Craig Zgabay and Tammy Zgabay v. NBRC Property Owners Association

• Court: Court of Appeals of Texas
• Decided: February 3, 2015
• Docket: 03-14-00660-CV
• Status: Published

Opinion

ACCEPTED 03-14-00660-CV 3999768 THIRD COURT OF APPEALS AUSTIN, TEXAS 2/3/2015 12:09:58 PM JEFFREY D. KYLE CLERK No. 03-14-00660-CV

FILED IN 3rd COURT OF APPEALS IN THE AUSTIN, TEXAS THIRD DISTRICT COURT OF APPEALS 2/3/2015 12:09:58 PM AT AUSTIN, TEXAS JEFFREY D. KYLE Clerk

CRAIG ZGABAY AND TAMMY ZGABAY, Appellants

v.

NBRC PROPERTY OWNERS ASSOCIATION, Appellee

Appeal from the 433rd Judicial District Court, Comal County, Texas, Cause No. C2014-0501C

APPELLEE’S BRIEF

Wade C. Crosnoe Tom L. Newton, Jr. State Bar No. 00783903 State Bar No. 14982300 Brian D. Hensley Allen, Stein & Durbin, P.C. State Bar No. 24036759 6243 IH-10 West, 7th Floor Thompson, Coe, Cousins & Irons, LLP P. O. Box 101507 701 Brazos, Suite 1500 San Antonio, Texas 78201 Austin, Texas 78701 Telephone: (210) 734-7488 Telephone: (512) 708-8200 Facsimile: (210) 738-8036 Facsimile: (512) 708-8777 E-mail: tnewton@asdh.com E-mail: wcrosnoe@thompsoncoe.com

Counsel for Appellee NBRC Property Owners Association

Oral Argument Requested IDENTITY OF PARTIES AND COUNSEL

1. Appellants/Plaintiffs Craig and Tammy Zgabay

Trial and Appellate Counsel:

J. Patrick Sutton 1706 W. 10th Street Austin, Texas 78703 Telephone: (512) 417-5903 Facsimile: (512) 355-4155

2. Appellee/Defendant NBRC Property Owners Association

Trial Counsel:

Brian Hensley Thompson, Coe, Cousins & Irons, L.L.P. 701 Brazos, Suite 1500 Austin, Texas 78701 Telephone: (512) 708-8200 Facsimile: (512) 708-8777

Tom L. Newton, Jr. Ashley Giordano Allen Stein & Durbin, P.C.1 6243 IH-10 West, 7th Floor San Antonio, Texas 78201 Telephone: (210) 734-7488 Facsimile: (210) 738-8036

1 Guillermo M. Hernandez, III also appeared as counsel in the trial court proceedings but is no longer with Allen Stein & Durbin, P.C.

i Appellate counsel:

Wade C. Crosnoe Brian D. Hensley Thompson, Coe, Cousins & Irons, L.L.P. 701 Brazos, Suite 1500 Austin, Texas 78701 Telephone: (512) 708-8200 Facsimile: (512) 708-8777

Tom L. Newton, Jr. Allen Stein & Durbin, P.C.

ii TABLE OF CONTENTS

Identity of Parties and Counsel ...................................................................................i

Table of Contents ..................................................................................................... iii

Index of Authorities ...................................................................................................v

Statement of the Case............................................................................................. viii

Statement Regarding Oral Argument .......................................................................ix

Statement of Facts ......................................................................................................1

Summary of the Argument.........................................................................................3

Argument....................................................................................................................5

I. The Rules of Construction for Restrictive Covenants ..................................... 5

II. Under Texas Law, Short-Term Rentals Are Not a Single-Family Residential Use ................................................................................................9

III. The Out-of-State Cases Are Distinguishable and Should Not Be Followed by This Court .................................................................................15

IV. The Zgabays’ Challenge to the Alleged Vagueness of the Injunction Was Not Preserved and Lacks Merit .............................................................18

Conclusion and Prayer .............................................................................................19

Certificate of Compliance ........................................................................................20

Certificate of Service................................................................................................21

iii Appendix

Order on Competing Motions for Summary Judgment (CR 127–29) ............ Tab 1

Declaration of Covenants, Conditions and Restrictions for River Chase Unit Three (CR 67–87) .............................................................................. Tab 2

Tex. Prop. Code §§ 202.002, 202.003 ............................................................. Tab 3

iv INDEX OF AUTHORITIES

Cases Applegate v. Colucci, 908 N.E.2d 1214 (Ind. Ct. App. 2009) .......................... 15, 17

Ashcreek Homeowner’s Ass’n v. Smith, 902 S.W.2d 586 (Tex. App.— Houston [1st Dist.] 1995, no writ) .........................................................................7

Benard v. Humble, 990 S.W.2d 929 (Tex. App.—Beaumont 1999, pet. denied) ................................................................................................... 8, 9, 10, 14

Cedar Oak Mesa, Inc. v. Altemate Real Estate, LLC, No. 03-10- 00067-CV, 2010 WL 3431703 (Tex. App.—Austin Aug. 31, 2010, no pet.)..................................................................................................................11

City of Pasadena v. Gennedy, 125 S.W.3d 687 (Tex. App.—Houston [1st Dist.] 2003, pet. denied) ..................................................................................8

Dunn v. Aamodt, 695 F.3d 797 (8th Cir. 2012) ................................................ 15, 17

Estates at Desert Ridge Trails Homeowners’ Ass’n v. Vazquez, 300 P.3d 736 (N.M. Ct. App. 2013)............................................................................16 Highlands Mgmt. Co. v. First Interstate Bank, 956 S.W.2d 749 (Tex. App.—Houston [14th Dist.] 1997, pet. denied) .....................................................7 InterFirst Bank San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640 (Tex. 1986) ...........................................................................................................18

Int’l Bhd. of Elec. Workers Local Union 479 v. Becon Constr. Co., 104 S.W.3d 239 (Tex. App.—Beaumont 2003, no pet.) .....................................18

Liberty Mut. Ins. Co. v. Adcock, 412 S.W.3d 492 (Tex. 2013) .................................6 Lowden v. Bosley, 909 A.2d 261 (Md. 2006) ..........................................................16 Mason Family Trust v. Devaney, 207 P.3d 1176 (N.M. Ct. App. 2009) .......... 16, 17

McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337 (Tex. 1993).....................................................................................................................13

Mullin v. Silvercreek Condo. Owner’s Ass’n, Inc., 195 S.W.3d 484 (Mo. Ct. App. 2006) ...................................................................................... 15, 17

v Munson v. Milton, 948 S.W.2d 813 (Tex. App.—San Antonio 1997, pet. denied) ...................................................................... 7, 8, 10, 12, 14, 18

Pinehaven Planning Bd. v. Brooks, 70 P.3d 664 (Idaho 2003) ........................ 16, 17

Quinn v. Harris, No. 03-98-00117-CV, 1999 WL 125470 (Tex. App.—Austin March 11, 1999, pet. denied)............................................... 7, 8, 12

Reagan Nat’l Adver. of Austin, Inc. v. Capital Outdoors, Inc., 96 S.W.3d 490 (Tex. App.—Austin 2002, pet. granted, judgm’t vacated w.r.m.) ............................................................................................ 5, 8, 12

Roaring Lion, LLC v. Exclusive Resorts PBL1, LLC, No. CAAP-11- 0001072, 2013 WL 1759002 (Haw. Ct. App. April 24, 2013) ............... 15, 16, 17

Ross v. Bennett, 203 P.3d 383 (Wash. Ct. App. 2009) ............................................16

Russell v. Donaldson, 731 S.E.2d 535 (N.C. Ct. App. 2012) ........................... 16, 17 Scott v. Walker, 645 S.E.2d 278 (Va. 2007) ............................................................16 Shields v. State, 27 S.W.3d 267 (Tex. App.—Austin 2000, no pet.).......................18 Slaby v. Mountain River Estates Residential Ass'n, Inc., 100 So. 3d 569 (Ala. Civ. App. 2012)....................................................................................16 Slusher v. Streater, 896 S.W.2d 239 (Tex. App.—Houston [1st Dist.] 1995, no writ) .......................................................................................................10 Smith v. Bd. of Regents of Univ. of Houston Sys., 874 S.W.2d 706 (Tex. App.—Houston [1st Dist.] 1994, writ denied) ...........................................10

Warehouse Partners v. Gardner, 910 S.W.2d 19 (Tex. App.—Dallas 1995, writ denied) ................................................................................................10 Wein v. Jenkins, No. 03-04-00568-CV, 2005 WL 2170354 (Tex. App.—Austin Sept. 9, 2005, no pet.) ...................................................................11

Wilkinson v. Chiwawa Cmtys. Ass’n, 327 P.3d 614 (Wash. 2014) .........................17 Yogman v. Parrott, 937 P.2d 1019 (Or. 1997).................................................. 16, 17

vi Statutes Tex. Gov’t Code § 311.021(2) ...................................................................................6

Tex. Prop. Code § 92.152(a) ....................................................................................10 Tex. Prop. Code § 202.002(a) ....................................................................................6

Tex. Prop. Code § 202.003(a) ......................................................................... 5, 8, 16

Tex. Prop. Code § 202.004 ........................................................................................2

Rules Haw. R. App. P. 35 ..................................................................................................15 Tex. R. App. P. 9.4(i)(1) ..........................................................................................20 Tex. R. App. P. 9.4(i)(2)(B) .....................................................................................20

Tex. R. App. P. 33.1(a) ............................................................................................18

Tex. R. Civ. P. 166a(c) ............................................................................................13 Tex. R. Civ. P. 683 ............................................................................................ 18, 19

vii STATEMENT OF THE CASE

Nature of the Case: This is a declaratory-judgment action brought by two homeowners, Craig and Tammy Zgabay, seeking an interpretation of restrictive covenants governing a residential subdivision (CR2 6-10). Defendant NBRC Property Owners Association counterclaimed for injunctive relief, statutory damages, and attorney’s fees (CR 11-15).

Course of Proceedings: The parties filed cross-motions for summary judgment (CR 18-51, 54-101; 102-21; SCR 7-35).

Trial Court’s The 433rd District Court of Comal County, the Disposition: Honorable Dib Waldrip presiding, granted the Association’s summary judgment motion and denied the Zgabays’ motion (CR 127-29; Apx. 1). The court’s order enjoined the Zgabays from renting their house to any person or the public for temporary or transient purposes, and awarded the Association statutory damages of $500 and attorney’s fees of $3,422.50 (CR 129; Apx. 1).

2 “CR” refers to the Clerk’s Record. As used in this brief, “SCR” refers to the Supplemental Clerk’s Record and “Apx.” refers to the appendix attached to this brief.

viii STATEMENT REGARDING ORAL ARGUMENT

The Association disagrees with the Zgabays’ assertion that no precedent

squarely addresses the issue in this case. Two published opinions by Texas courts

address the same or a similar issue. Nevertheless, the Association believes that

oral argument would help the Court in deciding the appeal because of the unsettled

question on how to reconcile the statute mandating liberal construction of

restrictive covenants with the common-law rule of strict construction.

ix STATEMENT OF FACTS

The Declaration of Covenants, Conditions and Restrictions for River Chase

Unit Three—a residential subdivision in Comal County, Texas—was adopted and

recorded in November 1999 (CR 67-87; Apx. 2). Among other provisions, the

Declaration has restrictive covenants that (1) limit each tract to one dwelling unit

to be used for “single family residential purposes” and (2) prohibit activities “not

related to single family residential purposes” (CR 70, 72 [§§ 3.01, 3.14]; Apx. 2).

The Declaration states that its “provisions . . . shall be liberally construed as a

whole to effectuate the purpose of this Declaration” (CR 86 [§ 9.05]; Apx. 2).

The Declaration also created the NBRC Property Owners Association,

consisting of all record owners of tracts, and the Association’s Board of Directors

(CR 67-68 [§§ 1.01, 1.02]; Apx. 2). The Board has the authority to enforce the

Declaration’s provisions, including through legal actions (CR 84 [§ 8.11]; Apx. 2).

Craig and Tammy Zgabay bought a lot in the River Chase subdivision in

2000 and built a house in 2004 (CR 50). They did not get around to reading the

Declaration until later (CR 50). Upon reading the Declaration, Craig Zgabay

allegedly concluded that it had no restrictions on leasing (CR 50). Early last year,

he and his wife began renting the house for periods ranging from two to eight days,

1 and intend to continue with short-term rentals of the house (CR 50).3 According

to a neighbor, the Zgabays’ renters have used the neighbor’s pool without

permission during the night and played loud music at all hours (CR 90).4

After receiving complaints from neighbors (CR 88), the Board wrote to the

Zgabays and demanded that they cease short-term rentals (CR 50). The Zgabays

responded by filing this declaratory-judgment action seeking a ruling that the

restrictive covenants do not prohibit short-term leases (CR 6-10). The Association

responded with a counterclaim for injunctive relief, and also sought to recover

statutory damages under section 202.004 of the Texas Property Code and

attorney’s fees (CR 11-14).

The parties filed cross-motions for summary judgment (CR 18-51, 54-101,

102-21; SCR 7-35). After a hearing, the trial court granted the Association’s

motion and denied the Zgabays’ motion (CR 127-29; Apx. 1; RR 1:1). The court’s

summary judgment order enjoined the Zgabays from renting their house to any

person or the public for temporary or transient purposes (CR 129; Apx. 1). This

appeal followed (CR 170-71).

3 Although the Zgabays’ brief asserts that they have moved and have leased the house for a one- year term (Appellants’ Brief at 6-7), nothing in the record supports either assertion. 4 The Zgabays’ brief contends that the trial court struck the neighbor’s affidavit and another affidavit filed with the Association’s summary judgment motion (Appellants’ Brief at 8). But their supporting record cite is to a docket entry that indicates the trial court took the motion to strike those affidavits under advisement (CR 173). The record contains no written order or oral ruling on the motion to strike. Regardless, the affidavits are cited only for background purposes.

2 SUMMARY OF THE ARGUMENT

The Zgabays’ brief effectively asks this Court to disregard the Texas statute

requiring liberal construction of restrictive covenants. But the Legislature must

have meant to accomplish something when, in the face of the common-law rule

requiring strict construction of restrictive covenants, it mandated liberal

construction of all such covenants. This Court is not free to disregard the

Legislature’s pronouncement. And although Texas courts are split on the interplay

between the statute and common-law rule, under the approach this Court follows

the common-law rule never comes into play unless the restrictive covenant is

ambiguous. Neither side in this case argues that the restrictive covenant is

ambiguous. The common-law rule is therefore irrelevant, and the statutory rule of

liberal construction controls.

The Texas rule of liberal construction goes a long way toward explaining the

differing results reached by Texas courts and some out-of-state courts. Texas

courts have held that virtually-identical or similar restrictive covenants prohibit

short-term rentals. Against the backdrop of liberal construction, those Texas courts

have reasoned that residency generally requires a fixed place of habitation and an

intent to remain despite temporary absences. When, as here, a series of families or

other groups stay in a rental house for a few nights or less, the house is not the

3 residence of any of them. It certainly is not being used for “single family

residential purposes” under the wording of the covenants at issue here.

To be sure, courts in some other states have reached contrary conclusions.

But those decisions from twelve other states—out of fifty, last we checked—are

hardly the “overwhelming tide” that the Zgabays portray them to be. More

importantly, those decisions generally turn on the rule of strict construction

followed in those states. In this state, the converse rule of construction is mandated

by statute. The Zgabays should take their complaint that Texas will be out of step

with other states to the Texas Legislature. Meanwhile, this Court should follow the

legislative rule of liberal construction and the Texas cases holding that similar

restrictive covenants prohibit short-term rentals.

4 ARGUMENT

I. The Rules of Construction for Restrictive Covenants

Under the common law, restrictive covenants are subject to the traditional

rules of contract construction. See, e.g., Reagan Nat’l Adver. of Austin, Inc. v.

Capital Outdoors, Inc., 96 S.W.3d 490, 493 n.2 (Tex. App.—Austin 2002, pet.

granted, judgm’t vacated w.r.m.). The goal is to determine the drafters’ objective

intent by examining the entire instrument. Id. at 493. But any “[d]oubts about the

meaning of a covenant are resolved against the party seeking to enforce it and in

favor of the free and unrestricted use of land.” Id.

In 1987, however, the Texas Legislature altered the common-law rule. The

Legislature amended the Texas Property Code to mandate liberal construction of

restrictive covenants:

A restrictive covenant shall be liberally construed to give effect to its purposes and intent.

Tex. Prop. Code § 202.003(a) (Apx. 3). Notably, the Declaration at issue adopts

this statutory rule of construction, stating that “[t]he provisions of this Declaration

shall be liberally construed as a whole to effectuate the purpose of this

Declaration” (CR 86 [§ 9.05]; Apx. 2).

The Zgabays make various arguments about how the common-law rule

supposedly is more specific and should effectively trump the statute (and the

contract provision adopting the statute). But just like the common-law rule once

5 did, the statute applies to all restrictive covenants. See Tex. Prop. Code §

202.002(a) (Apx. 3). One is no more specific than the other.

The Zgabays argue that the trial court gave “undue weight” to the statutory

rule (Appellants’ Brief at 10). By this they appear to mean that the trial court

should not have given any weight to the statute. But that approach runs afoul of

the rule of statutory construction that the entire statute is intended to be effective.

See Tex. Gov’t Code § 311.021(2). Under the Zgabays’ reading of the statute, the

Legislature accomplished nothing when it mandated liberal construction of all

restrictive covenants. The courts are not free, however, to disregard legislative

pronouncements. See Liberty Mut. Ins. Co. v. Adcock, 412 S.W.3d 492, 493-94

(Tex. 2013) (stating that it is not the court’s province to override a legislative

determination and that the “primary objective in constructing a statute is to

ascertain and give effect to the Legislature’s intent”).

In any event, the trial court certainly did not give “undue weight” to the

statutory rule. The summary judgment order expressly states that the court

balanced the statute requiring liberal construction of restrictive covenants with the

common-law rule of strict construction (CR 127; Apx. 1). Given that the statute

“applies to all restrictive covenants regardless of the date on which they were

created,” see Tex. Prop. Code § 202.002(a), the only way the trial court erred, if at

6 all, was in giving any weight to the common-law rule. But the Zgabays can hardly

complain about that.

Though not necessarily correct, the trial court’s attempt to balance the rules

was certainly understandable in light of (1) the lack of guidance from the Supreme

Court of Texas on the interplay of the statute and the common-law rule and (2) the

lack of agreement in the courts of appeals. As this Court has noted, its sister

courts have taken differing approaches on this question. See Quinn v. Harris, No.

03-98-00117-CV, 1999 WL 125470, at *2 n.3 (Tex. App.—Austin March 11,

1999, pet. denied). Some have said that there is no conflict between the rules

without explaining how they fit together. Id. (citing, e.g., Ashcreek Homeowner’s

Ass’n v. Smith, 902 S.W.2d 586, 588-89 (Tex. App.—Houston [1st Dist.] 1995, no

writ)). Other courts seem to have concluded that the statute trumps the common-

law rule entirely. Id. (citing Highlands Mgmt. Co. v. First Interstate Bank, 956

S.W.2d 749, 752 (Tex. App.—Houston [14th Dist.] 1997, pet. denied)). And still

others have attempted to harmonize the standards by liberally construing restrictive

covenants to determine the drafters’ intent but if that intent is ambiguous, then

strictly construing the covenant in favor of the unrestricted use of property. Id.

(citing Munson v. Milton, 948 S.W.2d 813, 816 (Tex. App.—San Antonio 1997,

pet. denied)); see also City of Pasadena v. Gennedy, 125 S.W.3d 687, 693-95 (Tex.

7 App.—Houston [1st Dist.] 2003, pet. denied) (collecting cases and discussing

various approaches).

This Court follows the Munson approach of harmonizing the statute and

common-law rule. See Quinn, 1999 WL 125470, at *2 n.3; Reagan Nat’l Advert.

of Austin, Inc., 96 S.W.3d. at 493 n.2. Under this approach, the common-law rule

does not come into play unless the restrictive covenant is ambiguous. See Quinn

1999 WL 125470, at *2 n.3 (citing Munson, 948 S.W.2d at 816). As noted by the

trial court, the parties in this case agree that the applicable restrictive covenants are

unambiguous (CR 127; Apx. 1). The Zgabays do not contend otherwise on appeal,

and do not explain how the common-law rule would come into play under the

Munson approach in the absence of an ambiguity. Thus, the common-law rule has

no relevance to this appeal.

For the record, however, the Association does not believe the common-law

rule survived the enactment of section 202.003(a). That statute mandates liberal

construction of all restrictive covenants—presumably even ambiguous ones. It is

difficult to understand why liberal construction should not require interpreting

ambiguous restrictive covenants in favor of the person seeking enforcement when

strict construction requires the exact opposite—that is, interpreting ambiguous

covenants against such persons. See Benard v. Humble, 990 S.W.2d 929, 930-31

(Tex. App.—Beaumont 1999, pet. denied) (concluding that the Legislature

8 intended for restrictive covenants to be construed in a manner that might “run hard

afoul of the strict common law requirements,” and noting that the court would have

reached a different result if strict construction applied).

II. Under Texas Law, Short-Term Rentals Are Not a Single-Family Residential Use

The Zgabays’ forty-page brief devotes less than two pages to discussing the

two leading Texas cases on the short-term rental issue: Benard and Munson. In

the former case, the Beaumont Court of Appeals interpreted a restrictive covenant

stating that “[n]o lot shall be used except for single-family residential purposes.”

See Benard, 990 S.W.2d at 930. That covenant is virtually identical to the

restrictive covenants in this case, which likewise limit use to “single family

residential purposes” (CR 70, 72 [§3.01, 3.14]; Apx. 2). The Benard court held

that the trial court did not err in ruling that the covenant prohibited renting for

periods of less than ninety days. Id. at 930-32.

Although the Benard court agreed that renting was not prohibited per se, the

court explained that renting a house on a weekly or weekend basis is more akin to

temporary or transient housing rather than residential housing. Id. at 931. The

court analogized to cases involving residency requirements for voting or obtaining

a divorce, and observed that residency typically requires a fixed place of habitation

and intent to remain or return despite any temporary absences. Id. at 931-32

(citing Slusher v. Streater, 896 S.W.2d 239, 243-44 (Tex. App.—Houston [1st

9 Dist.] 1995, no writ)). In reaching this result, the Court noted the outcome might

have been different if the common-law rule of strict construction applied but

concluded it was compelled to give effect to the statutory mandate of liberal

construction. Id. at 930-31.

In Munson, the San Antonio Court of Appeals addressed a restrictive

covenant requiring that lots be used for “residential, camping or picnicing [sic]

purposes” and not “for business purposes.” Munson, 948 S.W.2d at 815. The court

agreed that the trial court’s temporary injunction against all rentals was too broad

and modified it to prevent only leasing “to the public for temporary or transient

housing purposes.” Id. at 817. In concluding that such rentals were prohibited, the

court of appeals reasoned that residence generally requires both physical presence

and intent to remain. Id. at 816 (citing, e.g., Smith v. Bd. of Regents of Univ. of

Houston Sys., 874 S.W.2d 706, 712 (Tex. App.—Houston [1st Dist.] 1994, writ

denied)). Thus, when a person comes to a place temporarily, without any intention

of making the place his or her home, the place is not the person’s residence. Id. at

817. The Munson court further reasoned that the Texas Property Code

distinguishes between a permanent residence and transient housing. Id. (citing

Warehouse Partners v. Gardner, 910 S.W.2d 19, 23 (Tex. App.—Dallas 1995, writ

denied); Tex. Prop. Code § 92.152(a)).

10 This Court has not squarely addressed whether a similar restrictive covenant

bars short-term rentals. In one case, however, the Court upheld a permanent

injunction that interpreted a “single-family, private residential purposes” restriction

to preclude operating a “bed & breakfast,” hotel, inn, or venue for parties, business

meetings, or retreats. See Wein v. Jenkins, No. 03-04-00568-CV, 2005 WL

2170354, at *1-3 (Tex. App.—Austin Sept. 9, 2005, no pet.). In rejecting the

contention that the plaintiffs received greater relief than they requested, this Court

observed that the trial court’s interpretation of what the phrase “single-family,

private residential purposes” does not include—e.g., bed & breakfast, inn, etc.—

was “consistent with both the plain language and the underlying purpose” of the

restriction. Id. at *2. This statement strongly suggests that similarly-transient uses

(such as short-term rentals) are not single-family residential uses either.

In another case, this Court held that a restrictive covenant stating that no

more than one “private dwelling house” could be erected on each lot was

ambiguous as to whether it prohibited short-term rentals, and remanded that fact

issue for trial. See Cedar Oak Mesa, Inc. v. Altemate Real Estate, LLC, No. 03-10-

00067-CV, 2010 WL 3431703, at *2-5 (Tex. App.—Austin Aug. 31, 2010, no

pet.). As noted, however, neither side in this case contends the restrictive

covenants are ambiguous. Also, the wording of the covenants—“single family

residential purposes”—is markedly different than the “private dwelling” language

11 in Cedar Oak Mesa. Presumably because of those distinctions, the Zgabays cite

Cedar Oak Mesa but do not contend that its reasoning controls here.

Finally, this Court has found the Munson court’s analysis persuasive on the

interplay between the statutory and common-law rules of construction. See Reagan

Nat’l Advert. of Austin, Inc., 96 S.W.3d at 493 n.2; Quinn v. Harris, 1999 WL

125470, at *2 n.3. In doing so, the Court did not express any doubts about

Munson’s reasoning on the short-term rental issue.

The Zgabays nevertheless argue that this Court should not follow Munson on

the merits. They attempt to distinguish the restrictive covenant in Munson based

on its express prohibition on business uses, and its language clarifying that motels,

tourist courts, and trailer parks are business uses. Munson, 948 S.W.2d at 815. On

the flipside, however, the Munson restrictive covenant lacked the additional

requirement found in the covenants in this case, which require that the residential

use be “single family.” Entering into a series of short-term rentals with separate

families (or other groups) is not a “single family” use.

Moreover, both Munson and Bernard relied on well-established Texas law in

distinguishing between temporary and residential housing. Both courts are surely

correct that residential housing does not encompass the temporary or transient

presence that is the hallmark of short term-rental housing. This Court should rule

likewise.

12 Given the unfavorable Texas law, the Zgabays resort to novel appellate

arguments. They contend that (1) the trial court effectively imposed an occupancy

requirement the Zgabays cannot meet because they no longer live in the house and

(2) the restrictive covenants elsewhere distinguish between temporary and

permanent structures but not between temporary and permanent residence. But

they never made either argument in their summary judgment papers, and have

therefore waived them for appeal. See McConnell v. Southside Indep. Sch. Dist.,

858 S.W.2d 337, 341 (Tex. 1993) (stating that grounds for or against summary

judgment must be expressly presented in the motion or response); Tex. R. Civ. P.

166a(c) (“Issues not expressly presented to the trial court by written motion,

answer or other response shall not be considered on appeal as grounds for

reversal.”)

Regardless, the trial court’s order imposes no “occupancy” requirement. It

does not require that the Zgabays or anyone else occupy the house. The order

simply enjoins the Zgabays from renting to the public for temporary or transient

purposes (CR 129; Apx. 1).

The Zgabays’ other argument mixes apples and oranges or, more aptly,

permitted structures and permitted uses. Section 3.04 of the Declaration generally

bars temporary residential structures, with certain exceptions (CR 71; Apx. 2). On

the other hand, the provisions at issue here—sections 3.01 and 3.14—limits use of

13 the permanent structure to single-family residential purposes (CR. 70; Apx. 2).

Section 3.04 does not speak to or imply anything about whether a short-term rental

is a permitted use. But by limiting use to single-family residential purposes,

sections 3.01 and 3.14 confirm that temporary use for short-term rentals is not

allowed. See Benard, 990 S.W.2d at 930-32; Munson, 948 S.W.2d at 815-17.

The Zgabays say that the test for single-family residential use should be

“whether natural persons (or a “single family,” whatever that may encompass)

occupy the property consistent with the property’s nature as a place for dwelling as

opposed to a place for those persons’ conducting of a trade or commercial

enterprise on the property” (Appellants’ Brief at 29). They cite no Texas case or

any other authority for this proposed test. They also fail to recognize that their use

fails their own test. Even if one accepts the dubious proposition that temporary

occupancy of property equates to residence, a “single family” is not occupying the

property when it is rented for short periods to either successive families or

successive other groups.

Crucially, the Zgabays also concede that the duration of the lease may be

relevant to their proposed test (Appellants’ Brief at 30). But it is difficult to

imagine much shorter durations than the periods the Zgabays have leased their

house for (two to eight days), or the one-night rentals that they say would also be

14 permissible (CR 50; Appellants’ Brief at 29, 37). Once again, the Zgabays’ use

fails their own test.

III. The Out-of-State Cases Are Distinguishable and Should Not Be Followed by This Court

Finding no support in Texas law, the Zgabays turn to decisions by courts

outside the state (Appellants’ Brief at 33-34). But the “overwhelming tide” of out-

of-state cases they cite consists of decisions from just twelve other states. In seven

of those twelve states, the issue has not been decided by the state’s highest court.

And one of the decisions—Roaring Lion, LLC v. Exclusive Resorts PBL1, LLC,

No. CAAP-11-0001072, 2013 WL 1759002 (Haw. Ct. App. April 24, 2013)—is a

memorandum opinion that is not even precedent under Hawaiian law. See Haw. R.

App. P. 35. Even at first blush, the out-of-state cases are hardly overwhelming.

Closer inspection further undermines the Zgabays’ reliance on the out-of-

state cases. First and foremost, the result in most of those cases turned on the

common-law rule requiring strict construction of ambiguous restrictive covenants.

See, e.g., Dunn v. Aamodt, 695 F.3d 797, 799-802 (8th Cir. 2012) (applying

Arkansas law)5; Applegate v. Colucci, 908 N.E.2d 1214, 1220 (Ind. Ct. App.

2009); Mullin v. Silvercreek Condo. Owner’s Ass’n, Inc., 195 S.W.3d 484, 490

(Mo. Ct. App. 2006); Estates at Desert Ridge Trails Homeowners’ Ass’n v.

5 The Zgabays’ brief cites only the district court’s unpublished decision, which was affirmed by the Eighth Circuit.

15 Vazquez, 300 P.3d 736, 740-43 (N.M. Ct. App. 2013); Mason Family Trust v.

Devaney, 207 P.3d 1176, 1178-79 (N.M. Ct. App. 2009); Russell v. Donaldson,

731 S.E.2d 535, 538-39 (N.C. Ct. App. 2012); Yogman v. Parrott, 937 P.2d 1019,

1022-24 (Or. 1997); Scott v. Walker, 645 S.E.2d 278, 283 (Va. 2007); see also

Pinehaven Planning Bd. v. Brooks, 70 P.3d 664, 668-69 (Idaho 2003) (alternative

holding was based on rule of strict construction).6

None of the out-of-state cases applies a statute that, like section 202.003(a)

of the Texas Property Code, requires liberal construction of all restrictive

covenants. Given the unique Texas statute, it is hardly surprising that Texas courts

have reached a different result than courts in other states. Needless to say,

however, foreign cases applying a common-law rule of strict construction have

little to no relevance in Texas cases where liberal construction is mandated.

Beyond the diametrically-opposed rules of construction, the out-of-state

cases are distinguishable for other reasons:

• Several cases involved restrictive-covenant language that does not include a residential-use restriction. See Pinehaven Planning Bd., 70 P.3d at 668 (addressing covenant limiting construction to one

6 Of the remaining five cases, the two Washington cases indicate that Washington courts no longer strictly construe restrictive covenants. See Wilkinson v. Chiwawa Cmtys. Ass’n, 327 P.3d 614, 619 (Wash. 2014); Ross v. Bennett, 203 P.3d 383, 387 (Wash. Ct. App. 2009). In a third case, the court noted the rule of strict construction for ambiguous restrictive covenants but held that the covenant at issue was unambiguous. See Lowden v. Bosley, 909 A.2d 261, 266-69 (Md. 2006). In two other cases, the court mentioned the rule of strict construction but it is not clear whether the courts’ holdings on the short-term rental issue turned on strict construction of the restrictive covenants. See Slaby v. Mountain River Estates Residential Ass’n, Inc., 100 So. 3d 569, 578 (Ala. Civ. App. 2012); Roaring Lion, LLC, 2013 WL 1759002, at *4-5.

16 single-family dwelling per lot and prohibiting commercial use; distinguishing the San Antonio Court of Appeals’ decision in Munson as involving narrower residential-use language); Mason Family Trust, 207 P.3d at 1178 (addressing dwelling-use limitation and prohibition on commercial use, and distinguishing Munson on the same basis); Russell, 731 S.E.2d at 538 (interpreting covenant prohibiting use of land for business or commercial purposes and distinguishing cases involving residential-use restrictions).

• A number of the cases interpreted covenants that limited use to residential or dwelling use but did not add the “single family” qualifier present here. See Dunn, 695 F.3d at 798; Applegate, 908 N.E.2d at 1217; Roaring Lion, LLC, 2013 WL 1759002, at *1-2; Mason Family Trust, 207 P.3d at 1177; Russell, 731 S.E.2d at 537; Yogman, 937 P.2d at 1020.

• In some cases, there was evidence that short-term rentals were widely allowed in the subdivision. See Mullin, 195 S.W.3d at 490- 91 (discussing the evidence that from the beginning, condominium units had been rented on a short-term or nightly basis); Wilkinson, 327 P.3d at 617 (stating that subdivision residents had entered into short-term rentals for decades without controversy).

• The restrictive covenants in one case incorporated definitions from that state’s Uniform Business Code, which defined residential use to include apartments and lodging houses. See Pinehaven Planning Bd., 70 P.3d at 668.

Viewed in light of all of these distinctions, including the dispositive distinction of

liberal versus strict construction, the Zgabays’ “overwhelming tide” is a trickle at

best. This Court should follow the Texas cases and the Texas statute mandating

liberal construction of restrictive covenants.

17 IV. The Zgabays’ Challenge to the Alleged Vagueness of the Injunction Was Not Preserved and Lacks Merit

The Zgabays also argue that the permanent injunction is too vague to be

enforced. But they never raised that argument in the trial court, either in their

summary judgment response or in a motion to modify the injunction. As a result,

their vagueness challenge is not preserved for appeal. See Shields v. State, 27

S.W.3d 267, 273 (Tex. App.—Austin 2000, no pet.) (holding that defendant

waived complaint about order not stating reasons for permanent injunction by

failing to raise complaint in trial court, citing Tex. R. App. P. 33.1(a)).7

In any event, the language in the trial court’s order—enjoining the Zgabays

“from renting their property . . . to any person or the public for temporary or

transient purposes” (CR 129; Apx. 1)—is based upon and nearly identical to the

language approved by the Munson court. See Munson, 948 S.W.2d at 817

(modifying injunction to enjoin appellants from “renting and/or leasing said

property to the public for temporary or transient housing purposes.”) Moreover,

the trial court’s order elaborates that residential use “means to occupy a place over

7 Other Texas courts have held that complaints about an injunction’s failure to comply with Tex. R. Civ. P. 683 cannot be waived because the requirements of that rule are mandatory. See, e.g., Int’l Bhd. of Elec. Workers Local Union 479 v. Becon Constr. Co., 104 S.W.3d 239, 243 (Tex. App.—Beaumont 2003, no pet.) (citing InterFirst Bank San Felipe, N.A. v. Paz Constr. Co., 715 S.W.2d 640, 641 (Tex. 1986)). But both cases involved temporary (rather than permanent) injunctions, which have differing requirements under Rule 683. Interfirst Bank involved a failure to comply with a separate requirement of Rule 683 (the requirement that a temporary injunction order set the case for trial), and there apparently was no appellate argument that the complaint was waived. See InterFirst Bank San Felipe, N.A., 715 S.W.2d at 640-41.

18 a substantial period such that it is permanent rather than temporary evidenced by

one’s physical presence simultaneous with a then-existing intent to remain” (CR

128; Apx. 1). Read in its entirety, the order satisfies the requirement that the act

sought to be restrained be described in “reasonable detail.” See Tex. R. Civ. P.

683.8

CONCLUSION AND PRAYER

For these reasons, the trial court’s summary judgment order and injunction

should be affirmed. The Association also requests all other relief to which it is

justly entitled, including an award of its appeal costs.

8 The Zgabays are not entitled to remand for an award of attorney’s fees because they have not demonstrated any reversible error in the trial court’s judgment.

19 Respectfully submitted,

THOMPSON, COE, COUSINS & IRONS, L.L.P.

By: /s/ Wade Crosnoe Wade C. Crosnoe State Bar No. 00783903 Brian D. Hensley State Bar No. 24036759

701 Brazos, Suite 1500 Austin, Texas 78701 Telephone: (512) 708-8200 Facsimile: (512) 708-8777 E-Mail: wcrosnoe@thompsoncoe.com bhensley@thompsoncoe.com

Tom L. Newton, Jr. State Bar No. 14982300 Allen, Stein & Durbin, P.C. 6243 IH-10 West, 7th Floor P. O. Box 101507 San Antonio, Texas 78201 Telephone: (210) 734-7488 Facsimile: (210) 738-8036 E-Mail: tnewton@asdh.com

CERTIFICATE OF COMPLIANCE

This brief complies with the word limit of Tex. R. App. P. 9.4(i)(2)(B) be- cause it contains 4,447 words, excluding the parts of the brief exempted by Tex. R. App. P. 9.4(i)(1).

/s/ Wade Crosnoe Wade Crosnoe

20 CERTIFICATE OF SERVICE

I certify that a true and correct copy of this Appellee’s Brief was served on February 3, 2014, via electronic service or email, to the following counsel:

J. Patrick Sutton 1706 W. 10th Street Austin, Texas 78703 E-Mail: jpatricksutton@jpatricksuttonlaw.com Counsel for Appellants

21 APPENDIX APPENDIX Tab 1 Order on Motions for Summary Judgment 150 N. Seguin, Suite 317 830-620-5562 New Braunfels, Texas 78130 Fax 830-608-2030

.......~ ~- -< - -· ., ~

--,., -~ '·--,..., DIB WALDRIP \ ·-·"': ~ (/) __/ .. PRESIDING JUDGE ~

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.,-, 433RD JUDICIAL DISTRICT COURT -u ~ 1 -~ . __ .... COMAL COUNTY ~

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0 :J ...-.., ~,·l ..J 0 September 19, 20 14 \ \ -l -<

Cause No. C2014-0501C

CRAIG ZGABAY AND § IN THE DISTRICT COURT TAMMYZGABAY § Plaintiffs/Counter-Defendant§ vs. § 433rd JUDICIAL DISTRICT § NBRC PROPERTY OWNERS § ASSOCIATION § Defendant/Counter-Plaintiff § COMAL COUNTY, TEXAS

ORDERS ON COMPETING MOTIONS FOR SUMMARY JUDGMENT

CAME ON TO BE CONSIDERED Plaintiffs'/Counter-Defendants' Craig and Tammy Zgabay (hereinafter "Zgabay") and Defendant's/Counter-Plaintiffs NBRC Property Owners Association (hereinafter "NBRC") competing Motions for Summary Judgment.

Among other matters, both parties principally seek reciprocal declarative relief regarding the subject Declaration of Covenants, Conditions and Restrictions to River Chase Subdivision, Unit Three. The parties agree the applicable provisions of the restrictive covenants are not ambiguous. While it is the Court's duty to determine the intent of the drafter of the covenants, the Court must do so balancing both statutory requirements to liberally construe language within such subdivision covenants with common law mandates to strictly construe restrictive clauses in real estate instruments resolving all doubt in favor of the free use of real estate. See generally, Benard v. Humble, 990 S.W.2d 929, 930 (Tex.App.-Beaumont 1999, writ ref'd n.r.e.) (noting the invariable legal conflict).

127 After considering the Motions, the responses, the pleadings, the evidence properly before the Court, and the arguments of counsel, the Court determines that the Defendant's/Counter-Plaintiffs Motion should be and is hereby GRANTED while the Plaintiffs'/Counter-Defendants' Motion should be and is hereby DENIED for the following reasons.

The parties do not differ nor argue about the summary judgment evidence, and key word central to the instant dispute from within the subject covenants is the word "residential." Common law authorities whose opinions are controlling upon this Court from the United States and Texas Supreme Courts along with the 3rd Court of Appeals in Austin hold, for various purposes and reasons, that a "residence" is a place occupied over a substantial period such that it is permanent rather than temporary evidenced by one's physical presence simultaneous with a then-existing intent to remain. See generally, Martinez v. Bynum, 461 U.S. 321, 103 S.Ct. 1838, 1843, 75 L.Ed.2d 879 (1983) ("Although the meaning may vary according to context, 'residence' generally requires both physical presence and an intention to remain."), Mills v Bartlett, 377 S.W.2d 636, 637 (Tex. 1964) ("Neither bodily presence alone nor intention alone will suffice to create the residence, but when the two coincide at that moment the residence is fixed and determined."); Howell v. Mauzy, 899 S.W.2d 690, 697 n. 9 {Tex.App.-Austin 1994, writ denied) (residence is a fixed place of abode occupied substantially enough to become permanent).

Although the legislature has assigned differing minimum lengths of time (i.e., 30 days to 6 months) in order that a person might obtain some various benefit or avoid some various consequence, the Texas Supreme Court held in Mills, supra, that for a purpose of residency under the Texas Election Code "no specific length of time [is required] for the bodily presence to continue." Mills, supra at 637. The San Antonio Court of Appeals, albeit in construction of a more specific set of covenants than are at issue here, noted the well-recognized distinction in Texas law between a permanent residence and temporary housing. Munson v. Milton, 948 S.W.2d 813, 816-17 (Tex.App.-San Antonio 1997, writ denied). Without ascribing any specific length of time or bright-lined rule, the San Antonio Court modified the lower court's injunction enjoining a homeowner from "renting and/or leasing [the subject] property to the public for lodging, vacation and recreation purposes" to prohibit "renting and/or leasing [the subject] property to the public for temporary or transient housing purposes." Id. at 815 & 817.

Based upon the existing and proper summary judgment record, the Court has no doubt regarding the intent of the drafter of the instant covenants. The covenants, created and filed in 1999, clearly allow properties to be rented or leased for residential purposes consistent with the then-existing common law understanding and meaning of that word at that time. Thus, the Court declares that, within the Declaration of Covenants, Conditions and Restrictions for River Chase Unit Three-as used in the phrase single-family residential purposes, to be "residential" means to occupy a place over a substantial period such that it is permanent rather than temporary evidenced by one's physical presence simultaneous with a then-existing intent to remain.

128 (·)-~'-.'.·: \/ -<~~.

Accordingly, it is ORDERED that Counter-PlaintiffNBRC is entitled to injunctive relief against Counter-Defedants Zgabay restraining them from renting their property located at 1175 River Chase Drive, New Braunfels, Texas 78132 (hereinafter the "Property") to any person or the public for temporary or transient purposes.

It is FURTHER ORDERED that consistent with the Declaration of covenants, Conditions and Restrictions for River Chase Unit Three, which is applicable to the Property, neither Counter-Defendants Zgabay, nor their tenants, assigns, heirs or successors, shall allow or cause the Property to be rented, sub-rented, leased or subleased to any person or the public for temporary or transient purposes.

It is FURTHER ORDERED that Plaintiffs/Counter-Defendants Zgabay take nothing against Defendant/Counter-PlaintiffNBRC and that all claims asserted by Plaintiff/Counter-Defendant Zgabay are denied and that all costs of court be taxed against Plaintiff and that Defendant/Counter-PlaintiffNBRC recover from Plaintiffs $3,422.50 as reasonable and necessary attorney's fees and $500.00 as statutory damages.

129 APPENDIX Tab 2 Declaration of Covenants, Conditions and Restrictions for River Chase Unit Three Doclt 9906031628 .... vaoso:uua

Document Numbe~ 9906031412 is re-recorded to correct Page 8. This document as re-recorded replaces Document Number 9906031t12

DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS RIVER CHASE UNIT THREE

STATE OF TEXAS KNOW AU. MEN BY THESE PRESENTS; COUNTY OF COMAL

Thle Declaration made on thlt' date hereinafter set forth by TEXAS SOUTHERLAND VENTURE, formerly known u TEXAS SUMMERLIN VENTURE, a Maauchuaette Joint Vlt'nture, acting h~~rein by and through iU duly authorized Joint Venturer, SOUTHERLAND PROPEFITIES, INC., formerly known a• SUMMERUN PROPERTIES, INC., a Texaa Corporation, duly authorized to do busineu in the Statlt' of Texu, hereinafter referred to u "Developer".

WITNESSETH:

WHEREAS, Developer is the owner of that certain tract of land known ae RIVER CHASE UNIT TWO, beiniJ a subdlvlaion containing 741.43 l1Cf8S out of a 1494.571 acre tract of land situated In ComaJ County, Texas (hereinafter referred to as the "Property• or tha "Subdivlalon") with the Plat of RIVER CHASE UNIT THREE, baing recorded In the olflca of the County Clerk of Coma! CountY, Texas on the 5111 day of November, 1999, after having bean approved 111 provided by 1-. and being recorded in Book Volume13, PagR 131-138, of tha Mep Recorde of ComaJ County, Tax••• and,

WHEREAS, it Ia the desire of Developer to place certain reatrictlons. -manta, covenants, conditions, atipulatlone and reservation• (herein sometime• referred to u (the •Reatrlctlona"l upon and agelntt RIVER CHASE UNIT THREE in order to establish a uniform pian for itt development, improvement and sale, and to insure tha preservation of IUch uniform plan for the baneflt of both the present and future ownare of tracta in RIVER CHASE UNIT THREE.

NOW, THEREFORE, Developer hereby adopts, eatablishaa and lmpo- upon RIVER CHASE UNIT THREE, and daclaras -the following ruarvationa, eaaamente, reatrictiona. covenants and conditiona eppllcable thereto all of which are for the purpqaae of enhancing and protecting the value. daeirabillty and ettrxtivenesa of said Propart'f, which Reatrlctiona shall run with aeid PropertY and title or lntaraat therein, or any part thereof, and ahalllnura to the benefit ot each owner thereof. Developer also doclaree that RIVER CHASE UNIT THREE shall beaubject to the juriadlctlon of tha • Association• (ae hereinafter defined).

I ARTICLE I QEFINII!ONS

I Section 1.01 • Association" shall maan and refer to the NBRC PROPERTY OWNERS ASSOCIATION, and ita auccasaors and a~algna. Notwithstanding anything herein to the contrllfY, the NBRC PROPERTY OWNERS ASSOCIATION ahaU co111iat of members from all Sections and Unite within the Property. It is Intended that only one NBRC i PROPERTY OWNERS ASSOCIATION exista for the whole ofthe 1494.871 acres and

I for any other property hereafter subjected to theee reatrictiona.

~

ta 1

EXHIBIT

I Jl 67 .llac:H 99868iU41il!

Doctt 9'906031628

Section1.02 'Bgard gf Qjrectgrs" shall mean and refer to the Board of Directors of the Association.

Section1.03 "Builders• shall mean and refer to persona or antltiaa that purchase tracts and build specu latlve or custom homes thereon lor third party purchasers.

Section1.04 'Cgmmon Area• shall mean all real Property (including the Improvements thereon) within the Subdivlaion owned by the Developer and/or tho Aa•oclation for the common usa and enjoyment of the Owners.

Section 1.05 "Cgntragtgr• sheD mean end refer to the parson or entity with whom an Owner contracts to construct a residential dwelling on such Owner's Tract.

Sectlon1.06 "Oevelgoar• shall maan and refer to TEXAS SOUTHERLAND VENTURE, a MaaAChuaatta Joint Ventura, acting herein by and through ita duly authorized Joint Venturer, SOUTHERLAND PROPERTIES, INC., a Texas Corporation, itsauccesaora and aaslgna.

Section 1 .07 .:.II:G1: shall mean and refer to any plot of land identified as a parcel or home site on the Plat of RIVER CHASE UNIT THREE. For purposes of this instrument, "T ract• shall not be deemed to includs any portion of tho "Common Araaa • or 'Unrestricted Reserves•, (defined herein as any Common Areaa and Unrestricted Raaarvaa shown on the Plstl in RIVER CHASE UNIT THREE, regardless of the use made of such area.

Sectlon1.08 "Member• shall mean and refer to every parson or entity who holds a membership in the Aesoclation.

Sectlon1.09~ shall mean and refer to the record owner, whether one or more persons or entitles, of fee simple title to any tract which is a part of the Subdivision, Including (i} contract aellar (a sellar under a Contract for Dead), but excluding those having auch interest merely as security for the performance of an obligation, (iii Developer (except es otherwise provided heralnl, end IIIII Bulldera.

Section1.1 0 ~The words 'Sectlon(al' and 'Unitlsl" are uaad interchangeable within those Rastrictiona to refer to a particular tract of land designated on each filed map or plat of RIVER CHASE.

ARTICLE II RESERVATIONS EXCEPTION ANQ QEQICADONS

Sectlon2.01 Recgr!led SubdMajgn Map gf tho Prooartv. The Plat ("Piat"l of RIVER CHASE UNIT THREE dedicates for use aa such, subject to the limitations aa set forth therein, the roada, streets and easements shown thereon. The Plat further establishes certain raetrictiona applicable to RIVER CHASE UNIT THREE. All dadicatlona, restrictions and reaarvatlons created herein or shown on the Plat, rapists or amendment of the Plat of RIVER CHASE UNIT THREE recorded or hereafter recorded shall be construed as being included in each contract, dead, or conveyance executed

63 - - - - - - - - - t '}•?- - - - - - - - . . . ~r--------

Doell 9906031628

or to be executed by or on behalf of Developer, whether speclllcellv referred to therein or not.

Section 2.02 Easements. Developer reserves for pubtic use the utility eeaementl shown on the Plat or that have bean or hereafter may be cr81ted by separate instrument recorded In the Official Public Records of Carnal County, Texaa, for the purpose of conetructing, melntainlng and repairing a syatem or syateme of electric lighting, electric power, telegraph and telephone line or linea, storm surface drainage, cable television, or any other utility the Developer sees fit to lnetall In, acrose and/or under the Property. All utility eaaemante In the Subdivision may be used for the construction of drainage swalea In order to provide for Improved surface drainage of the Reserves, Common Area end/or Tracts. Should any utUity company furnishing a service covered by the general sasement herein provided or provided on the plat requeat a specific easement within the general easement area by separate recordable document, Developer, without the joinder of any other Owner, shall have the right to grant such easement on said Property without conflicting with the terms hereof. Any utility company serving the Subdivision shall have the right to enter upon any utility easement for the purpose of installation, repair and maintenance of their respective facilitlas. Neither Developer nor any utility company, political subdivision or other authorized entity using the aasemante herein refaned to shall bailable for any damages dona by them or their &Siigna, agents, employees, or servants, to fences, shrubbery, trees and Iaws or any other Property of the Owner on the Property covered by said easements.

Section 2.03 Tjtle Sub!ect to Easamants. It is expressly agreed and understood that the title conveyed by developer to any of the Tracts by dead, contract for deed or other corrveyanca shall be subject to any easement affecting aama for roadwaya or drainage, electric lighting, electric power, telegraph or telephone purposes and other easements hereafter granted affecting the Tracta. The Owners of the respective Tracts shall not be deemed to own pipes, wires, conduits or other service linea running through their Tracts which are utilized for or service to other Tracts, but each Owner shall have an easement in and to the aforesaid facilities as shall ba necessary for the use, maintenance and enjoyment of his Tract. The Developer may convey title to the above said easamenta to the public, a public utility company or the Allocietlon.

Section 2.04 Utllitv Ea§8menta. (a) Utility ground and aerial easement• have been dedicated In accordance with tha Plat and by separate recorded easement documents.

(b) No building shell be located over, under, upon or serosa any portion of any utility easement. The Owner of each Tract shall have the right to construct, keep and maintain. concrete drives, fences, and similar improvements across any utility easement, and shall be entitled to cross such easements at ali times for purposes of gaining acceae to and from such Tracts, provided, however, any concrete drive, lance or similar improvement placed upon such Utility Easement by the Owner shall be constructed, maintained end used at Owner's risk and, as such. the Owner of each Tract subject to said Utility Easements shall be

I I I

69 ---------r.:fi)._---------:.,.~~-------- Doc• 9906031628

responsible for (i) any and all repairs to the concrete drives, fences and similar improvements which erose or are located upon such Utility Easamenta and (ill repairing any damaga to said lmprovemanta caused by the Utility District or any public utility in the caursa of lnstalftng, operating, maintaining, repairing, or removing Ita facilities located within the Utility Easamants.

ARTICLE Ill USE RESTRICTIONS

Section 3.01 SlngiB Family Bujdeotial Construction. Except aa provided below, no building shall be erected, altered, placed or permitted to remain on any Tract other than one dwelling unit par each Tract to be used for single family residential purposes. One guest/aervanta house may be built provided said guest/servants housa contains no lass than five hundred (500) square feat, no mora that on•thousand (1 000) square feat, is built after or while the main dwelling Is being built and haa prior approval of the Architectural Control Committee. All reaidances muat have a garage. Detached

II garagea and work shops may not ba conatructed on the Property prior to the main dwelling being built. Barns and/or storage buUdlnga may be conatructad on the property prior to the main dwelling being built provided they ere approved In writing by the Architectural Control Committee prior to baing erected, altered or placed on the property and are placed on the reer half of the property, out of view of any road, and behind the Intended dwelling alta. All structure• must be approved In writing by the Architectural Control Committee prior to being erected, altered or placed on the Property. The term "dwelling• doaa not Include either double wide or manufactured homes, or single wide mobile homes, or prefeb houses regardless of whether the aame are placed upon permanent foundation, and said homea are not permitted within the Subdivision. All dwellings must have at least one thousand eight hundred (1800) I square feet of living area for one story homaa and two thousand 120001 square feat l of living area for two story homes, with at laaat one thousand (10001squara feat on the ground floor, excluding porchee, and be built with new construction material. Any building, structure or lmprovamanta commenced on any tract shall be completed aa to the exterior finish and appearance within six (61 montha from the commencement date. All garagaa, Including detached garagea, wiU be of the same general construction as the main dwelling and located on the tract according to the Committee approved building aite plan and shell be aultable for not lasa that two (21 automobiles. All garages must be aide or rear entry. No carports shall ba allowed.

Section 3.02 Comgosita Building Sjto, Any Owner of one or mora adjoining Tracts lor portions thareofl may, with the prior written approval of the Architectural Control Committee, and with approval of the Coma! County Commissioner's Court, If required, consolidate such Tracts or portion• Into one bulldlng alta, with the privilege of placing or constructing improvements on such resulting site, In which caaa the aida setback linea shall be meesured from the raaulting side Property linea rather than from the Tract linea as Indicated on the Plat. Public utility and drainage eaeementa era exempt from this provision.

Section 3.03 Location of the lmproyementa upon the Tract, No building of any kind

7J i ! I Beall 990i03l,.ll!

l shall be located on any tract nearer than forty feat (40') to the side Property line, no nearer than seventy-five feet (76'1 to the front Property Una and no nearer than

I seventy-five feat (76'1 to the rear Property line, provided however, as to any tract, the Architectural Control Committee may waive or altar any such setback Una, If the Architectural Control Committee In the exercise of the Architectural Control Committee's aola discretion, such waiver, or alteration Is necacsary to permit affective utilization of a tract. Any such waiver or alteration must be in writing and recorded

I In the Offlclal Publlo Recorda of Comal County, Texas. All dweUings placed on Subject Property must be equipped with Class I Aerobic Septic tank system that meet all applicable laws, rules, standards and specifications, and all such dwellings must be served with water and electricity.

Section 3.04 Usa pf Temoorarv Structural. No structure of a temporary character, whether trailer, motor home, basement, shack, garage, bam or other outbuilding shall be maintained or used on any Tract at any time as a residence, either temporarily or permanently, except as provided below. No Trect shall be uaed as a camping ground. A property owner may usa an RV camper or motor home as hlslhar temporary residence for up to six (61 months during construction provided an approved septic system has bean Installed and the RV camper or motor home Is placed behind the construction site. After the dwelling is complete an RV camper or motor home may be stored on the tract provided It Ia stored In compliance with Section 3.17 of the1e restrictions. The Declarant or the Commlttaa shall have the right to have any RV or motor home found to ba in violation of these raatrictions removed end stored at the

l I expanse of the owner: and, for these purposea Declarant andlor the representative of the Committee Ia granted express written consent to remove the same without penalty or offense. I i The Developer resarvea the exclusive right to erect, place and maintain a mobile home, i camper or motor home In or upon any portion of the Subdivision as In Its sola

Ii discretion may be necessary or convenient while selling Tracts, selling or constructing residences and constructing other Improvements within the Subdivision. The Developer Ia not raatrlctad by any of the above time constraint& in thla provision.

l Section 3.06 Repair of Buildjnga. All Improvements upon any of the Property shaD at

l all times be kept in good condition and repair and adequately painted or otherwise maintained by the Owner thereof. i Section 3.06 Alteration or Removal of Improvements Any construction, other than

i 1 3 normal maintenance, which altars the exterior appearance of any Improvement, or the removal of any Improvement, shell ba performed only with the prior written approval of the Architectural Control Committee.

i' Section 3.07 Roofing Materiels. The roof surface of all principal and secondary structures Including garages and domestic living quartera shell be of slate, stone, i. concrete tile, clay tile, or other tile of a ceramic natura, composition shingles with a 1 twenty-five (25) year or mora warranty; or they may ba metal, left natural or painted J a color approved by the Architectural Control Committee, using standing or battened ~ seams. The Architectural Control Committee shall have the authority and sola A J 6 ~ ll

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discretion to approve other roof treatments and materials if the form utilized will be harmonious with the surrounding homes and subdivision as a whale.

Section 3.08 Construction In Place. All dweiUngs constructed on the Property shall be built In place on the applicable Lot. The use of prefabricated materlala for any Improvements, Including but not limited to fences, shall be allowed only with the prior written approval of the Architectural Control Committee.

Section 3.09 ~ All exterior color schemes on any structure must be approved by the Architectural Control Committee prior to use.

Section 3.1 0 Model Hom11. Notwithstanding anything herein contained, Builders shell be allowed to construct model homes aa long aa such modal homes conform to these restrictions.

Section 3.11 ~ The exterior walls of the main residence conatructed on any lot shall be at leaat sevanty·flve percent (76%1 masonry or masonry veneer, Inclusive of door, window and similar openings. However, all exterior walls exposed to view from the front property line shall be constructed of no lass that seventy-five percent (76%1 masonry or masonry veneer exclusive of all door, window or similar openings. Masonry and Masonry veneer lncludea atucco, ceramic tile, clay, brick, rock and all other materials commonly referred to In the New Braunfels, Texas area aa masonry. Notwithstanding this provision, log housea not meeting the above masonry requirements may be allowed with the prior written approval of the Architectural Control Committee.

Section 3.12 Walls. foncaa, qnd Mall Boxes. Walls and fences, if any, must be approved prior to construction by the Architectural Control Committee and, unless otherwise permitted by the Architectural Control Committee, must be constructed of wood, metal, masonry, masonry veneer, smooth wire or barbed wire. Electric wire and chain link fencing shall not be permitted. All wooden fencea must be painted and the color of such paint muat be approved by the Architectural Control Committee. All individual mall boxea (If approved by the poatal department) must be of masonry construction and approved by the Architectural Control Committee.

Section 3.13 Antonnat, Towera. qnd Satellite pjahal. Antennas, towarl, or sateUita dlshe1 of any kind shall not exceed ten feat above the roof of the Dwelling or Accaasory Building whichever Ia higher. Any anteMae, tower or eatelllte dish rnuat be located to the side or rear of the Dwelling or Accessory Building and not within forty feat (40'1 of any side Property line or seventy-five feet (76') of any rear Property line. Nothing herein shall be construed to conflict with the latest rules and regulations

I set forth by the Federal Communications Commission.

l ~ Section 3.14 Prohibition of Offwjve Actjyitjas. No Activity, whether for profit or nat, shall be conducted on any Tract which Is not releted to single family residential purposes, unleaa said activity meets the following criteria: (a) no additional exterior sign of activity is pre11nt, (b) It Ia the type of action that usually happens In a home, ''~' (c) no additional traffic, that would not be there normally, Is created, and (d) nothing

I 6

II

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dangerous Ia present that should not be there. Thla restriction is waived in regard to the customary sales activities required to sell homes In the Subdivision. The discharge or u.. of firearms is el(presllly prohibited. Hunting Is elCpresaly prohibited. Tha Association shall have the sola and ab10lute dlacretion to determine what constitutes a nuisance or annoyance.

Section 3.15 Garbage and Trash Disposal. Garbage and trash or other refuse accumulated In thla Subdivision shall not be permitted to be dumped at any place upon adjoining land where a nuisance to any residence of this Subdivision Is or may be created. No Tract shall be used or maintained as a dumping ground for rubbish. Trash, garbage or other waste shall not be allowed to accumulate, shall be kept In sanitary containers and shaU be disposed of regularly. All equipment for the storage or disposal of such material shall be kept In a clean and sanitary condition.

Section 3.18 Junked Motor Vehicles Prohjbjted. No tract shall be used as a depository for abandoned or junked motor vehicles. No junk of any kind or character shall be kept on any Tract.

Section 3.17 TrajfeCJ. Rys. Boats All trailars, travel trailars, graders, recreational vehicles IRV's), trucks (other than pickups of a size one 111 ton or less), boats, tractors, campans, wagons, buses, motorcyclea, motor scooters and lawn or garden maintenance equipment shall be kept at all times, elCcapt when In actual use, In enclosed structures or screened from view from common areas, public or privata thoroughfares and adjacent properties.

Section 3.18 ~. No signs, advertising, billboards or advertising atructure of any kind may be aracted or maintained on any Tract without the consent In writing of the Architectural Control Committee, elCcept one 111 professionally made sign not more than twenty-four Inches 124 "I by thirty Inches (30") advartislng Owner's Tract for sale or rant, and one 111 profesaionally made sign, not more than twelve inches 112"1 by twenty-four Inches 124"1 identifying the Tract owner's name or names. The term "professionally made algn• does not Include the plastic pre-made "for sale" or "for rent" signs. No algn shall be nailed to a tree. Daclarant or any member of such Committee shall have the right to remove any such sign, advertisement or billboard or structure which is placed on any Tract In violation of these reatrlctlons, and In doing so, shan not be liable, end are hereby elCpressly relieved from, any liability for trespass or other tort in connection therewith, or arising from such removal.

Section 3. 19 Animal Husbandry. No animals, livestock or poultry of any kind shall be raised, bred or kept on any Tract &lCcept that one (1) horse par avery 2.5 acres may be kept, ea long as it doaa not become a nuisance or threat to other Owners. Provided, however, animals baing raised for 4-H or school sponsored prograrne will be permitted. No pigs or hogs will be permitted under any circumstances or programs. All horses, cows and 4-H animal• baing raiaed by Individual tract owners must be kept In e fenced araa on the owner's tract. No ovargrazlng Is permitted on any portion of tha lot. Dogs, cats, or other common housahold pata may be kept on a Tract. Dogs must be kept in a kennel, dog run, or fenced In area that confinn aald doglsl to that area, and for these purposes chain link fencing shall be permitted provided, however,

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no such fenced In area shall be located adjacent to any aida, front or rear boundary line. Dogs will not be permitted to run loose In the Subdivision and muat be vaccinated for rabin according to State law once a year and registered with Comal County once a year.

Section 3.20 Mineral Developmem. No commercial oil drilling, oil development operations, oil refining, quarrying or mining operation of any kind shall be permitted upon or In any Tract. No demck or other structures daigned for the uaa of boring for oil or natural gas shall be erected, maintained or permitted upon any Tract.

Section 3.21 prajnage, Natural established drainage patterns of atreeta, tracts or roadway ditches wiU not ba Impaired by arry person or paraona. Driveway culverts must ba Installed and will ba of suHiclant size to afford proper drainage of ditches without backlog water up Into ditch or diverting flow. Drainage culvert installation Is subject to the inspection and approval of the Architactural Control Committee and to County requirements.

Section 3.22 Ro-sybdjy!sjon. Except as provided below or as otherwise permitted In thea& restrictions, no tract shall be re-aubdivlded or spUt. Lots may be combined Into one Lot for building purposes and the Interior common boundary line shall be extinguished by filing a recordable document of record, joined by the Declarant, or Architectural Control Committee. or ita duly authorized represantstlva, declaring the same to be extinguished. Thereafter, aU sat back linea shall refer to the exterior property llna1. Combined Lots shall nevarthalasl b1 considered as separate Lots for assessment purposes, unless otherwise determined by tha Architectural Control Committee. Public utility end drainage aaaementa ara exempt from thla provision.

Builder reserves the right to further subdivide Lot 220. Thla right Ia assignable by Developer at ita sole discretion. The assignment, if any, shall be executed at such time aa Lot 220 Ia sold by Davalopar and shall ba evidence in writing and filed of record, Thl8 right Is exclusive to Developer and shall not be affected by the transfer of architectural and property owner aaeociatlon control.

In the evant of the failure of Owner to comply with the above requirements after ten (101 days written notice thereof, the Auoclatlon or their designated agents may, without liability to the Owner, Contractor or any occupant• of the Tract In trespass or otherwise, enter upon (and/or authorize one or mora othara to enter upon) said Tract, causa to be removed, such garbage, traah and rubbish or do any other thing necessary to secure compliance with this Declaration at the expanse of Owner. Payment for the chargae by such Owner shall be payable on the flrat day of the next calendar month.

ARTICLE IV ARCHITECTURAL CQNTBOL COMM!me

Section 4.01 Basic Control (a) No building or other Improvements of any character shell be erected or placed, or the erection or placing thereof commenced or changes made In the design or exterior appearance thereof (excluding, without

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limitation. any staining, painting or aiding), or any addition or exterior alteration made thereto after original by construction, or demolition or destruction by voluntary action made thereto after originally constructed, on any tract in the Subdivision until the obtaining of the neca11ary approval (as hereinafter provided) from the Committee of the construction plana and specification for the construction or alteration of such improvements or demolition or destruction of existing improvements by voluntary action. Approval shall be granted or withheld besed on matters of compliance with the provisions of thia Instrument.

(bl Each application made to the Committee. or to the Davalopar, shall be accompanied by two seta of plans and specifications for all proposed construction (initial or alteration) to be done on auch Tract including plot plana showing location on the tract.

Section 4.02 Architectural Comrol Committee.

(a) The authority to grant or withhold architectural control approval as referred to above ie initially vested In the Oavalopar; provided, however, the authority of the Daveloper shall caue and tarmlnate upon the election of the Architectural Control Committee of the Association (sometimes herein referred to as the "Committee"), In which avant such authority shall be vested In and exercised by the Committee (aa provided In (bl below), hereinafter referred to, e~ecept aa to plena and specifications and plot plans theretofore submitted to the Daveloper which shall continua to e~eercise auch authority over all such plana, specifications end plot plans. Notwithstanding, attar the Control Transfer Date, both the Davelopar and the Architectural Control Committae 1hall have the right to grant a variance from the building set-back Una restrictions. Either party may grant this variance as It determines In its sole discretion is needed, without the consent of the other. The term "Committee•, as used in this Declaration, shall mean or refer to the Developer or to the RIVER CHASE Architectural Control Committee composed of members of the Association, as applicable.

(b) On or after such time as fifty-one percent (51 %1 of all of the Tracts in all sections of the Subdivision are conveyed by Developer I from time to time hereafter referred to as the "Control Transfer Data"), the Developer shall cause an Instrument transferring control to the Association to be placed of record in the Official Public Recorda of Come! County, Texea (the effective control Transfer Data shall be the data of its recording). Thereupon, the Developer shall appoint a Committee of three (31 members to be known as the RIVER CHASE Architectural Control Committee who ahall serve until the next aucceeding annual meeting following the Control Transfer Data. From and after the Control Transfer Data, each member of the Committee must be an Owner of the Pro~rty in soma Section of RIVER CHASE. Additionally, the Developer shaft have the right to discontinue the exercise of architectural control privilegas and

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arrange for the trans far to the Assoc;iatlon at any time prior to the Control Transfer Date by flUng a statement and Instrument to such effect in the Official Public Recotda of Coma! CountY, Taxa.

Section 4.03 Effect of Inaction. Approval or disapproval aa to architectural control mettera aa aet forth In tha preceding provisions of thfa Declaratlon ahell be In writing. In the event that the authority exarc:ialng the prerog11tlve of approval or disapproval (whether the Developer or the Committeel falla to approve or disapprove In writing any plana and apeclflc:lltloM and plot plans received by it in compliance with the preceding provlalom within thirty (301 days following such submissions, such plana and apec:iflcatlona and plot plan shall be deemed approved and the construction of any such building and other Improvements may be cornmanced and proceeded with In compliance with all such plana and spec;ltlcatlona and plot plan and all of the other terma and provislona hereof.

Section 4.04 Effect of Aoproyal. The granting of the aforesaid approval (whether In writing or by lapse of tlrna• shall constitute only an expreatlon of opinion by the Committee that the term• and provialone hereof shaft be complied with if the building and/or other Improvements are erected in accordance with said plana and specificatlone and plot plan; and such approvel shall not constitute any nature of waiver or estoppal either ae to the persona expreaaing such approval or any other peraon In the avant that such building and/or improvements ate not constructed in accordance with such plane and specifications end plot plan, but, nevertheless, fail to comply with the provlalona hereof, Further, no pereon exarcblng any prerogative of approval of disapproval shaft Incur any liabilitY by reasons of the good faith exarc;ille thereof.

Section 4.05 ~ The Developer or the Committee, aa the case may be. may authorize variance• from compftance with any of the provllions of thllt Declaration or minimum acceptabto construction standard• or regulations and requirement• aa promulgated from time to time by the Developer or the Committee, when clrcumatancaa such 111 topography, natural obstruction•• Tract configuration, Tract size, hardahlp, aeathatio or environmental conalderstlona require 1 variance. Tha Developer and the Committee reserve the right to grant variances at to building set·back nn... Such variances must be evidenced in writing and shall become effective whan signed by the Developar or by at laest a majority ot the members of the Committee. If any such vlirlancea are granted, no violation of the provlslona of this Declaration shall be deamed to have occurred with respect to the matter for which the verlance Is granted; provided, however, that the granting of a vlirlance shall not operata to waive any of the provtslona of thla Declaration for any purpoaa except as to the partiCUlar Property and partlculer provlslons hereof coVered by the vlirlanca, nor ahall the granting of any variance affect in any way tha Owner's obligation to comply with all governmental law. and regulations affecting the Property concerned and the Plat.

ARTICLE V NBBC PROPERTY OWNERS ASSOCIATION

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Section 5.01 Mambershlo. Every person or entity who Is a record owner of any Tract which Ia subject to the Maintenance charge (or could be following the withdrawal of an exemption therefrom) and other aasenmenta provided herein, shall be a "Member" of the Association. The foregoing Ia not Intended to include persona or antitiea who hold an interest merely as sacurity for the performance of an obligation or thosa having only an interest In the mineral estate. No Owner ahall have mora than one membership for each Tract owned by such Member. Memberships shaH be appurtenant to and may not be separated from the ownership of the Tracta, ragardlaaa of the number of persona who may own a Tract (such as husband and wife, or joint tenanta, ate.) there shall be but one membership for each Tract. Additionally, the Directors of the Association must be Members of the Assoclatlon (as more particularly described in the By-laws). Ownership of the Tracts ahall be the aole qualification for membership. The voting rlghta of the Members are sat forth In the Bylawa of the Association. However, the Reatrlctlva covenants will not be construed as to assess the Vaterens Land Board or the State of Texas. Any asaaumenta are the personal obligation of the Veteran purchaser, hla succuaors, hairs and assigns. Any lien Imposed by the restrictive covenanta does not affect the Veterana Land Board's Interest In the Property.

Section 5.02 Non·Profjt Corooratlon, NBRC PROPERTY OWNERS ASSOCIATION, a non-profit corporation, has bean (or will bel organized and It shall be governed by the Articles of Incorporation and Bylaws of said Association; and all duties, obligations, benefits, Uens and rights hereunder In favor of the A11oclation shall vest In said corporation.

Section 5.03 .!MutL The Association has adopted or may adopt whatever Bylawa it may choose to govern the organization or operation of the Subdivision and the usa and enJoyment of the Tracts and Common Areas, provided that the same are not In conflict with the terms and provisions hereof.

Section 5.04 Owner's Rjght of Enloyment, Evvry Owner shall have a banvficial Interest of usa and enjoyment In and to the Common Areas and such right shall be appurtenant to and shall pasa with tha title to avery assessed Tract, subject to the following provisions:

(a) the right of the Association, with respect to the Common Areas, to limit the number of guuta of Owners;

(b) the right of the Anoclatlon, In accordance with Its Articles and Bylaws (and until fifty-one percent (51 %1 of all tracts in the Subdivision are sold), subject to the prior written approval of the Oeveloper, to Ill borrow money or the purpose of Improving and maintaining the Common Areas and facilities (including borrowing from the Developer or any entity affiliated with the Developer) and (iil mortgage said Property, however, the rights of such mortgage of said Property shall be subordinate to the rights of the Owners hereunder;

(cl the right of the Association to suspend the Members voting rights and

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the Member' a and Related User• right to use any recreational facilities within the Common Areas during any period In which the Maintenance Charge or any assestment agalnat this Tract ramalna unpaid;

ldl the right of the Association to suspend the Mamber'a voting rights and the Member" a and Related Users' right to usa any recreational facintles within the Common Ares, after notice and hearing by tha Board of Dlractors, for the Infraction or violation by such Member or Related Users of this Declaration or the "Rules and Reguletlons', as hereinafter defined, which auspension shall continue for the duration of such Infraction or violation, plue a period not to axceed sixty (601 days following the cessation or curing of such Infraction or violation.

ARnCLEVI MAINTENANCE FUNQ

Section 8.01 Maintenance Fund ObUqatlon. Each Owner of a tract by acceptance of a dead therefore, whether or not It shall be axpreuad in any such dead or other conveyance, Ia deemed to covenant and agrees to pay to the Association a monthly maintenance charge (the "Maintenance Charge"), and any other asaassmenta or charges hereby levied. The Maintenance Charge and any other asaassments or chargee hereby levied, together with such Interest thereon and costs of collection thereof, as hereinafter provided, shell be a charge on the Tracts and shall be a continuing lien upon the Property against which each such Maintenance Charge and other chargee and aaseasmants ara made.

Section 8.02 Basis of tho Malntenancg Charge.

(a) The Maintenance Charge referred to shall bo used to create a fund to ba known ae the "Maintenance Fund". which shall be used as herein provided; and each such Maintenance Charge (except 111 otherwise heralnafter provided) shall be peld by the Owner of each Tract (or residential building site) to the Association. The Maintenance Charge for the year of purchase shall be pro-rated at closing and then shall be paid annually, In advance, on or before the first day of tha first month of each calendar yaer. Provided, however If such owner owne mora than one tract In the subdivision, such Owner shall pay only twice the aseaesment of one I 11 tract no matter how many tracta are owned or In the avant as Owner obtains consent from the Committee for a Composite Building site pursuant to Section 3.02 hereof, such Composite Building Site shall be considered for the Maintenance Charge of one Tract for beginning upon the completion of the Improvement& thereon.

(b) Any Maintenance Charge not paid within thirty (30) days after the due data shall bear Interest from the due data at the Iasser of Iii the rata of eighteen percent ( 18%) per annum or (Ill the maximum rate permitted by law. The Association may bring an action at law against the Owner personally obligated to pay the same, or foreclose tha hereinafter

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described lien against the Owner's Tract. No Owner may waive or otherwise escape liability for the Maintenance Charge by non-use of any Common Areaa or rec:reationel facilities evailllble for uae by Ownara of the Subdivision or by the abandonment of his tract.

(c) The Initial amount of the Malntenanca Charge applicable to each Tract will be $120.00 per year due In advance, payable on January 1 of each year. All other mattera relating to the Maintenance Charge and the collection, expenditures and administration of the Maintenance Fund shall be determined by the Developer or the Board of Dlrectora of the Association, subject to the provlaiona hereof.

ldl The Association, from and attar the Control Tranafer Date, shall have the further right at any time, with a majority vote of all esaoclatlon membara, to adjust or alter said Maintenance Charge from year to year salt deems proper to meat the reasonable operating expanses and reserve requirements of the Asaoclatlon In order for the Association to cerry out Its duties hereunder.

Section 6.03 Craatjgn of Uen and Personal Obligation. In order to secure the payment of the Maintenance Charge, and other charges and aaaassmanta hereby levied, each Owner of a Tract In the Subdivision, by such party's acceptance of a dead thereto, hereby granta to the Association a contractual lien on such Tract which may ba foreclosed on by non-judicial foreclosure, pursuant to the provisions of Section 61.002 of the Taxes Property Code (and any aucceaaor statute); end each such owner hereby expressly grants the Aesoclation a power of sale In connection therewith. The Association shall, whenever It proceeds with non-judicial foreclosure pursuant to the provlalona of seld Section 61.002 of the Taxae Property Code and said power of sale, designata In writing a Trustee to post or causa to be posted all required notlcaa of such foreclosure sale and to conduct such foracloaura sala. The Trustaa may ba changed at any time and from time to time by the Association by means of written Instrument axacutad by the President or any Vlce-Prallldant of the Association and filed for record In the Official Public Recorda of Cornel County, Taxes. In the evant that the Association has detarmlnad to non-judicially foreclose tha lien provided harein pursuant to tha provisions of said Section 51.002 of tha Texaa Property Coda and to exercise tha power of sale haraby granted, the Association, or the Association's agent, shall give notice of foreclosure sale as provided by the Texas Property Code as than amended. Upon request by Association, the Trustee shall give any further notice of foraclosura sale sa may be required by the Texas Property Coda as than amended, and shall convey such Tract to the highest bidder for cash by tha General Warranty Deed. Out of the proceeds of such sale, if any, there shaU first ba paid all expenses incurred by the Association In connection with such default, Including reasonable attornay'a teas and a reasonable truataa's faa; second, from such procaads there shall ba paid to the Association an amount equal to tha amount In default; and third, the remaining balance shall be paid to such Owner. Following any such foreoloaura, each occupant of any such Tract foreclosed on and each occupant of any Improvements thereon shall ba deemed to be a tenant at suffaranca and may be removed from possession by any and all lawful means, Including a judgment for poaaasslon In action of forcible detainer

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and the Issuance of a writ of restitution thereunder.

In the event of non-payment by any Owner of any Maintenance Charge or other charge or assessment levied hereunder, the Association may,ln addition to foreclosing the lien hereby retained, and exercising the remedies provided herein, upon ten 1101 days prior written notice thereof to such non-paying Owner, exercise all other rights and remedlee available at law or In equity.

It Is the intent of the provisions of this 6.03 to comply with tha provisions of said Section 61.002 of the Texas Property Coda relating to non·judicial sale a by power of sale and, In the event of the emandmant of said Section 51.002 of the Taxes Property code hereafter, the Pre1ident or any Vice-Praaidant of the A"ociatlon, acting without joinder of any other Owner or mortgagee or other person may, by amendment to thla Declaration file In the OHiclal Public Recorda of Comal County, Texas, amend the provislona hereof so as to comply with said amendments to Section 61.002 of the Taxes Property Code.

Section 6.04 Notice of Lien, In addition to the right of the Aseociatlon to enforce the Maintenance Charge or other charge or assessment levied hereunder, the Association may file e claim or lien against the Tra11t of the delinquent Owner by recording a notice ("Notice of Uen") setting forth (a) the amount of the claim of delinquency, lbl the Interest thereon, (c) the costs of collection which have accrued thereon, (d) the legal description and street address of the Tract against which the lien le claimed and (a) the name of the Owner thereof. Such Notice of Lien shall be signed and acknowledged by an officer of the Association or other duly authorized agent of the Association. The lien shaU continue until the amounts secured hereby end all subsequently accruing amounts are fully paid or otherwise satisfied. When allemounta claimed under the Notice of Lien and all other costs and assessments which may have accrued subsequent to the filing of the Notice of Lien have been fully paid or satisfied, the Association shall execute and record a notice releasing the lien upon payment by the Owner of a reasonable fee as fixed by the Board of Directors to cover the preparation and recordation of such release of lien Instrument.

Section 6.06 Uena Subordinate to Mortgages. The lien described In this Article VI shall be deemed subordinate to a first lien or other Ilene of any bank, Insurance company, aavinga and loan association, university, pension and profit sharing truats or plans, or any other third party lender, Including Developer, which may have heretofore or may hereafter lend money In good faith for the purchase or Improvement of any Tract and any renewal, extension, rearrangement or refinancing thereof. Each such mortgagee of 11 mortgage encumbering a Tract who obtains title to such Tract pursuant to the remedies provided In the deed of trust or mortgage or by judicial foreclosure shall take title to the Tract free and clear of any claims for unpaid Maintenance Chargea or other charges of assessment• against such Tract which accrued prior to the time such holder ecqulred title to such Tract. No such sale or transfer shall relieve such holder from liability for any Maintenance Cherge or other cherg.. or 81sessmenta thareaftar becoming due or from the lien thereof. Any other sale or transfer of a Tract shall not affect the Association's lien for Maintenance Charges or other chargee or assessments. The Aaaoclation shall make a good faith

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effort to give each such mortgagaa sixty (601 days advance written notice of the Aaaoclatlon'a proposed foreclosure of lien described In Section 6.01 hereof, which notice shall be sent the nearest office of auch mortgagee by prepeid United States registered or Certified mail, return receipt requeated, and shall contain a atatemant of delinquent Maintenance Charges or other chargea or uaesamenta upon which the proposed action Ia baaed provided, however, the Aaaoclation'a failure to give such notice shall not Impair or lnvelldate any foreclosure conducted by the Association purauant to the provisions of this Article VI. .! Section 6.08 PucDO&a of the Malntrmance Charges. The Maintenance Charge levied by the Developer or the A11ociatlon ahaU be used exclusively for the purpose of promoting the recreation, health, safety, and welfare of the Ownera of the Subdivision which hereafter may become subject to the jurisdiction of the Association. In particular, the Maintenance Charge ahall be used for any Improvement or aervicaaln furtherance of these purposea and the performance of the Association' a duties described In Article VIII, Including the malntenence of any Common Areas, any Drainage Easements and the establishment and maintenance of a reserve fund for maintenance of any Common Areas. The Maintenance Fund may be expanded by the Developer or the Association for any purposes which, In the judgment of the Association, will tend to maintain the Property values in the Subdivision, Including, but not limited to, providing funds for the actual coat to the Association of all taxes, Insurance, repairs, anergy chargaa, replacement and maintenance of the Common Area es may from tima to tima be authorized by the Aaaoclatlon. Except for the Association's use of the Maintenance Charge to perform Ita duties daacribad In this Declaration and In the Bylaws, the usa of the Maintenance Charge for any of these purposes Ia permissive and not mandatory. It is understood that the judgment of the Association 11 to the expenditure of said fundi shall be final and conclusive so long as tuch judgment Ia exercised In good faith.

Section 6.07 Handling of Malntenanet CharaOI· The collection and management of the Maintenance Charge or other charge or assessment levied hereunder, shall be performed by the Developer until the Control Transfer Date, at which time the Developer shall deliver to the Asaocletlon aH funds on hand together with all books and recorda of receipt and dlsburaements. The Devalopar end, upon transfer, the Anoclatlon, shall maintain aaparete special accounts for th888 funds, and Owners shall be provided at taut annually Information on the Maintenance Fund.

ARTICLE VII DEVELOPER'S RIGHTS AND RESERVATIONS

Section 7. 01 Par!od gf peve!gpac'1 BIQhtl and Rtsttvlflon•· Developer shall have, retain and reeerve certain rlghta aa aat forth In this declaration with raapect to the Association and the Common Area from the dete hereof, until the earlier to occur of Iii the Control Transfer Date or 1111 Developer'• written notice to the AHoclatlon of Developer' a termination of the rights described In Article VII hereof, lese, save and except those rlghta set forth In Sectlona 7.03, 7.04 and 7 .06. The rights In Sections 7 .03, 7,04 end 7.06 shall be released et such time as 11 document relinquishing aaid rights Ia filed of record or the developer no longer holds record title to any Iota In the

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subdivision. The rights and reservations hereinafter set forth shall be deemed excepted and reserved In each conveyance of a Tract by Developer to an Owner whether or not apacifically stated therein and In each dead or other Instrument by which any Property within the Control Area Is conveyed by Developer. The rights, reservations and easemanta hereafter set forth ahaU be prior and superior to any other provisions of thla Declaration and may not, without Developer's prior written consent, be modified, amended, rescinded or affected by any amendment of this Declaretlon. Developer's consent to any one auch amendment shall not be construed as a consent to any other or aubaequent amendment.

Section 7.02 Bight to Cgnstruct Mdit!pnollmprovomentaln Common Area, Developer shall have and hereby reaervn the right !without the consent of any other Owner), but shall not be obligated to construct additional Improvements within the Common Area at any time and from time to time In accordance with this Declaration for the Improvement and anhancemont thereof and for tho benefit of the Aeaoclatlon and Ownera, so long oa such construction does not directly result In the Increase of such Maintenance Charge. Developer shall, upon the Control Transfer Date, convey or transfer such Improvements to the Association and the Association shall bo obligated to accept tltlo to care for and maintain the same aa olsewhera provided in this

II Declaration.

Section 7.03 Develgpgr'a Bights tg Use Common Areas jn P,omotlon and Marketing gf thg Proportv. Developer shall have and hereby raservea the right to reasonable use of the Common Area and of services offered by the Aaaoclatlon In connection with the promotion and marketing of land within the boundaries of the Property. Wrthout limiting the generality of the foregoing, Developer may erect and maintain on any part of the Common Area such signa, temporary building• and othar structures as t Developer may reasonably deem necessary or proper in connection with the promotion,

I development and marketing of land within the Property; may usa vehicles and equipment within the Common Area for promotional purposes; and may permit prospective purchaaera of Property within the boundaries of the Property, who era not Owners or Mambera of tho Association, to usa the Common Area at reaaonable times l and In reaaonable numbers; and may refer to the aervicea offered by the Association ~ i In connection with the development, promotion and marketing of the Property. l ! Section 7.04 Qgyeloper's Rights tg Grant and Creetg Easements Developer shall have and hereby reaerves the right, without the consent of any other Owners or the

l\ Association, to grant or create temporary or permanent easements, for access, utllltlea, pipeline easement, cable ta!evlslon systems, communication and aecuritv system&, drainage, water and other purposes Incidental to development, sale, operation and maintenance of the Subdivision, located In, on, under, over and across (I) the Tracts or other Property owned by Developer, (ill the Common Area, and liill existing utility easements. Developer also reserves the right, without the consent of J any other Owner or the Association, to (I) grant or create temporary or permanent j easements for access over and across the streets and roads within the Subdivision.

Section 7.05 Deva!goer's Rights tg Cgnygy Additional Cgmmgn Area tg the Assocjatlgn. Developer shall have and hereby reserves the right, but shall not be

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Doell 9906.0316.28

obligated to, convey additional real Property and Improvement& thereon, If any, to the Aseoclatlon as Common Area at any time and from time In accordance with this Declaration, without the consent of any other Owner or the Auociatlon.

Section 7.06 Annexation of Additional Areas. Developer may causa additional real property to be annexed to the Property, by caua!ng a written Annexation Declaration confirming the annexation thereof, adopting these Restrictions, to be placed of record In the Official Public Records of Camel County, Texas. At that point the annexed property ahaU bec:ome a part of this Subdivision and shall be subject to all of the Restrictions herein set forth the same aa If originally Included. No consent shall be required of the Asaocletlon or any Member thereof, each Owner baing deemed to have appointed Developer as hla agent and attorney·ln-fact to effect this Annexation, which power hereby granted to Developer Is and shall b.- a power coupled with an lntereat. Thereaftar the Association shall be the Association for the entirety of the Subdivision, the same aa It the Property ware Included In the first instance. The Owner of the Annexed Property shall be subject to these Reatrictlons and shall be a member of the Association and shall be entitled to all of the rights and benefits provided members.

ARTICLE VIII QUilES ANP POWERS OF THE PROPERTY OWNERS ASSOCIATION

Section 8.01 General Qut!oa and powora of the A§loc!ation. The Assocletlon has been formed to further the common Interest of the Members. The Assocletlon, acting through the Board of Dlractora or through persona to whom the Board of Directors has delegated such powers (and subject to the provisions of the Bylaws), shall have the duties and powere hereinafter lit forth and, in general, the power to do anything that may ba naceS&ary or desirable to further the common Interest of the members, to maintain, Improve and enhance the Common Areas and to Improve and enhance the attractiveness, desirability and safety of the Subdivision. The Aaaoclatlon shall have the authority to act 111 the agent to enter into any and all contracts on behalf of the Members In order to carry out the dutiel, powers and obligations of the Association as sat forth In this Declaration.

Section 8.02 Dutv to Accent tba Property and Eacj!it!es Ironstaaoct bv Deyaloptr. The Aaeoclatlon shall accept title to any Property ,Including any Improvements thereon and personal property transferred to the Association by Developer, and equipment related thereto, together with the responsibility to perform any and all edmlnlstrative function• and recreation functions associated therewith (collectlvaly herein referred to as "Functions"), provided that such Property and Functions are not lncon•lstant with the tsrma of this Declaration. Property Interest transferred to tha Association by Developer may Include faa simple title, easements, leasehold Interests and llcenaea to usa such Property. Any Property or interest In Property transferred to the Association by Developer ahaU be within the boundaries of tha Property. Any Property or lntareat in Property transferred to the Association by Developer shall, except to the extent otherwise specifically approved by resolution of the Board of Directors, be transferred to the Association free and clear of all liens and mortgages (other than the lien for Property taxes and asse&lilments not than due and payable), but shall be subject to tha terme of this Declaration, the terms of any declaration of covenants, conditions and

17 - - - - - - - - r · . ~..__--------:.:;,...------- Doell 990&031628

:Dvolt 990503l4J 2

restrictions llllflexlng such Property to the Common Area, and ell euamenu, covenanu, conditions, restrictions and equitable servitude or other encumbrances which do not materially affect the Owners authorized to use such Property. Except as otherwlae specifically approved by raaolutlon of the Board of Directors, no Property or Interest In Property transferred to the Association by the Developer shall Impose upon the Association any obligation to make monetary paymanU to Developer or any affiUata of Developer Including, but not limited to, any purchase price, rent, charge or faa. The Property or Interest In Property transferred to the Aeeaclatlon by Developer shall not Impose any unreuonable or special burdens of ownership of Property, Including the management maintenance, replacamant and operation thereof.

Section 8.03 Puty to Maoage and Care fgr the Common Area. The Aasociatlon shall manage, operate, care for, maintain and repair all Common Areu and keep the same in e safe, attrectlva and desirable condition for the use and enjoyment of the Membare. The duty to operate, manage and maintain the Common Araaa shall Include, but not be limited to the following: establishment, operation and maintenance of a security ayatam, If any, for the Subdivision; landacaplng maintenance, repair and replacement of park, end management, maintenance, repair end upkeep of the subdivision entrances and other common areas.

Section 8.04 Other lnsyranca Bgnds, The Association shall obtain such insurance as may be required by law, Including workman's compenaation insurance, and shall have the power to obtain such other Insurance end such fidelity, Indemnity or other bonde as the Aaaociatlon shall deem nacassery or daalrebla.

Section 8.05 Putv tp Prepare Budgets, The Aaaoclation shall prepare budgets for the Association, which budgeU shall include a reserve fund for the maintenance of all Common Araaa.

Section 8.06 pyty tg law and Cgllact the Ma!ntananca Charqa, The Asaociatlon shall levy, collect and enforce the Maintenance Charge and other chargea and assessment• 11 elsewhere provided In this Declaration.

Section 8.07 Dyly to Proy!da Annyal Review. The Association shall provide for an annual unaudited Independent review of the accounts of the Association. Copies of tha review shall be made available to any Member who requeau a copy of the same upon payment by such Member of the reasonable coat of copying the same.

Section 8.08 Putlas wjtb Basooct to Arcbjtocwral Approyals. Tha Association shall perform functions to assist the Committee as elsewhere provided In Article IV of this Declaration.

Section 8.09 Power to Acgyjra P,gporty and Cpnstruct lmprgyomwa The Association may acquire Property or an Interest In Property (Including leases) for the common benefit of Ownara Including Improvements and personal property. The Association may construct Improvements on the Property end may demolish existing lmprovemanta.

83 ------------------------------~~~.~ p..··.' ~----------------------------~ .·~~:;:~::--~--- ",.t' ·-'~"

Section 8.10. Power to Adopt Byles and Regulations. The Association may adopt, amend, repeal and enforce rulea and regulationa ("Rulaund Begulationa"), flnaa,!evlea and enforcement provlaiona aa may be deemed necessary or desirable with respect to the interpretation and Implementation of thla Declaration, the oparetlon of the Association, the use and enjoyment of tha Common Areas, and the usa of any other Property, fac!l!tlas or Improvements ownad or operetad by the Association.

Section 8.11 Powtr to Enforce Bastdct!qns and Byfgs grul Bpgulations. The Association (end any Owner with respect only to the ramedlaa described In (Ill below) shall have the power to enforce the provisions of this Declaration and the Rulaa and Regulations and 1hall taka such action as the Board of Directors daema necessary or desirable to caun such compliance by each Member and each Related User. Without limiting the ganeralltv of the foregoing, the Association aha!! have the power to enforce the provlalona of thla Declaration and of Rulaa and Raguletlona of the Asaoolatlon by

l any one or mora of the following means: Ill By entry upon any Property, excluding main residence, within the Subdivision after notice and haerlng (unless a bona fide emergency axiata in which event this right of entry may be exercisad without notice (written or oral) to the Owner In such manner to avoid any unraa1onabla or unnecetsary lntarfersnca with the lawful poussaion, usa or enjoyment of the I Improvements situated thereon by the Ownar or any other parson), without !lability by the Association to the Owner thereof, for the purpose of enforcement of this

I Declaration or the Buies and Regulations; (iii By commencing and maintaining actions and sulta to restrain and enjoin any breach or threataned breach of the provialons of thle Declaration or the Rulea and Regulationa; (iii) By exclusion, after notice and hearing, of any Member of Related User from usa of any recreational facilities within the Common Areas during and for up to sixty (60) days following any breach of this Declaration or auch Rules and Regulatlona by such Member or any Relatad User, unless the breach Is e continuing breach in which case axcluslon shall continua for so long as such breach continuea; (lv) By suspension, after notice and hearing, of the voting rlghta of a Member during and for up to sixty (801 days following any breach by auch Membar or a Related User of a provision of this Declaration or such Rules and Regulation•, uniau the breach i1 a continuing breach in which casa IIUCh suspension shall continua for so long ss auch breach contlnuea; (vi By levying and collecting, after notice and hearing, an asnssmant against any Member for breach of thl1 Declaration or such Rulea end Regulations by such Member or a Belated User which asaaument reimbursed the Association for the costa Incurred by the Association In connection with such breach; (vii by levying and collecting, after notice and hearing, raesonable and uniformly applied flnaa and penaltl.., established in edvanca In the Rulee and Regulation• of the Association, from any Member or Related User for breach of this Declaration or auch Rules and Ragulatlon• by such Member or • Belated User; and (viii By taking action Itself to cure or abate such violation and to charge the expanse• theraof, if any, to such vlcletlng Members, plus attorney'a faas Incurred by the Association with respect to exercising such remedy.

Before the Board may invoke the remediet provided above, it aha!! give registered notice of such alleged violation to Owner, and shall afford the Owner a hearing. If, after tha hearing, a violation is found to exist, the Board's right to proceed with the l!stad ramadlet shall become absolute. Each day a violation continues aha!! ba deemad

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........ 9'9e6&at ua

a separate violation. Failure of the Association, the Developer, or of any Owner to taka any action upon any breach or dafault with respect to any of tha foregoing violations shall not ba deemed a waiver of their right to take enforcement action thereafter or upon a subsequent breach or default.

Section 8. 12 Power to Grant Easomenta, In addition to any blanket easemenw described In this Dacleratlon, the A88ociatlon shall hava the power to grant accesa, utility, drainage, water facilhy and other easements in, on, over or under the Common Area.

ARTICLE IX GENERAL PROVISIONS

Section 9.01 Imn. The provisions hereof shall run with all Property In RIVER CHASE UNIT THREE and shall be binding upon all Owners and all persons claiming under them for a period of forty 1401 years from the data this Declaration Ia recorded, after which time said Declaration shall be automatically extended for succesalva periods of ten (1 0) years each, unless an Instrument, signed by not leas than two-thirda 12/3rdsl of the Owners (Including the Developer) of the Tracts has bean recorded agreeing to amend or change, In whole or In part, this Declaration.

Section 9.02 Amendments. This Declaration may be amended or changed, In whole or in part, at any time by the written agreement or by signed ballots voting for such amendment, of not less than two-thirds 12/3rdal of ell of the Ownere (Including Developer) of the Subdivision. There shall be one vote per Tract. Anyone owning mora than one Tract shall have one vote for each Tract owned. If the Declaration Is amended by a written Instrument signed by those Ownera entitled to cast not leas than two-thirds 12/3rdsl of all of the votes of the Owners of the Association, such amendment must be approved by said Ownera whhln three hundred sixty-five 1365) days of tha data the first Owner executea such amendment. Tha data an Owner's signature Is acknowledged shall constitute prima facia evidence of the data of execution of said amendment by such Owner. Those Members (Ownara, Including the Devaloparl entitled to cast not lasa than two-thirds (2/3rdsl of all of the votes of the Membere of the A..oclatlon may also vote to emend thla Declaration, In person, or by proxy, at a meeting of the Members IOwnars, Including tha Oecfarant) duly called for such purpoaa, written notice of which shall be given to all Ownefl et least ten (1 01 days and not mora then sixty 1601 days in advance and ahallaet forth the purpose of such meeting, Notwithetandlng any provision contained In the Bylaws to the Contrary, a quorum, for purposes of such meeting, shall consist of not less than seventy percent (70%1 of all of the Mambara lin parson or by proxy) entitled to vote. Any such amendment shall become effective when an Instrument Ia filed for record In the Official Publlo Records of Comal County, TeKal, accompanied by a certificate, signed by a majorhy of the Board of Trustees, stating that the required number of Members (Owners, Including the Developer) executed the Instrument amending this Declaration or cast a written vote, In pereon or by proxy, In favor of said amendment et the meeting called for such purpo... Copies of the written ballots pertaining to such amendment shall be retained by the Association for a period of not less than thraal31 years after the data filing of the amendment or termination.

85 ---------r')l>-:;------,~,,r-------- Doell 9906031628

Daett 99860314:J:i!

Section 9.03 Amendment by the Dgyalooar. The Developer shall have and raaarvas the right at any time and from time to tima prior to the Control Tranafar Data, without the joinder or consent of any Owner or otbar party, to amend thle Declaration by an Instrument In writing duly signed, acknowledged, and filed for record for the purpose of correcting any typogrephlcal or grammatical error, oversight, ambiguity or lnconslatency appearing herein, provided that any such amendment shall be consistent with and In furtherance of the general plan and achama of development as evidenced by this Declaration and shall not impair or adveraely affect tha vested Property or other rigbtl of any Owner or his mortgagae. Additionally, Developer shall have and reserves the right at any time and from tlma to tlma prior to the Control Tranafer Date, without the joinder or consent of any Owner of other party, to amend thla Declaration by an Instrument In writing duly signed, acknowledged and filed for record for the purpose of permitting the Owners to enjoy the benefits from technological edvancas, such as security, communications or anergy-related davlcaa or equipment which did not al!lsta or ware not In common usaln residential subdivisions at the time this Declaration was adopted. Ukewise, the Developer shall have and re10rvas the right at IJ/tiY time and from time to time prior to the Control Transfer Date, without the joinder or consent of any Owner or other party, to amend this Declaration by an Instrument In writing duly signed, acknowledged and filed for record fcir the purpose of prohibiting the usa of any device or apparatus developed and/or avaDable for residential usa following the data of this Declaration if the use of euch device or apparatus will adverealy affect the Asaoclatlon or wiH adversely affect the Property values within the Subdivision.

Section 9.04 Severability. Each of the provisions of this Daclaratlon shall be deemed Independent end severable and the invalidity or unenforcaabillty or partial invalidity or partially unenforcaablllty of any provision or portion hereof shall not affect the validity or enforceability of any other provision.

Section 9.05 Uberallntgroretatjon. The provisions of this Declaration shall be liberally construed as a whole to effectuate the purpose of thla Declaration.

Section 9.08 Succa11ors and Ats!qns. The provisions hereof shall be binding upon and Inure to the benefit of the Owners, the Developer and the Association, and their respective hairs, legal rapresentatlvae, executora, administrators, successors and assigns.

Section 9.07 Effect of Ylolotions on Mortgages. No violation of the provisions herein contained, or any portion thereof, shall affect the lien of any mortgage or dead of trust pra10ntly or hereafter placed of record or otherwise affect the rights of the mortgagee under any such mongage, the bolder of any such lien or beneficiary of any such deed of trust; and any such mongage, lien or dead of trust may, nevarthela88, be enforced In accordance with its terms, subject, naverthelesa, to the provisions herein contained.

Section 9.08 Terminology All personal pronoune used In this Declaration and all exhibits attached berato, whether used In the masculine, feminine or neuter gander, sbaU Include all other ganders; the singular aballlnclude the plural and vice versa. Title of Articles and Section• are for convenience only and neither limit nor amplify tha provisions of this Declaration Itself. The terms "herein", "hereofft and similar terms, as

86 Doc:tt 9906031628

used in this instrument~ refer to the entire agreement and are not limited to referring only to the specifiC paragraph, Section or article In which auch tarma appear. All reference• In this Declaration to Exhibltl shall refar to the Exhiblta attached hereto.

VEIEBAN PI,IRCHASER PABDAL RELEASE

Notwithstanding anything contained In the Restrictions to the contrary, a Veteran Purchaser shall be entitled to have a 1.00 acre tract released from the Vetarana Land Board for a home Bite and same shall not be construed as a violation of the above Restrictive Covenants.

IN WITNESS WHE~EOF, the und,raigned, being the Developer herein, has hereunto sat Its hand of this~ day of )_.;>J v•-kL , 1999.

TEXAS SOUTHERLAND VENTURE, a Massachusetts Joint V. re by SOUTHERLAND P ERT S, INC. a Texas C , Join Venturer

ON, Vice President 1~:.ra603162a

THE STATE OF TEXAS m: 1~::1J't!'" 2J~I af AI

~ ~s COUNTY OF Y"l)4c • COUIIIT

Thle inttrument waa acknowledged before me on thl• the "~ day of lL-Ii

,., ' 0

N~.i:~f~a~. ~Ari'o~-TEXAS Nort:tm• ~~~t: g .. ._ .. My Commitlon Expires: tV·i:l·:;..lJ<'<•

1 AFTER RECORDING RETURN TO: BOB R. KIESUNG, P.C. J. P. 0. Box 3l1688

I~ New Braunfela, TX 78131·1686

I1 ,\ l ),

87 APPENDIX Tab 3 Tex. Prop. Code §§ 202.002, 202.003 PROPERTY CODE

TITLE 11. RESTRICTIVE COVENANTS

CHAPTER 202. CONSTRUCTION AND ENFORCEMENT OF RESTRICTIVE COVENANTS

* * *

Sec. 202.002. APPLICABILITY OF CHAPTER. (a) This chapter applies to all restrictive covenants regardless of the date on which they were created.

(b) This chapter does not affect the requirements of the Community Homes for Disabled Persons Location Act (Article 1011n, Vernon's Texas Civil Statutes).

Added by Acts 1987, 70th Leg., ch. 712, Sec. 1, eff. June 18, 1987.

Sec. 202.003. CONSTRUCTION OF RESTRICTIVE COVENANTS. (a) A restrictive covenant shall be liberally construed to give effect to its purposes and intent.

(b) In this subsection, "family home" is a residential home that meets the definition of and requirements applicable to a family home under the Community Homes for Disabled Persons Location Act (Article 1011n, Vernon's Texas Civil Statutes). A dedicatory instrument or restrictive covenant may not be construed to prevent the use of property as a family home. However, any restrictive covenant that applies to property used as a family home shall be liberally construed to give effect to its purposes and intent except to the extent that the construction would restrict the use as a family home.

Added by Acts 1987, 70th Leg., ch. 712, Sec. 1, eff. June 18, 1987.