Company: LEN
Filing Date: 2025-07-01
Form Type: 10-Q
Source: 0001628280-25-033777
Chunk: 127

Company: LENNAR CORP /NEW/
Filing Date: 2025-07-01
Form: 10-Q
Item: Item 8
Chunk 127
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 unconsolidated VIEs, the Company is not required to purchase the assets and could walk away from the contracts.

26

Lennar Corporation and SubsidiariesNotes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

Option ContractsThe Company has access to land through option contracts, which generally enable it to control portions of properties owned by third parties (including land banks) until the Company has determined whether to exercise the options.The Company evaluates option contracts with third party land holding companies for land to determine whether they are VIEs and, if so, whether the Company is the primary beneficiary of certain of these option contracts. Although the Company does not have legal title to the optioned land, if the Company is deemed to be the primary beneficiary and makes a significant deposit or pre-acquisition cost investment for optioned land, or is otherwise economically compelled to takedown the optioned land, it may need to consolidate the land under option at the purchase price of the optioned land. As of May 31, 2025, land under option with third parties that the Company was compelled to takedown was $1.8 billion, of which $1.1 billion were land purchase contract obligations due to land banks upon maturity of the contracts. The Company's intention is to have other land banks close on the land purchase commitments and the Company will option the land from the land banks. Land under option with third parties is included in consolidated inventory not owned. Consolidated inventory not owned related to land financing transactions, which are land sale transactions that did not meet the criteria for revenue recognition and derecognition of land by the Company as a result of the Company maintaining an option to repurchase the land in the future, was $869.0 million as of May 31, 2025.During the six months ended May 31, 2025, consolidated inventory not owned decreased by $1.4 billion with a $1.2 billion decrease to liabilities related to consolidated inventory not owned in the accompanying condensed consolidated balance sheet as of May 31, 2025. The decrease was primarily due to the reassessment of certain option contracts due to the amendment of various contract terms. This reassessment resulted in a decrease of $1.6 billion of consolidated inventories not owned with a corresponding decrease of $1.4 billion of liabilities related to consolidated inventories not owned. The decrease was partially offset by the consolidation of homesites under option that the Company is economically compelled to takedown, which resulted in