EditARTICLE 6 ASSESSMENTS
6.1 Creation of Lien and Personal Oblipation of Assessments. Declarant, for each Lot owned by it, hereby covenants and agrees, and all other Owners, by becoming the Owner of a Lot, are deemed to covenant and agree to pay Assessments to the Association in accordance with this Declaration. All Assessments shall be established and collected as provided in this Declaration. The Assessments, Collection Costs, and all other fees, costs and charges permitted under the Project Documents, shall be a charge on the Lot and shall be a continuing lien upon the Lot against which each such Assessment is made to the fullest extent permitted by A.R.S. $33- 1807 and/or applicable law, and, to the extent that the Assessment Lien provisions of this Declaration are or may be broader and more expansive than Arizona statutory law, the provisions of this Declaration shall govern and control except to the extent Arizona statutory law expressly supersedes or a court having jurisdiction over the Project otherwise determines in a binding published opinion. Each such Assessment shall also be the personal obligation of the Person who was the Owner of the Lot at the time when the Assessment became due. The personal obligation for delinquent Assessments shall not pass to the successors in title of the Owner unless expressly assumed by them.
6.2 Annual Assessments.6.2.1 In order to provide for the operation and management of the Association and to provide funds for the Association to pay all Common Expenses and to perform its duties and obligations under the Project Documents, including the establishment of replacement and maintenance reserves, the Board, for each Assessment Period, shall assess an Annual Assessment against each Lot, except as provided in Section 6.3 below regarding certain Declarant owned or leased Lots.
6.2.2 The Board shall give notice of the Annual Assessment to each Owner at least 30 days prior to the beginning of each Assessment Period, but the failure to give such notice shall not affect the validity of the Annual Assessment established by the Board nor relieve any Owner from its obligations to pay the Annual Assessment. If the Board determines during any Assessment Period that the funds budgeted for that Assessment Period are, or will, become inadequate to meet all Common Expenses for any reason, including, without limitation, nonpayment of Assessments by Members, it may increase the Annual Assessment for that Assessment Period (except as expressly limited in Section 6.2.3 below and by Arizona law) and the revised Annual Assessment for that Assessment Period shall commence on the date designated by the Board.
6.2.3 The Association may not impose an Annual Assessment for any Assessment Period that is more than 20% greater than the Annual Assessment established for the most recent Assessment Period prior to the current Assessment Period without the approval of a majority of the Members of the Association or, if less, the number of Members or votes as may be required to approve such an Assessment increase by Arizona's Planned Communities statutes, A.R.S. $33-1801 et seq., as amended from time to time.
6.3 Rate of Assessment. The Owners of all Lots (other than those Lots owned by Declarant or leased by Declarant for model home purposes) shall each pay an equal amount of each Annual or Special Assessment. At such time as a Declarant owned or leased Lot ceases to qualify for the exemption from Annual Assessments because the Lot has been conveyed to a Purchaser or is no longer leased by the Declarant, the Annual Assessment for that Lot shall be prorated on the basis of the number of days in the Assessment Period that the Lot qualified for the exemption and the number of days that the Lot was fully assessable.
6.4 Obligation of Declarant for Deficiencies. Except as provided in this Section 6.4, so long as there is a Class B membership in the Association, Declarant shall pay and contribute to the Association, within 30 days after the end of each fiscal year of the Association, or at such other times as may be reasonably requested by the Board, such funds as may be necessary (when added to the Annual Assessments levied by the Association) to pay all current operating expenses of the Association as they become due. Regardless of whether Class B Membership exists, Declarant's obligation to fund any shortfall in Association revenues under this Section 6.4 shall cease at any time Declarant elects to pay Annual Assessments at the full rate of assessment for all Lots owned by Declarant or leased by Declarant for model home purposes. Such election may be made either by Declarant's giving written notice to the Association or, without the necessity of giving written notice, by Declarant's paying the Association each month an amount equivalent to the amount of the monthly installment of the Annual Assessments attributable to Declarant's then owned or leased Lots at the full or 100% rate of assessment assessed to all non Declarant owned or leased Lots. Notwithstanding anything to the contrary herein, at no time shall Declarant be obligated to pay more in a year to the Association than an amount equivalent to the 100% rate of Annual Assessments for all Lots owned by Declarant or leased by Declarant for model home purposes.
6.5 Special Assessments. In any Assessment Period, the Association may levy a Special Assessment against each Lot which is then subject to Assessment, for the purpose of defraying, in whole or in part, the cost of any construction, reconstruction, repair or replacement of an Improvement on the Common Area or in an Area of Association Responsibility, including fixtures and personal property related thereto. Any Special Assessment must have the assent of Declarant, while Declarant owns any Lots, and the consent of Members holding 2/3 of the votes entitled to be cast by Members (other than Declarant) who are voting in person, by proxy (if permitted by applicable law), or by absentee or written ballot at a meeting duly called for this purpose or the consent of Members evidenced by written agreement of Members holding 2/3 of
the votes in the Association pursuant to A.R.S. $10-3704. Notwithstanding the foregoing, Special Assessments made pursuant to Section 8.7 below shall only require the consent of the Board and 50% of the total votes in the Association.
6.6 Enforcement Assessments. The Association may assess against a Lot an Enforcement Assessment any of the following expenses: (i) any Collection Costs incurred by the Association in attempting to collect Assessments or other amounts payable to the Association by the Owner of the Lot; (ii) any Collection Costs, including attorneys' fees (whether or not a law suit is filed), incurred by the Association with respect to any violation of the Project Documents by the Owner, his Lessee or any other Resident of his Lot and their respective Invitees; (iii) any monetary penalties levied against the Owner for infractions of the Project Documents in accordance with procedures set forth in the Bylaws or Association Rules; or (iv) late charges and any other amounts (other than Annual Assessments or Special Assessments) which become due and payable to the Association by the Owner, his Lessee or any other Resident of his Lot pursuant to the Project Documents. For purposes of this Section 6.6, the Association shall be deemed to automatically have assessed any late charges and delinquent interest charges accruing against a specific Lot for non-payment of Assessments as provided for in this Declaration and/or adopted by Association Rule as an Enforcement Assessment without the requirement of a hearing or a formal Board resolution or assessment against the applicable Lot. To the extent any Enforcement Assessment is not secured by an Assessment Lien as may be provided by applicable Arizona law consistent with the provisions of Section 6.1 above, the Association may seek a civil judgment for the amounts so assessed against the applicable Owner or Lot. If the Association is a prevailing party in such a civil action, the Association may record the judgment lien against the Lot in the amount so awarded by the applicable court; provided, further, however, in no event may the Association bring an action to foreclose such civil judgment against the Lot so encumbered thereby, but such civil judgment shall be paid no later than at such time as a conveyance of the encumbered Lot occurs as further provided in A.R.S. $33-1807.
6.7 Assessment Period. The period for which the Annual Assessment is to be levied shall be the calendar year, except that the first Assessment Period, and the obligation of the Owners to pay an Annual Assessment shall commence upon the conveyance of the first Lot to a Purchaser and terminate on December 31 of such year. The Board in its sole discretion from time to time may change the Assessment Period.
6.8 Commencement Date of Assessment Obligation. Except as expressly provided in this Section 6.8, each Lot shall become subject to assessment upon the date that Lot is first conveyed to a Purchaser. Declarant and the applicable Lots owned or leased by Declarant shall be automatically exempt from the Annual Assessment for all Lots owned by Declarant or Lots leased by Declarant for Declarant's model home purposes, provided further that: (i) Declarant shall be obligated to pay the full Annual Assessment for any Lots then owned or leased by Declarant for Declarant's model home purposes at any time after 2 years from the Recording of this Declaration; and (ii) while Class B Membership exists, Declarant shall have the obligation to fund shortfalls or deficiencies in Association revenue to meet current operating expenses (but not reserves or Reserve Contributions) as more specifically provided in Section 6.4 above during the stated period of obligation therein. Such funding of shortfalls or deficiencies shall not exceed the total amount of the Annual Assessment for each Lot owned or leased by Declarant as if Declarant had paid the full amount of the Annual Assessment for the time period Declarant owned or leased each Lot.
6.9 Rules Regarding Billing and Collection Procedures. Annual Assessments shall be collected on a monthly basis or such other basis as may be selected by the Board Gut no less frequently than quarterly). Special Assessments may be collected as specified by the Board. The Board shall have the right to adopt Rules setting forth procedures for levying Assessments and for the billing and collection thereof provided that the procedures are not inconsistent with the provisions of this Declaration, the Articles or Bylaws. The failure of the Association to send a bill to a Member shall not relieve any Member of his liability for any Assessment or charge under this Declaration or the Project Documents, but, to the extent those Assessments or charges are secured by the Assessment Lien, the Assessment Lien therefor shall not be foreclosed until the Member has been given not less than 30 days' written notice prior to initiation of such foreclosure action that the Assessment or any installment thereof is due and of the amount owing. Any notice given to a Member pursuant to Section 6.10.2 below shall suffice if given at least 30 days before commencement of a civil foreclosure action. The Association shall be under no duty to refund any payments received by it even though the ownership of a Lot changes during an Assessment Period, but successor Owners of Lots shall be given credit for prepayments, on a prorated basis, made by prior Owners. The provisions of this Section 6.9 shall be subject to any applicable limitations of Arizona law.
6.10 Effect of Nonpayment of Assessments; Association Remedies. 6.10.1 Any Assessment, or any installment of an Assessment, not paid within 15 days after the Assessment or any installment thereof first became due shall be deemed delinquent as of the original due date for the missed Assessment and shall bear interest from the date such payment was due at the rate of at the rate of 18% per annum. In addition to or in lieu of delinquent interest, the Board may establish a late fee to be charged to any Owner who has not paid any Assessment or installment thereof or any other charges payable to the Association pursuant to the Project Documents. In said event, the late charge shall automatically attach to the Assessment within 15 days after such Assessment was first due in an amount not to exceed the limitations of A.R.S. 933-1803, as amended from time to time.
6.10.2 To the fullest extent permitted by this Declaration and applicable law, the Association shall have a lien on each Lot for: (i) all Annual and Special Assessments levied against the Lot; (ii) late charges accruing on Annual and Special Assessments; (iii) all other reasonable Collection Costs and other fees and charges due to the Association, including, without limitation, monetary penalties and fines. The Recording of this Declaration constitutes record notice and perfection of the Assessment Lien. The Association may, at its option, record a "Notice of Lien" setting forth the name of the delinquent Owner as shown in the records of the Association, the legal description or street address of the Lot against which the Notice of Lien is Recorded. If the Association or the Managing Agent Records a Notice of Lien, the Association may charge the Owner of the Lot against which the Notice of Lien is Recorded a lien fee in an amount to be set from time to time by the Board.
6.10.3 Except as may be otherwise provided by Arizona law, the Assessment Lien shall have priority over all liens or claims except for: (i) tax liens for real property taxes; (ii) assessments in favor of any municipal or other governmental body; and (iii) the lien of any First Mortgage. Any First Mortgagee or other Person acquiring title or coming into possession of a Lot through foreclosure of the First Mortgage, purchase at a foreclosure sale or trustee sale, or through any equivalent proceedings, such as, but not limited to, the taking of a deed in lieu of foreclosure, shall acquire title free and clear of any claims for unpaid Assessments and charges against the Lot which became payable prior to the acquisition of such Lot by the First Mortgagee or other Person. Any Assessments and charges against the Lot which accrue prior to such sale or transfer shall remain the obligation of the defaulting Owner of the Lot.
6.10.4 Except as may be otherwise provided by Arizona law or in this Declaration, the Association shall not be obligated to release the Assessment Lien until all delinquent Assessments, including, without limitation, late charges, reasonable attorneys' fees and costs, and any other sums lawfully secured by the Assessment Lien have been paid in full.
6.10.5 Subject to the applicable limitations of Arizona law, the Association shall have the right, at its option, to enforce collection of any delinquent charges and all other sums due to the Association in any manner allowed by law, including, but not limited to: (i) bringing an action at law against the Owner personally obligated to pay the delinquent charges and such action may be brought without waiving the Assessment Lien to the extent the Assessment Lien secures such charges or (ii) bringing an action to foreclose the Assessment Lien against the Lot in the manner provided by law for the foreclosure of a realty mortgage. The Association shall have the power to bid at any foreclosure sale and to purchase, acquire, hold, lease, mortgage and convey any and all Lots purchased at such sale.
6.11 Evidence of Payment of Assessments. Upon receipt of a written request by a Member or other Person, and within a reasonable period of time thereafter (but not to exceed 10 days or such earlier time period as may be established under A.R.S. $33-1807 from time to time), the Association shall issue to such Member or other Person a written certificate stating that all Assessments, interest, late charges, lien fees, fines, penalties, and other fees and costs have been paid with respect to any specified Lot as of the date of such certificate, or if all Assessments or other charges have not been paid, the amount of such Assessments or other charges due and payable as of such date. The Association or the Managing Agent may make a reasonable charge for the issuance of such certificates, which charges must be paid at the time the request for any such certificate is made. Any such certificate, when duly issued as herein provided, shall be conclusive and binding with respect to any matters therein stated as against the Association, every Owner, and the bona fide Purchaser or Person acquiring the Lot in question, and any First Mortgagee thereof, if the statement is requested by an escrow agency that is licensed pursuant to Title 6, Chapter 7 of the Arizona Revised Statutes. The Association shall also deliver such information and statements to or for the benefit of prospective Purchasers as may be reasonably requested by a Member who intends to convey that Lot or as the Association is required to provide to such prospective Purchasers for purposes of complying with A.R.S. $33-1806, as amended from time to time. The Association or the Managing Agent may charge a reasonable fee for such services as determined by the Board from time to time.
6.12 Purposes for which Association's Funds May Be Used. The Association shall apply all funds and property collected and received by it (including Assessments, fees, loan proceeds, surplus funds and property from any other source) for the common good and benefit of the Project and the Owners and Residents by devoting said funds and property, among other things, to the acquisition, construction, alteration, maintenance, provision and operation, by any manner or method whatsoever, of any and all land, properties, Improvements, facilities, services, projects, programs, studies and systems, within or without the Project, which may be necessary, desirable or beneficial to the general common interests of the Project, the Owners and Residents. The following are some, but not all, of the areas in which the Association may seek to aid, promote and provide for such common benefit: social interaction among the Residents, maintenance of landscaping in Areas of Association Responsibility and the purchase of reclaimed or grey water from the City or any entity authorized by the City for such purposes, recreation, insurance, communication, education, transportation, health, utilities, public services, safety and indemnification of officers and directors of the Association. The Association may also expend its funds for any purpose for which a nonprofit corporation may expend funds under the laws of the State of Arizona.
6.13 Surplus Funds. The Association shall not be obligated to spend in any year all the Assessments (including any Special Assessments) and other sums received by it in such year, and may carry forward as surplus any balances remaining. The Association shall not be obligated to reduce the amount of the Annual Assessment 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 and/or the Board may deposit any such surplus funds in the Association's Reserve Account.
6.14 Working Capital Fund. To insure that the Association shall have adequate funds to meet its expenses or to purchase necessary equipment or services, each Purchaser of a Lot from the Declarant shall pay to the Association immediately upon becoming the Owner of the Lot a sum equal to 116th of the current Annual Assessment for the Lot. Funds paid to the Association pursuant to this Section 6.14 may be used by the Association for payment of operating expenses or any other purpose permitted under the Project Documents. Payments made pursuant to this Section 6.14 shall be nonrefundable and shall not be considered as an advance payment of any Assessments levied by the Association pursuant to this Declaration.
6.15 Transfer Fee. 6.15.1 Except as expressly provided in Section6.15.2 below, (i) each Purchaser, immediately upon becoming the Owner of a Lot, and (ii) each Member, immediately upon leasing his Lot to a Lessee pursuant to Section 3.12.2 above, shall pay to the Association a transfer fee ("Transfer Fee") in such amount as is established from time to time by the Board to compensate the Association for the administrative costs incurred resulting from the transfer of the Lot. The Transfer Fee is not intended to compensate the Association for the costs incurred in the preparation of the statement which the Association is required to mail or deliver pursuant to A.R.S. $33-1806(A), and, therefore, the Transfer Fee shall be in addition to the fee which the Association or the Managing Agent is entitled to charge pursuant to A.R.S. $33-1806(C).
6.15.2 No Transfer Fee shall be payable with respect to: (a) any transaction in which the Person acquiring title to a Lot is a Purchaser of that Lot from Declarant; (b) the transfer or conveyance of a Unit by devise or intestate succession; (c) a transfer or conveyance of a Lot to a family trust, family limited partnership or other Person for bona fide estate planning purposes; (d) a transfer or conveyance of a Unit to a corporation, partnership or other entity in which the grantor owns a majority interest; (e) the conveyance of a Lot by a trustee's deed following a trustee's sale under a deed of trust; (0 a conveyance of a Lot as a result of the foreclosure of a realty mortgage or the forfeiture or foreclosure of a purchaser's interest under a Recorded contract for the conveyance of real property subject to A.R.S. $33-741 et seq.;(g) the conveyance of a Lot to a mortgagee pursuant to a deed in lieu of foreclosure executed by the mortgagor Owner; and (h) the conveyance by an Owner of a Lot who acquired title by trustee's deed, foreclosure of a realty mortgage, forfeiture or foreclosure of a Recorded contract pursuant to A.R.S. $33-741 am., or deed in lieu of foreclosure to a Purchaser. If the Board determines, in its sole discretion, that a material purpose of a transfer or conveyance was to avoid payment of the Transfer Fee (or any other fee due that would otherwise be due to the Association), the Board may choose to charge such a Transfer Fee despite an apparent exemption.
6.16 No Offsets. All Assessments and Collection Costs and other fees and charges payable to the Association shall be payable in accordance with the provision of the Project Documents, and no offsets against such Assessments, Collection Costs, or other fees and charges shall be permitted for any reason, including, without limitation, a claim that the Association is not properly exercising its duties and powers as provided in the Project Documents.
6.17 No Exemption of Owners. Except for Declarant as provided in Section 6.3 above, no Owner of a Lot may partially or fully exempt himself from liability for Assessments levied against his Lot or for other amounts which he may owe to the Association under the Project Documents by waiver and non-use of any of the Common Area facilities or by abandonment of his Lot.
6.18 Reserve Contributions/Reserves. 6.18.1 After Declarant has conveyed the last Lot in the Project to a Purchaser, the Board may, in its discretion, establish a contribution to be collected from each subsequent Purchaser of a Lot at the time of transfer or conveyance (the ''Reserve Contribution",) to the reserves to be established pursuant to Section 6.18.3 below. The amount of the initial Reserve Contribution, if any is so established, shall be based upon the recommendations contained in any professionally prepared reserve study obtained by the Board as to the amount of reserves required for the Project after taking into consideration the amount of Reserves then held by the Board in a segregated account. The Board of Directors may, from time to time, increase or decrease the amount of the Reserve Contribution, but the amount of the Reserve Contribution may not be increased by the Board by more than 20% during any Assessment Period without the approval of the Members holding more than 50% of the votes in the Association. Reserve Contributions, if established by the Board, are non-refundable and are shall not be considered as an advance payment of the Annual Assessment.
6.18.2 No Reserve Contribution shall be payable with respect to any transfer of a Lot exempt from the Transfer Fee pursuant to Section 6.15.2 above.
6.18.3 The Annual Assessments shall include a reasonable amount for reserves as determined by the Board of Directors for the future periodic maintenance, repair or replacement of all or a portion of the Common Area and other Areas of Association Responsibility and Improvements thereon, or any other reasonable purpose as determined by the Board of Directors. The reserves may be funded from Annual Assessments, remaining balances from unused Special Assessments, Reserve Contributions and from any other revenues of the Association. All amounts collected as reserves, whether pursuant to this Section 6.18 or otherwise, shall be deposited by the Board of Directors in a separate bank account (the "Reserve Account") commencing no later than the expiration or termination of Class B Membership. All b d s in the Reserve Account shall be held in trust for the purposes for which they are collected and are to be segregated from and not commingled with other Association funds. Such reserves shall be deemed a contribution to the capital account of the Association by the Members. The Board of Directors shall not expend funds from the Reserve Account for any other purpose other than those purposes for which they are collected. Withdrawal of funds from the Reserve Account shall require the signatures of two members of the Board of Directors or one member of the Board and an officer of the Association who is not also a Board member. After the termination or expiration of Class B Membership, the Board of Directors shall periodically obtain a reserve study in accordance with good management practice and shall present such findings to the Members no later than the next annual meeting of the Members. The reserve study shall at a minimum include: (i) identification of the major components of the Common Area having a remaining useful life of less than 30 years as of the date of the study and their estimated probable remaining useful life; (ii) an estimate of the cost of maintenance, repair, replacement, restoration of such Common Area during and at the end of their useful life; (iii) an estimate of the annual contribution to the Reserve Account necessary to defray such costs, after subtracting the funds in the Reserve Account as of the date of the study. The Board of Directors shall modify the budget in accordance with the findings of the reserve study.
6.18.4 Unless the Association is exempt from federal or state income taxes, all reserves shall be accounted for as contributions to the capital of the Association and as trust funds segregated from the regular income of the Association or in any other manner authorized by law or regulation of the Internal Revenue Service that will prevent such funds from being taxed as income of the Association.
6.19 Notice and Quorum for any Action Under Sections 6.2 or 6.5. Written notice of any meeting called for the purpose of obtaining the consent of the Members for any action for which the consent of Members is required under Sections 6.2 or 6.5 of this Declaration shall be sent to all Members not less than 30 days nor more than 50 days in advance of the meeting. At the first such meeting called, the presence of Members voting in person, by proxy (if allowed by applicable law) by written or absentee ballots, entitled to cast 60% of all the votes of each class of membership shall constitute a quorum. If the required quorum is not present, another meeting may be called subject to the same notice requirement, and the required quorum at the subsequent meeting shall be 1/2 of the required meeting at the preceding meeting. No such subsequent meeting shall be held more than 50 days following the preceding meeting without the quorum requirements reverting back to the original level.
6.20 Unallocated Taxes. In the event that any taxes are assessed against the Common Area or the personal property of the Association rather than against the Lots, said taxes shall be included in the Assessments made under the provisions of this ARTICLE 6, and, if necessary, a Special Assessment may be levied on a pro rata basis to each of the Lots.