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Commitments and Contingencies (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Letters of Credit and Performance Bonds

During the ordinary course of business, certain regulatory agencies and municipalities require the Company to post letters of credit or performance bonds related to development projects. As of December 31, 2019 and 2018, letters of credit outstanding were $9.0 million and $2.2 million, respectively, and performance bonds outstanding totaled $5.4 million and $5.3 million, respectively. The Company does not believe that it is likely that any material claims will be made under a letter of credit or performance bond in the foreseeable future.

Warranties

Warranty activity, included in accrued expenses in our consolidated balance sheets, for 2019, 2018 and 2017 consists of the following (in thousands):



	2019			2018			2017
Warranty accrual, beginning of period	$	2,980		$	2,083		$	1,210
Warranties issued	3,358			2,384			1,454
Changes in liability for existing warranties	37			163			482
Settlements	(2,535		)	(1,650		)	(1,063		)
Warranty accrual, end of period	$	3,840		$	2,980		$	2,083

Operating Leases

The Company has leases associated with office and design center space in Georgia, Texas, and Florida that, at the commencement date, have a lease term of more than 12 months and are classified as operating leases. The exercise of any extension options available in such operating lease contracts is not reasonably certain.

Operating lease cost of $1.3 million for these leases for the year ended December 31, 2019 is included in selling, general and administrative expense in the consolidated statements of income. For the year ended December 31, 2019, cash paid for amounts included in the measurement of operating lease liabilities was $1.2 million.

Rental expense for these leases totaled $1.2 million and $0.9 million for the years ended December 31, 2018 and 2017, respectively, and was included in selling, general and administrative expense in the consolidated statements of income.

As of December 31, 2019, the weighted-average remaining lease term and the weighted-average discount rate used in calculating our lease liabilities were 3.3 years and 5.22%, respectively.

The future annual undiscounted cash flows in relation to the operating leases and a reconciliation of such undiscounted cash flows to the operating lease liabilities recognized in the consolidated balance sheet as of December 31, 2019 are presented below (in thousands):



2020	$	1,320
2021	1,096
2022	819
2023	1,218
2024	14
Total future lease payments	$	4,467
Less: Interest	$	903
Present value of lease liabilities	$	3,564

The Company elected the short-term lease recognition exemption for all leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise. For such leases, the Company does not recognize ROU assets or lease liabilities and instead recognizes lease

payments in the consolidated income statements on a straight-line basis. Short-term lease cost of $0.4 million for the year ended December 31, 2019 related to such lease contracts is included in selling, general and administrative expense in the consolidated statements of income.

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, title company regulations, 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 an accrual for 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 the possible range of losses or a statement that such loss is not reasonably estimable. We believe that the disposition of legal claims and related contingencies will not have a material adverse effect on our results of operations and liquidity or on our financial condition.

Schedule of Warranty Activity

Warranties

Warranty activity, included in accrued expenses in our consolidated balance sheets, for 2019, 2018 and 2017 consists of the following (in thousands):



	2019			2018			2017
Warranty accrual, beginning of period	$	2,980		$	2,083		$	1,210
Warranties issued	3,358			2,384			1,454
Changes in liability for existing warranties	37			163			482
Settlements	(2,535		)	(1,650		)	(1,063		)
Warranty accrual, end of period	$	3,840		$	2,980		$	2,083