MASTER ASSOCIATION DISCLOSURE FOR STONEHAVEN MASTER ASSOCIATION, INC.

MASTER ASSOCIATION DISCLOSURE FOR STONEHAVEN MASTER ASSOCIATION, INC. Woodlands at Stonehaven / Highlands of Stonehaven (Non-MCIOA) Neighborhoods Dated March 9, 2011

TABLE OF CONTENTS 1. General Description of Master Community...1 1.1. Master Developer...1 1.2. Master Community Neighborhoods...1 1.3. Master Association Facilities and Services...1 1.4. Separate Neighborhood Facilities...2 2. Master Association...2 2.1. Master Governing Documents...2 2.2. Members; Functions...2 2.3. Residential Use...2 2.4. Estimated Maximum Number of Homesites; Master Developer Control...2 2.5. Facilities Owned by Third Parties...2 2.6. Financial Assurances for Completion of Improvements...3 2.7. Master Association Assessments; Balance Sheet; Budget...3 2.8. Included/Excluded Expenses...3 2.9. Powers Delegated to Master Association...3 2.10. Master Common Area Encumbrances...3 2.11. Master Common Area Warranties...4 2.12. Master Association Judgments...5 2.13. Master Association Insurance...5 2.14. No Master Common Area Use Fees...5 3. No Buildout Commitment...5 3.1. Undeveloped Homesites...5 3.2. Multiple Builders; Final Buildout Estimates...5 List of Exhibits Master Declaration Master Association Articles of Incorporation Master Association Bylaws Master Association Delinquent Assessments Policy Master Association Projected Annual Budget Master Association Balance Sheet ii

MASTER ASSOCIATION DISCLOSURE FOR STONEHAVEN MASTER ASSOCIATION, INC. Woodlands at Stonehaven / Highlands of Stonehaven (Non-MCIOA) Neighborhood Dated March 9, 2011 Pursuant to the Minnesota Common Interest Ownership Act, Minnesota Statutes Chapter 515B ( MCIOA ), Sections 4-101(e) and 4-102(c), as amended, the following information is furnished to persons who purchase a Homesite in the Woodlands at Stonehaven / Highlands of Stonehaven Neighborhood (each a Purchaser ) from U.S. Home Corporation d/b/a Lennar, a Delaware corporation ( Seller ): 1. General Description of Master Community. The home being acquired by Purchaser and the entire Woodlands at Stonehaven / Highlands of Stonehaven Neighborhood are located within a larger master planned development named Stonehaven (the Master Community ). All lots/units in the Master Community are referred to in this Disclosure as Homesites. All Homesites in the Master Community are subject to the Master Declaration of Covenants for Stonehaven ( Master Declaration ). A copy of the Master Declaration is an Exhibit to this Disclosure. Unless otherwise defined herein, capitalized words and phrases in this Disclosure have the same meanings as defined in the Master Declaration. 1.1. Master Developer. As of the date of this Disclosure, Seller is the Master Developer of the Master Community. Master Developer s address is: U.S. Home Corporation dba Lennar 935 E Wayzata Blvd Wayzata, MN 55391-1849 1.2. Master Community Neighborhoods. The Master Community, if developed as anticipated, is currently expected to have approximately 262 homes containing a variety of housing products in three or more separate residential Neighborhoods. Currently it is anticipated that the Master Community will have approximately 157 detached Single Family Homes and approximately 105 Exterior Maintenance Homes consisting of approximately 40 Twin Homes and 65 row townhomes. The number and product types of Homes are subject to change. Woodlands at Stonehaven / Highlands of Stonehaven is a Single Family Neighborhood. Seller is the subdivision developer for the Master Community and the Woodlands at Stonehaven / Highlands of Stonehaven Neighborhood, but might not be the subdivision developer for any or all other Neighborhoods in the Master Community. 1.3. Master Association Facilities and Services. Stonehaven Master Association, Inc. (the Master Association ) is responsible for owning and maintaining all of the Master Common Area designated pursuant to the Master Declaration. The Master Common Area may include a private park, open spaces, private trails, landscaping areas and other facilities. All Master Community Homesite Owners are entitled to the use and benefit of the Master Common Area, except the swimming pool and community center to be constructed on Lot 1, Block 1, Stonehaven 1 st Addition ( Community Center ). The use and maintenance cost of the Community Center is restricted to the Owners of Single Family Homes and Twin Homes. The Owners of other types of Homes are not entitled to use the Community Center. In addition to the Common Area, the Master Association will also own and maintain Public Open Spaces for the use and enjoyment of the general public. The Master Association is also responsible for maintaining the Landscape Maintenance Areas designated pursuant to the Master Declaration. The Master Association has hired a professional management company to manage its day to day 1

operating responsibilities. All costs incurred by the Master Association will be assessed against the Homesites in the Master Community in the proportions specified in the Master Declaration. 1.4. Separate Neighborhood Facilities. Each Exterior Maintenance Neighborhood will have its own Exterior Maintenance Governing Documents and Exterior Maintenance Neighborhood Association, all of which are separate from and in addition to the Master Association and the Master Declaration and other Master Governing Documents. Woodlands at Stonehaven / Highlands of Stonehaven, which is a Single Family Neighborhood, will not have separate Neighborhood facilities or separate Neighborhood documents, and is only subject to the Master Declaration and other Master Governing Documents. 2. Master Association. All Homesites in the Stonehaven Master Community are subject to the Master Declaration and all Owners of Master Community Homesites, including Purchaser, will be members of the Master Association. 2.1. Master Governing Documents. Copies of the Master Declaration, the Articles of Incorporation and Bylaws of the Master Association are Exhibits to this Disclosure. The Master Association has not adopted any Rules and Regulations as of the date of this Disclosure. The Master Association Board of Directors has adopted a delinquent Assessment Policy, which is attached as an Exhibit to this Disclosure. 2.2. Members; Functions. The name of the Master Association is Stonehaven Master Association, Inc. Its address is c/o its professional manager, Community Development, Inc., 7100 Madison Avenue West, Golden Valley, MN 55427-3602. The members of the Master Association are all the Owners of Homesites in the Master Community. The Master Association s primary functions are (i) to own and/or maintain and manage the Master Common Area, the Public Open Spaces and the Landscape Maintenance Areas, (ii) to perform architectural review of Single Family Homesites, and to administer and enforce the provisions of the Master Declaration and other Master Governing Documents, for the use and benefit of the Owners and Residents of Homesites in the Master Community. 2.3. Residential Use. The Master Community is a residential planned unit development with no nonresidential uses. The Public Open Spaces, which are part of the Master Community and maintained by the Master Association for the use and enjoyment of the public, may be used for the purposes authorized under the City approved Open Space Management Plan described in Article 6 of the Master Declaration. 2.4. Estimated Maximum Number of Homesites; Master Developer Control. At the time the Master Declaration was recorded, the estimated maximum number of Homesites to be included in the Master Association ( Estimated Buildout ) was 263 Homesites. The Estimated Buildout can change as provided in Section 13.4 of the Master Declaration. There will be a Master Developer Control Period during which Master Developer will have the exclusive right to control the operation and administration of the Master Association, including the right to appoint all of the members of the Board of Directors. The Master Developer Control Period expires when 75% of the Estimated Buildout number of Homesites have been sold (but not later than July 30, 2020). The Master Developer Control Period is described in Section 13.4 of the Master Declaration. 2.5. Facilities Owned by Third Parties. All Master Common Area facilities and improvements intended for the benefit of the Master Association members are located on property owned or controlled by the Master Association or a member of the Master Association. The public streets, public sidewalks and Public Trails in the Master Community are owned 2

and/or controlled by the City. Although the Public Open Spaces will be owned and maintained by the Master Association, they are for the use and benefit of the general public. 2.6. Financial Assurances for Completion of Improvements. Master Developer has posted letters of credit with the City in amounts sufficient to ensure completion of the public street and sidewalk improvements in the Master Community. Master Developer has not provided any financial security guaranteeing completion of any Master Common Area or Public Open Space facilities or improvements to be owned or maintained by the Master Association. 2.7. Master Association Assessments; Balance Sheet; Budget. The current balance sheet and current annual budget of the Master Association are Exhibits to this Disclosure Statement. As of the date of this Disclosure, the Master General Assessment payable to the Master Association is currently estimated to be approximately $1,152 per year per detached single family home in the Woodlands/Highlands of Stonehaven Neighborhood, payable in quarterly installments of $288. As provided in Section 9.9 of the Master Declaration, the amount of the Master General Assessments for other Neighborhoods in the Master Community may be different. Master General Assessments are based upon the Master Association budget for the 2011 2012 fiscal year which assumes that (i) all proposed Homesites have been added to the Master Community (see Section 3 below) and their owners are paying assessments at the current budgeted rate, which is not yet the case, and (ii) a specified number of proposed Homesites are added to the Master Community each year until all proposed Homesites are added to the Master Community and their owners are paying assessments at the current budgeted rate, which is not yet the case. Pursuant to Section 9.9.2 of the Master Declaration, each Homesite owned by Seller is assessed at twenty-five percent (25%) of the rate assessed against Homesites owned by persons other than Seller until a home is substantially completed on that Homesite. There are no assurances that these alternative Master Assessment arrangements for Homesites owned by Seller will not affect the level of services for items set forth in the Master Association s budget. Master Association operating deficits are expected to occur until a significant percentage of the proposed total number of homes in the Master Community have been sold and closed. If the rate at which homes are added to the Master Community falls below budgeted expectations, and/or if Seller decides not to develop all proposed Homesites as part of the Master Community (see Section 3 below), and/or if Master Community expenses increase, then the Master Assessments per Homesite will increase. The budget for the Master Association is only an estimate of what it will cost to run the Master Association. The Master Association may make changes in its budget at any time to cover increases or decreases in expenses or other changes in budgetary assumptions. 2.8. Included/Excluded Expenses. There are no Master Association expenses or services that are not reflected in the current Master Association budget which are paid for or provided by the Master Developer that may become an expense of the Master Association in the future. 2.9. Powers Delegated to Master Association. No Exterior Maintenance Neighborhood Association powers under MCIOA Section 3-102 have been delegated to the Master Association pursuant to MCIOA Section 2-121(e)(2). 2.10. Master Common Area Encumbrances. The following are the liens, defects or encumbrances that affect title to the Master Common Area, or any other property owned or operated by the Master Association for the benefit of its members: 2.10.1. MCIOA. Applicable requirements of the Minnesota Common Interest Ownership Act, Chapter 515B, Minnesota Statutes, as amended; 3

2.10.2. Master Community Documents. Requirements, restrictions, easements, conditions, obligations, covenants and reservations contained or identified in the following: (a) The Master Declaration, including the Annexation Amendments adding additional Homesites to the Master Community, and the Articles of Incorporation and Bylaws of the Master Association; (b) (c) (d) (e) (f) (g) (h) Plats of record and any amendments thereto, including all drainage, utility and other easements shown on such Plats; Recorded Resolutions of the City of Eagan approving the Preliminary and Final Plats, the Zoning Variance, the Development Contracts and the recorded Final Plats for the Master Community. Development Contracts between the City of Eagan and Master Developer, recorded in the offices of the Hennepin County Recorder and Registrar of Titles, as applicable. Public street, highway, turnaround, trail and drainage and utility easements and vehicular access restrictions of record. The June 1, 2010 Open Space Management Plan attached as Exhibit C to the Development Contract for the Master Community recorded with the plat of Stonehaven 1 st Addition. Recorded Conservation and Public Open Space Easement and Trail Lease dated June 15, 2010, by and between Rahn Family Limited Partnership, a Minnesota limited partnership, U.S. Home Corporation, a Delaware corporation, and the City of Eagan, a Minnesota municipal corporation. Recorded Final Planned Development Agreement for Stonehaven dated June 15, 2010, by and between Rahn Family Limited Partnership, a Minnesota limited partnership, U.S. Home Corporation, a Delaware corporation, and the City of Eagan, a Minnesota municipal corporation 2.10.3. Laws and Regulations; Mineral and Wetland Reservations. Federal, state and local building, housing and zoning laws, codes, ordinances and regulations; Resolutions of the City of Eagan approving the Plats and zoning variances for the Master Community; reservations of any minerals or mineral rights to the State of Minnesota; and the rights of the State of Minnesota and the Department of Natural Resources, if any, in and to the wetlands, if any, as shown on the recorded Plats. 2.10.4. Taxes and Assessments. Lien of real estate taxes and installments of special assessments (including interest) payable therewith in the year following the conveyance of title to the Master Association and subsequent years. 2.11. Master Common Area Warranties. The Master Common Area improvements and plant materials are warranted for one year from the date of installation. Details on all warranties are 4

available from the Master Developer. There are no known defects in the Master Common Area facilities. 2.12. Master Association Judgments. To Master Developer s knowledge, there are no unsatisfied judgments or pending lawsuits to which the Master Association is a party. 2.13. Master Association Insurance. The Master Association maintains the insurance required by Article 8 of the Master Declaration. Specifically, the Master Association is required to keep in force at all times a policy of commercial general liability insurance, with coverage of at least $1,000,000 for bodily injury and property damage for any single occurrence and at least $2,000,000 aggregate coverage. The Master Association also procures special forms peril (formerly all risk) casualty insurance with such other insured perils the Board of Directors of the Master Association may deem necessary on all insurable real property and personal property owned by the Master Association. The Master Association also procures: (1) fidelity bonds or insurance coverage against dishonest acts on the part of directors, officers, managers, trustees, employees or persons responsible for handling funds belonging to or administered by the Master Association if reasonably available; (2) workers compensation insurance if required by law; (3) directors and officers liability insurance with such reasonable limits and coverages as the Board of Directors of the Master Association shall determine from time to time; and (4) such other insurance as the Board of Directors of the Master Association may determine from time to time to be in the best interest of the Master Association and its members. 2.14. No Master Common Area Use Fees. There are no current or expected fees or charges, other than Master Assessments by the Master Association, to be paid by members of the Master Association for the use of any Master Common Area facilities intended for the benefit of the Owners. However, at the closing for Purchaser s Homesite (i) Purchaser will pay a contribution to the working capital of the Master Association in an amount determined by the Master Board (currently estimated to be $192 which is approximately two months Master General Assessment), and (ii) Purchaser shall pay to Master Developer a one time Start Up Fee in the amount of $1,500 for the purpose of reimbursing Master Developer for amounts Master Developer has paid or may pay in the future to start up the Master Association. The working capital contribution and Start-Up Fee are further described in the Master Disclosure and Information Addendum to Purchase and Sale Agreement between Purchaser and Master Developer. 3. No Buildout Commitment. 3.1. Undeveloped Homesites. Master Developer has not made any representations or provided any assurances with regard to the construction of Homes on Homesites in and around the Master Community. Homesites in and around the Master Community may remain vacant at the sole discretion of Master Developer and/or other builders in the Master Community 3.2. Multiple Builders; Final Buildout Estimates. Purchaser acknowledges that Master Developer makes no representations or warranties that Master Developer will be the exclusive builder or developer in the Master Community, or that the Master Community will be built out exactly as currently planned, and Master Developer expressly reserves the right to make whatever changes it deems necessary relating to future development or build out of the Master Community and individual Neighborhoods in the Master Community. Any current maps or other materials showing any final or projected development of the Master Community or individual Neighborhoods in the Master Community may be modified or updated in the future, without notice to Purchaser. 5

MASTER DEVELOPER HAS NOT MADE ANY REPRESENTATIONS OR PROVIDED ANY ASSURANCES WITH REGARD TO THE DEVELOPMENT OF HOMESITES IN AND AROUND THE MASTER COMMUNITY OR INDIVIDUAL NEIGHBORHOODS IN THE MASTER COMMUNITY. HOMESITES IN AND AROUND THE MASTER COMMUNITY OR INDIVIDUAL NEIGHBORHOODS IN THE MASTER COMMUNITY MAY REMAIN UNDEVELOPED AT THE SOLE DISCRETION OF MASTER DEVELOPER AND/OR OTHER BUILDERS IN THE MASTER COMMUNITY. PURCHASER ACKNOWLEDGES THAT MASTER DEVELOPER HAS MADE NO REPRESENTATIONS OR PROVIDED ANY ASSURANCES, STATED, IMPLIED, OR OTHERWISE WITH REGARD TO MASTER DEVELOPER BEING THE SOLE OR EXCLUSIVE BUILDER WITHIN THE MASTER COMMUNITY. MASTER DEVELOPER HAS NOT MADE ANY REPRESENTATIONS OR PROVIDED ANY ASSURANCES, STATED, IMPLIED, OR OTHERWISE WITH REGARD TO CONTINUING TO BUILD IN THE MASTER COMMUNITY OR INDIVIDUAL NEIGHBORHOODS IN THE MASTER COMMUNITY THROUGH FINAL BUILD OUT AND/OR BUILDING UPON ANY UNDEVELOPED HOMESITE(S). ANY ESTIMATES OR PROJECTIONS THAT HAVE BEEN COMMUNICATED TO PURCHASER REGARDING THE FINAL BUILD OUT TIME OF ANY UNDEVELOPED HOMESITE(S) OR OVERALL COMPLETION SCHEDULE FOR THE MASTER COMMUNITY OR INDIVIDUAL NEIGHBORHOODS IN THE MASTER COMMUNITY ARE MERELY MASTER DEVELOPER S GOOD FAITH ESTIMATES OR PROJECTIONS AT THIS TIME AND ARE NOT A REPRESENTATION, GUARANTEE OR PROMISE BY MASTER DEVELOPER. PURCHASER ACKNOWLEDGES THAT MASTER DEVELOPER CONSTANTLY EVALUATES THE PRICING, DESIGNS, PRODUCT MIX AND AMENITIES OF ITS COMMUNITIES AND NEIGHBORHOODS AND MASTER DEVELOPER MAKES NO REPRESENTATIONS, WARRANTIES OR PROMISES REGARDING WHETHER MASTER DEVELOPER OR ANY OTHER BUILDER WILL CONTINUE TO BUILD HOMES WITHIN THE MASTER COMMUNITY OR INDIVIDUAL NEIGHBORHOODS IN THE MASTER COMMUNITY AND PURCHASER IS NOT RELYING UPON ANY OF THE FOREGOING IN DECIDING TO PURCHASE A HOMESITE. Dated: March 9, 2011 SEE TABLE OF CONTENTS FOR LIST OF EXHIBITS A COPY OF THIS DISCLOSURE STATEMENT FOR STONEHAVEN MASTER ASSOCIATION, INC, INCLUDING THE EXHIBITS LISTED IN THE TABLE OF CONTENTS, HAS BEEN FURNISHED TO PURCHASER AS PART OF THE NEIGHBORHOOD DOCUMENT BOOK FOR PURCHASER S WOODLANDS/HIGHLANDS AT STONEHAVEN HOMESITE, AS DESCRIBED IN SECTION 3 OF THE MASTER DISCLOSURE AND INFORMATION ADDENDUM TO PURCHASE AND SALE AGREEMENT BETWEEN PURCHASER AND SELLER. 6