17.	Commitments and Contingencies

Land Purchase and Option Agreements

We are subject to obligations associated with entering into contracts for the purchase of land and improved homesites. These purchase contracts typically require us to provide a cash deposit or deliver a letter of credit in favor of the seller, and our purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the near-term use of funds from our corporate financing sources. Option contracts generally require a non-refundable deposit for the right to acquire lots over a specified period of time at predetermined prices. We generally have the right at our discretion to terminate our obligations under both purchase contracts and option contracts by forfeiting our cash deposit or by repaying amounts drawn under our letter of credit with no further financial responsibility to the land seller, although in certain instances, the land seller has the right to compel us to purchase a specified number of lots at predetermined prices.

In some instances, we

may

also expend funds for due diligence, development and construction activities with respect to our land purchase and option contracts prior to purchase, which we would have to write off should we not purchase the land. At

March

31,

2017,

we had non-refundable cash deposits outstanding of approximately

$56.0

million and capitalized pre-acquisition and other development and construction costs of approximately

$16.5

million relating to land purchase and option contracts having a total remaining purchase price of approximately

$788.6

million.

Our utilization of option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries, general housing market conditions, and geographic preferences. Options

may

be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

Land Development and Homebuilding Joint Ventures

Our joint ventures have historically obtained secured acquisition, development and construction financing designed to reduce the use of funds from corporate financing sources. As of

March

31,

2017,

we held ownership interests in

homebuilding and land development joint ventures, of which

were active and

were inactive or winding down. As of such date, only

two

joint ventures had project specific debt outstanding, which totaled

$30.1

million. This joint venture bank debt is non-recourse to us and is scheduled to mature in

June

2017.

March

31,

2017,

we had

joint venture surety bonds outstanding.

Surety Bonds

We obtain surety bonds in the normal course of business to ensure completion of the infrastructure of our communities. At

March

31,

2017,

we had approximately

$918.1

million in surety bonds outstanding, with respect to which we had an estimated

$464.7

million remaining in cost to complete.

Mortgage Loans and Commitments

We commit to making mortgage loans to our homebuyers through our mortgage financing subsidiary, CalAtlantic Mortgage. CalAtlantic Mortgage sells substantially all of the loans it originates in the

secondary

mortgage market and finances these loans under its mortgage credit facilities for a short period of time (typically for

days), as investors complete their administrative review of applicable loan documents. Mortgage loans in process for which interest rates were committed to borrowers totaled approximately

$358.4

million at

March

31,

2017

and carried a weighted average interest rate of approximately

3.9%.

Interest rate risks related to these obligations are mitigated by CalAtlantic Mortgage through the preselling of loans to investors or through its interest rate hedging program. As of

March

31,

2017,

CalAtlantic Mortgage had approximately

$156.4

million in closed mortgage loans held for sale and

$36.1

million of mortgage loans that we were committed to sell to investors subject to our funding of the loans and the investors’ completion of their administrative review of the applicable loan documents. In addition, as of

March

31,

2017,

CalAtlantic Mortgage had approximately

$322.3

million of mortgage loans in process that were or are expected to be originated on a non-presold basis, substantially all of which were hedged by forward sale commitments of mortgage-backed securities prior to entering into loan sale transactions with

third

party investors.

Substantially all of the loans originated by CalAtlantic Mortgage are sold with servicing rights released on a non-recourse basis. These sales are generally subject to CalAtlantic Mortgage’s obligation to repay its gain on sale if the loan is prepaid by the borrower within a certain time period following such sale, or to repurchase the loan if, among other things, the purchaser’s underwriting guidelines are not met, or there is fraud in connection with the loan. During the

three

months ended

March

31,

2017

and

2016,

CalAtlantic Mortgage recorded no loan loss expense related to indemnification and repurchase allowances. As of

March

31,

2017

and

December

31,

2016,

CalAtlantic Mortgage had indemnity and repurchase allowances related to loans sold of approximately

$3.6

million. In addition, during the

three

months ended

March

31,

2017

and

2016,

CalAtlantic Mortgage made make-whole payments of

and

$0.1

million, respectively.

Insurance and Litigation Accruals

Insurance and litigation accruals are established with respect to estimated future claims cost. We maintain general liability insurance designed to protect us against a portion of our risk of loss from construction-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy. We record allowances to cover the estimated costs of our self-insurance liability based on an analysis performed by an independent

third

party actuary that uses our historical claim and expense data, as well as industry data to estimate these overall costs. Our total insurance and litigation accruals as of

March

31,

2017

and

December

31,

2016

were

$233.7

million and

$233.5

million, respectively, which are included in accrued liabilities in the accompanying condensed consolidated balance sheets. Because of the high degree of judgment required in determining these estimated accrual amounts, actual future claim costs could differ materially from our currently estimated amounts.