Understanding CAM

When you rent an office space for your business, the monthly rent is not the only cost that you will have to pay. In many cases, you are also required to pay for common area maintenance or CAM to cover costs associated with the building’s shared parts such as elevators, lobby, and parking lot. 

What is the Purpose of CAM?

CAM fees require tenants to help cover the direct expenses of the property owner for “common areas.” Common spaces may include both internal (halls, elevators, lobbies, public toilets, etc.) and external (parking spots, landscaped areas, etc.) zones.

List exactly what your CAM fees are going to cover in the lease, how often they are going to be paid, and how much they can be increased each year. If you are required to help with major renovation costs such as repairing parking lots or any kind of structural repairs, get it in writing. The landlord should also list when these repairs were last made and when they are scheduled or expected to be made in the future. 

Not all property owners will need tenants to help with costs such as roofing, maintenance of parking lots, and structural repairs. There’s really no standard for leases, so don’t just look at “CAM fees” in your lease; be sure to have them explained to you.

How are CAM expenses calculated?</big<

Your property manager forecasts anticipated expenses of common area maintenance for the property as part of the annual budget at the beginning of each year. Then, the estimate is divided proportionally across the building’s tenants. Your percentage of expenditure is calculated by dividing your square footage by the building’s gross leasing area. 

This total expenditure is calculated in your monthly operating expenditure so it can be paid throughout the year in small increments. The property manager will reconcile the actual costs of CAM with the estimated costs at the end of the year. 

If the actual CAM expenses are less than estimated, you and the other tenants will receive a credit for the difference from the property managers. If the estimated CAM did not cover the actual cost of the year, however, this difference will be owed as a lump sum. 

Seek Legal Help

If you have any questions about CAM, please contact Drucker & Mattia Attorneys at Law.

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