ARTICLE VI

ASSESSMENTS

Section 1. Creation of the Lien and Personal Obligation of Assessment: The Declarant, for each Site and each Dwelling Unit owned, hereby covenants, and every other Owner of any Site and any Dwelling Unit covered by this Declaration, by acceptance of a deed therefore, whether or not expressed in any such deed or other covenant, is deemed to covenant and agrees to pay to Lochmere Association:

(a) Annual assessments or charges;

(b) Special assessments for capital improvements, such assessments to be fixed, established, and collected from time to time as hereinafter provided.

The annual and special assessments on a Dwelling Unit or Site together with Interest thereon and costs of collection thereof, as hereinafter provided, shall be a charge on the land and shall be a continuing lien upon the property against which each such assessment Is made. Each such assessment, together with interest and costs, and reasonable attorney's fees (is provided in North Carolina General Statutes 6‑21.2) incurred by Lochmere Association In collecting delinquent assessments shall also be the personal obligation of the person or entity who was the owner of such Dwelling Unit or Site at the time when the assessment became due. The obligation of an Owner for delinquent assessments shall pass to his successors or assigns in title unless expressly excused by Lochmere Association.

Section 2. Purpose of Assessments: The assessments levied by Lochmere Association shall be used exclusively for the purposes of promoting the beautification of Lochmere, the recreation, health, safety and welfare of the Owners in Lochmere the enforcement of these covenants and the rules of Lochmere Association, and in particular, the improvement and maintenance of the services and facilities of the Common Area.

Section 3. Annual Assessment: To and including December 31, 198_ the Annual Assessment shall be shared equally and shall not be in excess of _____ Dollars per Dwelling Unit or Site, except as otherwise provided herein, the exact amount of which shall be determined from time to time by the Board of Directors in accordance with the following provisions:

(a) From and after December 31, 198_ the basic annual assessment may be increased by the Board of Directors of the Lochmere Association effective January 1 of each year, without the vote of the Members, by a percentage which may not exceed the percentage increase reflected in the U.S. City Average, Consumer Price Index‑United States (published by the U.S. Bureau of Labor Statistics, Washington, D.C.) or such index as may succeed the Consumer Price Index, for the twelve (12) month period ending the immediately preceding July 1.

(b) After December 31, 196_ the basic annual assessment may be increased by the assent of two thirds (2/3) of the votes of each class of the Members who are voting in person or by proxy at a meeting called for such purpose. For this purpose, the Class 8 Member shall be entitled only to one vote for each Dwelling Unit or Site as to which it owns the required ownership interest. Written notice of the meeting shall be given to all Members not less than thirty (30) days in advance of the meeting. The provisions of this Sub‑Section shall not apply to nor be a limitation upon any change in the basic annual assessment undertaken as an incident to a merger or consolidation in which Lochmere Association is authorized to participate under its Articles of Incorporation.

Section 4. Special Assessment for Repairs: In the event any portion of any Common Area is damaged or destroyed by an Owner or any of his guests, tenants, licensees, agents, or family members, such Owner does hereby authorize Lochmere Association to repair said damaged area in a good and workmanlike manner. The amount necessary for such repairs, labor and material, shall become a special assessment upon the Dwelling Unit or Site of said Owner.

Section 5. Special Assessments for Capital Improvements: In addition to the Annual Assessments authorized above, the Lochmere Association may levy one or more special assessments applicable to that year only for the purpose of defraying the costs of construction or reconstruction, unexpected repair, or replacement of a described capital improvement upon the Common Area, including the necessary fixtures and personal property related thereto, provided that any such assessment shall have the assent of two‑thirds (2/3) of the votes of each class of the Members (as defined and determined above in Section 3(b)) who are voting in person or by proxy at a meeting duly called for this purpose, written notice of which shall be sent to all Members not less than thirty (30) days in advance of the meeting.

Section 6. Uniform Rate of Assessment: Both Annual and Special Assessments, (with the exception of the Special Assessment authorized by Article VI, Section 4. above) must be fixed at a uniform rate for all Dwelling Units or Sites and may be collected on a monthly or quarterly basis in advance.

Section 7. Date of Commencement of Annual Assessments: Due Dates: The annual Assessments provided for herein shall commence as to all Dwelling Units or Sites on the first day of the year following the date on which such Site has either: (a) had construction of a Dwelling Unit begun; or, (b) been owned by one other than Declarant for two (2) years. Notwithstanding anything herein to the contrary, Declarant's assessments shall be 25% of the Annual Assessment on all other Dwelling Units or Sites. The Board of Directors shall fix the amount of the annual assessment against each Dwelling Unit or Site at least thirty (30) days in advance of each annual assessment period. Written notice of the annual assessment shall be sent to every Owner subject thereto. If the Board of Directors shall determine that it would be inequitable to require the payment of the full amount of the annual assessment (as might be the case if only a few of the recreational amenities are available for the use of the members at such time) the Board may waive payment of any portion of the assessment. The due dates and appropriate penalties for late payment shall be established by the Board of Directors. Lochmere Association, upon demand at any time, shall furnish a certificate in writing setting forth whether the assessments on a specified Dwelling Unit or Site have been paid. A reasonable charge may be made by the Board for the issuance of these certificates. Such certificates shall be conclusive evidence of payment status

Section 8. Remedies for Non-Payment of Assessments: Any assessments which are not paid when due shall be delinquent if the assessment is not paid within thirty (30) days after the due date, the assessment shall bear interest from the date of delinquency at a rate not to exceed 10%. The Lochmere Association may bring an action at law against the Owner personally obligated to pay any assessments and interest or foreclose the lien created herein in the same manner as prescribed by the laws of the State of North Carolina for the foreclosure of Deeds of Trust. Costs and reasonable attorney's fees (as set forth in Article VI, Section 1 above), of any such action shall be added to the amount of such assessment. No Owner may waive or otherwise escape liability for the assessments provided for herein by the nonuse of the Common Area or abandonment of his Dwelling Unit or Site.

In the event of such action at law and in the further event that such action results in a Judgment being entered against the Owner and In favor of Lochmere Association, then, and in that event, Lochmere Association shall be further empowered to execute on that judgment in such manner and to the extent provided and permitted by the laws of the State of North Carolina.

Section 9. Subordination of the Lien to Mortgages and Ad Valorem Taxes: The lien of the assessments provided for herein on any Dwelling Unit or Site shall be subordinate to the lien of any first mortgage, deed of trust or first purchase money deed of trust representing a first lien on said property and shall be subordinate to ad valorem taxes. Safe or transfer of any Dwelling Unit or Site shall not affect the assessment lien; provided, however, that the sale or transfer of any Dwelling Unit or Site pursuant to a decree of foreclosure on a mortgage thereon or any proceeding in lieu of foreclosure thereof, shall extinguish the lien of such assessments as to payments which became due prior to such sale or transfer. No sale or transfer shall relieve such Dwelling Unit or Site from liability or liens arising from assessments thereafter becoming due.

Section 10. Exempt Property: Any portion of Lochmere dedicated to, and accepted by, a' local public authority shall be exempt from the assessments created herein; provided, however no land or improvements devoted to Dwelling Unit use shall be exempt from said assessments,

Section 11. Annual Budget: By a majority vote of the directors, the Board shall adopt an annual budget for the subsequent year of operation, which shall provide for allocation of expenses in such a manner that the obligations imposed by the Declaration and any and all Supplementary Declarations will be met.

ARTICLE VII

EASEMENTS

Section 1. Walks, Drives, Parking Areas, Utilities, Etc: Lochmere, including Sites and Common Areas, shaft be subject to such easements for driveways, walkways, parking areas, water lines, sanitary sewers, storm drainage facilities, gas lines, telephone and electric power lines, television antenna lines, other utilities, maintenance access to the cemetery, ingress, egress and regress and otherwise as shall be established by the Declarant or by its predecessor in title, prior to the conveyance of the property designated to be the Common Area to Lochmere Association; and Lochmere Association shall have the power and authority to grant and establish further easements upon, over, under and across the Common Area.