Park River Oak Estates Homeowner's Association

CC&Rs

ARTICLE X
Damage or Destruction

[10. 1] Section 1. Destruction; Proceeds Exceed 85 Percent of the Reconstruction Costs. If there is a total or partial destruction of any Townhouse or Common Facility Improvements within the Properties, and if the available proceeds of the insurance maintained pursuant to article IX are sufficient to cover not less than 85 percent of the costs of repair and reconstruction, the Improvements shall be promptly rebuilt unless, within 90 days from the date of destruction, 75 percent of the total voting power “eligible Members” (as defined in section 4, below), determine that such repair and reconstruction shall not take place. If repair and reconstruction is to take place, the Board shall be required to execute, acknowledge and record in the office of the County Recorder, not later than 120 days from the date of such destruction, a certificate declaring the intention of the Members to rebuild.

[10.2] Section 2. Destruction; Proceeds Less Than 85 Percent of Reconstruction Costs. If the proceeds of insurance are less than 85 percent of the cost of repair and reconstruction, repair and reconstruction of the damaged or destroyed Improvements may nevertheless take place, if, within 90 days from the date of destruction, eligible Members then holding at least 51 percent of the total voting power determine that such repair and reconstruction shall take place. If a meeting or written ballot is called to vote on the matter, the Association shall solicit and obtain bids from at least two reputable contractors to repair and reconstruct the Improvements in accordance with the original plans and shall present this information to the Owners at the meeting. If repair and reconstruction are to take place, the Association shall execute, acknowledge, and record in the office of the County Recorder of the County not later than 120 days from the date of destruction a certificate declaring the intention of the Owners to rebuild.

[10.3] Section 3. Rebuilding Procedures. If the eligible Members determine to rebuild, pursuant to section 1 or 2, above, the Owners of each Townhouse located within a structure that has been totally or partially destroyed shall be obligated to contribute his or her proportionate share of the cost of reconstruction or restoration of the structure containing his or her Townhouse, over and above the available insurance proceeds. The Owners’ proportionate share of the cost of reconstruction or restoration shall be based upon the ratio that the square footage of the living area of his or her Townhouse bears to the total square footage of the living area of all Townhouses. If any Owner fails or refuses to pay his or her proportionate share, the Board may levy a Special Individual Assessment against the Townhouse of such Owner which may be enforced under the lien provisions contained in article IV or in any other manner provided in this Declaration.

 

If any Owner disputes the amount of his or her proportionate liability under this section 3, such Owner may contest the amount of his or her liability by submitting to the Board, within 9 days after notice to the Owner of his or her share of the liability, written objections supported by cost estimates or other information that the Owner deems to be material and may request a hearing before the Board at which the Owner may be represented by counsel. Following such hearing, the Board shall give written notice of its decision to all Owners, including any recommendation that adjustments be made with respect to the liability of any Owners. If such adjustments are recommended, the notice shall schedule a special meeting of Members for the purpose of acting on the Board’s recommendation, including making further adjustments, if deemed by the Members to be necessary or appropriate. All adjustments shall be affirmed or modified by 51 percent of the total voting power of the eligible Members. If no adjustments are recommended by the Board, the decision of the Board shall be final and binding on all Owners, including any Owner filing objections.

[10.4] Section 4. Definition of “Eligible Members” Entitled to Vote. For purposes of any vote pursuant to this article X, the Members eligible to vote shall be:

(a)  the requisite percentage of the total voting power of the membership in the case of any damage to or destruction of Common Facilities other than buildings containing Townhouses, and

(b)  in the case of any damage to or destruction of buildings containing Townhouses, the requisite percentage of the voting power of those members whose Townhouses are located in the damaged or destroyed structure(s). Any membership vote required hereunder shall be conducted either at a duly convened meeting at which a quorum is present or by written ballot conducted in accordance with article IV, section 6 of the Bylaws.

[10.5] Section 5. Rebuilding Contract. If the Eligible Members determine to rebuild, the Board shall reconstruct the damaged or destroyed portions of the Properties substantially in accordance with the original plan. The Board or its authorized representative shall obtain bids from at least two reputable contractors and shall award the repair and reconstruction work to the bidder the Association Board determines to be the most qualified (which need not be the lowest bidder).

The Board shall have the authority to enter into a written contract with the contractor for such repair and reconstruction on terms deemed reasonable by the Board. The insurance proceeds held by the trustee shall be disbursed to the contractor according to the terms and conditions of the agreement. It shall be the obligation of the Board to take all steps which are necessary or appropriate to assure the commencement and completion of authorized repair and reconstruction at the earliest possible date.

[10.6] Section 6. Rebuilding Not Authorized. If the Eligible Members determine not to rebuild, then any insurance proceeds then available for rebuilding shall be used or distributed as follows:

 

(a)  If, prior to the expiration of 120 days from the date of destruction, 75 percent of all Owners and institutional first Mortgagees with Mortgages encumbering the affected Townhouses within the Properties consent by vote or in writing, the Board acting on behalf of the Association shall have the right to purchase the Townhouses which were rendered uninhabitable by such damage or destruction at the fair market value thereof immediately prior to the damage or destruction (as determined by an appraiser in accordance with section 8, below), using the available proceeds of insurance for such purpose. Any shortage of insurance proceeds shall be made up by a Special Assessment levied against all remaining Owners (but without the consent or approval of Owners, despite any contrary provisions of this Declaration). The Board’s decision as to whether or not a Townhouse is uninhabitable shall be final and binding on all parties. Any payment of the purchase price shall be made jointly to the selling Owner and all Mortgagees of his or her Townhouse and each Owner by accepting a deed to a Lot agrees to be bound by these provisions and to sell his or her Lot by grant deed to the Association as provided herein. Concurrently with such purchase, the Board or individuals authorized by the Board, acting as attorney-in-fact of all Owners shall amend the Subdivision Map and this Declaration to eliminate from the Properties the Lots so purchased and to adjust the undivided ownership interest of the remaining Owners to reflect the reduced number of Lots in the Project; and the Association shall convey to each remaining Owner a proportionate share of the undivided interests in the Common Area represented by the Lots purchased. This proportion shall be in the ratio that each remaining Owner’s undivided interest in the Common Area bears to all remaining Owner’s undivided interests in the Common Area.

(b)             Notwithstanding the determination of eligible Members not to rebuild pursuant to section 1 or 2 of this article X, any Townhouses which are not rendered uninhabitable shall be repaired and restored to a condition as near as possible to their condition immediately before such damage or destruction. Such repair and restoration shall be paid first from the insurance proceeds remaining after the purchase of Lots pursuant to subparagraph (a), of this section 6, if any, and second from a Special Individual Assessment levied against all remaining Owners in the manner described in section 4 of this article X (but without the consent or approval of Owners, despite any contrary provisions of this Declaration).

(c)  If the required 75 percent of all Owners and institutional first Mortgagees do not consent to purchase the Lots which were rendered uninhabitable, an appraiser shall determine the relative fair market values of all Lots in the Properties, as of a date prior to any damage or destruction and the proceeds of insurance shall be apportioned among all Owners, and their respective Mortgagees, in proportion to such relative values. The Board shall have the duty, within 120 days from the date of destruction, to execute, acknowledge and record in the office of the County Recorder, a certificate declaring the intention of the Members not to rebuild On recordation of the certificate, the right of any Owner to partition through legal action as described in article XII shall revise immediately.

[10.7] Section 7. Minor Repair and Reconstruction. In any case, the Board shall have the duty to repair and reconstruct Improvements owned by the Association or improvements it is obligated to repair and maintain, without the consent of Members and irrespective of the

 

amount of available insurance proceeds, in all cases of partial destruction when the estimated cost of repair and reconstruction does not exceed $20,000. Any amounts paid by the Board up to and including $20,000 which are not covered by insurance shall be assessed to the Owners of Lots which are damaged upon the basis of the ratio of the square footage of the floor area of the Lot to be assessed to the total square footage of the floor area of all Lots to be assessed.

[10.8] Section 8. Appraiser. Wherever in this article X or article XI reference is made to a determination of the value or fair market value of one or more Lots by an appraiser, this shall mean an appraisal by an independent appraiser selected by the Board, who shall be a member of the Society of Real Estate Appraisers (SREA) or other nationally recognized appraiser organization and who shall apply its or such other organization’s standards in determining the value or fair market value of each Lot. The costs of such appraisals shall be paid from the sale or insurance proceeds, as the case may be.