Commitments and Contingencies

12 Months Ended

Oct. 31, 2019

Commitments and Contingencies [Abstract]

Legal Proceedings

We are involved in various claims and litigation arising principally in the ordinary course of business. We believe that adequate provision for resolution of all current claims and pending litigation has been made and that the disposition of these matters will not have a material adverse effect on our results of operations and liquidity or on our financial condition.

In March 2018, the Pennsylvania Attorney General informed the Company that it was conducting a review of our construction of stucco homes in Pennsylvania after January 1, 2005 and requested that we voluntarily produce documents and information. The Company has produced documents and information in response to this request and, in addition, has produced requested information and documents in response to a subpoena issued in the second quarter of fiscal 2019. Management cannot at this time predict the eventual scope or outcome of this matter.

Land Purchase Commitments

Generally, our agreements to acquire land parcels do not require us to purchase those land parcels, although we, in some cases, forfeit any deposit balance outstanding if and when we terminate an agreement. If market conditions are weak, approvals needed to develop the land are uncertain, or other factors exist that make the purchase undesirable, we may choose not to acquire the land. Whether a purchase agreement is legally terminated or not, we review the amount recorded for the land parcel subject to the purchase agreement to determine whether the amount is recoverable. While we may not have formally terminated the purchase agreements for those land parcels that we do not expect to acquire, we write off any nonrefundable deposits and costs previously capitalized to such land parcels in the periods that we determine such costs are not recoverable.

Information regarding our land purchase commitments at October 31, 2019 and 2018, is provided in the table below (amounts in thousands):



	2019		2018
Aggregate purchase commitments:
Unrelated parties	$	2,349,900	$	2,404,660
Unconsolidated entities that the Company has investments in	10,826		128,235
Total	$	2,360,726	$	2,532,895
Deposits against aggregate purchase commitments	$	168,778	$	168,421
Credits to be received from unconsolidated entities			79,168
Additional cash required to acquire land	2,191,948		2,285,306
Total	$	2,360,726	$	2,532,895
Amount of additional cash required to acquire land included in accrued expenses	$	14,620	$	40,103

In addition, we expect to purchase approximately 2,500 additional home sites over a number of years from several joint ventures in which we have investments; the purchase prices of these home sites will be determined at a future date.

At October 31, 2019, we also had purchase commitments to acquire land for apartment developments of approximately $280.2 million, of which we had outstanding deposits in the amount of $13.7 million.

We have additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since we do not believe that we will complete the purchase of these land parcels and no additional funds will be required from us to terminate these contracts.

Investments in Unconsolidated Entities

At October 31, 2019, we had investments in a number of unconsolidated entities, were committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 4, “Investments in Unconsolidated Entities,” for more information regarding our commitments to these entities.

Surety Bonds and Letters of Credit

At October 31, 2019, we had outstanding surety bonds amounting to $777.2 million, primarily related to our obligations to governmental entities to construct improvements in our communities. We estimate that $402.6 million of work remains on these improvements. We have an additional $179.7 million of surety bonds outstanding that guarantee other obligations. We do not believe it is probable that any outstanding bonds will be drawn upon.

At October 31, 2019, we had outstanding letters of credit of $177.9 million under our Revolving Credit Facility. These letters of credit were issued to secure our various financial obligations, including insurance policy deductibles and other claims, land deposits, and security to complete improvements in communities in which we are operating. We do not believe that it is probable that any outstanding letters of credit will be drawn upon.

Backlog

At October 31, 2019, we had agreements of sale outstanding to deliver 6,266 homes with an aggregate sales value of $5.26 billion.

Mortgage Commitments

Our mortgage subsidiary provides mortgage financing for a portion of our home closings. For those home buyers to whom our mortgage subsidiary provides mortgages, we determine whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers who qualify, our mortgage subsidiary provides the home buyer with a mortgage commitment that specifies the terms and conditions of a proposed mortgage loan based upon then-current market conditions. Prior to the actual closing of the home and funding of the mortgage, the home buyer will lock in an interest rate based upon the terms of the commitment. At the time of rate lock, our mortgage subsidiary agrees to sell the proposed mortgage loan to one of several outside recognized mortgage financing institutions (“investors”) that is willing to honor the terms and conditions, including interest rate, committed to the home buyer. We believe that these investors have adequate financial resources to honor their commitments to our mortgage subsidiary.

Information regarding our mortgage commitments at October 31, 2019 and 2018, is provided in the table below (amounts in thousands):



	2019		2018
Aggregate mortgage loan commitments:
IRLCs	$	565,634	$	614,255
Non-IRLCs	1,364,972		1,329,674
Total	$	1,930,606	$	1,943,929
Investor commitments to purchase:
IRLCs	$	565,634	$	614,255
Mortgage loans receivable	208,591		163,208
Total	$	774,225	$	777,463

Lease Commitments

We lease certain facilities, equipment, and properties held for rental apartment operation or development under non-cancelable operating leases which, in the case of the rental properties, are 99-year leases. Rental expenses incurred by us under these operating leases were (amounts in thousands):



Year ending October 31,	Amount
2019	$	20,180
2018	$	15,783
2017	$	14,505

At October 31, 2019, future minimum rent payments under our operating leases were (amounts in thousands):



Year ending October 31,	Amount
2020	$	15,430
2021	12,576
2022	10,082
2023	7,800
2024	6,691
Thereafter	218,221
	$	270,800