Desarrolladora Homex, S.A.B. de C.V. and Subsidiaries
Notes to restated consolidated financial statements
for the years ended December 31, 2010 and 2009
(Figures in thousands of Mexican pesos (Ps.), except as otherwise indicated)

25. Contingencies and commitments
Construction guarantees
The Company provides a two-year warranty against construction defects to all of its customers which could be due to the Company’s own activities, to defects in the construction materials provided by third parties (electrical installations, plumbing, gas, waterproofing, etc.) or to other circumstances not within the control of the Company.

The Company is insured against any defect, hidden or visible, that could occur during the construction, and after the construction for a certain period of time. In addition, the contractors provide a surety against any hidden or visible defects which is refunded on the approval of customers. The contractors also provide a security fund to cover any probable claims from customers during the warranty period, which is returned to them once such period ends.

Insurance coverage expensed for the years ended December 31, 2010, 2009 and 2008 amounted to Ps. 3,584, Ps. 3,226 and 2,904, respectively.

Settlement of Contingency
In July 2007, the Company entered into a Quota holders’ Agreement with Empreendimentos Imobiliarios Limitada (“E.O.M”), pursuant to which the Company agreed to contribute 67% and E.O.M. agreed to contribute 33% of the projected 4.0 million Brazilian Reals capital stock of Homex Brasil Incorporacoes and Construcoes Imobiliarios Limitada. Following disagreements with E.O.M., the Company exercised its right to withdraw from the Quota holders’ Agreement.

In November 2008, the Company reached an agreement (“Brazilian settlement”) to end the Quota holders’ Agreement entered into with E.O.M in July 2007, and terminate all litigation that had been taking place in the previous months. The settlement of the dispute included the purchase of the 33% interest of members of the Khafif family in Homex Brasil, through E.O.M., for 8,352,941 Brazilian Reals, equivalent to approximate Ps. 48,536, which has been paid out as of December 31, 2010. The Company has treated the 2008 step acquisition of this non-controlling interest as a transaction between entities under common control, as is appropriate under MFRS . Because E.O.M. had negligible identifiable tangible or intangible assets as of the date of the transaction, the Company has recognized the entire amount of this transaction as a settlement expense (other expense) in the statement of income for 2008 (See Note 22).

The Company now operates in Brazil through its 100% subsidiary.

Commitment
At December 15, 2010 the Company through its subsidiary Homex India Private Limited, celebrated an investment agreement with Kotak Real Estate Fund - I, for which, in case of achieving certain conditions, that are obtaining all the permits, licenses and necessary authorizations for the construction of a development in the city of Chennai, India, the Company will acquire all equity shares of KS Realty Constructions Private Limited (KS Realty), company that owns the land on which the project will be developed.

KS Realty has liabilities and other credits o debt for approximately 1,600 million rupees (US 36 million) that the Company shall pay in five installments, the first one in the closing date (for 50 million rupees) and the following four in six, fourteen, twenty and thirty six months after the closing date for 388 million rupees each.

At the date of the financial statements, the Company is still waiting on the conditions to be achieved in order to acquire all equity shares of KS Realty.

Other Contingencies
The Company is party to various legal disputes as a result of the normal course of construction business. The Company is of the opinion that the ultimate outcome of such matters will not have a material adverse impact on the Company’s consolidated financial statements.