Common Area Maintenance (CAM) charges can cause unwanted surprises in a commercial lease. CAM charges include items that the landlord must pay to maintain the property, such as real estate taxes, landlord’s insurance, utilities, property maintenance, and parking lot repairs. The landlord places the burden on tenants to reimburse these expenses by including CAM charges in the lease, requiring each tenant to pay its pro-rata share based on its percentage of occupation in a multi-unit property.
Common Pitfalls in CAM Provisions
One major issue that arises is that CAM language can be complex and unclear without an in-depth legal review:
- Unjustified Annual Increases: Leases may include language that increases CAM charges by a set percentage each year. This automatic increase may not reflect what the landlord is actually spending to maintain the property.
- Real Estate Tax Pass-Throughs: CAM provisions often include language that requires the tenant to cover a portion of the landlord’s real estate taxes.
Protecting Your Business with CAM Caps
You should negotiate a cap on CAM charges, especially during volatile economic times. A cap ensures that CAM charges cannot increase over a specified percentage each year, protecting your business from sudden financial burdens.
We recommend retaining the services of a business attorney to review, explain, and negotiate CAM language on your behalf. If you would like assistance with your commercial lease, please contact Kapadia Naik & Farhoudi or call us at 770-881-8081.