NexPoint Residential Trust, Inc. Commitments Disclosure

11. Commitments and Contingencies

Commitments

In the normal course of business, the Company enters into various rehabilitation construction related purchase commitments with parties that provide these goods and services. In the event the Company were to terminate rehabilitation construction services prior to the completion of projects, the Company could potentially be committed to satisfy outstanding or uncompleted purchase orders with such parties. As of December 31, 2025 and 2024, management does not anticipate any material deviations from schedule or budget related to rehabilitation projects currently in process.

The Company’s agreement with NLMF Holdco, LLC may result in additional funding requirements to cover future project costs. The maximum exposure of potential development funding is expected to be no more than 10% of the total project costs.

Contingencies

In the normal course of business, the Company is subject to claims, lawsuits, and legal proceedings. While it is not possible to ascertain the ultimate outcome of all such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts provided or covered by insurance, will not have a material adverse effect on the consolidated balance sheets or consolidated statements of operations and comprehensive income (loss) of the Company. The Company is not involved in any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the Company or its properties or subsidiaries.

Environmental liabilities could have a material adverse effect on the Company’s business, assets, cash flows or results of operations. As of December 31, 2025 and 2024, the Company was not aware of any environmental liabilities. There can be no assurance that material environmental liabilities do not exist.

Self-Insurance Program

On April 1, 2023, the Adviser entered into a property insurance agreement resulting in a new aggregate amount of $2,950,000 (the “2023 Aggregate Amount”) which is allocated across properties managed by the Adviser with approximately $2.1 million being allocated to the Company.

On April 1, 2024, the Adviser entered into a property insurance agreement resulting in a new aggregate amount of $2,950,000 (the “2024 Aggregate Amount”) which is allocated across properties managed by the Adviser with approximately $2.1 million being allocated to the Company.

On April 1, 2025, the Adviser entered into a new property insurance agreement that has an aggregate amount of $4,000,000 (the “2025 Aggregate Amount”) which is allocated across properties managed by the Adviser with approximately $2.6 million being allocated to the Company.

As of December 31, 2025 and 2024, the Company had funded its entire 2025 and 2024 aggregate amounts due and $0.1 million and zero remained in prepaid and other assets on the consolidated balance sheets, respectively. During the years ended December 31, 2025, 2024 and 2023, the Company incurred $1.8 million, $2.1 million, and zero, respectively, in self-insurance expenses which is included in property operating expenses on the consolidated statement of operations and comprehensive income (loss).