22. Land Use

Land Use Classification - Permitted Uses - Maximum Occupancy

Land Use Classifications for Private Units or Sub-Condominium Units within the Master Condominium are Residential, Commercial, or Mixed Use. In order to balance and protect the rights of all Owners with respect to their property and to preserve and enhance the character of Loreto Bay, the Master Rules provide for maximum occupancy restrictions and the regulation of noise, odors, and other potential nuisances throughout Loreto Bay.

22A. Land Use Classifications

Subject to any provisions in the Law or any limitations established or approvals granted by municipal authorities, where the Land Use Classification for a particular Private Unit or Sub-Condominium Unit has been specified in the Master Condominium Declaration or any Sub-Condominium Declaration, absent the approval of a special use permit by the Master Condominium Assembly in accordance with the Master Rules, the use of such property is limited by its classification as follows:

Residential: A Private Unit or Sub-Condominium Unit with a Residential Land Use Classification is designated for housing and may be used only for the accommodation of the Owner or Owners of the Unit, their Guests, or tenants. Although the unit may be leased or rented pursuant to a single rental agreement per rental period as a residence, on a short-term or long-term basis, it may not be operated in whole or in part as a hotel, hostel, or for any other commercial hospitality use, it may not be sub-divided into multiple dwelling units, and it may not be used for commercial or business purposes except as specifically permitted by the Master Rules, these Administrators Rules, or a Special Use Permit.

Commercial: A Private Unit or Sub-Condominium Unit with a Commercial Land Use Classification is designated for business purposes, including, but not limited to, services, office, hotel, hospitality, recreational, retail sales, grocery, restaurant, or storage.

Mixed Use: A Private Unit or Sub-Condominium Unit with a Mixed Use Land Use Classification is designated for both Residential and Commercial Use. The Residential Use of such Mixed Use Units is subject to the same occupancy limits as Units designated for Residential Use alone. The Commercial Use of such Mixed Use Units is subject to the same limits and controls as those imposed on other Commercial Use units by the rules and regulations of Loreto Bay and the Law, based on the location of the Unit and other pertinent factors.

22B. Maximum Occupancy

Development and architecture in Loreto Bay must be managed to control population density and ensure that the use and occupancy of homes and commercial spaces does not overwhelm Loreto Bay’s existing infrastructure, it’s Common Areas, the provision of Common Services to and by the community, or the natural environment in which Loreto Bay is located.

For purposes of determining maximum occupancy under these rules, each residential unit will be deemed to have the number of bedrooms provided in the original developer’s plans, based on the designation of the particular unit in the applicable Sub-Condominium Declarations as follows: (a) Casas Verdes will have a maximum occupancy of three persons; (b) Casas Chicas, Nueva Chicas, Casas Altas, Tiendas del Artes, Bohemias, and Las Brisas have a maximum occupancy of six persons; (c) Encantadas, Poemas, Aquarius, and Abiertas have a maximum occupancy of nine persons; and (d) Casas Olas and Cuartetos have a maximum occupancy twelve persons. Custom homes have a maximum occupancy of three persons per existing bedroom, not to exceed a total of twelve persons, unless the Managing Agent, in consultation with the Design Review Committee, the Administrators, and the affected Subcondominiums approves a different maximum occupancy for that unit.

Owners of property claiming to have more bedrooms than originally provided for in the standard floor plans for their unit or Owners of custom homes, who wish to be allowed to exceed the maximum occupancy limit for their unit on a permanent basis, must submit an application to the Managing Agent, who will determine if all necessary information has been provided and submit the application to the Master Assembly for consideration. The Master Assembly must consult with the Design Review Committee and may consider the specified occupancy of the unit, whether the bedrooms claimed all comply with Mexican building standards for bedrooms, and other pertinent factors.

In special circumstances, Owners may apply to the Managing Agent for permission to have additional Guests on a short-term basis.

The maximum occupancy of any Unit with a Commercial Land Use Designation may not exceed the occupancy restrictions imposed by the pertinent licensing authorities; however, the maximum occupancy of commercial units may be further restricted by the Managing Agent, if such restriction is necessary to protect the rights of the Owners of neighboring properties or to preserve or protect Loreto Bay’s existing infrastructure, Loreto Bay Common Areas, or the ability of Loreto Bay to provide Commons

Services to the community. Owners of Units with Mixed Use Land Use Classifications must comply with the occupancy limits imposed on residential and commercial property in those portions of the Unit being used for residential and commercial purposes respectively.

22C. Rights of Others

Regardless of Land Use Classification no property may be used in a way that obstructs or interferes with the rights of any other Owners, Occupants, or Persons authorized to use and enjoy the Master Condominium; or in a way that constitutes a violation of the rules and regulations of Loreto Bay or the Law; or is a nuisance, hazardous, offensive, or a threat to the security or safety of other Owners or Occupants.

22D. Compliance with Law

Owners of Residential property may not exceed, or allow others to exceed, established occupancy limits pertaining to their Units, and Owners who do so will be subject to sanctions. No commercial business may operate in any Unit unless that Unit has a Commercial or Mixed-Use Land Use Classification. All Owners in Loreto Bay must comply with and ensure that Occupants of their property comply with all federal, state, and local laws, any licensure requirements pertaining to the operation of commercial businesses, as well as all rules and regulations of the Master Condominium and the affected SubCondominium.

22E. Design Review

Any new construction to the interior or exterior of existing structures to a Residential Unit that changes the number or configuration of rooms or that could otherwise affect the existing infrastructure or Common Areas of the Master Condominium, or to accommodate commercial businesses in Commercial or Mixed Use Units must be approved by the Design Review Committee in accordance with the Design Review Guidelines, which approval will be granted only upon a finding that the proposed modifications will not adversely impact the Loreto Bay infrastructure, Loreto Bay common areas, or the ability of Loreto Bay to provide Commons Services to the community. The

Design Review Committee will consider, among other things, the potential impact of all construction on the community due to increased building density or occupancy of such structures, and will preserve the intended character and density of the community. No commercial enterprise may open for business or operate in Loreto Bay unless it is in compliance with the requirements of the Design Review Committee and the Law and has obtained written approval for such construction or modifications.