Reconciling Common Area Maintenance (CAM) in Commercial Property

Common Area Maintenance (CAM) charges are a standard component of most commercial retail leases. Typical expenses – including landscaping, snow removal, utilities, sanitation, maintenance, repairs, etc.  – are added to the base rent as additional rent (much the same as taxes and insurance). These costs are negotiated at the beginning of a lease but can often become a point of contention if both the tenant and landlord don’t communicate openly.

Here are a few things to keep in mind when it’s time to reconcile CAM charges:

  • Make sure all charges that could be considered CAM costs are presented to the landlord or owner by the submission deadline for review.
  • Determine the amounts per tenant based on their Gross Leasable Area.
  • Determine if the charges benefited one tenant or all tenants.
  • Have tenants been credited or refunded for over paying CAM estimates?
  • Were notices of deadlines for reconciliation clearly provided to tenants?
  • Make sure to follow the terms of each lease as they may vary (i.e. Base Year CAM or Cap on CAM rates).
  • Landlords should also provide CAM estimates for the current year and give adequate notice to the tenant.

Agreeing to terms and understanding charges as they arise is an easy way to avoid frustration at the end of the year. CAM reconciliation shouldn’t add aggravation to the already tedious budget process as long as the landlord and tenant keep accurate records and an open line of communication.