( StormTech Maintenance Log Project Name: Location: Stadia Rod Readings Date Fixed point to chamber bottom (1) Fixed point to top of sediment (2) Sediment Depth (1) - (2)Observations / Actions Inspector