ST.CHARLES TOWN COMPANY

Dear Palace Lofts Homeowner(s),

Palace Lofts Condominium Association1499 Blake St.Denver, Colorado 80202

January 4,2012

Please find enclosed a letter from HOA attorney Wendy Weigler regarding the status ofthe litigation with Unit 3L.

Regards,

Kelly StockwellProperty Administrator

1800 GLENARM PLACE, SUITE 200 DENVER, CO 80202 TEL. 303.595.8710 FAX. 303.595.8704 WWW.STC

Lansky. Weigler & Porter, P,C, • WendyE.Weiglerwweigler@lanskyweigler.com

•~·I·I'January 3,2012

VIAEMAIL

Re: Palace Lofts Condominium Association - K.S. Leuteneggcr Revocable Trust1499 Blal{e Street, Unit 3L, Denver, CO 80202Denver District Court Case No. 10 CV 5868

To Whom It May Concern:

Lansky, Weigler & Porter, P.C. represents the Palace Lofts Condominium Association(the "Association"). The owner of Unit 3L, K.S. Leutenegger Trust, by its Trustee, KarenLeutenegger, has filed a lawsuit against the Association, seeking reimbursement for damagesallegedly incurred in Unit 3L. A copy ofthe lawsuit is enclosed.

The lawsuit alleges that the interior of Unit 3L has suffered water infiltration from theterrace, damaging hardwood flooring and walls. The lawsuit alleges that the Associationbreached its obligations to investigate, repair and replace common elements, and failed to keepmoisture from entering Unit 3L. The lawsuit further alleges that the water infiltrationconstitutes a trespass, and that the owner has suffered damages as a result.

The lawsuit is being covered and handled by the Association's insurance carrier.Repairs have been completed to the common elements, and repairs to the interior are beingundertaken. A trial has been scheduled for March 2012, but the owner is attempting to continuethe trial to a later date, over the Association's objection.

The claims in the lawsuit are limited to Unit 3L and do not affect the future solvency ofthe Association. It is anticipated that any settlement, judgment or costs related to the lawsuitwill be covered by the Association's insurance policy, so any financial impact to theAssociation will be minimal. The worst case scenario for the Association is an increase infuture insurance premiums.

Attorneys at Law

1401 17th Street, Suite 560Denver, Colorado 80202www.lanskyweigler.com

o Direct 303.382.4153• Office 303.297.1900• Fax 303.293.8938

c: Palace Lofts Condominium Associationc/o St. Charles Town Company

The claims in the lawsuit are not related to title and have no effect upon any otherowner's ability to transfer title. We have conducted a title search and have found no recordeddocuments relating to the lawsuit. The owner has not alleged that the claims in the lawsuitaffect title, nor has she included all of the owners in the building as parties to the lawsuit. Theclaims in the lawsuit are not anticipated to have any impact on any owner's rights, other thanthe owner of Unit 3L.

If you require additional information, please do not hesitate to contact our office.

Wendy E. Wei rLansky, Weigler & Porter, P.e.

Lansky, Weigler & Porter, P.C.