ARTICLE V

COVENANT FOR MAINTENANCE ASSESSMENTS

Section 5.01. Creation of the Lien and Personal Obligation of Assessments. The Declarant, for each Lot owned within the Property, hereby covenants, and each Owner of any Lot by acceptance of a deed therefor, whether or not it shall be so expressed in such deed, is deemed to covenant and agrees to pay to the Association: (1) annual assessments or charges, and (2) special assessments for capital improvements, such assessments to be established and collected as hereinafter provided. The annual and special assessments together with interest costs, late fees (if any) and reasonable attorneys' fees, shall be a charge an the Lot (including all improvements thereon), and shall be a continuing lien upon the property against which each such assessment is made, provided the requirements of the Maryland Contract Lien Act have been fulfilled. Each such assessment, together with interest, costs,, late fees (if any) and reasonable attorneys' fees shall also be the personal obligation of the person who was the Owner of such property at the time when the assessment fell due. The personal obligation for delinquent assessments shall not pass to his successors in title unless expressly assumed by them.

Section 5.02. Purpose of Assessments

The assessments levied by the Association shall be used exclusively to promote the recreation, health, safety, and welfare at the residents in the Property and for the improvement and maintenance of the Common Area, the payment of real estate taxes, assessments and utility services for the Common Area and management fees, administration. expenses and all other costs and expenses incurred by the Association in the proper conduct of its activities, including, without limitation, charges accruing under any cross-easement or reciprocal easement agreements or charges accruing with respect to off-site facilities required to be maintained by the Association or which the Association elects to maintain whether such facilities are located within the Property or not, which areas may include, without limitation, off-site hiker/biker paths, and buffer strips or entrance area improvements.

Section 5.03. Maximum Annual Assessment. Until January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment for a Lot shall not exceed Seven Hundred Twenty Dollars ($720.00) per Lot; provided, however, that the maximum annual assessment for that period and thereafter (including special assessments) for Lots (if any) owned by Declarant shall be twenty-five percent (25%) of the assessment for any Lot not owned by the Declarant. Notwithstanding the foregoing, Declarant shall pay the full maximum annual and special assessments for Lots owned by Declarant upon which a dwelling unit has been completed and is occupied by a party other than the Declarant. Notwithstanding any provision contained in this Declaration to the contrary, Declarant hereby covenants and agrees for the benefit of each Class A Member to pay any and all expenses incurred by the Association during the Deficit Period (as such term is hereinafter defined) in furtherance of its purposes to the extent that the annual and special assessments levied during the Deficit Period are insufficient to pay such expenses; provided, however, that at such time as the Declarant has paid what would equal one hundred percent (100%) of the assessments for its Lots which my receive the benefit of the reduced twenty-five percent (25%) assessment hereinabove referred to, then the Declarant shall only be obligated to pay any further assessments during that annual period in an amount equal to what would be due for such Lots had they been owned by a Class A member. As used herein the term "Deficit Period" shall mean that period of time commencing on the date of recordation of this Declaration and ending on the date on which the Class B membership lapses and becomes a nullity in accordance with the provisions of this Declaration.

It &hall be the duty of the Board of Directors, at least -thirty (30) days before the beginning of the fiscal year and fifteen (15) days prior to the meeting at which the budget shall be presented to the membership, to prepare a budget covering the estimated costs of operating the Association during the coming year. The budget shall include an amount sufficient to establish and maintain a reserve fund in accordance with a reserve fund budget separately prepared by the Board of Directors pursuant to Section 5.11. The Board shall cause

a copy of the budget and the amount of the assessments to be levied against each Lot for the following year to be delivered to each owner at least seven (7) days prior to the meeting. The budget and the assessments shall become effective unless disapproved at the meeting by a vote of at least a majority of both classes of the total Association membership.

Notwithstanding the foregoing, however, in the event the membership disapproves the proposed budget or the Board of Directors fails for any reason so to determine the budget for the succeeding year, then and until such time as a budget shall have been determined as provided heroin, the budget in effect for the then current year shall continue for the succeeding year.

(a) Pursuant to the procedure contained in this Article, from and after January 1 of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased by the Board of Directors of the Association, without a vote of the Class A membership, by an amount equal to five percent (5%) of the maximum annual assessment for the preceding year plus (i) the amount by which any ad valorem real estate taxes and insurance premiums payable by the Association have increased over amounts payable for the same or similar items for the previous year, plus (ii) the amount by which the Association has incurred or anticipates incurring increased operating expenses by reason of the completion, annexation or addition of facilities within the Common Area and/or additional Common Area or Lots, plus (iii) the amount by which the Association has incurred or anticipates incurring additional obligations or responsibilities in performing its duties and responsibilities in accordance with this Declaration.

(b) From and after January I of the year immediately following the conveyance of the first Lot to an Owner, the maximum annual assessment may be increased above five percent (5%) (subject to the qualifications set forth in Section 5.03(a)) by a vote of two- thirds (2/3) of each class of members who are voting, in person or by proxy, at a meeting duly called for this purpose.

(c) The Board of Directors may from time to time fix the annual assessment at an amount not in excess of the maximum; provided, however, that notice of any change in the annual assessment is provided to each Owner not lose than thirty (30) days prior to such change.

(d) The Declarant may establish a working capital fund for the initial operation of the Association. Such working capital fund my be funded by a one-time assessment of two (2) times the normal monthly assessment for a Lot and shall be payable, if established, by the Declarant's grantee upon the settlement of a completed dwelling located on any Lot.

Section 5.04. Special assessments for Capital Improvements. In addition to the annual assessments authorized above, the Association may levy, in any assessment year, a special assessment applicable to

that year only for the purpose of defraying, in whole or in part, the cost of any construction, reconstruction, repair or replacement of a capital improvement upon the Common Area including fixtures and personal property related thereto, provided that any such assessment shall have the assent of two-thirds (2/3) of the voted of each class of Members in the Association who are voting in person or by proxy at a meeting duly called for this purpose.

Section 5.05. Notice and Quorum for any Action Authorized under Sections 5.03 and 5.04. Written notice of any meeting called for the purpose of taking any action authorized under Section 5.03 or 5.04 shall be sent to all members not loss than thirty (30) days nor more than sixty (60) days in advance of the meeting. At the first such meeting called, the presence of members or of proxies entitled to cast sixty percent (60%) of all the votes of each class of membership shall constitute a quorum. If the required quorum in not present, another meeting may be called subject to the same notice requirement and the required quorum at the subsequent meeting shall be one-half (1/2) of the required quorum at the preceding meeting. No such subsequent meeting shall be hold more than sixty (60) days following the preceding meeting.

Section 5.06. Uniform Rate of Assessment. Except as otherwise provided in Section 5.03, both annual and special assessments must be fixed at a uniform rate for all Lots of a similar type and may be collected in advance on a monthly basis; provided, however, pursuant to a resolution of the Board of Directors assessments may be collected an a s&mi-annual, quarterly, annual or other periodic basis.

Section 5.07. Date of Commencement of Annual Assessment: Due Dates. The annual assessments provided for herein shall commence as to all Lots on the first day of the month following the first conveyance of the Common Area. The first annual assessment shall be adjusted according to the number of months remaining in the calendar year. The Board of Directors shall fix the amount of the annual assessment against each Lot at least thirty (30) days in advance of each annual assessment period. Written notice of the annual assessment shall be sent to every Owner subject thereto. The due dates shall be established by the Board of Directors. The Board of Directors shall determine the amount of the maintenance assessment annually, but may do so at more frequent intervals should circumstances so require. The Association shall, upon demand, and for a reasonable charge, furnish a certificate signed by an officer for the Association setting forth whether the assessments on a specified Lot have been paid. A properly executed certificate of the Association with the status of assessments on the Lots shall be binding on the Association as of the date of its issuance.

Section 5.08. Effect of Non-Payment of Assessments: Remedies of the Association. Any assessment not paid within thirty (30) days after the due date shall bear interest from the due date until paid at the maximum rate permitted by law (or such lesser sum as VA and/or PM may specify if any Lot subject to this Declaration is then encumbered a deed of trust or mortgage which is guaranteed by VA

or insured by FRA). The Board of Directors may elect to collect a reasonable late fee, not to exceed Twenty-Five Dollars ($25.00) for any assessment or installment thereof which is fifteen (15) or more days delinquent. Additionally, the entire balance of the unpaid annual assessments for the remainder of the fiscal year shall also become due, payable and collectible in the same manner as the delinquent portion of such annual assessment. The Association may bring an action at law against the Owner personally obligated to pay the same, and/or foreclose the lien against the Lot (and all improvements thereon). No Owner may waive or otherwise escape liability for the assessments provided for herein by non-use of the Common Area or abandonment of his Lot.

Section 5.09. Subordination of the Lien to Mortgages. The lien of the assessments provided for heroin shall be subordinate to the lien of any first mortgage or dead of trust. Sale or transfer of any Lot shall not affect the assessment lien. However, the sale or transfer of any Lot pursuant to mortgage or dead of trust foreclosure or any proceeding in lieu thereof, shall extinguish the lien of such assessments as to payments which became due prior to such sale or transfer. No sale or transfer shall relieve such Lot from liability for any assessments thereafter becoming due or from the lien thereof. No amendment to this Section shall affect the rights of the holder of any first mortgage on any Lot (or the indebtedness secured thereby); recorded prior to recordation of such amendment unless the holder thereof (or the indebtedness secured thereby) shall join in the execution of such amendment.

Section 5.10. Additional Default. Any recorded first mortgage secured on a Lot shall provide that any default by the mortgagor in the payment of any assessment levied pursuant to this Declaration, or any installment thereof, shall likewise be a default in such mortgage (or the indebtedness secured thereby); but failure to include such a provision in any such mortgage shall not affect the validity or priority thereof and the protection extended to the holder of such mortgage (or the indebtedness secured thereby) by reason of Section 5.09 shall not be altered, modified or diminished by reason of such failure.

Section 5.11. Reserves for Replacements. The Association shall establish and maintain a reserve fund for replacements of the Common Area and community facilities by the allocation and payment monthly (or such other periodic payment as determined by the Board of Directors) to such reserve fund of an amount to be designated from time to time by the Board of Directors. The reserve fund shall be conclusively deemed to be a Common Expense of the Association and may be deposited in any banking institution, the accounts of which are insured by any State or by an agency of the United States of America or my, in the discretion of the Board of Directors, be invested in obligations of, or fully guaranteed as to principal by the United States of America. The reserve for replacements of the Common Area and community facilities (including, but not limited to, storm water management facilities and equipment if owned and/or maintained by the Association) may be expanded only for the purpose of affecting the

replacement of the Common Area, major repairs to any equipment and replacement thereof, and for start-up expenses and operating contingencies of a non-recurring nature relating to the Common Area and community facilities. Funds should also be maintained in the reserve account to cover the deductible under the Association's insurance policies. The Association may establish such other reserves for such other purposes as the Board of Directors may from time to time consider to be necessary or appropriate. The proportional interest of any Member in any such reserves shall be considered an appurtenance of his Lot and shall not be separately withdrawn, assigned or transferred or otherwise separated from the Lot to which it appertains and shall be deemed to be transferred with such Lot.