Court Opinion

ID: 4045985
Source: CourtListenerOpinion
Date Created: 2016-09-29 00:00:00.566947+00
Date Added: 2024-06-11T14:04:11.298245
License: Public Domain

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

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

                    CRAIG ZGABAY AND TAMMY ZGABAY,
                                 Appellants

                                      v.

                  NBRC PROPERTY OWNERS ASSOCIATION,
                                  Appellee

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

                            APPELLEE’S BRIEF

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

          Counsel for Appellee NBRC Property Owners Association

Oral Argument Requested
                          IDENTITY OF PARTIES AND COUNSEL

1.     Appellants/Plaintiffs Craig and Tammy Zgabay

       Trial and Appellate Counsel:

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

2.     Appellee/Defendant NBRC Property Owners Association

       Trial Counsel:

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

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

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

                                               i
Appellate counsel:

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

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

                               ii
                                              TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                            iii
Appendix

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

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

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

                                                    iv
                                            INDEX OF AUTHORITIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                                         vii
                               STATEMENT OF THE CASE

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

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

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

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

                                           viii
                   STATEMENT REGARDING ORAL ARGUMENT

      The Association disagrees with the Zgabays’ assertion that no precedent

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

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

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

question on how to reconcile the statute mandating liberal construction of

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

                                        ix
                              STATEMENT OF FACTS

      The Declaration of Covenants, Conditions and Restrictions for River Chase

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

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

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

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

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

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

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

      The Declaration also created the NBRC Property Owners Association,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

statutory damages under section 202.004 of the Texas Property Code and

attorney’s fees (CR 11-14).

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

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

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

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

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

appeal followed (CR 170-71).

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

                                                2
                           SUMMARY OF THE ARGUMENT

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

requiring liberal construction of restrictive covenants. But the Legislature must

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

requiring strict construction of restrictive covenants, it mandated liberal

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

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

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

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

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

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

liberal construction controls.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

restrictive covenants prohibit short-term rentals.

                                          4
                                     ARGUMENT

I.    The Rules of Construction for Restrictive Covenants

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

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

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

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

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

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

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

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

Legislature amended the Texas Property Code to mandate liberal construction of

restrictive covenants:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Legislature accomplished nothing when it mandated liberal construction of all

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

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

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

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

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

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

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

balanced the statute requiring liberal construction of restrictive covenants with the

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

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

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

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

complain about that.

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

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

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

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

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

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

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

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

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

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

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

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

others have attempted to harmonize the standards by liberally construing restrictive

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

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

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

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

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

various approaches).

      This Court follows the Munson approach of harmonizing the statute and

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

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

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

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

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

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

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

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

no relevance to this appeal.

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

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

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

difficult to understand why liberal construction should not require interpreting

ambiguous restrictive covenants in favor of the person seeking enforcement when

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

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

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

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

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

reached a different result if strict construction applied).

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

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

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

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

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

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

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

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

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

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

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

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

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

court analogized to cases involving residency requirements for voting or obtaining

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

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

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

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

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

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

construction. Id. at 930-31.

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

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

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

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

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

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

court of appeals reasoned that residence generally requires both physical presence

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

distinguishing between temporary and residential housing. Both courts are surely

correct that residential housing does not encompass the temporary or transient

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

likewise.

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

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

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

(2) the restrictive covenants elsewhere distinguish between temporary and

permanent structures but not between temporary and permanent residence. But

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

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

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

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

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

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

reversal.”)

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

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

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

purposes (CR 129; Apx. 1).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

successive other groups.

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

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

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

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

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

fails their own test.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

holding was based on rule of strict construction).6

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

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

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

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

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

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

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

cases are distinguishable for other reasons:

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

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

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

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

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

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

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

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

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

liberal construction of restrictive covenants.

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

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

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

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

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

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

waived complaint about order not stating reasons for permanent injunction by

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

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

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

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

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

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

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

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

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

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

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

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

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

683.8

                               CONCLUSION AND PRAYER

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

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

justly entitled, including an award of its appeal costs.

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

                                             19
                                   Respectfully submitted,

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

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

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

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

                                   Counsel for Appellee NBRC Property Owners
                                   Association

                         CERTIFICATE OF COMPLIANCE

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

                                             /s/ Wade Crosnoe
                                             Wade Crosnoe

                                        20
                            CERTIFICATE OF SERVICE

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

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

                                             /s/ Wade Crosnoe
                                             Wade Crosnoe

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

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                                September 19, 20 14                                    \
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                             Cause No. C2014-0501C

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

     ORDERS ON COMPETING MOTIONS FOR SUMMARY JUDGMENT

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

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

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

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

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

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

                                                                                               128
                                                                (·)-~'-.'.·:
                                                                     \/
                                                                 -<~~.

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

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

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

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

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

               DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS
                               RIVER CHASE UNIT THREE

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

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

                                         WITNESSETH:

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

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

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

I                                              ARTICLE I
                                              QEFINII!ONS

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

I        for any other property hereafter subjected to theee reatrictiona.

~

ta
    1

                                                                                                       EXHIBIT

                                                                                                     I Jl
                                                                                                                 67
                                                              .llac:H 99868iU41il!

                                                                Doctt 9'906031628

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

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

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

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

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

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

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

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

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

                                 ARTICLE II
                  RESERVATIONS EXCEPTION ANQ QEQICADONS

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

                                             2

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

                                                                        Doell 9906031628

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

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

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

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

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

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

                                             ARTICLE Ill
                                          USE RESTRICTIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

        i'     Section 3.07 Roofing Materiels. The roof surface of all principal and secondary
               structures Including garages and domestic living quartera shell be of slate, stone,
        i.     concrete tile, clay tile, or other tile of a ceramic natura, composition shingles with a
        1      twenty-five (25) year or mora warranty; or they may ba metal, left natural or painted
        J      a color approved by the Architectural Control Committee, using standing or battened
        ~      seams. The Architectural Control Committee shall have the authority and sola
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                                                                  Doctl 9906031628

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

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

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

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

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

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

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

I       set forth by the Federal Communications Commission.

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

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

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

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

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

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

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

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

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

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

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

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

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

                                         ARTICLE IV
                              ARCHITECTURAL CQNTBOL COMM!me

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

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                                                                       Doell 990603161!8

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

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

        Section 4.02 Architectural Comrol Committee.

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

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

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

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

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

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

                                            ARTICLE V
                                NBBC PROPERTY OWNERS ASSOCIATION

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

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

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

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

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

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

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

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                                                         Doell 990603162&

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

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

                                    ARnCLEVI
                                MAINTENANCE FUNQ

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

Section 8.02 Basis of tho Malntenancg Charge.

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

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

                                           12

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                                                                     l)oc:M '990603lb.:o

                                                                        -Doc:tt 9'9o&eat ue

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

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

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

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

                                                     13

     '
    'i
     j

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                        ':11\ii....--------------------.:\,,TJ ..--------------------
                                                                                 Doell 9906031628

                                                                                  Doell ,.,08081411!

                and the Issuance of a writ of restitution thereunder.

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

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

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

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

                                                             14

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                                                                        DacM '9'906031628

                                                                       nan• V99603141E

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

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

                                         ARTICLE VII
                            DEVELOPER'S RIGHTS AND RESERVATIONS

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

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                                                                      Doclt 9906031626

                                                                           lteelt 'J1J8603141&-

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

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

     II
             Declaration.

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

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

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

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

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                                                                    Doell 9906.0316.28

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

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

                                    ARTICLE VIII
              QUilES ANP POWERS OF THE PROPERTY OWNERS ASSOCIATION

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

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

                                                  17
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                                                                       Doell 990&031628

                                                                      :Dvolt 990503l4J 2

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

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

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

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

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

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

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

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

                                                     18

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                                                                                  Doell 9906031628

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

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

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

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

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

                                                              19

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

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

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

                                          ARTICLE IX
                                      GENERAL PROVISIONS

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

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

                                                  20

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

                                                                      Daett 99860314:J:i!

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

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

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

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

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

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

                                                    21

                                                                                                     86
                                                                         Doc:tt 9906031628

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

                               VEIEBAN PI,IRCHASER PABDAL RELEASE

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

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

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

                                                                          ON, Vice President
                                                                                1~:.ra603162a

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

                      ~                                                          ~s
          COUNTY OF Y"l)4c                 •                                     COUIIIT

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