What is CAM?
Common Area Maintenance (CAM) refers to the expenses incurred by the landlord to maintain, operate, and manage the shared areas of a commercial property. These areas include spaces accessible to all tenants, such as:
- Hallways
- Lobbies
- Parking lots
- Elevators
- Landscaping and exterior areas
Typical CAM Expenses:
- Utilities (HVAC and lighting for common areas, water for landscaping)
- Repairs and Maintenance (roof, HVAC systems in common spaces)
- Janitorial Services (cleaning of shared spaces)
- Security Services (guards or surveillance systems)
- Management Fees (fees charged by property management companies)
What is CAM Reconciliation?
CAM Reconciliation is the annual process where the landlord compares the estimated CAM charges (billed monthly to tenants) with the actual expenses incurred during the year.
- Estimation: At the start of the lease year, the landlord estimates the CAM expenses and divides them among tenants.
- Actual Costs vs. Estimates: At the end of the year, the landlord totals the actual CAM expenses and compares them to the amounts collected from tenants.
- Adjustments:
- If actual costs were higher than estimated, tenants may be billed for the shortfall.
- If actual costs were lower, tenants may receive a refund or credit toward future payments.
Why CAM Reconciliation Matters:
- Transparency: Ensures tenants only pay their fair share of expenses.
- Fluctuation in Costs: Unexpected maintenance or rising utility costs can significantly impact CAM charges.
- Lease Negotiations: Tenants should carefully review lease terms to understand what is included in CAM charges and request caps on increases if possible.
Understanding CAM and reconciliation is crucial for tenants to manage their operating costs effectively and avoid surprises in their annual expenses.
Have questions about CAM charges? Reach out—I’ll help you decode those mysterious fees faster than your Wi-Fi can reconnect.
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