Century Communities, Inc. Leases Disclosure

13. Leases Under ASC 842, the Company determines if a contract is or contains a lease at inception or modification of a contract. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period in exchange for consideration. Control over the use of the identified asset means the lessee has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. We primarily enter into operating leases for the right to use office space and computer and office equipment, which have lease terms that generally range from 1 to 7 years and often include one or more options to renew. We include renewal terms in the lease term when it is reasonably certain that we will exercise the option. We establish a right of use asset and a lease liability at the commencement date of the lease based on the present value of future minimum lease payments. As the rate implicit in each lease is not readily determinable, we utilize our incremental borrowing rate in determining the present value of future minimum payments. Our incremental borrowing rate is determined based on information available at the commencement date. We account for the lease components and non-lease components as a single lease component. As of December 31, 2021, the Company had $16.9 million and $17.4 million recognized as a right of use asset and lease liability, respectively, which are presented on the consolidated balance sheet within prepaid expenses and other assets and accrued expenses and other liabilities, respectively. As of December 31, 2020, the Company had $16.2 million and $16.8 million recognized as a right of use asset and lease liability, respectively. The Company has entered into various short-term operating leases, primarily for marketing billboards, with an initial term of twelve months or less. These leases are not recorded on our consolidated balance sheet.Under ASC 842, operating lease expense is recognized on a straight-line basis over the lease term. Operating lease expense was $7.3 million and $6.5 million for the years ended December 31, 2021 and 2020, respectively, which are presented on the consolidated statement of operations within selling, general, and administrative expense. Information related to the Company’s right of use asset and lease liability were as follows (in thousands): Year Ended December 31, 2021 2020 Cash paid for operating lease liabilities $ 6,768 $ 6,074 Right of use assets obtained in exchange for new operating lease obligations $ 6,712 $ 2,815 Weighted-average remaining lease term 3.21 yrs 3.52 yrs Weighted-average discount rate 4.65% 5.64%Maturities of lease liabilities as of December 31, 2021 were as follows (in thousands): 2022 $ 5,9892023 5,8932024 4,4272025 1,7752026 587Thereafter 17Total $ 18,688Less: discount (1,329)Total lease liabilities $ 17,359