Organization, Consolidation and Presentation of Financial Statements

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest Entity Disclosure [Text Block]

3. VARIABLE INTEREST ENTITIES

Effective December 31, 2019, we, through our wholly owned subsidiary, CLH20, LLC (“Centre Living”), acquired the remaining membership and voting interests in our subsidiary, Centre Living Homes, LLC, and we contributed certain real estate inventory assets to Centre Living.

Subsequently, the prior owner of a portion of the membership and voting interests in Centre Living Homes, LLC acquired a ten percent membership and voting interest in Centre Living for $3.6 million. As a result, as of December 31, 2019, Centre Living was an indirect subsidiary in which the Company owned a ninety percent membership interest and a ninety percent voting interest, was no longer considered a VIE and was consolidated based on the majority voting interest pursuant to ASC 810. During the three months ended March 31, 2020, the minority interest owner made a $0.4 million cash contribution to Centre Living.

On April 29, 2020, through a series of transactions, the Company acquired the remaining membership and voting interests in our subsidiary, CB JENI Homes DFW LLC (“CB JENI”). As a result, CB JENI became an indirect wholly owned subsidiary of the Company, was no longer considered a VIE and was consolidated based on the majority voting interest pursuant to ASC 810.

As both the entity wholly owned by the Company to which CB JENI ownership interests were assigned and CB JENI were controlled by the Company on April 29, 2020, the acquisition of the remaining membership interest was accounted for at the carrying amounts on CB JENI’s books, pursuant to provisions of ASC 805 that govern transactions between entities under common control.

Consolidated VIEs

The Providence Group of Georgia LLC (“TPG”), the controlled builder based in Atlanta, in which the Company owns a 50% equity interest, is deemed to be a VIE for which the Company is considered the primary beneficiary. We sell finished lots and option lots from third-party developers to this controlled builder for their homebuilding operations and provide them with construction financing and strategic planning. The board of managers of this controlled builder has the power to direct the activities that significantly impact the controlled builder’s economic performance. Pursuant to the Company’s agreement with this controlled builder, the Company has the ability to appoint two of the three members to the controlled builder’s board of managers. A majority of the board of managers constitutes a quorum to transact business. No action can be approved by the

board of managers without the approval from at least one individual whom the Company has appointed at the controlled builder.

The Company has the ability to control the activities of the controlled builder that most significantly impact the controlled builder’s economic performance. Such activities include, but are not limited to, involvement in the day to day capital and operating decisions, the ability to determine the budget and plan, the ability to control financing decisions, and the ability to acquire additional land or dispose of land. In addition, the Company has the right to receive the expected residual returns and obligation to absorb the expected losses of the controlled builder through the pro rata profits and losses we are allocated based on our ownership interest. Therefore, the financial statements of the Atlanta-based controlled builder are consolidated in the Company’s consolidated financial statements following the variable interest model.

The aggregated carrying amounts of assets and liabilities of TPG following the variable interest model were $162.0 million and $146.6 million, respectively, as of December 31, 2021 and $131.9 million and $125.5 million, respectively, as of December 31, 2020. The noncontrolling interest attributable to the 50% minority interest owned by the Atlanta-based controlled builder was included as noncontrolling interests in the Company’s consolidated financial statements. The creditors of the above controlled builder have no recourse against the Company.

Unconsolidated VIEs

Please refer to Note 5 for information on the Company’s VIE evaluation of its joint ventures with EJB River Holdings, LLC and GBTM Sendera, LLC.

Land and lot option purchase contracts

The Company evaluates all option contracts to purchase land and lots to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of counterparts of these option contracts. Although the Company does not have legal title to the optioned land or lots, if the Company is deemed to be the primary beneficiary of or makes a significant deposit for optioned land or lots, it may need to consolidate the land or lots under option at the purchase price of the optioned land or lots.

As of December 31, 2021 and 2020, the Company’s exposure to loss related to its option contracts with third parties primarily consisted of its non-refundable option deposits. Following VIE evaluation, it was concluded that the Company was not the primary beneficiary in any of the VIEs related to land or lot option contracts as of December 31, 2021 and 2020.