Related Party Transactions

In October 2017, the Company entered into a Shared Services Agreement with D.R. Horton whereby D.R. Horton provides the Company with certain administrative, compliance, operational and procurement services. During the three months ended December 31, 2019 and 2018, the Company paid D.R. Horton $1.3 million and $0.5 million for these shared services and $0.6 million and $0.3 million for the cost of health insurance and other employee benefits. These expenses are included in selling, general and administrative expense in the consolidated statements of operations.

Under the terms of the Master Supply Agreement with D.R. Horton, both companies identify land development opportunities to expand Forestar's portfolio of assets. At December 31, 2019 and September 30, 2019, the Company owned or controlled through option purchase contracts approximately 44,500 and 38,300 residential lots, of which D.R. Horton had the following involvement.



	December 31, 2019		September 30, 2019
	(Dollars in millions)
Residential lots under contract to sell to D.R. Horton	12,700		12,800
Residential lots subject to right of first offer with D.R. Horton	12,900		10,600
Earnest money deposits from D.R. Horton for lots under contract	$	87.5	$	88.7
Remaining purchase price of lots under contract with D.R. Horton	$	918.6	$	953.8

In the three months ended December 31, 2019 and 2018, the Company's residential lot sales totaled 2,422 and 518, and lot sales revenues were $217.1 million and $34.7 million. Lot and land sales to D.R. Horton during those periods were as follows.



	Three Months Ended December 31,
	2019		2018
	(Dollars in millions)
Residential single-family lots sold to D.R. Horton	2,390		455
Residential lot sales revenues from sales to D.R. Horton	$	215.6	$	32.6
Residential tract acres sold to D.R. Horton	36		—
Residential tract sales revenues from sales to D.R. Horton	$	7.2	$	—

In addition, the increase in contract liabilities decreased revenues on lot sales to D.R. Horton by $1.5 million in the three months ended December 31, 2019 and decreased revenues by $3.6 million in the three months ended December 31, 2018.

During the three months ended December 31, 2019 and 2018, the Company reimbursed D.R. Horton approximately $10.7 million and $12.1 million for previously paid earnest money and $5.2 million and $3.0 million for pre-acquisition and other due diligence and development costs related to land purchase contracts whereby D.R. Horton assigned its rights under these land purchase contracts to the Company.

During the three months ended December 31, 2019 and 2018, the Company paid D.R. Horton $1.5 million and $0.5 million for land development services. These amounts are included in cost of sales in the Company’s consolidated statements of operations.

At December 31, 2019 and September 30, 2019, undeveloped land was $15.4 million and $17.1 million. Undeveloped land primarily consists of undeveloped land which the Company has the contractual right to sell to D.R. Horton within approximately one year of its purchase or, if D.R. Horton elects, at an earlier date, at a sales price equal to the carrying value of the land at the time of sale plus additional consideration which ranges from 12% to 16% per annum.

At December 31, 2019 and September 30, 2019, accrued expenses and other liabilities on the Company's consolidated balance sheets included $2.8 million and $2.2 million owed to D.R. Horton for any accrued and unpaid shared service charges, land purchase contract deposits and due diligence and other development cost reimbursements.