January 9, 1998

c/o Mr. Ramsey Shuayto
727 University Ave.
Los Gatos, CA 95030

Re: Hazari v. Wedgewood Manor HOA et al.

Dear Members:

I am writing this letter as requested by your Board of Directors to disclose a lawsuit that has been filed against your Homeowners' Association, its Board of Directors and Manager, and against certain Real Estate Agents, by plaintiff Cyrus Hazari, an Association member.

The lawsuit is pending in Santa Clara County Superior Court. The Complaint is a matter of public record; you may obtain a copy from the Court, or from the Association manager. If you would like a copy of the Complaint, please contact Ramsey Shuayto and make arrangements to pay copying and mailing costs. The lawsuit will have to be disclosed to any potential purchaser of your home, should you wish to sell, and to any potential lender, should you wish to re-finance.

The lawsuit alleges that the Association and the other defendants violated various of the Plaintiff's legal rights by enforcing the provisions in the governing documents pertaining to the project's status as senior housing. The lawsuit was filed as a "putative class action," and alleges it was filed on behalf of Mr. Hazari and on behalf of other owners who purchased their interests in late 1994.

The allegations of the lawsuit have not been proven in court, and the court has not certified the lawsuit as a class action.

The Association denies the allegations of the complaint, denies that the suit can properly be treated as a class action, and intends to vigorously defend the action. The Association's insurer has agreed to provide the Association with a legal defense, at the insurer's expense. The Board of Directors intends to continue to enforce the provisions of the Association's governing documents concerning age restrictions. The Board has scheduled Rules Enforcement Hearings against all Members believed to be in violation of the age restrictions, and may, after notice and an opportunity for a hearing, impose fines and take other disciplinary action, and pursue legal and other actions, against Association members who are found to be in violation of the Association's rules, regulations and/or governing documents.

The Board members and I will provide you with written updates on the progress of the litigation from time to time. You may provide these updates to potential purchasers and lenders. Please understand that in California, disclosure obligations in connection with real estate transactions are the duty of the seller, and that the Association and its legal counsel cannot get involved directly with potential purchasers or their agents. Therefore, if you have a potential purchaser who has questions about the lawsuit, please do not have the purchaser contact the Board, the manager, or legal counsel directly, as we will not be able to provide the purchaser or his/her agent with information. We will provide you with written disclosure letters, and will maintain them in a Disclosure File at the office of Community Management, Inc. so you can provide them to your agent for transmittal to the buyer's agent. Please do not contact my office directly, as the Association is on a budget and cannot afford to pay legal fees for such inquiries. If you need information and it is not in the Disclosure File, please let the manager know what you need, and if the Board thinks it appropriate, the Board or the Manager can direct such inquiries to me.

We will continue to keep you informed of developments.


Very truly yours,


Ann Rankin