Type: COVE Kind: DECLARATION OF RESTRICTIVE COV Recorded: 7/31/2018 8:54:00 AM Fee Amt: $168.00 Page 1 of 80 Chatham, Ga. Clerk Superior Court Tammie Mosley Clerk Superior Court Participant ID(s): 7428341760, 7067927936

BK 1411 PG 469 - 548

DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS

FOR

THE PALMS

00TB 'IO CLERK: Please Cross Reference with the following instruments: 1. • Major Sul::xlivision Plat recorded Book 51 Page 451, et. seq.; and 2. Limited Warranty Deed recorded in Book 318 C Page 073.

THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS

FOR THE PALMS ("Declaration") is made as of the date set forth on the sign ature page hereof by R6 SAVANNAH, LLC, a Georgia limited liability company ("Declarant").

PART ONE: INTRODUCTION TO THE COMMUNITY

Article I Creation of the Community

1. 1. Purpose and Intent. Declarant, as the owner of the real property described in Exhibit "A," intends by Recording this Declaration to establish a general plan of development for the subdivision known as The Palms. This Declaration provides a flexible and reasonable procedure for The Palms' future expansion as Declarant deems appropriate and provides for its overall development, administration, maintenance, and preservation. An integral part of the development plan is the creation of The Palms Homeowners Association, Inc., an association comprised of all owners of real property in The Palms, to own, operate, and/or maintain various common areas and community improvements and to administer and enforce this Declaration and the other Governing Documents referenced in this Declara,tion. This document does riot and is not intended to create a condominium under Georgia law. 1.2. Binding Effect. All property described in Exhibit "A," and any additional property which is made a

part of The Palms in the future by Recording one or more Supplemental Deciarations, shall

be owned, conveyed, and used subject to all of the provisions of this Declaration, which shall run with the title to such property. This Declaration shall be binding upon all Persons having any right, title, or interest in any portion of The Palms, their heirs, successors, successors-in-title, and assigns. This Declaration, as it may be amended, shall remain in effect and shall be enforceable by Declarant, the Association, any Ovvner, and their respective legal representatives, heirs, successors, and assigns, for a term of 20 years from the date this . Declaration is Recorded. After such time, this D·eclaration shall be extended automatically for successive periods of 10 years each, unless an instrument signed by a majority of the then

DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS

FOR

THEPALMS

NOTE TO CLERK:

Please Cross Reference with the following instruments:

1. Major Subdivision Plat recorded Book 51 Page 451, et. seq.; and

2. Limited Warranty Deed recorded in B(X)k 318 C Page 073.

THIS DECLARATION OF COVENANTS, CONDITIONS, AND RESTRICTIONS

FOR THE PALMS ("Declaration") is made as of the date set forth on the signature page

hereof by R6 SAVANNAH, LLC, a Georgia limited liability company ("Declarant").

Part One: Introduction to the Community

Article I Creation of the Community

1.1.Purpose and Intent.

Declarant, as the owner of the real property described in Exhibit "A," intends by

Recording this Declaration to establish a general plan of development for the subdivision

known as The Palms This Declaration provides a flexible and reasonable procedure for The

Palms' future expansion as Declarant deems appropriate and provides for its overall

development, administration, maintenance, and preservation. An integral part of the

development plan is the creation of The Palms Homeowners Association, Inc., an association

comprised of all owners of real prope1iy in The Palms, to own, operate, and/or maintain

various common areas and community improvements and to administer and enforce this

Declaration and the other Governing Documents referenced in this Declaration.

This document does not and is not intended to create a condominium under Georgia

law.

1.2.Binding Effect.

All prope1iy described in Exhibit "A," and any additional property which is made a

paii of The Palms in the future by Recording one or more Supplemental Declarations, shall

be owned, conveyed, and used subject to all of the provisions of this Declaration, which shall

run with the title to such prope1iy This Declaration shall be binding upon all Persons

having any right, title, or interest in any p01iion of The Palms, their heirs, successors,

successors-in-title, and assigns.

This Declaration, as it may be amended, shall remain in effect and shall be

enforceable by Declarant, the Association, any Owner, and their respective legal

representatives, heirs, successors, and assigns, for a term of 20 years from the date this

Declaration is Recorded. After such time, this Declaration shall be extended automatically

for successive periods of 10 years each, unless an instrument signed by a majority of the then

Owners has been Recorded within the year preceding any extension agreeing to terminate this Declaration, in which case it shall terminate as of the date specified in such instrument. Notwithstanding this, if any provision of this Declaration would be unlawful, void, or voidable by reason of any Georgia law restricting the period of time that covenants on land may be enforced. Nothing in this Section shall be construed to permit termination of any easement created in this Declaration without the consent of the easement holder. 1.3. Governing Documents.

GOVERNING DOCUMENTS

Articles of Incorporation (filed with Secretary of State of the State of Georgia) By-Laws Declaration Supplemental Declaration Architectural Guidelines Restrictions and Rules Board Resolutions Diagram 1.1 -Governing Documents establishes the Association as a non-profit corporation under Georgia law governs the Association's internal affairs, such as ( the Board of Directors adopts) voting rights, elections, meetings, officers, etc. creates obligations which are binding upon the (Recorded) Association and all present and future owners of property in The Palms adds property to The Palms; (Recorded) may impose additional obligations or restrictions on such property establish architectural standards and guidelines for (Declarant adopts) improvements and modifications to Units, including structures, landscaping, and other items on Units govern use of property, activities, and conduct (initial set attached as Exhibit 1 1C11 ) within The Palms establish rules, policies, and procedures for internal (Board adopts) governance and Association The Governing Documents apply to all Owners and occupants of property within The Palms, as well as to their respective tenants, guests, and invitees. Any lease on a Unit shall 2

provide that the tenant and all occupants of the leased Unit are bound by and obligated to

comply with the Governing Documents.

If any court should determine that any provision of this Declaration is invalid, or

invalid as applied in a particular instance, such determination shall not affect the validity of

other provisions or applications of such provision.

Throughout the Governing Documents there are diagrams to illustrate the concepts

discussed and to aid in the reader's comprehension. Such diagrams are for illustrative

purposes only. In the event of a conflict between any diagram and the text of the Governing

Documents, the text shall control.

Article II Concepts and Definitions

The terms used in the Governing Documents shall generally be given their natural,

commonly accepted definitions unless otherwise specified. Capitalized terms shall be

defined as set forth below.

"Architectural Guidelines": The architectural, design, and construction guidelines and

review procedures adopted pursuant to Article N, as they may be amended.

"Area of Common Responsibility": The Common Area, together with such other

areas, if any, for which the Association has or assumes responsibility pursuant to the terms of

this Declaration, any Supplemental Declaration, or other applicable covenants, contracts, or

agreements.

"Articles oflncorporation" or "Articles": The Palms Homeowners Association, Inc.'s

Articles of Incorporation, filed with the Secretary of State of the

State of Georgia, as they

may be amended.

"Association": The Palms Homeowners Association, Inc., a Georgia non-profit

corporation, its successors or assigns.

"Base Assessment": Assessments levied on all Units subject to assessment under

Article VIII to fund Common Expenses for the general benefit of all Units, as determined in

accordance with Section 8.1.

"Board of Directors" or "Board": The body responsible for administration of the

Association, selected as provided in the By-Laws and generally serving the same role as the

board of directors under Georgia corporate law.

"Builder": Any Person who purchases one or more Units for the purpose of

constructing improvements for later sale to consumers, or who purchases one or more parcels

3

of land within The Palms for further subdivision, development, and/or resale in the ordinary

course of its business.

"By-Laws'': The By-Laws of The Palms Homeowners Association, Inc., as they may

be amended. A copy of the initial By-Laws is attached to this Declaration as Exhibit "D."

"Class "B" Control Period": The period of time during which the Class "B" Member

is entitled to appoint a majority of the members of the Board as provided in Section 3.3 of the

By-Laws. The Class "B" Control Period shall terminate on the first to occur of the

following:

(a)when Declarant or its succssors and/or assigns no longer own any of the

property described in Exhibits "A" and "B";

(b)December 31, 2058; or

( c) when, in its discretion, the Class "B" Member so determines.

"Common Area": All real and personal property, including easements, which the

Association owns, leases, or otherwise holds possessory or use rights in for the common use

and enjoyment of the Owners.

"Common Expenses": The actual and estimated expenses incurred, or anticipated to

be incurred, by the Association for the general benefit of all Owners, including any

reasonable reserve, as the Board may find necessary and appropriate pursuant to the

Governing Documents. Common Expenses shall not include any expenses incurred during

the Class "B" Control Period for initial development or other original construction costs

unless Members representing a majority of the total Class "A" vote of the Association

approve. Payments due under leases of capital improvements such as street lights or

development and construction of common area amenities shall not be considered an initial

development or original construction cost and may be charged and collected as solely

determined by Declarant. Common Expenses may include assessments levied by the Master

Association pursuant to the Master Declaration, and the costs of fulfilling any other duties or

obligations under the Master Declaration, in the sole discretion of the Board of Directors.

"Community-Wide Standard": The standard of conduct, maintenance, or other

activity generally prevailing at The Palms, or the minimum standards established pursuant to

the Master Covenants and The Palms' Architectural Guidelines, Restrictions and Rules, and

Board resolutions, whichever is the highest standard. Initially, Declarant shall establish such

standard, which may contain both objective and subjective elements. The Community-Wide

Standard may evolve as development progresses and as the needs and desires within The

Palms change.

4

COMMUNITY-WIDE STANDARD

MINIMUM STANDARDS

STANDARD

Architectural Guidelines Restrictions and Rules Resolutions of Board Example set by Declarant, Board The higher of OR Diagram 2.1. Community-Wide Standard

PREVAILING STANDARD

"Declarant": R6 Savannah, LLC, a Georgia limited liability company, or any successor or assign who takes title to any portion of the property described in Exhibits "A'' or "B" for the purpose of development and/or sale and who is designated as Declarant in a Recorded instrument the immediately preceding Declarant executes. "Master Association": The Declarant or Association of the master planned community known as "New Hampstead". "Master Declaration": The Declaration of Covenants and subsequent amendments and supplements for the master planned community known as "New Hampstead". "Member": A Person subject to membership in the Association pursuant to

Section 6.2.

"Mortgage": A mortgage, a deed of trust, a deed to secure debt, or any other form of security instrument affecting title to any Unit. The term "Mortgagee" shall refer to a beneficiary or holder of a Mortgage. "Owner": One or more Persons who hold the record title to any Unit, but excluding in all cases any party holding an interest merely as security for the performance of an obligation. If a Unit is sold under a Recorded contract of sale, and the contract specifically so provides, the purchaser (rather than the fee owner) will be considered the Owner. entity. "Person": A natural person, a corporation, a partnership, a trustee, or any other legal "Properties" or "The Palms": The real property described in Exhibit "A," together with such additional property as is subjected to this Declaration in accordance with Article IX. 5

"Record,"

"Recording." or "Recorded": The filing of a legal instrument in the Office

of the Clerk of the Superior Court of Chatham County, Georgia, or such other place as may

be designated as the official location for recording documents affecting title to real estate.

"Restrictions and Rules": The initial restrictions and rules set forth in Exhibit "C," as

they may be supplemented, modified, and repealed pursuant to Article III.

"Special Assessment": Assessments levied in accordance with Section 8.3.

"Specific Assessment": Assessments levied in accordance with Section 8.4.

"Supplemental Declaration": An instrument Recorded pursuant to Article IX which

subjects additional property to this Declaration, and/or imposes additional restrictions and

obligations on the land described in such instrument.

"Unit": A portion of The Palms, whether improved or unimproved, which may be

independently owned and is intended for development, use, and occupancy as an attached or

detached residence for a single family. The term shall refer to the land, if any, which is part

of the Unit as well as any improvements thereon. In the case of a structure containing

multiple dwellings for independent ownership, each dwelling shall be deemed to be a

separate Unit.

A parcel shall be deemed to be a single Unit until such time as a plat subdivides all or

a portion of the parcel. Thereafter, the subdivided portion shall contain the number of Units

shown on the plat. Any portion not subdivided shall continue to be a single Unit.

Part Two: Creation and Maintenance of Community Standards

Article III Use and Conduct

3.1.Framework for Regulation.

The Governing Documents establish, as part of the general plan of development for

The Palms, a framework of affirmative and negative covenants, easements, and restrictions

which govern the Properties. Within that framework, the Board and the Members must have

the ability to respond to unforeseen problems and changes in circumstances, conditions,

needs, desires, trends, and technology. Therefore, this Article establishes procedures for

modifying and expanding the initial Restrictions and Rules set forth in Exhibit "C." The

rules, covenants, restrictions and requirements enumerate herein are subject to thse exisiting

in the form of the Master Declaration as operated and facilitated by the Master Association.

6

3.2.Rule Making Authority.

(a)Subject to the terms of this Article and the Board's duty to exercise business

judgment and reasonableness on behalf of the Association and its Members, the Board may

modify, cancel, limit, create exceptions to, or expand the Restrictions and Rules. The Board

shall mail notice to all Owners concerning any proposed action at least five business days

prior to the Board meeting at which such action is to be considered. Members shall have a

reasonable opportunity to be heard at a Board meeting prior to such action being taken.

Such action shall become effective, after compliance with subsection (c) below,

unless Members representing more than 50% of the total Class "A" votes in the Association

and the Class "B" Member, if any, disapprove. The Board shall have no obligation to call a

meeting of the Members to consider disapproval except upon receipt of a petition as required

for special meetings in the By-Laws. If the Board receives such petition prior to the

effective date of any action under this Section 3.2(a), the proposed action shall not become

effective until after such meeting is held, and then subject to the outcome of such meeting.

(b)Alternatively, Members representing more than 50% of the total Class "A"

votes in the Association, at an Association meeting duly called for such purpose, may vote to

modify, cancel, limit, create exceptions to, or expand the Restrictions and Rules then in

effect. Such action shall require the approval of the Class "B" Member, if any.

( c) Prior to any action taken under this Section becoming effective, the Board

shall send a copy of the new rule or explanation of any changes to the Restrictions and Rules

to each Owner. The effective date shall be not less than 30 days following distribution to

Owners. The Association shall provide, without cost, one copy of the Restrictions and Rules

then in effect to any requesting Member or Mortgagee.

( d) No action taken under this Article shall have the effect of modifying,

repealing, or expanding the Architectural Guidelines or any provision of this Declaration

other than the initial Restrictions and Rules set forth in Exhibit "C." In the event of a

conflict between the Architectural Guidelines and the Restrictions and Rules, the

Architectural Guidelines shall control.

( e) The procedures set forth in this Section 3.2 do not apply to the Board's

enactment by resolution of rules and regulations governing use and operation of the Common

Area; provided, the Board may choose, in its discretion, to submit to such procedures.

3.3.Owners' Acknowledgment and Notice to Purchasers.

All Owners are given notice that use of their Units and the Common Area is limited

by the Restrictions and Rules as amended, expanded, and otherwise modified from time to

time. Each Owner, by acceptance of a deed, acknowledges and agrees that the use and

enjoyment and marketability of his or her Unit can be affected by this provision and that the

7

Restrictions and Rules may change from time to time. All purchasers of Units are on notice

that the Association may have adopted changes and that such changes may not be reflected in

a Recorded instrument. Copies of the current Restrictions and Rules may be obtained from

the Association.

3.4.Protection of Owners and Others.

Except as may be set forth in this Declaration ( either initially or by amendment), the

Architectural Guidelines (as amended from time to time), or in the initial Restrictions and

Rules set forth in Exhibit "C," all Restrictions and Rules shall comply with the following

prov1s10ns:

(a)Similar Treatment. Similarly situated Owners shall be treated similarly.

(b)Signs and Displays. The Board shall not interfere with Owners' rights to

display religious and holiday signs, symbols, and decorations inside structures on their Units,

except that it may adopt time, place, and manner restrictions with respect to displays visible

from outside the dwelling.

Except as otherwise provided in this Declaration or approved by the Board of

Directors, signs, banners, posters, placards, billboards, advertisements, bulletins,

announcements, symbols, displays, or any other manifestation of a message, slogan, or

symbol of any kind shall not be displayed upon or visible from the outside of a Unit or placed

or displayed anywhere within the Properties; provided those signs installed or authorized

during the initial construction of the Properties by Declarant and those signs required by

Georgia law shall be permitted. In addition, one "builder identification" sign shall be

permitted to be placed by the Builder on a Unit indicating the name of the building company

constructing the residential dwelling on the Unit so long as such sign is placed in the area

designated by the Board and the design, quality and size of the sign is approved in accordance

with Article IV.

( c) Household Composition. The Board shall not interfere with the freedom of

Owners to determine the composition of their households, except that it may require that all

occupants be members of a single housekeeping unit and limit the total number of occupants

permitted in each Unit on the basis of the size and facilities of the Unit and its fair use of the

Common Area.

( d) Activities Within Dwellings. The Board may not interfere with the activities

carried on within the confines of dwellings, except that it may prohibit activities not normally

associated with property restricted to residential use, and it may restrict or prohibit any

activities that create monetary costs for the Association or other Owners, that create a danger

to the health or safety of others, that generate excessive noise or traffic, that create unsightly

conditions visible outside the dwelling, or that create an unreasonable source of annoyance.

8

Nothing herein is intended to restrict the Board from creating and implementing rules of

enforcement govenring the exterior fa9ade of any dwelling or portion of any unit.

( e) Allocation of Burdens and Benefits. The Board shall not alter the allocation

of financial burdens among the various Units or rights to use the Common Area to the

detriment of any Owner over that Owner's written objection. Nothing in this provision shall

prevent the Board from changing the Common Area available, from adopting generally

applicable rules for use of the Common Area, or from denying use privileges to those who

are delinquent in paying assessments, abuse the Common Area, or viol ate the Governing

Documents This provision does not affect the right to increase the amount of assessments

as provided in Article VIII.

(f)Alienation. The Board shall not prohibit leasing or transfer of any Unit, or

require consent of the Association or Board for leasing or transfer of any Unit; provided, the

Board may require a minimum lease term of up to 12 months. The Association may require

that Owners use Board-approved lease forms, but shall not impose any fee on the lease or

transfer of any Unit greater than an amount reasonably based on the Association's

administrative costs relating to that lease or transfer.

(g)Abridging Existing Ri ghts. No rule shall require an Owner to dispose of

personal property that was in or on a Unit prior to the adoption of such rule if such personal

property was in compliance with all rules previously in force This exemption shall apply

only during the period of such Owner's ownership of the Unit, and shall not apply to

subsequent Owners who take title to the Unit after adoption of the rule.

(h)Reasonable Rights to Develop. The Association shall not unreasonably

impede Declarant's right to develop the Properties.

The limitati ons in subsections

(a)through

(h)of this Section 3.4 shall only limit

rulemaking authority exercised under Section 3. 2; they shall not apply to amendments to this

Declaration adopted in accordance with Article XVI.

Article IV Architecture and Landscaping

4.1.General.

No structure or thing shall be placed, erected, or installed upon any Unit and no

improvements or other work (including staking, clearing, excavation, grading, and other site

work; exteri or alterations of existing improvements; or planting or removal of landscaping)

shall take place within the Properties, except in compliance with the Master Declaration, this

Article and the Architectural Guidelines.

No approval shall be required to repaint the exterior of a structure in accordance with

its most recently approved color scheme or to rebuild in accordance with previously approved

9

plans and specifications. Any Owner may remodel, paint, or redecorate the interior of his or

her Unit without approval. However, modifications to the interior of screened porches,

patios, and similar portions of a Unit visible from outside the structure are subject to

approval.

All dwellings shall be designed by and built in accordance with the plans and

specifications of a design professional approved by Declarant or its designee, in its sole

discretion.

This Article shall not apply to Declarant's activities, nor to activities of the

Association during the Class "B" Control Period.

4.2.Architectural Review.

(a)By Declarant. Each Owner, by accepting a deed or other instrument

conveying any interest in any portion of the Properties, acknowledges that Declarant has a

substantial interest in ensuring that the improvements within the Properties enhance

Declarant's reputation as a community developer and do not impair Declarant's ability to

market, sell, or lease its property. Therefore, each Owner agrees that no activity within the

scope of this Article shall be commenced on such Owner's Unit unless and until Declarant or

its designee has given its prior written approval for such activity, which approval may be

granted or withheld in Declarant's or its designee's sole discretion.

In reviewing and acting upon any request for approval, Declarant or its designee shall

be acting solely in Declarant's interest and shall owe no duty to any other Person.

Declarant's rights reserved under this Article shall continue so long as Declarant owns any

portion of the Properties or has the right to expand the Properties pursuant to Section 9.1,

unless earlier terminated in a Recorded instrument executed by Declarant.

Declarant may, in its sole discretion, designate one or more Persons from time to time

to act on its behalf in reviewing applications hereunder.

Declarant may from time to time, but shall not be obligated to, delegate all or a

portion of its reserved rights under this Article to

(i)an architectural review committee

appointed by the Board of Directors (the "ARC"), or

(ii)a committee comprised of architects,

engineers, or other persons who may or may not be Members of the Association. Any such

delegation shall be in writing, shall specify the scope of responsibilities delegated, and shall

be subject to

(i)Declarant's right to revoke such delegation at any time and reassume

jurisdiction over the matters previously delegated and

(ii)Declarant's right to veto any

decision which Declarant determines, in its sole discretion, to be inappropriate or inadvisable

for any reason. So long as Declarant has any rights under this Article, the jurisdiction of the

foregoing entities shall be limited to such matters as Declarant specifically delegates to it.

(b)Architectural Review Committee. Upon delegation by Declarant or upon

expiration or termination of Declarant's rights under this Article, the Association, acting

through the ARC, shall assume jurisdiction over architectural matters. The ARC, when

appointed, shall consist of at least three, but not more than seven, persons who shall serve

and may be removed and replaced in the Board's disc retion. The members of the ARC need

not be Members of the Association or representatives of Members, and may, but need not,

include architects, engineers, or similar professionals, who may be compensated in such

manner and amount, if any, as the Board may establish.

Unless and until such time as Declarant delegates all or a portion of its reserved rights

to the ARC or Declarant's rights under this Article terminate, the Association shall have no

jurisdiction over architectural matters.

(c)Reviewer. For purposes of this Article, the entity having jurisdiction in a

particular case is referred to as the "Reviewer."

( d) Fees; Assistance. The Reviewer may establish and charge reasonable fees for

review of applications and may require such fees to be paid in full prior to review of any

application. Such fees may include the reasonable costs incurred in having any application

reviewed by architects, engineers, or other professionals. Declarant and the Association may

employ architects, engineers, or other persons as deemed necessary to perform the review.

The Board may include the compensation of such persons in the Association's annual

operating budget.

( e) Conformance and Compliance Bond. Prior to review of any plans, the

Reviewer may require that the Owner post with the Reviewer, in such forms and amounts as

the Reviewer may reasonably determine:

(i)a conformance bond to insure that all work, including landscaping, is

completed in accordance with the approved plans; and

(ii)a compliance bond to be drawn upon as necessary to cover costs incurred

by the Reviewer or the Association in

(A)repairing damage to or removing

trash from any portion of the Properties necessitated by the activities for the

Owner, its agents, contractors, or subcontractors; and

(B)providing

maintenance or exercising other self-help to cure noncompliance with the

Governing Documents, construction rules, or breach of other obligations of

the Owner, its contractors or subcontractors relating to such Owner's Unit.

(f)Approved Builder. No Builder shall be allowed to carry out any construction

within the Properties until the builder has been approved by the ARC in relation to the

Builder's knowledge of construction, construction experience, reputation for high quality

design and construction of residences, past and present financial condition, and other factors

which the ARC deems relevant to the approval or disapproval of a builder. The ARC may

prepare and, on behalf of the Board of Directors, may promulgate Approved Builder

Guidelines (hereinafter the "Guidelines"). The Guidelines shall be those of the Association,

11

and the ARC shall have sole and full authority to prepare and amend them. The Guidelines

shall be made available to owners and builders who seek to engage in construction upon any

portion of the Properties. The ARC may also promulgate appropriate forms upon which

applications for approval shall be submitted, and shall have the authority to change such

forms from time to time. The approval of a builder by the ARC shall be conditional and

subject to change, in the sole discretion of the ARC, if the ARC determines there has been a

change in the factors upon which approval was granted.

4.3.Architectural Guidelines.

Declarant may prepare and amend Architectural Guidelines, in its sole discretion.

The Architectural Guidelines are intended to provide guidance to Owners and Builders

regarding matters of particular concern to the Reviewer in considering applications. The

Architectural Guidelines are not the exclusive basis for the Reviewer's decisions and

compliance with the Architectural Guidelines does not guarantee approval of any application.

Any amendments to the Architectural Guidelines shall be prospective only and shall

not apply to require modifications to or removal of structures previously approved once the

approved construction or modification has commenced. There shall be no limitation on the

scope of amendments to the Architectural Guidelines, and such amendments may remove

requirements previously imposed or otherwise make the Architectural Guidelines less

restrictive.

The Reviewer shall make the Architectural Guidelines available to Owners and

Builders who seek to engage in development or construction within the Properties. In

Declarant's discretion, such Architectural Guidelines may be Recorded, in which event the

Recorded version, as it may be amended from time to time, shall control in the event of any

dispute as to which version of the Architectural Guidelines was in effect at any particular

time.

4.4.No Waiver of Future Approvals.

Each Owner acknowledges that the persons reviewing applications under this Article

will change from time to time and that opinions on aesthetic matters, as well as interpretation

and application of the Architectural Guidelines, may vary accordingly. In addition, each

Owner acknowledges that it may not always be possible to identify objectionable features

until work is completed, in which case it may be unreasonable to require changes to the

improvements invo lved, but the Reviewer may refuse to approve similar proposals in the

future. Approval of applications or plans, or in connection with any other matter requiring

approval, shall not constitute a waiver of the right to withhold approval as to any similar

applications, plans, or other matters subsequently or additionally submitted for approval.

12

4.5.Variances.

The Reviewer may authorize variances from compliance with any of its guidelines

and procedures when circumstances such as topography, natural obstructions, hardship, or

aesthetic or environmental considerations require, but only in accordance with duly adopted

rules and regulations. No variance shall

(a)be effective unless in writing;

(b)be contrary to

this Declaration; or ( c) estop the Reviewer from denying a variance in other circumstances.

For purposes of this Section, the inability to obtain approval of any governmental agency, the

issuance of any permit, or the terms of any financing shall not be considered a hardship

warranting a variance.

4.6.Limitation of Liability.

The standards and procedures established by this Article are intended as a mechanism

for maintaining and enhancing the overall aesthetics of the Properties; they do not create any

duty to any Person. Review and approval of any application pursuant to this Article may be

based on aesthetic considerations only. The Reviewer shall not bear any responsibility for

ensuring the structural integrity or soundness of approved construction or modifications, nor

for ensuring compliance with building codes and other governmental requirements, nor for

ensuring that all dwellings are of comparable quality, value, or size, of similar design, or

aesthetically pleasing or otherwise acceptable to neighboring Owners.

Declarant, the Association, the Board, any committee, or any member of the Board or

any committee shall not be held liable for soil conditions, drainage, or other general site

work; any defects in plans revised or approved hereunder; any loss or damage arising out of

the action, inaction, integrity, financial condition, or quality of work of any contractor or its

subcontractors, employees, or agents, whether or not Declarant has approved or featured such

contractor as a builder; or any injury, damages, or loss arising out of the manner or quality or

other circumstances of approved construction on or modifications to any Unit. In all

matters, the Board, the ARC, and the members of each shall be defended and indemnified by

the Association as provided in Section 7.6.

Article V Maintenance and Repair

5.1.Maintenance of Units.

Each Owner shall maintain his or her Unit and all landscaping and improvements

comprising the Unit in a manner consistent with the Governing Documents, the

Community-Wide Standard, and all applicable covenants, unless such maintenance

responsibility is otherwise assumed by or assigned to the Association pursuant to any

Supplemental Declaration or other declaration of covenants applicable to such Unit.

13

Each Owner who owns a Unit which abuts Common Area adjacent to a body of water

shall be required to maintain the adjoining area located between the Owner's Unit and the

edge of the water line as if said area were a part of the Unit owned by such Owner.

5.2.Responsibility for Repair and Replacement.

Unless otherwise specifically provided in the Governing Documents or in other

instruments creating and assigning maintenance responsibility, responsibility for maintenance

shall include responsibility for repair and replacement, as necessary to maintain the property

to a level consistent with the Community-Wide Standard.

By virtue of taking title to a Unit, each Owner covenants and agrees with all other

Owners and with the Association to carry property insurance for the full replacement cost of

all insurable improvements on his or her Unit, less a reasonable deductible. If the

Association assumes responsibility for obtaining any insurance coverage on behalf of

Owners, the premiums for such insurance shall be levied as a Specific Assessment against the

benefitted Unit and the Owner.

Each Owner further covenants and agrees that in the event of damage to or destruction

of structures on or comprising his or her Unit, the Owner shall proceed promptly to repair or

to reconstruct in a manner consistent with the original construction or such other plans and

specifications as are approved in accordance with Article IV. Alternatively, the Owner shall

clear the Unit and maintain it in a neat and attractive condition consistent with the

Community-Wide Standard. The Owner shall pay any costs not covered by insurance

proceeds.

Part Three: Community Governance and Administration

Article VI The Association and its Members

6.1.Function of Association.

The Association is the entity responsible for management, maintenance, operation,

and control of the Area of Common Responsibility. The Association also is the primary

entity responsible for enforcement of the Governing Documents. The Association shall

perform its functions in accordance with the Governing Documents and Georgia law.

6.2.Membership.

Every Owner shall be a Member of the Association. There shall be only one

membership per Unit. If a Unit is owned by more than one Person, all co-Owners shall share

the privileges of such membership, subject to reasonable Board regulation and the restrictions

on voting set forth in Section 6.3(c) and in the By-Laws, and all such co-Owners shall be

jointly and severally obligated to perform the responsibilities of Owners. The membership

14

rights of an Owner which is not a natural person may be exercised by any officer, director,

partner, or trustee, or by the individual designated from time to time by the Owner in a

written instrument provided to the Secretary of the Association.

6.3.Voting.

The Association shall have two classes of membership, Class tlAtl and Class tlB. ti

(a)Class "A". Class tlA" Members shall be all Owners except the Class tlBtl

Member, if any. Class tlA" Members shall have one equal vote for each Unit in which they

hold the interest required for membership under Section 6.2, except that there shall be only

one vote per Unit. No vote shall be exercised for any property which is exempt from

assessment under Sections 8.8

(a)and (b). All Class "A" votes shall be cast as provided in

Section 6.3(c) below.

(b)Class "B". The sole Class "B" Member shall be Declarant. The Class tlBtl

Member may appoint a majority of the members of the Board of Directors during the

Class "B" Control Period, as specified in the By-Laws. Additional rights of the Class "Btl

Member are specified in the relevant sections of the Governing Documents. After

termination of the Class tlB" Control Period, the Class "B" Member shall have a right to

disapprove Board and committee actions as provided in the By-Laws. The Class "B"

Member shall be fully empowered and authorized to assign its rights as the Class "B"

Member to a 3rd party.

The Class tlB ti membership shall terminate upon the earlier of:

(i)two years after expiration of the Class tlB ti Control Period; or

(ii)when, in its discretion, Declarant so determines and declares m a

Recorded instrument.

Upon termination of the Class tlBtl membership, Declarant shall be a Class "Atl

Member entitled to Class tlAtl votes for each Unit which it owns.

( c) Exercise of Voting Rights. Except as otherwise specified in this Declaration

or the By-Laws, the vote for each Unit owned by a Class tlAtl Member shall be exercised by

the Member. In any situation where there is more than one Owner of such Unit, the vote for

such Unit shall be exercised as the co-Owners determine among themselves and advise the

Secretary

of the Association in writing prior to the vote being taken. Absent such advice, the Unit's

vote shall be suspended if more than one Person seeks to exercise it.

Article VII Association Powers and Responsibilities

15

7.1.Acceptance and Control of Association Property.

(a)The Association may acquire, hold, lease (as lessor or lessee), operate, and

dispose of tangible and intangible personal property and real property, subject to the

provisions of Sections 13.5 and 15.2 hereof. The Association may enter into leases, licenses,

or operating agreements for portions of the Common Area, for such consideration or no

consideration as the Board deems appropriate, to permit use of such portions of the Common

Area by others for the provision of goods or services for the general benefit or convenience of

Owners, occupants, and residents of the Properties.

(b)Declarant and its designees may convey to the Association, and the

Association shall accept, personal property and fee title, leasehold, or other property interests

in any real property, improved or unimproved, described in Exhibits "A" or "B." Upon

Declarant's written request, the Association shall reconvey to Declarant any unimproved

portions of the Common Area Declarant originally conveyed to the Association for no

consideration, to the extent conveyed by Declarant in error or needed by Declarant to make

minor adjustments in property lines.

( c) The Association shall be responsible for management, operation, and control

of the Common Area, subject to any covenants and restrictions set forth in the deed or other

instrument transferring such property to the Association. The Board may adopt such

reasonable rules regulating use of the Common Area as it deems appropriate.

7.2.Maintenance of Area of Common Responsibility.

The Association shall maintain, in accordance with the Community-Wide Standard,

the Area of Common Responsibility, which shall include, but need not be limited to:

(a)all portions of and structures situated on the Common Area;

(b)landscaping within public rights -of-way within or abutting the Properties;

( c) such portions of any additional property included within the Area of Common

Responsibility as may be dictated by this Declaration, any Supplemental Declaration, any

covenant to share costs, or any contract or agreement for maintenance thereof entered into by

the Association;

( d) all ponds, streams, and/or wetlands located within the Properties which serve

as part of the storm water drainage system for the Properties, including improvements and

equipment installed therein or used in connection therewith; and

( e) any property and facilities which Declarant owns and makes available, on a

temporary or permanent basis, for the primary use and enjoyment of the Association and its

Members. Such property and facilities shall be identified by written notice from Declarant

16

to the Association and will remain part of the Area of Common Responsibility maintained by

the Association until such time as Declarant revokes such privilege of use and enjoyment by

written notice to the Association; and

(f)any property subject to the Boat Ramp Easement Agreement.

The Association may maintain other property which it does not own, including,

without limitation, property dedicated to the public, if the Board of Directors determines that

such maintenance is necessary or desirable to maintain the Community-Wide Standard.

The Association shall not be liable for any damage or injury occurring on or arising

out of the condition of property which it does not own except to the extent that it has been

negligent in the performance of its maintenance responsibilities.

The Association shall maintain the facilities and equipment within the Area of

Common Responsibility in continuous operation, except for any periods necessary, as

determined in the Board's sole discretion, to perform required maintenance or repairs, unless

Members representing 75% of the Class "A" votes in the Association and the Class "B"

Member, if any, agree in writing to discontinue such operation.

Except as provided above, the Area of Common Responsibility shall not be reduced

except with Declarant's prior written approval as long as Declarant owns any property

described in Exhibits "A" or "B" of this Declaration.

The costs associated with maintenance, repair, and replacement of the Area of

Common Responsibility shall be a Common Expense; provided, the Association may seek

reimbursement from the owner(s) of, or other Persons responsible for, certain portions of the

Area of Common Responsibility pursuant to this Declaration, a covenant to share costs, other

Recorded covenants, or agreements with the owner(s) thereof.

7.3.Insurance.

(a)Required Coverages. The Association, acting through its Board or its duly

authorized agent, shall obtain and continue in effect the following types of insurance, if

reasonably available, or if not reasonably available, the most nearly equivalent coverages as

are reasonably available:

(i)Blanket property insurance covering "risks of direct physical loss" on a

"special form" basis ( or comparable coverage by whatever name denominated) for all

insurable improvements on the Common Area and within the Area of Common

Responsibility to the extent that the Association has assumed responsibility in the event of a

casualty, regardless of ownership. If such coverage is not generally available at reasonable

cost, then "broad form" coverage may be substituted. All property insurance policies

17

obtained by the Association shall have policy limits sufficient to cover the full replacement

cost of the insured improvements under current building ordinances and codes;

(ii)Commercial general liability insurance on the Area of Common

Responsibility, insuring the Association and its Members for damage or injury caused by the

negligence of the Association or any of its Members, employees, agents, or contractors while

acting on its behalf. If generally available at reasonable cost, such coverage (including

primary and any umbrella coverage) shall have a limit of at least two million dollars

($2,000,000.00) per occurrence with respect to bodily injury, personal injury, and property

damage; provided, should additional coverage and higher limits be available at reasonable

cost which a reasonably prudent person would obtain, the Association shall obtain such

additional coverages or limits;

(iii)Workers' compensation insurance and employers' liability insurance, if

and to the extent required by law;

(iv)Directors' and officers' liability coverage;

(v)Commercial crime insurance, including fidelity insurance covering all

Persons responsible for handling Association funds in an amount determined in the Board's

business judgment but not less than an amount equal to one-quarter of the annual Base

Assessments on all Units plus reserves on hand. Fidelity insurance policies shall contain a

waiver of all defenses based upon the exclusion of Persons serving without compensation;

and

(vi)Agreement; and

Such msurance as may be required by the Boat Ramp Easement

(vii)Such additional insurance as the Board, in the exercise of its business

judgment, determines advisable.

Premiums for all insurance on the Area of Common Responsibility shall be Common

Expenses, unless the Board reasonably determines that other treatment of the premiums is

more appropriate.

(b)Policy Requirements. The Association shall arrange for an annual review of

the sufficiency of its insurance coverage by one or more qualified Persons, at least one of

whom must be familiar with insurable replacement costs in the Savannah area. All

Association policies shall provide for a certificate of insurance to be furnished to the

Association and, upon request, to each Member insured.

The policies may contain a reasonable deductible and the amount thereof shall not be

subtracted from the face amount of the policy in determining whether the policy limits satisfy

the requirements of Section 7.3 (a). In the event of an insured loss, the deductible shall be

18

treated as a Common Expense in the same manner as the premiums for the applicable

insurance coverage. However, if the Board reasonably determines, after notice and an

opportunity to be heard in accordance with the By-Laws, that the loss is the result of the

negligence or willful misconduct of one or more Owners, their guests, invitees, or lessees,

then the Board may assess the full amount of such deductible against such Owner(s) and their

Units as a Specific Assessment.

All insurance coverage obtained by the Board shall:

(i)be written with a company authorized to do business in Georgia which

satisfies the requirements of the Federal National Mortgage Association, or such other

secondary mortgage market agencies or federal agencies as the Board deems appropriate;

(ii)be written in the name of the Association as trustee for the benefitted

parties. Policies on the Common Areas shall be for the benefit of the Association and its

Members.

(iii)not be brought into contribution with insurance purchased by Owners,

occupants, or their Mortgagees individually;

(iv)contain an inflation guard endorsement;

(v)include an agreed amount endorsement, if the policy contains a

co-insurance clause;

(vi)provide that each Owner is an insured person under the policy with

respect to liability arising out of such Owner's interest in the Common Area as a Member in

the Association (provided, this provision shall not be construed as giving an Owner any

interest in the Common Area other than that of a Member);

(vii)provide a waiver of subrogation under the policy against any Owner or

household member of an Owner;

(viii)include an endorsement precluding cancellation, invalidation,

suspension, or non-renewal by the insurer on account of any one or more individual Owners,

or on account of any curable defect or violation without prior written demand to the

Association to cure the defect or violation and allowance of a reasonable time to cure; and

(ix)include an endorsement precluding cancellation, invalidation, or

condition to recovery under the policy on account of any act or omission of any one or more

individual

Owners, unless such Owner is acting within the scope of its authority on behalf of the

Association.

19

In addition, the Board shall use reasonable efforts to secure insurance policies which

list the Owners as addi tional insureds and provide:

(i)a waiver of subrogation as to any claims agains t the Associ ation's

Board, officers, employees, and i ts manager, the Owners and their tenants, servants, agents,

and guests;

paying cash;

(ii)a waiver of the insurer's rights to repair and reconstruct instead of

(iii)an endorsement excluding Owners' individu al policies from

consideration under any "other insurance" clause;

(i v) an endorsement requirin g at least 30 days' prior written notice to the

Associ ation of any cancellation, sub stanti al modific ation, or non-renewal;

(v)a cross li abili ty provi sion; and

(vi ) a provi sion vesting in the Board exclusi ve authori ty to adjust losses;

provid ed, however, no Mortgagee having an interest in such losses may be prohibi ted from

parti ci pating in the settlement negoti ations, i f any, related to the loss.

( c) Restoring Damaged Improvements. In the event of damage to or destruction

of Common Area or other property whi ch the Associ ation i s obli gated to insure, the Board or

i ts duly authori zed agent shall fi le and adjust all insurance claims and obtain reli able and

detail ed estimates of the cost of repai ring or restoring the property to substanti ally the

condition in whi ch i t exi sted prio r to the damage, allowing for changes or improvements

necessi tated by changes in appli cable buildin g codes.

Damaged improvements on the Common Area shall be repai red or reconstructed

unless the Members representing at least 75% of the total Class "A" votes in the Associ ation,

and the Class "B" Member, i f any, decid e wi thi n 60 days after the loss not to repai r or

reconstruct. If ei ther the insurance proceeds or the estim ates of the loss, or both, are not

avail able to the Associ ation wi thin such 60-day period, then the period shall be extended

until such funds or in formation are avail able. However, such extension shall not exceed 60

addi tional days. No Mortgagee shall have the ri ght to partici pate in the determination of

whether the damage or destruction to the Common Area shall be repai red or reconstructed.

If a deci sion i s made not to restore the damaged improvements, and no alternati ve

im provements are authori zed, the affected property shall be cleared of all debri s and ruins

and

thereafter shall be maintained by the Associ ation in a neat and attracti ve, landscaped

condition consi stent wi th the Community-Wide Standard.

20

Any insurance proceeds remaining after paying the costs of repair or reconstruction,

or after such settlement as is necessary and appropriate, shall be retained by the Association

for the benefit of its Members, and placed in a capital improvements account This is a

covenant for the benefit of Mortgagees and may be enforced by the Mortgagee of any affected

Unit.

If insurance proceeds are insufficient to cover the costs of repair or reconstruction, the

Board may, without a vote of the Members, levy Special Assessments to cover the shortfall

against those Owners responsible for the premiums for the applicable insurance coverage

under Section 7. 3(a).

7.4.Compliance and Enforcement.

(a)Every Owner and occupant of a Unit shall comply with the Governing

Documents. The Board may impose sanctions for violation of the Governing Documents

after notice and a hearing in accordance with the procedures set forth in the By-Laws. Such

sanctions may include, without limitatio n:

(i ) imposing reasonable monetary fines which shall constitute a lien upon

the violator's Unit. (In the event that any occupant, guest, or invitee of a Unit violates the

Governing Documents and a fine is imposed, the fine shall first be assessed against the

violator; provided, however, if the fine is not paid by the violator within the time period set

by the Board, the Owner shall pay the fine upon notice from the Board);

(ii ) suspending an Owner's right to vote;

(iii ) suspending any Person's right to use any recreational facilities within

the Common Area; provided, however, nothing herein shall authorize the Board to limit

ingress or egress to or from a Unit;

(iv ) suspending any services provided by the Association to an Owner or

the Owner's Unit if the Owner is more than 30 days delinquent in paying any assessment or

other charge owed to the Association;

(v)exercising self-help in a non-emergency situation;

(vi ) requiring an Owner, at its own expense, to remove any structure or

improvement on such Owner's Unit in violation of the Governing Documents and to restore

the Unit to its previous condition and, upon failure of the Owner to do so, the Board or its

designee shall have the right to enter the property, remove the violation and restore the

property to substantially the same condition as previously existed and any such action shall

not be deemed a trespass; and

21

(vii)without liability to any Person, precluding any contractor,

subcontractor, agent, employee, or other invitee of an Owner who fails to comply with the

terms and provisions of Article IV and the Architectural Guidelines from continuing or

performing any further activities in the Properties.

In addition, the Board may take the following enforcement procedures to ensure

compliance with the Governing Documents without the necessity of compliance with the

procedures set forth in the By-Laws:

(i)abating an immediate violation on the Common Area and exercising

self-help in any emergency situation (specifically including, but not limited to, the towing of

vehicles that are in violation of parking rules and regulations); or

(ii)bringing suit at law or in equity to enjoin any violation or to recover

monetary damages or both.

In addition to any other enforcement rights, if an Owner fails to properly perform his

or her maintenance responsibility, the Association may Record a notice of violation or

perform such maintenance responsibilities and assess all costs incurred by the Association

against the Unit and the Owner as a Specific Assessment. Except in an emergency situation,

the Association shall provide the Owner reasonable notice and an opportunity to cure the

problem prior to taking such enforcement action (which may be provided in lieu of the notice

and hearing procedures set forth in the By-Laws).

All remedies set forth in the Governing Documents shall be cumulative of any

remedies available at law or in equity. In any action to enforce the Governing Documents, if

the Association prevails, it shall be entitled to recover all costs, including, without limitation,

attorneys' fees and court costs, reasonably incurred in such action.

(b)The decision to pursue enforcement action in any particular case shall be left

to the Board's discretion, except that the Board shall not be arbitrary or capricious in taking

enforcement action. Without limiting the generality of the foregoing sentence, the Board

may determine that, under the circumstances of a particular case:

action;

(i)the Association's position is not strong enough to justify taking any or further

(ii)the covenant, restriction, or rule being enforced is, or is likely to be construed

as, inconsistent with applicable law;

(iii)although a technical violation may exist or may have occurred, it is not of such

a material nature as to be objectionable to a reasonable person or to justify expending the

Association's resources; or

22

(iv)that it is not in the Association's best interests, based upon hardship, expense,

or other reasonable criteria, to pursue enforcement action.

Such a decision shall not be construed as a waiver of the Association's right to enforce

such provision at a later time under other circumstances or preclude the Association from

enforcing any other covenant, restriction, or rule.

The Association, by contract or other agreement, may enforce city and county

ordinances, if applicable, for the benefit of the Association and its Members, and any

municipality having jurisdiction may enforce ordinances within the Properties.

7.5.Implied Rights; Board Authority.

The Association may exercise any right or privilege given to it expressly by the

Governing Documents, or reasonably implied from or reasonably necessary to effectuate any

such right or privilege. All rights and powers of the Association may be exercised by the

Board without a vote of the membership except where applicable law or the Governing

Documents specifically require a vote of the membership.

The Board may institute, defend, settle, or intervene on behalf of the Association in

mediation, binding or non-binding arbitration, litigation, or administrative proceedings in

matters pertaining to the Area of Common Responsibility, enforcement of the Governing

Documents, or any other civil claim or action. However, the Governing Documents shall

not create any independent legal duty to institute litigation on behalf of or in the name of the

Association or the Members.

In exercising the Association's rights and powers, making decisions on behalf of the

Association, and conducting the Association's affairs, Board members shall be subject to, and

their actions shall be judged in accordance with, the standards set forth in Section 3.26 of the

By-Laws.

7.6.Indemnification of Officers, Directors, and Others.

Subject to Georgia law, the Association shall indemnify every officer, director, and

committee member against all damages and expenses, including counsel fees, reasonably

incurred in connection with any action, suit, or other proceeding (including settlement of any

suit or proceeding, if approved by the then Board of Directors) to which he or she may be a

party by reason of being or having been an officer, director, or committee member, except

that such obligation to indemnify shall be limited to those actions for which liability is

limited under this Section and Georgia law This right to indemnification shall not be

exclusive of any other rights to which any present or former officer, director, or committee

member may be entitled. The Association shall, as a Common Expense, maintain adequate

23

general liability and officers' and directors' liability insurance to fund this obligation, if such

insurance is reasonably available.

The officers, directors, and committee members shall not be liable for any mistake of

judgment, negligence or otherwise, except for their own individual willful misfeasance,

malfeasance, misconduct, or bad faith. The officers and directors shall have no personal

liability with respect to any contract or other commitment made or action taken in good faith

on behalf of the Association ( except to the extent that such officers or directors may also be

Members of the Association).

7. 7. Safety and Security.

Each Owner and occupant of a Unit, and their respective guests and invitees, shall be

responsible for their own personal safety and the security of their property in the Properties.

The Association may, but shall not be obligated to, maintain or support certain activities

within the Properties designed to enhance the level of safety or security which each person

provides for himself or herself and his or her property. Neither the As sociation nor

Declarant shall in any way be considered insurers or guarantors of safety or security within

The Palms, nor shall either be held liable for any loss or damage by reason of failure to

provide adequate security or ineffectiveness of security measures undertaken.

No representation or warranty is made that any systems or measures, including any

mechanism or system for limiting access to the Properties, cannot be compromised or

circumvented, nor that any such systems or security measures undertaken will in all cases

prevent loss or provide the detection or protection for which the system is designed or

intended. Each Owner acknowledges, understands, and shall be responsible for informing

its tenants and all occupants of its Unit that the Association, its Board and committees, and

Declarant are not insurers or guarantors of security or safety and that each Person within the

Properties assumes all risks of personal injury and loss or damage to property, including

Units and the contents of Units, resulting from acts of third parties.

7.8.Provision of Services.

The Association may provide, or provide for, services and facilities for the Owners

and their Units, and shall be authorized to enter into and terminate contracts or agreements

with other entities, including Declarant, to provide such services and facilities. The Board

may charge use or service fees for any such services and facilities provided at the option of an

Owner, or may include the costs thereof in the Association's budget as a Common Expense

and assess it as part of the Base Assess ment if provided to all Units. By way of example,

such services and facilities might include landscape maintenance, pest control service, cable

television service, security, caretaker, transportation, fire protection, utilities, and similar

services and facilities.

24

Nothing in this Section shall be construed as a representation by Declarant or the

Association as to what, if any, services shall be provided. In addition, the Board shall be

permitted to modify or cancel existing contracts for services in its discretion, unless the

provision of such services is otherwise required by the Governing Documents. Non-use of

services provided to all Owners or Units as a Common Expense shall not exempt any Owner

from the obligation to pay assessments for such services.

7.9.Relationships with Other Properties.

The Association may enter into contractual agreements or covenants to share costs

with any neighboring property to contribute funds for, among other things, shared or mutually

beneficial property or services and/or a higher level of Common Area maintenance.

7.1 0. Facilities and Services Open to the Public.

Certain facilities and areas within the Properties may be open for use and enjoyment

of the public. Such facilities and areas may include, by way of example: greenbelts, trails

and paths, parks, and other neighborhood spots conducive to gathering and interaction, roads,

sidewalks, and medians. Declarant may designate such facilities and areas as open to the

public at the time Declarant makes such facilities and areas a part of the Area of Common

Responsibility or the Board may so designate at any time thereafter.

Article VIII Association Finances

8. 1. Budgeting and Allocating Common Expenses.

Before the beginning of each fiscal year, the Board shall prepare a budget of the

estimated Common Expenses for the coming year, including any contributions to be made to

a reserve fund pursuant to Section 8.2. The budget shall also reflect the sources and

estimated amounts of funds to cover such expenses, which may include any surplus to be

applied from prior years, any income expected from sources other than assessments levied

against the Units, and the amount to be generated through the levy of Base Assessments and

Special Assessments against the Units, as authorized in Section 8.5.

The Association is authorized to levy Base Assessments equally against all Units

subject to assessment under Section 8.5 to fund the Common Expenses. In determining the

Base Assessment rate per Unit, the Board may consider any assessment income expected to

be generated from any additional Units reasonably anticipated to become subject to

assessment during the fiscal year.

Declarant may, but shall not be obligated to, reduce the Base Assessment for any

fiscal year by payment of a subsidy, which may be either a contribution, an advance against

future assessments due from Declarant, or a loan, in Declarant's discretion. Any such

subsidy shall be disclosed as a line item in the income portion of the budget. Payment of

25

such subsidy in any year shall not obligate Declarant to continue payment of such subsidy in

future years, unless otherwise provided in a written agreement between the Association and

Declarant.

The Board shall send a copy of the final budget, together with notice of the amount of

the Base Assessment to be levied pursuant to such budget, to each Owner at least 3 0 days

prior to the effective date of such budget. The budget shall automatically become effective

unless disapproved at a meeting by Members representing at least 75% of the total Class "A"

votes in the Association and by the Class "B" Member, if such exists. There shall be no

obligation to call a meeting for the purpose of considering the budget except on petition of

the Members as provided for special meetings in the By-Laws. Any such petition must be

presented to the Board within 10 days after delivery of the budget and notice of any

assessment.

If any proposed budget is disapproved or the Board fails for any reason to determine

the budget for any year, then the budget most recently in effect shall continue in effect until a

new budget is determined.

The Board may revise the budget and adjust the Base Assessment from time to time

during the year, subject to the notice requirements and the right of the Members to disapprove

the revised budget as set forth above.

8. 2. Budgeting for Reserves.

The Board shall prepare and review at least annually a reserve budget for the Area of

Common Responsibility. The budget shall take into account the number and nature of

replaceable assets, the expected life of each asset, and the expected repair or replacement

cost. The Board shall include in the Common Expense budget adopted pursuant to Section

8.1, a capital contribution to fund reserves in an amount sufficient to meet the projected need

with respect both to amount and timing by annual contributions over the budget period.

8.3.Special Assessments.

In addition to other authorized assessments, the Association may levy Special

Assessments to cover unbudgeted expenses or expenses in excess of those budgeted. Except

as otherwise specifically provided in this Declaration, any Special Assessment shall require

the affirmative vote or written consent of Owners representing more than 50% of the total

votes allocated to Units which will be subject to such Special Assessment, and the

affirmative vote or written consent of the Class "B" Member, if such exists. Special

Assessments shall be payable in such manner and at such times as determined by the Board,

and may be payable in installments extending beyond the fiscal year in which the Special

Assessment is approved.

8.4.Specific Assessments.

26

The Association shall have the power to levy Specific Assessments against a

particular Unit as follows:

(a)to cover the costs, including overhead and administrative costs, of providing

services to Units upon request of an Owner pursuant to any menu of special services which

may be offered by the Association (which might include the items identified in Section 7. 8).

Specific Assessments for special services may be levied in advance of the provision of the

requested service; and

(b)to cover costs incurred in bringing the Unit into compliance with the

Governing Documents, or costs incurred as a consequence of the conduct of the Owner or

occupants of the Unit, their agents, contractors, employees, licensees, invitees, or guests.

8.5.Time of Payment.

The obligation to pay assessments shall commence as to each Unit on the first day of

the month followi ng:

(a)the month in which the Unit is made subject to this Declaration, or

(b)the month in which the Board first determines a budget and levies assessments pursuant

to this Arti cle, whichever is later. The first annual Base Assessment, if any, levied on each

Unit shall be adjusted according to the number of months remaining in the fiscal year at the

time assessments commence on the Unit.

Assessments shall be paid in such manner and on such dates as the Board may

establish. The Board may require advance payment of assessments at closing of the transfer

of title to a Unit and impose special requirements for Owners with a history of delinquent

payment. If the Board so elects, assessments may be paid in two or more installments.

Unless the Board otherwise provides, the Base Assessment shall be due and payable in

advance on the first day of each fiscal year. If any Owner is delinquent in paying any

assessments or other charges levied on his or her Unit, the Board may require the outstanding

balance on all assessments to be paid in full immediat ely.

8.6.Obliga tion for Assessments.

Each Owner, by accepting a deed or entering into a Recorded contract of sale for any

portion of the Properties, is deemed to covenant and agree to pay all assessments authorized

in the Governing Documents. All assessments, together with interest ( computed from its

due date at a rate of 15% per annum or such other rate as the Board may establish, subject to

the limitations of Georgia law), late charges as determined by Board resolution, costs, and

attorneys' fees, shall be the personal obligation of each Owner and a lien upon each Unit until

paid in full. Upon a transfer of title to a Unit, the grantee shall be jointly and severally liable

for any assessments and other charges due at the time of conveyance.

Failure of the Board to fix assessment amounts or rates or to deliver or mail to each

27

Owner an assessment notice shall not be deemed a waiver, modification, or a release of any

Owner from the obligation to pay assessments. In such event, each Owner shall continue to

pay Base Assessments on the same basis as during the last year for which an assessment

was made, if any, until a new assessment is levied, at which time the Association may

retroactively assess any shortfalls in collections.

No Owner may exempt himself or herself from liability for assessments by non-use of

the Common Area, abandonment of his or her Unit, or any other means. The obligation to

pay assessments is a separate and independent covenant on the part of each Owner. No

diminution or abatement of assessments or set-off shall be claimed or allowed for any alleged

failure of the Association or Board to take some action or perform some function required of

it, or for inconvenience or discomfort arising from the making of repairs or improvements, or

from any other action it takes.

Upon written request, the Association shall furnish to any Owner liable for any type

of assessment a certificate in writing signed by an Association officer setting forth whether

such assessment has been paid. Such certificate shall be conclusive evidence of payment.

The Association may require the advance payment of a reasonable processing fee for the

issuance of such certificate.

8.7.Lien for Assessments.

The Association shall have a lien against each Unit to secure payment of delinquent

assessments, as well as interest, late charges (subject to the limitations of Georgia law), and

costs of collection (including attorneys' fees). Such lien shall be superior to all other liens,

except

(a)the liens of all taxes, bonds, assessments, and other levies which by law would be

superior, and

(b)the lien or charge of any Recorded first Mortgage (meaning any Recorded

Mortgage with first priority over other Mortgages) made in good faith and for value. Such

lien, when delinquent, may be enforced by suit, judgment, and judicial or nonjudicial

foreclosure.

The Association may bid for the Unit at the foreclosure sale and acquire, hold, lease,

mortgage, and convey the Unit. While a Unit is owned by the Association following

foreclosure:

(a)no right to vote shall be exercised on its behalf;

(b)no assessment shall be

levied on it; and ( c) each other Unit shall be charged, in addition to its usual assessment, its

pro rata share of the assessment that would have been charged such Unit had it not been

acquired by the Association. The Association may sue for unpaid assessments and other

charges authorized hereunder without foreclosing or waiving the lien securing the same.

Sale or transfer of any Unit shall not affect the assessment lien or relieve such Unit

from the lien for any subsequent assessments. However, the sale or transfer of any Unit

pursuant to foreclosure of the first Mortgage shall extinguish the lien as to any installments of

such assessments due prior to the Mortgagee's foreclosure. The subsequent Owner to the

foreclosed Unit shall not be personally liable for assessments on such Unit due prior to such

28

acquisition of title. Such unpaid assessments shall be deemed to be Common Expenses

collectible from Owners of all Units subject to assessment under Section 8.6, including such

acquirer, its successors and assigns.

8.8.Exempt Property.

The following property shall be exempt from payment of Base Assessments and

Special Assessments:

(a)All Common Area and such portions of the property owned by Declarant as

are included in the Area of Common Responsibility;

(b)Any property dedicated to and accepted by any governmental authority or

public utility; and

( c) Property owned by the Declarant or its assignee for any purpose.

( d) All unimproved Property or Units This exemption shall expire and temrinate

upon the issu ance of a Certificate of Occupancy for the respective Property or Unit.

In addition, Declarant and/or the Association shall have the right, but not the

obligation, to grant exemptions to certain Persons qualifying for tax-exempt status under

Section 501(c) of the Internal Revenue Code so long as such Persons own property subject to

this Declaration for purposes listed in Section 501(c).

Part Four: Community Development

Article IX Expansion of the Community

9.1.Expansion by Declarant.

It is contemplated and specifically understood that Declarant may, from time to time,

subject to the provisions of this Declaration expand all or any portion of the property

described in Exhibit 11B11 by Recording a Supplemental Declaration describing the property

being subjected to this Declaratio. A Supplemental Declaration Recorded pursuant to this

Section shall not require the consent of any Person except the owner of such additional

property, if other than Declarant.

Until such time as Declarant, or its successors and/or assigns, has fully divested itself

of all property described in attached Exhibit "B" or otherwise terminates its rights of

Declarant, Declarant always shall have the right to expand the property subject to this

Declaration. Declarant may transfer or assign its rights as Declarant and this particular right

to any Person who is the developer of at least a portion of the real property described in

29

Exhibits "A" or "B." Any such transfer shall be memorialized in a Recorded instrument

executed by Declarant.

Nothing in this Declaration shall be construed to require Declarant or any successor to

subject additional property to this Declaration or to develop any of the property described in

Exhibit "B" in any manner whatsoever.

9.2.Expansion by the Association.

The Association may also subject property to the provisions of this Declaration by a

Recorded Supplemental Declaration. Any such Supplemental Declaration shall require the

affirmative vote of Members representing more than 50% of the Class "A" votes of the

Association represented at a meeting duly called for such purpose and the consent of the

owner of the property. In addition, so long as Declarant or its successors and/or assigns

owns property subject to this Declaration or which may become subject to this Declaration in

accordance with Section 9.1, Declarant's consent shall be necessary. The Supplemental

Declaration shall be signed by the President and Secretary of the Association, by the Owner

of the property, and by Declarant, if Declarant's consent is necessary.

9.3.Additional Covenants and Easements.

Declarant may subject any portion of the Properties to additional covenants and

easements. Such additional covenants and easements may be set forth either in a

Supplemental Declaration subjecting such property to this Declaration or in a separate

Supplemental Declaration referencing property previously subjected to this Declaration. If

the property is owned by someone other than Declarant or its successors an/or assigns, then

the consent of the Owner(s) shall be necessary and shall be evidenced by their execution of

the Supplemental Declaration. Any such Supplemental Declaration may supplement, create

exceptions to, or otherwise modify the terms of this Declaration as it applies to the subject

property in order to reflect the different character and intended use of such property.

9.4.Effect of Filing Supplemental Declaration.

A Supplemental Declaration shall be effective upon Recording unless otherwise

specified. Any property subjected to this Declaration shall be assigned voting rights in the

Association and assessment liability in accordance with the provisions of this Declaration.

Article X Additional Rights Reserved to Declarant

10.1.Withdrawal of Property.

Declarant reserves the right to amend this Declaration, so long as it has a right to

annex property pursuant to Section 9.1, for the purpose of removing any portion of the

Properties which has not yet been improved with structures from the coverage of this

30

Declaration, provided such withdrawal does not reduce the total number of Units then subject

to the Declaration by more than 10 percent. Such amendment shall not require the consent

of any Person other than the Owner( s) of the property to be withdrawn, if not Declarant. If

the property is Common Area, the Association shall consent to such withdrawal.

10.2.Marketing and Sales Activities.

Declarant and Builders authorized by Declarant may construct and maintain upon

portions of the Common Area and Units which they own such facilities and activities as, in

Declarant's sole opinion, may be reasonably required, convenient, or incidental to the

construction or sale of Units, including, but not limited to, business offices, signs, model

units, and sales offices. Declarant and authorized Builders shall have easements for access to

and use of such facilities at no charge.

10.3.Right to Develop.

Declarant and its employees, agents, and designees shall have a right of access and

use and an easement over and upon all of the Common Area for the purpose of making,

constructing, and installing such improvements to the Common Area as it deems appropriate

in its sole discretion.

Every Person that acquires any interest in the Properties acknowledges that the

Properties is a master planned community, the development of which is likely to extend over

many years, and agrees not to protest, challenge, or otherwise object to

(a)changes in uses or

density of property, or

(b)changes in the master plan.

10.4.Right to Approve Additional Covenants.

No Person shall Record any declaration of covenants, conditions, and restrictions, or

declaration of condominium or similar instrument affecting any portion of the Properties

without Declarant's review and written consent. Any instrument Recorded without such

consent shall be void and of no force and effect unless subsequently approved by Declarant in

a Recorded consent.

10.5.Right to Approve Changes in the Properties' Standards.

No amendment to or modification of the Restrictions and Rules or the Architectural

Guidelines shall be effective without prior notice to and the written approval of Declarant so

long as Declarant owns property subject to this Declaration or which may become subject to

this Declaration in accordance with Section 9.1.

31

10.6.Right to Transfer or Assign Declarant Rights.

Any or all of Declarant's special rights and obligations set forth in this Declaration or

the By-Laws may be transferred in whole or in part to other Persons; provided, the transfer

shall not reduce an obligation nor enlarge a right beyond that which Declarant has under this

Declaration or the By-Laws. No such transfer or assignment shall be effective unless it is in

a Recorded instrument signed by Declarant. The foregoing sentence shall not preclude

Declarant from permitting other Persons to exercise, on a one time or limited basis, any right

reserved to Declarant in this Declaration where Declarant does not intend to transfer such

right in its entirety, and in such case it shall not be necessary to Record an assignment unless

necessary to evidence Declarant's consent to such exercise.

10.7.Exclusive Rights To Use Name of Development.

No Person shall use the name "The Palms" or any derivative of such name or in logo

or depiction in any printed or promotional material without Declarant's prior written consent.

However, Owners may use the name "The Palms" in printed or promotional matter where

such term is used solely to specify that particular property is located within The Palms and

the Association shall be entitled to use the words "The Palms" in its name.

10. 8. Easement to Inspect and Right to Correct.

Declarant reserves for itself and others it may designate the right to inspect, monitor,

test, redesign, and correct any structure, improvement, or condition which may exist on any

portion of the Properties, including Units, and a perpetual nonexclusive easement of access

throughout the Properties to the extent reasonably necessary to exercise such right. Except

in an emergency, entry onto a Unit shall be only after reasonable notice to the Owner and no

entry into a dwelling shall be permitted without the consent of the Owner. The person

exercising this easement shall promptly repair, at such person's own expense, any damage

resulting from such exercise.

10.9.Right to Notice of Design or Construction Claims.

No Person shall retain an expert for the purpose of inspecting the design or

construction of any structures or improvements within the Properties in connection with or in

anticipation of any potential or pending claim, demand, or litigation involving such design or

construction unless Declarant and any Builder involved in the design or construction have

been first notified in writing and given an opportunity to meet with the Owner of the property

to discuss the Owner's concerns and conduct their own inspection.

32

10.10.Termination of Rights.

Except as otherwise specified, the rights contained in this Article shall not terminate

until the earlier of

(a)40 years from the date this Declaration is Recorded, or

(b)Recording

by Declarant of a statement that all sales activity has ceased.

Part Five: Property Rights Within the Community

Article XI Easements

11.1.Easements in Common Area.

Declarant grants to each Owner a nonexclusive right and easement of use, access, and

enjoyment in and to the Common Area, subject to:

(a)The Governing Documents and any other applicable covenants;

(b)Any restrictions or limitations contained in any deed conveying such property

to the Association;

(c)The Board's right to:

(i)adopt rules regulating use and enjoyment of the Common Area,

including rules limiting the number of guests who may use the Common Area;

(ii)suspend the right of an Owner to use recreational facilities within the

Common Area

(A)for any period during which any charge against such Owner's Unit

remains delinquent, and

(B)for a period not to exceed 30 days for a single violation or for a

longer period in the case of any continuing violation of the Governing Documents after notice

and a hearing pursuant to the By-Laws;

(iii)dedicate or transfer all or any part of the Common Area, subject to

such approval requirements as may be set forth in this Declaration;

(iv)impose reasonable membership requirements and charge reasonable

admission or other use fees for the use of any recreational facility situated upon the Common

Area;

(v)permit use of any recreational facilities situated on the Common Area

by persons other than Owners, their families, lessees, and guests upon payment of use fees

established by the Board and designate other areas and facilities within the Area of Common

Responsibility as open for the use and enjoyment of the public; and

33

(vi)mortgage, pledge, or hypothecate any or all of its real or personal

property as security for money borrowed or debts incurred, subject to the approval

requirements set forth in sections 13.5 and

15.2.Any Owner may extend his or her right of use and enjoyment to the members of his or

her family, lessees, and social invitees, as applicable, subject to reasonable regulation by the

Board. An Owner who leases his or her Unit shall be deemed to have assigned all such

rights to the lessee of such Unit for the period of the lease.

11.2.Easements of Encroachment.

Declarant grants reciprocal appurtenant easements of encroachment, and for

maintenance and use of any permitted encroachment, between each Unit and any adjacent

Common Area and between adjacent Units or any Unit and any private amenity due to the

unintentional placement or settling or shifting of the improvements constructed,

reconstructed, or altered thereon (in accordance with the terms of these restrictions) to a

distance of not more than three feet, as measured from any point on the common boundary

along a line perpendicular to such boundary. However, in no event shall an easement for

encroachment exist if such encroachment occurred due to willful and knowing conduct on the

part of, or with the knowledge and consent of, the Person claiming the benefit of such

easement.

11.3.Easements for Utilities, Etc.

(a)Installation and Maintenance. Declarant reserves for itself, so long as

Declarant owns any property described in Exhibit "A" or "B" of this Declaration, and grants

to the Association and all utility providers, perpetual non-exclusive easements throughout the

Properties (but not through a structure) to the extent reasonably necessary for the purpose of:

(i)installing utilities and infrastructure to serve the Properties, cable and

other systems for sending and receiving data and/or other electronic signals, security and

similar systems, walkways, pathways and trails, drainage systems, street lights, and signage

on property which Declarant owns or within public rights-of-way or easements reserved for

such purpose on Recorded plats;

(ii)inspecting, maintaining, repamng, and replacing the utilities,

infrastructure, and other improvements described in Section l l.3(a)(i); and

(iii)access to read utility meters.

Notwithstanding the above, Declarant reserves the right to deny access to any utility

or service provider, to the extent permitted by law, or to condition such access on negotiated

terms.

34

(b)Specific Easements. Declarant also reserves for itself the non-exclusive right

and power to grant and Record such specific easements as may be necessary, in the sole

discretion of Declarant, in connection with the orderly development of any property described

in Exhibits "A" and "B." The Owner of any property to be burdened by any easement

granted pursuant to this subsection

(b)shall be given written notice in advance of the grant.

The location of the easement shall be subject to the written approval of the Owner of the

burdened property, which approval shall not unreasonably be withheld, delayed, or

conditioned.

( c) Minimal Interference. All work associated with the exercise of the easements

described in subsections

(a)and

(b)of this Section shall be performed in such a manner as to

minimize interference with the use and enjoyment of the property burdened by the easement.

Upon completion of the work, the Person exercising the easement shall restore the property,

to the extent reasonably possible, to its condition prior to the commencement of the work.

The exercise of these easements shall not extend to permitting entry into the structures on any

Unit, nor shall it unreasonably interfere with the use of any Unit and, except in an emergency,

entry onto any Unit shall be made only after reasonable notice to the Owner or occupant.

11.4.Easements to Serve Additional Property.

Declarant hereby reserves for itself and its duly authorized agents, successors, assigns,

and mortgagees, an easement over the Common Area for the purposes of enjoyment, use,

access, and development of the property described in Exhibit "B," whether or not such

property is made subject to this Declaration This easement includes, but is not limited to, a

right of ingress and egress over the Common Area for construction of roads and for

connecting and installing utilities on such property.

Declarant agrees that it and its successors or assigns shall be responsible for any

damage caused to the Common Area as a result of their respective actions in connection with

development of such property. Declarant further agrees that if the easement is exercised for

permanent access to such property and such property or any portion thereof benefitting from

such easement is not made subject to this Declaration, Declarant, its successors or assigns

shall enter into a reasonable agreement with the Association to share the cost of any

maintenance which the Association provides to or along any roadway providing access to

such property.

11.5.Easements for Maintenance, Emergency, and Enforcement.

Declarant grants to the Association easements over the Properties as necessary to

enable the Association to fulfill its maintenance responsibilities under Section 7.2. The

Association shall also have the right, but not the obligation, to enter upon any Unit for

emergency, security, and safety reasons, to perform maintenance, and to inspect for the

purpose of ensuring compliance with and enforcing the Governing Documents. Such right

may be exercised by any member of the Board and its duly authorized agents and assignees,

35

and all emergency personnel in the performance of their duties. Except in an emergency

situation, entry shall only be during reasonable hours and after notice to the Owner.

11.6.Easements for Maintenance of Lakes, Pond and Waterfront Areas and Flood

Declarant reserves for itself, the Association, and their successors, assigns, and

designees, the nonexclusive right and easement, but not the obligation, to enter upon bodies

of water and wetlands located within the Area of Common Responsibility to

(a)install,

operate, maintain, and replace pumps to supply irrigation water to the Area of Common

Responsibility;

(b)construct, maintain, and repair structures and equipment used for retaining

water; and ( c) maintain such areas in a manner consistent with the Community-Wide

Standard. Declarant, the Associ ation, and their successors, assigns, and designees shall have

an access easement over and across any of the Properties abutting or containing bodies of

water or wetlands to the extent reasonably necessary to exercise their rights under this

Section.

Declarant further reserves for its elf, the Associ ation, and their successors, assigns, and

designees, a perpetual, nonexclusive right and easement of access and encroachment over the

Common Area and Units (but not the dwellings thereon) adjacent to or within 50 feet of

bodies of water and wetlands within the Properties, in order to

(a)temporarily flood and back

water upon and maintain water over such portions of the Properties;

(b)alter in any manner

and generally maintain the bodies of water and wetlands within the Area of Common

Responsibility; and ( c) maintain and landscape the slopes and banks pertaining to such areas.

All Persons entitled to exercise these easements shall use reasonable care in and repair any

damage resulting from the intentional exercise of such easements. Nothing herein shall be

construed to make Declarant or any other Person liable for damage resulting from flooding

due to hurricanes, heavy rainfall, or other natural occurrences.

11.7 Easement for Pedestrian Use.

Each Unit is burdened with a pedestrian easement for access and use of the paved

sidewalk adjacent to each roadway. The Builder of each improvement shall be responsible

for construction of said paved sidewalk in accordance with plans approved by the Declarant

or its assignee. Surveyor Note 19 of that certain Major Subdivision Plat - The Palms Phase

1, recorded in Book 51 Page 451, Chatham County records, is clarified in that its reference to

"The Developer shall install" in intended to be defined as the "Builder" as defined ion this

Declaration of Covenants.

PART SIX: RELATIONSHIPS WITHIN AND OUTSIDE THE COMMU NITY

Article XII Dispute Resolution and Limitation on Litigation

12.1.Agreement to Encourage Resolution of Disputes Without Litig ation.

36

(a)Declarant, the Association and its officers, directors, and committee members,

all Persons subject to this Declaration, and any Person not otherwise subject to this

Declaration who agrees to submit to this Article ( each being a "Bound Party"), agree that it is

in the best interest of all concerned to encourage the amicable resolution of disputes

involving the Properties without the emotional and financial costs of litigation. Accordingly,

each Bound Party agrees not to file suit in any court with respect to a Claim described in

subsection (b ), unless and until it has first submitted such Claim to the alternative dispute

resolution procedures set forth in Section 12.2 in a good faith effort to resolve such Claim.

(b)As used in this Article, the term "Claim" shall refer to any claim, grievance, or

dispute arising out of or relating to

Documents;

(i)the interpretation, application, or enforcement of the Governing

(ii)the rights, obligations, and duties of any Bound Party under the

Governing Documents; or

(iii)the design or construction of improvements within the Properties,

other than matters of aesthetic judgment under Article IV, which shall not be subject to

review; except that the following shall not be considered "Claims" unless all parties to the

matter otherwise agree to submit the matter to the procedures set forth in Section 12.2:

(a)any suit by the Association to collect assessments or other

amounts due from any Owner;

(b)any suit by the Association to obtain a temporary restraining

order ( or emergency equitable relief) and such ancillary relief as the court may deem

necessary in order to maintain the status quo and preserve the Association's ability to enforce

the provisions of

Part Two of this Declaration (relating to creation and maintenance of

community standards);

( c) any suit between Owners, which does not include Declarant or

the Association as a party, if such suit asserts a Claim which would constitute a cause of

action independent of the Governing Documents;

and

( d) any suit in which any indispensable party is not a Bound Party;

( e) any suit as to which any applicable statute of limitations would

expire within 180 days of giving the Notice required by Section 12.2(a), unless the party or

37

parties against whom the Claim is made agree to toll the statute of limitations as to such

Claim for such period as may reasonably be necessary to comply with this Article.

12.2.Dispute Resolution Procedures.

(a)Notice. The Bound Party asserting a Claim ("Claimant") against another

Bound Party ("Respondent") shall give written notice to each Respondent and to the Board

stating plainly and concisely:

(i)the nature of the Claim, including the Persons involved and the

Respondent's role in the Claim;

Claim arises);

(ii)the legal basis of the Claim (i.e., the specific authority out of which the

(iii)the Claimant's proposed resolution or remedy; and

(iv)the Claimant's desire to meet with the Respondent to discuss in good

faith ways to resolve the Claim.

(b)Negotiation. The Claimant and Respondent shall make every reasonable

effort to meet in person and confer for the purpose of resolving the Claim by good faith

negotiation. If requested in writing, accompanied by a copy of the Notice, the Board may

appoint a representative to assist the parties in negotiating a resolution of the Claim.

( c) Mediation. If the parties have not resolved the Claim through negotiation

within 30 days of the date of the notice described in Section 12.2(a) (or within such other

period as the parties may agree upon), the Claimant shall have 30 additional days to submit

the Claim to mediation with an entity designated by the Association (if the Association is not

a party to the Claim) or to an independent agency providing dispute resolution services in the

Chatham County area.

If the Claimant does not submit the Claim to mediation within such time, or does not

appear for the mediation when scheduled, the Claimant shall be deemed to have waived the

Claim, and the Respondent shall be relieved of any and all liability to the Claimant (but not

third parties) on account of such Claim.

If the parties do not settle the Claim within 3 0 days after submission of the matter to

mediation, or within such time as determined reasonable by the mediator, the mediator shall

issue a notice of termination of the mediation proceedings indicating that the parties are at an

impasse and the date that mediation was terminated. The Claimant shall thereafter be

entitled to file suit or to initiate administrative proceedings on the Claim, as appropriate.

Each party shall bear its own costs of the mediation, including attorneys' fees, and

each party shall share equally all fees charged by the mediator.

38

Alternative Dispute Resolution Process Negotiation Mediation Notice of Claim Termination of Mediation or Settlement Diagram 14. 1 - Alternative Dispute Resolution Process ( d) Settlement. Any settlement of the Claim through negotiation or mediation shall be documented in writing and signed by the parties. If any party thereafter fails to abide by the terms of such agreement, then any other party may file suit or initiate administrative proceedings to enforce such agreement without the need to again comply with the procedures set forth in this Section. In such event, the party taking action to enforce the agreement or award shall, upon prevailing, be entitled to recover from the non-complying party (or if more than one non-complying party, from all such parties in equal proportions) all costs incurred in enforcing such agreement or award, including, without limitation, attorneys' fees and court costs. 12.3. Initiation of Litigation by Association. In addition to compliance with the foregoing alternative dispute resolution procedures, if applicable, the Association shall not initiate any judicial or administrative proceeding unless first approved by a vote of Members entitled to cast 7 5% of the total Class 39

"A" votes in the Association, except that no such approval shall be required for actions or

proceedings:

(a)initiated during the Class "B" Control Period;

(b)initiated to enforce the provisions of this Declaration, including collection of

assessments and foreclosure of liens;

(c)initiated to challenge ad valorem taxation or condemnation proceedings;

( d) initiated against any contractor, vendor, or supplier of goods or services

arising out of a contract for services or supplies; or

( e) to defend claims filed against the Association or to assert counterclaims in

proceedings institut ed against it.

(f)in an emergency where waiting to obtain approval of the Members creates a

substantial risk of irreparable injury to the Common Area or Members (the imminent

expiration of a statute of limitations shall not be deemed an emergency obviating the need for

the requisite vote of three-fourths (3/4) of the Members).

(g)termination of an employment relationship or enforcement of a contract.

This Section shall not be amended unless such amendment is approved by the same

percentage of votes necessary to institute proceedings.

Article XIII Mortgagee Provisions

The following provisions are for the benefit of holders, insurers, and guarantors of

first Mortgages on Units in the Properties. The provisions of this Article apply to both this

Declaration and to the By-Laws, notwithstanding any other provisions contained therein.

13.1.Notices of Action.

An institutional holder, insurer, or guarantor of a first Mortgage which provides a

written request to the Association (such request to state the name and address of such holder,

insurer, or guarantor and the street address of the Unit to which its Mortgage relates, thereby

becoming an "Eligible Holder"), will be entitled to timely written notice of:

(a)Any condemnation loss or any casualty loss which affects a material portion of

the Properties or which affects any Unit on which there is a first Mortgage held, insured, or

guaranteed by such Eligible Holder;

40

subject

(b)Any delinquency in the payment of assessments or charges owed by a Unit

to the Mortgage of such Eligible Holder, where such delinquency has continued for a period

of 60 days, or any other violation of the Governing Documents relating to such Unit or the

Owner or Occupant which is not cured within 60 days;

( c) Any lapse, cancellation, or material modification of any msurance policy

maintained by the Association; or

( d) Any proposed action which would require the consent of a specified

percentage of Eligible Holders.

13.2.No Priori ty.

No provision of this Declaration or the By-Laws gives or shall be construed as giving

any Owner or other party priority over any rights of the first Mortgagee of any Unit in the

case of distribution to such Owner of insurance proceeds or condemnation awards for losses

to or a taking of the Common Area.

13.3.Notice to Association.

Upon request, each Owner shall be obligated to furnish to the Association the name

and address of the holder of any Mortgage encumbering such Owner's Unit.

13.4.Failure of Mortgagee to Respond.

Any Mortgagee who receives a written request from the Board to respond to or

consent to any action shall be deemed to have approved such action if the Association does

not receive a written response from the Mortgagee within 30 days of the date of the

Association's request, provided such request is delivered to the Mortgagee by certified or

registered mail, return receipt requested.

Part Seven: Changes in the Community

Article XIV Changes in Ownership of Units

Any Owner desiring to sell or otherwise transfer title to his or her Unit shall give the

Board written notice of the name and address of the purchaser or transferee, the date of such

transfer of title, and such other information as the Board may reasonably require. The

transferor shall continue to be jointly and severally responsible with the transferee for all

obligations of the Owner of the Unit, including assessment obligations, until the date upon

which such notice is received by the Board, notwithstanding the transfer of title.

41

Article XV Changes in Common Area

15.1.Transfer or Dedication of Common Area.

The Association may dedicate portions of the Common Area to Chatham County,

Georgia, the City of Savannah, or to any other local, state, or federal governmental or

quasi-governmental entity, subject to such approval as may be required by Sections 13. 5 and

15.2.

15.2.Actions Requiring Owner Approval.

Notwithstanding anything to the contrary in Section 15.1 or this Section, the

Association, acting through the Board, may grant easements over the Common Area for

installation and maintenance of utilities and drainage facilities and for other purposes not

inconsistent with the intended use of the Common Area, without the approval of the

membership.

Article XVI Amendment of Declaration

16.1.By Declarant.

In addition to specific amendment rights granted elsewhere in this Declaration, until

conveyance of the first Unit to a Person other than a Builder, Declarant may unilaterally

amend this Declaration for any purpose. Thereafter, Declarant may unilaterally amend this

Declaration if such amendment is necessary

(a)to bring any provision into compliance with

any applicable governmental statute, rule, regulation, or judicial determination;

(b)to enable

any reputable title insurance company to issue title insurance coverage on the Units; ( c) to

enable any institutional or governmental lender, purchaser, insurer, or guarantor of mortgage

loans, including, for example, the Federal National Mortgage Association or Federal Home

Loan Mortgage Corporation, to make, purchase, insure, or guarantee mortgage loans on the

Units; or

(iv)to satisfy the requirements of any local, state, or federal governmental agency.

However, any such amendment shall not adversely affect the title to any Unit unless the

Owner shall consent in writing.

In addition, so long as Declarant owns property described in Exhibits "A" or "B" for

development as part of the Properties, it may unilaterally amend this Declaration for any

other purpose, provided the amendment has no material adverse effect upon the rights of

more than 2% of the Owners.

16.2.By Members.

42

Except as otherwise specifically provided above and elsewhere in this Declaration,

this Declaration may be amended only by the affirmative vote or written consent, or any

combination thereof, of Members representing 75% of the total Class "A" votes in the

Association, including 75% of the Class "A" votes held by Members other than Declarant,

and Declarant's consent, so long as Declarant owns any property subject to this Declaration or

which may become subject

to this Declaration in accordance with Section 9.1. In addition, the approval requirements

set forth in Article XIII shall be met, if applicable.

Notwithstanding the above, the percentage of votes necessary to amend a specific

clause shall not be less than the prescribed percentage of affirmative votes required for action

to be taken under that clause.

16.3.Validity and Effective Date.

No amendment may remove, revoke, or modify any right or privilege of Declarant or

the Class "B" Member without the written consent of Declarant or the Class "B" Member,

respectively ( or the assignee of such right or privilege).

If an Owner consents to any amendment to this Declaration or the By-Laws, it will be

conclusively presumed that such Owner has the authority to consent, and no contrary

provision in any Mortgage or contract between the Owner and a third party will affect the

validity of such amendment.

Any amendment shall become effective upon Recording, unless a later effective date

is specified in the amendment. Any procedural challenge to an amendment must be made

within six months of its Recordation or such amendment shall be presumed to have been

validly adopted. In no event shall a change of conditions or circumstances operate to amend

any provisions of this Declaration.

16.4.Exhibits.

Exhibits "A" and "B" attached to this Declaration are incorporated by this reference

and amendment of such exhibits shall be governed by the provisions of Article XVI. Exhibit

"C" is incorporated by reference and may be amended in accordance with Article III or

Article XVI. All other exhibits are attached for informational purposes and may be amended

as provided therein or in the provisions of this Declaration which refer to such exhibits.

[SIGNATURES ON FOLLOWING PAGE]

43

IN _WJTNESS WHEREOF, the undersigned Declarant has executed this Declaration on this _\_g"<'_� day of ;::':5-\..A...,\v.. ,2 018 . <S: Signed, sealed and delivered R6 SAVANNAH, LLC, a Georgia in the presence of: limited liability company �ru �- � By � ________ __ , as Manager Notary Public My Commission Expires: \ I b ':-\ / Q.� l

I I [NOTARIAL SEAL]

44

EXHIBIT "A"

Land Initially Submitted

All that certain lot, tract or parcel of land situate, lying and being in Chatham County, Georgia

and shovm as "The Palms, Phase 1" containing 62.53 acres, more or less on that subdivision plat

entitled, "Major Subdivision Plat - The Palms phase 1, Portion of Parcel V Being a Portion of

B-1 of the New Hampstead Tracts, 8th G.M. District, Savannah, Chatham County, Georgia,"

prepared by P. Nathan Brovm, GRLS No. 3185 of Hussey Gay Bell & De Young, Inc., dated May

31, 2018, and recorded on June 7, 2006 in Subdivision Map Book 51 Page 451 - 458, Chatham

County, Georgia records. Said plat incorporated herein by reference.

EXHIBIT "B"

Land Subject to Annexation

All that certain lot, tract or parcel of land situate, lying and being in Chatham County, Georgia and

shown as "Parcel V", containing 252.60 acres, more or less on that subdivision plat entitled,

"Minor Subdivision Parcel V Being a Portion ofB-1 of the New Hampstead Development Area,

PUD R-6, Lands of International Paper Realty Corporation, 8th G.M. District, Savannah, Chatham

County, Georgia," prepared by Michael S. Williams, GRLS No. 2712 of Williams & Associates,

Inc., dated July 18, 2006, and recorded on September 7, 2006 in Subdivision Map Book 36-S

Pages 68A-68F, Chatham County, Georgia records. Said plat incorporated herein by reference.

EXHIBIT "C"

Initial Restrictions and Rules

The following restrictions shall apply to all of the Properties until such time as they are

amended, modified, repealed, or limited pursuant to Article III of the Declaration.

1. General. The Properties shall be used only for residential, recreational, and

related purposes (which may include, without limitation, an information center and/or a sales

office for any real estate broker retained by Declarant to assist in the sale of property described in

Exhibits "A" or "B," offices for any property manager retained by the Association, or business

offices for Declarant or the Association) consistent with this Declaration and any Supplemental

Declaration. Each Unit shall only be used for private residential purposes for a single family.

Only one building shall be erected on each Unit, except for such accessory buildings as may be

approved by the Board or the architectural review committee.

2. Restricted Activities. The following activities are prohibited within the

Properties unless expressly authorized by, and then subject to such conditions as may be imposed

by, Declarant or the Board of Directors:

(a)Parki ng. Parking any vehicles on public or private streets or thoroughfares, or

parking of commercial vehicles or equipment, mobile homes, recreational vehicles, golf carts,

boats and other watercraft, trailers, stored vehicles, or inoperable vehicles in places other than

enclosed garages, the driveway area or required parking pads; provided, construction, service,

and delivery vehicles shall be exempt from this provision during daylight hours for such period

of time as is reasonably necessary to provide service or to make a deliver y to a Unit or the

Common Area;

(b)Animals and Pets. Raising, breeding, or keeping animals, livestock, or poultry of

any kind, except that a reasonable number of dogs, cats, or other usual and common household

pets may be permitted in a Unit; however, those pets which are permitted to roam free, or, in the

sole discretion of the Board, make objectionable noise, endanger the health or safety of, or

constitute a nuisance or inconvenience to the occupants of other Units shall be removed upon

request of the Board. If the pet owner fails to honor such request, the Board may remove the

pet. Dogs shall be kept on a leash or otherwise confined in a manner acceptable to the Board

whenever outside the dwelling. Pets shall be registered, licensed, and inoculated as required by

law;

(c)Odors and Noise. Any activit y which emits foul or obnoxious odors outside the

Unit or creates noise or other conditions which tend to dist urb the peace or threaten the safety of

the occupants of other Units;

2

( d) Laws. Any activity which violates local, state, or federal laws or regulations;

however, the Board shall have no obligation to take enforcement action in the event of a

violation;

(e)Hobbies. Pursuit of hobbies or other activities which tend to cause an unclean,

unhealthy, or untidy condition to exist outside of enclosed structures on the Unit;

(f)Offensive Activit ies. Any noxious or offensive activity which in the reasonable

determination of the Board tends to cause embarrassment, discomfort, annoyance, or nuisance to

persons using the Common Area or to the occupants of other Units;

(g)Burning. Outside burning of trash, leaves, debris, or other materials, except

during the normal course of constructing a dwelling on a Unit;

(h)Loud Noises. Use or discharge of any radio, loudspeaker, horn, whistle, bell, or

other sound device so as to be audible to occupants of other Units, except alarm devices used

exclusively for security purposes;

(i)Fireworks. Use and discharge of firecrackers and other fireworks;

G) Dumping. Dumping grass clippings, leaves or other debris, petroleum products,

fertilizers, or other potentially hazardous or toxic substances in any drainage ditch, stream, pond,

or lake, or elsewhere within the Properties, except that fertilizers may be applied to landscaping

on Units provided care is taken to minimize runoff, and Declarant and Builders may dump and

bury rocks and trees removed from a building site on such building site;

(k)Trash. Accumulation of rubbish, trash, or garbage except between regular

garbage pick ups, and then only in approved containers;

(1) Drainage Interference. Obstruction or rechanneling drainage flows after location

and installation of drainage swales, storm sewers, or storm drains, or any other impairment of or

interference with the neighborhood drainage plan, except that Declarant and the Association shall

have such right; provided, the exercise of such right shall not materially diminish the value of or

unreasonably interfere with the use of any Unit without the Owner's consent;

(m)Subdivision. Subdivision of a Unit into two or more Units, or changing the

boundary lines of any Unit after a subdivision plat including such Unit has been approved and

Recorded, except that Declarant shall be permitted to subdivide or replat Units which it owns;

(n)Use of Lakes. Swimming, boating, use of personal flotation devices, or other

active use of lakes, ponds, streams, or other bodies of water within the Properties, except that

fish i ng from the shore shall be permitted with appropriate licenses and Declarant, its successors

and assigns, shall be permitted and shall have the exclusive right and easement to draw water

from lakes, ponds, and streams within the Properties for purposes of irrigation and such other

2

purposes as Declarant shall deem desirable. The Association shall not be responsible for any

loss, damage, or injury to any person or property arising out of the authorized or unauthorized

use of rivers, lakes, ponds, streams, or other bodies of water within or adjacent to the Properties;

(o)Timeshares. Use of any Unit for operation of a timesharing, fraction-sharing, or

similar program whereby the right to exclusive use of the Unit rotates among participants in the

program on a fixed or floating time schedule over a period of years, except that Declarant and its

assigns may operate such a program with respect to Units which it owns;

(p)Firearms. Discharge of firearms; provided, the Board shall have no obligation to

take action to prevent or stop such discharge;

( q) Fuel Storage. On-site storage of gasoline, heating, or other fuels, except that a

reasonable amount of fuel may be stored on each Unit for emergency purposes and operation of

lawn mowers and similar tools or equipment, and the Association shall be permitted to store fuel

for operation of maintenance vehicles, generators, and similar equipment;

(r)Home Occupations. Any business, trade, garage sale, moving sale, rummage

sale, or similar activity, except that an Owner or occupant residing in a Unit may conduct

business activities within the Unit so long as:

(i)the existence or operation of the business

activity is not apparent or detectable by sight, sound, or smell from outside the Unit;

(ii)the

business activity conforms to all zoning requirements for the Properties;

(iii)the business activity

does not involve door-to-door solicitation of residents of the Properties;

(iv)the business activity

does not, in the Board's reasonable judgment, generate a level of vehicular or pedestrian traffic or

a number of vehicles being parked in the Properties which is noticeably greater than that which is

typical of Units in which no business activity is being conducted; and

(v)the business activity is

consistent with the residential character of the Properties and does not constitute a nuisance, or a

hazardous or offensive use, or threaten the security or safety of other residents of the Properties,

as may be determined in the sole discretion of the Board.

The terms "business" and "trade," as used in this provision, shall be construed to have

their ordinary, generally accepted meanings and shall include, without limitation, any occupation,

work, or activity undertaken on an ongoing basis which involves the provision of goods or

services to persons other than the provider's family and for which the provider receives a fee,

compensation, or other form of consideration, regardless of whether:

(i)such activity is engaged

in full or part-time,

(ii)such activity is intended to or does generate a profit, or

(iii)a license is

required.

Leasing of a Unit shall not be considered a business or trade within the meaning of this

subsection This subsection shall not apply to any activity conducted by Declarant or a Builder

approved by Declarant with respect to its development and sale of the Properties or its use of any

Units which it owns within the Properties, including the operation of a timeshare or similar

program.

"Leasing," for purposes of this Paragraph, is defined as regular, exclusive occupancy of a

Unit by any person, other than the Owner for which the Owner receives any consideration or

3

benefit, including, but not limited to, a fee, service, gratuity, or emolument. All leases shall be

in writing. The Board may require a minimum lease term, which is currently not less than 12

months. Notice of any lease, together with such additional information as may be required by

the Board, shall be given to the Board by the Unit Owner within seven days of execution of the

lease. The Owner must make available to the lessee copies of the Declaration, By-Laws, and the

Restrictions and Rules;

( s) Wildlife. Capturing, trapping, or killing of wildlife within the Properties, except

in circumstances posing an imminent threat to the safety of persons using the Properties;

(t)Nature. Any activities which materially disturb or destroy the vegetation,

wildlife, wetlands, or air quality within the Properties or which use excessive amounts of water

or which result in unreasonable levels of sound or light pollution;

(u)Garage Conversions. Conversion of any carport or garage to finished space for

use as an apartment or other integral part of the living area on any Unit without prior approval

pursuant to Article IV;

(v)Motorized Vehicles. Operation of motorized vehicles on pathways or trails

maintained by the Association, except that golf carts may be operated on cart paths intended for

such purposes; and

(w)Construction. Any construction, erection, placement, or modification of any

thing, permanently or temporarily, on the outside portions of the Unit, whether such portion is

improved or unimproved, except in strict compliance with the provisions of Article IV of the

Declaration This shall include, without limitation, signs, basketball hoops, swing sets, and

similar sports and play equipment; clotheslines; garbage cans; woodpiles; above-ground

swimming pools; docks, piers, and similar structures; and hedges, walls, dog runs, animal pens,

or fences of any kind.

(x)Irrigation. Sprinkler or irrigation systems or wells of any type which draw upon

water from lakes, creeks, streams, rivers, ponds, wetlands, canals, or other ground or surface

waters within the Properties, except that Declarant and the Association shall have the right to

draw water from such sources.

(y)Antennas. Satellite dishes, antennas, and similar devices for the transmission of

television, radio, satellite, or other signals of any kind, except that Declarant and the Association

shall have the right, without obligation, to erect or install and maintain any such apparatus for the

benefit of all or a portion of the Properties; and

(i)satellite dishes designed to receive direct

broadcast satellite service which are 18" or less in diameter;

(ii)satellite dishes designed to

receive video programming services via multi-point distribution services which are 18" or less in

diameter or diagonal measurement; or

(iii)antennas designed to receive television broadcast

signals ((i), (ii), and (iii), collectively, "Permitted Devices") shall be permitted, provided that any

such Permitted Device is placed in the least conspicuous location on the Unit (generally being the

4

rear yard) at which an acceptable quality signal can be received and is not visible from the street,

Common Area, or neighboring property or is screened from the view of adjacent Units and the

street in a manner consistent with the Community-Wide Standard and the standards, unless such

screening unreasonably interferes with the use of such Permitted Device.

(z)Yard Decorations. No yard ornaments, fountains, statues, lights, artificial plants

or other permanent outdoor decorations, unless approved pursuant to Article IV.

5

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.

Text for this source page is queued for review.