We are involved in various litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

We generally do not engage in land development. Instead, we typically acquire finished building lots from various third-party land developers under LPAs. The LPAs require deposits that may be forfeited if we fail to perform under the agreements. The deposits required under the LPAs are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. As of December 31, 2025, assuming that contractual development milestones are met and we exercise our option, we expect to place additional forfeitable deposits with land developers under existing LPAs of approximately $733,900.

During the ordinary course of operating the homebuilding and mortgage banking businesses, we are required to enter into bond or letter of credit arrangements with local municipalities, government agencies, or land developers to collateralize our obligations under various contracts. As of December 31, 2025, we had contingent obligations of approximately $46,300 in bonds and approximately $9,700 in letters of credit issued under the Credit Agreement. We believe we will fulfill our obligations under the related contracts and do not anticipate any material losses under these bonds or letters of credit.

The following table reflects the changes in our warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):


	Year Ended December 31,
	2025		2024		2023
Warranty reserve, beginning of year	$	133,095	$	146,283	$	144,006
Provision	73,318		84,945		95,193
Payments	(89,851)		(98,133)		(92,916)
Warranty reserve, end of year	$	116,562	$	133,095	$	146,283