STATE OF ARIZONA

DEPARTMENT OF REAL ESTATE

JANICE K. BREWER
GOVERNOR

JUDY LOWE
COMMISSIONER

2910 NORTH 44TH STREET, SUITE 100, PHOENIX, ARIZONA 85015
PHONE 602.771.7750 FAX 602.955.9361

400 WEST CONGRESS, SUITE 523, TUCSON, ARIZONA 85701
PHONE 520.628.6940 FAX 520.628.6941

This is to acknowledge issuance of the disclosure report for the above referenced development. This property may now be offered for sale.

A copy of the disclosure report must be given to the prospective purchaser, allowing ample time for review, prior to signing the purchase contract and receipt for disclosure report. The developer shall obtain the purchaser’s signature on the receipt form approved by this Department. Signed receipts shall be maintained at the office of the developer for a period of not less than five (5) years. Receipts shall be subject to inspection at any reasonable time by the Department. The receipt form enclosed with this letter is approved by this Department and must be used when the prospective purchaser receives a copy of the disclosure report.

LICENSE NO. DM09-055060

EC BAR RANCH ESTATES

SUBDIVIDER
James Wayne Crosswhite, L.L.C., an Arizona limited liability company
P.O. Box 44
Nutrioso, AZ 85932

This report is NOT A RECOMMENDATION OR AN ENDORSEMENT by the State of Arizona of this land but is provided for informational purposes ONLY. The report reflects information provided by the subdivider and obtained by the Department in its review process in accordance with the provisions of Title 32, Chapter 20, Article 4, of the Arizona Revised Statutes, as amended. NOTE that not all of the information in this report has been verified by the Department; certain information has been accepted by the Department as true and accurate based on attestation of the subdivider and/or the subdivider’s agents. You should verify all facts before signing any documents. The Department has not passed upon the quality or quantity of any improvement or structure and does not assume responsibility in either event.

This report includes: Lots 1 through 63, inclusive in the EC Bar Ranch Estates subdivision.

The map of this subdivision is recorded in Book 9 Page 45 (1-6), records of Apache County, Arizona.

The subdivision is approximately 206.50 acres in size. It has been divided into 63 lots. Lot boundaries will be marked with metal survey pins.

YOU ARE ADVISED TO OBTAIN A COPY OF THE RECORDED MAP AND CORRECTION DOCUMENTS, IF ANY, AND NOTE ALL EASEMENTS, RESTRICTIONS AND STATEMENTS CONTAINED THEREIN.

Location: Subdivision is located at Highway 180/191 and County Road 2112, Nutrioso, Apache County, Arizona. Subdivision is located 2 miles north from Nutrioso or 15 miles south from Springerville or Eagar, AZ. From Springerville or Eagar, take Highway 180/191 south 15.5 miles to County Road 2112, turn west on County Road 2112 to the southeast corner of the subdivision. Go about 500 feet on County Road 2112 to EC Bar Ranch Road (CR 2362), which is one entrance to the subdivision. Go west on County Road 2112 about ½ mile to Nutrioso Creek Road (CR 2360), a second entrance to the subdivision.

Electricity: Navopache Electric Co-Op (NEC), 1878 W. White Mountain Blvd, Lakeside, AZ, (928) 368-5118, www.navopache.org. There is one primary electric line that crosses several lots on the south side of the subdivision. The farthest lot is less than 3000 feet from the primary electrical service. The lot owner will be responsible for completion of the facilities to the lot lines. Estimated costs lot purchaser will have to pay for completion of facilities to their lot line is based on current rates quoted by Navopache Electric Co-Op. The cost is approximately $15/foot from the primary electric line near County Road 2112 to lot line for primary overhead power. Buried primary electric line is approximately $30.00/foot to lot line. The estimated costs lot purchaser will have to pay for completion of facilities from lot line to their dwelling is the cost of buried primary electric approximately $30/foot from lot line to dwelling. Upon completion of facilities, other costs or requirements that exist before the lot purchaser can receive service are based upon usage, but a minimum monthly service charge is approximately $20/month. Hook-up and turn-on fees vary based on facilities available to lot or desired by lot owner, but may be less than $100.00.

Telephone: Frontier Communications, 1-800-921-8101, www.frontier.com . There are buried telephone lines that are located in a utility easement that adjoins the subdivision along Hwy 180/191 and County Road 2112. The farthest lot is approximately 2,000 feet from the present telephone facilities. The lot purchaser will be responsible for the completion of the facilities to the lot lines, which is dependent upon current rates at Frontier Communications. Upon completion of facilities the lot purchaser will be responsible for a $65.00 connection fee before they will be able to receive service.

Internet or Fiber Optic: Frontier Communications, 1-800-921-8101, www.frontier.com

Gas: Sierra Propane, (877) 4-SIERRA or (928) 333-5550, 33 N. Zuni St, Springerville, AZ, Sierra Propane has agreed to service the EC Bar Ranch Estates. Service will be at the following prices and are subject to change: Tank Rental 60 to 250 gallon tank $30.00 to $45.00 for one year or less, Plumbing 10’ from home, price is to be determined, includes trench, gas lines, labor and appliance conversion, trench cost based on no rock or hard dig.

Tank size will be based on usage. Tanks are filled to 80-85% capacity to allow for fuel expansion. There are no fees for the tank set, initial pressure test or regulator (included with tank rent) on new sets. Tanks that are 150 gallons or more have to be a minimum of 10’ away from the home. Some insurance companies (All State) require all tanks, regardless of size, to be 10’ away from the home.

Additional costs: miscellaneous parts for final connection - $0- $50; appliance conversions - $45 for permits. Fees will also vary if multiple trips become necessary - $45.00/trip Tanks should be placed where there will be an unobstructed access to the truck when filling and be within 25 feet of the truck. Where possible, tanks should be located outside fences. Although we are often able to set a tank immediately, customers should allow 7-14 days between requesting the service and having it installed.

Purchasers are urged to contact Sierra Propane for current pricing and any additional information. (877)4-SIERRA or (928)333-5550.

Water: A private or shared well is to be utilized for the individual lots for this subdivision. Requirements and costs involved to install an operational domestic water system are: ADWR Drill Permit Fee $100, Average depth to water 70 feet, approximate cost to drill and case 100 foot hole with steel casing $4,000 (PVC casing is less expensive), cost of ½ HP 5-gpm electric pump and installation to existing power source $4,000, 1,000 gallon storage tank $1,000. Total approximate cost 9,100.

“EC Bar Ranch Estates subdivision is a dry lot subdivision and will be served groundwater from individual wells. The developer has chosen not to demonstrate a 100-year adequate water supply. The applicant has not demonstrated that the criteria for physical, legal and continuous availability, water quality, and financial capability have been met.” Therefore, the Department of Water Resources find the water supply to be inadequate to meet the subdivision’s projected needs. This information is stated in the Certificate of Water Facilities from the Arizona Department of Water Resources.

Sewage Disposal: All lots will be required to have Individual on-site waste water treatment system (septic tank system) Standard septic tank systems or alternate septic systems are customary in the area. Costs and arrangements are the responsibility of the purchaser. In a letter from Isaacson Engineering sated February 12, 2009, “Standard Septic Tank/Leach Field system will cost in the range of $4,500 to $5,500 for a 3 bedroom home including engineering, permitting, equipment and installation. For those lots requiring alternate treatment methods due to shallow rock formation or poor soil conditions, the price for waste treatment will cost in the range of $12,500 to $16,000 including engineering permitting, equipment and installation.” For additional information please contact Isaacson Engineering at (928) 337-9910.

“The subdivider or his/her agent shall disclose prior to sale of each approved lot of these ADEQ provisions an those of the ADEQ ATC for Drinking Water Facilities (Initial Lot owner).

The owner of an approved lot shall obtain site-specific permits for construction and operation from Apache County Health Department before constructing any on-site wastewater treatment facility or Arizona Department of Environmental Quality, if the County or City is not delegated authority to approve the on-site wastewater treatment system.

If any approved lot is determined to be not suitable for construction and operation of a conventional septic disposal system, the lot owner shall obtain site-specific construction and operating permits for an alternative on-site wastewater treatment facility from ADEQ or from the local agency authorized by ADEQ to issue such permits. The cost of an alternative on-site wastewater treatment facility may be in excess of $15,000.

At the time of this ADEQ approval for EC Bar Ranch Estates subdivision Lots 1 though 63, the following lots share a boundary with unsubdivided land:

The required setback for on-site sewage systems (including the reserved disposal area) from unsubdivided land is 50 feet minimum unless the dwelling and other future improvements on the unsubdivided land will be served by a community waste water system, or an appropriate waiver has been obtained from the adjacent property owner(s).

This approval is based upon ADEQ evaluation of sanitary facilities for a single family dwelling with four or less bedrooms on each lot. Some lots may accommodate larger sewage disposal capacities, subject to local approvals.”

This information is stated from the Arizona Department of Environmental Quality Certificate of Sanitary Facilities.

Garbage Services: Blue Hills Environmental Association, Inc., 74 N Main St # 3, Eagar, AZ 85925-9713, (928) 333-1628, fee $18./month.

PURCHASERS ARE ADVISED TO CONTACT THE ABOVE LISTED PROVIDERS REGARDING EXTENSION RULES, REGULATIONS, SERVICE CONNECTIONS, INSTALLATION CHARGES, ACCOUNT SET-UP FEES AND THE COSTS INVOLVED. COSTS ARE SUBJECT TO CHANGE BY THE SERVICE PROVIDERS.

Access to the Subdivision: Public access on Apache County Road 2112. This road is gravel and asphalt and is maintained by Apache County. Cost for this maintenance is included in the yearly property tax.

Access within the Subdivision: Public access within the subdivision. These roads are grated with a gravel top. Apache County has accepted the responsibility of maintaining these roads. Cost is included in the yearly property tax.

Arizona State Trust Land: The Arizona State Land Department administers over 9.3 million acres of State Trust Land. This is not public land. Trust land may be subject to future development and may not be preserved or saved for open space without compensation.

A person must have prior approval to use State Trust Land. Temporary recreational use is allowed with certain restrictions and conditions through purchase of a recreational permit. Use of State Trust Land without proper approval is a trespass.

MANY ROADS ON RURAL TRUST LANDS ARE NOT LEGAL TRAVEL ROUTES, EXCEPT FOR STATE LESSEES AND HUNTERS, AND DO NOT PROVIDE LEGAL ACCESS TO PRIVATE LAND. STATE TRUST LAND MAY BE SOLD OR LEASED FOR USES WHICH MAY EXCLUDE RECREATION. RECREATION IS A TEMPORARY USE THAT MAY BE TERMINATED AT ANY TIME. For additional information, visit the State Land Department web page at www.land.state.az.us, or call (602) 542-4631.

Schools: Elementary: 10 miles to Alpine Elementary School, 101 County Road 2311, Alpine, (928) 339-4570; 20 miles to Round Valley Primary School, 940 E. Maricopa Dr., Springerville, (928) 333-4136 Junior High: 20 miles to Round Valley Intermediate School, 165 S. Brown Street, Eagar, (928) 333-6600 High School: 20 miles to Round Valley High School, 550 N. Butler Street, Eagar, (928) 333-6800. School bus transportation is available.

SCHOOL FACILITIES AND BUS SERVICE MAY CHANGE. YOU SHOULD CONTACT THE LOCAL SCHOOL BOARD REGARDING THE CURRENT LOCATION OF SCHOOLS AND BUS SERVICE.

Shopping Facilities: There are several different small independently owned shopping facilities in the Round Valley area that is approximately 20 miles from the subdivision. Safeway Plaza, 203 S. Mountain Ave, Springerville, AZ 85938, (928) 333-4165; is within 20 miles from subdivision

Medical Facilities: White Mountain Regional Medical Center, Hospital, Emergency Room, 118 S Mountain Ave, Springerville, AZ 85938, (928) 333-4368; 20 miles from subdivision

Fire Protection: Springerville Fire Department, 418 E. Main St, Springerville, AZ (928) 333-2422, cost for this is included in the yearly property taxes.

Ambulance Service: White Mountain Ambulance Service, 12 S. Hamblin St, Eagar, AZ 85925, (928) 333-4202

Police Services: Apache County Sheriff’s Office, PO Box 518, St. Johns, AZ 85936, (928) 337-4321 or 1-800-352-1850. This subdivision is located within a 9-1-1 service area.

Garbage Services: Blue Hills Environmental Association, 74 N Main St # 3, Eagar, AZ 85925-9713, (928) 333-1628; cost $18/month for once a week pick up at lot. An authorized transfer station is located on Hwy 180/191 approximately 1 mile north from subdivision. Cost of disposal varies with load size, but approximately $5.00 for a small load of refuse.

LOCATIONS AND COSTS OF THE ABOVE SERVICES AND FACILITIES MAY CHANGE. YOU SHOULD VERIFY THEIR CURRENT LOCATIONS AND COSTS PRIOR TO PURCHASE.

Assurances for Completion of Subdivision Facilities: All facilities that the developer is going to install is complete. No financial assurances are needed.

Assurances for Maintenance of Subdivision Facilities: The Utility companies and Apache County will all maintain facilities up to the lot lines, any upgrades, or modifications done from the lot line to the dwelling will be the responsibility of the home owner.

Name and Assessments: EC Bar Ranch Estates Property Owners Association Inc. Property Owners will be required to pay assessments in the amount of $10.00 per month or $120 per year.

Control of Association: Will be transferred over when 51% of lots in Phase I have been sold.

Membership: All lot owners will be members of the Property Owner’s Association.

PAYMENTS TO PROPERTY OWNERS ASSOCIATIONS ARE SUBJECT TO CHANGE IN ACCORDANCE WITH RECORDED RESTRICTIONS. SAID ASSOCIATION MAY ALSO IMPOSE SPECIAL ASSESSMENTS.

YOU ARE ADVISED TO READ THE RECORDED DECLARATION OF (COVENANTS, CONDITIONS AND RESTRICTIONS, ARTICLES OF INCORPORATION, DECLARATION OF CONDOMINIUM, BYLAWS) FOR THIS SUBDIVISION TO DETERMINE THE RIGHTS OF LOT/UNIT OWNERS TO PARTICIPATE IN THE CONTROL OF THE PROPERTY OWNERS’ ASSOCIATION AND TO DETERMINE THE RIGHTS, DUTIES AND LIMITATIONS OF OWNERS IN AND TO USE OF THEIR LOT/UNITS. FURTHER, YOU SHOULD DETERMINE FOR YOURSELF IF SUBDIVIDER’S ARRANGEMENTS AND PLANS FOR THE PAYMENT OF ASSESSMENTS ON UNSOLD LOTS/UNITS WILL BE SUFFICIENT TO FULFILL THE NEEDS, DEMANDS AND FINANCIAL OBLIGATIONS OF THE ASSOCIATION, AS SET FORTH IN THE DECLARATION AND BYLAWS.

Topography: Lots average 7600 ft elevation with open meadows interspersed with bushes and trees. Nutrioso Creek, within the riparian corridor, flows through the subdivision from south to north and lots gradually slope toward Nutrioso Creek from the east and west. The Nutrioso Creek riparian corridor is defined as the FEMA 100 year floodplain plus 100 feet on each side. No portion of the riparian corridor, including Nutrioso Creek, is part of the subdivision. State highway 180/191 adjoins the subdivision on the east and County Road 2112 adjoins the subdivision on the south and west. Property on the north is undeveloped land. The Apache Sitgreaves National Forest adjoins the subdivision at the northeast corner. An earth irrigation ditch is parallel with EC Bar Ranch Road and another ditch parallel with Nutrioso Creek Road draining from south to north with no irrigation diversions located on any lots in the subdivision. Roadways have drainage beside the road. A Drainage Plan is part of the final plat.

Flooding and Drainage: The subdivision is not subject to any known flooding or drainage problems or is downstream from any existing flood structure/dam. In a certified letter written by Kenneth K. Isaacson, P.E of Isaacson Engineering, Inc. dated August 12, 2009, it is stated; “The above referenced subdivision and lots all fall within Zone D, Areas in which flood hazards are undetermined, but possible, according to the Federal Emergency Management Agency’s (FEMA) Flood Insurance Rate Maps (FIRM) as follows:

In general, flood insurance should not be required for structures built on these properties. Of course, sound engineering judgment should be exercised in any construction process.”

Soils: The subdivision lots may be subject to subsidence or expansive soils. In a certified letter from Kenneth K. Isaacson, P.E. of Isaacson Engineering, Inc. dated August 12, 2009, it is stated; “ The soils found on the above referenced subdivision and lots are classified as Clover Springs silt loam, Eagar loam, Eagar gravelly loam, Fruitland loam, Hereford loam, Hereford gravelly loan, Hereford stony loam, Luth clay loam, Nutrioso loam, and Rudd stony loam. There is a potential for encountering some areas with bedrock and there is a moderate shrink-swell potential in portions of the site. Sound Engineering judgment should be exercised in any construction process to ensure a sound finished product.”

Nutrioso Creek riparian corridor is approximately 52 acres adjoining some subdivision lots, but not part of the subdivision. In the future, a Conservation Easement may be created to protect aquatic/wildlife habitat, conservation values, and open spaces within the riparian corridor. The Conservation Easement may be donated or sold to a qualified organization with title to the easement property retained by the Grantor, donated to a qualified organization, or sold to others. Other than the northeast corner, which is owned by the US Forest Service, all land adjoining the subdivision is private property. Lot owners are prohibited from entering private property without permission from the landowner.

Property adjoining the subdivision on the north may be subdivided or split under Minor Land Division rules with access provided from EC Bar Ranch Road.

Property that is not part of the subdivision located approximately 2,000 feet north may be suitable for use by light aircraft.

Property adjoining the subdivision on the north may be suitable for construction and operation of alternative energy sources such as wind turbines and solar panels.

A refuse transfer station is located approximately 1,500 feet north of the subdivision.

Open range grazing of livestock is practiced within the subdivision. Lot owners may install fencing to prevent livestock from roaming onto their lot.

Wildlife, including elk, deer, antelope, bear, lion, raccoon, rabbits, and similar natural resources may roam on, or adjacent to, subdivision lots. Lot owners are prohibited from harassing wildlife, but may construct fencing to exclude undesirable species.

There are no American Indian reservation lands within 5 miles of the subdivision.

There are no existing or proposed high voltage power lines (115kv or greater) or any existing or proposed substations (115kV or greater) within the boundary of the subdivision or within ½ miles of the subdivision boundary.

Restrictions and Other Matters of Record: Conditions, reservations, and Restrictions that may run with the land including City or County zoning restrictions should be investigated by you. Copies of those items which are recorded may be inspected at the Office of the Apache County Recorder. Information about zoning may be obtained at the Office of the Apache County Planning and Zoning Department. Restrictions are recorded as cited in the following title exceptions and per the subdivision plat.

This subdivision is located in an area where livestock are allowed to roam at large under laws of this State. Portions of the subdivision are fenced into pastures that may control livestock movements within the subdivision. Livestock are not precluded from roaming on any lots within the subdivision. Public roads have cattle guards installed.

Irrigation ditch. Certain lots have an earth irrigation ditch within the lot boundary that permits water rights holders to maintain the irrigation ditch and transfer water through the ditch across lots in the subdivision from south to north. Water rights allow holders to transfer irrigation water through the ditch at any time from April 15 to September 15 each year, but maintenance may take place year-round. Lot owners are prohibited from disturbing any irrigation ditch or water flow, including filling the ditch with soil, cutting the ditch bank, planting trees that interfere with ditch operation and maintenance, diverting flows out of the ditch, and/or constructing any structure near the ditch that would impede operation and maintenance of the ditch located on their lot. Lot owners are not responsible for operation, maintenance, or transfer of water related to an irrigation ditch that is located on their lot. Water rights holders are responsible for keeping water within the ditch. Water rights are described in the Norveil Decree and administered by Superior Court, Apache County, AZ.

Elk fence. Certain lots have an 8-foot high fence constructed on or within the boundaries of the lot, which is designed to exclude elk and control livestock movements. While lot owners may install gates or cattle guards, the effectiveness of the fence cannot be compromised. Lot owners are required to maintain the fence in an operable condition, although it may be relocated.

Easements. Certain lots have one or more easements for utilities, drainage, and/or access that must remain available for the intended use(s).

Other Use Restrictions. Certain lots adjoining Nutrioso Creek Riparian Corridor may have restrictions on use(s) as described in the Covenants, Conditions, and Restrictions (CCR’s) and recorded with the Apache County Recorder.

Military Airport: There is no military airport in the vicinity as defined in A.R.S. 28-8461.

Public Airport: The nearest public airport is located 20 miles north of the subdivision in Springerville.

Airport: The closest airport to the subdivision is located in Springerville.

Title to this subdivision is vested in James Wayne Crosswhite, L.L.C., an Arizona limited liability company.

Title is subject, among other things, to all taxes, assessments, covenants, conditions, restrictions, limitations, reservations, rights, obligations, powers, easements, rights of way, liens, and charges of record. YOU SHOULD INVESTIGATE THE TITLE AND SATISFY YOURSELF AS TO WHAT EFFECT, IF ANY, THESE MATTERS MAY HAVE ON THE USE OF THE LAND. Title exceptions affecting the condition of title are listed in the Preliminary Title Report dated August 29, 2009 issued by Lawyers Title Insurance Company. You should obtain a title report and determine the effect of the listed exceptions.

Sales: Title will pass by Warranty Deed with the assistance of an Escrow Company

Release of Liens and Encumbrances: All lots will be sold free and clear of any liens

Use and Occupancy: Purchasers will be able to occupy lot at the close of escrow, and recordation of documents.

THE PURCHASE CONTRACT IS A BINDING AGREEMENT. CONTRARY TO THE TERMS AND PROVISIONS OF THE CONTRACT, YOU MAY HAVE ADDITIONAL RIGHTS, REMEDIES AND WARRANTIES PROVIDED BY LAW. READ THOROUGHLY BEFORE SIGNING. IF NOT UNDERSTOOD, SEEK COMPETENT ADVICE PRIOR TO COMMITMENT TO PURCHASE.

Real Property Taxes: The combined primary and secondary property tax rate for this subdivision for the year 2008 is $8.4903 per $100.00 assessed valuation. The estimated property tax for an improved lot (lot with dwelling), based on the above tax rate and average sales price of $__N/A___, is $__N/A___. The estimated property tax for an unimproved lot (vacant), based on the above tax rate and average sales price of $114,000.00, is $1,548.00.

AMOUNT OF TAXES AND ASSESSMENTS SET FORTH ABOVE ARE APPROXIMATE ONLY AND SUBJECT TO CHANGE.

YOU ARE ADVISED TO READ THE RECORDED DECLARATION OF (COVENANTS, CONDITIONS AND RESTRICTIONS), ARTICLES OF INCORPORATION, DECLARATION OF CONDOMINIUM, BYLAWS FOR THIS SUBDIVISION TO DETERMINE THE RIGHTS OF LOT/UNIT OWNERS TO PARTICIPATE IN THE CONTROL OF THE PROPERTY OWNERS’ ASSOCIATION AND TO DETERMINE THE RIGHTS, DUTIES AND LIMITATIONS OF OWNERS IN AND TO USE OF THEIR LOT/UNITS. FURTHER, YOU SHOULD DETERMINE FOR YOURSELF IF SUBDIVIDER’S ARRANGEMENTS AND PLANS FOR THE PAYMENT OF ASSESSMENTS ON UNSOLD LOTS/UNITS WILL BE SUFFICIENT TO FULFILL THE NEEDS, DEMANDS AND FINANCIAL OBLIGATIONS OF THE ASSOCIATION, AS SET FORTH IN THE DECLARATION AND BYLAWS.

(All recording data refer to records in the office of the County Recorder of the County in which the land is situated.)

A. The exceptions and/or exclusions contained in any form policy that might be requested.

“THERE ARE NO FURTHER MATERS OF RECORD CONCERNING THIS SUBDIVISION THROUGH THE DATE OF THIS REPORT.”