r. Offer of units; Purpose and Limitations of Offering

Transcription

1 Prospective Purchaser PUBLIC OFFERING STATEMENT FOR THE OCEAN HOUSE CONDOMINIUM, A CONDOMINIUM RESIDENCE r. Offer of units; Purpose and Limitations of Offering Statement This Public Offering Statement, dated March l, 1986, is being delivered to prospective Purchasers of Units in The ocean House, a Condominium Residence (hereinafter the "Condominium'') in accordance with the provisions of the Maine condominium Act. Chapter 31, Title 33 of the Maine Revised Statutes of 1964, as amended, 33 M.R.S.A et seq. (hereinafter called the "Condominium Act''). Seabury Housing Associates, a Maine corporation (hereinafter called the "Declarant") is presently offering for sale to prospective Purchasers 66 Condominium Units at certain premises located at Ocean Avenue. York Beach, Maine. No offer is being made hereby, however, except to the prospective Purchaser named hereinabove. The information provided in this Public Offering Statement contains certain basic or summary information which must be disclosed under the Condominium Act. The condominium Act and the documents attached hereto including the Declaration, which created the Condominium set forth all relevant information concerning the Condominium as well as the exact terms. conditions, rights and obligations pertaining to the creation, sale and existence of the Units in the Condominium and the operation and management of the Condominium. As this Public Offering Statement merely contains a summary description of certain information required by the condominium Act. interested prospective Purchasers are urged to review the condominium Act and the copies of the Declaration, Bylaws, contracts and other documents provided herewith. All capitalized terms used herein have the meaning set forth herein.or in the Declaration. No broker, salesman or other person is authorized to give or provide any information or to make any representations other than those contained in this Public Offering Statement, in the Declaration or in the unit Purchase and Sale Agreement. No information or representations may be relied upon by any prospective Purchaser unless contained in such documents. This offering does not constitute an offer by the Declarant to sell a Unit in any state to any person to whom it is unlawful to make such offer in such state. The prices for Units owned by Declarant may be changed from time to time by Declarant so that different Purchasers may pay different prices for similar

2 Units. Prospective Purchasers are advised to consult with their own attorneys, financial advisors and other appropriate advisors regarding factors which should be considered by prospective Purchasers of Units including the risks inherent in ownership of real estate or Condominium Units. Unless a purchaser has received and reviewed a copy of this Publi~ Offeririg Statement prior to the execution of a contract for sale, a purchaser. before conveyance, may cancel any contract for Purchase of a Unit from the Declarant. If a purchaser accepts the conveyance of a Unit, he may not cancel the contract. II. Name and Address of Declarant and condominium and General Description of the Condominium The Condominium was created pursuant to the Condominium Act by the Declarant by submitting the property located at Ocean Avenue, York Beach, Maine, described in Exhibit A to the Declaration of Condominium, dated March l, 1986, and recorded in the York county Registry of Deeds, a copy of which is attached hereto and made a part hereof (hereinafter called the "Property"). The name of the condominium is The ocean House, a Condominium Residence. The principal address of the Declarant and of the Condominium is Ocean Avenue, P. 0. Box 779. York Beach, Maine. The Condominium consists of 66 Units, 43 of which will be in the Main Building and 23 of which will be Townhouse Units, as shown on the Plats and Plans, copies of which are attached hereto. Each Townhouse unit, when constructed, will be located in one of the 6 Townhouse buildings and will contain- a livingroom with fireplace, dining area, kitchen, loft den, two bedrooms, two baths, and a one car garage and a limited common element driveway parking space. Units in the Main building will be of the following types: 6 one bedroom units; 29 two bedroom flats and 8 two bedroom duplex units. Main building units will have livingroom. kitchen, bedroorn{s) and the right to use a parking space. Many units will have a dining area and all two bedrooms con ta in two bathrooms. Uni ts in the Townhouses and Main Building contain many of the following features: wall to-to-wall carpet, refrigerator, dishwasher, disposal, washer and dryer, thermopane windows, individual heating and cooling, security intercom system, individual storage area, cathedral ceilings. turret rooms, skylights and porch, patio or balcony serving the unit. -2-

3 A Unit Purchaser may, at additional cost, purchase the exclusive right to use one of the 25 basement or covered interior or garage parking spaces under the Main Building which Declarant will assign as a Limited Common Element to any Purchaser who purchases such a space. There are, in addition to the Townhouse main building garage parking spaces described above, 45 other open-air parking spaces in the condominum as shown on the Plans; each main building unit shall have the right to use one such space on an unassigned. unreserved basis unless the Association elects to reserve or assign one such specific space to each main building Unit. The Declarant will provide the following improvements, amenities or Common Elements at the Condominium: indoor pool; whirlpool; health and exercise facility; lobby in the main building, main building elevator, and central trash system. Declarant commenced construction of the units in October 1985, and expects to complete construction of the main building Units and Common Elements between July 1986 and December 1986 and townhouse units between July 1986 and May In a Condominium, portions of the property. called the Units, are designated for sale to and separate ownership by Purchasers, each unit constitutes a separate parcel of real estate for all purposes including real estate taxation and assessment. Accordingly, a Unit owner will pay real estate taxes directly to the Town of York on the Unit and the Common Expense Assessment will not cover real estate taxes. The remainder of the property, called the Common Elements. is designated for common ownership by the owners of the Units. The Common Elements include the supporting structure of the Building. the exterior walls, roof, lobby area, walkways and grounds of the property and all other portions of the property other than the Units. The portions of the Common Elements which are designated for the exlusive use of specific Unit owners. such as Unit windows, balconies, porches, Townhouse driveways, Main building storage spaces, and certain parking spaces are called Limited Common Elements. Each Unit Owner is responsible for maintenance, repair and replacement of his Unit. The Association is responsible for and assesses the unit owners for the costs of, maintenance, repair and replacement of the common Elements including most of the limited common elements except that a Unit owner is responsible for certain damage caused thereto and for certain maintenance of certain Limited Common Elements primarily being the requirement that unit owner's having main building garage parking spaces pay the costs of maintenance of the garage. The Condominium Act imposes a lien on Units for unpaid assessments for common expenses, which lien may be foreclosed by the Association in -3-

4 the same manner as foreclosure of a mortgage on real estate. Unit owners are also obligated to pay interest on all Common Expenses not paid when due at the rate of 18% per annum and to pay all costs of collection of the assessments including reasonable attorney's fees. III. Brief Description of Certain Documents The following is a brief narrative description of the Declaration, and the Bylaws and of certain contracts. A. Declaration: The Declaration is the document which created the condominium. The Declaration establishes certain matters pursuant to the Condominium Act including, but not limited to, the maximum number of units which the Declarant reserves the right to create, a description of Unit boundaries and identification numbers. restrictions on the use, of units and common elements a description of the common Elements, the Limited common Elements and the Special Declarant Rights reserved for the benefit of the Declarant, its successors and assigns to complete certain improvements, to create Units, common Elements or Limited Common Elements, to subdivide Units or convert Units into Common Elements and to maintain sales offices. management offices and models on the Property. The Declaration also provides for an allocation of the undivided interests in the Common Elements, the Common Expense liability and the votes in the Association allocated to each Unit (hereinafter called the 11 Allocated Interests"). certain easements, the restrictions on use, occupancy and alienation of the Units, and the period of Declarant Control of the Association. The following is a narrative summary of the significant provisions of the Declaration: The name of the Association is The ocean House condominium Association. The legal description of the real estate included in the Condominium and the easements and restrictions thereon and the location thereof is attached to the Declaration as Exhibit A. The maximum number of Units which the Declarant will create is 66 consisting of the 43 Main Building Units, and the 23 Townhouse Units. An allocation to each unit of the Allocated Interest, including the votes, the undivided interest in common elements and common expense liability share of each unit is attached to the Declaration as Exhibit B. The method used to establish those allocations of votes and common expense liability and interest consisted of dividing estimated relative value of each Unit by the estimated value of all Units as determined by Declarant on March 1, 1986: such Allocated Interests are fixed and will not change in accordance with actual sale prices or any fluctuations in the actual relative value of the Units. -4-

5 The unit boundaries of the Units generally are the walls. floor and ceiling of the Unit. The identifying numbers of each Unit are set forth in Exhibit B to the Declaration and correspond to the Unit number designations shown on the Plats and Plans recorded in the York County Registry of Deedsf which depict the Unit boundaries. All lath, furring, wallboard, plasterboard, plaster. paneling, tiles, wallpaper, paint, finished flooring and any other materials constituting finished surfaces of walls, floors and ceilings are part of the Unit and all other portions of walls, floors or ceilings are part of the Common Elements. If ariy chute, flue, duct, wire, conduit. bearing wall, bearing column or any other fixture lies partially within and partially outside the designated boundaries of a unit, any portion thereof serving only that Unit is a Limited Common Element allocated solely to that Unit, and any portion thereof serving more than one Unit or any portion of the Common Elements is part of the common Elements. Subject to the provisions of the foregoing sentence, all spaces, interior partitions and other fixtures and improvements within the boundaries of a Unit are a part of that Unit. Any shutters, awnings, window boxes, doorsteps, stoops. porches, balconies, patios and all exterior doors and windows or other fixtures ae,igned to serve a single Unit. but located outside the Unit's boundaries, are Limited Common Elements allocated exclusively to.that Unit. The Limited Common Elements of the Uni ts, which are part of the Common Elements reserved for exclusive use of one or more Units, established by the Declaration, other than those specified hereinabove, consist of parking spaces assigned or which may be ~ssigned to specific Units, Townhouse driveways, Main building garage parking spaces, Main building storage bins, Townhouse fenced in areas, and condensers and heat pumps servicing certain units. No other real estate, except for certain Assignable Limited Common Elements consisting of Main building garage parking spaces and 45 par~ing lot spaces may be subsequently allocated as Limited Common Elements: Declarant intends to assign the Main building garage spaces to unit owners. who purchase the right to use such spaces but intends to allow the Association to determine whether the 45 parking lot spaces will be assigned to specific units; if such parking lot spaces are not assigned, each Main building unit shall have the right to use one parking lot space each on an unreserved or unasstgned basis. Other significant provisions of the Declaration are briefly described in other sections of this Public Offering Statement or bereinbel-0w. The Declaration provides in Article I for creation of the Condominium, definition of certain terms and interpretation of the Condominium Documents. Article II of the Declaration provides for the identification and location of the Condominium and the Association. Article III thereof the!\

6 Property and the Units. and includes provisions controlling any subdivision of Units. relocation of Unit boundaries and alteration of Unit partitions. and also sets forth some of the maintenance responsibilities of a Unit owner..article rv of the Declaration describes the Common Elements and Limited common Elements, the manner in which Limited Common Elements such as parking spaces may be assigned by Declarant. the rights of the Association to reserve portions of the Common Elements for use by less than all Unit Owners or by non-unit Owners for specified periods of time and contains other restrictions and regulations on the use of the Limited Common Elements. and the responsibilities and liabilities of Unit owners relating thereto. Article V of the Declaration specifies the Special Declarant Rights of the Declarant which include rights relating to sales offices, models, advertising. and easements for improvements. Article VI of the Declaration sets forth the Common Expense Liability of Unit Owners. the manner of allocation of common Expense Assessments. the remedies of the Association against a Unit and Unit Owner in the case of default in payment of assessments which remedies include inter~st charges of 18% per annum, the obligatio~ to pay costs of collection of assessments and interest (including reasonable attorney s fees), the imposition of liens on Units to secure payment of the foregoing. and the right of foreclosure of such liens. Article VI of the Declaration also specifies the respective obligations of a Seller and Purchaser of a Unit for payment of assessments and determination of the amounts due. Article VII of the Declaration defines the Association and the period of Declarant Control. Article VIII of the Declaration sets forth certain limitations on any liabilities of and provides for certain indemnification by the Association of members of the Executive Board of the Association for certain actions. Article IX of the Declaration provides for the effect of any eminent domain proceedings on the Condominium. Articles X and XI, respectively. provide for various matters relating to any fire or other casualty and insurance with respect to the condominium. Article XII of the Declaration sets forth any restraints on use. occupancy and alienation of the Units. The applicability of the Declaration and the obligations of compliance therewith and certain remedies for default are set forth in Article XIII thereof. Article XIV specifies the rights of holder of certain mortgages on Units in the condominium, including the rights of such mortgagees to notice and to approve certain Association actions. Provisions relating to amendment of the Declaration. easements and licenses. notices affecting the condominium, taxation. teimination of the condominium and miscellaneous other provisions are set forth in Articles XV to XX of the Declaration. -6-

7 B. Association, Bylaws, Rules and Regulations: The Condominium will be managed by The Ocean House Condominium Association, the members of which consist of the unit owners. Every unit owner is automatically a member of the Association and remains a member until his ownership of a unit ceases. The Association is organized as a nonprofit corporation under Maine law. The Bylaws of the Association are attached to the Declaration as Exhibit c and contain the rules for government of the Condominium. The Bylaws provide for the creation of the Board of Directors or Executive Board, which directs the affairs of the Condominium, and generally oversees the upkeep and administration of the Condominium. The Bylaws also cover such matters as the composition of the Executive Board. requirement for meetings, voting, the manner in which the Condominium budget should be prepared, the determination and handling of assessments, including special assessments and the filing of assessment liens and restrictions on the use of the Units and the Common Elements. The Declaration.provides for a period of Declarant Control of the Association during which the Declarant will control the Association. That period will last until the earlier of Ci) three (3) years after the date on which the first unit in the Condominium is conveyed or (ii) sixty days from the date on Which Units having seventy-five.percent (75\) of the allocated interests have been conveyed.. Each Unit.is allocated the percentage of votes in the Unit Owners Association equal to the Allocated Interest of the Unit. A Unit Owner is entitled to cast the voting rights allocated to his Unit except to the extent that eligible Unit Mortgagees have certain voting rights as provided in the Declarati-0n. After the Declarant Control period specified above, the Unit owners elect the Executive Board members. Other voting rights of Unit owners are specified in the Declaration and Bylaws. The Bylaws provide that the powers and responsibilities of the Association are delegated to the Condominium's Board of Directors. some of which in turn may be delegated to the managing agent. Basically, the Board of Directors has the powers and responsibilities in administering the Condominium, among other matters. to: (a) prepare the annual buaget: (b) make and collect assessments against. the unit owners for Common Expenses; (c) provide for the upkeep. maintenance and care of Common Elements; (d) designate, hire and dismiss the personnel necessary for the maintenance of the Condominium: {e) make rules and regulations concerning the use of the Condominium: (f) establish a bank account on behalf of the Association; (g) make alterations to the condominium: (h) enforce by legal means the provisions of the Condominium instruments: {i) obtain necessary insurance; (j) pay the cost of services rendered ~o the Condominium; (k) keep the books of account of the Condominium: and 1) borrow certain amounts of money as a Common Expense. The Bylaws provide that the Board of Directors may -7-

8 employ a professional managing agent for the Condominium at a level of compensation fixed by the Board of Directors. The Association may enter into a management agreement with a company affiliated with the Declarant. A management fee is provided for in the proposed budget. c. Contracts Subject to Cancellation by Association:. Pursuant to the condominium Act, the Association. upon not less than 90 days notice to the other party at any time after election of the Executive Board by Unit Owners, may terminate without penalty any of the following contracts entered into before the Executive Board elected by the Unit owner takes office: {a) any management contract, employment contract or lease of recreational or parking areas or facilities; {b) any other contract or lease between the Association and the Declarant or any affiliate thereof: or (c) any contract or lease that is not bona fide or was unconscionable to the Unit owners atr the time entered into under the circumstances then prevailing. No such contracts or leases exist at this time. The Declarant may, in the future, cause the Association to enter a management contract provided that the Association wi11 have the right to terminate such management contract at any time after the end of the period of Declarant control. without cause and without penalty on 90 days written notice. rv. Balance Shee~ and Projected Association Budget and Assessments; Pending Suits A projected Association budget and Unit assessments for each Unit is attached hereto as Exhibit A covering the period of one year after the expected date of the first conveyance of a Unit to a Purchaser. The projected budget and assessments are subject to the assumptions and risk of inaccuracy noted in Exhibit A. A current balance sheet of the Association is attached hereto as Exhibit B. There are currently no unsatisfied judgments or pending suits against the Association or otherwise material to the Condominium of which the Declarant has knowledge~ except for a suit seeking an injunction and $50, in damages for alleged unlawful use of the "Ocean House" name. Declaraht believes that the suit is without any merit and is contesting such suit at its own expense, and will pay at its expense any and all damages awarded therein proyided that the Association abides by the terms of any court order. v. Unit Purchase The prospective purchaser named on the first page of this Public Offering Statement may purchase a Unit by executing a Unit Purchase and Sale Agreement prepared by Declarant. The following documents must be signed as part of the Purchase of a Unit: -8-

9 A. Unit Purchase and Sa 1 e Agreement. The obligation of the parties in connection with the initial sale and purchase of a Unit are set forth in the Unit Purchase and Sale Agreement Terms attached hereto as Exhibit C and in the portion of such Agreement to be provided to Purchaser and signed by Declarant and Purchaser. Prices for the Unit are established by Declarant and may be subject to change at any time in the Declarant's sole discretion prior to the execution by Declarant of a unit Purchase and Sale Agreement. Different purchasers may pay different prices for similar units at the sole discretion of the Declarant. B. Warranty Modification and Exclusion. At closing, purchasers will be required to sign an agreement, as described in the next section of the Public Offering Statement excluding and modifying certain warranties otherwise implied under law. C. Warranty Statute of Limitations Modification. At closing, purchasers will be required to sign an agreement, as described in the next section of the Public Offering Statement, reducing the statute of lirnitati6ns for breach of w~rranty claims to two (2) years. At the closing on the purchase of a Unit, a purchaser will be required to pay, in addition to the purchase price of a Unit closing costs and any prorated items due to the Declarant under the Unit Purchase and sale Agreement, a nonrefundable initial capital contribution or assessment to the Association in order to provide initial working capital to the Association in an amount equal to two times the estimated monthly common element charge for the Unit. The calculation of that initial fee was based on an estimate of immediate, initial Association working capital needs. Upon payment of the Purchase Price closing costs and capital contributions the Declarant will deliver a Unit Deed to such Purchaser. Said working capital fund will be maintained in a segregated account by the Association. Within 60 days after the date of the first conveyance of a Unit, the Declarant will pay to the Association said initial capital contribution for working capital for all unsold units. When said unsold Units are sold, Declarant will reimburse itself in the amount of the capital contribution paid by Declarant as the initial capital contribution for such Unit into the working capital fund. The source of such reimbursement will be from the estimated assessment or capital contribution paid by unit Purchasers at closing. The estimated additional fees or charges to be paid by the Unit Owners for the use of the common Elements and other facilities related to the Condominium consist of the estimated fees set forth in the Estimated First Year Budget attached

10 hereto; and any other fees or charges imposed by the Association from time to ti~e. Monthly assessments will begin to be charged on the first day of the first month after the date of the first sale of a Unit. Any deposit made in conriection with the purchase of a Unit will be held in an escrow account until closing and will be returned to the purchaser if the purchaser validly cancels the contract pursuant to the Condominium Act, which provides, in relevant part that unless prior to the execution of a contract for sale a purchaser acknowledges in writing receipt and review of the Public Offering Statement required by law. the purchaser, upon written notice to the Declarant, may cancel the contract at any time prior to conveyance of the Unit, unless the purchaser shall, subsequently, expressly and in writing waive such right to canc l after having received and reviewed this Public Offering Statement. The name and address of the escrow agent is Robert E. Bowes. Scanlan & Bowes. P. o. Box 779, ocean Avenue, York Beach, Maine. Declarant does not offer and hai not arranged any financing for any Purchaser of a Unit. vr. Limitations on Warranties Certain express and implied warranties are given to all unit owners, as described below, subject to certain exclusions, limitations and modifications made by Declarant. As a condition of purchase, a Purchaser will be required to execute a written instrument limiting the statute of limitations (which is the time for commencing a judicial proceeding for breach of warranty} for any warranty claim to two years. Additionally, implied warranties of quality and of merchantability will be limited, excluded or modified as set forth in an agreement which each Purchaser will be required to execute at closing, a copy of which is provided herewith. A. Express warranties. With respect to the Condominium units being sold and the common elements appurtenant thereto, the Maine Condominium Act provides, in part, that express warranties made to a purchaser of a unit, if relied upon by the purchaser, are only created by: (1) Any written affirmation of fact or promise; (2) Any model or description of the quantity or extent of the real estate comprising the Condominium, including plans and specifications for improvemeits; and (3) any written description of the quantity or extent of the real estate comprising the condominium, including plats or surveys; and (4) a provision that a buyer may put a unit only to a specified use. A statement purporting to be merely an opinion or commendation of the real estate or its value does not create -10-

11 a warranty. Subject to the limitations set forth in the Warranty Exclusion and Modification. Exhibit C-1 hereto, Declarant will warrant to correct (a) any structual defect arising within 2 years of the first sale of any Unit; and (b) any item which is defective or incomplete and which is listed on a punch list submitted by Purchaser to Declarant within 15 days after Declarant notifies Purchaser that the Unit is substantially complete. Other than as set forth in the Declaration oi in any Unit Purchase and Sale Agreement between Declarant and any specific Purchaser. or in the Warranty Exclusion and Modification. Declarant has no express warranties upon which any prospective Purchaser may rely and no person or agent is entitled to make any warranties on behalf of Declarant. B. Implied Warranties. The Maine Condominium Act provides that unless disclaimed or modified. a Declarant warrants that (1) a unit will be in at least as good condition at the earlier of the time of the conveyance or delivery of possession as it was at the time of contracting. reasonable wear and tear excepted; (2) a Unit and the common Elements in the Condominium are suitable for the ordinary uses of real estate of its type and that any improvements made or contracted for by him. or made by any person before the creation of the condominium, will be: (a) free from defective materials; and (b) constructed in accordance with applicable law, according to sound engineering and construction standards and in a workmanlike manner. Construction complying with the National Building Code and the Administrators Basic Building Code or equivalent applicable local Building Code shall be deemed to satisfy sucb. sound engineering or construction standards. In addition, a Declarant, unless disclaimed or modified. warrants to a Purchaser of a residential Unit that may be used for residential use that any existing use, continuation of which is contemplated by the parties, does not violate applicable law at the earlier of the time of conveyance or delivery of possession. Warranties imposed by the condominium Act may be excluded or modified. Under the condominium Act, a Declarant may disclaim such warranties which are otherwise implied in an instrument signed by a purchaser for a specified defect or specified failure to comply with applicable law. if the defect or failure enters into and becomes a part of the basis of the bargain by its inclusion in a Unit Purchase and Sale Agreement. The warranties imposed by the Condominium Act will be so excluded or modified by an agreement entered at closing. Such agreement will provide, in part, that the implied warranty described under paragraph B(2) hereinabove is limited, modified.or excluded by excluding from the implied warranties of quality: (a) liability for incidental or consequential damages; (b) liability for defects not listed on the punch list -11-

12 described hereinabove; (d) normal maintenance items: (d) any liability other than for repair or replacement: (e) any manufacturer warranties: and (f) as provided in th~ Warranty Modification and Exclusion set forth as Exhibit C-1 hereto, which Exhibit prospective Purchasers are urged to review carefully. VII. Restraints on Alienationi Encumbrances: The Declarant has not imposed any restraints on. alienation of a Unit after its purchase by a purchaser unless any of the following restraints are considered restraints on alienation. A Unit shall remain subject to the restrictions, conditions, reservations and covenants set forth in the Declaration including, but not limited to, the limitation on the use of the premises to residential purposes, the limitation on renting or leasing of units except on terms and for periods consistent with the provisions of the Declaration and the Bylaws of the Association, and the covenant to pay common expense assessments. The Association has the power to terminate any lease and to bring summary proceedings to evict a tenant in violation of the Declaration or Bylaws or any rules and regulations adopted pursuant thereto. Under the Condominium Ac~. the Association has a lien on a Unit for any assessment levied against that Unit or any fines or service charges imposed against its Unit Owner from the time the assessment or fine becomes due. The current res~rictions on any Purchaser's use, occupancy and alienation of the Units generally include provisions that the Units are limited to residential uses, that the Units be used in accordance with all applicable laws, that no use is permitted which may increase any insurance premium, that no waste be committed and no nuisance is permitted, that pets are permitted only on such Rules and Regulations and conditions as established by the Association which may bar certain pets from any Unit or the Common Elements, that no unit may be rented for transient or hotel purposes or for a period of less than one month, that no Unit may be leased except pursuant to a written lease requiring compliance with Association rules and regulations and with notice to the Association, that the exterior appearance of the Unit, including the color and material of window shades be as determined by the Association, that Limited Common Elements and Unit areas visible from the common Elements be kept neat and orderly. Each Unit is also subject to the restrictions set forth in the Declaration, Bylaws and in any rules and regulations adopted by the Association from time to time. -12-

13 The Condominium is located in a zone of the Town of York which permits multi-family dwellings among other uses as a conditional use: Declarant has obtained a conditional use approval and a height variance from the Town of York zoning Board of Appeals. Declarant has also obtainea the requisite subdivision approval from the Town of York Planning Board. There are no other significant land use requirements affecting the Condominium. A description of any current liens. defects or encumbrances on or affecting the title of the Condominium and the Units is set forth in Exhibit A to the Declaration. There are no other recorded convenants, restrictions or reservations affecting the Condominium. Under the Declaration, the Condominium will be subject to normal utility easements now existing or hereafter created and to easements of the Declarant necessary or convenient to the exercise of Declaration's Special Declarant Rights and the Units are subject to easements for encroachment of other units and Common Elements, for support of adjoining Units and to the Association's and Declarant's Rights to enter Units to make repairs. and to exercise certain other rights including the correction of any condition violating the Bylaws. Declaration or any rules and reguiations established by the Association. The expense of any such correction work shall be charged to the Unit owner and shall constitute a lien on the Unit. Under the condominium Act, portions or the Common Elements of the Condominium may be conveyed or subjected to a security interest by the Association if persons entitled to cast a least 80% of the votes in the Association, including BO% of the votes allocated to units not owned by a Declarant, or any larger percentage which the Declaration specifies. agree to that action; provided that all the owners of units to which any Limited Common Element is allocated must agree in order to convey that Limited Common Element or subject it to a security interest. Any agreement to convey Common Elements or subject them to a security interest must comply with the provisions and requirements of the Condominium Act, including the requirement that any such agreement be evidenced by the execution of an agreement or ratification thereof. in the same manner as a deed, by the requisite number of unit owners. VIII. Insurance Coverage for Unit owners The Association will maintain, the extent reasonably available, the following insurance coverage: A, Property insurance on the common elements and the Units (but not any improvements. betterments or personal property of -13-

14 Unit owners), insuring against all risks of direct physical loss commonly insured against or, in the case of a conversion condominium, against fire and extended coverage perils. The total amount of insurance after application of any deductibles shall be not less than 100% of the replacement value of the insured property at the time the insurance is purchased and at each renewal date, exclusive of land, ~xcavations, foundations and other items normally excluded from property policies: and B. Liability insurance, including medical payments' insurance, in an amount determined by the Executive Board but not less than One Million Dollars {$1,000,000) for personal injury for any one occurrence covering all occurrences commonly insured against for death, bodily injury and property damage arising out of or in connection with the use, ownership or maintenance of the common elements. If the insurance described hereinabove is not reasonably available, the Association promptly shall cause notice of that fact to be hand delivered or sent prepaid by United States' mail to all unit owners. Insurance policies carried will have the endorsements and be subject to the terms, conditions and limitations specifie~ in detail in Article XI of the Declaration. An insurer that has issued an insurance policy shall issue certificates or memoranda of insurance to the Association and, upon request, to any unit owner or mortgagee. Any loss covered by the property policy under paragraph (B) set forth above shall be adjusted with the Association, but the insurance proceeds for that loss shall be payable generally to any insurance trustee designated for that purpose, or otherwise to the Association, and not to any mortgagee or unit owner. The insurance trustee or the Association shall hold any insurance proceeds in trust for unit owners and lien holders as their interest may appear. The above-described property insurance on the common elements does not insure any personal property or improvements or betterments made by or belonging to a Unit Owner nor any special improvements to a Unit made by or at the request of any current or former Unit owner, tenant or occupant. The above-described liability insurance does not insure Unit Owners against liability arising from an accident or injury occuring within a unit or liability arising from the act or negligence of a Unit Owner. The insurance carried by the Association does not prevent a Unit owner from obtaining insurance for his own behalf. The Declarant recommends, at a minimum, that each Unit owner obtain insurance coverage on his personal property, improvements and betterments, and liability insurance for liability exposure not covered by the Association. -14-

15 The Association will also maintain worker's compensation insurance, fidelity bonds as aescribed in the Declaration, and airectors' and officers' liability coverage to protect against dishonest acts on the part of officers, directors, trustees and employees of the Association, including any managing agent. IX. Financial Arrangements for Mandatory Improvements Declarant is obligated to complete all improvements labeled "Must Be Built" on the plats or plans recorded in the York County Registry of Deeds, which improvements or amenities are described in Section II of this Offering Statement. Declarant has entered a Construction Loan Agreement with Maine Savings Bank providing for the borrowing of funds believed by Declarant to be sufficient for the completion of such mandatory improvements. A copy of said construction Loan Agreement is available for inspection on request by a prospective purchaser. The terms and conditions of the construction Loan Agreement allow Maine Savings Bank to refuse to loan such funds in certain ev~nts including in the event of certain defaults by the Declarant thereunder or under the Mortgage and Security Agreement from Declarant to Maine savings Bank recorded in the York County R~gistry of Deeds in January