Section 5.1. Creation of Lien and Personal Obligation for Assessments.
Except as Assessments of the Declarant and its affiliates are limited herein, each Owner of a Living Unit by acceptance of a deed therefor, whether or not expressly stated in such deed, shall be deemed to covenant and agree to pay the Association all Assessments levied by the Association in accordance with the Governing Documents. Each Assessment made against a Living Unit, together with interest, costs, late fees and reasonable attorneys’ fees and other legal and collection costs, shall be a charge on the Living Unit (including all improvements thereon), and a continuing lien, provided the requirements of the Maryland Contract Lien Act, if applicable, have been fulfilled. Each Assessment, together with interest, costs, late fees and reasonable attorneys’ fees and other legal and collection costs shall also be the personal obligation of the Owner of the Living Unit at the time the Assessment fell due. The personal obligation for delinquent Assessments shall not pass to a prior Owner’s successors in title unless expressly assumed by such successors; however, any lien established prior to the transfer of any Living Unit shall continue until paid and satisfied in full. No Owner shall be exempt from liability for Assessments by abandonment of such Owner’s Living Unit or by the abandonment of such Owner’s right to the use and enjoyment of the Community Property, or by any other means. No Owner shall be entitled to any diminution, abatement or set-off of Assessments for any alleged failure of the Association to perform its duties or for any reduction in services or benefits by the Association.
Section 5.2. Purpose of Assessments.
Assessments levied by the Association may be used to promote the recreation, health, safety and welfare of the Owners within the Community and for any lawful purpose relating to the proper conduct of Association activities, including, without limitation, the following:
(a) Improvement, maintenance, repair and replacement of the Community Areas including, without limitation, some or all of the rights-of-way, entry strips, signs and entrance features, the Storage Lagoon, roads, sidewalks, community amenities and other improvements located within the Community, or which are appurtenant to and serve or benefit the Community;
(b) Improvement, maintenance, repair and replacement of any and all storm water management facilities (including, without limitation, drainage pipes, infiltration trenches, ponds, basins, swales, berms, out-flow control devices, drainage areas, filters, inlets, oil/grit separators and underground facilities) whether such storm water management facilities are located within the Property or not, as long as such storm water management facilities are designed to benefit or serve any portion of the Property or are required or intended to be maintained by the Association pursuant to any easement, agreement or the direction of any governmental or quasi-governmental authority or agency. The Association shall not refuse to accept the conveyance of any such facilities from the Declarant;
(c ) Payment of charges or expenses accruing with respect to off-site facilities that serve or benefit the Community, which the Association elects to maintain or which are otherwise required or intended to be maintained by the Association pursuant to any easement, agreement or the direction of any governmental authority or agency;
(d) Payment of all taxes, charges and assessments levied against the Community Property and any facilities situated thereon;
(e) Payment for services provided to the Association for the benefit of the Community Property, any facilities situated thereon, as well as for the Living Units and/or Owners, to the extent the Association agrees to provide such services;
(f) Payment of management fees, utility charges and operating expenses relating to the Community Areas and any facilities situated thereon;
(g) Payment of insurance premiums for liability and property insurance on the Community Areas and any facilities situated thereon, for directors and officers liability insurance, and for such other insurance as the Association may obtain with respect to its officers and directors, management agent, or the Community Property, my facilities situated thereon and/or the Living Units within the Community;
(h) Funding all reserves established by the Association, including, without limitation, general operating reserves and reserves for replacements and/or contingencies;
(i) Payment of costs related to the Association’s maintenance responsibilities under Section 12.2 of this Declaration;
(j) Payment of indebtedness from the Association to the Declarant (or the Declarant’s affiliates) pursuant to any note, bond, instrument, or contractual obligation entered into between the Declarant (or the Declarant’s affiliates) and the Association from time to time in connection with the (i) financing of costs related to the development or operation of the Community Areas or (ii) funding of operating deficits of the Association; and
(k) Payment of all other costs and expenses incurred by the Association in the proper conduct of its activities or as may be deemed by the Board of Directors to be in any reasonable way related to the well being of the Community and the Owners.
Section 5.3. Adoption of Common Expense Budget.
(a) At least sixty (60) days before the beginning of each fiscal year, the Board of Directors shall make a reasonable effort to prepare a budget setting forth the estimated Common Expenses during the coming year, including a reasonable amount to establish a reserve fund in accordance with this Article 5.
(b) The Association is hereby authorized to levy Annual Assessments against all Living Units subject to assessment in order to fund the Common Expenses. The Annual Assessment shall be set at a level which is reasonably expected to produce revenue for the Association equal to the total budgeted Common Expenses, including reserves. Either the Declarant or the Association may, but shall not be required to, increase or decrease the Annual Assessment otherwise applicable to specific Living Units to such amount as the Declarant or Board of Directors deems to be appropriate in relation to the scope or level of services, benefits or voting rights available or anticipated to be utilized by Members within such Living Units as well as the cost to the Association of providing such services and benefits. The Declarant or the Board of Directors may also determine to modify the level of Annual Assessments for specific Living Units based upon “public policy” reasons such as providing for a diversity of housing choices within the Community.
(c ) The Board of Directors shall make a reasonable effort to send a copy of the budget and a notice of the amount of the Annual Assessment for the following year to each Owner at least thirty (30) days prior to the beginning of the fiscal year for which it is to be effective. The budget and Assessments shall become effective unless a special meeting of the Association is held and at such a special meeting the budget and Assessments are disapproved by Members representing at least a majority of the total votes in the Association. There shall be no obligation to call a special meeting of the Association for the purpose of considering the budget except on petition of the Members as provided in the Bylaws for special meetings.
(d) If the proposed budget and Annual Assessment are disapproved or if the Board of Directors fails for any reason to determine the budget for any year, then until such time as a budget is determined, the budget in effect for the immediately preceding year shall continue for
the current year.
Section 5.4. Adoption of Local Area Budgets.
(a) In addition to the budget for Common Expenses set forth in Section 5.3 above, at least sixty (60) days before the beginning of each fiscal year, the Board of Directors shall, if Local Area Expenses are anticipated for the coming year, make a reasonable effort to prepare a separate budget covering the estimated Local Area Expenses for each Local Area anticipated to incur Local Area Expenses during the coming year. The Board of Directors shall be entitled to establish a budget and Local Area Assessments for a Local Area if it determines that additional services, benefits, or facilities are being provided to such Local Areas. In addition, a Local Area Committee may request that additional services, benefits, or facilities be provided by the Association, and in such case, any additional anticipated costs may be added to the budget for Local Area Expenses. Such budget shall include a reserve fund for repair and replacement of any capital items maintained within the Local Area which are intended to be utilized primarily by Owners that are part of the Local Area.
(b) The Association may levy Local Area Assessments equally against all Living Units subject to the Local Area; provided, if so specified in the Declaration of Annexation applicable to such Local Area or if so directed by the Local Area Committee, any portion of the Local Area Assessment intended for the exterior maintenance of structures, landscaping of individual Living Units, insurance on structures, or any other expenses intended to benefit a particular Living Unit or Living Units, may be levied individually on the benefited Living Unit based upon the anticipated costs to be incurred for such benefited Living Unit.
(c ) The Board of Directors shall make a reasonable effort to send a copy of the budget for the Local Area and notice of the amount of the Local Area Assessment for the coming year to each Owner of a Living Unit in the Local Area at least thirty (30) days prior to the beginning of the fiscal year. Such budget and Assessment shall become effective unless disapproved by a majority of the Owners of Living Units in the Local Area to which the Local Area Assessment applies.
(d) If the proposed budget for any Local Area is disapproved or if the Board of Directors fails for any reason to determine the budget for any year, then until such time as a budget is determined, the budget and Local Area Assessments in effect for the immediately preceding year shall continue for the current year.
Section 5.5. Special Assessments.
(a) In addition to the Annual Assessments and Local Area Assessments authorized by this Article, the Association may levy in any assessment year a Special Assessment or Special Assessments, applicable in that year only, for the purpose of defraying any unbudgeted expenses or any expenses in excess of those contained in the budget, or for such other purposes as the Board of Directors may consider appropriate in its discretion; provided, however, that any such Special Assessment which exceeds fifteen percent (15%) of the annual budget for the current year shall have the prior consent of Owners representing at least fifty-one percent (51%) of the total votes allocated to Living Units which will be subject to the Special Assessment, and the consent of the Declarant, during the Declarant’s Rights and Obligations Period. A Special Assessment may be levied against all Owners and Living Units if it relates to Common Expenses or against the Living Units subject to a Local Area and the Owners of such Living Units if it relates to Local Area Expenses.
(b) The Association may also levy a Special Assessment against any Owner to reimburse the Association for costs incurred in bringing the Owner and/or such Owner’s Living Unit into compliance with the Governing Documents or if the actions or activities of any Owner cause or result in increased expenses to the Association. Such Special Assessment may only be levied upon the affirmative vote of the Board of Directors, after notice and an opportunity for a hearing has been provided to the Owner. Special Assessments levied under this Section 5.5(b) shall not be limited to a fiscal year, but may be imposed for such time period as the circumstances require.
Section 5.6. Commencement and Applicability of Assessments.
Subject to Sections 5.7 and 5.8, Assessments shall commence as to each Living Unit which has been annexed to the Community pursuant to a Declaration of Annexation on the first day of the month following (i) the date upon which the Declaration of Annexation has been recorded against such Living Unit or (ii) the date upon which the Board of Directors adopts a budget and determines to levy Assessments. Annual Assessments and annual Local Area Assessments shall be adjusted based upon the number of months remaining in the fiscal year to which the Assessments commence. No Living Unit, including Living Units owned by the Declarant or Participating Builders, shall be subject to any Assessment by the Association prior to annexation.
Section 5.7. Declarant Exemption from Assessments.
Living Units owned by the Declarant and any affiliate of the Declarant (including, without limitation, Centex Homes) shall not at any time be subject to any Assessments or other charges levied by the Association and the Declarant shall have no obligation to pay any such Assessments or other charges. A Living Unit formerly owned by the Declarant or any affiliate of the Declarant shall cease to be exempt from Assessments and other charges levied by the Association upon transfer or conveyance of such Living Unit from the Declarant to any other Owner.
Section 5.8. Assessments Applicable to Participating Builders.
Subject to the exemption for the Declarant and any affiliates of the Declarant pursuant to Section 5.7 above, each Participating Builder shall pay such Assessments and/or working capital contributions to the Association as may be determined by the Declarant in its sole discretion.
Section 5.9. Community Property Exempt.
No portion of the Community Property or the facilities situated thereon shall be subject to assessment of any kind by the Association.
Section 5.10. Initial Contribution and Working Capital Contributions.
An assessment in the amount of Five Hundred Dollars ($500.00) shall be paid by the initial homeowner of each Living Unit upon settlement of the completed Living Unit (the “Initial Contribution”). The Initial Contribution is established to assist with the funding of the initial operation of the Association and shall be in addition to other Assessments and shall not be considered an advance payment of Assessments. The Association may, but shall not be obligated to, collect a reasonable working capital contribution in addition to the Initial Contribution and all other Assessments, which working capital contribution shall be payable by transferee Owners upon subsequent re-sales of Living Units.
Section 5.11. Reserves.
The Association shall establish and maintain a reasonable reserve fund for the repair and replacement of the Community Areas and the Exclusive Community Property and any facilities situated thereon. Such reserve fund may also be established for the repair and replacement of any property, improvements or facilities otherwise required or intended to be maintained by the Association pursuant to any easement, agreement or the direction of any governmental authority or agency. The Board of Directors shall set the required reserve fund contribution in an amount sufficient to meet the projected reserve needs of the Association. The reserve fund contribution shall be included as part of the Association’s annual budget, and shall be payable as part of the (i) Annual Assessment applicable to all Living Units (except as otherwise provided with respect to Living Units owned by the Declarant and Participating Builders) to the extent such reserve fund will be utilized to replace assets which are determined by the Board of Directors to benefit substantially all Owners, and (ii) Local Area Assessments to the extent such reserve fund will be utilized to replace assets which are determined by the Board of Directors to primarily benefit the Owners of the Living Units subject to such Local Area Assessment. The Association may establish such other reserve funds as the Board of Directors may from time to time consider necessary or desirable, including, without limitation, a general operating reserve. The proportional interest of an Owner in any reserve fund established by the Association shall be considered an appurtenance of such Owner’s Living Unit and shall not be separately withdrawn, assigned, transferred or otherwise separated from the Living Unit to which it appertains, and shall be deemed to be transferred with such Living Unit.
Section 5.12. Assessment Due Dates.
Installments of Assessments including, without limitation, Annual Assessments, may be levied and collected on a monthly, quarterly, semiannual or annual basis, as may be determined from time to time by the Board of Directors.
Section 5.13. Priority of Lien.
The lien for Assessments under the Governing Documents shall be subordinate to the lien of any First Mortgage recorded against a Living Unit. The sale or transfer of any Living Unit shall not affect the Assessment lien; provided, however, that the sale or transfer of any Living Unit pursuant to mortgage or deed of trust foreclosure or any proceeding in lieu thereof, shall extinguish the lien of such Assessments as to installments which became due prior to such sale or transfer. No sale or transfer of a Living Unit shall exempt such Living Unit or the Owner thereof from liability for any Assessments thereafter coming due or from the lien thereof. No amendment to this Section shall affect the rights of the holder of any First Mortgage on a Living Unit (or the indebtedness secured thereby) recorded prior to recordation of such amendment unless the holder thereof shall join in the execution of such amendment.
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