FS0078FX proj summary

• Contract/PO #: FS0078FX
• Contractor Name: Blue Lake Homeowners Association
• Contract Type: Loan
• Loan Projects - Doc Type: Project Summary

Declaration of Covenants Conditions and Restrictionsl —
Articie II Property Riehts Section 2 Owners Easements of Enioyment:
Every owner shall have a non-exclusive nght and easement of en�oyment in and to the Common Area which shall be
appurtenant to and shall pass with the title to every lot, subject to the following provisions:
(a) The right of the Association, in accordance with its Articles and Bylaws, to borrow money for the
purpose of improving the Common Area and, with written consent of the Members entitled to vote two-
thirds (2/3) of the votes of each class of inembership and 100 percent of all First Mortgagees of Lots (based
upon one vote for each First Mortgage owned), to mortgage said property as security for any such loan"
Article VIII First Mort�a�ees Member and First iVlort¢agee Approval Section 1(a):
"unless it has obtained the prior wntten consent of at least sixty-seven percent (67%) of each class of Members and
67% of the First Mortgagees of Lots (based upon one vote for each First Mortgage Owned):
(4) by act or omission, seek to abandon, partition, subdivide, encumber, sell, or transfer any common
property owned, directly or indirectly, by the Association for the benefit of the Owners... ."
Additionally, we bring to the Board's attention the following quote from the Bylaws:
Article XIII, Section 2; In the case of any conflict between the Articles of Incorporation and these Bylaws, the
Articles shall control; in the case of any conflict between the Declaration and these Bylaws, the Declaration shall
control; and in the case of any conflict between the Articles and Declaration, the Declaration shall control."
The Board of Directors is hereby again notified that it is in breach of the above quoted sections of the
Declaration. Many committee members and other homeowners have checked with their mortgagees. No
mortgagee thus far has reported that the Association has been in contact with them regarding their
required permission. This is the Board's fmal notification of its violations of the above referenced
Covenants, Bylaws and Articles of Incorporation. The Board was previously notified of these violations,
amongst others, in the Bergquists' letter of August 4, 1997. The Board is hereby further notified that it
remains in violation of the above referenced docuxnents on the additional counts contained in said letter of
8/4/97, as well as the State Statutes violations it was notified of in that same conespondence. The
Board's 9/25/97 written response (copy enclosed) to that 8/4/971etter did not address its many Covenant
breaches, but rebutted each allegation with out of context quotes from other (non-governing) documents.
(See paragraph 3 of this page). Several items enumerated in said letter were ignored completely. The
Board's failure to comply with all portions of all the legal documents that control its actions will result in
the immediate commencement of litigation against the Board by the Members of the Association in
accordance with BLOA Covenants, Article IX, Section 1 and Colorado State Statute No. 38-33.3-123.
A contingent of Members of the Association will be visiting the offices of Blue Lake Owners Association
on March 31S`, 1998 at 2:00 PM, with recording devices. Pursuant to Article VIII, Section 4 and Article
IX, Section 1 of the Declaration, the following documents are to be made available at that time for
inspection and/or counting by selected contingency representatives:
1. Written proof of conveyance of all Water Rights from Vantex to BLOA.
2. The original Written Permission slips of at least 235 Members of the Association
approving the borrowing of money encumbering our common property (Please note —
we have "Revocation of Permission" slips in our possession, so we suggest a healthy
margin for error)
3. The 350 written permissions of the first mortgagees of lots.
4. The total count of homeowners present physically and by proxy at the Annual Meeting
of BLOA held in October, 1997 and the original ballots and proxies collected before and
during the Special Meeting of the iVlembership that was called by the Board for, and
that took place on, 12/4/97.
5. Legal documents showing that at least $300,000.00 has been raised through alternative
funding.
6. A copy of the Colorado Water Conservation Board's final loan approval and written
authority from same for access to the proceeds thereof.
7. A copy of Mid Valley Metro District's written approval.
1 All cites of Convenant Articles and Sections in this letter are those used in Filing II.
CWCB — 3/23/98 - Page 4