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Commitments and Contingent Liabilities | 12 Months Ended
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Dec. 31, 2016
Commitments And Contingencies Disclosure [Abstract] |
Commitments and Contingent Liabilities |
13. | Commitments and Contingent Liabilities
NVR is committed under multiple non-cancelable operating leases involving office space, model homes, production facilities, automobiles and equipment. Future minimum lease payments under these operating leases as of December 31, 2016 are as follows:
Year Ending December 31, |  |  |  |
2017 |  | $ | 25,331 |
2018 |  |  | 19,544 |
2019 |  |  | 16,833 |
2020 |  |  | 13,785 |
2021 |  |  | 10,938 |
Thereafter |  |  | 22,760 |
|  |  | 109,191 |
Sublease income |  |  | (53 | )
|  | $ | 109,138 |
Total rent expense incurred under operating leases was $45,843, $48,056 and $45,508 for the years ended December 31, 2016, 2015 and 2014, respectively. The Company generally does not engage in the land development business. Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements. The Lot Purchase Agreements require deposits that may be forfeited if the Company fails to perform under the agreement. The deposits required under the Lot Purchase Agreements 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. The Company believes this lot acquisition strategy reduces the financial requirements and risks associated with direct land ownership and land development. The Company generally seeks to maintain control over a supply of lots believed to be suitable to meet its five-year business plan. At December 31, 2016, assuming that contractual development milestones are met and the Company exercises its option, the Company expects to place additional forfeitable deposits with land developers under existing Lot Purchase Agreements of approximately $94,600. The Company also has one specific performance contract pursuant to which the Company is committed to purchase 10 finished lots at an aggregate purchase price of approximately $1,505. Additionally, as of December 31, 2016, we had funding commitments totaling approximately $12,000 under a joint development agreement related to our land under development, a portion of which we expect will be offset by development credits of approximately $7,100. During the ordinary course of operating the homebuilding and mortgage banking businesses, the Company is required to enter into bond or letter of credit arrangements with local municipalities, government agencies, or land developers to collateralize its obligations under various contracts. The Company had approximately $50,700 of contingent obligations under such agreements, including approximately $8,300 for letters of credit issued under the Credit Agreement as of December 31, 2016. The Company believes it will fulfill its obligations under the related contracts and does not anticipate any material losses under these bonds or letters of credit. The following table reflects the changes in the Company’s warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):
|  | Year Ended December 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
Warranty reserve, beginning of year |  | $ | 87,407 |  |  | $ | 94,060 |  |  | $ | 101,507 |
Provision |  |  | 50,787 |  |  |  | 47,003 |  |  |  | 51,668 |
Payments |  |  | (44,299 | ) |  |  | (53,656 | ) |  |  | (59,115 | )
Warranty reserve, end of year |  | $ | 93,895 |  |  | $ | 87,407 |  |  | $ | 94,060 |
In June 2010, the Company received a Request for Information from the United States Environmental Protection Agency (“EPA”) pursuant to Section 308 of the Clean Water Act. The request sought information about storm water discharge practices in connection with homebuilding projects completed or underway by the Company in New York and New Jersey. The Company cooperated with this request, and provided information to the EPA. The Company was subsequently informed by the United States Department of Justice (“DOJ”) that the EPA forwarded the information on the matter to the DOJ, and the DOJ requested that the Company meet with the government to discuss the status of the case. Meetings took place in January 2012, August 2012 and November 2014 with representatives from both the EPA and DOJ. The Company has continued discussions with the EPA and DOJ and is presently engaged in settlement discussions with them. Any settlement is expected to include injunctive relief and payment of a civil penalty. Although there can be no assurance that a settlement will be reached, in 2015 the Company recorded a liability and corresponding expense associated with an estimated civil penalty amount. The Company and its subsidiaries are also involved in various other 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 the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

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