STATE OF CALIFORNIA DEPARTMENT OF REAL ESTATE Serving Californians Since 1917 ASSESSMENT SECURITY AGREEMENT AND INSTRUCTIONS TO ESCROW DEPOSITORY - Reg. 2792.9 RE 643 (Rev. 8/) NAME OF OWNERS ASSOCIATION ASSOCIATION ADDRESS, CITY, STATE, ZIP CODE NAME OF SUBDIVIDER SUBDIVIDER ADDRESS, CITY, STATE, ZIP CODE NAME OF SUBDIVISION COUNTY SUBDIVISION TYPE OF SUBDIVISION NAME OF ESCROW-HOLDER DRE FILE NUMBER ESCROW HOLDER ADDRESS, CITY, STATE, ZIP CODE ESCROW ACCOUNT NUMBER PART ONE — ASSESSMENT SECURITY AGREEMENT 1. This Assessment Security Agreement (“Agreement”) is made this _________ day of __________________________, BBBBBBB E\ DQG EHWZHHQ WKH 6XEGLYLGHU DQG WKH $VVRFLDWLRQ LGHQWL¿HG DERYH 2. Recitals. A. Property to Which Agreement Applies. (Interests to be covered by the Public Report). Subdivider is the owner of certain real property described as: ________________________________________________________________ ____________________________________________________________________________________________ _____ _______________________________________________________________________________________ __________ __________________________________________________________________________________ _______________ Records of ______________________________________________ County, California (herein “the Subdivision”). B. Public Report. Subdivider has applied for a California Department of Real Estate Public Report (“Public Report”) covering the Subdivision. Prior to obtaining the Public Report, the Subdivider is required pursuant to the provisions of Section 2792.9 of Chapter 6, Title 10, California Code of Regulations to make and retain in full force and effect arrangements securing Subdivider’s obligations as an owner of separate interests covered by the public report to pay regular and special assessments. 3. Secured Obligation. Subdivider shall pay, as and when due, all regular and special assessments which are levied by the Association against separate interests owned by the Subdivider in the Subdivision from the date hereof. The secured obligation to be in full force and effect until title to 80% of the separate interests in the Subdivision have been conveyed or leased with a term of one year or more. 4. Security. To secure the performance of the obligation described in Part One, Paragraph 3, above, the Subdivider has procured the issuance of the: Surety bond in the sum of ___________________________________________________ Dollars ($__________), American LegalNet, Inc. www.FormsWorkFlow.com RE 643 Page 2 of 5 to the Association, as obligee, Letter of credit in the sum of __________________________________________________ Dollars ($__________), WR WKH (VFURZ +ROGHU LGHQWL¿HG DERYH IRU WKH EHQH¿W RI WKH $VVRFLDWLRQ Set-aside letter in the sum of ________________________________________________ Dollars ($___________) WR WKH (VFURZ +ROGHU IRU WKH EHQH¿W RI WKH $VVRFLDWLRQ a copy of which instrument is attached to this Agreement as an Exhibit, or cash deposit in the sum of _______________________________________________________ Dollars ($___________) KDV EHHQ GHSRVLWHG ZLWK (VFURZ +ROGHU IRU WKH EHQH¿W RI WKH $VVRFLDWLRQ The term “Security” as used in this Agreement refers to the cash deposit, surety bond, letter of credit, or set-aside letter LGHQWL¿HG DERYH WRJHWKHU ZLWK DQ\ IXQGV GUDZQ WKHUHXQGHU KHOG E\ WKH (VFURZ +ROGHU 5. Set-Aside Letter. ,I WKH 6HFXULW\ LV D VHWDVLGH OHWWHU IXQGV LQ WKH VXP VSHFL¿HG DERYH ³)XQGV´ ZLOO EH UHWDLQHG LQ D VHSDUDWH DFFRXQW FRQWUROOHG DQG DGPLQLVWHUHG E\ WKH ,VVXHU XQWLO IXOO DQG ¿QDO SHUIRUPDQFH E\ 6XEGLYLGHU RI 6XEGLYLGHU¶V obligations under Part One, Paragraph 3 of this Agreement, or until disbursed in accordance with the terms of the setDVLGH OHWWHU 7KH 6XEGLYLGHU KHUHE\ JUDQWV WKH $VVRFLDWLRQ D VHFXULW\ LQWHUHVW LQ WKH )XQGV WR VHFXUH WKH SHUIRUPDQFH RI the obligation described in Part One, Paragraph 3, above. 6. Enforcement and Release of the Security. If the Subdivider fails to perform the Subdivider’s obligation under Part One, Paragraph 3 of this Agreement, the Association shall have the right, whether through enforcement of the Security, demand upon funds drawn thereunder held by the Escrow Holder, or otherwise, to receive such sums as may be required to satisfy the obligation of the Subdivider under Part One, Paragraph 3 of this Agreement, and the Subdivider shall, without regard to any other disputes or negotiations then existing, immediately take any and all actions and execute any and all documents as may be required to cause such sums to be paid to the Association. Any amount received by the Association directly from the Subdivider or from proceeds of the Security shall be credited against any claim by the Association arising out of the Subdivider’s failure to perform the Subdivider’s obligations under this Agreement. Upon full DQG ¿QDO SHUIRUPDQFH E\ 6XEGLYLGHU RI 6XEGLYLGHU¶V REOLJDWLRQV XQGHU WKLV $JUHHPHQW WKH $VVRFLDWLRQ VKDOO ZLWKRXW regard to any other disputes or negotiations then existing, immediately take any and all actions and execute any and all documents reasonably necessary to cause the Security to be released and exonerated. 7. 3URYLVLRQV IRU $UELWUDWLRQ RI &RQÀLFWV In the event there is a dispute between the Subdivider and the Association with respect to this Agreement, or the enforcement, exoneration, or release of the Security, the issue or issues shall, at the request of either Subdivider or Association, be submitted to arbitration, in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) before an arbitrator selected from the panels of the arbitrators of said AAA. In the event of referral to arbitration, Subdivider will remit the fee to initiate the arbitration. The parties agree, however, that the costs of arbitration shall ultimately be borne as determined by the arbitrator. The parties further agree to abide by the determination of the arbitrator with respect to the enforcement, exoneration or release of the Security and with respect to payment of the costs of arbitration. 8. Attorney’s Fees. In any action or proceeding arising out this Agreement, the prevailing party or parties shall be entitled to reasonable attorney’s fees. 9. Obligations of Parties; Assignment. This Agreement and the rights and obligations of each of the parties are personal to such parties and may not be transferred or assigned without the prior written consent of the other, except that Subdivider may assign its rights under this Agreement to a successor in interest as part of a transfer of the Subdivision in its entirety. Subdivider may also assign its rights under this Agreement to the Issuer of the Security. Such assignment does not make the assignee liable for any of Subdivider’s obligations pursuant to this Agreement, unless such obligations have been VSHFL¿FDOO\ DVVXPHG E\ WKH DVVLJQHH LQ ZULWLQJ $Q\ DVVLJQPHQW LQ YLRODWLRQ RI WKLV 6HFWLRQ VKDOO EH YRLG 10. Binding Upon Successors. This Agreement and the rights and duties of the parties shall be binding upon and shall inure WR WKH EHQH¿W RI WKH VXFFHVVRUV LQ LQWHUHVW DQG DVVLJQV RI WKH UHVSHFWLYH SDUWLHV 11. Laws of California. This Agreement shall be construed and governed by the laws of the State of California. American LegalNet, Inc. www.FormsWorkFlow.com RE 643 Page 3 of 5 12. Delivery of Agreement. Subdivider shall furnish the Association with an executed copy of this Agreement and the Instructions to Escrow Depository along with evidence of the Security deposited with Escrow no later than ten (10) days DIWHU WKH FORVLQJ RI WKH ¿UVW VDOH RI D VHSDUDWH LQWHUHVW LQ WKH 6XEGLYLVLRQ RZQHG E\ WKH 6XEGLYLGHU 13. Complete Agreement. This Agreement contains the entire agreement between the parties with respect to the subject matter covered in this Agreement. PART TWO — INSTRUCTIONS TO ESCROW DEPOSITORY This constitutes joint escrow instructions of the Subdivider and the Association, which instructions are irrevocable except DV PRGL¿HG E\ ZULWWHQ VXSSOHPHQWDO LQVWUXFWLRQV H[HFXWHG E\ WKH 6XEGLYLGHU DQG WKH $VVRFLDWLRQ 7KH 6XEGLYLGHU DQG WKH Association are the only principals in this escrow. Escrow Holder hereby acknowledges receipt of the cash deposit, surety bond, letter of credit, or set-aside letter described LQ 3DUW 2QH 3DUDJUDSK  RI WKH IRUHJRLQJ $VVHVVPHQW 6HFXULW\ $JUHHPHQW 8QOHVV RWKHUZLVH VSHFL¿FDOO\ VWDWHG KHUHLQ WKH capitalized terms in these instructions shall have the same meaning as set forth in the foregoing Agreement. Nothing contained in these instructions imposes any duty on the Escrow Holder to interpret Section 2792.9 of Chapter 6, Title 10, California Code of Regulations, to audit in any way the Subdivider’s discharge of its duties or obligations thereunder, or to verify the truth of the statements made in any notices given to the Escrow Holder by the Subdivider or the Association. Except as otherwise provided by law, the duties of the Escrow Holder are to receive, hold, release, or draw upon the Security LQ DFFRUGDQFH ZLWK WKH IROORZLQJ LQVWUXFWLRQV 7KHVH LQVWUXFWLRQV PD\ EH PRGL¿HG E\ WKH ZULWWHQ MRLQW RU PXWXDO LQVWUXFWLRQV of the principals. Escrow Holder hereby agrees to comply with the terms and provisions of these instructions. 1. Return Of The Security To The Subdivider. A. If the Escrow Holder receives a written demand from the Subdivider for the return of the Security, which demand is accompanied by Subdivider’s written statement that (1) the Subdivider has paid as and when due all regular and special assessments which have been levied by the Association against separate interests owned by the Subdivider in the Subdivision, and (2) title to 80% of the separate interests in the Subdivision have been conveyed or leased with WHUPV RI RQH \HDU RU PRUH E\ WKH 6XEGLYLGHU WKHQ ZLWKLQ ¿IWHHQ  FDOHQGDU GD\V RI UHFHLSW RI WKH GHPDQG DQG statement, the Escrow Holder shall deliver a copy of the demand and statement to the Association, or its authorized agent, together with a written notice to the Association that the Association’s written objection to return of the Security to the Subdivider must be received by the Escrow Holder within forty (40) days after delivery of the demand and statement to the Association. B. If within forty (40) calendar days after such delivery, the Association delivers to the Escrow Holder the Association’s written objection to the return of the Security to the Subdivider, then the Escrow Holder shall continue to hold, release, or draw upon the Security in accordance with these instructions. If within forty (40) calendar days after the Escrow Holder delivers the demand and statement to the Association, or its authorized agents, the Association does not deliver to the Escrow Holder the Association’s written objection to the return of the Security to the Subdivider, then the Escrow Holder shall promptly deliver the Security to the Subdivider. 2. Remittance Of The Security To The Association. $ ,I WKH (VFURZ +ROGHU UHFHLYHV D GHPDQG IURP WKH $VVRFLDWLRQ IRU WKH UHPLWWDQFH RI WKH 6HFXULW\ RU VRPH VSHFL¿HG SRUWLRQ WKHUHRI ZKLFK GHPDQG LV DFFRPSDQLHG E\ D ZULWWHQ VWDWHPHQW VLJQHG E\ DQ RI¿FHU RI WKH $VVRFLDWLRQ WKDW WKH Subdivider is delinquent in the payment of regular or special assessments which have been levied by the AssociaWLRQ DJDLQVW VHSDUDWH LQWHUHVWV RZQHG E\ WKH 6XEGLYLGHU LQ WKH 6XEGLYLVLRQ WKHQ ZLWKLQ ¿IWHHQ  FDOHQGDU GD\V RI receipt of the demand and statement, the Escrow Holder shall deliver a copy of the demand and the statement to the Subdivider, together with a statement notifying the Subdivider that the Subdivider’s written objection to remittance of the Security to the Association must be received by the Escrow Holder within forty (40) days after delivery of the demand, and statement to the Subdivider. B. If within forty (40) calendar days after such delivery, the Subdivider delivers to the Escrow Holder the Subdivider’s written objection to the remittance of the Security to the Association, then the Escrow Holder shall continue to hold, release, or draw upon the Security in accordance with these instructions. If within forty (40) calendar days after the (VFURZ +ROGHU GHOLYHUV WKH GHPDQG FHUWL¿FDWH DQG QRWLFH WR WKH 6XEGLYLGHU WKH 6XEGLYLGHU GRHV QRW GHOLYHU WR WKH Escrow Holder the Subdivider’s written objection to the remittance of the Security to the Association, then: 1) If the Security is a surety bond, the Escrow Holder shall promptly deliver the Security to the Association; American LegalNet, Inc. www.FormsWorkFlow.com RE 643 Page 4 of 5 2) If the Security is a letter of credit, the Escrow Holder shall promptly present the Security for payment of that SRUWLRQ RI WKH 6HFXULW\ VSHFL¿HG LQ $VVRFLDWLRQ¶V GHPDQG E\ SUHVHQWLQJ WKH 6HFXULW\ DQG D VLJKW GUDIW GUDZQ under and in compliance with the letter of credit to the issuer of the letter of credit, and upon receipt of payment SURPSWO\ UHPLW WR WKH $VVRFLDWLRQ WKDW SRUWLRQ RI WKH 6HFXULW\ VSHFL¿HG LQ WKH $VVRFLDWLRQ¶V GHPDQG 3) If the Security is a set-aside letter, the Escrow Holder shall promptly make demand in compliance with the VHWDVLGH OHWWHU WR WKH LVVXHU RI WKH VHWDVLGH OHWWHU IRU SD\PHQW RI WKDW SRUWLRQ RI WKH 6HFXULW\ VSHFL¿HG LQ WKH $Vsociation’s demand, and upon receipt of payment promptly remit to the Association that portion of the Security VSHFL¿HG LQ WKH $VVRFLDWLRQ¶V GHPDQG 4) If the Security is or has become a cash deposit, the Escrow Holder shall promptly remit to the Association that SRUWLRQ RI WKH 6HFXULW\ VSHFL¿HG LQ WKH $VVRFLDWLRQ¶V GHPDQG 3. Release Of The Security Upon Joint Instructions. If the Escrow Holder receives written instructions from both the Subdivider and the Association directing the Escrow Holder to return the Security to the Subdivider or to remit the Security, its proceeds or some portion of the proceeds to the Association, the Escrow Holder shall promptly comply with the instructions. 4. &RQÀLFWLQJ ,QVWUXFWLRQV In any of the circumstances described in subparagraphs A through E, below, the Escrow Holder shall, at its sole discretion, either (1) interplead the Security, (2) retain the Security until the Security is returned to the Subdivider or remitted to the Association in accordance with these instructions, or (3) retain the Security until the Security is disposed of in accordance with written supplemental instructions executed by the Subdivider and the Association, the order of a court RI FRPSHWHQW MXULVGLFWLRQ RU LQ DFFRUGDQFH ZLWK WKH ¿QDO ELQGLQJ GHFLVLRQ UHQGHUHG LQ DQ DOWHUQDWLYH GLVSXWH UHVROXWLRQ proceeding: A. The Association timely objects in writing to a demand by the Subdivider for the return of the Security; B. The Subdivider’s demand for the return of the Security is not accompanied by the statement described in Part Two, Paragraph 1-A, above; C. The Subdivider timely objects in writing to a demand by the Association for remittance of all or any portion of the Security; D. The Association’s demand for remittance of the Security is not accompanied by the statement described in Part Two, Paragraph 2-A , above; or ( 7KH (VFURZ +ROGHU UHFHLYHV FRQÀLFWLQJ LQVWUXFWLRQV IURP WKH SDUWLHV WR WKLV HVFURZ 5. Pending Return Or Remittance Of The Security. A. If the Security is a letter of credit, and if the issuer of the letter of credit has not extended the time for drawing upon the letter of credit by extending or reissuing the letter of credit and depositing the extension or reissued letter of credit ZLWK WKH (VFURZ +ROGHU WKHQ ¿IWHHQ  FDOHQGDU GD\V SULRU WR WKH H[SLUDWLRQ RI WKH WLPH IRU GUDZLQJ XSRQ WKH OHWter of credit, the Escrow Holder shall present the Security for payment in full by presenting the Security and a sight draft drawn under and in compliance with the letter of credit to the issuer of the letter of credit, and upon receipt of payment handle the proceeds of the Security as a cash deposit. The Escrow Holder shall notify the Association and the Subdivider upon receipt of proceeds of a draw on the letter of credit. B. If the Security is or has become a cash deposit, the Escrow Holder is hereby instructed to deposit all funds deposited in the above-numbered escrow in a federally insured interest-bearing account or accounts, in the name of the Escrow +ROGHU IRU WKH EHQH¿W RI WKH $VVRFLDWLRQ 7KH SDUWLHV KHUHWR DJUHH DQG XQGHUVWDQG WKDW VDLG IXQGV DUH XQGHU WKH FRQtrol of Escrow Holder and that no withdrawals or additions may be made by anyone other than Escrow Holder. The LQWHUHVW HDUQHG RQ VDLG DFFRXQW LI DQ\ LV IRU WKH EHQH¿W RI WKH 6XEGLYLGHU RQO\ DQG WKH (VFURZ +ROGHU VKDOO FDXVH VDLG LQWHUHVW WR EH SDLG WR WKH 6XEGLYLGHU 7D[SD\HU ,GHQWL¿FDWLRQ 1XPEHU VKDOO EH IXUQLVKHG E\ 6XEGLYLGHU LQ RUGHU for Escrow Holder to open an account for a cash deposit. Escrow shall furnish the parties with account information ZLWKLQ ¿YH GD\V RI RSHQLQJ American LegalNet, Inc. www.FormsWorkFlow.com RE 643 Page 5 of 5 C. If the Security is a surety bond or set aside letter, the Escrow Holder shall retain the Security until the Security is disposed of in accordance with these instructions or the order of a court of competent jurisdiction. 6. Notices. Delivery of all notices and other documents described in these Instructions to Escrow Depository or in the foregoing Assessment Security Agreement shall be made by overnight or same-day commercial delivery service or by United 6WDWHV PDLO FHUWL¿HG RU UHJLVWHUHG SRVWDJH SUHSDLG $OO VXFK QRWLFHV DQG GRFXPHQWV VKDOO EH GHHPHG GHOLYHUHG JLYHQ and received: (a) the day of sending via same-day commercial delivery service; (b) the following business day after sending via overnight commercial delivery service; or (c) three (3) calendar days after deposit in the United States mail. All such notices shall be addressed as set forth on page 1 of this Assessment Security Agreement and Instructions to Escrow Depository; provided that the Association, the Subdivider and the Escrow Holder may at any time change their respective address for notices and other documents described herein by sending to the other two parties a written notice specifying the new address. 7. Counterparts. This Assessment Security Agreement and Instructions to Escrow Depository may be executed in counterparts, and all counterparts together shall be construed as one document. Dated: ___________________ ___________________________________________ Subdivider ___________________________________________ By Dated: ___________________ ___________________________________________ Association ___________________________________________ By Dated: ___________________ ___________________________________________ Escrow Holder BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB %\ American LegalNet, Inc. www.FormsWorkFlow.com