Dear Knolls Estates Home and Lot Owners

September 30, 2011

Dear Knolls Estates Home and Lot Owners,

New Covenants, Conditions & Restrictions (CC&Rs) In Process One of the 2011 goals for the Board of Directors has been to rewrite our CC&Rs. In case you have not reviewed this document lately, much of what it says applies to a developer managed subdivision rather than a homeowner managed subdivision. It is difficult to read, is not always consistent with the Bylaws and currently contains some policies that are unenforceable because of State or National laws.

The Board located an Attorney, Derek Simmons, in 2010, whose law office has extensive experience in CC&R development. The Board also held multiple study sessions, reviewed governing documents from other Oregon subdivisions and produced a report outlining the changes or clarifications needed. This Board report was given to our Attorney and his resulting recommendation was that it will be easier and less expensive for us to start out with a new set of CC&Rs rather than to attempt to rewrite our current set of CC&Rs and Bylaws. The Board has agreed with this conclusion. Consequently, rather than a rewrite, we are going to have a new document produced, which will incorporate and replace both the CC&Rs and Bylaws.

This does not mean that we intend upon making substantial changes to these documents. It does mean that the new set of CC&Rs will be clearly written, logically organized and will be in accordance with our current State laws regarding planned unit developments. The major changes this Board is currently contemplating are as follows:

1. The Administrator in our CC&Rs was originally the Developer or the Manager hired by the Developer. Consequently, the Board will shift the duties, responsibilities and powers given to the Developer or the Developer’s Manager to the Homeowners Association Board and Members. All mention of the Developer will be deleted from these documents.

2. Fences, retaining walls and walls will be allowed on the golf course, but cannot be over four feet in height and have to be approved by the Design Committee. There is no logical reason provided for in our founding documents for restricting fences or walls on the golf course. If the view corridor is protected, walls and fences do keep golf balls and golfers out of back yards and are more attractive than the posting of “No Trespassing” signs or strings of red tape. We also have multiple cases of retaining walls being necessary on the golf course side of properties or fences being required per building codes on the golf course side of house.

3. We are going to change Section 12.01 of our current CC&Rs which does not allow us to change Section 3 and 10 of our current CC&Rs. Oregon State Laws advise against making CC&Rs unchangeable; laws and building requirements are constantly being revised and building materials and housing and landscaping preferences evolve. Our CC&Rs must be flexible enough to incorporate these changes while still protecting property values. All revisions to the CC&Rs

1 will need to be approved by a vote of the Homeowners, so this new flexibility will not be without some limits.

4. We are going to make the size of the Board flexible, ranging from three to seven members. Given the current problem we have with getting people to run for a Board position, it seems reasonable to allow the size of the Board to vary.

The Board received the first draft of the new CC&Rs this week, and is currently reviewing it. We expect to have a draft distributed to the Membership in 2011, and voted upon via a written ballot in 2012. We have scheduled a Homeowners Annual Meeting on Saturday, October 22nd, and will have a representative from our Attorney’s Office present to field any questions you may have. We also have phone numbers and email addresses posted at theknollsestates.com website if any of you have comments you want to submit to the Board. Drafts of the CC&Rs will also be posted on our website.

What Is a Developer Waiver? 1. The term “Developer Waiver” will replace the former term of “Grandfathering”. A Developer Waiver is a permission to violate a CC&R that was granted to an Owner by the Developer of The Knolls Estates. A Developer Waiver will not run with the land and will not be transferrable to any new owner or renter or lease holder.

2. Some Developer Waivers are structural and not easily curable (example, roofs that are too high). The Developer Waiver in these cases will run for the lifetime of the structure. If the structure is replaced, the new structure must be in accordance with the CC&Rs.

3. Developer Waivers will be decided upon by the Board of Directors per a set of standardized requirements and recommendations. Board Members cannot vote on waivers for properties that they own. Any Owner who disagrees with a Board Decision and/or a Design Committee recommendation can request a case review by the Judicial Council. This includes Owners who are impacted indirectly by any Developer Waiver.

4. The documentation which explains and verifies each Developer Waiver must be maintained in the Board of Director records. The documentation will specify exactly what has been waived and will provide a detailed description of what has been waived.

5. Developer Waivers for violations that are curable (example: parked recreational vehicles) pertain only to the vehicle that was originally approved by the Developer. If the vehicle was changed, it cannot be larger or greater in number than the vehicle the Developer gave the Owner permission to park on their property.

6. Parked recreational vehicles that are approved for a Developer Waiver must be reasonably concealed by a fence or landscaping. It is not permissible for the vehicle to extend past the front line of the house and is not permissible for them to simply be parked in full view. The

2 Developer of The Knolls Estates did issue a requirement that recreational vehicles that were permitted to be parked on Owner lots did need to be concealed. We will be adhering to this original requirement.

7. July 1, 2006 is the date the Board of Directors assumed control of The Knolls Estates, and in accordance with previous Board decisions, was the date upon which all Developer Waivers were stopped. If you did not occupy your home before July 1, 2006, you can still apply for a Developer Waiver and your request will be considered.

We Need You to Tell Us If You Received a Waiver from the Developer As part of the process of revising our CC&Rs, our Attorney has advised us to document and record all “grandfathered variances” to the CC&Rs. As most of you know, the 2009 Board of Directors conducted tours of the subdivision and issued letters to twenty-nine owners in August, 2009. These letters informed Owners that they were being granted a waiver for the violation or that they were not being granted a waiver and needed to correct a violation. The intent of this action was to create a permanent and final record of all owners who had received a “Developer Waiver”.

There have been numerous problems with these letters. First of all, these letters were never filed or recorded. Owners were never notified in advance that the 2009 Board was ruling on these waivers and were not allowed to participate in the decision process. Documentation that verifies that Owners were granted permission to violate a CC&R by the Developer was never collected or reviewed. A description of the violation was not provided; the number of the CC&R which was allegedly violated was the only information provided as to the violation; this left a number of Owners guessing as to exactly what the violation was.

As a consequence, some Owners received letters for violations that are not in the CC&Rs. At least two Owners who assumed they had a Developer Waiver received no letter. Some Owners were told that structures required by building codes were really violations. Many Owners received letters for violations that assumed that a retaining wall or net was the legal equivalent of a fence. There also was no discussion or vote by the 2009 Board on these waiver letters and Board Officers signed waiver letters for their own properties.

The 2012 Board is therefore asking every Owner to provide documentation on any waiver they believe that they received from the Developer that gives them permission to do something or build something that is prohibited by the CC&Rs. We have provided a “Developer Waiver Application Form” in this package so that documentation can be provided and returned to the Board. The Board will review each submission by each Owner, with Board Members excusing themselves from reviewing or voting on anything pertaining to their own properties. Finally, the Board will have a meeting, will ask Owners to attend, and will discuss and take a vote on each waiver application submitted. All documentation will be maintained in the permanent Association files. Neighbors who may be impacted by a Developer Variance that an Owner receives can also attend this meeting and voice opinions or concerns.

3 Do I Need To Apply For A Developer Waiver? Every Owner needs to complete and return to the Association the attached Developer Waiver Application. The vast majority of Owners did not have their homes completed and occupied by July 1, 2006 OR there are no CC&R violations on their properties that should be remedied by a Developer Waiver. These Owners need to check the first option in Part I of the form, complete signatures in Part III of the form and return the completed form to the Association.

We are attaching a list of those Owners who we believe should apply for a “Developer Waiver”. These Owners need to complete Sections I, II and III of the Developer Waiver Application. Most Owners on this list received a letter in 2009 from the Board advising them of a “Grandfather Waiver” and have one of the following occurring on their property – a roof that is too high, a recreational vehicle, boat, camper or trailer of any sort parked outside of a garage, a chain link fence or an unattached R.V. garage. If you are not on this list, but think you were granted a waiver to do something or build something by the Developer or the Board of Directors, please let the Board know. Your failure to apply for a “Developer Waiver” will not excuse you from any future fines or requirements to make a correction.

Some Owners received a letter from the Board in August, 2009, but we are not asking you to apply for a waiver. Owners who fall into this category are lot owners who were cited for having a garage that was too small, a fence on the golf course, a dog run or a satellite dish on the front of the house. We are not asking this group to apply for a Developer Waiver because we believe that these violations will disappear by revisions in the CC&Rs or because they were incorrect citations of our original CC&Rs. If you have any questions as to whether or not you should apply for a Developer Waiver, please call a Board Member.

If you are on the list of Owners who should apply for a Developer Waiver or if you think you were granted a Waiver from the Developer for something, please complete the attached Application for a Developer Waiver Form and return it to the Board of Directors. If you are not on the list of Owners who should apply for a Developer Waiver, we suggest that you read the balance of this letter anyway, as it does concern you and your property.

List of Owners Who Probably Need to Apply for a Developer Waiver A. Boats/Recreational Vehicles/Trailers (CC&R 3.05 C & E) Lot 1: Phyllis Scott – Parked Boat Lot 2: Scott & April Warren – Parked R.V. Lot 7: David & Jane Fullerton – Parked Vehicle – Not specified in 2009 Board Notes Lot 33 – Joe & Diane Keady – Parked R.V. & Extra Cars Lot 38 – Raymond & Donna Pagel – Unattached R.V. Garage Lot 39 – Harold & Sarah Sheeran – Parked R.V. Lot 40 – Ben & Pat Shoufle – Parked R.V. Lot 41 – James & Anita Crooker – Parked Recreational Vehicles Lot 48 – Michael & Summer Shelton – Parked R.V. Lot 72 – Albert & Kaye Bouska – Parked R.V.

4 Lot 83 – Ben Fry – Parked Construction Equipment Lot 89 – John & Laura Lakey – Parked R.V. Lot 98 – John & Patricia Klassen – Parked R.V. Lot 102 – Scott & Sarah Richardson – Parked R.V. and/or Boat Lot 122 – Rich & Marilyn Boehm – Unattached R.V. Garage B. Roof Violations (CC&R 3.05I) Lot 17 – Carly & Irene Bratton Lot 67 - John & Pam Shoemaker C. Fence or Hedge Violations (CC&R 3.05 M) Lot 8: Merle & Mary Nordeen – Chain Link Fence Lot 11: Clifford Dils - Chain Link Fence Lot 13: Donna Cross – Fence Violation; not specified in 2009 Board notes. Lot 15: Al Olson – 3.05M – Fence Violation not specified in 2009 Board notes; could be a net. D. Other Violations: Lot 16: Julia Korpi - 3.05 T – Granted permission to rent property; this developer variance is already documented and no application or documentation is needed.

Who Can Help Me with My Questions or Concerns? If you have questions or concerns about the new CC&Rs or the Developer Waivers, please contact any of the Board Members listed at the end of this letter. You can also attend a Board Meeting, held ever third Tuesday of the Month at the Golf Course Club House at 6:30 p.m. Mark your calendars for Saturday, October 22nd. We will be holding our Annuals Homeowners Meeting at 10:00 a.m. in the Sutherlin High School Auditorium. Someone from our Attorney’s Office will be there to help address your questions.

Finally, use theknollsestates.com web site. We will post the current draft of the CC&Rs on the site, and will provide you with updates on our progress. You should also review Board Minutes, which are also posted on the site for additional information.

Should anyone want to volunteer to help deliver materials to Owners, to proof read drafts or to prepare mailings, we would welcome your assistance. Just let a Board Member know what you would like to do. If any of you are leaving for the winter, please make sure that we have a forwarding address for you.

We understand that this is a rather long and tedious letter and appreciate you taking the time to read it. We hope to see you at our annual meeting on October 22nd.

Sincerely,

The Knolls Estates Board of Directors

5 Developer Waiver Application

Instructions: Please complete the application form provided and attach any documentation which you may have that verifies the fact that you requested and were given approval by the Developer to do or build something that was not in accordance with the CC&Rs. If you do not know the answer to a question, just check the “Don’t Know” option.

Owner(s):______

Lot #______Street Address:______

Part I: All Owners should complete Part I and Part III. ____ I do not have any structure or vehicle for which I am applying for a Developer Waiver. OR ___ I am submitting an application for a Developer waiver for (Please describe)______

______

______(Example, parking my boat in my back yard, my chain link fence around my home.)

Part II: Complete only if you are applying for a Developer Waiver. If you do not have a vehicle or structure for which you are applying for a Developer Waiver, go to Part III of this form, sign it and return it to the Association. Thank you.

2. When was your home built? ___ My house was built in _____ (Year). ___ I don’t know when my house was built.

3. Was a certificate of occupancy for your home filed before July 1, 2006? ____Yes ____ No ___ Don’t Know

4. Are you the original owner of this home? ___Yes, I am the original owner of this home. ___ No, I am not the original owner; I purchased this property in ______(Year).

5. What specifically did the developer give you or the previous owner permission to do that is not permitted in the CC&Rs?

______

6 ______

______

6. Have you made any changes to the structure or vehicle for which you or the previous owner were granted a variance by the Developer? For example, did you make a fence longer or shorter, or change the size of a recreational vehicle or the number of recreational vehicles parked on your lot? ___ Don’t Know ___I have made no changes to the number or size of structures or vehicles for which the Developer granted me a variance. ___I have made changes to the number or size of structures or vehicles for which the Developer granted me a variance. These changes are as follows: ______

______

7. Were you ever instructed by the Developer or the Board to conceal the structure or vehicle for which you received a variance? __ No ___Don’t Know ___Yes: If yes, what was that instruction? ______

______

______Please attach any documentation you may have that supports your claim to a Developer Waiver to your completed application form. Your personal story as to what happened would be helpful. Blueprints, letters from the Developer or statements from your Builder are great sources of documentation.

Part III: All Owners should complete Part III and return by October 15, 2011.

Your Signature(s):

______Owner Date ______Owner Date

7 Where Do I Send My Completed Developer Variance Application? Your completed application form (two pages) and your attached documentation must be mailed or delivered to the Board of Directors by October 15, 2011. A return envelope has been included for your convenience. If you need assistance completing this form, please call any of the Board Members and we will find someone to help you. Your completed form and attached documentation can be mailed to Knolls Estates, PO Box 1498, Sutherlin, OR 97479. You can also drop off your completed application at the home of any Board Member. Please call that Board Member in advance and inform him/her that you are delivering an application to them. Also, we advise you to keep a copy of the application for your own records.

2011 Board Member Names, Addresses & Phone Numbers: Sharon Anderson 541-459-4799 2090 Culver Loop Monica Duran 541-4591831 523 St. Andrews Court Jane Fullerton 541-459-9173 2278 Eagle Loop Doyle Hall 541-520-0583 2098 Culver Loop Joe Keady 541459-1719 2257 Eagle Loop Russ Mock 541459-7681 1829 Culver Loop Harold Sheeran 541-459-4007 2281 Eagle Loop

Knolls Estates Web Site Our Web site provides copies of Board Minutes, current CC&R Drafts, budgets, and just about everything you might want to know about your Homeowners Association. We also give away a free bottle of wine monthly to a Homeowner each month, but you can only win if you visit the site and see your name posted as a winner.

So, go to theknollsestates.com and start reading!