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VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | 12 Months Ended
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Dec. 31, 2023
Variable Interest Entities and Consolidated Real Estate Not Owned [Abstract] |
VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED | VARIABLE INTEREST ENTITIES AND CONSOLIDATED REAL ESTATE NOT OWNED We enter into purchase and option agreements for land or lots as part of the normal course of business. These purchase and option agreements enable us to acquire properties at one or multiple future dates at pre-determined prices. We believe these acquisition structures allow us to better leverage our balance sheet and reduce our financial risk associated with land acquisitions. Based on the provisions of the relevant accounting guidance, we have concluded that when we enter into an option or purchase agreement to acquire land or lots from an entity, a variable interest entity (“VIE”), may be created. In accordance with ASC 810, Consolidation, we evaluate all purchase and option agreements for land to determine whether they are a VIE, and if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are the primary beneficiary we are required to consolidate the VIE in our financial statements and reflect its assets and liabilities as Real estate not owned and Liabilities related to real estate not owned, respectively. The liabilities related to consolidated VIEs are generally excluded from our debt covenant calculations. In order to determine if we are the primary beneficiary, we must first assess whether we have the ability to control the activities of the VIE that most significantly impact its economic performance. Such activities include, but are not limited to, the ability to determine the budget and scope of land development work, if any; the ability to control financing decisions for the VIE; the ability to acquire additional land into the VIE or dispose of land in the VIE not under contract with Meritage; and the ability to change or amend the existing option contract with the VIE. If we are not determined to control such activities, we are not considered the primary beneficiary of the VIE. If we do have the ability to control such activities, we will continue our analysis by determining if we are also expected to absorb a potentially significant amount of the VIE’s losses or, if no party absorbs the majority of such losses, if we will benefit from a potentially significant amount of the VIE’s expected gains. In substantially all cases, creditors of the entities with which we have option agreements have no recourse against us and the maximum exposure to loss in our option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. Often, we are at risk for items over budget related to land development on property we have under option if we are the land developer. In these cases, we have typically contracted to complete development at a fixed cost on behalf of the land owner and any budget savings or shortfalls are borne by us. Some of our option deposits may be refundable to us if certain contractual conditions are not performed by the party selling the lots. The table below presents a summary of our lots under option that are not recorded on the balance sheet at December 31, 2023 (dollars in thousands):
|  | Projected Number of Lots (unaudited) |  | Purchase Price (unaudited) |  | Option/ Earnest Money Deposits–Cash |  |
Purchase and option contracts recorded on balance sheet as Real estate not owned |  | — |  |  | $ | — |  |  | $ | — |  |  |
Option contracts — non-refundable deposits, committed (1) |  | 7,116 |  | 508,943 |  |  | 51,032 |  |  |
Purchase contracts — non-refundable deposits, committed (1) |  | 9,047 |  | 324,112 |  |  | 45,107 |  |  |
Purchase and option contracts —refundable deposits, committed |  | 1,856 |  | 81,058 |  |  | 1,645 |  |  |
Total committed |  | 18,019 |  | 914,113 |  |  | 97,784 |  |  |
Purchase and option contracts — refundable deposits, uncommitted (2) |  | 28,015 |  | 871,661 |  |  | 13,580 |  |  |
Total lots under contract or option |  | 46,034 |  | $ | 1,785,774 |  |  | $ | 111,364 |  |  |
Total purchase and option contracts not recorded on balance sheet (3) |  | 46,034 |  | $ | 1,785,774 |  |  | $ | 111,364 |  |  | (4)
(1)Deposits are non-refundable except if certain contractual conditions are not performed by the selling party. (2)Deposits are refundable at our sole discretion. We have not completed our acquisition evaluation process and we have not internally committed to purchase these lots. (3)Except for our specific performance contracts recorded on our balance sheet as Real estate not owned (if any), none of our purchase or option contracts require us to purchase lots. (4)Amount is reflected in our consolidated balance sheets in Deposits on real estate under option or contract as of December 31, 2023. Generally, our options to purchase lots remain effective so long as we purchase a pre-established minimum number of lots on a pre-determined schedule in accordance with each respective agreement. Although the pre-established number is typically structured to approximate our expected rate of home construction starts, during a weakened homebuilding market, we may purchase lots at an absorption level that exceeds our expected orders and home starts pace to meet the pre-established minimum number of lots or restructure our original contract to terms that more accurately reflect our revised orders pace expectations. During a strong homebuilding market, we may accelerate our pre-established minimum purchases if allowed by the contract.

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- Definition Variable interest entities and consolidated real estate not owned. + References No definition available. + Details
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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent + Details
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