Summercreek

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PROPOSED AMENDMENTS TO DECLARATION & BYLAWS RE: AMENDMENT PROCED

Summercreek Amendment Text 11/06

Text of Amendments

Below are the actual texts of the Declaration and Bylaw amendments. Because a redlined copy could be too hard to read with the additions and strikeouts, we have shown the existing language first followed by the proposed amendment language. Language in [bracketed italics] is for information only; it is not part of either the current language or the proposed amendment.

Proposed Declaration Amendments

We are proposing to change the Declaration amendment procedure by deleting all of existing Article XIII, Section 3 set forth below and to replace it with the proposed new sections that follow it.
[We propose to delete existing Article XIII, Section 3 below]

Section 3. Amendments. During the period of time prior to conversion of the Class
B membership to Class A membership, this Declaration may be amended by an .instrument
in writing signed by the Secretary of the Association certifying that at least sixty-six and two-thirds percent (66-2/3%) of the voting power of each class of members of the Association has approved the amendment, which amendment shall become effective upon the recording thereof by the Office of the County Recorder of San Diego County, California. After conversion of the Class B membership in the Association to Class A membership, the
Declaration may be amended by an instrument in writing signed by (i) sixty-six and two-thirds
percent (66-2/3%) of the total voting power of the Association, and (ii) at least sixty-six and two-thirds percent (66-2/3%) of the voting power of members of the Association other than Declarant. No amendment material to a Mortgagee may be made to this Declaration without the prior written consent of seventy-five percent (75%) or more of the Mortgagees of First Mortgages encumbering Lots within the Properties (based upon one vote for each such Mortgagee), provided, however, that each Mortgagee has informed the Association in writing of its appropriate address. For purposes hereof, any amendments to provisions of this Declaration governing any of the following subjects, shall be deemed "material to a Mortgagee."
(a) The fundamenta1 purpose for which the project was created (such as a change from residential use to a different use).
(b) Assessments, assessment liens and subordination thereof.
(c) The reserve for repair and replacement of the Common Area.
(d) Property maintenance obligations.
(e) Casualty and liability insurance.
(f) Reconstruction in the event of damage or destruction.
(g) Rights to use the Common Area.
(h) Annexation.
(i) Voting.
(j) Any provision which, by its terms, is specifically for the benefit of the First Mortgagees, or specifically confers rights on First Mortgagees.


[We propose to replace the above language with proposed Article XIII, Section 3 below
and to create a separate Section 3A for the lender approval requirements.]

Section 3. Amendments. This Declaration may be amended using the following procedure. First, the vote will be conducted by a secret ballot in accordance with the Civil Code §1363.03 and any other requirements of California law. Second, to constitute a quorum, the total number of ballots returned must come from at least a simple majority (i.e., more than half) of the voting power of the members. Third, the voting must remain open for at least one month after the date the ballots are mailed to the members, but the initial deadline may be extended periodically after that date, if a quorum of ballots has not been received by the initial deadline, and may be extended automatically for additional periods of time until a quorum of ballots has been returned. Fourth, the amendment must be approved by the affirmative vote of at least two-thirds of the ballots cast, and the total number of affirmative votes cast must also be at least two-thirds of the minimum required quorum. A blank ballot or empty envelope or other action indicating an intention to abstain will be deemed to have a neutral effect, so it will be counted toward the quorum only, but it will not be counted as a ballot cast for purposes of computing the two-thirds approval. Notwithstanding any contrary provision in this Section, the percentage of the voting power necessary to amend a specific clause or provision of this Declaration shall not be less than the percentage of affirmative votes prescribed for action to be taken under that clause or provision.
A Declaration amendment becomes effective after (a) the approval of the required fraction of the voting power of Members has been given, (b) that fact has been certified in the form of a written document executed and acknowledged by an officer designated by the Board for that purpose or, if no such designation is made, by the President of the Association and (c) the document has been properly recorded in San Diego County.

[We also propose to add a new Article XIII, Section 3A below]

Section 3A. Eligible Lender Approval of Specified Amendments.
Notwithstanding Section 3 above, certain specified amendments of the Declaration or Bylaws, require approval by "Eligible Lenders" as provided by this Section. An "Eligible
Lender" means a First Mortgagee that has provided a written request to the Association stating the name and address of such Mortgagee, the address on which it holds a First
Mortgage, and requesting notice to which such Eligible Lender is due under the Declaration
or Bylaws. Approval by fifty-one percent (51%) of "Eligible Lenders" shall be required to
add or amend any material provisions of the Declaration or Bylaws that establish, provide
for, govern or regulate the following:
a. Changing the fundamental purpose for which the Properties were created such as a change from residential to a different use;
b. Increases in assessments that raise the previously assessed amount by more than twenty-five percent (25%), assessment liens or the priority of assessment liens;
c. Reductions in reserves for maintenance, repair and replacement of the
Common Area;
d. Responsibility for maintenance and repairs;
e. Hazard or fidelity insurance requirements;
f. Reconstruction in the event of damage or destruction.
g. Reallocation of interests in the Common Area or rights to its use;
h. Expansion or contraction of the Properties, or the addition, annexation, or withdrawal of property to or from the Properties;
i. Voting rights.
j. Redefinition of any Lot boundaries;
k. Converting Owner Lots into Common Area or vice versa;
l. Imposition of any restrictions on the leasing of Lots;
m. Imposition of any restrictions on an Owner's right to sell or transfer his or her Separate Interest;
n. Changing any provisions which, by its terms, is specifically for the benefit of first Mortgagees or insurers or guarantors of first Mortgages on Lots.
o. Any provision which, by its terms, is specifically for the benefit of the First Mortgagees, or specifically confers rights on First Mortgagees.
An amendment to the Declaration or Bylaws shall not be considered material if it is for the purpose of correcting technical errors, or for clarification, or for making a change which is of no practical significance. An Eligible Lender who receives a written request to approve additions or amendments by certified or registered mail, return receipt requested, addressed to the address provided by such Eligible Lender, who does not deliver or post to the requesting party a negative response within thirty (30) days after the notice of the proposed addition or amendment, shall be deemed to have approved such request. No Eligible Lender may charge a fee in connection with reviewing a request for a response. Any response from an Eligible Lender which only requests a fee for review shall not be deemed a "negative response" for the purposes of determining Eligible Lender consent within the meaning of this Section.

Proposed Bylaw Amendments

We are also proposing to change the Bylaw amendment procedure by deleting all of existing Article XIII, Section 1 set forth below and to replace it with the proposed new Article XIII, Section 1 shown farther below.
[We propose to delete existing Article XIII, Section 1 below]

Section 1. Except as may otherwise be stated in these Bylaws, prior to conversion of the Class B membership in the Association to Class A membership, new Bylaws may be adopted or these Bylaws may be amended or repealed by the vote of the Members entitled to exercise a majority or more of the voting power of each class of Members of the Association or by the written assent of such Members. After conversion of the Class B membership to Class A membership in the Association, these Bylaws may be amended or repealed by the vote of (i) Members entitled to "exercise a majority of the voting power of the Association, and (ii) at least a majority of the voting power of Members of the Association other than Declarant. Anything herein stated to the contrary notwithstanding, no material amendment to the Bylaws shall be made without the prior written approval of Mortgagees holding fifty-one percent (51%) of the first Mortgages encumbering Lots; provided further. that so long as there remains a Class B membership in the Association, the VA and the FHA shall have the right to veto any amendments to these Bylaws. "Material amendment" shall mean, for purposes of this Article XIII, any amendments to provisions of these Bylaws governing any of the following subjects:
(a) The fundamental purpose for which the project was created (such as a change from residential use to a different use).
(b) Assessments, assessment liens and subordination thereof.
(c) The reserve for repair and replacement of the Common Area.
(d) Property maintenance obligations.
(e) Insurance or Fidelity Bonds.
(f) Reconstruction in the event of damage or destruction.
(g) Rights to use the Common Area.
(h) Expansion or 'construction of the Properties or the addition, annexation or withdrawal of property to or from the Properties.
(i) Voting.
(j) Boundaries of any Lot.
(k) The interests in the Common Area.
(1) Convertibility of Lots into Common Area or of Common Area into Lots.
(m) Leasing of Lots.
(n) Imposition of any right of first refusal or similar restriction on the right of an Owner to sell, transfer or otherwise convey his Lot.
(o) Any provision which, by its terms, is specifically for the benefit of first Mortgagees, or specifically confers rights on first Mortgagees.
Notwithstanding the above provisions, the percentage of the voting power necessary to amend a specific clause or provision in the Bylaws shall not be less than the percentage
of affirmative votes necessary for action to be taken under that clause or provision.

[We propose to replace the above language with proposed Article XIII, Section 1 below]

Section 1. These Bylaws may be amended using the following procedure.
First, the vote will be conducted by a secret ballot in accordance with the Civil Code
§1363.03 and any other requirements of California law. Second, to constitute a quorum, the
total number of ballots returned must come from at least a simple majority (i.e., more than half) of the voting power of the Members. Third, the voting must remain open for at least
one month after the date the ballots are mailed to the Members, but the initial deadline may
be extended periodically after that date, if a quorum of ballots has not been received by the
initial deadline, and may be extended automatically for additional periods of time until a
quorum of ballots has been returned. Fourth, the amendment must be approved by the
affirmative vote of at least two-thirds of the ballots cast, and the total number of affirmative votes cast must also be at least two-thirds of the minimum required quorum. A blank ballot or empty envelope or other action indicating an intention to abstain will be deemed to have a neutral effect, so it will be counted toward the quorum only, but it will not be counted as a ballot cast for purposes of computing the two-thirds approval. Notwithstanding any contrary provision in this Section, the percentage of the voting power necessary to amend a specific clause or provision of these Bylaws shall not be less than the percentage of affirmative votes prescribed for action to be taken under that clause or provision.
Unless otherwise provided when the amendment is approved, a Bylaw amendment becomes effective immediately after approval by the required fraction of the voting power of Members has been given. The Secretary of the Association shall certify any such amendment to the Bylaws, and the Association shall provide copies of any such amendment to the Members. Whenever an amendment or new Bylaw is adopted, it shall be placed in an appropriate location with the official copy of the Bylaws and shall recite the date when the amendment was enacted or the written assents were filed. Approval of Bylaw amendments by "Eligible Lenders" (i.e., lenders who have requested notice and the right to vote on certain amendments) may be required, but only to the extent required under the applicable amendment provisions in the Declaration.

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