Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

Warranties

Warranty activity, included in accrued expenses in our consolidated balance sheets, for 2016, 2015 and 2014 consists of the following (in thousands):



	2016			2015			2014
Beginning balance	$	474		$	460		$	328
Additions	1,399			667			388
Charges	(663		)	(653		)	(256		)
Ending balance	$	1,210		$	474		$	460

Commitments

Prior to 2015, the Company had a month to month lease with a related party (See Note 9). 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 $0.7 million, $0.6 million, and $0.5 million in 2016, 2015 and 2014, 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 leases as of December 31, 2016 are (in thousands):



2017	$	770
2018	786
2019	803
2020	808
2021 and thereafter	458
	$	3,625

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. 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.