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Lanard Law Blog
What Are Common Area Maintenance Charges In A Commercial Lease?
Most commercial retail leases are triple net leases. What this means is that the landlord passes through all expenses to the tenants on a pro-rata basis. These expenses typically include taxes and common area maintenance charges (known as CAM charges). CAM charges in a commercial lease are typically added on to base rent as additional rent. A landlord typically will try to pass through as much of the overhead as possible through CAM charges. It is common to find administrative and maintenance fees, costs for repair and replacement of roofs, lighting, plumbing, electrical wiring, HVAC, etc., for the common areas. How can a prospective tenant minimize the CAM charges? A prospective tenant can attempt to negotiate a cap on CAM increases yearly, a fixed fee of CAM charges (typically the cap and fixed fee will exclude snow removal in northern climates), exclusions to items that the landlord may pass through to the tenant (for example, exclude costs due to the landlord's or another tenant's negligence), among others. It is also recommended that a tenant have the right to examine the books and records of the landlord to determine if the CAM charges have been properly calculated. This post does not create an attorney-client privilege and is not intended to provide legal advice for any particular situation.