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Commitments and Contingent Liabilities
 6 Months Ended
May 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities Commitments and Contingent Liabilities
The Company is party to various claims, legal actions and complaints relating to homes sold by the Company arising in the ordinary course of business. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s condensed consolidated financial statements. From time to time, the Company is also a party to various lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of properties and disputes regarding the obligation to purchase or sell properties.
The Company does not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on its business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.
Product Warranty
Warranty and similar reserves for homes are established at an amount estimated to be adequate to cover potential costs for materials and labor with regard to warranty-type claims expected to be incurred subsequent to the delivery of a home. Reserves are determined based on historical data and trends with respect to similar product types and geographical areas. The activity in the Company’s warranty reserve, which is included in Homebuilding other liabilities, was as follows:
Three Months EndedSix Months Ended
May 31,May 31,
(In thousands)2023202220232022
Warranty reserve, beginning of the period$403,334 374,146 418,017 377,021 
Warranties issued67,221 67,815 120,900 117,007 
Adjustments to pre-existing warranties from changes in estimates (1)14,246 998 10,188 5,722 
Payments(69,647)(64,969)(133,951)(121,760)
Warranty reserve, end of period$415,154 377,990 415,154 377,990 
(1)The adjustments to pre-existing warranties from changes in estimates during the three and six months ended May 31, 2023 and 2022 primarily related to specific claims in certain of the Company's homebuilding communities and other adjustments.
Leases
The Company has entered into agreements to lease certain office facilities and equipment under operating leases. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. Right-of-use ("ROU") assets and lease liabilities are recorded on the balance sheet for all leases, except leases with an initial term of 12 months or less. Many of the Company's leases include options to renew. The exercise of lease renewal options is at the Company's option and therefore renewal option payments have not been included in the ROU assets or lease liabilities. The following table includes additional
information about the Company's leases:
(Dollars in thousands)May 31, 2023November 30, 2022
Right-of-use assets$138,746 149,966 
Lease liabilities147,222 158,832 
Weighted-average remaining lease term (in years)7.77.9
Weighted-average discount rate3.1%3.0%
Future minimum payments under the noncancellable leases in effect at May 31, 2023 were as follows:
(In thousands)Lease Payments
2023$17,412 
202429,701 
202525,185 
202619,571 
202716,366 
Thereafter56,958 
Total future minimum lease payments (1)$165,193 
Less: Interest (2)17,971 
Present value of lease liabilities (2)$147,222 
(1)Total future minimum lease payments exclude variable lease costs of $22.7 million and short-term lease costs of $2.3 million.
(2)The Company's leases do not include a readily determinable implicit rate. As such, the Company has estimated the discount rate for these leases to determine the present value of lease payments at the lease commencement date or as of December 1, 2019, which was the effective date of ASU 2016-02. The Company recognized the lease liabilities on its condensed consolidated balance sheets within accounts payable and other liabilities of the respective segments.
The Company's rental expense on lease liabilities were as follows:
Six Months Ended
May 31,
(In thousands)20232022
Rental expense$52,998 50,698 
On occasion, the Company may sublease rented space which is no longer used for the Company's operations. For both the six months ended May 31, 2023 and 2022, the Company had an immaterial amount of sublease income.