Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Commitments and Contingencies

At September 30, 2011, the Company had outstanding approximately $67.8 million of completion bonds and standby letters of credit, some of which were issued to various local governmental entities that expire at various times through December 2016. Included in this total are: (1) $22.9 million of performance and maintenance bonds and $26.9 million of performance letters of credit that serve as completion bonds for land development work in progress (including the Company's less than $0.1 million share of our Unconsolidated LLCs' letters of credit and bonds); (2) $11.1 million of financial letters of credit, of which $3.7 million represent deposits on land and lot purchase agreements; and (3) $6.9 million of financial bonds.

As of September 30, 2011, the Company has identified 93 homes that have been confirmed as having defective imported drywall installed by our subcontractors.  All of these homes are located in Florida.  While we are continuing to investigate whether other homes are affected, the number of additional affected homes newly identified each quarter has declined significantly since 2009 to a nominal amount. As of September 30, 2011, we have completed the repair of 80 homes, are in the process of repairing nine homes, and are continuing to seek the authorization of the remaining homeowners to repair their homes. In consideration for performing these repairs, we received from the homeowner a full release of claims (excluding, in nearly all cases, personal injury claims) arising from the defective drywall.. Since 2009, the Company has accrued approximately $13.0 million for the repair of these 93 homes. The remaining balance in this accrual is $1.4 million, which is included in Other liabilities on the Company's Unaudited Condensed Consolidated Balance Sheets. Based on our investigation to date and our evaluation of the defective drywall issue, we believe our existing accrual is sufficient to cover costs and claims associated with the repair of these homes. However, if and to the extent the scope of the defective drywall issue proves to be significantly greater than we currently believe, then it is possible that we could incur additional costs or liabilities related to defective drywall that may have a material adverse effect on our results of operations, financial condition, and cash flows. During the third quarter of 2010, the Company received a $2.4 million settlement for claims attributed to the defective drywall. The Company has made demand for additional reimbursement from manufacturers, suppliers, insurers and others for costs the Company has incurred and may incur in the future in connection with the defective drywall. Please refer to Note 10 for further information on this matter.

At September 30, 2011, the Company had sales agreements outstanding, some of which have contingencies for financing approval, to deliver 838 homes with an aggregate sales price of approximately $222.7 million. Based on our current housing gross margin, excluding the charge for impairment of inventory, less variable selling costs, less payments to date on homes in backlog, we estimate payments totaling approximately $107.6 million to be made in 2011 relating to those homes. At September 30, 2011, the Company also has options and contingent purchase agreements to acquire land and developed lots with an aggregate purchase price of approximately $140.3 million. Purchase of properties under these agreements is contingent upon satisfaction of certain requirements by the Company and the sellers.