APPENDIX 14 PUBLIC OFFERING STATEMENT

Transcription

1 PUBLIC OFFERING STATEMENT This Public Offering Statement is appropriate for a new construction condominium project which contains both garden apartments and townhomes. Different provisions will apply for conversion projects and for other types of Units. PUBLIC OFFERING STATEMENT FILED AND PRESENTED BY, a New Jersey (corporation/partnership) having an office at Avenue,, New Jersey for Condominium Units located in Borough/City of, County, New Jersey and designated as CONDOMINIUM NOTICE TO PURCHASERS: THIS PUBLIC OFFERING STATEMENT IS FOR INFORMATIONAL PURPOSES ONLY. PURCHASERS SHOULD ASCERTAIN FOR THEMSELVES THAT THE PROPERTY OFFERED MEETS THEIR PERSONAL REQUIREMENTS. THE NEW JERSEY DIVISION OF CODES AND STANDARDS, BUREAU OF HOMEOWNERS PROTECTION, DEPARTMENT OF COMMUNITY AFFAIRS HAS NEITHER APPROVED NOR DISAPPROVED THE MERITS OF THIS OFFERING. BE SURE TO READ CAREFULLY ALL DOCUMENTS BEFORE YOU SIGN THEM. THIS PUBLIC OFFERING STATEMENT HAS BEEN FILED AND IS PRESENTED PURSUANT TO THE PLANNED REAL ESTATE DEVELOPMENT FULL DISCLOSURE ACT (N.J.S. 45:22A-21 ET SEQ.) AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (N.J.A.C. 5:26-1 ET SEQ.). EFFECTIVE DATE OF PUBLIC OFFERING STATEMENT: REGISTRATION NUMBER: PUBLIC OFFERING STATEMENT FOR CONDOMINIUM TABLE OF CONTENTS PAGE 1. Introduction 2. Description of Interest To Be Offered 3. Description of the Property 4. Community Information 5. Maintenance, Management and Operation of Common Elements 6. Budget and Common Expenses

2 7. Improvements 8. Management Agreement and Service Contracts 9. Relationship Between Developer and Managing Agent 10. Restrictions on Occupancy, Alienation and Alteration of the Units 11. Instruments to be Delivered to Purchaser 12. Deposits and Other Monies Paid Prior to Closing 13. Easements, Encumbrances and Restrictions 14. Natural and Artificial Forces 15. Real Estate Taxes and Special Assessments 16. Settlement Costs and Closing of Title 17. Limited Warranty, Appliances and Insulation Information 18. Other Developments 19. Insurance 20. Rights and Obligations of Developer 21. Units Acquired by the Association 22. Financing and Terms of Purchase 23. General EXHIBITS [Ed. Note: These Exhibits are not included in the sample document] 1. Master Deed A. Legal (Metes and Bounds) Description of Property B. Survey/Site Plan C. Architectural Drawings and Floor Plans D. Certificate of Incorporation of Condominium Association, Inc. E. By-Laws of Condominium Association, Inc. F. Schedule of Percentage Interest in Common Elements G. Chart of Maintenance Responsibilities H. Rules and Regulations 2. Estimated Operating Budget for First Full Year of Operation, Estimated Common Expense Assessments and Letters of Budget and Insurance Adequacy 3. Subscription and Purchase Agreement 4. Unit Deed 5. Management Agreement 6. Specimen of Title Insurance Policy 7. Flood Zone Status 8. Escrow Certification, Escrow Agreement and Down Payment Bond FOREWORD ANY PROSPECTIVE PURCHASER WHO ENTERS INTO A SUBSCRIPTION AND PURCHASE AGREEMENT CAN, AS A MATTER OF RIGHT, CANCEL THE AGREEMENT, WITHOUT CAUSE, BY DELIVERING WRITTEN NOTICE OF CANCELLATION TO THE DEVELOPER BY MIDNIGHT OF THE SEVENTH CALENDAR DAY FOLLOWING THE DAY ON WHICH THE AGREEMENT IS EXECUTED, AND ALL MONIES PAID WILL BE PROMPTLY REFUNDED IN THEIR ENTIRETY. 1. INTRODUCTION, a New Jersey corporation/partnership organized under the laws of the State of New Jersey (the Developer ), having its principal office at, New Jersey, presents herewith its Public Offering Statement for the establishment of a plan of condominium ownership (the Plan ) with respect to

3 PUBLIC OFFERING STATEMENT approximately acres of land located in the City/Borough of, County, New Jersey (the Property ) and the residential dwellings (the Units ) located in buildings, together with certain other improvements. The Condominium shall be known as Condominium (the Condominium ). The Units will be of the following types: (Apartment Units, Townhouse Units), as more fully described in Section 2 hereof. A legal (metes and bounds) description of the property is appended as Exhibit A to the Master Deed (Exhibit 1 to the Public Offering Statement) for Condominium and is graphically depicted in Exhibit B thereto. The creation of the Condominium is governed by the New Jersey Condominium Act, N.J.S. 46:8B-1 et seq. The Planned Real Estate Development Full Disclosure Act, N.J.S. 45:22A-21 et seq., and the Regulations adopted thereunder, govern the offering for sale of all of the Units. All multiple dwellings in New Jersey are subject to the Hotel and Multiple Dwelling Law (N.J.S. 55:13A- 1), including those which are held under the condominium form of ownership. This law governs the maintenance and upkeep of the residential structures. Condominium Association, Inc., a not-for-profit corporation formed under N.J.S. 15A:1-1 et seq. (the Association ) will be responsible under this law for the abatement of all violations which it has the power to abate and for the payment of registration and inspection fees. Unit Owners may be required to abate violations within their individual Units. The Condominium form of ownership will be established by the recording of the Master Deed in the office of the Clerk/Register of County (the Master Deed ), a copy of the proposed form of which is annexed hereto as Exhibit 1. The Master Deed will pertain to the Property as an entirety, and will be recorded by the Developer prior to the closing of title to the first Unit in the Condominium. The Condominium will be managed and administered by the Association. The Developer has or will file a Certificate of Incorporation for the Association as required by law. A copy of the Certificate of Incorporation of the Association is annexed as Exhibit D to the Master Deed. Each Unit Owner will automatically become a member of the Association by virtue of acceptance of a Deed to his Unit. No membership certificates will be issued. The By-Laws of the Association will be in the form set forth in Exhibit E of the Master Deed. The By-Laws provide for the election of the Board of Trustees and of the Officers and their respective duties and powers, the time, place and conduct of meetings of Members of the Association, meetings of the Board of Trustees and, in general, procedures to be followed in relation to the governance and operations of the Association. The Master Deed and its exhibits, together with all other Exhibits annexed hereto are an integral part of this Public Offering Statement and are incorporated by reference wherever referred to. The Developer recommends that these documents be carefully examined by prospective purchasers and their legal and financial advisors. 2. DESCRIPTION OF INTEREST TO BE OFFERED The interest held by the owner of a Unit in the Condominium ( Unit Owner ) consists of two distinct but inseparable interests in real property. One is the sole ownership in fee simple of the Unit itself, and the other is the ownership of an undivided interest in the Common Elements in common with all of the other Unit Owners.

4 Townhome Units generally consist of the space bounded by an imaginary plane along and coincident with the underside of the ceiling joists of the Unit, an imaginary plane along and coincident with the unexposed surface of the ground floor or floor joists of the Unit, as the case may be, and imaginary planes along and coincident with the innermost surfaces of the studding of the perimeter walls of the Unit. Apartment Units generally consist of the space bounded by an imaginary plane along and coincident with the innermost surface of the ceiling joists of the Unit, an imaginary plane along and coincident with the unexposed surface of the ground floor or floor joists of an Apartment Unit, and imaginary planes along and coincident with the innermost surfaces of the studding of the perimeter walls of the Unit. A more specific delineation of the Units is set forth in Article III of the Master Deed. Although a Unit Owner is subject to certain restrictions on the use of his Unit which are contained in the Master Deed and By- Laws, a Unit Owner is entitled to the sole possession of his Unit, and may generally decorate the interior of his Unit as he chooses, subject to such Rules and Regulations as may be adopted by the Association. In addition, a Unit Owner is responsible for the maintenance of the interior of the Unit as well as its doors and windows and must pay the cost of any utilities that are individually metered and utilized in his Unit. A Unit Owner also owns an undivided proportionate interest in the Common Elements of the Condominium, which include, but are not limited to, such things as the parking areas, amenities, the land on which the buildings are erected, the undeveloped land within the Condominium, the exterior, footings and foundations of all buildings, roadways, hallways, stairways, lobbies, open spaces, and any Units, equipment, furniture or other property which is owned by the Association. Under Article IV of the Master Deed, the Common Elements are separated into three categories. General Common Elements can be broadly described as those which are for the use and benefit of all Units, regardless of type. Limited Common Elements are those which are for the exclusive use of certain Units, such as balconies, patios or stoops attached or adjacent to specific Units. The Board of Trustees is also authorized to designate, for the use and benefit of one or more Unit Owners to the exclusion of other Unit Owners on either a short term or long term basis, portions of the Common Elements as Reserved Common Elements. The Developer recommends that each prospective purchaser consult Article IV of the Master Deed for a more complete delineation of the various types of Common Elements. All Unit Owners have access to the General Common Elements, while access to the Limited Common Elements is restricted to certain Unit Owners. Access to Reserved Common Elements, if any, is restricted to certain Unit Owners, or to such non-unit Owners, as may be designated by the Board. The Percentage Interest of each Unit Owner in the Condominium has been established at the sole discretion of the Developer and is expressed as a percentage of the whole in Exhibit F to the Master Deed. The aggregate Percentage Interests of all Units incorporated within the Condominium will equal one hundred percent (100%). The percentage interest of the Unit Owner is utilized to allocate the casualty insurance proceeds paid for any damage to the Common Elements among the Unit Owners, as well as those proceeds resulting from any condemnation or other disposition thereof. The responsibility for the administration, operation and maintenance of the Common Elements lies with the Association, a nonprofit corporation in which each Unit Owner is automatically a member. Each Unit Owner will be responsible to pay a proportion of the expenses incurred by the Association for the administration, management, maintenance, repair and replacement of the Common Elements of the Condominium ( Common

5 PUBLIC OFFERING STATEMENT Expenses ). The proportionate share to be paid by each Unit Owner will be equivalent to the particular Unit s appurtenant Percentage Interest. The Common Expenses are discussed in more detail in Section 6 hereof. When a Unit Owner takes title to his Unit at the closing, the Unit Owner will make a non-refundable capital contribution to the Association equal to two months Common Expense Assessment installment, to be used by the Association for working capital. At the closing, each Unit Owner will also be required to contribute to the Association a non-refundable membership fee in the amount of $ to establish a Transition Expense Fund for the benefit of the Unit Owners other than the Developer. Upon the completion of transition and the formal release of Sponsor from all liability with respect to the Common Elements and Other Improvements but not for warranty obligations for individual Units, any surplus monies remaining in the Transition Expense Fund shall be promptly transferred by the Treasurer into the Capital Repair and Replacement Account of the Association to be used as an offset against the budgeted expense for such Account and credited against common expense assessments for the same fiscal year when such transfer is made. The ownership of the Common Elements cannot be legally partitioned and thereby transformed from a Percentage Interest in all of the Common Elements to an exclusive interest in a portion thereof. In addition, each prospective purchaser should be aware that the Unit Owner s title to the Unit itself cannot be separated from his Percentage Interest in the Common Elements. The interest held by a Unit Owner in the Condominium is similar to many other ownership interests in real property with respect to the rights and obligations which attach thereto. A Unit can be mortgaged provided that the mortgage loan is procured from a bank, insurance company, savings and loan association or other recognized institutional lender or is a purchase money mortgage made by a present owner of the Unit, including the Developer. A default under a mortgage encumbering any particular Unit does not affect the other Units, except to the extent that all Unit Owners may be required to contribute to assessments which are intended to compensate for delinquent and unpaid common expenses for other Units. In addition, a Unit Owner is permitted to lease his Unit, although there are certain restrictions imposed under Article XI of the Master Deed such as that which requires a lease to be for a minimum term of six (6) months unless to a bona fide contract purchaser. Restrictions on leasing as contained in the Master Deed do not apply to the Developer. A Unit Owner is also responsible for the payment of the real estate taxes which are assessed against his Unit. The failure of any particular Unit Owner to pay real estate taxes that are due does not result in the imposition of any liability for those taxes on the remaining Unit Owners. Based on the tax laws existing as of the date of this Public Offering Statement, each individual Unit Owner who resides in his Unit and itemizes his federal income tax deductions is entitled to deduct from his gross income for federal income tax purposes the real property taxes assessed against his Unit and the interest paid by him on any mortgage indebtedness encumbering his Unit. The actual amount of any federal income tax deduction may increase or decrease as the amount of real estate taxes or mortgage interest actually paid by each Unit Owner changes. The relative value of any such deduction available to each Unit Owner will depend on his income tax bracket. Neither the Developer, the Association, any real estate broker or sales agent that might be retained by the Developer for the purpose of advertising and promoting the sale of Units offered hereunder, nor any of their agents or employees, hereby may make or are authorized to make any representation whatsoever as to the availability of the right or ability of any

6 purchaser to deduct for federal income tax purposes monies spent by a Unit Owner on account of the ownership of a Unit. Any statement to the contrary is void. If the Unit qualifies as the Unit Owner's principal residence or second residence, the Unit Owner may deduct mortgage interest to the extent that the interest is attributable to loans not exceeding the original purchase price of the Unit plus the cost of any home improvements, unless the excess mortgage indebtedness is incurred for educational or medical expenses. In the case of a principal residence or second residence, the Unit Owner must choose to itemize his deductions from adjusted gross income. The amount of any federal income tax deduction may increase or decrease according to the amount of mortgage interest actually paid by the Unit Owner. Real property taxes assessed and paid on the Unit Owner's principal residence or second residence will also be deductible without limitation for federal income tax purposes if the Unit Owner chooses to itemize his deductions. For New Jersey gross income tax purposes the Unit Owner will not be able to deduct mortgage interest, but may deduct the greater of the real property taxes assessed against his Unit and paid, or a statutory amount which varies depending upon the Unit Owner's taxable income. In the case of a Unit Owner who does not intend to use his Unit for personal use but rather intends to hold his Unit for investment, the deduction of mortgage interest for federal income tax purposes may be subject to limitation under the investment interest limitation rules, passive loss rules and at-risk rules. The deductibility of real property taxes for federal income tax purposes will also be subject to the passive loss rules and at risk rules. The Unit Owner who holds his Unit for investment is not required to itemize his deductions as a prerequisite to deducting such expenses. For New Jersey gross income tax purposes a Unit Owner who holds his Unit for investment may reduce his rental income without limitation by the ordinary and necessary expenses incurred in connection with the production of such income, including mortgage interest and real property taxes. However, the Unit Owner is not permitted to utilize his rental expenses to reduce his income from non-rental sources. The exact amount by which a Unit Owner will reduce his income tax will depend upon his particular income tax bracket. Neither the Developer, the Association nor any of their agents or employees make or are authorized to make any other representation whatsoever as to the right or ability of any purchaser to claim and deduct for federal or New Jersey state income tax purposes monies spent by a Unit Owner on account of the ownership of the Unit. Any statement to the contrary is void. Purchasers should consult their personal legal and financial advisors to determine whether any deductions are available to them. Under Article X of the Master Deed, the Developer and the Association are given the right to amend the Condominium Documents, without the consent of the Unit Owners, under certain circumstances. This right is called a power of attorney and is granted to the Developer and the Association by each Unit Owner when he accepts the deed to his Unit. This power of attorney may only be exercised if an amendment is required (i) by law or any governmental agency; (ii) by any title insurance company insuring any portion of the Condominium at the Developer s request; and (iii) by any Institutional Lender designated by the Developer. However, the written consent of an affected Unit Owner must be obtained first if the amendment changes the floor plan of a Unit, reduces a Unit s Percentage Interest in the Common Elements, increases the financial obligations of a Unit Owner or reserves special or additional privileges for the Developer. The Developer has the right to exercise this power from the date the first Unit is

7 PUBLIC OFFERING STATEMENT conveyed to an individual purchaser or until the last Unit is sold; thereafter, this power of attorney can only be exercised by the Association. The Association is also granted a power of attorney under Section of the Master Deed. The power of attorney authorizes the Association to acquire, sell or lease Units from any Unit Owner and to mortgage any Unit which it owns. Prospective purchasers are urged to consult the appropriate sections of the Master Deed for a more complete explanation of these powers of attorney. The principal purpose of this offering is the sale of the Units for use as residences by purchasers, with the ordinary concomitants of home ownership, subject to the unique features of condominium ownership as set forth in detail herein. This offering does not involve: (i) any rental arrangement or other similar service with emphasis on the economic benefits to the purchaser from rental of the Units to be derived from the managerial efforts of the Developer, or a third party designated or arranged for by the Developer; or (ii) the offering of participation in a rental pool arrangement; or (iii) the offering of a rental or similar arrangement whereby the purchaser must hold his Unit available for any part of the year or must use an exclusive rental agent or is otherwise similarly restricted materially in his occupancy or rental of his Unit. The Units are not offered or sold with emphasis on the economic benefits to the purchaser which may result from capital appreciation or from the managerial efforts of others, nor is it intended that the Public Offering Statement lead a purchaser to expect profits of any sort from the efforts of the Developer or a third party. Each prospective purchaser should be aware that, as a Unit Owner, he will be bound by the terms of the Master Deed and By-Laws and any Rules and Regulations promulgated or adopted by the Board of Trustees of the Association, as well as any amendments or supplements to those documents. The Unit Owner s interest in the Condominium is defined and governed by these documents as well as by the New Jersey Condominium Act and settled common law principles of property ownership. The Master Deed and its exhibits, together with all other Exhibits annexed hereto, are an integral part of this Public Offering Statement and are incorporated by reference wherever referred to. The Developer recommends that these documents be carefully examined by prospective purchasers and their legal and financial advisors. 3. DESCRIPTION OF THE PROPERTY The Condominium is located on Street in the City/Borough of, County, New Jersey. The parcel of land encompasses acres and is presently designated as Block, Lot on the Tax Map of the City/Borough of. The Property is located in the zone pursuant to the current zoning ordinance of the City/Borough of, as presently enacted. The permitted uses within this zone are. To the best of the Developer s knowledge, information and belief, the property is in compliance with all applicable ordinances and governmental regulations. [Ed. Note: This section continues with a discussion of the zoning, permitted uses and existing use of the lands surrounding the Property to the north, south, east and west.] The Developer has no knowledge and can make no representation that the present zoning scheme adopted by the City/Borough of or that the existing use of adjacent lands will continue as presently constituted. The Developer has no

8 knowledge of any intent of adjacent property owners to change the present use of those lands. There will be residential units located within buildings. The relative location of the Buildings is graphically displayed on the Survey/Site Plan that appears as Exhibit B to the Master Deed. [Ed. Note: This section continues with a discussion of each unit type which includes approximate square footage, number of bedrooms and bathrooms, types of rooms and the types of common elements such as storage facilities, parking facilities and recreational amenities.] The model types described above are shown on Exhibit C of the Master Deed. Any areas and dimensions of the Units depicted on Exhibit C of the Master Deed are only approximations. The actual areas and dimensions may be different. THE DEVELOPER EXPRESSLY DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, WITH REGARD TO THE ACCURACY OF THESE VERBAL AND GRAPHIC APPROXIMATIONS. ARCHITECTURAL DRAWINGS REFLECTING ACTUAL MODEL TYPES, AREAS AND DIMENSIONS WILL BE DEPICTED IN THE MASTER DEED AT THE TIME OF RECORDATION IN THE COUNTY CLERK'S OFFICE. The Developer reserves the right to offer building types and Unit types in the Condominium other than those discussed and depicted in this offering. The Developer can exercise this right by registering an appropriate amendment to this Public Offering Statement with the New Jersey Department of Community Affairs. In any event, the Developer will also have to comply with applicable requirements of all laws, ordinances, codes and other governmental regulations relating to the Property in order to modify the building or Unit types. Such modification and/or amendment may include changing the aggregate number of Units contemplated for the Condominium, as well as the configuration, design, mix, materials, model types or Percentage Interest of any unsold Units or of any Common Elements which have not been legally designated for a specific Unit which has been sold to an individual purchaser by the Developer. In the Master Deed, the Developer has reserved the right to use one or more Units as models or a sales office or both until it has sold the last Unit within the fully developed Condominium. The Developer may use the Units indicated on the Condominium Site Plan, or it may choose to locate the sales office and models elsewhere within the Property. This reserved right shall continue for so long as the Developer continues to offer Units for sale in the regular course of business but shall in no event exceed ten (10) years from the date of recordation of the Master Deed. Prospective purchasers should consult the exhibits to the Master Deed for the purposes of familiarizing themselves with the location of all improvements and for ascertaining the location of any particular Unit in which they may be interested. Unit Owners other than the Developer will be limited to use of their Units for residential purposes. In addition to the Buildings, Units and Common Elements described herein, the Condominium will also contain those other site improvements shown on the Survey. The gas or electricity required to operate the heating and air conditioning system or otherwise utilized for individual Units will be independently metered and billed to each Unit Owner and will not be part of the Assessment collected by the Association. Water and sewer for individual Units will also be independently metered and billed to each Unit Owner and will not be part of the Assessment collected by the Association. Unit Owners will also pay for their own telephone service. If a Unit Owner wants cable television service, that Unit Owner must pay the connection and subscription cost for his own Unit.

9 PUBLIC OFFERING STATEMENT Unit Owners, their respective families and guests, shall be entitled to equal use of common facilities subject to such rules, regulations, limitations and conditions as may from time to time be imposed by the Association acting through its Board of Trustees. Unit Owners may, by written agreement and upon notice to the Board, delegate their right of enjoyment and use of the parking and other common elements to their permitted lessees. Maintenance, repair, and replacement of the physical structure or property which are within or part of a Unit shall be the responsibility of each Unit Owner, individually. 4. COMMUNITY INFORMATION [Ed. Note: This section includes a wide variety of information that describes the surrounding community. It is presented in narrative form with each paragraph discussing a different topic, as follows: (a) The location of the Property and its distance in miles from neighboring municipalities. In addition, northern New Jersey condominiums generally include distances in miles to New York City and Newark, while southern New Jersey condominiums generally include distances in miles to Trenton, Atlantic City and Philadelphia. (b) The location of the nearest train stations and bus stops and the distance in miles from the Property. (c) The location of airports and the distance in miles from the Property. (d) The hospitals convenient to the Property, including addresses and distance in miles from the Property. (e) The schools that students in the Condominium will attend, including grade levels and addresses, and the distance in miles from the Property. Colleges and universities convenient to the Property should also be included. (f) The places of worship convenient to the Property. (g) The address, distance in miles from the Property and number of paid employees and/or volunteers of the Police Department, Fire Department and First Aid Squad. (h) The shopping facilities convenient to the Property. (i) The recreational facilities and cultural events convenient to the Property.] The Developer has not reserved any right to use any off-property public or private recreational facility on behalf of Unit Owners. Interested prospective purchasers should contact such facilities directly to ask about the availability of membership and use fees, if applicable. Water for the Property is supplied by the Water Company. Company supplies electric service. Gas service is provided by the Company. Telephone service is provided by New Jersey Bell Telephone Company. The sewage system is maintained by the. Cable television service is provided by under individual contract with any interested Unit Owner. A copy of correspondence from the Borough/City of to the Developer dated, 20 confirming the municipality's support of certain municipal services required under N.J.S. 40:67.23 et seq. is included in Exhibit 2 of this Public Offering Statement. 5. MAINTENANCE, MANAGEMENT AND OPERATION OF COMMON ELEMENTS Upon acceptance of a Deed to a Unit, each Owner shall become a Member of the Association and shall be a Member for so long as he shall hold legal title to his Unit, subject to all provisions of the Condominium Documents and the New

10 Jersey Condominium Act, as same may now or hereafter be amended. In addition, without the payment of any capital contribution, fee or other charge, the Developer has one membership in the Association for each Unit, completed or prospective, which has not been conveyed to an individual purchaser. The Association is charged with the responsibility for the maintenance, management and operation of the Common Elements. This responsibility is discharged through a Board of Trustees (the Board ), which is empowered by the terms of the By- Laws to employ any person, firm or corporation to assist it in the performance of its duties. As long as the Developer is in control of the Board, it plans to enter into a contract on behalf of the Association with a management company to provide for the performance of such administrative duties as the awarding of maintenance contracts, collecting of Assessments, day-to-day maintenance of the Property, and providing bookkeeping and limited secretarial services to the Association. Sections 8 and 9 of this Public Offering Statement provide further information regarding these arrangements for management and maintenance. The manner in which Trusteeships are filled is set forth in Article IV of the By- Laws. Initially the Board will be composed of three individuals appointed by the Developer, none of whom need be a Unit Owner. As Units within the Condominium are conveyed by the Developer, the number of Trustees will be expanded from three (3) to five (5) and Unit Owners will be elected to the Board to replace the Developer appointed Trustees. This turnover of control of the governance of the executive board of the Association from the Developer to the Unit Owner is required by New Jersey law and is based upon the total number of Units contemplated by the Developer for the Condominium. Until the first annual meeting of the Association, which is to take place within thirty (30) days after the Developer conveys ( ) Units to individual purchasers (25% of the total number of Units contemplated for the Condominium), the Board will consist of three (3) individuals chosen by the Developer, none of whom need be a Unit Owner. At the first annual meeting, the Board will be reconstituted to consist of five (5) Trustees, three (3) of whom will be appointed by the Developer and two (2) of whom will be elected by Unit Owners other than the Developer. The elected Trustees will serve for three-year terms, and the appointed Trustees will serve for two-year terms. Within thirty (30) days after Unit Owners other than the Developer own Units (75% of the total number of Units contemplated for the Condominium), the Board shall again be reconstituted, and Unit Owners other than Developer shall be entitled to elect the entire Board; except that the Developer shall be entitled to appoint one (1) member of the Board for so long as Developer owns and holds for sale at least one (1) Unit in the ordinary course of business. Unit Owners other than the Developer shall elect the remaining three Trustees. Two of these Trustees will be elected for two-year terms and the remaining Trustees for three-year terms so that, eventually, all Trustees will be elected for staggered two-year terms, with three Trustees being elected in one year, and the remaining two Trustees being elected in the following year. The Developer may relinquish its rights to appoint a majority of said Trustees at any time, in its sole discretion, provided that the Unit Owners, by majority vote, agree to assume control pursuant to N.J.A.C. 5:26-8.4(d). Despite any assumption of control of the Board by Unit Owners other than the Developer, until the Developer has sold every Unit in the Condominium, the Board is prohibited by law from taking any action which may discriminate against the Developer, or which would be detrimental to the sales or leasing of Units owned by the Developer. The Board will be required to continue the same level and quality of maintenance, operation and services as that provided immediately

11 PUBLIC OFFERING STATEMENT prior to the assumption of control of the Association by Unit Owners other than the Developer until the Developer sells the last Unit owned by it in the ordinary course of business. Each Trustee shall be elected by a majority vote of the Unit Owners entitled to vote for him. [Ed. Note: For discussion of the authority for this voting scheme, see Chapter 6, Section 6:6.05.] The Developer shall not have the right to vote for any Trustees to be elected by Unit Owners other than the Developer. Other details concerning the turnover of control by the Developer to Unit Owners other than the Developer are set forth in Article IV of the By-Laws of the Association. The Association will be responsible for the administration, maintenance, and operation of all common facilities as and from the date they are available for use by Unit Owners, including any necessary replacement of equipment, furniture and other personal property used in connection therewith. Each Unit Owner shall be entitled to equal use of common facilities and such use shall also be available to their respective families and guests subject, however, to such rules, regulations, limitations and conditions as may from time to time be imposed by the Board. Unit Owners may, by written agreement and upon notice to the Board, delegate their right of enjoyment and use of the common facilities to their permitted lessees; however, no Unit Owner shall have the right to use same during the tenancies of any permitted lease of his Unit. 6. BUDGET AND COMMON EXPENSES Article VI of its By-Laws requires the Association to prepare an annual budget which reflects the anticipated Common Expenses for the ensuing fiscal year. Common Expenses include, but are not limited to, the estimated costs for the operation, maintenance and administration of the Common Elements for the Condominium, including reserves. The estimated annual budget for the Condominium, based upon first year occupancy of the Condominium and prevailing costs for 20, appears as Exhibit 2 of this Public Offering Statement. Included with the estimated budget is an estimate of the initial annual Common Expense assessments to be levied against the Units as well as letters of budget and insurance adequacy. The funds necessary to meet the Common Expenses contemplated by the annual budget are acquired by the Association through the assessment of an annual charge (the Annual Common Expense Assessment ) which is to be paid by each Unit Owner in monthly installments on the first day of each month. The Annual Common Expense Assessment borne by each Unit is based on the Common Expenses contemplated under the annual budget, and the allocation of that amount among the Units as provided in the Master Deed and By-Laws. The estimated Annual Common Expense Assessment for each Unit during the first year of the Condominium s operation may be found at Exhibit 2. The Developer will be obligated to pay Common Expense Assessments only for those Units within the Condominium to which it holds title and for which the City/Borough of has issued a Certificate of Occupancy. The Developer has reserved the right, however, while it controls the Association, to subsidize any deficit in the operating expenses of the Association, which subsidy may be terminated unilaterally by the Developer at any time. The Developer hereby represents that in the event such subsidy is undertaken, it is the Developer s intent to subsidize budget deficits which are beyond the Developer s control and not for the purpose of artificially reducing common expenses payable by Unit Owners other than the Developer during the period of the Developer s control of the Board of Trustees.

12 The Budget is not intended, and should not be taken to constitute a guarantee by anyone that Common Expenses or other income or expenses for the first or succeeding fiscal years of operation of the Association will be as set forth in the Budget and it is likely that actual Common Expenses, other income and expenses will vary from the amounts shown. The Developer has not undertaken to guarantee the amount of Common Expenses payable by Unit Owners or to assess responsibility for any increase in the amounts as presently projected. The Developer s sole liability in respect to Common Expenses will be to pay the amounts assessed against Units owned by the Developer, if any. If the costs incurred by the Association for any particular year exceed those which are estimated, the Board can impose a special assessment to cover the deficiency. In addition, the Board of Trustees is empowered under the terms of Article of the Master Deed to levy a special assessment to defray the cost of any emergency or other repair, replacement or improvement of the Common Elements. Any repair, replacement or improvement which is not of an emergency nature and which exceeds in the aggregate more than ten percent (10%) of the Annual Common Expense Assessment provided for in the last annual budget, must receive the assent of two-thirds in interest to be cast by all eligible votes of the Unit Owners at a meeting duly called for this purpose. An expenditure for repair, replacement or improvement of the Common Elements is assessed against the Unit Owners who are benefitted by the assessment in the same manner as the Common Expenses. While the Developer maintains a majority of the Board of Trustees, it shall make no additions, alterations, improvements or purchases not contemplated by this Public Offering Statement which would necessitate a special assessment or a substantial increase in the monthly Common Expenses unless required by a government agency, title insurance company, mortgage lender, or in the event of an emergency. The regular assessments and special assessments are personal obligations of each Unit Owner under the terms of the Master Deed. Payment of these charges is secured by a continuous lien which is placed on each Unit. If any assessment is not paid by a Unit Owner, the Board of Trustees can accelerate the outstanding assessments and institute a lawsuit to foreclose upon the Unit. The Association can also file a lawsuit against a delinquent Unit Owner to compel the payment of any unsatisfied regular or special assessments or other charges due and payable to the Association. Until the conveyance of title to the first Unit, the Sponsor shall be solely responsible for all Common Expenses, including insurance and fidelity bond premiums, if applicable. Following the first conveyance, (i) the Owners to whom title has been conveyed shall be responsible for their proportionate share of all budgeted Common Expenses based upon the full occupancy budget for the completed Condominium, including reserves, and (ii) the Sponsor shall be responsible for the payment of any operating deficit based upon the current annual operating budget, including reserves for completed improvements only, after taking into account any other revenues of the Association. This means that the Sponsor shall pay the difference between (i) the total amount assessed and due from the individual Owners plus any other revenues of the Association, including membership fees collected from the Owners at the time of closing of title to the Unit and (ii) the actual amount of current operating expenses for the Association s fiscal year, including reserves for completed improvements. The reserve schedule shall be updated periodically. The Sponsor shall not be responsible for Owner delinquencies that are not the result of the Sponsor s failure to diligently pursue the collection of same while it is in control of the Board. After the Sponsor relinquishes control of the Board, the Sponsor will no longer be responsible for the payment of any operating deficits, but will pay operating expenses for Units owned by it for which a certificate of occupancy has been issued, including each

13 PUBLIC OFFERING STATEMENT such Unit s proportionate share of replacement reserves for completed common improvements. If multiple Units are located in one building and at least one certificate of occupancy has been issued for a Unit, the Sponsor shall be responsible for replacement reserves for all unsold Units in the building whether completed or under development. At the time of the relinquishment of control of the Board to the Unit Owners, all of the working capital and replacement reserves held by the Association, together with an accounting therefore, shall be delivered to the Unit Owner controlled Board. While the Developer maintains a majority of representation on the Association s Board of Trustees, the Developer shall post, at the Association s expense, a fidelity bond or other guarantee acceptable to the Department of Community Affairs in an amount equal to the annual budget. Beginning with the first anniversary date of the recording of the Master Deed, and for succeeding years thereafter in which the Developer maintains a majority of representation on the Association s Board of Trustees, the amount of the bond or other guarantee shall also include accumulated reserves. The Association is responsible for paying the premiums on such bonds. [Ed. Note. See Section 20.] 7. IMPROVEMENTS The buildings, Units, parking areas, sidewalks, internal drives and other site improvements discussed in Section 3 of this Public Offering Statement are the only improvements contemplated by the Developer. 8. MANAGEMENT AGREEMENT AND SERVICE CONTRACTS The Developer has caused the Association to enter into a contract with, Inc., an experienced manager of multi-family residential property, for the management of the Condominium and to perform the operational and administrative duties of the Board for an annual management fee of $ per unit, payable in equal monthly installments. This contract is for a term of one year, terminable by either party upon thirty days prior written notice. For so long as the Developer appoints a majority of the Board, the Developer anticipates renewing this management contract. A copy of the Management Agreement is appended hereto as Exhibit 5. The Developer does not presently expect to enter into any other service contracts, leases or other contracts or agreements or proposed contracts or agreements affecting the use, maintenance or access of or to any or all of the Common Elements that will be binding upon the Association once the Condominium is under unit owner control. Any contract or agreement affecting the use, maintenance, management or access of or to the Common Elements and facilities entered into between the Developer and itself or a company owned, operated or controlled by it or in which it has a financial interest, prior to Unit Owners being entitled to elect a majority of the Trustees of the Board of Trustees of the Association, shall not be entered into for a period in excess of one (1) year. Further, such contracts or agreements shall not be renewed for periods in excess of one (1) year and the Association may, at the expiration of any one (1) year period, terminate any further renewals or extensions thereof. All contracts and agreements shall automatically terminate ninety (90) days after a majority of Unit Owners other than the Developer control the Board. It is anticipated that the Managing Agent will enter into agreements with independent contractors for lawn care, snow clearing and similar maintenance services. The estimated cost of such services has been included in the estimated operating Budget annexed hereto as Exhibit 2.

14 9. RELATIONSHIP BETWEEN DEVELOPER AND MANAGING AGENT Principals of the Managing Agent of the Condominium,, Inc. are/are not affiliated with the Developer in any way. 10. RESTRICTIONS ON OCCUPANCY, ALIENATION AND ALTERATION OF THE UNITS Under Article X of the Master Deed, certain restrictions are imposed upon the occupancy, right to transfer, and right to alter the Units. These restrictions place limits on such things as keeping pets, parking vehicles, dumping waste, affixing loudspeakers, antennae, or other items to the exterior of the building, and making structural alterations to a Unit. In addition, limitations are placed on the leasing or mortgaging of Units. These are only examples of the types of restrictions on occupancy, transfer, and alterations that have been placed on the Condominium. Prospective buyers must be aware that as Unit Owners they will be bound by these restrictions and any others imposed in the future by the Association. The Association is charged with enforcing these restrictions and may do so by several different means, including the imposition of fines or the institution of appropriate legal action. The prospective purchaser should refer to Article X of the Master Deed and familiarize himself thoroughly with the restrictions before purchasing a Unit. 11. INSTRUMENTS TO BE DELIVERED TO PURCHASER A copy of the Subscription and Purchase Agreement attached hereto and made a part hereof as Exhibit 3 will be executed by the Developer and each purchaser for the purchase of a Unit in the Condominium. A copy of the Rider to Subscription and Purchase Agreement - Notification Regarding Off-Site Conditions which each purchaser is required to acknowledge in writing is appended hereto as Exhibit 3A. The Unit Deed-New Construction in the form attached hereto as Exhibit 4 will be delivered to each Unit Owner. A copy of the Affidavit of Title is appended hereto as Exhibit 4A. No membership certificate in the Association will be delivered. 12. DEPOSITS AND OTHER MONIES PAID PRIOR TO CLOSING All deposit monies paid by a prospective purchaser directly or through his agents or employees will be held in escrow by, Street,, New Jersey, until title to the Unit is transferred or the Subscription and Purchase Agreement is terminated, in a non-interest bearing escrow account known as Condominium Escrow Account maintained at Bank, Street,, New Jersey. No monies shall be released without the written consent of the Escrow Agent. If the Developer posts a bond or other security acceptable to the Division of Codes and Standards, Bureau of Homeowners Protection, of the New Jersey Department of Community Affairs to ensure the return of all the deposit monies to a prospective purchaser upon the termination of his Subscription and Purchase Agreement, the deposit monies need not be held in escrow, but may instead be utilized by Developer as it sees fit. In no event, however, will the monies be released to the Developer prior to the termination of the seven day rescission period provided by the Subscription and Purchase Agreement. No interest will be earned on deposit monies, and no interest on deposit monies will be credited or paid to purchasers. The Escrow Certification, together with the Escrow Agreement and the Down Payment Bond, are appended hereto as Exhibit EASEMENTS, ENCUMBRANCES AND RESTRICTIONS A. The Property is presently encumbered by the following mortgage(s): (1) A mortgage made by the Developer, as mortgagor, and, as mortgagee, dated, and recorded in the County Clerk/

15 PUBLIC OFFERING STATEMENT Register s office in Mortgage Book, Page et seq. and having an original principal amount of $ (the Mortgage ). [Ed. Note: All other Mortgages are disclosed in this manner. A discussion of the specific terms of the mortgage follows.] B. The Property is presently subject to the following easements and restrictions of record, and the easements contained herein. C. The Property will also be subject to the following perpetual easements which shall apply and run to each Unit Owner, his successors and assigns, which shall be for the benefit of all owners and occupants of Units in the Condominium and their invitees: (1) A non-exclusive easement in, upon, over, under, across and through the Common Elements to keep, maintain, use, operate, repair and replace his Unit in its original position and in every subsequent position to which it changes by reason of the gradual forces of nature and the elements; (2) An exclusive easement for the existence and continuance of any encroachment by his Unit upon any adjoining Unit or upon any Common Element, now existing or which may come into existence hereafter as a result of construction, repair, shifting, settlement, movement of any portion of a Building or a Unit, or as a result of condemnation or eminent domain proceedings, so that any such encroachment may remain undisturbed so long as the Building(s) stands; (3) A non-exclusive easement for ingress and egress to his Unit in, upon, under, over, across and through the Common Elements; (4) An exclusive easement to use and enjoy the surfaces of the main walls (including any windows, skylights, doors, fireplace and chimney therein), ceilings, floors, stairways, stairwells, foyer, balconies or terraces servicing his Unit; (5) An easement in common with the Owners of all other Units to use all pipes, wires, ducts, cables, conduits, public utility lines, cable and master antenna television lines, water and sewer systems or other Common Elements located within any of the other Units or Common Elements and serving his Unit; (6) A perpetual and non-exclusive easement for access to and enjoyment of the common facilities and recreational amenities within the Condominium; however, the privilege to use such easement may be denied by the Board during any period when the Unit Owner's membership in the Association is deemed not to be in good standing, subject to the right of the Board to: (a) promulgate Rules and Regulations for the use and enjoyment thereof; and (b) suspend the use and enjoyment of any Unit Owner of such facilities and amenities for any period during which any assessment, fine or other charge remains unpaid, or for any period during which any infraction of the published Rules and Regulations continues, it being understood that any suspension for either non-payment of any assessment or a breach of the Rules and Regulations of the Association shall not constitute a waiver or discharge of the Unit Owner s obligation to pay the assessment; (c) designate portions of the General Common Elements as Reserved Common Elements pursuant to Section 5.05 of the Master Deed. (7) A non-exclusive easement for pedestrian ingress and egress to and from the other Unit(s) over and through all common walkways and roadways located within the General Common Elements, which easement shall be for the benefit of all Unit Owners and occupants in the Condominium or their invitees; (8) A non-exclusive easement for access to or use of the General Common Elements within the Condominium for any other purposes not prohibited by the Condominium Documents, which easement is for the benefit of all Owners and occupants of Units in the Condominium and their invitees; and