If you are a commercial tenant, Common Area Maintenance (CAM) fees are standard in lease agreements. These charges can greatly increase your occupancy cost and cause unexpected expenses.
What are CAM Fees?
In addition to base rent, cover shared-area costs like landscaping, snow removal, parking lot maintenance, cleaning, lighting, security, and property management. Certain repair and maintenance costs may also apply.
The costs are usually split amongst the building’s tenants, in proportion to the share of the premises that they occupy. For example, a tenant who occupies 10% of the space pays 10% of the CAM charges.
This is a common lease inclusion. Most CAM charges are intended to be both reasonable and necessary to maintain the premises. But what happens if these charges are not what you expected?
Common Ways CAM Charges Get Abused
While CAM charges are typical, an unscrupulous landlord or tricky lease wording could have you paying more than you anticipated. A few potential ways that CAM charges are subject to abuse include:
- Capital Expenses Passed Off as Maintenance. Landlords may try to include large, one-time improvements as CAM expenses. And depending on the definition of “CAM charges” in your lease agreement, you may still be on the hook. This is a problem as these go beyond routine maintenance. They benefit the landlord long-term, and can be particularly unfair if you only have a year or two remaining on your lease, but pay for a roof that will last for the next 30 years.
- Management Fees That Are Excessive or Duplicative. Property management fees are legitimate costs. There is an administrative cost associated with the day-to-day maintenance of a property, particularly for larger shopping centers or office buildings. Here, be careful to avoid above-market rates or certain “double-dip” charges – for example, a landlord that charges an administrative fee on top of management fees. In the lease itself, vague wording like “administrative costs as determined by landlord” could leave you paying more.
- Including Non-Common Area Costs. Some landlords push costs into CAM that do not actually relate to shared spaces, such as repairs inside other tenants’ spaces, marketing costs for vacant units, and leasing commissions. Be careful in ensuring that your lease only has you paying for the expenses related to your space.
- Lack of Transparency or Documentation. Some tenants receive only a lump-sum CAM bill with no breakdown. This makes it difficult for you to verify what you’re paying for, and also runs the risk of a landlord inflating expenses beyond what is reasonable or transparent.
- Charging for Deferred Maintenance. If a landlord neglects maintenance for years and then performs major repairs, they may try to pass the full cost onto current tenants as CAM charges. You’re stuck paying for past neglect, not current upkeep.
CAM fees are a normal part of commercial leasing, but they shouldn’t be a mystery. With a clear understanding of how they work and a careful review of your lease, you can avoid costly surprises. If you have questions about your CAM fees, reach out to the attorneys at Way Law today!