Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Commitments and Contingencies
Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on the Company’s results of operations, financial position, or liquidity.
In the fourth quarter of 2021, certain insurers paid $14.9 million on behalf of the Company and others to settle a wrongful death suit. The insurers contend they are entitled to seek reimbursement from the Company for some or all of such amounts, which the Company disputes. During October 2023, one of the insurers filed a lawsuit seeking reimbursement; however, at this time the Company is unable to determine the outcome of the insurers’ claims against the Company or any potential damages associated therewith.
Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $109.3 million and $114.9 million of performance bonds outstanding at December 31, 2023 and 2022, respectively.
Land Purchase Contracts—The Company enters into land purchase contracts to acquire land for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land at a future point in time with predetermined terms. Under the terms of some of the purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land purchase contract deposits and capitalized pre-acquisition costs are expensed when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover those costs through other means.
As of December 31, 2023, the Company had total deposits of $96.2 million, of which $1.0 million are refundable, related to contracts to purchase land and lots with a total remaining purchase price of approximately $663.1 million, net of deposits. As of December 31, 2022, the Company had total deposits of $$98.4 million, of which $0.8 million was refundable, related to contracts to purchase land and lots with a total remaining purchase price of approximately $620.2 million, net of deposits. The majority of land and lots under contract are currently expected to be purchased within the next four years.
Operating Leases—The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 8 years and often include one or more options to renew. During the year ended December 2021, the Company sold model homes and immediately leased these models back for up to two years. Certain of these model homes were not complete at the time of sale. All of the leases from the sale-leasebacks are accounted for as operating leases and are reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party; refer to Note 11 – Related Party Transactions for further detail. The weighted average remaining lease term as of December 31, 2023 and 2022 was 5.7 years and 5.7 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised.
The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company’s incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of December 31, 2023 and 2022 was 5.5% and 4.6%, respectively. Lease components and non-lease components are accounted for as a single lease component. As of December 31, 2023, the Company had $11.9 million and $13.1 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2022, the Company had $15.6 million and $16.4 million recognized as a right-of-use asset and lease liability, respectively.
Operating lease expense for the years ended December 31, 2023, 2022, and 2021 was $3.9 million, $2.2 million, and $1.9 million, respectively, and is included in general and administrative expense on the consolidated statements of operations.
Future minimum payments under the non-cancelable operating leases in effect at December 31, 2023 were as follows (dollars in thousands):
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| Commitments and Contingencies | Commitments and Contingencies
Legal—The Company is currently involved in various legal actions and proceedings that arise from time to time and may be subject to similar or other legal and/or regulatory actions in the future. The Company is currently unable to estimate the likelihood of an unfavorable result in any such proceeding that could have a material adverse effect on the Company’s results of operations, financial position, or liquidity.
In the fourth quarter of 2021, certain insurers paid $14.9 million on behalf of the Company and others to settle a wrongful death suit. The insurers contend they are entitled to seek reimbursement from the Company for some or all of such amounts, which the Company disputes. During October 2023, one of the insurers filed a lawsuit seeking reimbursement; however, at this time the Company is unable to determine the outcome of the insurers’ claims against the Company or any potential damages associated therewith.
Performance Obligations—In the ordinary course of business, and as part of the entitlement and development process, the Company’s subsidiaries are required to provide performance bonds to assure completion of certain public facilities. The Company had $109.3 million and $114.9 million of performance bonds outstanding at December 31, 2023 and 2022, respectively.
Land Purchase Contracts—The Company enters into land purchase contracts to acquire land for the construction of homes. Under these contracts, the Company will fund a stated deposit in consideration for the right, but not the obligation, to purchase land at a future point in time with predetermined terms. Under the terms of some of the purchase contracts, the deposits are not refundable in the event the Company elects to terminate the contract. Land purchase contract deposits and capitalized pre-acquisition costs are expensed when the Company believes it is probable that it will not acquire the property under contract and will not be able to recover those costs through other means.
As of December 31, 2023, the Company had total deposits of $96.2 million, of which $1.0 million are refundable, related to contracts to purchase land and lots with a total remaining purchase price of approximately $663.1 million, net of deposits. As of December 31, 2022, the Company had total deposits of $$98.4 million, of which $0.8 million was refundable, related to contracts to purchase land and lots with a total remaining purchase price of approximately $620.2 million, net of deposits. The majority of land and lots under contract are currently expected to be purchased within the next four years.
Operating Leases—The Company primarily enters into operating leases for the right to use office space, model homes, and computer and office equipment, which have remaining lease terms that range from 1 to 8 years and often include one or more options to renew. During the year ended December 2021, the Company sold model homes and immediately leased these models back for up to two years. Certain of these model homes were not complete at the time of sale. All of the leases from the sale-leasebacks are accounted for as operating leases and are reflected as part of the Company’s right-of-use assets and lease liabilities in the accompanying consolidated balance sheets. Certain of these sales were to a related party; refer to Note 11 – Related Party Transactions for further detail. The weighted average remaining lease term as of December 31, 2023 and 2022 was 5.7 years and 5.7 years, respectively. Renewal terms are included in the lease term when it is reasonably certain the option will be exercised.
The Company established a right-of-use asset and a lease liability based on the present value of future minimum lease payments at the commencement date of the lease or, if subsequently modified, the date of modification for active leases. As the rate implicit in each lease is not readily determinable, the Company’s incremental borrowing rate is used in determining the present value of future minimum payments as of the commencement date. The weighted average rate as of December 31, 2023 and 2022 was 5.5% and 4.6%, respectively. Lease components and non-lease components are accounted for as a single lease component. As of December 31, 2023, the Company had $11.9 million and $13.1 million recognized as a right-of-use asset and lease liability, respectively, which are presented on the consolidated balance sheets within other assets and accrued expenses and other liabilities, respectively. As of December 31, 2022, the Company had $15.6 million and $16.4 million recognized as a right-of-use asset and lease liability, respectively.
Operating lease expense for the years ended December 31, 2023, 2022, and 2021 was $3.9 million, $2.2 million, and $1.9 million, respectively, and is included in general and administrative expense on the consolidated statements of operations.
Future minimum payments under the non-cancelable operating leases in effect at December 31, 2023 were as follows (dollars in thousands):
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