United Homes Group, Inc.UHG
United Homes Group, Inc. Commitments Disclosure
Note 13 - Commitments and Contingencies
Leases
The Company leases several office spaces in South Carolina under operating lease agreements with related parties, and one office space in North Carolina with a third party. In addition, the Company leases certain model homes from related parties and third parties. The leases have a remaining lease terms of up to three years, some of which include options to extend on a month-to-month basis, and some of which include options to terminate the lease. These options are excluded from the calculation of the right-of-use asset (“ROU asset”) and lease liability until it is reasonably certain that the option will be exercised. The Company recognized an operating lease expense of $1.3 million within Selling, general, and administrative expense on the consolidated statements of operations for both of the years ended December 31, 2025
and 2024, respectively, which includes operating lease expense of $0.8 million and $1.2 million for the years ended December 31, 2025 and 2024, respectively, associated with related party leases.
Variable lease expense included within operating lease expense was de minimis for the years ended December 31, 2025 and 2024. The weighted-average discount rate for the operating leases was 9.43% and 9.13% during the years ended December 31, 2025 and 2024, respectively. The weighted-average remaining lease term was 2.49 and 3.20 years for the years ended December 31, 2025 and 2024, respectively.
The maturity of the contractual, undiscounted operating lease liabilities as of December 31, 2025 are as follows (in thousands):
| Lease Payment | ||||||||
| 2026 | $ | 949 | ||||||
| 2027 | 696 | |||||||
| 2028 | 522 | |||||||
| Total undiscounted operating lease liabilities | $ | 2,167 | ||||||
| Interest on operating lease liabilities | (231) | |||||||
| Total present value of operating lease liabilities | $ | 1,936 | ||||||
In December 2024, the Company sold 21 completed model homes to a third party and simultaneously entered into a lease agreement for these homes. As the executed contracts for the sale have commercial substance, legal title was transferred, and the risks and rewards of ownership were conveyed, the Company accounted for these transactions as a sale-leaseback. The Company determined that the sale of completed homes is part of its ordinary activities. Accordingly, the sales were recognized as Revenue in the consolidated statements of operations for the year ended December 31, 2024, in accordance with ASC 606, Revenue from contracts with customers.
The leases commenced on December 31, 2024. Eleven of the 21 individual leases had a lease term greater than twelve months. In connection with these eleven leases, the Company recognized an operating lease right-of-use-asset and a corresponding operating lease liability of $0.6 million.
Rent expense related to the short-term leases within Selling, general and administrative expense on the consolidated statements of operations for the years ended December 31, 2025 and 2024 was $0.2 million and $0.1 million, respectively.
Surety Bonds and Letters of Credit
During the ordinary course of business, certain regulatory agencies and municipalities require the Company to post surety bonds or letters of credit related to development projects. As of December 31, 2025, the Company had outstanding surety bonds and letters of credit totaling $9.1 million and $1.3 million, respectively. The Company believes it will fulfill its obligations under the related contracts and does not anticipate any material losses under these surety bonds or letters of credit.
Litigation
The Company is subject to various claims and lawsuits that may arise primarily in the ordinary course of business, which consist mainly of construction defect claims. In the opinion of management, the disposition of these matters will not have a material adverse effect on the Company’s consolidated financial statements. When the Company believes that a loss is probable and reasonably estimable, the Company will record an expense and corresponding contingent liability. As of the date of these consolidated financial statements, management believes that the Company has not incurred a liability as a result of any claims.
Rosewood Proceedings
Rosewood was named as a co-defendant in a lawsuit alleging negligence/recklessness and breach of certain implied warranties arising out of Rosewood’s construction of homes in a subdivision prior to the Company’s acquisition of Rosewood. In July 2025, the Company and the plaintiffs reached a settlement that has been paid in full, and the case has been dismissed with prejudice. As a result, the Company recognized a loss of $0.2 million within Other expense, net on the consolidated statements of operations.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 15, 2024 | |
| 2022 | Mar 28, 2023 | |
| 2021 | Apr 13, 2022 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.