ALTERNATE DISPUTE RESOLUTION POLICY

Paradise Pines Townhomes Association, Inc.

Paradise Pines Townhomes Association, Inc. adopts this alternate dispute resolution policy pursuant to the provisions of § 38-33.3-124 of the Colorado Common Interest Ownership Act ("CCIOA").

Disputes and disagreements that arise between the Association and unit owners that cannot be resolved by the parties themselves shall be resolved by alternate dispute resolution proceedings. The policy set forth below is mandatory and shall be followed by all unit owners and the Association before any party shall file litigation unless litigation is necessary to avoid an imminent threat to the peace, health, or safety of the community.

POLICY

If any dispute shall arise between one or more unit owners and the Association, such dispute shall be submitted first to mediation and second to arbitration (unless such dispute shall involve an imminent threat to the peace, health, or safety of the community, in which case this policy shall not apply to such threat involving such imminent threat to the peace, health, or safety of the community unless the parties to the dispute elect to apply this policy to such dispute).

A dispute shall be deemed to have arisen whenever there is a disagreement between one or more unit owners and the Association that the parties have not resolved themselves, as determined solely by the Association in its discretion even if such unit owner or owners do not agree with the Association that a dispute exists. The Association's determination that a dispute exists shall be binding on such owner or owners for purposes of this policy.

Within fourteen (14) days of such determination, the parties mutually shall select a mediator acceptable to all parties and proceed to mediation pursuant to the rules and procedures established by such mediator, who shall be knowledgeable in the subject matter of such dispute. Facts that are not in dispute shall be stipulated. The mediator shall establish the rules and procedures that apply to such mediation but the parties may make suggestions about such rules and procedures if the parties believe such suggestions will expedite or simplify the mediation. If mediation shall resolve such dispute, the parties, with the mediator's assistance if requested, shall prepare a written agreement resolving such dispute, which agreement shall recite that it is a complete and final agreement of the dispute and shall be binding on the parties who sign such agreement and their respective successors, assigns, and others claiming under them. The parties shall each bear their respective proportions of the costs and expenses of such mediation, which the mediator shall determine by suggestion in the event of disagreement.

If the parties fail to agree on a mediator or if such mediation shall fail to result in an agreement signed by the parties, the parties shall, within thirty (30) days of such failure, submit such dispute to an arbitrator knowledgeable in the subject matter of such dispute mutually selected by the parties. If the parties cannot mutually select an arbitrator, each party shall appoint a representative, and the representatives so appointed together shall select such knowledgeable arbitrator. No more than one arbitrator shall be selected unless all parties shall waive a single arbitrator and mutually agree to have the dispute resolved by a panel of two or more arbitrators, as they may agree. Unless otherwise agreed by the parties before submission to arbitration or as otherwise determined by the arbitrator after hearing the matter as set forth in the next sentence, the parties shall each bear their respective proportions of the costs and expenses of such arbitration. The decision of the arbitrator (or arbitration panel) shall be final, both with respect to such dispute itself and also with respect to the costs and expenses of the arbitration proceeding, including which parties, whether all or fewer than all, shall bear the costs associated with such arbitration proceeding, including attorneys' fees if applicable, and in what proportion.

The arbitrator shall establish the rules and procedures that shall apply to such arbitration; in such arbitrator's discretion. The goal in such arbitration will be to allow all parties to the arbitration to have a complete say with respect to their respective positions while at the same time making every effort to keep down the costs and expenses associated with such arbitration. Informal arbitration (under the rules and procedures established by the arbitrator) is encouraged.

The arbitrator's decision shall be in writing and shall address the matters associated with the dispute, including the amount of the award, if any, as well as such other matters as the arbitrator may deem appropriate. The arbitrator shall have authority to award the Association a lien against a unit owner's property but only if such lieu, under the factual circumstances present in such dispute, is authorized expressly by law or the covenants themselves (not the bylaws). If a lien is awarded by the arbitrator, it shall be subject to the provisions of CCIOA and a notice thereof may be recorded in the county real property records by the Association at any time after fifteen (15) days of the date of the arbitrator's award. If a party who is required to pay another party a sum of money based on the arbitrator's award fails to do so, the party who is owed the debt may, at any time after thirty (30) days of the date of the arbitrator's award, commence judicial proceedings to convert the arbitrator’s award into a judgment based solely on the arbitrator's award, the amount of the judgment in any such judicial enforcement action to include not only the arbitrator's award itself but also the costs and reasonable attorneys' fees, if any, associated with such judicial enforcement proceedings. The total debt amount of such award or judgment (including costs and attorneys' fees, if any), whether entered by the arbitrator or the court, shall bear interest at the rate of eight percent (8%) per annum, compounded annually, from the date of the arbitrator's award (or the judgment for those amounts, if any, that are awarded by the court in addition to the arbitrator's award) until paid. Any lien awarded by the arbitrator may be foreclosed judicially by the Association, to include the costs and reasonable attorneys' fees associated with such judicial foreclosure action, which the Association may combine with any judicial enforcement action to convert the arbitrator's award into a judgment.

Adopted this day: December 14, 2006