LAW OFFICES OF ANN RANKIN

March 26, 2002


Members
THE GABLES HOMEOWNERS' ASSOCIATION
c/o Ms. Cindy Smittle Parker
MASSINGHAM & ASSOCIATES
2497 Industrial Parkway West
Hayward, CA 94545

Re: Disclosure Letter: The Gables of Fremont

Dear Members:

This is an updated Disclosure Letter written in accordance with the requirements of California Civil Code 1375 to inform you of status of the proposals to repair the various alleged defects that were the subject of the Association's lawsuit against the developer.

a. Roof claims.

Settlement of the roofing claims was for repairs or a tune-up for all the roofs, which included (1) perimeter flashings, (2) overexposed tiles, (3) bond patterns, (4) field flashings, (5) tile and drainage at chimneys close to the ridge lines, (6) incomplete closures, (7) eave riser flashings and (8) replacement of broken tiles. The repair work was monitored by a well-respected expert in this field, Michael Hirsch. The work has already been completed.

Settlement of the roofing claims also included reimbursement to the Association for expenses already incurred for roof and leak repairs, and for experts and attorneys' fees, in the total sum of $47,000.

b. Non-roof claims.

Settlement of claims other than those related to the roofs was for the sum of $335,000. This was an amount recommended by the judge of the superior court after he reviewed the Association's claims and the defendants' defenses, and particularly the recent decision of the California Supreme Court in Aas v. Superior Court. The Aas case dramatically changed California law to bar recovery on causes of action for negligence and strict liability for defective conditions that have not yet caused property damage, such as improperly constructed fire-walls and shear-walls. Due to this development in the applicable law, the Association's attorneys and the judge of the superior court believed that the Association would not obtain a significantly better result if the case proceeded to trial, and in fact the result could have been much worse. The trial was expected to last six weeks, with the Association incurring a great deal of added expense for legal fees and costs for consultants and experts.

The Board of Directors selected Quillci Engineers Inc. to recommend repairs to the non-roofing building components that were the subject of the lawsuit. The largest claim involved the fire-resistive construction at the complex, which was not installed in accordance with applicable codes, according to the Association's consultants.

1. Fire-Resistive Construction.

All units will receive repairs to the area separation walls in the attic. Fire stopping will be installed around all penetrations.

The area separation walls will be extended into the eave area.

The five foot closeouts at the area separation walls will be rebuilt, and the contractor will install another layer of 5/8" gypsum wallboard on all ceilings within five feet of the area separation walls.

The contractor will install rated fire dampers on the exhaust fans and registers that penetrate the firewall assembly.

In fifteen C units with three bedrooms, the tub in the master bath will be removed and gypsum board will be installed on the inside of the exterior wall.

The existing garage doors will be replaced with a one-hour rated door for fire-resistive purposes.

An additional layer of 5/8 inch gypsum board will be installed on the garage ceilings.

The gypsum wallboard on the wall between the garages and the living spaces will be renailed. The contractor will construct a one-hour rated cabinet around the existing electrical panel.

The contractor will install rated dampers on the water heater and furnace flues that penetrate the garage ceiling.

The contractor will install fire stopping at the top of each party wall.

2. Structural Repairs.

The contractor will inspect and correct, if needed, any improperly anchored shear wall posts at the end of the garages.

The contractor will survey and install A-35 clips as needed to connect the bottom chord of the party wall truss to the double top plate.

The contractor will renail the base plat of the second floor shear wall to comply with the original drawings.

In A and C units, the contractor will install new plywood shear panels that extend to the top of the beam in the kitchen.

3. Bath Tubs.

The contractor will fill the space in under the tub with 3# density polyurethane foam to support the bottom of the tub, and repair cracked bathtubs.

4. Heating and Venting.

The contractor will locate and reconnect ducts that are discharging heated air into the attic spaces.

The Board will commence the repairs as soon as the engineering report and repair drawings are received from the engineer, bids have been been obtained, and a contractor selected. The Board anticipates that this will occur during the dry season of 2002.

These plans may change if the engineering report and the bids reveal information that is not currently known by the Board members. The Board will provide further scheduling information to the Owners as it becomes available.

Very truly yours,

LAW OFFICES OF ANN RANKIN

Ann Rankin

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