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Variable Interest Entities | 12 Months Ended
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Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Variable Interest Entities | Variable Interest Entities In the ordinary course of business, we enter into land option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. Such deposits are recorded as land purchase and land option deposits under real estate inventories in the accompanying consolidated balance sheets. We analyze each of our land option agreements and other similar contracts under the provisions of ASC 810 to determine whether the land seller is 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 determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE. Creditors of the entities with which we have land option agreements have no recourse against us. The maximum exposure to loss under our land option agreements is limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the land owner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots. The following provides a summary of our interests in land option agreements (in thousands):
| December 31, 2023 |  | December 31, 2022
| Deposits |  | Remaining Purchase Price |  |  |  | Deposits |  | Remaining Purchase Price |  |
Unconsolidated VIEs | $ | 159,164 |  |  | $ | 1,017,791 |  |  |  |  | $ | 207,846 |  |  | $ | 1,129,369 |  |  |
Other land option agreements | 16,303 |  |  | 189,007 |  |  |  |  | 21,046 |  |  | 210,964 |  |  |
Total | $ | 175,467 |  |  | $ | 1,206,798 |  |  |  |  | $ | 228,892 |  |  | $ | 1,340,333 |  |  |
Unconsolidated VIEs represent VIEs for which the Company’s land option agreement represents a variable interest in the VIE and the Company was not the primary beneficiary. Other land option agreements were not considered VIEs. In addition to the deposits presented in the table above, our exposure to loss related to our land option contracts consisted of capitalized pre-acquisition costs of $9.5 million and $13.8 million as of December 31, 2023 and 2022, respectively. These pre-acquisition costs were included in real estate inventories as land under development on our consolidated balance sheets. Tri Pointe Connect Joint Venture For the year ended December 31, 2023, Tri Pointe Connect was a joint venture that acted as a preferred mortgage loan broker to our homebuyers in all of the markets in which we operated, generating income from fees paid by third party lenders for the successful funding and closing of loans for homebuyers that originated through Tri Pointe Connect. From inception and through the fiscal year ended December 31, 2021, Tri Pointe Connect was accounted for as an unconsolidated entity pursuant to which we recorded a percentage of income earned by Tri Pointe Connect based on our ownership percentage in this joint venture. During the first quarter of 2022, a reconsideration event under ASC 810 occurred that gave us the ability to direct the activities of the joint venture that most significantly affect the entity’s economic performance. Based on our reassessment under ASC 810, we concluded that Tri Pointe Connect is a VIE and we are the primary beneficiary based on our controlling financial interest. As a result, beginning in January 2022, Tri Pointe Connect is accounted for as a consolidated VIE under the Financial Services section of our consolidated statements of operations, with the noncontrolling interest recorded on the consolidated statements of operations as net income attributable to noncontrolling interests. As of December 31, 2023, the accompanying consolidated balance sheets included the carrying value of the VIE’s assets of $3.0 million of cash and $9.8 million of other assets, accrued expenses and other liabilities of $5.2 million, and noncontrolling interests of $2.7 million. As of December 31, 2022, the accompanying consolidated balance sheets included the carrying value of the VIE’s assets of $6.5 million of cash and $11.9 million of other assets, accrued expenses and other liabilities of $6.6 million, and noncontrolling interests of $4.1 million. Effective February 1, 2024, we acquired the minority equity interest in the joint venture, upon which Tri Pointe Connect became a wholly owned subsidiary of the Company. In connection with this transaction, Tri Pointe Connect will transition to a mortgage lending entity that will act as a preferred mortgage lender to our homebuyers in all of the markets in which we operate and provide mortgage financing by utilizing its own funds and funds made available pursuant to a credit facility with third party lenders. We intend to sell all of the loans we originate in the secondary market within a short period of time after origination.

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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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