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Commitments and Contingencies
 12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
COMMITMENTS AND CONTINGENCIES

Warranties
Warranty activity, included in accrued expenses in our consolidated balance sheets, for 2014, 2013 and 2012 consists of the following (in thousands):
 
2014
 
2013
 
2012
Beginning balance
$
328

 
$
58

 
$
3

Additions
388

 
290

 
57

Charges
(256
)
 
(20
)
 
(2
)
Ending balance
$
460

 
$
328

 
$
58


Commitments
The Company had a month to month lease with a related party (See Note 11). The Company also has leases associated with office space in Georgia and Texas which are classified as operating leases. Rent expense under these leases totaled $0.5 million, $0.2 million, and $0.1 million in 2014, 2013 and 2012, respectively and are included in the selling, general and administrative expense in the consolidated statements of income.

The approximate annual minimum lease payments over the next five years under the operating lease as of December 31, 2014 are (in thousands):
2015
$
583

2016
572

2017
578

2018
591

2019 and thereafter
1,217

 
$
3,541



Legal Matters
Lawsuits, claims and proceedings may be instituted or asserted against us in the normal course of business. The Company is also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices and environmental protection. As a result, the Company may be subject to periodic examinations or inquiry by agencies administering these laws and regulations.

The Company records a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. The Company accrues for these matters based on facts and circumstances specific to each matter and revises these estimates when necessary.

In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, the Company generally cannot predict their ultimate resolution, related timing or eventual loss. If evaluations indicate loss contingencies that could be material are not probable, but are reasonably possible, the Company will disclose their nature with an estimate of possible range of losses or a statement that such loss is not reasonably estimable. At December 31, 2014 and 2013, the Company did not have any accruals for asserted or unasserted matters.