1346227.04

BY-LAWS

OF

IMPERIAL HOUSE CONDOMINIUM ASSOCIATION, INC.

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TABLE OF CONTENTS

Article Page

ARTICLE I NAME, OFFICE, AND PURPOSE .................................................................... 1 101. Name and Principal Office...................................................................................... 1 102. Purpose.................................................................................................................... 1 103. Definitions............................................................................................................... 1 104. Fiscal Year .............................................................................................................. 1

ARTICLE II PLAN OF UNIT OWNERSHIP........................................................................ 1 201. Applicability of By-Laws ....................................................................................... 1 202. Application.............................................................................................................. 2 203. Percentage Interest ............................................................................................... 2

ARTICLE III MEMBERSHIP AND VOTING RIGHTS ..................................................... 2 301. Members ................................................................................................................. 2 302. Member in Good Standing...................................................................................... 2 303. Associate Member .................................................................................................. 2 304. Change of Membership........................................................................................... 3 305. Rights of Membership............................................................................................. 3 306. Suspension of Rights .............................................................................................. 3 307. Votes ....................................................................................................................... 3

ARTICLE IV MEETINGS OF UNIT OWNERS .............................................................. 4 401. Place of Meetings.................................................................................................... 4 402. Annual Meetings..................................................................................................... 4 403. Special Meetings ................................................................................................... 4 404. Record Date ........................................................................................................... 4 405. Notice of Meeting ................................................................................................... 4 406. Notice to Mortgagees.............................................................................................. 5 407. Quorum and Adjourned Meetings .......................................................................... 5 408. Organization............................................................................................................ 5 409. Majority Vote.......................................................................................................... 5 410. Voting ..................................................................................................................... 5 411. Ballot by Mail ......................................................................................................... 6 412. Proxies..................................................................................................................... 6 413. Action By Written Consent of Unit Owners........................................................... 6 414. Inspectors ................................................................................................................ 7 415. Order of Business.................................................................................................... 7

ARTICLE V BOARD OF TRUSTEES ................................................................................... 7 501. Qualifications.......................................................................................................... 8 502. Number and Qualification....................................................................................... 8 503. Term of Office ........................................................................................................ 9 504. Nomination ............................................................................................................. 9

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505. Removal of Members of the Board....................................................................... 10 506. Vacancies .............................................................................................................. 10 507. Regular Meetings .................................................................................................. 10 508. Special Meetings................................................................................................... 11 509. Waiver of Notice................................................................................................... 11 510. Quorum of Board of Trustees ............................................................................... 11

ARTICLE VI POWERS AND DUTIES OF THE BOARD OF TRUSTEES .................... 11 601. General Powers and Privileges ............................................................................. 11 602. Duties and Responsibilities................................................................................... 14 603. Managing Agent.................................................................................................... 15

ARTICLE VII OFFICERS ..................................................................................................... 15 701. Designation ........................................................................................................... 15 703. Election of Officers............................................................................................... 15 704. Removal of Officers.............................................................................................. 15 705. President................................................................................................................ 15 706. Vice-President....................................................................................................... 15 707. Secretary ............................................................................................................... 16 708. Treasurer ............................................................................................................... 16 709. Other Duties and Powers ...................................................................................... 16 710. Eligibility of Trustees ........................................................................................... 16 711. Agreements, Contracts., Deeds., Checks., etc. ..................................................... 16

ARTICLE VIII INSURANCE................................................................................................ 16 801. Insurance ............................................................................................................... 16

ARTICLE IX FISCAL MANAGEMENT............................................................................. 19 901. Budget; Common Expense Assessments .............................................................. 19 902. Determination of Annual Common Expenses ...................................................... 19 903. Disbursements....................................................................................................... 19 904. Depositories .......................................................................................................... 19 905. Accounts ............................................................................................................... 19 906. Reserves ................................................................................................................ 20 907. Notice; Emergencies ............................................................................................. 21 908. Acceleration of Assessment Installment Upon Default ........................................ 21 909. Interest and Counsel Fees ..................................................................................... 22 910. Assessment of Expenses in Actions by or Against Association; Allocation of

Awards .................................................................................................................. 22 911. Power of Attorney to Permitted Mortgage Holder ............................................... 23 912. Annual Audit......................................................................................................... 23

ARTICLE X RECORDS......................................................................................................... 23 1001. Records and Audit................................................................................................. 23 1002. Examination of Books........................................................................................... 23 1003. Fidelity Bonds....................................................................................................... 23

ARTICLE XI CASUALTY AND INSURANCE PROCEEDS............................................ 23 1101. Insurance ............................................................................................................... 23 1102. Disposition of Insurance Proceeds........................................................................ 24

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1103. Insurance Proceeds Less Than or Equal to $50,000 ............................................. 24 1104. Insurance Proceeds Greater than $50,000............................................................. 24 1105. Responsibility of Owner ....................................................................................... 25 1106. Insurance Proceeds Insufficient ............................................................................ 25 1107. Excess Insurance Proceeds ................................................................................... 25 1108. Assignment to Permitted Mortgage Holder .......................................................... 25

ARTICLE XII EMINENT DOMAIN .................................................................................... 25 1201. General.................................................................................................................. 25 1202. Notice and Participation of Owners...................................................................... 26 1203. Allocation of Awards............................................................................................ 26

ARTICLE XIII OBLIGATIONS OF OWNERS.................................................................. 27 1301. Payment of Common Expenses ............................................................................ 27 1302. Payment of Special Assessments .......................................................................... 27 1303. Default in Payment of Common Expenses and Assessments, Acceleration,

and Other Remedies.............................................................................................. 27 1304. Maintenance and Repair ....................................................................................... 28 1305. Terraces................................................................................................................. 28 1306. Restrictions on Use of Units ................................................................................. 29 1307. Additions, Alterations, or Modifications .............................................................. 29 1308. Use of Common Elements and Facilities.............................................................. 30 1309. Right of Access ..................................................................................................... 30 1310. Additions, Alterations, or Improvements by the Association............................... 30 1311. Rules of Conduct................................................................................................... 30 1312. Emergency Contact. .............................................................................................. 31

ARTICLE XIV COVENANTS AND RESTRICTIONS...................................................... 31 1401. Covenants and Restrictions................................................................................... 31 1403. Restrictions on Alterations.................................................................................... 35 1404. Compliance with Americans with Disabilities Act............................................... 35 1405. Lease Requirements .............................................................................................. 36 1406. Restrictions on Parking ......................................................................................... 37

ARTICLE XV SALES, LEASES, AND MORTGAGES OF UNITS.................................. 38 1501. Sale, Lease, or Other Disposition of Units ........................................................... 38 1502. Foreclosure............................................................................................................ 40 1503. Transfer of Unit and Payment of Assessment....................................................... 40 1504. Mortgage of Unit................................................................................................... 40

ARTICLE XVI DISSOLUTION ............................................................................................ 40 1601. Procedure .............................................................................................................. 40 1602. Ownership Upon Dissolution................................................................................ 40

ARTICLE XVII COMPENSATION, INDEMNIFICATION AND EXCULPATION..... 41 1701. Compensation ....................................................................................................... 41 1702. Liability of the Board of Trustees......................................................................... 41 1703. Indemnification ..................................................................................................... 41 1704. Exculpation ........................................................................................................... 42

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ARTICLE XVIII ENFORCEMENT ..................................................................................... 42 1801. Enforcement.......................................................................................................... 42 1802. Fines...................................................................................................................... 42 1803. Penalties ................................................................................................................ 42 1804. Waiver................................................................................................................... 43 1805. Cause of Action against Association .................................................................... 43

ARTICLE XIX AMENDMENTS........................................................................................... 43 ARTICLE XX CONFLICT; INVALIDITY.......................................................................... 43

2001. Conflict ................................................................................................................. 43 2002. Invalidity ............................................................................................................... 44

ARTICLE XXI NOTICE ........................................................................................................ 44 ARTICLE XXII CIVIL ACTION FOR DAMAGES........................................................... 44

ARTICLE XXIII ALTERNATIVE DISPUTE RESOLUTION COMMITTEE............... 44 2301. Designation ........................................................................................................... 44 2302. Power .................................................................................................................... 44 2303. Authority ............................................................................................................... 44 2304. Alternative Dispute Resolution Procedure............................................................ 45

ARTICLE XIV CORPORATE SEAL................................................................................... 46

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Draft - March 1, 2012

BY-LAWS OF

IMPERIAL HOUSE CONDOMINIUM ASSOCIATION, INC.

ARTICLE I

NAME, OFFICE, AND PURPOSE 101. Name and Principal Office. These are the By-Laws of Imperial House Condominium

Association, Inc. (hereinafter called the “Association”). The principal office of the Association shall be located at 787 Ocean Avenue, Long Branch, New Jersey, or such other location as may be determined by the Board.

102. Purpose. The Association is formed to serve as a means through which the.

condominium residential unit owners (hereinafter “Unit Owners”) may take action with regard to the administration, management, maintenance, repair, and operation of the Property (hereinafter defined) known as Imperial House, A Condominium (hereinafter the “Condominium”) in accordance with the provisions of a master deed (hereinafter the “Master Deed”) recorded in the office of the Monmouth County Clerk, to which these By-Laws are appended as an exhibit.

The statutes relating to condominiums in effect in the State of New Jersey pursuant to which the Condominium is to be promulgated and governed are at N.J.S.A.. 46:8B-1 et seq. of the laws of the State of New Jersey (hereinafter the “Condominium Act” or the “Act”) and the Association is intended to be the entity responsible for the administration of the Condominium as defined in the Condominium Act.

103. Definitions. Unless the context clearly indicates otherwise, all definitions set forth in the Master Deed for Imperial House, A Condominium (the “Master Deed”) or in N.J.S.A. 46:8B-3 are incorporated herein by reference.

104. Fiscal Year. The fiscal year of the corporation shall be determined by the Board of Trustees.

ARTICLE II

PLAN OF UNIT OWNERSHIP

201. Applicability of By-Laws. The provisions of these By-Laws are applicable to the

Condominium and to the use and occupancy thereof. The term “Property” as used herein shall include the land, the building (“Building”) and all other improvements thereon (including the residential units and the common elements), and all easements, rights, and

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appurtenances belonging thereto, and all other property, personal or mixed, intended for use in connection therewith, all as set forth in the Master Deed.

202. Application. All present and future owners, mortgagees, lessees, and occupants of

residential units (hereinafter “Unit”) and their employees, and any other persons who may use the facilities of the Property in any manner are subject to these By-Laws, the rules and regulations of the Association, and the Master Deed.

The recording or acceptance of a deed conveying a Unit, or any interest thereon, or any ownership interest in the Property whatsoever, or the entering into a lease or the act of occupancy of a Unit shall constitute an agreement that these By-Laws, the rules and regulations of the Association, and the provisions of the Master Deed, as they may be amended from time to time, are accepted, ratified, and will be complied with. Each purchaser of a residential unit in the Condominium will, by virtue of his/her/its ownership, become a member of the Association.

203. Percentage Interest. Where the symbol (%) or the term percentage is used in these By-Laws, it shall mean the proportionate undivided interest of each Unit Owner in the Common Elements as set forth in Exhibit (4) annexed to the Master Deed unless otherwise specifically stated.

ARTICLE III

MEMBERSHIP AND VOTING RIGHTS

301. Members. Every person, firm, association, corporation or other legal entity who is a record owner or co-owner of the fee title to any Unit shall be a Member of the Association; provided, however, that any person, firm, association, corporation, or legal entity who holds such title or interest merely as a security for the performance of an obligation (including, but not limited to, mortgagees or trustees under deeds of trust) shall not be a Member of the Association.

302. Member in Good Standing. A Member shall be deemed to be in good standing and

entitled to vote in person or by proxy at any meeting of the Association or in any ballot by mail, if before the date fixed for such meeting, the Member has fully paid all installments due for assessments made or levied against him and his Unit by the Board as hereinafter provided, together with all interest, costs, attorney's fees, penalties and other expenses if any, properly chargeable to him and to his Unit.

Any date set forth in these By-Laws for determining good standing for voting purposes, as well as any related requirement which may be established by the Board of Trustees, shall be deemed supplemental to, and not in derogation of, the record date provisions of N.J.S.A. 15A:5-7.

303. Associate Member. Every person who is entitled to possession and occupancy of a Unit

as a tenant or lessee of an Owner pursuant to Article _____ of these By-Laws may be an

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Associate Member of the Association, but shall not be entitled to any vote with respect to Association matters.

304. Change of Membership. Change of membership shall be accomplished by recordation in

the Monmouth County Clerk’s Office of a deed or other instrument establishing a record title to a Unit, and delivery to the Secretary of the Association of a certified copy of such instrument, together with such sums of money as are required for the payment of any membership fee, contribution to capital or escrow deposits. The membership of the prior Owner shall be thereby terminated.

305. Rights of Membership. Every person who is entitled to membership in the Association,

pursuant to the provisions of the Certificate of Incorporation and these By-Laws, and permanently resides in a Unit, including any Associate Member, shall be privileged to use and enjoy the General Common Elements of the Condominium, subject, however, to the right of the Association to:

a. Promulgate Rules and Regulations governing such use and enjoyment; b. Suspend the use and enjoyment of the General Common Elements; and c. Transfer all or part of the General Common Elements, other than the Building in

which the Units are contained.

306. Suspension of Rights. The membership and voting rights of any member may be suspended by the Board for any period during which any type of assessment against the Unit to which his membership is appurtenant remains unpaid; but upon payment of such assessments, and any interest accrued thereon, if by cash, money order, or certified or collected funds, his rights and privileges shall be immediately and automatically restored. Further, if Rules and Regulations governing the use of the Common Elements and the conduct of persons thereon have been adopted and published, as authorized herein, the rights and privileges of any person in violation thereof or in violation of any non-monetary covenant of the Master Deed may be suspended on written notice at the discretion of the Board for a period not to exceed thirty (30) days for any single violation, but if the violation is of a continuing nature, such rights and privileges may be suspended indefinitely until such time as the violation is abated. No such action shall be taken by the Board until the Owner is afforded an opportunity for a hearing consistent with the principles of due process of law.

307. Votes. Each Member in Good Standing shall be entitled to such vote for each Unit to

which he holds title as is provided in Article ___ of these By-Laws. When more than one person holds title, the vote shall be exercised as the co-owner Members among themselves determine. When one or more co-owner Members signs a proxy or purports to vote for his or her co-owner Members, such vote shall be counted unless one or more of the other co-owner Members is present and objects to such vote; or if not present, submits a proxy or objects in writing delivered to the Secretary of the Association before

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the vote is counted. If co-owner Members disagree as to the vote, the vote shall be split equally among the co-owner Members.

ARTICLE IV

MEETINGS OF UNIT OWNERS

401. Place of Meetings. All meetings of the Owners of the Association shall be held at the

Condominium or at such other place convenient to the Members as may be designated by the Board.

402. Annual Meetings. All annual meetings of the Owners of the Association shall be held on

the day and month of the year to be established by the Board. At each annual meeting., the election of Trustees shall take place. If the election of Trustees shall not be held at the annual meeting or any adjournment of such meeting, the Board shall cause the election to be held at a special meeting as soon thereafter as may be convenient. At such special meeting the Owners may elect the Trustees and transact other business with the same force and effect as at an annual meeting duly called and held. All proxies validly received for the originally scheduled meeting shall remain in full force and effect for any such adjourned meeting or special meeting and new proxies may be received for any such subsequent meeting.

403. Special Meetings. Special meetings of Owners may be called by the President

whenever he/she deems such a meeting advisable, or shall be called by the Secretary upon the order of the Board or upon the written request of Members representing not less than twenty-five (25%) percent of all the votes entitled to be cast at such meeting. Such request shall state the purpose(s) of such meeting and the matter(s) proposed to be acted upon. Unless Owners representing at least fifty (50%) percent of all votes entitled to be cast request such a meeting, no special meeting may be called to consider any matter which is substantially the same as a matter voted upon at any meeting of the Owners held during the preceding twelve (12) months, which determination shall be made in the sole and absolute discretion of the Board.

404. Record Date. For the purpose of determining the Unit Owners entitled to notice of

any meeting of the Association, or any adjournment thereof, or for the purpose of any other action, the Board of Trustees shall fix in advance a date as the record date for such determination. Such date shall not be more than sixty (60) nor less than ten (10) days before the date of the meeting. If no record date is fixed, the date shall be determined in accordance with the provisions of law relating thereto.

405. Notice of Meeting. Notice of each meeting of Members, whether annual or special, shall

be given not less than ten (10) days, nor more than sixty (60) days before the day on which the meeting is to be held, to each Owner at his last known address, by delivering a written or printed notice thereof to said Owner, or by mailing such notice, postage prepaid. Every such notice shall state the time, place and purpose(s) of the meeting. Notice of any meeting of Owners shall not be required to have been sent to any Owners

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who shall attend such meeting in person or by proxy. Notice of any adjourned meeting of the Owners shall not be required to be given unless the time and place to which the meeting is adjourned is not announced at the adjourned meeting. Except where otherwise expressly required by law, no publication of any notice of a meeting of Owners shall be required.

406. Notice to Mortgagees. Notice of all meetings relating to disposition of assets or the

granting of rights or easements in the Property must also be given to the holders of first mortgages secured on any Units if the Association has received notice of the identity and address of such mortgagee from the Unit Owner whose Unit is subject to such mortgage or from the mortgagee.

407. Quorum and Adjourned Meetings. At each meeting of the Owners, persons holding

twenty-five (25%) percent of the authorized votes present in person, by proxy or by mail ballot shall constitute a quorum for the transaction of business at a meeting of the membership, including the election of Trustees, except where otherwise provided by law. In the absence of a quorum, a majority of the votes present in person or by proxy may adjourn the meeting from time to time, until a quorum shall be present or represented. At any such adjourned meeting at which a quorum may be present any business may be transacted which might have been transacted at the meeting originally called.

408. Organization. At each meeting of the Association, the President, or, in his absence, the

Vice President, or in the absence of both of them, a person chosen by a majority vote of the Members in Good Standing present in person or represented by proxy, shall act as a chairperson, and the Secretary, or in his absence, a person whom the chairperson shall appoint, shall act as Secretary of the meeting.

409. Majority Vote. The vote of a majority in interest of the Owners, as determined by the

relative proportionate (percentage) interest in the Common Elements appurtenant to the Units as established by the Master Deed, present and entitled to vote at a meeting at which a quorum shall be present shall be binding upon all Unit Owners for all purposes other than those which, under the terms of the Master Deed or of these By-Laws or the provisions of New Jersey law, require a higher percentage vote.

410. Voting. The Association may, but shall not be required to, issue certificates or other

evidence of membership. The aggregate number of votes for all Unit Owners shall be one hundred (100) and shall be divided among the Unit Owners in accordance with the proportionate (percentage) interest in the Common Elements appurtenant to each of their Units. A fiduciary shall be entitled to vote with respect to any Unit owned in a fiduciary capacity. If a Unit is owned by more than one Unit Owner, the votes allocable to such Unit may be divided in such manner as the Unit Owners owning the same shall determine; provided that written notice of such determination has been filed with the Secretary of the Association before the appointed time of the meeting signed by all Owners of such Unit. No vote shall be cast on behalf of a Unit which has been acquired by the Association in its own name or in the name of its agent, designee, or nominee on behalf of all of the Unit Owners so long as it continues to be so held. Votes may be cast

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by each Unit Owner in person or by written proxy when filed with the Secretary of the Association at least ten (10) days before the appointed time of the meeting. A proxy shall be valid only for the particular meeting designated therein. A proxy may be revoked by the Unit Owner by appearance in person at the meeting and upon filing with the Secretary of the Association, at that time, notice of the revocation.

411. Ballot by Mail. The Board, in lieu of calling a membership meeting, may submit any

question or election, to a vote of the membership through a ballot by mail. No ballot by mail shall be valid or tabulated unless the identity of the Owner(s) submitting the ballot has been verified in accordance with procedures established by the Board. Only Members in Good Standing shall be entitled to vote. The Board shall appoint judges to tabulate the ballot whose report shall be included in the minute book. In order to conduct a ballot by mail for a question submitted to a vote of the membership, the Board shall serve a notice upon all members which shall (i) state with specificity in terms of motion(s) the question(s) upon which the vote is to be taken; (ii) state the date by which ballots must be received in order to be counted; (iii) provide an official ballot for the purposes of the vote; and (iv) state the date upon which the action contemplated by the motion(s) shall be effective, which date shall be not less than ten (10) days after the date ballots must be received. No actions contemplated by a question submitted to a ballot by mail shall be taken unless a majority in interest of all Members in Good Standing submit ballots approving such action.

In order to conduct a ballot by mail for an election of Trustees, the Board shall serve a

notice upon all Members which shall (i) provide an official ballot for the purposes of the election; and (ii) state the date by which the ballot must be received in order to be counted. No ballot shall be counted if the Member casting same is not a Member in Good Standing thirty (30) days prior to the date set for the ballot to be received.

412. Proxies. Voting by proxy shall be permitted with respect to all elections of Trustees, and

all amendments to the Certificate of Incorporation, the Master Deed or these By-Laws, or any other matter which is to come before a meeting of the membership of the Association. All proxies shall be in writing, signed by all individual Owners (or in the case of joint owners by any one of them), or by his or their duly authorized representative(s) and delivered to the Secretary of the Association, or such other person as the President may designate, prior to the opening of the polls at the meeting at which ballots are to be cast. Proxies may be revoked at any time prior to the opening of the polls, and no proxy shall be valid after eleven (11) months from its date unless said proxy provides for a longer period, not to exceed three (3) years from the date of execution. All proxies shall be substantially in the form prescribed by the Board, and if not in such form, shall be deemed invalid which determination shall be made in the sole and absolute discretion of the Board.

413. Action By Written Consent of Unit Owners. Any action that may be taken by a vote of

the Unit Owners may be taken without a meeting (provided the laws of the State of New Jersey then so provide) by written consent setting forth the action so taken or to be taken signed and duly acknowledged by the Unit Owners entitled to cast the majority of the

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total outstanding votes of all Unit Owners in accordance with Section 308 hereof, unless these By-Laws or the provisions of New Jersey law shall require a greater percentage of votes with respect to a particular action (in which case the action, to be effective, must be signed by Unit Owners entitled to cast such greater percentage of votes).

414. Inspectors. If, at any membership meeting a vote by ballot shall be taken, the chairperson

of such meeting shall appoint two persons to act as inspectors with respect to the ballots. Each inspector so appointed shall first subscribe an oath to execute faithfully the duties of an inspector with strict impartiality and according to the best of his ability. Such inspectors shall decide upon the qualifications of voters and shall report the number of votes represented at the meeting and entitled to be cast, shall conduct and accept the votes, and when the voting is completed, shall ascertain and report to the Secretary the number of votes for and against the questions or candidates respectively. Reports of inspectors shall be in writing and subscribed and delivered by them to the Secretary of the meeting. The inspectors need not be members of the Association and any Officer or Trustee of the Association may be an inspector on any question, other than a vote for or against his election or any other question in which he may be directly interested.

415. Order of Business. The order of business at the annual meeting of the Owners or at any

special meeting insofar as practicable shall be:

(a) Calling of the roll and certifying the proxies.

(b) Proof of notice of meeting and waiver of notice.

(c) Reading and disposal of any unapproved minutes.

(d) Appointment of inspectors of election, if appropriate.

(e) Election of Trustees, if appropriate.

(f) Receiving reports of officers.

(g) Receiving reports of committees.

(h) Old business.

(i) New business.

(j) Adjournment.

ARTICLE V

BOARD OF TRUSTEES

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501. Qualifications. The following criteria shall be qualifications for nomination, appointment or election to a Trusteeship:

(a) Membership in Good Standing. Membership in Good Standing shall be a qualification of any nominee or appointee to a Trusteeship and for continued service on the Board. (b) Representation. Partnerships, corporations, limited liability companies, fiduciaries or co-owners holding memberships in good standing may designate one (1) individual per Unit owned to be eligible for nomination, appointment, or election as Trustees in accordance with the following qualifications:

(i) Partnership designees shall be members, employees or agents of the partnership; (ii) Corporate designees shall be officers, stockholders, employees or agents of the corporation; (iii) Limited liability company designees shall be members, employees or agents of the limited liability company; (iv) Fiduciary designees shall be fiduciaries, officers, or employees of the fiduciary; and (v) Co-Owners holding a membership in good standing may designate any one of them, but only one of them, to be eligible for nomination, appointment, or election as a Trustee; however, in the case of any disagreement, the express consent of a majority in interest of such co-Owners shall be required.

(c) Disqualification of Trustees: Any Trustee whose membership in the Association is not a Member in Good Standing for thirty (30) consecutive days shall automatically be disqualified as a Trustee upon expiration of said thirty (30) day period and a replacement shall be appointed by the Board within thirty (30) days thereafter to serve the remainder of the term as contemplated by Section 6.04 hereof. Despite the aforesaid, any Trustee who conveys title to his Unit and no longer holds title to any other Unit is automatically disqualified as a Trustee effective on the date of said conveyance.

Further, only Owners who are Members in Good Standing shall be eligible to be nominated, elected, or to serve on the Board, except that in the case of any Owner which is a partnership, corporation or limited liability company, a designee shall be eligible if the Owner is a Member in Good Standing.

502. Number and Qualification. The affairs of the Association shall be governed by a Board

of Trustees and shall consist of seven (7) persons or such greater number as may be fixed by the Board of Trustees from time to time, each of whom shall be subject to the qualifications set forth at Section 501.

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503. Term of Office. Trustees shall serve three (3) year terms. The election of Trustees A and

B shall be held in the same year, Trustees C and D in the same year thereafter; and of Trustees E, F and G in the year thereafter, the intent and purpose being that at each Annual Meeting, either two (2) or three (3) Trustees are subject to election in accordance with this Section 503. The first election of Board members held after the adoption of these By-Laws shall subject the Board members in office to the terms of office specified in this Paragraph 503.

504. Nomination. The Board of Trustees shall consist of not less than seven (7) qualified Unit

Owners, who shall serve for a term of three (3) years and until a successor is elected. There shall be an election of Trustees each year at the Annual Meeting to fill vacancies on the Board of Trustees as they occur.

The nomination of candidates for the office of Trustee shall be made by a Nominating Committee consisting of between three (3) and five (5) Unit Owners, the number of which shall be determined in the sole discretion of the Board of Trustees, who shall be appointed on or before March 1st of each year by the President with the advice and approval of the Board of Trustees, one of whom shall be designated Chairman by the President. Unit Owners must satisfy the qualifications set forth at Section 501 in order to serve on the Nominating Committee. Notice of the appointment and the names of the Unit Owners constituting the Nominating Committee shall be mailed or delivered immediately after appointment to each Unit Owner and posted on the bulletin board. This notice shall, in addition to notifying each Unit Owner of the appointment of the Committee, inform Unit Owners that the Committee will receive, for its consideration in nomination of Trustees, the name or names of any Unit Owner qualified to serve as a Trustee, together with the consent of such person named, serve as a Trustee, if elected. The notice shall also contain a provision, stating that in addition to the nomination of Trustees by the Committee, it shall also be required to accept for nomination for election to the Board of Trustees the name of any qualified Unit Owner who submits or who has had submitted on his behalf a petition containing the endorsement by signature of at least fifteen (15) qualified Unit Owners, together with the consent of the nominee to serve, if elected. The names of those to be considered by the Committee and all petitions nominating candidates given to the Manager of the Association for delivery to the Committee on or before May 15th prior to the Annual Meeting. The Committee shall not be obliged to accept a petition or name thereafter. No nominations may be made from the floor at the Annual Meeting.

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On or before June 1st, prior to the Annual Meeting, the Committee shall prepare and have mailed or delivered to each Unit Owner a notice containing the names of those selected by the Committee and those nominated by petition for the office of Trustee.

The notice shall contain the information that voting may be either in person at the Annual Meeting or a proxy may be designated for that purpose. The notice shall also state the number of Trustees to be elected and that voting may be from either the list nominated by the Committee or those nominated by petition.

505. Removal of Members of the Board. At any duly held and constituted regular or special

meeting of the Owners, any one or more Trustees may be removed with or without cause by vote of the Owners present, provided that the notice of the meeting expressly includes this item. A successor may then and there be elected by a majority of the remaining Trustees to fill the vacancy thus created. Each person so appointed shall be a Trustee for the remainder of the term of the Trustee whose term he is filling and until his successor is duly elected and qualified. Any Trustee whose removal has been proposed shall be given an opportunity to be heard at the meeting but the failure of any Trustee to be a Member in Good Standing for a period of thirty (30) days or more shall be grounds for automatic removal without any vote of the members.

Despite the foregoing, an Owner-elected Trustee cannot be removed except by a majority

vote (in number) of the Owners present. The failure of any Trustee to be a Member in Good Standing for a period of thirty (30) days or more shall be grounds for automatic removal without any vote of the members. In the event that all of the Owner-elected Trustees are removed, successors shall be elected by the Owners in the manner set forth in Section 4.03 herein to fill the vacancies thus created.

Notwithstanding anything to the contrary in this Section 505, the Board shall have the right to remove any Trustee in the event that the Trustee fails to attend at least 50% of the Board meetings in any calendar year.

506. Vacancies. Vacancies on the Board caused by any reason other than the removal of a

Trustee by a vote of the Owners shall be filled by a vote of a majority of the remaining Trustees at a special meeting of the Board held for that purpose promptly after the occurrence of any such vacancy. Each person so elected shall be a Trustee for the remainder of the term of the Trustee whose term he is filling and until his successor shall have been duly elected and qualified.

507. Regular Meetings. Regular meetings of the Board of Trustees may be held at such time

and place as shall be determined from time to time by a majority of the members of the Board of Trustees, but at least one such meeting shall be held during each fiscal year of the Association. Notice of regular meetings of the Board of Trustees shall be given to each member of the Board of Trustees at least three (3) business days prior to the day designated for such meeting.

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508. Special Meetings. Special Meetings of the Board of Trustees may be called by the President of the Association on notice sent to each member of the Board of Trustees at least three (3) business days prior to such meeting. The aforesaid notice shall state the time, place, and purpose of the meeting. Special meetings of the Board of Trustees shall be called by the President or Secretary in like manner and on like notice at the written request of at least three (3) members of the Board of Trustees.

509. Waiver of Notice. Any member may at any time waive notice of any meeting of the

Board of Trustees, in writing, and such waiver shall be deemed equivalent to the giving of such notice. Attendance by a member of the Board of Trustees at any meeting of the Board of Trustees shall constitute a waiver of notice by him of the time and place thereof, unless such attendance is for the purpose of protesting lack of notice and written notice of such purpose is delivered to the other members of the Board at that time. If a majority of the members of the Board of Trustees are present at any meeting of the Board, no notice shall be required and any business may be transacted at such meeting.

510. Quorum of Board of Trustees. At a meeting of the Board of Trustees, a majority of

members thereof shall constitute a quorum for the transaction of business and the votes of a majority of the members of the Board present at a meeting at which a quorum is present shall constitute the decision of the Board of Trustees. If at any meeting of the Board of Trustees there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum is present, any business which might have been transacted at the meeting originally called may be transacted without further notice.

ARTICLE VI

POWERS AND DUTIES OF THE BOARD OF TRUSTEES

601. General Powers and Privileges. Subject to the Master Deed, or other instruments of creation, the Association may do all that it is legally entitled to do under the laws applicable to its form of organization. The Association shall discharge its powers in a manner that protects and furthers the health, safety and general welfare of the residents of the Condominium. The Association shall provide a fair and efficient procedure for the resolution of disputes between individual Owners and the Association, and between different Owners, that shall be readily available as an alternative to litigation.

The property, affairs and business of the Association shall be managed by the Board of

Trustees, which shall have all those powers granted to it by the Certificate of Incorporation, the Master Deed, these By-Laws, and by law.

The Board shall have those powers, which include, but which are not necessarily limited

to, the following, together with such other powers as may be provided herein or in the Master Deed, or which may be necessarily implied.

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a. To employ, by contract or otherwise, a manager, managing agent or an independent contractor to oversee, supervise and carry out the responsibilities of the Board. Said manager or said independent contractor shall be compensated upon such terms as the Board deems necessary and proper; and b. To employ any person, firm or corporation to repair, maintain or renovate the Common Elements of the Condominium; to lay pipes or culverts; to bury utilities; to put up lights or poles; to erect signs and traffic and safety controls of various sorts on said Property; and c. To employ professional counsel and to obtain advice from persons, firms or corporations such as, but not limited to, landscape architects, architects, engineers, lawyers and accountants; and d. To employ or contract for water and sewer, electricity and gas or other forms of utilities, cable or master antenna television; and e. To employ all managerial personnel necessary, or enter into a managerial contract, for the efficient discharge of the duties of the Board hereunder; and f. To adopt, amend, and publish Rules and Regulations covering the details of the operation and use of the Common Elements including, but not limited to, pet controls; and g. To secure full performance by all Owners or occupants of all items of maintenance for which they are responsible; and h. To set minimum standards for floor coverings installed by all Owners in the Building; and i. To coordinate the plans of Owners and occupants of Units for moving their personal effects or property into the Unit or out of it, with a view toward scheduling such movements so that there shall be a minimum of inconvenience to others; and j. To arrange for security protection as necessary; and k. To enforce obligations of the Owners and do anything and everything else necessary and proper for the sound management of the Condominium, including the right to bring or defend lawsuits to enforce the terms, conditions and restrictions contained in the Master Deed, these By-Laws, or any Rules and Regulations; and l. To borrow and repay monies giving notes, mortgages or other security upon such term or terms as it deems necessary; and m. To invest and reinvest monies; sue and be sued; collect interest, dividends, and capital gains; exercise rights; pay taxes; make and enter into contracts; enter into leases or

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concessions; make and execute any and all proper affidavits for various purposes; compromise any action without leave of court; and all other powers contained herein, and those necessary and incidental thereto; and n. To transfer, grant or obtain easements, licenses, and other property rights with respect to the General Common Elements in a manner not inconsistent with the rights of Owners; and o. To purchase or lease or otherwise acquire in the name of the Association or its designees, corporate or otherwise, on behalf of all Owners within the Condominium, Units offered for sale or lease or surrendered by their Owners to the Board, provided that the foregoing shall not be construed to constitute a right of first refusal; and p. To purchase Units within the Condominium at foreclosure or other judicial sales in the name of the Association or its designees, corporate or otherwise, on behalf of all Owners; and q. To sell, lease, mortgage (but not vote the votes appurtenant thereto) or otherwise deal with Units acquired by the Association, and sublease any such Units leased by the Association or its designees, on behalf of all Owners; and r. To bring and defend actions by or against more than one Owner which are pertinent to the operation of the Condominium, the health, safety or general welfare of the Owners, or any other legal action to which the Owners may consent in accordance with these By-Laws; and s. To appoint an Insurance Trustee, who shall not be a Member of the Association, or the manager, who shall discharge his duties in accordance with these By-Laws. In the absence of such an appointment, the Board shall be responsible for the disposition of all insurance proceeds; and t. To create, appoint members to and disband such committees as shall from time to time be deemed appropriate or necessary to aid the Board in the discharge of its duties, functions and powers; and u. To establish an Alternative Dispute Resolution Committee, as hereinafter provided in Article XV; and v. Organize corporations to act as designees of the Association in acquiring title to or leasing Units on behalf of all Unit Owners; and w. Make repairs, additions, and improvements to or alterations of the Property when necessary and, in addition, make repairs to and restoration of the Property in accordance with the other provisions of these By-Laws after damage or destruction by fire or other casualty or as a result of condemnation or eminent domain proceedings. When, in the opinion of the Board of Trustees, any of the Common

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Elements requires protection, renewal, maintenance, or repair, or when enforcement of any of the Association’s rules and regulations so require or when the abatement of any nuisance is required or in any emergency situation, the Board of Trustees shall have the right to enter any Unit for such purpose. Such entry shall, however, be done with as little inconvenience to the Unit Owners as is reasonably possible. By the acceptance of a deed conveying each Unit to the Unit Owner, each Unit Owner expressly and irrevocably grants and confirms the rights of entry aforesaid; and x. Own and maintain an apartment unit on such terms as the Board of Trustees deem appropriate to a resident manager employed by the Association and, in the discretion of the Board of Trustees, obtain a mortgage for all or a part of the purchase price, and charge the mortgage payments and the share of Common Expenses otherwise payable on account of that Unit as a Common Expense.

602. Duties and Responsibilities. It shall be the affirmative and perpetual obligation and duty of the Board to perform the following: a. To cause the General Common Elements and Limited Common Elements to be maintained according to accepted standards and as set forth in the Master Deed, including, but not limited to, such maintenance, painting, replacement and repair work as may be necessary, lawn maintenance and clearing of snow from driveways and walkways as the Board may deem appropriate. All repairs and replacements shall be substantially similar to the original installation and shall be of first class quality; and b. To investigate, hire, pay, supervise and discharge the personnel necessary to be employed, and provide the equipment and materials necessary, in order to properly maintain and operate the Common Elements. Compensation for the services of such employees (as evidenced by certified payroll) shall be considered an operating expense of the Association; and c. To cause to be kept a complete record of all its acts and corporate affairs and to present a summary report thereof to the Members at the annual meeting or at any special meeting when requested in writing at least twenty-one (21) days in advance by the Members entitled to cast at least twenty-five (25%) percent of the total votes of the Association; and d. To allocate common surplus or make repairs, additions, improvements to, or restoration of the Common Elements in accordance with the provisions of these By-Laws and the Master Deed after damage or destruction by fire or other casualty, or as a result of condemnation or eminent domain proceedings; and e. To take such action as may be necessary to comply promptly with any and all orders or requirements affecting the premises maintained by the Association placed

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thereon by any federal, state, county or municipal authority having jurisdiction thereover, and order of the Board of Fire Underwriters or other similar bodies; and f. To manage the fiscal affairs of the Association as hereinafter provided in Article IX.

603. Managing Agent. The Board of Trustees may employ a managing agent for the Condominium at a rate of compensation established by the Board of Trustees to perform such duties and services as the Board of Trustees shall authorize. The Board of Trustees may delegate to the managing agent all of the powers granted to the Board of Trustees by these By-Laws but, notwithstanding such delegation, shall remain responsible to the Unit Owners for the proper performance of such duties and services.

ARTICLE VII

OFFICERS

701. Designation. The principal officers of the Association shall be a President, a Vice

President, both of whom shall be Members of the Board, a Secretary and a Treasurer. The Board may also appoint such other Assistant Treasurers and Assistant Secretaries as in its judgment may be necessary. Any two (2) offices, except that of President and Vice President, may be held by one person.

703. Election of Officers. The. officers of the Association shall be elected by a majority vote

of the Board of Trustees and shall hold office at the pleasure of the Board of Trustees. Elections shall be held at its first meeting following each annual meeting, or more frequently, if necessary.

704. Removal of Officers. Upon the affirmative vote of a majority of the members of the

Board of Trustees, any officer may be removed, with or without cause, after an opportunity to be heard. His successor may be elected at any regular meeting of the Board of Trustees or at any special meeting of the Board of Trustees called for such purpose.

705. President. The President shall be the Chief Executive Officer of the Association. He

shall preside at all meetings of the Unit Owners and of the Board of Trustees. He shall have all of the general powers and duties which are incident to the office of President of a corporation organized under New Jersey law, including, but not limited to, the power to appoint committees from among the Unit Owners, from time to time, as he may in his discretion decide is appropriate, to assist in the conduct of the affairs of the Association.

706. Vice-President. The Vice-President shall take the place of the President and perform his

duties whenever the President shall be absent or unable to act. If neither the President nor the Vice-President is able to act, the Board of Trustees shall appoint a member of the Board of Trustees to act in the place of the President on an interim basis. The Vice-

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President shall also perform such other duties as shall from time to time be imposed upon him by the Board of Trustees or the President.

707. Secretary. The Secretary shall keep the minutes of all meetings of the Association and of

the Board of Trustees. He/she shall have charge of such books and papers as the Board of Trustees may direct and he/she shall, in general, perform all the duties incident to the office of Secretary of a corporation organized under New Jersey law. The Secretary shall also perform the duties aforesaid for any committees as the Board of Trustees or the President may so direct.

708. Treasurer. The Treasurer shall have the responsibility for Association funds and

securities and shall be responsible for keeping full and accurate financial records and books of account showing all receipts and disbursements and for the preparation of all required financial data. He/she shall be responsible for the deposit of all monies and other valuable effects in the name of the Association in such depositories as may from time to time be designated by the Board of Trustees and he/she shall generally perform all duties incident to the office of Treasurer of a corporation under New Jersey law. He/she shall render to the President and to the Board of Trustees a full account of the transactions as Treasurer and a full account of financial conditions of the Association at the regular meetings of the Board of Trustees and whenever either the President or the Board of Trustees shall so require.

709. Other Duties and Powers. The officers shall have such other duties, powers and

responsibilities as shall, from time to time, be authorized by the Board. 710. Eligibility of Trustees. Nothing herein contained shall prohibit a Trustee from being an

officer. 711. Agreements, Contracts., Deeds., Checks., etc. All agreements, contracts, deeds, leases,

checks, and other. instruments of the Association shall require execution by any two officers of the Association or by such other person or persons as may be designated by the Board of Trustees.

ARTICLE VIII

INSURANCE

801. Insurance. The Board of Trustees shall be required to t place and keep in force all

insurance coverages required to be maintained by the Association, applicable to its property and Members including, but not limited to:

(i) Physical Damage Insurance. To the extent obtainable in the normal

commercial marketplace, broad form insurance against loss by fire and against loss by lightning, windstorm and other risks normally included within all risk extended coverage, including vandalism and malicious mischief, insuring all improvements within the Condominium, Common Elements and Unit betterments existing at the time of the initial

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conveyance, together with all service machinery appurtenant thereto, as well as common personalty belonging to the Association, and covering the interest of the Association, the Board, and all Owners and any Mortgage Holder who has requested the Association in writing to be named as loss payee, as their respective interests may appear, in an amount equal to the full replacement value of the Common Elements (exclusive of foundations and footings) and Unit betterments existing at the time of the initial conveyance, without deduction for depreciation. Each policy shall contain a standard mortgagee clause in favor of each applicable Mortgage Holder, which shall provide that the loss, if any, thereunder, shall be payable to each applicable Mortgage Holder, its successors and assigns, as its interest may appear, subject to the loss payment provisions set forth in Article ___ of the Master Deed. The aforesaid mortgagee clause shall name as mortgagee either the Federal National Mortgage Association (FNMA) or its servicers in the event FNMA holds mortgages on any Units. When a servicer is named as the mortgagee, its name must be followed by the phrase "its successors and assigns." Prior to obtaining any renewal of a policy of fire insurance, the Board shall obtain an appraisal or other written evaluation of an insurance broker licensed to conduct business in New Jersey or other qualified expert as to the full replacement value of the Common Elements (exclusive of foundations and footings) and Unit betterments existing at the time of the initial conveyance of the Unit without deduction for depreciation, for the purposes of determining the amount of fire insurance to be obtained pursuant to this subparagraph. The amount of any deductible and the responsibility for payment of same shall be determined by the Board, in its sole discretion.

(ii) Public Liability Insurance. To the extent obtainable in the normal commercial

marketplace, public liability insurance for personal injury and death from accidents occurring within the Common Elements (and any other areas which the Board may deem advisable), and the defense of any actions brought by injury or death of a person or damage to property, occurring within such Common Elements, and not arising by reason of any act or negligence of any individual Owner. Said insurance shall be in such limits as the Board may, from time to time, determine, covering each Member of the Board, the managing agent, the manager, and each Member, and shall also cover cross liability claims of one insured against another. Until the first meeting of the Board following the first annual meeting, such public liability insurance shall be in a single limit of not less than $1,000,000.00 covering all claims for personal injury or property damage arising out of any one occurrence. The Board shall review such limits once a year.

(iii) Trustees’ and Officers' Liability Insurance. To the extent obtainable in the

normal commercial marketplace, liability insurance indemnifying the Trustees and Officers of the Association against liability for errors and omissions occurring in connection with the performance of their duties in an amount of at least $1,000,000.00, with any deductible amount to be in the sole discretion of the Board.

(iv) Workers' Compensation Insurance. Workers' compensation and New Jersey

disability benefits insurance as required by law.

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(v) Vehicular Liability Insurance. To the extent obtainable in the normal commercial marketplace, vehicular liability insurance to cover all motor vehicles, if any, owned or operated by the Association.

(vi) Flood Insurance. Flood hazard insurance in the event any of the insurable

Common Elements are located within a federally designated zone of greater than minimal flood hazard.

(vii) Water Damage. Water Damage legal liability insurance. (viii) Elevator Insurance. To the extent obtainable in the normal commercial

marketplace, elevator liability and collision insurance. (ix) Boiler Insurance. To the extent obtainable in the normal commercial

marketplace, boiler explosion liability insurance. (x) Other Insurance. Such other insurance as the Board may determine to be

appropriate.

All policies shall: (i) provide if possible for recognition of any insurance trust agreement of the Association and that adjustment of loss shall be made by the Board of Trustees with the approval of the Insurance Trustee, if any, and that the net proceeds thereof, if $50,000.00 or less shall be payable to the Board, and if more than $50,000.00 shall be payable to the Insurance Trustee, if any; (ii) require that the proceeds of physical damage insurance be applied to the restoration of such Common Elements and such structural portions and service machinery as is required by the Master Deed and these By-Laws; (iii) to the extent obtainable contain agreed amount and inflation guard endorsements; construction code endorsement; demolition cost endorsement; contingent liability from operation of building laws endorsement and increased cost of construction endorsement; (iv) provide that the insurance will not be prejudiced by any act or omission of individual Members that are not under the control of the Association; (v) provide that the policy will be primary, even if insurance covering the same loss is held by any Member(s); (vi) to the extent obtainable contain waivers of subrogation and waivers of any defense based on co-insurance or of invalidity arising from any acts of the insured; and (vii) provide that such policies may not be canceled without at least thirty (30) days prior written notice to all of the named insureds, including all Owners and Permitted Mortgagees. All policies shall show the named insured as: "Imperial House Condominium Association, Inc., for the use and benefit of the individual owners’ or the Association's Insurance Trustee, if any”. The "loss payable" clause must show the Association or the Insurance Trustee, as a trustee for each Owner, mortgage holder or other loss payee. Also, the policies must require the insurer to notify in writing the Association, its Insurance Trustee and each Permitted Mortgage Holder or other entity named in the mortgage clause at least thirty (30) days before it substantially changes the Association's coverage.

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The Board may determine, in its sole discretion, the amount of any deductible and the responsibility for payment of same as to any policy of insurance maintained under this subparagraph. Despite any other provisions of this subparagraph, the Association shall not be required to provide any type or amount of insurance not commonly available in the normal commercial marketplace. The premiums for any and all insurance coverage maintained by the Association shall be a common expense of the Association. Owners shall not be prohibited from carrying insurance for their own benefit provided that all such policies shall contain waivers of subrogation; and further provided that the liability of the carriers issuing insurance obtained by the Board shall not be affected or diminished by reason of any such additional insurance carried by any Owners.

ARTICLE IX

FISCAL MANAGEMENT

901. Budget; Common Expense Assessments. The Board shall prepare an annual Common Expense budget which reflects the anticipated operating expenditures and repair and replacement reserve accumulation requirements for the next ensuing fiscal year of the Association. Common Expenses shall include, but not be limited to, the estimated costs for the operation, repair and maintenance of the Common Elements, the estimated costs for the operation of the Association, and any reserves for deferred maintenance, replacement or capital improvements of the Common Elements.

902. Determination of Annual Common Expenses. The amount of monies for Annual

Common Expenses deemed necessary by the Board and the manner of expenditure thereof, including, but not limited to, the allocation thereof, shall be a matter for the sole discretion of the Board.

903. Disbursements. The Board shall take and hold the funds as collected and shall disburse

same for the purposes and in the manner set forth herein and as required by the Master Deed, Certificate of Incorporation, and applicable law.

904. Depositories. The depository of the Association shall be such bank or banks as shall be

designated from time to time by the Board and in which the monies of the Association shall be deposited. Withdrawal of monies from such accounts shall be only by checks signed by such parties as are authorized by the Board, provided that a management agreement may include, among its provisions, authority for a manager to sign checks on behalf of the Association for payment of the obligations of the Association, if the proper fidelity bond is furnished to the Association.

905. Accounts. The receipts and expenditures of the Association shall be Common Expense

Assessments and Common Expenses respectively, and shall be credited and charged to accounts under the following classifications as the Board shall deem appropriate, all of which expenditures shall be Common Expenses:

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(i) Current expenses, which shall include expenditures within the year for which the

budget is made, including reasonable allowances for contingencies and working funds. Current expenses shall not include expenditures chargeable to reserves. At the end of each year, any unexpended amount remaining in this account may be retained in one or more accounts of the Association, applied to reduce the assessments for current expenses for the succeeding year, or distributed to the membership in the same manner as assessed, as the Board shall determine.

(ii) Reserve for deferred maintenance, which shall include funds for maintenance

items that occur less frequently than annually. (iii) Reserve for replacement, which shall include funds for repair or replacement of

the Common Elements and those portions of the Common Elements for which repair or replacement is required because of damage, depreciation or obsolescence. The amounts in this account shall be allocated among each of the separate categories of replacement items, which amounts and items shall be determined in the sole discretion of the Board.

(iv) Reserves for capital improvements, which shall include the funds to be used for

capital expenditures or for acquisition of additional personal property that will be part of the Common Elements.

(v) Operations, which shall include all funds from the use of the Common Elements

or from any other sources. Only the additional direct expense required by any revenue producing operation will be charged to this account, and any surplus from any operation or otherwise shall be used to reduce the assessments for current expenses for the year during which the surplus is realized, or at the discretion of the Board, in the year following the one in which the surplus is realized. Losses from operations or otherwise shall be met by special assessments against Owners, which assessments may be made in advance in order to provide a working fund.

The Board of Trustees shall not be required to physically segregate the funds held in the above accounts, except for the reserves for replacement and repair and escrow deposits, if any, which funds must be maintained in separate accounts. The Board may, in its sole discretion, maintain the remaining funds in one or more consolidated accounts; however, the division into the various accounts set forth above need be made only on the Association's records.

906. Reserves. The Board shall not be obligated to expend all of the reserves collected in any

accounting period, and must maintain reasonable reserves for, among other things, repairs, replacements, emergencies, contingencies of bad weather or uncollected accounts. Despite anything herein to the contrary, the Board in its determination of the Common Expenses and the preparation of a budget shall specifically designate and identify that portion of the Common Expenses which is to be assessed against the Owners as a capital contribution and is allocable to reserves for each separate item of capital

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improvement of and to said property. The amounts assessed and collected for the reserves shall be kept in one or more interest-bearing savings accounts or certificates of deposit, or any other financial product insured by the Federal Deposit Insurance Corporation (FDIC) and shall not be utilized for any purpose other than that which was contemplated at the time of the assessment. The foregoing shall not be construed to mean that the Board shall not be permitted to keep additional cash on hand, in a checking or petty cash account, for the necessary discharge of its functions.

907. Notice; Emergencies. The Board shall give written notice to each Owner and Permitted

Mortgage Holder of the amount estimated by the Board for Common Expenses for the management and operation of the Association for the next ensuing budget period, directed to the Owner at his last known address by ordinary mail, or by hand delivery. Said notice shall be conclusively presumed to have been delivered five (5) days after deposit in the United States mails. In addition to notice by United States mail, the Board may provide a supplemental notice by e-mail to any Unit Owner wishing to provide to Board with his or her e-mail address for such purposes. If an Annual Common Expense Assessment is not made as required, an Assessment shall be presumed to have been made in the amount of the last prior year's Assessment, and monthly installments on such Assessment shall be due upon each installment payment date until changed by an amended Assessment. In the event the Annual Common Expense Assessment proves to be insufficient, the budget and Assessments may be amended at any time by the Board, provided that nothing herein shall serve to prohibit or prevent the Board from imposing an Emergency Assessment in the case of any immediate need or emergency which cannot be met by funds earmarked for such contingency.

908. Acceleration of Assessment Installment Upon Default. If an Owner shall be in default

less than thirty (30) days in the payment of an installment upon any type of assessment, if the Board elects to accelerate the remaining installments of the assessment, the Board shall notify the delinquent Owner that the remaining installments of the assessment shall be accelerated if the delinquent installment has not been paid by the date stated in the notice, which date shall not be less than five (5) days after delivery of the notice to the Owner, or not less than ten (10) days after the mailing of such notice to him by registered or certified mail. If default shall continue for a period of thirty (30) days after the giving of notice, then the Board shall be required to give such notice of acceleration. If default continues following the time for payment prescribed in the notice, then the Board shall be required to accelerate the remaining installments of the assessment for the current year and notify the delinquent Owner that a lien for the accelerated amount shall be filed on a date certain stated in the notice, if the accelerated balance has not then been paid. The lien for such accelerated assessment as permitted by law shall then be filed if the delinquent assessment has not been paid by the date stated in the notice. The Board may also (i) notify any holder of a mortgage encumbering the Unit affected by such default or (ii) publish appropriate notice of such delinquency to the membership of the Association. If said default continues for a period of ninety (90) days, then the Board may foreclose the foregoing lien pursuant to law and/or commence an independent suit against the appropriate parties to collect the Assessment and any legal fees or costs incurred.

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909. Interest and Counsel Fees. The Board at its option shall have the right in connection with the collection of any type of assessment, or other charge, to impose a late charge of any reasonable amount and/or interest at the legal maximum rate permitted by law for the payment of delinquent real estate taxes, if such payment is made after a date certain stated in such notice. In the event that the Board shall effectuate collection of said Assessments or charges by resort to counsel, and/or the filing of a lien, the Board may add to the aforesaid Assessments or charges a sum or sums of twenty (20%) percent of the gross amount due as counsel fees, plus the reasonable costs for preparation, filing and discharge of the lien, in addition to such other costs as may be allowable by law.

910. Assessment of Expenses in Actions by or Against Association; Allocation of Awards.

a. Common Expenses. In the case of any action or proceeding brought or defended by the Association or the Board pursuant to the provisions of the Master Deed, Certificate of Incorporation, these By-Laws, or any rules or regulations, the reasonable costs and expenses of preparation and litigation, including attorneys' fees, shall be a Common Expense allocated to all Owners.

All Common Expense Assessments received and to be received by the Board, for the purpose of paying any judgment obtained against the Association or the Board and the right to receive such funds, shall constitute trust funds and same shall be expended first for such purpose before expending any part of same for any other purpose.

b. Allocation of Awards. Money judgments recovered by the Association in any

action or proceeding brought hereunder, including costs, penalties or damages, shall be deemed a special fund to be applied to (1) the payment of unpaid litigation expenses; (2) Common Expense Assessments, if the recovery thereof was the purpose of the litigation; (3) repair or reconstruction of the Common Elements, if recovery of damages to same was the purpose for the litigation; and (4) any amount not applied to (1), (2), and (3) above shall at the discretion of the Board be treated either as (i) a common surplus which shall be allocated and distributed pursuant to the provisions of Section 6.06 of the Master Deed or (ii) a set off against the Common Expense Assessments generally. Despite the foregoing, if an Owner(s), the Board or any other person or legal entity affected by any such distribution, shall assert that the damages sustained by an Owner(s) was disproportionate to his allocated amount of any common surplus, the matter shall be decided in accordance with the procedures set forth in Article ____ hereof.

c. Recovery by Owner. In the event that an Owner(s) succeeds in obtaining a

judgment or order against the Association or the Board, then in addition to any other sums to which said Owner(s) would otherwise be entitled by such judgment or order, said Owner(s) shall also be entitled to the restitution or recovery of any sums paid to the Board as Common Expense Assessments for litigation expenses in relation to said action or proceeding.

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911. Power of Attorney to Permitted Mortgage Holder. In the event the Board shall not cause

he enforcement procedures provided in Sections 808 and 809 above to be implemented within the time provided, any Permitted Mortgage Holder for any Unit as to which there shall be such unpaid Common Expense Assessments is hereby irrevocably granted a power of attorney to commence such actions and to invoke such other remedies, all in the name of the Association. This power of attorney is expressly stipulated to be coupled with an interest in the subject matter.

912. Annual Audit. The Board shall submit the books, records, and memoranda of the

Association to an annual audit by an independent certified public accountant who shall audit same and render a report thereon in writing to the Board and in summary form to the Owners and such Permitted Mortgagee or other persons, firms or corporations as may be entitled to same.

ARTICLE X

RECORDS

1001. Records and Audit. The Board of Trustees shall keep or cause to be kept detailed records

of its actions; minutes of its meetings and of the meetings of the Unit Owners; and financial records and books of account of the Association, including a chronological listing of receipts and expenditures as well as a separate account for each Unit which, among other things, shall contain the amount of each assessment of Common Expenses against such Units, the date when due, the amounts paid thereon and the balance remaining unpaid.

1002. Examination of Books. Each Owner shall be permitted to examine the books of account

of the Board by appointment in the offices of the Association or such other place as may be designated therefor by the Board at a reasonable time on business days; provided, however, that the Treasurer has been given at least ten (10) days prior written notice of the Owner's desire to make such an examination.

1003. Fidelity Bonds. Fidelity bonds shall be required by the Board from all persons handling

or responsible for Association funds. The amount of such bonds shall be determined by the Board in its sole discretion. The premium on such bonds shall be paid by the Association.

ARTICLE XI

CASUALTY AND INSURANCE PROCEEDS

1101. Insurance. The Board of Trustees shall obtain and continue in effect blanket property insurance on the Common Elements in an amount equaling replacement value (exclusive of land, foundations or slabs, excavations and such other items as are usually excluded from such insurance coverage) and in form satisfactory to any Permitted Mortgage

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Holder holding first mortgages on a majority of the Units, but without prejudice to the right of the Owner of any Unit to obtain individual Unit insurance at his own cost. In addition, the Board of Trustees shall obtain and continue such other amounts of insurance as may be required by the provisions of the By-Laws and in accordance with the provisions of N.J.S.A. 46:8B-14(d). Premiums for all such insurance coverage, except for individual Unit coverage, shall be a Common Expense to be included in the Annual Common Expense Assessment.

1102. Disposition of Insurance Proceeds. If any insured improvements or any part thereof is

damaged or destroyed by fire or casualty and is covered by insurance maintained by the Association, the repair and restoration of the improvement and the ultimate disposition of any insurance proceeds shall be in accordance with the provisions of this Article XI.

1103. Insurance Proceeds Less Than or Equal to $50,000. If such insurance proceeds derived

from a loss of $50,000.00 or less, then the Board of Trustees shall contract with any licensed contractor or contractors to rebuild or repair such damage or destroyed portions of the insured improvements in conformance with the original plans and specifications, or if adherence to such original plans and specifications is impracticable in the discretion of the Board of Trustees, then in conformance with revised plans and specifications provided such repairs or rebuilding shall be of a quality and kind substantially equivalent to the original construction. The Board of Trustees shall accept bids only in specific amounts and shall not enter into any cost-plus or other sliding scale arrangement for compensation to the contractor.

1104. Insurance Proceeds Greater than $50,000. If the insurance proceeds derived from such

loss exceed $50,000.00, all such insurance proceeds shall be paid directly to an Insurance Trustee as may be designated by the Board of Trustees, as trustee for all Permitted Mortgage Holders holding First Mortgages on any portion of the Property, and all Owners as their interests may then appear. Disbursement of such funds shall be made only upon the signatures of a majority of the members of the Board of Trustees in accordance with the following:

(a) Upon notification of the receipt of insurance proceeds by the Insurance

Trustee or at such earlier date as may be determined by the Board of Trustees, the Board of Trustees shall enter into a contract for a specific dollar amount with a licensed contractor or contractors for the repair or rebuilding of all of the damaged or destroyed portions of the Property, as nearly as practicable to the original plans and specifications thereof and in accordance with all applicable building codes.

(b) The Board of Trustees shall enter into said contract with a licensed

contractor or contractors, which contract shall have provisions for periodic disbursements of funds by the trustee. Disbursements to the contractor shall be made subject to the prior receipt of an architect's certificate and contractor's requisition containing such provisions as may be appropriate under the circumstances and deemed suitable by the Board of Trustees.

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(c) The Board of Trustees shall employ a properly qualified party to supervise the repair and rebuilding to insure that such work, services and supplies are of proper quality and that construction is completed in a workmanlike manner and according to plans and specifications.

1105. Responsibility of Owner. If the damage is only to those parts of a Unit for which the

responsibility for maintenance and repair is that of the Owner, then that Owner shall be responsible for reconstruction and repair, but the proceeds of any insurance that may have been obtained by the Association and cover such damage, if any, shall be made available for such purpose. Subject to the provisions of this Master Deed, in all other instances the responsibility of reconstruction and repair after casualty shall be that of the Association.

1106. Insurance Proceeds Insufficient. If the proceeds of insurance are not sufficient to defray

the estimated costs of reconstruction and repair of the insured property, or if at any time during or upon completion of reconstruction and repair, the funds for payment of the costs thereof are insufficient, assessments shall be made against all Owners whose Units were damaged or destroyed, in sufficient amounts to provide funds for the payment of such costs. Despite anything to the contrary in this Master Deed or the By-Laws, such assessments shall be in proportion as the Owner's percentage interest in the Common Elements. The foregoing provisions of this Section 11.06 are applicable to the repairs and reconstruction to be undertaken by the Association and do not cover damages to those portions of the Unit for which the responsibility of maintenance and repair and the costs thereof is that of the Owner; provided, however, that any portion of the insurance proceeds representing reimbursement for damage for which the responsibility of reconstruction and repair lies with an individual Owner, if any, shall be paid to said Owner and utilized to repair the damage covered, or if there is a mortgage endorsement as to such Unit, then to the Owner and mortgagee, jointly.

1107. Excess Insurance Proceeds. If the amount of available insurance proceeds should exceed

the cost of any such reconstruction or repair, the excess shall be retained by the Association and applied by it to reduce the Annual Common Expense Assessments of all Owners.

1108. Assignment to Permitted Mortgage Holder. In the event the Association determines not

to repair or restore the damaged property in accordance with N.J.S.A. 46:8B-24, any insurance proceeds payable to an Owner as a result of damage or destruction to his Unit and/or interest in the Common Elements are hereby assigned and shall be paid to any appropriate Permitted Mortgage Holder(s) as their interests may appear, for application to the appropriate mortgage indebtedness and the excess, if any, shall be paid to the appropriate Owners, all in accordance with N.J.S.A. 46:8B-24.

ARTICLE XII

EMINENT DOMAIN

1201. General. This Article shall be deemed to be supplemental to and not in derogation of the provisions of N.J.S.A. 46:8B-25.

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1202. Notice and Participation of Owners. If the building, any improvement or Common

Element or any part thereof shall be taken, injured or destroyed by eminent domain, each Owner affected shall be entitled to notice of such taking and to participate through the Association in the proceedings incident thereto.

1203. Allocation of Awards. Any awards made in connection with such proceedings shall be

collected by the Association and applied or distributed by it in accordance with the following and Section 5.03 hereof, unless the award or decree provides to the contrary:

(a) Units Rendered Uninhabitable. Upon acquisition by the condemning authority

which renders a Unit uninhabitable, each affected Unit's entire percentage interest and its corresponding liability for payment of Common Expenses shall be automatically reallocated to the remaining Units on the same basis as their respective percentage interests and liability for payment of Annual Common Expense Assessments were initially established. The Association shall promptly prepare, execute, and record an amendment to the Master Deed reflecting the reallocations. Any remnant of a Unit which has been rendered uninhabitable after a part of a Unit is taken under this subsection shall thereafter be a Common Element.

(b) Units Remaining Habitable. In the case of a Unit which remains habitable after

acquisition of any portion of the Unit by the condemning authority, unless the decree provides otherwise, the percentage interest of each such affected Unit and its corresponding liability for payment of Annual Common Expense Assessment shall remain unchanged.

(c) If a part of the Common Elements is acquired by eminent domain, the award must

be paid to the Association, and unless the decree provides otherwise, the Association shall divide any portion of the award not used for any restoration or repair of the remaining Common Elements among the Owners affected, in proportion to their respective damage suffered and their respective percentage interest in the Common Elements before the taking on an equitable basis.

(d) If all of the Common Elements are acquired by eminent domain, the award must

be paid to the Association and unless the decree provides otherwise, the Association shall divide the award among all Owners in accordance with their respective percentage interests in the Common Elements.

(e) Despite the foregoing, if a portion of an award is attributable to the acquisition by

the condemning authority of any Limited Common Elements, unless the award provides otherwise, such portion must be equitably distributed among the Owners of Units to which the applicable Limited Common Elements were allocated at the time of acquisition based upon the percentage interest of the affected Owners.

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ARTICLE XIII

OBLIGATIONS OF OWNERS

1301. Payment of Common Expenses.

(a) All Unit Owners shall be obligated to pay the Common Expenses assessed by the Board of Trustees pursuant to the provisions of Section 601 hereof. Payments shall be made to the Association monthly, in advance, on the first day of each month at the principal office of the Association or at such other place as may be designated for such purpose by the Board of Trustees. Each member of the Association shall, in addition, be required to maintain with the Association a sum equal to one-fourth (1/4) of the estimated annual assessment for his Unit as security against nonpayment of future assessments. Said sum may be used by the Association for working capital. Unit Owners may be required to supplement said security from time to time by further payments in the event that the estimated annual assessment for future years is increased, or if the amount, theretofore paid has been applied in whole or in part for working capital or to cure a default of the Unit Owner.

(b) The pro-rata contribution of each Unit Owner toward the Common Expenses he

is obligated to pay shall be based upon the percentage or share of the Unit Owner’s interest in the Common Elements as set forth in the Master Deed. No abandonment of the Unit owned by a Unit Owner or waiver of the use and enjoyment of any of the Common Elements shall exempt or excuse any Unit owner from his contribution toward the expenses aforesaid.

1302. Payment of Special Assessments. Special Assessments, when levied by the Board of

Trustees pursuant to these By-Laws, shall be paid by the Unit Owners in such manner as may be determined by the Board of Trustees; provided, however, that the pro-rata contribution of each Unit Owner for such special assessment shall be in accordance with Section 604 (b) hereof.

1303. Default in Payment of Common Expenses and Assessments, Acceleration, and Other

Remedies. All Common Expenses and assessments chargeable to and payable by a Unit Owner with respect to his Unit shall constitute a lien against said Unit in favor of the Association. In accordance with the provisions of N.J.S.A. 46:8B-21, if a Unit Owner shall be in default in payment of any installment of such assessment, the Board may accelerate the remaining installments of any such assessment upon notice to the Unit Owner in the manner hereinafter provided, upon which such notice, the then remaining unpaid balance of the assessment shall come due and payable upon the date stated in said notice, but not less than five (5) days after delivery of the notice to the Unit Owner, or not less than ten (10) days after the mailing of such notice to said Unit Owner by registered or certified mail, whichever shall first occur.

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If such default shall continue for a period of thirty (30) days from delivery or mailing of such notice, then the Board shall be obligated to (i) accelerate the remaining installments of the assessment; (ii) file a lien for such accelerated assessment as permitted by the provisions of the “Condominium Act”; of such default if the mortgagee has requested such notice from the Association in writing. If said default shall continue for a period of 180 days from the delivery or mailing of notice aforesaid, then the Board shall have the duty to foreclosure the foregoing lien in the name of the Association pursuant to law and/or to commence a suit against the appropriate Unit Owner to collect said assessment. Upon expiration of thirty (30) days from the delivery or mailing of notice of default set forth above, the Unit Owner shall be considered a “defaulting Unit Owner”, and shall thereupon be deprived of all voting rights in connection with the management and operation of the Condominium. In connection with the foregoing, the Board shall, at its option, have the right in connection with the collection of any assessment or other charge, to impose an interest charge at the legal maximum if such payment is made after a date certain stated in said notice. In the event that the Board shall retain counsel in connection with the collection of said charges, the Board may add to the aforesaid charge or charges, a sum or sums of 20% of the gross amount due as counsel fees, but in no event less than $100.00, in addition to such costs allowable by law.

1304. Maintenance and Repair.

(a) All maintenance and repair of and replacements to Common Elements, whether located inside or outside of the Units (unless necessitated by the negligence, misuse, or neglect of a Unit Owner, a member of his family living with him in the Unit, or another authorized occupant of his Unit, in which case such expense may be charged to such Unit Owner), and regardless of whether there is special benefit thereby to particular Unit Owners., shall be made by the Association and be charged to all members as a Common Expense.

(b) All maintenance of and repairs to such portion of any Unit as does not comprise a

part of the Common Elements shall be made promptly and carefully by the Unit Owner or Owners of such Units at their own risk, cost, and expense. Each member shall be liable for any damages, liabilities, costs, or expenses, including attorneys’ fees, caused by or arising out of his failure to promptly and/or carefully perform any such maintenance and repair work.

1305. Balconies. A balcony which may be entered only through a Unit and is not directly

connected t o a Common Element designed to allow access thereto is a Limited Common Element and shall be for the exclusive use of the Unit Owner of such Unit. Any such balcony shall be kept free and clean of snow, ice, and any accumulation of water by the Unit Owner of such Unit who shall also, at the option of the Association, make repairs thereto caused or made necessary by his negligence, misuse, or neglect thereof. All other repairs in, to, or with respect to such balcony shall be made by the Association anything herein or in the Master Deed to the contrary notwithstanding.

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1306. Restrictions on Use of Units. In order to provide for congenial occupancy of the Property and for the protection of the values of the Units, the use of the Property shall be restricted to and shall be in accordance with the following provisions:

(a) The Units shall be used as single family, private residences only. (b) The Common Elements as well as the property and facilities of the Association

shall be used only for the furnishing of the services and facilities for which they are reasonably suited and which are incident to the private residential use and occupancy of Units and to the use of garage spaces and parking spaces accessory to the residential use.

(c) No nuisances shall be maintained by any Unit Owner, nor shall any use or

practice be allowed by any Unit Owner which unreasonably interferes with the peaceful possession or proper use of the Units or Common Elements by Unit Owners.

(d) No unlawful use shall be made of any Unit or part thereof or of any of the

Common Elements and all valid laws, zoning ordinances, and regulations of all governmental bodies having jurisdiction thereof shall be observed. Violations of laws, orders, rules, regulations, or requirements of any governmental agency having jurisdiction thereof shall be complied with by and at the sole expense of the Unit Owners or the Association, whichever shall have the obligation to maintain or repair such portion.

(e) No portion of a Unit (other than the entire Unit) may be rented. No transient

tenants may be accommodated in the Unit. 1307. Additions, Alterations, or Modifications. No Unit Owner shall make or cause or permit

to be made any structural additions, alterations, or improvements in or to his Unit (or elsewhere on the Property) without the prior written consent of the Board of Trustees or impair any easement without the written consent of the Board of Trustees and of the Unit Owner for whose benefit such easement exists.

The Board of Trustees shall have the obligation to answer any written requests received by it from a Unit Owner for approval of a proposed addition, alteration or improvement in or to his Unit or upon or to the Common Elements or impairment of an easement within ten (10) business days after the receipt of such request, and failure to do so within the stipulated time shall constitute an approval of the proposal. Any application to any municipal authority for a permit to make an addition, alteration or improvement in or to any Unit or upon or to the Common Elements must first be reviewed by the Board of Trustees and, if approved, shall be executed by the Board of Trustees so as to indicate its consent and may then be submitted by the Unit Owner. Such approval, and execution, however, shall not incur any liability on the part of the Condominium Association to any contractor, subcontractor or materialman on account of such addition, alteration or improvement or to any person having any claim for injury to person or damage to

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property arising therefrom. The Unit Owner shall furnish the Board of Trustees with a copy of any such permit which he/she has procured.

1308. Use of Common Elements and Facilities.

(a) A Unit Owner shall not place or cause to be placed in the lobbies, vestibules, public halls, stairways, elevator areas, or other Common Elements, other than in the areas designated as storage areas, any furniture, packages, or objects of any kind. The lobbies, vestibules, public halls, stairways, and elevators shall be used for no purpose other than for normal transit.

(b) Unit Owners shall require their tradesmen to utilize the elevators designated by

the Association for transporting or delivering packages, merchandise, or any other objects which may affect the comfort of well-being of the passengers of the elevators used for transportation of Unit Owners, residents, and guests.

1309. Right of Access. A Unit Owner shall grant a right of access to his Unit to the Association

or any person authorized by the Association for the purpose of making inspections, or for the purpose of correcting any condition originating in his Unit and threatening any other Unit or any Common Element, or for the purpose of performing installations, alterations, or repairs to the mechanical or electrical services or other Common Elements in his Unit or elsewhere in the Property, or to correct any condition which violates the provisions of any mortgage covering another Unit; provided that requests for entry are made in advance and that such entry is at a time reasonably convenient to the Unit Owner. In case of an emergency, such right of entry shall be immediate whether the Unit Owner is present at the time or not.

1310. Additions, Alterations, or Improvements by the Association. The Association shall have

the right to make or cause to be made alterations and improvements to the Common Elements provided the making of such alterations and improvements is first authorized by the Board of Trustees of the Association and, if in excess of $50,000, then approved by not less than a majority of the Unit Owners. The written consent of any Unit Owner adversely and specially affected thereby shall also be required. The costs of such alterations and improvements shall be assessed as Common Expenses unless, in the judgment of not less than 70% of .the Board of Trustees, the same are exclusively or substantially exclusively for the benefit of the Unit Owners requesting the same, in which case such requesting Owners shall be assessed therefor in such proportion as they approve, jointly, and failing such approval, in such proportion as may be determined by the Board of Trustees.

1311. Rules of Conduct. Rules and regulations concerning the use of Units and the Common

Elements may be promulgated and amended by the Association with the approval of a majority of the Unit Owners. Copies of such rules and regulations shall be furnished by the Association to each Unit Owner.

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1312. Emergency Contact. Each Unit Owner shall provide to the Association or its designee, a written statement containing the name and address of two (2) parties to be contacted in the event of an emergency. The Board may adopt such rules and regulations as are necessary to implement the terms of this section. If, after providing the Association with the emergency contact information required by this section, the name, address or contact information of the parties changes, the Unit Owner, within fourteen (14) days of receiving knowledge of such change shall provide written notice to the Association of the change

ARTICLE XIV

COVENANTS AND RESTRICTIONS

1401. Covenants and Restrictions. The following covenants and restrictions are

imposed upon ownership and occupancy within the Condominium: (a) Permitted Uses. All Units shall be used for the purposes permitted or

contemplated by the Master Deed, the By-Laws and Rules and Regulations of the Association and by the applicable zoning and other governmental approvals for the Building.

(b) Equipment Connections. To the extent that equipment, facilities and

fixtures within any Unit(s) shall be connected to similar equipment, facilities or fixtures affecting or serving the Common Elements or other Unit(s), then the use thereof by the individual Owners shall be subject to this Master Deed, the By-Laws and the Rules and Regulations of the Association.

(c) Common Elements. The Common Elements shall be used only for the

furnishing of the services and facilities for which they are reasonably intended and suited and which are incidental to the use and occupancy of the Units.

(d) Permitted Mortgage. No Owner shall have the right to mortgage or

encumber his Unit, unless such mortgage or encumbrance is a Permitted Mortgage. No other mortgages or encumbrances shall be permitted without the prior written consent of the Board of Trustees.

(e) Utilities. Each Owner shall pay for his own telephone, cable television

service (if individually billed to Units), electric, sewer and other utilities that are separately metered or billed to each Unit by the respective utility company providing such services. Utilities or other services which are not separately metered or billed or which serve the Common Elements shall be treated as part of the Common Expenses.

(f) Non-Motorized Vehicles. No bicycles, baby carriages, wagons or similar

non-motorized vehicles or toys, nor mopeds, motorcycles or similar motorized vehicles shall be parked or otherwise left unattended in any General Common Element or Limited Common Element areas.

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(g) Residential Use. The Residential Units and the Limited Common Elements shall be used for residential purposes only; provided, however, any Residential Unit may be used incidentally for the purpose of operating a home based small business if, and only if, (a) the business is operated solely within the Residential Unit, (b) the business is limited to the rendition of professional services or other similar activities, (c) the business is operated by an occupant of the Residential Unit whose principal residence is the Residential Unit, (d) the operation of the business is permitted by, and is at all times in compliance with, all applicable laws, and (e) the operation of the business does not result in (i) the violation of any of the other provisions of this Master Deed, (ii) any unreasonable increase in the flow of traffic within the Property, (iii) any odor, noise, or vibration outside of the Unit, or (iv) parking problems within the Condominium.

(h) Obstructions. There shall be no obstruction of the Common Elements nor

shall anything be stored in or upon the Common Elements without the prior consent of the Board of Trustees.

(i) Trash Disposal. No portion of the Common Elements or other portion of

the Property shall be used or maintained for the dumping of rubbish or debris, except in receptacles provided or approved by the Association. Trash, garbage or other waste and recyclables from individual Units shall be deposited only in the designated containers located on the Property.

(j) Title Transfers. In order to provide an orderly procedure in the case of

title transfers and to assist in the maintenance of a current, up to date roster of Owners or occupants, each Owner shall give the Association’s Property Manager, if any, or the Secretary of the Association timely notice prior to the sale of his Unit. Said notice shall notify the Association’s Property Manager, if any, or Secretary of the names and home addresses of the purchasers.

(k) Building and Planting. No Owner or occupant shall build, plant, or

maintain any matter or thing upon, in, over or under the General Common Elements or Limited Common Elements without the prior written consent of the Board of Trustees unless permitted by any Rules and Regulations promulgated by the Board of Trustees.

(l) Nuisances. No unlawful or noxious activities, including but not limited to,

repair of automobiles or other motorized vehicles, shall be conducted within the Property. Nothing shall be done on or within the Property that may be or may become an unreasonable annoyance or nuisance to the residents of the Property, or that in any way interferes with the quiet enjoyment of the occupants. Unless otherwise permitted by the Rules and Regulations of the Association, no occupant shall serve food or beverages, cook, barbecue, or engage in similar activities, except within a Unit or the terrace appurtenant to such Unit subject to the provisions of the Rules and Regulations of the Association.

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(m) Noise And Vibration. No person shall produce, or allow to be produced excessive or unreasonable noise or shaking vibration of a Unit or the Building at such levels as will be offensive to other occupants.

(n) Toxic or Noxious Matter. No person shall discharge into the Property's

sewer system, storm drain or any toxic or noxious matter in such concentrations as to be detrimental to or endanger the public health, safety, welfare, violate any law, subject any Owner or occupant to liability under state and federal law for any clean-up or cause injury or damage to neighboring property or business elsewhere on the Property.

(o) Animals. No animals, livestock, reptiles, insects, poultry or other animals

of any kind, including ordinary domestic dogs and cats, fish, may be kept as household pets, shall be kept in any Unit, Fish and birds inside bird cages may be kept as household pets within any Unit provided that they are not kept, bred or raised therein for commercial purposes or in unreasonable quantities or sizes.

(p) Insurance. Nothing shall be done or kept in any Unit or in or upon the

Common Elements that might increase the rate of, or cause the cancellation of, insurance for the Building, or any portion of the Condominium. No occupant shall permit anything to be done or kept in his or her Unit that violates any law, ordinance, statute, rule or regulation of any local, county, state or federal body, including any laws, ordinances or statutes pertaining to the use or storage of any hazardous, contaminated or toxic materials.

(q) Loudspeakers. No exterior loudspeakers other than those contained in

portable radios or television sets shall be permitted on the Property. (r) Burning. No Owner or occupant shall burn, chop or cut anything on, over

or above the Property. (s) Lawful Use. No unlawful use of any Unit shall be permitted and all laws,

zoning ordinances and regulations of all governmental bodies having jurisdiction thereover shall be observed.

(t) Antenna. No terrace enclosure, canopies, shutters or, radio or television

antenna, aerial or satellite dish shall be erected, displayed, shown, put in any window or installed within the Condominium, except as permitted by the Master Deed or applicable law, and subject to the rules and regulations of the Association.

(u) Outside Installations. The following items are prohibited: (i) outside

installations, including clotheslines, terrace covers, wiring, air conditioning equipment, water softeners, other machines and other improvements, (ii) Improvements to terrace railings, and (iii) other exterior additions or alterations to any Unit. Notwithstanding anything to the contrary in this subparagraph (u), Unit Owners shall be permitted to install storm shutters, subject to the rules and regulations of the Association.

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(v) Outside Drying and Laundering. No exterior clothesline shall be erected or maintained or hung on terraces or railings within the Condominium and there shall be no exterior drying or laundering of clothes or other items on any terrace or Common Elements.

(w) Exterior Lighting. Any exterior electrical, gas or other artificial lighting

installed on any Unit shall be positioned, screened, or otherwise directed or situated and of such controlled focus and intensity so as not to unreasonably disturb the residents of any other Unit(s). No Owner or Occupant shall rewire, modify, alter, obscure or tamper with any exterior lights which have been installed pursuant to any applicable Building Code. The Board may promulgate further rules regarding exterior lighting.

(x) Water Beds. No water bed shall be permitted in any Unit. (y) Heat. All Units must be heated to the extent necessary to prevent damage

from freezing temperatures during the months of October through April, inclusive, regardless of whether or not occupied. Any Owner failing to so heat his Unit shall be obligated to pay a Remedial Assessment for the costs of any damage caused to any portion of the Condominium due to his neglect, or if such damage is insured by the Association, for any deductible or other amount not received by the Association from the proceeds of the insurance.

(z) Firewood and Propane. No firewood and no propane gas may be stored in

any Unit, storage bin or on any terrace. (aa) Signs. No signs or displays of any kind (including for rent and for sale

signs) shall be displayed or installed within the Condominium, except for (i) identification and directional signs constructed by the Association, or (ii) signs displayed within the parking garage and public areas. Except as otherwise provided in this Master Deed, no signs or other advertising device whatsoever, including without limitation, commercial, political and similar signs, shall be erected or maintained within Units or on the Common Elements of the Condominium except: (a) such signs as may be required by legal proceedings; and (b) residential identification signs, subject to the approval of the Board as to suitability. Notwithstanding the foregoing, an Owner of a Unit may place one (1) sign of reasonable and customary dimensions in the place designated by the Board to advertise its Unit for sale or rent. The Board may adopt rules and regulations regarding the size and location of "for sale" and "for rent" signs.

(bb) Sound Attenuation. In any multi-family dwelling, sound may be audible

between Units, particularly where the sound level of the source is sufficiently high and the background noise in an adjacent Unit is very low. Each Owner shall endeavor to minimize any noise transmission from his or her Unit, and shall adhere to any of the rules and regulations set forth in the Association Rules and Regulations that are designed to minimize noise transmission.

(cc) Roof: Access Restrictions. Occupants and Invitees shall not at any time

or for any reason whatsoever enter upon or attempt to enter upon (i) the Roof of the Condominium, (ii) any portion of the Association Property used by the Association for management, administrative or security purposes, and (iii) utility closets and rooms, without the prior approval of the Board.

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(dd) Storage Areas. Storage Areas shall be used only for the storage of

personal property. In no event shall the Storage Areas be used for the storage of any Hazardous Materials or any other noxious, toxic, or odorous substances.

(ee) Decorating by Owner. Each Owner shall have the right, at his or her sole

cost and expense, to maintain, repair, paint, paper, panel, plaster, tile and finish the interior surfaces of the ceilings, floors, window frames, door frames, trim and perimeter walls of the Unit, and the surfaces of the bearing walls and partitions located within the Unit, subject to the requirements of the Condominium Documents.

1402. Restrictions on Alterations. Nothing shall be done to any Unit or on or in the Common

Elements which will impair the structural integrity of the Building or which will structurally change the Building. No Owner may make any additions, alterations or improvements in or to his Unit or in or to the Common Elements or impair any easement without the prior written approval of the Board of Trustees, nor without all required governmental permits and approvals evidencing compliance with applicable laws including, but not limited to, the laws, rules, and regulations of the Borough. An Owner who acquires fee title to two (2) adjoining Units may be permitted to remove the demising wall dividing the two (2) Units, so long as the Owner has complied with the requirements and obtained the approval of the Architectural Review Committee.

The Board of Trustees shall have the obligation to answer any written request received by it from an Owner for approval of a proposed addition, alteration or improvement to his Unit within forty-five (45) calendar days after the receipt of such request, and failure to do so within the stipulated time shall constitute approval of the proposal. Any application to any municipal authority for a permit to make an addition, alteration or improvement must be reviewed by the Board of Trustees and, if approved, shall be executed by the Board and may then be submitted to the appropriate municipal authorities by the Owner. Such approval shall not incur any liability on the part of the Association to any contractor, subcontractor, or materialman on account of such addition, alteration, or improvement, or to any person having any claim for injury to person or damage to property arising therefrom. The Owner(s) shall furnish the Board of Trustees or the Architectural Review Committee with a copy of any such permit which he has procured.

1404. Compliance with Americans with Disabilities Act. Despite the foregoing, nothing herein shall be construed to prohibit compliance with the Americans with Disabilities Act nor the reasonable adaptation of any Unit for use by a handicapped resident in accordance with the provisions of the Fair Housing Amendments Act of 1988, as amended from time to time. Subject to the provisions of Article X of this Master Deed, each Owner shall have the right to modify the Owner's Unit and the route over the Common Element leading to the front door of the Unit, at the Owner's sole cost and expense, in order to facilitate access to the Unit by persons who are blind, visually handicapped, deaf or physically disabled, or to alter conditions which could be hazardous to such persons. The rights granted by this Section are further subject to the following conditions: (i) the

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modifications shall be consistent with applicable building code requirements; (ii) the modifications shall be consistent with the intent of otherwise applicable provisions of this Master Deed pertaining to safety or the aesthetic integrity of the Property; (iii) the modifications which are external to the Unit shall not prevent reasonable passage by other Owners or Invitees on the Condominium, and shall be removed by the Owner when the Unit is no longer occupied by persons requiring those modifications; (iv) any Owner who intends to modify a Unit pursuant to this Section shall submit their plans and specifications to the Architectural Review Committee for review to determine whether the modifications comply with the provisions of Article X; and (v) any change in the exterior appearance of a Unit shall be in accordance with the provisions of this Master Deed and all applicable provisions of law. The Association shall not deny approval of the proposed modifications under this Section without good cause.

1405. Lease Requirements. An Owner shall be entitled to rent an entire Unit (but not a portion

thereof) subject to the restrictions contained in Section 1501. All leases, renewals, or extensions thereof shall require the written approval of the Board of Trustees and shall be for a term of not less than two (2) years unless the Board, in its discretion, shall permit a shorter period. The Board of Trustees shall have the right to require that a uniform lease acceptable to it be used. Any rental or leasing agreement shall be in writing, shall provide that the lease or rental is subject to the Governing Documents and shall provide that any failure to comply with any provision of the Governing Documents shall be a default under the terms of the rental or lease agreement. A copy of the Governing Documents shall be made available to each tenant or lessee by the Owner so renting or leasing. The Owners shall, at all times, be responsible for their tenant's or lessee's compliance with all of the provisions of this Master Deed pursuant to the occupancy and use of the Unit. No Owner may lease a Unit for hotel, motel or transient purposes, "Time Sharing Purposes" or any other purpose inconsistent with the provisions of this Master Deed. The term "Time Sharing Purposes" as used herein shall be defined to include, but shall not be limited to, any agreement, plan, program or arrangement under which the right to use, occupy or possess the Unit or any portion thereof in the Condominium rotates among various unrelated persons, on a periodically recurring basis for value exchanged, whether monetary or like-kind use privileges, according to a fixed or floating interval or period of time one hundred eighty (180) consecutive calendar days or less. Any lease which is either for a period of fewer than one hundred eighty (180) days or pursuant to which the lessor provides any services normally associated with a hotel, shall be deemed to be for transient or hotel purposes.

(a) Liability For Assessments. When an Owner who is leasing his or her Unit

fails to pay any Common Expense Assessments or any other charge to be paid by the Owner to the Association pursuant to this Master Deed for a period of more than thirty (30) days after it is due and payable, then the delinquent Owner hereby consents to the assignment of any rent received from the lessee during the period of delinquency, and, upon request by the Board, lessee shall pay to the Association all such rent until all unpaid amounts owned by the Owner to the Association have been paid in full. All such payments made by lessee shall reduce, by the same amount, lessee's obligation to make monthly rental payments to lessor. The above provision shall not be construed to release

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the Owner from any obligation, including the obligation for Assessments, for which he or she would otherwise be responsible.

(b) Inapplicability to Sponsor and Holders of First Mortgages. This shall not

apply to any leasing transaction entered into by Sponsor, or by the holder of any first Mortgage on a Unit who becomes the Owner of a Unit through foreclosure or any other means pursuant to the satisfaction of the indebtedness secured by such Mortgage.

1406. Restrictions on Parking.

(a) Handicap Parking Spaces. Certain parking spaces in the Parking Garage will be designated for use by handicapped persons ("Handicap Parking Spaces"). The Association shall have the right to assign and manage such spaces. The Owners who are assigned Handicap Parking Spaces shall be subject to the rights of the Association to re-assign such parking spaces. Evidence of handicap status shall be by distinguishing license plate or placard issued by the New Jersey Department of Motor Vehicles. The Association shall have the authority and be responsible for coordinating the assignment of parking spaces pursuant to this Section and shall adopt rules and regulations with respect thereto, including the procedure to be followed should an occupant become handicapped and wish to use a Handicap Parking Space, forms and methods of notice to be given to the Association and occupant, and procedures for review of the required evidence of handicap status. The Association shall maintain appropriate records of such assignment, including a copy of the evidence provided. In no event shall the Sponsor or the Association be held liable if the Sponsor or the Association is unable to assign a Handicap Parking Space to a handicapped occupant because all designated Handicap Parking Spaces have previously been assigned to other handicapped occupants.

(b) Authorized Vehicles. The following vehicles are Authorized Vehicles:

motorized land vehicles designed and used primarily for non-commercial passenger transport, such as automobiles, passenger vans designed to accommodate ten (10) or fewer people, two-wheel motorcycles, and pick-up trucks having a manufacturer's rating or payload capacity of one (1) ton or less. Subject to subparagraph (e) below, Authorized Vehicles may be parked in the parking areas in the Property intended for parking of motorized vehicles.

(c) Prohibited Vehicles. The following vehicles are Prohibited Vehicles:

recreational vehicles (e.g., motor homes, travel trailers, camper vans, boats, dune buggies, etc.), commercial-type vehicles (e.g., stake bed trucks, tank trucks, dump trucks, step vans, concrete trucks, trucks with any exterior commercial advertisement, or other similar vehicles), buses or vans designed to accommodate more than ten (10) people, vehicles having more than two (2) axles, trailers, inoperable vehicles or parts of vehicles, aircraft, other similar vehicles or any vehicle or vehicular equipment deemed a nuisance by the Board. Prohibited Vehicles shall not be parked, stored or kept in any parking areas in the Property.

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(d) General Restrictions. All Authorized Vehicles owned or operated by or within the control of an occupant and kept within the Property shall be parked in accordance with the rules and regulations of the Association. No vehicle shall be parked in any Parking Space if such vehicle does not completely and clearly fit between the painted parking lines designated for a Parking Space or otherwise physically fit wholly within the designated space or any other portion of the parking areas in the Property designed for ingress and egress of vehicles. There shall be no parking in the Property that obstructs free traffic flow, constitutes a nuisance, violates the Association Rules, or otherwise creates a safety hazard. The parking areas in the Property shall be used for parking Authorized Vehicles only and shall not be used for storage, living, recreational or business purposes. No maintenance, repair, restoration, or construction of any vehicle shall be conducted on the Property. Assigned Parking Spaces shall not be leased, subleased, sold or otherwise separately conveyed apart from conveyance of the Unit. Except as set forth herein, no Assigned Parking Space may be sold, transferred, or assigned to, or retained in the ownership of, any person not an occupant.

(e) Parking Regulations. The Board may establish additional regulations as it deems

appropriate in its sole discretion with regard to any of the parking areas including, without limitation, designating "residential guest parking", "commercial parking," "parking," and "no parking" areas thereon. Any parking areas shall be subject to such further reasonable control and use limitations as the Board may establish. The Board shall determine, in its discretion, whether there is a violation of the parking and vehicular restrictions set forth in this Master Deed or established by the Board, and, if such noncompliance is determined by the Board to exist, the Board shall have the power to enforce all parking and vehicle use regulations applicable to the Property, including the power to remove violating vehicles from any of the Property pursuant to any applicable statute, regulation or ordinance.

ARTICLE XV

SALES, LEASES, AND MORTGAGES OF UNITS

1501. Sale, Lease, or Other Disposition of Units.

(a) No assignment or subleasing by a lessee of a Unit shall be permitted. All leases, renewals, or extensions thereof shall require the written approval of the Board of Trustees and shall be for a term of not less than two (2) years unless the Board, in its discretion, shall permit a shorter period. Any lease shall be in compliance with Section 1405 hereof and all requirements of the City of Long Branch.

(d) The foregoing provisions shall in no way be construed as affecting the rights of a

Permitted Mortgagee nor shall they be applicable to purchasers at foreclosure or other judicial sales resulting from a default under Permitted Mortgages or to transfers to Permitted Mortgagees. They shall, however, be applicable to all

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transactions involving Units after a Permitted Mortgagee has sold such Unit. They shall also be applicable to sales, leases, or other transactions that are proposed by a purchaser at a judicial sale.

(f) A Unit Owner who elects to sell his Unit, which owner also owns a Limited

Common Element in the form of a cabana must dispose of the ownership of the Limited Common Element cabana simultaneously with the sale of the Unit. In the event that the Unit is sold to the same purchaser who is purchasing the cabana, then in such event the disposition of both the Unit and the Limited Common Element-Cabana should be contained in the same purchase agreement. In the event that the purchaser of the Unit does not purchase the Limited Common Element-Cabana and in the further event should the Owner fail to enter into an agreement with a different Unit Owner for the purchase of the Limited Common Element-Cabana, then in such event said Owner shall provide written proof to the Board of Trustees that the Limited Common Element-Cabana has or will be transferred to an existing Unit Owner of the Building prior to the date of closing of the aforesaid Unit. A party who does not own a Unit in the Condominium cannot have an interest in a cabana.

Should a Unit Owner fail to comply with the requirements and procedures above stated, and should the Unit be sold but the Limited Common Element-Cabana not be transferred, then in such event all pool and beach privileges and other guest privileges shall be suspended with regard to the cabana and the cabana itself shall be closed by the Association until title to it can be transferred. In the event that a transfer of the Limited Common Element-Cabana is not effected within a one (1) year period from the date of the sale of the Unit, then in such event the Association shall transfer title to the Unit by way of public sale without notice as Power of Attorney for the aforesaid Unit Owner. The proceeds realized from the sale of the Unit shall be paid into a special account and all expenses of the sale, as well as any unpaid assessments and liens due and owing the Association, shall be deducted. The balance of the proceeds shall then be remitted to the former Unit Owner at his last known address. The Power of Attorney regarding the sale of the cabana shall be delivered to the Association, as a condition precedent to the issuance of a Consent To Transfer of the aforesaid Unit. Should the Unit Owner fail to execute such Power of Attorney, then in such event, the Association shall be deemed to have been given the Power of Attorney as a result of the authority conferred upon it by these aforesaid By-Laws. All references to the Limited Common Element-Cabana shall also include the Limited Common Element-Cabanettes, it being the intention that the rules and regulations above contained and the procedure set forth regarding disposition by sale or otherwise shall apply to cabanas and cabanettes, both of which are Limited Common Elements.

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1502. Foreclosure. In the event of foreclosure proceedings against a Unit Owner, the Association, on its own behalf or on behalf of one or more Unit Owners, shall have the right to redeem the Unit from the mortgagee for the amount due, or to purchase such Unit at the foreclosure sale. In the event that the Association has so acted, the cost thereof shall be a Common Expense and the Association shall have the right to assess all Unit Owners therefor in proportion to their interest in the Common Elements.

1503. Transfer of Unit and Payment of Assessment. Upon any voluntary conveyance of a Unit

by a Unit Owner, the Unit Owner and his transferee shall be jointly and severally liable for all unpaid assessments pertaining to said Unit duly made by the Association or accrued up to the date of the said conveyance without prejudice to the right of the transferee to recover from the Unit Owner any amounts paid by the transferee to the Association, provided that the transferee shall be exclusively liable for any assessments accruing subsequent to the date upon which he became the Unit Owner. The Association shall furnish a statement of amounts due it upon request from any proposed transferee, and the Association shall be limited in its recovery from such transferee to the amounts set forth therein. A Permitted Mortgagee who acquires title to a mortgaged Unit or a purchaser at a judicial sale held as a result of a default under a Permitted Mortgage shall not be liable and the Unit shall not be subject to a lien for common expenses assessed prior to the acquisition of title by such mortgagee or purchaser at such sale. In the event of a foreclosure by the Association of a statutory lien on any Unit for unpaid common expenses and in the event the proceeds of the foreclosure sale shall not be sufficient for the payment of such unpaid common expenses, the unpaid balance shall be charged to all Unit Owners as a common expense.

1504. Mortgage of Unit. Each Unit Owner shall have the right to mortgage his Unit provided

that any such mortgage is made to a bank, trust company, insurance company, savings and loan association, pension fund, or other institutional lender. All mortgages so made are herein referred to as Permitted Mortgages and the holders thereof are herein referred to as Permitted Mortgagees.

ARTICLE XVI

DISSOLUTION 1601. Procedure. The provisions of the then applicable laws of the State of New Jersey

including the provisions of the Condominium Act shall be followed should it be determined that the Association be dissolved. No such action shall be taken without the written consent of all Permitted Mortgagees.

1602. Ownership Upon Dissolution. In the event of dissolution, the Property shall thereupon be

owned by all of the Unit Owners as tenants in common, each having an undivided percentage interest therein equal to his proportionate share of the Common Elements owned prior to termination. Each Unit Owner may be required to execute such deeds and

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other documents or instruments as may reasonably be required to effect the sale of the Property by the Association following a decision to dissolve the Association.

ARTICLE XVII

COMPENSATION, INDEMNIFICATION AND EXCULPATION

1701. Compensation. No compensation shall be paid to the President or the Vice President or any Trustee, or committee member for acting as such officer or Trustee. The Secretary and/or Treasurer may be compensated for their services if the Board determines that such compensation is appropriate. Nothing herein stated shall prevent any officer, Trustee or committee member from being reimbursed for out-of-pocket expenses or compensated for services rendered in any other capacity to or for the Association, provided, however, that any such expenses incurred or services rendered shall have been authorized in advance by the Board.

1702. Liability of the Board of Trustees. The members of the Board of Trustees shall not be

liable to the Unit Owners or the Association for any mistake of judgment, negligent or otherwise, except for their own individual willful misconduct or bad faith. The Unit Owners and the Association shall indemnify, defend, and hold harmless each of the members of the Board of Trustees from and against all contractual liability to others arising out of contracts made by the Board of Trustees on behalf of the Association unless any such contract shall have been made in bad faith or contrary to the provisions of the Master Deed or of these By-Laws. It is intended that the members of the Board of Trustees shall have no personal liability with respect to any contract made by them on behalf of the Association. It is also intended that the liability of any Unit Owner arising out of any contract made by the Board of Trustees or out of the aforesaid indemnity in favor of the members of the Board of Trustees shall be limited to such proportion of the total liability thereunder as his interest in the Common Elements bears to the interest of all the Unit Owners in the Common Elements. Every agreement made by the Board of Trustees on behalf of the Association shall provide that the members of the Board are acting only as agents for the Unit Owners and shall have no personal liability thereunder (except as Unit Owners) and that each Unit Owner’s liability thereunder shall be limited to such proportion of the total liability thereunder as his interest in the Common Elements bears to the interest of all Unit Owners in the Common Elements.

1703. Indemnification. Each Trustee, Officer or committee member of the Association, shall be

indemnified by the Association against the actual amount of net loss, including counsel fees, reasonably incurred by or imposed upon him in connection with any action, suit or proceeding to which he may be a party by reason of his being or having been a Trustee, Officer, or committee member of the Association, except as to matters for which he shall be ultimately found in such action to be liable for gross negligence or willful misconduct. In the event of a settlement of any such case, indemnification shall be provided only in connection with such matters covered by the settlement as to which the Association is advised by counsel that the person to be indemnified had not been guilty of gross negligence or willful misconduct.

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1704. Exculpation. Unless acting in bad faith, neither the Board as a body nor any Trustee, Officer, or committee member shall be personally liable to any Owner in any respect for any action or lack of action arising out of the execution of his office. Each Owner shall be bound by the good faith actions of the Board, Officers and committee members of the Association, in the execution of the duties and powers of said Trustee, Officers and committee members. Nothing contained herein shall be construed so as to exculpate members of the Board of Trustees, including those appointed by the Sponsor, from discharging their fiduciary responsibilities.

ARTICLE XVIII

ENFORCEMENT

1801. Enforcement. The Board shall have the power, at its sole option, to enforce the terms of this instrument or any Rule or Regulation promulgated pursuant thereto, by any or all of the following: self-help in the case of an emergency; sending notice to the offending party to cause certain things to be done or undone; restoring the Association to its original position and charging the breaching party with the entire cost or any part thereof; complaint to the duly constituted authorities; or by taking any other action before any court, summary or otherwise, as may be provided by law.

1802. Fines. To the extent now or hereafter permitted by the law of the State of New Jersey,

the Board shall also have the power to levy fines against any Owner(s) for violation(s) of any Rule or Regulation of the Association or for any covenants or restrictions contained in the Master Deed or By-Laws, except that no fine may be levied for more than the maximum amount of $500 as presently contemplated under N.J.S.A. 46:8B-15(f) and N.J.S.A. 55:13A-19 for any one violation; provided, however, that for each day a violation continues after notice it shall be considered a separate violation and may be levied up to a maximum of $5,000 as permitted by the foregoing statutes. Collection of the fines may be enforced against any Owner(s) involved as if the fine were a Common Expense owed by the particular Owner(s). Despite the foregoing, before any fine is imposed by the Board, the Owner involved shall be given at least ten (10) days prior written notice and afforded an opportunity to be heard, with or without counsel, with respect to the violation(s) asserted.

1803. Penalties. These By-Laws, the Rules and Regulations adopted pursuant hereto, all future amendments hereof and thereof, and the covenants and restrictions in the Master Deed shall be strictly complied with by each Unit Owner. In the event of failure to comply with any of the foregoing, the Association shall have the power, at its option, to enforce the terms of this instrument or any rule or regulation promulgated pursuant hereto to any or all of the following: self-help, by sending notice to the offending party to cause certain things to be done or undone; by restoring the Association to its original position and charging the breaching party with the entire cost or any part thereof; by taking any other action before any other court, summary, or otherwise, as may be provided by law; by complaint to the duly constituted authorities. The foregoing shall be construed to be in addition to any other powers granted herein and by the New Jersey Condominium Act,

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and not in limitation thereof. If suit has been instituted by the Association and the Unit Owner has been found by the Court to have committee the violation complained of, the Unit Owner shall reimburse the Association for reasonable attorneys’ fees and such other costs as shall be established by the Court. Nothing herein shall be deemed to preclude any Unit Owner from bringing an action for relief against another Unit Owner or Unit Owners for a violation which affects such aggrieved Unit Owner’s occupancy.

1804. Waiver. No restriction, condition, obligation or covenant contained in these By-Laws

shall be deemed to have been abrogated or waived by reason of the failure to enforce same irrespective of the number of violations or breaches thereof which may occur.

1805. Cause of Action against Association. Subject to the mediation requirement set forth

herein, Owners shall have a cause of action, to the extent permitted by the laws of this State, against the Association for any material failure to act in accordance with the Master Deed, Certificate of Incorporation, these By-Laws, any Rules or Regulations or any formal decisions of the Association. Any dispute between or among Owners or with the Association, other than collection matters, must first be submitted to mediation before any litigation is commenced with respect to the dispute in question, all as contemplated by N.J.S.A. 45:22A-44(c). Such mediation shall be conducted in accordance with the Alternative Dispute Resolution Procedures of the Association formally established by the Board.

ARTICLE XIX

AMENDMENTS

These By-Laws, or any of them, may be altered or repealed, or new By-Laws may be made, at any meeting of the Association duly held for such purpose, and previous to which written notice to Owners of the exact language of the amendment or of the repeal shall have been sent, a quorum being present, by an affirmative vote of 51% of the votes entitled to be cast in person or by proxy by all Members in Good Standing, except that:

(i) the obligation of the proportionate responsibility for the payment of

Common Expenses with respect to Units or the Common Elements may not be changed by reason of any such new By-Law, amendment or repeal;

(ii) no amendment shall revoke or diminish the delegation of any power or

duty to the Board.

ARTICLE XX

CONFLICT; INVALIDITY

2001. Conflict. Despite anything to the contrary herein, if any provision of these By-Laws is in conflict with or contradiction of the Master Deed, the Certificate of Incorporation or any applicable government requirements or permits, then the requirements of said Master Deed, Certificate of Incorporation or law shall be deemed controlling.

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2002. Invalidity. The invalidity of any part of these By-Laws shall not impair or affect in any

manner the enforceability or affect the validity of the remaining provisions of the By-Laws.

ARTICLE XXI NOTICE

Any notice required to be sent to any Owner under the provisions of the Master Deed or the Certificate of Incorporation or these By-Laws shall be deemed to have been properly sent and notice thereby given, when mailed, by regular post with postage prepaid, addressed to the Owner at the last known post office address of the person who appears as a member on the records of the Association at the time of such mailing. Notice to one of two or more co-Owners of a Unit shall constitute notice to all co-Owners. It shall be the obligation of every Owner to immediately notify the Secretary of the Association in writing of any change of address. Valid notice may also be given to Owners by (i) personal delivery to any occupant of said Unit over 14 years of age or (ii) by affixing said notice to or sliding same under the front door of any Unit.

ARTICLE XXII

CIVIL ACTION FOR DAMAGES

The Association shall not be liable in any civil action brought by or on behalf of an Owner to respond in damages as a result of bodily injury to the Owner occurring on the premises of the Association, except as the result of its willful, wanton, or grossly negligent act of commission or omission.

ARTICLE XXIII

ALTERNATIVE DISPUTE RESOLUTION COMMITTEE

2301. Designation. The Board may establish an Alternative Dispute Resolution Committee (“ADR Committee”), consisting of a chairman and two or more members, other than Members of the Board. The ADR Committee shall serve indefinitely at the pleasure of the Board.

2302. Power. The ADR Committee shall have power to appoint a subcommittee from among its

members and may delegate to any such subcommittee any of its powers, duties and functions.

2303. Authority. If initial attempts by the Association, on its own initiative or upon the receipt

of a formal written complaint from an Owner, to secure compliance with the Condominium Documents through correspondence to the Owner disclosing the nature of the violation are not successful, it shall be the duty of the ADR Committee to conduct a hearing and issue a binding decision, subject to appeal, pursuant to the applicable Condominium Documents and any Rules and Regulations adopted thereunder.

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2304. Alternative Dispute Resolution Procedure.

a. Authority. In addition to the mediation authority granted to it herein, the ADR

Committee shall have such additional duties, power and authority as the Board may from time to time provide by resolution. This shall include the right to resolve disputes arising under and to enforce the provisions of the Condominium Documents, including the right to (i) impose temporary cease and desist orders and (ii) levy fines pursuant to Section 1802 hereof to the extent permitted by law. The ADR Committee shall carry out its duties and exercise its powers and authority in the manner provided for in these By-Laws, the Rules and Regulations or by Resolution of the Board. Despite the foregoing, no action may be taken by the ADR Committee without giving the Owner(s) involved at least ten (10) days prior written notice and affording the Owner an opportunity to be heard, with or without counsel, with respect to the violation(s) asserted.

Further, any Owner who is aggrieved by any decision of the ADR Committee shall have the right to appeal such decision to a court of competent jurisdiction. Any dispute between or among Owners or with the Association must first be submitted to the ADR Committee for mediation or non-binding arbitration before any litigation is commenced with respect to the dispute in question, all as contemplated by N.J.S.A. 45:22A-44(c) and these By-Laws. If there is not an appeal to a court of competent jurisdiction, or if the parties do not agree to binding arbitration, within forty-five (45) days of the decision by the ADR Committee, the decision of the ADR Committee shall be binding on all parties and shall have full force and effect under the laws of the State of New Jersey.

The expenses for mediation or non-binding arbitration are Common Expenses of the Association. However, if the Owner requests binding arbitration, then the expenses will be shared equally by the Owner and the Association unless the arbitrator determines otherwise. Moreover, nothing herein shall prevent the Association from charging a reasonable application fee to any party who requests mediation or arbitration.

b. Mediation Alternative. Prior to the commencement of any court appeal or

binding arbitration procedure pursuant to this Article XXIII, any party to the dispute, or the ADR Committee on its own motion, may request mediation of the dispute by an impartial mediator appointed by the ADR Committee in order to attempt to settle the dispute in good faith. Such mediator may be a member of the ADR Committee, its counsel or any other qualified mediator. Any such mediation shall be concluded within fifteen (15) days after such request, unless extended by the mediator for good cause. In the event that no settlement is reached within said fifteen (15) day period, all relevant time periods in the hearing process shall be extended for fifteen (15) days plus any extension period.

ARTICLE XIV

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CORPORATE SEAL

The Association shall have a seal in circular form having within its circumference the words "Imperial House Condominium Association, Inc.".