In the ordinary course of doing business, we are subject to claims or proceedings from time to time relating to the purchase, development and sale of real estate and homes and other aspects of our homebuilding operations. Management believes that these claims include usual obligations incurred by real estate developers and residential home builders in the normal course of business. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows.

We have provided unsecured environmental indemnities to certain lenders and other counterparties. In each case, we have performed due diligence on the potential environmental risks including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, we may have recourse against other previous owners. In the ordinary course of doing business, we are subject to regulatory proceedings from time to time related to environmental and other matters. In the opinion of management, these matters will not have a material effect on our consolidated financial position, results of operations or cash flows.

On July 23, 2025, the Company’s indirect, wholly owned special purpose subsidiary LGI Living SFR entered into the LGI Living Loan Agreement with Evergreen Residential Capital, LLC, as lender. The loan under the LGI Living Loan Agreement is unconditionally guaranteed as to payment and performance by the Company under a limited recourse guaranty with respect to (i) certain losses and liabilities to the extent such losses or liabilities are actually incurred by the lender and (ii) the entire amount of the loan upon the occurrence of certain events. The LGI Living Loan Agreement requires that the Company, as guarantor, maintain (i) liquidity of not less than 15% of the loan amount and (ii) net worth in excess of 50% of the loan amount.

The loan under the LGI Living Loan Agreement is secured by certain of LGI Living SFR’s single-family rental properties. The LGI Living Loan Agreement provides for a secured non-recourse loan for up to $50.0 million, which can be increased at the request of LGI Living SFR by up to $75.0 million (for a total of $125.0 million), subject to the terms and conditions of the LGI Living Loan Agreement. As of March 31, 2026, LGI Living SFR had $50.0 million of borrowings outstanding under the LGI Living Loan Agreement.

We have land purchase contracts, generally through cash deposits, for the right to purchase land or lots at a future point in time with predetermined terms. We do not have title to the property, and obligations with respect to the land purchase contracts are generally limited to the forfeiture of the related nonrefundable cash deposits. The following is a summary of our land purchase deposits included in pre-acquisition costs and deposits (in thousands, except for lot count):





	March 31, 2026		December 31, 2025

Land deposits and option payments (1)	$	16,904	$	19,187
Commitments under the land purchase option and deposit contracts if the purchases are consummated (1)	$	246,553	$	285,654
Lots under land options and land purchase contracts (1)	7,822		8,952

As of March 31, 2026 and December 31, 2025, approximately $9.3 million and $8.2 million, respectively, of the land deposits are related to purchase contracts to deliver finished lots that are refundable under certain circumstances, such as feasibility or specific performance, and secured by mortgages or letters of credit or guaranteed by the seller or its affiliates.

We recognize lease obligations and associated right-of-use (“ROU”) assets for our existing non-cancelable leases. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We have non-cancelable operating leases primarily associated with our corporate and regional office facilities. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The lease term may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets, as included in other assets on the consolidated balance sheets, were $4.6 million and $4.7 million as of March 31,

2026 and December 31, 2025, respectively. Lease obligations, as included in accrued expenses and other liabilities on the consolidated balance sheets, were $5.0 million and $5.1 million as of March 31, 2026 and December 31, 2025, respectively.

Operating lease cost, as included in general and administrative expense in our consolidated statements of operations, was $0.5 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. Cash paid for amounts included in the measurement of lease liabilities for operating leases was $0.7 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the weighted-average discount rate was 5.9% and our weighted-average remaining life was 1.8 years. We do not have any significant lease contracts that have not yet commenced at March 31, 2026.

The table below shows the future minimum payments under non-cancelable operating leases at March 31, 2026 (in thousands):


Year Ending December 31,	Operating leases
2026	$	1,494
2027	1,760
2028	1,265
2029	611
2030	308
Thereafter	109
Total	5,547
Lease amount representing interest	(498)
Present value of lease liabilities	$	5,049

We have outstanding letters of credit and performance and surety bonds totaling $380.1 million (including $19.3 million of letters of credit issued under the Credit Agreement) and $392.2 million (including $19.5 million of letters of credit issued under the Credit Agreement) at March 31, 2026 and December 31, 2025, respectively, related to our obligations for site improvements at various projects. Management does not believe that draws upon the letters of credit, surety bonds or financial guarantees if any, will have a material effect on our consolidated financial position, results of operations or cash flows.

As of March 31, 2026, we had two equity-method real estate joint ventures and five additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to our homebuyers. As of March 31, 2026 and December 31, 2025, we have a total of $23.1 million and $21.2 million, respectively, within other assets on the balance sheet relating to our investment in joint ventures associated with our operations. Contributions into the unconsolidated entities are for the use of investing in certain real estate transactions and residential mortgage services, respectively. Income associated with our investment in unconsolidated entities during the three months ended March 31, 2026 and 2025 was $0.4 million and $0.9 million, respectively.