COLLECTION POLICY

The following resolution has been adopted by Smoky Hill Homeowners Association (the "Association") pursuant to Colorado law, at a regular meeting of the Board of Directors on December 13, 2005.

Background

The Association was lawfully formed in 1979 as a not for profit corporation of Lot Owners who reside in the Smoky Hill 400 neighborhood. The original formation was recorded in Arapahoe County Colorado on May 17, 1978 at page 157 of book 2777 in the Arapahoe County Clerk and Recorder’s Office.

The covenants of Smoky Hill were revised by vote of Lot Owners, following the requirements of the original covenants, on January 31, 2003. The revised covenants make membership in the Association mandatory for all lot owners. The Association enforces the covenants of Smoky Hill that were recorded under filing number B3022630 in the Arapahoe County Clerk and Recorder’s office.

Purpose

A. In order to carry out the business of the Smoky Hill Homeowners Association, as defined in their annual budget of expenses, it is necessary to collect annual membership dues and receive reimbursement of some expenses incurred by the actions of some individual Lot Owners. The Association must have the financial means to discharge its responsibilities. The Board of Directors has a responsibility to pursue collection of assessments and other charges from Lot Owners pursuant to the Homeowners Declaration for Smoky Hill ("Declaration ") and the Bylaws of the Association.

B. The Board of Directors believes that it is in the best interest of the Association to refer delinquent accounts to an attorney for collection so as to minimize the Association's loss of assessment revenue. The Board of Directors has retained an attorney with experience in representing homeowner’s associations in collections and other matters.

This policy describes how the Association accomplishes the collection of money owed to it by individual lot owners.

Procedure

An “account” is established for each lot owner in the Smoky Hill Homeowners Association.

Annual dues for membership in the Association are recorded in the account of the individual lot owner.
Any legal fees that are incurred by the Association in the enforcement of the recorded covenants, or in collection of amounts owed to the Association, are recorded in the individual lot owner’s account.
Any late fees or fines that are imposed by the Association against individual lot owners are recorded in the lot owner’s account.
The Homeowners Association maintains an ongoing balance record of the individual lot owner’s account.
Any payments made by, or on behalf of, the individual lot owner are recorded in the individual lot owner’s account ledger, and are reflected in the running balance due on the account.

Statements of Account are mailed to each lot owner on a periodic basis. These statements are normally sent to the legal owner of the lot once annually, however the individual lot owner may view the “account” activity at any time, upon written request to the Smoky Hill Homeowners Association, or its agent.

Annual dues are assessed to each Lot Owner at the start of each calendar/fiscal year. Late fees and interest are assessed to each account in accordance with the provisions of the covenants if the annual dues amount remains unpaid. (60 days).

Invoices of new charges including late fees, fines, and legal fees and costs (“Charges”) against the account are mailed to the individual account Lot Owner as the Charges occur (“First Notice”), but the Association shall not be required to mail such invoices more often than once per month.

It is the individual lot owner’s responsibility to pay Charges to the Smoky Hill Homeowners Association within 30 days of mailing of the First Notice.

All invoices will be sent by first class mail to the address on file for the lot owner.

It is the responsibility of the lot owner to provide and maintain a current billing address for the invoices and periodic statement of account that will be sent by the Association.

In the event the Association shall cause a collection or demand letter, or notices to be sent to a delinquent Lot Owner by regular mail, the Association may also cause, but shall not be required to send, an additional copy of that letter or notice by certified mail. Failure to receive an invoice that is mailed to the individual lot owner will not invalidate the charge claimed in the invoice.

The Association shall furnish to an Lot Owner or such Lot Owner's designee upon written request to the Association's agent, a written statement setting forth the amount of unpaid assessments currently levied against such Lot Owner's property. There will be a fee for this service as determined by the agent. If the account has been turned over to the Association's attorney, such request shall be handled through the attorney.

If the lot owner disputes any charge against the lot owner’s account, they must contact the Association or its agent in writing within 30 days of the charge, and make arrangements to discuss the matter with the Association’s Board of Directors. The Association’s Board of Directors will attempt to resolve all disputes with individual lot owners.

If a First Notice has not been paid in full thirty (30) days after mailing, the Board shall cause a written notice ("Final Notice") of non-payment, amount past due, and request immediate payment. The Final Notice will state that the matter will be turned over to legal counsel if not paid in full within thirty (30) additional days. This notice may advise the lot owner of the potential additional legal fees that may be incurred if the balance is not paid in full.

If an account has not been paid in full thirty (30) days after mailing of the Final Notice, the Board may turn the account over to the Association’s attorneys for collection. Upon receiving the delinquent account and unless otherwise directed by the Board, the Association's attorneys shall send a letter to the delinquent Lot Owner demanding payment for past due assessments, fines, interest, late fees and all additional legal fees and other costs due. Upon further review, the Association's attorneys may file a summons and complaint with the court of jurisdiction. If a judgment or decree is obtained, including without limitation a foreclosure action, such judgment or decree shall include reasonable attorney's fees together with the cost of the action and any applicable interest. Upon referral to the Association's attorneys, the attorneys shall take all appropriate action to collect the accounts referred. After an account has been referred to an attorney, the account shall remain with the attorney until the account is settled, has a zero balance or is charged off. The attorney is authorized to take whatever action is necessary, in consultation with the Association’s Board of Directors, that is believed to be in the best interests of the Association, including, but not limited to:

a) Filing of a suit against the delinquent Lot Owner for a money judgment.

b) Instituting a judicial foreclosure action of the Association's lien.

c) Filing necessary claims, documents, and motions in bankruptcy court in order to protect the Association's interests.

d) Seeking the appointment of a receiver.

The Association may choose to foreclose on its lien in lieu of or in addition to suing an Lot Owner in county court for a money judgment. The purpose of foreclosing is to obtain payment of all amounts due and owing in situations where either a money judgment lawsuit has been or is likely to be unsuccessful or other circumstances favor such action.

Upon receipt of any notice of a bankruptcy filing by a lot owner, or upon receipt of a notice of a foreclosure by any holder of an encumbrance against any unit within the Association, the Manager shall advise the Association’s attorney of the same and turn the account over to the Association’s attorney.

The Association may seek the appointment of a receiver if a lot owner becomes delinquent in the payment of assessments or other Charges pursuant to the Declaration and Colorado law. A receiver is a disinterested person, appointed by the court who manages the rental of the property, collects the rent and disburses the rents according to the court’s order. The purpose of a receivership for the Association is to: obtain payment of current assessments, reduce past due assessment, correct any violations of the Declaration, Bylaws or Rules and Regulations and prevent the waste and deterioration of the property.

10. The Association shall, upon request, provide all Lot Owners with a copy of this Resolution, which shall become effective upon its adoption. All communication with a delinquent lot owner shall be handled through the Association’s attorney once a matter has been referred to the attorney. Neither the Board nor any member of the Board of Directors nor any of its agents shall discuss the collection of the account directly with a lot owner after it has been turned over to the Association's attorney unless the attorney is present or has been notified of the contact. Once an account has been referred to the association’s legal counsel for collection, all communication/correspondence must be directed to the legal counsel in order to resolve the matter.

In addition to any and all charges imposed under the Declaration, Articles of Incorporation and Bylaws, the Rules and Regulations of the Association, or this Resolution, a forty dollar ($40.00) fee, or other amount deemed appropriate by the Board of Directors, shall be assessed against a Lot Owner in the event any check or other instrument attributable to or payable for the benefit of such Lot Owner is not honored by the bank or is returned by the bank for any reason whatsoever, including but not limited to insufficient funds. Such return check charge shall be due and payable immediately, upon demand. Notwithstanding this provision, the Association shall be entitled to all additional remedies as may be provided by applicable law. Returned check charges shall be the obligation of the Lot Owners of the property for which payment was tendered to the Association. Returned check charges shall become effective on any instrument tendered to the Association for payment of sums due under the Declaration, Articles, Bylaws, Rules and Regulations, or this Resolution after the date adopted as shown above. If the bank returns two or more of a Lot Owner’s checks as unpaid, within any 12-month period, the Association may require that all future payments be made by certified check or money order. This return check charge shall be in addition to any late fees incurred by a lot owner.

As an additional expense permitted under the Declaration and by Colorado law, the Association shall be entitled to recover its reasonable attorney fees and collection costs incurred in the collection of assessments or other charges due the Association from a delinquent Lot Owner. The reasonable attorney fees incurred by the Association shall be due and payable immediately when incurred and shall operate as a lien against the property.

Application Of Payments. Except as otherwise agreed to in writing by both the Lot Owners and the Association, all sums collected on a delinquent account shall be remitted to the Association’s attorney until the account is brought current. All payments received on account of any Lot Owner or the Lot Owner’s property, shall be applied to payment of any and all legal fees and costs (including attorney fees), expenses of enforcement and collection, late charges, returned check charges, lien fees, and other costs owing or incurred with respect to such Lot Owner pursuant to the Declaration, Articles, Bylaws, Rules and Regulations, or this Resolution, prior to application of the payment to any special or regular assessments due or to become due with respect to such Lot Owner.

In addition to the steps outlined above, the Association may also elect to suspend the voting rights of any Lot Owner whose account is past due at the time of such voting or suspend any other privileges as set forth in the Declaration, Bylaws, or Rules and Regulations.

The Association is hereby authorized to extend the time for the filing of lawsuits and liens, or to otherwise modify the procedures contained herein, as the Association shall determine appropriate under the circumstances

Nothing in this Resolution shall require the Association to take specific actions other than to notify the Lot Owners of the adoption of these policies and procedures by first class mail. However, the Association has the option and right to continue to evaluate each delinquency on a case-by-case basis.

Failure of the Association to comply with any provision in this Collection Policy shall not be deemed a defense to payment of assessment fees or other charges, late charges, return check charges, attorney fees and/or costs as described and imposed by this Collection Policy.

This Collection Policy may be amended, from time to time, by the Board of Directors.

IN WITNESS WHEREOF, the undersigned certifies that this Resolution was adopted by the Board of

Directors of the Association this 13th day of December, 2005.

___________________________

Ronald W. Weidmann

President

Smoky Hill Homeowners Association Board of Directors