Commitments and Contingencies

Legal Proceedings

The Company is involved in various claims and litigation arising principally in the ordinary course of business. The Company believes that adequate provision for resolution of all current claims and pending litigation has been made for probable losses and the disposition of these matters will not have a material adverse effect on the Company’s results of operations and liquidity or on its financial condition.

Investments in and Advances to Unconsolidated Entities

At January 31, 2014, the Company had investments in and advances to a number of unconsolidated entities, was committed to invest or advance additional funds, and had guaranteed a portion of the indebtedness and/or loan commitments of these entities. See Note 3, “Investments in and Advances to Unconsolidated Entities,” for more information regarding the Company’s commitments to these entities.

Land Purchase Commitments

Generally, the Company’s option and purchase agreements to acquire land parcels do not require the Company to purchase those land parcels, although the Company may, in some cases, forfeit any deposit balance outstanding if and when it terminates an option and purchase agreement. If market conditions are weak, approvals needed to develop the land are uncertain or other factors exist that make the purchase undesirable, the Company may not acquire the land. Whether an option and purchase agreement is legally terminated or not, the Company reviews the amount recorded for the land parcel subject to the option and purchase agreement to determine if the amount is recoverable. While the Company may not formally terminate the option and purchase agreements for those land parcels that it does not expect to acquire, it writes off any non-refundable deposits and costs previously capitalized to such land parcels in the periods that it determines such costs are not recoverable.

Information regarding the Company’s land purchase commitments, excluding the Shapell acquisition, as of the date indicated, is provided in the table below (amounts in thousands):



	January 31, 2014		October 31, 2013
Aggregate purchase commitments:
Unrelated parties	$	1,155,798	$	1,301,987
Unconsolidated entities that the Company has investments in	12,552		61,738
Total	$	1,168,350	$	1,363,725
Deposits against aggregate purchase commitments	$	76,814	$	76,986
Additional cash required to acquire land	1,091,536		1,286,739
Total	$	1,168,350	$	1,363,725
Amount of additional cash required to acquire land in accrued expenses	$	1,753	$	1,439

In addition, the Company expects to purchase approximately 3,800 additional home sites from several joint ventures in which it has interests. The purchase prices of these home sites will be determined at a future date.

At January 31, 2014, the Company had purchase commitments to acquire land for apartment developments of approximately $56.0 million, of which it had outstanding deposits in the amount of $2.5 million.

The Company has additional land parcels under option that have been excluded from the aforementioned aggregate purchase amounts since it does not believe that it will complete the purchase of these land parcels and no additional funds will be required from the Company to terminate these contracts.

Surety Bonds and Letters of Credit

At January 31, 2014, the Company had outstanding surety bonds amounting to $427.1 million, primarily related to its obligations to governmental entities to construct improvements in the Company’s communities. The Company estimates that $281.4 million of work remains on these improvements. The Company has an additional $70.8 million of surety bonds outstanding that guarantee other obligations of the Company. The Company believes it is not probable that any outstanding bonds will be drawn upon.

At January 31, 2014, the Company had outstanding letters of credit of $83.6 million, including $71.1 million under its Credit Facility and $12.5 million collateralized by restricted cash. These letters of credit were issued to secure various financial obligations of the Company including insurance policy deductibles and other claims, land deposits and security to complete improvements in communities which it is operating. The Company believes it is not probable that any outstanding letters of credit will be drawn upon.

Acquisition of Shapell Industries, Inc.

On February 4, 2014, the Company completed its previously announced acquisition of Shapell. See Note 1 - "Significant Accounting Policies - Subsequent Events" for more information regarding this acquisition.

Backlog

At January 31, 2014, the Company had agreements of sale outstanding to deliver 3,667 homes with an aggregate sales value of $2.69 billion.

Mortgage Commitments

The Company’s mortgage subsidiary provides mortgage financing for a portion of the Company’s home closings. For those home buyers to whom the Company’s mortgage subsidiary provides mortgages, it determines whether the home buyer qualifies for the mortgage based upon information provided by the home buyer and other sources. For those home buyers that qualify, the Company’s 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, the Company’s 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. The Company believes that these investors have adequate financial resources to honor their commitments to its mortgage subsidiary.

Information regarding the Company’s mortgage commitments, as of the date indicated, is provided in the table below (amounts in thousands):



	January 31, 2014		October 31, 2013
Aggregate mortgage loan commitments:
IRLCs	$	254,179	$	247,995
Non-IRLCs	659,968		645,288
Total	$	914,147	$	893,283
Investor commitments to purchase:
IRLCs	$	254,179	$	247,995
Mortgage loans receivable	53,623		107,873
Total	$	307,802	$	355,868