A MESSAGE TO PROSPECTIVE PURCHASERS OF PROPERTY IN
HIGHLAND LAKES AND THEIR REALTORS

Highland Lakes Country Club and Community Association is a private lake community
comprised of five lakes, a Clubhouse, and recreational facilities including ballfields, beaches,
tennis and basketball courts, picnic areas and playgrounds.

Sailing and boating are enjoyed by many, along with swimming, hiking, fishing, and
kayaking. There are sailing leagues, swim teams, tennis leagues and a variety of
recreational and social activities held at the Clubhouse (see http://www.hlcc.org/events.htm
and http://www.hlcc.org/ClubhouseTest07.htm).  The Club supplies docks and boat racks for
members located throughout the community.

Volunteerism is a big part of the lifestyle in Highland Lakes. Many of the athletics, social and
recreational activities of Highland Lakes are planned, organized and directed by the
dedicated junior and adult volunteers of Highland Lakes. Each summer, in the proud
tradition of Highland Lakes, our volunteers are honored at events entitled Junior
Appreciation and Adult Appreciation. Volunteers make our Highland Lakes so special.

Highland Lakes is approximately two square miles. There are approximately 1,970 private
homes and 230 vacant lots that comprise the 2,200 members of Highland Lakes. The Club is
governed by an elected, seventeen member Voting Board and various committees including
Roads, Ecology, Planning, Athletics, etc. The General Manager is supported by a year-round
administrative, maintenance and security staff. The employee roster grows significantly
during the summer months as lifeguards and recreational aides join the staff.

Highland Lakes, as a private community, is governed by By-Laws and Rules and
Regulations. All owners of property in Highland Lakes, at the time title is acquired for the
first time or if a change of ownership results in a new owner of property in Highland Lakes,
are obligated to the Club for the payment of an Initiation Fee of $2,000. Always check with
the Club Office before changing the ownership of property in order to determine whether an
Initiation Fee will become due.

It is important to understand what is meant by a change in ownership. Most times, we think
of a typical real estate transaction where there is a buyer and seller, but there are many
other real estate transactions that give rise to an Initiation Fee assessment. For example,
many people follow the advice of professional financial advisors and create a trust for estate
planning and other purposes, and one of the financial transactions involved in creating the
trust may include transferring title to the property they own into the trust. These trusts are
distinct legal persons and are required to obtain taxpayer identification numbers from the
Internal Revenue Service. When this occurs, an Initiation Fee is assessed to the trust as a
new owner of property in Highland Lakes.

Other examples of real estate transfers that result in Initiation Fees being assessed include
when an owner buys the property in their name only and then adds their spouse as an
owner of the property, parents when they add their children as owners of their Highland
Lakes property, or when they transfer ownership of their property to their children.

It is not practical or even possible to identify all of the real estate transfers that give rise to
the assessment of the Initiation Fee. Therefore, in order to determine when an Initiation Fee
will become due, it is always best to consult with your attorney and to check with the Club
Office before changing the ownership of the property

Members are also obligated to the Club for the payment of the annual dues that are charged
for every house and vacant lot in Highland Lakes. For those who own a home, payment of

the annual dues and assessments (if any) entitles members to all of the privileges of
membership, including membership badges and boating, docking and parking permits for
owners and those residing in the household. There is an additional charge for membership
badges and permits for lot owners. Guest badges are available for purchase by members for
$1.00 per day for their guests to use the Club’s beaches and recreational facilities.

The annual dues also provides for the maintenance and snow plowing of the Club’s thirty-
two mile network of private roads, insurance, real estate taxes, maintenance of Club
facilities, utilities, security patrol, lake and dam management, lifeguards and swim lessons,
fish stocking, etc.

Prospective purchasers are strongly cautioned that, before they close title on a property in
Highland Lakes, a report on the status of outstanding dues and assessments should be
obtained from the Club by their attorney or title company. This report discloses to the
prospective purchasers whether the seller’s have met their obligations to the Club by the
payment of the Club’s dues and assessments. The attorney or title company working on
behalf of the purchaser will ensure that all charges are paid through the closing date.
Otherwise, a purchaser is not entitled to any of the privileges of membership if the seller is
delinquent with their dues and assessments. So, it is very important that attorneys are
aware of the status of dues prior to closing.

Additionally, please note that even though the property address that you are considering
purchasing may state “Highland Lakes”, there are many properties located within the
Highland Lakes zip code of 07422 that are located in other communities, such as the Barry
Lakes or Lake Wanda sections of Vernon Township. You, or your attorney or title company,
can get this question answered through the filing of a request for a Status Report, or by
making a simple telephone call to the Club Office.

We look forward to your interest in Highland Lakes Country Club and Community
Association. It is a superior place to live.

Should you require additional information, browse our web site or call the Highland Lakes
Club Office at 973.764.4366 with questions.